# EDGAR Filing Document

**Accession Number:** 0001114448
**File Stem:** 0001114448-26-000004
**Filing Date:** 2026-2
**Character Count:** 1702394
**Document Hash:** 414aff72590dcdb5e34e4d1a55f611e7
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001114448-26-000004.hdr.sgml**: 20260204

**ACCESSION NUMBER**: 0001114448-26-000004

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 253

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260204

**DATE AS OF CHANGE**: 20260204

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** NOVARTIS AG
- **CENTRAL INDEX KEY:** 0001114448
- **STANDARD INDUSTRIAL CLASSIFICATION:** PHARMACEUTICAL PREPARATIONS [2834]
- **ORGANIZATION NAME:** 03 Life Sciences
- **EIN:** 000000000
- **STATE OF INCORPORATION:** V8
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-15024
- **FILM NUMBER:** 26595979

**BUSINESS ADDRESS:**
- **STREET 1:** LICHTSTRASSE 35
- **CITY:** BASEL
- **STATE:** V8
- **ZIP:** CH 4056
- **BUSINESS PHONE:** 01141613241111

**MAIL ADDRESS:**
- **STREET 1:** LICHTSTRASSE 35
- **CITY:** BASEL
- **STATE:** V8
- **ZIP:** CH 4056

?xml version='1.0' encoding='ASCII'? 20-F

![picture](x_coverfront.jpg)

------

**As filed with the Securities and Exchange Commission on February 4, 2026**

**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington D.C. 20549**

### Form 20-F
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report……………

For the transition period from _____ to _____

**Commission file number** 1-15024

**Novartis AG**

(Exact name of Registrant as specified in its charter)

**N/A**

(Translation of Registrant's name into English)

**Switzerland**

(Jurisdiction of incorporation or organization)

Lichtstrasse 35

4056 Basel, Switzerland

(Address of principal executive offices)

Karen L. Hale

Chief Legal & Compliance Officer

Novartis AG

CH 4056 Basel

Switzerland

Tel.: +41-61-324-1111

Fax: +41-61-324-7826

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

<u>Title of each class</u>

<u>Trading Symbol(s)</u>

<u>Name of each exchange on which registered</u>

American Depositary Shares each representing 1 share

NVS

New York Stock Exchange

Ordinary shares, nominal value CHF 0.49 per share\*

NOVN

New York Stock Exchange\*

\* Not for trading but only in connection with the registration of American Depositary Shares representing such ordinary shares.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

**None**

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

**None**

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

**1 908 151 679 ordinary shares**

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

**Yes** ☒ **No** ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Yes** ☐ **No** ☒

Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

**Yes** ☒ **No** ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

**Yes** ☒ **No** ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "large accelerated filer," "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accelerated filer ☐ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-accelerated filer ☐ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other ☐

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

&nbsp;&nbsp;&nbsp;&nbsp;**Item 17** ☐ **Item 18** ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

&nbsp;&nbsp;&nbsp;&nbsp;**Yes** ☐ **No** ☒

------

## Table of contents
[Introduction and use of certain terms](#anchorId00214823)

[Forward-looking statements](#anchorId00214846)

#### Part I
[Item 1. Identity of Directors, Senior Management and Advisers](#anchorId00314835)

[Item 2. Offer Statistics and Expected Timetable](#anchorId00314843)

[Item 3. Key Information](#anchorId00314849)

[3.A \[Reserved\]](#anchorId00314851)

[3.B Capitalization and indebtedness](#anchorId00314853)

[3.C Reasons for the offer and use of proceeds](#anchorId00314857)

[3.D Risk factors](#anchorId00314861)

[Item 4. Information on the Company](#anchorId00315376)

[4.A History and development of Novartis](#anchorId00315379)

[4.B Business overview](#anchorId00315416)

[4.C Organizational structure](#anchorId00319309)

[4.D Property, plants and equipment](#anchorId00319332)

[Item 4A. Unresolved Staff Comments](#anchorId00319527)

[Item 5. Operating and Financial Review and Prospects](#anchorId0010014876)

[5.A Operating results](#anchorId0010014879)

[5.B Liquidity and capital resources](#anchorId0010022669)

[5.C Research and development, patents and licenses](#anchorId0010025446)

[5.D Trend information](#anchorId0010025459)

[5.E Critical accounting estimates](#anchorId0010025466)

[Item 6. Directors, Senior Management and Employees](#anchorId00414823)

[6.A Directors and senior management](#anchorId00414825)

[6.B Compensation](#anchorId00914939)

[6.C Board practices](#anchorId001014841)

[6.D Employees](#anchorId00514826)

[6.E Share ownership](#anchorId00515569)

[6.F Disclosure of a registrant's action to recover erroneously awarded compensation](#anchorId00515584)

[Item 7. Major Shareholders and Related Party Transactions](#anchorId00515590)

[7.A Major shareholders](#anchorId00515593)

[7.B Related party transactions](#anchorId00515708)

[7.C Interests of experts and counsel](#anchorId00515714)

[Item 8. Financial Information](#anchorId00515720)

[8.A Consolidated statements and other financial information](#anchorId00515723)

[8.B Significant changes](#anchorId00515758)

[Item 9. The Offer and Listing](#anchorId00515765)

[9.A Offer and listing details](#anchorId00515769)

[9.B Plan of distribution](#anchorId00515773)

[9.C Markets](#anchorId00515777)

[9.D Selling shareholders](#anchorId00515785)

[9.E Dilution](#anchorId00515789)

[9.F Expenses of the issue](#anchorId00515793)

[Item 10. Additional Information](#anchorId00515799)

[10.A Share capital](#anchorId00515802)

[10.B Memorandum and articles of association](#anchorId00515806)

[10.C Material contracts](#anchorId00516084)

[10.D Exchange controls](#anchorId00516102)

[10.E Taxation](#anchorId00516111)

[10.F Dividends and paying agents](#anchorId00516410)

[10.G Statement by experts](#anchorId00516414)

[10.H Documents on display](#anchorId00516421)

[10.I Subsidiary information](#anchorId00516433)

[10.J Annual report to security holders](#anchorId00516437)

[Item 11. Quantitative and Qualitative Disclosures About Market Risk](#anchorId00516443)

[Item 12. Description of Securities Other than Equity Securities](#anchorId00516459)

[12.A Debt securities](#anchorId00516462)

[12.B Warrants and rights](#anchorId00516466)

[12.C Other securities](#anchorId00516470)

[12.D American Depositary Shares](#anchorId00516474)

#### PART II
[Item 13. Defaults, Dividend Arrearages and Delinquencies](#anchorId00516660)

[Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds](#anchorId00516667)

[Item 15. Controls and Procedures](#anchorId00614823)

[Item 16A. Audit Committee Financial Expert](#anchorId00714826)

[Item 16B. Code of Ethics](#anchorId00714838)

[Item 16C. Principal Accountant Fees and Services](#anchorId00714849)

[Item 16D. Exemptions from the Listing Standards for Audit Committees](#anchorId00714861)

[Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers](#anchorId00714870)

[Item 16F. Change in Registrant's Certifying Accountant](#anchorId00715556)

[Item 16G. Corporate Governance](#anchorId00715565)

[Item 16H. Mine Safety Disclosure](#anchorId00715600)

[Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#anchorId00715609)

[Item 16J. Insider Trading Policies](#anchorId00715618)

[Item 16K. Cybersecurity](#anchorId00715630)

#### PART III
[Item 17. Financial Statements](#anchorId00114836)

[Item 18. Financial Statements](#anchorId00114843)

[Item 19. Exhibits](#anchorId001414822)

## Introduction and use of certain terms
Novartis AG and its consolidated affiliates publish consolidated financial statements expressed in US dollars. Our consolidated financial statements responsive to Item 18 of this Annual Report on Form 20-F (Annual Report) are prepared in accordance with International Financial Reporting Standards Accounting Standards as issued by the International Accounting Standards Board. "Item 5. Operating and Financial Review and Prospects," together with the sections on products in development and key development projects of our businesses (see "Item 4. Information on the Company—Item 4.B. Business overview"), constitute the Operating and Financial Review ("*Lagebericht*"), as defined by the Swiss Code of Obligations.

Unless the context requires otherwise, the words "we," "our," "us," "Novartis," "Company," and similar words or phrases in this Annual Report refer to Novartis AG and its consolidated affiliates. However, each Novartis affiliate is legally separate from all other Novartis affiliate companies and manages its business independently through its respective board of directors or similar supervisory body or other top local management body, if applicable. Each executive identified in this Annual Report reports directly to other executives of the Novartis affiliate company that employs such executive, or to such company's board of directors.

In this Annual Report, references to: "ADR" or "ADRs" are to Novartis American Depositary Receipts; "ADS" or "ADSs" are to Novartis American Depositary Shares; "associates" are to employees of our affiliates; "Australasia" are to Australia, New Zealand, Melanesia, Micronesia and Polynesia, unless the context otherwise requires; "CHF" are to Swiss francs; the "CHMP" are to the Committee for Medicinal Products for Human Use of the EMA; the "EC" are to the European Commission; the "EMA" are to the European Medicines Agency, an agency of the European Union; "euro" or "EUR" are to the lawful currency of the member states of the European Union in which it is the official currency; the "European Union" or "EU" are to the European Union and its 27 member states; the "Executive Committee" or "ECN" are to the Executive Committee of Novartis; the "FDA" are to the US Food and Drug Administration; "Latin America" are to Central and South America, including the Caribbean; "NYSE" are to the New York Stock Exchange; the "SEC" are to the US Securities and Exchange Commission; "SIX" are to the SIX Swiss Exchange; "US dollars," "USD" or "$" are to the lawful currency of the United States of America; the "United States" or "US" are to the United States of America; and "xRNA" are to our ribonucleic acids (RNA) technology platform.

All product names appearing in italics are trademarks owned by or licensed to Novartis. Product names identified by a "™" are trademarks that are not owned by or licensed to Novartis and are the property of their respective owners.

Certain documents and information referenced in this Annual Report are available on our website. However, the information contained on our website, or any information that may be accessed by links on our website, is not included as part of, or incorporated by reference into, this Annual Report.

## Forward-looking statements
This Annual Report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the United States Private Securities Litigation Reform Act of 1995, as amended. Other written materials filed with or furnished to the SEC by Novartis, as well as other written and oral statements made to the public, may also contain forward-looking statements. Forward-looking statements can be identified by words such as "potential," "expect," "will," "plan," "pipeline," "outlook," "may," "could," "would," "anticipate," "seek," "likely," "ongoing," "estimate," "believe," "target," "intend," or similar terms, or by express or implied discussions regarding potential new products, potential new indications for existing products, or regarding potential future revenues from any such products or indications; or regarding the acquisition, maintenance or loss of intellectual property protection for our products; or regarding the potential outcome, or financial or other impact on Novartis, of any of the transactions described; or regarding the potential impact of share buybacks; or regarding potential future sales or earnings of Novartis or potential shareholder returns; or regarding potential future credit ratings of Novartis; or by discussions of strategy, plans, expectations or intentions. Such forward-looking statements are based on the current beliefs and expectations of management regarding future events, and are subject to significant known and unknown risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in forward-looking statements. You should not place undue reliance on these statements.

In particular, our expectations could be affected by, among other things, risks and uncertainties concerning:

• trends toward healthcare cost-containment, including new laws, executive/administrative orders and regulations, ongoing government, payer and general public pricing and reimbursement pressures, including proposals for international reference pricing, and requirements for increased pricing transparency

• our ability to competitively discover and develop high-value medicines and new indications for our existing products in our focus therapeutic areas and technology platforms

• the success of our key products, commercial priorities and strategy, including our ability to maintain and grow our business and to replace revenue and income lost to generic, biosimilar and other competition

• our ability to obtain or maintain proprietary intellectual property protection

• our ability to realize the strategic benefits, operational efficiencies or opportunities expected from our external business opportunities

• our development and adoption of advanced technologies, including artificial intelligence (AI)

• potential significant breaches of our information security or disruptions of our information technology systems and our ability to comply with cybersecurity and data privacy laws and regulations

• the implementation of our new IT projects and systems

• our reliance on outsourcing key business functions to third parties

• actual or potential legal or regulatory proceedings

• potential tariffs on our products

• safety, quality, data integrity or manufacturing issues

• our ability to identify, attract, integrate, develop and retain key personnel and qualified individuals for critical roles

• our ability to adapt to major geopolitical and macroeconomic developments

These risks and others are discussed in more detail in this Annual Report, including under "Item 3. Key Information—Item 3.D. Risk factors," "Item 4. Information on the Company," and "Item 5. Operating and Financial Review and Prospects." Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Annual Report as anticipated, believed, estimated or expected. It is not possible to predict or identify all risk to our business. Consequently, you should not consider the foregoing to be a complete discussion of all potential risks or uncertainties. We provide the information in this Annual Report as of the date of its filing. We do not intend, and do not assume any obligation, to update any information or forward-looking statements set out in this Annual Report as a result of new information, future events or otherwise.

## Part I

## Item 1. Identity of Directors, Senior Management and Advisers
Not applicable.

## Item 2. Offer Statistics and Expected Timetable
Not applicable.

## Item 3. Key Information

### 3.A [Reserved]

### 3.B Capitalization and indebtedness
Not applicable.

### 3.C Reasons for the offer and use of proceeds
Not applicable.

### 3.D Risk factors
Our business faces significant risks and uncertainties. You should carefully consider all of the information set forth in this Annual Report and in other documents we file with or furnish to the SEC, including the following risk factors, before deciding to invest in or to maintain an investment in any Novartis securities. Our business, as well as our reputation, financial condition, results of operations, and share price, could be materially adversely affected by any of these risks, as well as other risks and uncertainties not currently known to us or not currently considered material.

**Strategic risks**

#### Pricing, reimbursement and access

#### Risk description
Pricing and reimbursement pressure, including pricing transparency and access to healthcare

#### Context and potential impact
Our business has continuously experienced significant pressures on the pricing of our products and on our ability to obtain and maintain satisfactory rates of reimbursement for our products from governments, insurers and other payers. These pressures have many sources, including: growth of healthcare costs as a percentage of gross domestic product; funding restrictions and policy changes; and public controversies, political debate, investigations, and legal proceedings regarding pharmaceutical pricing. Pressures on pricing may negatively impact both our product pricing and the availability of our products.

In addition, we face numerous cost-containment measures imposed by governments and other payers. These include: government-imposed, industrywide price reductions; mandatory pricing systems; reference pricing systems; payers limiting access to treatments based on cost-benefit analyses; the importation of drugs from lower-cost countries to higher-cost countries; the shifting of the payment burden to patients through higher co-payments and co-pay accumulator programs; the limiting of physicians' ability to choose among competing medicines; the mandatory substitution of generic drugs for the patented equivalent; pressure on physicians to reduce the prescribing of patented prescription medicines; increasing pressure on intellectual property protections; and growing requirements for increased transparency on pricing. For example, in May 2025, the US administration issued an executive order aiming to implement "most-favored-nation" pricing tying US prescription drug prices with prices in selected comparably developed nations. In July 2025, the administration sent letters to several pharmaceutical manufacturers, including Novartis, that, among other things, sought commitments from manufacturers to match US prices to the lowest price offered in certain other developed nations. In December 2025, we announced a voluntary agreement with the US administration that includes, among other things, a commitment to launching future medicines with comparable prices across high-income countries, applying to participate in the GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) Model, and building direct-to-patient platforms for certain of our medicines. These measures and any further developments concerning government imposed pricing pressures could negatively impact access to our products by providers and patients, and depress the price ultimately paid to us for our products, which could have a material adverse impact on our business. For more information on price controls, see "Item 4. Information on the Company—Item 4.B Business overview—Price controls."

Macroeconomic and geopolitical trends will continue to have an impact on these pricing and reimbursement pressures. Slow economic growth and the onset and

expansion of war in certain parts of the world (which has contributed to challenges such as high energy costs and inflation) have led to increased strain on fiscal budgets in many major economies. In addition, legislative developments such as those in the US (e.g., the Inflation Reduction Act (IRA)) and in Europe (e.g., the EU Joint Health Technology Assessment and 2023 EU Pharmaceutical Legislation Update) have imposed further pressures on pricing and timelines for reimbursement in these countries as legislators seek to reduce growth in healthcare spending. These external factors may materially affect our ability to protect prices to achieve and maintain an acceptable return on our investments in the research and development of our products; and may impact our ability to research and develop new products. For example, in August 2024, we acceded to a "maximum fair price" under the US IRA for our cardiovascular drug *Entresto* for 2026 to avoid fines or the removal of all our products from both Medicare and Medicaid. Additionally, the Centers for Medicare and Medicaid Services (CMS) selected *Cosentyx*, *Kisqali*, and *Xolair* as part of the Medicare Drug Price Negotiation Program for 2028. Other products of ours may be selected for the Medicare Drug Price Negotiation Program or other price negotiation programs in the US or other jurisdictions in the future.

#### Competition and commercial priorities

#### Risk description
Failure to deliver key commercial priorities and successfully launch new products ahead of competitors

#### Context and potential impact
We operate in a highly competitive and rapidly changing industry, and our ability to maintain and grow our business and to replace revenue and income lost to generic, biosimilar, and other competition depends heavily on the commercial success of our new or existing key products. The commercial success of these products could be impacted at any time by a number of factors, including pressure from new or existing competitive products, changes in the prescribing habits of healthcare professionals, slower than expected post-launch adoption, unexpected side effects or safety signals, supply chain issues or other product shortages, pricing pressure, regulatory proceedings, changes in labeling, loss of intellectual property protection, or global pandemics.

Healthcare professionals, patients and payers may choose competitors' products instead of ours for various reasons, including if they perceive them to be better in terms of efficacy, safety, cost, convenience or other reasons. The commercial success of our key products and launches in the face of increasing competition requires significant attention, management focus and resource allocation. Such competition could significantly affect the revenue from our products and our results of operations. This impact could also be compounded to the extent that such competition results in us making significant additional investments in research and development, marketing or sales. The continual development and utilization of new technologies for new products and product enhancements is an important way in which we deliver our key commercial priorities and remain competitive. If we fail to keep pace with technological changes in our industry, such as AI, we may experience lower revenues and lower margins.

Furthermore, we regularly reassess how our business is organized to help ensure that we have the optimal structure with which to execute our strategy. An inability to successfully optimize our capability and operating model could have a material adverse effect on our results of operations and financial condition.

#### Research and development

#### Risk description
Failure to competitively discover and develop innovative medicines in our core therapeutic areas and leverage our technology platforms

#### Context and potential impact
We engage in extensive and costly research and development activities, both through our own internal resources and through collaborations with third parties, in an effort to identify and develop new products and new indications for existing products that address unmet, ever-changing medical needs, while ensuring commercial viability and success. Our product candidates are subject to the high rate of failure inherent in pharmaceutical research and development. Failure can occur at any point, including after significant investments have been made in a product candidate. Our ability to grow our business and our product pipeline, to replace sales lost due to branded competition, entry of generics, or other factors, and to bring products to market that take advantage of new technologies — including AI as well as cell, gene and radioligand therapies — depends in significant part on the success of these efforts.

Failure to successfully develop our pipeline products is typically the result of the inherent uncertainty of science, suboptimal internal execution, or both. Key elements of internal execution include our ability to: prioritize our investments in our highest potential value assets; optimize the transition of assets from research to development; integrate externally acquired assets in an efficient way; and execute the steps in our drug development process that enable our assets to be approved and reimbursed in a timely manner to positively impact clinical practice. We cannot guarantee that we will prioritize investment of resources into assets optimally to achieve commercial success or that our product candidates currently under development will be approved or launched. Further, a failure to successfully implement AI as part of our R&D strategy may put us at a competitive disadvantage and impact our productivity and pipeline value. For more information, see also "Item 4. Information on the Company—Item 4.B Business overview—Research and development."

Our new products must undergo intensive preclinical and clinical testing and are approved by means of a highly complex, lengthy, and expensive approval process that varies substantially from country to country and may have specific requirements for the recruitment of patients for clinical trials. Additionally, if we fail to successfully progress late-stage assets and the core elements of drug development for key programs, this could have a negative impact on the development of our product

pipeline, and ultimately on the success of our business and our financial results.

We may be unable to develop the necessary clinical evidence to support the desired indications and product profile for a particular disease that is needed to drive clinical adoption of our new products, and to thereby achieve the full potential of our assets (also known as the "target product profile"). It is increasingly challenging to adequately recruit a sufficient number of patients in the US for clinical trials due to competition from other clinical trials, and the cost and effort associated with expanding our operations for the recruitment of patients into such trials. Similarly, the post-approval regulatory burden has also increased, and may continue to increase, as regulators are increasingly focused on long-term data. For example, certain of our products have received, and in the future may receive, accelerated approvals that are contingent upon confirmatory studies, including data that continues to demonstrate clinical benefit or safety. These requirements make the maintenance of regulatory approvals and label expansions for our products increasingly expensive, and further heighten the risk of recalls, product withdrawals, changes to product specifications, loss of market share, and loss of revenue and profitability.

The clinical testing, regulatory processes and post-approval activities described above have become, and may in the future continue to become, more difficult during pandemics and periods of geopolitical and economic uncertainty. This is due to challenges related to recruiting, enrolling and treating patients in clinical trials, as well as to ensuring the supply of trial materials.

Furthermore, our research and development activities must be conducted in an ethical and compliant manner. Among other things, we are concerned with patient safety (both pre- and post-product approval), data privacy, current Good Clinical Practices (cGCP) requirements, data integrity, the fair treatment of patients, broad representation in the recruitment of patients to clinical trials, and animal welfare. If we fail to properly manage such issues, we risk injury to third parties, damage to our reputation, negative financial consequences as a result of potential claims for damages, sanctions and fines, and the potential that investments in research and development activities may not bring the expected benefits to us. For a further description of the research and development of, and approval processes for, our products, see "Research and development" and "Regulation" under "Item 4. Information on the Company—Item 4.B Business overview."

#### Intellectual property

#### Risk description
Expiry, assertion or loss of intellectual property protection

#### Context and potential impact
Many of our products are protected by intellectual property rights, including patents and regulatory exclusivities, which may provide us with exclusive rights to market those products for a limited time, to enable our purpose of reimagining medicine by sustainably financing our research and development. However, the strength and duration of those rights can vary significantly from product to product and from country to country, and they may be successfully challenged by third parties or governmental authorities.

If we fail to obtain and maintain adequate intellectual property protection, we may not be able to prevent third parties from launching generic or biosimilar versions of our branded products or from using our proprietary technologies. Intellectual property protection related to particular compound forms, uses, formulations, or processes may not preclude third parties from designing around our rights to compete with our products. Loss of intellectual property protection and the introduction of generic or biosimilar competition for a patented branded medicine in a country typically result in a significant reduction in net sales and operating income for the branded product. In any given year, we may experience a potentially significant impact on our net sales from products that have already lost intellectual property protection, as well as products that may lose protection during the year. Such competition can occur after successful challenges to intellectual property rights or the regular expiration of the patent term or other intellectual property rights. Such competition can also result from the entry of generic or biosimilar versions of another medicine in the same therapeutic class as one of our drugs or in a competing therapeutic class, from a Declaration of Public Interest or the compulsory licensing of our intellectual property by governmental authorities, or as a result of a general weakening of intellectual property and governing laws in certain countries around the world. In addition, generic or biosimilar manufacturers may sometimes launch products "at risk" before the final resolution of legal proceedings concerning the infringement or validity of relevant patents or regulatory exclusivities. For example, we lost market exclusivity for *Entresto* in the US in July 2025, and thereafter experienced a substantial decline in *Entresto* sales in that market during the second half of 2025. Our regulatory data protection for *Entresto* in Europe expires in November 2026, and revenues will decline substantially thereafter unless we are successful in appropriately asserting our intellectual property rights that expire later. Further, certain of our other products may face significant generic competition as we anticipate the expiration of certain patent-based or regulatory exclusivities in the coming years for certain of our key marketed products. For more information on the patent and generic competition status of our products, see "Item 4. Information on the Company—Item 4.B Business overview—Intellectual property."

We also rely across all aspects of our businesses on unpatented proprietary technology, know-how, trade secrets, and other confidential information. We seek to protect these through various measures, including confidentiality agreements with employees, licensees, third-party collaborators, contractors, and consultants who may have had access to such information. If these agreements are breached or our other protective measures should fail, we may not be able to prevent a third party from copying or otherwise obtaining and using our trade secrets or other intellectual property without authorization, and our contractual or other remedies may not be adequate to cover our losses. Further, others may

independently and lawfully develop substantially similar or identical products that circumvent our intellectual property by means of alternative designs or processes or otherwise.

In addition, third parties may claim that our products or business infringe, misappropriate or otherwise violate patents or other intellectual property rights held by them. Claims of intellectual property infringement, misappropriation or other violations can be costly and time-consuming to resolve and may delay or prevent product launches. If successful, these actions may involve payment of future royalties or damages (including treble damages on US sales if we are found to have willfully infringed valid patent rights of a third party) and may also involve injunctive relief requiring the removal of one or more dosage strengths of a product from the market (or removal of a therapeutic indication from the product's approved labeling) for a period of time or throughout the life of the asserted intellectual property right. Such damages or such an injunction may have a material impact on our operating income and net sales.

A third party may also claim that our owned or licensed patent rights are not infringed or are invalid or unenforceable in a litigation. The outcome following such legal assertions is unpredictable, and the loss of patent rights as a result of such assertions could result in the introduction of generic or biosimilar competition for, and reduction in sales of, the branded product covered by such patent rights. The outcome may also result in our inability to obtain fair value for the use of our patents, or to obtain an injunction preventing the unlicensed practice of our patents. In addition, intellectual property protection in certain jurisdictions outside the EU and US may be weaker, and we may face heightened risks to our intellectual property rights in these jurisdictions, including competition with generic, infringing or counterfeit versions of our products at or after launch.

Because we may have substantially reduced marketing and research and development expenses related to products that are in their final years of exclusivity, the initial loss of protection for a product during a given year could also have an impact on our operating income for that year in an amount corresponding to a significant portion of the product's lost sales. The magnitude of the impact of generic or biosimilar competition on our income could depend on a number of factors. These include: with respect to income in a given year, the time of year at which the generic or biosimilar competitor is launched; the ease or difficulty of manufacturing a competitor product and obtaining regulatory approval to market it; the number of generic or biosimilar competitor products approved, including whether, in the US, a single competitor is granted an exclusive marketing period; whether an authorized generic is launched; the geographies in which generic or biosimilar competitor products are approved, including the strength of the market for generic or biosimilar pharmaceutical products in such geographies, and the comparative profitability of branded pharmaceutical products in such geographies; and our ability to successfully develop and launch new products for patients that may also offset the income lost to generic or biosimilar competition.

#### Alliances, acquisitions and integration

#### Risk description
Failure to identify, execute or realize the expected benefits from our external business opportunities

#### Context and potential impact
As part of our strategy as a focused innovative medicines company, we routinely evaluate external opportunities that could strengthen our portfolio by acquiring and divesting products, entering new areas of business, or entering into strategic alliances and collaborations. Additionally, strategic deals with early stage companies or involving new technology platforms contribute to our innovation. For example, in 2025, we closed the acquisitions of Anthos Therapeutics, Regulus Therapeutics, and Tourmaline Bio, announced the proposed acquisition of Avidity Biosciences, and entered into several strategic partnerships for the development and commercialization of innovative products across our core therapeutic areas and technology platforms. This strategy relies on our ability to identify strategic external business opportunities, which may be limited, in a highly competitive environment, including assessing the value of early stage companies, and to close transactions with third parties on mutually acceptable terms and timelines. The market for clinical-stage assets and cutting-edge technology platforms within our core therapeutic areas is highly competitive and we may be unsuccessful in acquiring businesses or assets or entering into strategic partnerships that may complement our existing portfolio.

Once the key terms of a strategic transaction have been agreed with a third party, we may not be able to reach final agreement on the transaction as a result of, among other things, disagreement on the contractual terms or negative due diligence results. In addition, we cannot be sure that pre-transaction due diligence will identify all possible issues that might arise during and after the transaction. Further, regulatory scrutiny of business acquisitions in our industry, including by competition authorities across jurisdictions globally, could delay, jeopardize or increase the costs of our business development activities. Our efforts on such transactions can also divert management's attention from our existing businesses and pursuing multiple transactions at the same time may impact our ability to efficiently conduct appropriate levels of pre-transaction technical due diligence, and to consummate such transactions.

After a transaction is closed, efforts to develop and commercialize acquired or licensed products, to integrate the acquired business or to achieve expected synergies may fail or may not fully meet expectations. This may occur due to difficulties in retaining key personnel, customers and suppliers; failure to obtain marketing approval or reimbursement within expected timeframes or at all; differences in corporate culture, standards, controls, processes and policies; or other factors. Transactions can also result in liabilities being incurred that were not known at the time of acquisition, or the creation of tax or accounting issues. Acquired businesses are not always in full compliance with legal, regulatory or Novartis standards, including, for example, current Good Manufacturing Practices (cGMP) or cGCP standards, which can be costly and time-consuming to remediate.

Furthermore, our strategic alliances and collaborations with third parties may not achieve their intended goals and objectives within expected time frames, or at all. For more information about recent business acquisitions, see "Item 18. Financial Statements—Note 2. Significant acquisitions of businesses and spin-off of Sandoz business."

Similarly, we cannot ensure that we will be able to successfully divest or spin off businesses or other assets that we have identified for this purpose; or that any completed divestment or spin-off will achieve the expected strategic benefits, operational efficiencies or opportunities; or that the divestment or spin-off will ultimately maximize shareholder value.

#### Social impact and sustainability matters

#### Risk description
Failure to meet rapidly evolving social impact and sustainability expectations

#### Context and potential impact
In addition to financial results, companies are scrutinized by various stakeholders for their performance on a variety of matters related to social impact and sustainability. An inability to successfully perform on social impact and sustainability matters and to meet heightened and sometimes conflicting stakeholder expectations could result in negative impacts on our reputation, recruitment, retention, operations, access to capital, financial results, and share price.

Topics related to large societal changes, such as social inequity, access to medicines, and climate change, are important to a wide range of our stakeholders. For example, a variety of organizations measure the performance of companies on social impact and sustainability topics, and the results of these assessments are widely publicized. In addition, investments in funds that focus on companies that perform well in such assessments remain significant, and major institutional investors have publicly emphasized the importance of such measures in making their investment decisions. Our actions related to social impact and sustainability topics may, in the long term, impact our operations and ability to achieve our strategic goals, and ultimately could have a potential negative impact on the value of Novartis.

Considering the fast pace of change in external expectations, including a range of upcoming social impact and sustainability regulations in various jurisdictions, there can be no certainty that we will manage such issues successfully, that the standards we currently use to measure our performance against our social impact and sustainability commitments and goals will remain the same, or that we will successfully meet society's or investors' expectations. Failure to meet rapidly evolving regulatory requirements, investor, and societal expectations could also result in litigation or regulatory actions, which could have a material adverse impact on our reputation, recruitment, retention, operations, financial results, and share price. Additionally, partners in our value chain that we do not control may not comply with commitments and goals we set for ourselves, which may have a negative impact on our business.

#### Artificial Intelligence

#### Risk description
Failure to successfully implement AI solutions and capture the full potential of AI opportunities

#### Context and potential impact
AI presents opportunities across our value chain. The race to harness AI is intensifying, as competitors seek tangible benefits, including faster trial execution, improved yield, and AI-discovered biologics in clinical development. If we fail to drive an effective enterprise AI strategy and capture these opportunities, or if our competitors secure more sophisticated AI models, algorithms or partnerships than us, the result will be significant loss of competitive advantage in developing and launching our medicines.

There are significant risks involved in utilizing AI, and no assurance can be provided that our use will enhance our business and operations or produce the intended results. For example, AI algorithms may be flawed, insufficient, of poor quality, reflect unwanted forms of bias, or contain other errors or inadequacies — any of which may not be easily detectable. AI systems are susceptible to producing false or "hallucinatory" inferences or outputs, and AI can present ethical issues and may subject us to new or heightened legal, regulatory, ethical, reputational, or other challenges. Further, inappropriate or controversial data practices, or other factors adversely affecting public opinion of AI, could impair the acceptance of AI solutions, including those incorporated in our business and operations. If the AI solutions that we create or use are deficient or inaccurate, we could incur operational inefficiencies, competitive harm, legal liability, brand or reputational harm, or other adverse impacts on our business and financial results. If we do not have sufficient rights to use the data or other material or content on which our AI solutions or other AI tools we use rely, we may also incur liability through the violation of applicable laws and regulations, third-party intellectual property, privacy or other rights, or contracts to which we are a party.

In addition, regulation of AI is rapidly evolving worldwide as legislators and regulators are increasingly focused on these emerging technologies. The technologies underlying AI and its uses are subject to a variety of laws and regulations, including intellectual property, privacy, data protection and information security, consumer protection, competition, labor and equal opportunity laws, and are expected to be subject to increased regulation and new laws or new applications of existing laws and regulations. We may not be able to anticipate how to respond to these rapidly evolving frameworks, which may increase compliance costs and constrain global business processes. We may need to expend resources to adjust our use of AI in certain jurisdictions if the legal frameworks are inconsistent or divergent across jurisdictions. Furthermore, because AI technology itself is highly complex and rapidly developing, it is not possible to predict all of the legal, operational or technological risks that may arise related to the use of AI.

**Operational risks**

#### Cybersecurity and data protection

#### Risk description
Cybersecurity breaches, data loss and catastrophic loss of IT systems

#### Context and potential impact
We are heavily dependent on critical, complex and interdependent information technology (IT) systems, including internet-based systems to support our business processes. We also outsource significant parts of our IT infrastructure to third-party providers, including those who provide AI services and technology, and currently use these providers to perform business-critical IT and non-IT services for us. We are therefore vulnerable to cybersecurity attacks and incidents on such networks and systems — whether our own or those of the third-party providers that we contract — and we have experienced, and may in the future experience, such cybersecurity threats and attacks. Cybersecurity threats and attacks take many forms, and the size, age and complexity of our IT systems make them potentially vulnerable to external and internal security threats; outages; malicious intrusions and attacks; cybercrimes, including state-sponsored cybercrimes; malware; ransomware; misplaced or exposed data, lost data or data errors; programming or human errors; or other similar events, and may remain undetected for significant periods of time. We may not be able to anticipate all types of security threats, and we may not be able to implement preventive measures that are effective against all such security threats. The risk of such threats and attacks has increased in part due to the rise of AI, and as virtual and remote working have become more common, and sensitive data is accessed by employees working in less secure, home-based environments. In addition, due to our reliance on third-party providers, we have experienced, and may in the future experience, interruptions, delays or outages in IT service availability due to a variety of factors outside our control, including technical failures, natural disasters, fraud, or security attacks experienced by or caused by third-party providers. Interruptions in the service provided by these third parties could affect our ability to perform critical tasks. Further, businesses we acquire may be more vulnerable to cybersecurity attacks and we may be unable to address such deficiencies immediately after acquisition.

A significant information security or other event, such as a disruption or loss of availability of one or more of our IT systems, whether managed by us or a third-party service provider, has previously and could in the future negatively impact important business processes. These include the conduct of scientific research and clinical trials, the submission of data and information to health authorities, our manufacturing and supply chain processes, our shipments to customers, our compliance with legal obligations, and communication between employees and with third parties.

In the ordinary course of business, we collect, store and transmit confidential information (including but not limited to intellectual property, proprietary business information, and personal information). IT issues have previously led to, and could in the future lead to, the compromise of trade secrets, confidential information or other intellectual property that could be sold and used by competitors to accelerate the development or manufacturing of competing products; the compromise of personal financial and health information; and the compromise of IT security data such as usernames, passwords and encryption keys, as well as security strategies and information about network infrastructure, which could allow unauthorized parties to gain access to additional systems or data. In addition, malfunctions in software or medical devices that make significant use of IT could lead to a risk of direct harm to patients. The costs related to significant security breaches or disruptions could be material and any cybersecurity insurance that we may have in place may not cover such expenses. If the information technology systems of our third-party providers become subject to disruptions or security breaches, we may have insufficient recourse against such third parties and we may have to expend significant resources to mitigate the impact of such an event, and to develop and implement protections to prevent future events of this nature from occurring.

The occurrence of any of the events described above in the future could disrupt our business operations and result in enforcement actions or liability, including potential government fines and penalties, claims for damages, and shareholder litigation or allegations that the public health, or the health of individuals, has been harmed.

Any significant events of this type could require us to expend significant resources beyond those we already invest to remediate any damage, to further modify or enhance our protective measures, and to enable the continuity of our business.

#### Strategic technology programs implementation

#### Risk description
Failure to successfully implement our IT strategy may disrupt our core business processes

#### Context and potential impact
We rely on various IT systems to operate our complex global business and several of our current IT systems are reaching the end of their useful life. As a result, we are implementing several companywide IT programs to replace and consolidate outdated IT systems, to simplify and standardize our processes, systems and tools, and to create a unified data marketplace. These changes could cause disruptions to our operational stability, including to our internal controls and ability to produce accurate financial statements, as we transition to these new programs. Implementation and operation of these new systems involves certain risks, including: the potential for a failure of the new systems to operate as expected; a failure to properly integrate new systems with other systems we use; delays in adopting and scaling new systems; potential loss of data or information; a failure of, or potential issues with, systems related to our payment and procurement processes; compliance issues; and cost overruns and delays. An inability to implement our IT strategy in a timely and successful manner may prevent us from materializing expected business benefits or capitalizing on opportunities, and could lead

to business disruptions, cost inefficiencies and potential exposure to legal, regulatory and reputational risks as our internal controls could be negatively affected. Any disruptions or malfunctions of new systems could cause critical information to be delayed, lost, defective, corrupted, or rendered inadequate or inaccessible, which could negatively impact our operations, the effectiveness of our internal controls, and financial condition.

#### Talent and external workforce management

#### Risk description
Inability to identify, attract, develop and retain qualified talent for critical roles or to effectively manage our external workforce could hinder our growth and result in increased information security, data and legal compliance risks

#### Context and potential impact
We rely on identifying, attracting, developing and retaining a highly skilled workforce across our business and functions to achieve our objectives. Any failure to develop and sustain a supply of key personnel — including senior members of our scientific and management teams, high-quality researchers and development specialists, and skilled employees with key capabilities in priority markets — could hinder our innovation, execution, and competitiveness in such markets, adversely affect our ability to achieve our key business objectives and negatively impact our brand and reputation.

The market for skilled talent has become increasingly competitive, and we anticipate this trend will persist in the long term. We face a challenge to attract and retain top talent in several areas, including biology, immunology, chemistry, clinical development, drug manufacturing, data, digital and IT, including AI, oncology, and advanced therapy platforms (i.e., gene and cell therapy, radioligand therapy, and xRNA). In addition, many pharmaceutical and biotechnology companies, universities and research centers, and government entities with significant capital are not only competing with us to attract the same skilled talent, but are also aggressively pursuing our experienced talent. Additionally, if the performance of our leadership and management fails to build on our capabilities, the results could be suboptimal performance of our teams and misalignment with strategic goals, and could hinder our ability to attract, develop and retain qualified talent in critical roles. Furthermore, if we are unable to retain and engage key talent of companies that we acquire and integrate, we may not be able to realize the full value of these acquisitions.

In recent years, we have adopted new ways of working that include location flexibility and increasingly recruiting from a global pool of talent. However, the success of our business continues to depend on having employees who possess local knowledge of, and experience in, our key markets. The external talent supply is especially limited in many of the geographies that are expected to be sources of growth for us. In the US, China and several other markets, the geographic mobility of talent is decreasing, as they find ample career opportunities available closer to home. Additionally, if we are unable to manage our external workforce effectively, it could lead to suboptimal access to external capabilities, limited cost management, reduced engagement, increased IT and compliance risks, and impaired strategic decision-making.

The risks associated with the challenging talent market will be exacerbated if we are unable to retain and effectively develop employees or to maintain an internal pipeline with critical skills, experiences, and leadership to deliver our business priorities. As a result, development, engagement, motivation, succession planning, and performance rewards for our critical talent are essential to achieving our business priorities. Further, we make substantial investments into developing and training our employees to meet our evolving business needs, including AI capabilities and competencies to assess the reliability and accuracy of AI-generated outputs. If these efforts are unsuccessful, we may fail to develop the necessary talent with critical skills and capabilities.

#### Legal, regulatory and compliance

#### Risk description
Challenges posed by evolving legal and regulatory requirements

#### Context and potential impact
We are subject to an extensive and complex framework of laws and regulations across the jurisdictions in which we operate. The laws and regulations relevant to the healthcare industry and applicable to us are broad in scope, are subject to change, and have evolving interpretations, which could require us to incur substantial costs associated with compliance or to alter one or more of our business practices. For example, we have been, are currently, and may in the future be, subject to various significant legal proceedings, such as private party litigation, government investigations, and law enforcement actions worldwide. These types of matters may take various forms based on evolving government enforcement and private party litigation priorities, and could include, among other things, matters pertaining to allegations regarding: pricing; bribery and corruption; trade regulation and embargo legislation; product liability; commercial disputes; employment and wrongful discharge; antitrust and competition; securities; government benefit programs; reimbursement; rebates; healthcare fraud; sales and marketing practices; insider trading; occupational health and safety; environmental regulations; tax; cyber and data security; use of technologies, including AI; data privacy; regulatory interactions; disclosure compliance; and intellectual property. Such matters can involve civil or criminal proceedings and can retroactively challenge practices previously considered to be legal.

There is also a risk that governance of our medical and patient support activities, and of our interactions with governments, public officials/institutions, healthcare professionals, healthcare organizations, and patient organizations may later be deemed inadequate or fail, or that we may undertake activities based on improper or inadequate scientific justification.

New requirements may also be imposed on us due to changing government and societal expectations regarding the healthcare industry, as well as evolving standards of acceptable corporate behavior generally.

For example, we are faced with laws and regulations requiring changes in how we do business, including with respect to disclosures concerning our interactions with healthcare professionals, healthcare organizations, and patient organizations. These laws and regulations include requirements that we disclose payments or other transfers of value made to healthcare professionals and organizations, as well as information related to the costs and prices for our products, which represent evolving standards of acceptable corporate behavior. These requirements may cause us to incur significant costs, including substantial time and additional resources, that are necessary to bring our interactions with healthcare professionals and organizations into compliance with these evolving standards. There is also an increased risk of noncompliance with applicable laws and regulations as we pursue new strategies and make organizational changes that may cause responsibilities for compliance matters to become unclear. An actual or alleged failure to comply with the law or with heightened public expectations could lead to substantial liabilities, fines, penalties or other losses that may not be covered by insurance adequately or at all.

Legal proceedings and investigations are inherently unpredictable, and significant judgments sometimes occur. Regardless of the outcome of any legal proceedings, such proceedings are costly and time-consuming. They require significant attention from our management, and could therefore have a material adverse effect on our business, financial condition, and results of operations. Consequently, we may in the future incur judgments that could involve large payments, including the potential repayment of amounts allegedly obtained improperly, and other penalties, including treble damages. In addition, such legal proceedings and investigations, even if meritless, may affect our reputation, may create a risk of potential exclusion from government reimbursement programs in the US and other countries, and may lead to civil litigation or criminal exposure. As a result, we have in the past and may again in the future, enter into major settlements of such claims without bringing them to final legal adjudication, despite having potentially significant defenses against them, to limit the risks they pose to our business and reputation. Such settlements may require us to pay significant sums of money and to enter into corporate integrity or similar agreements, which are intended to regulate company behavior for extended periods. From time to time, we may also initiate challenges to laws or regulations that we believe to be illegal or unconstitutional. The result of such litigation that we may pursue is inherently uncertain and may negatively impact our business and reputation.

For information on significant legal matters pending against us, see "Item 18. Financial Statements—Note 20. Provisions and other non-current liabilities" and "Item 18. Financial Statements—Note 27. Commitments and contingent liabilities."

#### External partner risk management and human rights

#### Risk description
Failure to maintain adequate governance and risk oversight over external partner relationships, and failure of external partners to meet their contractual, regulatory or other obligations

#### Context and potential impact
We rely on external partners for the performance of certain key business functions and services, including, among others, research and development, manufacturing operations and warehousing and distribution, certain finance functions, sales and marketing activities, and data management. Many of our external partners do not have internal compliance systems or resources comparable to ours.

Our reliance on external partners poses certain risks. These include the misappropriation of our intellectual property, the failure of the external partner to comply with our standards, including environmental, anti-bribery, human rights and labor rights standards; regulatory standards; societal expectations; quality assurance requirements; unexpected supply disruptions; breach of information security & data privacy standards, breach of our agreement by the external partner; and the unexpected termination or nonrenewal of our agreement by the external partner. Any of these risks could result in legal claims or proceedings, liability under applicable laws or significant regulatory penalties, and could disrupt our operations and have a negative impact on our reputation.

In addition, in certain jurisdictions we are required to, and the public may expect us to, take responsibility for and report on compliance with various human rights, responsible sourcing and environmental practices, as well as other actions of our external partners around the world.

Ultimately, if external partners fail to meet their obligations to us, we may lose our investment in the relationship with the external partners or we may fail to receive the expected benefits of our agreements with the external partners. While we aim to identify and assess any risk of harm to society caused by our external partners' operations, should any of these external partners fail to comply with the law or our standards, or should they otherwise act inappropriately while performing services for us, we could be held responsible for their acts, our reputation may suffer, and penalties could be imposed on us.

#### Supply chain and product quality

#### Risk description
Inability to maintain continuity of product supply and to ensure proper controls in product development and product manufacturing

#### Context and potential impact
The development and manufacture of our products is complex and heavily regulated by governmental health authorities around the world, and regulations vary by country. Healthcare systems, healthcare providers, and patients rely on us to meet the highest quality standards. Regardless of whether our products and the related raw materials are developed and manufactured at our own manufacturing sites or by third parties, we must ensure that all development, manufacturing, quality control, and supply processes comply with regulatory requirements

and cGMPs, as well as our own quality standards to deliver novel therapies while ensuring patient safety. In recent years, global health authorities have substantially intensified their scrutiny of manufacturers' compliance with regulatory requirements. Failure to comply with regulatory requirements by us or third-party suppliers may result in the suspension of manufacturing; the shutdown of production facilities or production lines; the recall of clinical or commercial products; the receipt of warning letters; the seizure of products; injunctions or debarment; delays in or failure to secure product approvals; or harm to patients or our reputation. Even slight deviations at any point in the production of our products or in the materials used have led to, and may in the future lead to, production failures or recalls. Additionally, we may acquire new companies or technology platforms that may not fully comply with regulatory requirements or expectations, which may pose legal, financial and reputation risks for us post-acquisition.

The technically complex manufacturing processes required to produce many of our products increase the risk of both production failures and product recalls, and can increase the cost of producing our goods. In addition, we manufacture and sell a number of sterile products, biologic products, and products that involve advanced therapy platforms, such as gene and cell therapy, radioligand therapy, and xRNA, or require a supply of highly specialized raw materials, such as cell lines, tissue samples, bacteria, viral strains, and radioisotopes. Due to this complexity, there is a risk of failure in the production and supply of critical raw materials, which may result in supply interruptions and/or product recalls due to manufactured products not meeting required specifications. Further, for some of our products and raw materials, we may rely on a single source of supply, and are therefore vulnerable to shortages. In addition, due to the inherent nature of our manufacturing processes and the supply chains for advanced therapy platforms, we are required to plan our production activities and purchase of materials well in advance. If we suffer from third-party raw material shortages, underestimate market demand for a product, or fail to accurately predict when a new product will be approved for sale, we may not be able to produce sufficient product to meet demand. These issues could be made worse during a pandemic, or as a result of macroeconomic factors or geopolitical events, such as military actions and wars in certain parts of the world, and could lead to a sudden increase in demand for selected medicinal products, resulting in the short-term scarcity of critical materials; logistical and supply challenges that may lead to an inability to ship products from one location to another; or our inability to properly operate a manufacturing site due to restrictions imposed. Our inability, or that of our suppliers, to manage such issues could lead to shutdowns, product shortages, or to us being entirely unable to supply products to patients for an extended period of time. Furthermore, as our products are intended to promote the health of patients, such shortages or shutdowns could harm our reputation, and have led to, and could continue in the future to lead to, significant losses of sales revenue, potential litigation or allegations that the public health, or the health of individuals, has been harmed. For more information, see "Item 4. Information on the Company—Item 4.B. Business overview—Production."

#### Data privacy

#### Risk description
Noncompliance with personal data protection laws and regulations

#### Context and potential impact
Our business, including certain core activities such as clinical research and healthcare professional engagement, relies on the collection, processing, analysis and interpretation of large sets of patients', health care professionals' and other individuals' personal information, including via technologies, vendors, and social media. The operation of our global business requires data to flow to our third-party contractors' systems and across the borders of numerous countries in which there are different, potentially conflicting, and frequently changing, data privacy laws in effect. Examples of such laws include: the EU General Data Protection Regulation (GDPR); Brazil's General Personal Data Protection Law; the Personal Information Protection Law in China; and multiple comprehensive state privacy laws in the US. Such laws impose stringent requirements on how we — and third parties with whom we contract — collect, share, export, protect or otherwise process personal information, and provide for significant penalties for noncompliance. Security breaches of our systems or those of our third-party contractors, or other failures to protect the data we collect from misuse or breach by third parties, could expose such personal information to unauthorized persons. This could result in: legal claims or proceedings; liability under applicable data privacy laws; and significant regulatory penalties, all of which could disrupt our operations and have a negative impact on our reputation.

Events involving the substantial loss or unlawful access or disclosure of personal information, use of personal information without a legal basis, or other privacy violations could give rise to significant liability, reputational harm, damaged relationships with business partners, and potentially substantial monetary penalties and other sanctions under laws enacted or being enacted around the world. Such events could also lead to restrictions on our ability to use personal information and/or transfer personal information across country borders, which could interfere with critical business operations. In addition, there is a trend of increasing divergence of data privacy legal frameworks, not only across these frameworks but also within individual legal (data and security) frameworks themselves. This divergence may increase compliance costs, constrain the implementation of global business processes, and bring about different approaches to the use of health data for scientific research, which may have a negative impact on our business and operations.

#### Falsified medicines

#### Risk description
Impact of falsified medicines on patient safety, and reputational and financial harm to us and our products

#### Context and potential impact
We continue to be challenged by the vulnerability of distribution channels to falsified medicines, which, as defined by the WHO, include counterfeit, stolen, tampered and illegally diverted medicines.

Falsified medicines pose patient safety risks and can be seriously harmful or life-threatening. Reports of adverse events related to falsified medicines and increased levels of falsified medicines in the healthcare system affect patients' confidence in genuine medicines and in healthcare systems in general. These events could also cause us substantial reputational and financial harm, and could potentially lead to litigation if the adverse event from a falsified medicine is mistakenly attributed to our products. Stolen or illegally diverted medicines that are not properly stored and are later sold through unauthorized channels could adversely impact patient safety, our reputation, and our business. Furthermore, falsified medicines can lead to direct financial losses through social security fraud, recalls, or declines in sales of our legitimate products.

#### Healthcare agency disruptions

#### Risk description
Disruptions at the Food and Drug Agency (FDA), European Medicines Agency (EMA) and other government health agencies could negatively impact our business

#### Context and potential impact
The FDA, EMA and other government health agencies provide important oversight over certain aspects of our business, and review and approve our regulatory submissions. If these oversight and review activities are disrupted, our ability to develop and secure timely approval of our product candidates could be negatively impacted. For example, turnover in FDA leadership and reduction in personnel could lead to disruptions and delays in FDA guidance, review, and approval of our product candidates. While the FDA's review of marketing applications and other activities for new drugs and biologics is largely funded through the user fee program established under the Prescription Drug User Fee Act, it remains unclear how any reduction in force and budget cuts will impact this program and the ability of the FDA to provide guidance and review our product candidates in a timely manner. There is also substantial uncertainty as to how regulatory reform measures being proposed by the current US administration will impact the FDA and other federal agencies with jurisdiction over our activities. In addition, government funding of other government agencies on which our operations may rely is subject to the political process, which is inherently fluid and unpredictable. For example, over the last several years, the US government has shut down several times, and certain regulatory agencies, such as the FDA, have had to furlough key employees and stop or slow oversight activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to review and approve our regulatory submissions in a timely way.

Accordingly, if there are any disruptions impacting the ability of the FDA, EMA or other governmental health agencies — including as a result of government shutdowns — to provide guidance on our development programs or to delay the review and approval of our regulatory submissions (including INDs, NDAs or BLAs), our business would be negatively impacted.

**Emerging risks**

#### Geopolitical developments

#### Risk description
Impact of geo- and socio-political threats

#### Context and potential impact
Geopolitical and social tensions and conflicts, such as changes in trade policies, including the imposition of tariffs, or changes in the diplomatic relations between governments, government shutdowns, changes in government administrations, sovereign risks, acts of war or aggression, and terrorist activities, have both a direct and indirect impact on the pharmaceutical industry and our operations. As a result of such tensions and conflicts, certain countries have adopted, or may in the future adopt, additional protectionist measures including the imposition of tariffs, which could have a material impact on our business. For example, in 2025, the US administration proposed tariffs on pharmaceuticals imported into the US. In December 2025, in recognition of our plans to expand our US R&D and manufacturing infrastructure, we announced that we expect to receive a three-year relief from any such tariffs. If tariffs or export controls are placed on pharmaceutical products or active pharmaceutical ingredients (APIs) in the US or other parts of the world and we do not receive relief from such tariffs, our supply chain and flow of our products could be disrupted, resulting in a material impact on our business and our financial results. There is also an additional risk that aggressive monetary and fiscal policies by governments and central banks to curb inflation may prompt market-specific recessions and raise the cost-of-living, further putting pressure on pricing and cost containment for the pharmaceutical industry.

Collectively, unstable geo- and socio-political conditions could, among other things, disturb the international flow of goods and increase the costs and difficulties of international transactions. This could potentially impact our ability to develop and supply our products to patients in an undisrupted fashion, and further erode reimbursement mechanisms for our medicines.

#### Macroeconomic developments

#### Risk description
Impact of macroeconomic developments

#### Context and potential impact
Our business may be impacted by deteriorating macroeconomic and financial conditions directly affecting us, our suppliers, payers and consumers. Given that patients in many jurisdictions directly pay a sizable and increasing portion of their own healthcare costs, there is a risk that patients may cut back on prescription drugs due to financial constraints.

Negative macroeconomic developments may also adversely affect the ability of payers, as well as our

distributors, customers, suppliers, and service providers, to pay for our products or to buy necessary inventory or raw materials, and to perform their obligations under agreements with us. Weakening growth, unstable market conditions and rising debt service costs may also increase the credit risk of our counterparties. Although we make efforts to monitor the financial condition and liquidity of these third parties, our ability to do so is limited, and some of them may become unable to fulfill their obligations in a timely manner or may even become insolvent. These risks may be elevated with respect to our interactions with fiscally challenged government payers, or with third parties with substantial exposure to such payers.

At the same time, significant changes and potential future volatility in financial markets, the consumer and business environment, the competitive landscape, and the global political and security landscape make it increasingly difficult for us to predict our revenues and earnings, which may impact the success of our mid- and long-term planning.

Asset price corrections in financial markets may also result in lower returns on our financial investments. In addition, pricing pressures in developed markets resulting from efforts to reduce the cost of healthcare (e.g., in the US, the IRA, tariffs, or other legislation or regulation targeting the cost of drugs) may have a negative impact on our revenue and our net sales. In addition, inflation may have an impact on our operating costs in the form of higher prices for supplies, energy, raw materials, wages, and capital, which could reduce our net income.

Uncertainties around future central bank and other economic policies in the US and EU, including elevated interest rates, government shutdowns, debt ceilings, or government funding, could also impact world trade. Sudden increases in economic, currency or financial market volatility in different countries, such as fluctuations in the value of the US dollar, have also impacted and may continue to have an unpredictable impact on our business, or results of operations, including the conversion of our operating results into our reporting currency, the US dollar, as well as the value of our investments in our pension plans.

For more information about the effect of price controls on our business, see "Item 4. Information on the Company—Item 4.B—Business overview—Price controls." See also "Item 5. Operating and Financial Review and Prospects—Item 5.B Liquidity and capital resources—Effects of currency fluctuations," "Item 5. Operating and Financial Review and Prospects—Item 5.B Liquidity and capital resources—Condensed consolidated balance sheets," "Item 18. Financial Statements—Note 15. Trade receivables" and "Item 18. Financial Statements—Note 28. Financial instruments – additional disclosures."

#### Climate change and natural disasters

#### Risk description
Failure to manage risks from climate change and natural disasters

#### Context and potential impact
We are exposed to a broad range of climate risks such as transition risks (e.g., regulatory frameworks, carbon pricing, and the cost of and access to capital) and physical risks (e.g., heat, water scarcity, tropical storms, rising sea levels, and flooding from severe weather events), which could vary in magnitude and impact across different countries.

Climate change has triggered, and may continue to trigger, the adoption of new and potentially diverging regulatory requirements across the globe, as well as rapidly evolving societal expectations. As a result, we may be required to increase our investment in measures such as technology, process changes, and materials from renewable or lower emission sources to reduce our energy use, water use, greenhouse gas emissions, and waste disposal. In addition, legislative and regulatory action, both current and in the future, includes or could include, carbon pricing, climate risk-related disclosures, and changes in zoning or building codes to increase business resilience. As a result, the combined impact of these transition risks could increase our direct operating costs or be passed on to us through the impact on our supply chain. Further, any failure to achieve climate-related commitments we have made in the past, or that we make in the future, in the expected timeframe, or at all, could result in negative impacts on our reputation, our operations, and the price of our shares.

Natural disasters and extreme weather events such as droughts, tornadoes, wildfires, tropical storms, flooding, and extreme heat pose physical risks to our business and our supply chain, which may be intensified by climate change. Some of our production facilities and supplier locations that depend on the availability of significant water supplies are located in areas where fresh water is increasingly scarce. Other facilities and suppliers are located in areas that, due to increasingly violent weather events, rising sea levels, or both, are increasingly at risk of substantial damage. In regions where such a risk is present, this has an impact not only on our own operations but also our distributed supply chain. Such events may result in the loss of life, increased costs, business interruptions, destruction of facilities, and disruption to healthcare systems that patients use to access our medicines. Furthermore, our headquarters and a number of our major production and research facilities are located near earthquake fault lines in Basel, Switzerland. Other major facilities are located near major earthquake fault lines in various locations around the world. A major earthquake could result in loss of life, business interruptions, and the destruction of our facilities. See also "Item 4. Information on the Company—Item 4.D Property, plants and equipment" and "Item 18. Financial Statements—Note 20. Provisions and other non-current liabilities."

#### Tax laws and developments

#### Risk description
Changes in tax laws or their application

#### Context and potential impact
Our multinational operations are taxed under the laws of the jurisdictions in which we operate. Changes in tax laws or in their application could lead to an increased risk of international tax disputes and an increase in our effective tax rate, which could adversely affect our

financial results. The integrated nature of our worldwide operations can produce conflicting claims from tax authorities in different jurisdictions as to the profits to be taxed in the respective jurisdictions, including potential disputes related to the prices our subsidiaries charge one another for intercompany transactions, known as transfer pricing. Most of the jurisdictions in which we operate have double tax treaties with other foreign jurisdictions, which provide a framework for mitigating the impact of double taxation on our revenues and capital gains. However, mechanisms developed to resolve such conflicting claims are largely untried and can be expected to be very lengthy. Accruals for tax contingencies are made based on experience, interpretations of tax law, and judgments about potential actions by tax authorities. However, due to the complexity of tax contingencies, the ultimate resolution of any tax matter may result in payments materially different from the amounts accrued.

In 2019, the Organization for Economic Co-operation and Development (OECD) launched a new initiative on behalf of the G20 to minimize profit shifting by working toward a global tax framework that ensures that corporate income taxes are paid where consumption takes place, in addition to introducing a global standard on minimum taxation combined with new tax dispute resolution processes. The implementation of a number of these new OECD principles began in 2024 in certain countries, including Switzerland. Once changes to the tax laws in any jurisdiction in which we operate are enacted or substantially enacted, we will be subject to the OECD minimum tax regime, the aim of which is to bring the total amount of taxes paid on our profit in a given jurisdiction up to a minimum rate of 15%. After implementing the qualified domestic top-up tax for financial year 2024, in September 2024, the Swiss Federal Council announced the implementation of the income inclusion rule in 2025 as a next step to further align with the new OECD global agreed standards. The US and China have abstained from the implementation of any of these rules, and pursuant to the "side-by-side" package published by the OECD in January 2026, the US is excluded from the global minimum tax project.

Due to ongoing discussions in many countries regarding the implementation and additional guidance from the OECD, the full impact in the longer term of the OECD minimum tax project on our financial position, income statement, and cash flows cannot currently be estimated as the OECD continues to issue additional guidance aimed at providing more clarity on the application of the new global standards.

In the US, Public Law No. 119–21 (commonly referred to as the "One Big Beautiful Bill Act" (OBBBA)) was signed into law on July 4, 2025. The OBBBA codifies certain key changes including the treatment of US R&D expenses, increasing the interest expense deduction limits and reducing R&D credits. Additionally, beginning in 2026, the Foreign Derived Intangible Income (FDII) was renamed the Foreign-Derived Deduction Eligible Income (FDDEI), and the tax rate was increased to 14%, and is not reduced by R&D expenditures and interest expenses.

While we have taken steps to comply with the evolving tax initiatives of the OECD, the US, and the EU, and we will continue to do so, given the complexity of tax laws, related regulations, and evolving interpretations, significant uncertainties remain as to the outcome of our efforts.

For more information, see "Item 18. Financial Statements—Note 6. Income taxes" and "Item 18. Financial Statements—Note 12. Deferred tax assets and liabilities."

**General risks**

#### Indebtedness

#### Risk description
Our indebtedness could adversely affect our operations

#### Context and potential impact
As of December 31, 2025, we had USD 27.9 billion of non-current financial debt, and USD 5.6 billion of current financial debt. Our current and long-term debt requires us to dedicate a portion of our cash flow to service interest and principal payments, and, if interest rates rise, this amount may increase. As a result, our existing debt may limit our ability to use our cash flow to fund capital expenditures, to engage in transactions, or to meet other capital needs, or otherwise may place us at a competitive disadvantage relative to competitors that have less debt. Our debt could also limit our flexibility to plan for and react to changes in our business or industry, and increase our vulnerability to general adverse economic and industry conditions, including changes in interest rates or a downturn in our business or the economy. We may also have difficulty refinancing our existing debt or incurring new debt on terms that we would consider to be commercially reasonable, if at all.

#### Goodwill and intangible assets other than goodwill

#### Risk description
Goodwill and intangible assets other than goodwill resulting in significant impairment charges

#### Context and potential impact
We carry a significant amount of goodwill and intangible assets other than goodwill on our consolidated balance sheet. These include, in particular, substantial goodwill and intangible assets other than goodwill obtained through acquisitions, including most recently through our acquisitions of Anthos Therapeutics, Regulus Therapeutics, and Tourmaline Bio, and through long-term research and development agreements with various third parties. As a result, we have incurred, and may in the future incur further, significant impairment charges if the fair value of the intangible assets other than goodwill and the groupings of cash-generating units containing goodwill would be less than their carrying value on our consolidated balance sheet at any point in time.

We regularly review our intangible and tangible assets for impairment, including identifiable intangible assets and goodwill. If one or more events occur that would cause us to revise our estimates and assumptions used in analyzing the value of our goodwill and intangible assets other than goodwill, such revision could result in an impairment charge in the period in which it occurs. Any significant impairment charges could have a material adverse effect on our results of operations and

financial condition. In 2025, for example, we recorded impairment charges of USD 557 million on intangible assets other than goodwill.

For a detailed discussion about how we determine whether an impairment has occurred, what factors could result in an impairment, and the impact of impairment charges on our results of operations, see "Item 18. Financial Statements—Note 1. Accounting policies" and "Item 18. Financial Statements—Note 11. Goodwill and intangible assets other than goodwill."

#### Foreign currency exchange rates

#### Risk description
Negative effect on financial results due to foreign currency exchange rate fluctuations

#### Context and potential impact
Changes in exchange rates between the US dollar, which is our reporting currency, and other currencies have previously resulted in, and in the future may result in, significant increases or decreases in our reported sales, costs, and earnings as expressed in US dollars, as well as in the reported value of our assets, liabilities and cash flows.

In addition to ordinary market risk, there is a risk that countries could take affirmative steps that could significantly impact the value of their currencies. Such steps could include unconventional monetary policies, tariffs, and potential withdrawals by countries from common currencies. In addition, countries facing local financial difficulties, including countries experiencing high inflation rates, and highly indebted countries facing large capital outflows, may impose controls on the exchange of foreign currency. Currency exchange controls and sanctions could limit our ability to distribute retained earnings from our local affiliates, or to pay intercompany payables due from those countries.

Despite measures undertaken to reduce or hedge against foreign currency exchange risks, as a significant portion of our earnings and expenditures are in currencies other than the US dollar, including expenditures in Swiss francs that are significantly higher than our revenue in Swiss francs, any such exchange rate volatility may negatively and materially impact our results of operations and financial condition, and may impact the reported value of our net sales, earnings, assets, and liabilities. In addition, the timing and extent of such volatility can be difficult to predict. Furthermore, depending on the movements of particular foreign exchange rates, we may be materially adversely affected at a time when the same currency movements are benefiting some of our competitors.

For more information on the effects of currency fluctuations on our consolidated financial statements and on how we manage currency risk, see "Item 5. Operating and Financial Review and Prospects—Item 5.B Liquidity and capital resources—Effects of currency fluctuations" and "Item 18. Financial Statements—Note 28. Financial instruments – additional disclosures."

#### Key customers

#### Risk description
Concentration among our key customers

#### Context and potential impact
A significant portion of our global sales is to a small number of drug wholesalers, retail chains, governments, and other purchasing organizations. For example, our three largest customers globally accounted for approximately 18%, 13% and 7%, respectively, of net sales in 2025. The top three largest customers' trade receivables outstanding amounted to 16%, 12% and 6%, respectively, of the trade receivables at December 31, 2025. Historically, there has been a trend of consolidation among our customer base, which may continue in the future. As a result, we are exposed to a concentration of credit risk among our key customers. If one or more of our major customers experienced financial difficulties, the effect on us would be material, and would result in a substantial loss of sales and an inability to collect amounts owed to us.

#### Environmental matters

#### Risk description
Impact of environmental liabilities

#### Context and potential impact
The environmental laws of various jurisdictions impose actual and potential obligations on us to investigate and remediate contaminated sites, including in connection with activities in the past by businesses that are no longer part of Novartis. In some cases, these remediation efforts may take many years. While we have set aside provisions for known worldwide environmental liabilities that are probable and estimable, there is no guarantee that additional costs will not be incurred beyond the amounts for which we have provided in our consolidated financial statements. If environmental contamination resulting from our facility operations, business activities or products adversely impacts third parties, or if we fail to properly manage the safety of our facilities, including the safety of our employees and contractors, and the environmental risks, we may face substantial one-time and recurring costs and other penalties, as well as being required to increase our provisions for environmental liabilities.

#### Pension plans

#### Risk description
Inaccuracies in the assumptions and estimates used to calculate our pension plan and other post-employment obligations

#### Context and potential impact
We sponsor pension and other post-employment benefit plans in various forms that cover a significant portion of our current and former employees. For post-employment plans with defined benefit obligations, we are required to make significant assumptions and estimates about future events in calculating the expense and the present value of the liability related to these plans. These include assumptions about the discount rates we apply

to estimate future defined benefit obligations and net periodic pension expense, as well as rates of future pension increases. In addition, our actuarial consultants provide our management with historical statistical information, such as withdrawal and mortality rates in connection with these estimates.

Assumptions and estimates that we use may differ materially from the actual results we experience due to changing market and economic conditions, higher or lower withdrawal rates, and longer or shorter life spans of participants, among other factors. Such differences could have a material effect on our total equity, and may require us to make additional contributions to our pension funds.

For more information on obligations under retirement and other post-employment benefit plans and underlying actuarial assumptions, see "Item 18. Financial Statements—Note 24. Post-employment benefits for employees."

## Item 4. Information on the Company

### 4.A History and development of Novartis
**Novartis AG**

Novartis AG was incorporated on February 29, 1996, under the laws of Switzerland as a stock corporation ("*Aktiengesellschaft*") with an indefinite duration. On December 20, 1996, our predecessor companies, Ciba-Geigy AG and Sandoz AG, merged into this new entity, creating Novartis. We are domiciled in and governed by the laws of Switzerland. Our registered office is located at the following address:

Novartis AG

Lichtstrasse 35

CH-4056 Basel, Switzerland

Telephone: +41-61-324-1111

Website: www.novartis.com

Novartis AG, our Swiss holding company, owns, directly or indirectly, all of our significant operating companies. For a list of our significant operating subsidiaries, see "Item 18. Financial Statements—Note 31. Novartis principal subsidiaries and associated companies."

For a description of important corporate developments since January 1, 2023, see "Item 18. Financial Statements—Note 2. Significant acquisitions of businesses and spin-off of Sandoz business." For information regarding the Company's material commitments for capital expenditures, see "Item 5. Operating and Financial Review and Prospects—Material contractual obligations and commitments."

The SEC maintains an internet site at *http://www.sec.gov* that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

### 4.B Business overview
**Overview**

Novartis is an innovative medicines company, engaged in the research, development, manufacturing, distribution, marketing and sale of a broad range of pharmaceutical products. Our purpose is to reimagine medicine to improve and extend people's lives. Our strategy is to deliver high-value medicines that alleviate society's greatest disease burdens through technology leadership in R&D and novel access approaches. To support our strategy, we have clear focus areas where we commit most of our time, energy and resources. These core therapeutic areas are cardiovascular, renal and metabolic; immunology; neuroscience; and oncology. For more information about our strategy, see "Item 5. Operating and Financial Review and Prospects—Overview—Our strategy."

In 2025, Novartis achieved net sales from continuing operations of USD 54.5 billion, and net income from continuing operations amounted to USD 14.0 billion. Headquartered in Basel, Switzerland, we employed 75 267 full-time equivalent employees as of December 31, 2025. Our products are sold in approximately 120 countries around the world.

Our operations are organized into the following five organizational units:

• *Biomedical Research* is our innovation engine, focused on creating new ways of fighting disease and turning scientific breakthroughs into new medicines with the potential to change lives.

• *Development* oversees the development of potential new medicines through clinical trials to confirm their safety and efficacy, and steers the way to regulatory approval for use by patients.

• *Operations* manufactures and delivers our medicines to customers, while also overseeing the global functions of IT, procurement, and real estate services.

• The two commercial units, *US* and *International*, focus on their respective geographic areas. They work with customers to provide innovative medicines and services that improve treatment options and raise the quality of care for patients.

These organizational units are supported by our global functions in areas such as corporate affairs, ethics, risk and compliance, finance, legal, internal audit, people and organization and strategy and growth. For more information about our Development unit, see "—Research and development—Development program" below. For more information about our Operations unit see "—Item 4.D Property, plants and equipment" and "Item 18. Financial Statements—Note 3. Operating segment and Note 4. Revenues and geographical information."

**Key marketed products** 

The following summaries describe certain Novartis key marketed products in certain indications. These products are listed according to year-end net sales. Some of them have lost patent protection or are otherwise subject to generic competition, while others are subject to patent challenges by potential generic competitors (see "—Intellectual property" for general information on intellectual property and regulatory data protection, and for more information on the status of patents and exclusivity for certain key marketed products).

While we typically seek to sell our marketed products throughout the world, not all products and indications are available in every country. The indications described in these summaries may therefore vary by country. In addition, a product may be available under different brand names depending on the country and indication.

• *Entresto* (sacubitril/valsartan) is an oral, first-in-class angiotensin receptor-neprilysin inhibitor. *Entresto* enhances the protective effects of a hormone system called the natriuretic peptide system, and simultaneously suppresses the harmful effects of a hormone system called the renin-angiotensin-aldosterone system. It is approved:

&nbsp;&nbsp;&nbsp;&nbsp;• In the US, the EU, and other markets to treat adults who have symptomatic chronic heart failure with reduced ejection fraction (HFrEF). HFrEF is a disease in which the heart cannot pump blood efficiently

&nbsp;&nbsp;&nbsp;&nbsp;• In the US and other markets to treat adult patients with chronic heart failure with preserved ejection fraction (HFpEF). HFpEF is a disease in which the heart's main pumping chamber (left ventricle) becomes stiff and unable to fill properly with blood

&nbsp;&nbsp;&nbsp;&nbsp;• In the US, the EU, and other markets to treat children and adolescents aged 1 year and older who have symptomatic chronic heart failure with left ventricular systolic dysfunction

&nbsp;&nbsp;&nbsp;&nbsp;• In China, Japan, and other markets to treat adult patients with essential hypertension (abnormally high blood pressure that is not the result of a medical condition)

• *Cosentyx* (secukinumab) is an injectable, fully human monoclonal antibody that selectively inhibits interleukin-17A (IL-17A), a cytokine involved in several immunological diseases. It is approved in the US, the EU, and other markets to treat:

&nbsp;&nbsp;&nbsp;&nbsp;• Adults and children aged 6 years and older with moderate-to-severe plaque psoriasis (this indication is also approved in China). Psoriasis is a debilitating systemic inflammatory disease that is characterized by the appearance of raised, red patches on the skin

&nbsp;&nbsp;&nbsp;&nbsp;• Adults with active non-radiographic axial spondyloarthritis (nr-axSpA). nr-axSpA is a long-term inflammatory disease that is characterized by chronic back pain and is not visible on X-rays

&nbsp;&nbsp;&nbsp;&nbsp;• Adults with active psoriatic arthritis (PsA). PsA is a type of progressive inflammatory arthritis that results in swollen and painful joints and tendons, which can cause structural damage to the bones and joints

&nbsp;&nbsp;&nbsp;&nbsp;• Adults with active ankylosing spondylitis (AS). AS is a progressive inflammatory disease that is characterized by chronic back pain, is generally visible on X-rays, and can cause structural damage to the bones and joints

&nbsp;&nbsp;&nbsp;&nbsp;• Children (aged 4 years and older in the US, and 6 years and older in the EU) with active enthesitis-related arthritis (ERA) and children (aged 2 years and older in the US, and 6 years and older in the EU) with active juvenile psoriatic arthritis (JPsA). ERA and JPsA are subtypes of juvenile idiopathic arthritis. If left untreated, they can lead to high levels of pain and disability

&nbsp;&nbsp;&nbsp;&nbsp;• Adults with moderate to severe hidradenitis suppurativa (HS). HS is a chronic skin disease that causes recurring boil-like lumps that may burst into open wounds and cause irreversible scarring, often in the most intimate parts of the body

An intravenous formulation of *Cosentyx* is approved in the US for the treatment of adults with active PsA, AS, and nr-axSpA.

• *Kisqali* (ribociclib) is a selective, oral cyclin-dependent inhibitor of kinases 4 and 6 (CDK4/6) — two enzymes involved in the control of cell cycle progression. *Kisqali* is approved in the US, the EU, and other markets to treat:

&nbsp;&nbsp;&nbsp;&nbsp;• Pre-, peri- and postmenopausal women, and men (US and other markets), with locally advanced or metastatic hormone receptor-positive (HR+)/human epidermal growth factor receptor 2-negative (HER2-) breast cancer, in combination with an aromatase inhibitor as initial endocrine-based therapy. HR+/HER2- breast cancer is the most common subtype of breast cancer

&nbsp;&nbsp;&nbsp;&nbsp;• Pre-, peri- (EU) and postmenopausal women, and men (US), with locally advanced or metastatic HR+/HER2- breast cancer, in combination with fulvestrant, as a first- or second-line therapy

&nbsp;&nbsp;&nbsp;&nbsp;• Adults with HR+/HER2- stage II and III early breast cancer at high risk of recurrence, as an adjuvant treatment in combination with an aromatase inhibitor (US)

&nbsp;&nbsp;&nbsp;&nbsp;• Patients with HR+/HER2- early breast cancer at high risk of recurrence, as an adjuvant treatment in combination with an aromatase inhibitor (EU and other markets)

*Kisqali* was developed by our Biomedical Research organizational unit (formerly the Novartis Institutes for BioMedical Research) under a research collaboration with Astex Pharmaceuticals.

• *Kesimpta* (ofatumumab) is an anti-CD20 monoclonal antibody that enables the targeted depletion of B-cells, specifically in lymph nodes. *Kesimpta* is the only B-cell treatment for relapsing multiple sclerosis that is self-administered once-monthly via the *Sensoready* autoinjector pen, following three weekly starter doses. It is approved:

&nbsp;&nbsp;&nbsp;&nbsp;• In the US to treat adults with relapsing forms of multiple sclerosis, including clinically isolated syndrome, relapsing-remitting multiple sclerosis, and active secondary progressive multiple sclerosis. Multiple sclerosis is a disease in which the immune system

&nbsp;&nbsp;&nbsp;&nbsp;attacks the protective covering of nerves (known as myelin)

&nbsp;&nbsp;&nbsp;&nbsp;• In the EU to treat adults with relapsing forms of multiple sclerosis with active disease defined by clinical or imaging features (i.e., relapse, disability, or lesions detected by MRI scans)

Approved indications vary by country. Ofatumumab was originally developed by Genmab and licensed to GlaxoSmithKline (GSK). Novartis obtained the rights to ofatumumab from GSK across all indications.

• *Tafinlar* + *Mekinist* (dabrafenib + trametinib) is an oral combination therapy. *Tafinlar* and *Mekinist* are kinase inhibitors of the BRAF and MEK1/2 proteins, respectively, approved in combination to treat patients who have certain types of cancer with a change in the BRAF gene (called a BRAF V600 mutation), including:

&nbsp;&nbsp;&nbsp;&nbsp;• Adults in the US, the EU, and other markets with unresectable or metastatic melanoma with a BRAF V600 mutation. Melanoma is a form of skin cancer; unresectable melanoma cannot be removed with surgery and metastatic melanoma has spread to other parts of the body. *Tafinlar* and *Mekinist* are also approved as single agents for this indication

&nbsp;&nbsp;&nbsp;&nbsp;• Adults in the US, the EU, and other markets with stage III melanoma with a BRAF V600 mutation as an adjuvant treatment (following surgery)

&nbsp;&nbsp;&nbsp;&nbsp;• Adults in the US, the EU, and other markets with advanced non-small cell lung cancer (NSCLC) with a BRAF V600 mutation. NSCLC is the most common type of lung cancer

&nbsp;&nbsp;&nbsp;&nbsp;• Adults and children aged 1 year and older in the US and other markets with unresectable or metastatic solid tumors with a BRAF V600E mutation whose cancer has progressed following prior treatment and who have no satisfactory alternative treatment options

&nbsp;&nbsp;&nbsp;&nbsp;• Children aged 1 year and older in the US, the EU, and other markets with low-grade glioma with a BRAF V600E mutation who require systemic therapy. Low grade gliomas are tumors that develop from brain cells.

Approved indications and pharmaceutical forms vary by country. *Tafinlar* is provided in capsules and dispersible tablets. *Mekinist* is provided in tablets and powder for oral solution. Novartis has worldwide exclusive rights to develop, manufacture, and commercialize trametinib granted by Shionogi & Co., Ltd. (as successor to Japan Tobacco Inc.).

• *Jakavi* (ruxolitinib) is an oral inhibitor of the JAK1 and JAK2 tyrosine kinases. It is the first JAK1/JAK2 inhibitor approved in the EU and other markets to treat:

&nbsp;&nbsp;&nbsp;&nbsp;• Adults with myelofibrosis (MF), including primary myelofibrosis, post-polycythemia vera myelofibrosis and post-essential thrombocythemia myelofibrosis. MF is a rare blood cancer characterized by abnormal blood cell production and scarring in the bone marrow, which can lead to an enlarged spleen

&nbsp;&nbsp;&nbsp;&nbsp;• Adults with polycythemia vera (PV) who are resistant or intolerant to a medication called hydroxyurea. PV is a rare blood cancer in which the bone marrow produces too many red blood cells, resulting in serious problems like clots

&nbsp;&nbsp;&nbsp;&nbsp;• Patients aged 12 years and older with acute or chronic graft-versus-host disease (GvHD) and who have had an inadequate response to corticosteroids or other systemic therapies, and for patients with GvHD aged 28 days to less than 18 years old. GvHD occurs in stem-cell transplant patients when donor cells see the recipient's healthy cells as foreign and attack them

Novartis licensed ruxolitinib from Incyte Corporation for development and commercialization in the indications of oncology, hematology and GvHD outside the US. Incyte Corporation markets ruxolitinib as Jakafi<sup>®</sup> in the US.

• *Pluvicto* (lutetium (<sup>177</sup>Lu) vipivotide tetraxetan) is an intravenous prostate-specific membrane antigen (PSMA)-targeted radioligand therapy that combines a targeting compound (a ligand) with a therapeutic radionuclide (a radioactive particle, in this case lutetium-177). Pluvicto selectively delivers beta particle radiation to PSMA-positive cells, including prostate cancer cells and the surrounding cells, with a high tumor-to-normal-tissue uptake that minimizes off-target effects. It is approved:

&nbsp;&nbsp;&nbsp;&nbsp;• In the US, the EU, and other markets to treat adults with PSMA-positive metastatic castration-resistant prostate cancer (mCRPC), a type of advanced prostate cancer that has spread to other parts of the body (metastatic), who have already been treated with androgen receptor pathway inhibition and taxane-based chemotherapy

&nbsp;&nbsp;&nbsp;&nbsp;• In the US, to treat adult patients with PSMA-positive mCRPC who have already been treated with androgen receptor pathway inhibition therapy and are considered appropriate to delay taxane-based chemotherapy.

• *Ilaris* (canakinumab) is an injectable, selective, high-affinity, fully human monoclonal antibody that inhibits interleukin-1 beta (IL-1 beta), a key cytokine in the inflammatory pathway. It is approved in the US, the EU, and other markets to treat patients with certain debilitating rare autoinflammatory disorders, including:

&nbsp;&nbsp;&nbsp;&nbsp;• Adults and children with periodic fever syndromes. Periodic fever syndromes are a set of rare disorders characterized by recurrent episodes of illness, with fever as the main symptom

&nbsp;&nbsp;&nbsp;&nbsp;• Patients with Still's disease, including systemic juvenile idiopathic arthritis and adult-onset Still's disease. Still's disease is a disorder that causes fevers, rash and joint pain

&nbsp;&nbsp;&nbsp;&nbsp;• Adults with acute gouty arthritis (a non-rare indication). Gouty arthritis is a type of arthritis characterized by pain, redness, tenderness and swelling in one or more joints

Approved indications vary by country.

• *Xolair* (omalizumab) is an injectable prescription medicine designed to target and block immunoglobulin E (IgE). It is approved:

&nbsp;&nbsp;&nbsp;&nbsp;• In the US, the EU, and other markets to treat adults and children aged 6 years and older with moderate-to-severe, or severe, persistent allergic asthma

&nbsp;&nbsp;&nbsp;&nbsp;• In the US, the EU, and other markets to treat adults and children aged 12 years and older with chronic spontaneous urticaria/chronic idiopathic urticaria (hives)

&nbsp;&nbsp;&nbsp;&nbsp;• In the US, the EU, and other markets to treat adults with nasal polyps or severe chronic rhinosinusitis with nasal polyps (CRSwNP). CRSwNP is a chronic inflammation of the nose and the sinuses with the presence of benign lesions (nasal polyps) on the lining of the nasal sinuses or nasal cavity

&nbsp;&nbsp;&nbsp;&nbsp;• In the US to treat adults and children one year and older with IgE-mediated food allergies for the reduction of allergic reactions, including reducing the risk of anaphylaxis, that may occur with accidental exposure to one or more foods

Approved indications and pharmaceutical forms vary by country. *Xolair* is provided as lyophilized powder for reconstitution, and as a liquid formulation in a pre-filled syringe and pre-filled pen. Novartis co-promotes *Xolair* with Genentech in the US and shares a portion of operating income, but Novartis does not record any US sales. Novartis records all sales of *Xolair* outside the US.

• *Promacta*/*Revolade* (eltrombopag) is a once daily oral thrombopoietin receptor agonist that works by stimulating bone marrow cells to produce platelets. It is approved in the US, the EU, and other markets to treat:

&nbsp;&nbsp;&nbsp;&nbsp;• Immune thrombocytopenia (ITP) in patients who have had an insufficient response to or have failed previous therapies. ITP is a bleeding disorder caused by an unusually low number of platelets

&nbsp;&nbsp;&nbsp;&nbsp;• Thrombocytopenia in patients with chronic hepatitis C to allow them to initiate and maintain interferon-based therapy

&nbsp;&nbsp;&nbsp;&nbsp;• Patients with severe aplastic anemia (SAA). SAA is a condition in which the body does not produce enough blood cells

*Promacta*/*Revolade* is marketed under a research, development and license agreement between Novartis and RPI Finance Trust (dba Royalty Pharma), as assignee of Ligand Pharmaceuticals.

• *Scemblix* (asciminib) is an oral kinase inhibitor that works by binding to a part of the BCR-ABL protein called the ABL myristoyl pocket. It is approved:

&nbsp;&nbsp;&nbsp;&nbsp;• In the US, EU, and other markets to treat both newly diagnosed and previously treated adults with Philadelphia chromosome-positive chronic myeloid leukemia (Ph+ CML) in the chronic phase (CP)

&nbsp;&nbsp;&nbsp;&nbsp;• In the US and other markets to treat adults with Ph+ CML in the CP with the T315I mutation. The T315I mutation causes resistance to most available TKI therapies, and, as a result, patients with this mutation would otherwise have limited treatment options

• *Zolgensma* (onasemnogene abeparvovec)/*Itvisma* (onasemnogene abeparvovec-brve) is a one-time gene therapy designed to address the genetic root cause of spinal muscular atrophy (SMA) by replacing the function of the missing or nonworking SMN1 gene. A new working copy of the human SMN1 gene is delivered into a patient's cells. SMA is a rare, genetic neuromuscular disease resulting in the progressive and irreversible loss of motor neurons, affecting muscle functions, including breathing, swallowing and basic movement. It is approved:

&nbsp;&nbsp;&nbsp;&nbsp;• In the US, the EU, and other markets as an intravenous infusion (*Zolgensma*) to treat babies and young children who have SMA with biallelic mutations in the SMN1 gene

&nbsp;&nbsp;&nbsp;&nbsp;• In the US and other markets as an intrathecal injection (*Itvisma*) to treat adults and pediatric patients 2 years of age and older living with SMA with a confirmed mutation in the SMN1 gene

Approved indications vary by country.

• *Sandostatin* SC (octreotide acetate for injection) and *Sandostatin* LAR (octreotide acetate for injectable suspension) are somatostatin analogs approved in the US, the EU, and other markets to treat:

&nbsp;&nbsp;&nbsp;&nbsp;• Adults with acromegaly that is inadequately controlled by surgery or radiotherapy. Acromegaly is a chronic disease caused by the oversecretion of growth hormone

&nbsp;&nbsp;&nbsp;&nbsp;• Patients with certain symptoms associated with carcinoid tumors and other types of functional gastrointestinal and pancreatic neuroendocrine tumors

*Sandostatin* LAR is also approved in the EU and other markets to treat patients with advanced neuroendocrine tumors of the midgut or of unknown primary tumor origin.

• *Leqvio* (inclisiran) is the first and only approved small-interfering RNA therapy to reduce LDL cholesterol, a risk factor for atherosclerotic cardiovascular disease (ASCVD), which is caused by plaque buildup in the arteries. *Leqvio* is administered by a healthcare professional twice a year as an injection, except in the first year of treatment where, following an initial dose, another dose is required after three months. It is approved:

&nbsp;&nbsp;&nbsp;&nbsp;• In the EU and other markets to treat adults with primary hypercholesterolemia (heterozygous familial and non-familial) or mixed dyslipidemia as an adjunct to diet. *Leqvio* is used in combination with a statin or with a statin plus other lipid-lowering therapies in patients unable to reach LDL cholesterol goals with the maximum tolerated dose of a statin, or alone or in combination with other lipid-lowering therapies in patients who are statin-intolerant or for whom a statin is contraindicated. Primary hypercholesterolemia and mixed dyslipidemia are disorders characterized by high levels of fats (lipids) in the blood

&nbsp;&nbsp;&nbsp;&nbsp;• In the US to treat adults with hypercholesterolemia, including heterozygous familial hypercholesterolemia (HeFH), as an adjunct to diet and statin therapy to reduce LDL cholesterol. Hypercholesterolemia, also known as high cholesterol, is characterized by high levels of fats in the blood

Novartis obtained global rights to develop, manufacture and commercialize *Leqvio* under a license and collaboration agreement with Alnylam Pharmaceuticals, Inc.

• *Tasigna* (nilotinib) is a twice-daily oral tyrosine kinase inhibitor that acts by blocking the BCR-ABL protein. It is approved in the US, the EU, and other markets to treat:

&nbsp;&nbsp;&nbsp;&nbsp;• Patients with Philadelphia chromosome-positive chronic myeloid leukemia (Ph+ CML) in the chronic and/or accelerated phase who are resistant or intolerant to existing treatment. Ph+ CML is a cancer that starts in the blood-forming cells of bone marrow

&nbsp;&nbsp;&nbsp;&nbsp;• Newly diagnosed adults and children with Ph+ CML in the chronic phase

• *Lutathera* (lutetium Lu 177 dotatate/lutetium (<sup>177</sup>Lu) oxodotreotide) is an intravenous targeted radioligand therapy approved in the US, the EU, and other markets to treat:

&nbsp;&nbsp;&nbsp;&nbsp;• Patients with somatostatin receptor-positive gastroenteropancreatic neuroendocrine tumors (GEP-NETs). GEP-NETs are rare tumors found in the digestive tract

Approved indications vary by country.

• *Lucentis* (ranibizumab) is a humanized, high-affinity antibody fragment that binds to vascular endothelial growth factor A (VEGF-A), a protein that can cause the growth of blood vessels in the eye, potentially leading to vision loss. *Lucentis* is an anti-VEGF therapy that is injected into the eye. It is approved in the EU and other markets to treat patients with certain eye conditions, including:

&nbsp;&nbsp;&nbsp;&nbsp;• Adults with neovascular (wet) age-related macular degeneration (AMD). Wet AMD develops when abnormal blood vessels grow under the macula and leak blood and other fluids in the back of the eye, which damages the macula

&nbsp;&nbsp;&nbsp;&nbsp;• Adults with proliferative diabetic retinopathy, moderately severe to severe non-proliferative diabetic retinopathy, and/or visual impairment due to diabetic macular edema. These conditions are complications of diabetes

&nbsp;&nbsp;&nbsp;&nbsp;• Adults with visual impairment due to macular edema secondary to retinal vein occlusion (branch RVO or central RVO). Retinal vein occlusion is a blockage of the branch or central retinal veins, which carry blood away from the retina

Approved indications vary by country. *Lucentis* is licensed from Genentech, and Novartis holds the rights to commercialize the product outside the US. Genentech holds the rights to commercialize *Lucentis* in the US.

• *Fabhalta* (iptacopan) is an oral Factor B inhibitor of the alternative complement pathway, a part of the innate immune system involved in triggering inflammation and fighting infections. It is approved:

&nbsp;&nbsp;&nbsp;&nbsp;• In the US, the EU, and other markets to treat adults with paroxysmal nocturnal hemoglobinuria (PNH). PNH is a rare chronic blood disorder in which red blood cells are susceptible to premature destruction by the complement system

&nbsp;&nbsp;&nbsp;&nbsp;• In the US, for the reduction of proteinuria in adults with primary immunoglobulin A nephropathy (IgAN) at risk of rapid disease progression (generally UPCR ≥1.5 g/g). IgAN is a progressive, rare disease in which the immune system attacks the kidneys

&nbsp;&nbsp;&nbsp;&nbsp;• In the US, the EU, and other markets for the treatment of adults with C3 glomerulopathy (C3G). C3G is an ultra-rare kidney disease caused by overactivation of the alternative complement pathway — part of the immune system — which is thought to contribute to the pathogenesis of C3G

Approved indications vary by country.

• *Rhapsido* (remibrutinib) is an oral, small molecule kinase inhibitor that inhibits Bruton's tyrosine kinase. *Rhapsido* is a pill taken twice daily. It is approved in the US for the treatment of:

&nbsp;&nbsp;&nbsp;&nbsp;• Adult patients with chronic spontaneous urticaria who remain symptomatic despite H1 antihistamine treatment

• *Vanrafia* (atrasentan) is a selective endothelin A receptor antagonist. *Vanrafia* is a once-daily, non-steroidal, oral treatment that can be added onto supportive care, including a renin-angiotensin system (RAS) inhibitor with or without a sodium-glucose co-transporter-2 (SGLT2) inhibitor. It is approved:

&nbsp;&nbsp;&nbsp;&nbsp;• In the US, for the reduction of proteinuria in adults with primary IgAN at risk of rapid disease progression (generally UPCR ≥1.5 g/g)

**Compounds in development** 

The following table provides an overview of key projects currently in the Confirmatory Development stage, and may also describe certain projects in the Early Development stage. Projects typically enter Confirmatory Development and become the responsibility of our Development organizational unit during Phase II testing. (For more information about our drug development program, see "—Research and development—Development program.") Projects are listed in alphabetical order by compound code, or by product name where applicable. Included are projects seeking to develop potential uses of new molecular entities as well as potential additional indications or new formulations for already marketed products. The table below, entitled "Projects removed from the development table since 2024," highlights changes to the table entitled "Selected development projects" from the previous year.

The year that each project entered the current phase of development refers to the year of the first patient's first visit in the first clinical trial of that phase. For projects in Phase II, the year generally refers to the first patient's first visit in the first trial in Confirmatory Development. In some cases, the first patient's first visit in a Phase II trial can occur before the Confirmatory Development stage.

A reference to a project being in registration means that an application has been submitted to a health authority for marketing approval. Compounds and new indications in development are subject to required regulatory approvals, and, in certain instances, contractual limitations. These compounds and indications are in various stages of development throughout the world. It may not be possible to obtain regulatory approval for any or all of the new compounds and new indications referred to in the Form 20-F in any country or in every country. See "—Regulation" for more information on the approval process.

#### Selected development projects

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **<br>Compound/<br>product** | **<br>Common <br> name** | **<br>Mechanism <br> of action** | **<br>Potential indication** | **<br>Category** | **<br>Formulation/<br> route of<br> administration** | **Year project<br> entered<br> current<br> development<br> phase** | **<br>Planned filing<br> dates/current<br> phase** |
| AAA817 | actinium<br> (<sup>225</sup>Ac)-<br> vipivotidum<br> tetraxetan | Radioligand therapy <br> targeting PSMA<br>| Post-Lu metastatic castration-resistant <br> prostate cancer <sup>1</sup><br>| Oncology<br>| Intravenous infusion<br>| 2025<br>| 2028/III<br>|
|  |  |  | Metastatic castration-resistant <br> prostate cancer, 1st line <sup>1</sup> | Oncology<br>| Intravenous infusion<br>| 2025<br>| ≥2029/III<br>|
| *Cosentyx* | secukinumab | IL-17A inhibitor | Polymyalgia rheumatica | Immunology | Subcutaneous injection | 2023 | 2026/III |
| DAK539 | pelabresib | BET inhibitor | Myelofibrosis | Oncology | Oral | 2024 | 2026/III |
| DII235 | TBD<br>| siRNA targeting <br> Lp(a) mRNA<br>| Risk reduction in cardiovascular <br> disease w elevated Lp(a) <sup>1</sup><br>| Cardiovascular,<br> Renal and<br> Metabolic | Subcutaneous injection<br>| 2025<br>| ≥2029/II<br>|
| *Fabhalta*<br>(LNP023) | iptacopan<br>| CFB inhibitor<br>| IC-MPGN<br>| Cardiovascular,<br> Renal and<br> Metabolic | Oral<br>| 2023<br>| ≥2029/III<br>|
|  |  |  | Atypical hemolytic uremic syndrome | Oncology | Oral | 2021 | ≥2029/III |
|  |  |  | Myasthenia gravis | Neuroscience | Oral | 2024 | 2027/III |
| FUB523 | zigakibart<br>| Anti-APRIL <br> monoclonal<br> antibody | IgA nephropathy<br>| Cardiovascular,<br> Renal and<br> Metabolic | Subcutaneous injection<br>| 2023<br>| 2027/III<br>|
| GHZ339 | TBD | TBD | Atopic dermatitis <sup>1</sup> | Immunology | Subcutaneous injection | 2025 | ≥2029/II |
| JSB462 | luxdegalu-<br> tamide | Androgen receptor <br> protein degradation | Prostate cancer <sup>1</sup><br>| Oncology<br>| Oral<br>| 2025<br>| ≥2029/II<br>|
| KAE609 | cipargamin | PfATP4 inhibitor | Malaria, uncomplicated | Global Health | Oral | 2017 | ≥2029/II |
|  |  |  | Malaria, severe | Global Health | Intravenous infusion | 2022 | ≥2029/II |
| *Kesimpta* | ofatumumab | Anti-CD20 | Multiple sclerosis <sup>1</sup> | Neuroscience | Subcutaneous injection | 2025 | 2027/III |
| KLU156 | ganaplacide <br> + <br> lumefantrine | Non-artemisinin <br> plasmodium <br> falciparum inhibitor | Malaria, uncomplicated<br>| Global Health<br>| Oral<br>| 2024<br>| 2026/III<br>|
| *Leqvio* | inclisiran<br>| siRNA <br> (regulation of LDL-C)<br>| Secondary prevention of cardiovascular <br> events in patients with elevated levels <br> of LDL-C | Cardiovascular,<br> Renal and<br> Metabolic | Subcutaneous injection<br>| 2018<br>| 2027/III<br>|
|  |  |  | Primary prevention cardiovascular <br> risk reduction<br>| Cardiovascular,<br> Renal and<br> Metabolic | Subcutaneous injection<br>| 2023<br>| ≥2029/III<br>|
|  <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development | <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development | <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development | <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development | <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development | <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development | <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development | <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **<br>Compound/<br>product** | **<br>Common <br> name** | **<br>Mechanism <br> of action** | **<br>Potential indication** | **<br>Category** | **<br>Formulation/<br> route of<br> administration** | **Year project<br> entered<br> current<br> development<br> phase** | **<br>Planned filing<br> dates/current<br> phase** |
| LOU064 | remibrutinib | BTK inhibitor | Chronic inducible urticaria | Immunology | Oral | 2023 | Registration |
|  |  |  | Food allergy <sup>1</sup> | Immunology | Oral | 2022 | ≥2029/II |
|  |  |  | Multiple sclerosis | Neuroscience | Oral | 2021 | 2027/III |
|  |  |  | Myasthenia gravis | Neuroscience | Oral | 2024 | 2028/III |
|  |  |  | Hidradenitis suppurativa, Immunology <sup>1</sup> | Immunology | Oral | 2025 | 2028/III |
|  |  |  | Multiple sclerosis, secondary progressive <sup>1</sup> | Neuroscience | Oral | 2025 | ≥2029/III |
| *Lutathera* | lutetium <br> Lu 177 <br> dotatate/<br> lutetium <br> (<sup>177</sup>Lu)<br> oxodotreotide | Radioligand therapy <br> targeting SSTR<br>| Gastroenteropancreatic <br> neuroendocrine tumors <sup>1</sup><br>| Oncology<br>| Intravenous infusion<br>| 2025<br>| 2028/III<br>|
| LTP001 | TBD<br>| SMURF1 inhibitor<br>| Pulmonary arterial hypertension <sup>1</sup><br>| Cardiovascular,<br> Renal and<br> Metabolic | Oral<br>| 2025<br>| ≥2029/II<br>|
| LXE408 | TBD | Proteasome inhibitor | Visceral leishmaniasis | Global Health | Oral | 2022 | ≥2029/II |
| MAA868 <sup>2</sup> | abelacimab<br>| F11 inhibitor<br>| Stroke prevention in atrial fibrillation<br>| Cardiovascular,<br> Renal and<br> Metabolic | Subcutaneous injection<br>| 2025<br>| 2028/III<br>|
| PAC001 <sup>3</sup> | pacibekitug<br>| Anti-IL-6 mAb<br>| Atherosclerotic cardiovascular disease<br>| Cardiovascular,<br> Renal and<br> Metabolic | Subcutaneous injection<br>| 2025<br>| ≥2029/II<br>|
| *Pluvicto* | lutetium<br> Lu 177 <br> vipivotide <br> tetraxetan/<br> lutetium <br> (<sup>177</sup>Lu) <br> vipivotide <br> tetraxetan | Radioligand therapy <br> targeting PSMA<br>| Metastatic hormone-sensitive <br> prostate cancer<br>| Oncology<br>| Intravenous infusion<br>| 2025<br>| Registration<br>|
|  |  |  | Oligometastatic prostate cancer | Oncology | Intravenous infusion | 2024 | ≥2029/III |
| QCZ484 | TBD<br>| TBD<br>| Hypertension <sup>1</sup><br>| Cardiovascular,<br> Renal and<br> Metabolic | Subcutaneous injection<br>| 2025<br>| ≥2029/II<br>|
| TQJ230 | pelacarsen<br>| ASO targeting<br> lipoprotein(a)<br>| Secondary prevention of cardiovascular <br> events in patients with elevated levels <br> of lipoprotein(a) | Cardiovascular,<br> Renal and<br> Metabolic | Subcutaneous injection<br>| 2019<br>| 2026/III<br>|
| VAY736 | ianalumab | BAFF-R inhibitor | Lupus nephritis | Immunology | Subcutaneous injection | 2022 | 2028/III |
|  |  |  | Sjögren's syndrome | Immunology | Subcutaneous injection | 2022 | 2026/III |
|  |  |  | Systemic lupus erythematosus | Immunology | Subcutaneous injection | 2023 | 2028/III |
|  |  |  | Systemic sclerosis | Immunology | Subcutaneous injection | 2024 | 2028/II |
|  |  |  | Immune thrombocytopenia, 1st line | Oncology | Intravenous infusion | 2023 | 2027/III |
|  |  |  | Immune thrombocytopenia, 2nd line | Oncology | Intravenous infusion | 2023 | 2027/III |
|  |  |  | Warm autoimmune hemolytic anemia<br> (wAIHA) | Oncology<br>| Intravenous infusion<br>| 2022<br>| 2027/III<br>|
| VHB937 | TBD<br>| TREM2 stabilizer <br> and activator | Alzheimer's disease <sup>1</sup><br>| Neuroscience<br>| Intravenous infusion<br>| 2025<br>| ≥2029/II<br>|
|  |  |  | Amyotrophic lateral sclerosis <sup>1</sup> | Neuroscience | Intravenous infusion | 2025 | ≥2029/II |
| *Vijoice* | alpelisib | PI3K-alpha inhibitor | Lymphatic malformations | Oncology | Oral | 2023 | ≥2029/III |
| YTB323 | rapcabtagene<br> autoleucel | CD19 CAR-T<br>| Severe refractory lupus nephritis/<br> systemic lupus erythematosus | Immunology<br>| Intravenous infusion<br>| 2023<br>| 2028/II<br>|
|  |  |  | High-risk large B-cell lymphoma, 1st line | Oncology | Intravenous infusion | 2023 | ≥2029/II |
|  |  |  | Systemic sclerosis | Immunology | Intravenous infusion | 2024 | ≥2029/II |
|  |  |  | Myositis | Immunology | Intravenous infusion | 2024 | ≥2029/II |
|  |  |  | ANCA associated vasculitis <sup>1</sup> | Immunology | Intravenous infusion | 2025 | ≥2029/II |
|  <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development | <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development | <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development | <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development | <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development | <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development | <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development | <sup>1</sup> Project added to selected development projects table in 2025 – entered Confirmatory Development |
|  <sup>2</sup> Entered Confirmatory Development following the acquisition of Anthos Therapeutics in 2025 | <sup>2</sup> Entered Confirmatory Development following the acquisition of Anthos Therapeutics in 2025 | <sup>2</sup> Entered Confirmatory Development following the acquisition of Anthos Therapeutics in 2025 | <sup>2</sup> Entered Confirmatory Development following the acquisition of Anthos Therapeutics in 2025 | <sup>2</sup> Entered Confirmatory Development following the acquisition of Anthos Therapeutics in 2025 | <sup>2</sup> Entered Confirmatory Development following the acquisition of Anthos Therapeutics in 2025 | <sup>2</sup> Entered Confirmatory Development following the acquisition of Anthos Therapeutics in 2025 | <sup>2</sup> Entered Confirmatory Development following the acquisition of Anthos Therapeutics in 2025 |
|  <sup>3</sup> Entered Confirmatory Development following the acquisition of Tourmaline Bio in 2025 | <sup>3</sup> Entered Confirmatory Development following the acquisition of Tourmaline Bio in 2025 | <sup>3</sup> Entered Confirmatory Development following the acquisition of Tourmaline Bio in 2025 | <sup>3</sup> Entered Confirmatory Development following the acquisition of Tourmaline Bio in 2025 | <sup>3</sup> Entered Confirmatory Development following the acquisition of Tourmaline Bio in 2025 | <sup>3</sup> Entered Confirmatory Development following the acquisition of Tourmaline Bio in 2025 | <sup>3</sup> Entered Confirmatory Development following the acquisition of Tourmaline Bio in 2025 | <sup>3</sup> Entered Confirmatory Development following the acquisition of Tourmaline Bio in 2025 |

---

#### Projects removed from the development table since 2024

---

| | | | |
|:---|:---|:---|:---|
| **Compound/product** | **Potential indication** | **Change** | **Reason** |
| *Coartem* | Malaria (<5 kg patients) | Commercialized |  |
| *Beovu* | Diabetic retinopathy | Commercialized |  |
| *Fabhalta* | C3 glomerulopathy | Commercialized |  |
| *Itvisma* | Spinal muscular atrophy (IT formulation) | Commercialized |  |
| *Pluvicto* | Metastatic castration-resistant prostate cancer, pre-taxane | Commercialized |  |
| *Rhapsido* | Chronic spontaneous urticaria | Commercialized |  |
| *Vanrafia* | IgA nephropathy | Commercialized |  |
| *Cosentyx* | Giant cell arteritis | Removed | Development discontinued |

---

**Principal markets**

Novartis sells products in approximately 120 countries worldwide. Net sales are primarily concentrated in the US and Europe. The following table sets forth aggregate net sales by region for each of the last three years:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025 net sales** | **2025 net sales** | 2024 net sales | 2024 net sales | 2023 net sales | 2023 net sales |
|  | **USD millions** | **%** | USD millions | % | USD millions | % |
| United States | 23 331 | 43 | 21 146 | 42 | 17 959 | 40 |
| Europe | 16 729 | 31 | 15 557 | 31 | 14 997 | 33 |
| Asia, Africa, Australasia | 10 797 | 20 | 10 021 | 20 | 9 308 | 20 |
| Canada and Latin America | 3 675 | 6 | 3 593 | 7 | 3 176 | 7 |
| **Total** | **54 532** | **100** | **50 317** | **100** | **45 440** | **100** |
| Of which in established markets <sup>1</sup> | 40 555 | 74 | 37 371 | 74 | 33 725 | 74 |
| Of which in emerging growth markets <sup>1</sup> | 13 977 | 26 | 12 946 | 26 | 11 715 | 26 |
|  <sup>1</sup> Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. | <sup>1</sup> Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. | <sup>1</sup> Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. | <sup>1</sup> Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. | <sup>1</sup> Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. | <sup>1</sup> Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. | <sup>1</sup> Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. |

---

Many of our products are used for chronic conditions that require patients to continue dosing of the product over long periods of time, ranging from months to years. However, certain of our marketed products and development projects, such as cell and gene therapies, are administered only once. Net sales of the vast majority of our products are not subject to material changes in seasonal demand.

**Production**

Our primary goal is to ensure the uninterrupted and timely supply of medicines that meet all product specifications and quality standards, and that are manufactured in the most cost-effective and sustainable manner. The manufacturing of our products is highly regulated by governmental health authorities around the world, including the FDA and the EMA. In addition to regulatory requirements, many of our products involve technically complex manufacturing processes or require highly specialized raw materials.

We manufacture our products across the following technologies at facilities worldwide: chemistry, biotherapeutics, cell and gene therapy, xRNA therapy and radioligand therapy (see also "—Item 4.D Property, plants and equipment"). In addition, we generate contract manufacturing sales from chemistry, biotherapeutics, xRNA, and cell and gene therapy, including fill and finish activities, which we include under "established brands" in our consolidated financial statements (see "Item 18. Financial Statements—Note 4. Revenues and geographic information").

In our manufacturing network, we maintain state-of-the-art processes, with quality as a priority, and require our suppliers to adhere to the same high standards we expect from our own people and processes. These processes include chemical and biological syntheses; radioisotope handling; sterile processing in the area of formulation and delivery; CAR-T cell processing and gene modification; and packaging. We are continually working to improve our existing manufacturing processes, develop new and innovative technologies, and review and adapt our manufacturing network to maintain quality in our manufacturing processes and supply of products to customers and patients.

We produce raw materials for manufacturing in-house or purchase them from third-party suppliers. Where possible, we maintain multiple supply sources so that the business is not dependent on a single or limited number of suppliers. However, our ability to do so may at times be limited by regulatory or other requirements. We monitor market developments that could have an adverse effect on the supply of essential materials. Our suppliers of raw materials are required to comply with applicable regulations and Novartis quality standards.

Because the manufacturing of our products is complex and highly regulated by governmental health authorities and other regulators, uninterrupted supply cannot be guaranteed. If we or our third-party suppliers fail to comply with applicable regulations, there could be a product recall or other disruption to our production

activities. We have experienced supply interruptions for our products in the past, and there can be no assurance that supply will not be interrupted again in the future. For more information on the risks related to the manufacturing of our products, see "Item 3. Key Information—Item 3.D Risk factors—Supply chain and product quality—Inability to maintain continuity of product supply and to ensure proper controls in product development and product manufacturing." We have implemented a global manufacturing strategy to maximize business continuity in case of such events.

**Marketing and sales** 

Although specific distribution patterns vary by country, Novartis generally sells its prescription drugs primarily to drug wholesalers, retailers, private health systems, government agencies, managed care providers, pharmacy benefit managers, and government-supported healthcare systems. We reach healthcare professionals and patients in many markets and across our core therapeutic areas through integrated channels, including field force operations, patient support programs, and Novartis-owned digital platforms.

We have 17 491 full-time equivalent field force employees, as of December 31, 2025, including supervisors and administrative personnel. These trained representatives present the therapeutic benefits and risks of our products to physicians, pharmacists, hospitals, insurance groups, managed care organizations, and other healthcare professionals. In the US, Novartis advertises certain products via digital and traditional media channels, including the internet, television, newspapers, and magazines. Novartis also pursues co-promotion or co-marketing opportunities as well as licensing and distribution agreements with other companies in various markets.

The marketplace for healthcare is constantly evolving. Customer groups beyond prescribers have an increasing influence on treatment decisions and guidelines, while patients continue to become more informed stakeholders in their healthcare decisions and look for solutions to meet their changing needs. Novartis is responding by adapting our business practices to engage appropriately with patients, customer groups, and other stakeholders, including by delivering innovative solutions to drive education, access and improved patient care.

The growing number of so-called "specialty" drugs in our portfolio, such as *Cosentyx*, *Kesimpta*, *Leqvio*, and *Pluvicto*, has resulted in increased engagement with specialty pharmacies. Because many of these drugs require special handling and administration, we are rolling out patient support programs across our priority markets, which serve as a central resource for onboarding, education and support to help patients navigate their healthcare.

In the US, the CMS is the largest single payer for healthcare services as a result of continuing changes in healthcare economics and an aging population. In addition, both commercial and government-sponsored managed care organizations continue to be among the largest groups of payers for healthcare services in the US. In other countries, national health services are often the only significant payer for healthcare services. In an effort to control prescription drug costs, almost all managed care organizations and national health services use formularies that list specific drugs that may be reimbursed and/or the level of reimbursement for each drug. Managed care organizations and national health services also use cost-benefit analyses to determine whether or not newly approved drugs will be added to a formulary and/or the level of reimbursement for that drug, and to determine whether or not to continue to reimburse existing drugs. We have dedicated teams that actively seek to optimize patient access, including formulary positions, for our products.

The trend toward consolidation among distributors and retailers of our products continues in the US and internationally, both within and across countries. This has increased our customers' purchasing leverage and resulted in increased pricing pressure on our products. Moreover, we are exposed to increased concentration of credit risk as a result of the consolidation among our customers.

Drug pricing is an increasingly prominent issue in many countries as healthcare spending continues to rise. We aim to enable patient access through innovative pricing and access initiatives in the US, Europe, and other markets. These include contract structures such as pay-over-time and outcome-based agreements. Additionally, we recently launched a direct-to-patient platform in the US, offering cash-paying patients prescribed *Cosentyx* the option of purchasing it at a discount to the list price. Further, as part of the voluntary agreement we reached with the US administration in December 2025, we intend to build direct-to-patient platforms for certain of our other medicines. For further information see "—Price Controls".

**Competition** 

The global pharmaceutical market is highly competitive. We compete against other major international corporations that have substantial financial and other resources, as well as against smaller companies that operate regionally or nationally. Competition within the industry is intense and extends across a wide range of activities, including pricing, product characteristics, customer service, sales and marketing, and research and development.

Like other companies selling patented pharmaceuticals, Novartis faces challenges from companies selling competing patented products as well as from companies selling generics and biosimilars. Generic or biosimilar forms of our products may follow the expiration of intellectual property protection or regulatory exclusivities, and generic companies may also gain entry to the market through successfully challenging our intellectual property rights and exclusivities. We use appropriate, legally permissible measures to defend those rights and exclusivities (see also "—Intellectual property" below).

There is ongoing consolidation in the pharmaceutical industry. At the same time, new entrants are looking to use their expertise to establish or expand their presence in healthcare. Technology companies, for instance, are seeking to benefit from the increasing importance

of data and data management in our industry, including the use of artificial intelligence.

**Research and development** 

The discovery and development of a new drug usually requires approximately 10 to 15 years from the initial research to bringing a drug to market. This includes approximately six to eight years from Phase I clinical trials to market entry. At each of these steps, there is a substantial risk that a therapeutic candidate will not meet the requirements to progress further. In such an event, we may be required to abandon the development of a potential therapy in which we have made a substantial investment.

We manage our research and development expenditures across our entire portfolio in accordance with our strategic priorities. We make decisions about whether or not to proceed with research and development projects on a project-by-project basis. These decisions are based on the project's potential to meet a significant unmet medical need or to improve patient outcomes, the strength of the science underlying the project, and the potential of the project (subject to the risks inherent in pharmaceutical development) to generate significant positive financial results for the Company. Once a management decision has been made to proceed with the development of a therapeutic candidate, the level of research and development investment required will be driven by many factors. These include the medical indications for which it is being developed, the number, sequence and timing of indications being pursued, whether the therapeutic candidate is of a chemical or biological nature, the stage of development, and the level of evidence necessary to demonstrate clinical efficacy and safety.

#### Research program
Our research and early development program is conducted by our Biomedical Research organizational unit, which is the innovation engine of Novartis. This unit is responsible for the discovery and first clinical evaluation of new medicines that bring value for patients and the Company. This requires hiring and retaining highly talented employees, focusing on fundamental disease mechanisms that are relevant across different disease areas, continuously improving technologies for drug discovery and potential therapies, working with patients to understand their diseases and the potential benefits of therapies, forming close alliances with clinical and commercial colleagues, and establishing strategic external alliances.

We have 5 720 full-time-equivalent scientists, physicians and business professionals based primarily at Biomedical Research sites in Basel, Switzerland; Cambridge, Massachusetts; East Hanover, New Jersey; San Diego, California; and Emeryville, California. They contribute to research in our core therapeutic areas of cardiovascular, renal and metabolic diseases; neuroscience; oncology; and immunology, among others. Research at the Friedrich Miescher Institute focuses on basic genetic and genomic research, and our Global Health Disease Area (formerly the Novartis Institute for Tropical Diseases) focuses on discovering new medicines to fight tropical diseases, including malaria and cryptosporidiosis.

All drug candidates go through clinical trials, adhering to the guidance set forth by health authorities, to enable an early assessment of the safety and efficacy of the drug while collecting basic information on how the drug moves through the body and is tolerated. When assessments are favorable, our Development organizational unit conducts confirmatory trials on the drug candidates to generate data that can be submitted to regulatory authorities to secure approval for patient use.

#### Development program
Our Development organizational unit oversees and executes drug development activities in our core therapeutic areas, working collaboratively with Biomedical Research, our commercial units, and other parts of the Company on our overall pipeline strategy. It includes centralized functions such as Regulatory Affairs, Medical Affairs, and Global Clinical Operations, and has 13 530 full-time equivalent employees worldwide.

The traditional model of clinical development consists of three phases:

**Phase I:** The first clinical trials of a new compound — generally performed in a small number of healthy human volunteers or patients (e.g., in oncology) — to assess the drug's safety profile, including the safe dosage range. These trials also determine how a drug is absorbed, distributed, metabolized and excreted, and the duration of its action.

**Phase II:** Studies performed with patients who have the target disease, with the aim of continuing the Phase I safety assessment in a larger group, assessing the efficacy of the drug in the patient population, and determining the appropriate doses for further evaluation.

**Phase III:** Large-scale studies with up to several thousand patients, which aim to establish the safety and efficacy of the drug in specific indications for regulatory approval. Phase III trials may also be used to compare a new drug against a current standard of care to evaluate the overall benefit-risk relationship of the new medicine.

In each of these phases, physicians closely monitor consenting volunteers or patients to assess the safety and efficacy of a potential new drug or indication.

Although we use this traditional model, we take a flexible and efficient approach based on close collaboration across R&D, enabling development teams to initiate later-stage planning in parallel with early evaluations, and allowing research teams to better support later-stage activities.

Our development process consists of two stages: Early Development to build confidence in the overall properties of the compound, followed by Confirmatory Development to confirm the concept in large numbers of patients. Early development consists of both Phase I studies in healthy volunteers as well as Phase Ib and Phase II studies in patients. This work includes a careful review of safety and tolerability, understanding of whether the drug is modulating the target of interest, and understanding of dose response and early evidence of disease efficacy. Biomedical Research conducts these

trials, and if this evaluation is positive, the drug moves to the Confirmatory Development stage and becomes the responsibility of our Development organizational unit.

Confirmatory Development has elements of traditional Phase II/III testing and includes trials aimed at confirming the safety and efficacy of the drug in the given indication, leading up to submission of a dossier to health authorities for approval. This stage can also include trials that compare the drug to the current standard of care for the disease in order to evaluate the drug's overall benefit-risk profile. Further, with new treatment approaches such as gene therapy for rare diseases, elements of Early and Confirmatory Development may be combined and suffice for registration under certain conditions, such as high unmet medical need and clinical data showing highly favorable benefit-risk profiles. In these cases, additional post-approval studies may be required by the regulatory authorities to continue to gather important data that further supports approval.

The vast amount of data that must be collected and evaluated makes clinical testing the most time-consuming and expensive part of new drug development. The next stage in the drug development process is to seek registration for the new drug. For more information, see "—Regulation."

The Innovation Management Board (IMB), chaired by our Chief Executive Officer, drives our R&D portfolio strategy. The IMB endorses new early- and late-stage development projects, strategic plans, and portfolio-related priorities. It oversees our drug development budget, approves major project phase transitions, and makes key decisions, such as when to submit regulatory applications to health authorities or when to discontinue projects. IMB members include representatives from the Executive Committee of Novartis (ECN) and senior management with expertise in different fields.

To support our R&D strategy, we are investing in AI and other technologies that have the potential to enhance and accelerate the delivery of innovative medicines to patients. We are working with partners on scalable projects in early-stage research and in clinical development to help improve our decision-making and generate actionable insights across our core therapeutic areas — from designing new compounds to predicting drug safety and conducting clinical trials. In addition, we are continually adapting our organizational setup to drive a leading and sustainable R&D performance, by building future capabilities across our Research and Development organizations and accessing global talent pools.

**Alliances and acquisitions** 

Novartis enters into business development agreements with other pharmaceutical and biotechnology companies as well as with academic and other institutions to develop new products and access new markets. We license products that complement our current product line and are appropriate to our business strategy. We focus on strategic alliances and acquisition activities for key disease areas and indications that we expect to be growth drivers in the future. We review products and compounds that we are considering licensing, using the same criteria that we use for our own internally discovered drugs.

In April 2025, Novartis acquired Anthos Therapeutics, a US-based, clinical stage biopharmaceutical company with abelacimab, a late-stage medicine in development for the prevention of stroke and systemic embolism in patients with atrial fibrillation. The acquisition added a Phase III asset and is aligned with the Novartis growth strategy and our expertise in the cardiovascular therapeutic area.

In June 2025, Novartis acquired Regulus Therapeutics, a clinical-stage biopharmaceutical company focused on developing microRNA therapeutics. Regulus's lead asset, farabursen, is a potential first-in-class oligonucleotide targeting miR-17 for the treatment of autosomal dominant polycystic kidney disease (ADPKD) that recently completed Phase Ib. The acquisition is aligned with the therapeutic area focus of Novartis and leverages its strength and expertise in renal disease.

In October 2025, Novartis acquired Tourmaline Bio, a clinical-stage biopharmaceutical company developing pacibekitug, a Phase III-ready anti-IL-6 monoclonal antibody for atherosclerotic cardiovascular disease (ASCVD).

Also in October 2025, Novartis entered into an agreement to acquire Avidity Biosciences. The completion of the transaction is subject to the satisfaction or waiver of certain closing conditions specified in the agreement. For additional information, see "Item 18. Financial Statements—Note 2. Significant acquisitions of businesses and spin-off of Sandoz business." and "Item 10. Additional Information—Item 10.C Material Contracts."

**Regulation** 

The international pharmaceutical industry is highly regulated. Regulatory authorities around the world administer numerous laws and regulations regarding the testing, approval, manufacturing, importing, labeling and marketing of drugs, and review the safety and efficacy of pharmaceutical products. Extensive controls exist on the non-clinical and clinical development of pharmaceutical products. These regulatory requirements, and the implementation of them by local health authorities around the globe, are a major factor in determining whether a substance can be developed into a marketable product, and the amount of time and expense associated with that development.

Health authorities, including those in the US and the EU, have high standards of technical evaluation. The introduction of new pharmaceutical products generally entails a lengthy approval process. Products must be authorized or registered prior to marketing, and such authorization or registration must subsequently be maintained. In recent years, the registration process has required increased testing and documentation for the approval of new drugs, with a corresponding increase in the expense of product introduction.

To register a pharmaceutical product, a registration dossier containing evidence establishing the safety, efficacy and quality of the product must be submitted to regulatory authorities. Generally, a therapeutic product must be registered in each country in which it will be sold. In every country, the submission of an application to a regulatory authority does not guarantee that approval to

market the product will be granted. Although the criteria for the registration of therapeutic drugs are similar in most countries, the formal structure of the necessary registration documents and the specific requirements, including risk tolerance, of the local health authorities can vary significantly from country to country. Even if a drug is registered and marketed in one country, the registration authority in another country may request additional information from the pharmaceutical company prior to registration or even reject the product. A drug may be approved for different indications in different countries.

The registration process generally takes between six months and several years, depending on the country, the quality of the data submitted, the efficiency of the registration authority's procedures, and the nature of the product. Many countries provide for accelerated processing of registration applications for innovative products of particular therapeutic interest. In recent years, the US and the EU have made efforts to harmonize registration requirements to achieve shorter development and registration times for medical products. However, the requirement in many countries to negotiate selling prices or reimbursement levels with government regulators and other payers can substantially extend the time until a product may finally be available to patients.

The following provides a summary of the regulatory processes in the principal markets served by our affiliates:

#### United States
In the US, applications for drug registration are submitted to and reviewed by the FDA. The FDA regulates the testing, manufacturing, labeling and approval for marketing of pharmaceutical products intended for commercialization in the US. The FDA continues to monitor the safety of pharmaceutical products after they have been approved for sale in the US market. The pharmaceutical development and registration process is typically intensive, lengthy and rigorous. When a pharmaceutical company has gathered data that it believes sufficiently demonstrates a drug's safety, efficacy and quality, the company may file a New Drug Application (NDA) or Biologics License Application (BLA), as applicable, for the compound. The FDA has four designations — (i) Fast Track; (ii) Breakthrough Therapy Designation; (iii) Accelerated Approval; and (iv) Priority Review — to facilitate and expedite development and/or review of new drugs to address unmet medical needs in the treatment of serious or life-threatening conditions. More than one of these designations can be granted for a given product (i.e., a product designated as a Breakthrough Therapy may also be eligible for Priority Review). The NDA or BLA must contain all the scientific information that has been gathered about the compound. This typically includes information regarding the clinical experiences of patients tested in the drug's clinical trials. A Supplemental New Drug Application (sNDA) or Supplemental Biologics License Application (sBLA) must be filed for new indications and dosage forms for a previously approved drug. Applications eligible for Priority Review are reviewed four months faster than those reviewed under Standard Review.

Once an application is submitted, the FDA assigns reviewers from its staff, including experts in biopharmaceutics, chemistry, clinical microbiology, pharmacology/toxicology, and statistics. After a complete review, these content experts provide written evaluations of the NDA or BLA. These recommendations are consolidated and are used by senior FDA staff in its final evaluation of the NDA or BLA. Based on that final evaluation, the FDA then either approves the NDA or BLA, or provides a "complete response" letter if the NDA or BLA application is not approved. If not approved, the letter will state the specific deficiencies in the NDA or BLA that need to be addressed. The company making the application must then submit an adequate response to the deficiencies to restart the review procedure.

Once the FDA has approved an NDA, BLA, sNDA or sBLA, the company can make the new drug available for physicians and other healthcare providers to prescribe. The drug owner must submit periodic reports to the FDA, including any cases of adverse reactions. For some medications, the FDA requires additional post-approval studies (Phase IV) to evaluate long-term effects or to gather information on the use of the product under specified conditions.

Throughout the life cycle of a product, the FDA requires compliance with standards relating to good laboratory, clinical and manufacturing practices. The FDA also requires compliance with rules pertaining to the manner in which we may promote our products.

#### European Union
In the EU, there are three main procedures for application for authorization to market pharmaceutical products in more than one EU member state at the same time: (i) the centralized procedure; (ii) the mutual recognition procedure; (iii) and the decentralized procedure. It is also possible to obtain a national authorization for products intended for commercialization in a single EU member state only. The procedure used for first authorization must continue to be followed for subsequent changes, e.g., to add an indication for a licensed product.

Under the centralized procedure, applications are made to the EMA for an authorization that is valid for the European Union (all member states). The centralized procedure is mandatory for all biotechnology products; new chemical entities in cancer, neurodegenerative disorders, diabetes, AIDS, autoimmune diseases and other immune dysfunctions; advanced therapy medicines, such as gene therapy, somatic cell therapy and tissue-engineered medicines; and orphan medicines (medicines for rare diseases). It is optional for other new chemical entities, innovative medicinal products, and medicines for which authorization would be in the interest of public health. When a pharmaceutical company has gathered data that it believes sufficiently demonstrates a drug's safety, efficacy and quality, the company may submit an application to the EMA. The EMA then receives and validates the application, and the Committee for Medicinal Products for Human Use (CHMP) appoints a rapporteur and co-rapporteur to review it. They use experts from their countries to carry out the assessment but can also draw on expertise from other member states ("multinational teams"). The entire review cycle must be completed within 210 days, although there

are "clock stops" to allow the company to respond to questions set forth in the rapporteur and co-rapporteur's assessment report and agreed with the CHMP. The first clock stop is at Day 120 and the clock restarts on Day 121, when the company's complete response is received by the EMA. If there are further aspects of the dossier requiring clarification, the CHMP will issue further questions at Day 180, and may also request an oral explanation, in which case the sponsor must not only respond to the further questions but also appear before the committee to justify its responses. On Day 210, the CHMP will take a vote to recommend the approval or non-approval of the application, and their opinion is transferred to the European Commission (EC). The final EC decision under this centralized procedure is a single decision that is applicable to all member states. This decision occurs 60 days, on average, after a positive CHMP recommendation. As in the US, the EU offers pathways to facilitate and expedite the development and review of new drugs of major interest for public health and therapeutic innovation, including PRIME designation and Accelerated Assessment. Applications eligible for Accelerated Assessment are reviewed up to 60 days faster than those reviewed under Standard Assessment.

Under both the mutual recognition procedure (MRP) and the decentralized procedure (DCP), the assessment is led by one member state, called the reference member state (RMS), which then liaises with other member states, known as the concerned member states. In the MRP, the company first obtains a marketing authorization in the RMS, which is then recognized by the concerned member states within 90 days. In the DCP, the application is undertaken simultaneously in the RMS and all concerned member states. During the DCP, the RMS drafts an assessment report within 120 days. Within an additional 90 days, the concerned member states review the application and can issue objections or requests for additional information. On Day 90, each concerned member state must be assured that the product is safe and effective, and that it will cause no undue risks to the public health. Once an agreement has been reached, each member state grants national marketing authorizations for the product.

After receiving the marketing authorizations, the company must submit periodic safety reports to the relevant health authority (EMA for the centralized procedure; national health authorities for DCP or MRP). In addition, pharmacovigilance measures must be implemented and monitored, including the collection, evaluation and expedited reporting of adverse events, and updates to risk management plans. For some medications, post-approval studies (Phase IV) may be imposed to complement available data with additional data to evaluate long-term effects (called a Post-Approval Safety Study, or PASS) or to gather additional efficacy data (called a Post-Approval Efficacy Study, or PAES).

European marketing authorizations have an initial duration of five years. The holder of the marketing authorization must actively apply for its renewal after this first five-year period. As part of the renewal procedure, the competent authority performs a full benefit-risk review of the product. Should the authority conclude that the benefit-risk balance is no longer positive, the marketing authorization can be suspended or revoked. Once renewed, the marketing authorization is valid for an unlimited period, unless it is determined that the product must be further monitored for safety reasons. In this case, the authority may require another renewal at 10 years. If the holder does not apply for renewal, the marketing authorization automatically lapses. Any marketing authorization that is not followed within three years of its granting by the actual placing on the market of the corresponding medicinal product ceases to be valid.

**Price controls** 

In most of the markets where we operate, the prices of pharmaceutical products are subject to both direct and indirect price controls and to drug reimbursement programs with varying price control mechanisms. Due to increasing political pressure and governmental budget constraints, we expect these mechanisms to remain robust — and potentially even be strengthened — and to have a continued negative influence on the prices we are able to charge for our products.

#### Direct governmental efforts to control prices
United States: The Inflation Reduction Act of 2022 (IRA), signed into law in August 2022, mandates that eligible Medicare Part B and Part D drugs participate in what the statute calls the Drug Price Negotiation Program (Program); redesigned the Medicare Part D benefit, including a USD 2 000 out-of-pocket cap for Medicare beneficiaries going into effect in 2025; and imposed penalties for Medicare drugs that increase in price faster than the rate of inflation. Under the Program, the US government will set Medicare prices for selected products it has defined as single-sourced small-molecule drugs that have been on the market for seven years following FDA approval, as well as single-sourced biologics that have been on the market for 11 years after FDA approval, and will become effective for selected drugs two years later (nine years after FDA approval for eligible small molecules, and 13 years after FDA approval for eligible biologics).

Medicare drugs with the highest total cost to the US government are selected for the Program as they become eligible. Exemptions include orphan drugs that have approvals only in orphan conditions, drugs with a total cost to Medicare of less than USD 200 million, and plasma-derived drugs.&nbsp;&nbsp;&nbsp;&nbsp;

The IRA will be implemented as follows:

• 10 eligible Medicare Part D drugs in 2026

• An additional 15 eligible Medicare Part D drugs in 2027

• An additional 15 eligible combined Medicare Part B and Part D drugs in 2028

• An additional 20 eligible combined Medicare Part B and Part D drugs in 2029

• An additional 20 eligible combined Medicare Part B and Part D drugs each year after 2029

On August 29, 2023, the US government released the list of the first 10 drugs to be subject to the Program, and *Entresto* was one of the selected products. Novartis has completed the process of participating because manufacturers that refuse to participate are subject to an excise tax of up to 95% of sales. Further, the CMS

selected *Cosentyx*, *Kisqali*, and *Xolair* as part of the Medicare Drug Price Negotiation Program for 2028. We are also affected by other provisions of the IRA, such as price increase penalties for Medicare drugs, and new mandatory rebates on eligible Medicare Part D sales.

Ongoing changes to the 340B Program landscape continue to affect our business. The expansion of the program and the increasing number of covered entities and contract pharmacies seeking access to 340B pricing could have an impact on our revenue as it becomes a growing proportion of sales. Novartis regularly reviews and updates its contract pharmacy policy in response to changes related to 340B, including recent clarifications of the definition of in-house pharmacies and modifications addressing the management of limited distribution networks. One aspect of the evolving 340B program is the introduction of 340B-related legislation by individual states that requires Novartis to sell to all contract pharmacies in that state. In 2025, 25 states introduced 340B legislation and 11 states passed 340B-related bills, with this trend expected to continue in 2026. To date, government intervention regarding unforeseen growth of the 340B program has been limited. In August 2025, the Health Resources and Services Administration (HRSA) announced a pilot program (the Rebate Model Pilot Program) that will allow manufacturers to provide 340B pricing through a rebate-based model. This pilot program was only available for the 10 products included in the initial year of the Medicare Drug Price Negotiation program. *Entresto* is one of those selected products, and HRSA approved Novartis's implementation plan for the Rebate Model Pilot Program. However, in December 2025, a US court enjoined implementation of the Rebate Model Pilot Program and the ultimate timing for any such program is currently uncertain.

In addition, a number of US states have passed legislation intended to impact pricing or requiring manufacturers to report price increases to states, with some of these states also allowing for drug affordability (i.e., price control) review boards. The disclosure requirements vary by state. Many states require multiple types of reporting, including for new drug applications, new drug launches, prior notice of price increases, and quarterly or annual reporting.

Other policy changes have recently been proposed in the US focusing on drug pricing, including the May 2025 executive order that is aimed at using price benchmarks from other developed countries to set US pricing targets. Additionally, in July 2025, the US administration sent letters to several pharmaceutical manufacturers, including Novartis, that, among other things, sought commitments from manufacturers to match US prices to the lowest price offered in certain other developed nations. Further, in December 2025, we announced a voluntary agreement with the US administration that aims to lower the cost of medicines in the US. We have agreed to take actions aimed at meeting the US administration's drug pricing priorities, including, among other things, launching future medicines with comparable prices across high-income countries. We have also agreed to building direct-to-patient platforms for *Mayzent*, *Rydapt* and *Tabrecta*, applying to participate in the GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) Model aimed at further improving access to medicines in the US Medicaid program, and supporting efforts to address the global imbalance in investment in pharmaceuticals. See "Item 3. Key Information—Item 3.D Risk factors—Pricing, reimbursement and access—Pricing and reimbursement pressure, including pricing transparency and access to healthcare" for additional information.

Europe: Our operations in Europe are subject to significant price and marketing regulations. Many governments are introducing healthcare reforms in a further attempt to curb increasing healthcare costs. In some EU member states, these include reforms to permit the reimbursed use of off-label medicines, despite the presence of licensed alternatives on the market. In the EU, governments influence the price of pharmaceutical products through their control of national healthcare systems that fund a large part of the cost of such products to patients. The downward pressure on healthcare costs in general in the EU, particularly with regard to prescription drugs, is intense. Increasingly strict analyses are applied when evaluating the entry of new products, and as a result, access to innovative medicines is limited based on strict cost-benefit assessments. In addition, prices for marketed products are referenced within member states and across international borders, further impacting individual EU member state pricing. Member states also collaborate to enhance pricing transparency, and have started conducting joint health technology assessments, joint pricing negotiations, and/or joint purchasing. As an additional control for healthcare budgets, some EU countries have passed legislation to impose further mandatory rebates for pharmaceutical products and/or financial claw-backs on the pharmaceutical industry. The calculation of these rebates and claw-backs may lack transparency in some cases and can be difficult to predict.

#### Regulations favoring generics and biosimilars
In response to rising healthcare costs, most governments and private medical care providers have established reimbursement schemes that favor the substitution of more expensive brand-name pharmaceuticals by generic pharmaceuticals. All US states have generic substitution statutes. These statutes permit or require the dispensing pharmacist to substitute a less expensive generic drug instead of an original drug. Other countries, including many European countries, have similar laws. We expect that the pressure for generic substitution will continue to increase. In addition, the US, the EU and other jurisdictions are increasingly introducing laws and regulations that encourage the development of biosimilar versions of biologic drugs, which can also be expected to have an impact on pricing.

#### Cross-border sales
Price controls in one country can have an impact in other countries as a result of cross-border sales. In the EU, products that we have sold to customers in countries with stringent price controls can be legally resold to customers in other EU countries at a lower price than the price at which the product is otherwise available in the importing country (known as parallel trade). In North America, products that we have sold to customers in Canada – which has relatively stringent price

controls — are sometimes resold into the US, again at a lower price than the price at which the product is otherwise sold in the US. Reimportation from Canada and other countries into the US for commercial purposes is currently illegal. An exception is that states may seek approval from the Secretary of HHS to establish a Canadian drug importation program. Seven US states (Colorado, Florida, Maine, New Hampshire, New Mexico, Texas and Vermont) have enacted laws authorizing the establishment of such a program. However, the Secretary of HHS must approve each state importation plan before it can be implemented. As of December 31, 2025, Florida is the only state to have received FDA approval for a state importation plan, but has not yet implemented it.

We expect that pressures on pricing will continue worldwide and will likely increase. Because of these pressures, there can be no certainty that in every instance we will be able to charge prices for a product that, in a particular country or in the aggregate, would enable us to earn an adequate return on our investment in that product.

**Intellectual property** 

Intellectual property (IP) rights, including patents, trademarks, copyrights, know-how, and trade secrets, as well as regulatory-based protections, are essential to our business as an innovative medicines company, and protect our innovation and investments in research and development, manufacturing, and marketing of our products.

#### Patents
Patents may cover a product itself, including the product's active ingredient or other ingredients and its formulation. Patents may also cover processes for manufacturing a product, including processes for manufacturing intermediate substances used in the manufacture of the product. In addition, patents may cover particular uses of a product, such as its use to treat a particular disease, or its dosage regimen. Further, patents may cover tests for certain diseases or biomarkers — which can improve patient outcomes when administered with certain drugs — as well as assays, research tools, and other techniques used to identify new drugs.

#### United States
• In the US, an issued patent will generally receive a term of 20 years from the earliest application filing date and may be eligible for potential patent term adjustments if there are delays in prosecution of the patent by the United States Patent and Trademark Office (USPTO).

• A US pharmaceutical patent may also be eligible for a patent term extension (PTE) given that the development of a pharmaceutical product and its review by the FDA can take an extended period of time. PTE provides an extension of patent term to compensate for the time taken to conduct clinical trials and for the FDA's review process. The PTE may only extend the patent term for a maximum of five years and may not extend the patent term beyond 14 years from the first US regulatory approval. For a patent to be eligible for PTE, the patent must claim the product, a method of using the product, or a method of manufacturing the product. In addition, only one patent may be extended for any product.

#### European Union
• Patent applications in Europe may be filed in the European Patent Office (EPO) or in the patent offices of particular countries. The term of a patent granted by the EPO or an EU country's patent office is 20 years from the earliest application filing date. A patent issued by the EPO may also become a Unitary Patent, enforceable in multiple countries in the EU.

• Given that the development of a pharmaceutical product and its review by health authorities in the EU can take an extended period of time, a pharmaceutical patent in the EU may be eligible for a patent term extension that is called a supplementary protection certificate (SPC). An SPC may only extend the term of a patent for a maximum of five years, and may not extend the term of the patent beyond 15 years from the date of the first EU marketing authorization for the product covered by the patent. There is no unified procedure among countries in the EU for obtaining an SPC, and SPCs must be applied for and granted on a country-by-country basis.

Whether we are granted PTEs or SPCs, and the duration thereof, may depend on many factors, including whether we have: exercised due diligence during the product testing phase or regulatory review process; have applied for the extension within applicable deadlines; and satisfied all other applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request.

#### RDP and market exclusivity
In addition to patent protection, various countries provide regulatory-based protection, including regulatory data protection (RDP) and/or other market exclusivities, for a prescribed period of time. RDP provides exclusivity that precludes a potential competitor from filing a regulatory application that relies on the sponsor's clinical trial data, or that precludes the regulatory authority from approving the application for a set period of time.

#### United States
• A new small-molecule active pharmaceutical ingredient receives five years of RDP, during which time a competitor generally may not obtain final approval of an application to the FDA based on a sponsor's clinical data.

• A new biologic active pharmaceutical ingredient receives 12 years of regulatory-based market exclusivity, during which time a competitor generally may not market the same or similar drug.

• The FDA may also request that a sponsor conduct pediatric studies, and, in exchange, it will grant an additional six-month period of pediatric market exclusivity if the sponsor makes a timely submission of the reports of the pediatric studies in response to the FDA's written request. The sponsor must also have a patent-based and/or regulatory-based exclusivity period for the product to which the pediatric market exclusivity is appended.

• Orphan drug exclusivity (ODE) provides seven years of market exclusivity for drugs designated by the FDA as orphan drugs, meaning drugs that treat rare diseases affecting fewer than 200 000 people in the US. During this period, a potential competitor generally may not market the same or similar drug for the same indication even if the competitor's application does not rely on data from the sponsor.

#### European Union
• A new pharmaceutical ingredient receives eight years of data protection, during which a competitor cannot rely on the relevant data; a further period of two years of market exclusivity, during which the data can be used to support applications for marketing authorization but a competing product cannot be launched; and a possible one-year extension of the market exclusivity period if, during the initial eight-year data exclusivity period, the sponsor registered a new therapeutic indication with "significant clinical benefit."

• ODE provides for 10 years of market exclusivity, during which time an application for the same or similar medicine for the same indication will not generally be accepted or granted. Under certain circumstances, this exclusivity can be extended with a two-year pediatric extension.

#### Third-party patents and challenges to intellectual property
Third parties can challenge our IP, including patents, PTEs, SPCs, RDP, and marketing exclusivities (such as pediatric extensions and ODE), through various proceedings. For example, patents in the US can be challenged in the USPTO through various proceedings, including *inter partes* review (IPR) and post-grant review (PGR) proceedings. They may also be challenged through patent infringement litigation under the Abbreviated New Drug Application (ANDA) provisions of the Hatch-Waxman Act or under the Biologics Price Competition and Innovation Act (BPCIA). In the EU, patents may be challenged through oppositions in the EPO, or revocation actions before the Unified Patent Court, whereas national patents may be challenged in national courts or national patent offices. The outcomes of such challenges can be difficult to predict.

In addition to directly challenging our IP rights, in some circumstances a competitor may be able to market a generic version of one of our products by, for example, designing around our patents or marketing the generic product for non-patent-protected indications. A competitor may seek approval for a modified product (e.g. a different dosage form or strength) by filing a separate hybrid New Drug Application (NDA) under the Hatch-Waxman Act that relies partly on existing data and on new data to support the changes (typically referred to as a 505(b)(2) application). Despite RDP, a competitor could opt to incur the costs of conducting its own clinical trials and preparing its own regulatory application and avoid our RDP altogether. There is a risk that some countries may seek to impose limitations on or seek not to recognize the availability of IP rights for pharmaceutical products or may limit the extent to which such rights are enforced. Additionally, even though we may own, co-own or in-license patents protecting our products and conduct freedom-to-operate analyses, a third party may nevertheless assert that one of our products infringes or otherwise violates a third-party patent or other intellectual property right for which we do not have a license, seeking remedies such as monetary damages or an injunction against our continued marketing of the product.

As a result, there can be no assurance that our IP rights will protect our products or that we will be able to avoid adverse effects from the loss of IP protection or from third-party patents or other intellectual property rights in the future. For more information on the risks related to IP, see "Item 3. Key Information—Item 3.D Risk factors—Intellectual property—Expiry, assertion or loss of intellectual property protection."

#### Intellectual property protection for certain key marketed products and compounds in development
The following chart lists our key marketed products, together with the year in which, unless otherwise indicated, the basic composition of matter (CoM) patent protection (including granted PTEs, granted SPCs, and granted pediatric exclusivity periods) or regulatory exclusivity (for example, RDP or ODE), whichever lasts longer, is currently estimated to expire in the US and EU. In instances where Novartis has been involved in litigation or other proceedings regarding such patent protection, the date provided reflects any license or other rights Novartis granted under the patent for a generic or biosimilar competitor. We also sell these products in other countries, but do not include exclusivity loss on a country-by-country basis, which may vary considerably from the estimated loss in the US and EU. Generally, the dates in the table below for each of the products are estimated only for the purpose of base-case business or financial planning. Moreover, where applicable, we provide information regarding current challenges involving the patents or regulatory exclusivities expiring on the listed dates. In addition, we may own, co-own, control, or have rights to additional, later-expiring patents relating, for example, to compound forms, methods of treatment or use, formulations, devices, processes, product-by-process, synthesis, purification, and assays. We may also be seeking or may have been granted forms of regulatory exclusivity that may expire later than the dates shown below. These later-expiring patents or RDP may or may not protect our products from generic or biosimilar competition after the date specified. Novartis strongly believes in the entire portfolio of innovation and technology covering its products and may therefore seek to appropriately enforce any and all of its intellectual property and RDP for a given product in a country. Accordingly, the listing of any date in the table below should not be regarded as the date after which Novartis expects generic or biosimilar competition or as any indication of the strength or coverage of any later-expiring intellectual property or RDP.

It is not possible to predict with certainty the length of patent or regulatory-based market exclusivity for any of our products due to the complex interaction between patent and regulatory forms of exclusivity, and the inherent uncertainties regarding IP litigation. There can be no assurance that a particular product will receive patent or regulatory-based market exclusivity for the full period

of time that we estimate, or at all, and the products listed below may face generic or biosimilar competition in the US or EU earlier than the dates listed below. See "Item 3. Key Information—Item 3.D Risk factors—Intellectual property—Expiry, assertion or loss of intellectual property protection" for additional information.

---

| | | |
|:---|:---|:---|
| **<br>Product** | **Year of Expiration<br> (US)** | **Year of Expiration<br> (EU)<sup>1</sup>** |
| *Entresto* | Combination patent expired | 2026 <sup>2</sup> |
| *Cosentyx* | 2029 | 2030 |
| *Kesimpta* | 2031 | CoM patent expired <sup>4</sup> |
| *Kisqali* | 2031 | 2032 |
| *Promacta/Revolade* | CoM patent expired | CoM patent expired |
| *Tafinlar* | 2030 | 2029 |
| *Mekinist* | 2027 <sup>3</sup> | 2029 |
| Use of *Mekinist* with *Tafinlar* or *Tafinlar* with *Mekinist* | 2031 | 2030 |
| *Jakavi* | N/A | 2028 |
| *Xolair* | N/A | CoM patent expired |
| *Tasigna* | CoM patent expired | CoM patent expired |
| *Ilaris* | CoM patent expired <sup>4</sup> | CoM patent expired |
| *Pluvicto* | 2034 <sup>5</sup> | 2037 |
| *Zolgensma* | 2033 | 2033 |
| *Leqvio* | 2034 <sup>5</sup> | 2035 |
| *Scemblix* | 2035 | 2037 |
| *Lutathera* | ODE expired <sup>6</sup> | 2029 |
| *Fabhalta* | 2034 <sup>5</sup> | 2039 |
|  <sup>1</sup> SPC (including pediatric extensions (PE)) expiry dates are listed when an SPC/PE has been granted in at least one of the following European markets: France, Germany, Italy, Spain, and the United Kingdom. | <sup>1</sup> SPC (including pediatric extensions (PE)) expiry dates are listed when an SPC/PE has been granted in at least one of the following European markets: France, Germany, Italy, Spain, and the United Kingdom. | <sup>1</sup> SPC (including pediatric extensions (PE)) expiry dates are listed when an SPC/PE has been granted in at least one of the following European markets: France, Germany, Italy, Spain, and the United Kingdom. |
|  <sup>2</sup> RDP expires in 2026. Combination patent with SPC expires in 2028. Novartis has additional, later expiring EU patents that it will enforce as appropriate. | <sup>2</sup> RDP expires in 2026. Combination patent with SPC expires in 2028. Novartis has additional, later expiring EU patents that it will enforce as appropriate. | <sup>2</sup> RDP expires in 2026. Combination patent with SPC expires in 2028. Novartis has additional, later expiring EU patents that it will enforce as appropriate. |
|  <sup>3</sup> Certain patents (expiring in 2032) are being challenged in ANDA proceedings by a generic manufacturer. | <sup>3</sup> Certain patents (expiring in 2032) are being challenged in ANDA proceedings by a generic manufacturer. | <sup>3</sup> Certain patents (expiring in 2032) are being challenged in ANDA proceedings by a generic manufacturer. |
|  <sup>4</sup> There is no generic or biosimilar competition for this product in this market. | <sup>4</sup> There is no generic or biosimilar competition for this product in this market. | <sup>4</sup> There is no generic or biosimilar competition for this product in this market. |
|  <sup>5</sup> We have applied for a PTE or SPC which is pending. | <sup>5</sup> We have applied for a PTE or SPC which is pending. | <sup>5</sup> We have applied for a PTE or SPC which is pending. |
|  <sup>6</sup> Formulation patents (expiring in 2039 with PE) are being challenged in patent proceedings against manufacturers having FDA applications referencing *Lutathera*. | <sup>6</sup> Formulation patents (expiring in 2039 with PE) are being challenged in patent proceedings against manufacturers having FDA applications referencing *Lutathera*. | <sup>6</sup> Formulation patents (expiring in 2039 with PE) are being challenged in patent proceedings against manufacturers having FDA applications referencing *Lutathera*. |

---

#### Established Brands
*Lucentis* faces generic competition in the EU. For *Sandostatin* SC, there is generic competition in the US and the EU. For *Sandostatin* LAR, there is generic competition in the US and in most EU countries.

#### Compounds in development
We provide certain patent information for non-marketed compounds in development that have been submitted to the FDA and/or the EMA for registration but have yet to be approved by either agency. For these products, Novartis will seek all appropriate RDP, will continue to seek additional intellectual property protection for significant product developments, and will apply for PTEs and SPCs in keeping with the great importance we place on intellectual property.

#### Trademarks
Our products are sold under brand names and logos that are generally protected as trademarks and/or through related intellectual property rights. Trademark registrations are for fixed, but renewable terms, with protection provided, depending on the country, for as long as the trademark is registered and/or in use. Protecting our trademarks is of material importance to us.

### 4.C Organizational structure
**Organizational structure**

See "Item 4. Information on the Company—Item 4.A History and development of Novartis" and "Item 4. Information on the Company—Item 4.B Business overview—Overview."

**Significant subsidiaries**

See "Item 18. Financial Statements—Note 31. Novartis principal subsidiaries and associated companies."

### 4.D Property, plants and equipment
Our principal executive offices are located in Basel, Switzerland. We operate through a number of affiliates that have offices, research and development facilities, and production sites throughout the world.

We generally own our facilities or have entered into long-term lease arrangements for them. Some of our principal facilities are subject to mortgages and other security interests granted to secure certain debts.

Our Operations organizational unit manages the production, quality, and supply chain of our products through a network of 31 manufacturing sites, as well as through external suppliers, and warehouse and distribution centers. In addition, our Operations organizational unit also manages non-production real estate owned or leased by Novartis around the world.

The following table sets forth our major headquarters and most significant production, research and development, and administrative facilities. See also "—Item 4.B Business overview—Production" for a discussion of our manufacturing processes.

**Major facilities**

---

| | | |
|:---|:---|:---|
| **<br>Location** | **Size of site <br> (in square meters)** | **<br> Major activity** |
| Basel, Switzerland – St. Johann | 481 448  | Global Company headquarters; International organizational unit headquarters; research and development |
| Kundl and Schaftenau, Austria | 283 017  | Production of biotechnological products, active drug substances and nucleic acids, drug products and finished products; product development |
| Cambridge, Massachusetts, US | 167 225 | Research and development |
| Menges, Slovenia | 166 591  | Production of small molecules and large molecules drug substances and drug intermediates; Research and development for Biologics |
| Ljubljana, Slovenia | 144 717  | Management of the small molecules platform, testing hub for Novartis manufacturing sites, production of oral dosage forms, and aseptic drug product manufacturing |
| East Hanover, NJ, US | 123 751 | US organizational unit headquarters; research and development |
| Shanghai, China | 105 614 | China country headquarters; research and development |
| Stein, Switzerland | 64 700  | Production of sterile vials, pre-filled syringes and ampoules; capsules and tablets; active pharmaceutical ingredients; and cell and gene therapies |
| Huningue, France | 41 000 | Production of drug substances for clinical and commercial supply |
| Durham, North Carolina, US | 15 794  | Manufacture, package and release commercial *Zolgensma* product and certain clinical development activities |
| Schweizerhalle, Switzerland | 8 880 | Manufacture of small-interfering RNA (siRNA) drug substance for *Leqvio* |
| Indianapolis, Indiana, US | 8 230  | Manufacture, package and release clinical and commercial *Pluvicto* and *Lutathera* product for US and Canada |
| Ivrea, Italy | 4 300  | Galenic development and manufacture, package and release of radioligand therapy products in oncology (clinical & commercial) *Pluvicto* and *Lutathera* product |

---

As our product portfolio evolves, the Company is adapting our manufacturing capacity and capabilities to meet our changing needs, shifting from high-volume products toward lower-volume, customized and personalized medicines. We have closed, exited, consolidated or sold 6 Novartis manufacturing sites in the three-year period ended December 31, 2025. We continue expanding our capacity in new technologies such as cell culture and radioligand therapy, and in our core biopharmaceutical manufacturing and small molecule manufacturing. We are further making investments to expand our US-based manufacturing and R&D footprint and to enable end-to-end production of all key medicines for patients in the US. We are leveraging innovation to increase the reliability and productivity of our manufacturing network, including using data and digital and manufacturing automation technologies. We continue to seek opportunities to manage our production facilities as efficiently as possible, optimize external spend, and simplify and standardize across our manufacturing network to help us increase our cost competitiveness and optimize the value of our products. At the same time, we are working to improve our environmental sustainability, for example by reducing energy, waste disposal, and water consumption at our sites by making our manufacturing processes more efficient, introducing new technologies, and switching to clean and renewable energy solutions.

For a description of the impact of environmental matters, see "Item 3. Key Information—Item 3.D Risk factors—Environmental matters—Impact of environmental liabilities," and "Item 3. Key Information—Item 3.D Risk factors—Climate change and natural disasters—Failure to manage risks from climate change and natural disasters." See also "Item 18. Financial Statements—Note 20. Provisions and other non-current liabilities."

## Item 4A. Unresolved Staff Comments
Not applicable.

## Item 5. Operating and Financial Review and Prospects

### 5.A Operating results
This operating and financial review should be read together with our consolidated financial statements in this Annual Report, which have been prepared in accordance with International Financial Reporting Standards (IFRS®) Accounting Standards as issued by the International Accounting Standards Board (see "Item 18. Financial Statements"). "Item 5. Operating and Financial Review and Prospects" with the sections on our compounds in development and selected development projects (see "Item 4. Information on the Company—Item 4.B Business overview") constitute the Operating and Financial Review (*Lagebericht*), as defined by the Swiss Code of Obligations.

After Novartis AG shareholders approved the Sandoz spin-off on September 15, 2023, we reported our consolidated financial statements as "continuing" operations (retained innovative medicines business and corporate activities) and "discontinued" operations (Sandoz division and related corporate activities until the distribution date of October 3, 2023) in compliance with IFRS Accounting Standards. For more information, see "Item 18. Financial Statements—Note 1. Accounting policies."

The disclosures and commentary in "Item 5. Operating and Financial Review and Prospects" focus on continuing operations, as there were no financial results from discontinued operations in 2025 and 2024.

The discussion of our operating and financial review and prospects for the years ended December 31, 2024, and December 31, 2023, can be found in "Item 5. Operating and Financial Review and Prospects—5.A. Operating results — Results of operations" of our Annual Report on Form 20-F filed on January 31, 2025.

Significant transactions are discussed in "Item 18. Financial Statements—Note 2. Significant acquisitions of businesses and spin-off of Sandoz business," and "Item 18. Financial Statements—Note 27. Commitments and contingent liabilities."

**Overview** 

Novartis is an innovative medicines company engaged in the research, development, manufacturing, distribution, marketing, and sale of a broad range of pharmaceutical products. Our purpose is to reimagine medicine to improve and extend people's lives.

We focus on four core therapeutic areas with strong growth potential and high unmet patient needs—cardiovascular, renal and metabolic; immunology; neuroscience; and oncology. Our operations are organized into five organizational units: Biomedical Research, Development, Operations, and two commercial units US and International. Global functions support these organizational units in the execution of their work. For more information about our organizational structure, see "Item 4. Information on the Company—Item 4.B Overview."

**Our business environment**

Advances in both medical science and digital technologies are opening opportunities for new treatments and more efficient drug discovery. At the same time, pressure on pricing is increasing due to regulatory changes, government funding constraints and tariffs on international trade. Meanwhile, as demand for high quality treatment is rising, there are many people around the world who struggle to access adequate healthcare and the medicines they need. The major trends shaping our business environment include:

• **Scientific and technological innovation**: Rapid progress in medical science means we now understand more about human health than ever before, and these advances are supported by developments in data and digital technologies, including AI. This is opening potential opportunities for new breakthrough treatments, shorter times for their development, reduced costs, more personalized forms of healthcare and greater drug safety. It highlights the importance of continued investment in research and development, particularly in next-generation technologies such as radioligand therapy, xRNA, and cell and gene therapies.

• **Policy, economic and geopolitical pressures**: Geopolitical tensions are contributing to trade protectionism, economic sanctions, political instability, and new national security regulations. These measures may disrupt complex global supply chains in the pharmaceutical industry. At the same time, evolving legislation is changing how governments pay for medicines. In the US, the 2022 Inflation Reduction Act imposed price controls on select drugs in the country's Medicare program and in 2025 the US administration made several further proposals related to drug pricing and tariffs. Meanwhile, the EU is revising legislation with a view to improving access and affordability for patients.

• **Health challenges**: Demand for quality healthcare is continuing to rise, particularly in areas such as oncology, cardiovascular and immunology. US and EU markets are expanding, as is China, given current government support for better healthcare access. Patients, meanwhile, are better informed and have increasing influence on treatment decisions. Nevertheless, access to healthcare remains a serious challenge, complicated by recent cuts to international aid budgets. The WHO estimates that almost two billion people worldwide do not have regular access to essential medicines due to costs, poor healthcare infrastructure and a shortage

of healthcare workers. Collaboration and partnerships across the healthcare system are needed to address these complex challenges. At the same time, many healthcare systems are under pressure as a result of long-term factors, such as aging populations, funding constraints, climate change and evolving lifestyles. These factors have led to an increase in illnesses, such as cancer, diabetes and heart disease, as well as respiratory illness and vector-borne diseases such as malaria.

**Our strategy**

As part of our core strategy, we focus on four therapeutic areas: cardiovascular, renal and metabolic; immunology; neuroscience; and oncology. Each has strong growth potential and high unmet patient needs.

This focus allows us to build depth in our chosen areas, and to use our scientific expertise to discover and develop new treatments, intervene earlier in the progress of a disease and improve the quality of life for patients.

Our exploratory research focuses on these four areas, but we recognize that a wider approach is needed to develop an effective R&D pipeline and remain a leader in scientific discovery. We also work closely with external researchers, biotechnology companies and academics to increase our chances of discovering new medicines and treatments.

To support these focus areas, we invest in technology platforms to help us deliver future treatments. We focus on two established platforms — chemistry and biotherapeutics — in addition to three advanced platforms: radioligand therapy, xRNA, and cell and gene therapy.

We focus on four priority markets: US, China, Germany, and Japan. Together, these markets account for most of the expected growth in global healthcare spending through 2030. Though these are our priority markets, we also maintain a presence in other markets worldwide.

We have set three strategic priorities:

• **Deliver high-value medicines to accelerate growth**: We aim to increase growth, driven by continued strong momentum in our existing portfolio of medicines and key upcoming launches. Over the longer term, we expect growth will come through delivering high-value medicines that sustain and replace our existing growth drivers.

• **Embed operational excellence to deliver returns**: In an increasingly competitive environment, we are simplifying processes and reducing costs to become more efficient and effective in our decision-making and to free up resources for investment in new medicines. Our goal is to continue making attractive returns to shareholders while creating value for patients, healthcare systems and society.

• **Strengthen our foundations**: We continue to invest in the foundations of our long-term success. We have made progress in strengthening our culture to attract and retain talent, while developing artificial intelligence capabilities across our value chain and continuing to build trust with stakeholders and society.

**Results of operations**

**Key figures**<sup>1</sup>

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br>(USD millions unless indicated otherwise) | **<br>Year ended<br> Dec 31, 2025** | <br>Year ended<br> Dec 31, 2024 | <br> Change<br> in USD% | Change in<br> constant<br> currencies<br> %<sup>1</sup> |
| **Net sales from continuing operations** | **54 532** | **50 317** | **8** | **8** |
| Other revenues | 2 142 | 1 405 | 52 | 51 |
| Cost of goods sold | -13 699 | -12 827 | -7 | -5 |
| **Gross profit from continuing operations** | **42 975** | **38 895** | **10** | **10** |
| Selling, general and administration | -13 248 | -12 566 | -5 | -4 |
| Research and development | -11 200 | -10 022 | -12 | -9 |
| Other income | 1 460 | 1 175 | 24 | 17 |
| Other expense | -2 343 | -2 938 | 20 | 24 |
| **Operating income from continuing operations** | **17 644** | **14 544** | **21** | **25** |
| Return on net sales (%) | 32.4 | 28.9 |  |  |
| Loss from associated companies | -12 | -38 | 68 | 70 |
| Interest expense | -1 144 | -1 006 | -14 | -14 |
| Other financial income and expense | -136 | 140 | nm | nm |
| **Income before taxes from continuing operations** | **16 352** | **13 640** | **20** | **22** |
| Income taxes | -2 385 | -1 701 | -40 | -43 |
| **Net income from continuing operations** | **13 967** | **11 939** | **17** | **19** |
| **Net income** | **13 967** | **11 939** | **17** | **19** |
| **Basic earnings per share from continuing operations (USD)** | 7.21 | 5.92 | **22** | **24** |
| **Basic earnings per share (USD)** | 7.21 | 5.92 | **22** | **24** |
| **Net cash flows from operating activities** | **19 144** | **17 619** | **9** |  |
| **Non-IFRS measures <sup>1</sup>** |  |  |  |  |
| **Free cash flow <sup>1</sup>** | **17 596** | **16 253** | **8** |  |
|  <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." |
| nm = not meaningful | nm = not meaningful | nm = not meaningful | nm = not meaningful | nm = not meaningful |

---

**Company overview**

Net sales from continuing operations were USD 54.5 billion, up 8% in USD reported terms and 8% measured in constant currencies (cc)<sup>1</sup> to remove the impact of exchange rate movements. Net sales growth was driven by volume growth of 15 percentage points. Generic competition had a negative impact of 6 percentage points, pricing had a negative impact of 1 percentage point while currency had no impact. Sales in the US were USD 23.3 billion (+10%) and in the rest of the world USD 31.2 billion (+7%, +6% cc).

Sales growth was mainly driven by continued strong performance from *Kisqali* (USD 4.8 billion, +58%, +57% cc), *Kesimpta* (USD 4.4 billion, +37%, +36% cc), *Pluvicto* (USD 2.0 billion, +43%, +42% cc), *Scemblix* (USD 1.3 billion, +87%, +85% cc) and *Cosentyx* (USD 6.7 billion, +9%, +8% cc), partly offset by generic competition, mainly for *Promacta*, *Tasigna* and *Lucentis*.

In the US (USD 23.3 billion, +10%), sales growth was mainly driven by *Kisqali*, *Kesimpta*, *Pluvicto*, *Scemblix* and *Cosentyx*, partly offset by generic competition, mainly for *Entresto*, *Promacta* and *Tasigna*. In Europe (USD 16.7 billion, +8%, +4% cc), sales growth was mainly driven by *Kesimpta*, *Entresto*, *Kisqali* and *Pluvicto*, partly offset by generic competition, mainly for *Lucentis* and *Tasigna*. Sales in emerging growth markets<sup>2</sup> were USD 14.0 billion (+8%, +10% cc), including USD 4.2 billion of sales from China (+8%, +8% cc).

Operating income from continuing operations was USD 17.6 billion (+21%, +25% cc), mainly driven by higher net sales and lower impairments, partly offset by higher investments behind priority brands and launches. Operating income margin from continuing operations was 32.4% of net sales, increasing 3.5 percentage points (4.4 percentage points cc).

Net income was USD 14.0 billion (+17%, +19% cc), mainly driven by higher operating income. Basic earnings per share was USD 7.21 (+22%, +24% cc), benefiting from the lower weighted average number of shares outstanding

Net cash flows from operating activities amounted to USD 19.1 billion (+9%) mainly driven by higher net income, adjusted for non-cash items and other adjustments, partly offset by unfavorable changes in working capital, higher payments out of provisions and higher income taxes paid.

Free cash flow<sup>1</sup> amounted to USD 17.6 billion (+8%) driven by higher net cash flows from operating activities.

We also present our core results<sup>1</sup>, which exclude the impact of amortization of intangible assets, impairments, business acquisitions, divestments, and other significant items, including restructuring and related items, to help investors understand our underlying performance.

Core operating income from continuing operations was USD 21.9 billion (+12%, +14% cc), mainly driven by higher net sales, partly offset by higher investments behind priority brands and launches. Core operating income margin from continuing operations was 40.1% of net sales, increasing 1.4 percentage points (2.1 percentage points cc).

Core net income was USD 17.4 billion (+11%, +12% cc), mainly due to higher core operating income. Core basic earnings per share was USD 8.98 (+15%, +17% cc), benefiting from the lower weighted average number of shares outstanding.

As the Sandoz spin-off was completed on October 3, 2023, there were no operating results in 2025 and 2024 related to discontinued operations.

<sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "Non-IFRS measures as defined by Novartis."

<sup>2</sup> Novartis definition of emerging growth markets comprises all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.

**Net sales from continuing operations**

The following table provides an overview of net sales from continuing operations by core therapeutic area and established brands:

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br>(USD millions) | **<br>Year ended<br> Dec 31, 2025** | <br>Year ended<br> Dec 31, 2024<sup>1</sup> | <br> Change<br> in USD% | Change in<br> constant<br> currencies<br> %<sup>2</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cardiovascular, renal and metabolic | 8 959 | 8 576 | 4 | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Immunology | 10 293 | 9 293 | 11 | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neuroscience | 5 993 | 4 750 | 26 | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Oncology | 16 830 | 14 297 | 18 | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Established brands | 12 457 | 13 401 | -7 | - 7 |
| **Total net sales from continuing operations** | **54 532** | **50 317** | **8** | **8** |
|  <sup>1</sup> Reclassified to conform with 2025 presentation of brands by therapeutic area and established brands. | <sup>1</sup> Reclassified to conform with 2025 presentation of brands by therapeutic area and established brands. | <sup>1</sup> Reclassified to conform with 2025 presentation of brands by therapeutic area and established brands. | <sup>1</sup> Reclassified to conform with 2025 presentation of brands by therapeutic area and established brands. | <sup>1</sup> Reclassified to conform with 2025 presentation of brands by therapeutic area and established brands. |
|  <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." |

---

The following table provides the top 20 product net sales from continuing operations<sup>1</sup> in 2025, as well as the change compared with 2024:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | US | US | Rest of world | Rest of world | Rest of world | **Total** | **Total** | **Total** |
| **Brands** | **Brand classification by therapeutic area or established brands** | **&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Key indications** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;USD m | % change USD/cc<sup>2</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;USD m | % change USD | % change cc<sup>2</sup> | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;USD m | % change USD | % change cc<sup>2</sup> |
| *Entresto* | Cardiovascular, renal and metabolic | Chronic heart failure, hypertension | 3 285  | -19  | 4 463  | 18  | 16  | 7 748  | -1  | -2  |
| *Cosentyx* | Immunology  | Psoriasis (PsO), ankylosing spondylitis (AS), psoriatic arthritis (PsA), non-radiographic axial spondyloarthritis (nr-axSPA), hidradenitis suppurativa (HS) | 3 839  | 9  | 2 829  | 8  | 7  | 6 668  | 9  | 8  |
| *Kisqali* | Oncology  | HR+/HER2- metastatic breast cancer and early breast cancer | 2 975  | 77  | 1 808  | 33  | 33  | 4 783  | 58  | 57  |
| *Kesimpta* | Neuroscience  | Relapsing forms of multiple sclerosis (MS) | 2 943  | 35  | 1 483  | 42  | 39  | 4 426  | 37  | 36  |
| *Tafinlar* + *Mekinist* | Oncology  | BRAF V600+ metastatic and adjuvant melanoma, advanced non-small cell lung cancer (NSCLC), tumor agnostic with BRAF mutation indication, pediatric low grade glioma (pLGG) | 867  | 2  | 1 348  | 11  | 9  | 2 215  | 8  | 6  |
| *Jakavi* | Oncology  | Myelofibrosis (MF), polycythemia vera (PV), graft-versus-host disease (GvHD) |  |  | 2 110  | 9  | 7  | 2 110  | 9  | 7  |
| *Pluvicto* | Oncology  | PSMA-positive mCRPC patients post-ARPI, pre- and post-Taxane | 1 596  | 38  | 398  | 69  | 65  | 1 994  | 43  | 42  |
| *Ilaris* | Immunology  | Auto-inflammatory (CAPS, TRAPS, HIDS/MKD, FMF, SJIA, AOSD, gout) | 1 041  | 30  | 842  | 18  | 16  | 1 883  | 25  | 24  |
| *Xolair <sup>3</sup>* | Immunology  | Severe allergic asthma (SAA), chronic spontaneous urticaria (CSU), nasal polyps, food allergy (FA) |  |  | 1 723  | 5  | 4  | 1 723  | 5  | 4  |
| *Promacta/Revolade* | Oncology  | Immune thrombocytopenia (ITP), severe aplastic anemia (SAA) | 636  | -46  | 1 000  | -3  | -4  | 1 636  | -26  | -27  |
| *Scemblix* | Oncology  | Philadelphia chromosome-positive chronic myeloid leukemia (Ph+ CML) in chronic phase (CP); Ph+ CML in CP with the T315I mutation | 824  | 89  | 461  | 82  | 78  | 1 285  | 87  | 85  |
| *Zolgensma* Group | Neuroscience  | Spinal muscular atrophy (SMA) | 413  | -5  | 819  | 5  | 3  | 1 232  | 1  | 0  |
| *Sandostatin* Group | Established brands  | Carcinoid tumors, acromegaly | 729  | -9  | 484  | 2  | 2  | 1 213  | -5  | -5  |
| *Leqvio* | Cardiovascular, renal and metabolic  | Atherosclerotic cardiovascular disease (ASCVD) | 575  | 49  | 623  | 69  | 65  | 1 198  | 59  | 57  |
| *Tasigna* | Oncology  | Chronic myeloid leukemia (CML) | 486  | -43  | 618  | -25  | -25  | 1 104  | -34  | -34  |
| *Lutathera* | Oncology  | GEP-NETs gastroenteropancreatic neuroendocrine tumors | 588  | 15  | 228  | 8  | 5  | 816  | 13  | 12  |
| *Exforge* Group | Established brands | Hypertension | 5 | -38 | 722 | 4 | 4 | 727 | 3 | 4 |
| *Lucentis* | Established brands  | Age-related macular degeneration (AMD), diabetic macular edema (DME), retinal vein occlusion (RVO) |  |  | 643  | -38  | -40  | 643  | -38  | -40  |
| *Diovan* Group | Established brands | Hypertension | 35 | 25 | 569 | 1 | 1 | 604 | 2 | 2 |
| *Fabhalta <sup>4</sup>* | Oncology  | Paroxysmal Nocturnal Hemoglobinuria (PNH), IgA Nephropathy (IgAN), Adult C3 Glomerulopathy (C3G) | 317  | 217  | 188  | nm  | nm  | 505  | 291  | 287  |
| **Top 20 brands total** | **Top 20 brands total** | **Top 20 brands total** | **21 154** | **11** | **23 359** | **12** | **11** | **44 513** | **12** | **11** |
| Rest of portfolio | Rest of portfolio | Rest of portfolio | 2 177 | 1 | 7 842 | -6 | -6 | 10 019 | -5 | -4 |
| **Net sales from continuing operations** | **Net sales from continuing operations** | **Net sales from continuing operations** | **23 331** | **10** | **31 201** | **7** | **6** | **54 532** | **8** | **8** |
|  <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer |
|  <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>2</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." |
|  <sup>3</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. |
|  <sup>4</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>4</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>4</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>4</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>4</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>4</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>4</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>4</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>4</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>4</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>4</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |
| nm = not meaningful | nm = not meaningful | nm = not meaningful | nm = not meaningful | nm = not meaningful | nm = not meaningful | nm = not meaningful | nm = not meaningful | nm = not meaningful | nm = not meaningful | nm = not meaningful |

---

For the table providing the net sales from continuing operations by core therapeutic area and established brands for 2025 and 2024, see "Item 18. Financial statements—Note 4. Revenues and geographic information."

For information about the approved indications for certain products described, see "Item 4. Information on the Company—Item 4.B Business overview— Products."

#### Cardiovascular, renal and metabolic
Net sales in the cardiovascular, renal and metabolic therapeutic area were USD 9.0 billion (+4%, +3% cc), with sales growth mainly driven by *Leqvio*.

*Entresto* (USD 7.7 billion, -1%, -2% cc) sales declined due to generic entry in the US in the third quarter of 2025. *Entresto* continued to grow ex-US, where the product is approved for heart failure globally as well as for hypertension in China and Japan. Novartis is in litigation with a generic manufacturer to protect its *Entresto* IP rights.

*Leqvio* (USD 1.2 billion, +59%, +57% cc) sales grew across all regions, achieving blockbuster status. Focus remains on increasing account and patient adoption and continuing medical education. Novartis obtained global rights to develop, manufacture and commercialize *Leqvio* under a license and collaboration agreement with Alnylam Pharmaceuticals.

*Vanrafia* (USD 13 million) received accelerated approval in the US and conditional approval in China in the second and fourth quarter of 2025, respectively, as the first and only selective endothelin A (ETA) receptor antagonist for proteinuria reduction in primary IgA nephropathy (IgAN).

#### Immunology
Net sales in the immunology therapeutic area reached USD 10.3 billion (+11%, +10% cc), with sales growth mainly driven by *Cosentyx* and *Ilaris*.

*Cosentyx* (USD 6.7 billion, +9%, +8% cc) sales grew across all regions, driven by continued demand from recent launches (including the hidradenitis suppurativa indication and the IV formulation in the US) and volume growth in core indications (psoriasis, psoriatic arthritis, ankylosing spondylitis and non-radiographic axial spondyloarthritis).

*Ilaris* (USD 1.9 billion, +25%, +24% cc) sales grew across all regions, led by the US, Europe and Japan, with continued momentum in the Periodic Fever Syndromes and Still's disease indications.

*Xolair* (USD 1.7 billion, +5%, +4% cc) sales grew driven by the chronic spontaneous urticaria (CSU) indication, mainly in emerging growth markets. A biosimilar was introduced in some European markets in the third quarter of 2025. Novartis co-promotes *Xolair* with Genentech in the US and shares a portion of revenue as operating income but does not record any US sales.

*Rhapsido* (USD 19 million) received FDA approval in Q3 2025 as the only oral, targeted BTK inhibitor for CSU and has shown strong uptake with appropriate use of a free drug program to help support patient access. *Rhapsido* was also approved in China in the fourth quarter of 2025.

#### Neuroscience
Net sales in the neuroscience therapeutic area were USD 6.0 billion (+26%, +25% cc), with sales growth mainly driven by *Kesimpta*.

*Kesimpta* (USD 4.4 billion, +37%, +36% cc) sales grew across all regions, driven by increased demand and strong access, as a high efficacy B-cell therapy with at-home self-administration for a broad population of RMS patients.

*Zolgensma* Group (USD 1.2 billion, +1%, 0% cc) sales were stable, as the IV formulation has reached a high penetration rate in the incident SMA population. *Itvisma*, the intrathecal formulation, was approved in both the US and UAE in the fourth quarter of 2025.

*Aimovig* (USD 0.3 billion, +7%, +3% cc) sales grew driven by increased demand for migraine prevention. Novartis commercializes *Aimovig* ex-US and ex-Japan, while Amgen retains all rights in the US and Japan.

#### Oncology
Net sales in the oncology therapeutic area were USD 16.8 billion (+18%, +17% cc), with sales growth mainly driven by *Kisqali*, *Pluvicto*, *Scemblix* and *Fabhalta*.

*Kisqali* (USD 4.8 billion, +58%, +57% cc) sales grew strongly across all regions, including +77% growth in the US, reflecting continued share gains in metastatic breast cancer (mBC), as well as leading NBRx share in early breast cancer (eBC). *Kisqali* performance reflects its consistent overall survival benefit across all Phase 3 mBC trials, its NCCN Category 1 Preferred status, and its highest ESMO clinical benefit ratings in mBC and eBC.

*Tafinlar* + *Mekinist* (USD 2.2 billion, +8%, +6% cc) sales grew across all regions, driven by demand in BRAF+ adjuvant melanoma, NSCLC and tumor agnostic indications.

*Jakavi* (USD 2.1 billion, +9%, +7% cc) sales grew across regions and indications. Incyte retains all rights to ruxolitinib (Jakafi®) in the US.

*Pluvicto* (USD 2.0 billion, +43%, +42% cc) showed strong demand growth in the US following the pre-taxane metastatic castration-resistant prostate cancer (mCRPC) approval in the first quarter of 2025. Access ex-US continued to expand, with the pre-taxane setting approved in Japan and China in the fourth quarter of 2025 and the post-taxane mCRPC setting now approved in 32 countries.

*Promacta*/*Revolade* (USD 1.6 billion, -26%, -27% cc) sales declined due to generic entry in the US in Q2 2025 and ex-US in the third quarter of 2025.

*Scemblix* (USD 1.3 billion, +87%, +85% cc) sales grew across all regions, demonstrating the continued high unmet need for treatment options with high efficacy and tolerability for adult CML patients. Launch momentum in the early line setting continues, with 61 markets having secured early-line approvals, including approval in the EU in the fourth quarter of 2025.

*Tasigna* (USD 1.1 billion, -34%, -34% cc) sales declined due to generic competition globally.

*Lutathera* (USD 0.8 billion, +13%, +12% cc) sales grew mainly in the US, Europe and Japan due to increased demand and earlier-line adoption (within indication) in the US and Japan. Novartis is in patent litigation with manufacturers having FDA applications referencing *Lutathera*.

*Fabhalta* (USD 0.5 billion, +291%, +287% cc) sales grew due to continued launch execution and market share gains in PNH as well as renal indications IgAN and C3G. The C3G indication received FDA approval in the first quarter of 2025.

*Piqray*/*Vijoice* (USD 0.4 billion, -15%, -15% cc) sales declined, driven by increased competition for *Piqray* across all markets.

#### Established Brands
The established brands had net sales of USD 12.5 billion (-7%, -7% cc).

*Sandostatin* Group (USD 1.2 billion, -5%, -5% cc) sales declined primarily due to erosion from generic competition.

*Exforge* Group (USD 0.7 billion, +3%, +4% cc) sales grew mainly in China.

*Lucentis* (USD 0.6 billion, -38%, -40% cc) sales declined mainly due to increased competition. Novartis only commercializes Lucentis in markets ex-US.

*Diovan* Group (USD 0.6 billion, +2%, +2% cc) sales grew mainly in China.

*Galvus* Group (USD 0.5 billion, -19%, -17% cc) sales declined mainly due to continued competition.

*Kymriah* (USD 0.4 billion, -14%, -15% cc) sales declined across most markets due to continued competition.

**Operating income from continuing operations**

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br>(USD millions unless indicated otherwise) | **<br>Year ended<br> Dec 31, 2025** | <br>Year ended<br> Dec 31, 2024 | <br> Change<br> in USD% | Change in<br> constant<br> currencies<br> %<sup>1</sup> |
| **Gross profit from continuing operations** | **42 975** | **38 895** | **10** | **10** |
| Selling, general and administration | -13 248 | -12 566 | -5 | -4 |
| Research and development | -11 200 | -10 022 | -12 | -9 |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Of which research and exploratory development* | *-4 290* | *-4 027* | *-7* | *-4* |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Of which confirmatory development* | *-6 910* | *-5 995* | *-15* | *-12* |
| Other income | 1 460 | 1 175 | 24 | 17 |
| Other expense | -2 343 | -2 938 | 20 | 24 |
| **Operating income from continuing operations** | **17 644** | **14 544** | **21** | **25** |
| Return on net sales (%) | 32.4 | 28.9 |  |  |
|  <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." |

---

Gross profit from continuing operations was USD 43.0 billion (+10%, +10% cc), mainly driven by higher net sales.

Selling, general and administration expenses were USD 13.2 billion (-5%, -4% cc), mainly driven by higher investments behind priority brands and launches.

Research and development expenses were USD 11.2 billion (-12%, -9% cc), driven by increases in confirmatory development (-15%, -12% cc) and research and exploratory development (-7%, -4% cc), mainly due to higher investments in recently acquired assets.

Other income was USD 1.5 billion (+24%, +17% cc), mainly driven by higher government grant income. Other expense was USD 2.3 billion (+20%, +24% cc), as higher legal related costs were more than offset by a goodwill impairment in the prior year.

Operating income from continuing operations was USD 17.6 billion (+21%, +25% cc), mainly driven by higher net sales and lower impairments, partly offset by higher investments behind priority brands and launches. Operating income margin from continuing operations was 32.4% of net sales, increasing 3.5 percentage points (4.4 percentage points cc).

**Non-IFRS measure Core operating income from continuing operations**<sup>1</sup>

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br>(USD millions unless indicated otherwise) | **<br>Year ended<br> Dec 31, 2025** | <br>Year ended<br> Dec 31, 2024 | <br> Change<br> in USD% | Change in<br> constant<br> currencies% |
| **Core gross profit from continuing operations** | **45 515** | **41 872** | **9** | **9** |
| Core selling, general and administration | -13 238 | -12 564 | -5 | -4 |
| Core research and development<sup>2</sup> | -10 295 | -9 302 | -11 | -8 |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Of which core research and exploratory development* | *-3 798* | *-3 370* | *-13* | *-10* |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Of which core confirmatory development* | *-6 497* | *-5 932* | *-10* | *-7* |
| Core other income | 667 | 273 | 144 | 121 |
| Core other expense | -760 | -785 | 3 | 8 |
| **Core operating income from continuing operations** | **21 889** | **19 494** | **12** | **14** |
| Core return on net sales (%) | 40.1 | 38.7 |  |  |
|  <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." |
|  <sup>2</sup> Core research and development expense exclude impairments, amortization and certain other items. | <sup>2</sup> Core research and development expense exclude impairments, amortization and certain other items. | <sup>2</sup> Core research and development expense exclude impairments, amortization and certain other items. | <sup>2</sup> Core research and development expense exclude impairments, amortization and certain other items. | <sup>2</sup> Core research and development expense exclude impairments, amortization and certain other items. |

---

The adjustments made to operating income to arrive at core operating income amounted to USD 4.2 billion (compared with USD 5.0 billion in the prior year). For more information, see "—Non-IFRS measures as defined by Novartis—2025 and 2024 reconciliation from IFRS Accounting Standards results to non-IFRS core results."

Core gross profit from continuing operations was USD 45.5 billion (+9%. +9% cc), mainly driven by higher net sales.

Core selling, general and administration expenses were USD 13.2 billion (-5%, -4% cc), mainly driven by higher investments behind priority brands and launches.

Core research and development expenses were USD 10.3 billion (-11%, -8% cc), driven by increases in core confirmatory development (-10%, -7% cc) and core research and exploratory development (-13%, -10% cc), mainly due to higher investments in recently acquired assets.

Core other income was USD 0.7 billion (+144%, +121% cc) mainly driven by higher government grant income. Core other expense was USD 0.8 billion (+3%, +8% cc).

Core operating income from continuing operations was USD 21.9 billion (+12%, +14% cc), mainly driven by higher net sales, partly offset by higher investments behind priority brands and launches. Core operating income margin from continuing operations was 40.1% of net sales, increasing 1.4 percentage points (2.1 percentage points cc).

**Non-operating income and expense** 

The term "non-operating income and expense" includes all income and expense items outside operating income from continuing operations. The following table provides an overview of non-operating income and expense from continuing operations:

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br>(USD millions unless indicated otherwise) | **<br>Year ended<br> Dec 31, 2025** | <br>Year ended<br> Dec 31, 2024 | <br> Change<br> in USD% | Change in<br> constant<br> currencies<br> %<sup>1</sup> |
| **Operating income from continuing operations** | **17 644** | **14 544** | **21** | **25** |
| Loss from associated companies | -12 | -38 | 68 | 70 |
| Interest expense | -1 144 | -1 006 | -14 | -14 |
| Other financial income and expense | -136 | 140 | nm | nm |
| **Income before taxes from continuing operations** | **16 352** | **13 640** | **20** | **22** |
| Income taxes | -2 385 | -1 701 | -40 | -43 |
| **Net income from continuing operations** | **13 967** | **11 939** | **17** | **19** |
| **Net income** | **13 967** | **11 939** | **17** | **19** |
| **Basic earnings per share from continuing operations (USD)** | 7.21 | 5.92 | **22** | **24** |
| **Basic earnings per share (USD)** | 7.21 | 5.92 | **22** | **24** |
|  <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." |
| nm = not meaningful  | nm = not meaningful  | nm = not meaningful  | nm = not meaningful  | nm = not meaningful  |

---

#### Interest expense and other financial income and expense
Interest expense amounted to USD 1.1 billion compared with USD 1.0 billion in the prior year.

Other financial income and expense amounted to an expense of USD 136 million compared with an income of USD 140 million in the prior year, mainly due to lower interest and other financial income, partially offset by lower monetary losses from hyperinflation accounting.

#### Income taxes
The tax rate was 14.6% compared with 12.5% in the prior year. The current-year tax rate was favorably impacted by changes in uncertain tax positions and the remeasurement of deferred tax balances following tax law changes, primarily in Switzerland and the US, partially offset by the impact of intercompany transactions, prior-year items and other items. The prior-year tax rate was favorably impacted by the effect of changes in uncertain tax positions. Excluding these impacts, the current-year tax rate would have been 15.0% compared with 15.0% in the prior year.

#### Net income
Net income was USD 14.0 billion (+17%, +19% cc), mainly driven by higher operating income.

#### Earnings per share
Basic earnings per share was USD 7.21 (+22%, +24% cc), benefiting from the lower weighted average number of shares outstanding.

**Non-IFRS measure Core non-operating income and expense**<sup>1</sup>

The following table provides an overview of the non-IFRS measure core non-operating income and expense from continuing operations:

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br>(USD millions unless indicated otherwise) | **<br>Year ended<br> Dec 31, 2025** | <br>Year ended<br> Dec 31, 2024 | <br> Change<br> in USD% | Change in<br> constant<br> currencies% |
| **Core operating income from continuing operations** | **21 889** | **19 494** | **12** | **14** |
| Core loss from associated companies | -12 | -12 | 0 | 1 |
| Core interest expense | -1 144 | -1 006 | -14 | -14 |
| Core other financial income and expense | 44 | 295 | -85 | -86 |
| **Core income before taxes from continuing operations** | **20 777** | **18 771** | **11** | **12** |
| Core income taxes | -3 366 | -3 016 | -12 | -13 |
| **Core net income from continuing operations** | **17 411** | **15 755** | **11** | **12** |
| **Core net income** | **17 411** | **15 755** | **11** | **12** |
| **Core basic EPS from continuing operations (USD)** | 8.98 | 7.81 | **15** | **17** |
| **Core basic EPS (USD)** | 8.98 | 7.81 | **15** | **17** |
|  <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." | <sup>1</sup> For an explanation of non-IFRS measures and reconciliation tables, see "—Non-IFRS measures as defined by Novartis." |

---

#### Core interest expense and other financial income and expense
Core interest expense amounted to USD 1.1 billion compared with USD 1.0 billion in the prior year.

Core other financial income and expense amounted to an income of USD 44 million compared with an income of USD 295 million in the prior year, mainly due to lower interest income.

#### Core income taxes
The core tax rate (core taxes as a percentage of core income before tax) was 16.2% compared with 16.1% in the prior year.

#### Core net income
Core net income was USD 17.4 billion (+11%, +12% cc), mainly due to higher core operating income.

#### Core earnings per share
Core basic earnings per share was USD 8.98 (+15%, +17% cc), benefiting from the lower weighted average number of shares outstanding.

**Factors affecting comparability of year-on-year results of operations**

**Significant transactions** 

The comparability of the year-on-year results of our operations for the total Company can be significantly affected by acquisitions and divestments. As part of our long-term strategy to focus Novartis as a leading innovative medicines company, we announced and/or completed several acquisitions and divestments during 2025 and 2024.

A detailed description of significant transactions in 2025 and 2024 can be found in "Item 18. Financial Statements—Note 2. Significant acquisitions of businesses and spin-off of Sandoz business."

**Internal control over financial reporting**

The Company's management has assessed the effectiveness of internal control over financial reporting. The Company's independent registered public accounting firm also issued an opinion on the effectiveness of internal control over financial reporting. Both the Company's management and its independent registered public accounting firm concluded that the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025. For more information, see "Item 15. Controls and Procedures."

**Approach to risk management**

See "Item 6. Directors, Senior Management and Employees—Item 6.C Board practices—Corporate governance—Information and control systems—Risk management" and "Item 18. Financial Statements—Note 28. Financial instruments – additional disclosures."

**Non-IFRS measures as defined by Novartis**

Novartis uses certain non-IFRS Accounting Standards metrics when measuring performance, especially when measuring current-year results against prior periods, including core results, constant currencies and free cash flow. These are referred to by Novartis as non-IFRS measures.

Despite the use of these measures by management in setting goals and measuring the Company's performance, these are non-IFRS measures that have no standardized meaning prescribed by IFRS Accounting Standards. As a result, such measures have limits in their usefulness to investors.

Because of their non-standardized definitions, the non-IFRS measures (unlike IFRS Accounting Standards measures) may not be comparable to the calculation of similar measures of other companies. These non-IFRS measures are presented solely to permit investors to more fully understand how the Company's management assesses underlying performance. These non-IFRS measures are not, and should not be viewed as, a substitute for IFRS Accounting Standards measures, and should be viewed in conjunction with the consolidated financial statements prepared in accordance with IFRS Accounting Standards.

As an internal measure of Company performance, these non-IFRS measures have limitations, and the Company's performance management process is not solely restricted to these metrics.

**Core results**

The Company's core results – including core operating income, core net income and core earnings per share – exclude fully the amortization and net impairment charges of intangible assets, excluding software, net gains and losses on fund investments and equity securities valued at fair value through profit and loss, impact of IAS Standards 29 "Financial reporting in Hyperinflationary Economies" to other financial income and expense, and certain acquisition- and divestment-related items. The following items that exceed a threshold of USD 25 million are also excluded: integration- and divestment-related income and expenses, divestment gains and losses, restructuring charges/releases and related items, legal-related items, impairments of property, plant and equipment, software, and financial assets, and income and expense items that management deems exceptional and that are or are expected to accumulate within the year to be over a USD 25 million threshold.

Novartis believes that investor understanding of the Company's performance is enhanced by disclosing core measures of performance, since core measures exclude items that can vary significantly from year to year, they enable better comparison of business performance across years. For this same reason, Novartis uses these core measures in addition to IFRS Accounting Standards measures and other measures as important factors in assessing the Company's performance.

The following are examples of how these core measures are used:

• In addition to monthly reports containing financial information prepared under IFRS Accounting Standards, senior management receives a monthly analysis incorporating these non-IFRS core measures.

• Annual budgets are prepared for both IFRS Accounting Standard measures and non-IFRS core measures.

As an internal measure of Company performance, the core results measures have limitations, and the Company's performance management process is not solely restricted to these metrics. A limitation of the core results measures is that they provide a view of the Company's operations without including all events during a period, such as the effects of an acquisition, divestment, or amortization/impairments of intangible assets, impairments to property, plant and equipment and restructurings and related items.

**Constant currencies**

Changes in the relative values of non-US currencies to the US dollar can affect the Company's financial results and financial position. To provide additional information that may be useful to investors, including changes in volume, price and generic competition impacts on net sales, we present information about changes in net sales and selected key figures, including operating income and net income, on a basis that excludes the effects of foreign currency fluctuations.

Constant currency calculations have the goal of eliminating two exchange rate effects so that an estimate can be made of underlying changes in the consolidated income statement excluding the impact of fluctuations in exchanges rates:

• The impact of translating the income statements of consolidated entities from their non-USD functional currencies to USD

• The impact of exchange rate movements on the major transactions of consolidated entities performed in currencies other than their functional currency.

We calculate constant currency change measures to present percentage changes by translating the current year's foreign currency sales and other income statement items into USD using the prior-year average exchange rates (excluding adjustments required under IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies), and then comparing these translated amounts to prior-year results in USD to derive a constant currency percentage change.

We use constant currency percentage change measures in evaluating the Company's performance, since they may assist us in evaluating our ongoing performance from year to year. These percentage change measures are considered alongside the corresponding USD percentage change measures that are not adjusted for changes in currency exchange rates.

**Free cash flow**

Novartis defines free cash flow as net cash flows from operating activities less purchases of property, plant and equipment. Management believes that this definition provides a performance measure that focuses on core operating activities, and also excludes items that can vary significantly from year to year, thereby enabling better comparison of business performance across years.

Free cash flow is a non-IFRS measure, which means it should not be interpreted as a measure determined under IFRS Accounting Standards. Free cash flow is not intended to be a substitute measure for net cash flows from operating activities as determined under IFRS Accounting Standards. Free cash flow is presented as additional information because management believes it is a useful supplemental indicator of the Company's ability to operate without reliance on additional borrowing or use of existing cash. Free cash flow is a measure of the net cash generated that is available for investment in strategic opportunities, returning to shareholders and for debt repayment.

**Additional information**

#### Growth rate calculation
For ease of understanding, Novartis uses a sign convention for its growth rates such that a reduction in operating expenses or losses compared with the prior year is shown as a positive growth.

#### Net debt
Novartis calculates net debt as current financial debts and derivative financial instruments plus non-current financial debts less cash and cash equivalents and marketable securities, time deposits and derivative financial instruments.

Net debt is presented as additional information because it sets forth how management monitors net debt or liquidity and management believes it is a useful supplemental indicator of the Company's ability to pay dividends, to meet financial commitments, and to invest in new strategic opportunities, including strengthening its balance sheet.

For the table that shows the Company's net debt, see "— Item 5.B Liquidity and capital resources — Company liquidity, financial debts and net debt."

#### Reconciliation from IFRS Accounting Standards results to non-IFRS measure core results
The following tables provide an overview of the reconciliation from IFRS Accounting Standards results to non-IFRS measure core results:

**2025 and 2024 reconciliation from IFRS Accounting Standards results to non-IFRS measure core results** 

---

| | | |
|:---|:---|:---|
| (USD millions unless indicated otherwise) | **2025** | 2024 |
| **IFRS Accounting Standards operating income from continuing operations** | **17 644** | **14 544** |
| **Amortization of intangible assets** | **3 197** | **3 174** |
| Impairments |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intangible assets | 549 | 1 401 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment related to the company-wide rationalization of manufacturing sites | &nbsp;&nbsp;&nbsp;&nbsp;2 | &nbsp;&nbsp;&nbsp;&nbsp;18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other property, plant and equipment | 1 | 9 |
| **Total impairment charges** | **552** | **1 428** |
| Acquisition or divestment of businesses and related items |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Income | -380 | -458 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Expense | 451 | 483 |
| **Total acquisition or divestment of businesses and related items, net** | **71** | **25** |
| Other items |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Divestment gains | -50 | -45 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial assets - fair value adjustments | -48 | 45 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restructuring and related items |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Income | -66 | -123 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Expense | 544 | 487 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Legal-related items |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Income | -280 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Expense | 441 | 89 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional income | -236 | -183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional expense | 120 | 53 |
| **Total other items** | **425** | **323** |
| **Total adjustments** | **4 245** | **4 950** |
| **Core operating income from continuing operations** | **21 889** | **19 494** |
| *as % of net sales* | 40.1% | 38.7% |
| Loss from associated companies | -12 | -38 |
| Core adjustments to loss from associated companies, net of tax |  | 26 |
| Interest expense | -1 144 | -1 006 |
| Other financial income and expense | -136 | 140 |
| Core adjustments to other financial income and expense | 180 | 155 |
| Income taxes, adjusted for core adjustment items (core income taxes) | -3 366 | -3 016 |
| **Core net income from continuing operations** | **17 411** | **15 755** |
| **Core net income** | **17 411** | **15 755** |
| **Core net income attributable to shareholders of Novartis AG** | **17 411** | **15 757** |
| Core net income attributable to non-controlling interests <sup>1</sup> | 0 | -2 |
| **Core basic EPS from continuing operations (USD) <sup>2</sup>** | 8.98 | 7.81 |
| **Core basic EPS (USD) <sup>2</sup>** | 8.98 | 7.81 |
|  <sup>1</sup> In 2025, the IFRS Accounting Standards results for net income attributable to non-controlling interests was USD -17 million. Core net income attributable to non-controlling interests was adjusted for USD 17 million related to impairment charges related to an intangible asset. | <sup>1</sup> In 2025, the IFRS Accounting Standards results for net income attributable to non-controlling interests was USD -17 million. Core net income attributable to non-controlling interests was adjusted for USD 17 million related to impairment charges related to an intangible asset. | <sup>1</sup> In 2025, the IFRS Accounting Standards results for net income attributable to non-controlling interests was USD -17 million. Core net income attributable to non-controlling interests was adjusted for USD 17 million related to impairment charges related to an intangible asset. |
|  <sup>2</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | <sup>2</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | <sup>2</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. |

---

**2025 and 2024 reconciliation from IFRS Accounting Standards results to non-IFRS measure core results** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| <br>2025 (USD millions unless indicated otherwise) | IFRS<br> Accounting<br> Standards<br> results | <br> Amortization <br> of intangible <br> assets<sup>1</sup> | <br>Impairments<sup>2</sup> | Acquisition or <br> divestment of <br> businesses and<br> related items<sup>3</sup> | <br>Other <br> items<sup>4</sup> | <br>Core results |
| **Gross profit from continuing operations** | **42 975** | **2 805** | **59** |  | **-324** | **45 515** |
| **Operating income from continuing operations** | **17 644** | **3 197** | **552** | **71** | **425** | **21 889** |
| **Income before taxes from continuing operations** | **16 352** | **3 197** | **552** | **71** | **605** | **20 777** |
| Income taxes <sup>5</sup> | -2 385 | -631 | -90 | -8 | -252 | -3 366 |
| **Net income from continuing operations** | **13 967** |  |  |  |  | **17 411** |
| **Net income** | **13 967** |  |  |  |  | **17 411** |
| *Attributable to:* |  |  |  |  |  |  |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Shareholders of Novartis AG* | *13 984* |  |  |  |  | *17 411* |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Non-controlling interests* | *-17* |  | *17* |  |  | *0* |
| **Basic EPS from continuing operations (USD) <sup>6</sup>** | 7.21 |  |  |  |  | 8.98 |
| **Basic EPS (USD) <sup>6</sup>** | 7.21 |  |  |  |  | 8.98 |
| **The following are adjustments to arrive at core gross profit from continuing operations** |  |  |  |  |  |  |
| Other revenues | 2 142 |  |  |  | -344 | 1 798 |
| Cost of goods sold | -13 699 | 2 805 | 59 |  | 20 | -10 815 |
| **The following are adjustments to arrive at core operating income from continuing operations** |  |  |  |  |  |  |
| Selling, general and administration | -13 248 |  |  |  | 10 | -13 238 |
| Research and development | -11 200 | 392 | 491 | 16 | 6 | -10 295 |
| Other income | 1 460 |  |  | -380 | -413 | 667 |
| Other expense | -2 343 |  | 2 | 435 | 1 146 | -760 |
| **The following are adjustments to arrive at core income before taxes from continuing operations** |  |  |  |  |  |  |
| Other financial income and expense | -136 |  |  |  | 180 | 44 |
|  <sup>1</sup> Amortization of intangible assets: cost of goods sold includes the amortization of currently marketed products intangible assets; research and development includes the amortization of scientific infrastructure and technologies intangible assets | <sup>1</sup> Amortization of intangible assets: cost of goods sold includes the amortization of currently marketed products intangible assets; research and development includes the amortization of scientific infrastructure and technologies intangible assets | <sup>1</sup> Amortization of intangible assets: cost of goods sold includes the amortization of currently marketed products intangible assets; research and development includes the amortization of scientific infrastructure and technologies intangible assets | <sup>1</sup> Amortization of intangible assets: cost of goods sold includes the amortization of currently marketed products intangible assets; research and development includes the amortization of scientific infrastructure and technologies intangible assets | <sup>1</sup> Amortization of intangible assets: cost of goods sold includes the amortization of currently marketed products intangible assets; research and development includes the amortization of scientific infrastructure and technologies intangible assets | <sup>1</sup> Amortization of intangible assets: cost of goods sold includes the amortization of currently marketed products intangible assets; research and development includes the amortization of scientific infrastructure and technologies intangible assets | <sup>1</sup> Amortization of intangible assets: cost of goods sold includes the amortization of currently marketed products intangible assets; research and development includes the amortization of scientific infrastructure and technologies intangible assets |
|  <sup>2</sup> Impairments: cost of goods sold, research and development and and net income attributable to non-controlling interests include net impairment charges related to intangible assets; other expense includes net impairment charges related to property, plant and equipment | <sup>2</sup> Impairments: cost of goods sold, research and development and and net income attributable to non-controlling interests include net impairment charges related to intangible assets; other expense includes net impairment charges related to property, plant and equipment | <sup>2</sup> Impairments: cost of goods sold, research and development and and net income attributable to non-controlling interests include net impairment charges related to intangible assets; other expense includes net impairment charges related to property, plant and equipment | <sup>2</sup> Impairments: cost of goods sold, research and development and and net income attributable to non-controlling interests include net impairment charges related to intangible assets; other expense includes net impairment charges related to property, plant and equipment | <sup>2</sup> Impairments: cost of goods sold, research and development and and net income attributable to non-controlling interests include net impairment charges related to intangible assets; other expense includes net impairment charges related to property, plant and equipment | <sup>2</sup> Impairments: cost of goods sold, research and development and and net income attributable to non-controlling interests include net impairment charges related to intangible assets; other expense includes net impairment charges related to property, plant and equipment | <sup>2</sup> Impairments: cost of goods sold, research and development and and net income attributable to non-controlling interests include net impairment charges related to intangible assets; other expense includes net impairment charges related to property, plant and equipment |
|  <sup>3</sup> Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution and adjustments to provisions | <sup>3</sup> Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution and adjustments to provisions | <sup>3</sup> Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution and adjustments to provisions | <sup>3</sup> Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution and adjustments to provisions | <sup>3</sup> Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution and adjustments to provisions | <sup>3</sup> Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution and adjustments to provisions | <sup>3</sup> Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution and adjustments to provisions |
|  <sup>4</sup> Other items: other revenues includes milestones income from an outlicensing agreement and a royalty settlement income; cost of goods sold includes fair value adjustments; cost of goods sold, selling, general and administration, other income and other expense include restructuring income and charges related to the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; research and development includes contingent consideration adjustments; other income and other expense include fair value adjustments on financial assets; other income also includes divestment gains, fair value adjustments on contingent consideration receivable and adjustments to provisions and other items; other expense includes legal related items, loss due to legal entities reorganization, write-down of assets within other non-current assets and other costs and items; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies and a fair value adjustment on a financial liability | <sup>4</sup> Other items: other revenues includes milestones income from an outlicensing agreement and a royalty settlement income; cost of goods sold includes fair value adjustments; cost of goods sold, selling, general and administration, other income and other expense include restructuring income and charges related to the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; research and development includes contingent consideration adjustments; other income and other expense include fair value adjustments on financial assets; other income also includes divestment gains, fair value adjustments on contingent consideration receivable and adjustments to provisions and other items; other expense includes legal related items, loss due to legal entities reorganization, write-down of assets within other non-current assets and other costs and items; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies and a fair value adjustment on a financial liability | <sup>4</sup> Other items: other revenues includes milestones income from an outlicensing agreement and a royalty settlement income; cost of goods sold includes fair value adjustments; cost of goods sold, selling, general and administration, other income and other expense include restructuring income and charges related to the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; research and development includes contingent consideration adjustments; other income and other expense include fair value adjustments on financial assets; other income also includes divestment gains, fair value adjustments on contingent consideration receivable and adjustments to provisions and other items; other expense includes legal related items, loss due to legal entities reorganization, write-down of assets within other non-current assets and other costs and items; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies and a fair value adjustment on a financial liability | <sup>4</sup> Other items: other revenues includes milestones income from an outlicensing agreement and a royalty settlement income; cost of goods sold includes fair value adjustments; cost of goods sold, selling, general and administration, other income and other expense include restructuring income and charges related to the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; research and development includes contingent consideration adjustments; other income and other expense include fair value adjustments on financial assets; other income also includes divestment gains, fair value adjustments on contingent consideration receivable and adjustments to provisions and other items; other expense includes legal related items, loss due to legal entities reorganization, write-down of assets within other non-current assets and other costs and items; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies and a fair value adjustment on a financial liability | <sup>4</sup> Other items: other revenues includes milestones income from an outlicensing agreement and a royalty settlement income; cost of goods sold includes fair value adjustments; cost of goods sold, selling, general and administration, other income and other expense include restructuring income and charges related to the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; research and development includes contingent consideration adjustments; other income and other expense include fair value adjustments on financial assets; other income also includes divestment gains, fair value adjustments on contingent consideration receivable and adjustments to provisions and other items; other expense includes legal related items, loss due to legal entities reorganization, write-down of assets within other non-current assets and other costs and items; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies and a fair value adjustment on a financial liability | <sup>4</sup> Other items: other revenues includes milestones income from an outlicensing agreement and a royalty settlement income; cost of goods sold includes fair value adjustments; cost of goods sold, selling, general and administration, other income and other expense include restructuring income and charges related to the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; research and development includes contingent consideration adjustments; other income and other expense include fair value adjustments on financial assets; other income also includes divestment gains, fair value adjustments on contingent consideration receivable and adjustments to provisions and other items; other expense includes legal related items, loss due to legal entities reorganization, write-down of assets within other non-current assets and other costs and items; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies and a fair value adjustment on a financial liability | <sup>4</sup> Other items: other revenues includes milestones income from an outlicensing agreement and a royalty settlement income; cost of goods sold includes fair value adjustments; cost of goods sold, selling, general and administration, other income and other expense include restructuring income and charges related to the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; research and development includes contingent consideration adjustments; other income and other expense include fair value adjustments on financial assets; other income also includes divestment gains, fair value adjustments on contingent consideration receivable and adjustments to provisions and other items; other expense includes legal related items, loss due to legal entities reorganization, write-down of assets within other non-current assets and other costs and items; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies and a fair value adjustment on a financial liability |
|  <sup>5</sup> Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include adjustments for the tax effects of intercompany transactions, including effects of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years and remeasurement effects on deferred tax balances following tax law changes. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 4.4 billion to arrive at the core results before tax amounts to USD 1.0 billion and the average tax rate on the total adjustments was 22.2%. | <sup>5</sup> Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include adjustments for the tax effects of intercompany transactions, including effects of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years and remeasurement effects on deferred tax balances following tax law changes. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 4.4 billion to arrive at the core results before tax amounts to USD 1.0 billion and the average tax rate on the total adjustments was 22.2%. | <sup>5</sup> Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include adjustments for the tax effects of intercompany transactions, including effects of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years and remeasurement effects on deferred tax balances following tax law changes. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 4.4 billion to arrive at the core results before tax amounts to USD 1.0 billion and the average tax rate on the total adjustments was 22.2%. | <sup>5</sup> Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include adjustments for the tax effects of intercompany transactions, including effects of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years and remeasurement effects on deferred tax balances following tax law changes. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 4.4 billion to arrive at the core results before tax amounts to USD 1.0 billion and the average tax rate on the total adjustments was 22.2%. | <sup>5</sup> Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include adjustments for the tax effects of intercompany transactions, including effects of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years and remeasurement effects on deferred tax balances following tax law changes. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 4.4 billion to arrive at the core results before tax amounts to USD 1.0 billion and the average tax rate on the total adjustments was 22.2%. | <sup>5</sup> Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include adjustments for the tax effects of intercompany transactions, including effects of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years and remeasurement effects on deferred tax balances following tax law changes. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 4.4 billion to arrive at the core results before tax amounts to USD 1.0 billion and the average tax rate on the total adjustments was 22.2%. | <sup>5</sup> Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include adjustments for the tax effects of intercompany transactions, including effects of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years and remeasurement effects on deferred tax balances following tax law changes. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 4.4 billion to arrive at the core results before tax amounts to USD 1.0 billion and the average tax rate on the total adjustments was 22.2%. |
|  <sup>6</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | <sup>6</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | <sup>6</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | <sup>6</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | <sup>6</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | <sup>6</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | <sup>6</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| <br>2024 (USD millions unless indicated otherwise) | IFRS<br> Accounting<br> Standards<br> results | <br> Amortization<br> of intangible<br> assets<sup>1</sup> | <br>Impairments<sup>2</sup> | Acquisition or <br> divestment of <br> businesses and<br> related items<sup>3</sup> | <br>Other <br> items<sup>4</sup> | <br>Core results |
| **Gross profit from continuing operations** | **38 895** | **2 965** | **-9** |  | **21** | **41 872** |
| **Operating income from continuing operations** | **14 544** | **3 174** | **1 428** | **25** | **323** | **19 494** |
| **Income before taxes from continuing operations** | **13 640** | **3 174** | **1 428** | **25** | **504** | **18 771** |
| Income taxes <sup>5</sup> | -1 701 | -592 | -74 | -8 | -641 | -3 016 |
| **Net income from continuing operations** | **11 939** |  |  |  |  | **15 755** |
| **Net income** | **11 939** |  |  |  |  | **15 755** |
| *Attributable to:* |  |  |  |  |  |  |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Shareholders of Novartis AG* | *11 941* |  |  |  |  | *15 757* |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Non-controlling interests* | *-2* |  |  |  |  | *-2* |
| **Basic EPS from continuing operations (USD) <sup>6</sup>** | 5.92 |  |  |  |  | 7.81 |
| **Basic EPS (USD) <sup>6</sup>** | 5.92 |  |  |  |  | 7.81 |
| **The following are adjustments to arrive at core gross profit from continuing operations** |  |  |  |  |  |  |
| Cost of goods sold | -12 827 | 2 965 | -9 |  | 21 | -9 850 |
| **The following are adjustments to arrive at core operating income from continuing operations** |  |  |  |  |  |  |
| Selling, general and administration | -12 566 |  |  |  | 2 | -12 564 |
| Research and development | -10 022 | 209 | 500 | 23 | -12 | -9 302 |
| Other income | 1 175 |  | -1 | -458 | -443 | 273 |
| Other expense | -2 938 |  | 938 | 460 | 755 | -785 |
| **The following are adjustments to arrive at core income before taxes from continuing operations** |  |  |  |  |  |  |
| Loss from associated companies | -38 |  |  |  | 26 | -12 |
| Other financial income and expense | 140 |  |  |  | 155 | 295 |
|  <sup>1</sup> Amortization of intangible assets: cost of goods sold includes the amortization of acquired rights to currently marketed products; research and development includes the amortization of acquired rights to scientific infrastructure and technologies | <sup>1</sup> Amortization of intangible assets: cost of goods sold includes the amortization of acquired rights to currently marketed products; research and development includes the amortization of acquired rights to scientific infrastructure and technologies | <sup>1</sup> Amortization of intangible assets: cost of goods sold includes the amortization of acquired rights to currently marketed products; research and development includes the amortization of acquired rights to scientific infrastructure and technologies | <sup>1</sup> Amortization of intangible assets: cost of goods sold includes the amortization of acquired rights to currently marketed products; research and development includes the amortization of acquired rights to scientific infrastructure and technologies | <sup>1</sup> Amortization of intangible assets: cost of goods sold includes the amortization of acquired rights to currently marketed products; research and development includes the amortization of acquired rights to scientific infrastructure and technologies | <sup>1</sup> Amortization of intangible assets: cost of goods sold includes the amortization of acquired rights to currently marketed products; research and development includes the amortization of acquired rights to scientific infrastructure and technologies | <sup>1</sup> Amortization of intangible assets: cost of goods sold includes the amortization of acquired rights to currently marketed products; research and development includes the amortization of acquired rights to scientific infrastructure and technologies |
|  <sup>2</sup> Impairments: cost of goods sold and research and development include net impairment charges related to intangible assets; other income and other expense include net impairment charges related to property, plant and equipment; other expense also includes a goodwill impairment | <sup>2</sup> Impairments: cost of goods sold and research and development include net impairment charges related to intangible assets; other income and other expense include net impairment charges related to property, plant and equipment; other expense also includes a goodwill impairment | <sup>2</sup> Impairments: cost of goods sold and research and development include net impairment charges related to intangible assets; other income and other expense include net impairment charges related to property, plant and equipment; other expense also includes a goodwill impairment | <sup>2</sup> Impairments: cost of goods sold and research and development include net impairment charges related to intangible assets; other income and other expense include net impairment charges related to property, plant and equipment; other expense also includes a goodwill impairment | <sup>2</sup> Impairments: cost of goods sold and research and development include net impairment charges related to intangible assets; other income and other expense include net impairment charges related to property, plant and equipment; other expense also includes a goodwill impairment | <sup>2</sup> Impairments: cost of goods sold and research and development include net impairment charges related to intangible assets; other income and other expense include net impairment charges related to property, plant and equipment; other expense also includes a goodwill impairment | <sup>2</sup> Impairments: cost of goods sold and research and development include net impairment charges related to intangible assets; other income and other expense include net impairment charges related to property, plant and equipment; other expense also includes a goodwill impairment |
|  <sup>3</sup> Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income includes divestment gains; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution, and adjustments to provisions | <sup>3</sup> Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income includes divestment gains; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution, and adjustments to provisions | <sup>3</sup> Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income includes divestment gains; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution, and adjustments to provisions | <sup>3</sup> Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income includes divestment gains; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution, and adjustments to provisions | <sup>3</sup> Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income includes divestment gains; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution, and adjustments to provisions | <sup>3</sup> Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income includes divestment gains; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution, and adjustments to provisions | <sup>3</sup> Acquisition or divestment of businesses and related items, including integration charges: research and development and other expense include integration cost charges; other income includes divestment gains; other income and other expense include transitional services fee income and expenses related to the Sandoz distribution, and adjustments to provisions |
|  <sup>4</sup> Other items: cost of goods sold, selling, general and administration, research and development, other income and other expense include restructuring income and charges related to the initiative to implement a new streamlined organizational model, the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; cost of goods sold and research and development also include contingent consideration adjustments; other income and other expense include adjustments to environmental provisions, fair value adjustments on financial assets, a fair value adjustment on a contingent receivable and other costs and items; other income also includes divestment gains; other expense includes legal related items and a curtailment adjustment; loss from associated companies includes a divestment adjustment related to the sale of an investment in associated companies; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies, currency devaluation losses, an adjustment related to the gain on sale of financial assets and interests on tax related items | <sup>4</sup> Other items: cost of goods sold, selling, general and administration, research and development, other income and other expense include restructuring income and charges related to the initiative to implement a new streamlined organizational model, the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; cost of goods sold and research and development also include contingent consideration adjustments; other income and other expense include adjustments to environmental provisions, fair value adjustments on financial assets, a fair value adjustment on a contingent receivable and other costs and items; other income also includes divestment gains; other expense includes legal related items and a curtailment adjustment; loss from associated companies includes a divestment adjustment related to the sale of an investment in associated companies; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies, currency devaluation losses, an adjustment related to the gain on sale of financial assets and interests on tax related items | <sup>4</sup> Other items: cost of goods sold, selling, general and administration, research and development, other income and other expense include restructuring income and charges related to the initiative to implement a new streamlined organizational model, the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; cost of goods sold and research and development also include contingent consideration adjustments; other income and other expense include adjustments to environmental provisions, fair value adjustments on financial assets, a fair value adjustment on a contingent receivable and other costs and items; other income also includes divestment gains; other expense includes legal related items and a curtailment adjustment; loss from associated companies includes a divestment adjustment related to the sale of an investment in associated companies; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies, currency devaluation losses, an adjustment related to the gain on sale of financial assets and interests on tax related items | <sup>4</sup> Other items: cost of goods sold, selling, general and administration, research and development, other income and other expense include restructuring income and charges related to the initiative to implement a new streamlined organizational model, the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; cost of goods sold and research and development also include contingent consideration adjustments; other income and other expense include adjustments to environmental provisions, fair value adjustments on financial assets, a fair value adjustment on a contingent receivable and other costs and items; other income also includes divestment gains; other expense includes legal related items and a curtailment adjustment; loss from associated companies includes a divestment adjustment related to the sale of an investment in associated companies; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies, currency devaluation losses, an adjustment related to the gain on sale of financial assets and interests on tax related items | <sup>4</sup> Other items: cost of goods sold, selling, general and administration, research and development, other income and other expense include restructuring income and charges related to the initiative to implement a new streamlined organizational model, the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; cost of goods sold and research and development also include contingent consideration adjustments; other income and other expense include adjustments to environmental provisions, fair value adjustments on financial assets, a fair value adjustment on a contingent receivable and other costs and items; other income also includes divestment gains; other expense includes legal related items and a curtailment adjustment; loss from associated companies includes a divestment adjustment related to the sale of an investment in associated companies; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies, currency devaluation losses, an adjustment related to the gain on sale of financial assets and interests on tax related items | <sup>4</sup> Other items: cost of goods sold, selling, general and administration, research and development, other income and other expense include restructuring income and charges related to the initiative to implement a new streamlined organizational model, the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; cost of goods sold and research and development also include contingent consideration adjustments; other income and other expense include adjustments to environmental provisions, fair value adjustments on financial assets, a fair value adjustment on a contingent receivable and other costs and items; other income also includes divestment gains; other expense includes legal related items and a curtailment adjustment; loss from associated companies includes a divestment adjustment related to the sale of an investment in associated companies; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies, currency devaluation losses, an adjustment related to the gain on sale of financial assets and interests on tax related items | <sup>4</sup> Other items: cost of goods sold, selling, general and administration, research and development, other income and other expense include restructuring income and charges related to the initiative to implement a new streamlined organizational model, the company-wide rationalization of manufacturing sites and other net restructuring charges and related items; cost of goods sold and research and development also include contingent consideration adjustments; other income and other expense include adjustments to environmental provisions, fair value adjustments on financial assets, a fair value adjustment on a contingent receivable and other costs and items; other income also includes divestment gains; other expense includes legal related items and a curtailment adjustment; loss from associated companies includes a divestment adjustment related to the sale of an investment in associated companies; other financial income and expense includes the impact of IAS Standards 29 "Financial Reporting in Hyperinflationary Economies" for subsidiaries operating in hyperinflationary economies, currency devaluation losses, an adjustment related to the gain on sale of financial assets and interests on tax related items |
|  <sup>5</sup> Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include the effect of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 5.1 billion to arrive at the core results before tax amounts to USD 1.3 billion and the average tax rate on the total adjustments was 25.6%. | <sup>5</sup> Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include the effect of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 5.1 billion to arrive at the core results before tax amounts to USD 1.3 billion and the average tax rate on the total adjustments was 25.6%. | <sup>5</sup> Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include the effect of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 5.1 billion to arrive at the core results before tax amounts to USD 1.3 billion and the average tax rate on the total adjustments was 25.6%. | <sup>5</sup> Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include the effect of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 5.1 billion to arrive at the core results before tax amounts to USD 1.3 billion and the average tax rate on the total adjustments was 25.6%. | <sup>5</sup> Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include the effect of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 5.1 billion to arrive at the core results before tax amounts to USD 1.3 billion and the average tax rate on the total adjustments was 25.6%. | <sup>5</sup> Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include the effect of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 5.1 billion to arrive at the core results before tax amounts to USD 1.3 billion and the average tax rate on the total adjustments was 25.6%. | <sup>5</sup> Taxes on the adjustments between IFRS Accounting Standards and core results, for each item included in the adjustment, take into account the tax rate that will finally be applicable to the item based on the jurisdiction where the adjustment will finally have a tax impact. Generally, this results in amortization and impairment of intangible assets other than goodwill and acquisition-related restructuring and integration items having a full tax impact. There is usually a tax impact on other items, although not always for items arising from legal settlements in certain jurisdictions. Other items include the effect of adjusting deferred income taxes resulting from temporary differences on intercompany inventory transactions arising from the elimination of unrealized profit on consolidation when the seller and buyer subsidiaries are subject to different tax rates. Other items also include adjustments related to uncertain tax positions from prior years. Due to these factors and the differing effective tax rates in the various jurisdictions, the tax on the total adjustments of USD 5.1 billion to arrive at the core results before tax amounts to USD 1.3 billion and the average tax rate on the total adjustments was 25.6%. |
|  <sup>6</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | <sup>6</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | <sup>6</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | <sup>6</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | <sup>6</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | <sup>6</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. | <sup>6</sup> Core earnings per share (EPS) is calculated by dividing core net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding used in the basic EPS calculation in the reporting period. |

---

### 5.B Liquidity and capital resources
The following table summarizes the Company's cash flows and net debt:

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| Net cash flows from operating activities | 19 144 | 17 619 |
| Net cash flows used in investing activities | -4 877 | -7 513 |
| Net cash flows used in financing activities | -14 867 | -11 742 |
| Effect of exchange rate changes on cash and cash equivalents | 576 | -298 |
| **Net change in cash and cash equivalents** | **-24** | **-1 934** |
| Change in marketable securities, time deposits and derivative financial instruments | -1 843 | 963 |
| Change in current and non-current financial debts and derivative financial instruments | -3 939 | -4 987 |
| **Change in net debt** | **-5 806** | **-5 958** |
| Net debt at January 1 | -16 141 | -10 183 |
| **Net debt at December 31** | **-21 947** | **-16 141** |

---

**Cash flow**

Net cash flows from operating activities amounted to USD 19.1 billion, compared with USD 17.6 billion in the prior year. This increase was mainly driven by higher net income, adjusted for non-cash items and other adjustments, partly offset by unfavorable changes in working capital, higher payments out of provisions and higher income taxes paid.

Net cash outflows used in investing activities amounted to USD 4.9 billion, compared with USD 7.5 billion in the prior year.

In the current year, net cash outflows used in investing activities were mainly driven by USD 2.8 billion for acquisitions applying the optional concentration test, net of USD 0.3 billion in cash acquired, including the acquisition of Anthos Therapeutics, Inc. for USD 0.8 billion, the acquisition of Regulus Therapeutics Inc. for USD 0.8 billion and the acquisition of Tourmaline Bio, Inc. for USD 1.2 billion. In addition, the cash outflows for purchases of intangible assets amounted to USD 2.4 billion and purchases of property, plant and equipment amounted to USD 1.5 billion. These cash outflows were partly offset by the net proceeds of USD 1.8 billion from marketable securities and time deposits, mainly due to the maturity of time deposits.

In the prior year, net cash outflows used in investing activities were mainly driven by USD 3.9 billion net cash outflows for acquisitions and divestments of businesses, including the acquisition of Kate Therapeutics for USD 0.4 billion, the acquisition of Mariana Oncology for USD 1.0 billion (USD 1.04 billion, net of cash acquired of USD 80 million) and the acquisition of MorphoSys for USD 2.3 billion (USD 2.5 billion, net of cash acquired of USD 0.2 billion). In addition, the cash outflows for purchases of intangible assets amounted to USD 2.4 billion, purchases of property, plant and equipment amounted to USD 1.4 billion, purchases of financial assets amounted to USD 0.2 billion and net investments in time deposits, marketable securities and commodities amounted to USD 0.7 billion. These cash outflows were partly offset by cash inflows of USD 1.0 billion from the sale of financial assets (including USD 0.7 billion proceeds from the sale of Sandoz Group AG shares by consolidated foundations) and by USD 0.2 billion from the sale of intangible assets and property, plant and equipment.

Net cash outflows used in financing activities amounted to USD 14.9 billion, compared with USD 11.7 billion in the prior year.

In the current year, net cash outflows used in financing activities were mainly driven by USD 9.2 billion for net treasury share transactions, USD 7.8 billion for the annual dividend payment and USD 3.35 billion for the repayment of three bonds at maturity, comprising two US dollar denominated bonds with notional amounts of USD 1.75 billion and USD 1.0 billion, respectively, and one Swiss franc denominated bond with a notional amount of CHF 0.5 billion, equivalent to USD 0.6 billion. These cash outflows were partly offset by cash inflows of USD 6.0 billion, from the issuance of US dollar denominated bonds with a notional amount of USD 6.0 billion.

In the prior year, net cash outflows used in financing activities were mainly driven by USD 8.3 billion for net treasury share transactions, USD 7.6 billion for the annual dividend payment, USD 2.15 billion for the repayment of a US dollar bond at maturity and USD 0.3 billion for the repayments of other current financial debts. Cash outflows for MorphoSys shares purchased outside the Offer amounted to USD 0.3 billion, which included a USD 0.2 billion payment to the former remaining minority shareholders in connection with the "squeeze-out." These cash outflows were partly offset by cash inflows from the issuance of bonds totaling USD 6.1 billion (Swiss franc denominated bonds with a notional amount of CHF 2.2 billion, equivalent to USD 2.5 billion, and US dollar denominated bonds with a notional amount of USD 3.7 billion). The change in current financial debts resulted in net cash inflows of USD 1.0 billion.

**Non-IFRS measure Free cash flow**

Free cash flow is a non-IFRS measure, see "—Item 5.A Operating results—Non-IFRS measures as defined by Novartis—Free cash flow" for further information.

The following table is a reconciliation of the three major categories of the IFRS Accounting Standards consolidated statements of cash flows to the non-IFRS measure free cash flow:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
| <br>(USD millions) | **IFRS <br> Accounting <br> Standards<br> cash flow** | **<br>Adjustments** | **<br>Free <br> cash flow** | **IFRS <br> Accounting <br> Standards<br> cash flow** | **<br>Adjustments** | **<br>Free <br> cash flow** |
| Net cash flows from operating activities | 19 144 |  | 19 144 | 17 619 |  | 17 619 |
| Net cash flows used in investing activities <sup>1</sup> | -4 877 | 3 329 | -1 548 | -7 513 | 6 147 | -1 366 |
| Net cash flows used in financing activities <sup>2</sup> | -14 867 | 14 867 | 0 | -11 742 | 11 742 | 0 |
| **Non-IFRS measure free cash flow** |  |  | **17 596** |  |  | **16 253** |
|  <sup>1</sup> With the exception of purchases of property, plant and equipment, all net cash flows used in investing activities are excluded from the free cash flow. | <sup>1</sup> With the exception of purchases of property, plant and equipment, all net cash flows used in investing activities are excluded from the free cash flow. | <sup>1</sup> With the exception of purchases of property, plant and equipment, all net cash flows used in investing activities are excluded from the free cash flow. | <sup>1</sup> With the exception of purchases of property, plant and equipment, all net cash flows used in investing activities are excluded from the free cash flow. | <sup>1</sup> With the exception of purchases of property, plant and equipment, all net cash flows used in investing activities are excluded from the free cash flow. | <sup>1</sup> With the exception of purchases of property, plant and equipment, all net cash flows used in investing activities are excluded from the free cash flow. | <sup>1</sup> With the exception of purchases of property, plant and equipment, all net cash flows used in investing activities are excluded from the free cash flow. |
|  <sup>2</sup> Net cash flows used in financing activities are excluded from the free cash flow. | <sup>2</sup> Net cash flows used in financing activities are excluded from the free cash flow. | <sup>2</sup> Net cash flows used in financing activities are excluded from the free cash flow. | <sup>2</sup> Net cash flows used in financing activities are excluded from the free cash flow. | <sup>2</sup> Net cash flows used in financing activities are excluded from the free cash flow. | <sup>2</sup> Net cash flows used in financing activities are excluded from the free cash flow. | <sup>2</sup> Net cash flows used in financing activities are excluded from the free cash flow. |

---

The following table is a summary of the non-IFRS measure free cash flow:

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| **Operating income from continuing operations** | **17 644** | **14 544** |
| Reversal of non-cash items and other adjustments |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation, amortization and impairments | 5 275 | 6 114 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in provisions and other non-current liabilities | 1 083 | 696 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | 1 194 | 817 |
| **Operating income from continuing operations adjusted for non-cash items** | **25 196** | **22 171** |
| Dividends received from associated companies and others | 1 | 1 |
| Interest received and other financial receipts | 576 | 489 |
| Interest paid and other financial payments | -1 007 | -971 |
| Income taxes paid | -2 562 | -2 258 |
| Payments out of provisions and other net cash movements in non-current liabilities | -1 483 | -1 107 |
| Changes in inventories and trade receivables less trade payables | -1 363 | -1 261 |
| Changes in other operating cash flow items | -214 | 555 |
| **Net cash flows from operating activities from continuing operations** | **19 144** | **17 619** |
| **Net cash flows from operating activities** | **19 144** | **17 619** |
| Purchases of property, plant and equipment | -1 548 | -1 366 |
| **Non-IFRS measure free cash flow** | **17 596** | **16 253** |

---

Free cash flow amounted to USD 17.6 billion (+8%), compared with USD 16.3 billion in the prior year, driven by higher net cash flows from operating activities.

**Condensed consolidated balance sheets** 

---

| | | |
|:---|:---|:---|
| (USD millions) | **Dec 31, 2025** | Dec 31, 2024 |
| **Assets** |  |  |
| **Non-current assets** |  |  |
| Property, plant and equipment | 10 782 | 9 458 |
| Right-of-use assets | 1 570 | 1 415 |
| Goodwill | 25 567 | 24 756 |
| Intangible assets other than goodwill | 29 411 | 26 915 |
| Investments in associated companies | 98 | 119 |
| Deferred tax assets | 5 438 | 4 359 |
| Financial assets | 2 348 | 2 015 |
| Other non-current assets | 5 275 | 3 505 |
| **Total non-current assets** | **80 489** | **72 542** |
| **Current assets** |  |  |
| Inventories | 6 269 | 5 723 |
| Trade receivables | 8 937 | 7 423 |
| Income tax receivables | 205 | 133 |
| Marketable securities, time deposits and derivative financial instruments | 155 | 1 998 |
| Cash and cash equivalents | 11 435 | 11 459 |
| Other current assets | 3 459 | 2 968 |
| **Total current assets** | **30 460** | **29 704** |
| **Total assets** | **110 949** | **102 246** |
| **Equity and liabilities** |  |  |
| **Total equity** | **46 549** | **44 126** |
| **Liabilities** |  |  |
| **Non-current liabilities** |  |  |
| Financial debts | 27 935 | 21 366 |
| Lease liabilities | 1 657 | 1 568 |
| Deferred tax liabilities | 3 397 | 2 419 |
| Provisions and other non-current liabilities | 4 133 | 4 075 |
| **Total non-current liabilities** | **37 122** | **29 428** |
| **Current liabilities** |  |  |
| Trade payables | 4 456 | 4 572 |
| Financial debts and derivative financial instruments | 5 602 | 8 232 |
| Lease liabilities | 263 | 235 |
| Current income tax liabilities | 1 969 | 1 599 |
| Provisions and other current liabilities | 14 988 | 14 054 |
| **Total current liabilities** | **27 278** | **28 692** |
| **Total liabilities** | **64 400** | **58 120** |
| **Total equity and liabilities** | **110 949** | **102 246** |

---

#### Assets
Total non-current assets of USD 80.5 billion increased by USD 7.9 billion compared with December 31, 2024.

Intangible assets other than goodwill increased by USD 2.5 billion, mainly due to acquisitions applying the optional concentration test (Anthos Therapeutics, Inc., Regulus Therapeutics Inc., Tourmaline Bio, Inc. and a private clinical-stage biotech company), additions, and currency translation adjustments, partially offset by amortization and impairment charges.

Goodwill increased by USD 0.8 billion, due to currency translation adjustments.

Property, plant and equipment increased by USD 1.3 billion, mainly due to additions and currency translation adjustments, partially offset by depreciation.

Other non-current assets increased by USD 1.8 billion, mainly due to an increase in prepaid post-employment benefit plans. This increase was driven by an increase in the fair value of plan assets, a higher discount rate applied in calculating actuarial defined benefit obligations, and currency translation adjustments.

Deferred tax assets increased by USD 1.1 billion, mainly due to higher deferred tax assets on inventories.

Financial assets increased by USD 0.3 billion. Right-of-use assets and investments in associated companies were broadly in line with December 31, 2024.

Total current assets of USD 30.5 billion increased by USD 0.8 billion compared with December 31, 2024.

Cash and cash equivalents were broadly in line with December 2024, as cash inflows from operating activities of USD 19.1 billion, net proceeds from changes in

financial debts of USD 2.7 billion and from marketable securities and time deposits of USD 1.8 billion, mainly due to the maturity of time deposits, were offset by cash outflows of USD 9.2 billion for net purchases of treasury shares, USD 7.8 billion for the annual dividend payment, USD 3.7 billion for net purchases of property, plant and equipment and intangible assets, USD 2.8 billion for the acquisitions applying the optional concentration test, as well as other net cash outflows from investing and financing activities, and currency effects of USD 0.1 billion.

Marketable securities, time deposits and derivative financial instruments decreased by USD 1.8 billion, mainly due to the maturity of time deposits.

Trade receivables increased by USD 1.5 billion, mainly due to the increase in net sales.

Inventories increased by USD 0.5 billion. Other current assets increased by USD 0.5 billion, mainly due to higher prepaid expenses and other current assets. Income tax receivables were broadly in line with December 31, 2024.

We consider our provisions for doubtful trade receivables to be adequate. We particularly monitor the level of trade receivables in countries deemed to have an elevated credit risk. We consider macroeconomic environment, historical experience, country and political risks, in addition to other relevant information when assessing risk. These risk factors are monitored regularly to determine any adjustments to risk classification. The majority of the past due trade receivables from elevated credit risk countries are due from local governments or from government-funded entities. Deteriorating credit and economic conditions as well as other factors in these elevated credit risk countries have resulted in, and may continue to result in an increase in the average time that it takes to collect these trade receivables and may require the Company to re-evaluate the expected credit loss amount of these trade receivables in future periods. As at December 31, 2025, amounts past due for more than one year were not significant in elevated credit risk countries.

For a table showing an overview of the aging analysis of total trade receivables and the total amount of the provision for doubtful trade receivables as at December 31, 2025, and 2024, see "Item 18. Financial Statements—Note 15. Trade receivables."

There is also a risk that certain countries could devalue their currency. Currency exposures are described in more detail in "Effects of currency fluctuations."

#### Liabilities
Total non-current liabilities of USD 37.1 billion increased by USD 7.7 billion compared with December 31, 2024.

Non-current financial debts increased by USD 6.6 billion, mainly due to the issuance of US dollar denominated bonds with a notional amount of USD 6.0 billion and currency translation adjustments of USD 1.1 billion, partly offset by the reclassification of a EUR denominated bond with a notional amount of EUR 0.6 billion maturing in 2026 from non-current to current financial debts.

Deferred tax liabilities increased by USD 1.0 billion, mainly due to higher deferred tax liabilities on other assets, provisions and accruals.

Provisions and other non-current liabilities, and non-current lease liabilities were broadly in line with December 31, 2024.

Total current liabilities of USD 27.3 billion decreased by USD 1.4 billion compared with December 31, 2024.

Current financial debts and derivative financial instruments decreased by USD 2.6 billion, mainly due to the repayment at maturity of two US dollar denominated bonds with a notional amount of USD 2.8 billion and a Swiss franc denominated bond with a notional amount of CHF 0.5 billion. This was partially offset by the reclassification of a EUR denominated bond with a notional amount of EUR 0.6 billion maturing in 2026 from non-current to current financial debts.

Provisions and other current liabilities increased by USD 0.9 billion, mainly driven by the increase in provisions for deductions from revenue.

Current income tax liabilities increased by USD 0.4 billion. Trade payables and current lease liabilities were broadly in line with December 31, 2024.

In our most significant tax jurisdictions, Switzerland and the United States, tax assessments have been agreed by the tax authorities up to 2020 in Switzerland and up to 2016 in the United States.

Novartis believes that its total provisions are adequate based upon currently available information. However, given the inherent difficulties in estimating these liabilities, Novartis may incur additional costs beyond the amounts provided. Management believes that such additional amounts, if any, would not be material to the Company's financial condition but could be material to the results of operations or cash flows in a given period.

#### Equity
The Company's equity increased by USD 2.4 billion to USD 46.5 billion compared with December 31, 2024. This increase was mainly driven by net income of USD 14.0 billion, a favorable impact from currency translation differences of USD 3.0 billion, actuarial gains from defined benefit plans of USD 1.2 billion, and a favorable impact from equity-based compensation plans of USD 1.2 billion. These were partially offset by annual dividends of USD 7.8 billion paid to Novartis AG shareholders and the purchase of treasury shares of USD 9.1 billion.

**Summary of equity movements attributable to Novartis AG shareholders**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Number of outstanding shares (in millions) | Number of outstanding shares (in millions) | Equity attributable to Novartis AG shareholders | Equity attributable to Novartis AG shareholders |
|  | **<br> 2025** | <br> 2024 | **2025<br> USD millions** | 2024<br> USD millions |
| **Balance at beginning of year** | **1 975.1** | **2 044.0** | **44 046** | **46 667** |
| Shares acquired to be canceled | -77.6 | -77.5 | -8 947 | -8 316 |
| Other share purchases | -1.7 | -1.2 | -175 | -134 |
| Equity-based compensation plans and employee transactions | 12.3 | 9.7 | 1 157 | 1 060 |
| Taxes on treasury share transactions |  |  | -113 | -68 |
| Dividends |  |  | -7 818 | -7 624 |
| Net income of the year attributable to shareholders of Novartis AG |  |  | 13 984 | 11 941 |
| Other comprehensive income attributable to shareholders of Novartis AG |  |  | 3 985 | 592 |
| Changes in non-controlling interests |  |  | -89 | -226 |
| Other movements | 0.1 | 0.1 | 100 | 154 |
| **Balance at end of year** | **1 908.2** | **1 975.1** | **46 130** | **44 046** |

---

In 2025, Novartis repurchased a total of 77.6 million shares for USD 8.9 billion on the SIX Swiss Exchange second trading line. These repurchases included 49.1 million shares (USD 5.4 billion) under the USD 15 billion share buyback (announced in July 2023 and completed in July 2025) and 17.8 million shares (USD 2.3 billion) under the new up-to USD 10 billion share buyback announced in July 2025. In addition, 10.7 million shares (USD 1.3 billion) were repurchased to mitigate full-year dilution related to the equity-based compensation plans of employees. Furthermore, 1.7 million shares (equity value of USD 0.2 billion) were repurchased from employees. In the same period, 12.4 million shares (equity value of USD 1.2 billion) were delivered to employees related to equity-based compensation plans. Consequently, the total number of shares outstanding decreased by 66.9 million versus December 31, 2024. These treasury share transactions resulted in an equity decrease of USD 8.0 billion and a net cash outflow of USD 9.2 billion.

In 2024, Novartis repurchased a total of 77.5 million shares for USD 8.3 billion on the SIX Swiss Exchange second trading line. These purchases included 68.8 million shares (USD 7.3 billion) under the up-to USD 15 billion share buyback announced in July 2023 (with up to USD 5.4 billion still to be executed). In addition, 8.7 million shares (USD 1.0 billion) were repurchased to mitigate the impact of share deliveries under the equity-based compensation plans for employees. Furthermore, 1.2 million shares (equity value of USD 0.1 billion) were repurchased from employees. In the same period, 9.8 million shares (equity value of USD 1.1 billion) were delivered as a result of share deliveries related to employee equity-based compensation plans. Consequently, the total number of shares outstanding decreased by 68.9 million versus December 31, 2023. These treasury share transactions resulted in an equity decrease of USD 7.4 billion and a net cash outflow of USD 8.3 billion.

#### Treasury shares
As at December 31, 2025, our holding of treasury shares amounted to 204.3 million shares, or approximately 10% of the total number of issued shares. Approximately 75.4 million treasury shares were held in entities that restrict their availability for use.

As at December 31, 2024, our holding of treasury shares amounted to 214.9 million shares, or approximately 10% of the total number of issued shares. Approximately 86.0 million treasury shares were held in entities that restrict their availability for use.

**Effects of currency fluctuations**

We transact our business in many currencies other than the US dollar, our reporting currency.

The following table provides an overview of net sales and operating expenses from continuing operations based on IFRS Accounting Standards values, for the most important currencies to the Company:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | 2024 <sup>1</sup> | 2024 <sup>1</sup> |
| <br>Currency | <br> Net sales% | Operating<br> expenses<br> %<sup>2</sup> | <br> Net sales% | Operating<br> expenses<br> %<sup>2</sup> |
| US dollar (USD) | 45 | 42 | 44 | 39 |
| Euro (EUR) | 23 | 22 | 23 | 23 |
| Swiss franc (CHF) | 1 | 17 | 1 | 18 |
| Chinese yuan (CNY) | 8 | 5 | 8 | 5 |
| Japanese yen (JPY) | 4 | 2 | 4 | 2 |
| Canadian dollar (CAD) | 2 | 1 | 2 | 1 |
| British pound (GBP) | 2 | 2 | 2 | 2 |
| Russian ruble (RUB) | 1 | 1 | 1 | 0 |
| Brazilian real (BRL) | 2 | 1 | 2 | 1 |
| Other currencies | 12 | 7 | 13 | 9 |
|  <sup>1</sup> In 2025, the Australian dollar (AUD) was no longer designated as one of the most import currencies to the Company. In 2024, the AUD net sales and operating expenses have been reclassified to Other currencies to conform with 2025 presentation. | <sup>1</sup> In 2025, the Australian dollar (AUD) was no longer designated as one of the most import currencies to the Company. In 2024, the AUD net sales and operating expenses have been reclassified to Other currencies to conform with 2025 presentation. | <sup>1</sup> In 2025, the Australian dollar (AUD) was no longer designated as one of the most import currencies to the Company. In 2024, the AUD net sales and operating expenses have been reclassified to Other currencies to conform with 2025 presentation. | <sup>1</sup> In 2025, the Australian dollar (AUD) was no longer designated as one of the most import currencies to the Company. In 2024, the AUD net sales and operating expenses have been reclassified to Other currencies to conform with 2025 presentation. | <sup>1</sup> In 2025, the Australian dollar (AUD) was no longer designated as one of the most import currencies to the Company. In 2024, the AUD net sales and operating expenses have been reclassified to Other currencies to conform with 2025 presentation. |
|  <sup>2</sup> Operating expenses include cost of goods sold; selling, general and administration; research and development; other income and other expense. | <sup>2</sup> Operating expenses include cost of goods sold; selling, general and administration; research and development; other income and other expense. | <sup>2</sup> Operating expenses include cost of goods sold; selling, general and administration; research and development; other income and other expense. | <sup>2</sup> Operating expenses include cost of goods sold; selling, general and administration; research and development; other income and other expense. | <sup>2</sup> Operating expenses include cost of goods sold; selling, general and administration; research and development; other income and other expense. |

---

We prepare our consolidated financial statements in US dollars. As a result, fluctuations in the exchange rates between the US dollar and other currencies can have a significant effect on both the Company's results of operations as well as the reported value of our assets, liabilities and cash flows. This in turn may significantly affect reported earnings (both positively and negatively) and the comparability of period-to-period results of operations.

For purposes of our consolidated balance sheets, we translate assets and liabilities denominated in other currencies into US dollars at the prevailing market exchange rates as of the relevant balance sheet date. For purposes of the Company's consolidated income and cash flow statements, revenue, expense and cash flow items in local currencies are translated into US dollars at average exchange rates prevailing during the relevant period. As a result, even if the amounts or values of these items remain unchanged in the respective local currency, changes in exchange rates have an impact on the amounts or values of these items in our consolidated financial statements.

Because our expenditure in Swiss francs is significantly higher than our revenue in Swiss francs, volatility in the value of the Swiss franc can have a significant impact on the reported value of our earnings, assets and liabilities, and the timing and extent of such volatility can be difficult to predict.

The Company manages its global currency exposure by engaging in hedging transactions where management deems appropriate, after taking into account the natural hedging afforded by our global business activity. In 2025 and 2024, we entered into various contracts that change in value with movements in foreign exchange rates, to preserve the value of assets, commitments and expected transactions. We use forward contracts and foreign currency options to hedge. For more information on how these transactions affect our consolidated financial statements and on how foreign exchange rate exposure is managed, see "Item 18. Financial Statements—Note 1. Accounting policies," "Item 18. Financial Statements—Note 5. Interest expense and other financial income and expense," "Item 18. Financial Statements—Note 15. Trade receivables," "Item 18. Financial Statements—Note 27. Commitments and contingent liabilities" and "Item 18. Financial Statements—Note 28. Financial instruments – additional disclosures."

The following table sets forth the foreign exchange rates of the US dollar against key currencies used for foreign currency translation when preparing the Company's consolidated financial statements:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Average for year | Average for year | Average for year | Year-end | Year-end | Year-end |
| USD per unit | **2025** | 2024 | Change in % | **2025** | 2024 | Change in % |
| Brazilian real (BRL) | 0.179 | 0.186 | -4 | 0.183 | 0.162 | 13 |
| Canadian dollar (CAD) | 0.715 | 0.730 | -2 | 0.730 | 0.696 | 5 |
| Swiss franc (CHF) | 1.205 | 1.136 | 6 | 1.261 | 1.107 | 14 |
| Chinese yuan (CNY) | 0.139 | 0.139 | 0 | 0.143 | 0.137 | 4 |
| Euro (EUR) | 1.129 | 1.082 | 4 | 1.174 | 1.041 | 13 |
| British pound (GBP) | 1.318 | 1.278 | 3 | 1.346 | 1.256 | 7 |
| Japanese yen (JPY (100)) | 0.669 | 0.661 | 1 | 0.639 | 0.640 | 0 |
| Russian ruble (RUB (100)) | 1.200 | 1.080 | 11 | 1.255 | 0.889 | 41 |

---

**Currency impact on key figures**

The following table provides a summary of the currency impact on key Company figures due to their conversion into US dollars, the Company's reporting currency:

---

| | | | |
|:---|:---|:---|:---|
|  | <br> Change in<br> USD %<br> 2025 | Change in<br> constant<br> currencies %<br> 2025 | Percentage<br> point currency<br> impact<br> 2025 |
| Net sales from continuing operations | 8 | 8 | 0 |
| Operating income from continuing operations | 21 | 25 | -4 |
| Net income from continuing operations | 17 | 19 | -2 |
| Basic earnings per share (USD) from continuing operations | 22 | 24 | -2 |
| Core operating income from continuing operations | 12 | 14 | -2 |
| Core net income from continuing operations | 11 | 12 | -1 |
| Core basic earnings per share (USD) from continuing operations | 15 | 17 | -2 |

---

For additional information on the constant currency calculation ("cc"), see "—Item 5.A Operating results—Non-IFRS measures as defined by Novartis—Constant currencies."

For additional information on the effects of currency fluctuations, see "Item 18. Financial Statements—Note 28. Financial instruments – additional disclosures."

**Company liquidity, financial debts and net debt**

The following table shows Company liquidity, financial debts and net debt:

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| Non-current financial debts | -27 935 | -21 366 |
| Current financial debts and derivative financial instruments | -5 602 | -8 232 |
| **Total financial debts** | **-33 537** | **-29 598** |
| Less liquidity |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | 11 435 | 11 459 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Marketable securities, time deposits and derivative financial instruments | &nbsp;&nbsp;&nbsp;&nbsp;155 | &nbsp;&nbsp;&nbsp;&nbsp;1 998 |
| **Total liquidity** | **11 590** | **13 457** |
| **Net debt at December 31** | **-21 947** | **-16 141** |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |

---

The Company's net debt as at December 31, 2025, increased to USD 21.9 billion, compared with USD 16.1 billion as at December 31, 2024.

Total financial debts amounted to USD 33.5 billion as at December 31, 2025, compared with USD 29.6 billion as at December 31, 2024. Non-current financial debts increased by USD 6.6 billion, mainly due to the issuance of US dollar denominated bonds with a notional amount of USD 6.0 billion and currency translation adjustments of USD 1.1 billion, partly offset by the reclassification of a EUR denominated bond with a notional amount of EUR 0.6 billion maturing in 2026 from non-current to current financial debts.

Current financial debts and derivative financial instruments decreased by USD 2.6 billion, mainly due to the repayment at maturity of two US dollar denominated bonds with a notional amount of USD 2.8 billion and a Swiss franc denominated bond with a notional amount of CHF 0.5 billion. This was partially offset by the reclassification of a EUR denominated bond with a notional amount of EUR 0.6 billion maturing in 2026 from non-current to current financial debts.

Novartis has a US commercial paper program under which it can issue up to USD 9.0 billion in the aggregate of unsecured commercial paper notes. Novartis also has a Japanese commercial paper program under which it can issue up to JPY 150 billion (approximately USD 1.0 billion) of unsecured commercial paper notes. Commercial paper notes totaling USD 4.0 billion under these two programs were outstanding as at December 31, 2025 (2024: USD 4.1 billion).

Novartis further has a committed credit facility of USD 6.0 billion. This credit facility is intended to be used as a backstop for the US commercial paper program. This facility matures in May 2029, and was undrawn as at December 31, 2025.

Total liquidity decreased to USD 11.6 billion compared with USD 13.5 billion as at December 31, 2024.

As of year-end 2025, Moody's Ratings rated the Company Aa3 for long-term maturities and P-1 for short-term maturities and S&P Global Ratings rated the Company AA- for long-term maturities and A-1+ for short-term maturities.

**Liquidity and financial debts by currency** 

The following table provides a breakdown of liquidity and financial debts by currency as at December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **<br> Liquidity<br> in % 2025<sup>1</sup>** | <br> Liquidity<br> in % 2024<sup>1</sup> | **Financial<br> debts in %<br> 2025<sup>2</sup>** | Financial<br> debts in %<br> 2024<sup>2</sup> |
| USD | 57 | 59 | 66 | 65 |
| CHF | 5 | 7 | 12 | 13 |
| EUR | 30 | 30 | 18 | 18 |
| JPY |  |  | 2 | 2 |
| Other | 8 | 4 | 2 | 2 |
|  | **100** | **100** | **100** | **100** |
|  <sup>1</sup> Liquidity includes cash and cash equivalents and marketable securities, including debt securities and time deposits. | <sup>1</sup> Liquidity includes cash and cash equivalents and marketable securities, including debt securities and time deposits. | <sup>1</sup> Liquidity includes cash and cash equivalents and marketable securities, including debt securities and time deposits. | <sup>1</sup> Liquidity includes cash and cash equivalents and marketable securities, including debt securities and time deposits. | <sup>1</sup> Liquidity includes cash and cash equivalents and marketable securities, including debt securities and time deposits. |
|  <sup>2</sup> Financial debts includes non-current and current financial debts. | <sup>2</sup> Financial debts includes non-current and current financial debts. | <sup>2</sup> Financial debts includes non-current and current financial debts. | <sup>2</sup> Financial debts includes non-current and current financial debts. | <sup>2</sup> Financial debts includes non-current and current financial debts. |

---

**Bonds** 

In February 2025, a 5-year US dollar denominated bond of USD 1.0 billion with a coupon of 1.75% was repaid at maturity.

In May 2025, a 10-year Swiss franc denominated bond of CHF 500 million with a coupon of 0.25% was repaid at maturity.

In November 2025, seven US dollar denominated bonds totaling USD 6.0 billion were issued: a 3-year floating rate note of USD 800 million with a quarterly-reset coupon based on compounded USD Secured Overnight Financing Rate (SOFR) plus 0.52%, a 3-year bond of USD 700 million with a coupon of 3.90%, a 5-year bond of USD 1.75 billion with a coupon of 4.10%, a 7-year bond of USD 925 million with a coupon of 4.30%, a 10-year bond of USD 925 million with a coupon of 4.60%, a 20-year bond of USD 350 million with a coupon of 5.20% and a 30-year bond of USD 550 million with a coupon of 5.30%.

In November 2025, a 10-year US dollar denominated bond of USD 1.75 billion with a coupon of 3.00% was repaid at maturity.

In May 2024, a 10-year US dollar denominated bond of USD 2.15 billion with a coupon of 3.40% was repaid at maturity.

In June 2024, five Swiss franc denominated bonds totaling CHF 2.2 billion were issued: a 3-year bond of CHF 650 million with a coupon of 1.60%, a 7-year bond of CHF 435 million with a coupon of 1.65%, a 10-year bond of CHF 645 million with a coupon of 1.75%, a 16-year bond of CHF 280 million with a coupon of 1.85% and a 25-year bond of CHF 190 million with a coupon of 1.85%.

In September 2024, four US dollar denominated bonds totaling USD 3.70 billion were issued: a 5-year bond of USD 1.00 billion with a coupon of 3.80%, a 7-year bond of USD 0.85 billion with a coupon of 4.00%, a 10-year bond of USD 1.10 billion with a coupon of 4.20% and a 30-year bond of USD 0.75 billion with a coupon of 4.70%.

**Liquidity/short-term funding**

The Company's liquidity amounted to USD 11.6 billion as at December 31, 2025, compared with USD 13.5 billion as at December 31, 2024. Total non-current and current ﬁnancial debts, including derivatives, amounted to USD 33.5 billion as at December 31, 2025, compared with USD 29.6 billion as at December 31, 2024.

The debt/equity ratio increased to 0.72:1 as at December 31, 2025, compared with 0.67:1 as at December 31, 2024. The net debt increased to USD 21.9 billion as at December 31, 2025, compared with USD 16.1 billion as at December 31, 2024.

We continuously track our liquidity position and asset/liability profile. This involves modeling cash flow maturity profiles based on both historical experiences and contractual expectations to project our liquidity requirements. We seek to preserve prudent liquidity and funding capabilities. We are confident that we have sufficient liquidity to support our normal business activities for the foreseeable future.

Certain countries have legal or economic restrictions on the ability of subsidiaries to transfer funds to the Company in the form of cash dividends, loans or advances, but these restrictions do not have an impact on the ability of the Company to meet its cash obligations.

We are not aware of any significant demands to change the level of liquidity needed to support our normal business activities. We make use of various borrowing facilities provided by several financial institutions. We also successfully issued various bonds in 2025 and previous years and raised funds through our commercial paper programs.

The maturity schedule of our net debt can be found in "Item 18. Financial Statements—Note 28. Financial instruments—Additional disclosures—Nature and extent of risks arising from financial instruments—Liquidity risk."

**Material contractual obligations and commitments**

The Company's material contractual obligations and commitments, entered into from time to time, consist of the following:

• Non-current financial debts, including current portion (see "Item 18. Financial Statements—Note 19. Non-current financial debts"). For the table showing the maturity schedule of our current and non-current financial debts, see "Item 18. Financial Statements—Note 28. Financial instruments—additional disclosures—Nature and extent of risks arising from financial instruments— Liquidity risk";

• Leases on assets used in operations entered into in the ordinary course of business (see "Item 18. Financial Statements— Note 10. Right-of-use assets and lease liabilities");

• Long-term research and development agreements with various third parties related to intangible assets. The Company has also entered into acquisition agreements related to intangible assets with third parties that were accounted for as assets separately acquired by electing to apply the optional concentration test. These agreements may provide for potential milestone payments by Novartis, which are dependent on successful achievement of specified clinical development, regulatory approval, or sales milestones, or other conditions specified in the agreements (see "Item 18. Financial Statements—Note 27. Commitments and contingent liabilities—Research and development commitments");

• Commitments related to the acquisition of businesses and interests in intellectual property focused on key disease areas and indications that the Company expects to be growth drivers in the future (see "Item 18. Financial Statements—Note 27. Commitments and contingent Liabilities—Other commitments"). In addition, certain business combination arrangements include contingent payments, which the shareholders of the acquired company are eligible to receive upon the achievement of specified milestones. For the table showing the maturity schedule of contingent

consideration liabilities, see "Item 18. Financial Statements—Note 28. Financial instruments—additional disclosures—Nature and extent of risks arising from financial instruments—Liquidity risk";

• Unfunded independent pension and other post-employment benefit plans (see "Item 18. Financial Statements – Note 24. Post-employment benefits for employees"); and

• Property, plant and equipment purchase commitments in the ordinary course of business (see "Item 18. Financial Statements—Note 9. Property, plant and equipment").

The Company intends to fund contractual obligations and commitments related to leases, long-term research and development agreements, business combinations, acquisition agreements related to intangible assets accounted for as assets separately acquired by electing to apply the optional concentration test, property, plant and equipment, and unfunded independent pension and other post-employment benefit plans with available cash and short- and long-term borrowings.

### 5.C Research and development, patents and licenses
Our research and development spending from continuing operations totaled USD 11.2 billion and USD 10.0 billion (non-IFRS measure core research and development from continuing operations USD 10.3 billion and USD 9.3 billion) for the years 2025 and 2024, respectively.

Novartis has numerous products in various stages of development. For further information on these products in development, see "Item 4. Information on the Company—Item 4.B Business overview."

As described in the risk factors section and elsewhere in this Annual Report, our drug development efforts are subject to the risks and uncertainties inherent in any new drug development program. Due to the risks and uncertainties involved in progressing through preclinical development and clinical trials, and the time and cost involved in obtaining regulatory approvals, among other factors, we cannot reasonably estimate the timing, completion dates and costs, or range of costs, of our drug development programs, or of the development of any particular development compound (see "Item 3. Key Information—Item 3.D Risk factors"). In addition, for a description of the research and development process for the development of new drugs and our other products, and the regulatory process for their approval, see "Item 4. Information on the Company—Item 4.B Business overview."

### 5.D Trend information
See "—Item 5.A Operating results", "—Item 5.B Liquidity and capital resources" and "Item 4. Information on the Company—Item 4.B Business overview" for trend information.

### 5.E Critical accounting estimates
Not applicable.

## Item 6. Directors, Senior Management and Employees

### 6.A Directors and senior management
The information set forth under "Item 6. Directors, Senior Management and Employees—Item 6.C Board practices—Corporate governance—Board of Directors" and "Item 6. Directors, Senior Management and Employees—Item 6.C Board practices—Corporate governance—Executive Committee" is incorporated by reference.

### 6.B Compensation
**Dear shareholder,** 

On behalf of the Compensation Committee of Novartis, I am pleased to present our 2025 Compensation Report.

#### Our compensation philosophy
The compensation of the members of the Executive Committee of Novartis (ECN) is built on a strong pay-for-performance philosophy. A significant proportion of total compensation is variable, with payouts directly tied to the achievement of short- and long-term financial and strategic objectives. These are delivered through the Annual Incentive and the Long-Term Performance Plan (LTPP), with performance metrics in each case designed to drive sustainable value creation for shareholders. The Compensation Committee closely oversees the application of this compensation system to ensure that outcomes are tightly linked to the Company's evolution and strategic priorities.

#### 2025 company performance
Novartis delivered strong commercial and operational performance in 2025, reflecting our ability to adapt and thrive in a rapidly evolving external environment.

Net sales from continuing operations grew year-on-year by 8% in constant currencies (cc), while core operating income grew by 14% (cc), and free cash flow increased by USD 1.3 billion. Sales growth was mainly driven by continued strong performance from *Kisqali, Kesimpta, Pluvicto, Scemblix* and *Cosentyx*. The outcomes under both the Annual Incentive and LTPP were directly influenced by these achievements.

Innovation lies at the heart of the Novartis mission and is fundamental to the value we deliver to society. It is strongly embedded within the Annual Incentive strategic targets and comprises 25% of the LTPP assessment criteria. In 2025, our innovation highlights included the approval of *Rhapsido* in the US and China as the first oral BTKi for chronic spontaneous urticaria in adults. Furthermore, *Pluvicto* gained US, Japan and China approval for earlier use before chemotherapy in PSMA-positive metastatic castration-resistant prostate cancer patients, *Coartem* Baby was cleared by Swissmedic as the first malaria treatment for newborns, and *Itvisma* was approved in the US as the first gene replacement therapy for spinal muscular atrophy in patients two years and older.

#### 2025 realized compensation
As a result of the Company's performance in 2025, total realized compensation for the CEO amounted to CHF 24 871 860, of which 90% was made up of variable components. This included an Annual Incentive at 180% of target and a 2023-2025 LTPP at 188% of target.

In the 2025 Annual Incentive, outcomes relating to sales, core operating income and free cash flow were met or above target. In addition, considerable progress was made toward our strategic objectives as assessed through the CEO's balanced scorecard. These outcomes reflect our commitment to sustained growth, innovation, operational excellence, and strong ESG foundations. For more information, see "—2025 CEO Annual Incentive balanced scorecard."

The LTPP continues to represent the largest portion of total ECN realized compensation. Under the 2023-2025 LTPP cycle, outcomes relating to third-party sales CAGR (compound annual growth rate) and core operating income CAGR (both in cc) both significantly exceeded the level required for a maximum payout. Over the three-year performance cycle, growth brands such as *Entresto, Kisqali and Kesimpta* delivered sales well above expectations. The Novartis share price over the same period increased by 64% (in USD), underscoring the value delivered to shareholders, leading to a maximum payout for the total shareholder return (TSR) metric. These and advances in innovation drove strong performance, resulting in a payout for the 2023-2025 LTPP at 188% of target, as mentioned above. For more information, see "—2023-2025 LTPP cycle performance outcomes."

The Board of Directors concluded that the results under both the Annual Incentive and LTPP fairly reflect the company's performance and the shareholder experience.

The performance outcomes described above contributed to the aggregated total realized compensation for the other ECN members of CHF 88 737 650.

#### 2025 realized compensation versus previous cycles
The total 2025 realized compensation for the CEO increased by 30% compared with 2024, primarily driven by higher LTPP vesting. The 2023-2025 LTPP cycle was one of our strongest performing cycles, reflecting outperformance against ambitious targets. This was further supported by our share price performance, and year-on-year dividend increases, which resulted in a TSR of 84% over the performance cycle (Novartis three-year TSR in USD (%), using a three-month average), and ranking us No. 2 out of our 15 global healthcare peer companies (including Novartis).

The following chart illustrates the strong alignment between pay and performance, with the 2023-2025 cycle delivering the highest shareholder returns of the past five cycles.

#### Historic LTPP payout versus TSR
![WSGE_DP_Graph_ceo_chart2](comp_0034.gif)

For further details on the realized compensation, including a comparison with 2024 realized compensation, see "—CEO and Executive Committee 2025 realized compensation."

#### 2026 Executive Committee compensation system changes
Novartis operates in a highly competitive and global talent marketplace. The ability to attract, retain and incentivize high caliber executives is critical to delivering our ambitious strategic plan and creating long-term, sustainable value for our shareholders. In recognition of this, the Board of Directors remains attentive to the evolving debate around global pay competitiveness, particularly the challenges faced by global companies headquartered in Europe.

In this context, the Compensation Committee continues to review global pay practices, considering the perspectives of our investors and proxy advisors to ensure our approach is competitive, while remaining aligned with stakeholder expectations. As part of this ongoing review, the Compensation Committee and the Board of Directors decided to make the following changes to the compensation system, effective January 1, 2026:

• Global healthcare peer group: The global healthcare peer group reflects the global talent markets from which we recruit, and the specialist expertise required within the ECN. Following a review of this group – which we have used since 2018 – we will remove Biogen and add Takeda, a more relevant comparator across key metrics. This change improves the peer group's geographical balance and reflects the global talent markets in which Novartis operates. The revised peer group will be used to benchmark ECN compensation and to assess relative TSR performance for future LTPP awards.

• Relative TSR payout schedule: Starting with the 2026-2028 LTPP cycle, we will adopt a formulaic percentile-based TSR payout structure. This adjustment of the current structure simplifies the payout schedule and brings it in line with market practice both among peer companies and European companies more broadly.

• Annual Incentive system: We will align the ECN Annual Incentive with the rest of the organization in a simplified, multiplicative format. This approach, which now applies across the entire company, strengthens performance alignment and rewards achievement of ambitious financial and operational goals. It also allows for more meaningful differentiation, both upwards and downwards, based on financial and individual strategic outcomes. The financial metrics within the Annual Incentive remain unchanged, as do the individual strategic objectives. The Annual Incentive will continue to be capped at 200% and will be underpinned by stretched targets, reflecting our commitment to driving exceptional performance.

These changes were also discussed with our shareholders and proxy advisors during the 2025 governance roadshow, and we are grateful for their feedback and support. For more information about these changes, see "—2026 Executive Committee compensation system changes."

#### AGM 2026-2027 Board fee changes
As part of its annual process, the Compensation Committee conducted a review of Board fees, in line with our Board compensation philosophy. The last material adjustment to Board fees was made in 2018. The review considered fees at comparable SMI (Swiss Market Index) companies and concluded that (i) Board retainer fees will remain unchanged and (ii) targeted adjustments will be made to fees for Board committee chairs and members. These adjustments reflect expanded responsibilities and the increased scope and complexity of committee work. For more information, see "—Board compensation philosophy and fee structure."

#### 2026 Annual General Meeting (AGM)
At the 2026 AGM, as in prior years, shareholders will be asked to vote on:

• The maximum aggregate compensation for the Board of Directors from the 2026 AGM to the 2027 AGM, which remains broadly in line with the prior term.

• The maximum aggregate compensation for the Executive Committee for the financial year 2027, which remains the same as in the previous year.

• This 2025 Compensation Report (advisory vote), which follows the same structure as in the previous year.

We trust that this Report, together with our 2026 Say-on-Pay brochure, provides the information necessary for you to vote in favor of the above.

Looking ahead, the Compensation Committee will continue to exercise sound judgment in all its decisions, taking market context and evolving business realities into account. At the same time, we will maintain a disciplined approach to target-setting to ensure alignment with our long-term strategic priorities and sustained value creation. As always, we welcome your feedback. We would like to thank investors for their input this year, which was invaluable in driving improvements in our compensation systems and practices.

![WSGE_DP_Sign_CompChair](comp_0028.gif)

**Simon Moroney, D.Phil.**

Chair of the Compensation Committee

## Executive Committee and Board 2025 compensation at a glance
**CEO and Executive Committee total realized compensation**

The 2025 total realized compensation for the CEO and Executive Committee members was CHF 113 609 510. For more information, see "—2025 CEO Annual Incentive balanced scorecard", " —2023-2025 LTPP cycle performance outcomes" and " —CEO and Executive Committee 2025 realized compensation."

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 2025 base salary | 2025 pension benefits | 2025 Annual Incentive | 2023 - 2025 LTPP cycle | Other 2025 compensation |  |
|  | **<br> Cash (amount)** | **<br> Amount** | **<br> Cash & Equity** | **Equity (value <br> at vesting date)** | **<br> Amount** | **Total 2025 realized <br> compensation** |
| Vasant Narasimhan (CEO)<br> CHF | 1 897 771 | 181 332 | 5 137 468 | 17 296 846 | 358 442 | 24 871 860 |
| Aggregate realized compensation of the other 10 Executive Committee members, including the member who stepped down during the financial year 2025<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CHF | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8 703 034 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1 879 884 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14 697 608 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;52 894 280 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10 562 845 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;88 737 650 |
| **Total**<br> **CHF** | **10 600 804** | **2 061 216** | **19 835 076** | **70 191 127** | **10 921 287** | **113 609 510** |

---

**CEO pay for performance**

![WSGE_DP_Graph_ataglance_ceopfp](comp_0031.gif)

2025 Annual Incentive% of target200%150%100%50%0%MaximumPayout: 180% of targetTarget2023-2025 Long-Term Performance Plan cycle% of target200%150%100%50%0%MaximumTargetPayout: 188% of targetThird-party sales CAGR (200% of target)Core operating income CAGR (200% of target)Innovation (150% of target)Relative TSR (200% of target)

**Board compensation** 

The total actual compensation earned by Board members in the financial year 2025 is presented in the table below. For more information, see "—Board member total compensation earned for the financial year 2025."

---

| | |
|:---|:---|
| <br>in CHF | 2025<br> total compensation |
| Board Chair (Giovanni Caforio) | 2 938 795 |
| Other members of the Board (including former Board Chair) | 5 193 452 |
| **Total** | **8 132 247** |

---

## CEO compensation and performance
**2025 fixed pay and benefits**

**Annual base salary**

The CEO 2025 base salary was CHF 1 902 765 (1.6% salary increase effective as of March 1, 2025, in line with ordinary salary increases received by other Swiss employees).

**Pension and other benefits**

The CEO is a member of the Novartis Swiss pension funds, which provide company contributions on the base salary and Annual Incentive up to the legal cap of CHF 907 200. No supplementary pension plans or savings plans are provided. The CEO's employer pension contributions represent 9.5% of the base salary.

**2025 CEO Annual Incentive balanced scorecard** 

This section presents the balanced scorecard for the CEO. Financial performance is measured in constant currencies (cc) to reflect operational performance that can be influenced. Performance outcomes for compensation purposes may differ from reported numbers in accordance with our compensation adjustments policy.

![WSGE_DP_Graph_ecncycompensationsystem_ceoscorecard_b](comp_0029.gif)

TargetMeasureWeight (%)Target Performance1achievementFinancial performance (cc)60AboveNet sales (USD million)245341953 691MetCore operating income (USD million)182100422 092AboveFree cash flow as a % of net sales1833.1%34.2%Above1Performance outcomes for compensation purposes are measured in cc and may differ from reported numbers in accordance with our compensation adjustments policy to consider items not known at the time of target setting e.g. Merger & Acquisition (M&A) / Business Development & Licensing (BD&L) deal costs and an unplanned increase in US inventory to mitigate potential trade related disruptions.

The Board reviewed the core adjustments made on operating income (as indicated in Item 5. Operating and Financial Review and Prospects - 5.A Operating results - Non-IFRS measures as defined by Novartis - Reconciliation from IFRS Accounting Standards results to non-IFRS measure core result) to arrive at the performance outcomes in the table above.

#### 2025 CEO Annual Incentive balanced scorecard (continued)
At the start of the performance cycle, the Board sets the CEO-specific targets against each of the four strategic objectives listed below. The table below provides a summary of those targets that most heavily impact overall performance and their respective achievement.

![WSGE_DP_Graph_ecncycompensationsystem_ceoscorecard_b_2](comp_0030.gif)

TargetMeasureWeight (%) / PerformanceachievementStrategic objectives40 Significantly aboveMaintain growth momentum and ensure successful launches (10%)•Sales performance for growth drivers, which include Cosentyx, Kisqali, Kesimpta, Zolgensma, Leqvio and Lutathera reached 101% of the 2025 target in cc, with Kisqali notably outperforming in the US.•Recent launches, including Pluvicto, Scemblix, Fabhalta, Vanrafia and Rhapsido, were above expectations and delivered 114% of the 2025 sales target in cc.•Successfully executed planned investments on pre-launches with a strong focus on Rhapsido(remibrutinib) and preparing for the future launch of ianalumab.•Effectively navigated a rapidly evolving external policy landscape, including reaching an agreement with the US Administration on drug pricing, and progressed investments in US R&D and manufacturing.AboveDeliver pipeline and drive R&D productivity (10%)•18 (vs. target of 10) key approvals secured including approvals of Rhapsido CSU (remibrutinib) in the US and China; Itvisma in the US; Pluvicto pre-taxane in the US, Japan and China; Scemblix 1L in the EU, Japan and China; Fabhalta C3G in the US, EU, China and Japan; FabhaltaIgAN in China; KisqalieBC in China; VanrafiaIgAN in the US and China; and Coartem Baby in Switzerland.•13 (vs. target of 7) regulatory filings submitted: Rhapsido (remibrutinib) for CSU in the US, EU, China and Japan, and CIndU in the US; Scemblix 1L in the EU; Leqvio monotherapy in China; PluvictomHSPC in the US, China and Japan; and Itvisma IT in the US, EU and Japan.•17 (vs. target of 6) compounds transitioned into late-stage clinical development.•10 (vs. target of 7) new molecular entity, first-in-human, first patient first visits and 31 (vs. target of 24) entries in the research pipeline.•17 complementary BD&L/M&A deals signed, including multiple late-stage clinical programs highlighted by the proposed acquisition of Avidity Biosciences (closing expected in H1 2026), and the acquisitions of Anthos Therapeutics and Tourmaline Bio.Significantly aboveExecute on operational excellence & productivity (10%)•Delivered a core margin of 40.1%, achieving our 2027 external guidance two years ahead of plan underscoring both the strength of our business performance and our disciplined focus on cost management and productivity.•Delivered significantly above the Technical Operations productivity target (USD +0.3bn vs. target), and global customer service levels were ahead of plan.•Launched Lean Digital Core, our transformation program to future-proof the processes and technologies to enable core business capabilities in Germany, UK, Netherlands and US.•Continued to advance AI-enabled R&D and commercial priority programs including drug discovery partnerships with Isomorphic labs, Generate Bio, Profound Therapeutics, and Relation Therapeutics.Significantly aboveStrengthen foundations (ESG / Human Capital) (10%)•Recognized externally for our ESG achievements, reflected in our leading performance in key ESG ratings, including Double A List status for CDP Climate Change and Water Security (fourth consecutive year), and an upgrade by MSCI to AAA, their highest rating.•Delivered on the patient reach targets for strategic innovative medicines and flagship programs in LMICs(low- and middle-income countries). Additionally, all new medicines launched had a global access strategy in place.•Increased investment to advance R&D for malaria and neglected tropical diseases. Cumulatively from 20212025, we invested a total of USD 500m, twice as much as our original target of USD 250m.•Launched Coartem Baby in Ghana, the first malaria treatment designed for newborns and infants weighing 25kg. KALUMA also delivered a positive Phase 3 readout as a next-generation malaria treatment, representing the first major innovation in malaria therapy since 1999.•Achieved significant reductions in environmental impact: Scope 1 and 2 GHG emissions reduced by 45% and Scope 3 by 17% (vs. 2022 baseline). Water consumption and waste decreased by 59% (vs. 2016 baseline) and 18% (vs. 2022 baseline), respectively.Significantly aboveTotal100Overall assessment and payout for CEOSignificantly above

Novartis had a strong year in 2025, meeting or exceeding targets for Net Sales, Core Operating Income, and Free Cash Flow. *Kisqali* and the launch portfolio outperformed their respective 2025 target in cc by 9% and 14%. Pipeline progress surpassed goals with 18 approvals, 13 regulatory filings, and 17 molecules moving to late-stage development. BD&L/M&A activity was robust, completing 17 deals including major acquisitions. Overall, productivity savings, strong performance and a strengthened pipeline resulted in an improved 2025-2030 sales growth outlook. The market rewarded strong performance with the Novartis 2025 share price up 41.4% and TSR of 46.5% since the beginning of the year, in USD at spot rates. In view of these achievements, the Board of Directors decided on an Annual Incentive payout for the CEO amounting to **CHF 5 137 468**, which is **180%** of target, within the range of 0-200%.

**2023-2025 LTPP cycle performance outcomes** 

The charts below illustrate the very strong performance of the 2023-2025 LTPP cycle against targets. The financial LTPP targets were recalibrated to take the Sandoz spin-off into account. Given that these metrics measure the compound annual growth rate, Sandoz targets were not included in any of the financial years for this cycle. For the relative TSR measure, the dividend in kind distribution was treated as a one-time dividend that is not reinvested.

![WSGE_DP_Graph_LTPP_outcome](comp_0032.gif)

THIRD-PARTY sales CAGR(25% weighting)Payout range 0-200% of targetThreshold:0.4%Target:2.4%Maximum:5.4%Actual: 10.1%Payout:200% of targetOur transformation into a pure-play innovative medicines company enabled a more focused allocation of resources and operational execution on priority brands. The following brands each exceeded their 2023-2025 sales targets (set at the beginning of the cycle) by over USD 1 billion:•Entresto: we strengthened our commercial focus and excellence across our priority geographies and exceeded our three-year target, despite the launch in the US of FDA-approved generics•Kisqali: with positive results from NATALEE and MONALEESA studies, we enhanced our investment and resource allocation in this brand, and following FDA approval of eBC (early breast cancer) we are leading NBRx (new-to-brand prescription) market share in the US•Kesimpta: streamlining our focus on neuroscience resulted in increased demand and share gain for the treatment of multiple sclerosis across all marketsCore operating income (COI) CAGR(25% weighting)Payout range 0-200% of targetThreshold:0.9%Target:4.9%Maximum:10.9%Actual: 19.4%Payout:200% of targetCOI CAGR performance reached high-teens growth, as a result of strong sales performance, strong operational leverage and productivity, partly offset by higher investments behind priority brands and launches.Relative Total Shareholder Return (TSR)(25% weighting)Novartis position Payout rangein the peer group(% of target)Position 1 2Position 3 5Position 6 8Position 9 15170% 200% 130% 160%80% 120%0%Ranking = No. 2 TSR for the 2023-2025 cycle was 84%. Novartis ranked No. 2 out of the 15 healthcare companies in our global healthcare peer group (including Novartis), as share price performance, growing dividend and spin-off of our generics business, Sandoz, generated considerable value to shareholders. The Board of Directors determined that it was appropriate to recognize the sustained and exceptional relative TSR outperformance versus peers, over the three-year cycle, and considered the underlying strategic achievements that supported this result. In line with the applicable payout range, the Board of Directors approved a payout of 200% for this metric. Innovation(25% weighting)Innovation performance was solid, supported by 19 successful key submissions across the three-year cycle (2023-25), including the following highlights: •submission and approval of Rhapsido (remibrutinib) in chronic spontaneous urticaria (CSU) in the US and China•submission and approval of Vanrafia for immunoglobulin A nephropathy (IgAN) in US and China•submission and approval of Coartem(artemether-lumefantrine) Baby in Switzerland as the first malaria medicine for newborns and young infants•submission and approval of PluvictomCRPC, pre-taxane (Pre taxane metastatic castration-resistant prostate cancer) in US, Japan and China•submission of PluvictomHSPC (metastatic Hormone Sensitive Prostate Cancer) in US, China and Japan•submission and approval ofItvisma SMA in USAdditionally, in Biomedical Research, a record number of 24 transitions to Development was achieved.Based on input from the Science & Technology Committee (STC), the Board of Directors approved a payout of 150% for this metric. 2023-2025 LTPP CYCLE PayoutOverall, the Board of Directors approved a 2023-2025 LTPP cycle payout at 188% of target, within the range of 0-200%. This resulted in an LTPP payout of CHF 17 296 846 for the CEO, including dividend equivalents of CHF 1 310 102 and keep-whole awards (granted in connection with the Sandoz spin-off) of CHF 1 026 087. The Board of Directors and the Compensation Committee did not exercise any discretion and no adjustments were made in the evaluation of performance.Third-party sales CAGR200% x 25%+COI CAGR200% x 25%+Innovation150% x 25%+Relative TSR200% x 25%Final vesting188% of target

**Interim update regarding ongoing LTPP cycles**

The performance tracking against target for our ongoing LTPP performance cycles is reported below.

#### 2024-2026 LTPP cycle
Following the first two years of the three-year LTPP cycle, net sales CAGR and core operating income CAGR are tracking significantly ahead of target, underpinned by the strong operational performance delivered in the financial years 2024 and 2025. Innovation is on track. At the end of 2025, the relative TSR for Novartis was No. 4 among our global healthcare peer group.

---

| | |
|:---|:---|
| **Performance measures** | **Tracking** |
| Net sales CAGR (25%) | ![sign](sign-full.jpg) |
| Core operating income CAGR (25%) | ![sign](sign-full.jpg) |
| Innovation (25%) | ![sign](sign-full.jpg) |
| Relative TSR (25%) | ![sign](sign-full.jpg) |

---

#### 2025-2027 LTPP cycle
Following the first year of the three-year LTPP cycle, net sales CAGR and core operating income CAGR are ahead of target and innovation is tracking on target. At the end of 2025, the relative TSR for Novartis was No. 7 among our global healthcare peer group.

---

| | |
|:---|:---|
| **Performance measures** | **Tracking** |
| Net sales CAGR (25%) | ![sign](sign-full.jpg) |
| Core operating income CAGR (25%) | ![sign](sign-full.jpg) |
| Innovation (25%) | ![sign](sign-full.jpg) |
| Relative TSR (25%) | ![sign](sign-full.jpg) |

---

![sign](sign-full.jpg) On or ahead of target

## CEO and Executive Committee
**CEO and Executive Committee 2025 realized compensation**

To aid shareholders' understanding of the link between pay and performance, the Compensation Report discloses the realized compensation for the CEO on an individual basis, and for the other ECN members on an aggregated basis. Disclosing realized compensation means that the Annual Incentive and the LTPP are disclosed at the end of their respective performance cycles, reflecting actual payouts based on performance.

The total actual payout may vary year-on-year depending on multiple factors, including: the composition of the Executive Committee and the tenure of its members (as new members may not have equity vestings); compensation increases; payout of variable compensation based on actual performance; share price fluctuations; and dividend equivalents. Adherence to the Say-on-Pay budget approved by shareholders is determined based on the total compensation at grant value (see "—CEO and Executive Committee 2025 compensation at grant"), in line with the Swiss Code of Obligations.

To determine the appropriateness of 2025 CEO and ECN compensation payouts under the Annual Incentive and LTPP, the Board of Directors and the Compensation Committee reviewed management's performance against targets set at the beginning of the cycles as described in "—2025 CEO Annual Incentive balanced scorecard" and "—2023-2025 LTPP cycle performance outcomes."

The Board of Directors recognized that during the 2023-2025 cycle, Novartis significantly exceeded performance targets and delivered industry-leading, upper-quartile relative TSR at 84%, resulting in substantial value creation for shareholders.

The incentive performance outcomes, combined with dividend equivalents and keep-whole awards (awards granted in connection with the Sandoz spin-off) as well as base salary, pension and other benefits, resulted in 2025 total realized compensation for the CEO of **CHF 24 871 860**. This represents an increase of 30% compared with 2024 (CHF 19 165 899), largely attributable to the higher LTPP payout (CHF 17 296 846<sup>1</sup> for the 2023-2025 LTPP cycle compared with CHF 12 468 155 for the 2022-2024 LTPP cycle).

Aligned to our pay for performance philosophy, the higher LTPP payout is a reflection of the total value delivered to shareholders<sup>2</sup> during the 2023-2025 cycle (USD 128 billion / CHF 78 billion), more than triple (in USD) and double (in CHF) compared with previous cycle (USD 39 billion / CHF 33 billion).

The above factors influenced the results for the other ECN members, and additionally, a year-on-year increase in realized compensation also reflects a first full year of LTPP vesting for four executives (i.e., Shreeram Aradhye, Victor Bulto, Aharon Gal and Fiona Marshall) who were appointed in the course of 2022 and received their first full ECN LTPP grants in January 2023.

The following table presents the compensation for all ECN members for the financial year 2025, including base salary, pension, other benefits, 2025 Annual Incentive, 2023-2025 LTPP cycle payout, and any buyouts paid or vesting within the year. The table also includes the total 2024 realized compensation for all ECN members for comparison.

<sup>1</sup> CHF 4 370 574 of this CHF 17 296 846 LTPP payout is due to the share price increase from the grant date to the vesting date.

<sup>2</sup> Total value delivered to shareholders is the change in market capitalization of Novartis, the market capitalization of the spun-off Sandoz at year-end of the applicable cycle as well as the combined dividends paid out by both companies over the relevant period.

#### Realized compensation for the CEO and Executive Committee (2025 compared with 2024)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
| in CHF (gross) <sup>1</sup> | **CEO** | **Other ECN<sup>2</sup>** | **Total** | **CEO** | **Other ECN<sup>3</sup>** | **Total** |
| Annual base salary | 1 897 771 | 8 703 034 | 10 600 804 | 1 865 483 | 8 985 234 | 10 850 717 |
| Annual Incentive (performance achieved) | &nbsp;&nbsp;&nbsp;&nbsp;5 137 468 | &nbsp;&nbsp;&nbsp;&nbsp;14 697 608 | &nbsp;&nbsp;&nbsp;&nbsp;19 835 076 | &nbsp;&nbsp;&nbsp;&nbsp;4 494 788 | &nbsp;&nbsp;&nbsp;&nbsp;15 051 053 | &nbsp;&nbsp;&nbsp;&nbsp;19 545 841 |
| *Thereof cash* | *3 596 225* | *9 376 290* | *12 972 515* | *3 146 304* | *7 279 690* | *10 425 994* |
| *Thereof equity* | *1 541 243* | *5 321 318* | *6 862 561 <sup>4</sup>* | *1 348 484* | *7 771 363* | *9 119 847 <sup>5</sup>* |
| LTPP (performance achieved) | &nbsp;&nbsp;&nbsp;&nbsp;17 296 846 | &nbsp;&nbsp;&nbsp;&nbsp;52 894 280 | &nbsp;&nbsp;&nbsp;&nbsp;70 191 127 <sup>6</sup> | &nbsp;&nbsp;&nbsp;&nbsp;12 468 155 | &nbsp;&nbsp;&nbsp;&nbsp;23 212 440 | &nbsp;&nbsp;&nbsp;&nbsp;35 680 595 <sup>7</sup> |
| Other payments <sup>8</sup> | 358 442 | 10 562 845 | 10 921 287 <sup>9</sup> | 164 750 | 7 371 770 | 7 536 520 |
| Pension benefits <sup>10</sup> | 181 332 | 1 879 884 | 2 061 216 <sup>11</sup> | 172 722 | 1 959 918 | 2 132 640 <sup>12</sup> |
| **Total** | **24 871 860** | **88 737 650** | **113 609 510** | **19 165 899** | **56 580 414** | **75 746 314** |
|  <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). | <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). | <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). | <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). | <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). | <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). | <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). |
|  <sup>2</sup> Aggregate realized compensation of the other 10 Executive Committee members, including a member who stepped down during the financial year 2025. | <sup>2</sup> Aggregate realized compensation of the other 10 Executive Committee members, including a member who stepped down during the financial year 2025. | <sup>2</sup> Aggregate realized compensation of the other 10 Executive Committee members, including a member who stepped down during the financial year 2025. | <sup>2</sup> Aggregate realized compensation of the other 10 Executive Committee members, including a member who stepped down during the financial year 2025. | <sup>2</sup> Aggregate realized compensation of the other 10 Executive Committee members, including a member who stepped down during the financial year 2025. | <sup>2</sup> Aggregate realized compensation of the other 10 Executive Committee members, including a member who stepped down during the financial year 2025. | <sup>2</sup> Aggregate realized compensation of the other 10 Executive Committee members, including a member who stepped down during the financial year 2025. |
|  <sup>3</sup> Aggregate realized compensation of the other 10 Executive Committee members. | <sup>3</sup> Aggregate realized compensation of the other 10 Executive Committee members. | <sup>3</sup> Aggregate realized compensation of the other 10 Executive Committee members. | <sup>3</sup> Aggregate realized compensation of the other 10 Executive Committee members. | <sup>3</sup> Aggregate realized compensation of the other 10 Executive Committee members. | <sup>3</sup> Aggregate realized compensation of the other 10 Executive Committee members. | <sup>3</sup> Aggregate realized compensation of the other 10 Executive Committee members. |
|  <sup>4</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. At the start of the 2025 performance period, Vasant Narasimhan, Aharon Gal, Harry Kirsch, Steffen Lang, Karen Hale, Victor Bulto, Fiona Marshall, Klaus Moosmayer and Patrick Horber had met their shareholding requirement and therefore received at least 30% of their Annual Incentive in equity. All other Executive Committee members who had not yet met their shareholding requirement at the start of the 2025 performance period received at least 50% of their Annual Incentive in equity. | <sup>4</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. At the start of the 2025 performance period, Vasant Narasimhan, Aharon Gal, Harry Kirsch, Steffen Lang, Karen Hale, Victor Bulto, Fiona Marshall, Klaus Moosmayer and Patrick Horber had met their shareholding requirement and therefore received at least 30% of their Annual Incentive in equity. All other Executive Committee members who had not yet met their shareholding requirement at the start of the 2025 performance period received at least 50% of their Annual Incentive in equity. | <sup>4</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. At the start of the 2025 performance period, Vasant Narasimhan, Aharon Gal, Harry Kirsch, Steffen Lang, Karen Hale, Victor Bulto, Fiona Marshall, Klaus Moosmayer and Patrick Horber had met their shareholding requirement and therefore received at least 30% of their Annual Incentive in equity. All other Executive Committee members who had not yet met their shareholding requirement at the start of the 2025 performance period received at least 50% of their Annual Incentive in equity. | <sup>4</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. At the start of the 2025 performance period, Vasant Narasimhan, Aharon Gal, Harry Kirsch, Steffen Lang, Karen Hale, Victor Bulto, Fiona Marshall, Klaus Moosmayer and Patrick Horber had met their shareholding requirement and therefore received at least 30% of their Annual Incentive in equity. All other Executive Committee members who had not yet met their shareholding requirement at the start of the 2025 performance period received at least 50% of their Annual Incentive in equity. | <sup>4</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. At the start of the 2025 performance period, Vasant Narasimhan, Aharon Gal, Harry Kirsch, Steffen Lang, Karen Hale, Victor Bulto, Fiona Marshall, Klaus Moosmayer and Patrick Horber had met their shareholding requirement and therefore received at least 30% of their Annual Incentive in equity. All other Executive Committee members who had not yet met their shareholding requirement at the start of the 2025 performance period received at least 50% of their Annual Incentive in equity. | <sup>4</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. At the start of the 2025 performance period, Vasant Narasimhan, Aharon Gal, Harry Kirsch, Steffen Lang, Karen Hale, Victor Bulto, Fiona Marshall, Klaus Moosmayer and Patrick Horber had met their shareholding requirement and therefore received at least 30% of their Annual Incentive in equity. All other Executive Committee members who had not yet met their shareholding requirement at the start of the 2025 performance period received at least 50% of their Annual Incentive in equity. | <sup>4</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. At the start of the 2025 performance period, Vasant Narasimhan, Aharon Gal, Harry Kirsch, Steffen Lang, Karen Hale, Victor Bulto, Fiona Marshall, Klaus Moosmayer and Patrick Horber had met their shareholding requirement and therefore received at least 30% of their Annual Incentive in equity. All other Executive Committee members who had not yet met their shareholding requirement at the start of the 2025 performance period received at least 50% of their Annual Incentive in equity. |
|  <sup>5</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR. At the start of the 2024 performance period, Vasant Narasimhan, Aharon Gal, Harry Kirsch, Steffen Lang and Klaus Moosmayer had met their shareholding requirement and therefore received at least 30% of their Annual Incentive in equity. All other Executive Committee members who had not yet met their shareholding requirement at the start of the 2024 performance period received at least 50% of their Annual Incentive in equity. | <sup>5</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR. At the start of the 2024 performance period, Vasant Narasimhan, Aharon Gal, Harry Kirsch, Steffen Lang and Klaus Moosmayer had met their shareholding requirement and therefore received at least 30% of their Annual Incentive in equity. All other Executive Committee members who had not yet met their shareholding requirement at the start of the 2024 performance period received at least 50% of their Annual Incentive in equity. | <sup>5</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR. At the start of the 2024 performance period, Vasant Narasimhan, Aharon Gal, Harry Kirsch, Steffen Lang and Klaus Moosmayer had met their shareholding requirement and therefore received at least 30% of their Annual Incentive in equity. All other Executive Committee members who had not yet met their shareholding requirement at the start of the 2024 performance period received at least 50% of their Annual Incentive in equity. | <sup>5</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR. At the start of the 2024 performance period, Vasant Narasimhan, Aharon Gal, Harry Kirsch, Steffen Lang and Klaus Moosmayer had met their shareholding requirement and therefore received at least 30% of their Annual Incentive in equity. All other Executive Committee members who had not yet met their shareholding requirement at the start of the 2024 performance period received at least 50% of their Annual Incentive in equity. | <sup>5</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR. At the start of the 2024 performance period, Vasant Narasimhan, Aharon Gal, Harry Kirsch, Steffen Lang and Klaus Moosmayer had met their shareholding requirement and therefore received at least 30% of their Annual Incentive in equity. All other Executive Committee members who had not yet met their shareholding requirement at the start of the 2024 performance period received at least 50% of their Annual Incentive in equity. | <sup>5</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR. At the start of the 2024 performance period, Vasant Narasimhan, Aharon Gal, Harry Kirsch, Steffen Lang and Klaus Moosmayer had met their shareholding requirement and therefore received at least 30% of their Annual Incentive in equity. All other Executive Committee members who had not yet met their shareholding requirement at the start of the 2024 performance period received at least 50% of their Annual Incentive in equity. | <sup>5</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR. At the start of the 2024 performance period, Vasant Narasimhan, Aharon Gal, Harry Kirsch, Steffen Lang and Klaus Moosmayer had met their shareholding requirement and therefore received at least 30% of their Annual Incentive in equity. All other Executive Committee members who had not yet met their shareholding requirement at the start of the 2024 performance period received at least 50% of their Annual Incentive in equity. |
|  <sup>6</sup> The amount represents the underlying share value of the 605 462 realized LTPP PSUs to the CEO and other Executive Committee members for the 2023-2025 LTPP cycle, including dividend equivalents for the three-year cycle of value CHF 1 310 102 for the CEO, and CHF 4 068 777 for the other Executive Committee members. The taxable value is determined using the closing share price on the day the payout factor is approved by the Board of Directors (January 28, 2026): CHF 114.20 per Novartis share and USD 147.87 per ADR. Includes vested keep-whole shares received in connection with the Sandoz spin-off. Patrick Horber joined Novartis after the 2023-2025 LTPP awards were made, and therefore did not receive an LTPP award for the 2023-2025 LTPP cycle. | <sup>6</sup> The amount represents the underlying share value of the 605 462 realized LTPP PSUs to the CEO and other Executive Committee members for the 2023-2025 LTPP cycle, including dividend equivalents for the three-year cycle of value CHF 1 310 102 for the CEO, and CHF 4 068 777 for the other Executive Committee members. The taxable value is determined using the closing share price on the day the payout factor is approved by the Board of Directors (January 28, 2026): CHF 114.20 per Novartis share and USD 147.87 per ADR. Includes vested keep-whole shares received in connection with the Sandoz spin-off. Patrick Horber joined Novartis after the 2023-2025 LTPP awards were made, and therefore did not receive an LTPP award for the 2023-2025 LTPP cycle. | <sup>6</sup> The amount represents the underlying share value of the 605 462 realized LTPP PSUs to the CEO and other Executive Committee members for the 2023-2025 LTPP cycle, including dividend equivalents for the three-year cycle of value CHF 1 310 102 for the CEO, and CHF 4 068 777 for the other Executive Committee members. The taxable value is determined using the closing share price on the day the payout factor is approved by the Board of Directors (January 28, 2026): CHF 114.20 per Novartis share and USD 147.87 per ADR. Includes vested keep-whole shares received in connection with the Sandoz spin-off. Patrick Horber joined Novartis after the 2023-2025 LTPP awards were made, and therefore did not receive an LTPP award for the 2023-2025 LTPP cycle. | <sup>6</sup> The amount represents the underlying share value of the 605 462 realized LTPP PSUs to the CEO and other Executive Committee members for the 2023-2025 LTPP cycle, including dividend equivalents for the three-year cycle of value CHF 1 310 102 for the CEO, and CHF 4 068 777 for the other Executive Committee members. The taxable value is determined using the closing share price on the day the payout factor is approved by the Board of Directors (January 28, 2026): CHF 114.20 per Novartis share and USD 147.87 per ADR. Includes vested keep-whole shares received in connection with the Sandoz spin-off. Patrick Horber joined Novartis after the 2023-2025 LTPP awards were made, and therefore did not receive an LTPP award for the 2023-2025 LTPP cycle. | <sup>6</sup> The amount represents the underlying share value of the 605 462 realized LTPP PSUs to the CEO and other Executive Committee members for the 2023-2025 LTPP cycle, including dividend equivalents for the three-year cycle of value CHF 1 310 102 for the CEO, and CHF 4 068 777 for the other Executive Committee members. The taxable value is determined using the closing share price on the day the payout factor is approved by the Board of Directors (January 28, 2026): CHF 114.20 per Novartis share and USD 147.87 per ADR. Includes vested keep-whole shares received in connection with the Sandoz spin-off. Patrick Horber joined Novartis after the 2023-2025 LTPP awards were made, and therefore did not receive an LTPP award for the 2023-2025 LTPP cycle. | <sup>6</sup> The amount represents the underlying share value of the 605 462 realized LTPP PSUs to the CEO and other Executive Committee members for the 2023-2025 LTPP cycle, including dividend equivalents for the three-year cycle of value CHF 1 310 102 for the CEO, and CHF 4 068 777 for the other Executive Committee members. The taxable value is determined using the closing share price on the day the payout factor is approved by the Board of Directors (January 28, 2026): CHF 114.20 per Novartis share and USD 147.87 per ADR. Includes vested keep-whole shares received in connection with the Sandoz spin-off. Patrick Horber joined Novartis after the 2023-2025 LTPP awards were made, and therefore did not receive an LTPP award for the 2023-2025 LTPP cycle. | <sup>6</sup> The amount represents the underlying share value of the 605 462 realized LTPP PSUs to the CEO and other Executive Committee members for the 2023-2025 LTPP cycle, including dividend equivalents for the three-year cycle of value CHF 1 310 102 for the CEO, and CHF 4 068 777 for the other Executive Committee members. The taxable value is determined using the closing share price on the day the payout factor is approved by the Board of Directors (January 28, 2026): CHF 114.20 per Novartis share and USD 147.87 per ADR. Includes vested keep-whole shares received in connection with the Sandoz spin-off. Patrick Horber joined Novartis after the 2023-2025 LTPP awards were made, and therefore did not receive an LTPP award for the 2023-2025 LTPP cycle. |
|  <sup>7</sup> Based on the closing share price on January 24, 2025 of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. For more information, see the 2024 Compensation Report. | <sup>7</sup> Based on the closing share price on January 24, 2025 of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. For more information, see the 2024 Compensation Report. | <sup>7</sup> Based on the closing share price on January 24, 2025 of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. For more information, see the 2024 Compensation Report. | <sup>7</sup> Based on the closing share price on January 24, 2025 of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. For more information, see the 2024 Compensation Report. | <sup>7</sup> Based on the closing share price on January 24, 2025 of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. For more information, see the 2024 Compensation Report. | <sup>7</sup> Based on the closing share price on January 24, 2025 of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. For more information, see the 2024 Compensation Report. | <sup>7</sup> Based on the closing share price on January 24, 2025 of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. For more information, see the 2024 Compensation Report. |
|  <sup>8</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. | <sup>8</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. | <sup>8</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. | <sup>8</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. | <sup>8</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. | <sup>8</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. | <sup>8</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. |
|  <sup>9</sup> In line with the buyout policy of Novartis (see "—CEO and Executive Committee: appointments"), includes 31 850 vested ADRs (for a total value of USD 3 601 844), which vested partially on April 26, 2025, and partially on May 1, 2025, to Fiona Marshall to replace entitlements forfeited from her previous employer. Also includes 23 109 RSUs which vested partially on February 1, 2025, and on July 1, 2025, and 16 096 PSUs which vested on January 25, 2026 in line with the 2023-2025 LTPP cycle payout to Patrick Horber, to replace entitlements forfeited from his previous employer (total value of vested RSUs and PSUs is CHF 4 053 557). | <sup>9</sup> In line with the buyout policy of Novartis (see "—CEO and Executive Committee: appointments"), includes 31 850 vested ADRs (for a total value of USD 3 601 844), which vested partially on April 26, 2025, and partially on May 1, 2025, to Fiona Marshall to replace entitlements forfeited from her previous employer. Also includes 23 109 RSUs which vested partially on February 1, 2025, and on July 1, 2025, and 16 096 PSUs which vested on January 25, 2026 in line with the 2023-2025 LTPP cycle payout to Patrick Horber, to replace entitlements forfeited from his previous employer (total value of vested RSUs and PSUs is CHF 4 053 557). | <sup>9</sup> In line with the buyout policy of Novartis (see "—CEO and Executive Committee: appointments"), includes 31 850 vested ADRs (for a total value of USD 3 601 844), which vested partially on April 26, 2025, and partially on May 1, 2025, to Fiona Marshall to replace entitlements forfeited from her previous employer. Also includes 23 109 RSUs which vested partially on February 1, 2025, and on July 1, 2025, and 16 096 PSUs which vested on January 25, 2026 in line with the 2023-2025 LTPP cycle payout to Patrick Horber, to replace entitlements forfeited from his previous employer (total value of vested RSUs and PSUs is CHF 4 053 557). | <sup>9</sup> In line with the buyout policy of Novartis (see "—CEO and Executive Committee: appointments"), includes 31 850 vested ADRs (for a total value of USD 3 601 844), which vested partially on April 26, 2025, and partially on May 1, 2025, to Fiona Marshall to replace entitlements forfeited from her previous employer. Also includes 23 109 RSUs which vested partially on February 1, 2025, and on July 1, 2025, and 16 096 PSUs which vested on January 25, 2026 in line with the 2023-2025 LTPP cycle payout to Patrick Horber, to replace entitlements forfeited from his previous employer (total value of vested RSUs and PSUs is CHF 4 053 557). | <sup>9</sup> In line with the buyout policy of Novartis (see "—CEO and Executive Committee: appointments"), includes 31 850 vested ADRs (for a total value of USD 3 601 844), which vested partially on April 26, 2025, and partially on May 1, 2025, to Fiona Marshall to replace entitlements forfeited from her previous employer. Also includes 23 109 RSUs which vested partially on February 1, 2025, and on July 1, 2025, and 16 096 PSUs which vested on January 25, 2026 in line with the 2023-2025 LTPP cycle payout to Patrick Horber, to replace entitlements forfeited from his previous employer (total value of vested RSUs and PSUs is CHF 4 053 557). | <sup>9</sup> In line with the buyout policy of Novartis (see "—CEO and Executive Committee: appointments"), includes 31 850 vested ADRs (for a total value of USD 3 601 844), which vested partially on April 26, 2025, and partially on May 1, 2025, to Fiona Marshall to replace entitlements forfeited from her previous employer. Also includes 23 109 RSUs which vested partially on February 1, 2025, and on July 1, 2025, and 16 096 PSUs which vested on January 25, 2026 in line with the 2023-2025 LTPP cycle payout to Patrick Horber, to replace entitlements forfeited from his previous employer (total value of vested RSUs and PSUs is CHF 4 053 557). | <sup>9</sup> In line with the buyout policy of Novartis (see "—CEO and Executive Committee: appointments"), includes 31 850 vested ADRs (for a total value of USD 3 601 844), which vested partially on April 26, 2025, and partially on May 1, 2025, to Fiona Marshall to replace entitlements forfeited from her previous employer. Also includes 23 109 RSUs which vested partially on February 1, 2025, and on July 1, 2025, and 16 096 PSUs which vested on January 25, 2026 in line with the 2023-2025 LTPP cycle payout to Patrick Horber, to replace entitlements forfeited from his previous employer (total value of vested RSUs and PSUs is CHF 4 053 557). |
| <sup>10</sup> Includes social security contributions to the extent that they result in a pension entitlement. Also includes contributions to company-provided pension plans. | <sup>10</sup> Includes social security contributions to the extent that they result in a pension entitlement. Also includes contributions to company-provided pension plans. | <sup>10</sup> Includes social security contributions to the extent that they result in a pension entitlement. Also includes contributions to company-provided pension plans. | <sup>10</sup> Includes social security contributions to the extent that they result in a pension entitlement. Also includes contributions to company-provided pension plans. | <sup>10</sup> Includes social security contributions to the extent that they result in a pension entitlement. Also includes contributions to company-provided pension plans. | <sup>10</sup> Includes social security contributions to the extent that they result in a pension entitlement. Also includes contributions to company-provided pension plans. | <sup>10</sup> Includes social security contributions to the extent that they result in a pension entitlement. Also includes contributions to company-provided pension plans. |
| <sup>11</sup> This amount is part of the total employer contributions paid in 2025 for all Executive Committee members: CHF 4 237 531 for social security and CHF 2 263 443 for pension plans. | <sup>11</sup> This amount is part of the total employer contributions paid in 2025 for all Executive Committee members: CHF 4 237 531 for social security and CHF 2 263 443 for pension plans. | <sup>11</sup> This amount is part of the total employer contributions paid in 2025 for all Executive Committee members: CHF 4 237 531 for social security and CHF 2 263 443 for pension plans. | <sup>11</sup> This amount is part of the total employer contributions paid in 2025 for all Executive Committee members: CHF 4 237 531 for social security and CHF 2 263 443 for pension plans. | <sup>11</sup> This amount is part of the total employer contributions paid in 2025 for all Executive Committee members: CHF 4 237 531 for social security and CHF 2 263 443 for pension plans. | <sup>11</sup> This amount is part of the total employer contributions paid in 2025 for all Executive Committee members: CHF 4 237 531 for social security and CHF 2 263 443 for pension plans. | <sup>11</sup> This amount is part of the total employer contributions paid in 2025 for all Executive Committee members: CHF 4 237 531 for social security and CHF 2 263 443 for pension plans. |
| <sup>12</sup> This amount is part of the total employer contributions paid in 2024 for all Executive Committee members: CHF 3 279 227 for social security and CHF 2 158 144 for pension plans. | <sup>12</sup> This amount is part of the total employer contributions paid in 2024 for all Executive Committee members: CHF 3 279 227 for social security and CHF 2 158 144 for pension plans. | <sup>12</sup> This amount is part of the total employer contributions paid in 2024 for all Executive Committee members: CHF 3 279 227 for social security and CHF 2 158 144 for pension plans. | <sup>12</sup> This amount is part of the total employer contributions paid in 2024 for all Executive Committee members: CHF 3 279 227 for social security and CHF 2 158 144 for pension plans. | <sup>12</sup> This amount is part of the total employer contributions paid in 2024 for all Executive Committee members: CHF 3 279 227 for social security and CHF 2 158 144 for pension plans. | <sup>12</sup> This amount is part of the total employer contributions paid in 2024 for all Executive Committee members: CHF 3 279 227 for social security and CHF 2 158 144 for pension plans. | <sup>12</sup> This amount is part of the total employer contributions paid in 2024 for all Executive Committee members: CHF 3 279 227 for social security and CHF 2 158 144 for pension plans. |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |

---

#### Pay for performance assessment
To assess whether the target-setting process provided sufficiently stringent targets in the 2023-2025 LTPP cycle, the Compensation Committee reviewed the past five LTPP payouts. It found a strong correlation between the LTPP payout and the three-year total shareholder return, as presented in the table below, demonstrating alignment with shareholders' experience. The Committee also recognized the high variability of payouts across the years.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | 2021 | 2022 | 2023 | 2024 | **2025** |
| **LTPP three-year cycle payout (% of target)** | 107% | 57% | 122% | 158% | **188%** |
| **Novartis three-year TSR in USD (%) <sup>1</sup>** | 22% | 6% | 31% | 54% | **84%** |
|  <sup>1</sup> The starting share price and ending share price for the TSR measure are calculated as the average of the closing share prices over the 3 months prior to December 31, with the closing prices of all trading days equally weighted to derive the average. | <sup>1</sup> The starting share price and ending share price for the TSR measure are calculated as the average of the closing share prices over the 3 months prior to December 31, with the closing prices of all trading days equally weighted to derive the average. | <sup>1</sup> The starting share price and ending share price for the TSR measure are calculated as the average of the closing share prices over the 3 months prior to December 31, with the closing prices of all trading days equally weighted to derive the average. | <sup>1</sup> The starting share price and ending share price for the TSR measure are calculated as the average of the closing share prices over the 3 months prior to December 31, with the closing prices of all trading days equally weighted to derive the average. | <sup>1</sup> The starting share price and ending share price for the TSR measure are calculated as the average of the closing share prices over the 3 months prior to December 31, with the closing prices of all trading days equally weighted to derive the average. | <sup>1</sup> The starting share price and ending share price for the TSR measure are calculated as the average of the closing share prices over the 3 months prior to December 31, with the closing prices of all trading days equally weighted to derive the average. |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |

---

The Board of Directors reviewed the overall 2025 incentive outcomes against the performance of the Company, noting the strong year-on-year TSR between 2024 and 2025. The Board concluded that pay and performance remain well aligned. Consistent with prior years, it decided that no adjustments were required and did not apply any discretion to the 2023-2025 LTPP payout.

**CEO and Executive Committee 2025 compensation at grant**

In accordance with the Swiss Code of Obligations, Novartis discloses total compensation at grant value for the CEO and Executive Committee.

The table below provides compensation information for the CEO, CFO, and Presidents of our International and US organizations individually, with target pay for all other ECN members shown in aggregate. It includes:

• 2025 base salary

• Actual cash portion and portion deferred in equity of the 2025 Annual Incentive

• 2025-2027 LTPP cycle awards, which are reported at target grant date value, based on the assumption that the awards will vest at 100% achievement, excluding any share price movement and dividend equivalents that may be accrued over the performance cycle. The future payout will be determined only after the performance cycle concludes in three years (i.e., at the end of 2027), with a performance factor of 0% to 200% of the target value

• Other payments for 2025, which include other benefits, either paid in cash or granted in equity during the year

• 2025 pension benefits

• Total 2025 and total 2024 compensation at grant, for comparative purposes

The highest-paid individual in 2025 was Vasant Narasimhan, CEO of Novartis.

#### Compensation at grant value for the CEO and Executive Committee (2025 compared with 2024)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| <br>in CHF (gross)<sup>1</sup> | **<br>2025<br> base salary** | **2025 Annual<br> Incentive<br> (performance<br> achieved)<sup>2</sup>** | **2025-2027<br> LTPP cycle<br> PSUs<br> (target amount)<sup>3</sup>** | **<br>Other 2025<br> payments<sup>4</sup>** | **<br> 2025<br> Pension<br> benefits<sup>5</sup>** | **<br>Total 2025<sup>6</sup>** | **<br>Total 2024<sup>7</sup>** |
| Vasant Narasimhan | 1 897 771 | 5 137 468 | 7 611 084 | 358 442 | 181 332 | 15 186 098 | 14 189 029 |
| Victor Bulto | 855 596 | 1 859 017 | 2 409 799 | 384 720 | 244 764 | 5 753 896 | 5 767 033 |
| Patrick Horber | 1 029 167 | 1 490 487 | 2 898 068 | 36 384 | 180 316 | 5 634 422 | 5 892 798 |
| Harry Kirsch | 1 149 627 | 1 648 405 | 2 996 903 | 15 475 | 186 075 | 5 996 485 | 6 266 554 |
| Other ECN members | 5 480 817 | 9 530 548 | 12 905 043 | 1 968 345 | 1 216 718 | 31 101 471 | 30 771 790 |
| **Subtotal** | **10 412 978** | **19 665 926** | **28 820 898** | **2 763 366** | **2 009 205** | **63 672 372** | **62 887 204** |
| Member who stepped down <sup>8</sup> | 187 827 | 169 150 | 1 264 723 | 1 109 323 | 52 011 | 2 783 034 | - |
| **Subtotal** | **187 827** | **169 150** | **1 264 723** | **1 109 323** | **52 011** | **2 783 034** | **-** |
| **Total** | **10 600 804** | **19 835 076** | **30 085 621** | **3 872 689** | **2 061 216** | **66 455 406** | **62 887 204** |
|  <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). | <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). | <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). | <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). | <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). | <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). | <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). | <sup>1</sup> All compensation amounts are stated gross, before the deduction of social security contributions and income tax paid by the Executive Committee members. Amounts for Executive Committee members paid in USD were converted at a rate of USD 1.00 = CHF 0.8315, which is the same average exchange rate used in the Company's 2025 consolidated financial statements (a similar rule applies to payments made in other currencies during the year). |
|  <sup>2</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. For the Annual Incentive split between cash and equity, see ''—Realized compensation for the CEO and Executive Committee (2025 compared with 2024)''. | <sup>2</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. For the Annual Incentive split between cash and equity, see ''—Realized compensation for the CEO and Executive Committee (2025 compared with 2024)''. | <sup>2</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. For the Annual Incentive split between cash and equity, see ''—Realized compensation for the CEO and Executive Committee (2025 compared with 2024)''. | <sup>2</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. For the Annual Incentive split between cash and equity, see ''—Realized compensation for the CEO and Executive Committee (2025 compared with 2024)''. | <sup>2</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. For the Annual Incentive split between cash and equity, see ''—Realized compensation for the CEO and Executive Committee (2025 compared with 2024)''. | <sup>2</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. For the Annual Incentive split between cash and equity, see ''—Realized compensation for the CEO and Executive Committee (2025 compared with 2024)''. | <sup>2</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. For the Annual Incentive split between cash and equity, see ''—Realized compensation for the CEO and Executive Committee (2025 compared with 2024)''. | <sup>2</sup> The portion of the Annual Incentive delivered in equity is rounded up to the nearest share, based on the closing share price on the grant date (January 28, 2026) of CHF 114.20 per Novartis share and USD 147.87 per ADR. For the Annual Incentive split between cash and equity, see ''—Realized compensation for the CEO and Executive Committee (2025 compared with 2024)''. |
|  <sup>3</sup> The amounts represent the underlying share value of the target number of PSUs granted to Executive Committee members for the three-year performance cycle, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. | <sup>3</sup> The amounts represent the underlying share value of the target number of PSUs granted to Executive Committee members for the three-year performance cycle, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. | <sup>3</sup> The amounts represent the underlying share value of the target number of PSUs granted to Executive Committee members for the three-year performance cycle, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. | <sup>3</sup> The amounts represent the underlying share value of the target number of PSUs granted to Executive Committee members for the three-year performance cycle, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. | <sup>3</sup> The amounts represent the underlying share value of the target number of PSUs granted to Executive Committee members for the three-year performance cycle, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. | <sup>3</sup> The amounts represent the underlying share value of the target number of PSUs granted to Executive Committee members for the three-year performance cycle, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. | <sup>3</sup> The amounts represent the underlying share value of the target number of PSUs granted to Executive Committee members for the three-year performance cycle, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. | <sup>3</sup> The amounts represent the underlying share value of the target number of PSUs granted to Executive Committee members for the three-year performance cycle, based on the closing share price on the grant date (January 24, 2025) of CHF 90.26 per Novartis share and USD 99.97 per ADR for all members. |
|  <sup>4</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. | <sup>4</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. | <sup>4</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. | <sup>4</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. | <sup>4</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. | <sup>4</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. | <sup>4</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. | <sup>4</sup> Includes any other perquisites, benefits in-kind, and international assignment benefits as per the global mobility policy (e.g., housing, international health insurance, children's school fees, tax equalization and reimbursement of additional taxes arising from international business travel). The compensation and benefit elements related to the period after the ECN step-down dates are also reported under 'other payments'. |
|  <sup>5</sup> Includes social security contributions to the extent that they result in a pension entitlement and contributions to company-provided pension plans. This amount is out of total social security employer contributions of CHF 4 237 531 and pension employer contributions of CHF 2 263 443 paid in 2025 for all Executive Committee members. | <sup>5</sup> Includes social security contributions to the extent that they result in a pension entitlement and contributions to company-provided pension plans. This amount is out of total social security employer contributions of CHF 4 237 531 and pension employer contributions of CHF 2 263 443 paid in 2025 for all Executive Committee members. | <sup>5</sup> Includes social security contributions to the extent that they result in a pension entitlement and contributions to company-provided pension plans. This amount is out of total social security employer contributions of CHF 4 237 531 and pension employer contributions of CHF 2 263 443 paid in 2025 for all Executive Committee members. | <sup>5</sup> Includes social security contributions to the extent that they result in a pension entitlement and contributions to company-provided pension plans. This amount is out of total social security employer contributions of CHF 4 237 531 and pension employer contributions of CHF 2 263 443 paid in 2025 for all Executive Committee members. | <sup>5</sup> Includes social security contributions to the extent that they result in a pension entitlement and contributions to company-provided pension plans. This amount is out of total social security employer contributions of CHF 4 237 531 and pension employer contributions of CHF 2 263 443 paid in 2025 for all Executive Committee members. | <sup>5</sup> Includes social security contributions to the extent that they result in a pension entitlement and contributions to company-provided pension plans. This amount is out of total social security employer contributions of CHF 4 237 531 and pension employer contributions of CHF 2 263 443 paid in 2025 for all Executive Committee members. | <sup>5</sup> Includes social security contributions to the extent that they result in a pension entitlement and contributions to company-provided pension plans. This amount is out of total social security employer contributions of CHF 4 237 531 and pension employer contributions of CHF 2 263 443 paid in 2025 for all Executive Committee members. | <sup>5</sup> Includes social security contributions to the extent that they result in a pension entitlement and contributions to company-provided pension plans. This amount is out of total social security employer contributions of CHF 4 237 531 and pension employer contributions of CHF 2 263 443 paid in 2025 for all Executive Committee members. |
|  <sup>6</sup> Compensation at grant for the 11 Executive Committee members, including Klaus Moosmayer who stepped down during the financial year 2025. | <sup>6</sup> Compensation at grant for the 11 Executive Committee members, including Klaus Moosmayer who stepped down during the financial year 2025. | <sup>6</sup> Compensation at grant for the 11 Executive Committee members, including Klaus Moosmayer who stepped down during the financial year 2025. | <sup>6</sup> Compensation at grant for the 11 Executive Committee members, including Klaus Moosmayer who stepped down during the financial year 2025. | <sup>6</sup> Compensation at grant for the 11 Executive Committee members, including Klaus Moosmayer who stepped down during the financial year 2025. | <sup>6</sup> Compensation at grant for the 11 Executive Committee members, including Klaus Moosmayer who stepped down during the financial year 2025. | <sup>6</sup> Compensation at grant for the 11 Executive Committee members, including Klaus Moosmayer who stepped down during the financial year 2025. | <sup>6</sup> Compensation at grant for the 11 Executive Committee members, including Klaus Moosmayer who stepped down during the financial year 2025. |
|  <sup>7</sup> Compensation at grant for the 11 Executive Committee members. | <sup>7</sup> Compensation at grant for the 11 Executive Committee members. | <sup>7</sup> Compensation at grant for the 11 Executive Committee members. | <sup>7</sup> Compensation at grant for the 11 Executive Committee members. | <sup>7</sup> Compensation at grant for the 11 Executive Committee members. | <sup>7</sup> Compensation at grant for the 11 Executive Committee members. | <sup>7</sup> Compensation at grant for the 11 Executive Committee members. | <sup>7</sup> Compensation at grant for the 11 Executive Committee members. |
|  <sup>8</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. The LTPP grant for the 2025-2027 performance cycle, included in the table above, will vest at the end of the performance cycle on a pro-rata basis subject to the LTI plan rules. | <sup>8</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. The LTPP grant for the 2025-2027 performance cycle, included in the table above, will vest at the end of the performance cycle on a pro-rata basis subject to the LTI plan rules. | <sup>8</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. The LTPP grant for the 2025-2027 performance cycle, included in the table above, will vest at the end of the performance cycle on a pro-rata basis subject to the LTI plan rules. | <sup>8</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. The LTPP grant for the 2025-2027 performance cycle, included in the table above, will vest at the end of the performance cycle on a pro-rata basis subject to the LTI plan rules. | <sup>8</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. The LTPP grant for the 2025-2027 performance cycle, included in the table above, will vest at the end of the performance cycle on a pro-rata basis subject to the LTI plan rules. | <sup>8</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. The LTPP grant for the 2025-2027 performance cycle, included in the table above, will vest at the end of the performance cycle on a pro-rata basis subject to the LTI plan rules. | <sup>8</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. The LTPP grant for the 2025-2027 performance cycle, included in the table above, will vest at the end of the performance cycle on a pro-rata basis subject to the LTI plan rules. | <sup>8</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. The LTPP grant for the 2025-2027 performance cycle, included in the table above, will vest at the end of the performance cycle on a pro-rata basis subject to the LTI plan rules. |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |

---

#### Number of equity instruments granted to the CEO and Executive Committee (2025 compared with 2024)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Variable compensation<sup>1</sup> | Variable compensation<sup>1</sup> | Variable compensation<sup>1</sup> | Variable compensation<sup>1</sup> | Variable compensation<sup>1</sup> |
|  | 2025 Annual Incentive<br> (performance achieved)<br> equity<br> (number)<sup>2</sup> | 2025-2027<br> LTPP cycle<br> PSUs<br> (target amount)<sup>3</sup> | <br> Other<br> equity/PSUs<br> (number) | **<br>Total<br> 2025** | **<br>Total<br> 2024** |
| Vasant Narasimhan | 13 496 | 84 324 | - | 97 820 | 95 035 |
| Victor Bulto | 4 536 | 28 989 | - | 33 525 | 32 849 |
| Patrick Horber | 3 916 | 32 108 | - | 36 024 | 38 031 |
| Harry Kirsch | 4 331 | 33 203 | - | 37 534 | 45 918 |
| Other ECN members | 32 657 | 145 308 | - | 177 965 <sup>4</sup> | 197 522 |
| **Subtotal** | **58 936** | **323 932** | **-** | **382 868** | **409 355** |
| Member who stepped down <sup>5</sup> | 445 | 14 012 | - | 14 457 | - |
| **Subtotal** | **445** | **14 012** | **-** | **14 457** | **-** |
| **Total** | **59 381** | **337 944** | **-** | **397 325** | **409 355** |
|  <sup>1</sup> The values of these awards are reported in the table "—Compensation at grant value for the CEO and Executive Committee." | <sup>1</sup> The values of these awards are reported in the table "—Compensation at grant value for the CEO and Executive Committee." | <sup>1</sup> The values of these awards are reported in the table "—Compensation at grant value for the CEO and Executive Committee." | <sup>1</sup> The values of these awards are reported in the table "—Compensation at grant value for the CEO and Executive Committee." | <sup>1</sup> The values of these awards are reported in the table "—Compensation at grant value for the CEO and Executive Committee." | <sup>1</sup> The values of these awards are reported in the table "—Compensation at grant value for the CEO and Executive Committee." |
|  <sup>2</sup> Vested shares, restricted shares and/or RSUs granted under the Annual Incentive for the 2025 performance period. | <sup>2</sup> Vested shares, restricted shares and/or RSUs granted under the Annual Incentive for the 2025 performance period. | <sup>2</sup> Vested shares, restricted shares and/or RSUs granted under the Annual Incentive for the 2025 performance period. | <sup>2</sup> Vested shares, restricted shares and/or RSUs granted under the Annual Incentive for the 2025 performance period. | <sup>2</sup> Vested shares, restricted shares and/or RSUs granted under the Annual Incentive for the 2025 performance period. | <sup>2</sup> Vested shares, restricted shares and/or RSUs granted under the Annual Incentive for the 2025 performance period. |
|  <sup>3</sup> Target number of PSUs granted for the 2025-2027 LTPP cycle. | <sup>3</sup> Target number of PSUs granted for the 2025-2027 LTPP cycle. | <sup>3</sup> Target number of PSUs granted for the 2025-2027 LTPP cycle. | <sup>3</sup> Target number of PSUs granted for the 2025-2027 LTPP cycle. | <sup>3</sup> Target number of PSUs granted for the 2025-2027 LTPP cycle. | <sup>3</sup> Target number of PSUs granted for the 2025-2027 LTPP cycle. |
|  <sup>4</sup> For the other six active members at December 31, 2025. | <sup>4</sup> For the other six active members at December 31, 2025. | <sup>4</sup> For the other six active members at December 31, 2025. | <sup>4</sup> For the other six active members at December 31, 2025. | <sup>4</sup> For the other six active members at December 31, 2025. | <sup>4</sup> For the other six active members at December 31, 2025. |
|  <sup>5</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. The LTPP grant for the 2025-2027 performance cycle, included in the table above, will vest at the end of the performance cycle on a pro-rata basis, subject to the LTI plan rules. | <sup>5</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. The LTPP grant for the 2025-2027 performance cycle, included in the table above, will vest at the end of the performance cycle on a pro-rata basis, subject to the LTI plan rules. | <sup>5</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. The LTPP grant for the 2025-2027 performance cycle, included in the table above, will vest at the end of the performance cycle on a pro-rata basis, subject to the LTI plan rules. | <sup>5</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. The LTPP grant for the 2025-2027 performance cycle, included in the table above, will vest at the end of the performance cycle on a pro-rata basis, subject to the LTI plan rules. | <sup>5</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. The LTPP grant for the 2025-2027 performance cycle, included in the table above, will vest at the end of the performance cycle on a pro-rata basis, subject to the LTI plan rules. | <sup>5</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. The LTPP grant for the 2025-2027 performance cycle, included in the table above, will vest at the end of the performance cycle on a pro-rata basis, subject to the LTI plan rules. |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |

---

**Additional disclosures and other statutory information**

#### Fixed and variable compensation
The following table summarizes the annual base salary and variable compensation at grant for the CEO and Executive Committee for the financial year 2025.

---

| | | |
|:---|:---|:---|
|  | Fixed <br> compensation | Variable<br> compensation<sup>1</sup> |
| Vasant Narasimhan | 13.0% | 87.0% |
| Victor Bulto | 16.7% | 83.3% |
| Patrick Horber | 19.0% | 81.0% |
| Harry Kirsch | 19.8% | 80.2% |
| Other ECN members <sup>2</sup> | 19.6% | 80.4% |
| **Total** | **17.7%** | **82.3%** |
|  <sup>1</sup> See the table "–Compensation at grant value for the CEO and Executive Committee" with regard to the disclosure principles of variable compensation. | <sup>1</sup> See the table "–Compensation at grant value for the CEO and Executive Committee" with regard to the disclosure principles of variable compensation. | <sup>1</sup> See the table "–Compensation at grant value for the CEO and Executive Committee" with regard to the disclosure principles of variable compensation. |
|  <sup>2</sup> For the other six active members at December 31, 2025. | <sup>2</sup> For the other six active members at December 31, 2025. | <sup>2</sup> For the other six active members at December 31, 2025. |

---

#### Other payments to Executive Committee members
During 2025 (as in 2024), no other payments or waivers of claims other than those set out in the tables (including the footnotes) contained in this Compensation Report were made to Executive Committee members or to "persons closely linked" to them.

#### Executive Committee compensation approved by shareholders
The total compensation dispensed by the Company in 2025 is within the Say-on-Pay budget approved by the shareholders at the 2024 AGM (CHF 95 000 000).

#### Payments to former Executive Committee members
Under the employment contracts of Executive Committee members and in line with the Company's LTI plan rules, payments were made to 5 former members. Of these payments, CHF 5 209 005 (CHF 8 281 897 in 2024) relate to the vesting of LTI awards and CHF 108 127 (CHF 1 913 169 in 2024) relate to contractual obligations. In 2025, there were no payments made in relation to tax equalization on variable compensation granted during international assignments/commuter arrangements (as in 2024). In 2025, the highest paid former Executive Committee member was Marie-France Tschudin who received CHF 4 702 882 (comprising realized LTI and other benefits). For more information, see the 2023 Compensation Report. In 2024, Marie-France Tschudin was also the highest paid former Executive Committee member, receiving CHF 6 195 281. No other payments (or waivers of claims) were made to former Executive Committee members or to "persons closely linked" to them during 2025 (as in 2024).

#### Persons closely linked
"Persons closely linked", a definition used throughout the Annual Report, are: (i) their spouse or equivalent; (ii) their children (under 18 years of age); (iii) any legal entities that they own or otherwise control; and (iv) any legal or natural person who is acting as their fiduciary.

#### Malus and clawback
Consistent with our "—CEO and Executive Committee compensation philosophy and system," in 2025 there was no legal or factual basis on which to exercise malus or clawback for current or former Executive Committee members.

#### Award and delivery of equity to Novartis employees
During 2025, 11.0 million restricted shares (or ADRs), RSUs and target PSUs were granted, and 12.3 million Novartis vested shares (or ADRs) were delivered to Novartis employees under various equity-based participation plans. Current unvested equity instruments held by employees represent 0.86% of issued shares (based on a total of 1.7 million restricted shares, 13.9 million RSUs, and 2.7 million target PSUs). Novartis delivers treasury shares to employees to fulfill these obligations and aims to offset the dilutive impact from its equity-based participation plans.

#### Note 26 to the Company's audited consolidated financial statements
The total expense for the year for compensation awarded to Executive Committee, using IFRS Accounting Standards measurement rules, is presented in Note 26 to the Company's audited consolidated financial statements.

#### Shares, ADRs and other equity rights owned by Executive Committee members as at December 31, 2025 (compared with prior year)
The following table presents, in alphabetical order after the CEO, the total number of shares, ADRs and other equity rights owned by the CEO and the other Executive Committee members and "persons closely linked" to them as at December 31, 2025. At this date, no members of the Executive Committee, either individually or together with "persons closely linked" to them, owned 1% or more of the outstanding shares (or ADRs) of Novartis. As at December 31, 2025, all members who had served at least five years on the Executive Committee had met or exceeded their personal Novartis share ownership requirements.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | <br> Vested shares <br> and ADRs<sup>1</sup> | <br> Unvested shares <br> and other equity rights<sup>2</sup> | <br> Unvested PSUs <br> (e.g., LTPP)<sup>4</sup> | **Total as at<br> December 31, <br> 2025** | **Total as at<br> December 31, <br> 2024** |
| Vasant Narasimhan | 312 846 | 72 382<br> 22x | 232 965 | 618 193 | 642 353 |
| Shreeram Aradhye | 4 433 | 27 113<br> 3x | 98 776 | 130 322 | 79 977 |
| Victor Bulto | 21 979 | 30 671<br> 7x | 80 951 | 133 601 | 83 458 |
| Aharon Gal | 30 160 | 17 409<br> 5x | 69 155 | 116 724 | 64 937 |
| Karen Hale | 58 234 | 26 876<br> 9x | 71 309 | 156 419 | 121 615 |
| Patrick Horber | 42 822 | 39 662<br> 8x | 44 617 | 127 101 | 115 986 |
| Harry Kirsch | 456 069 | 31 036<br> 46x | 138 143 | 625 248 | 545 187 |
| Robert Kowalski | 20 289 | 21 581<br> 5x | 54 064 | 95 934 | 70 213 |
| Steffen Lang | 74 362 | 25 363<br> 11x | 74 606 | 174 331 | 188 262 |
| Fiona Marshall | 5 915 | 48 133<br> 6x | 100 762 | 154 810 | 91 058 |
| **Subtotal** | **1 027 109** | **340 226** | **965 348** | **2 332 683** | **2 003 046** |
| Member who stepped down <sup>5</sup> | 22 777 | 13 398 | 48 215 | 84 390 | 88 497 |
| **Subtotal** | **22 777** | **13 398** | **48 215** | **84 390** | **88 497** |
| **Total** | **1 049 886** | **353 624** | **1 013 563** | **2 417 073** | **2 091 543** |
|  <sup>1</sup> Includes holdings of persons closely linked to Executive Committee members (see definition "—Persons closely linked"). | <sup>1</sup> Includes holdings of persons closely linked to Executive Committee members (see definition "—Persons closely linked"). | <sup>1</sup> Includes holdings of persons closely linked to Executive Committee members (see definition "—Persons closely linked"). | <sup>1</sup> Includes holdings of persons closely linked to Executive Committee members (see definition "—Persons closely linked"). | <sup>1</sup> Includes holdings of persons closely linked to Executive Committee members (see definition "—Persons closely linked"). | <sup>1</sup> Includes holdings of persons closely linked to Executive Committee members (see definition "—Persons closely linked"). |
|  <sup>2</sup> Includes unvested shares and ADRs as well as other equity rights relevant to share ownership requirements (see definition "—CEO and Executive Committee: share ownership requirements"). Also includes unvested keep-whole awards received in connection with the Sandoz spin-off. | <sup>2</sup> Includes unvested shares and ADRs as well as other equity rights relevant to share ownership requirements (see definition "—CEO and Executive Committee: share ownership requirements"). Also includes unvested keep-whole awards received in connection with the Sandoz spin-off. | <sup>2</sup> Includes unvested shares and ADRs as well as other equity rights relevant to share ownership requirements (see definition "—CEO and Executive Committee: share ownership requirements"). Also includes unvested keep-whole awards received in connection with the Sandoz spin-off. | <sup>2</sup> Includes unvested shares and ADRs as well as other equity rights relevant to share ownership requirements (see definition "—CEO and Executive Committee: share ownership requirements"). Also includes unvested keep-whole awards received in connection with the Sandoz spin-off. | <sup>2</sup> Includes unvested shares and ADRs as well as other equity rights relevant to share ownership requirements (see definition "—CEO and Executive Committee: share ownership requirements"). Also includes unvested keep-whole awards received in connection with the Sandoz spin-off. | <sup>2</sup> Includes unvested shares and ADRs as well as other equity rights relevant to share ownership requirements (see definition "—CEO and Executive Committee: share ownership requirements"). Also includes unvested keep-whole awards received in connection with the Sandoz spin-off. |
|  <sup>3</sup> The multiple is calculated based on the full-year annual base salary and the closing share price as at the end of the 2025 financial year. The Novartis share price and ADR price on the final trading day of 2025 were CHF 109.60 and USD 137.87, respectively. | <sup>3</sup> The multiple is calculated based on the full-year annual base salary and the closing share price as at the end of the 2025 financial year. The Novartis share price and ADR price on the final trading day of 2025 were CHF 109.60 and USD 137.87, respectively. | <sup>3</sup> The multiple is calculated based on the full-year annual base salary and the closing share price as at the end of the 2025 financial year. The Novartis share price and ADR price on the final trading day of 2025 were CHF 109.60 and USD 137.87, respectively. | <sup>3</sup> The multiple is calculated based on the full-year annual base salary and the closing share price as at the end of the 2025 financial year. The Novartis share price and ADR price on the final trading day of 2025 were CHF 109.60 and USD 137.87, respectively. | <sup>3</sup> The multiple is calculated based on the full-year annual base salary and the closing share price as at the end of the 2025 financial year. The Novartis share price and ADR price on the final trading day of 2025 were CHF 109.60 and USD 137.87, respectively. | <sup>3</sup> The multiple is calculated based on the full-year annual base salary and the closing share price as at the end of the 2025 financial year. The Novartis share price and ADR price on the final trading day of 2025 were CHF 109.60 and USD 137.87, respectively. |
|  <sup>4</sup> The number of PSUs is disclosed pro-rata until December 31, 2025, unless the award qualified for full vesting under the relevant plan rules. Also includes unvested keep-whole awards received in connection with the Sandoz spin-off. | <sup>4</sup> The number of PSUs is disclosed pro-rata until December 31, 2025, unless the award qualified for full vesting under the relevant plan rules. Also includes unvested keep-whole awards received in connection with the Sandoz spin-off. | <sup>4</sup> The number of PSUs is disclosed pro-rata until December 31, 2025, unless the award qualified for full vesting under the relevant plan rules. Also includes unvested keep-whole awards received in connection with the Sandoz spin-off. | <sup>4</sup> The number of PSUs is disclosed pro-rata until December 31, 2025, unless the award qualified for full vesting under the relevant plan rules. Also includes unvested keep-whole awards received in connection with the Sandoz spin-off. | <sup>4</sup> The number of PSUs is disclosed pro-rata until December 31, 2025, unless the award qualified for full vesting under the relevant plan rules. Also includes unvested keep-whole awards received in connection with the Sandoz spin-off. | <sup>4</sup> The number of PSUs is disclosed pro-rata until December 31, 2025, unless the award qualified for full vesting under the relevant plan rules. Also includes unvested keep-whole awards received in connection with the Sandoz spin-off. |
|  <sup>5</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. | <sup>5</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. | <sup>5</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. | <sup>5</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. | <sup>5</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. | <sup>5</sup> Klaus Moosmayer stepped down from the Executive Committee on April 14, 2025, and will end his contractual notice period on April 30, 2026. |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |

---

## CEO and Executive Committee compensation philosophy and system
**Compensation philosophy**

Our compensation philosophy aims to ensure that we attract and retain outstanding Executive Committee members and reward them according to their success in implementing the Company strategy, as well as their contribution to Company performance and long-term value creation. The main elements of our compensation philosophy are set out in the table below.

![WSGE_DP_Graph_ecncompensation_philosophy](comp_0006.gif)

Pay for performance•Variable compensation is tied directly to the achievement of strategic Company targetsShareholderalignment•Our incentives are significantly weighted toward long-term equity-based plans•Measures under the long-term incentive plans are calibrated to promote the creation of shareholder value•Executive Committee members are expected to build and maintain substantial shareholdingsBalanced rewards•Balanced set of measures to create sustainable value•Mix of targets based on financial metrics, strategic objectives, and performance versus our competitorsBusiness ethics•The Novartis Values and Behaviors are an integral part of our compensation system•They underpin the assessment of overall performance for the Annual IncentiveCompetitive compensation•Total compensation must be sufficient to attract and retain key global talent•Overarching emphasis on pay for performance

#### Approach to peer group definition
The Compensation Committee believes in a rigorous approach to peer group construction and maintenance. Furthermore, it believes that using a consistent set of global peers that is similar to Novartis in size and scope of operations enables shareholders to both evaluate compensation year-on-year and make pay-for-performance comparisons.

This year, we reviewed the peer companies used to evaluate and assess executive compensation. This review evaluated several reference points and concluded that the use of a single global healthcare peer group more meaningfully represents our talent markets, the complexity of the global pharmaceutical industry, and the specialist skills that we require from our executives.

We therefore agreed to use a single peer group of global healthcare companies when reviewing executive compensation. This simplified approach better reflects the global talent markets from which we recruit, and the specialist expertise required within the ECN. We are still mindful of the expectations of European investors and proxy advisors, and European best practice features are reflected in how executive compensation at Novartis is structured.

The global healthcare peer companies that were considered by the Compensation Committee in 2025 are presented in the table below.

#### global healthcare peer companies
AbbVie

Amgen

AstraZeneca

Biogen

Bristol-Myers Squibb

Eli Lilly

Gilead Sciences

GlaxoSmithKline

Johnson & Johnson

Merck & Co.

Novo Nordisk

Pfizer

Roche

Sanofi

The Compensation Committee also determined that an updated global healthcare peer group would apply effective 2026. For healthcare peer companies effective from 2026 see "—2026 Executive Committee compensation system changes."

#### Competitive compensation
Significant competition continues to exist for top executive talent with deep expertise, and the requisite competencies and proven performance within the pharmaceutical and biotechnology industries. For this reason, to help ensure that the compensation system and levels at Novartis remain competitive, external peer compensation data is one of a number of key reference points considered by the Board of Directors and the Compensation Committee when making decisions on executive pay. Novartis is committed to transparency in its benchmarking practices.

Given this landscape, the Compensation Committee reviewed the competitive positioning of the CEO, the results of which are shown below<sup>1</sup>. The data indicates that the CEO's target total direct compensation<sup>2</sup> (CHF 12.2 million) is globally positioned between the 25th and 50th percentile.

![WSGE_DP_Graph_ceo_target](comp_0035.gif)

<sup>1</sup> This benchmark is based on 2024 data for the updated global healthcare peer group that will be effective from 2026 (for a full list of the companies, see "—2026 Executive Committee compensation system changes").

<sup>2</sup> Novartis CEO 2024 total direct target compensation was comprised of annual base salary of CHF 1 872 800, Annual Incentive target of 150% of annual base salary and LTPP target of 400% of annual base salary (as communicated in the 2024 Compensation Report).

#### Components of CEO and Executive Committee compensation
The compensation of the CEO and Executive Committee is comprised of fixed pay (including an annual base salary, pension, and other benefits) — in addition to a variable annual incentive and long-term incentive, which are entirely performance based. The Board of Directors may use its discretion on the Annual Incentive and LTPP, deciding on the payout within the pre-defined ranges where appropriate. In doing so, it takes into consideration factors such as the underlying assumptions of the targets set at the beginning of the relevant performance cycle, overall economic conditions, currency fluctuations, and other unforeseeable situations.

Fixed pay and benefits

**Annual base salary**

• The annual base salary is based on the individual's role, skills and experience. It is reviewed on an annual basis based on an external benchmark for the role, the performance of the individual, business performance and the external environment, salary increases across the Company, and market movements.

**Pension and other benefits**

• Pension and other benefits are provided to the Executive Committee members on the same terms as to all other employees, in line with local country practices and regulations. No supplementary pension plans or savings plans are provided.

• Pension and other benefits do not constitute a significant proportion of total compensation.

• Globally, the Company operates both defined benefit and defined contribution pension plans (see also Note 24 to the Company's consolidated financial statements).

• Novartis may provide other benefits according to local market practice. These include the provision of a company car, tax and financial planning, and insurance benefits.

• Novartis reimburses additional taxes incurred by employees arising from international business travel outside their country of employment.

2025 Annual Incentive

![WSGE_DP_Graph_ecncycompensationsystem_variablecompensation](comp_0012.gif)

PLAN OVERVIEWTarget Annual Incentive On-target opportunities•CEO: 150% of annual base salary.•Other Executive Committee members: 90% to 120% of annual base salary.Performance measures•An Annual Incentive balanced scorecard containing:•Financial performance measures (60% weighting) related to the Company •Strategic objectives (40% weighting)•The balanced scorecard targets and achievements of the CEO are detailed in "2025 CEO Annual Incentive balanced scorecard."•The balanced scorecards for individual Executive Committee members include the same company financialtargets (60% weighting), as well as individual qualitative and quantitative targets (40% weighting).•Values and Behaviors are a key component of the Annual Incentive and are embedded in our culture. Assuch, members of the Executive Committee are expected to demonstrate these to the highest standards.Target setting•Financial targets are set at the beginning of each financial year and align with the strategic plan proposed by management to the Board of Directors for approval.•The strategic objectives are aligned with the most important priorities in any performance year.Payout ranges•The payout schedule for the Annual Incentive incorporates performance against financial and strategic objectives. The payout range is from 0% to 200% of target depending on performance, as shown below:PERFORMANCEPAYOUT (% of target)Outstanding170% 200%Exceeds expectations130% 160%Meets expectations80% 120%Partially meets expectations40% 70%Below expectations0%Payout formulaPayout vehicle•At the end of the performance period, 50% is paid in cash, and the remaining 50% is delivered in Novartis equity (restricted shares or RSUs) deferred for three years. If the shareholding requirement is met, the portion of the Annual Incentive that is mandatorily deferred in equity is reduced to 30%.•Executives may choose to receive all or part of the cash portion of their Annual Incentive in Novartis shares or American Depositary Receipts (ADRs; US only) that will not be subject to forfeiture conditions. In the US, awards may also be delivered in cash under the US deferred compensation plan.Dividend rights, voting rights and settlement•Novartis restricted shares and ADRs carry voting rights and dividends during the vesting period. •RSUs are of equivalent value but do not carry voting rights and dividends during the vesting period. Following the vesting period, settlement of RSUs is made in unrestricted Novartis shares or ADRs. Annual base salaryxTargetincentive % =Target Annual IncentiveAnnual base salaryxTarget incentive %xPayout factor (% of target: 0%200%)=Realized Annual Incentive

2023–2025 LTPP cycle

![WSGE_DP_Graph_planstructure_LTPP](comp_0016.gif)

PLAN OVERVIEWAward vehiclePerformance share units (PSUs) are granted at the beginning of the three-year performance cycle and vest at the end of the cycle to the extent that performance conditions have been met. At the time of vesting, they are converted into Novartis shares.PSUs carry dividend equivalents that are paid in shares at the end of the cycle.Grant formula At the start of the performance cycle, PSUs are granted under the LTPP, as follows:Target opportunity •CEO: 325% of annual base salary. Effective 2024-2026 LTPP cycle: 400% of annual base salary as communicated in the 2023 Compensation Report.•Other Executive Committee members: between 190% and 270% of annual base salaryPerformance measures•Third-party sales CAGR (25%)•Core operating income CAGR (25%)•Innovation (25%)•Relative TSR (25%)Target settingFinancial targets: Targets for third-party sales CAGR and core operating income CAGR are set based on the three-year strategic plan of the Company. Innovation: Development targets are based on targeted filings communicated at the start of each three-year performance cycle, weighted 70%. For cycle 2023-2025, Biomedical Research targets consider the expected Net Present Value (eNPV) of programs transitioning to late-stage clinical development, weighted 30%. Effective 2024-2026 LTPP cycle, given the earlier involvement from our commercial, strategy and growth business areas, all projects transitioning to late-stage clinical development have strategic value and are therefore scored equally.Payout rangeFinancial targets: When assessing performance, achievements for threshold, target, and maximum payout are defined for each metric, and a payout curve is applied to determine the corresponding payout between 0-200% against target.Innovation: At the end of the cycle, the Compensation Committee determines, following input from the STC, the payout factor based on the number of relevant clinical milestones achieved against the target score.Relative TSR: Performance on TSR is assessed relative to our global healthcare peer group, as outlined below. A three-month averaging method is used for both the start and the end of the performance cycle. Companies are then ranked in order of highest to lowest TSR in USD. No payout for below median TSR applies.Payout formulaStep 1Annual base salaryxTarget incentive %=Grant valueStep 2Grant value/Share price=Target number of PSUsGlobal healthcare peer groupAbbVieAmgenAstraZenecaBiogenBristol-Myers SquibbEli LillyGilead SciencesGlaxoSmithKlineJohnson & JohnsonMerck & Co.Novo NordiskPfizerRocheSanofiNovartis position Payout rangein the peer group(% of target)Position 1 2Position 3 5Position 6 8Position 9 15170% 200% 130% 160%80% 120%0%Target number of PSUsxPayout factor+Dividend equivalents=Realized PSUs

#### CEO and Executive Committee share ownership requirements
CEO and Executive Committee members are required to own a minimum multiple of their annual base salary in Novartis equity as set out in the table below. The Compensation Committee reviews compliance with the share ownership guideline on an annual basis.

![WSGE_DP_Chart_Shareownership](comp_0033.gif)

FunctionOwnership levelAdditional holding requirementsTime for achieving levelEquity included in determinationCEOCFOOther ECN members6 x annual base salary3 x annual base salaryEquity vesting under the LTPP for a minimum of two years after the vesting dateNoneWithin five years of hire or promotion In the event of a substantial rise or drop in the share price, the Board of Directors may, at its discretion, amend the time period accordinglyVested and unvested Novartis shares or ADRs, and RSUs acquired under Novartis compensation plans (unvested PSUs excluded)Other shares and vested options of Novartis shares or ADRs that are owned directly or indirectly by "Persons closely linked" to an Executive Committee member

#### CEO and Executive Committee: appointments
![WSGE_DP_Graph_ecncytotalcompensation_ecnappointmentspolicy](comp_0007.gif)

Element of compensationPolicyLevelThe overall package should be market-competitive to enable the recruitment of global executive talent with deep expertise and competencies.The Compensation Committee may appoint individuals who are new to a role on an annual base salary (and/or incentives) that is below the market level, with a view to increase this toward market level over a period of three to four years as an individual develops in the role.If the scope of an existing Executive Committee member's role changes significantly during the year, the Compensation Committee may make adjustments to the individual's base salary (and/or incentives) in consideration of the benchmark of the new role and the Executive Committee appointments compensation policy.Annual base salaryThis prudent approach ensures pay levels are merit-based, with increases dependent on strong performance and proven ability in the role over a sustained period.IncentivesThe compensation package will normally include the key compensation elements and incentive opportunities in line with those offered to current Executive Committee members.In exceptional circumstances, higher incentive opportunities than those offered to current Executive Committee members may be provided at the Compensation Committee's discretion.Performance measures may include business-specific measures tailored to the specific role.Pension and other benefitsNewly appointed Executive Committee members are eligible for the local country pension plan and other benefits in line with the wider employee group.BuyoutsThe Compensation Committee seeks to balance the need to offer competitive compensation opportunities to acquire the talent required by the business with the principle of maintaining a strong focus on pay for performance.As such, when an individual forfeits variable compensation as a result of an appointment at Novartis, the Compensation Committee may offer replacement awards to compensate the commercial equivalent value or fair value of payments and awards forfeited by the individual, in such form as the Compensation Committee considers appropriate, taking into account relevant factors.Relevant factors include the expected value of the forfeited award, the replacement vehicle (i.e., cash, restricted share units, restricted shares or performance share units), whether the award is contingent on meeting performance conditions or not, the timing of forfeiture (i.e., Novartis mirrors the blocking or vesting period of the forfeited award) and the leaver conditions, in the event that the recruited individual leaves Novartis prior to the end of the blocking or vesting period.International mobility If individuals are required to relocate or be assigned away from their home location to take up their position, relocation support may be provided in line with our global mobility policies (e.g., relocation support and tax equalization). This includes ongoing US state income tax liabilities on behalf of US citizens locally employed outside the US who have US workdays and therefore, US state taxable compensation that generates a US state tax liability.

#### CEO and Executive Committee: termination arrangements
![WSGE_DP_Graph_ecncytotalcompensation_ecnleaverspolicy](comp_0008.gif)

ElementsRetirement, termination by the Company for reasons other than performance or conduct, and change of controlVoluntary resignationTermination by the Company for misconduct or poor performanceDeath or long-term disabilityAnnual Incentive for period between start of notice and termination datePro-rata Annual Incentive is paid to reflect the portion of the year the individual was employed.Annual Incentive is fully forfeited.Pro-rata Annual Incentive is paid to reflect the portion of the year the individual was employed.Unvested equity: mandatory deferral of Annual Incentive into restricted shares/ restricted share units (RSUs)Awards are released on the original blocking end date. Awards are subject to forfeiture in the event that a leaver joins a competitor company before the original vesting date.Unvested restricted shares and restricted share units (RSUs) are forfeited.Accelerated vesting is applied.Unvested equity: voluntary deferral of Annual Incentive into restricted shares/RSUs/American Depository Receipts (ADRs) (ADRs applicable for US employees only)Awards are not subject to forfeiture during the deferral period. Unvested equity: long-term incentive performance share units (PSUs)Awards vest on the regular vesting date, subject to performance, on a pro-rata basis for time spent with the Company during the performance cycle. Awards are subject to forfeiture in the event that a leaver joins a competitor company before the vesting date.All of the award is forfeited.Accelerated vesting at target is applied.Unvested equity: Buyouts or previous equity grants in restricted shares/ restricted share units (RSUs)Accelerated vesting is applied to equity pro-rated until last date of employment.All of the awards are forfeited.Accelerated vesting is applied.

Further details are provided in in our "—Risk Management principles."

#### Malus and clawback policy
Any incentive compensation paid to Executive Committee members is subject to malus and clawback rules. This means that the Board of Directors for the CEO, and the Compensation Committee for the other Executive Committee members, may decide — subject to applicable law — to retain any unpaid or unvested incentive compensation (malus), or to recover incentive compensation that has been paid or vested in the past (clawback). This applies in cases where the payout has resulted from a violation of laws or conflicts with internal management standards, including Company and accounting policies, as well as with US Securities and Exchange Commission (SEC) Rule requirements.

This principle applies to both the short-term Annual Incentive and all long-term incentive plans.

**CEO and Executive Committee performance management** 

To foster a high-performance culture, the Company applies a performance management process based on quantitative and qualitative criteria. The CEO and the other Executive Committee members are subject to a formal three-step process, which consists of objective setting, performance evaluation, and compensation determination. This process is explained in the chart below.

Performance targets are generally set before the start of the relevant performance cycle. A rigorous framework is in place for establishing targets to ensure they are suitably robust, challenging and aligned with the strategic priorities of the Company.

The key factors taken into account when setting targets include:

• Internal and external market expectations

• The strategic priorities of Novartis

• Regulatory factors (e.g., new launches and patent expiries)

• Investment in capital expenditure

• Novartis Values and Behaviors

The targets are challenged at multiple stages before they are ultimately approved by the Board of Directors. In line with good governance practices, the Compensation Committee works to set targets that are ambitious and challenging, but do not encourage undue risk-taking.

Following the end of the performance cycle, the Board of Directors and the Compensation Committee consider performance against the targets originally set. The CEO and Executive Committee members are not present while the Board of Directors and the Compensation Committee discuss their individual performance evaluations and determine their individual compensation. Prior to determining the final outcome, related factors such as performance relative to peers, wider market conditions, general industry trends, and best practice are used to inform the overall performance assessment.

![WSGE_DP_Graph_ecnperformancemgtprocess_process](comp_0009.gif)

Objective setting•The CEO proposes his targets to the Board Chair; they are then reviewed and approved by the Board of Directors.•For other Executive Committee members, targets for their business units or functions are initially discussed with the CEO and subsequently approved by the Board of Directors.Performance evaluation•The CEO's performance against the individual balanced scorecard is assessed by the Board of Directors.•For Executive Committee members, the CEO discusses each member's performance (assessed against their individual balanced scorecard) with the Board Chair before making recommendations to the Board of Directors for final determination.•Periodic assessments, including at the mid-year stage, ensure progress is suitably tracked.Compensation determination •A recommendation for the CEO's variable pay is made by the Compensation Committee to the Board of Directors for final determination.•For the LTPP financial measures payout schedules, a formulaic approach applies, and the Compensation Committee can also exercise judgment to ensure there is appropriate alignment between payout levels and overall performance achieved. The same principle of discretion applies to the relative TSR and innovation performance measures.•The CEO's recommendations for other Executive Committee members are considered and approved by the Compensation Committee, after which the Board of Directors is notified of the outcomes.

## 2026 Executive Committee compensation system changes
Novartis operates in a highly competitive and global talent marketplace. Our executive compensation system is designed to attract, retain, and motivate high caliber executives capable of executing our challenging strategy and delivering long-term, sustainable value for shareholders.

In recognition of this, the Board remains attentive to the evolving debate around global pay competitiveness, particularly the challenges faced by European-headquartered companies. As set out in the section "—Competitive Compensation", the Compensation Committee assessed remuneration benchmarking results for the CEO, using a peer group of global healthcare companies. The analysis highlighted the gap in compensation levels between US-based healthcare companies and those in the rest of the world.

The Compensation Committee will continue to monitor the evolving competitive landscape, drawing on benchmarking insights to assess the ongoing competitiveness of the ECN compensation system. In parallel, the Committee will review global pay practices and incorporate the perspectives of investors and proxy advisors to ensure the approach of Novartis remains market competitive and aligned with stakeholder expectations.

As part of the review undertaken in 2025, the Compensation Committee evaluated specific features of the executive compensation system at Novartis. We identified a number of enhancements to simplify our approach, outlined below, which will be effective from January 1, 2026.

All the changes that we have made were discussed with shareholders and proxy advisors during the 2025 governance roadshow, and we are grateful for the feedback we received.

**Global healthcare peer group**

A review of the composition of the global healthcare peer group was undertaken against key metrics such as revenue, market capitalization, and global reach. The review concluded that it would be appropriate to remove Biogen, as it is now significantly smaller than Novartis across these metrics. To ensure the peer group remains robust, relevant, and reflective of the global talent markets in which Novartis competes, we replaced Biogen with Takeda — which is more aligned with Novartis in terms of scale and strategic profile — and its inclusion enhances the overall balance of the peer group, particularly from a geographic perspective.

The updated peer group will take effect on January 1, 2026, and will serve as the basis for both ECN compensation benchmarking and relative TSR performance assessments, starting with the 2026-2028 LTPP cycle.

#### global healthcare peer companies (effective 2026)
AbbVie

Amgen

AstraZeneca

Bristol-Myers Squibb

Eli Lilly

Gilead Sciences

GlaxoSmithKline

Johnson & Johnson

Merck & Co.

Novo Nordisk

Pfizer

Roche

Sanofi

Takeda

**Relative TSR payout schedule** 

The Compensation Committee reviewed the design of the relative TSR payout curve to ensure that it is fair, transparent, and reflective of market practice. Starting with the 2026–2028 LTPP cycle, we will adopt a formulaic percentile-based TSR payout structure. This adjustment from the current structure simplifies the payout schedule and brings it in line with market practice both among peer companies and European companies more broadly. The relative TSR peer group will be based on the 14 global healthcare companies.<sup>1</sup> The revised TSR payout schedule, which will apply from the LTPP performance cycle 2026-2028, is presented below:

---

| | |
|:---|:---|
| **Novartis TSR performance (percentile)** | **Payout (% of target)** |
| >75th | 200% |
| 50th-75th | Straight-line interpolation |
| 50th | 100% |
| <50th | 0% |

---

<sup>1</sup> Peer group effective 2026: AbbVie, Amgen, AstraZeneca, Bristol-Myers Squibb, Eli Lilly, Gilead Sciences, GlaxoSmithKline, Johnson & Johnson, Merck & Co., Novo Nordisk, Pfizer, Roche, Sanofi, and Takeda.

**Annual Incentive system** 

The Compensation Committee evaluated the ECN Annual Incentive system to identify opportunities for simplification and to enhance alignment with the short-term incentive approach applied across our workforce. We concluded that a consistent Annual Incentive system that operates across all levels at Novartis is strategically important to focus all our employees on delivering against our ambitious financial and operational goals. Effective January 1, 2026, we will align the ECN Annual Incentive with the rest of the organization in a simplified, multiplicative format, which has already been in place for several years. This unified approach reinforces the significance of shared goals across the entire company, strengthens performance alignment, and rewards achievement of ambitious financial and operational targets.

We will retain our balanced scorecard approach, which will now operate under a multiplicative model. This model allows for a clear and formulaic structure for calculating payouts, while also strengthening the link between company and individual performance. The system will continue to be underpinned by stretched targets, reflecting our commitment to driving exceptional performance.

To assess the impact of changes to the ECN Annual Incentive, the Compensation Committee conducted rigorous scenario analysis and back-testing to identify any potential unintended consequences. In 2025, it reviewed a range of performance scenarios, comparing outcomes under the multiplicative model with those under peer short-term incentive structures. The analysis showed minimal deviation in payout levels across most scenarios, while also confirming that the multiplicative model enables more meaningful differentiation — both upward and downward — based on financial and individual strategic performance.

Under the Annual Incentive approach for performance year 2026, the measures and relative weightings of the financial performance metrics — as well as the 200% cap — will remain unchanged. Strategic objectives will continue to include both quantitative and qualitative targets, which will be aligned with business priorities and assessed through a balanced scorecard. The payout schedule for the strategic objectives will be as follows:

---

| | |
|:---|:---|
| **Descriptor** | **Impact factor** |
| Exceptional | 140% |
| Exceeds | 120% – 130% |
| Meet | 100% |
| Below | 50% – 80% |
| Well below | 0% |

---

The Board of Directors may use its discretion in determining Annual Incentive outcomes, including deciding the payout within the ranges, taking all relevant factors into account.

The table below summarizes the mechanics of the new Annual Incentive system.

![WSGE_DP_Graph_ai_framework](comp_0036.gif)

ANNUAL INCENTIVE system EFFECTIVE 2026Financial performance measures1 (company) •Net sales (USD m)Weighting: 40%•Core operating income (USD m)Weighting: 30%•Free cash flow as a % of net salesWeighting: 30%Payout factor between 0%– 150%Strategic objective measures (individual) •Maintain growth momentum and ensure successful launches Weighting: 25%•Deliver pipeline and drive R&D productivity Weighting: 25%•Execute on operational excellence & productivity Weighting: 25%•Strengthen foundations (ESG / Human capital) Weighting: 25%Impact factor between 0% – 140%Final Annual Incentive payoutFinal payout determined by multiplying financial and strategic performance factorsCapped at 200%1 Financial performance metrics are measured in constant currency (cc) to reflect operational performance that can be influenced.

## Executive Committee 2026 compensation
**Executive Committee members** 

#### Vasant Narasimhan, Chief Executive Officer
The Board of Directors approved an increase of 5% in the CEO's annual base salary from CHF 1 902 765 to CHF 1 997 903, effective March 1, 2026. While this exceeds the ordinary base salary increases applied to employees for 2026, the Board of Directors considered the adjustment appropriate in light of the CEO's exceptional leadership and the experience he brings to the role. This is the first significant change to the CEO's base salary since 2020. The target Annual Incentive and target LTPP remain unchanged.

#### Other Executive Committee compensation increases
Each year, we collaborate with our independent external advisors to assess the competitiveness of the Executive Committee members' total target compensation. 2026 compensation increases reflect demonstrated performance, scope of responsibilities, and development in role, as outlined in "—CEO and Executive Committee: appointments."

Karen Hale joined Novartis and the Executive Committee as Chief Legal Officer in May 2021. On April 14, 2025, Ms. Hale was appointed to the expanded role of Chief Legal and Compliance Officer, with oversight of both the Legal function and the Ethics, Risk & Compliance (ERC) function. In recognition of the increased scope and additional responsibilities, Ms. Hale received a 7% increase in annual base salary and a 10 ppts increase in her target Annual Incentive and target LTPP, expressed as a percentage of annual base salary.

In accordance with our policy to adjust total target compensation toward a more market-competitive level over a period of three to four years as executives develop in their roles, we have made changes, effective 2026, for Shreeram Aradhye, President, Development, and Chief Medical Officer; Aharon Gal, Chief Strategy & Growth Officer; and Fiona Marshall, President, Biomedical Research, who assumed their role in the last four years. They will receive increases in annual base salary between 2.5% and 5.6%, and a 20 ppts increase in their target LTPP, expressed as a percentage of annual base salary, reflecting their strong performance, leadership contributions, and the continued development and expansion of their respective roles.

Following demonstrated strong leadership, the remaining Executive Committee members will receive increases in annual base salary between 1% and 6.5% and selected members will receive an additional 10 ppts increases in their target LTPP, expressed as a percentage of base salary.

#### Departure of Chief Ethics, Risk & Compliance Officer, Klaus Moosmayer
Mr. Moosmayer stepped down from the Executive Committee on April 14, 2025, and started his notice period on May 1, 2025. The Compensation Committee ensured that contractual entitlements were respected, with all payments in line with our plan rules and the Swiss Code of Obligations. Per policy (see "—CEO and Executive Committee: termination arrangements"). During his 12-month notice period, Mr. Moosmayer is entitled to his base salary, pension, Annual Incentive, and other benefits. No severance payments were made. Outstanding equity grants will vest in line with the respective plan rules and are subject to malus and clawback — including requirements defined by the U.S. Securities and Exchange Commission — as well as non-compete restrictions. No new LTPP grants will be made during the notice period.

**Pay practice for other employees**

The Board of Directors is committed to maintaining fair and competitive compensation practices across the organization and to ensuring that all our employees receive equal pay for equal work, in full accordance with applicable laws. It approved a global budget of over USD 348 million for salary adjustments during 2026. In support of our renewed Equal Pay International Coalition (EPIC) commitments for 2027 and the upcoming EU Pay Transparency Directive, we expanded our pay equity studies beyond base pay to consider total pay for 16% of all employees in 2025.

## Board compensation

#### Board member total compensation earned for the financial year 2025 (compared with 2024)

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Positions as per December 31 | Positions as per December 31 | Positions as per December 31 | Positions as per December 31 | Positions as per December 31 | Positions as per December 31 |  | Share-based compensation | Share-based compensation |  |  |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Board | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit and Compliance Committee | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation Committee | Governance, Sustainability and Nomination Committee | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Science & Technology Committee | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Risk Committee | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash (CHF) (A) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares (CHF) (B) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares (number)<sup>1</sup> | &nbsp;&nbsp;&nbsp;&nbsp;Pension and benefits (CHF) (C)<sup>2</sup> | **&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total 2025 (CHF) (A)+(B)+(C)<sup>3</sup>** | **&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total 2024 (CHF)** |
| Giovanni Caforio | Board Chair <sup>4</sup> |  |  |  |  |  | 1 458 333 | 1 458 333 | 9 108 | 22 129 | **2 938 795** | - |
| Simon Moroney | Vice-Chair |  | Chair |  | •  |  | 230 000 | 230 000 | 2 466 | - | **460 000** | 460 000 |
| Patrice Bula | Lead Independent Director |  | •  | Chair |  |  | 205 000 | 205 000 | 2 198 | 3 918 | **413 918** | 413 784 |
| Nancy Andrews | •  |  |  |  | •  | •  | 180 000 | 180 000 | 1 929 | - | **360 000** | 360 000 |
| Ton Buechner | •  | •  |  |  |  | Chair | 175 000 | 245 000 | 3 411 | 4 808 | **424 808** | 424 675 |
| Elizabeth Doherty | •  | Chair |  |  |  | •  | 225 000 | 225 000 | 2 412 | - | **450 000** | 450 000 |
| Bridgette Heller | •  | •  | •  | •  |  |  | 215 000 | 215 000 | 2 305 | - | **430 000** | 430 000 |
| Daniel Hochstrasser | •  | •  |  | •  |  |  | 195 000 | 195 000 | 2 090 | 4 140 | **394 140** | 394 675 |
| Frans van Houten | •  | •  |  | • <sup>4</sup> | •  |  | 195 417 | 227 917 | 2 733 | - | **423 334** | 390 000 |
| Ana de Pro Gonzalo | •  | •  |  |  |  | •  | 195 000 | 195 000 | 2 090 | - | **390 000** | 390 000 |
| Elizabeth McNally | • <sup>4</sup> |  |  |  | • <sup>4</sup> |  | - | 266 667 | 1 665 | - | **266 667** | - |
| John Young | •  |  | • <sup>4</sup> |  | Chair | •  | 211 667 | 211 667 | 2 195 | - | **423 334** | 385 000 |
| **Subtotal** |  |  |  |  |  |  | **3 485 417** | **3 854 583** | **34 602** | **34 995** | **7 374 995** | **4 098 133** |
| Board members who stepped down <sup>5</sup> |  |  |  |  |  |  | 346 667 | 406 667 | 13 467 | 3 918 | **757 252** | 4 523 784 |
| **Subtotal** |  |  |  |  |  |  | **346 667** | **406 667** | **13 467** | **3 918** | **757 252** | **4 523 784** |
| **Total** |  |  |  |  |  |  | **3 832 084** | **4 261 250** | **48 069** | **38 913** | **8 132 247** | **8 621 918** |
|  <sup>1</sup> The amounts shown represent the gross number of shares delivered to each Board member in 2025 for the respective Board member's service period. The number of shares reported in this column represent: (i) the second and final equity installment delivered in January 2025 (based on the closing share price of January 15, 2025, of CHF 90.58) for their service from the 2024 AGM to the 2025 AGM; and (ii) the first of two equity installments delivered in July 2025 (based on the closing share price of July 15, 2025, of CHF 96.06) for their service from the 2025 AGM to the 2026 AGM. The second and final equity installment for their service from the 2025 AGM to the 2026 AGM took place in January 2026. | <sup>1</sup> The amounts shown represent the gross number of shares delivered to each Board member in 2025 for the respective Board member's service period. The number of shares reported in this column represent: (i) the second and final equity installment delivered in January 2025 (based on the closing share price of January 15, 2025, of CHF 90.58) for their service from the 2024 AGM to the 2025 AGM; and (ii) the first of two equity installments delivered in July 2025 (based on the closing share price of July 15, 2025, of CHF 96.06) for their service from the 2025 AGM to the 2026 AGM. The second and final equity installment for their service from the 2025 AGM to the 2026 AGM took place in January 2026. | <sup>1</sup> The amounts shown represent the gross number of shares delivered to each Board member in 2025 for the respective Board member's service period. The number of shares reported in this column represent: (i) the second and final equity installment delivered in January 2025 (based on the closing share price of January 15, 2025, of CHF 90.58) for their service from the 2024 AGM to the 2025 AGM; and (ii) the first of two equity installments delivered in July 2025 (based on the closing share price of July 15, 2025, of CHF 96.06) for their service from the 2025 AGM to the 2026 AGM. The second and final equity installment for their service from the 2025 AGM to the 2026 AGM took place in January 2026. | <sup>1</sup> The amounts shown represent the gross number of shares delivered to each Board member in 2025 for the respective Board member's service period. The number of shares reported in this column represent: (i) the second and final equity installment delivered in January 2025 (based on the closing share price of January 15, 2025, of CHF 90.58) for their service from the 2024 AGM to the 2025 AGM; and (ii) the first of two equity installments delivered in July 2025 (based on the closing share price of July 15, 2025, of CHF 96.06) for their service from the 2025 AGM to the 2026 AGM. The second and final equity installment for their service from the 2025 AGM to the 2026 AGM took place in January 2026. | <sup>1</sup> The amounts shown represent the gross number of shares delivered to each Board member in 2025 for the respective Board member's service period. The number of shares reported in this column represent: (i) the second and final equity installment delivered in January 2025 (based on the closing share price of January 15, 2025, of CHF 90.58) for their service from the 2024 AGM to the 2025 AGM; and (ii) the first of two equity installments delivered in July 2025 (based on the closing share price of July 15, 2025, of CHF 96.06) for their service from the 2025 AGM to the 2026 AGM. The second and final equity installment for their service from the 2025 AGM to the 2026 AGM took place in January 2026. | <sup>1</sup> The amounts shown represent the gross number of shares delivered to each Board member in 2025 for the respective Board member's service period. The number of shares reported in this column represent: (i) the second and final equity installment delivered in January 2025 (based on the closing share price of January 15, 2025, of CHF 90.58) for their service from the 2024 AGM to the 2025 AGM; and (ii) the first of two equity installments delivered in July 2025 (based on the closing share price of July 15, 2025, of CHF 96.06) for their service from the 2025 AGM to the 2026 AGM. The second and final equity installment for their service from the 2025 AGM to the 2026 AGM took place in January 2026. | <sup>1</sup> The amounts shown represent the gross number of shares delivered to each Board member in 2025 for the respective Board member's service period. The number of shares reported in this column represent: (i) the second and final equity installment delivered in January 2025 (based on the closing share price of January 15, 2025, of CHF 90.58) for their service from the 2024 AGM to the 2025 AGM; and (ii) the first of two equity installments delivered in July 2025 (based on the closing share price of July 15, 2025, of CHF 96.06) for their service from the 2025 AGM to the 2026 AGM. The second and final equity installment for their service from the 2025 AGM to the 2026 AGM took place in January 2026. | <sup>1</sup> The amounts shown represent the gross number of shares delivered to each Board member in 2025 for the respective Board member's service period. The number of shares reported in this column represent: (i) the second and final equity installment delivered in January 2025 (based on the closing share price of January 15, 2025, of CHF 90.58) for their service from the 2024 AGM to the 2025 AGM; and (ii) the first of two equity installments delivered in July 2025 (based on the closing share price of July 15, 2025, of CHF 96.06) for their service from the 2025 AGM to the 2026 AGM. The second and final equity installment for their service from the 2025 AGM to the 2026 AGM took place in January 2026. | <sup>1</sup> The amounts shown represent the gross number of shares delivered to each Board member in 2025 for the respective Board member's service period. The number of shares reported in this column represent: (i) the second and final equity installment delivered in January 2025 (based on the closing share price of January 15, 2025, of CHF 90.58) for their service from the 2024 AGM to the 2025 AGM; and (ii) the first of two equity installments delivered in July 2025 (based on the closing share price of July 15, 2025, of CHF 96.06) for their service from the 2025 AGM to the 2026 AGM. The second and final equity installment for their service from the 2025 AGM to the 2026 AGM took place in January 2026. | <sup>1</sup> The amounts shown represent the gross number of shares delivered to each Board member in 2025 for the respective Board member's service period. The number of shares reported in this column represent: (i) the second and final equity installment delivered in January 2025 (based on the closing share price of January 15, 2025, of CHF 90.58) for their service from the 2024 AGM to the 2025 AGM; and (ii) the first of two equity installments delivered in July 2025 (based on the closing share price of July 15, 2025, of CHF 96.06) for their service from the 2025 AGM to the 2026 AGM. The second and final equity installment for their service from the 2025 AGM to the 2026 AGM took place in January 2026. | <sup>1</sup> The amounts shown represent the gross number of shares delivered to each Board member in 2025 for the respective Board member's service period. The number of shares reported in this column represent: (i) the second and final equity installment delivered in January 2025 (based on the closing share price of January 15, 2025, of CHF 90.58) for their service from the 2024 AGM to the 2025 AGM; and (ii) the first of two equity installments delivered in July 2025 (based on the closing share price of July 15, 2025, of CHF 96.06) for their service from the 2025 AGM to the 2026 AGM. The second and final equity installment for their service from the 2025 AGM to the 2026 AGM took place in January 2026. | <sup>1</sup> The amounts shown represent the gross number of shares delivered to each Board member in 2025 for the respective Board member's service period. The number of shares reported in this column represent: (i) the second and final equity installment delivered in January 2025 (based on the closing share price of January 15, 2025, of CHF 90.58) for their service from the 2024 AGM to the 2025 AGM; and (ii) the first of two equity installments delivered in July 2025 (based on the closing share price of July 15, 2025, of CHF 96.06) for their service from the 2025 AGM to the 2026 AGM. The second and final equity installment for their service from the 2025 AGM to the 2026 AGM took place in January 2026. | <sup>1</sup> The amounts shown represent the gross number of shares delivered to each Board member in 2025 for the respective Board member's service period. The number of shares reported in this column represent: (i) the second and final equity installment delivered in January 2025 (based on the closing share price of January 15, 2025, of CHF 90.58) for their service from the 2024 AGM to the 2025 AGM; and (ii) the first of two equity installments delivered in July 2025 (based on the closing share price of July 15, 2025, of CHF 96.06) for their service from the 2025 AGM to the 2026 AGM. The second and final equity installment for their service from the 2025 AGM to the 2026 AGM took place in January 2026. |
|  <sup>2</sup> Includes social security contributions to the extent that they result in a pension entitlement. For Giovanni Caforio, it also includes mandatory employer pension contributions, as required by Swiss law, and relocation costs. | <sup>2</sup> Includes social security contributions to the extent that they result in a pension entitlement. For Giovanni Caforio, it also includes mandatory employer pension contributions, as required by Swiss law, and relocation costs. | <sup>2</sup> Includes social security contributions to the extent that they result in a pension entitlement. For Giovanni Caforio, it also includes mandatory employer pension contributions, as required by Swiss law, and relocation costs. | <sup>2</sup> Includes social security contributions to the extent that they result in a pension entitlement. For Giovanni Caforio, it also includes mandatory employer pension contributions, as required by Swiss law, and relocation costs. | <sup>2</sup> Includes social security contributions to the extent that they result in a pension entitlement. For Giovanni Caforio, it also includes mandatory employer pension contributions, as required by Swiss law, and relocation costs. | <sup>2</sup> Includes social security contributions to the extent that they result in a pension entitlement. For Giovanni Caforio, it also includes mandatory employer pension contributions, as required by Swiss law, and relocation costs. | <sup>2</sup> Includes social security contributions to the extent that they result in a pension entitlement. For Giovanni Caforio, it also includes mandatory employer pension contributions, as required by Swiss law, and relocation costs. | <sup>2</sup> Includes social security contributions to the extent that they result in a pension entitlement. For Giovanni Caforio, it also includes mandatory employer pension contributions, as required by Swiss law, and relocation costs. | <sup>2</sup> Includes social security contributions to the extent that they result in a pension entitlement. For Giovanni Caforio, it also includes mandatory employer pension contributions, as required by Swiss law, and relocation costs. | <sup>2</sup> Includes social security contributions to the extent that they result in a pension entitlement. For Giovanni Caforio, it also includes mandatory employer pension contributions, as required by Swiss law, and relocation costs. | <sup>2</sup> Includes social security contributions to the extent that they result in a pension entitlement. For Giovanni Caforio, it also includes mandatory employer pension contributions, as required by Swiss law, and relocation costs. | <sup>2</sup> Includes social security contributions to the extent that they result in a pension entitlement. For Giovanni Caforio, it also includes mandatory employer pension contributions, as required by Swiss law, and relocation costs. | <sup>2</sup> Includes social security contributions to the extent that they result in a pension entitlement. For Giovanni Caforio, it also includes mandatory employer pension contributions, as required by Swiss law, and relocation costs. |
|  <sup>3</sup> All amounts are before the deduction of social security contributions and income tax paid by the Board members. | <sup>3</sup> All amounts are before the deduction of social security contributions and income tax paid by the Board members. | <sup>3</sup> All amounts are before the deduction of social security contributions and income tax paid by the Board members. | <sup>3</sup> All amounts are before the deduction of social security contributions and income tax paid by the Board members. | <sup>3</sup> All amounts are before the deduction of social security contributions and income tax paid by the Board members. | <sup>3</sup> All amounts are before the deduction of social security contributions and income tax paid by the Board members. | <sup>3</sup> All amounts are before the deduction of social security contributions and income tax paid by the Board members. | <sup>3</sup> All amounts are before the deduction of social security contributions and income tax paid by the Board members. | <sup>3</sup> All amounts are before the deduction of social security contributions and income tax paid by the Board members. | <sup>3</sup> All amounts are before the deduction of social security contributions and income tax paid by the Board members. | <sup>3</sup> All amounts are before the deduction of social security contributions and income tax paid by the Board members. | <sup>3</sup> All amounts are before the deduction of social security contributions and income tax paid by the Board members. | <sup>3</sup> All amounts are before the deduction of social security contributions and income tax paid by the Board members. |
|  <sup>4</sup> From March 7, 2025. | <sup>4</sup> From March 7, 2025. | <sup>4</sup> From March 7, 2025. | <sup>4</sup> From March 7, 2025. | <sup>4</sup> From March 7, 2025. | <sup>4</sup> From March 7, 2025. | <sup>4</sup> From March 7, 2025. | <sup>4</sup> From March 7, 2025. | <sup>4</sup> From March 7, 2025. | <sup>4</sup> From March 7, 2025. | <sup>4</sup> From March 7, 2025. | <sup>4</sup> From March 7, 2025. | <sup>4</sup> From March 7, 2025. |
|  <sup>5</sup> Includes the compensation earned by Joerg Reinhardt (CHF 637 252), Charles Sawyers (CHF 60 000), and William Winters (CHF 60 000), who stepped down at the 2025 AGM. In addition, in 2025, Charles Sawyers received consultancy fees for his work on the Oncology Scientific Advisory Board of Novartis Institutes for BioMedical Research, Inc for an amount of CHF 11 641 (2024: CHF 12 327). The consultancy fees received by Charles Sawyers are excluded from the table above. | <sup>5</sup> Includes the compensation earned by Joerg Reinhardt (CHF 637 252), Charles Sawyers (CHF 60 000), and William Winters (CHF 60 000), who stepped down at the 2025 AGM. In addition, in 2025, Charles Sawyers received consultancy fees for his work on the Oncology Scientific Advisory Board of Novartis Institutes for BioMedical Research, Inc for an amount of CHF 11 641 (2024: CHF 12 327). The consultancy fees received by Charles Sawyers are excluded from the table above. | <sup>5</sup> Includes the compensation earned by Joerg Reinhardt (CHF 637 252), Charles Sawyers (CHF 60 000), and William Winters (CHF 60 000), who stepped down at the 2025 AGM. In addition, in 2025, Charles Sawyers received consultancy fees for his work on the Oncology Scientific Advisory Board of Novartis Institutes for BioMedical Research, Inc for an amount of CHF 11 641 (2024: CHF 12 327). The consultancy fees received by Charles Sawyers are excluded from the table above. | <sup>5</sup> Includes the compensation earned by Joerg Reinhardt (CHF 637 252), Charles Sawyers (CHF 60 000), and William Winters (CHF 60 000), who stepped down at the 2025 AGM. In addition, in 2025, Charles Sawyers received consultancy fees for his work on the Oncology Scientific Advisory Board of Novartis Institutes for BioMedical Research, Inc for an amount of CHF 11 641 (2024: CHF 12 327). The consultancy fees received by Charles Sawyers are excluded from the table above. | <sup>5</sup> Includes the compensation earned by Joerg Reinhardt (CHF 637 252), Charles Sawyers (CHF 60 000), and William Winters (CHF 60 000), who stepped down at the 2025 AGM. In addition, in 2025, Charles Sawyers received consultancy fees for his work on the Oncology Scientific Advisory Board of Novartis Institutes for BioMedical Research, Inc for an amount of CHF 11 641 (2024: CHF 12 327). The consultancy fees received by Charles Sawyers are excluded from the table above. | <sup>5</sup> Includes the compensation earned by Joerg Reinhardt (CHF 637 252), Charles Sawyers (CHF 60 000), and William Winters (CHF 60 000), who stepped down at the 2025 AGM. In addition, in 2025, Charles Sawyers received consultancy fees for his work on the Oncology Scientific Advisory Board of Novartis Institutes for BioMedical Research, Inc for an amount of CHF 11 641 (2024: CHF 12 327). The consultancy fees received by Charles Sawyers are excluded from the table above. | <sup>5</sup> Includes the compensation earned by Joerg Reinhardt (CHF 637 252), Charles Sawyers (CHF 60 000), and William Winters (CHF 60 000), who stepped down at the 2025 AGM. In addition, in 2025, Charles Sawyers received consultancy fees for his work on the Oncology Scientific Advisory Board of Novartis Institutes for BioMedical Research, Inc for an amount of CHF 11 641 (2024: CHF 12 327). The consultancy fees received by Charles Sawyers are excluded from the table above. | <sup>5</sup> Includes the compensation earned by Joerg Reinhardt (CHF 637 252), Charles Sawyers (CHF 60 000), and William Winters (CHF 60 000), who stepped down at the 2025 AGM. In addition, in 2025, Charles Sawyers received consultancy fees for his work on the Oncology Scientific Advisory Board of Novartis Institutes for BioMedical Research, Inc for an amount of CHF 11 641 (2024: CHF 12 327). The consultancy fees received by Charles Sawyers are excluded from the table above. | <sup>5</sup> Includes the compensation earned by Joerg Reinhardt (CHF 637 252), Charles Sawyers (CHF 60 000), and William Winters (CHF 60 000), who stepped down at the 2025 AGM. In addition, in 2025, Charles Sawyers received consultancy fees for his work on the Oncology Scientific Advisory Board of Novartis Institutes for BioMedical Research, Inc for an amount of CHF 11 641 (2024: CHF 12 327). The consultancy fees received by Charles Sawyers are excluded from the table above. | <sup>5</sup> Includes the compensation earned by Joerg Reinhardt (CHF 637 252), Charles Sawyers (CHF 60 000), and William Winters (CHF 60 000), who stepped down at the 2025 AGM. In addition, in 2025, Charles Sawyers received consultancy fees for his work on the Oncology Scientific Advisory Board of Novartis Institutes for BioMedical Research, Inc for an amount of CHF 11 641 (2024: CHF 12 327). The consultancy fees received by Charles Sawyers are excluded from the table above. | <sup>5</sup> Includes the compensation earned by Joerg Reinhardt (CHF 637 252), Charles Sawyers (CHF 60 000), and William Winters (CHF 60 000), who stepped down at the 2025 AGM. In addition, in 2025, Charles Sawyers received consultancy fees for his work on the Oncology Scientific Advisory Board of Novartis Institutes for BioMedical Research, Inc for an amount of CHF 11 641 (2024: CHF 12 327). The consultancy fees received by Charles Sawyers are excluded from the table above. | <sup>5</sup> Includes the compensation earned by Joerg Reinhardt (CHF 637 252), Charles Sawyers (CHF 60 000), and William Winters (CHF 60 000), who stepped down at the 2025 AGM. In addition, in 2025, Charles Sawyers received consultancy fees for his work on the Oncology Scientific Advisory Board of Novartis Institutes for BioMedical Research, Inc for an amount of CHF 11 641 (2024: CHF 12 327). The consultancy fees received by Charles Sawyers are excluded from the table above. | <sup>5</sup> Includes the compensation earned by Joerg Reinhardt (CHF 637 252), Charles Sawyers (CHF 60 000), and William Winters (CHF 60 000), who stepped down at the 2025 AGM. In addition, in 2025, Charles Sawyers received consultancy fees for his work on the Oncology Scientific Advisory Board of Novartis Institutes for BioMedical Research, Inc for an amount of CHF 11 641 (2024: CHF 12 327). The consultancy fees received by Charles Sawyers are excluded from the table above. |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |

---

#### Compensation approved and dispensed

---

| | | |
|:---|:---|:---|
| in CHF |  | **Board of Directors** |
| Compensation earned during the financial year 2025 | (A) | 8 132 247 |
| Compensation earned for the period January 1 to February 28, 2025 (2 months) | (B) | 1 437 820 |
| Compensation to be earned for the period from January 1 to February 28, 2026 (2 months) | (C) | 1 338 152 |
| Total compensation earned for the period from the 2025 AGM to the 2026 AGM | (A)-(B)+(C) | 8 032 579 |
| Amount approved by shareholders at the 2025 AGM |  | 8 200 000 |
| Compensation dispensed by the Company within the approved amount |  | Yes |

---

#### Shares, ADRs and share options owned by Board members
The total number of vested Novartis shares and ADRs owned by members of the Board of Directors and "persons closely linked" to them as at December 31, 2025, is presented in the table below. As at this date, no members of the Board, either individually or together with "persons closely linked" to them, owned 1% or more of the outstanding shares (or ADRs) of Novartis. As at that date, no members of the Board of Directors held any share options to purchase Novartis shares.

---

| | | |
|:---|:---|:---|
|  | **Number of shares <br> at December 31, 2025<sup>1,2</sup>** | Number of shares <br> at December 31, 2024 |
| Giovanni Caforio | 6 875 | - |
| Simon Moroney | 9 663 | 7 814 |
| Patrice Bula | 15 604 | 13 406 |
| Nancy Andrews | 11 609 | 11 962 |
| Ton Buechner | 29 534 | 26 236 |
| Elizabeth Doherty | 18 434 | 16 625 |
| Bridgette Heller | 9 646 | 7 917 |
| Daniel Hochstrasser | 5 000 | 4 883 |
| Frans van Houten | 20 927 | 18 878 |
| Ana de Pro Gonzalo | 5 534 | 3 966 |
| Elizabeth McNally | 1 249 | - |
| John Young | 3 649 | 2 070 |
| **Subtotal** | **137 724** | **113 757** |
| **Board members who stepped down at the 2025 AGM** | **Board members who stepped down at the 2025 AGM** | **Board members who stepped down at the 2025 AGM** |
| Joerg Reinhardt | 524 192 | 675 414 |
| Charles Sawyers | 19 664 | 18 919 |
| William Winters | 14 949 | 33 489 |
| **Subtotal** | 558 805 | **727 822** |
| **Total** | **696 529** | **841 579** |
|  <sup>1</sup> Includes holdings of persons closely linked to Board members (see definition "—persons closely linked"). | <sup>1</sup> Includes holdings of persons closely linked to Board members (see definition "—persons closely linked"). | <sup>1</sup> Includes holdings of persons closely linked to Board members (see definition "—persons closely linked"). |
|  <sup>2</sup> Each share provides entitlement to one vote. | <sup>2</sup> Each share provides entitlement to one vote. | <sup>2</sup> Each share provides entitlement to one vote. |

---

**Additional disclosures and other statutory information**

#### Other payments to Board members
During 2025 (as in 2024), no payments (or waivers of claims) other than those set out in the Board member compensation table titled "—Board member total compensation earned for the financial year 2025" (including in the table footnotes) were made to current members of the Board or to "persons closely linked" to them.

#### Payments to former Board members
During 2025 (as in 2024), no payments (or waivers of claims) were made to former Board members or to "persons closely linked" to them.

#### Note 26 to the Group's audited consolidated financial statements
The total expense for the year for compensation awarded to Board members, using IFRS Accounting Standards measurement rules, is presented in Note 26 to the Group's audited consolidated financial statements.

## Board compensation philosophy and fee structure
**Philosophy and benchmarking**

Aligned with market practice in Switzerland, the Board of Directors sets compensation for its members at a level that allows for the attraction of high-caliber individuals, including both Swiss and international members, who have global experience.

Given their focus on corporate strategy, supervision and governance, Board members do not receive variable compensation. Each year at the AGM, shareholders are requested to approve, in a binding vote, the total compensation of the Board of Directors until the following AGM.

The Board of Directors sets the level of compensation for its Chair and other members to be in line with relevant benchmark companies, including other large Switzerland-based multinational companies such as ABB, Holcim, Nestlé, Richemont, Roche, Swiss Re, UBS, and Zurich Insurance. This peer group, which remains the same as last year, was chosen due to the comparability of Swiss legal requirements, including broad personal and individual liabilities under Swiss law (and criminal liability under Swiss rules regarding board and executive committee compensation related to the Swiss Code of Obligations), and under US law, where applicable (due to the Company's secondary listing on the New York Stock Exchange). To ensure independent decision-making, the peer group used for the Board of Directors is different to that used for the Executive Committee. Each year, the Board of Directors reviews the compensation of its members, including the Board Chair, based on a proposal by the Compensation Committee and advice from its independent advisor, including relevant benchmarking information.

The Board Chair's contract and the Board of Directors compensation policy do not provide for any termination-related payments.

**Share ownership requirements for Board members** 

To ensure their interests are aligned with those of shareholders, the Board Chair is required to own a minimum of 30 000 Novartis shares, and other members of the Board of Directors are required to own at least 5 000 Novartis shares, within five years of having joined the Board of Directors.

Board members are prohibited from hedging or pledging their ownership positions in Novartis shares that are part of their guideline share ownership requirement and are required to maintain this requirement for 12 months after having retired from the Board of Directors. As at December 31, 2025, all current and former members of the Board of Directors who were required to meet the minimum share ownership requirements did so.

**AGM 2025-2026 Board fee structure** 

The AGM 2025-2026 annual fee rates for Board membership and additional functions are included in the table below. These were approved by the Board of Directors and remain unchanged from the prior term. Aggregate Board compensation is aligned with other large Swiss companies.

Board members receive only fixed compensation and do not receive additional fees for attending meetings. Fees paid are at least 50% in Novartis shares (up to 100% at the choice of each Board member) and the remainder is paid in cash. Board members bear the full cost of their employee social security contributions, if any.

---

| | |
|:---|:---|
| AGM 2025-2026 annual fee | CHF 000s |
| Board Chair | 3 500 |
| Board membership | 280 |
| Vice-Chair | 50 |
| Lead Independent Director | 20 |
| Chair of the Audit and Compliance Committee | 130 |
| Chair of the Compensation Committee | 90 |
| Chair of the following committees:<br>• Governance, Nomination and Corporate Responsibilities Committee<br>• Science & Technology Committee<br>• Risk Committee | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;70 |
| Membership of the Audit and Compliance Committee | &nbsp;&nbsp;&nbsp;&nbsp;70 |
| Membership of the following committees:<br>• Compensation Committee<br>• Governance, Nomination and Corporate Responsibilities Committee<br>• Science & Technology Committee<br>• Risk Committee | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;40 |

---

Board members do not receive any company pension, insurance or other benefits, unless mandated by local legislation. Novartis pays mandatory employer pension contributions for the Board Chair as required by law.

**AGM 2026-2027 Board fee changes** 

At the 2025 AGM, shareholders approved the annual Board Chair compensation of CHF 3.5 million, effective from the 2025 AGM. The Board Chair fee will remain unchanged for AGM 2026-2027.

In 2025, as part of the annual review process, an evaluation of Board and committee fees was undertaken to ensure fees reflect the required time commitment, responsibilities, and expertise, in line with our Board compensation philosophy.

The review found that since 2018, when the last material adjustment to Board fees was made, the demands on Board committees have increased significantly. This is due to Committees operating in a more dynamic and complex environment, shaped by heightened regulatory expectations and increased engagement with internal and external stakeholders.

To ensure fee levels reflect these expanded responsibilities and the increased scope and complexity of committee work, it was determined that an increase in Committee fees for chairs (CHF 20 000 each) and members (CHF 10 000 each) was necessary, effective from the 2026 AGM. Board retainer fees will remain unchanged. For more information and rationale, see our 2026 Say-on-Pay brochure.

## Compensation governance
**Legal framework**

The Swiss Code of Obligations and the corporate governance guidelines of the SIX Swiss Exchange require listed companies to disclose certain information about the compensation of board and executive committee members, their equity participation, and loans made to them. This Annual Report fulfills that requirement in addition to being in line with the principles of the Swiss Code of Best Practice for Corporate Governance of the Swiss Business Federation (economiesuisse). For more information, see "—Corporate Governance" in Section 6C of this Annual Report.

**Compensation decision-making authorities**

Authority for decisions related to compensation is governed by the Articles of Incorporation, Board Regulations, and the Compensation Committee Charter, which are all published on the Company website: www.novartis.com/investors/company-overview/corporate-governance. The Compensation Committee serves as the supervisory and governing body for compensation policies and plans within Novartis, and has overall responsibility for determining, reviewing and proposing compensation policies and plans for approval by the Board of Directors in line with the Compensation Committee Charter. The discussions and conclusions of each committee meeting are delivered to the full Board of Directors. A summary of the compensation decision-making authorities is set out below.

**Approval process for key compensation decisions**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | <br> CEO | Board <br> Chair | Compensation <br> Committee | Board of <br> Directors | <br> AGM |
| **Executive Compensation** |  |  |  |  |  |
| *CEO* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Performance target setting and assessment |  | ![sign](sign-border.jpg) |  | ![sign](sign-full.jpg) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Individual compensation |  |  | ![sign](sign-border.jpg) | ![sign](sign-full.jpg) |  |
| *Other EC members* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Performance target setting and assessment | ![sign](sign-border.jpg) | ![sign](sign-full-gray.jpg) |  | ![sign](sign-full.jpg) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Individual compensation | ![sign](sign-border.jpg) | ![sign](sign-full-gray.jpg) | ![sign](sign-full.jpg) |  |  |
| *All Executive Committee* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maximum aggregate amount of fixed and variable long-term compensation |  |  | ![sign](sign-border.jpg) | ![sign](sign-full-gray.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;Binding vote |
| **Board Compensation** |  |  |  |  |  |
| *Board of Directors* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fee structure for individual roles on the Board of Directors |  |  | ![sign](sign-border.jpg) | ![sign](sign-full.jpg) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maximum aggregate amount of compensation for the next term of office |  |  | ![sign](sign-border.jpg) | ![sign](sign-full-gray.jpg) | &nbsp;&nbsp;&nbsp;&nbsp;Binding vote |
| **Other** |  |  |  |  |  |
| *Board members, Executive Committee and other employees* |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation report |  |  | ![sign](sign-border.jpg) | ![sign](sign-full.jpg) | Advisory vote |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation policy and principles |  |  | ![sign](sign-border.jpg) | ![sign](sign-full.jpg) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Variable short-term and long-term compensation payout factors for the Group |  |  | ![sign](sign-border.jpg) | ![sign](sign-full.jpg) |  |

---

![sign](sign-border.jpg) Propose ![sign](sign-full-gray.jpg) Endorse ![sign](sign-full.jpg) Approve

**Committee member independence**

The Compensation Committee is composed exclusively of members of the Board of Directors who meet the independence criteria outlined in the Board Regulations. From the 2025 AGM, the Compensation Committee consisted of the following four members: Simon Moroney (as Chair), Patrice Bula, Bridgette Heller, and John Young.

**Role of the Compensation Committee's independent advisor**

The independent external compensation advisor supports the Compensation Committee in determining the design and implementation of compensation and benefits.

In 2025, the Compensation Committee retained Mitul Shah of Deloitte LLP, who was appointed in July 2022, as its independent compensation advisor. The independent advisor from Deloitte LLP and the team that advised and supported the Compensation Committee are neither responsible for nor compensated for any work on senior compensation, other than the support provided to the Compensation Committee and the People & Organization function.

**Meetings held in 2025 and self-evaluation**

In 2025, the Compensation Committee held five formal meetings. For the approval of the Board of Directors, in line with prior years, it collaborated with the Science & Technology Committee to review and endorse the innovation targets and achievements of the 2025 Annual Incentive and the 2023-2025 LTPP. The Compensation Committee conducted a self-evaluation in 2025.

**Risk management principles**

The Compensation Committee, with support from its independent compensation advisor, reviews market trends in compensation and changes in corporate governance rules and best practices. Together with the Audit and Compliance Committee, it also reviews the Novartis compensation systems to ensure that they do not encourage inappropriate or excessive risk-taking, and instead encourage behaviors that support sustainable value creation. A summary of the risk management principles is outlined below.

#### RISK MANAGEMENT PRINCIPLES
• Rigorous performance management process, with approval of targets and evaluation of performance of the CEO by the Board of Directors

• Balanced mix of short-term and long-term variable compensation elements

• Novartis Values and Behaviors are an integral part of the Annual Incentive and are embedded in our culture

• Clawback and malus principles apply to all elements of the variable compensation

• Performance-vesting long-term incentives only, with three-year cycles

• All variable compensation is capped at 200% of target

• Contractual notice period of 12 months

• Post-contractual non-compete period is limited to a maximum of 12 months from the end of employment. Resulting compensation, if applicable, will not exceed the average annual compensation (annual base salary plus Annual Incentive) of the previous three financial years

• Good and bad leaver provisions apply to variable compensation of leavers

• No severance payments or change-of-control clauses

• Share ownership requirements; no hedging or pledging of Novartis share ownership

• No loans granted to current or former members of the Executive Committee and the Board of Directors or to "Persons closely linked" to them

## Mandates outside the Novartis Group
According to article 34 of the Articles of Incorporation (https://www.novartis.com/investors/company-overview/corporate-governance), limitations apply to mandates outside the Novartis Group for Board members and Executive Committee members (see "—Item 6.C Board Practices-Board of Directors-Mandates outside the Novartis Group" and "—Item 6.C Board Practices-Executive Committee-Mandates outside the Novartis Group"). The following external mandates are subject to these limitations and are therefore presented in the Compensation Report.

#### Board Members

#### Giovanni Caforio
Stryker Corp., US ![sign](sign-full.jpg)

• Member of the Board

• Chair of the Compensation and Human Capital Committee

#### Nancy C. Andrews
Charles River Laboratories International, Inc., US ![sign](sign-full.jpg)

• Member of the Board

• Chair of the Governance and Nominating Committee ![sign](sign-full-gray.jpg)

Maze Therapeutics, Inc., US

• Member of the Board ![sign](sign-full.jpg)

#### Ton Buechner
Swiss Prime Site AG, Switzerland ![sign](sign-full.jpg)

• Board Chair

• Chair of the Sustainability Committee

Tonality Holding AG, Switzerland (private holding)\*

• Director

Bandinnera GmbH, Switzerland (private holding)\*

• Manager

Great Apes Aviation GmbH, Switzerland (private holding)\*

• Manager

#### Patrice Bula
Schindler AG, Switzerland ![sign](sign-full.jpg)

• Vice Chair of the Board

Froneri Lux Topco Sarl, Luxembourg

• Board Chair

European Pizza Group TopCo Sarl, Luxembourg

• Board Chair

New Tiger LLC, US

• Member of the Board

• Chair of the ESG Committee

• Member of the management board of Tropicana Switzerland GmbH, Switzerland (subsidiary of New Tiger LLC) ![sign](sign-full-gray.jpg)

#### Elizabeth (Liz) Doherty
Corbion NV, the Netherlands ![sign](sign-full.jpg)

• Member of the Board

• Chair of the Audit Committee

Royal Philips NV, the Netherlands ![sign](sign-full.jpg)

• Member of the Supervisory Board

• Chair of the Audit Committee

Freya Holdco S.à r.l., Luxembourg

• Member of the Advisory Committee

#### Bridgette Heller
Aramark, US ![sign](sign-full.jpg)

• Member of the Board

DexCom, Inc., US ![sign](sign-full.jpg)

• Member of the Board

• Chair of the Compensation Committee ![sign](sign-full-gray.jpg)

Newman's Own Inc., US

• Member of the Board

#### Daniel Hochstrasser
Daniel Hochstrasser AG, Switzerland

• Board Chair

• CEO

#### Frans van Houten
Absci Corporation, US ![sign](sign-full.jpg)

• Board Chair

• Chair of Nominating and Corporate Governance Committee ![sign](sign-full-gray.jpg)

Castor EDC, the Netherlands

• Board Chair

Synthesis Health Inc. Canada

• Member of the Board

FvH Capital BV, the Netherlands (private family holding)

• Director

Affidea Group BV, the Netherlands

• Member of the Board

#### Elizabeth McNally
Ikaika Therapeutics, Inc., US

• Founder, CEO and Board member

#### Simon Moroney
Biotalys NV, Belgium ![sign](sign-full.jpg)

• Board Chair

• Chair of the Remuneration and Nomination Committee

#### Ana de Pro Gonzalo
Mobico Group PLC, UK ![sign](sign-full.jpg)

• Member of the Board

STMicroelectronics NV, the Netherlands ![sign](sign-full.jpg)

• Member of the Supervisory Board

• Chair of the Audit Committee

#### John Young
Johnson Controls International plc., Ireland ![sign](sign-full.jpg)

• Member of the Board

#### Executive Committee members

#### Steffen Lang
Bachem Holding AG, Switzerland ![sign](sign-full.jpg)

• Board member

#### Victor Bulto
Labcorp Holdings Inc., US ![sign](sign-full.jpg)![sign](sign-full-gray.jpg)

• Board member

#### Other Executive Committee members
–

&nbsp;&nbsp;&nbsp;&nbsp;![sign](sign-full.jpg)in listed companies ![sign](sign-full-gray.jpg) 2026 new mandate vs. 2025

\* under common ownership

(This page has been left blank intentionally.)

(This page has been left blank intentionally.)

### 6.C Board practices

## Corporate governance
**Framework** 

Novartis is committed to effective corporate governance, and our corporate governance framework is intended to support sustainable financial performance and long-term value creation for our shareholders, patients, employees, and other stakeholders based on our Values and Behaviors.

Novartis AG is subject to and compliant with the laws and regulations of Switzerland (in particular Swiss company and securities law, SIX Swiss Exchange rules, and the Swiss Code of Best Practice for Corporate Governance), and the securities laws of the United States, including New York Stock Exchange (NYSE) listing standards applicable to foreign private issuers of securities.

The Novartis corporate governance principles are described in key governance documents, in particular in our Articles of Incorporation and the Organizational Regulations of Novartis AG ("Board Regulations") (www.novartis.com/investors/company-overview/corporate-governance).

In line with our commitment to maintaining the highest standards of corporate governance, the Governance, Sustainability and Nomination Committee (GSNC) periodically reviews both the corporate governance principles and the key governance documents against evolving best practice standards and new developments in line with our commitment to maintaining the highest standards.

![WSGE_DP_Graph_GovernanceBodies_2](cogo_0002.gif)

Our leadership structureGovernance bodies General Meeting of ShareholdersApproves operating and financial review, Novartis Group consolidated financial statements, and financial statements of Novartis AG; decides appropriation of available earnings and dividend; approves compensation of Board and Executive Committee; elects Board members, Board Chair, Compensation Committee members, Independent Proxy and external auditor; adopts and amends Articles of IncorporationExternal auditorProvides opinion on the compliance of Novartis Group consolidated financial statements and the financial statements of Novartis AG with applicable standards and Swiss law; the compliance of the Compensation Report with applicable law; and the effectiveness of internal controls over financial reportingBoard of DirectorsAudit and Compliance CommitteeCompensation CommitteeGovernance, Sustainability and Nomination CommitteeRISK CommitteeSCIENCE &TECHNOLOGYCommitteeSets strategic direction of Novartis; appoints and oversees key executives; approves major transactions and investments; adopts and amends Board RegulationsExecutive CommitteeResponsible for the operational management of Novartis

**Group structure and shareholders**

**Group structure**

#### Novartis AG and Group companies
Novartis AG, the Group's holding company, is a corporation organized under Swiss law with issued registered shares and registered office at Lichtstrasse 35, CH-4056 Basel, Switzerland.

The principal subsidiaries and associated companies of the Novartis Group are shown in "Item 18. Financial Statements—Note 31. Novartis principal subsidiaries and associated companies."

#### Organizational structure
Novartis is an innovative medicines company engaged in the research, development, manufacturing, distribution, marketing and sale of a broad range of innovative pharmaceutical medicines. Our Company comprises five organizational units: Biomedical Research, Development, Operations, US, and International. These units are supported by our global functions in areas such as corporate affairs, legal, ethics, risk and compliance, finance, internal audit, people and organization, and strategy and growth.

![WSGE_DP_Graph_CompanyStructure](cogo_0026.gif)

**Shareholdings**

#### Listed companies belonging to the Novartis Group
Novartis owns 70.68% of Novartis India Ltd., with its registered office in Mumbai, India, and a listing on the BSE (formerly known as the Bombay Stock Exchange) (ISIN INE234A01025, symbol: HCBA). The total market value of the 29.32% free float of Novartis India Ltd. was USD 63.2 million as at December 31, 2025, using the quoted market share price at year-end. Applying this share price to all shares of Novartis India Ltd, the market capitalization of the whole company was USD 215.6 million, with the market capitalization of the shares owned by Novartis amounting to USD 152.4 million.

**Shareholders**

#### Significant shareholders
According to the Share Register, as at December 31, 2025, the following registered shareholders, including nominees, held more than 2% of the total share capital, with the right to vote all their shares based on exemptions granted by the Board (see "—Item 6.C Board practices—Shareholder participation—Voting rights, restrictions and representation—Registration restrictions"):\*

---

| | |
|:---|:---|
|  | **% holding of<br> share capital<br> Dec 31, 2025** |
| **Shareholders registered for their own account:** |  |
| UBS Fund Management (Switzerland) AG, Basel | 5.5 |
| Emasan AG, Basel <sup>1</sup> | 2.0 |
|  <sup>1</sup> According to a disclosure notification filed with Novartis AG and the SIX Swiss Exchange, the beneficial owner of the shares registered for Emasan AG is Sandoz – Fondation de Famille, Liechtenstein. | <sup>1</sup> According to a disclosure notification filed with Novartis AG and the SIX Swiss Exchange, the beneficial owner of the shares registered for Emasan AG is Sandoz – Fondation de Famille, Liechtenstein. |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |

---

---

| | |
|:---|:---|
|  | **% holding of<br> share capital<br> Dec 31, 2025** |
| **Shareholders registered as nominees:** |  |
| Nortrust Nominees Ltd., London | 3.7 |
| The Bank of New York Mellon, New York | 4.6 |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Through The Bank of New York Mellon, Everett* | 3.2 |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Through The Bank of New York Mellon, SA/NV, Brussels* | 1.4 |
| **Shareholder acting as American Depositary Share (ADS) depositary:** |  |
| JPMorgan Chase Bank, N.A., New York | 8.0 |

---

According to a disclosure notification filed with Novartis AG, Norges Bank (Central Bank of Norway), Oslo, held 2.2% of the share capital but was not registered in the Share Register as at December 31, 2025.

According to a disclosure notification filed with Novartis AG and the SIX Swiss Exchange, BlackRock, Inc., New York, held between 5% and 10% but was registered with less than 2% of the share capital as at December 31, 2025.

Disclosure notifications pertaining to shareholdings filed with Novartis AG and the SIX Swiss Exchange are published on the latter's electronic publication platform:

www.ser-ag.com/en/resources/notifications-market-participants/significant-shareholders.html.

<sup>\*</sup> 9.6% of the share capital is held as treasury shares by Novartis AG or its fully owned subsidiaries (including Swiss foundations controlled by Novartis AG). Percentages in the two tables below are calculated on the basis of 2 112 421 867 ordinary shares including these treasury shares.

#### Duty to make an offer
According to the Swiss Federal Act on Financial Infrastructures, anyone who — directly, indirectly or acting in concert with third parties — acquires equity securities exceeding 33.3% of the voting rights of a company (whether or not such rights are exercisable) is required to make an offer to acquire all listed equity securities of that company. A company may raise this threshold up to 49% of the voting rights ("opting up") or may, under certain circumstances, waive the threshold ("opting out"). Novartis AG has not adopted any such measures.

#### Cross shareholdings
Novartis AG has no cross shareholdings in excess of 5% of capital or voting rights with any other company.

#### Overview of shareholder structure
The following tables relate only to registered shareholders, and cannot be assumed to represent the entire investor base because nominees and JPMorgan Chase Bank, N.A., as ADS depositary, are registered as shareholders for a large number of beneficial owners.

As at December 31, 2025, Novartis AG had approximately 184 000 registered shareholders.

#### Registered shareholders by number of shares held

---

| | | |
|:---|:---|:---|
| <br>As at December 31, 2025 | Number of<br> registered <br> shareholders | <br> % of <br> share capital |
| 1–100 | 42 973 | 0.11 |
| 101–1 000 | 104 632 | 1.95 |
| 1 001–10 000 | 33 266 | 4.30 |
| 10 001–100 000 | 2 779 | 3.29 |
| 100 001–1 000 000 | 401 | 5.84 |
| 1 000 001–5 000 000 | 64 | 6.40 |
| 5 000 001 or more | 22 | 34.08 |
| Total registered shareholders/shares <sup>1</sup> | 184 137 | 55.97 |
| Unregistered shares <sup>2</sup> |  | 44.03 |
| **Total** |  | 100.00 |
|  <sup>1</sup> Including 9.6% of the share capital held as treasury shares by Novartis AG or its fully owned subsidiaries (including Swiss foundations controlled by Novartis AG). | <sup>1</sup> Including 9.6% of the share capital held as treasury shares by Novartis AG or its fully owned subsidiaries (including Swiss foundations controlled by Novartis AG). | <sup>1</sup> Including 9.6% of the share capital held as treasury shares by Novartis AG or its fully owned subsidiaries (including Swiss foundations controlled by Novartis AG). |
|  <sup>2</sup> At the record date of the 2025 Annual General Meeting of Shareholders (AGM), unregistered shares amounted to 20.5%. | <sup>2</sup> At the record date of the 2025 Annual General Meeting of Shareholders (AGM), unregistered shares amounted to 20.5%. | <sup>2</sup> At the record date of the 2025 Annual General Meeting of Shareholders (AGM), unregistered shares amounted to 20.5%. |

---

#### Registered shareholders by type

---

| | | |
|:---|:---|:---|
| As at December 31, 2025 | Shareholders in % | Shares in % |
| Individual shareholders | 97.00 | 19.49 |
| Legal entities <sup>1</sup> | 2.98 | 41.12 |
| Nominees and fiduciaries | 0.02 | 39.39 |
| **Total** | 100.00 | 100.00 |
|  <sup>1</sup> Excluding 9.6% of the share capital held as treasury shares by Novartis AG or its fully owned subsidiaries (including Swiss foundations controlled by Novartis AG). | <sup>1</sup> Excluding 9.6% of the share capital held as treasury shares by Novartis AG or its fully owned subsidiaries (including Swiss foundations controlled by Novartis AG). | <sup>1</sup> Excluding 9.6% of the share capital held as treasury shares by Novartis AG or its fully owned subsidiaries (including Swiss foundations controlled by Novartis AG). |

---

#### Registered shareholders by country<sup>1</sup>

---

| | | |
|:---|:---|:---|
| As at December 31, 2025 | Shareholders in % | Shares in % |
| Belgium | 0.10 | 2.96 |
| Canada | 0.03 | 0.71 |
| France | 2.12 | 0.51 |
| Germany | 5.97 | 1.86 |
| Ireland | 0.62 | 0.80 |
| Luxembourg | 0.06 | 1.28 |
| Sweden | 0.09 | 0.56 |
| Switzerland <sup>2</sup> | 82.55 | 52.22 |
| United Kingdom | 0.73 | 10.82 |
| United States | 0.23 | 25.74 |
| Other countries | 7.50 | 2.54 |
| **Total** | 100.00 | 100.00 |
|  <sup>1</sup> Registered shares held by nominees are shown in the country where the company/affiliate entered in the Share Register as shareholder has its registered office. | <sup>1</sup> Registered shares held by nominees are shown in the country where the company/affiliate entered in the Share Register as shareholder has its registered office. | <sup>1</sup> Registered shares held by nominees are shown in the country where the company/affiliate entered in the Share Register as shareholder has its registered office. |
|  <sup>2</sup> Excluding 9.6% of the share capital held as treasury shares by Novartis AG or its fully owned subsidiaries (including Swiss foundations controlled by Novartis AG) . | <sup>2</sup> Excluding 9.6% of the share capital held as treasury shares by Novartis AG or its fully owned subsidiaries (including Swiss foundations controlled by Novartis AG) . | <sup>2</sup> Excluding 9.6% of the share capital held as treasury shares by Novartis AG or its fully owned subsidiaries (including Swiss foundations controlled by Novartis AG) . |

---

**Capital structure**

**Share capital**

As at December 31, 2025, the share capital amounted to CHF 1 035 086 714.83 fully paid-in and divided into 2 112 421 867 registered shares with a nominal value of CHF 0.49 each.

Shares are listed on the SIX Swiss Exchange (ISIN CH0012005267, symbol: NOVN), and on the New York Stock Exchange (NYSE) in the form of American Depositary Receipts (ADRs), representing American Depositary Shares (ADSs) (ISIN US66987V1098, symbol: NVS).

No conditional capital exists as at December 31, 2025, nor has a capital band been introduced in the Company's Articles of Incorporation.

**Shares, participation certificates, non-voting equity securities, profit-sharing certificates**

Shares are issued as uncertificated securities (in the sense of the Swiss Code of Obligations) and as book entry securities (in terms of the Swiss Act on Intermediated Securities). All shares have equal voting rights and carry equal entitlements to dividends. No participation certificates, non-voting equity securities (Genussscheine) or profit-sharing certificates have been issued.

**Convertible securities and options**

As at December 31, 2025, Novartis AG had no outstanding convertible or exchangeable bonds, warrants, options or other securities granting rights to shares, other than certain instruments granted under or in connection with equity-based participation plans of employees.

**Limitation on transferability** 

No transferability restrictions are imposed on shares (for registration restrictions, see "—Item 6.C Board practices—Shareholder participation—Voting rights, restrictions and representation—Registration restrictions"). The registration of shareholders in the Share Register or in the ADR register kept by JPMorgan Chase Bank, N.A., does not affect the tradability of shares or ADRs.

**Changes to share capital**

---

| | | | |
|:---|:---|:---|:---|
| **<br>AGM** | **<br> Shareholder decision** | **Shares<br> canceled** | **Average repurchase <br> share price (CHF)<sup>1</sup>** |
| 2023 | • Capital reduction by CHF 63.12 million (from CHF 1 201 860 626.00 to CHF 1 138 738 876.00) <br>• Authorization of the Board to repurchase shares up to a maximum of CHF 10 billion between the 2023 AGM and the 2026 AGM <sup>2</sup> | 126 243 500  | 81.56  |
| 2024 | • Capital reduction by CHF 42.90 million (from CHF 1 115 964 098.48 to CHF 1 073 065 943.53) | 87 547 255 | 86.36 |
| 2025 | • Capital reduction by CHF 37.98 million (from CHF 1 073 065 943.53 to CHF 1 035 086 714.83) <br>• Authorization of the Board to repurchase shares up to CHF 10 billion between the 2025 AGM and the 2028 AGM <sup>3</sup> | 77 508 630  | 94.23  |
| **EGM** | **Shareholder decision** |  |  |
| 2023 | • Capital reduction by CHF 22.77 million (from CHF 1 138 738 876.00 to CHF 1 115 964 098.48) by reducing the par value of each share from CHF 0.50 to CHF 0.49 |  |  |
| **<br>AGM** | **<br> Proposal to the shareholders** | **Shares to be<br> canceled** | **Average repurchase <br> share price (CHF)<sup>1</sup>** |
| 2026 | • Capital reduction by CHF 38.03 million (from CHF 1 035 086 714.83 to CHF 997 061 559.41) | 77 602 358 | 96.45 |
|  <sup>1</sup> All shares were repurchased on the SIX Swiss Exchange second trading line. | <sup>1</sup> All shares were repurchased on the SIX Swiss Exchange second trading line. | <sup>1</sup> All shares were repurchased on the SIX Swiss Exchange second trading line. | <sup>1</sup> All shares were repurchased on the SIX Swiss Exchange second trading line. |
|  <sup>2</sup> In addition to the remaining authorization from the 2022 AGM | <sup>2</sup> In addition to the remaining authorization from the 2022 AGM | <sup>2</sup> In addition to the remaining authorization from the 2022 AGM | <sup>2</sup> In addition to the remaining authorization from the 2022 AGM |
|  <sup>3</sup> In addition to the remaining authorization from the 2023 AGM | <sup>3</sup> In addition to the remaining authorization from the 2023 AGM | <sup>3</sup> In addition to the remaining authorization from the 2023 AGM | <sup>3</sup> In addition to the remaining authorization from the 2023 AGM |

---

**Key Novartis share data**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| **Issued shares** | **2 112 421 867** | **2 189 930 497** | **2 277 477 752** |
| Treasury shares <sup>1</sup> | 204 270 188 | 214 841 249 | 233 443 766 |
| **Outstanding shares at December 31** | **1 908 151 679** | **1 975 089 248** | **2 044 033 986** |
| **Weighted average number of shares outstanding** | **1 938 949 981** | **2 018 281 520** | **2 076 794 140** |
|  <sup>1</sup> Approximately 75 million treasury shares (2024: 86 million 2023: 94 million) are held in Novartis entities that restrict their availability for use. | <sup>1</sup> Approximately 75 million treasury shares (2024: 86 million 2023: 94 million) are held in Novartis entities that restrict their availability for use. | <sup>1</sup> Approximately 75 million treasury shares (2024: 86 million 2023: 94 million) are held in Novartis entities that restrict their availability for use. | <sup>1</sup> Approximately 75 million treasury shares (2024: 86 million 2023: 94 million) are held in Novartis entities that restrict their availability for use. |

---

**Per-share information**<sup>1</sup>

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| Basic earnings per share from continuing operations (USD) | 7.21 | 5.92 | 4.13 |
| Diluted earnings per share from continuing operations (USD) | 7.15 | 5.87 | 4.10 |
| Net cash flows from operating activities from continuing operations (USD) | 9.87 | 8.73 | 6.85 |
| Year-end equity for Novartis AG shareholders (USD) | 24.18 | 22.30 | 22.83 |
| Dividend (CHF) <sup>2</sup> | 3.70 | 3.50 | 3.30 |
| Dividend (USD) <sup>3</sup> | 4.67 | 3.97 | 3.76 |
|  <sup>1</sup> Calculated on the weighted average number of shares outstanding, except year-end equity. | <sup>1</sup> Calculated on the weighted average number of shares outstanding, except year-end equity. | <sup>1</sup> Calculated on the weighted average number of shares outstanding, except year-end equity. | <sup>1</sup> Calculated on the weighted average number of shares outstanding, except year-end equity. |
|  <sup>2</sup> 2025: proposal to shareholders for approval at the AGM on March 6, 2026. | <sup>2</sup> 2025: proposal to shareholders for approval at the AGM on March 6, 2026. | <sup>2</sup> 2025: proposal to shareholders for approval at the AGM on March 6, 2026. | <sup>2</sup> 2025: proposal to shareholders for approval at the AGM on March 6, 2026. |
|  <sup>3</sup> Translated into US dollars at the December 31, 2025, rate of USD 1.261 to the Swiss franc. This translation is an example only, and should not be construed as a representation that the Swiss franc amount represents, or has been or could be converted into US dollars at that or any other rate. 2024 and 2023, dividends are translated into US dollars at the Bloomberg Market System Rate on the payment date. | <sup>3</sup> Translated into US dollars at the December 31, 2025, rate of USD 1.261 to the Swiss franc. This translation is an example only, and should not be construed as a representation that the Swiss franc amount represents, or has been or could be converted into US dollars at that or any other rate. 2024 and 2023, dividends are translated into US dollars at the Bloomberg Market System Rate on the payment date. | <sup>3</sup> Translated into US dollars at the December 31, 2025, rate of USD 1.261 to the Swiss franc. This translation is an example only, and should not be construed as a representation that the Swiss franc amount represents, or has been or could be converted into US dollars at that or any other rate. 2024 and 2023, dividends are translated into US dollars at the Bloomberg Market System Rate on the payment date. | <sup>3</sup> Translated into US dollars at the December 31, 2025, rate of USD 1.261 to the Swiss franc. This translation is an example only, and should not be construed as a representation that the Swiss franc amount represents, or has been or could be converted into US dollars at that or any other rate. 2024 and 2023, dividends are translated into US dollars at the Bloomberg Market System Rate on the payment date. |

---

**Key ratios – December 31**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| Price/earnings ratio <sup>1</sup> | 19.2 | 16.6 | 14.1 |
| Dividend yield (%) <sup>1</sup> | 3.4 | 3.9 | 3.9 |
|  <sup>1</sup> Based on the Novartis share price at December 31 of each year | <sup>1</sup> Based on the Novartis share price at December 31 of each year | <sup>1</sup> Based on the Novartis share price at December 31 of each year | <sup>1</sup> Based on the Novartis share price at December 31 of each year |

---

**Key data on ADRs issued in the US**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| Year-end ADR price (USD) | 137.87 | 97.31 | 100.97 |
| High <sup>1</sup> | 139.20 | 120.89 | 105.13 |
| Low <sup>1</sup> | 97.14 | 92.57 | 80.03 |
| Number of ADRs outstanding <sup>2</sup> | &nbsp;&nbsp;&nbsp;&nbsp;168 281 989 | &nbsp;&nbsp;&nbsp;&nbsp;174 267 912 | &nbsp;&nbsp;&nbsp;&nbsp;189 633 312 |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |
|  <sup>1</sup> Based on daily closing prices | <sup>1</sup> Based on daily closing prices | <sup>1</sup> Based on daily closing prices | <sup>1</sup> Based on daily closing prices |
|  <sup>2</sup> The depositary, JPMorgan Chase Bank, N.A., holds one Novartis AG share for every ADR issued. | <sup>2</sup> The depositary, JPMorgan Chase Bank, N.A., holds one Novartis AG share for every ADR issued. | <sup>2</sup> The depositary, JPMorgan Chase Bank, N.A., holds one Novartis AG share for every ADR issued. | <sup>2</sup> The depositary, JPMorgan Chase Bank, N.A., holds one Novartis AG share for every ADR issued. |

---

**Share price (CHF)**

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| Year-end share price | 109.60 | 88.70 | 84.87 |
| High <sup>1</sup> | 110.10 | 102.70 | 93.87 |
| Low <sup>1</sup> | 82.96 | 84.52 | 74.62 |
| **Year-end market capitalization (USD billions) <sup>2</sup>** | **&nbsp;&nbsp;&nbsp;&nbsp;263.7** | **&nbsp;&nbsp;&nbsp;&nbsp;193.9** | **&nbsp;&nbsp;&nbsp;&nbsp;206.3** |
| **Year-end market capitalization (CHF billions) <sup>2</sup>** | **&nbsp;&nbsp;&nbsp;&nbsp;209.1** | **&nbsp;&nbsp;&nbsp;&nbsp;175.2** | **&nbsp;&nbsp;&nbsp;&nbsp;173.5** |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |
|  <sup>1</sup> Based on daily closing prices | <sup>1</sup> Based on daily closing prices | <sup>1</sup> Based on daily closing prices | <sup>1</sup> Based on daily closing prices |
|  <sup>2</sup> Market capitalization is calculated based on the number of shares outstanding (excluding treasury shares). Market capitalization in USD is based on the market capitalization in CHF converted at the year-end CHF/USD exchange rate. | <sup>2</sup> Market capitalization is calculated based on the number of shares outstanding (excluding treasury shares). Market capitalization in USD is based on the market capitalization in CHF converted at the year-end CHF/USD exchange rate. | <sup>2</sup> Market capitalization is calculated based on the number of shares outstanding (excluding treasury shares). Market capitalization in USD is based on the market capitalization in CHF converted at the year-end CHF/USD exchange rate. | <sup>2</sup> Market capitalization is calculated based on the number of shares outstanding (excluding treasury shares). Market capitalization in USD is based on the market capitalization in CHF converted at the year-end CHF/USD exchange rate. |

---

## Shareholder participation
**Shareholder engagement**

Shareholder engagement is fundamental to our commitment to governance and transparency, and the feedback we receive during these engagements helps us create long-term and sustainable value.

We concentrate our outreach efforts on our largest 100 shareholders — portfolio managers, buy-side professionals, stewardship teams and ESG analysts — who represent approximately 60% of our ownership. While the Board Chair, CEO and CFO, together with our Investor Relations team, are responsible for ensuring effective shareholder engagement, other senior managers from within and outside the Executive Committee also participate in these meetings. We conduct regular outreach to investors throughout the year.

#### Our shareholder engagement efforts include:
• AGM and quarterly results webcasts

• Bank conferences and management roadshows

• The "Meet Novartis Management" capital markets event

• Pipeline updates i.e. Novartis Immunology Pipeline Update webcast

• Governance roadshow and teleconferences

• Board Chair's meetings with Swiss, US and UK investors

• Annual Social Impact and Sustainability investor event

#### Topics discussed with shareholders during 2025:

#### ACCELERATE Growth AND RETURNS:
• Growth drivers (including *Kisqali, Kesimpta, Pluvicto, and Scemblix*)

• Replacement power

• Innovation milestones (i.e. *Pluvicto, Vanrafia, Fabhalta, and Rhapsido*)

• Policy and pricing environment

#### DELIVER THROUGH OPERATIONal EXCELLENCE:
• Progress on financial, strategic and operational performance

• Return on R&D investments

• Capital allocation strategy

• New organizational model

#### STRENGTHEN FOUNDATIONS:
• Systematic integration of Access Principles across the research and development/production/commercialization continuum

• Global health and malaria innovation pipeline

• Progress on climate and nature aspirations

#### Compensation AND Governance:
• Board renewal, succession planning and evaluation

• The linking of the compensation system to performance and strategic priorities

**Voting rights, restrictions and representation**

#### Registration
Shareholders have the right to vote and to execute all other rights as granted under Swiss law and the Articles of Incorporation (see, in particular, articles 17 and 18 of the Articles of Incorporation).

Each share registered with the right to vote by the third business day before the General Meeting entitles the holder to one vote. Article 5, paragraph 2 of the Articles of Incorporation provides that to be registered with voting rights, shareholders must declare that they acquired the shares in their own name and for their own account. According to article 5, paragraph 3 of the Articles of Incorporation, the Board may register nominees with the right to vote. The Share Register is a non-public register subject to statutory confidentiality and data privacy.

The Articles of Incorporation are available at www.novartis.com/investors/company-overview/corporate-governance.

#### Registration restrictions
Article 5, paragraph 2 of the Articles of Incorporation stipulates that no shareholder shall be registered with the right to vote for more than 2% of the share capital. Given that shareholder representation at General Meetings has traditionally been comparatively low in Switzerland, Novartis AG considers registration restrictions necessary to prevent a minority shareholder from dominating a General Meeting. The Board may, upon request, grant an exemption. Considerations include if the shareholder supports our goal of creating sustainable value and has a long-term investment horizon. Exemptions are in force for the registered shareholders listed in "—Item 6.C Board practices—Group structure and shareholders—Shareholders—Significant shareholders." An exemption also applies to Norges Bank (Central Bank of Norway), Oslo, which as at December 31, 2025, was not registered but held 2.2% according to a disclosure notification filed with Novartis AG. No further exemptions were requested in 2025. The same restrictions indirectly apply to ADR holders.

Article 5, paragraph 3 of the Articles of Incorporation stipulates that no nominee shall be registered with the right to vote for more than 0.5% of the registered share capital. The Board may, upon request, grant an exemption from this restriction if the nominee discloses the names, addresses and number of shares of the persons for whose account it holds 0.5% or more of the registered share capital. Exemptions are in force for the nominees listed in "—Item 6.C Board practices—Group structure and shareholders—Shareholders—Significant shareholders," and for the nominee Citibank, London, which in 2015 requested an exemption, but as at December 31, 2025, was not registered in the Share Register. The same restrictions indirectly apply to ADR holders.

According to article 5, paragraph 4 of the Articles of Incorporation, shareholders, ADR holders, or nominees who are linked to each other or who act in concert to circumvent registration restrictions are treated as one person or nominee for the purposes of the restrictions on registration.

The registration restrictions may be changed by resolution of the General Meeting, with approval of at least two-thirds of the votes represented at the meeting.

The Articles of Incorporation are available at www.novartis.com/investors/company-overview/corporate-governance.

#### Attendance, Representation and Web Portal
Registered shareholders receive a personal invitation letter to the General Meetings with an access code to log in to our web portal, and a printed registration/proxy form. Registered shareholders who have activated paperless invitations will receive the access code by email. By returning the registration/proxy form or using the web portal, shareholders can order an admission ticket for the General Meeting or can be represented by a legal representative, or, by means of a written proxy, by a representative of choice. Furthermore, a shareholder may be represented by the Independent Proxy.

If the Independent Proxy is appointed, shareholders can also give voting instructions on agenda items or on alternative or additional motions related to the agenda items either (i) following the recommendations of the Board for such alternative or additional motions; or (ii) opposing such alternative or additional motions. They can also abstain from voting.

#### ADR holders
ADR holders have the rights enumerated in the deposit agreement (such as the right to give voting instructions and to receive dividends). The ADS depositary of Novartis AG — JPMorgan Chase Bank, N.A., New York — holds the shares underlying the ADRs and is registered as a shareholder in the Share Register. An ADR is not a share, and an ADR holder is not a Novartis AG shareholder. Each ADR represents one share. ADR holders exercise their voting rights by instructing the depositary to exercise their voting rights. The ADS depositary exercises the voting rights for registered shares underlying ADRs, for which no voting instructions have been given, by providing a discretionary proxy to an uninstructed independent designee.

**Annual General Meeting (AGM)**

#### Convening
The AGM must be held within six months of the end of our financial year (December 31) and normally takes place in late February or early March. It is convened by the Board by way of notice appearing once in the Swiss Official Gazette of Commerce. In addition, the agenda is published on our website (www.novartis.com/agm). According to article 12a of the Articles of Incorporation (www.novartis.com/investors/company-overview/corporate-governance), the Board may foresee that shareholders who cannot be present at the venue of the AGM may exercise their rights through electronic means. The Board may at any time until June 30, 2028, also order that the AGM be held electronically without a venue. Extraordinary General Meetings may be requested by the Board, the external auditor, or shareholders representing at least 5% of the share capital.

#### Agenda
The General Meeting agenda is set by the Board. Shareholders representing shares with an aggregate nominal value of at least CHF 1 million may request that an item be included in a General Meeting agenda. Such requests must be made in writing at least 45 days before the meeting, specifying the requested item and proposal. If an explanatory statement is to be included in the notice of meeting, it must be submitted within the same period, and formulated in a short, clear and concise manner.

#### Powers
According to article 17 of the Articles of Incorporation (www.novartis.com/investors/company-overview/corporate-governance), the following powers are vested exclusively in the General Meeting:

• Adoption and amendment of the Articles of Incorporation

• Election and removal of the Board Chair, the Board and Compensation Committee members, the Independent Proxy, and the external auditor

• Approval of the management report, the consolidated financial statements, and the report on non-financial matters

• Approval of the financial statements of Novartis AG, and the decision on the appropriation of available earnings shown on the balance sheet, in particular with regard to dividends (including any repayment of the statutory capital reserves and the approval of interim dividends and the interim financial statements required for such purpose)

• Approval of the maximum aggregate compensation of the Board (from one AGM until the next AGM) and of the Executive Committee (for the financial year following the AGM). If the maximum aggregate amount of compensation already approved by the AGM is insufficient to cover the compensation of newly appointed or promoted Executive Committee members, Novartis may use up to 40% of the amount last approved for the newly appointed or promoted Executive Committee members

• Discharge of Board and Executive Committee members

• Delisting of the shares of Novartis AG

• Decisions on other matters that are reserved by law or by the Articles of Incorporation (e.g., advisory vote on the Compensation Report) to the General Meeting

#### Statutory Quorums
The General Meeting passes resolutions and elections with an absolute majority of the votes represented at the meeting. However, under article 18 of the Articles of Incorporation (www.novartis.com/investors/company-overview/corporate-governance), the approval of two-thirds of the votes represented at the meeting is required for:

• An alteration of the purpose of Novartis AG

• The consolidation of shares, unless the approval of all affected shareholders is required

• An increase of the share capital out of equity, by contribution in kind, for the purpose of an acquisition of property or the grant of special rights

• An increase of the share capital out of equity, by contributions in kind by way of set-off against a receivable and the grant of special rights

• A restriction or cancellation of rights of options to subscribe

• The introduction of a conditional capital or a capital band

• An implementation of restrictions on the transfer of registered shares, and the removal of such restrictions

• The creation of shares with increased voting powers

• The change of the currency of the share capital

• The introduction of the deciding vote for the presiding officer at the General Meeting of Shareholders

• A provision in the Articles of Incorporation allowing to hold the General Meeting of Shareholders abroad

• The delisting of the shares of Novartis AG

• A change of the registered office of Novartis AG

• The introduction of an arbitration clause in the Articles of Incorporation

• The merger, split or transformation of Novartis AG under the Merger Act (subject to mandatory provisions)

• The dissolution of Novartis AG

**Board of Directors**

![WSGE_DP_Graph_BoardOfDirectors](cogo_0005.gif)

Composition (as at December 31, 2025)BOARD Chair: G. CaforioVice-Chair:S. Moroney lead independent Director: P. BulaN. AndrewsT. BuechnerE. DohertyB. HellerD. HochstrasserF. van HoutenE. McNallyA. de Pro GonzaloJ. YoungAudit and Compliance CommitteeE. Doherty (Chair)T. BuechnerB. HellerD. Hochstrasser F. van HoutenA. de Pro GonzaloCompensation CommitteeS. Moroney (Chair)P. BulaB. HellerJ. YoungGovernance, Sustainability and Nomination CommitteeP. Bula (Chair)B. HellerD. HochstrasserF. van HoutenRisk CommitteeT. Buechner (Chair)N. AndrewsE. DohertyA. de Pro Gonzalo J. YoungScience & Technology CommitteeJ. Young (Chair)N. AndrewsF. van HoutenE. McNallyS. Moroney

**Changes to the Board of Directors**

Giovanni Caforio was elected as the new Board Chair and Elizabeth McNally was elected as a new Board member at the 2025 AGM. Joerg Reinhardt, who had been Board Chair since 2013, and Charles L. Sawyers and William T. Winters, who had been Board members since 2013, did not stand for re-election at the 2025 AGM. The biographies of Mr. Reinhardt, Mr. Sawyers and Mr. Winters can be found in the 2024 Annual Report (pages 106 and 111), available at www.novartis.com/news/media-library/novartis-annual-report-2024.

**Election and term of office**

Board members (including the Board Chair) and Compensation Committee members are elected individually by shareholders at the General Meeting for a one-year term of office. The term of office expires at the end of the next AGM.

According to article 20, paragraph 3 of the Articles of Incorporation, a member shall not serve on the Board for more than 12 years. Under special circumstances and if deemed to be in the best interest of the Company, the Board may recommend exceptions to the shareholders (www.novartis.com/investors/company-overview/corporate-governance).

The term limit supports our commitment to renew the Board on an ongoing basis and follows international best practice.

**Succession planning**

The GSNC prepares and reviews succession plans for the Board on an annual basis. These plans are discussed by the Board in private meetings. A search for a new Board member is launched — normally with the support of a professional executive search company — with individual selection criteria defined based on the evolving needs of the Company and a continuing focus on diversity, skills and experience. The set of competencies (further explained in "—Item 6.C Board practices—Board of Directors—Board skills") and a balance between continuity of experience and fresh perspectives are also important criteria for the GSNC when evaluating new candidates. Candidates are interviewed by the Board Chair, members of the GSNC, other Board members, and members of the Executive Committee. The GSNC then makes a recommendation to the full Board, and the Board ultimately decides who should be proposed for election at the upcoming AGM.

**Independence**

All Board members — including the Board Chair — are non-executive and independent, pursuant to applicable corporate governance rules and Novartis independence criteria, which are outlined in Appendix II to the Board Regulations (www.novartis.com/investors/company-overview/corporate-governance). In particular, no Board member is or was a member of the management of Novartis AG or of any other Novartis Group company in the last three financial years up to December 31, 2025, or has or had, a significant business relationship with Novartis AG or with any other Novartis Group company.

The independence of Board members is assessed annually. Each Board member completes an independence questionnaire that is reviewed by the GSNC. The GSNC then submits a proposal to the full Board, and the Board determines the independence status of each Board member.

The Board members are also subject to procedures to avoid conflicts of interest which are outlined in the Board Regulations (www.novartis.com/investors/company-overview/corporate-governance).

**Diversity**

Novartis is dedicated to fostering an inclusive Board where individuals from all genders and ethnic backgrounds can thrive and contribute their unique insights. A diverse Board ensures that the appropriate balance of skills, expertise, experience, and cultural background is represented to discharge its responsibilities and to support long-term value creation for shareholders, patients, employees and other stakeholders.

Diversity remains a critical focus area for the Board, and the GSNC continuously examines opportunities to further increase the Board's diversity when identifying new Board member candidates. The GSNC considers gender, age, nationality, ethnicity and viewpoints, professional background, and expertise in its selection process.

Regarding gender diversity, the Board pledges to sustain its efforts to achieve 50% representation of both genders in the composition of the Board, within a range of +/- 10%.

![WSGE_DP_Graph_Diversity](cogo_0027.gif)

Diversity profileNationality1WAmerican29.5%WSwiss25%WDutch12.5%WBritish8.5%WSpanish8.5%WGerman4%WIrish4%WItalian4%WNew Zealander4%GenderWMale58%WFemale42%AgeW55–6017%W61–6550%W>6533%TenureW<3 y25%W3–6 y42%W7–9 y25%W>9 y8%1 Six Board members have dual nationalities. Each of these nationalities is counted as half in the above chart.

**Board skills**

Upon proposal by the GSNC, the Board has determined a diverse set of competencies for its members that aligns with our status as a listed company, as well as our business portfolio, geographic reach and culture. Within this set of competencies, Board members are asked to identify their most relevant skills based on their educational background, professional experience and personal achievements.

The GSNC assesses the set of competencies as well as the individual skills annually to ensure that an appropriate balance of skills, expertise, experience and diversity is represented on the Board.

To learn more about Board members and their individual skills, see "—Item 6.C Board practices—Board of Directors—Members of the Board of Directors."

![WSGE_DP_Graph_DiversityBackground](cogo_0059.gif)

Board skill distributionMedicine/healthcare/R&D58%7/12Environmental, social 58%7/12and governance (ESG)Data/digital33%4/12Leadership/management 92%11/12Finance/accounting67%8/12Law/regulatory/risk management75%9/12

## Members of the Board of Directors
![WSGE_DP_Pic_Caforio](cogo_0074.jpg)

#### Giovanni Caforio, M.D.
Board Chair since 2025 \| Nationality: Italian/American \| Year of birth: 1964

Giovanni Caforio has had an international career in the healthcare industry spanning more than 35 years. He graduated in medicine and surgery in Italy in 1988, and has held senior leadership positions at Abbott Laboratories and Bristol Myers Squibb (BMS) in several European countries and the US. He was CEO of BMS from 2015 to 2023 and Chair of the company's board of directors from 2017 to 2024. Under his leadership, BMS nearly tripled its revenue, undertook several strategic acquisitions and partnerships, and launched 12 new medicines. Giovanni Caforio currently serves on the board of Stryker Corp. He is fluent in Italian, French, Spanish, Portuguese and English.

#### Professional experience
• Board chair, BMS, US (2017–2024)

• Chief Executive Officer, BMS, US (2015–2023)

• Chief Operating Officer, BMS, US (2014–2015)

• Executive Vice President, Chief Commercial Officer, BMS, US (2013–2014)

• President, US Pharmaceuticals, BMS, US (2011–2013)

• Various managerial positions at BMS and Abbot Laboratories in the US, France, Italy, Portugal and Spain (1990–2011)

#### Mandates

#### Current:
• Board member and chair of the compensation and human capital committee, Stryker Corp, US

#### Past:
• Board chair, PhRMA (2019–2020), US

#### Education
• Doctor of medicine and surgery, Sapienza University, Rome, Italy

#### Key skills
• Medicine/healthcare/R&D

• Environmental, social and governance (ESG)

• Leadership/management

• Finance/accounting

• Law/regulatory/risk management

![WSGE_DP_Pic_Moroney](cogo_0061.jpg)

#### Simon Moroney, D.Phil.
Board member since 2020 \| Vice-Chair since 2022 \| Nationality: German/New Zealander \| Year of birth: 1959

As co-founder and CEO of MorphoSys AG, Simon Moroney played a central role in establishing the company as a force in the field of therapeutic antibodies, with one of the broadest pipelines of drug candidates in the industry. Mr. Moroney holds both a doctorate and a Master's degree in chemistry.

#### Professional experience
• Co-founder and CEO, MorphoSys AG, Germany (1992–2019)

• Research associate, Department of Pharmacology, University of Cambridge, UK (1991–1992)

• Assistant professor, Department of Chemistry, University of British Columbia, Canada (1989–1990)

#### Mandates

#### Current:
• Board chair and chair of the remuneration and nomination committee, Biotalys NV, Belgium

#### Education
• Doctorate in chemistry, University of Oxford, UK

• Master's degree in chemistry, University of Waikato, New Zealand

#### Key skills
• Medicine/healthcare/R&D

• Environmental, social and governance (ESG)

• Leadership/management

• Law/regulatory/risk management

![WSGE_DP_Pic_Andrews](cogo_0028.jpg)

#### Nancy C. Andrews, M.D., Ph.D.
Board member since 2015 \| Nationality: American/Swiss \| Year of birth: 1958

Nancy C. Andrews has extensive experience as a physician, scientist, professor and senior administrator at leading academic institutions and hospitals. Her distinguished career spans more than 30 years, with leadership roles at Harvard Medical School, Duke University School of Medicine and Boston Children's Hospital. Since 2023, Dr. Andrews is credited with conducting research that led to advances in understanding iron biology and iron diseases.

#### Professional experience
• Professor in residence of pediatrics, Harvard Medical School, US (since 2023)

• Executive vice president and chief scientific officer, Boston Children's Hospital, US (since 2021)

• Dean emerita, Duke University School of Medicine, and vice chancellor emerita for academic affairs, Duke University, US (since 2017)

• Dean, Duke University School of Medicine, and vice chancellor for academic affairs, Duke University, US (2007–2017)

• Professor of pediatrics, pharmacology and cancer biology, Duke University, US (2007–2021)

• Dean for basic sciences and graduate studies, Harvard Medical School, US (2003–2007)

• Director, Harvard/MIT M.D.-Ph.D. Program, US (1999–2003)

• Biomedical research investigator, Howard Hughes Medical Institute, US (1993–2006)

#### Mandates

#### Current:
• Board member and chair of the governance and nominating committee, Charles River Laboratories International Inc., US

• Board member, Maze Therapeutics Inc., US

• Home secretary (since July 2023) and council member, National Academy of Sciences, US

#### Past:
• Chair, American Academy of Arts and Sciences, US (2017–2023)

• Member of the executive committee of the corporation, Massachusetts Institute of Technology, US (2019-2022)

• Council member, National Academy of Medicine, US (2013–2019)

• Member of the scientific management review board, National Institutes of Health, US (2014–2019)

• Chair, Burroughs Wellcome Fund, US (2011–2019)

#### Education
• Doctor of medicine, Harvard Medical School, US

• Doctorate in biology, Massachusetts Institute of Technology, US

• Master's and bachelor's degrees in molecular biophysics and biochemistry, Yale University, US

#### Key skills
• Medicine/healthcare/R&D

• Leadership/management

![WSGE_DP_Pic_Buechner](cogo_0032.jpg)

#### Ton Buechner
Board member since 2016 \| Nationality: Dutch/Swiss \| Year of birth: 1965

Ton Buechner is an engineer by training who started his career in the oil and gas construction industry. Before becoming the CEO of Sulzer AG, he held several divisional leadership roles at the company and worked in markets including Asia. Mr. Buechner most recently served as CEO and chair of the executive board of AkzoNobel NV, where he introduced industry-leading ESG policies.

#### Professional experience
• CEO and chair of the executive board, AkzoNobel NV, Netherlands (2012–2017)

• CEO, Sulzer AG, Switzerland (2007–2011)

• President, Sulzer Pumps, Switzerland (2003–2006)

• President, Sulzer Turbomachinery Services, Switzerland (2000–2002)

• Various managerial positions at Sulzer AG, China and Switzerland (1994–2000)

#### Mandates

#### Current:
• Board chair and chair of the sustainability committee, Swiss Prime Site AG, Switzerland

#### Past:
• Board chair and chair of the strategy and sustainability committee, Burckhardt Compression AG, Switzerland (2020–2025)

• Member of advisory committee to the Ministry of Economic Affairs and Climate Policy ("Adviescommissie Maatwerkafspraken Verduurzaming Industrie"), Netherlands (2023–2025)

• Member of the presidential and shareholder committees, Voith GmbH & Co. KGaA, Germany (2014–2020)

• Member of the supervisory board, Voith GmbH & Co. KGaA, Germany (2014–2018)

#### Education
• Master of business administration, IMD business school, Switzerland

• Master's degree in civil engineering, Delft University of Technology, Netherlands

#### Key skills
• Environmental, social and governance (ESG)

• Leadership/management

• Finance/accounting

• Law/regulatory/risk management

![WSGE_DP_Pic_Bula](cogo_0025.jpg)

#### Patrice Bula
Board member since 2019 \| Lead Independent Director since 2022 \| Nationality: Swiss \| Year of birth: 1956

Patrice Bula has 40 years of global management experience and is a leader in the consumer goods industry across established and emerging markets. He has served in various senior roles at Nestlé SA, including as general manager of its businesses in China, Germany and South Africa. Most recently, he successfully led the Nestlé Group's brand strategies, digital marketing transformation and Nespresso business.

#### Professional experience
• Executive vice president and head of strategic business units, marketing, sales and Nespresso, Nestlé SA, Switzerland (2011–2021)

• Market head of the Greater China region, Nestlé SA, Switzerland (2007–2011)

• Market head of Germany, Nestlé SA, Switzerland (2003–2007)

• Head of the confectionery and biscuits strategic business unit, Nestlé SA, Switzerland (2000–2003)

• Various managerial positions at Nestlé SA, Switzerland (1980–2000)

#### Mandates

#### Current:
• Board member and vice chair, Schindler AG, Switzerland

• Board chair, European Pizza Group Topco Sarl, Luxembourg

• Board chair, Froneri Lux Topco Sarl, Luxembourg

• Board member and chair of the ESG committee, New Tiger LLC, US

#### Past:
• Board co-chair (2020–2021) and member (2015–2021), Cereal Partners Worldwide SA, Switzerland (Nestlé representative)

• Board member, Froneri Lux Topco Sarl, Luxembourg (Nestlé representative) (2016–2020)

• Board member, Bobst Group SA, Switzerland (2017–2019)

• Board chair, Blue Bottle Coffee Inc., US (Nestlé representative) (2017–2019)

• Board chair, Nestlé Nespresso SA, Switzerland (Nestlé representative) (2011–2019)

• Board member, Hsu Fu Chi Food Companies, China (Nestlé representative) (2011–2019)

#### Education
• Program for executive development, IMD Business School, Switzerland

• Master's degree in economic sciences, HEC Lausanne, Switzerland

#### Key skills
• Environmental, social and governance (ESG)

• Data/digital

• Leadership/management

• Finance/accounting

![WSGE_DP_Pic_Doherty](cogo_0035.jpg)

#### Elizabeth (Liz) Doherty
Board member since 2016 \| Nationality: British/Irish \| Year of birth: 1957 \| Audit Committee Financial Expert

Elizabeth (Liz) Doherty is an expert in finance and accounting who has broad operational experience in international consumer and retail businesses. She began her career in internal audit at Unilever PLC and has held senior finance and accounting roles there and at other companies including Tesco PLC and Reckitt Benckiser Group PLC.

#### Professional experience
• CFO (interim), Cognita Schools Ltd., UK (2014–2015)

• CFO and board member, Reckitt Benckiser Group PLC, UK (2011–2013)

• CFO (interim), City Inn, UK (2010)

• CFO, Brambles Ltd., Australia (2007–2009)

• Group international finance director, Tesco PLC, UK (2001–2007)

• Various managerial positions at Unilever PLC, UK (1981–2001)

#### Mandates

#### Current:
• Board member and chair of the audit committee, Corbion NV, Netherlands

• Member of the supervisory board and chair of the audit committee, Royal Philips NV, Netherlands

• Member of the advisory committee, Freya Holdco S.à.r.l., Luxembourg

#### Past:
• Advisor, Affinity Petcare SA and GB Foods SA, Spain (2017–2023)

• Board member, Dunelm Group PLC, UK (2013–2019)

• Board member, HM Courts & Tribunals Service, UK (2015–2019)

• Board member, Ministry of Justice, UK (2015–2019)

• Board member, Delhaize Group, Belgium (2013–2016)

• Board member, Nokia Corp., Finland (2013–2016)

#### Education
• Fellow, Chartered Institute of Management Accountants, UK

• Bachelor's degree in liberal studies in science (physics), University of Manchester, UK

#### Key skills
• Leadership/management

• Finance/accounting

• Law/regulatory/risk management

![WSGE_DP_Pic_Heller](cogo_0060.jpg)

#### Bridgette Heller
Board member since 2020 \| Nationality: American \| Year of birth: 1961

Bridgette Heller has proven experience in the standalone divisions of companies such as Johnson & Johnson, Merck & Co. Inc. and Danone SA, and has served on the audit committees of ADT Corp. and Tech Data Corp. During her career, she has overseen the performance of CFOs and made decisions on strategic R&D priorities. Ms. Heller is an advocate for diversity, equity and inclusion, and traveled globally to reinforce Danone's commitment to infant and maternal health, inclusive diversity, an equitable workforce for women, and sustainable communities. She is co-founder and CEO of the Shirley Proctor Puller Foundation, an education and youth empowerment nonprofit, and devotes much of her time to strengthening education and sustainability in an underserved community in the US.

#### Professional experience
• Co-founder and CEO, Shirley Proctor Puller Foundation, US (since 2019)

• EVP and president of specialized nutrition, Danone SA, Netherlands (2017–2019)

• EVP of early life nutrition, Danone SA, Netherlands (2016–2019)

• EVP and president of consumer care, Merck & Co. Inc., US (2010–2015)

• Global president of the baby global business unit, Johnson & Johnson, US (2007–2009)

• President of the US baby, kids and wound care business and of global innovation development, Johnson & Johnson, US (2005–2007)

• Managing partner, Heller Associates: Ideas for Growth Inc., US (2004–2005)

• CEO, Chung's Gourmet Foods, US (2003–2004)

• Various managerial positions at Kraft Foods Inc., US (1985–2003)

#### Mandates

#### Current:
• Board member, Aramark, US

• Board member and chair of the compensation committee, Dexcom Inc., US

• Board member, Newman's Own Inc., US

• Member of the advisory board, Kellogg School of Management at Northwestern University, US

• Member of the board of trustees, Northwestern University, US

• Board member, Newman's Own Foundation, US

• Board member, Shirley Proctor Puller Foundation, US

#### Past:
• Board member, Integral Ad Science Inc., US (2021–2025)

• Board member, Tech Data Corp., US (2016–2020)

• Board member, ADT Corp., US (2012–2016)

• Board member, Girls Inc., US (2002–2014)

#### Education
• Master's degree in marketing and management policy, Kellogg School of Management at Northwestern University, US

• Bachelor's degree in economics and computer studies, Northwestern University, US

#### Key skills
• Medicine/healthcare/R&D

• Environmental, social and governance (ESG)

• Data/digital

• Leadership/management

• Finance/accounting

• Law/regulatory/risk management

![WSGE_DP_Pic_Hochstrasser](cogo_0066.jpg)

#### Daniel Hochstrasser
Board member since 2022 \| Nationality: Swiss \| Year of birth: 1960

Daniel Hochstrasser is an independent dispute resolution specialist practicing in Zurich, Switzerland. He led Bär & Karrer, one of the leading Swiss law firms, from 2011 to 2021 as CEO/Senior Partner. In addition, he was the head of the firm's dispute resolution practice for 15 years. He frequently represented parties in complex disputes arising from matters such as M&A transactions, industrial and infrastructure projects, and license, distribution and development agreements, particularly in the pharmaceutical industry. He has published extensively on arbitration and litigation, and lectures at the University of Zurich and the University of St. Gallen in Switzerland.

#### Professional experience
• Attorney-at-law, Daniel Hochstrasser AG, Switzerland (since 2023)

• Attorney-at-law and partner, Bär & Karrer AG, Switzerland (1993–2022)

• Senior partner and Board chair, Bär & Karrer AG, Switzerland (2011–2021)

• Lawyer, District Court of Affoltern, Court of Appeals/Court of Cassation of Zurich, Switzerland (1987–1992)

• In-house lawyer, Staubli SA, France (1986–1987)

#### Mandates

#### Current:
• Board chair, Daniel Hochstrasser AG, Switzerland

• Vice president, ICC Court of Arbitration, France

• Member of the Ethics Court, Zurich Bar Association, Switzerland

#### Past:
• Board member, Finland Arbitration Institute, Finland (2019–2025)

• Board chair, Bär & Karrer AG, Switzerland (2011–2021)

• Member, ICC Court of Arbitration, France (2015–2021)

• Member of the Court, Swiss Arbitration Chambers, Switzerland (2004–2014)

#### Education
• Master of laws (LL.M.), Cornell Law School, US

• Bar examination, Switzerland

• Licentiatus iuris, University of Zurich, Switzerland

#### Key skills
• Law/regulatory/risk management

![WSGE_DP_Pic_vanHouten](cogo_0033.jpg)

#### Frans van Houten
Board member since 2017 \| Nationality: Dutch \| Year of birth: 1960

Frans van Houten is passionate about purpose-driven innovation, entrepreneurship and business transformation to drive customer value and competitiveness. Under his leadership as CEO of Royal Philips, the company transformed into a leading health technology solutions company, leveraging data and informatics to improve healthcare provider results, and became a forerunner across ESG dimensions, having become carbon neutral in its operations since 2020 and recycling over 90% of its waste. Mr. van Houten was an initiator of the World Economic Forum Compact for Responsive and Responsible Leadership as well as founder and co-chair of the Platform to Accelerate the Circular Economy.

#### Professional experience
• CEO and chair of the executive committee and the board of management, Royal Philips NV, Netherlands (2011–2022)

• Interim management, ING Group NV, Netherlands (2009–2010)

• CEO and chair of the management board, NXP Semiconductors NV (formerly Philips Semiconductors NV), Netherlands (2004–2009)

• Various managerial positions at Royal Philips Electronics NV, Netherlands (1986–2004)

#### Mandates

#### Current:
• Board chair and chair of the nominating and corporate governance committee, Absci Corporation, US

• Board chair, Castor EDC, Netherlands

• Board member, Affidea Group, Netherlands

• Board chair, Synthesis Health Inc, Canada

#### Past:
• Member of the steering committee, European Round Table for Industry (ERT), Belgium (2014-2022)

• Vice chair and member of the supervisory board, Philips Lighting, Netherlands (2016–2017)

#### Education
• Master's degree in economics and business management, Erasmus University Rotterdam, Netherlands

• Bachelor's degree in economics, Erasmus University Rotterdam, Netherlands

#### Key skills
• Medicine/healthcare/R&D

• Environmental, social and governance (ESG)

• Data/digital

• Leadership/management

• Finance/accounting

• Law/regulatory/risk management

![WSGE_DP_Pic_Gonzalo](cogo_0067.jpg)

#### Ana de Pro Gonzalo
Board member since 2022 \| Nationality: Spanish \| Year of birth: 1967 \| Audit Committee Financial Expert

Since starting her career at Arthur Andersen, Ana de Pro Gonzalo has worked across a variety of industries, ranging from construction and real estate to engineering and telecommunications. With deep expertise in finance, capital markets and technology, she has held executive positions at several multinational companies. Most recently, she spent 10 years as chief financial officer of Amadeus IT Group, a leading software provider for the global travel and tourism industry.

#### Professional experience
• Chief financial officer, Amadeus IT Group SA, Spain (2010–2020)

• Corporate general manager, Sacyr Vallehermoso SA, Spain (2002–2010)

• Deputy general manager and finance director, Metrovacesa SA, Spain (1994–2002)

• Senior auditor, Arthur Andersen SA, Spain (1990–1994)

#### Mandates

#### Current:
• Board member, Mobico Group PLC, UK

• Member of the supervisory board and chair of the audit committee, STMicroelectronics NV, Netherlands

• Board member, GAVI Alliance, Switzerland

#### Past:
• Board member, Indra Sistemas SA, Spain (2020–2022)

• Board member, Merlin Properties Socimi SA, Spain (2015–2017)

#### Education
• General management program (PDG), IESE Business School, Spain

• Bachelor's degree in business studies, Complutense University of Madrid, Spain

#### Key skills
• Environmental, social and governance (ESG)

• Data/digital

• Leadership/management

• Finance/accounting

• Law/regulatory/risk management

![WSGE_DP_Pic_McNally](cogo_0075.jpg)

#### Elizabeth McNally, M.D., Ph.D.
Board member since 2025 \| Nationality: American \| Year of birth: 1961

Elizabeth McNally is a human geneticist and cardiologist with extensive experience as a physician, scientist, professor and senior administrator at leading academic institutions in the US. She qualified as a medical doctor at the Albert Einstein College of Medicine in New York City. Elizabeth McNally is a practicing cardiologist with expertise in cardiovascular genetics, with postgraduate training at the Brigham and Women's Hospital in Boston. With interests in the genetics of cardiovascular and neuromuscular disorders, she has had research and leadership roles at the University of Chicago and Northwestern University. She is the founder, CEO and a board member of Ikaika Therapeutics.

#### Professional experience
• Editor-in-chief, Journal of Clinical Investigation (since 2022)

• Director, Center for Genetic Medicine, and professor of genetic medicine, Department of Medicine, Northwestern University, Chicago, IL, US (since 2014)

• Professor, Department of Biochemistry and Molecular Genetics, Feinberg School of Medicine, Northwestern University, Chicago, IL, US (since 2014)

• Professor, University of Chicago, Chicago, IL, US (2006–2014)

• Director, Institute for Cardiovascular Research, University of Chicago, Chicago, IL, US (2005–2014)

• Associate professor, University of Chicago, Chicago, IL, US (2003–2006)

• Assistant professor, University of Chicago, Chicago, IL, US (1996–2003)

• Clinical and research fellow in medicine, Harvard Medical School, Boston, MA, US (1990–1996)

#### Mandates

#### Current:
• Board member, Ikaika Therapeutics, US

• Board member, Muscular Dystrophy Association of America, US

#### Education
• Doctor of medicine, Albert Einstein College of Medicine, US

• Doctorate in microbiology and immunology, Albert Einstein College of Medicine, US

• Bachelor's degree in biology and philosophy, Columbia University, US

#### Key skills
• Medicine/healthcare/R&D

• Leadership/management

![WSGE_DP_Pic_Young](cogo_0072.jpg)

#### John D. Young
Board member since 2023 \| Nationality: British/American \| Year of birth: 1964

A scientist by training, John D. Young has over 35 years of experience in the healthcare industry and brings a wealth of experience in leadership, strategy, business development and commercialization of innovative medicines to the Novartis Board of Directors. He joined Pfizer in 1987 as a sales representative and held positions of increasing seniority across the company, including as a member of Pfizer's executive leadership team for a decade. As Pfizer's group president and chief business officer from 2019 until 2022, Mr. Young also played an integral role in the development and delivery of the Pfizer-BioNTech COVID-19 vaccine.

#### Professional experience
• Senior advisor to the CEO, Pfizer, US (2022)

• Group president and chief business officer, Pfizer, US (2019–2022)

• Group president, innovative health business, Pfizer, US (2018)

• Group president, essential health business, Pfizer, US (2014–2017)

• President and general manager, global primary care business unit, Pfizer, US (2012–2013)

• Regional president, primary care business unit for Europe and Canada, Pfizer, UK (2009–2012)

• Various managerial positions, Pfizer, UK and Australia (1987–2008)

#### Mandates

#### Current:
• Board member, Johnson Controls International, Ireland

#### Past:
• Board member and chair of the compensation committee, Arvinas Inc, US (2022–2025)

• Board member, Imbria Pharmaceuticals, US (2022–2024)

• Board member, Haleon, UK (2022–2023)

• Board member, GSK Consumer Health Joint Venture, UK (2019–2022)

• Board member, Biotechnology Innovation Organization (BIO), US (2018–2021)

• US bio-pharmaceutical representative, UK Government Life Sciences Council, UK (2007–2021)

• Board member, National Committee for US China Relations, US (2014–2017)

• Board member, European Federation of Pharmaceutical Industries and Associations (EFPIA), Belgium (2012–2017)

#### Education
• Master of business administration, University of Strathclyde, UK

• Bachelor's degree in biological sciences, University of Glasgow, UK

#### Key skills
• Medicine/healthcare/R&D

• Leadership/management

• Finance/accounting

• Law/regulatory/risk management

### Corporate Secretary

#### Charlotte Pamer-Wieser, Ph.D.
**Honorary Chairman**

#### Daniel Vasella, Ph.D.<sup>1</sup>

<sup>1</sup> Mr. Vasella does not attend Board meetings and is not provided with Board documents.

### Self-assessment
The Board and its committees conduct a self-assessment once a year, covering topics around the following areas: responsibility, structure and composition, Board processes and governance; dynamics within the Board (and the committees); interactions with the Executive Committee (or the committees' key stakeholders); and Board Chair and peer evaluation. This process is conducted every three years by an independent external consultant. The most recent external assessment took place in 2023, carried out by the consulting firm Egon Zehnder.

The 2025 self-assessment was conducted internally:

![WSGE_DP_Graph_BoardSelfAssessment](cogo_0063.gif)

Questionnaire•Each Board member fills out an anonymous survey. •A report identifying key strengths and challenges is produced for the Board and its committees.Review•Based on the results, the Board Chair and the committee chairs each lead a qualitative review with their colleagues and then with the entire Board.•In addition, the Vice-Chair leads a qualitative review of the Board Chair's performance, without the Chair being present, and then provides the Board Chair with the Board's feedback.Outcome•The last self-assessment for 2025 determined that the Board and its committees are functioning effectively and efficiently.•The feedback confirmed that the Board has the right mix of experience, perspectives and skills, with a high level of trust and collaboration among its members, and strong interactive participation during the meetings.•The findings underscored key priorities, including advancing the Novartis strategy with a strong emphasis on artificial intelligence and driving continuous innovation and reinforcing the product pipeline, while also navigating the challenges posed by the dynamic global landscape particularly in relation to US and China.

**Training**

The Board receives regular briefings and training on ethics, risks and compliance, ESG, and other relevant topics. In 2025, each Board member completed the following internal trainings:

• "Code of Ethics", emphasizing the importance of both speaking up and listening up to foster an ethical workplace culture

• "Doing Business Ethically", addressing external partner risk management

• "Conflict of Interest", covering how to identify, avoid, and address conflicts of interest by fostering an open environment for disclosure and discussion

• "Fit to Commit", aimed at strengthening the ability to recognize and respond to ethical challenges, with a focus on fair competition, insider trading, conflicts of interest, and adverse event reporting

• "Data and Technology Curriculum", to enhance competencies in ethical and responsible data handling, covering good data citizenship, data privacy and AI, and the secure use of technology

In addition, the Company offers a broad range of external education programs to Board members, and external speakers are regularly invited to present to the Board to provide additional coverage of specific topics. In 2025, external speakers covered a wide range of topics, including persectives on pharmaceutical markets, a focus on select local markets, and the role of universities in innovation.

Further, the Chief Legal and Compliance Officer also provides regular updates to the Board members on developments related to insider trading laws and regulations and briefs members of the Board and the Executive Committee on an annual basis on their respective duties.

**Role of the Board and its committees**

The Board is responsible for the overall direction and oversight of management, and holds the ultimate decision-making authority, with the exception of decisions reserved for shareholders. Board members are expected to commit the time and effort required to fulfil all their Board and committee responsibilities.

The Board has delegated certain duties and responsibilities to its five committees, led by a Board-elected committee chair, as set out in the Board Regulations (www.novartis.com/investors/company-overview/corporate-governance). In some cases, these responsibilities are of an advisory or preparatory nature. In other cases, the committee has decision-making power that is subject to final Board approval, or the responsibilities have been fully delegated to the committee. All committees have the authority to retain external consultants.

Any Board member may request a Board or committee meeting and the inclusion of an agenda item. Before meetings, Board members receive materials to help them prepare for the discussions and to inform decision-making.

Given the maturity and rigor of the Enterprise Risk Management (ERM) processes, the Board has decided to dissolve the Risk Committee with effect from the 2026 AGM. The Board will annually review and verify the effectiveness of the ERM program and will focus on the periodic review of strategic risks.

**Attendance at Board and board committee meetings in 2025** 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| <br>Name | <br>Position | <br>Board | <br> Audit and <br> Compliance <br> Committee | <br>Compensation <br> Committee | Governance, <br> Sustainability <br> and Nomination <br> Committee | <br>Risk <br> Committee | <br> Science & <br> Technology <br> Committee |
| G. Caforio <sup>1</sup> | Board Chair | 10/10 |  |  |  |  |  |
| S. Moroney | Vice-Chair | 12/12 |  | 5/5 |  |  | 5/5 |
| P. Bula | Lead Independent Director | 12/12 |  | 5/5 | 3/3 |  |  |
| N. Andrews | Member | 11/12 |  |  |  | 3/3 | 5/5 |
| T. Buechner | Member | 12/12 | 7/7 |  |  | 3/3 |  |
| E. Doherty | Member | 11/12 | 7/7 |  |  | 3/3 |  |
| B. Heller | Member | 10/12 | 6/7 | 5/5 | 3/3 |  |  |
| D. Hochstrasser | Member | 12/12 | 7/7 |  | 3/3 |  |  |
| F. van Houten | Member | 12/12 | 7/7 |  | 3/3 |  | 5/5 |
| E. McNally <sup>1</sup> | Member | 9/10 |  |  |  |  | 5/5 |
| A. de Pro Gonzalo | Member | 11/12 | 7/7 |  |  | 2/3 |  |
| J. Young <sup>2</sup> | Member | 12/12 |  | 4/4 |  | 3/3 | 5/5 |
|  <sup>1</sup> Mr. Caforio and Ms. McNally were elected at the 2025 AGM | <sup>1</sup> Mr. Caforio and Ms. McNally were elected at the 2025 AGM | <sup>1</sup> Mr. Caforio and Ms. McNally were elected at the 2025 AGM | <sup>1</sup> Mr. Caforio and Ms. McNally were elected at the 2025 AGM | <sup>1</sup> Mr. Caforio and Ms. McNally were elected at the 2025 AGM | <sup>1</sup> Mr. Caforio and Ms. McNally were elected at the 2025 AGM | <sup>1</sup> Mr. Caforio and Ms. McNally were elected at the 2025 AGM | <sup>1</sup> Mr. Caforio and Ms. McNally were elected at the 2025 AGM |
|  <sup>2</sup> Mr. Young was elected as member of the Compensation Committee at the 2025 AGM | <sup>2</sup> Mr. Young was elected as member of the Compensation Committee at the 2025 AGM | <sup>2</sup> Mr. Young was elected as member of the Compensation Committee at the 2025 AGM | <sup>2</sup> Mr. Young was elected as member of the Compensation Committee at the 2025 AGM | <sup>2</sup> Mr. Young was elected as member of the Compensation Committee at the 2025 AGM | <sup>2</sup> Mr. Young was elected as member of the Compensation Committee at the 2025 AGM | <sup>2</sup> Mr. Young was elected as member of the Compensation Committee at the 2025 AGM | <sup>2</sup> Mr. Young was elected as member of the Compensation Committee at the 2025 AGM |
| Further details can be found on pages 116 to 121. | Further details can be found on pages 116 to 121. | Further details can be found on pages 116 to 121. | Further details can be found on pages 116 to 121. | Further details can be found on pages 116 to 121. | Further details can be found on pages 116 to 121. | Further details can be found on pages 116 to 121. | Further details can be found on pages 116 to 121. |

---

**Board of Directors**

**Primary responsibilities**

• Strategy: decides on the ultimate direction of the Company's business (including portfolio, markets, acquisitions and divestments), considering also ESG strategy

• Structure and organization: determines major changes in the Group's structure and organization

• Culture: oversees the strategy and implementation of the corporate culture

• Ethics and compliance: oversees the Company's ethics and compliance framework, including the approval of fundamental corporate policies such as the Novartis Code of Ethics

• Risk management: oversees the Company's risk management system, the most significant risks, and how these risks are managed

• Finance: determines the principles of accounting, financial controlling and financial planning; and reviews and prepares the Annual Report (including the Compensation Report)

• Non-financial reporting: prepares the Company's annual reporting on non-financial matters

• People and organization: nominates or appoints, removes, and determines responsibilities of key persons, and oversees succession planning

**Key activities in 2025**

• Oversaw the Company's strategy to deliver high-value medicines that alleviate society's greatest disease burdens through technology leadership in R&D and novel access approaches

• Reviewed strategic considerations around mergers and acquisitions (including the acquisitions of Regulus Therapeutics, Tourmaline Bio, and Avidity Biosciences), and the Company's larger strategic moves to drive sustainable growth

• Regularly reviewed the Company's overall performance

• Discussed and assessed the geopolitical situation and associated risks and opportunities, with a particular focus on the impact of the new administration in the US (including tariffs and pricing policies)

• Discussed the strategy and performance updates of the organizational units US and International

• Reviewed the strategy, performance and ambition for the key Asian markets of China and Japan

• Reviewed the research and development/production/commercialization continuum execution and the priorities of the different therapeutic areas

• Discussed the Company's ESG strategy, plans and developments, including updates on non-financial disclosure regulations and the non-financial reporting governance of the Company

• Reviewed the development of the talent pipeline in the context of strengthening the Company's foundations and leadership bench

• Discussed longer-term succession planning and appointed the successor of the Company's CFO

• Discussed and reviewed the annual Board self-evaluation

• Participated with the ECN in town halls for Novartis employees in different locations around the world

**Meetings**

Number of meetings held

Number of members

Approximate average duration (hours)

4:55

Meeting attendance

96%

The Board met 12 times in 2025. Regular meetings were held in January, April, June, August, October and December, with special meetings called to deal with ad hoc matters. Board committees typically meet the day before the meeting of the full Board. The Board held virtual, hybrid and physical meetings, with participants joining in person whenever possible.

G. Caforio (Board Chair)<sup>1</sup> 

S. Moroney (Vice-Chair)

P. Bula (Lead Independent Director)

N. Andrews

T. Buechner

E. Doherty

B. Heller

D. Hochstrasser

F. van Houten

E. McNally<sup>1</sup> 

A. de Pro Gonzalo

J. Young

**Documents**

• Articles of Incorporation of Novartis AG

• Board Regulations

www.novartis.com/investors/company-overview/corporate-governance

<sup>1</sup> Mr. Caforio and Ms. McNally were elected at the 2025 AGM. 10 Board meetings were held following their election.

**Audit and Compliance Committee**

**Primary responsibilities**

• Supervises the external auditor, and selects and nominates the external auditor for election by the shareholders (FD)\*\*

• Oversees Internal Audit (FD)\*\*

• Oversees accounting policies, financial controls, and compliance with accounting and internal control standards (FD)\*\*, and in coordination with the Risk Committee oversees the Group's financial risks (FBA)\*\*\*

• Approves financial statements for the first three quarters of each calendar year and the corresponding financial results media releases (FD)\*\*, and reviews the annual financial statements and the corresponding financial results media releases (FBA)\*\*\*

• Reviews the non-financial data contained in the Group's annual reporting (FBA)\*\*\*

• Oversees compliance with laws, regulations and internal policies related to its subject matter expertise (FD)\*\*

• Reviews updates with regards to Quality Assurance and patient safety twice a year and Health Safety & Environment once a year (FD)\*\*

• Reviews updates from the SpeakUp Office twice a year (FD)\*\*

• Reviews the Group's tax policy every two years (FD)\*\*

• Reviews updates in closed sessions with the Chief Financial Officer, Chief Audit Officer, and external auditor (FD)\*\*

**Key activities in 2025**

• Reviewed accounting and financial reporting, focusing on areas involving significant risk or judgment

• Reviewed non-financial reporting and received an update on the Company's approach to non-financial reporting and assurance, in a joint session held with the GSNC

• Received an update on the use of artificial intelligence at Novartis and related compliance matters

• Liaised with the Risk Committee to ensure adequate oversight of the Company's key transformation projects (Enterprise Data Governance and Management, and the Lean Digital Core (LDC) program)

• Monitored progress on the internal control process

• Discussed an update on recent developments in tax

• Evaluated the performance of the external auditor of Novartis (KPMG) during 2025

• Reviewed and assessed the adequacy of the Company's internal control framework

• Received reports and updates from Internal Audit; Quality; Ethics, Risk & Compliance; the SpeakUp Office; Health, Safety & Environment; and Legal (legal enforcement landscape) and discussed progress on identifying and remedying the root causes of any associated issues.

**Meetings**

Number of meetings held

Number of members

Approximate average duration (hours)

2:05

Meeting attendance

98%

E. Doherty (Chair, Audit Committee Financial Expert)

T. Buechner

B. Heller

D. Hochstrasser

F. van Houten

A. de Pro Gonzalo (Audit Committee Financial Expert)

**Documents**

• Board Committees Charter, Appendix I to the Board Regulations

www.novartis.com/investors/company-overview/corporate-governance

<sup>\*</sup> A/P = advisory or preparatory task

<sup>\*\*</sup> FD = fully delegated task

<sup>\*\*\*</sup> FBA = task subject to final Board approval

**Compensation Committee**

**Primary responsibilities**

• Designs, reviews and recommends compensation policies and programs to the Board (FBA)\*\*\*

• Advises the Board on the compensation of Board members and the CEO (A/P)\*

• Determines the compensation of Executive Committee members (FD)\*\*

• Prepares the Compensation Report and the Say-on-Pay brochure, and submits them to the Board for approval (FBA)\*\*\*

**Key activities in 2025**

• Made decisions relating to Executive Committee and wider employee compensation during the year

• Determined the critical performance measures (including financial, strategic, operational, innovation and ESG/Human Capital) to be considered in Executive incentive plan targets

• Assessed the achievement of incentive plan targets for Executive Committee members

• Reviewed shareholder and proxy advisor feedback related to Novartis compensation practices and disclosures, in addition to those of peer companies

• Reviewed disclosures in the Novartis Compensation Report

• Proposed appropriate peer companies for comparisons of board and executive committee compensation, and assessed the Company's level of compensation against the peer group

• Reviewed incentive plan rules to secure pay-for-performance alignment while preserving market competitiveness

• Reflected on the effectiveness of the Company's compensation programs, ensuring they support the Company's evolution and strategic objectives

**Meetings**

Number of meetings held

Number of members

Approximate average duration (hours)

2:05

Meeting attendance

100%

S. Moroney (Chair)

P. Bula

B. Heller

J. Young<sup>1</sup> 

**Documents**

• Board Committees Charter, Appendix I to the Board Regulations

www.novartis.com/investors/company-overview/corporate-governance

<sup>\*</sup> A/P = advisory or preparatory task

<sup>\*\*</sup> FD = fully delegated task

<sup>\*\*\*</sup> FBA = task subject to final Board approval

<sup>1</sup> Mr. Young was elected as member of the Compensation Committee at the 2025 AGM and has attended all meetings of the Compensation Committee following his election.

**Governance, Sustainability and Nomination Committee**

**Primary responsibilities**

• Oversees the Company's strategy, governance and progress on sustainability, including access to products and services, environmental sustainability (including matters related to climate and nature), people management, and other material ESG matters (FBA)\*\*\*

• Recommends corporate governance best practices to the Board (FBA)\*\*\*

• Reviews the Articles of Incorporation and Board Regulations on a periodic basis (FD)\*\*

• Reviews the composition and size of the Board and its committees as well as the skills matrix on a regular basis (FBA)\*\*\*

• Identifies new Board member candidates and recommends to the Board whether existing Board members should stand for re-election (FBA)\*\*\*

• Prepares and reviews succession plans for the Board Chair, the Vice-Chair, the Lead Independent Director, Board members, committee members and chairs, and the CEO (FBA)\*\*\*

• Reviews the independence of each Board member on an annual basis (FBA)\*\*\*

• Reviews directorships and agreements of Board members for conflicts of interest, and deals with any such conflicts of interest (FBA)\*\*\*

**Key activities in 2025**

• Evaluated the results of the 2025 AGM, in addition to investor and analyst feedback from ESG and Governance roadshows held during 2025

• Received an update on recent developments in corporate governance

• Reviewed Board member independence

• Received an update on human capital management focused on leadership development, the Company culture and workforce health, and the digital transformation, including the impact of artificial intelligence

• Reviewed the Access to Medicines Program

• Received an update on environmental sustainability, including an update on performance against targets, and ESG disclosure regulations

• Received regular updates on the ESG Scorecard to track progress against the sustainability targets for Innovation & Access, Human Capital Management, Environmental Sustainability and Ethical Standards; reviewed the 2026 ESG targets

• Received an update on Novartis Global Health programs and pipeline

• Reviewed the Company's performance to date, upcoming regulatory developments, and future Novartis targets on gender balance, equal pay, and pay transparency

• Discussed the composition of, and the succession for, the Board and its committees on a regular basis

• Discussed the size of the Board, composition, diversity, skills matrix and committee structure

**Meetings**

Number of meetings held

Number of members

Approximate average duration (hours)

1:35

Meeting attendance

100%

P. Bula (Chair)

B. Heller

D. Hochstrasser

F. van Houten

**Documents**

• Board Committees Charter, Appendix I to the Board Regulations

www.novartis.com/investors/company-overview/corporate-governance

<sup>\*</sup> A/P = advisory or preparatory task

<sup>\*\*</sup> FD = fully delegated task

<sup>\*\*\*</sup> FBA = task subject to final Board approval

**Risk Committee**

**Primary responsibilities**

• Oversees the risk management system and processes (FBA)\*\*\*

• Reviews, together with management, the prioritization and handling of risks, the risk portfolio, and actions implemented by management (FBA)\*\*\*

• Performs deep dives into key risk areas and fosters a culture of smart risk-taking (FBA)\*\*\*

• Reviews updates on cyber security on an annual basis (FD)\*\*

• Reviews regular updates from designated risk owners as well as the Chief Legal and Compliance Officer and/or the Head of Corporate Ethics, Risks & Compliance (FD)\*\*

**Key activities in 2025**

• Received updates on Enterprise Risk Management mitigation measures and results

• Discussed the outcome of the Risk Intelligence Forum 2025 and emergency and crisis management

• Received updates and closely monitored the implementation of strategic technology programs, with a particular focus on the Lean Digital Core (LDC) program, in alignment with the Audit and Compliance Committee

• Received a deep-dive update on cyber security, including the underlying IT resilience framework

• Received an update on external partner risk management — including new regulations — with a focus on acquisitions and animal welfare

**Meetings**

Number of meetings held

Number of members

Approximate average duration (hours)

1:15

Meeting attendance

93%

T. Buechner (Chair)

N. Andrews

E. Doherty

A. de Pro Gonzalo

J. Young

**Documents**

• Board Committees Charter, Appendix I to the Board Regulations

www.novartis.com/investors/company-overview/corporate-governance

<sup>\*</sup> A/P = advisory or preparatory task

<sup>\*\*</sup> FD = fully delegated task

<sup>\*\*\*</sup> FBA = task subject to final Board approval

**Science & Technology Committee**

**Primary responsibilities**

• Monitors emerging scientific, data-related, technological and research trends and issues, and presents recommendations to the Board (FBA)\*\*\*

• Assists the Board with setting the Company's strategy for science, data, technology and research (A/P)\*

• Assists the Board with oversight and evaluation of the performance of the scientific, technological and research teams within the Company in support of the Company's strategy (FBA)\*\*\*

• Reviews key portfolio developments by T/A, key research activities, and R&D performance against industry benchmarks (A/P)\*

• Reviews of progress against Research & Development goals. (FD)\*\*

• Reviews other matters in relation to science, data, technology and research that the committee may, at its own discretion, deem desirable in connection with its responsibilities (A/P)\*

**Key activities in 2025**

• Reviewed the preclinical and early clinical portfolio strategy of the disease areas Global Health, Immunology, Aging and Regenerative Medicine (DARe), and Neuroscience

• Reviewed AI use case on "New Target Identification", "Driving Translation through Data Science and AI", "Present and Future of AI Augmented Chemistry", and "AI/ML in Biologics"

• Provided guidance to Merger & Acquisition (M&A) and Business Development & Licensing (BD&L) teams on scientific aspects of key deals

• Reviewed portfolio updates from the Biomedical Research and Development organizational unit; and reviewed an update on the external landscape by the Strategy & Growth global function

• Reviewed R&D performance metrics — including benchmarking — and the Biomedical Research and Development organizational units' plans to enhance performance

**Meetings**

Number of meetings held

Number of members

Approximate average duration (hours)

3:40

Meeting attendance

100%

J. Young (Chair)

N. Andrews

F. van Houten

E. McNally

S. Moroney

**Documents**

• Board Committees Charter, Appendix I to the Board Regulations

www.novartis.com/investors/company-overview/corporate-governance

<sup>\*</sup> A/P = advisory or preparatory task

<sup>\*\*</sup> FD = fully delegated task

<sup>\*\*\*</sup> FBA = task subject to final Board approval

**Board Chair**

The Board Chair leads the Board to represent the interests of all stakeholders and ensures an appropriate balance of power between the Board and the Executive Committee. In this role, the Board Chair:

• Provides leadership to the Board

• Supports and mentors the CEO

• Ensures that the Board and its committees work effectively

• Sets the agenda, style and tone of Board discussions, promoting constructive dialogue and effective decision-making

• Ensures onboarding programs for new Board members and continuous education for and specialization of all Board members

• Ensures the Board's annual performance evaluation

• Promotes effective relationships and communication between Board and Executive Committee members

• Ensures effective communication with the Company's shareholders, other stakeholders and the public

**Vice-Chair and Lead Independent Director**

#### Vice-Chair
The Vice-Chair has the following responsibilities:

• Leads the Board in the event that, and for as long as, the Board Chair is incapacitated

• Leads the yearly session of the Board members to evaluate the performance of the Board Chair, during which the Board Chair is not present

The Vice-Chair also provides advice and support to the Board Chair.

#### Lead Independent Director
To support adequate control mechanisms, the Board Regulations outline the role of the Lead Independent Director. The Lead Independent Director has the following responsibilities:

• Chairs the sessions of the independent Board members

• Leads the independent Board members in the event of a crisis or matter requiring their separate consideration or decision

The roles of the Vice-Chair and the Lead Independent Director can be held by two Board members or by one Board member (combined role).

The Board appointed Simon Moroney as Vice-Chair and Patrice Bula as Lead Independent Director, with both roles effective as of March 4, 2022.

The Board has decided that as from the 2026 AGM, Simon Moroney will assume both roles as Vice-Chair and Lead Independent Director.

**Mandates outside the Novartis Group**

According to article 34, paragraph 1 of the Articles of Incorporation (www.novartis.com/investors/company-overview/corporate-governance), the following limitations on mandates apply:

---

| | |
|:---|:---|
|  | Maximum number <br> of mandates |
| Mandates | 10 |
| Other listed companies <sup>1</sup> | 4 |
|  <sup>1</sup> Holding a chair position of the board of directors in other listed companies counts as two mandates. | <sup>1</sup> Holding a chair position of the board of directors in other listed companies counts as two mandates. |

---

According to article 34, paragraph 3 of the Articles of Incorporation (www.novartis.com/investors/company-overview/corporate-governance), the following mandates are not subject to the above-mentioned limitations:

---

| | |
|:---|:---|
|  | Maximum number <br> of mandates |
| Mandates in companies that are controlled by Novartis AG | No limit |
| Mandates held at the request of Novartis AG or companies controlled by it | &nbsp;&nbsp;&nbsp;&nbsp;5 |

---

"Mandates" shall mean any membership in the board of directors, in the executive board or in the advisory board, or a comparable function under foreign law, in a company with an economic purpose. Mandates in different legal entities that are under joint control are deemed to be one mandate.

For a full list of all external mandates subject to the above-mentioned limitations, please refer to the Compensation Report (see "—Item 6.B Compensation—Mandates outside the Novartis Group").

## Executive Committee
![WSGE_DP_Graph_Management](cogo_0021.gif)

Composition (as at December 31, 2025)Vasant (Vas) NarasimhanChief Executive OfficerShreeram AradhyePresident, Development,& Chief Medical OfficerVictor BultoPresident, USAharon (Ronny) GalChief Strategy & Growth OfficerKaren L. HaleChief Legal and Compliance OfficerPatrick HorberPresident, InternationalHarry KirschChief Financial OfficerRob KowalskiChief People & Organization OfficerSteffen LangPresident, OperationsFiona H. MarshallPresident, BiomedicalResearch

**Changes to the Executive Committee**

Klaus Moosmayer stepped down from his role as Chief Ethics Risk & Compliance Officer, effective March 31, 2025, having been in the position since 2018. Karen Hale was appointed to the expanded role of Chief Legal and Compliance Officer, effective April 14, 2025. The biography of Klaus Moosmayer can be found in the 2024 Annual Report (page 126), available at www.novartis.com/news/media-library/novartis-annual-report-2024.

**Role of the Executive Committee**

The Board has appointed the Executive Committee members and delegated overall responsibility for and oversight of the operational management of Novartis to them, including:

• Recruiting, appointing and promoting senior management

• Ensuring the efficient operation of the Group and the achievement of optimal results

• Promoting an active internal and external communications policy

• Developing policies and strategic plans for Board approval, and implementing those approved

• Submitting the following to the Board for approval: investments, divestments, transactions, contracts and litigations with a value exceeding USD 500 million, and capital market and other important financing transactions, as well as all other matters of fundamental significance to the Novartis Group

• Preparing and submitting quarterly and annual reports to the Board and its committees

• Informing the Board of all matters of fundamental significance to the businesses

• Dealing with any other matters delegated by the Board

There are no contracts between Novartis and third parties whereby Novartis would delegate any business management tasks to such third parties.

**Chief Executive Officer**

With the support of the Executive Committee, the CEO is responsible for the operational management of Novartis. These responsibilities include effectively implementing the Company strategy, delivering financial results, and shaping a corporate culture of empowerment and responsibility to help drive innovation, improve performance and enhance reputation.

In addition to other Board-assigned duties, the CEO leads the Executive Committee, and is responsible for building and maintaining an effective executive team. With the support of the Executive Committee, the CEO is responsible for:

• Ensuring Novartis has the capabilities to achieve its long-term strategic objectives

• Developing robust management succession and development plans for presentation to the Board

• Promoting effective communication with shareholders and other stakeholders

• Ensuring Novartis conducts its business in a legal and ethical manner

• Developing an effective risk control framework for all business activities

• Ensuring the flow of information to the Board is accurate, timely and clear

**Diversity**

The composition of the Executive Committee of Novartis as at December 31, 2025, in terms of nationality, gender, age and length of tenure, is shown in the following charts:

![WSGE_DP_Graph_Diversity_ECN](cogo_0039.gif)

Diversity profileNationality1WAmerican45%WSwiss20%WGerman10%WBritish10%WSpanish10%WIsraeli5%GenderWMale80%WFemale20%AgeW<450%W45–5020%W>5080%TenureW<2 y0%W2–4 y70%W>4 y30%1 Three Executive Committee members have dual nationalities. Each of these nationalities is counted as a half in the above chart.

**Mandates outside the Novartis Group**

According to article 34, paragraph 2 of the Articles of Incorporation (www.novartis.com/investors/company-overview/corporate-governance), the following limitations on mandates apply:

---

| | |
|:---|:---|
|  | Maximum number <br> of mandates |
| Mandates | 6 |
| Other listed companies <sup>1</sup> | 2 |
|  <sup>1</sup> Holding a chair position of the board of directors in other listed companies is not allowed. | <sup>1</sup> Holding a chair position of the board of directors in other listed companies is not allowed. |

---

According to article 34, paragraph 3 of the Articles of Incorporation (www.novartis.com/investors/company-overview/corporate-governance), the following mandates are not subject to the above-mentioned limitations:

---

| | |
|:---|:---|
|  | Maximum number <br> of mandates |
| Mandates in companies that are controlled by Novartis AG | No limit |
| Mandates held at the request of Novartis AG or companies controlled by it | &nbsp;&nbsp;&nbsp;&nbsp;5 |

---

"Mandates" shall mean any membership in the board of directors, in the executive board or in the advisory board, or a comparable function under foreign law, in a company with an economic purpose. Mandates in different legal entities which are under joint control are deemed one mandate.

For a full list of all external mandates subject to the above-mentioned limitations, please refer to the Compensation Report (see "—Item 6.B Compensation—Mandates outside the Novartis Group").

## Members of the Executive Committee
![WSGE_DP_Pic_Narasimhan](cogo_0043.jpg)

#### Vasant (Vas) Narasimhan, M.D.
Chief Executive Officer since 2018 \| Nationality: American \| Year of birth: 1976

#### Professional experience
• Global Head of Drug Development and Chief Medical Officer, Novartis AG, Switzerland (2016–2018)

• Global Head of Development, Novartis Pharmaceuticals, Switzerland (2014–2016)

• Global Head of Biopharmaceuticals and Oncology Injectables, Sandoz International, Germany (2014)

• Global Head of Development, Novartis Vaccines, US (2012–2014)

• North America Region Head, Novartis Vaccines, and US Country President, Novartis Vaccines and Diagnostics, US (2008–2012)

• Joined Novartis in 2005

#### Mandates

#### Current:
• Board member, Pharmaceutical Research and Manufacturers of America (PhRMA), US

• Committee member, Biopharmaceutical CEOs Roundtable (BCR), International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), Switzerland

#### Past:
• Chair, Pharmaceutical Research and Manufacturers of America (PhRMA), US (2023–2024)

#### Education
• Doctor of medicine, Harvard Medical School, US

• Master's degree in public policy, John F. Kennedy School of Government, Harvard University, US

• Bachelor's degree in biological sciences, University of Chicago, US

![WSGE_DP_Pic_Aradhye](cogo_0069.jpg)

#### Shreeram Aradhye, M.D.
President, Development, and Chief Medical Officer since 2022 \| Nationality: American \| Year of birth: 1962

#### Professional experience
• Executive vice president & chief medical officer, Dicerna Pharmaceuticals, US (2020–2022)

• Executive vice president & chief development officer, Axcella Health, US (2019–2020)

• Global Head, Medical Affairs and Chief Medical Officer, Pharmaceuticals, Novartis, US & Switzerland (2017–2019)

• Global Head, Development Franchise, Neuroscience, and US Head, Development, Novartis, US & Switzerland (2013–2017)

• Executive Global Program Head, Multiple Sclerosis, Novartis, Switzerland (2012–2013)

• Head, Global Development India, Novartis, India (2011–2012)

• Head, Global Clinical Development & Medical Affairs, Biosimilars, Sandoz, Germany (2009–2011)

• Positions of increasing responsibility at Novartis (1999–2009)

#### Education
• Chief resident and teaching fellow in internal medicine, Newton Wellesley Hospital, US

• Resident in internal medicine, Newton Wellesley Hospital, US

• Fellow in nephrology, St Luke's Roosevelt Medical Center, US

• Resident in internal medicine (M.D.), All India Institute of Medical Sciences, India

• Bachelor of medicine and bachelor of surgery, All India Institute of Medical Sciences, India

![WSGE_DP_Pic_Bulto](cogo_0068.jpg)

#### Victor Bulto
President, US since 2022 \| Nationality: Spanish \| Year of birth: 1978

#### Professional experience
• President, Novartis Pharmaceuticals Corporation, US (2019–2022)

• Vice President & Head Immunology & Dermatology Franchise, Novartis US (2017–2019)

• Vice President & Head US Alcon Pharmaceuticals, US (2016–2017)

• Head Neuroscience Franchise, Region Europe, Novartis, Switzerland (2013–2016)

• Business Franchise Head Neuroscience, Novartis, Spain (2012–2013)

• Business Franchise Head Neuroscience/MS, Respiratory, Osteoarticular, Spain, Novartis (2010–2012)

• Marketing Head Respiratory, Osteoarticular, Novartis, Spain (2009–2010)

#### Mandates

#### Current:
• Board member, Labcorp, US

• Board member, Biotechnology Innovation Organization (BIO), US

• Board member, Advisory Board of the Leonard D. Schaeffer Center for Health Policy & Economics, US

#### Education
• Master of business administration, ESADE Business School, Spain

• Master's degree in health economics and pharmacoeconomics, Pompeu Fabra University Spain

• Master's degree in chemical engineering, Ramon Llull University, Spain

• Bachelor's degree in chemistry, Ramon Llull University, Spain

![WSGE_DP_Pic_Gal](cogo_0070.jpg)

#### Aharon (Ronny) Gal, Ph.D.
Chief Strategy & Growth Officer since 2022 \| Nationality: Israeli/American \| Year of birth: 1966

#### Professional experience
• Senior analyst, US biopharmaceutical, Sanford Bernstein, US (2020–2022)

• Senior analyst, US specialty pharmaceuticals and Biotech, Sanford Bernstein, US (2016–2020)

• Senior analyst, US specialty pharmaceuticals and EU mid–cap pharmaceuticals, Sanford Bernstein, US, UK (2013–2016)

• Senior analyst, US specialty pharmaceuticals, Sanford Bernstein, US (2004–2013)

• Vice president, Canon US Life Sciences, US (2003–2004)

• Consultant, team leader, manager, The Boston Consulting Group, Inc., US, Singapore, China (1996–2002)

#### Education
• Ph.D. in biochemistry, Massachusetts Institute of Technology, US

• B.Sc. in chemistry, Emory University, US

![WSGE_DP_Pic_Hale](cogo_0064.jpg)

#### Karen L. Hale
Chief Legal and Compliance Officer since April 14, 2025 \| Nationality: American \| Year of birth: 1968

#### Professional experience
• Chief Legal Officer of Novartis AG (2021–April 2025)

• Vice president, deputy general counsel, AbbVie Inc., US (2019–2021)

• Vice president, chief ethics and compliance officer, AbbVie Inc., US (2013–2019)

• Vice president, litigation and legal specialty operations, AbbVie Inc., US (2013)

• Divisional vice president, commercial litigation, Abbott Laboratories, US (2006–2012)

• Began practicing law in 1994 and joined Abbott in 1997

#### Education
• Bar memberships: Illinois and Virginia, US

• Juris doctor, William & Mary Law School, US

• Bachelor's degree in economics, Duke University, US

![WSGE_DP_Pic_Horber](cogo_0073.jpg)

#### Patrick Horber M.D.
President, International since 2023 \| Nationality: Swiss \| Year of birth: 1970

#### Professional experience
• Senior vice president, AbbVie, president Immunology, AbbVie, US (July 2023–September 2023)

• President, US commercial operations, Immunology, AbbVie, US (2020–2023)

• Vice president and head of global marketing and commercial operations, AbbVie, US (2019–2020)

• Vice president and managing director, AbbVie, Germany (2015–2019)

• Managing director, AbbVie, Switzerland (2013–2015)

• Managing director, Abbott, Switzerland (2012–2012)

• Leadership roles at headquarters and country operations, Roche (2005–2012)

#### Mandates

#### Current:
• Board member and vice–chair of the patient access committee, European Federation of Pharmaceutical Industries and Associations (EFPIA)

• Board member, economiesuisse

#### Past:
• Board member and chair of the strategy and politics committee, Verband Forschender Arzneimittelhersteller, Germany (2016–2019)

• Interpharma, the association of Switzerland's research–based pharmaceutical industry

– Chair of the executive committee (2015–2015)

– Member of the president's bureau (2015–2015)

– Member of the executive committee and the board (2013–2015)

#### Education
• Doctor of medicine (M.D.), University of Zurich, Switzerland

![WSGE_DP_Pic_Kirsch](cogo_0047.jpg)

#### Harry Kirsch
Chief Financial Officer since 2013 \| Nationality: German/Swiss \| Year of birth: 1965

#### Professional experience
• Chief Financial Officer Pharmaceuticals Division, Novartis Pharma AG, Switzerland (2010–2013)

• Chief Financial Officer of Pharma Europe, Novartis Pharma AG, Switzerland (2008–2010)

• Head of Business Planning & Analysis for the Pharmaceuticals Division, Novartis Pharma AG, Switzerland (2005–2008)

• Head Finance Global Primary Care, Novartis Pharma AG, Switzerland (2003–2005)

• Finance positions at Procter & Gamble (1991–2003)

#### Mandates

#### Past:
• Represented Novartis on the board of GlaxoSmithKline Consumer Healthcare Holdings Ltd. (2015–2018)

#### Education
• Diploma degree in industrial engineering and economics (Diplom–Wirtschaftsingenieur), University of Karlsruhe, Germany

![WSGE_DP_Pic_Kowalski](cogo_0065.jpg)

#### Rob Kowalski
Chief People & Organization Officer since 2021 \| Nationality: American \| Year of birth: 1968

#### Professional experience
• Executive Vice President and Global Head of Regulatory Affairs (2018–2021), and US Head of Global Drug Development (2009–2015 and 2017–2021), Novartis Pharmaceuticals Corporation, US

• Ad interim President, Novartis Corporation, US (2021)

• Ad interim Head of Global Drug Development and Chief Medical Officer, Novartis AG, Switzerland (2018)

• Senior Vice President and Head of Regulatory Affairs, Novartis Pharmaceuticals Corporation, US (2009–2015 and 2017–2018)

• Senior Vice President and Head of Regulatory Affairs, Novartis Pharma AG, Switzerland (2015–2017)

• Global Head of Country Medical Development, Novartis Pharmaceuticals Corporation, US (2010–2011)

• Previously held regulatory leadership roles at Schering–Plough Corporation (now Merck) and Pharmacia Corporation (now Pfizer)

#### Mandates

#### Past:
• Advisory board member, Industry Pharmacists Organization, US (2015–2024)

#### Education
• Doctor of pharmacy, University of Wisconsin–Madison, US

• Bachelor's degree in pharmaceutical sciences, University of Wisconsin–Madison, US

![WSGE_DP_Pic_Lang](cogo_0045.jpg)

#### Steffen Lang, Ph.D.
President, Operations since 2022 \| Nationality: German/Swiss \| Year of birth: 1967

#### Professional experience
• Global Head of Novartis Technical Operations (2017–2022)

• Global Head of Biologics Technical Development and Manufacturing, Novartis Technical Operations, Switzerland (2015–2017)

• Global Head of Technical Research and Development, Novartis Pharmaceuticals, Switzerland (2009–2015)

• Joined Novartis in 1994 as Head of Laboratory in Research, and over the years held positions of increasing responsibility within Pharmaceuticals Development

#### Mandates

#### Current:
• Board member, Bachem Holding AG, Switzerland

#### Education
• Doctorate in pharmaceutical technology, Swiss Federal Institute of Technology, Switzerland

• Master's degree in pharmaceutical sciences, University of Heidelberg, Germany

![WSGE_DP_Pic_Marshall](cogo_0071.jpg)

#### Fiona H. Marshall, Ph.D.
President, Biomedical Research since 2022 \| Nationality: British \| Year of birth: 1964

#### Professional experience
• Senior vice president, head of discovery, preclinical and translational medicine, Merck & Co., US, (2021–2022)

• Vice president, global head of neuroscience, Merck & Co., US (2019–2021)

• Vice president, head of UK discovery research, Merck & Co., UK (2018–2019)

• Executive vice president and chief scientific officer, Sosei Heptares, UK (2015–2018)

• Chief scientific officer and founder, Heptares Therapeutics, UK (2006–2018)

#### Education
• Doctorate in neuroscience, University of Cambridge, UK

• Bachelor's degree in biochemistry, University of Bath, UK

## Information and control systems
The Board's information and control systems vis-à-vis management include a steady flow of information from senior management; monthly financial reports; a comprehensive and integrated risk management framework; and the independent evaluation of our risk management and internal control framework by the Internal Audit function (see "Item 15. Controls and Procedures").

**Information from senior management**

The Board ensures that it receives timely and comprehensive information from the Executive Committee through:

• Monthly CEO reporting (encompassing progress against company targets, including financial results) and frequent communications from the CEO on current developments

• Executive Committee meeting minutes

• Regular meetings and teleconferences by the Board and/or Board committees with the CEO and/or other members of the Executive Committee (e.g., the CFO and the Chief Legal and Compliance Officer), and regular meetings and teleconferences with senior management (e.g., the Chief Audit Officer)

• Information from Executive Committee members or other Novartis employees, and visits to Novartis sites

To obtain an outside view, the Board and/or Board committees occasionally invite external advisors (e.g., the independent advisor of the Compensation Committee and the external auditor) to attend a meeting and/or share their observations about a specific topic.

**Monthly financial reports**

Novartis produces comprehensive, consolidated (unaudited) financial statements on a monthly basis for the Company. These are typically available no more than 10 days after the end of the month, and include the following:

• Consolidated income statement of the month and year to date, prepared in accordance with IFRS Accounting Standards, as well as adjustments to arrive at core results that are not aligned with IFRS measures, as defined by Novartis (see "Item 5. Operating and Financial Review and Prospects—Item 5.A Operating results—Non-IFRS measures as defined by Novartis"). Figures prepared in accordance with IFRS Accounting Standards, together with core figures that are not aligned with IFRS measures, are compared with the prior-year period and targets, both in USD and on a constant currency basis.

• Supplementary data on a monthly and year-to-date basis, such as free cash flow and earnings per share on a USD basis.

Management information related to the consolidated income statements and free cash flow is made available to Board members through the monthly CEO Report, which includes an analysis of key deviations from the prior year or target.

Prior to the release of each quarter's results, the Board receives the actual consolidated financial statement information and an outlook of the full-year results in accordance with IFRS Accounting Standards and core results that are not aligned with IFRS measures (as defined by Novartis), together with related commentary.

Annually, during the third quarter, the Board approves the Company's strategic plan for the next three years. In the fourth quarter of the year, the Board approves the operating targets for the following year as well as the financial targets for the following three-year period, including a projected consolidated income statement in USD prepared in accordance with IFRS Accounting Standards and non-IFRS measures as defined by Novartis (core results).

The Board does not have direct access to the Novartis financial and management reporting systems but can, at any time, request more detailed information.

**Risk management**

#### Overview
At Novartis, our continued success depends on our ability to manage risk. The Board has ultimate oversight of the Enterprise Risk Management (ERM) system and regularly reviews the most significant risks and how these are managed. As outlined below, the Board is supported by its committees. Furthermore, our Internal Audit function provides an independent evaluation of risk management (see "—Item 6.C Board practices—Information and control systems—Internal Audit").

#### Board committees

#### Risk committee
• Oversees the risk management system and processes

• Reviews, together with management, the prioritization and handling of risks, the risk portfolio, and actions implemented by management

• Performs deep dives into key risk areas and fosters a culture of smart risk-taking

• Receives annual updates on cyber security

• Receives regular updates from designated risk owners as well as the Chief Legal and Compliance Officer and/or the Head of Corporate Ethics, Risk & Compliance

#### Audit and compliance committee
• Ensures that Internal Audit plans are aligned with key risks, and that the function provides independent assurance and insights around these risks

• Works closely with the Risk Committee to minimize gaps in risk coverage

• Receives a semiannual presentation from the Chief Legal and Compliance Officer

• Receives a quarterly presentation from the Chief Audit Officer on progress achieved in implementing the risk-based audit plan, and key insights about audit and advisory activities

• Pays particular attention to financial risk

• Has closed sessions with the Chief Audit Officer and, upon request, with the Chief Legal and Compliance Officer

#### Compensation committee
• Works closely with the Risk Committee to ensure that the compensation system does not lead to excessive risk-taking (see "—Item 6.B Compensation—Compensation governance—Risk management principles")

#### Executive committee
• Regularly assesses risks and fosters a culture of risk awareness, in line with the Novartis Values and Behaviors and the Novartis Code of Ethics

#### Ethics, risk & compliance
• Governs the Novartis Code of Ethics

• Provides an integrated ERM framework (which is described in the following section)

• Governs the global compliance program within Novartis

• Administers the Enterprise Policy Management and global Internal Controls framework

#### SENIOR LEADERS OF ORGANIZATIONAL UNITS AND GLOBAL FUNCTIONS, AT ALL LEVELS
• Provide appropriate risk management within their area of responsibility

• Establish adequate risk prevention and mitigation strategies when risk exposure is identified, including tracking progress and providing resources for possible actions

• Assess emerging risks, trends and overall exposure as part of the ERM process

#### Enterprise Risk Management framework
The Ethics, Risk & Compliance (ERC) function provides an integrated ERM framework to obtain a holistic view of Company risks and drive a culture of smart risk-taking. Under the leadership of the Chief Legal and Compliance Officer, the Corporate ERC team is responsible for the overall ERM process, which is a fundamental pillar of our Integrated Assurance. This process covers, but is not limited to, risks associated with:

• The research, development, manufacturing, marketing and sales of products

• Finance, taxes, compliance with law and regulations, security, product safety, technology, human resources, and health, safety and environmental protection

• Business objectives and strategies, including mergers and acquisitions

• External factors (e.g., risk amplifiers) such as the social, political and economic environment

The ERM process continued to evolve in 2025. The Corporate ERC team conducted risk workshops and collaborated with all risk assurance and monitoring functions to identify key risks across the Company. Each Novartis unit organized a focused risk workshop that included leadership team members. In parallel, risk workshops were held in leading countries by revenue and in certain focus markets. Once key risks were identified, mitigation action plans were created to address them in an effective way. The findings from these workshops were consolidated into the Novartis Risk Radar, which enables senior management, the Executive Committee and the Board to focus discussions on key risks and to more closely align our corporate strategy with our risk exposure and our ways of working.

In 2025, the Corporate ERC team further developed the ERM framework within the Novartis Corporate ERC organization. We developed additional risk management training and held the risk intelligence forum — an event that brought together internal and external speakers to address emerging trends and threats. As a result, greater emphasis is now placed on anticipating risks and preparing for key scenarios over the next 5 to 10 years.

#### SpeakUp Office
Our SpeakUp Office provides a safe place for employees to report potential misconduct, including the option to do so anonymously.

#### Global Security
Global Security proactively collects and shares threat intelligence to protect Novartis from situations that may compromise the safety of people, products and assets, and/or the reputation of our organization. Global Security protects patients from counterfeit products and, as part of the SpeakUp process, performs fair and timely investigations into high-risk cases of alleged internal misconduct. It also provides personal security advice and support for Novartis executives and other employees with the utmost discretion.

**Internal Audit**

#### Internal Audit purpose and function
The Internal Audit function supports the Board and Executive Committee by providing independent assurance. It evaluates the effectiveness, efficiency, and adequacy of processes and controls, ensuring that Novartis meets its strategic objectives, manages major risks, and complies with applicable policies, laws, and regulations.

The Chief Audit Officer (CAO) reports administratively to the CEO and functionally to the Chair of the Audit and Compliance Committee (ACC). The CAO meets with the ACC at least quarterly, and reaffirms the organizational independence of the Internal Audit function to the ACC annually.

In 2025, Internal Audit executed a risk-based audit plan, with results reported to audited units, the Executive Committee, and the ACC. Audit findings and action plans are centralized to ensure efficient follow-up. To the right is a summary of the audits and advisory activities conducted in 2025, along with key methodology steps for managing the Internal Audit cycle.

![WSGE_DP_Graph_InternalAuditActivities](cogo_0062.gif)

2025 Internal Audit Activitiesaudits 59advisories15Internal Audit cycle methodology includes:Discovery (planning): Ongoing monitoring and information gathering through continuous risk assessments, utilizing business interviews, and biannual calibration of the audit plan. The plan is reviewed and approved by the ACC every six months.Execution and Reporting: 74 engagements delivered in 2025, all linked to group risks, emerging topics and company-wide initiatives.Follow Up: Management is responsible for resolving issues, supported by Internal Audit to ensure timely closure of high-risk observations.

## Auditors
**Duration of the mandate and terms of office**

On behalf of the Board, the ACC selects and nominates an independent auditor for election at the AGM. KPMG commenced its auditing mandate for Novartis in 2022. Heidi Broom-Hirst began serving as the global audit partner in 2023 and assumed the role of auditor in charge in 2025. Malcolm Dahn, global lead partner, began serving in his role in 2025. The ACC together with KPMG will ensure that these partners are rotated at least every five years.

**Auditing fees and additional fees**

The ACC monitors and preapproves the fees paid to the external auditor for all audit and non-audit services. It has approved a policy with clear guidelines on the engagement of the independent auditor firm. This policy is designed to help ensure that the independence of the external auditor is maintained. It limits the scope of services that the external auditor may provide to the Company, stipulating certain permissible types of audit-related and non-audit services, including tax services and other services that have been preapproved by the ACC. The ACC preapproves all other services on a case-by-case basis.

The external auditor is required to report periodically to the ACC about the scope of the services it has provided to the Company and the fees for the services it has performed to date. KPMG fees for professional services related to the 12-month periods ended December 31, 2025, and December 31, 2024, are as follows:

---

| | | |
|:---|:---|:---|
|  | **2025<br> USD million** | 2024<br> USD million |
| Audit services | 28.3 | 25.3 |
| Audit-related services | 2.8 | 1.9 |
| Tax services | 0.1 | 0.1 |
| Other services | 0.0 | 0.0 |
| **Total** | 31.2 | 27.3 |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |

---

Audit services include work performed to issue opinions on consolidated financial statements and parent company financial statements of Novartis AG, to issue opinions related to the effectiveness of the Company's internal control over financial reporting, and to issue reports on local statutory financial statements. Also included are audit services that can generally only be provided by the statutory auditor, such as the audits of the Compensation Report, special purpose financial statement in connection with divestment transactions, issuance of comfort letters; and reviews of quarterly financial results.

Audit-related services include other assurance services provided by the independent auditor but not restricted to those that can only be provided by the statutory auditor. They include services such as: limited assurance on selected sustainability information in the Novartis Report on Nonfinancial Matters, audits of pension and other employee benefit plans; audit services in connection with non-recurring transactions; assurance of the Compensation Report of Novartis, IT system implementation procedures; and other audit-related services.

Tax services include tax compliance and assistance with historical tax matters.

Other services include license fees for use of accounting and other reporting guidance databases and, in 2024, additional procedures related to training on emerging topics and benchmarking studies.

**Information to the Board and the ACC**

The ACC, acting on behalf of the Board, is responsible for overseeing the activities of the external auditor. In 2025, this committee held seven meetings. KPMG was invited to all of these meetings to attend the discussions on auditing matters and any other matters relevant to its audit.

The ACC recommended to the Board to approve the audited consolidated financial statements and the separate parent company financial statements of Novartis AG for the year ended December 31, 2025. The Board proposed the acceptance of these financial statements for approval by the shareholders at the next AGM.

The ACC regularly evaluates the performance of the external auditor and, based on this, once a year determines whether the external auditor should be proposed to the shareholders for re-election. To assess the performance of the external auditor, the ACC requests input from management and holds private meetings with the CFO and the Chief Audit Officer, and — if necessary — obtains an independent external assessment. Criteria applied for the performance assessment of the external auditor include an evaluation of: its technical and operational competence; its independence and objectivity; the adequacy of the resources it has employed; its focus on areas of significant risk to Novartis; its willingness to probe and challenge; its ability to provide effective, practical recommendations; and the openness and effectiveness of its communications and coordination with the ACC, the Internal Audit function and management.

On an annual basis, the auditor in charge and the global lead partner report to the Board on the external auditor's activities during the current year, and on the audit plan for the coming year.

Also on an annual basis, the external auditor provides the ACC with written disclosures required by the US Public Company Accounting Oversight Board, and the committee and the external auditor discuss the external auditor's independence from Novartis.

## Information policy
Novartis is committed to open and transparent communication with shareholders, investors, financial analysts, customers, suppliers and other stakeholders. Novartis disseminates information about material developments in its businesses in a broad and timely manner that complies with the rules of the SIX Swiss Exchange and the NYSE.

**Communications**

Novartis publishes this Annual Report to provide information on the Group's results and operations. Novartis discloses financial results in accordance with IFRS Accounting Standards on a quarterly basis, and issues press releases from time to time regarding business developments.

Novartis publishes press releases related to financial results and material events to the US Securities and Exchange Commission (SEC) via Form 6-K. An archive containing annual reports, US SEC Form 20-F, quarterly results releases and all related materials — including presentations and conference call webcasts — is available at www.novartis.com/investors.

Novartis also publishes the Report on Nonfinancial Matters, available at www.novartis.com/reportinghub, which provides an overview of how we manage different nonfinancial matters. The Report on Nonfinancial Matters is prepared in accordance with Art. 964a et seq of the Swiss Code of Obligations, and with reference to the standards issued by the Global Reporting Initiative (GRI).

The information on Board and Executive Committee compensation is outlined in the Compensation Report (see "—Item 6.B Compensation" in general, and for certain compensation information with respect to the Board that is responsive to Item 6.C.2 of Form 20-F, see "—Item 6.B Compensation—Board compensation philosophy and fee structure—Philosophy and benchmarking"). Please also refer to articles 29-35 of the Articles of Incorporation (www.novartis.com/investors/company-overview/corporate-governance). No change-of-control or 'golden parachute' clauses benefit Board members, Executive Committee members, or other members of senior management. Employment contracts with Executive Committee members are either for a fixed term not exceeding one year or for an indefinite period with a notice period not exceeding 12 months, and do not contain commissions for the acquisition or transfer of enterprises or severance payments. No loans or credits are granted to Board and Executive Committee members.

Information contained in reports and releases issued by Novartis is only correct and accurate at the time of release. Novartis does not update past releases to reflect subsequent events, and advises against relying on them for current information.

**Investor Relations** 

The Novartis Investor Relations team manages the Company's interactions with the international financial community. A number of events are held every year to provide institutional investors and analysts with the opportunity to learn more about Novartis.

The Investor Relations team is based at the Company's headquarters in Basel, with part of the team located in the US to coordinate communications with US investors. More information is available at www.novartis.com/investors.

**Website information**

---

| | |
|:---|:---|
| Topic | Information |
| **Share capital** | Articles of Incorporation of Novartis AG <br> www.novartis.com/investors/company-overview/corporate-governance<br> Novartis key share data<br> www.novartis.com/investors/share-data-analysis |
| **Shareholder rights** | Articles of Incorporation of Novartis AG <br> www.novartis.com/investors/company-overview/corporate-governance |
| **Annual General Meeting of Shareholders** | Annual General Meeting of Shareholders<br> www.novartis.com/investors/shareholder-information/annual-general-meeting |
| **Board Regulations** | Board Regulations<br> www.novartis.com/investors/company-overview/corporate-governance |
| **Ethical Conduct Requirements** | Ethical Conduct Requirements for CEO, ECN and Senior Financial <br> Officers of Novartis<br> www.novartis.com/investors/company-overview/corporate-governance |
| **Novartis Report on Nonfinancial Matters** | Novartis Report on Nonfinancial Matters<br> www.novartis.com/reportinghub |
| **Novartis Annual Report and Form 20-F** | Novartis Annual Report and Form 20-F<br> www.novartis.com/reportinghub |
| **Novartis financial data** | Novartis financial data<br> www.novartis.com/investors/financial-data |
| **Press releases** | Press releases<br> www.novartis.com/news/news-archive?type=media_release<br> Email service<br> www.novartis.com/news/stay-up-to-date |
| **Additional information (including event calendar, registered <br>office, contact and email addresses, phone numbers, etc.)** | Novartis Investor Relations <br> www.novartis.com/investors |
| The information on our website is not, and shall not be deemed to be, a part of this Annual Report or incorporated herein. | The information on our website is not, and shall not be deemed to be, a part of this Annual Report or incorporated herein. |

---

## Quiet periods
According to our Global Insider Policy, employees who have access to material non-public information on a regular basis are designated as Continuing Insiders and are banned from trading in Novartis securities during quiet periods. Limited exemptions apply for the expiry of options or warrants within a quiet period. Our quarterly quiet periods commence on the first trading day of each calendar quarter and end at the beginning of the first trading day after the subsequent release of the quarterly and/or annual results.

In 2025, the following quiet periods applied:

• January 1, 2025, until (and including) January 31, 2025

• April 1, 2025, until (and including) April 29, 2025

• July 1, 2025, until (and including) July 17, 2025

• October 1, 2025, until (and including) October 28, 2025

### 6.D Employees
The table below sets forth the breakdown of the total year-end number of our full-time equivalent employees by main category of activity and geographic area for the past three years.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **As of<br>December 31, 2025<br>(full-time equivalents)** | **<br> Marketing and<br> sales** | **<br> Research and<br> development** | **<br> Production and<br> supply** | **<br> General and <br> administration** | **<br>Total** |
| USA | 4 845 | 5 302 | 1 479 | 930 | **12 556** |
| Canada and Latin America | 1 970 | 475 | 403 | 1 085 | **3 933** |
| Europe | 7 709 | 9 252 | 12 000 | 5 112 | **34 073** |
| Asia/Africa/Australasia | 12 764 | 4 986 | 2 605 | 4 350 | **24 705** |
| **Total** | **27 288** | **20 015** | **16 487** | **11 477** | **75 267** |
| **As of<br>December 31, 2024<br>(full-time equivalents)<sup>1</sup>** | **<br> Marketing and<br> sales** | **<br> Research and<br> development** | **<br> Production and<br> supply** | **<br> General and <br> administration** | **<br>Total** |
| USA | 5 194 | 5 227 | 1 179 | 1 003 | **12 603** |
| Canada and Latin America | 1 819 | 455 | 336 | 1 081 | **3 691** |
| Europe | 8 054 | 9 177 | 11 823 | 5 098 | **34 152** |
| Asia/Africa/Australasia | 13 719 | 4 823 | 2 731 | 4 164 | **25 437** |
| **Total** | **28 786** | **19 682** | **16 069** | **11 346** | **75 883** |
| **As of<br>December 31, 2023<br>(full-time equivalents)<sup>1</sup>** | **<br> Marketing and<br> sales** | **<br> Research and<br> development** | **<br> Production and<br> supply** | **<br> General and <br> administration** | **<br>Total** |
| USA | 5 232 | 5 377 | 1 127 | 1 110 | **12 846** |
| Canada and Latin America | 1 844 | 503 | 327 | 1 047 | **3 721** |
| Europe | 8 573 | 8 773 | 11 811 | 5 302 | **34 459** |
| Asia/Africa/Australasia | 13 739 | 4 680 | 2 733 | 3 879 | **25 031** |
| **Total** | **29 388** | **19 333** | **15 998** | **11 338** | **76 057** |
|  <sup>1</sup> Reclassified to conform with 2025 presentation. | <sup>1</sup> Reclassified to conform with 2025 presentation. | <sup>1</sup> Reclassified to conform with 2025 presentation. | <sup>1</sup> Reclassified to conform with 2025 presentation. | <sup>1</sup> Reclassified to conform with 2025 presentation. | <sup>1</sup> Reclassified to conform with 2025 presentation. |

---

A significant number of our employees are represented by unions or works councils. We have not experienced any material work stoppages in recent years, and we consider our employee relations to be good.

### 6.E Share ownership
The information set forth under "Item 6. Directors, Senior Management and Employees—Item 6.B Compensation—CEO and Executive Committee—Additional disclosures and other statutory information—Shares, ADRs and other equity rights owned by Executive Committee members as at December 31, 2025 (compared with prior year)" and under "Item 6. Directors, Senior Management and Employees—Item 6.B Compensation—Board compensation—Shares, ADRs and share options owned by Board members" is incorporated by reference. For more information on our equity-based participation plans, see the information set forth under "Item 18. Financial Statements—Note 25. Equity-based participation plans for employees," which is incorporated by reference.

### 6.F Disclosure of a registrant's action to recover erroneously awarded compensation
Not applicable.

## Item 7. Major Shareholders and Related Party Transactions

### 7.A Major shareholders
Novartis shares are widely held. As at December 31, 2025, Novartis had approximately 184 000 shareholders listed in the Share Register of Novartis, representing approximately 56.0% of issued shares. Based on the Novartis Share Register and excluding treasury shares, approximately 52.2% of the shares registered by name were held in Switzerland, and approximately 25.7% were held in the US. Approximately 19.5% of the shares registered in the Share Register were held by individual investors, while approximately 41.1% were held by legal entities, excluding 9.6% of our share capital held as treasury shares by Novartis AG or its fully owned subsidiaries (including Swiss foundations controlled by Novartis AG), and 39.4% were held by nominees, fiduciaries and the ADS depositary.

Based on the Share Register, we believe that we are not directly or indirectly owned or controlled by another corporation or government, or by any other natural or legal persons. There are no arrangements that may result in a change of control.

As at December 31, 2025, the following shareholders held more than 5% of our share capital:

---

| | |
|:---|:---|
|  | **Ordinary <br> shares beneficially <br> owned as of <br> Dec 31, 2025** |
| BlackRock, Inc. | 139 392 071<br>7.3 <sup>2</sup> |
| UBS Group AG | 139 602 467<br>7.3 <sup>3</sup> |
|  <sup>1</sup> Calculated on the basis of 1 908 151 679 ordinary shares outstanding as of December 31, 2025, excluding shares held as treasury shares by Novartis AG or its fully owned subsidiaries (including Swiss foundations controlled by Novartis AG). | <sup>1</sup> Calculated on the basis of 1 908 151 679 ordinary shares outstanding as of December 31, 2025, excluding shares held as treasury shares by Novartis AG or its fully owned subsidiaries (including Swiss foundations controlled by Novartis AG). |
|  <sup>2</sup> This information is based solely on the Schedule 13G filed by BlackRock, Inc. on February 2, 2024 with the SEC. | <sup>2</sup> This information is based solely on the Schedule 13G filed by BlackRock, Inc. on February 2, 2024 with the SEC. |
|  <sup>3</sup> This information is based solely on the Schedule 13G filed by UBS AM on July 17, 2025 with the SEC. | <sup>3</sup> This information is based solely on the Schedule 13G filed by UBS AM on July 17, 2025 with the SEC. |

---

As at December 31, 2025, no other shareholder held more than 5% of our share capital.

The Articles of Incorporation provide that no shareholder shall be registered with the right to vote shares comprising more than 2% of the registered share capital. The Board of Directors may, upon request, grant an exemption from this restriction. See "Item 6. Directors, Senior Management and Employees—Item 6.C Board practices—Shareholder participation—Voting rights, restrictions and representation—Registration restrictions" for additional information.

### 7.B Related party transactions
The information set forth under "Item 18. Financial Statements—Note 26. Transactions with related parties" is incorporated by reference.

### 7.C Interests of experts and counsel
Not applicable.

## Item 8. Financial Information

### 8.A Consolidated statements and other financial information
See "Item 18. Financial Statements."

**Dividend policy**

Subject to the dividend policy described below, our Board of Directors expects to recommend the payment of a dividend in respect of each financial year. If approved by our shareholders at the relevant annual shareholders' meeting, the dividends will be payable shortly following such approval. Any shareholder who purchases our shares before the ex-dividend date and holds the shares until that date shall be deemed to be entitled to receive the dividends approved at that meeting. Dividends are reflected in our financial statements in the year in which they are approved by our shareholders.

Our dividend policy is to pay a growing annual dividend in Swiss francs per share. This policy is subject to our financial conditions and outlook at the time, the results of our operations, and other factors.

The Board will propose a dividend of CHF 3.70 per share to the shareholders for approval at the Annual General Meeting to be held on March 6, 2026. Because we pay dividends in Swiss francs, exchange rate fluctuations will affect the US dollar amounts received by holders of ADRs. For the amount of dividends we paid in the past three years, see "Item 18. Financial Statements—Note 18. Equity."

**Disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act (ITRA)**

At Novartis, our purpose is to reimagine medicine to improve and extend people's lives, regardless of where they live. This includes the compliant sale of medicines and other healthcare products worldwide. To help us fulfill this mission, we have for many years maintained a branch office located in Iran.

As of October 18, 2010, a non-US Novartis affiliate entered into a non-binding Memorandum of Understanding (MoU) with the Ministry of Health and Medical Education of the Islamic Republic of Iran. Pursuant to the MoU, the Iranian Ministry of Health acknowledges certain benefits that may apply to sales of certain of our medicines by third-party distributors in Iran. These include fast-track registration, market exclusivity, end-user subsidies, and exemptions from customs tariffs. Novartis receives no payments from the Iranian Ministry of Health under the MoU, and the MoU creates no obligations on the part of either Novartis or the Iranian Ministry of Health.

From time to time, including in 2025, certain Novartis non-US affiliates made payments to government entities in Iran related to patents, trademarks and exit fees.

From time to time, including in 2025, certain Novartis non-US affiliates enter into agreements with hospitals, research institutes, medical associations, and universities in Iran to provide grants and sponsor congresses, seminars and symposia, and with doctors and other healthcare professionals for consulting services, including participation in advisory boards and investigator services for observational (non-interventional) studies. Some hospitals and research institutes are owned or controlled by the government of Iran, and some doctors and healthcare professionals are employed by hospitals that may be public or government-owned.

Because we have operations in Iran, including employees, we obtain services and have other dealings incidental to our activities in that country, including paying taxes and salaries either directly or indirectly through a service provider, and obtaining office rentals, insurance, electricity, water and telecommunications services, office and similar supplies, and customs-related services from Iranian companies that may be owned or controlled by the government of Iran. In addition, from time to time, representatives of our non-US affiliates participate in meetings with Iranian officials to discuss issues relevant to our business and the pharmaceutical industry.

Certain Novartis non-US affiliates maintain local accounts at banks that are, as of November 5, 2018, on the Specially Designated Nationals and Blocked Persons List (SDN List). These non-US affiliates make local transactions for employee payroll and local vendor payment purposes. These transactions are conducted for the purpose of facilitating the provision of medicine to Iran, in line with the humanitarian exceptions contained in Section 11 of Executive Order 13902 and other applicable sanctions legal authorities. No transactions are made with an Iranian financial institution designated on the SDN List in connection with Iran's support for international terrorism or proliferation of weapons of mass destruction.

### 8.B Significant changes
None.

## Item 9. The Offer and Listing

### 9.A Offer and listing details
Our ordinary shares are listed in Switzerland on the SIX Swiss Exchange under the symbol "NOVN." Our ADSs, each representing one ordinary share, are traded on the New York Stock Exchange under the symbol "NVS."

### 9.B Plan of distribution
Not applicable.

### 9.C Markets
See "—Item 9.A Offer and listing details."

### 9.D Selling shareholders
Not applicable.

### 9.E Dilution
Not applicable.

### 9.F Expenses of the issue
Not applicable.

## Item 10. Additional Information

### 10.A Share capital
Not applicable.

### 10.B Memorandum and articles of association
The following is a non-exhaustive summary of certain provisions of our Articles of Incorporation ("Articles"); the Board Regulations; and Swiss law, particularly the Swiss Code of Obligations ("Swiss CO"), and is qualified in its entirety by reference to the Articles and the Board Regulations, which are an exhibit to the Form 20-F, and to Swiss law.

**10. B.1 Company purpose**

Novartis AG is registered in the commercial register of the canton of Basel-Stadt, Switzerland, under number CHE-103.867.266. Our business purpose, as stated in Article 2 of the Articles, is to hold interests in enterprises in the area of healthcare or nutrition. We may also hold interests in enterprises in the areas of biology, chemistry, physics, information technology or related areas. We may acquire, mortgage, liquidate or sell real estate and intellectual property rights in Switzerland or abroad. In pursuing our business purpose, we strive to create sustainable value.

**10. B.2 Directors**

According to our Articles, the Board of Directors ("Board") consists of a minimum of eight and a maximum of 16 members. The members of the Board (including the Board Chair) are elected individually by the General Meeting of Shareholders ("General Meeting") for a one-year term of office lasting until the completion of the next Annual General Meeting of Shareholders ("AGM").

(a) A Board resolution requires the affirmative majority of the votes cast. According to our Board Regulations, a member of our Board ("Director") may not participate in decisions and resolutions on matters that affect, or reasonably might affect, the Director's interests or the interests of a person close to the Director (but the Director may participate in the discussion).

(b) Compensation of the Directors is subject to the approval of the aggregate amounts of such compensation by a shareholders' resolution under the Swiss CO.

(c) The Articles prohibit the granting of loans or credits to Directors.

(d) The Articles provide that a Director shall not serve on the Board for more than 12 years. The Board may, under certain circumstances, and if deemed in the best interests of the Company, recommend exceptions to this rule to the General Meeting.

(e) Our Directors are not required to be shareholders at the time of their election by the General Meeting. However, according to our share ownership guidelines, to ensure their interests are aligned with those of our shareholders, the Board Chair is required to own a minimum of 30 000 Novartis AG shares, and other Directors are required to own at least 5 000 Novartis AG shares within five years of having joined the Board.

**10. B.3 Shareholder rights**

Because Novartis AG has only one class of registered shares, the following information applies to all shareholders.

(a) Under the Swiss CO, we may only pay dividends out of balance sheet profits or out of distributable reserves. In any event, under the Swiss CO, while the Board may propose that a dividend be paid, we may only pay dividends upon shareholders' approval at a General Meeting. Furthermore, the Swiss CO requires us to accrue general legal reserves under certain circumstances so long as these reserves amount to less than 20% of our registered share capital, and Swiss law and the Articles permit us to accrue additional reserves beyond the statutory reserves. Our auditors must confirm that the dividend proposal of our Board conforms with the Swiss CO and the Articles. Our Board expects to recommend the payment of a dividend in respect of each financial year. See "Item 6. Directors, Senior Management and Employees—Item 6.C Board Practices—Capital Structure—Limitation on transferability—Per-share information" and "Item 8. Financial Information—Item 8.A. Consolidated statements and other financial information—Dividend policy."

Dividends are usually due and payable shortly after the shareholders have passed a resolution approving the payment. Dividends that have not been claimed within five years after the due date revert to us and are allocated to our general reserves. For information about deduction of the withholding tax or other duties from dividend payments, see "—Item 10.E Taxation."

(b) Each share is entitled to one vote at a General Meeting. Voting rights may only be exercised for shares registered with the right to vote on the record date for the applicable General Meeting. To do so, the shareholder must file a share registration form with us, setting forth the shareholder's name, address and citizenship (or, in the case of a legal entity, its registered office). If the shareholder has not timely registered its shares, then the shareholder may not vote at, or participate in, a General Meeting.

To vote its shares, the shareholder must also explicitly declare that it has acquired the shares in its own name and for its own account. If the shareholder refuses to make such a declaration, the shares may not be voted unless the Board recognizes such shareholder as a nominee.

The Articles provide that no shareholder shall be registered with the right to vote shares comprising more than 2% of the registered share capital. The Board may, upon request, grant an exemption from this restriction. Considerations include whether the shareholder supports our goal of creating sustainable value and has a long-term investment horizon. Furthermore, the Articles provide that no nominee shall be registered with the right to vote for shares comprising more than 0.5% of the registered share capital. The Board may, upon request, grant an exemption from this restriction if the nominee discloses the names, addresses, and number of shares of the persons for whose account it holds 0.5% or more of the registered share capital. The same restrictions indirectly apply to ADR holders. We have in the past granted exemptions from the 2% rule for shareholders and the 0.5% rule for nominees.

For purposes of the 2% rule for shareholders and the 0.5% rule for nominees, groups of companies and groups of shareholders acting in concert are considered to be one shareholder. These rules also apply to shares acquired or subscribed by the exercise of subscription, option or conversion rights.

After hearing the registered shareholder or nominee, the Board may cancel, with retroactive effect as of the date of registration, the registration of the shareholders if the registration was effected based on false information.

Registration restrictions in the Articles may only be removed upon a resolution carrying a two-thirds majority of the votes represented at a General Meeting.

Except as noted below, shareholders' resolutions require the approval of an absolute majority of the votes present at a General Meeting. As a result, abstentions have the effect of votes against such resolutions. Examples of shareholders' resolutions requiring a vote by such "absolute majority of the votes" include:

&nbsp;&nbsp;&nbsp;&nbsp;• Adoption and amendment of the Articles

&nbsp;&nbsp;&nbsp;&nbsp;• Election and removal of the Board Chair, the Board and Compensation Committee members, the Independent Proxy, and the external auditor

&nbsp;&nbsp;&nbsp;&nbsp;• Approval of the management report (if required), the consolidated financial statements, and the report on non-financial matters

&nbsp;&nbsp;&nbsp;&nbsp;• Approval of the financial statements of Novartis AG, and the decision on the appropriation of available earnings shown on the balance sheet, in particular with regard to dividends (including any repayment of the statutory capital reserves and the approval of interim dividends and the interim financial statements required for such purpose), if any

&nbsp;&nbsp;&nbsp;&nbsp;• Approval of the maximum aggregate compensation of the Board (from an AGM until the next AGM) and of the Executive Committee (for the financial year following the AGM)

&nbsp;&nbsp;&nbsp;&nbsp;• Discharge of Board and Executive Committee members from liability for matters disclosed to the General Meeting

&nbsp;&nbsp;&nbsp;&nbsp;• Decision on other matters that are reserved by law or by the Articles (e.g., advisory vote on the Compensation Report) to the General Meeting

According to the Articles and Swiss law, the following matters require the approval of a "supermajority" of at least two-thirds of the votes present at a General Meeting:

&nbsp;&nbsp;&nbsp;&nbsp;• Alteration of the purpose of Novartis AG

&nbsp;&nbsp;&nbsp;&nbsp;• The consolidation of shares, unless the approval of all affected shareholders is required

&nbsp;&nbsp;&nbsp;&nbsp;• Increase of the share capital out of equity by contributions in kind or by way of set-off against receivable, or the grant of special rights

&nbsp;&nbsp;&nbsp;&nbsp;• Restriction or cancellation of subscription rights

&nbsp;&nbsp;&nbsp;&nbsp;• Introduction of a conditional capital or capital band

&nbsp;&nbsp;&nbsp;&nbsp;• Creation of shares with increased voting powers

&nbsp;&nbsp;&nbsp;&nbsp;• Implementation of restrictions on the transfer of registered shares, and the removal of such restrictions

&nbsp;&nbsp;&nbsp;&nbsp;• Change of the currency of the share capital

&nbsp;&nbsp;&nbsp;&nbsp;• Introduction of the deciding vote for the presiding officer at the General Meeting

&nbsp;&nbsp;&nbsp;&nbsp;• A provision in the Articles allowing the General Meeting to be held abroad

&nbsp;&nbsp;&nbsp;&nbsp;• Delisting of the shares of the Company

&nbsp;&nbsp;&nbsp;&nbsp;• Change of the registered office of Novartis AG

&nbsp;&nbsp;&nbsp;&nbsp;• Introduction of an arbitration clause in the Articles

&nbsp;&nbsp;&nbsp;&nbsp;• Merger, split or transformation of Novartis AG under the Swiss Merger Act (subject to mandatory statutory provisions)

&nbsp;&nbsp;&nbsp;&nbsp;• Dissolution of Novartis AG

Our shareholders are required, on an annual basis, to elect all Directors (including the Board Chair), the Compensation Committee members, the external auditor, and the Independent Proxy. The Articles do not provide for cumulative voting of shares.

At a General Meeting, shareholders can be represented by a legal representative or, by means of a written proxy, by a representative of choice. Furthermore, a shareholder may be represented by the Independent Proxy. Votes are taken either by a show of hands or by electronic voting, unless the General Meeting resolves to have a ballot or where a ballot is ordered by the chair of the meeting. ADSs, each representing one Novartis AG share and evidenced by ADRs, are issued by our depositary JPMorgan Chase Bank, N.A., New York, and not by us. The ADR is vested with rights defined and enumerated in the Deposit Agreement (such as the rights to vote, to receive a dividend, and to receive a share of Novartis AG in exchange for a certain number of ADRs). The enumeration of rights, including any limitations on those rights in the Deposit Agreement, is final. There are no other rights given to the ADR holders. Only the ADS depositary, holding our shares underlying the ADRs, is registered as shareholder in our share register. An ADR is not a Novartis AG share, and an ADR holder is not a Novartis AG shareholder.

The Deposit Agreement between our depositary, the ADR holder, and us has granted certain indirect rights to vote to the ADR holders. ADR holders may not attend a General Meeting in person. ADR holders exercise their voting rights by instructing JPMorgan Chase Bank, N.A., our depositary, to exercise the voting rights attached to the registered shares underlying the ADRs. Each ADR represents one Novartis AG share. JPMorgan Chase Bank, N.A., exercises the voting rights for registered shares underlying ADRs for which no voting instructions have been given by providing a discretionary proxy to an uninstructed independent designee. The same voting restrictions apply to ADR holders as to those holding Novartis AG shares (i.e., the right to vote up to 2% of the Novartis AG registered share capital — unless otherwise granted an exemption by the Board — and the disclosure requirement for nominees).

(c) Shareholders have the right to allocate the profit shown on our balance sheet and to distribute dividends by vote taken at the General Meeting, subject to the legal requirements described above.

(d) Under the Swiss CO, any surplus arising out of a liquidation of Novartis AG (i.e., after the settlement of all claims of all creditors) would be distributed to the shareholders in proportion to the paid-in nominal value of their shares.

(e) The Swiss CO limits a corporation's ability to hold or repurchase its own shares. We and our subsidiaries may only repurchase shares if we have sufficient freely disposable equity in the amount of the purchase price of the acquired shares. The aggregate nominal value of all Novartis AG shares held by us and our subsidiaries may not exceed 10% of our registered share capital. However, it is accepted that a Swiss corporation may repurchase its own shares beyond the statutory limit of 10% if the repurchased shares are clearly earmarked for cancellation. In addition, we are required to recognize a negative position, or if our subsidiaries acquire our shares, to create a special reserve on our balance sheet in the amount of the purchase price of the acquired shares. Repurchased shares held by us or our subsidiaries do not carry any rights to vote at a General Meeting but are entitled to the economic benefits generally connected with the shares.

Under the Swiss CO, we may not cancel treasury shares without the approval of a capital reduction by our shareholders given that shareholders have not approved the introduction of a capital band.

(f) Not applicable.

(g) Since all of our issued and outstanding shares have been fully paid in, our shareholders are not obliged to make further contributions with respect to their shares.

(h) See "—Item 10.B.3(b) Shareholder rights" and "—Item 10.B.7 Change in control."

**10. B.4 Changes to shareholder rights**

Under the Swiss CO, we may not issue new shares without the prior approval of a capital increase by our shareholders. If a capital increase is approved, then our shareholders would generally have certain pre-emptive rights to obtain newly issued shares in an amount proportional to the nominal value of the shares they already hold. These pre-emptive rights could be excluded in certain limited circumstances with the approval of a resolution adopted at a General Meeting by a supermajority of two-thirds of the votes. In addition, we may not create shares with increased voting powers or place restrictions on the transfer of registered shares without the approval of a resolution adopted at a General Meeting by a supermajority of votes. In addition, see "—Item 10.B.3(b) Shareholder rights" with regard to the Board's ability to cancel the registration of shares under limited circumstances.

**10. B.5 Shareholder meetings**

Under the Swiss CO and the Articles, we must hold an AGM within six months after the end of our financial year. A General Meeting may be convened by the Board or, if necessary, by the external auditor. The Board is further required to convene an extraordinary General Meeting if so resolved by a General Meeting, or if so requested by shareholders by signed petition representing at least 5% of the share capital, specifying the items for the agenda and their proposals. Shareholders representing shares with an aggregate nominal value of at least CHF 1 000 000 may request that an item be included in a General Meeting agenda. A General Meeting is convened by publishing a notice in the Swiss Official Gazette of Commerce (*Schweizerisches Handelsamtsblatt*) at least 20 days prior to such meeting. Shareholders may also be informed by mail. Neither the Swiss CO nor the Articles require a quorum for a General Meeting. In addition, see "—Item 10.B.3(b) Shareholder rights" regarding conditions for exercising a shareholder's right to vote at a General Meeting.

**10. B.6 Limitations**

There are no limitations under the Swiss CO or our Articles on the right of non-Swiss residents or nationals to own or vote shares other than the restrictions applicable to all shareholders and holders of ADRs described in "—Item 10.B.3(b) Shareholder rights."

**10. B.7 Change in control**

The Articles and the Board Regulations contain no provision that would have an effect of delaying, deferring or preventing a change in control of Novartis AG, and that would operate only with respect to a merger, acquisition or corporate restructuring involving us or any of our subsidiaries.

According to the Swiss Merger Act, shareholders may pass a resolution to merge with another corporation at any time. Such a resolution would require the consent of at least two-thirds of all votes present at the necessary General Meeting.

Under the Swiss Financial Market Infrastructure Act, shareholders and groups of shareholders acting in concert who acquire more than 33 1/3% of our shares would be under an obligation to make an offer to acquire all remaining Novartis AG shares. Novartis AG has neither opted out of the mandatory takeover offer obligation nor opted to increase the threshold for mandatory takeover offers in its Articles.

**10. B.8 Disclosure of shareholdings**

Under the Swiss Financial Market Infrastructure Act, persons who directly, indirectly or in concert with other parties acquire or dispose of our shares or purchase or sale rights relating to our shares are required to notify us and the SIX of the level of their holdings whenever such holdings reach, exceed or fall below certain thresholds — 3%, 5%, 10%, 15%, 20%, 25%, 33 1/3%, 50% and 66 2/3% — of the voting rights represented by our share capital (whether exercisable or not). This also applies to anyone who has discretionary power to exercise voting rights associated with our shares. Following receipt of such notification, we are required to inform the public by publishing the information via the electronic publication platform operated by the SIX.

An additional disclosure obligation exists under rules of the SIX that requires us to disclose the identity of all of our shareholders (or related groups of shareholders) as published pursuant to the paragraph above, in Item 6.C of this Annual Report. See "Item 6. Directors, Senior Management and Employees—Item 6.C Board practices—Group structure and shareholders—Shareholders—Significant shareholders."

**10. B.9 Differences in the law**

See the references to Swiss law throughout this "—Item 10.B Memorandum and articles of association."

**10. B.10 Changes in capital**

The requirements of the Articles regarding changes in capital are not more stringent than the requirements of Swiss law.

### 10.C Material contracts
**Sandoz Spin-Off**

In connection with the spin-off of Sandoz, we entered into a Separation and Distribution Agreement, dated September 30, 2023, a Tax Matters Agreement, dated September 30, 2023, and several other agreements with Sandoz to effect the separation of the Sandoz business and provide a framework for our relationship with Sandoz after the spin-off.

The Separation and Distribution Agreement sets forth the parties' agreements regarding the principal actions to be taken in connection with the separation of the Sandoz business and the spin-off, by way of a distribution of shares of Sandoz Group AG by Novartis AG to Novartis shareholders, including the conditions of the spin-off and the rights and obligations of the parties with respect to the separation and distribution. The Separation and Distribution Agreement identifies the assets to be transferred, liabilities to be assumed, and contracts to be assigned to each of Novartis and Sandoz as part of the internal transactions effected prior to the distribution and provides for when and how such transfers, assumptions, and assignments should occur. Each party agreed to indemnify the other and each of the other's directors, officers, managers, members, agents, and employees against certain liabilities incurred in connection with the spin-off and the parties' respective businesses (subject to certain exceptions).

The Tax Matters Agreement imposes certain restrictions and indemnity obligations on Sandoz designed to preserve the tax-neutral nature of the spin-off for Swiss tax and US federal income tax purposes.

The Tax Matters Agreement also provides that Sandoz will be liable for any taxes accruing in the ordinary course of business of Novartis and its subsidiaries before the spin-off if such taxes are attributable to entities that are transferred or allocated to the Sandoz Group as part of the spin-off, whereas Novartis will remain liable for any other taxes accruing before the spin-off in the ordinary course of business, to the extent not attributed to Sandoz.

**Acquisition of Avidity**

In connection with the proposed acquisition of Avidity Biosciences, Inc. (Avidity Biosciences), on October 25, 2025, we entered into an Agreement and Plan of Merger (Merger Agreement) by and among us, Avidity Biosciences and Ajax Acquisition Sub, Inc., an indirect wholly owned subsidiary of Novartis AG (Merger Sub), pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Avidity Biosciences, with Avidity Biosciences surviving the merger as an indirect wholly owned subsidiary of Novartis AG.

Pursuant to the Merger Agreement, at the Effective Time (as defined in the Merger Agreement), each share of common stock of Avidity Biosciences issued and outstanding immediately prior to the Effective Time (including any shares issued as a result of the exercise of any warrants prior to the Effective Time), will automatically be cancelled and converted into the right to receive an amount in cash equal to $72.00, without interest and subject to any applicable tax withholdings. The completion of the transaction is subject to the satisfaction or waiver of certain closing conditions specified in the Merger Agreement.

### 10.D Exchange controls
There are no Swiss governmental laws, decrees or regulations that affect — in a manner material to Novartis AG — the export or import of capital, including the availability of cash and cash equivalents for use by Novartis or any foreign exchange controls that affect the remittance of dividends, interest or other payments to non-residents or non-citizens of Switzerland who hold Novartis AG securities.

### 10.E Taxation
The taxation discussion set forth below is intended only as a descriptive summary and does not purport to be a complete analysis or listing of all potential tax effects relevant to the ownership or disposition of our shares or ADRs. The statements of US and Swiss tax laws set forth below are based on the laws and regulations in force as of the date of this 20-F — including the current Convention Between the US and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income, which entered into force on December 19, 1997 (the Treaty); the US Internal Revenue Code of 1986, as amended (the Code); Treasury regulations; rulings; judicial decisions; and administrative pronouncements — and may be subject to any changes in US and Swiss law, and in any double taxation convention or treaty between the US and Switzerland occurring after that date, which changes may have retroactive effect.

**Swiss taxation**

#### Swiss residents
*Withholding Tax on dividends and distributions.* Dividends that we pay and similar cash or in-kind distributions that we may make to a holder of shares or ADRs (including distributions of liquidation proceeds in excess of the nominal value, stock dividends, and, under certain circumstances, proceeds from repurchases of shares by us in excess of the nominal value) are generally subject to a Swiss federal withholding tax (the Withholding Tax) at a current rate of 35%. Under certain circumstances, distributions out of capital contribution reserves made by shareholders after December 31, 1996, are exempt from the Withholding Tax. We are required to withhold Withholding Tax due from the gross distribution and to pay the Withholding Tax to the Swiss Federal Tax Administration. The Withholding Tax is refundable in full to Swiss tax residents who are the beneficial owners of the taxable distribution at the time it is resolved and duly report the gross distribution received on their personal tax return or in their financial statements for tax purposes, as the case may be.

*Income tax on dividends.* A Swiss tax resident who receives dividends and similar distributions (including stock dividends and liquidation surplus) on shares or ADRs is required to include such amounts in the shareholder's personal income tax return. However, distributions out of qualified capital contribution reserves are not subject to income tax. A corporate shareholder may claim substantial relief from taxation of dividends and similar distributions received if the shares held represent a fair market value of at least CHF 1 million.

*Capital gains tax upon disposal of shares.* Under current Swiss tax law, the gain realized on shares held by a Swiss resident who holds shares or ADRs as part of their private property is generally not subject to any federal, cantonal or municipal income taxation on gains realized on the sale or other disposal of shares or ADRs. However, gains realized upon a repurchase of shares by us may be characterized as taxable dividend income if certain conditions are met. Book gains realized on shares or ADRs held by a Swiss corporate entity or by a Swiss resident individual as part of the shareholder's business property are, in general, included in the taxable income of such person. However, the Federal Law on the Direct Federal Tax of December 14, 1990, and several cantonal laws on direct cantonal taxes provide for exceptions for Swiss corporate entities holding more than 10% of our voting stock for more than one year.

#### Residents of other countries
Recipients of dividends and similar distributions on our shares who are neither residents of Switzerland for tax purposes nor hold shares as part of a business conducted through a permanent establishment situated in Switzerland (Non-Resident Holders) are not subject to Swiss income taxes in respect of such distributions. Moreover, gains realized by such recipients upon the disposal of shares are not subject to Swiss income taxes.

Non-Resident Holders of shares are, however, subject to the Withholding Tax on dividends and similar distributions mentioned above and, under certain circumstances, to the Stamp Duty described below. Such Non-Resident Holders may be entitled to a partial refund of the Withholding Tax if the country in which they reside has entered into a bilateral treaty for the avoidance of double taxation with Switzerland. Non-Resident Holders should be aware that the procedures for claiming treaty refunds (and the time frame required for obtaining a refund) may differ from country to country. Non-Resident Holders should consult their own tax advisors regarding receipt, ownership, purchase, sale or other dispositions of shares or ADRs, and the procedures for claiming a refund of the Withholding Tax.

As of January 1, 2026, Switzerland has entered into bilateral treaties for the avoidance of double taxation with respect to income taxes with the following countries, whereby a part of the above-mentioned Withholding Tax may be refunded (subject to the limitations set forth in such treaties):

Albania

Algeria

Argentina

Armenia

Australia

Austria

Azerbaijan

Bahrain

Bangladesh

Belarus

Belgium

Brazil

Bulgaria

Canada

Chile

China

Colombia

Croatia

Cyprus

Czechia

Denmark

Ecuador

Egypt

Estonia

Ethiopia

Finland

France

Georgia

Germany

Ghana

Greece

Hong Kong

Hungary

Iceland

India

Indonesia

Iran

Ireland

Israel

Italy

Ivory Coast

Jamaica

Japan

Jordan

Kazakhstan

Republic of Korea

(South Korea)

Kosovo

Kuwait

Kyrgyzstan

Latvia

Liechtenstein

Lithuania

Luxembourg

Malaysia

Malta

Mexico

Moldova

Mongolia

Montenegro

Morocco

Netherlands

New Zealand

North Macedonia

Norway

Oman

Pakistan

Peru

Philippines

Poland

Portugal

Qatar

Romania

Russia

Saudi Arabia

Serbia

Singapore

Slovak Republic

Slovenia

South Africa

Spain

Sri Lanka

Sweden

Taiwan

Tajikistan

Thailand

Trinidad and Tobago

Tunisia

Türkiye

Turkmenistan

Ukraine

United Arab Emirates

United Kingdom

United States of America

Uruguay

Uzbekistan

Venezuela

Vietnam

Zambia

Tax treaty negotiations are underway, or have been conducted, with Angola, Bosnia and Herzegovina, Cameroon, Costa Rica, Iraq, Kenya, Libya, Nigeria, Rwanda, Senegal, Syria, and Zimbabwe. Tax treaty negotiations between Switzerland and some of the countries listed in the immediately preceding sentence have been ongoing for an extended period of time, and we are not certain when or if such negotiations will be completed, or when or if the corresponding treaties will come into effect.

A Non-Resident Holder of shares or ADRs will not be liable for any Swiss taxes other than the Withholding Tax described above and, if the transfer occurs through or with a Swiss bank or other Swiss securities dealer, the Stamp Duty described below. If, however, the shares or ADRs of Non-Resident Holders can be attributed to a permanent establishment or a fixed place of business maintained by such person within Switzerland during the relevant tax year, the shares or ADRs may be subject to Swiss income taxes in respect of income and gains realized on the shares or ADRs, and such person may qualify for a full refund of the Withholding Tax based on Swiss tax law.

*Residents of the US.* A Non-Resident Holder who is a resident of the US for purposes of the Treaty is eligible for a reduced rate of tax on dividends equal to 15% of the dividend, provided that such holder: (i) qualifies for benefits under the Treaty; (ii) is not a company (or, if it is a company, such company directly holds less than 10% of our voting stock); and (iii) does not conduct business through a permanent establishment or fixed base in Switzerland to which the shares or ADRs are attributable. Such an eligible holder must apply for a refund of the amount of the Withholding Tax in excess of the 15% Treaty rate. A Non-Resident Holder who is a resident of the US for purposes of the Treaty is eligible for a reduced rate of tax on dividends equal to 5% of the dividend, provided that such holder: (i) is a company; (ii) qualifies for benefits under the Treaty; (iii) holds directly at least 10% of our voting stock; and (iv) does not conduct business through a permanent establishment or fixed place of business in Switzerland to which the shares or ADRs are attributable. Such an eligible holder must apply for a refund of the amount of the Withholding Tax in excess of the 5% Treaty rate. Claims for refunds must be filed on Swiss Tax Form 82 (82C for corporations; 82I for individuals; and 82E for other entities), which may be obtained from any Swiss Consulate General in the US or from the Federal Tax Administration of Switzerland at the address below, together with an instruction form. Four copies of the form must be duly completed, signed before a notary public of the US, and sent to the Federal Tax Administration of Switzerland, Eigerstrasse 65, CH-3003 Bern, Switzerland. The form must be accompanied by suitable evidence of deduction of Swiss tax withheld at source, such as certificates of deduction, signed bank vouchers, or credit slips. The form may be filed on or after July 1 or January 1 following the date the dividend was payable, but no later than December 31 of the third year following the calendar year in which the dividend became payable. For US resident holders of ADRs, JPMorgan Chase Bank, N.A., as depositary, will comply with these Swiss procedures on behalf of the holders, and will remit the net amount to the holders.

*Stamp Duty upon transfer of securities.* The sale of shares, whether by Swiss residents or Non-Resident Holders, may be subject to federal securities transfer Stamp Duty of 0.15%, calculated on the sale proceeds, if the sale occurs through or with a Swiss bank or other Swiss securities dealer, as defined in the Swiss Federal Stamp Duty Act. The Stamp Duty has to be paid by the securities dealer and may be charged to the parties in a taxable transaction who are not securities dealers. Stamp Duty may also be due if a sale of shares occurs with or through a non-Swiss bank or securities dealer, provided that: (i) such bank or dealer is a member of the SIX; and (ii) the sale takes place on the SIX. In addition to this Stamp Duty, the sale of shares by or through a member of the SIX may be subject to a minor stock exchange levy.

**US federal income taxation**

The following is a general discussion of the material US federal income tax consequences of the ownership and disposition of our shares or ADRs that may be relevant to you if you are a US Holder (as defined below). Because this discussion does not consider any specific circumstances of any particular holder of our shares or ADRs, persons who are subject to US taxation are strongly urged to consult their own tax advisors as to the overall US federal, state and local tax consequences, as well as to the overall Swiss and other foreign tax consequences, of the ownership and disposition of our shares or ADRs. In particular, additional or different rules may apply to US expatriates; banks and other financial institutions; regulated investment companies; traders in securities who elect to apply a mark-to-market method of accounting; dealers in securities or currencies; tax-exempt entities; insurance companies; broker-dealers; investors liable for alternative minimum tax; investors that hold shares or ADRs as part of a straddle, hedging or conversion transaction; holders whose functional currency is not the US dollar; partnerships or other pass-through entities; persons who acquired our shares pursuant to the exercise of employee stock options or otherwise as compensation; and persons who hold, directly, indirectly or by attribution, 10% or more of our outstanding shares. This discussion generally applies only to US Holders who hold the shares or ADRs as a capital asset (generally, for investment purposes), and whose functional currency is the US dollar. Investors are urged to consult their own tax advisors concerning whether they are eligible for benefits under the Treaty.

For purposes of this discussion, a US Holder is a beneficial owner of our shares or ADRs who is: (i) an individual who is a citizen or resident of the US for US federal income tax purposes; (ii) a corporation (or other entity taxable as a corporation for US federal income tax purposes) created or organized in or under the laws of the US or a state thereof or the District of Columbia; (iii) an estate the income of which is subject to US federal income taxation regardless of its source; or (iv) a trust (a) subject to the primary supervision of a US court and the control of one or more US persons; or (b) that has a valid election in place to be treated as a US person. If a partnership (or other entity treated as a partnership for US federal income tax purposes) holds shares or ADRs, the tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. Partners in a partnership that holds shares or ADRs are urged to consult their own tax advisor regarding the specific tax consequences of owning and disposing of such shares or ADRs by the partnership.

For US federal income tax purposes, a US Holder of ADRs generally will be treated as the beneficial owner of our shares represented by the ADRs. However, see the discussion below under "Dividends" regarding certain statements made by the US Treasury concerning depositary arrangements.

This discussion assumes that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms.

*Dividends.* US Holders will be required to include in gross income, as an item of ordinary income, the full amount (without reduction for any Withholding Tax) of the dividend paid with respect to our shares or ADRs at the time that such dividend is received by the US Holder, in the case of shares, or by the depositary, in the case of ADRs. For this purpose, a "dividend" will include any distribution paid by us with respect to our shares or ADRs (other than certain pro rata distributions of our capital stock) paid out of our current or accumulated earnings and profits, as determined under US federal income tax principles. To the extent the amount of a distribution by us exceeds our current and accumulated earnings and profits, such excess will first be treated as a tax-free return of capital to the extent of a US Holder's tax basis in the shares or ADRs (with a corresponding reduction in such tax basis), and thereafter will be treated as capital gain, which will be long-term capital gain if the US Holder held our shares or ADRs for more than one year. Under the Code, dividend payments by us on the shares or ADRs are not eligible for the dividends received deduction generally allowed to corporate shareholders.

Dividend income in respect of our shares or ADRs will constitute income from sources outside the US for US foreign tax credit purposes. Subject to the limitations and conditions provided in the Code, US Holders generally may claim any Withholding Tax withheld from a dividend as a credit against their US federal income tax liability. The rules governing the foreign tax credit are complex. Each US Holder is urged to consult its own tax advisor concerning whether, and to what extent, a foreign tax credit will be available with respect to dividends received from us. Alternatively, a US Holder may claim the Withholding Tax as a deduction for the taxable year within which the Withholding Tax is paid or accrued, provided a deduction is claimed for all of the foreign income taxes the US Holder pays or accrues in the particular year. A deduction does not reduce US tax on a dollar-for-dollar basis like a tax credit. The deduction, however, is not subject to the limitations applicable to foreign tax credits, but may be subject to other limitations, and each US Holder is urged to consult its own tax advisor.

The US Treasury has expressed concern that parties to whom ADRs are released may be taking actions inconsistent with the claiming of foreign tax credits for US Holders of ADRs. Accordingly, the summary above of the creditability of the Withholding Tax could be affected by future actions that may be taken by the US Treasury.

In general, a US Holder will be required to determine the amount of any dividend paid in Swiss francs, including the amount of any Withholding Tax imposed thereon, by translating the Swiss francs into US dollars at the spot rate on the date the dividend is actually or constructively received by a US Holder, in the case of shares, or by the depositary, in the case of ADRs, regardless of whether the Swiss francs are in fact converted into US dollars. If a US Holder converts the Swiss francs so received into US dollars on the date of receipt, the US Holder generally should not recognize foreign currency gain or loss on such conversion. If a US Holder does not convert the Swiss francs so received into US dollars on the date of receipt, the US Holder will have a tax basis in the Swiss francs equal to the US dollar value on such date. Any foreign currency gain or loss that a US Holder recognizes on a subsequent conversion or other disposition of the Swiss francs generally will be treated as US source ordinary income or loss.

For a non-corporate US Holder, the US dollar amount of any dividends paid that constitute qualified dividend income generally will be taxable at a maximum rate of 15% (or 20% in the case of taxpayers with annual income that exceeds certain thresholds), provided that the US Holder meets certain holding period and other requirements. In addition, the dividends could be subject to a 3.8% net investment income tax. This tax is applied against the lesser of the US Holder's net investment income or the amount by which modified adjusted gross income exceeds a statutory threshold amount based on filing status. We currently believe that dividends paid with respect to our shares and ADRs will constitute qualified dividend income for US federal income tax purposes, provided that the US Holder meets certain holding period and other requirements. US Holders of shares or ADRs are urged to consult their own tax advisors regarding the availability to them of the reduced dividend rate in light of their own particular situation and the computations of their foreign tax credit limitation with respect to any qualified dividends paid to them, as applicable.

*Sale or other taxable disposition.* Upon a sale or other taxable disposition of shares or ADRs, US Holders generally will recognize capital gain or loss in an amount equal to the difference between the US dollar value of the amount realized on the disposition and the US Holder's tax basis (determined in US dollars) in the shares or ADRs. This capital gain or loss generally will be US source gain or loss and will be treated as long-term capital gain or loss if the holding period in the shares or ADRs exceeds one year. In the case of a non-corporate US Holder, any long-term capital gain generally will be subject to US federal income tax at preferential rates, with a maximum rate of 15% (or 20% in the case of taxpayers with annual income that exceeds certain thresholds). In addition, the gains could be subject to a 3.8% investment income tax. This tax is applied against the lesser of the US Holder's net investment income or the amount by which modified adjusted gross income exceeds a statutory threshold amount based on filing status. The deductibility of capital losses is subject to significant limitations under the Code. Deposits or withdrawals of our shares by US Holders in exchanges for ADRs will not result in the realization of gain or loss for US federal income tax purposes.

*US information reporting and backup withholding.* Dividend payments with respect to shares or ADRs and proceeds from the sale, exchange or other disposition of shares or ADRs received in the United States or through US-related financial intermediaries may be subject to information reporting to the US Internal Revenue Service (IRS) and possible US backup withholding. Certain exempt recipients (such as corporations) are not subject to these information reporting and backup withholding requirements. Backup withholding will not apply to a US Holder who furnishes a correct taxpayer identification number and makes any other required certification or who is otherwise exempt from backup withholding. Any US Holders required to establish their exempt status generally must provide a properly executed IRS Form W-9 (Request for Taxpayer Identification Number and Certification). Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a US Holder's US federal income tax liability, and a US Holder may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.

### 10.F Dividends and paying agents
Not applicable.

### 10.G Statement by experts
Not applicable.

### 10.H Documents on display
Any statement in the Form 20-F about any of our contracts or other documents is not necessarily complete. If the contract or document is filed as an exhibit to the Form 20-F, the contract or document is deemed to modify the description contained in the Form 20-F. You must review the exhibits themselves for a complete description of the contract or document.

The SEC maintains an internet site at http://www.sec.gov that contains reports and other information regarding issuers that file electronically with the SEC. These SEC filings are also available to the public from commercial document retrieval services.

We are required to file or furnish reports and other information with the SEC under the Exchange Act and regulations under that act. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the form and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

### 10.I Subsidiary information
Not applicable.

### 10.J Annual report to security holders
We intend to submit any annual report to security holders required to be furnished on Form 6-K in electronic format in accordance with the EDGAR Filer Manual.

## Item 11. Quantitative and Qualitative Disclosures About Market Risk
The major financial risks facing us are managed centrally by the Company's treasury function, which has established processes and procedures to identify, aggregate and manage our financial risk exposure. The Company's treasury function is included in management's internal control assessment.

For information about the effects of currency fluctuations and how we manage currency risk, see "Item 5. Operating and Financial Review and Prospects—Item 5.B Liquidity and capital resources."

The information set forth under "Item 18. Financial Statements—Note 28. Financial instruments - additional disclosures" is incorporated by reference.

## Item 12. Description of Securities Other than Equity Securities

### 12.A Debt securities
Not applicable.

### 12.B Warrants and rights
Not applicable.

### 12.C Other securities
Not applicable.

### 12.D American Depositary Shares
**Fees payable by ADR holders** 

According to the deposit agreement that we entered into with JPMorgan Chase Bank, N.A. (JPMorgan), as depositary (as amended from time to time, the "Deposit Agreement"), holders of our ADRs may have to pay to JPMorgan, either directly or indirectly, fees or charges up to the amounts set forth below:

---

| | | |
|:---|:---|:---|
| **Category** | **Depositary actions** | **Associated fee** |
| Depositing or substituting <br>underlying shares | Acceptance of shares surrendered, and issuance of ADSs in exchange, <br> including surrenders and issuances in respect of:<br> — Share distributions<br> — Stock split<br> — Rights<br> — Merger<br> — Exchange of shares or any other transaction or event or other distribution <br> affecting the ADSs or the deposited shares | USD 5.00 for each 100 ADSs <br> (or portion thereof)<br>|
| Withdrawing <br>underlying shares | Acceptance of ADSs surrendered for withdrawal of deposited shares or <br> for ADSs that are cancelled or reduced for any other reason<br>| USD 5.00 (or less) for each <br> 100 ADSs (or portion <br> thereof) surrendered |
| Cash distributions | Distributing cash distributions made or any elective cash/stock dividend offered | USD 0.05 (or less) per ADS |
| Selling or <br>exercising rights | Distribution or sale of shares, the fee being in an amount equal to the fee <br> for the execution and delivery of ADRs that would have been charged <br> as a result of the deposit of such shares | USD 5.00 for each 100 ADSs <br> (or portion thereof)<br>|
| Depositary services | Services performed by the depositary in administering the ADRs<br>| USD 0.05 (or less) per ADS <br> per calendar year <br> (or portion thereof) |
| Expenses of the <br>depositary | Expenses incurred on behalf of holders in connection with:<br> — Compliance with foreign exchange control regulations or any law or <br> regulation relating to foreign investment<br> — The depositary's or its custodian's compliance with applicable law, <br> rule or regulation<br> — Stock transfer or other taxes and other governmental charges<br> — Cable, telex and facsimile transmission and delivery<br> — Expenses of the depositary in connection with the conversion of foreign <br> currency into US dollars (which are paid out of such foreign currency)<br> — Any other charge payable by any of the depositary or its agents | Expenses payable at the sole <br> discretion of the depositary <br> by billing holders or by <br> deducting charges from one <br> or more cash dividends or <br> other cash distributions<br>|

---

The depositary's principal executive office is located at 270 Park Avenue, Floor 8, New York, New York 10017.

**Fees payable by the depositary to the issuer** 

Pursuant to a letter agreement effective as of May 9, 2025, as may be amended from time to time, JPMorgan, as our ADS depositary, has agreed to make an annual contribution payment to Novartis at the end of each 12-month period beginning on May 11, 2025 and on each subsequent anniversary thereof (each such 12-month period is a "Contract Year"). This annual contribution payment is equal to the program revenues, tax reclaim revenues, and liquidity premium less: (1) a program maintenance fee of USD 550 000; and (2) fees (including any transfer agency, custody, legal, central securities depositary, tax reclaim service, and other out-of-pocket fees), costs and expenses incurred during the applicable Contract Year by JPMorgan.

JPMorgan has further agreed to waive the USD 0.05 per ADS issuance fees that would normally be owed by Novartis in connection with our deposits of shares as part of our employee stock ownership and employee participation plans. Novartis is responsible for reimbursing JPMorgan for all taxes and governmental charges required to have been withheld and/or paid, and not so withheld and/or paid, arising from such waived fees.

## PART II

## Item 13. Defaults, Dividend Arrearages and Delinquencies
None.

## Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
None.

## Item 15. Controls and Procedures
(a) Novartis AG's Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Annual Report, have concluded that, as of such date, our disclosure controls and procedures were effective.

(b) Report of Novartis Management on Internal Control Over Financial Reporting: The Board of Directors and management of the Company are responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting was designed to provide reasonable assurance to the Company's management and Board of Directors regarding the reliability of financial reporting and the preparation and fair presentation of its published consolidated financial statements.

Internal controls over financial reporting, no matter how well designed, have inherent limitations. Therefore, even those internal controls over financial reporting determined to be effective may not prevent or detect misstatements and can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2025. In making this assessment, it used the criteria established in *Internal Control—Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, management concluded that, as of December 31, 2025, the Company's internal control over financial reporting is effective based on those criteria.

KPMG AG, Switzerland, an independent registered public accounting firm, has issued an unqualified opinion on the effectiveness of the Company's internal control over financial reporting, which is included in this Annual Report under "Item 18. Financial Statements—Report of independent registered public accounting firm."

(c) See the report of KPMG AG, an independent registered public accounting firm, included under "Item 18. Financial Statements—Report of independent registered public accounting firm."

(d) There were no changes to our internal control over financial reporting that occurred during the period covered by this Annual Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Item 16A. Audit Committee Financial Expert
Our Audit and Compliance Committee has determined that Elizabeth Doherty and Ana de Pro Gonzalo possess specific accounting and financial management expertise, and that they are "audit committee financial experts" as defined in Item 16A of Form 20-F. The Board of Directors has also determined that each member of the Audit and Compliance Committee is "independent" in accordance with the applicable requirements set forth under the listing standards of the NYSE and Rule 10A-3 under the Exchange Act, and has sufficient experience and ability in finance and compliance matters to enable them to adequately discharge their responsibilities.

## Item 16B. Code of Ethics
In addition to our Code of Ethics and Doing Business Ethically Policy, which are applicable to all of our employees, we have adopted Ethical Conduct Requirements that impose additional obligations on our principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. This document is accessible on our internet website at:

https://www.novartis.com/investors/company-overview/corporate-governance

## Item 16C. Principal Accountant Fees and Services
The information set forth under "Item 6. Directors, Senior Management and Employees—Item 6.C Board practices—Corporate governance—Auditors" is incorporated by reference.

## Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.

## Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **<br>2025** | **<br>Total number of <br> shares purchased<br> (a)<sup>1</sup>** | **<br>Average price <br> paid per share <br> in USD<br> (b)** | **<br>Total number <br> of shares<br> purchased <br> as part of <br> publicly <br> announced <br> plans or <br> programs<br> (c)<sup>2</sup>** | **Maximum <br> approximate <br> value of <br> shares that <br> may yet be <br> purchased <br> under the <br> plans or <br> programs <br> (CHF millions)<br> (d)** | **Maximum <br> approximate <br> value of <br> shares that <br> may yet be <br> purchased <br> under the <br> plans or <br> programs <br> (USD millions)<br> (e)<sup>3</sup>** |
| Jan. 1-31 | 9 743 481 | 100.10 | 8 400 000 | 2 695 | 2 961 |
| Feb. 1-29 | 8 156 421 | 107.40 | 8 000 000 | 1 917 | 2 126 |
| Mar. 1-31 | 8 428 606 | 111.55 | 8 400 000 | 11 090 | 12 609 |
| Apr. 1-30 | 8 016 775 | 109.30 | 8 000 000 | 10 360 | 12 567 |
| May 1-31 | 8 025 392 | 111.34 | 8 000 000 | 9 621 | 11 680 |
| Jun. 1-30 | 8 015 780 | 118.25 | 8 000 000 | 8 852 | 11 101 |
| Jul. 1-31 | 9 110 271 | 119.50 | 9 085 873 | 7 985 | 9 837 |
| Aug. 1-31 | 4 607 742 | 120.90 | 4 600 000 | 7 537 | 9 398 |
| Sep. 1-30 | 3 986 319 | 125.23 | 3 956 485 | 7 142 | 8 963 |
| Oct. 1-31 | 4 153 728 | 129.81 | 4 140 000 | 6 713 | 8 364 |
| Nov. 1-30 | 3 633 422 | 128.22 | 3 600 000 | 6 342 | 7 870 |
| Dec. 1-31 | 3 437 562 | 134.58 | 3 420 000 | 5 975 | 7 534 |
| **Total** | **79 315 499** | 115.01 | **77 602 358** |  |  |
|  <sup>1</sup> Column (a) shows shares repurchased on the SIX Swiss Exchange second trading line plus shares we purchased from employees who had obtained the shares through a Novartis Employee Ownership Plan. See "Item 18. Financial Statements - Note 25. Equity-based participation plans for employees." | <sup>1</sup> Column (a) shows shares repurchased on the SIX Swiss Exchange second trading line plus shares we purchased from employees who had obtained the shares through a Novartis Employee Ownership Plan. See "Item 18. Financial Statements - Note 25. Equity-based participation plans for employees." | <sup>1</sup> Column (a) shows shares repurchased on the SIX Swiss Exchange second trading line plus shares we purchased from employees who had obtained the shares through a Novartis Employee Ownership Plan. See "Item 18. Financial Statements - Note 25. Equity-based participation plans for employees." | <sup>1</sup> Column (a) shows shares repurchased on the SIX Swiss Exchange second trading line plus shares we purchased from employees who had obtained the shares through a Novartis Employee Ownership Plan. See "Item 18. Financial Statements - Note 25. Equity-based participation plans for employees." | <sup>1</sup> Column (a) shows shares repurchased on the SIX Swiss Exchange second trading line plus shares we purchased from employees who had obtained the shares through a Novartis Employee Ownership Plan. See "Item 18. Financial Statements - Note 25. Equity-based participation plans for employees." | <sup>1</sup> Column (a) shows shares repurchased on the SIX Swiss Exchange second trading line plus shares we purchased from employees who had obtained the shares through a Novartis Employee Ownership Plan. See "Item 18. Financial Statements - Note 25. Equity-based participation plans for employees." |
|  <sup>2</sup> Column (c) shows shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2023 AGM until exhausted on May 15, 2025. Since May 15, 2025, the share repurchases are executed under the additional CHF 10 billion authority approved at the 2025 AGM. See "Item 6. Directors, Senior Management and Employees - Item 6C. Board Practices - Our capital structure - Changes in capital." | <sup>2</sup> Column (c) shows shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2023 AGM until exhausted on May 15, 2025. Since May 15, 2025, the share repurchases are executed under the additional CHF 10 billion authority approved at the 2025 AGM. See "Item 6. Directors, Senior Management and Employees - Item 6C. Board Practices - Our capital structure - Changes in capital." | <sup>2</sup> Column (c) shows shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2023 AGM until exhausted on May 15, 2025. Since May 15, 2025, the share repurchases are executed under the additional CHF 10 billion authority approved at the 2025 AGM. See "Item 6. Directors, Senior Management and Employees - Item 6C. Board Practices - Our capital structure - Changes in capital." | <sup>2</sup> Column (c) shows shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2023 AGM until exhausted on May 15, 2025. Since May 15, 2025, the share repurchases are executed under the additional CHF 10 billion authority approved at the 2025 AGM. See "Item 6. Directors, Senior Management and Employees - Item 6C. Board Practices - Our capital structure - Changes in capital." | <sup>2</sup> Column (c) shows shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2023 AGM until exhausted on May 15, 2025. Since May 15, 2025, the share repurchases are executed under the additional CHF 10 billion authority approved at the 2025 AGM. See "Item 6. Directors, Senior Management and Employees - Item 6C. Board Practices - Our capital structure - Changes in capital." | <sup>2</sup> Column (c) shows shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2023 AGM until exhausted on May 15, 2025. Since May 15, 2025, the share repurchases are executed under the additional CHF 10 billion authority approved at the 2025 AGM. See "Item 6. Directors, Senior Management and Employees - Item 6C. Board Practices - Our capital structure - Changes in capital." |
|  <sup>3</sup> Column (e) shows the Swiss franc amount from column (d) converted into US dollars as of the month-end, using the Swiss franc/US dollar exchange rate at the applicable month-end. | <sup>3</sup> Column (e) shows the Swiss franc amount from column (d) converted into US dollars as of the month-end, using the Swiss franc/US dollar exchange rate at the applicable month-end. | <sup>3</sup> Column (e) shows the Swiss franc amount from column (d) converted into US dollars as of the month-end, using the Swiss franc/US dollar exchange rate at the applicable month-end. | <sup>3</sup> Column (e) shows the Swiss franc amount from column (d) converted into US dollars as of the month-end, using the Swiss franc/US dollar exchange rate at the applicable month-end. | <sup>3</sup> Column (e) shows the Swiss franc amount from column (d) converted into US dollars as of the month-end, using the Swiss franc/US dollar exchange rate at the applicable month-end. | <sup>3</sup> Column (e) shows the Swiss franc amount from column (d) converted into US dollars as of the month-end, using the Swiss franc/US dollar exchange rate at the applicable month-end. |

---

## Item 16F. Change in Registrant's Certifying Accountant
Not applicable.

## Item 16G. Corporate Governance
Novartis AG is subject to and compliant with the laws and regulations of Switzerland (in particular, Swiss company and securities laws, SIX Swiss Exchange rules, and the Swiss Code of Best Practice for Corporate Governance) and the securities laws of the United States, including NYSE listing standards, as applicable to foreign private issuers of securities. The following summarizes a number of significant ways in which our corporate governance practices differ from those followed by domestic-listed US companies under the listing standards of the NYSE:

• Novartis AG shareholders do not receive written reports directly from Board committees.

• External auditors are appointed by shareholders at the Annual General Meeting of Shareholders (AGM), as opposed to being appointed by the Audit and Compliance Committee.

• While shareholders cannot vote on all equity compensation plans, they are entitled to hold separate, yearly binding votes on Board and Executive Committee compensation.

• The Board has established a separate Risk Committee that oversees the risk management system and processes, as opposed to delegating this responsibility to the Audit and Compliance Committee.

• The full Board is responsible for overseeing the performance evaluation of the Board and Executive Committee.

• The full Board is responsible for setting objectives relevant to the CEO's compensation and for evaluating their performance.

## Item 16H. Mine Safety Disclosure
Not applicable.

## Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.

## Item 16J. Insider Trading Policies
We are committed to compliance with laws and regulations and to financial integrity. We have adopted an insider trading policy that governs the purchase, sale, and other dispositions of Novartis securities by directors, management, and employees that is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and listing standards. A copy of the policy is included as Exhibit 11.1 to the Form 20-F.

## Item 16K. Cybersecurity
**Risk management and strategy**

Protecting the security and integrity of the IT systems under our control and safeguarding the privacy of our customers, patients and employees is a top priority for us at all levels. Cybersecurity and data privacy risks are among the core enterprise risks evaluated through our annual enterprise risk management assessment.

The Chief Security Officer oversees our cybersecurity risk management program in partnership with our Chief Information Officer and other business leaders. The program was developed to assess, identify and manage risks from cybersecurity threats, to respond to cybersecurity breaches and cyberattacks, and to protect and preserve the confidentiality, integrity, and continued availability of information owned by, or in the care of, Novartis.

**Governance**

To address cybersecurity threats and prevent IT system interruptions, the Information Security & Compliance (ISC) team, which is headed by our Chief Security Officer, has implemented enterprise-wide policies, processes and practices. Our Chief Security Officer reports to our Chief Information Officer, and is a subject matter expert on information security, privacy, information technology strategy and management, with over 20 years of relevant experience across a number of industries, including pharmaceuticals, consumer goods, financial services and consulting. Our Chief Information Officer has 25 years of experience as an IT professional, including 15 years with Novartis, and is responsible for our technology strategy, delivery and operations globally. Our ISC team assesses our systems against our policies and processes, reviews gaps, and prioritizes remediation. Key performance indicators are reported to the Executive Committee of Novartis. The Executive Committee is responsible for oversight of the Company's cybersecurity strategy.

We seek to follow industry best practices, such as the National Institute of Standards and Technology (NIST) Cybersecurity Framework and ISO 27001 to manage information security. Novartis has risk-based service continuity and systems recovery plans in place for key business processes, which are tested periodically. We also conduct ongoing internal vulnerability analyses (including simulated hacking), as well as external testing via third parties to ensure the effectiveness of our cybersecurity controls. We require employees to report IT security incidents to a Cyber Security Operations Center (CSOC) that operates 24 hours a day, seven days a week. CSOC is a function within ISC that is responsible for investigating all security incidents and alerts, including determining the threat type, incident scope and incident severity. Where appropriate, major incidents are escalated to our Chief Executive Officer, who may then inform our Board of the incident pursuant to our internal procedures. Novartis has not experienced any cybersecurity threats, including as a result of cybersecurity incidents, that have materially affected or are reasonably likely to materially affect Novartis, including its business strategy, results of operations or financial condition. See "Item 3. Key Information—Item 3.D. Risk factors—Operational risks—Cybersecurity and data protection" for information on risks to Novartis from cybersecurity threats.

As part of its enterprise risk management oversight, the Risk Committee of our Board, by delegation of the Board, is responsible for ensuring that the Company has implemented an appropriate and effective risk management system and process, including annually reviewing updates on cybersecurity. The Risk Committee receives updates on cybersecurity risks, which address a wide range of topics, including recent developments, security incidents, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends, and information security considerations arising with respect to the peers and vendors of Novartis. At least once each year, the Risk Committee discusses the Company's approach to cybersecurity risk management with the Chief Security Officer. See "Item 6. Directors, Senior Management and Employees—Item 6.C Board practices—Corporate governance—Risk management" for more information.

## PART III

## Item 17. Financial Statements
See response to "Item 18. Financial Statements."

## Item 18. Financial Statements
The following financial statements are filed as part of this Annual Report.

[Consolidated income statements](#anchorId001514959)

[Consolidated statements of comprehensive income](#anchorId001515712)

[Consolidated balance sheets](#anchorId001516201)

[Consolidated statements of changes in equity](#anchorId001517049)

[Consolidated statements of cash flows](#anchorId001519226)

[Notes to the Novartis consolidated financial statements](#anchorId001520421)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[1. Accounting policies](#anchorId001520427)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[2. Significant acquisitions of businesses and spin-off of Sandoz business](#anchorId001520844)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[3. Operating segment](#anchorId001521782)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[4. Revenues and geographic information](#anchorId001521807)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[5. Interest expense and other financial income and expense](#anchorId001528388)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[6. Income taxes](#anchorId001528742)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[7. Earnings per share](#anchorId001529508)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[8. Changes in consolidated statements of comprehensive income](#anchorId001529871)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[9. Property, plant and equipment](#anchorId001532231)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[10. Right-of-use assets and lease liabilities](#anchorId001533777)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[11. Goodwill and intangible assets other than goodwill](#anchorId001534995)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[12. Deferred tax assets and liabilities](#anchorId001536625)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[13. Financial and other non-current assets](#anchorId001538943)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[14. Inventories](#anchorId001539194)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[16. Marketable securities, time deposits, derivative financial instruments, and cash and cash equivalents](#anchorId001539779)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[17. Other current assets](#anchorId001539904)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[18. Equity](#anchorId001540023)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[19. Non-current financial debts](#anchorId001542029)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[20. Provisions and other non-current liabilities](#anchorId001544284)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[21. Current financial debts and derivative financial instruments](#anchorId001545145)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[22. Provisions and other current liabilities](#anchorId001545279)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[23. Details to the consolidated statements of cash flows](#anchorId001545900)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[24. Post-employment benefits for employees](#anchorId001548070)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[25. Equity-based participation plans for employees](#anchorId001551125)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[26. Transactions with related parties](#anchorId001551822)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[27. Commitments and contingent liabilities](#anchorId001552141)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[28. Financial instruments – additional disclosures](#anchorId001552306)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[29. Discontinued operations](#anchorId001559421)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[30. Events subsequent to the December 31, 2025, consolidated balance sheet date](#anchorId001559850)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[31. Novartis principal subsidiaries and associated companies](#anchorId001559880)

[Report of Independent Registered Public Accounting Firm – KPMG AG](#anchorAudit)(PCAOB ID 3240)

## Item 19. Exhibits
&nbsp;&nbsp;&nbsp;&nbsp;1.1 [Articles of Incorporation of Novartis AG, as amended March 7, 2025 (English translation).](a26020420f-ex1_1.htm)

1.2 [Organizational Regulations of Novartis AG, effective January 1, 2025 (incorporated by reference to Exhibit 1.2 to Novartis AG's Annual Report on Form 20-F as filed with the SEC on January 31, 2025).](http://www.sec.gov/Archives/edgar/data/1114448/000137036825000004/a25013120f-ex1_2.htm)

2.1 [Form of Second Amended and Restated Deposit Agreement among Novartis AG, JPMorgan Chase Bank, N.A., as depositary, and all Holders and Beneficial Owners from time to time of American Depositary Receipts issued thereunder (incorporated by reference to Exhibit 99.A to the Registration Statement on Form F-6 as filed with the SEC on December 16, 2022).](http://www.sec.gov/Archives/edgar/data/1114448/000110465922127792/tm2227652d1_ex99-a.htm)

2.2 [Form of American Depositary Receipt (included in Exhibit 2.1 incorporated by reference to Exhibit 99.A to the Registration Statement on Form F-6 as filed with the SEC on December 16, 2022).](http://www.sec.gov/Archives/edgar/data/1114448/000110465922127792/tm2227652d1_ex99-a.htm)

2.3 [Description of Securities registered under Section 12 of the Exchange Act.](a26020420f-ex2_3.htm)

2.4 [Indenture, dated as of February 10, 2009, among Novartis Capital Corporation, Novartis Securities Investment Ltd. and Novartis Finance S.A., as issuers, Novartis AG, as guarantor, and HSBC Bank USA, National Association, as trustee (incorporated by reference to Exhibit 4.1 of the Registrants' Registration Statement on Form F-3 (File Nos. 333-207004, 333-207004-01 and 333-207004-02) filed with the SEC on September 18, 2015).](http://www.sec.gov/Archives/edgar/data/1114448/000104746915007387/a2225910zex-4_1.htm)

4.1 [Separation and Distribution Agreement by and between Novartis AG and Sandoz Group AG, dated as of September 30, 2023 (incorporated by reference to Exhibit 4.1 to Novartis AG's Annual Report on Form 20-F as filed with the SEC on January 31, 2024).](http://www.sec.gov/Archives/edgar/data/1114448/000137036824000004/a24013120f-ex4_1.htm)

4.2 [Tax Matters Agreement by and between Novartis AG and Sandoz Group AG, dated as of September 30, 2023 (incorporated by reference to Exhibit 4.2 to Novartis AG's Annual Report on Form 20-F) as filed with the SEC on January 31, 2024).](http://www.sec.gov/Archives/edgar/data/1114448/000137036824000004/a24013120f-ex4_2.htm)

&nbsp;&nbsp;&nbsp;&nbsp;4.3 [Merger Agreement by and among Novartis AG, Avidity Biosciences, Inc. and Ajax Acquisition Sub, Inc., dated as of October 25, 2025.](a26020420f-ex4_3.htm)

8.1 [For a list of all of our principal subsidiaries and associated companies, see "Item 18. Financial](#anchorNote33)[Statements—Note 31. Novartis principal subsidiaries and associated companies."](#anchorNote33)

11.1 [Novartis AG Insider Policy (incorporated by reference to Exhibit 11.1 to Novartis AG's Annual Report on Form 20-F as filed with the SEC on January 31, 2025).](http://www.sec.gov/Archives/edgar/data/1114448/000137036825000004/a25013120f-ex11_1.htm)

12.1 [Certification of Vasant Narasimhan, Chief Executive Officer of Novartis AG, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](a26020420f-ex12_1.htm)

12.2 [Certification of Harry Kirsch, Chief Financial Officer of Novartis AG, pursuant to Section 302 of the](a26020420f-ex12_2.htm)[Sarbanes-Oxley Act of 2002.](a26020420f-ex12_2.htm)

13.1 [Certification of Vasant Narasimhan, Chief Executive Officer of Novartis AG, pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](a26020420f-ex13_1.htm)

13.2 [Certification of Harry Kirsch, Chief Financial Officer of Novartis AG, pursuant to Section 18 U.S.C.](a26020420f-ex13_2.htm)[Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](a26020420f-ex13_2.htm)

15.1 [Consent of KPMG AG.](a26020420f-ex15_1.htm)

97.1 [Novartis AG Policy Governing the Recovery of Erroneously Awarded Compensation.](a26020420f-ex97_1.htm)

101. INS Inline XBRL Instance Document

101. SCH Inline XBRL Taxonomy Extension Schema Document

101. CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101. DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101. LAB Inline XBRL Taxonomy Extension Label Linkbase Document

101. PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).

The total amount of long-term debt securities authorized under any instrument, other than the instrument listed above, does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. We hereby agree to furnish to the SEC, upon its request, a copy of any such instrument defining the rights of holders of long-term debt of the Company or of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.

## SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

Novartis AG

<u>By: /s/ Harry Kirsch</u>

Name: Harry Kirsch

Title: *Chief Financial Officer of Novartis*

<u>By: /s/ Karen Hale</u>

Name: Karen Hale

Title: *Chief Legal & Compliance Officer of Novartis*

Date: February 4, 2026

## Novartis consolidated financial statements
**Consolidated income statements**

(For the years ended December 31, 2025, 2024 and 2023)

---

| | | | | |
|:---|:---|:---|:---|:---|
| (USD millions unless indicated otherwise) | Note | **2025** | 2024 | 2023 |
| **Net sales from continuing operations** | 4 | **54 532** | **50 317** | **45 440** |
| Other revenues | 4 | 2 142 | 1 405 | 1 220 |
| Cost of goods sold |  | -13 699 | -12 827 | -12 472 |
| **Gross profit from continuing operations** |  | **42 975** | **38 895** | **34 188** |
| Selling, general and administration |  | -13 248 | -12 566 | -12 517 |
| Research and development |  | -11 200 | -10 022 | -11 371 |
| Other income |  | 1 460 | 1 175 | 1 772 |
| Other expense |  | -2 343 | -2 938 | -2 303 |
| **Operating income from continuing operations** |  | **17 644** | **14 544** | **9 769** |
| Loss from associated companies |  | -12 | -38 | -13 |
| Interest expense | 5 | -1 144 | -1 006 | -855 |
| Other financial income and expense | 5 | -136 | 140 | 222 |
| **Income before taxes from continuing operations** |  | **16 352** | **13 640** | **9 123** |
| Income taxes | 6 | -2 385 | -1 701 | -551 |
| **Net income from continuing operations** |  | **13 967** | **11 939** | **8 572** |
| Net income from discontinued operations before gain on distribution of Sandoz Group AG to Novartis AG shareholders | &nbsp;&nbsp;&nbsp;&nbsp;29 |  |  | 422 |
| Gain on distribution of Sandoz Group AG to Novartis AG shareholders | 2 |  |  | 5 860 |
| **Net income from discontinued operations** | 29 |  |  | **6 282** |
| **Net income** |  | **13 967** | **11 939** | **14 854** |
| *Attributable to:* |  |  |  |  |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Shareholders of Novartis AG* |  | *13 984* | *11 941* | *14 850* |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Non-controlling interests* |  | *-17* | *-2* | *4* |
| Basic earnings per share (USD) from continuing operations |  | 7.21 | 5.92 | 4.13 |
| Basic earnings per share (USD) from discontinued operations |  |  |  | 3.02 |
| **Total basic earnings per share (USD)** | 7 | 7.21 | 5.92 | 7.15 |
| Diluted earnings per share (USD) from continuing operations |  | 7.15 | 5.87 | 4.10 |
| Diluted earnings per share (USD) from discontinued operations |  |  |  | 3.00 |
| **Total diluted earnings per share (USD)** | 7 | 7.15 | 5.87 | 7.10 |
| The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. |

---

**Consolidated statements of comprehensive income**

(For the years ended December 31, 2025, 2024 and 2023)

---

| | | | | |
|:---|:---|:---|:---|:---|
| (USD millions) | Note | **2025** | 2024 | 2023 |
| **Net income** |  | **13 967** | **11 939** | **14 854** |
| **Other comprehensive income** |  |  |  |  |
| **Items that are or may be recycled into the consolidated income statement** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash flow hedge, net of taxes | 8 | 2 | -24 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net investment hedge, net of taxes | 8 | -232 | 91 | -50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currency translation effects, net of taxes | 8 | 3 026 | -1 566 | 1 375 |
| Total of items that are or may be recycled |  | 2 796 | -1 499 | 1 325 |
| **Items that will never be recycled into the consolidated income statement** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Actuarial gains/(losses) from defined benefit plans, net of taxes | 8 | 1 155 | 2 024 | -160 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair value adjustments on equity securities, net of taxes | 8 | 39 | 64 | 37 |
| Total of items that will never be recycled |  | 1 194 | 2 088 | -123 |
| **Total comprehensive income** |  | **17 957** | **12 528** | **16 056** |
| *Total comprehensive income for the year attributable to:* |  |  |  |  |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Shareholders of Novartis AG* |  | *17 969* | *12 533* | *16 050* |
| &nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp; Continuing operations* |  | *17 969* | *12 533* | *10 115* |
| &nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp; Discontinued operations* |  |  |  | *5 935* |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Non-controlling interests* |  | *-12* | *-5* | *6* |
| The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. |

---

**Consolidated balance sheets**

(At December 31, 2025 and 2024)

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | Note | **2025** | 2024 |
| **Assets** |  |  |  |
| **Non-current assets** |  |  |  |
| Property, plant and equipment | 9 | 10 782 | 9 458 |
| Right-of-use assets | 10 | 1 570 | 1 415 |
| Goodwill | 11 | 25 567 | 24 756 |
| Intangible assets other than goodwill | 11 | 29 411 | 26 915 |
| Investments in associated companies |  | 98 | 119 |
| Deferred tax assets | 12 | 5 438 | 4 359 |
| Financial assets | 13 | 2 348 | 2 015 |
| Other non-current assets | 13 | 5 275 | 3 505 |
| **Total non-current assets** |  | **80 489** | **72 542** |
| **Current assets** |  |  |  |
| Inventories | 14 | 6 269 | 5 723 |
| Trade receivables | 15 | 8 937 | 7 423 |
| Income tax receivables |  | 205 | 133 |
| Marketable securities, time deposits and derivative financial instruments | 16 | 155 | 1 998 |
| Cash and cash equivalents | 16 | 11 435 | 11 459 |
| Other current assets | 17 | 3 459 | 2 968 |
| **Total current assets** |  | **30 460** | **29 704** |
| **Total assets** |  | **110 949** | **102 246** |
| **Equity and liabilities** |  |  |  |
| **Equity** |  |  |  |
| Share capital | 18 | 766 | 793 |
| Treasury shares | 18 | -50 | -53 |
| Reserves |  | 45 414 | 43 306 |
| **Equity attributable to Novartis AG shareholders** |  | **46 130** | **44 046** |
| Non-controlling interests |  | 419 | 80 |
| **Total equity** |  | **46 549** | **44 126** |
| **Liabilities** |  |  |  |
| **Non-current liabilities** |  |  |  |
| Financial debts | 19 | 27 935 | 21 366 |
| Lease liabilities | 10 | 1 657 | 1 568 |
| Deferred tax liabilities | 12 | 3 397 | 2 419 |
| Provisions and other non-current liabilities | 20 | 4 133 | 4 075 |
| **Total non-current liabilities** |  | **37 122** | **29 428** |
| **Current liabilities** |  |  |  |
| Trade payables |  | 4 456 | 4 572 |
| Financial debts and derivative financial instruments | 21 | 5 602 | 8 232 |
| Lease liabilities | 10 | 263 | 235 |
| Current income tax liabilities |  | 1 969 | 1 599 |
| Provisions and other current liabilities | 22 | 14 988 | 14 054 |
| **Total current liabilities** |  | **27 278** | **28 692** |
| **Total liabilities** |  | **64 400** | **58 120** |
| **Total equity and liabilities** |  | **110 949** | **102 246** |
| The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. |

---

**Consolidated statements of changes in equity**

(For the years ended December 31, 2025, 2024 and 2023)

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | Reserves | Reserves |  |  |  |
| <br>(USD millions) | <br>Note | <br>Share<br> capital | <br>Treasury<br> shares | <br>Retained<br> earnings | <br>Total value<br> adjustments | Equity<br> attributable <br> to Novartis <br> shareholders | <br> Non-<br> controlling<br> interests | <br>Total<br> equity |
| **Total equity at January 1, 2023** |  | **890** | **-92** | **63 540** | **-4 996** | **59 342** | **81** | **59 423** |
| Net income |  |  |  | 14 850 |  | 14 850 | 4 | 14 854 |
| Other comprehensive income | 8 |  |  |  | 1 200 | 1 200 | 2 | 1 202 |
| **Total comprehensive income** |  |  |  | **14 850** | **1 200** | **16 050** | **6** | **16 056** |
| Dividends | 18.1 |  |  | -7 255 |  | -7 255 |  | -7 255 |
| Dividend in kind to effect the spin-off of Sandoz Group AG | &nbsp;&nbsp;&nbsp;&nbsp;2 |  |  | -13 962 |  | -13 962 |  | -13 962 |
| Purchase of treasury shares | 18.2 |  | -51 | -8 466 |  | -8 517 |  | -8 517 |
| Reduction of share capital | 18 | -65 | 94 | -29 |  |  |  |  |
| Exercise of options and employee transactions | 18.2 |  | 2 | 144 |  | 146 |  | 146 |
| Equity-based compensation | 18.2 |  | 6 | 898 |  | 904 |  | 904 |
| Shares delivered to Sandoz employees as a result of the Sandoz spin-off | &nbsp;&nbsp;&nbsp;&nbsp;18.2 |  | 0 | 30 |  | 30 |  | 30 |
| Taxes on treasury share transactions |  |  |  | 14 |  | 14 |  | 14 |
| Transaction costs, net of taxes | 18.5 |  |  | -214 |  | -214 |  | -214 |
| Changes in non-controlling interests | 18.3 |  |  |  |  |  | -4 | -4 |
| Fair value adjustments on financial assets sold | 8 |  |  | -1 | 1 |  |  |  |
| Value adjustments related to divestments | 8 |  |  | -29 | 29 |  |  |  |
| Other movements | 18.4 |  |  | 129 |  | 129 |  | 129 |
| **Total of other equity movements** |  | **-65** | **51** | **-28 741** | **30** | **-28 725** | **-4** | **-28 729** |
| **Total equity at December 31, 2023** |  | **825** | **-41** | **49 649** | **-3 766** | **46 667** | **83** | **46 750** |
| Net income |  |  |  | 11 941 |  | 11 941 | -2 | 11 939 |
| Other comprehensive income | 8 |  |  |  | 592 | 592 | -3 | 589 |
| **Total comprehensive income** |  |  |  | **11 941** | **592** | **12 533** | **-5** | **12 528** |
| Dividends | 18.1 |  |  | -7 624 |  | -7 624 |  | -7 624 |
| Purchase of treasury shares | 18.2 |  | -44 | -8 406 |  | -8 450 |  | -8 450 |
| Reduction of share capital | 18 | -32 | 26 | 6 |  |  |  |  |
| Equity-based compensation plans | 18.2 |  | 6 | 1 054 |  | 1 060 |  | 1 060 |
| Taxes on treasury share transactions |  |  |  | -68 |  | -68 |  | -68 |
| Changes in non-controlling interests | 18.3 |  |  | -226 |  | -226 | 2 | -224 |
| Value adjustments related to financial assets sold and divestments | &nbsp;&nbsp;&nbsp;&nbsp;8 |  |  | 81 | -81 |  |  |  |
| Other movements | 18.4 |  |  | 154 |  | 154 |  | 154 |
| **Total of other equity movements** |  | **-32** | **-12** | **-15 029** | **-81** | **-15 154** | **2** | **-15 152** |
| **Total equity at December 31, 2024** |  | **793** | **-53** | **46 561** | **-3 255** | **44 046** | **80** | **44 126** |
| Net income |  |  |  | 13 984 |  | 13 984 | -17 | 13 967 |
| Other comprehensive income | 8 |  |  |  | 3 985 | 3 985 | 5 | 3 990 |
| **Total comprehensive income** |  |  |  | **13 984** | **3 985** | **17 969** | **-12** | **17 957** |
| Dividends | 18.1 |  |  | -7 818 |  | -7 818 |  | -7 818 |
| Purchase of treasury shares | 18.2 |  | -46 | -9 076 |  | -9 122 |  | -9 122 |
| Reduction of share capital | 18 | -27 | 42 | -15 |  |  |  |  |
| Equity-based compensation plans | 18.2 |  | 7 | 1 150 |  | 1 157 |  | 1 157 |
| Taxes on treasury share transactions |  |  |  | -113 |  | -113 |  | -113 |
| Changes in non-controlling interests | 18.3 |  |  | -89 |  | -89 | 351 | 262 |
| Value adjustments related to financial assets sold and divestments | &nbsp;&nbsp;&nbsp;&nbsp;8 |  |  | 36 | -36 |  |  |  |
| Other movements | 18.4 |  |  | 100 |  | 100 |  | 100 |
| **Total of other equity movements** |  | **-27** | **3** | **-15 825** | **-36** | **-15 885** | **351** | **-15 534** |
| **Total equity at December 31, 2025** |  | **766** | **-50** | **44 720** | **694** | **46 130** | **419** | **46 549** |
| The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. |

---

**Consolidated statements of cash flows**

(For the years ended December 31, 2025, 2024 and 2023)

---

| | | | | |
|:---|:---|:---|:---|:---|
| (USD millions) | Note | **2025** | 2024 | 2023 |
| **Net income from continuing operations** |  | **13 967** | **11 939** | **8 572** |
| *Adjustments to reconcile net income from continuing operations to net cash flows from operating activities from continuing operations* |  |  |  |  |
| Reversal of non-cash items and other adjustments | 23.1 | 11 229 | 10 232 | 10 369 |
| Dividends received from associated companies and others |  | 1 | 1 | 2 |
| Interest received |  | 310 | 489 | 645 |
| Interest paid |  | -981 | -855 | -751 |
| Other financial receipts |  | 266 |  | 90 |
| Other financial payments |  | -26 | -116 | -17 |
| Income taxes paid | 23.2 | -2 562 | -2 258 | -2 787 |
| **Net cash flows from operating activities from continuing operations before working capital and provision changes** |  | **22 204** | **19 432** | **16 123** |
| Payments out of provisions and other net cash movements in non-current liabilities |  | -1 483 | -1 107 | -1 534 |
| Changes in working capital and other operating cash flow items | 23.3 | -1 577 | -706 | -369 |
| **Net cash flows from operating activities from continuing operations** |  | **19 144** | **17 619** | **14 220** |
| Net cash flows from operating activities from discontinued operations |  |  |  | 238 |
| **Total net cash flows from operating activities** |  | **19 144** | **17 619** | **14 458** |
| Purchases of property, plant and equipment |  | -1 548 | -1 366 | -1 060 |
| Proceeds from sale of property, plant and equipment |  | 13 | 86 | 237 |
| Purchases of intangible assets |  | -2 352 | -2 448 | -1 693 |
| Proceeds from sale of intangible assets |  | 164 | 80 | 1 955 |
| Purchases of financial assets |  | -116 | -193 | -106 |
| Proceeds from sale of financial assets |  | 209 | 957 | 348 |
| Acquisitions of businesses | 23.4 | -147 | -4 018 | -3 561 |
| Acquisitions applying the optional concentration test | 23.5 | -2 769 |  |  |
| Divestments of businesses, net | 23.6 | -88 | 107 | 3 |
| Investments in time deposits and marketable securities |  | -187 | -3 455 | -641 |
| Proceeds from time deposits and from sale of marketable securities and commodities |  | 1 968 | 2 744 | 11 248 |
| Other investing cash flows, net |  | -24 | -7 | -11 |
| **Net cash flows (used in)/from investing activities from continuing operations** |  | **-4 877** | **-7 513** | **6 719** |
| Net cash flows used in investing activities from discontinued operations | 29 |  |  | -1 123 |
| **Total net cash flows (used in)/from investing activities** |  | **-4 877** | **-7 513** | **5 596** |
| Dividends paid to shareholders of Novartis AG |  | -7 818 | -7 624 | -7 255 |
| Purchases of treasury shares |  | -9 212 | -8 331 | -8 719 |
| Proceeds from exercised options and other treasury share transactions, net |  | 27 | 30 | 153 |
| Proceeds from non-current financial debts | 23.7 | 6 098 | 6 143 |  |
| Repayments of the current portion of non-current financial debts | 23.7 | -3 392 | -2 160 | -2 223 |
| Change in current financial debts | 23.7 | 5 | 958 | 546 |
| Repayments of other current financial debts | 23.7 |  | -289 |  |
| Payments of lease liabilities | 23.7 | -281 | -262 | -258 |
| Payments from changes in ownership interests in consolidated subsidiaries |  | -91 | -293 |  |
| Other financing cash flows, net |  | -203 | 86 | 192 |
| **Net cash flows used in financing activities from continuing operations** |  | **-14 867** | **-11 742** | **-17 564** |
| Net cash flows from financing activities from discontinued operations | 29 |  |  | 3 286 |
| **Total net cash flows used in financing activities** |  | **-14 867** | **-11 742** | **-14 278** |
| **Net change in cash and cash equivalents before effect of exchange rate changes** |  | **-600** | **-1 636** | **5 776** |
| Effect of exchange rate changes on cash and cash equivalents |  | 576 | -298 | 100 |
| **Net change in cash and cash equivalents** |  | **-24** | **-1 934** | **5 876** |
| Cash and cash equivalents at January 1 |  | 11 459 | 13 393 | 7 517 |
| **Cash and cash equivalents at December 31** |  | **11 435** | **11 459** | **13 393** |
| The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. | The accompanying Notes form an integral part of the consolidated financial statements. |

---

## Notes to the Novartis consolidated financial statements
1. Accounting policies

Novartis AG, a Swiss holding company headquartered in Basel, Switzerland, directly or indirectly owns all subsidiaries and associated companies included in these consolidated financial statements. Novartis AG is a multinational group of companies (Novartis or Company) engaged in the research, development, manufacturing, distribution, marketing and sale of a broad range of innovative pharmaceutical medicines.

The consolidated financial statements of the Company are prepared in accordance with International Financial Reporting Standards (IFRS®) Accounting Standards as issued by the International Accounting Standards Board. They are prepared in accordance with the historical cost convention, except for items that are required to be accounted for at fair value.

The Company's financial year-end is December 31, which is also the annual closing date of the individual entities' financial statements incorporated into the Company's consolidated financial statements.

The preparation of financial statements requires management to make certain estimates and assumptions, either at the balance sheet date or during the year, which affect the reported amounts of revenues, expenses, assets, and liabilities, including the distribution liability and the non-cash, non-taxable gain recognized in connection with the distribution of Sandoz Group AG to Novartis AG shareholders, and contingent amounts.

Estimates are based on historical experience and other assumptions that are considered reasonable under the given circumstances and are regularly monitored. Actual outcomes and results could differ from those estimates and assumptions. Revisions to estimates are recognized in the period in which the estimate is revised.

At the Novartis AG Extraordinary General Meeting, held on September 15, 2023, our shareholders approved the spin-off of the Sandoz business. Following the share- holder approval, IFRS Accounting Standards required the Sandoz Division and selected portions of corporate activities attributable to Sandoz business, as well as certain expenses related to the spin-off (the "Sandoz business") to be reported as discontinued operations in the consolidated financial statements. As a result, the Sandoz business has been presented as discontinued operations in the consolidated financial statements. This required the year ended December 31, 2023 consolidated income statement, consolidated statement of comprehensive income and consolidated statement of cash flows to present separately continuing operations from discontinued operations. For further information and disclosures refer to the section "—Distribution of Sandoz Group AG to Novartis AG shareholders" in this Note 1, in Note 2, and in Note 29.

The material accounting policies applied by Novartis, including the option adopted by the Company where IFRS Accounting Standards permit alternatives, are disclosed in these notes to the consolidated financial statements.

**Scope of consolidation** 

The consolidated financial statements include all entities, including structured entities, that Novartis AG controls directly or indirectly (generally as a result of owning more than 50% of the entity's voting interest). Consolidated entities are also referred to as "subsidiaries."

Investments in associated companies (generally defined as investments in entities in which Novartis holds between 20% and 50% of voting shares or over which it otherwise has significant influence) and joint ventures are accounted for using the equity method, except for selected venture fund investments for which the Company has elected to apply the method of fair value through the consolidated income statement.

**Foreign currencies**

The consolidated financial statements of Novartis are presented in US dollars (USD). The functional currency of a subsidiary is generally the local currency of that entity. The functional currency used for the reporting of certain Swiss and foreign finance entities is USD instead of their respective local currencies. This reflects the fact that the cash flows and transactions of these entities are primarily denominated in this currency.

For subsidiaries using a functional currency other than USD, the subsidiary's results, financial position and cash flows are translated into USD using the following exchange rates:

• Income, expense and cash flows for each month using the average exchange rate, with the US dollar values for each month being aggregated during the year

• Balance sheet using year-end exchange rates

• Resulting exchange rate differences are recognized in other comprehensive income

**Distribution of Sandoz Group AG to Novartis AG shareholders** 

At the Extraordinary General Meeting (EGM) of Novartis AG shareholders, held on September 15, 2023, the Novartis AG shareholders approved a special distribution by way of a dividend in kind to effect the spin-off of Sandoz Group AG.

The September 15, 2023, shareholder approval for the spin-off required the Sandoz Division and selected portions of corporate activities attributable to Sandoz business, as well as certain expenses related to the spin-off (the "Sandoz business") to be reported as discontinued operations.

The shareholder approval on September 15, 2023, for the spin-off the Sandoz business, required the recognition of a distribution liability at the fair value of the Sandoz business. Novartis policy is to measure the distribution liability at the fair value of the Sandoz business net assets taken as a whole. The distribution liability was recognized through a reduction in retained earnings. It was required to be adjusted at each balance sheet date for changes in its estimated fair value, up to the date of the distribution to shareholders through retained earnings. Any resulting impairment of the business assets to be distributed would have been recognized in the consolidated income statements in "Other expense" of discontinued operations, at the date of initial recognition of the distribution liability or at subsequent dates resulting from changes of the distribution liability valuation.

At the October 4, 2023, distribution settlement date, the resulting gain, which is measured as the excess amount of the distribution liability over the then-carrying value of the net assets of the business distributed, was recognized on the line "Gain on distribution of Sandoz Group AG to Novartis AG shareholders" within the income statement of discontinued operations.

The recognition of the distribution liability required the use of valuation techniques for the purposes of impairment testing of the Sandoz business' assets to be distributed and for the measurement of the fair value of the distribution liability. These valuations required the use of management assumptions and estimates related to the Sandoz business' future cash flows, market multiples, and the opening share price of Sandoz Group AG on the first day of trading its shares on the SIX Swiss Exchange, to estimate day one market value, and control premiums to apply in estimating the Sandoz business fair value. These fair value measurements are classified as "Level 3" in the fair value hierarchy. The section "—Goodwill and intangible assets other than goodwill" in this Note 1 provides additional information on key assumptions that are highly sensitive in the estimation of fair values using valuation techniques.

Transaction costs that were directly attributable to the Distribution (spin-off) of the Sandoz business to Novartis AG shareholders by way of a dividend in kind, and that would otherwise have been avoided, were accounted for as a deduction from equity (within retained earnings). Prior to the recognition of the distribution liability, these costs were recorded as prepaid expenses in the consolidated balance sheet.

For additional disclosures, refer to the section "— Distribution of Sandoz Group AG to Novartis AG shareholders" in Note 2 and Note 29.

**Acquisition of assets and businesses**

Assets separately acquired are recorded at cost, which includes the purchase price and any directly attributable costs for bringing the asset into the condition to operate as intended. Expected costs for obligations to dismantle and remove property, plant and equipment and to restore the site when it is no longer used are included in their cost.

Acquired businesses are accounted for by applying the business combination acquisition method, unless the optional concentration test is applied. The optional concentration test allows for an election on a transaction-by-transaction basis to account for the acquired business as an asset separately acquired when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

The business combination acquisition method requires that the assets acquired and liabilities assumed be recorded at their respective fair values on the date the Company obtains control. The excess of the fair value of the total purchase consideration transferred over the fair value of the acquired assets and assumed liabilities is recognized as goodwill. The valuations are based on information available at the acquisition date. Acquisition-related costs are expensed as incurred.

The application of the business combination acquisition method requires certain estimates and assumptions to be made, especially concerning the fair values of the acquired intangible assets, inventories, property, plant and equipment, and the liabilities assumed at the acquisition date, and the useful lives of the intangible assets and property, plant and equipment. Estimates of fair value require the use of valuation techniques. These valuations require the use of management assumptions and estimates, including the value of comparable assets in the market, amount and timing of future cash flows, outcomes and costs of research and development activities, probability of obtaining regulatory approval, long-term sales forecasts, actions of competitors, discount rates and terminal growth rates. The section "—Goodwill and intangible assets other than goodwill" in this Note 1 provides additional information on key assumptions that are highly sensitive in the estimation of fair values using valuation techniques.

**Goodwill and intangible assets other than goodwill**

Goodwill arises on applying the business combination acquisition method on the acquisition of a business and is the excess of the fair value of the consideration transferred to acquire the business over the underlying fair value of the net identified assets acquired. Goodwill is allocated to groups of cash-generating units (CGUs) that are expected to benefit from the synergies of the combination, which are usually represented by the operating

segment. Goodwill is tested for impairment at the level of this group of CGUs annually, or when facts and circumstances warrant, and any impairment charges are recorded under "Other expense" in the consolidated income statement.

Intangible assets other than goodwill that are separately acquired or accounted for as separately acquired when the optional concentration test is applied, are initially recorded at cost. Intangible assets acquired in a business combination are recorded at fair value at the acquisition date in accordance with the business combination acquisition method.

Intangible assets available for use with a definite useful life (which includes the categories Currently marketed products and Other intangible assets) are amortized on a straight-line basis and evaluated for potential impairment whenever facts and circumstances indicate that their carrying value may not be recoverable.

Acquired research and development intangible assets that have not yet obtained marketing approval are recognized in the In-process research and development (IPR&D) category within intangible assets other than goodwill. IPR&D is not amortized because it is not yet available for use. It is tested for potential impairment on an annual basis, or whenever facts and circumstances indicate that an impairment may exist. When an IPR&D project receives marketing approval from a regulatory authority, it is reclassified to the "Currently marketed products" category within intangible assets other than goodwill.

An asset, a CGU or a grouping of CGUs is considered impaired when its balance sheet carrying amount exceeds its recoverable amount, which is defined as the higher of its fair value less costs of disposal and its value in use. Novartis generally determines the recoverable amount using the fair value less costs of disposal approach. As directly observable market inputs are typically unavailable, fair value less costs of disposal is estimated using net present value techniques based on post-tax cash flows and discount rates. In the limited cases where the value-in-use approach is applied, net present value techniques use pre-tax cash flows and discount rates.

Fair value less costs of disposal reflects estimates of assumptions that market participants would be expected to use when pricing the asset or CGU, and for this purpose, management considers the range of economic conditions that are expected to exist over the remaining useful life of the asset. These valuations are classified as "Level 3" in the fair value hierarchy.

The estimates used in calculating net present values are highly sensitive and depend on assumptions specific to the nature of the Company's activities, including:

• Amount and timing of projected future cash flows

• Sales forecasts

• Actions of competitors, such as launch of competing products, marketing initiatives

• Sales erosion rates after patent expiry, loss of exclusivity or other intellectual property protection, and timing of competitor products entering the market

• Outcome of research and development activities, such as compound efficacy, clinical trials results

• Amount and timing of projected costs to develop IPR&D into commercially viable products

• Profit margins

• Probability of obtaining regulatory approval

• Future tax rates

• Appropriate terminal growth or decline rate

• Appropriate discount rate

Generally, for intangible assets with a definite useful life, Novartis uses cash flow projections for the whole useful life of these assets. For goodwill, Novartis generally utilizes cash flow projections for a three-year period based on management forecasts, with a terminal value based on cash flow projections usually in line with inflation rates for later periods.

Probability-weighted scenarios are typically used.

Discount rates used consider the Company's estimated weighted average cost of capital, adjusted for asset-specific, country-specific, and currency risks associated with cash flow projections, to approximate the discount rate that market participants would use to value the asset.

Due to the above factors, actual cash flows and values could vary significantly from forecasted future cash flows and related values derived using discounting techniques.

**Cash and cash equivalents**

Cash and cash equivalents include highly liquid investments with original maturities of three months or less, which are readily convertible to known amounts of cash. Bank overdrafts are presented within current financial debts on the consolidated balance sheet.

**Marketable securities and non-current financial assets** 

Marketable securities are financial assets held for short-term purposes that are principally traded in liquid markets and are classified within current assets on the consolidated balance sheet. The financial impacts related to these financial assets are recorded in "Other financial income and expense" in the consolidated income statement. Non-current financial assets held for long-term strategic purposes are classified within non-current assets on the consolidated balance sheet. The financial impacts related to these financial assets are recorded in "Other income" and "Other expense" in the consolidated income statement.

Marketable securities and non-current financial assets are initially recorded at fair value on their trade date, which is different from the settlement date when the transaction is ultimately effected. Quoted securities are remeasured to fair value based on current market prices at each reporting date. If the market for a financial asset is not active or no market is available, fair values are established using valuation techniques. The majority of non-quoted investments are initially valued at fair value through the purchase price established between a willing buyer and seller. Non-quoted investments are subsequently adjusted based on values derived from discounted cash flow analysis or other

pricing models. These investment values are classified as "Level 3" in the fair value hierarchy.

The Company classifies and accounts for its marketable securities and non-current financial assets in the following categories:

• Debt securities are valued at fair value through other comprehensive income with subsequent recycling into the consolidated income statement, as they meet both the "solely payment of principal and interest" and the business model criteria. Unrealized gains and losses, except exchange gains and losses, are recorded as a fair value adjustment in the consolidated statement of comprehensive income. They are recognized in the consolidated income statement when the debt instrument is sold, at which time the gain/loss is transferred to "Other financial income and expense." Exchange gains and losses related to debt instruments are immediately recognized in the consolidated income statement in "Other financial income and expense."

• Fund investments and equity securities of the Novartis Venture Fund are valued at fair value through profit and loss (FVPL). Unrealized gains and losses, including exchange gains and losses, are recognized in the consolidated income statement in "Other income" for gains and "Other expense" for losses.

• Equity securities held as strategic investments, typically held outside of the Novartis Venture Fund, are generally designated at the date of acquisition as financial assets valued at fair value through other comprehensive income with no subsequent recycling through profit and loss. Unrealized gains and losses, including exchange gains and losses, are recorded as a fair value adjustment in the consolidated statement of comprehensive income. They are reclassified to retained earnings when the equity security is sold. If these equity securities are not designated at the date of acquisition as financial assets valued at fair value through other comprehensive income, they are valued at FVPL, as described above.

• Other non-current financial assets, such as loans and long-term receivables from customers, advances and other deposits, are valued at amortized cost, which reflects the time value of money less any allowances for expected credit losses.

The Company assesses on a forward-looking basis the expected credit losses associated with its debt securities valued at fair value through other comprehensive income. Impairments on debt securities are recorded in "Other financial income and expense."

For other financial assets valued at amortized cost, impairments, which are based on their expected credit losses, and exchange rate losses are included in "Other expense" in the consolidated income statement. Exchange rate gains and interest income, using the effective interest rate method, are included in "Other income" or "Other financial income" in the consolidated income statement, depending on the nature of the item.

**Derivative financial instruments**

Derivative financial instruments are initially recognized in the balance sheet at fair value and are remeasured to their current fair value at the end of each subsequent reporting period. The valuation of a forward exchange rate contract is based on the discounted cash flow model, using interest rate curves and forward rates at the reporting date as observable inputs.

Options are valued based on a modified Black-Scholes model using volatility and exercise prices as major observable inputs.

The Company enters into certain derivative financial instruments for the purpose of hedging to reduce volatility in the Company's performance due to exposure to various business-related risks. The risk mitigation is obtained because the derivative's value or cash flows are expected, wholly or partly, to offset changes in the value or cash flows of the recognized assets or liabilities. The overall strategy aims to mitigate the currency and interest rate risk of positions that are contractually agreed, and to partially mitigate the exposure risk of selected anticipated transactions.

Certain derivative financial instruments meet the criteria for hedge accounting treatment. A prerequisite for obtaining this accounting-hedge relationship is extensive documentation on inception and proving on a regular basis that the economic hedge is effective for accounting purposes. Other derivative financial instruments do not meet the criteria to qualify for hedge accounting or are not designated in a hedge relationship. Changes in the fair value of these derivative instruments are recognized immediately in "Other financial income and expense" in the consolidated income statement.

In addition, the Company has designated certain long-term debt components as hedges of the translation risk arising on certain net investments in foreign operations. On consolidation, foreign currency differences arising on long-term debt designated as net investment hedges of a foreign operation are recognized in other comprehensive income and accumulated in currency translation effects, to the extent that the hedge is effective. Foreign currency differences arising from hedge ineffectiveness are recognized in the income statement in "Other financial income and expense."

When a hedged net investment is disposed of, the proportionate portion of the cumulative amount recognized in equity in relation to the hedged net investment is transferred to the consolidated income statement as an adjustment to the gain or loss on disposal.

**Inventories**

Inventory is valued at the lower of acquisition or production cost determined on a first-in, first-out basis and net realizable value. This value is used for the "Cost of goods sold" in the consolidated income statement. Unsaleable inventory is fully written off in the consolidated income statement under "Cost of goods sold."

**Trade receivables**

Trade receivables are initially recognized at their invoiced amounts, including any related sales taxes less adjustments for estimated revenue deductions such as rebates, chargebacks and cash discounts.

Provisions for doubtful trade receivables are established using a forward-looking expected credit loss model (ECL). Charges for doubtful trade receivables are recorded as marketing and selling costs recognized in the consolidated income statement within "Selling, general and administration" expenses.

**Legal and environmental liabilities**

Novartis and its subsidiaries are subject to contingencies arising in the ordinary course of business, such as patent litigation, environmental remediation liabilities and other product-related and commercial litigation, and governmental investigations and proceedings. A provision is recorded when there is a probable outflow of resources for which a reliable estimate can be made of the outcome of the legal or other disputes against the subsidiary.

**Contingent consideration**

Contingent consideration from a business combination is recognized as a financial liability at fair value at the acquisition date, and forms part of the total purchase consideration transferred. The contingent consideration liability is remeasured at each reporting date, with changes in fair value recognized in the consolidated income statement in "Cost of goods sold" for currently marketed products and in "Research and development" for IPR&D.

For divestments, contingent consideration is recognized as a financial asset at fair value at the divestment date, and forms part of the total consideration received, excluding royalties under a license arrangement. The contingent consideration receivable is remeasured at each reporting date, with changes in fair value recognized in the consolidated income statement in "Other income" for increases in fair value and in "Other expense" for decreases in fair value.

These valuations are classified as "Level 3" in the fair value hierarchy. The estimates used in calculating the fair value of contingent consideration are highly sensitive and depend on assumptions specific to the nature of contingent amounts, particularly regarding expected future outcomes, including technical milestones, market performance, and probability-weighted scenarios and are discounted to reflect the time value of money. The unwinding of the discount is recognized in the consolidated income statement within "Interest expense" for contingent consideration liabilities and within "Other financial income and expense" for contingent consideration receivables.

For acquisitions where the Company elected to apply the optional concentration test, for in-licensing transactions and for other separately acquired intangible assets, contingent consideration is recognized as an addition to the intangible asset when the specified triggering event occurs (i.e. upon achievement of the defined milestones). The potential future milestone payments are disclosed within the research and development commitments table in Note 27.

**Defined benefit pension plans and other post-employment benefits**

The liability in respect of defined benefit pension plans and other post-employment benefits is the defined benefit obligation calculated annually by independent actuaries using the projected unit credit method. Plan assets are recognized at fair value. The current service cost for defined benefit pension plans and other post-employment benefit plans is included in personnel expenses allocated to the respective functions, while net interest on the defined benefit liability or asset is recognized as "Other expense" or "Other income."

**Revenue recognition**

Revenue on the sale of Novartis products and services, which is recorded as net sales to third parties in the line "Net sales from continuing operations" in the consolidated income statement, is recognized when a contractual promise to a customer (performance obligation) has been fulfilled by transferring control over the promised goods and services to the customer, substantially all of which is at the point in time of shipment to, or receipt of, the products by the customer or when the services are performed. If contracts contain customer acceptance provisions, revenue is recognized upon the satisfaction of the acceptance criteria. If a contract contains more than one performance obligation, the consideration is allocated based on the standalone selling price of each performance obligation. Consideration may be fixed or variable. Revenue is recognized based on the consideration Novartis expects to receive for its goods and services, only to the extent that it is highly probable that a significant reversal of revenue will not occur.

The most common elements of variable consideration are listed below.

• Rebates, discounts, and chargebacks granted to wholesalers, retailers, government agencies (including US Medicaid and US Federal Medicare programs), government supported healthcare systems, private health systems, pharmacy benefit managers, managed healthcare organizations, purchasing organizations, and other direct and indirect customers are provisioned and recorded as revenue deductions at the time the related revenues are recorded or when the incentives are offered. The provision represents estimates of the related obligations, requiring the use of judgment when estimating the effect of these revenue deductions. These rebates and discounts, applied using provision rates, are estimated based on the terms and conditions in the individual government agencies, states, plans and customer agreements (which may be subject to challenge or change in interpretative guidance by government authorities, payers and customers), historical experience, product sales and growth rate, population growth, product pricing including inflation impacts, the mix of contracts and products, the level of inventory in the distribution channel, regulations, channels and payers, as appropriate to the individual rebate and discount arrangements. These rebate provisions are adjusted based on established processes and experiences, for example from filing data with individual government

agencies, states, and plans. There is often a time lag between the recording of revenue deductions and the final accounting for them.

• Refunds granted to healthcare providers under innovative pay-for-performance agreements (i.e. outcome-based arrangements) are provisioned and recorded as a revenue deduction at the time the related sales are recorded. The provision represents estimates of the related obligations, requiring the use of judgment when estimating the effect of these revenue deductions. They are calculated on the basis of historical experience and clinical data available for the product, as well as the specific terms of the individual agreements. In cases where historical experience and clinical data are not sufficient for a reliable estimation of the outcome, revenue recognition is deferred until the uncertainty is resolved, until such history is available or the period when the refund right has expired. The provisions for revenue deductions under innovative pay-for-performance agreements are adjusted periodically based on established processes and actual experience, including the products' actual outcomes achieved compared with the anticipated predefined targets.

• Cash discounts are offered to customers to encourage prompt payment and are provisioned and recorded as revenue deductions at the time the related sales are recorded.

• Sales returns provisions are recognized and recorded as revenue deductions when there is historical experience of the Company agreeing to customer returns and Novartis can reasonably estimate expected future returns. The provision represents estimates of the related obligations, requiring the use of judgment when estimating the effect of these revenue deductions. In doing so, the estimated rate of return is applied, determined on the basis of historical experience of customer returns and considering any other relevant factors. This is applied to the amounts invoiced, also considering the amount of returned product to be destroyed versus product that can be placed back in inventory for resale. Where shipments are made on a resale or return basis, without sufficient historical experience for estimating sales returns, revenue is only recorded when there is evidence of consumption or when the right of return has expired. Provisions for sales returns are adjusted periodically based on established processes and actual experience.

Net sales to third parties and provisions for revenue deductions are adjusted periodically to reflect experience and to reflect actual amounts as rebates, refunds, discounts and returns are processed. There is often a time lag between recording of revenue deductions and the final accounting for them. The provision represents estimates of the related obligations, requiring the use of judgment when estimating the effect of these revenue deductions.

"Other revenue" includes income from profit-sharing arrangements with our collaboration partners, and royalty and milestone income from the out-licensing of intellectual property when Novartis retains an interest in the intellectual property through a license. Royalty income earned from a license is recognized when the underlying sales have occurred. Milestone income is recognized at the point in time when it is highly probable that the relevant milestone event criteria are met, and the risk of reversal of revenue recognition is remote. "Other revenue" also includes revenue from activities such as manufacturing or other services rendered, to the extent such revenue is not recorded under net sales, and is recognized when control transfers to the third party and our performance obligations are satisfied.

**Research and development**

Internal research and development (R&D) costs are fully charged to "Research and development" in the consolidated income statement in the period in which they are incurred. The Company considers that regulatory and other uncertainties inherent in the development of new products preclude the capitalization of internal development expenses as an intangible asset until marketing approval from a regulatory authority is obtained in a major market such as the United States, the European Union, Switzerland, China or Japan.

Payments made to third parties such as contract research and development organizations in compensation for subcontracted R&D, that are deemed not to transfer intellectual property to Novartis are expensed as internal R&D expenses in the period in which they are incurred. Such payments are only capitalized if they meet the criteria for recognition of an internally generated intangible asset, usually when marketing approval has been received from a regulatory authority in a major market.

Payments made to third parties to in-license or acquire intellectual property rights, compounds and products, including initial upfront and subsequent milestone payments, are capitalized, as are payments for other assets, such as scientific infrastructure and technologies to be used in R&D activities. If additional payments are made to the originator company to continue performing R&D activities, an evaluation is made as to the nature of the payments. Such additional payments will be expensed if they are deemed to be compensation for subcontracted R&D services not resulting in an additional transfer of intellectual property rights to Novartis. Such additional payments will be capitalized if they are deemed to be compensation for the transfer to Novartis of additional intellectual property developed at the risk of the originator company. Subsequent internal R&D costs in relation to IPR&D and other assets are expensed, since the technical feasibility of the internal R&D activity can only be demonstrated by the receipt of marketing approval for a related product from a regulatory authority in a major market.

Costs incurred for post-approval studies to support the continued registration of a marketed product are recognized as marketing expenses. Costs for activities required by regulatory authorities as a condition for obtaining marketing approval in a major market are capitalized in the "Currently marketed products" category within intangible assets other than goodwill.

Inventory produced ahead of regulatory approval is fully provisioned, and the charge is included in "Other

expense" in the consolidated income statement, as its ultimate use cannot be assured. If this inventory can subsequently be sold, the provision is released to "Other income" in the consolidated income statement, either on approval by the appropriate regulatory authority or, exceptionally in Europe, on recommendation by the Committee for Medicinal Products for Human Use (CHMP), if approval is assessed by the Company to be virtually certain.

**Share-based compensation**

Novartis shares and American Depositary Receipts (ADRs) granted as compensation with immediate vesting are measured at market value on the grant date. Since there is no vesting period the total compensation amount is expensed immediately within personnel costs and allocated to the respective function where the employee works.

The fair values of unvested restricted shares (RSs), including ADRs and restricted share units (RSUs) are measured at the grant date and recognized as an expensed on a straight-line basis over the vesting period. These awards are conditional only on continued service during the vesting period. RSUs do not entitle holders to dividends; therefore, their fair value is based on the Novartis share price at the grant date, adjusted for the present value of expected dividends during the vesting period. The compensation expense reflects adjustments for estimated forfeitures. The compensation expense is included within personnel costs allocated to the respective function where the employee works.

Performance Share Units (PSUs) are subject to both continued service and the achievement of specified performance criteria during the vesting period. These criteria comprise Company-specific performance metrics (non-market conditions) and, for certain plans, Novartis total shareholder return (TSR) relative to a defined peer group (a market condition measured using observable market data). Compensation expense is determined based on a bifurcation of the Company-specific metrics and the TSR component. The number of equity instruments that ultimately vest is determined at the vesting date. The following paragraphs provide an overview of the accounting policies for the determination of the components of the PSU share-based compensation plan expense.

The portion of the PSU expense related to Company-specific performance metrics (non-market conditions) is measured based on assumptions regarding expected achievement of these metrics over the vesting period. These assumptions reflect the Company's internal targets and expected forfeitures due to participants not meeting service conditions. Assumptions are reviewed and updated periodically during the vesting period. Changes in estimates for past service are recognized immediately in the consolidated income statement, while amounts for the remaining vesting period are expensed on a straight-line basis. Consequently, at the end of the vesting period, the total expense recognized equals the amount that ultimately vests.

The portion of the PSU expense related to TSR performance criteria (a market condition measured using observable market data) is determined based on the grant-date fair value of the award. Market conditions are incorporated into the fair value measurement at the grant date and are not subsequently adjusted for changes in TSR performance. Novartis estimates this fair value using a Monte Carlo simulation model. For this component, adjustments to compensation expense are only made if a participant fails to meet the service condition.

Measuring the fair values of PSUs with TSR performance criteria requires the use of estimates. The Monte Carlo simulation applied to determine this fair value incorporates assumptions about the probability of factors of future events, the expected term of the award, the grant price of the underlying shares or ADRs, expected volatilities, the correlation of Novartis shares with those of the peer group, and the risk-free interest rate.

If a plan participant leaves Novartis for reasons other than retirement, disability or death, then unvested restricted shares, restricted ADRs, RSUs and PSUs are forfeited, unless otherwise provided under the plan rules or determined by the Compensation Committee of the Novartis Board of Directors (for example, in connection with a reorganization or divestment).

**Income taxes**

Income taxes comprise current income taxes and deferred income taxes and are recognized in the same periods as the revenues and expenses to which they relate. Income taxes include interest and penalties incurred during the period, insofar as they are considered an income tax. Income taxes related to items recognized directly to other comprehensive income or to equity are recognized together with the corresponding item, to which the income tax is attributable, directly in other comprehensive income or in equity.

Deferred income taxes are determined using the comprehensive liability method and are calculated on the temporary differences that arise between the tax base of an asset or liability and its carrying value for financial reporting purposes, except for those temporary differences related to investments in subsidiaries and associated companies, where the timing of their reversal can be controlled and it is probable that the difference will not reverse in the foreseeable future. Since the retained earnings of subsidiaries are reinvested, withholding or other taxes on eventual distribution of a subsidiary's retained earnings are only recognized when a dividend is declared or has been planned. Furthermore, deferred income taxes are recognized for the net tax effects of net operating loss carryforwards and tax credits.

The Company applies the IFRS Accounting Standards exception to not recognize or disclose information about deferred tax assets and liabilities related to Pillar Two income taxes.

The carrying amount of deferred tax assets is reduced to the extent that it is not probable that sufficient taxable profits will be available to enable all or part of the asset to be recovered. In evaluating our ability to recover our deferred tax assets in the jurisdiction from which they arise, we consider all available positive and

negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations.

The estimated amounts for current and deferred tax assets or liabilities, including amounts related to any uncertain tax positions, are based on applicable tax law and regulations in the various tax jurisdictions, in which the Company operates, which are subject to interpretations based on currently known facts and circumstances.

Tax returns are based on an interpretation of tax laws and regulations, and reflect estimates based on these judgments and interpretations. Tax returns are subject to examination by the competent taxing authorities, which may result in an assessment being made requiring payments of additional tax, interest or penalties.

The calculation of income tax assets and liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. As a result, inherent uncertainties exist in the estimates of the tax positions. Tax liabilities for uncertain tax provisions are recognized on the consolidated balance sheets within current income tax liabilities.

**Impact of new IFRS Accounting Standards, amendments and interpretations in 2025**

No new IFRS Accounting Standards were adopted by the Company in 2025, 2024 and 2023. There were no new IFRS Accounting Standards amendments or interpretations that became effective in 2025, 2024 and 2023 that had a material impact on the Company's consolidated financial statements.

In 2024, the following new IFRS Accounting Standard, which is not yet effective, was issued by the International Accounting Standards Board:

**IFRS 18 Presentation and Disclosure in Financial Statements**

IFRS 18 Presentation and Disclosure in Financial Statements was issued by the International Accounting Standards Board in April 2024. IFRS 18 will become effective on January 1, 2027, and is required to be applied retrospectively to comparative periods presented, with early adoption permitted. Upon adoption, IFRS 18 replaces International Accounting Standards (IAS<sup>®</sup>) Standards 1 - Presentation of Financial Statements.

IFRS 18 sets out new requirements focused on improving financial reporting by:

• requiring additional defined structure to the statement of profit or loss (i.e. consolidated statement of income), to reduce diversity in the reporting, by requiring five categories (operating, investing, financing, income taxes and discontinued operations) and defined subtotals and totals (operating income, income before financing, income taxes and net income),

• requiring disclosures in the notes to the financial statements about management-defined performance measures (i.e. non-IFRS measures), and

• adding new principles for aggregation and disaggregation of information in the primary financial statements and notes.

IFRS 18 will not affect the recognition or measurement of items in the financial statements, but it might change what an entity reports as its "operating profit or loss", due to the classification of certain income and expense items between the five categories of the consolidated income statement. It might also change what an entity reports as operating activities, investing activities and financing activities within the statement of cash flows, due to the change in classification of certain cash flow items between these three categories of the cash flows statement.

The Company's preliminary assessment of IFRS 18 impacts indicates that certain income and expense amounts are expected to be reclassified within the consolidated income statement. For example, portions of foreign currency results and monetary losses from hyperinflation accounting will move from non-operating to operating income and expense. These expected presentation changes will not affect reported net income. The consolidated statement of cash flows presentation will change. It will start with operating income instead of net income, and certain cash flows are expected to be reclassified among the operating, investing, and financing activities categories. For example, dividends received and interest received are expected to be reclassified from operating activities to investing activities, while interest paid is expected to be reclassified from operating activities to financing activities. These presentation changes will not affect the net change in cash and cash equivalents reported for the period.

Novartis is currently finalizing its assessment of the impact of adopting IFRS 18, which will be effective January 1, 2027.

Based on the Company's assessment, there were no other IFRS Accounting Standards, amendments or interpretations not yet effective in 2025, 2024 or 2023 that would have been expected to have a material impact on the Company's consolidated financial statements.

2. Significant acquisitions of businesses and spin-off of Sandoz business

The following are the signiﬁcant acquisitions of businesses where the Company applied the business combination acquisition method of accounting.

**2025** 

In 2025, there were no acquisitions of businesses where the Company applied the business combination acquisition method of accounting.

**2024**

**Acquisition of Kate Therapeutics Inc.**

On October 31, 2024, Novartis acquired Kate Therapeutics Inc. (Kate Therapeutics), a US-based, preclinical-stage biotechnology company focused on developing adeno-associated viruses (AAV) based gene therapies to treat genetically defined muscle and heart diseases.

The purchase price consisted of a cash payment of USD 427 million (including purchase price adjustments of USD 2 million) and potential additional milestones of up to USD 700 million, which Kate Therapeutics shareholders are eligible to receive upon the achievement of specified development milestones.

The fair value of the total purchase consideration was USD 518 million, consisting of a cash payment of USD 427 million and the fair value of contingent consideration of USD 91 million. The purchase price allocation resulted in net identifiable assets of USD 234 million, consisting primarily of IPR&D intangible assets of USD 135 million, other intangible assets (scientific infrastructure) of USD 135 million, cash and cash equivalents of USD 6 million, net deferred tax liabilities of USD 41 million and other net liabilities of USD 1 million. Goodwill amounted to USD 284 million.

The 2024 results of operations from the date of acquisition were not material.

**Acquisition of Mariana Oncology Inc.**

On May 3, 2024, Novartis acquired Mariana Oncology Inc. (Mariana Oncology), a US-based, preclinical-stage biotechnology company focused on developing novel radioligand therapies (RLTs) with a portfolio of RLT programs across a range of solid tumor indications.

The purchase price consisted of a cash payment of USD 1.04 billion and potential additional milestones of up to USD 750 million, which Mariana Oncology shareholders are eligible to receive upon the achievement of speciﬁed milestones.

The fair value of the total purchase consideration was USD 1.28 billion, consisting of a cash payment of USD 1.04 billion and the fair value of contingent consideration of USD 239 million. The purchase price allocation resulted in net identiﬁable assets of USD 754 million, consisting primarily of IPR&D intangible assets of USD 344 million, other intangible assets (scientific infrastructure) of USD 473 million, cash and cash equivalents of USD 80 million, net deferred tax liabilities of USD 133 million and other net liabilities of USD 10 million. Goodwill amounted to USD 528 million.

The 2024 results of operations from the date of acquisition were not material.

**Acquisition of MorphoSys AG**

On February 5, 2024, Novartis entered into an agreement to acquire MorphoSys AG (MorphoSys), a Germany-based, global biopharmaceutical company developing innovative medicines in oncology. The acquisition of MorphoSys added to our oncology pipeline pelabresib, a late-stage BET inhibitor for myelofibrosis and tulmimetostat, an early-stage investigational dual inhibitor of EZH2 and EZH1 for solid tumors or lymphomasis.

On April 11, 2024, Novartis, through a subsidiary, commenced a voluntary public takeover offer (the "Offer") to acquire all outstanding shares of MorphoSys for EUR 68 per share, representing a total consideration of approximately EUR 2.6 billion in cash on a fully diluted basis. The settlement of the Offer was conditional on a minimum acceptance threshold of 65% of the MorphoSys outstanding shares.

Novartis purchased during the Offer acceptance period MorphoSys shares on the market for a total amount of EUR 0.3 billion (USD 0.3 billion). The closing conditions of the Offer, including the minimum acceptance threshold of 65%, were fulfilled by the end of the Offer acceptance period, and the acquisition of MorphoSys closed on May 23, 2024, with the settlement payment amounting to EUR 1.7 billion (USD 1.9 billion) to the MorphoSys shareholders for their tendered shares. Subsequent to May 23, 2024, Novartis acquired additional MorphoSys outstanding shares through the German statutory two-week extension period of the Offer (ending on May 30, 2024) for EUR 0.3 billion (USD 0.3 billion). As a result, as at May 30, 2024, Novartis held 89.7% of the total outstanding share capital of MorphoSys. Total cash paid for the MorphoSys shares purchased by Novartis through to the end of the statutory two-week extension period of the Offer amounted to EUR 2.3 billion (USD 2.5 billion). Non-controlling interests represented 10.3% of the MorphoSys outstanding shares amounting to USD 0.1 billion and were recognized in equity.

In June 2024, outside the Offer Novartis purchased an additional 1.7% of MorphoSys shares for EUR 44 million (USD 47 million). As a result, at June 30, 2024, Novartis held approximately 91.4% of outstanding MorphoSys shares.

On July 4, 2024, Novartis filed a public purchase offer to delist the MorphoSys shares admitted to trading on regulated markets and acquire all MorphoSys AG shares and American Depository Shares (ADS) not held directly by Novartis. In August 2024, the delisting of the MorphoSys shares admitted to trading on regulated markets was completed, and Novartis purchased an additional 3.2% of MorphoSys shares for EUR 83 million (USD 90 million). As a result, at September 30, 2024,

Novartis held approximately 94.5% of the outstanding MorphoSys shares.

On October 15, 2024, the "squeeze-out" of the remaining minority shareholders of MorphoSys was completed by way of a merger into a wholly-owned Novartis entity. As a result, Novartis held 100% of the outstanding shares of MorphoSys and non-controlling interests in equity were reduced to nil. On October 21, 2024, Novartis paid EUR 144 million (USD 156 million) to the former remaining minority shareholders in connection with the "squeeze-out."

The fair value of the total purchase consideration for the 89.7% stake held on May 30, 2024, was USD 2.5 billion (including cash acquired). The purchase price allocation resulted in net identifiable assets of USD 0.7 billion, consisting primarily of intangible assets other than goodwill of USD 1.1 billion, comprising IPR&D intangible assets of USD 0.6 billion and other intangible assets (customer out-licensing contracts) of USD 0.5 billion, financial investments and other receivables of USD 0.2 billion, marketable securities of USD 0.4 billion, cash and cash equivalents of USD 0.2 billion, financial debts to third parties of USD 0.9 billion, net deferred tax liabilities of USD 0.1 billion and other net liabilities of USD 0.2 billion. Non-controlling interests amounted to USD 0.1 billion, which were recognized at the non-controlling interests' proportionate share of MorphoSys identifiable net assets. Goodwill as at the acquisition date amounted to USD 1.9 billion.

The 2024 results of operations from the date of acquisition were not material.

Following the completion of management's analysis of the third-party integrated safety report related to certain clinical trial data readouts, that became available prior to closing of the MorphoSys acquisition, the necessity to perform an interim impairment test of the goodwill attributable to the MorphoSys business acquired at the provisional level of the grouping of CGUs of the MorphoSys business was triggered. This impairment test required the use of valuation techniques to estimate the fair value less cost of disposal of the MorphoSys business. These valuations required the use of management assumptions and estimates related to the MorphoSys business' future cash flows and assumptions on, among others, discount rate (8.5%) and terminal growth/decline rates (-15.0%). These fair value measurements are classified as "Level 3" in the fair value hierarchy. The section "—Goodwill and intangible assets other than goodwill" in Note 1 provides additional information on key assumptions that are highly sensitive in the estimation of fair values using valuation techniques. The interim impairment test indicated an impairment of the goodwill attributable to the MorphoSys business in the amount of USD 0.9 billion, which was recognized as "Other expense" in the consolidated income statement. As at December 31, 2024, the remaining carrying value of the goodwill attributable to the MorphoSys business amounting to USD 1.0 billion was allocated to the grouping of CGUs at the level of the operating segment of the Company, which is the level where the future synergies will be realized.

**2023**

**Acquisition of DTx Pharma, Inc.**

In the second quarter of 2023, Novartis entered into an agreement to acquire all outstanding shares of DTx Pharma, Inc. (DTx), a US based, pre-clinical stage biotechnology company focused on leveraging its proprietary FALCON platform to develop siRNA therapies for neuroscience indications. DTx lead program, DTx-1252 targets the root cause of CMT1A—the overexpression of PMP22, a protein that causes the myelin sheath that supports and insulates nerves in the peripheral nervous system to function abnormally. The transaction also included two additional pre-clinical programs for other neuroscience indications. The transaction closed on July 14, 2023.

The purchase price consisted of a cash payment of USD 0.6 billion and potential additional milestones of up to USD 0.5 billion, which the DTx shareholders are eligible to receive upon the achievement of specified milestones.

The fair value of the total purchase consideration was USD 0.6 billion. The amount consisted of a cash payment of USD 0.6 billion and the fair value of contingent consideration of USD 30 million, which DTx shareholders are eligible to receive upon the achievement of specified milestones. The purchase price allocation resulted in net identifiable assets of USD 0.4 billion, consisting primarily of IPR&D intangible assets of USD 0.4 billion, cash of USD 0.1 billion and net deferred tax liabilities of USD 0.1 billion. Goodwill amounted to USD 0.2 billion.

The 2023 results of operations from the date of acquisition were not material.

**Acquisition of Chinook Therapeutics, Inc**

In the second quarter of 2023, Novartis entered into an agreement to acquire all outstanding shares of Chinook Therapeutics, Inc. (Chinook Therapeutics), a US based clinical stage biopharmaceutical company with two late-stage medicines in development for rare, severe chronic kidney diseases. The acquisition closed on August 11, 2023.

The purchase price consisted of a cash payment of USD 3.2 billion and potential additional payments of up to USD 0.3 billion, which Chinook Therapeutics shareholders are eligible to receive upon the achievement of specified milestones.

The fair value of the total purchase consideration was USD 3.3 billion. The amount consisted of an upfront cash payment of USD 3.2 billion and the fair value of contingent consideration of USD 0.1 billion, which Chinook Therapeutics shareholders are eligible to receive upon achievement of specified milestones. The purchase price allocation resulted in net identifiable assets of USD 2.4 billion, consisting primarily of IPR&D intangible assets of USD 2.5 billion, net deferred tax liabilities of USD 0.4 billion and other net assets of USD 0.3 billion, including cash of USD 0.1 billion. Goodwill amounted to USD 0.9 billion.

The 2023 results of operations from the date of acquisition were not material.

**Fair value of assets and liabilities acquired through business combinations**

In 2025, there were no business combinations. The following table presents the fair value of the assets and liabilities acquired through business combinations and the total purchase consideration for the year ended December 31, 2024:

---

| | |
|:---|:---|
| (USD millions) | 2024 |
| Property, plant and equipment | 20 |
| Right-of-use assets | 47 |
| In-process research and development | 1 424 |
| Other intangible assets | 1 156 |
| Deferred tax assets | 465 |
| Non-current financial and other assets | 31 |
| Financial and other current assets | 613 |
| Cash and cash equivalents | 242 |
| Deferred tax liabilities | -799 |
| Current and non-current financial debts | -852 |
| Current and non-current lease liabilities | -47 |
| Trade payables and other liabilities | -297 |
| **Net identifiable assets acquired** | **2 003** |
| Non-controlling interests | -75 |
| Goodwill | 2 701 |
| **Total purchase consideration for business combinations** | **4 629** |

---

The significant business combinations in 2024 were Kate Therapeutics, Mariana Oncology and MorphoSys. The goodwill arising out of 2024 business combinations is not tax deductible and is attributable to synergies, including the cost synergies from pre-acquisition in-licensed IP from MorphoSys, accounting for deferred tax liabilities on acquired assets, and the assembled workforce. In the second half of 2024, an impairment of goodwill was recognized related to the MorphoSys business acquisition of USD 0.9 billion. See Acquisition of MorphoSys AG section of this Note 2 for additional information.

The following are the significant acquisitions where Novartis elected to apply the optional concentration test, resulting in the transaction being accounted for as assets separately acquired rather than as a business combination within the meaning of IFRS Accounting Standards.

**2025**

**Acquisition of Tourmaline Bio, Inc.**

On September 8, 2025, Novartis entered into an agreement and plan of merger to acquire Tourmaline Bio, Inc. ("Tourmaline"), a US-based, publicly traded clinical-stage biopharmaceutical company focused on developing a treatment option for atherosclerotic cardiovascular disease.

Pursuant to the Merger Agreement, on September 29, 2025, Novartis, through an indirect, wholly owned subsidiary, commenced a tender offer (the "Offer") to acquire all of the outstanding shares of common stock of Tourmaline in exchange for USD 48.00 in cash per share. The tender offer expired at one minute past 11:59 p.m., New York City time on October 27, 2025 with a payment on October 28, 2025 in the amount of USD 1.4 billion for the tendered outstanding shares to the Tourmaline shareholders. On October 28, 2025, the acquiring subsidiary merged with and into Tourmaline, resulting in Tourmaline becoming an indirect wholly owned subsidiary of Novartis, and Tourmaline shares admitted to trading on NASDAQ were delisted.

The cash purchase price consisted of cash consideration of USD 1.4 billion. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets acquired was concentrated in an identifiable IPR&D intangible asset.

The cash purchase price was allocated to an IPR&D intangible asset of USD 1.2 billion, and other net assets including cash and cash equivalents of USD 0.2 billion.

**Option agreement to acquire a private clinical-stage biotech company** 

On September 16, 2025, Novartis entered into an agreement granting it an option to acquire all outstanding shares of a private clinical-stage biotech company (the "Biotech company"). The option is subject to pre-defined terms and is exercisable at Novartis sole discretion. Management concluded that the terms of the option agreement conferred substantive control over the Biotech company, in accordance with the principles of IFRS Accounting Standards. Consequently, the Biotech company was consolidated into Novartis consolidated financial statements effective from September 2025.

If Novartis decides to exercise the option to acquire, it would make a payment to the Biotech company's shareholders, with potential additional payments, which they are eligible to receive upon achievement of specified milestones. The optional concentration test was applied as it indicated that substantially all of the fair value of the

gross assets at the consolidation date was concentrated in an identifiable IPR&D intangible asset.

The purchase price as at the option agreement date was USD 0.4 billion. The amount was allocated to the net assets at the consolidation date, including USD 0.4 billion IPR&D intangible assets and USD 18 million in cash and cash equivalents. A non-controlling interest of USD 0.4 billion was recognized in equity. Subsequent milestone-related payments will be recognized as additions to the intangible asset when the specified milestones are achieved.

**Acquisition of Regulus Therapeutics Inc.**

On April 29, 2025, Novartis entered into an agreement and plan of merger to acquire Regulus Therapeutics Inc. ("Regulus"), a US-based, publicly traded clinical-stage biopharmaceutical company focused on developing microRNA therapeutics. Regulus lead development phase asset, farabursen, is a potential first-in-class, next-generation oligonucleotide targeting miR-17 for the treatment of autosomal dominant polycystic kidney disease (ADPKD).

Pursuant to the merger agreement, on May 27, 2025, Novartis, through an indirect, wholly owned subsidiary, commenced a tender offer (the "Offer") to acquire all of the outstanding shares of common stock of Regulus in exchange for (i) USD 7.00 in cash per Share, plus (ii) one contingent value right (each, a "CVR") per Share, representing the right to receive one contingent payment of USD 7.00 in cash upon the achievement of a speciﬁed regulatory milestone. The tender offer expired at one minute past 11:59 p.m., New York City time on June 24, 2025 with a payment of USD 0.7 billion for the outstanding shares to the Regulus shareholders for their tendered shares and the issuance of 1 CVR per share. Additionally, the liability related to the Regulus employee share plans amounted to USD 0.1 billion and was paid on July 11, 2025, with the issuance of 1 CVR per share. On June 25, 2025, the acquiring subsidiary merged with and into Regulus, resulting in Regulus becoming an indirect wholly owned subsidiary of Novartis, and Regulus shares admitted to trading on NASDAQ were delisted.

The purchase price consisted of cash consideration of USD 0.8 billion and CVRs of up to USD 0.9 billion, which Regulus shareholders are eligible to receive upon the achievement of a specified regulatory milestone. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets acquired was concentrated in an identifiable IPR&D intangible asset.

The cash purchase price was allocated to an IPR&D intangible asset of USD 0.8 billion, and other net assets including cash and cash equivalents of USD 23 million. Subsequent payments for the potential CVRs upon achievement of the speciﬁed regulatory milestone will be recognized as additions to the intangible asset if the speciﬁed regulatory milestone is achieved.

**Acquisition of Anthos Therapeutics, Inc.**

On February 10, 2025, Novartis entered into an agreement and plan of merger to acquire all of the outstanding shares of common stock of Anthos Therapeutics, Inc. ("Anthos"), a US-based, clinical stage biopharmaceutical company with abelacimab, a late-stage medicine in development for the prevention of stroke and systematic embolism in patients with atrial fibrillation. The transaction closed on April 3, 2025.

The purchase price consisted of cash consideration of USD 0.9 billion and potential additional milestones of up to USD 2.1 billion, which Anthos shareholders are eligible to receive upon the achievement of specified milestones. The optional concentration test was applied as it indicated that substantially all of the fair value of the gross assets acquired was concentrated in an identifiable IPR&D intangible asset.

The cash purchase price was allocated to an IPR&D intangible asset of USD 0.9 billion, and other net assets including cash and cash equivalents of USD 47 million. Subsequent payments for the potential additional milestones will be recognized as additions to the intangible asset when the specified milestones have been achieved.

**2024**

There were no acquisitions in 2024 where the Company elected to apply the optional concentration test to account for the acquisitions as assets separately acquired.

**2023**

There were no acquisitions in 2023 where the Company elected to apply the optional concentration test to account for the acquisitions as assets separately acquired.

**Identifiable net assets acquired through acquisitions applying the optional concentration test**

In 2025, the following table presents the identifiable net assets acquired through acquisitions applying the optional concentration test:

---

| | |
|:---|:---|
| (USD millions) | **2025** |
| Property, plant and equipment | 4 |
| Right-of-use assets | 8 |
| In-process research and development | 3 157 |
| Deferred tax assets <sup>1</sup> | 180 |
| Non-current financial and other assets | 21 |
| Other current assets | 46 |
| Cash and cash equivalents | 320 |
| Current and non-current lease liabilities | -8 |
| Trade payables and other liabilities | -151 |
| **Identifiable net assets acquired through acquisitions applying the optional concentration test** | **3 577** |
|  <sup>1</sup> Deferred tax assets are attributable to tax loss and tax credit carryforwards. | <sup>1</sup> Deferred tax assets are attributable to tax loss and tax credit carryforwards. |

---

For significant pending transactions, see Note 27. Commitments and contingent liabilities – Other commitments.

**Distribution of Sandoz Group AG to Novartis AG shareholders**

On July 18, 2023, Novartis announced that its Board of Directors had unanimously endorsed the proposed separation of the Sandoz business to create an independent company by way of a spin-off and to seek shareholder approval for the spin-off of the Sandoz business into a separately traded standalone company, following the complete structural separation of the Sandoz business into a standalone company (the Sandoz business or Sandoz Group AG) and subject to the satisfaction of certain conditions and Novartis AG shareholder approval.

At the EGM held on September 15, 2023, Novartis AG shareholders approved a special distribution by way of a dividend in kind to effect the spin-off of Sandoz Group AG, subject to the completion of certain conditions precedent to the distribution. Upon shareholder approval, the Sandoz business was reported as discontinued operations and the distribution liability was recognized at its fair value, which exceeded the carrying value of the Sandoz business net assets.

The conditions precedent to the spin-off were met and on October 3, 2023 the spin-off of the Sandoz business was effected by way of a distribution of a dividend in kind of Sandoz Group AG shares to Novartis AG shareholders and American Depositary Receipt (ADR) holders (the Distribution). Through the Distribution, each Novartis AG shareholder received one Sandoz Group AG share for every five Novartis AG shares and each Novartis ADR holder received one Sandoz ADR for every five Novartis ADR that they held at the close of business on October 3, 2023. As of October 4, 2023, the shares of Sandoz Group AG have been listed on the SIX Swiss Exchange (SIX) under the stock symbol "SDZ".

On September 18, 2023, the Sandoz business entered into financing arrangements with a group of banks under which on September 28, 2023, it borrowed a total amount of USD 3.3 billion. These borrowings consisted of a bridge loan in EUR (EUR 2.4 billion) and term loans in EUR (EUR 0.2 billion) and USD (USD 0.5 billion). In addition, the Sandoz business borrowed approximately USD 0.4 billion under a number of local bilateral facilities in different countries. This resulted in a total gross debt of USD 3.7 billion. These outstanding borrowings of the Sandoz business legal entities were recognized in the September 30, 2023 consolidated balance sheet within Liabilities related to discontinued operations and within financing activities cash flows from discontinued operations. Prior to the Distribution on October 3, 2023, Sandoz business legal entities paid approximately USD 3.3 billion in cash to Novartis and its affiliates through a series of intercompany transactions.

At the Distribution date on October 3, 2023, the dividend in kind distribution liability to effect the Distribution (spin-off) of the Sandoz business amounted to USD 14.0 billion, measured by reference to the October 4, 2023 opening Sandoz Group AG share price and applying a control premium. The dividend in kind distribution liability was recorded as a reduction to equity (retained earnings) and remained in excess of the then carrying value of the Sandoz business net assets, which amounted to USD 8.6 billion.

Certain consolidated foundations own Novartis AG dividend-bearing shares that restricts their availability for use by Novartis. These Novartis AG shares are accounted for as treasury shares. Through the Distribution, these foundations received Sandoz Group AG shares representing an approximate 4.31% equity interest in Sandoz Group AG. Upon the loss of control of Sandoz Group AG through the Distribution on October 3, 2023, the financial investment in Sandoz Group AG was recognized at its initial fair value based on the opening traded share price of Sandoz Group AG on October 4, 2023 (a Level 1 hierarchy valuation). At initial recognition, on October 4, 2023, the Sandoz Group AG financial investment had a fair value of USD 0.5 billion, and was reported in the fourth quarter of 2023 on the consolidated balance sheet as a financial asset. Management has designated this investment at fair value through other comprehensive income.

The total non-taxable, non-cash gain recognized at the Distribution date of the spin-off of the Sandoz business amounted to USD 5.9 billion, which consisted of:

---

| | |
|:---|:---|
| <br>(USD millions) | Oct 3,<br> 2023 |
| Net assets derecognized <sup>1</sup> | -8 647 |
| Derecognition of distribution liability | 13 962 |
| **Difference between net assets and distribution liability** | **5 315** |
| Recognition of Sandoz Group AG shares obtained through consolidated foundations | 492 |
| Currency translation gains recycled into the consolidated income statement | 357 |
| Transaction costs and other items recognized in the consolidated income statement | -304 |
| **Gain on distribution of Sandoz Group AG to Novartis AG shareholders** | **5 860** |
|  <sup>1</sup> See Note 29 for additional information. | <sup>1</sup> See Note 29 for additional information. |

---

For additional disclosures on discontinued operations, refer to Note 29.

3. Operating segment

Following the September 15, 2023, shareholder approval of the spin-off of the Sandoz business (see Note 1 and Note 2), the Company reported its consolidated financial statements as "continuing operations" and "discontinued operations" (see Note 1).

Continuing operations include the retained business activities of Novartis, comprising the innovative medicines business (previously the Innovative Medicines Division) and the continuing corporate activities.

Discontinued operations include the Sandoz generic pharmaceuticals and biosimilars business (the Sandoz Division) and certain corporate activities attributable to the Sandoz business, as well as certain expenses related to the spin-off. Included in 2023 is also the IFRS Accounting Standards non-cash, non-taxable net gain on the Distribution of Sandoz Group AG to Novartis AG shareholders. For further details and disclosures on discontinued operations, refer to Note 1, Note 2 and Note 29.

The Company's continuing operations are engaged in the research, development, manufacturing, distribution, marketing and sale of a broad range of innovative pharmaceutical medicines.

Following the spin-off of the Sandoz business, on October 3, 2023, Novartis operates as a single global operating segment innovative medicines company that is engaged in the research, development, manufacturing, distribution, marketing and sale of a broad range of innovative pharmaceutical medicines, with a focus on the core therapeutic areas: cardiovascular, renal and metabolic; immunology; neuroscience; oncology; and established brands. The Company's research, development, manufacturing, and supply of products and functional activities are managed globally on a vertically integrated basis. Commercial efforts that coordinate marketing, sales and distribution of these products are organized by geographic region, therapeutic area and established brands.

The Executive Committee of Novartis (ECN), chaired by the CEO, is the governance body responsible for allocating resources and assessing the business performance of the operating segment of the Company on a global basis and is the chief operating decision-maker (CODM) for the Company.

The determination of a single operating segment is consistent with the financial information regularly reviewed by the CODM for purposes of assessing performance and allocating resources.

See Note 4 for revenues and geographic information disclosures.

4. Revenues and geographic information

**Net sales information**

Net sales from continuing operations comprise the following:

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| **Net sales to third parties from continuing operations** | **54 532** | **50 317** | **44 635** |
| Sales to discontinued operations |  |  | 805 |
| **Net sales from continuing operations** | **54 532** | **50 317** | **45 440** |

---

**Geographic information**

The following table shows countries that accounted for more than 5% of net sales from continuing operations for the years ended December 31, 2025, 2024 and 2023, or more than 5% of total of selected non-current assets, for the years ended December 31, 2025 and 2024:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Net sales from continuing operations<sup>1</sup> | Net sales from continuing operations<sup>1</sup> | Net sales from continuing operations<sup>1</sup> | Net sales from continuing operations<sup>1</sup> | Net sales from continuing operations<sup>1</sup> | Net sales from continuing operations<sup>1</sup> | Total of selected non-current assets<sup>2</sup> | Total of selected non-current assets<sup>2</sup> | Total of selected non-current assets<sup>2</sup> | Total of selected non-current assets<sup>2</sup> |
| (USD millions) | **2025** | **%** | 2024 | % | 2023 | % | **2025** | **%** | 2024 | % |
| **Country** |  |  |  |  |  |  |  |  |  |  |
| Switzerland | 1 394 | 3 | 1 315 | 3 | 1 308 | 3 | 21 137 | 31 | 18 759 | 30 |
| United States | 23 331 | 43 | 21 146 | 42 | 17 959 | 40 | 36 272 | 53 | 34 999 | 55 |
| China | 4 188 | 8 | 3 890 | 8 | 3 267 | 7 | 565 | 1 | 530 | 1 |
| Germany | 3 935 | 7 | 3 660 | 7 | 3 367 | 7 | 1 661 | 2 | 1 554 | 2 |
| Other | 21 684 | 39 | 20 306 | 40 | 19 539 | 43 | 8 302 | 13 | 7 243 | 12 |
| **Total** | **54 532** | **100** | **50 317** | **100** | **45 440** | **100** | **67 937** | **100** | **63 085** | **100** |
|  <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer |
|  <sup>2</sup> Total of property, plant and equipment; right-of-use assets; goodwill; intangible assets other than goodwill; investment in associated companies and other non-current assets excluding post-employment benefit assets | <sup>2</sup> Total of property, plant and equipment; right-of-use assets; goodwill; intangible assets other than goodwill; investment in associated companies and other non-current assets excluding post-employment benefit assets | <sup>2</sup> Total of property, plant and equipment; right-of-use assets; goodwill; intangible assets other than goodwill; investment in associated companies and other non-current assets excluding post-employment benefit assets | <sup>2</sup> Total of property, plant and equipment; right-of-use assets; goodwill; intangible assets other than goodwill; investment in associated companies and other non-current assets excluding post-employment benefit assets | <sup>2</sup> Total of property, plant and equipment; right-of-use assets; goodwill; intangible assets other than goodwill; investment in associated companies and other non-current assets excluding post-employment benefit assets | <sup>2</sup> Total of property, plant and equipment; right-of-use assets; goodwill; intangible assets other than goodwill; investment in associated companies and other non-current assets excluding post-employment benefit assets | <sup>2</sup> Total of property, plant and equipment; right-of-use assets; goodwill; intangible assets other than goodwill; investment in associated companies and other non-current assets excluding post-employment benefit assets | <sup>2</sup> Total of property, plant and equipment; right-of-use assets; goodwill; intangible assets other than goodwill; investment in associated companies and other non-current assets excluding post-employment benefit assets | <sup>2</sup> Total of property, plant and equipment; right-of-use assets; goodwill; intangible assets other than goodwill; investment in associated companies and other non-current assets excluding post-employment benefit assets | <sup>2</sup> Total of property, plant and equipment; right-of-use assets; goodwill; intangible assets other than goodwill; investment in associated companies and other non-current assets excluding post-employment benefit assets | <sup>2</sup> Total of property, plant and equipment; right-of-use assets; goodwill; intangible assets other than goodwill; investment in associated companies and other non-current assets excluding post-employment benefit assets |

---

**Net sales from continuing operations by region**<sup>1</sup>

The following table shows net sales from continuing operations by region for the years ended December 31, 2025, 2024 and 2023:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **<br>2025<br> USD m** | <br>2024<br> USD m | Change<br> (2024<br> to 2025)<br> USD % | <br>2023<br> USD m | Change<br> (2023<br> to 2024)<br> USD % |
| US | 23 331 | 21 146 | 10 | 17 959 | 18 |
| Europe | 16 729 | 15 557 | 8 | 14 997 | 4 |
| Asia/Africa/Australasia | 10 797 | 10 021 | 8 | 9 308 | 8 |
| Canada and Latin America | 3 675 | 3 593 | 2 | 3 176 | 13 |
| **Total** | **54 532** | **50 317** | **8** | **45 440** | **11** |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Of which in established markets* | 40 555 | 37 371 | 9 | 33 725 | 11 |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Of which in emerging growth markets* | 13 977 | 12 946 | 8 | 11 715 | 11 |
|  <sup>1</sup> Net sales from continuing operations by location of customer. Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. | <sup>1</sup> Net sales from continuing operations by location of customer. Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. | <sup>1</sup> Net sales from continuing operations by location of customer. Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. | <sup>1</sup> Net sales from continuing operations by location of customer. Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. | <sup>1</sup> Net sales from continuing operations by location of customer. Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. | <sup>1</sup> Net sales from continuing operations by location of customer. Emerging growth markets comprise all markets other than the established markets of the US, Canada, Western Europe, Japan, Australia and New Zealand. Novartis definition of Western Europe includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, Malta, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |

---

**Information about major customers**

The Company's largest, second-largest and third-largest customers account for approximately 18%, 13% and 7% of net sales from third parties from continuing operations, respectively (2024: 17%, 13% and 7%, respectively; 2023: 15%, 13% and 8%, respectively).

The top three largest customer's trade receivables outstanding amounted to approximately 16%, 12% and 6%, respectively, of the trade receivables at December 31, 2025 (2024: 19%, 12% and 7%, respectively).

**Net sales from continuing operations by core therapeutic area and established brands**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **<br>2025<br> USD m** | <br>2024<br> USD m<sup>1</sup> | Change<br> (2024 to<br> 2025)<br> USD % | <br>2023<br> USD m<sup>1</sup> | Change<br> (2023 to<br> 2024)<br> USD % |
| **Cardiovascular, renal and metabolic** |  |  |  |  |  |
| *Entresto* | 7 748 | 7 822 | -1 | 6 035 | 30 |
| *Leqvio* | 1 198 | 754 | 59 | 355 | 112 |
| *Vanrafia* | 13 |  | nm |  | nm |
| **Total cardiovascular, renal and metabolic** | **8 959** | **8 576** | **4** | **6 390** | **34** |
| **Immunology** |  |  |  |  |  |
| *Cosentyx* | 6 668 | 6 141 | 9 | 4 980 | 23 |
| *Ilaris* | 1 883 | 1 509 | 25 | 1 355 | 11 |
| *Xolair <sup>2</sup>* | 1 723 | 1 643 | 5 | 1 463 | 12 |
| *Rhapsido* | 19 |  | nm |  | nm |
| **Total immunology** | **10 293** | **9 293** | **11** | **7 798** | **19** |
| **Neuroscience** |  |  |  |  |  |
| *Kesimpta* | 4 426 | 3 224 | 37 | 2 171 | 49 |
| *Zolgensma* Group | 1 232 | 1 214 | 1 | 1 214 | 0 |
| *Aimovig* | 335 | 312 | 7 | 266 | 17 |
| **Total neuroscience** | **5 993** | **4 750** | **26** | **3 651** | **30** |
| **Oncology** |  |  |  |  |  |
| *Kisqali* | 4 783 | 3 033 | 58 | 2 080 | 46 |
| *Tafinlar* + *Mekinist* | 2 215 | 2 058 | 8 | 1 922 | 7 |
| *Jakavi* | 2 110 | 1 936 | 9 | 1 720 | 13 |
| *Pluvicto* | 1 994 | 1 392 | 43 | 980 | 42 |
| *Promacta/Revolade* | 1 636 | 2 216 | -26 | 2 269 | -2 |
| *Scemblix* | 1 285 | 689 | 87 | 413 | 67 |
| *Tasigna* | 1 104 | 1 671 | -34 | 1 848 | -10 |
| *Lutathera* | 816 | 724 | 13 | 605 | 20 |
| *Fabhalta <sup>3</sup>* | 505 | 129 | 291 | 1 | nm |
| *Piqray/Vijoice* | 382 | 449 | -15 | 505 | -11 |
| **Total oncology** | **16 830** | **14 297** | **18** | **12 343** | **16** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **<br>2025<br> USD m** | <br>2024<br> USD m<sup>1</sup> | Change<br> (2024 to<br> 2025)<br> USD % | <br>2023<br> USD m<sup>1</sup> | Change<br> (2023 to<br> 2024)<br> USD % |
| **Established brands** |  |  |  |  |  |
| *Sandostatin* Group | 1 213 | 1 279 | -5 | 1 314 | -3 |
| *Exforge* Group | 727 | 703 | 3 | 713 | -1 |
| *Lucentis* | 643 | 1 044 | -38 | 1 475 | -29 |
| *Diovan* Group | 604 | 590 | 2 | 613 | -4 |
| *Galvus* Group | 487 | 602 | -19 | 692 | -13 |
| *Kymriah* | 381 | 443 | -14 | 508 | -13 |
| Contract manufacturing <sup>4</sup> | 1 419 | 1 152 | 23 | 1 490 | -23 |
| Other <sup>4</sup> | 6 983 | 7 588 | -8 | 8 453 | -10 |
| **Total established brands <sup>4</sup>** | **12 457** | **13 401** | **-7** | **15 258** | **-12** |
| **Total net sales from continuing operations** | **54 532** | **50 317** | **8** | **45 440** | **11** |
|  <sup>1</sup> Reclassified to conform with 2025 presentation of brands by therapeutic area and established brands. | <sup>1</sup> Reclassified to conform with 2025 presentation of brands by therapeutic area and established brands. | <sup>1</sup> Reclassified to conform with 2025 presentation of brands by therapeutic area and established brands. | <sup>1</sup> Reclassified to conform with 2025 presentation of brands by therapeutic area and established brands. | <sup>1</sup> Reclassified to conform with 2025 presentation of brands by therapeutic area and established brands. | <sup>1</sup> Reclassified to conform with 2025 presentation of brands by therapeutic area and established brands. |
|  <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. |
|  <sup>3</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. |
|  <sup>4</sup> Effective January 1, 2023, the discontinued operations Sandoz business transferred to Novartis continuing operations its bio-technology manufacturing services to other companies' activities (included in Contract manufacturing) and the *Coartem* brand (included in Other). | <sup>4</sup> Effective January 1, 2023, the discontinued operations Sandoz business transferred to Novartis continuing operations its bio-technology manufacturing services to other companies' activities (included in Contract manufacturing) and the *Coartem* brand (included in Other). | <sup>4</sup> Effective January 1, 2023, the discontinued operations Sandoz business transferred to Novartis continuing operations its bio-technology manufacturing services to other companies' activities (included in Contract manufacturing) and the *Coartem* brand (included in Other). | <sup>4</sup> Effective January 1, 2023, the discontinued operations Sandoz business transferred to Novartis continuing operations its bio-technology manufacturing services to other companies' activities (included in Contract manufacturing) and the *Coartem* brand (included in Other). | <sup>4</sup> Effective January 1, 2023, the discontinued operations Sandoz business transferred to Novartis continuing operations its bio-technology manufacturing services to other companies' activities (included in Contract manufacturing) and the *Coartem* brand (included in Other). | <sup>4</sup> Effective January 1, 2023, the discontinued operations Sandoz business transferred to Novartis continuing operations its bio-technology manufacturing services to other companies' activities (included in Contract manufacturing) and the *Coartem* brand (included in Other). |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |
| nm = not meaningful | nm = not meaningful | nm = not meaningful | nm = not meaningful | nm = not meaningful | nm = not meaningful |

---

**Net sales from continuing operations**<sup>1</sup> **of the top 20 brands in 2025**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Brands** | **Brand classification by therapeutic area or established brands** | **&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Key indications** | &nbsp;&nbsp;&nbsp;&nbsp;US USD m | Rest of world USD m | **&nbsp;&nbsp;&nbsp;&nbsp;Total USD m** |
| *Entresto* | Cardiovascular, renal and metabolic | Chronic heart failure, hypertension | 3 285 | 4 463 | 7 748 |
| *Cosentyx* | Immunology  | Psoriasis (PsO), ankylosing spondylitis (AS), psoriatic arthritis (PsA), non-radiographic axial spondyloarthritis (nr-axSPA), hidradenitis suppurativa (HS) | 3 839 | 2 829 | 6 668 |
| *Kisqali* | Oncology  | HR+/HER2- metastatic breast cancer and early breast cancer | 2 975 | 1 808 | 4 783 |
| *Kesimpta* | Neuroscience  | Relapsing forms of multiple sclerosis (MS) | 2 943 | 1 483 | 4 426 |
| *Tafinlar* + *Mekinist* | Oncology  | BRAF V600+ metastatic and adjuvant melanoma, advanced non-small cell lung cancer (NSCLC), tumor agnostic with BRAF mutation indication, pediatric low grade glioma (pLGG) | 867 | 1 348 | 2 215 |
| *Jakavi* | Oncology  | Myelofibrosis (MF), polycythemia vera (PV), graft-versus-host disease (GvHD) |  | 2 110 | 2 110 |
| *Pluvicto* | Oncology  | PSMA-positive mCRPC patients post-ARPI, pre- and post-Taxane | 1 596 | 398 | 1 994 |
| *Ilaris* | Immunology  | Auto-inflammatory (CAPS, TRAPS, HIDS/MKD, FMF, SJIA, AOSD, gout) | 1 041 | 842 | 1 883 |
| *Xolair <sup>2</sup>* | Immunology  | Severe allergic asthma (SAA), chronic spontaneous urticaria (CSU), nasal polyps, food allergy (FA) |  | 1 723 | 1 723 |
| *Promacta/Revolade* | Oncology  | Immune thrombocytopenia (ITP), severe aplastic anemia (SAA) | 636 | 1 000 | 1 636 |
| *Scemblix* | Oncology  | Philadelphia chromosome-positive chronic myeloid leukemia (Ph+ CML) in chronic phase (CP); Ph+ CML in CP with the T315I mutation | 824 | 461 | 1 285 |
| *Zolgensma* Group | Neuroscience  | Spinal muscular atrophy (SMA) | 413 | 819 | 1 232 |
| *Sandostatin* Group | Established brands  | Carcinoid tumors, acromegaly | 729 | 484 | 1 213 |
| *Leqvio* | Cardiovascular, renal and metabolic  | Atherosclerotic cardiovascular disease (ASCVD) | 575 | 623 | 1 198 |
| *Tasigna* | Oncology  | Chronic myeloid leukemia (CML) | 486 | 618 | 1 104 |
| *Lutathera* | Oncology  | GEP-NETs gastroenteropancreatic neuroendocrine tumors | 588 | 228 | 816 |
| *Exforge* Group | Established brands | Hypertension | 5 | 722 | 727 |
| *Lucentis* | Established brands  | Age-related macular degeneration (AMD), diabetic macular edema (DME), retinal vein occlusion (RVO) |  | 643 | 643 |
| *Diovan* Group | Established brands | Hypertension | 35 | 569 | 604 |
| *Fabhalta <sup>3</sup>* | Oncology  | Paroxysmal Nocturnal Hemoglobinuria (PNH), IgA Nephropathy (IgAN), Adult C3 Glomerulopathy (C3G) | 317 | 188 | 505 |
| **Top 20 brands total** | **Top 20 brands total** | **Top 20 brands total** | **21 154** | **23 359** | **44 513** |
| Rest of portfolio | Rest of portfolio | Rest of portfolio | 2 177 | 7 842 | 10 019 |
| **Total net sales from continuing operations** | **Total net sales from continuing operations** | **Total net sales from continuing operations** | **23 331** | **31 201** | **54 532** |
|  <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer |
|  <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. |
|  <sup>3</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. | <sup>3</sup> Net sales from continuing operations reflect *Fabhalta* sales for all indications. |

---

**Net sales from continuing operations**<sup>1</sup> **of the top 20 brands in 2024**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Brands** | **Brand classification by therapeutic area or established brands** | **&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Key indications** | &nbsp;&nbsp;&nbsp;&nbsp;US USD m | Rest of world USD m | **&nbsp;&nbsp;&nbsp;&nbsp;Total USD m** |
| *Entresto* | Cardiovascular, renal and metabolic | Chronic heart failure, hypertension | 4 052 | 3 770 | 7 822 |
| *Cosentyx* | Immunology  | Psoriasis (PsO), ankylosing spondylitis (AS), psoriatic arthritis (PsA), non-radiographic axial spondyloarthritis (nr-axSPA), hidradenitis suppurativa (HS) | 3 530 | 2 611 | 6 141 |
| *Kesimpta* | Neuroscience  | Relapsing forms of multiple sclerosis (MS) | 2 183 | 1 041 | 3 224 |
| *Kisqali* | Oncology  | HR+/HER2- metastatic breast cancer and early breast cancer | 1 678 | 1 355 | 3 033 |
| *Promacta/Revolade* | Oncology  | Immune thrombocytopenia (ITP), severe aplastic anemia (SAA) | 1 181 | 1 035 | 2 216 |
| *Tafinlar* + *Mekinist* | Oncology  | BRAF V600+ metastatic and adjuvant melanoma, advanced non-small cell lung cancer (NSCLC), tumor agnostic with BRAF mutation indication, pediatric low grade glioma (pLGG) | 848 | 1 210 | 2 058 |
| *Jakavi* | Oncology  | Myelofibrosis (MF), polycytomia vera (PV), graft-versus-host disease (GvHD) |  | 1 936 | 1 936 |
| *Tasigna* | Oncology | Chronic myeloid leukemia (CML) | 848 | 823 | 1 671 |
| *Xolair <sup>2</sup>* | Immunology  | Severe allergic asthma (SAA), chronic spontaneous urticaria (CSU), nasal polyps, food allergy (FA) |  | 1 643 | 1 643 |
| *Ilaris* | Immunology  | Auto-inflammatory (CAPS, TRAPS, HIDS/MKD, FMF, SJIA, AOSD, gout) | 798 | 711 | 1 509 |
| *Pluvicto* | Oncology  | PSMA-positive mCRPC patients post-ARPI, post-Taxane | 1 157 | 235 | 1 392 |
| *Sandostatin* Group | Established brands | Carcinoid tumors, acromegaly | 805 | 474 | 1 279 |
| *Zolgensma* | Neuroscience | Spinal muscular atrophy (SMA) | 435 | 779 | 1 214 |
| *Lucentis* | Established brands  | Age-related macular degeneration (AMD), diabetic macular edema (DME), retinal vein occlusion (RVO) |  | 1 044 | 1 044 |
| *Leqvio* | Cardiovascular, renal and metabolic  | Atherosclerotic cardiovascular disease (ASCVD) | 385 | 369 | 754 |
| *Lutathera* | Oncology  | GEP-NETs gastroenteropancreatic neuroendocrine tumors | 513 | 211 | 724 |
| *Exforge* Group | Established brands | Hypertension | 8 | 695 | 703 |
| *Scemblix* | Oncology  | Philadelphia chromosome-positive chronic myeloid leukemia (Ph+ CML) in chronic phase (CP); Ph+ CML in CP with the T315I mutation | 436 | 253 | 689 |
| *Galvus* Group | Established brands | Type 2 diabetes |  | 602 | 602 |
| *Diovan* Group | Established brands | Hypertension | 28 | 562 | 590 |
| **Top 20 brands total** |  |  | **18 885** | **21 359** | **40 244** |
| Rest of portfolio |  |  | 2 261 | 7 812 | 10 073 |
| **Total net sales from continuing operations** | **Total net sales from continuing operations** | **Total net sales from continuing operations** | **21 146** | **29 171** | **50 317** |
|  <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer |
|  <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. |

---

**Net sales from continuing operations**<sup>1</sup> **of the top 20 brands in 2023**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Brands** | **Brand classification by therapeutic area or established brands** | **&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Key indications** | &nbsp;&nbsp;&nbsp;&nbsp;US USD m | Rest of world USD m | **&nbsp;&nbsp;&nbsp;&nbsp;Total USD m** |
| *Entresto* | Cardiovascular, renal and metabolic | Chronic heart failure, hypertension | 3 067 | 2 968 | 6 035 |
| *Cosentyx* | Immunology  | Psoriasis (PsO), ankylosing spondylitis (AS), psoriatic arthritis (PsA), non-radiographic axial spondyloarthritis (nr-axSPA), hidradenitis suppurativa (HS) | 2 636 | 2 344 | 4 980 |
| *Promacta/Revolade* | Oncology  | Immune thrombocytopenia (ITP), severe aplastic anemia (SAA) | 1 205 | 1 064 | 2 269 |
| *Kesimpta* | Neuroscience  | Relapsing-remitting multiple sclerosis (RRMS) | 1 528 | 643 | 2 171 |
| *Kisqali* | Oncology  | HR+/HER2- metastatic breast cancer | 1 032 | 1 048 | 2 080 |
| *Tafinlar* + *Mekinist* | Oncology  | BRAF V600+ metastatic adjuvant melanoma, advanced non-small cell lung cancer (NSCLC), tumor agnostic with BRAF mutation indication | 791 | 1 131 | 1 922 |
| *Tasigna* | Oncology | Chronic myeloid leukemia (CML) | 884 | 964 | 1 848 |
| *Jakavi* | Oncology  | Myelofibrosis (MF), polycytomia vera (PV), graft-versus-host disease (GvHD) |  | 1 720 | 1 720 |
| *Lucentis* | Established brands  | Age-related macular degeneration (AMD), diabetic macular edema (DME), retinal vein occlusion (RVO) |  | 1 475 | 1 475 |
| *Xolair <sup>2</sup>* | Immunology  | Severe allergic asthma (SAA), chronic spontaneous urticaria (CSU), nasal polyps |  | 1 463 | 1 463 |
| *Ilaris* | Immunology  | Auto-inflammatory (CAPS, TRAPS, HIDS/MKD, FMF, SJIA, AOSD gout) | 686 | 669 | 1 355 |
| *Sandostatin* Group | Established brands | Carcinoid tumors, acromegaly | 829 | 485 | 1 314 |
| *Zolgensma* | Neuroscience | Spinal muscular atrophy (SMA) | 372 | 842 | 1 214 |
| *Pluvicto* | Oncology  | PSMA-positive mCRPC patients post-ARPI, post-Taxane | 921 | 59 | 980 |
| *Gilenya* | Established brands | Relapsing multiple sclerosis (RMS) | 359 | 566 | 925 |
| *Exforge* Group | Established brands | Hypertension | 13 | 700 | 713 |
| *Galvus* Group | Established brands | Type 2 diabetes |  | 692 | 692 |
| *Diovan* Group | Established brands | Hypertension | 52 | 561 | 613 |
| *Lutathera* | Oncology  | GEP-NETs gastroenteropancreatic neuroendocrine tumors | 427 | 178 | 605 |
| *Gleevec/Glivec* | Established brands  | Chronic myeloid leukemia (CML), gastrointestinal stromal tumors (GIST) | 150 | 411 | 561 |
| **Top 20 brands total** |  |  | **14 952** | **19 983** | **34 935** |
| Rest of portfolio |  |  | 3 007 | 7 498 | 10 505 |
| **Total net sales from continuing operations** | **Total net sales from continuing operations** | **Total net sales from continuing operations** | **17 959** | **27 481** | **45 440** |
|  <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer | <sup>1</sup> Net sales from continuing operations by location of customer |
|  <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. | <sup>2</sup> Net sales from continuing operations reflect *Xolair* sales for all indications. |

---

**Other revenues**

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| Profit-sharing income | 1 341 | 1 063 | 941 |
| Royalty income <sup>1</sup> | 379 | 37 | 87 |
| Milestone income | 117 | 28 | 45 |
| Other <sup>2</sup> | 305 | 277 | 147 |
| **Total other revenues** | **2 142** | **1 405** | **1 220** |
|  <sup>1</sup> In 2025, royalty income includes a royalty settlement of USD 0.3 billion. | <sup>1</sup> In 2025, royalty income includes a royalty settlement of USD 0.3 billion. | <sup>1</sup> In 2025, royalty income includes a royalty settlement of USD 0.3 billion. | <sup>1</sup> In 2025, royalty income includes a royalty settlement of USD 0.3 billion. |
|  <sup>2</sup> Other includes revenue from activities such as manufacturing or other services rendered, to the extent such revenue is not recorded under net sales to third parties from continuing operations | <sup>2</sup> Other includes revenue from activities such as manufacturing or other services rendered, to the extent such revenue is not recorded under net sales to third parties from continuing operations | <sup>2</sup> Other includes revenue from activities such as manufacturing or other services rendered, to the extent such revenue is not recorded under net sales to third parties from continuing operations | <sup>2</sup> Other includes revenue from activities such as manufacturing or other services rendered, to the extent such revenue is not recorded under net sales to third parties from continuing operations |

---

5. Interest expense and other financial income and expense

**Interest expense**

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| Interest expense | -1 004 | -871 | -730 |
| Interest expense on lease liabilities | -76 | -72 | -62 |
| Expense arising from discounting long-term liabilities | -72 | -68 | -66 |
| Capitalized borrowing costs | 8 | 5 | 3 |
| **Total interest expense from continuing operations** | **-1 144** | **-1 006** | **-855** |

---

**Other financial income and expense**

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| Interest income | 373 | 568 | 627 |
| Other financial income <sup>1</sup> | 5 | 92 | 21 |
| Monetary loss from hyperinflation accounting | -105 | -231 | -194 |
| Financial expense | -109 | -31 | -18 |
| Currency result, net | -300 | -258 | -214 |
| **Total other financial income and expense from continuing operations** | **-136** | **140** | **222** |
|  <sup>1</sup> 2024 includes USD 78 million realized gain on commodities. | <sup>1</sup> 2024 includes USD 78 million realized gain on commodities. | <sup>1</sup> 2024 includes USD 78 million realized gain on commodities. | <sup>1</sup> 2024 includes USD 78 million realized gain on commodities. |

---

6. Income taxes

**Income before taxes**

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| Switzerland | 16 681 | 10 098 | 9 719 |
| Foreign <sup>1</sup> | -329 | 3 542 | -596 |
| **Income before taxes from continuing operations** | **16 352** | **13 640** | **9 123** |
|  <sup>1</sup> Foreign income before taxes from continuing operations includes the elimination of unrealized profit on intercompany-sourced inventory held at year-end. In 2025, foreign income before taxes from continuing operations was impacted by a higher elimination of unrealized profit due to increased intercompany-sourced inventory on hand at year-end compared with prior years. | <sup>1</sup> Foreign income before taxes from continuing operations includes the elimination of unrealized profit on intercompany-sourced inventory held at year-end. In 2025, foreign income before taxes from continuing operations was impacted by a higher elimination of unrealized profit due to increased intercompany-sourced inventory on hand at year-end compared with prior years. | <sup>1</sup> Foreign income before taxes from continuing operations includes the elimination of unrealized profit on intercompany-sourced inventory held at year-end. In 2025, foreign income before taxes from continuing operations was impacted by a higher elimination of unrealized profit due to increased intercompany-sourced inventory on hand at year-end compared with prior years. | <sup>1</sup> Foreign income before taxes from continuing operations includes the elimination of unrealized profit on intercompany-sourced inventory held at year-end. In 2025, foreign income before taxes from continuing operations was impacted by a higher elimination of unrealized profit due to increased intercompany-sourced inventory on hand at year-end compared with prior years. |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> In 2023 foreign income before taxes from continuing operations was impacted by impairment charges on intangible assets other than goodwill. | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> In 2023 foreign income before taxes from continuing operations was impacted by impairment charges on intangible assets other than goodwill. | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> In 2023 foreign income before taxes from continuing operations was impacted by impairment charges on intangible assets other than goodwill. | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> In 2023 foreign income before taxes from continuing operations was impacted by impairment charges on intangible assets other than goodwill. |

---

**Current and deferred income tax expense**

The significant components of the provision for income taxes from continuing operations are as follows:

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| Switzerland | -1 397 | -897 | -1 136 |
| Foreign | -1 348 | -1 486 | -1 290 |
| **Current income tax expense** | **-2 745** | **-2 383** | **-2 426** |
| Switzerland | -1 150 | -245 | 355 |
| Foreign | 1 510 | 927 | 1 520 |
| **Deferred tax income** | **360** | **682** | **1 875** |
| **Income tax expense from continuing operations** | **-2 385** | **-1 701** | **-551** |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |

---

**Analysis of tax rate**

Novartis has a substantial business presence in many countries and is therefore subject to income taxes in different tax jurisdictions. This leads to differences in income and expense items that are non-taxable or non-deductible (permanent differences) or are taxed at different statutory tax rates in those tax jurisdictions. As a result, there is a difference between our applicable tax rate and effective tax rate.

The applicable tax rate changes from year to year due to changes in the mix of the Company's income before taxes and changes in statutory tax rates since it is calculated as the weighted average tax rate based on the income before taxes of each subsidiary.

The main elements contributing to the difference between the Company's overall applicable tax rate and the effective tax rate are shown in the following table:

---

| | | | |
|:---|:---|:---|:---|
| (As a percentage) | **2025** | 2024 | 2023 |
| Applicable tax rate | 13.4 | 12.3 | 15.0 |
| Effect of disallowed expenditures | 0.9 | 1.6 | 1.4 |
| Effect of income taxed at reduced rates | -0.2 | -0.2 | -0.6 |
| Effect of income not subject to tax | -0.1 | -0.1 | -2.5 |
| Effect of tax credits and allowances | -3.0 | -3.2 | -3.9 |
| Effect of release of contingent consideration liability | 0.0 | 0.0 | -0.3 |
| Effect of tax rate changes on current and deferred tax assets and liabilities | -0.8 | 0.3 | -1.6 |
| Effect of derecognition and reversals of derecognition of deferred tax assets | 0.1 | 1.4 | 0.9 |
| Effect of write-down of investments in subsidiaries | 0.2 | -1.2 | -3.0 |
| Effect of prior-year items | -0.6 | -0.6 | 0.0 |
| Effect of changes in uncertain tax positions | 0.4 | -1.8 | 0.1 |
| Effect of other items <sup>1</sup> | 4.3 | 4.0 | 0.5 |
| **Effective tax rate from continuing operations** | 14.6 | 12.5 | 6.0 |
|  <sup>1</sup> 2025 includes the impact to current income tax expenses of Pillar Two tax legislation enacted in Switzerland and other countries (+2.0%) and the tax impact on intercompany transactions (+1.2%) | <sup>1</sup> 2025 includes the impact to current income tax expenses of Pillar Two tax legislation enacted in Switzerland and other countries (+2.0%) and the tax impact on intercompany transactions (+1.2%) | <sup>1</sup> 2025 includes the impact to current income tax expenses of Pillar Two tax legislation enacted in Switzerland and other countries (+2.0%) and the tax impact on intercompany transactions (+1.2%) | <sup>1</sup> 2025 includes the impact to current income tax expenses of Pillar Two tax legislation enacted in Switzerland and other countries (+2.0%) and the tax impact on intercompany transactions (+1.2%) |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> 2024 includes the effect of tax charges related to the expansion of products in the Swiss Patent Box regime (+1.0%) and the effect of a non-deductible impairment of goodwill (+1.7%) | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> 2024 includes the effect of tax charges related to the expansion of products in the Swiss Patent Box regime (+1.0%) and the effect of a non-deductible impairment of goodwill (+1.7%) | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> 2024 includes the effect of tax charges related to the expansion of products in the Swiss Patent Box regime (+1.0%) and the effect of a non-deductible impairment of goodwill (+1.7%) | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> 2024 includes the effect of tax charges related to the expansion of products in the Swiss Patent Box regime (+1.0%) and the effect of a non-deductible impairment of goodwill (+1.7%) |

---

The effective tax rate of Novartis fluctuates primarily as a result of, among other factors, changes in income before taxes between countries with varying statutory tax rates and the effects of disallowed expenditures, income not subject to tax, tax credits and allowances, tax rate changes on cur- rent and deferred tax assets and liabilities, derecognition and reversals of derecognition of deferred tax assets, write-down of investments in subsidiaries, and changes in uncertain tax positions. The table above provides the details of the significant items that impact the comparability of the effective tax rate between years.

On July 4, 2025, the United States enacted Public Law No. 119–21 (commonly referred to as the "One Big Beautiful Bill Act" ("OBBBA") that contains tax reform provisions. The OBBBA leaves the U.S. corporate tax rate unchanged at 21% and, in addition, among other changes, extends or revises key provisions of the Tax Cuts and Jobs Act ("TCJA") enacted in 2017, which were set to expire or change at the end of 2025.

Certain provisions of the OBBBA required a revaluation of a deferred tax asset. The impact of the revaluation was not material to the consolidated financial statements. However, given the complexity of tax laws, related regulations, and evolving interpretations, our estimates may require revision as additional information becomes available regarding the application of the OBBBA provisions.

The Basel-Stadt cantonal tax rate change, enacted on March 23, 2025, and effective January 1, 2026, will increase the cantonal tax rate from 6.5% to 8.5% and the blended Swiss cantonal and federal tax rate from 13.04% to 14.53%, impacting the Company's Basel-Stadt-domiciled operating subsidiaries. The enactment required revaluation of deferred tax assets and liabilities to the new tax rates at the date of enactment. The impact of the deferred tax assets and liabilities revaluation was not material.

In December 2021, the OECD issued model rules for a new global minimum tax framework (Pillar Two). Novartis is within the scope of the OECD Pillar Two model rules. Several governments in countries in which Novartis operates are in the process of enacting or have enacted tax legislation to comply with Pillar Two.

In December 2023, Switzerland partially implemented Pillar Two, whereby effective from January 1, 2024, a 15% minimum taxation is assessed on Pillar Two qualifying profits earned by companies domiciled in Switzerland (Qualified Domestic Minimum Top-Up Tax). This Qualified Domestic Minimum Top-Up Tax (QDMTT) does not apply to the Pillar Two qualifying profits earned by a company's affiliates domiciled in tax jurisdictions outside of Switzerland.

On September 4, 2024, Switzerland enacted the Income Inclusion Rule (IIR) effective January 1, 2025, which complements the QDMTT. This IIR imposes a 15% minimum top-up tax on the profits of foreign subsidiaries of Swiss-based multinational companies. In 2025, there was no amounts owed by the Company under the IIR in Switzerland.

Pillar Two tax legislation enacted in jurisdictions where we operate did not have a material impact on the Company's results of operations, financial position or cash flows in 2025, 2024 and 2023.

For disclosures on income taxes paid in 2025, 2024 and 2023, see Note 23.2.

7. Earnings per share

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| **Net income attributable to shareholders of Novartis AG (USD millions)** |  |  |  |
| - Continuing operations | 13 984 | 11 941 | 8 568 |
| - Discontinued operations |  |  | 6 282 |
| **Net income attributable to shareholders of Novartis AG (USD millions)** | **13 984** | **11 941** | **14 850** |
| **Number of shares (in millions)** |  |  |  |
| Weighted average number of shares outstanding used in basic earnings per share | 1 939 | 2 018 | 2 077 |
| Adjustment for assumed exercise of equity-settled compensation plans | 16 | 17 | 15 |
| **Weighted average number of shares in diluted earnings per share** | **1 955** | **2 035** | **2 092** |
| **Basic earnings per share (USD)** |  |  |  |
| - Continuing operations | 7.21 | 5.92 | 4.13 |
| - Discontinued operations |  |  | 3.02 |
| **Total basic earnings per share (USD)** | 7.21 | 5.92 | 7.15 |
| **Diluted earnings per share (USD)** |  |  |  |
| - Continuing operations | 7.15 | 5.87 | 4.10 |
| - Discontinued operations |  |  | 3.00 |
| **Total diluted earnings per share (USD)** | 7.15 | 5.87 | 7.10 |

---

Basic earnings per share (EPS) is calculated by dividing net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding in a reporting period. This calculation excludes the average number of issued shares purchased by the Company and held as treasury shares.

For diluted EPS, the weighted average number of shares outstanding is adjusted to assume the vesting of dilutive equity-settled compensation plans.

In 2025, 2024 and 2023, no equity-settled compensation plans were excluded from the calculation of diluted EPS, as all were dilutive.

8. Changes in consolidated statements of comprehensive income

The consolidated statements of comprehensive income include the Company's net income for the year as well as all other valuation adjustments recorded in the Company's consolidated balance sheet, which under IFRS Accounting Standards are not recorded in the consolidated income statement. These include fair value adjustments on financial instruments, actuarial gains or losses on defined benefit pension plans, hedging reserves and currency translation effects, all net of taxes.

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| <br>(USD millions) | <br>Note | <br> Fair value<br> adjustments <br> on financial<br> instruments | <br> Actuarial<br> gains/(losses)<br> from defined<br> benefit plans | <br>Hedging<br> reserves | <br> Cumulative<br> currency <br> translation<br> effects | Total value<br> adjustments<br> attributable to <br> Novartis AG <br> shareholders | <br>Non-<br> controlling<br> interest | <br>Total value<br> adjustments |
| **Value adjustments at December 31, 2022** |  | **-198** | **-4 038** |  | **-760** | **-4 996** | **-38** | **-5 034** |
| Fair value adjustments on equity securities, net of taxes of USD -6 million <sup>1</sup> |  | 37 |  |  |  | 37 |  | 37 |
| Net investment hedge, net of taxes of USD 19 million |  |  |  |  | -50 | -50 |  | -50 |
| Defined benefit plans, net of taxes of USD 16 million |  |  | -160 |  |  | -160 |  | -160 |
| Currency translation effects, net of taxes of USD -6 million | &nbsp;&nbsp;&nbsp;&nbsp;8.1 |  |  |  | 1 373 | 1 373 | 2 | 1 375 |
| **Value adjustments recognized through other comprehensive income in 2023** |  | **37** | **-160** |  | **1 323** | **1 200** | **2** | **1 202** |
| Fair value adjustments on equity securities sold, reclassified to retained earnings net of taxes of USD -7 million |  | 1 |  |  |  | 1 |  | 1 |
| Value adjustments related to divestments, net of taxes of USD -4 million |  | 2 | 27 |  |  | 29 |  | 29 |
| **Value adjustments recognized through equity in 2023** |  | **3** | **27** |  |  | **30** |  | **30** |
| **Value adjustments at December 31, 2023** |  | **-158** | **-4 171** |  | **563** | **-3 766** | **-36** | **-3 802** |
| Fair value adjustments on equity securities, net of taxes of USD -8 million <sup>1</sup> |  | 64 |  |  |  | 64 |  | 64 |
| Cash flow hedge - losses recognized in other comprehensive income, net of taxes of USD 3 million <sup>2</sup> |  |  |  | -24 |  | -24 |  | -24 |
| Net investment hedge, net of taxes of USD -30 million |  |  |  |  | 91 | 91 |  | 91 |
| Defined benefit plans, net of taxes of USD -343 million |  |  | 2 024 |  |  | 2 024 |  | 2 024 |
| Currency translation effects, net of taxes of USD 6 million | &nbsp;&nbsp;&nbsp;&nbsp;8.1 |  |  |  | -1 563 | -1 563 | -3 | -1 566 |
| **Value adjustments recognized through other comprehensive income in 2024** |  | **64** | **2 024** | **-24** | **-1 472** | **592** | **-3** | **589** |
| Fair value adjustments on equity securities sold, reclassified to retained earnings net of taxes of USD 8 million |  | -81 |  |  |  | -81 |  | -81 |
| **Value adjustments recognized through equity in 2024** |  | **-81** |  |  |  | **-81** |  | **-81** |
| **Value adjustments at December 31, 2024** |  | **-175** | **-2 147** | **-24** | **-909** | **-3 255** | **-39** | **-3 294** |
| Fair value adjustments on equity securities, net of taxes of USD -10 million <sup>1</sup> |  | 39 |  |  |  | 39 |  | 39 |
| Cash flow hedge – losses recognized in other comprehensive income, net of taxes of USD 0 million |  |  |  | 2 |  | 2 |  | 2 |
| Net investment hedge, net of taxes of USD 73 million |  |  |  |  | -232 | -232 |  | -232 |
| Defined benefit plans, net of taxes of USD -174 million |  |  | 1 155 |  |  | 1 155 |  | 1 155 |
| Currency translation effects, net of taxes of USD -134 million | &nbsp;&nbsp;&nbsp;&nbsp;8.1 |  |  |  | 3 021 | 3 021 | 5 | 3 026 |
| **Value adjustments recognized through other comprehensive income in 2025** |  | **39** | **1 155** | **2** | **2 789** | **3 985** | **5** | **3 990** |
| Fair value adjustments on equity securities sold, reclassified to retained earnings net of taxes of USD 12 million |  | -36 |  |  |  | -36 |  | -36 |
| **Value adjustments recognized through equity in 2025** |  | **-36** |  |  |  | **-36** |  | **-36** |
| **Value adjustments at December 31, 2025** |  | **-172** | **-992** | **-22** | **1 880** | **694** | **-34** | **660** |
|  <sup>1</sup> Includes fair value adjustments on equity securities designated as financial assets valued at fair value through other comprehensive income with no subsequent recycling into the consolidated income statement. | <sup>1</sup> Includes fair value adjustments on equity securities designated as financial assets valued at fair value through other comprehensive income with no subsequent recycling into the consolidated income statement. | <sup>1</sup> Includes fair value adjustments on equity securities designated as financial assets valued at fair value through other comprehensive income with no subsequent recycling into the consolidated income statement. | <sup>1</sup> Includes fair value adjustments on equity securities designated as financial assets valued at fair value through other comprehensive income with no subsequent recycling into the consolidated income statement. | <sup>1</sup> Includes fair value adjustments on equity securities designated as financial assets valued at fair value through other comprehensive income with no subsequent recycling into the consolidated income statement. | <sup>1</sup> Includes fair value adjustments on equity securities designated as financial assets valued at fair value through other comprehensive income with no subsequent recycling into the consolidated income statement. | <sup>1</sup> Includes fair value adjustments on equity securities designated as financial assets valued at fair value through other comprehensive income with no subsequent recycling into the consolidated income statement. | <sup>1</sup> Includes fair value adjustments on equity securities designated as financial assets valued at fair value through other comprehensive income with no subsequent recycling into the consolidated income statement. | <sup>1</sup> Includes fair value adjustments on equity securities designated as financial assets valued at fair value through other comprehensive income with no subsequent recycling into the consolidated income statement. |
|  <sup>2</sup> Includes USD 1 million that was recycled through the income statement as the hedged item has affected interest expense. | <sup>2</sup> Includes USD 1 million that was recycled through the income statement as the hedged item has affected interest expense. | <sup>2</sup> Includes USD 1 million that was recycled through the income statement as the hedged item has affected interest expense. | <sup>2</sup> Includes USD 1 million that was recycled through the income statement as the hedged item has affected interest expense. | <sup>2</sup> Includes USD 1 million that was recycled through the income statement as the hedged item has affected interest expense. | <sup>2</sup> Includes USD 1 million that was recycled through the income statement as the hedged item has affected interest expense. | <sup>2</sup> Includes USD 1 million that was recycled through the income statement as the hedged item has affected interest expense. | <sup>2</sup> Includes USD 1 million that was recycled through the income statement as the hedged item has affected interest expense. | <sup>2</sup> Includes USD 1 million that was recycled through the income statement as the hedged item has affected interest expense. |

---

8.1) In 2025, net cumulative currency translation losses of USD 57 million were recycled through the income statement as a result of the divestment of subsidiaries.

In 2024, net cumulative currency translation losses of USD 5 million were recycled through the income statement, as a result of the divestment of subsidiaries.

In 2023, net cumulative currency translation gains of USD 358 million were recycled through the income statement, consisting of USD 357 million as a result of the spin-off of the Sandoz business through a dividend in kind distribution to Novartis AG shareholders (see Note 2), and of USD 1 million as a result of the divestment of subsidiaries.

9. Property, plant and equipment

The following table summarizes the movements of property, plant and equipment during 2025:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| <br>(USD millions) | <br>Land | <br>Buildings | <br> Construction <br> in progress | Machinery <br> and other <br> equipment | <br>Total |
| **At January 1, 2025** |  |  |  |  |  |
| Cost | 376 | 9 526 | 1 610 | 9 046 | 20 558 |
| Accumulated depreciation and impairment | -5 | -4 984 | -7 | -6 104 | -11 100 |
| **Net book value** | **371** | **4 542** | **1 603** | **2 942** | **9 458** |
| **At January 1, 2025** | **371** | **4 542** | **1 603** | **2 942** | **9 458** |
| Impact of acquisitions applying the optional concentration test |  | 1 |  | 3 | 4 |
| Reclassifications | 1 | 400 | -973 | 572 |  |
| Additions | 34 | 119 | 1 058 | 274 | 1 485 |
| Disposals and derecognitions | -7 | -6 | -7 | -24 | -44 |
| Depreciation charge |  | -362 |  | -589 | -951 |
| Impairment charge | -4 | -6 | -2 | -12 | -24 |
| Currency translation effects | 41 | 341 | 175 | 297 | 854 |
| **At December 31, 2025** | **436** | **5 029** | **1 854** | **3 463** | **10 782** |
| **At December 31, 2025** |  |  |  |  |  |
| Cost | 446 | 10 746 | 1 863 | 10 453 | 23 508 |
| Accumulated depreciation and impairment | -10 | -5 717 | -9 | -6 990 | -12 726 |
| **Net book value** | **436** | **5 029** | **1 854** | **3 463** | **10 782** |
| **Commitments for purchases of property, plant and equipment <sup>1</sup>** |  |  |  |  | **683** |
| **Capitalized borrowing costs** |  |  |  |  | **8** |
|  <sup>1</sup> The estimated timing of the commitments for purchase of property, plant and equipment are as follows: 2026: USD 546 million, 2027: USD 117 million and 2028: USD 20 million. | <sup>1</sup> The estimated timing of the commitments for purchase of property, plant and equipment are as follows: 2026: USD 546 million, 2027: USD 117 million and 2028: USD 20 million. | <sup>1</sup> The estimated timing of the commitments for purchase of property, plant and equipment are as follows: 2026: USD 546 million, 2027: USD 117 million and 2028: USD 20 million. | <sup>1</sup> The estimated timing of the commitments for purchase of property, plant and equipment are as follows: 2026: USD 546 million, 2027: USD 117 million and 2028: USD 20 million. | <sup>1</sup> The estimated timing of the commitments for purchase of property, plant and equipment are as follows: 2026: USD 546 million, 2027: USD 117 million and 2028: USD 20 million. | <sup>1</sup> The estimated timing of the commitments for purchase of property, plant and equipment are as follows: 2026: USD 546 million, 2027: USD 117 million and 2028: USD 20 million. |

---

The following table summarizes the movements of property, plant and equipment during 2024:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| <br>(USD millions) | <br>Land | <br>Buildings | <br> Construction <br> in progress | Machinery <br> and other <br> equipment | <br>Total |
| **At January 1, 2024** |  |  |  |  |  |
| Cost | 403 | 10 147 | 1 213 | 9 630 | 21 393 |
| Accumulated depreciation and impairment | -5 | -5 251 | -7 | -6 616 | -11 879 |
| **Net book value** | **398** | **4 896** | **1 206** | **3 014** | **9 514** |
| **At January 1, 2024** | **398** | **4 896** | **1 206** | **3 014** | **9 514** |
| Impact of acquisitions of businesses |  | 6 |  | 14 | 20 |
| Reclassifications | 1 | 136 | -569 | 432 |  |
| Additions | 0 | 73 | 1 082 | 229 | 1 384 |
| Disposals and derecognitions | -4 | -35 | -19 | -58 | -116 |
| Depreciation charge |  | -327 |  | -558 | -885 |
| Impairment charge | -5 | -13 | -3 | -27 | -48 |
| Reversal of impairment charge |  |  |  | 1 | 1 |
| Currency translation effects | -19 | -194 | -94 | -105 | -412 |
| **At December 31, 2024** | **371** | **4 542** | **1 603** | **2 942** | **9 458** |
| **At December 31, 2024** |  |  |  |  |  |
| Cost | 376 | 9 526 | 1 610 | 9 046 | 20 558 |
| Accumulated depreciation and impairment | -5 | -4 984 | -7 | -6 104 | -11 100 |
| **Net book value** | **371** | **4 542** | **1 603** | **2 942** | **9 458** |
| **Commitments for purchases of property, plant and equipment** |  |  |  |  | **770** |
| **Capitalized borrowing costs** |  |  |  |  | **5** |

---

Property, plant and equipment is depreciated on a straight-line basis in the consolidated income statement over the estimated useful life of the individual asset. The related depreciation expense is included in the costs of the functions using the asset.

The following table shows the estimated useful life by major categories for property, plant and equipment:

---

| | |
|:---|:---|
|  | Useful life |
| Buildings | 20 to 40 years |
| Machinery and other equipment |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Machinery and equipment | 7 to 20 years |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furniture and vehicles | 5 to 10 years |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Computer hardware | 3 to 7 years |

---

Property, plant and equipment is assessed for impairment whenever there is an indication that the balance sheet carrying amount may not be recoverable using cash flow projections over the useful life. Impairment charges and impairment reversals are included in the costs of the functions using the asset or if resulting from a restructuring program in "Other expense" for impairments and in "Other income" for impairment reversals in the consolidated income statement.

The following table shows the property, plant and equipment depreciation charge, impairment charge and reversals of impairment charge for continuing operations for the years ended December 31, 2025, 2024 and 2023<sup>1</sup>:

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| Depreciation charge | -951 | -885 | -916 |
| Impairment charge | -24 | -48 | -106 |
| Impairment reversals |  | 1 | 16 |
|  <sup>1</sup> Note 29 provides disclosure of discontinued operations depreciation charge, impairment charge and reversals of impairment charge. | <sup>1</sup> Note 29 provides disclosure of discontinued operations depreciation charge, impairment charge and reversals of impairment charge. | <sup>1</sup> Note 29 provides disclosure of discontinued operations depreciation charge, impairment charge and reversals of impairment charge. | <sup>1</sup> Note 29 provides disclosure of discontinued operations depreciation charge, impairment charge and reversals of impairment charge. |

---

10. Right-of-use assets and lease liabilities

The Company recognizes a right-of-use asset and a corresponding lease liability for all arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low-value leases. For these short-term and low-value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease. The Company allocates the consideration in the lease contract to the lease and non-lease components on the basis of the relative standalone price of each component.

The portion of the lease payments attributable to the repayment of lease liabilities is recognized in cash flows used in financing activities, and the portion attributable to the payment of interest is included in cash flows from operating activities.

Right-of-use assets are depreciated on a straight-line basis from the commencement date of the lease over the shorter of the useful life of the right-of-use asset or the end of the lease term.

Right-of-use assets are assessed for impairment whenever there is an indication that the balance sheet carrying amount may not be recoverable using cash flow projections for the useful life.

The following table summarizes the movements of the right-of-use assets:

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| **Right-of-use assets at January 1** | **1 415** | **1 410** |
| Impact of acquisitions and divestments of businesses, net | -1 | 42 |
| Impact of acquisitions applying the optional concentration test | 8 |  |
| Additions | 458 | 304 |
| Depreciation charge | -276 | -257 |
| Impairment reversal/(charge) |  | 1 |
| Lease contract terminations <sup>1</sup> | -103 | -36 |
| Currency translation effects | 69 | -49 |
| **Total right-of-use assets at December 31** | **1 570** | **1 415** |
|  <sup>1</sup> Lease contract terminations also includes modifications to existing leases that result in reductions to the right-of-use assets, and reductions due to sub-leasing. | <sup>1</sup> Lease contract terminations also includes modifications to existing leases that result in reductions to the right-of-use assets, and reductions due to sub-leasing. | <sup>1</sup> Lease contract terminations also includes modifications to existing leases that result in reductions to the right-of-use assets, and reductions due to sub-leasing. |

---

The following table shows the right-of-use assets carrying value at December 31, 2025 and 2024, and the continuing operations depreciation charge for years 2025, 2024 and 2023, by underlying class of asset<sup>1</sup>:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| <br>(USD millions) | December 31,<br> 2025<br> carrying value | December 31,<br> 2024<br> carrying value | Depreciation <br> charge<br> 2025 | Depreciation <br> charge<br> 2024 | Depreciation <br> charge<br> 2023 |
| Land | 466 | 472 | 11 | 11 | 12 |
| Buildings | 777 | 752 | 163 | 153 | 156 |
| Vehicles | 149 | 133 | 85 | 80 | 80 |
| Machinery and equipment, and other assets | 178 | 58 | 17 | 13 | 11 |
| **Total right-of-use assets** | **1 570** | **1 415** | **276** | **257** | **259** |
|  <sup>1</sup> Note 29 provides disclosure of discontinued operations depreciation charge. | <sup>1</sup> Note 29 provides disclosure of discontinued operations depreciation charge. | <sup>1</sup> Note 29 provides disclosure of discontinued operations depreciation charge. | <sup>1</sup> Note 29 provides disclosure of discontinued operations depreciation charge. | <sup>1</sup> Note 29 provides disclosure of discontinued operations depreciation charge. | <sup>1</sup> Note 29 provides disclosure of discontinued operations depreciation charge. |

---

The following table shows the lease liabilities by maturity at December 31, 2025 and 2024:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| <br>(USD millions) | <br>Lease liabilities<br> 2025 | <br> Lease liabilities<br> undiscounted<br> 2025 | Interests for <br> discounting<br> lease liabilities <br> 2025 | <br>Lease liabilities<br> 2024 | <br> Lease liabilities<br> undiscounted<br> 2024 | Interests for <br> discounting<br> lease liabilities <br> 2024 |
| Less than one year | 263 | 300 | 37 | 235 | 291 | 56 |
| Between one and two years | 227 | 267 | 40 | 203 | 252 | 49 |
| Between two and three years | 165 | 210 | 45 | 168 | 209 | 41 |
| Between three and four years | 114 | 156 | 42 | 117 | 153 | 36 |
| Between four and five years | 80 | 115 | 35 | 86 | 116 | 30 |
| After five years | 1 071 | 2 299 | 1 228 | 994 | 2 178 | 1 184 |
| **Total lease liabilities** | **1 920** | **3 347** | **1 427** | **1 803** | **3 199** | **1 396** |
| Less current portion of lease liabilities | -263 | -300 | -37 | -235 | -291 | -56 |
| **Non-current portion of lease liabilities** | **1 657** | **3 047** |  | **1 568** | **2 908** |  |
| **Commitments for leases not yet commenced <sup>1</sup>** |  | **890** |  |  | **123** |  |
|  <sup>1</sup> The 2025 estimated timing of the commitments for leases not yet commenced are as follows: 2026 USD 38 million, 2027 USD 6 million, 2028 USD 23 million, 2029 USD 47 million, 2030 USD 48 million and thereafter USD 728 million. | <sup>1</sup> The 2025 estimated timing of the commitments for leases not yet commenced are as follows: 2026 USD 38 million, 2027 USD 6 million, 2028 USD 23 million, 2029 USD 47 million, 2030 USD 48 million and thereafter USD 728 million. | <sup>1</sup> The 2025 estimated timing of the commitments for leases not yet commenced are as follows: 2026 USD 38 million, 2027 USD 6 million, 2028 USD 23 million, 2029 USD 47 million, 2030 USD 48 million and thereafter USD 728 million. | <sup>1</sup> The 2025 estimated timing of the commitments for leases not yet commenced are as follows: 2026 USD 38 million, 2027 USD 6 million, 2028 USD 23 million, 2029 USD 47 million, 2030 USD 48 million and thereafter USD 728 million. | <sup>1</sup> The 2025 estimated timing of the commitments for leases not yet commenced are as follows: 2026 USD 38 million, 2027 USD 6 million, 2028 USD 23 million, 2029 USD 47 million, 2030 USD 48 million and thereafter USD 728 million. | <sup>1</sup> The 2025 estimated timing of the commitments for leases not yet commenced are as follows: 2026 USD 38 million, 2027 USD 6 million, 2028 USD 23 million, 2029 USD 47 million, 2030 USD 48 million and thereafter USD 728 million. | <sup>1</sup> The 2025 estimated timing of the commitments for leases not yet commenced are as follows: 2026 USD 38 million, 2027 USD 6 million, 2028 USD 23 million, 2029 USD 47 million, 2030 USD 48 million and thereafter USD 728 million. |

---

At December 31, 2025 and 2024, there were no material future cash outflows, including extension options, excluded from the measurement of lease liabilities. The Company's most material lease with a lease term extension, representing a lease liability value of USD 0.7 billion (2024: USD 0.7 billion), has a determined lease term end date of 2071 (2024: 2071). Non-enforceable extension options of up to 10 years have not been included within the measurement of this lease liability, and do not have a material impact to the carrying value of the lease for either 2025 or 2024. Should the landlord agree to a lease extension, rent will be referenced to the market rates as at the commencement of the extension period.

In 2025, the Company completed one sale and leaseback transaction (2024: two, 2023: two) as part of its facilities strategy. This generated USD 32 million in net cash (2024: USD 9 million, 2023: USD 273 million). This transaction resulted in no lease liability (2024: USD 14 million, 2023: USD 146 million) and USD 1 million in right-of-use assets (2024: USD 2 million, 2023: USD 109 million). Extension options were included where assessed likely to be exercised. The transaction resulted in a net gain of USD 21 million (2024: net loss of USD 10 million, 2023: net gain of USD 18 million).

The following table provides additional disclosures related to continuing operations right-of-use assets and lease liabilities for 2025, 2024 and 2023:

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | **2024** | **2023** |
| Interest expense on lease liabilities <sup>1</sup> | 76 | 72 | 62 |
| Expense on short-term leases | 5 | 7 | 5 |
| Expense on low-value leases | 2 | 5 | 6 |
| Total cash outflows for leases | 353 | 336 | 321 |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Thereof:* |  |  |  |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Cash outflows for short-term leases and low-value leases <sup>2</sup>* | *7* | *12* | *11* |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Payments of interest <sup>3</sup>* | *65* | *62* | *52* |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Payments of lease liabilities <sup>4</sup>* | *281* | *262* | *258* |
|  <sup>1</sup> The weighted average interest rate is 4.1% (2024: 4.0%, 2023: 3.5%).  | <sup>1</sup> The weighted average interest rate is 4.1% (2024: 4.0%, 2023: 3.5%).  | <sup>1</sup> The weighted average interest rate is 4.1% (2024: 4.0%, 2023: 3.5%).  | <sup>1</sup> The weighted average interest rate is 4.1% (2024: 4.0%, 2023: 3.5%).  |
|  <sup>2</sup> Cash flows from short-term and low-value leases are included within total net cash flows from operating activities. The portfolio of short-term leases to which the Company is committed to at December 31, 2025, 2024 and 2023, is similar to the portfolio of short-term leases the Company entered into during 2025, 2024 and 2023. | <sup>2</sup> Cash flows from short-term and low-value leases are included within total net cash flows from operating activities. The portfolio of short-term leases to which the Company is committed to at December 31, 2025, 2024 and 2023, is similar to the portfolio of short-term leases the Company entered into during 2025, 2024 and 2023. | <sup>2</sup> Cash flows from short-term and low-value leases are included within total net cash flows from operating activities. The portfolio of short-term leases to which the Company is committed to at December 31, 2025, 2024 and 2023, is similar to the portfolio of short-term leases the Company entered into during 2025, 2024 and 2023. | <sup>2</sup> Cash flows from short-term and low-value leases are included within total net cash flows from operating activities. The portfolio of short-term leases to which the Company is committed to at December 31, 2025, 2024 and 2023, is similar to the portfolio of short-term leases the Company entered into during 2025, 2024 and 2023. |
|  <sup>3</sup> Included within total net cash flows from operating activities | <sup>3</sup> Included within total net cash flows from operating activities | <sup>3</sup> Included within total net cash flows from operating activities | <sup>3</sup> Included within total net cash flows from operating activities |
|  <sup>4</sup> Reported as cash outflows in financing activities net of lease incentives received, if any. | <sup>4</sup> Reported as cash outflows in financing activities net of lease incentives received, if any. | <sup>4</sup> Reported as cash outflows in financing activities net of lease incentives received, if any. | <sup>4</sup> Reported as cash outflows in financing activities net of lease incentives received, if any. |

---

The net investment held and income from subleasing right-of-use assets, as well as income from leasing Novartis property, plant and equipment to third parties were not significant for 2025, 2024, or 2023.

11. Goodwill and intangible assets other than goodwill

Novartis has the following classes of available for use intangible assets other than goodwill: Currently marketed products and Other intangible assets.

Currently marketed products represent the composite value of acquired intellectual property (IP), patents, distribution rights and product trade names.

Other intangible assets include acquired scientific infrastructure, customer out-licensing contracts, and technologies and capitalized internally developed and acquired computer software.

The following table summarizes the movements of goodwill and intangible assets other than goodwill in 2025:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Goodwill | Intangible assets other than goodwill | Intangible assets other than goodwill | Intangible assets other than goodwill | Intangible assets other than goodwill |
| <br>(USD millions) | <br>Total | In-process<br> research and<br> development | Currently<br> marketed <br> products | Other<br> intangible<br> assets | <br>Total |
| **At January 1, 2025** |  |  |  |  |  |
| Cost | 25 665 | 9 621 | 45 462 | 5 123 | 60 206 |
| Accumulated amortization and impairment | -909 | -2 399 | -28 550 | -2 342 | -33 291 |
| **Net book value** | **24 756** | **7 222** | **16 912** | **2 781** | **26 915** |
| **At January 1, 2025** | **24 756** | **7 222** | **16 912** | **2 781** | **26 915** |
| Impact of acquisitions applying the optional concentration test |  | 3 157 |  |  | 3 157 |
| Reclassifications |  | -1 386 | 1 272 | 114 |  |
| Additions <sup>1</sup> |  | 1 316 | 148 | 789 | 2 253 |
| Disposals and derecognitions <sup>2</sup> | -1 |  |  | -4 | -4 |
| Amortization charge |  |  | -2 750 | -767 | -3 517 |
| Impairment charge |  | -313 | -25 | -219 | -557 |
| Currency translation effects | 812 | 435 | 451 | 278 | 1 164 |
| **At December 31, 2025** | **25 567** | **10 431** | **16 008** | **2 972** | **29 411** |
| **At December 31, 2025** |  |  |  |  |  |
| Cost | 26 586 | 12 525 | 49 573 | 6 185 | 68 283 |
| Accumulated amortization and impairment | -1 019 | -2 094 | -33 565 | -3 213 | -38 872 |
| **Net book value** | **25 567** | **10 431** | **16 008** | **2 972** | **29 411** |
|  <sup>1</sup> Additions to currently marketed products include USD 0.1 billion of capitalized development costs. | <sup>1</sup> Additions to currently marketed products include USD 0.1 billion of capitalized development costs. | <sup>1</sup> Additions to currently marketed products include USD 0.1 billion of capitalized development costs. | <sup>1</sup> Additions to currently marketed products include USD 0.1 billion of capitalized development costs. | <sup>1</sup> Additions to currently marketed products include USD 0.1 billion of capitalized development costs. | <sup>1</sup> Additions to currently marketed products include USD 0.1 billion of capitalized development costs. |
|  <sup>2</sup> Derecognition of assets that are no longer being used or developed and are not considered to have a significant disposal value or other alternative use. | <sup>2</sup> Derecognition of assets that are no longer being used or developed and are not considered to have a significant disposal value or other alternative use. | <sup>2</sup> Derecognition of assets that are no longer being used or developed and are not considered to have a significant disposal value or other alternative use. | <sup>2</sup> Derecognition of assets that are no longer being used or developed and are not considered to have a significant disposal value or other alternative use. | <sup>2</sup> Derecognition of assets that are no longer being used or developed and are not considered to have a significant disposal value or other alternative use. | <sup>2</sup> Derecognition of assets that are no longer being used or developed and are not considered to have a significant disposal value or other alternative use. |

---

The following table summarizes the movements of goodwill and intangible assets other than goodwill in 2024:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Goodwill | Intangible assets other than goodwill | Intangible assets other than goodwill | Intangible assets other than goodwill | Intangible assets other than goodwill |
| <br>(USD millions) | <br>Total | In-process<br> research and<br> development | Currently<br> marketed <br> products | Other<br> intangible<br> assets | <br>Total |
| **At January 1, 2024** |  |  |  |  |  |
| Cost | 23 391 | 7 822 | 46 909 | 3 588 | 58 319 |
| Accumulated amortization and impairment | -50 | -2 493 | -26 892 | -2 055 | -31 440 |
| **Net book value** | **23 341** | **5 329** | **20 017** | **1 533** | **26 879** |
| **At January 1, 2024** | **23 341** | **5 329** | **20 017** | **1 533** | **26 879** |
| Impact of acquisitions of businesses | 2 701 | 1 424 |  | 1 156 | 2 580 |
| Additions <sup>1</sup> |  | 1 116 | 263 | 764 | 2 143 |
| Disposals and derecognitions <sup>2</sup> |  |  | -91 | -4 | -95 |
| Amortization charge |  |  | -2 964 | -493 | -3 457 |
| Impairment charge | -910 | -471 |  | -52 | -523 |
| Reversal of impairment charge |  |  | 9 |  | 9 |
| Currency translation effects | -376 | -176 | -322 | -123 | -621 |
| **At December 31, 2024** | **24 756** | **7 222** | **16 912** | **2 781** | **26 915** |
| **At December 31, 2024** |  |  |  |  |  |
| Cost | 25 665 | 9 621 | 45 462 | 5 123 | 60 206 |
| Accumulated amortization and impairment | -909 | -2 399 | -28 550 | -2 342 | -33 291 |
| **Net book value** | **24 756** | **7 222** | **16 912** | **2 781** | **26 915** |
|  <sup>1</sup> Additions to currently marketed products include USD 0.1 billion of capitalized development costs. | <sup>1</sup> Additions to currently marketed products include USD 0.1 billion of capitalized development costs. | <sup>1</sup> Additions to currently marketed products include USD 0.1 billion of capitalized development costs. | <sup>1</sup> Additions to currently marketed products include USD 0.1 billion of capitalized development costs. | <sup>1</sup> Additions to currently marketed products include USD 0.1 billion of capitalized development costs. | <sup>1</sup> Additions to currently marketed products include USD 0.1 billion of capitalized development costs. |
|  <sup>2</sup> Derecognition of assets that are no longer being used or developed and are not considered to have a significant disposal value or other alternative use. | <sup>2</sup> Derecognition of assets that are no longer being used or developed and are not considered to have a significant disposal value or other alternative use. | <sup>2</sup> Derecognition of assets that are no longer being used or developed and are not considered to have a significant disposal value or other alternative use. | <sup>2</sup> Derecognition of assets that are no longer being used or developed and are not considered to have a significant disposal value or other alternative use. | <sup>2</sup> Derecognition of assets that are no longer being used or developed and are not considered to have a significant disposal value or other alternative use. | <sup>2</sup> Derecognition of assets that are no longer being used or developed and are not considered to have a significant disposal value or other alternative use. |

---

As at December 31, 2025, the most significant intangible assets within the Currently marketed products category, are *Leqvio* (acquired through The Medicines Company acquisition) and *Zolgensma* (acquired through AveXis Inc. acquisition). As at December 31, 2025, the carrying value and remaining amortization period for *Leqvio* is USD 5.7 billion and 10 years, respectively (2024: USD 6.3 billion and 11 years, respectively) and for *Zolgensma* USD 3.8 billion and 5 years, respectively (2024: USD 4.5 billion and 6 years, respectively).

The estimated useful life of Currently marketed products ranges from 5 to 20 years and amortization charges, impairments and impairment reversals are recognized in the consolidated income statement on the line "Cost of goods sold."

The estimated useful lives of Other intangible assets ranges from 3 to 15 years and amortization charges, impairments and impairment reversals are recognized in the consolidated income statement on the lines "Cost of goods sold," "Selling, general and administration," "Research and development" or "Other expense," or for impairment reversals "Other income," depending on the nature and use of the other intangible asset.

Impairment charges for IPR&D are recorded in the consolidated income statement line "Research and development."

The Company has no indefinite useful life intangible asset other than goodwill.

The Company's cash-generating unit to which goodwill is allocated, as at December 31, 2025 and 2024, is at the level of the single global operating segment, which is comprised of a group of smaller cash-generating units. The valuation method of the recoverable amount of the operating segment to which goodwill is allocated is based on the fair value less costs of disposal. Any impairment charges are recorded under "Other expense" in the consolidated income statement.

The following assumptions were used in the goodwill impairment testing calculation:

---

| | |
|:---|:---|
| (As a percentage) |  |
| Terminal growth rate | 1.7 |
| Discount rate (post-tax) | 7.5 |

---

The discount rates consider the Company's weighted average cost of capital, adjusted to approximate the weighted average cost of capital of a comparable market participant.

The fair value less costs of disposal for the cash-generating unit containing goodwill, is reviewed for the impact of reasonably possible changes in key assumptions. In particular, we considered an increase in the discount rate, a decrease in the terminal growth rate, and certain negative impacts on the forecasted cash flows. These reasonably possible changes in key assumptions did not indicate an impairment.

"Note 1. Accounting policies—Goodwill and intangible assets other than goodwill" provides additional disclosures on how the Company performs goodwill and intangible asset impairment testing.

The following table shows the intangible asset amortization charge, impairment charge and reversal of impairment charge for continuing operations for the years ended December 31, 2025, 2024 and 2023<sup>1</sup>:

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| Amortization charge | -3 517 | -3 457 | -3 960 |
| Impairment charge <sup>2</sup> | -557 | -1 433 | -3 048 |
| Reversal of impairment charge |  | 9 |  |
|  <sup>1</sup> Note 29 provides disclosure of discontinued operations amortization charge and impairment charge. | <sup>1</sup> Note 29 provides disclosure of discontinued operations amortization charge and impairment charge. | <sup>1</sup> Note 29 provides disclosure of discontinued operations amortization charge and impairment charge. | <sup>1</sup> Note 29 provides disclosure of discontinued operations amortization charge and impairment charge. |
|  <sup>2</sup> 2025 impairment charge included the write-down of IPR&D on the cessation of clinical research and clinical development programs, including the clinical development programs AAA602 and AAA802 (USD 0.3 billion). | <sup>2</sup> 2025 impairment charge included the write-down of IPR&D on the cessation of clinical research and clinical development programs, including the clinical development programs AAA602 and AAA802 (USD 0.3 billion). | <sup>2</sup> 2025 impairment charge included the write-down of IPR&D on the cessation of clinical research and clinical development programs, including the clinical development programs AAA602 and AAA802 (USD 0.3 billion). | <sup>2</sup> 2025 impairment charge included the write-down of IPR&D on the cessation of clinical research and clinical development programs, including the clinical development programs AAA602 and AAA802 (USD 0.3 billion). |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> 2024 impairment charge included the write-down of IPR&D on the cessation of clinical research and clinical development programs and a USD 0.9 billion impairment of goodwill attributable to the MorphoSys business acquired. See Note 2 - Acquisition of MorphoSys AG for additional information. | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> 2024 impairment charge included the write-down of IPR&D on the cessation of clinical research and clinical development programs and a USD 0.9 billion impairment of goodwill attributable to the MorphoSys business acquired. See Note 2 - Acquisition of MorphoSys AG for additional information. | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> 2024 impairment charge included the write-down of IPR&D on the cessation of clinical research and clinical development programs and a USD 0.9 billion impairment of goodwill attributable to the MorphoSys business acquired. See Note 2 - Acquisition of MorphoSys AG for additional information. | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> 2024 impairment charge included the write-down of IPR&D on the cessation of clinical research and clinical development programs and a USD 0.9 billion impairment of goodwill attributable to the MorphoSys business acquired. See Note 2 - Acquisition of MorphoSys AG for additional information. |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> 2023 impairment charge included the write-down of IPR&D on the cessation of clinical development programs, including PPY988 (USD 1.0 billion), which was acquired with the 2022 acquisition of Gyroscope Therapeutics Holdings plc (see Note 2), VDT482 (USD 0.4 billion), and MBG453 (USD 0.3 billion), and the clinical research program NIZ985 (USD 0.3 billion); as well as the write-down of a currently marketed product by USD 0.3 billion to reflect the reduction in its recoverable amount. | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> 2023 impairment charge included the write-down of IPR&D on the cessation of clinical development programs, including PPY988 (USD 1.0 billion), which was acquired with the 2022 acquisition of Gyroscope Therapeutics Holdings plc (see Note 2), VDT482 (USD 0.4 billion), and MBG453 (USD 0.3 billion), and the clinical research program NIZ985 (USD 0.3 billion); as well as the write-down of a currently marketed product by USD 0.3 billion to reflect the reduction in its recoverable amount. | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> 2023 impairment charge included the write-down of IPR&D on the cessation of clinical development programs, including PPY988 (USD 1.0 billion), which was acquired with the 2022 acquisition of Gyroscope Therapeutics Holdings plc (see Note 2), VDT482 (USD 0.4 billion), and MBG453 (USD 0.3 billion), and the clinical research program NIZ985 (USD 0.3 billion); as well as the write-down of a currently marketed product by USD 0.3 billion to reflect the reduction in its recoverable amount. | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> 2023 impairment charge included the write-down of IPR&D on the cessation of clinical development programs, including PPY988 (USD 1.0 billion), which was acquired with the 2022 acquisition of Gyroscope Therapeutics Holdings plc (see Note 2), VDT482 (USD 0.4 billion), and MBG453 (USD 0.3 billion), and the clinical research program NIZ985 (USD 0.3 billion); as well as the write-down of a currently marketed product by USD 0.3 billion to reflect the reduction in its recoverable amount. |

---

12. Deferred tax assets and liabilities

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| <br>(USD millions) | <br> Property, <br> plant and<br> equipment | <br>Intangible<br> assets | Pensions and<br> other benefit <br> obligations <br> of employees | <br>Inventories | <br> Tax loss<br> carry-<br> forwards | <br> Other assets,<br> provisions<br> and accruals | <br>Total |
| **Gross deferred tax assets at January 1, 2025** | **130** | **2 591** | **688** | **2 464** | **659** | **2 344** | **8 876** |
| **Gross deferred tax liabilities at January 1, 2025** | **-334** | **-4 506** | **-680** | **-71** |  | **-1 345** | **-6 936** |
| **Net deferred tax balance at January 1, 2025** | **-204** | **-1 915** | **8** | **2 393** | **659** | **999** | **1 940** |
| **At January 1, 2025** | **-204** | **-1 915** | **8** | **2 393** | **659** | **999** | **1 940** |
| Credited/(charged) to income | -15 | 343 | -46 | 1 102 | -157 | -867 | 360 |
| Credited/(charged) to equity |  |  |  |  | -109 | 37 | -72 |
| Credited/(charged) to other comprehensive income |  |  | -174 |  |  |  | -174 |
| Impact of acquisitions applying the optional concentration test |  |  |  |  | 149 | 31 | 180 |
| Other movements | -32 | 53 | -40 | -13 |  | -161 | -193 |
| **Net deferred tax balance at December 31, 2025** | **-251** | **-1 519** | **-252** | **3 482** | **542** | **39** | **2 041** |
| Gross deferred tax assets at December 31, 2025 | 115 | 2 634 | 718 | 3 589 | 542 | 2 460 | 10 058 |
| Gross deferred tax liabilities at December 31, 2025 | -366 | -4 153 | -970 | -107 |  | -2 421 | -8 017 |
| **Net deferred tax balance at December 31, 2025** | **-251** | **-1 519** | **-252** | **3 482** | **542** | **39** | **2 041** |
| After offsetting the following amount of deferred tax assets and liabilities within the same tax jurisdiction, the balance amounts to: |  |  |  |  |  |  | 4 620 |
| Deferred tax assets at December 31, 2025 |  |  |  |  |  |  | 5 438 |
| Deferred tax liabilities at December 31, 2025 |  |  |  |  |  |  | -3 397 |
| **Net deferred tax balance at December 31, 2025** |  |  |  |  |  |  | **2 041** |
| **Gross deferred tax assets at January 1, 2024** | **117** | **2 188** | **764** | **2 200** | **713** | **2 206** | **8 188** |
| **Gross deferred tax liabilities at January 1, 2024** | **-310** | **-4 228** | **-420** | **-77** |  | **-1 092** | **-6 127** |
| **Net deferred tax balance at January 1, 2024** | **-193** | **-2 040** | **344** | **2 123** | **713** | **1 114** | **2 061** |
| **At January 1, 2024** | **-193** | **-2 040** | **344** | **2 123** | **713** | **1 114** | **2 061** |
| Credited/(charged) to income | -23 | 615 | 9 | 272 | -189 | -2 | 682 |
| Creditied/(charged) to equity |  |  |  |  | -105 | 20 | -85 |
| Credited/(charged) to other comprehensive income |  |  | -343 |  |  | -9 | -352 |
| Impact of acquisitions of businesses | -2 | -479 |  |  | 263 | -116 | -334 |
| Other movements | 14 | -11 | -2 | -2 | -23 | -8 | -32 |
| **Net deferred tax balance at December 31, 2024** | **-204** | **-1 915** | **8** | **2 393** | **659** | **999** | **1 940** |
| Gross deferred tax assets at December 31, 2024 | 130 | 2 591 | 688 | 2 464 | 659 | 2 344 | 8 876 |
| Gross deferred tax liabilities at December 31, 2024 | -334 | -4 506 | -680 | -71 |  | -1 345 | -6 936 |
| **Net deferred tax balance at December 31, 2024** | **-204** | **-1 915** | **8** | **2 393** | **659** | **999** | **1 940** |
| After offsetting the following amount of deferred tax assets and liabilities within the same tax jurisdiction, the balance amounts to: |  |  |  |  |  |  | 4 517 |
| Deferred tax assets at December 31, 2024 |  |  |  |  |  |  | 4 359 |
| Deferred tax liabilities at December 31, 2024 |  |  |  |  |  |  | -2 419 |
| **Net deferred tax balance at December 31, 2024** |  |  |  |  |  |  | **1 940** |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |

---

Deferred tax liabilities have not been recognized for withholding tax and other taxes that would be payable on the remittance of earnings of foreign subsidiaries, insofar as the Company has the ability to control any future reversal and the unremitted earnings are retained in the foreign subsidiaries for reinvestment. The total unremitted earnings retained for reinvestment in the Company's foreign subsidiaries that would be subject to withholding tax or other taxes if remitted to the Company were estimated to be approximately USD 40 billion in 2025 (2024: USD 39 billion).

The gross value of tax-loss carry-forwards that have or have not been recognized as deferred tax assets, with their expiry dates, is as follows:

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | Unrecognized | Recognized | **2025 total** |
| One year | 133 | 10 | 143 |
| Two years | 39 | 10 | 49 |
| Three years <sup>1</sup> | 2 811 | 150 | 2 961 |
| Four years | 73 | 844 | 917 |
| Five years | 145 | 537 | 682 |
| More than five years <sup>1</sup> | 4 607 | 1 952 | 6 559 |
| Not subject to expiry | 553 | 603 | 1 156 |
| **Total** | **8 361** | **4 106** | **12 467** |
|  <sup>1</sup> Unrecognized losses expiring in three years include USD 2.8 billion attributable to US state capital loss carry-forwards, and those expiring in more than five years include USD 4.5 billion attributable to US state tax loss carry-forwards. | <sup>1</sup> Unrecognized losses expiring in three years include USD 2.8 billion attributable to US state capital loss carry-forwards, and those expiring in more than five years include USD 4.5 billion attributable to US state tax loss carry-forwards. | <sup>1</sup> Unrecognized losses expiring in three years include USD 2.8 billion attributable to US state capital loss carry-forwards, and those expiring in more than five years include USD 4.5 billion attributable to US state tax loss carry-forwards. | <sup>1</sup> Unrecognized losses expiring in three years include USD 2.8 billion attributable to US state capital loss carry-forwards, and those expiring in more than five years include USD 4.5 billion attributable to US state tax loss carry-forwards. |

---

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | Unrecognized | Recognized | **2024 total** |
| One year | 19 | 3 | 22 |
| Two years | 59 | 88 | 147 |
| Three years | 24 | 26 | 50 |
| Four years <sup>1</sup> | 2 337 | 399 | 2 736 |
| Five years | 97 | 1 136 | 1 233 |
| More than five years <sup>1</sup> | 4 205 | 2 456 | 6 661 |
| Not subject to expiry | 783 | 1 103 | 1 886 |
| **Total** | **7 524** | **5 211** | **12 735** |
|  <sup>1</sup> Unrecognized losses expiring in four years include USD 2.3 billion attributable to US state capital loss carry-forwards, and those expiring in more than five years include USD 4.0 billion attributable to US state tax loss carry-forwards. | <sup>1</sup> Unrecognized losses expiring in four years include USD 2.3 billion attributable to US state capital loss carry-forwards, and those expiring in more than five years include USD 4.0 billion attributable to US state tax loss carry-forwards. | <sup>1</sup> Unrecognized losses expiring in four years include USD 2.3 billion attributable to US state capital loss carry-forwards, and those expiring in more than five years include USD 4.0 billion attributable to US state tax loss carry-forwards. | <sup>1</sup> Unrecognized losses expiring in four years include USD 2.3 billion attributable to US state capital loss carry-forwards, and those expiring in more than five years include USD 4.0 billion attributable to US state tax loss carry-forwards. |

---

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| Tax losses carried forward that expired | 11 | 24 | 8 |

---

Deferred tax assets related to carry-forwards of tax losses and tax credits of relevant Company entities are recognized to the extent that it is considered probable that future taxable profits will be available in the respective tax jurisdictions against which such losses and credits can be utilized.

13. Financial and other non-current assets

**Financial assets**

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| Equity securities | 724 | 746 |
| Debt securities | 67 | 53 |
| Fund investments | 202 | 210 |
| **Total financial investments** | **993** | **1 009** |
| Long-term receivables from finance subleases | 52 | 54 |
| Other long-term receivables | 403 | 179 |
| Contingent consideration receivables <sup>1</sup> | 758 | 671 |
| Long-term loans, advances and security deposits | 142 | 102 |
| **Total financial assets** | **2 348** | **2 015** |
|  <sup>1</sup> Note 28 provides additional disclosures related to contingent consideration. | <sup>1</sup> Note 28 provides additional disclosures related to contingent consideration. | <sup>1</sup> Note 28 provides additional disclosures related to contingent consideration. |

---

**Other non-current assets**

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| Deferred compensation plans | 541 | 479 |
| Prepaid post-employment benefit plans <sup>1</sup> | 4 225 | 2 604 |
| Other non-current assets | 509 | 422 |
| **Total other non-current assets** | **5 275** | **3 505** |
|  <sup>1</sup> Note 24 provides additional disclosures related to post-employment benefits. | <sup>1</sup> Note 24 provides additional disclosures related to post-employment benefits. | <sup>1</sup> Note 24 provides additional disclosures related to post-employment benefits. |

---

14. Inventories

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| Raw material, consumables | 975 | 843 |
| Work in progress | 3 964 | 3 448 |
| Finished products | 1 330 | 1 432 |
| **Total inventories** | **6 269** | **5 723** |

---

The following table shows the amount of inventory recognized as an expense in "Cost of goods sold" in the consolidated income statements from continuing operations:

---

| | | | |
|:---|:---|:---|:---|
| (USD billions) | **2025** | 2024 | 2023 |
| Cost of goods sold | -6.6 | -6.3 | -5.8 |

---

The following table shows the recognized amount of inventory provision and reversals of inventory provision recorded in the consolidated income statements from continuing operations:

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| Inventory provisions | -532 | -526 | -467 |
| Reversals of inventory provisions | 160 | 156 | 111 |

---

The reversals mainly result from the release of products initially requiring additional quality control inspections and from the reassessment of inventory values manufactured prior to regulatory approval but for which approval was subsequently received.

15. Trade receivables

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| Total gross trade receivables | 8 989 | 7 481 |
| Provisions for doubtful trade receivables | -52 | -58 |
| **Total trade receivables** | **8 937** | **7 423** |

---

The following table shows the trade receivables that are not overdue as specified in the payment terms and conditions established with Novartis customers, as well as an analysis of overdue amounts and related provisions for doubtful trade receivables:

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| Not overdue | 8 564 | 7 138 |
| Past due for not more than one month | 99 | 134 |
| Past due for more than one month but less than three months | 130 | 95 |
| Past due for more than three months but less than six months | 85 | 37 |
| Past due for more than six months but less than one year | 45 | 24 |
| Past due for more than one year | 66 | 53 |
| Provisions for doubtful trade receivables | -52 | -58 |
| **Total trade receivables** | **8 937** | **7 423** |

---

Trade receivable balances represent amounts due from our customers, which are mainly drug wholesalers, retailers, private health systems, government agencies, managed care providers, pharmacy benefit managers and government-supported healthcare systems. In particular, the Company monitors the level of trade receivables in countries deemed to have an elevated credit risk. The Company considers macroeconomic environment, historical experience, and country and political risk, in addition to other relevant information when assessing risk. These risk factors are monitored regularly to determine any adjustments in risk classification. The majority of the past due trade receivables from elevated credit risk countries are due from local governments or from government-funded entities. Deteriorating credit and economic conditions as well as other factors in these elevated credit risk countries have resulted in, and may continue to result in, an increase in the average length of time that it takes to collect these trade receivables, and may require the Company to re-evaluate the expected credit loss amount of these trade receivables in future periods. At December 31, 2025, amounts past due for more than one year are not significant in elevated credit risk countries.

Total trade receivables are denominated in the following major currencies:

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024<sup>1</sup> |
| US dollar (USD) | 4 335 | 3 698 |
| Euro (EUR) | 1 273 | 1 144 |
| Japanese yen (JPY) | 536 | 470 |
| Russian ruble (RUB) | 347 | 212 |
| Chinese yuan (CNY) | 290 | 172 |
| British pound (GBP) | 230 | 191 |
| Brazilian real (BRL) | 188 | 130 |
| Swiss franc (CHF) | 74 | 54 |
| Canadian dollar (CAD) | 62 | 50 |
| Other currencies | 1 602 | 1 302 |
| **Total trade receivables** | **8 937** | **7 423** |
|  <sup>1</sup> In 2025, Australian dollar (AUD) is no longer designated as a major currency. The 2024 trade receivables denominated in AUD have been reclassified to other currencies to conform with 2025 presentation. | <sup>1</sup> In 2025, Australian dollar (AUD) is no longer designated as a major currency. The 2024 trade receivables denominated in AUD have been reclassified to other currencies to conform with 2025 presentation. | <sup>1</sup> In 2025, Australian dollar (AUD) is no longer designated as a major currency. The 2024 trade receivables denominated in AUD have been reclassified to other currencies to conform with 2025 presentation. |

---

16. Marketable securities, time deposits, derivative financial instruments, and cash and cash equivalents

**Marketable securities, time deposits and derivative financial instruments**

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| Time deposits and short-term investments with original maturity more than 90 days | 98 | 1 892 |
| Derivative financial instruments | 57 | 106 |
| **Total marketable securities, time deposits and derivative financial instruments** | **155** | **1 998** |

---

As at December 31, 2024, the vast majority of time deposits and short-term investments with an original maturity of more than 90 days was denominated in USD.

**Cash and cash equivalents**

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| Current accounts | 2 579 | 2 585 |
| Time deposits and short-term investments with original maturity less than 90 days | 8 856 | 8 874 |
| **Total cash and cash equivalents** | **11 435** | **11 459** |

---

17. Other current assets

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| VAT receivable | 550 | 478 |
| Prepaid expenses | 1 153 | 985 |
| Contingent consideration receivable <sup>1</sup> | 101 | 120 |
| Other receivables | 1 141 | 1 097 |
| Other current assets | 514 | 288 |
| **Total other current assets** | **3 459** | **2 968** |
|  <sup>1</sup> Note 28 provides additional disclosures related to contingent consideration. | <sup>1</sup> Note 28 provides additional disclosures related to contingent consideration. | <sup>1</sup> Note 28 provides additional disclosures related to contingent consideration. |

---

18. Equity

The following table shows the movement in the share capital:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| <br>(USD millions) | <br> Jan 1, 2023 | Movement<br> in year | <br> Dec 31, 2023 | Movement<br> in year | <br> Dec 31, 2024 | Movement<br> in year | **<br> Dec 31, 2025** |
| Share capital <sup>1</sup> | 890 | -65 | 825 | -32 | 793 | -27 | 766 |
| Treasury shares | -92 | 51 | -41 | -12 | -53 | 3 | -50 |
| **Outstanding share capital** | **798** | **-14** | **784** | **-44** | **740** | **-24** | **716** |
|  <sup>1</sup> At December 31, 2025, 2024 and 2023, the Novartis AG share capital consists of registered shares with a nominal value of CHF 0.49 each. Prior to the 2023 capital decrease (see Note 18.6), Novartis AG share capital consisted of registered shares with a nominal value of CHF 0.50 each. No authorized and conditional capital exists. | <sup>1</sup> At December 31, 2025, 2024 and 2023, the Novartis AG share capital consists of registered shares with a nominal value of CHF 0.49 each. Prior to the 2023 capital decrease (see Note 18.6), Novartis AG share capital consisted of registered shares with a nominal value of CHF 0.50 each. No authorized and conditional capital exists. | <sup>1</sup> At December 31, 2025, 2024 and 2023, the Novartis AG share capital consists of registered shares with a nominal value of CHF 0.49 each. Prior to the 2023 capital decrease (see Note 18.6), Novartis AG share capital consisted of registered shares with a nominal value of CHF 0.50 each. No authorized and conditional capital exists. | <sup>1</sup> At December 31, 2025, 2024 and 2023, the Novartis AG share capital consists of registered shares with a nominal value of CHF 0.49 each. Prior to the 2023 capital decrease (see Note 18.6), Novartis AG share capital consisted of registered shares with a nominal value of CHF 0.50 each. No authorized and conditional capital exists. | <sup>1</sup> At December 31, 2025, 2024 and 2023, the Novartis AG share capital consists of registered shares with a nominal value of CHF 0.49 each. Prior to the 2023 capital decrease (see Note 18.6), Novartis AG share capital consisted of registered shares with a nominal value of CHF 0.50 each. No authorized and conditional capital exists. | <sup>1</sup> At December 31, 2025, 2024 and 2023, the Novartis AG share capital consists of registered shares with a nominal value of CHF 0.49 each. Prior to the 2023 capital decrease (see Note 18.6), Novartis AG share capital consisted of registered shares with a nominal value of CHF 0.50 each. No authorized and conditional capital exists. | <sup>1</sup> At December 31, 2025, 2024 and 2023, the Novartis AG share capital consists of registered shares with a nominal value of CHF 0.49 each. Prior to the 2023 capital decrease (see Note 18.6), Novartis AG share capital consisted of registered shares with a nominal value of CHF 0.50 each. No authorized and conditional capital exists. | <sup>1</sup> At December 31, 2025, 2024 and 2023, the Novartis AG share capital consists of registered shares with a nominal value of CHF 0.49 each. Prior to the 2023 capital decrease (see Note 18.6), Novartis AG share capital consisted of registered shares with a nominal value of CHF 0.50 each. No authorized and conditional capital exists. |

---

The following table shows the movement in shares:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 |
| <br>Number of outstanding shares <br>(in thousands) | Total <br> Novartis <br> shares | Total <br> treasury <br> shares<sup>1</sup> | Total <br> outstanding <br> shares | Total <br> Novartis <br> shares | Total <br> treasury <br> shares<sup>1</sup> | Total <br> outstanding <br> shares | Total <br> Novartis <br> shares | Total <br> treasury <br> shares<sup>1</sup> | Total <br> outstanding <br> shares |
| **Balance at beginning of year** | **2 189 931** | **-214 842** | **1 975 089** | **2 277 478** | **-233 444** | **2 044 034** | **2 403 721** | **-284 112** | **2 119 609** |
| Shares canceled for capital reduction <sup>2</sup> | -77 509 | 77 509 |  | -87 547 | 87 547 |  | -126 243 | 126 243 |  |
| Shares acquired to be canceled <sup>3</sup> |  | -77 602 | -77 602 |  | -77 509 | -77 509 |  | -87 547 | -87 547 |
| Other share purchases <sup>4</sup> |  | -1 713 | -1 713 |  | -1 245 | -1 245 |  | -1 579 | -1 579 |
| Exercise of options and employee transactions <sup>5</sup> |  |  |  |  |  |  |  | 2 791 | 2 791 |
| Equity-based compensation plans <sup>5</sup> |  | 12 233 | 12 233 |  | 9 668 | 9 668 |  | 10 470 | 10 470 |
| Shares delivered to Sandoz employees |  | 145 | 145 |  | 141 | 141 |  | 290 | 290 |
| **Total movements** | **-77 509** | **10 572** | **-66 937** | **-87 547** | **18 602** | **-68 945** | **-126 243** | **50 668** | **-75 575** |
| **Balance at end of year** | **2 112 422** | **-204 270** | **1 908 152** | **2 189 931** | **-214 842** | **1 975 089** | **2 277 478** | **-233 444** | **2 044 034** |
|  <sup>1</sup> Approximately 75.4 million treasury shares (2024: 86.0 million; 2023: 93.8 million) are held in Novartis entities that restrict their availability for use. | <sup>1</sup> Approximately 75.4 million treasury shares (2024: 86.0 million; 2023: 93.8 million) are held in Novartis entities that restrict their availability for use. | <sup>1</sup> Approximately 75.4 million treasury shares (2024: 86.0 million; 2023: 93.8 million) are held in Novartis entities that restrict their availability for use. | <sup>1</sup> Approximately 75.4 million treasury shares (2024: 86.0 million; 2023: 93.8 million) are held in Novartis entities that restrict their availability for use. | <sup>1</sup> Approximately 75.4 million treasury shares (2024: 86.0 million; 2023: 93.8 million) are held in Novartis entities that restrict their availability for use. | <sup>1</sup> Approximately 75.4 million treasury shares (2024: 86.0 million; 2023: 93.8 million) are held in Novartis entities that restrict their availability for use. | <sup>1</sup> Approximately 75.4 million treasury shares (2024: 86.0 million; 2023: 93.8 million) are held in Novartis entities that restrict their availability for use. | <sup>1</sup> Approximately 75.4 million treasury shares (2024: 86.0 million; 2023: 93.8 million) are held in Novartis entities that restrict their availability for use. | <sup>1</sup> Approximately 75.4 million treasury shares (2024: 86.0 million; 2023: 93.8 million) are held in Novartis entities that restrict their availability for use. | <sup>1</sup> Approximately 75.4 million treasury shares (2024: 86.0 million; 2023: 93.8 million) are held in Novartis entities that restrict their availability for use. |
|  <sup>2</sup> Novartis reduced its share capital by canceling shares that were repurchased on the SIX Swiss Exchange second trading line during previous years. | <sup>2</sup> Novartis reduced its share capital by canceling shares that were repurchased on the SIX Swiss Exchange second trading line during previous years. | <sup>2</sup> Novartis reduced its share capital by canceling shares that were repurchased on the SIX Swiss Exchange second trading line during previous years. | <sup>2</sup> Novartis reduced its share capital by canceling shares that were repurchased on the SIX Swiss Exchange second trading line during previous years. | <sup>2</sup> Novartis reduced its share capital by canceling shares that were repurchased on the SIX Swiss Exchange second trading line during previous years. | <sup>2</sup> Novartis reduced its share capital by canceling shares that were repurchased on the SIX Swiss Exchange second trading line during previous years. | <sup>2</sup> Novartis reduced its share capital by canceling shares that were repurchased on the SIX Swiss Exchange second trading line during previous years. | <sup>2</sup> Novartis reduced its share capital by canceling shares that were repurchased on the SIX Swiss Exchange second trading line during previous years. | <sup>2</sup> Novartis reduced its share capital by canceling shares that were repurchased on the SIX Swiss Exchange second trading line during previous years. | <sup>2</sup> Novartis reduced its share capital by canceling shares that were repurchased on the SIX Swiss Exchange second trading line during previous years. |
|  <sup>3</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>3</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>3</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>3</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>3</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>3</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>3</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>3</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>3</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>3</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. |
|  <sup>4</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>4</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>4</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>4</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>4</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>4</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>4</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>4</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>4</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>4</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans |
|  <sup>5</sup> Shares delivered as a result of options being exercised and physical share deliveries related to equity-based compensation plans. See Note 18.8. | <sup>5</sup> Shares delivered as a result of options being exercised and physical share deliveries related to equity-based compensation plans. See Note 18.8. | <sup>5</sup> Shares delivered as a result of options being exercised and physical share deliveries related to equity-based compensation plans. See Note 18.8. | <sup>5</sup> Shares delivered as a result of options being exercised and physical share deliveries related to equity-based compensation plans. See Note 18.8. | <sup>5</sup> Shares delivered as a result of options being exercised and physical share deliveries related to equity-based compensation plans. See Note 18.8. | <sup>5</sup> Shares delivered as a result of options being exercised and physical share deliveries related to equity-based compensation plans. See Note 18.8. | <sup>5</sup> Shares delivered as a result of options being exercised and physical share deliveries related to equity-based compensation plans. See Note 18.8. | <sup>5</sup> Shares delivered as a result of options being exercised and physical share deliveries related to equity-based compensation plans. See Note 18.8. | <sup>5</sup> Shares delivered as a result of options being exercised and physical share deliveries related to equity-based compensation plans. See Note 18.8. | <sup>5</sup> Shares delivered as a result of options being exercised and physical share deliveries related to equity-based compensation plans. See Note 18.8. |

---

18.1) The amount available for distribution as a dividend to shareholders is based on the available distributable retained earnings of Novartis AG determined in accordance with the legal provisions of the Swiss Code of Obligations.

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| Dividend per share (in CHF) | 3.50 | 3.30 | 3.20 |
| Total dividend payment (in USD billion) | 7.8 | 7.6 | 7.3 |

---

18.2) Treasury shares are initially recorded at fair value on their trade date, which is different from the settlement date, when the transaction is ultimately effected. Treasury shares are deducted from consolidated equity at their nominal per share value. Differences between the nominal amount and the transaction price on purchases or sales of treasury shares with third parties, or the value of services received for the shares allocated to employees as part of share-based compensation arrangements, are recorded in "Retained earnings" in the consolidated statement of changes in equity.

The following table summarizes the treasury shares movements:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | **2025** | **2025** | 2024 | 2024 | 2023 | 2023 |
|  | <br>Note | Number of <br> outstanding <br> shares<br> (in millions) | <br>Equity impact<br> USD m | Number of <br> outstanding <br> shares<br> (in millions) | <br>Equity impact<br> USD m | Number of <br> outstanding <br> shares<br> (in millions) | <br>Equity impact<br> USD m |
| Shares acquired to be canceled <sup>1</sup> |  | -77.60 | -8 947 | -77.51 | -8 316 | -87.55 | -8 369 |
| Other share purchases <sup>2</sup> |  | -1.71 | -175 | -1.25 | -134 | -1.58 | -148 |
| Purchase of treasury shares |  | -79.31 | -9 122 | -78.76 | -8 450 | -89.13 | -8 517 |
| Exercise of options and employee transactions <sup>3</sup> | 18.8 |  |  |  |  | 2.79 | 146 |
| Equity-based compensation plans <sup>4</sup> |  | 12.23 | 1 157 | 9.67 | 1 060 | 10.47 | 904 |
| Shares delivered to Sandoz employees |  | 0.14 | 12 | 0.14 | 12 | 0.29 | 30 |
| **Total** |  | **-66.94** | **-7 953** | **-68.95** | **-7 378** | **-75.58** | **-7 437** |
|  <sup>1</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>1</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>1</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>1</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>1</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>1</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>1</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. | <sup>1</sup> Shares repurchased on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2022 Annual General Meeting (AGM), the additional CHF 10 billion authority approved at the 2023 AGM and the additional CHF 10 billion authority approved at the 2025 AGM. Since May 15, 2025, the share repurchases are executed under the authority approved at the 2025 AGM as all earlier authorizations are fully exhausted. |
|  <sup>2</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>2</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>2</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>2</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>2</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>2</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>2</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans | <sup>2</sup> Shares acquired from employees, which were previously granted to them under the respective equity-based compensation plans |
|  <sup>3</sup> Shares delivered as a result of options being exercised related to equity-based compensation plans and the delivery of treasury shares. The average share price of the shares delivered was significantly below market price, reflecting the strike price of the options exercised. | <sup>3</sup> Shares delivered as a result of options being exercised related to equity-based compensation plans and the delivery of treasury shares. The average share price of the shares delivered was significantly below market price, reflecting the strike price of the options exercised. | <sup>3</sup> Shares delivered as a result of options being exercised related to equity-based compensation plans and the delivery of treasury shares. The average share price of the shares delivered was significantly below market price, reflecting the strike price of the options exercised. | <sup>3</sup> Shares delivered as a result of options being exercised related to equity-based compensation plans and the delivery of treasury shares. The average share price of the shares delivered was significantly below market price, reflecting the strike price of the options exercised. | <sup>3</sup> Shares delivered as a result of options being exercised related to equity-based compensation plans and the delivery of treasury shares. The average share price of the shares delivered was significantly below market price, reflecting the strike price of the options exercised. | <sup>3</sup> Shares delivered as a result of options being exercised related to equity-based compensation plans and the delivery of treasury shares. The average share price of the shares delivered was significantly below market price, reflecting the strike price of the options exercised. | <sup>3</sup> Shares delivered as a result of options being exercised related to equity-based compensation plans and the delivery of treasury shares. The average share price of the shares delivered was significantly below market price, reflecting the strike price of the options exercised. | <sup>3</sup> Shares delivered as a result of options being exercised related to equity-based compensation plans and the delivery of treasury shares. The average share price of the shares delivered was significantly below market price, reflecting the strike price of the options exercised. |
|  <sup>4</sup> Equity-settled share-based compensation is expensed in the consolidated income statement in accordance with the vesting period of the equity-based compensation plans. The value for the shares and options granted is credited to consolidated equity over the respective vesting period. In addition, tax benefits arising from tax-deductible amounts exceeding the expense recognized in the income statement are credited to equity. | <sup>4</sup> Equity-settled share-based compensation is expensed in the consolidated income statement in accordance with the vesting period of the equity-based compensation plans. The value for the shares and options granted is credited to consolidated equity over the respective vesting period. In addition, tax benefits arising from tax-deductible amounts exceeding the expense recognized in the income statement are credited to equity. | <sup>4</sup> Equity-settled share-based compensation is expensed in the consolidated income statement in accordance with the vesting period of the equity-based compensation plans. The value for the shares and options granted is credited to consolidated equity over the respective vesting period. In addition, tax benefits arising from tax-deductible amounts exceeding the expense recognized in the income statement are credited to equity. | <sup>4</sup> Equity-settled share-based compensation is expensed in the consolidated income statement in accordance with the vesting period of the equity-based compensation plans. The value for the shares and options granted is credited to consolidated equity over the respective vesting period. In addition, tax benefits arising from tax-deductible amounts exceeding the expense recognized in the income statement are credited to equity. | <sup>4</sup> Equity-settled share-based compensation is expensed in the consolidated income statement in accordance with the vesting period of the equity-based compensation plans. The value for the shares and options granted is credited to consolidated equity over the respective vesting period. In addition, tax benefits arising from tax-deductible amounts exceeding the expense recognized in the income statement are credited to equity. | <sup>4</sup> Equity-settled share-based compensation is expensed in the consolidated income statement in accordance with the vesting period of the equity-based compensation plans. The value for the shares and options granted is credited to consolidated equity over the respective vesting period. In addition, tax benefits arising from tax-deductible amounts exceeding the expense recognized in the income statement are credited to equity. | <sup>4</sup> Equity-settled share-based compensation is expensed in the consolidated income statement in accordance with the vesting period of the equity-based compensation plans. The value for the shares and options granted is credited to consolidated equity over the respective vesting period. In addition, tax benefits arising from tax-deductible amounts exceeding the expense recognized in the income statement are credited to equity. | <sup>4</sup> Equity-settled share-based compensation is expensed in the consolidated income statement in accordance with the vesting period of the equity-based compensation plans. The value for the shares and options granted is credited to consolidated equity over the respective vesting period. In addition, tax benefits arising from tax-deductible amounts exceeding the expense recognized in the income statement are credited to equity. |

---

18.3) Changes in non-controlling interests represent the impact on the non-controlling interest of transactions with minority shareholders, such as acquisitions of businesses, change in ownership percentage, dividend payments and other equity transactions.

18.4) Other movements include, for subsidiaries in hyperinflationary economies, the impact of the application of IAS Standards 29 "Financial reporting in Hyperinflationary Economies." See Note 28 for additional disclosures.

18.5) Transaction costs in 2023 of USD 214 million, net of tax of USD 29 million, that were directly attributable to the Distribution (spin-off) of the Sandoz business to Novartis AG shareholders and that would otherwise have been avoided, were recorded as a deduction from equity (retained earnings). See Note 1.

18.6) In 2023, in connection with the Distribution (spin-off) of the Sandoz business, Novartis AG shareholders approved at the EGM held on September 15, 2023, a decrease in Novartis AG share capital in the amount of CHF 22.8 million (USD 17.1 million). The capital decrease resulted in a reduction of the nominal value of the Novartis AG shares by CHF 0.01 from CHF 0.50 per share to CHF 0.49 per share.

18.7) In December 2021, Novartis entered into an irrevocable, non-discretionary arrangement with a bank to repurchase Novartis shares on the second trading line under its up-to USD 15.0 billion share buyback. The arrangement was updated in July 2022, December 2022, and May 2023, and concluded in June 2023.

In June 2023, Novartis entered into an irrevocable, non-discretionary arrangement with a bank to repurchase 11.7 million Novartis shares on the second trading line, which concluded in July 2023.

In July 2023, Novartis entered into a new irrevocable, non-discretionary arrangement with a bank to repurchase Novartis shares on the second trading line under its up-to USD 15.0 billion share buyback. In June 2024, Novartis amended the arrangement to include the repurchase of an additional 8.7 million Novartis shares on the second trading line to mitigate the impact of share deliveries under the equity-based compensation plans for employees. These additional repurchases of 8.7 million shares concluded in October 2024. In June 2025, Novartis amended the arrangement to include the repurchase of an additional 10.7 million Novartis shares on the second trading line to mitigate the impact of share deliveries under the equity-based compensation plans for employees. These additional repurchases of 10.7 million shares concluded in August 2025.

The repurchases under the USD 15.0 billion share buyback that commenced in July 2023 concluded in July 2025. In July 2025, Novartis amended and restated the arrangement to repurchase Novartis shares on the second trading line under its new up-to USD 10.0 billion share buyback.

Novartis is able to cancel this amended and restated arrangement at any time but may be subject to a 90-day waiting period. As of December 31, 2025, 2024 and 2023, these waiting period conditions were not applicable and as a result, there was no requirement to record a liability under this arrangement as of December 31, 2025, 2024 and 2023.

18.8) At December 31, 2025, 2024 and 2023, there were no written call options outstanding.

19. Non-current financial debts

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| Straight bonds | 27 131 | 24 112 |
| Floating rate bond | 798 |  |
| Other bonds <sup>1</sup> | 500 | 523 |
| **Total bonds** | **28 429** | **24 635** |
| Other financial debts | 300 | 87 |
| **Total, including current portion of non-current financial debts** | **28 729** | **24 722** |
| Less current portion of non-current financial debts | -794 | -3 356 |
| **Total non-current financial debts** | **27 935** | **21 366** |
|  <sup>1</sup> Average interest rate during the year 2025: 5.3% (2024: 5.3%) | <sup>1</sup> Average interest rate during the year 2025: 5.3% (2024: 5.3%) | <sup>1</sup> Average interest rate during the year 2025: 5.3% (2024: 5.3%) |

---

All bonds are initially recorded at the amount of proceeds received, net of transaction costs. They are subsequently carried at amortized cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognized as a charge to the consolidated income statement over the period of the relevant bond. Financial debts, including current financial debts, contain only general default covenants. The Company is in compliance with these covenants.

The percentage of fixed-rate financial debts to total financial debts was 83% as at December 31, 2025 (December 31, 2024: 84%).

The average interest rate on total financial debts in 2025 was 3.3% (2024: 3.2%).

Note 28 contains a maturity table of the Company's future contractual interest payments commitments.

The following table provides a breakdown of straight and floating rate bonds:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| <br>Coupon | <br>Currency | Notional <br> amount<br> (millions) | <br> Issuance <br> year | <br> Maturity <br> year | <br>Issuer | <br>Issue price | **2025<br> (USD<br> millions)** | 2024<br> (USD<br> millions) |
| 3.700% | &nbsp;&nbsp;USD | 500 | 2012 | 2042 | Novartis Capital Corporation, New York, United States | 98.325% | 492 | 491 |
| 4.400% | &nbsp;&nbsp;USD | 1 850 | 2014 | 2044 | Novartis Capital Corporation, New York, United States | 99.196% | 1 829 | 1 828 |
| 1.625% | &nbsp;&nbsp;EUR | 600 | 2014 | 2026 | Novartis Finance S.A., Luxembourg, Luxembourg | 99.697% | 704 | 624 |
| 0.250% | &nbsp;&nbsp;CHF | 500 | 2015 | 2025 | Novartis AG, Basel, Switzerland | 100.640% |  | 553 |
| 0.625% | &nbsp;&nbsp;CHF | 550 | 2015 | 2029 | Novartis AG, Basel, Switzerland | 100.502% | 694 | 609 |
| 1.050% | &nbsp;&nbsp;CHF | 325 | 2015 | 2035 | Novartis AG, Basel, Switzerland | 100.479% | 410 | 360 |
| 3.000% | &nbsp;&nbsp;USD | 1 750 | 2015 | 2025 | Novartis Capital Corporation, New York, United States | 99.010% |  | 1 748 |
| 4.000% | &nbsp;&nbsp;USD | 1 250 | 2015 | 2045 | Novartis Capital Corporation, New York, United States | 98.029% | 1 224 | 1 223 |
| 0.625% | &nbsp;&nbsp;EUR | 500 | 2016 | 2028 | Novartis Finance S.A., Luxembourg, Luxembourg | 98.480% | 584 | 518 |
| 3.100% | &nbsp;&nbsp;USD | 1 000 | 2017 | 2027 | Novartis Capital Corporation, New York, United States | 99.109% | 998 | 997 |
| 1.125% | &nbsp;&nbsp;EUR | 600 | 2017 | 2027 | Novartis Finance S.A., Luxembourg, Luxembourg | 99.874% | 704 | 624 |
| 1.375% | &nbsp;&nbsp;EUR | 750 | 2018 | 2030 | Novartis Finance S.A., Luxembourg, Luxembourg | 99.957% | 879 | 779 |
| 1.700% | &nbsp;&nbsp;EUR | 750 | 2018 | 2038 | Novartis Finance S.A., Luxembourg, Luxembourg | 99.217% | 874 | 774 |
| 1.750% | &nbsp;&nbsp;USD | 1 000 | 2020 | 2025 | Novartis Capital Corporation, New York, United States | 99.852% |  | 1 000 |
| 2.000% | &nbsp;&nbsp;USD | 1 250 | 2020 | 2027 | Novartis Capital Corporation, New York, United States | 99.909% | 1 249 | 1 248 |
| 2.200% | &nbsp;&nbsp;USD | 1 500 | 2020 | 2030 | Novartis Capital Corporation, New York, United States | 99.869% | 1 496 | 1 496 |
| 2.750% | &nbsp;&nbsp;USD | 1 250 | 2020 | 2050 | Novartis Capital Corporation, New York, United States | 97.712% | 1 218 | 1 217 |
| 0.000% <sup>1</sup> | &nbsp;&nbsp;EUR | 1 850 | 2020 | 2028 | Novartis Finance S.A., Luxembourg, Luxembourg | 99.354% | 2 165 | 1 918 |
| 1.600% | &nbsp;&nbsp;CHF | 650 | 2024 | 2027 | Novartis AG, Basel, Switzerland | 100.138% | 819 | 719 |
| 1.650% | &nbsp;&nbsp;CHF | 435 | 2024 | 2031 | Novartis AG, Basel, Switzerland | 100.148% | 548 | 481 |
| 1.750% | &nbsp;&nbsp;CHF | 645 | 2024 | 2034 | Novartis AG, Basel, Switzerland | 100.229% | 813 | 714 |
| 1.850% | &nbsp;&nbsp;CHF | 280 | 2024 | 2040 | Novartis AG, Basel, Switzerland | 100.268% | 353 | 310 |
| 1.850% | &nbsp;&nbsp;CHF | 190 | 2024 | 2049 | Novartis AG, Basel, Switzerland | 100.149% | 239 | 210 |
| 3.800% | &nbsp;&nbsp;USD | 1 000 | 2024 | 2029 | Novartis Capital Corporation, New York, United States | 99.757% | 996 | 995 |
| 4.000% | &nbsp;&nbsp;USD | 850 | 2024 | 2031 | Novartis Capital Corporation, New York, United States | 99.565% | 844 | 844 |
| 4.200% | &nbsp;&nbsp;USD | 1 100 | 2024 | 2034 | Novartis Capital Corporation, New York, United States | 99.282% | 1 089 | 1 088 |
| 4.700% | &nbsp;&nbsp;USD | 750 | 2024 | 2054 | Novartis Capital Corporation, New York, United States | 99.936% | 744 | 744 |
| SOFR + 0.52% <sup>2</sup> | &nbsp;&nbsp;USD | 800 | 2025 | 2028 | Novartis Capital Corporation, New York, United States | 100.000% | 798 |  |
| 3.900% | &nbsp;&nbsp;USD | 700 | 2025 | 2028 | Novartis Capital Corporation, New York, United States | 99.978% | 699 |  |
| 4.100% | &nbsp;&nbsp;USD | 1 750 | 2025 | 2030 | Novartis Capital Corporation, New York, United States | 99.700% | 1 741 |  |
| 4.300% | &nbsp;&nbsp;USD | 925 | 2025 | 2032 | Novartis Capital Corporation, New York, United States | 99.409% | 917 |  |
| 4.600% | &nbsp;&nbsp;USD | 925 | 2025 | 2035 | Novartis Capital Corporation, New York, United States | 99.564% | 918 |  |
| 5.200% | &nbsp;&nbsp;USD | 350 | 2025 | 2045 | Novartis Capital Corporation, New York, United States | 99.889% | 348 |  |
| 5.300% | &nbsp;&nbsp;USD | 550 | 2025 | 2055 | Novartis Capital Corporation, New York, United States | 99.464% | 543 |  |
| **Total straight and floating rate bonds** |  |  |  |  |  |  | **27 929** | **24 112** |
|  <sup>1</sup> The EUR 1 850 million bond issued in 2020 features a coupon step-up of 0.25% commencing with the first interest payment date after December 31, 2025, if one or both of the 2025 Patient Access Targets are not met. These 2025 Patient Access Targets are the 2025 Flagship Programs Patient Reach Target and the 2025 Strategic Innovative Therapies Patient Reach Target, as defined in the bond prospectus. As of December 31, 2025, these 2025 Patient Access Targets have been met and there will therefore be no coupon step-up. | <sup>1</sup> The EUR 1 850 million bond issued in 2020 features a coupon step-up of 0.25% commencing with the first interest payment date after December 31, 2025, if one or both of the 2025 Patient Access Targets are not met. These 2025 Patient Access Targets are the 2025 Flagship Programs Patient Reach Target and the 2025 Strategic Innovative Therapies Patient Reach Target, as defined in the bond prospectus. As of December 31, 2025, these 2025 Patient Access Targets have been met and there will therefore be no coupon step-up. | <sup>1</sup> The EUR 1 850 million bond issued in 2020 features a coupon step-up of 0.25% commencing with the first interest payment date after December 31, 2025, if one or both of the 2025 Patient Access Targets are not met. These 2025 Patient Access Targets are the 2025 Flagship Programs Patient Reach Target and the 2025 Strategic Innovative Therapies Patient Reach Target, as defined in the bond prospectus. As of December 31, 2025, these 2025 Patient Access Targets have been met and there will therefore be no coupon step-up. | <sup>1</sup> The EUR 1 850 million bond issued in 2020 features a coupon step-up of 0.25% commencing with the first interest payment date after December 31, 2025, if one or both of the 2025 Patient Access Targets are not met. These 2025 Patient Access Targets are the 2025 Flagship Programs Patient Reach Target and the 2025 Strategic Innovative Therapies Patient Reach Target, as defined in the bond prospectus. As of December 31, 2025, these 2025 Patient Access Targets have been met and there will therefore be no coupon step-up. | <sup>1</sup> The EUR 1 850 million bond issued in 2020 features a coupon step-up of 0.25% commencing with the first interest payment date after December 31, 2025, if one or both of the 2025 Patient Access Targets are not met. These 2025 Patient Access Targets are the 2025 Flagship Programs Patient Reach Target and the 2025 Strategic Innovative Therapies Patient Reach Target, as defined in the bond prospectus. As of December 31, 2025, these 2025 Patient Access Targets have been met and there will therefore be no coupon step-up. | <sup>1</sup> The EUR 1 850 million bond issued in 2020 features a coupon step-up of 0.25% commencing with the first interest payment date after December 31, 2025, if one or both of the 2025 Patient Access Targets are not met. These 2025 Patient Access Targets are the 2025 Flagship Programs Patient Reach Target and the 2025 Strategic Innovative Therapies Patient Reach Target, as defined in the bond prospectus. As of December 31, 2025, these 2025 Patient Access Targets have been met and there will therefore be no coupon step-up. | <sup>1</sup> The EUR 1 850 million bond issued in 2020 features a coupon step-up of 0.25% commencing with the first interest payment date after December 31, 2025, if one or both of the 2025 Patient Access Targets are not met. These 2025 Patient Access Targets are the 2025 Flagship Programs Patient Reach Target and the 2025 Strategic Innovative Therapies Patient Reach Target, as defined in the bond prospectus. As of December 31, 2025, these 2025 Patient Access Targets have been met and there will therefore be no coupon step-up. | <sup>1</sup> The EUR 1 850 million bond issued in 2020 features a coupon step-up of 0.25% commencing with the first interest payment date after December 31, 2025, if one or both of the 2025 Patient Access Targets are not met. These 2025 Patient Access Targets are the 2025 Flagship Programs Patient Reach Target and the 2025 Strategic Innovative Therapies Patient Reach Target, as defined in the bond prospectus. As of December 31, 2025, these 2025 Patient Access Targets have been met and there will therefore be no coupon step-up. | <sup>1</sup> The EUR 1 850 million bond issued in 2020 features a coupon step-up of 0.25% commencing with the first interest payment date after December 31, 2025, if one or both of the 2025 Patient Access Targets are not met. These 2025 Patient Access Targets are the 2025 Flagship Programs Patient Reach Target and the 2025 Strategic Innovative Therapies Patient Reach Target, as defined in the bond prospectus. As of December 31, 2025, these 2025 Patient Access Targets have been met and there will therefore be no coupon step-up. |
|  <sup>2</sup> The coupon of the USD 800 million floating rate bond issued in 2025 is based on compounded USD Secured Overnight Financing Rate (SOFR) plus 0.52%, with quarterly coupon reset. | <sup>2</sup> The coupon of the USD 800 million floating rate bond issued in 2025 is based on compounded USD Secured Overnight Financing Rate (SOFR) plus 0.52%, with quarterly coupon reset. | <sup>2</sup> The coupon of the USD 800 million floating rate bond issued in 2025 is based on compounded USD Secured Overnight Financing Rate (SOFR) plus 0.52%, with quarterly coupon reset. | <sup>2</sup> The coupon of the USD 800 million floating rate bond issued in 2025 is based on compounded USD Secured Overnight Financing Rate (SOFR) plus 0.52%, with quarterly coupon reset. | <sup>2</sup> The coupon of the USD 800 million floating rate bond issued in 2025 is based on compounded USD Secured Overnight Financing Rate (SOFR) plus 0.52%, with quarterly coupon reset. | <sup>2</sup> The coupon of the USD 800 million floating rate bond issued in 2025 is based on compounded USD Secured Overnight Financing Rate (SOFR) plus 0.52%, with quarterly coupon reset. | <sup>2</sup> The coupon of the USD 800 million floating rate bond issued in 2025 is based on compounded USD Secured Overnight Financing Rate (SOFR) plus 0.52%, with quarterly coupon reset. | <sup>2</sup> The coupon of the USD 800 million floating rate bond issued in 2025 is based on compounded USD Secured Overnight Financing Rate (SOFR) plus 0.52%, with quarterly coupon reset. | <sup>2</sup> The coupon of the USD 800 million floating rate bond issued in 2025 is based on compounded USD Secured Overnight Financing Rate (SOFR) plus 0.52%, with quarterly coupon reset. |

---

The following tables provide a breakdown of total non-current financial debts, including current portion by maturity and currency:

Breakdown by maturity:

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| 2025 |  | 3 356 |
| 2026 | 794 | 678 |
| 2027 | 3 834 | 3 645 |
| 2028 | 4 434 | 2 495 |
| 2029 | 1 761 | 1 666 |
| 2030 | 4 182 | 2 276 |
| After 2030 | 13 724 | 10 606 |
| **Total** | **28 729** | **24 722** |

---

Breakdown by currency:

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| US dollar (USD) | 18 778 | 15 495 |
| Euro (EUR) | 5 911 | 5 238 |
| Swiss franc (CHF) | 3 876 | 3 956 |
| Others | 164 | 33 |
| **Total** | **28 729** | **24 722** |

---

The following table shows the comparison of balance sheet carrying value and fair value of total non-current financial debts, including current portion:

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br>(USD millions) | **2025<br> Balance<br> sheet** | **2025<br> Fair<br> values** | 2024<br> Balance<br> sheet | 2024<br> Fair<br> values |
| Straight and floating rate bonds | 27 929 | 26 635 | 24 112 | 22 504 |
| Others | 800 | 800 | 610 | 610 |
| **Total** | **28 729** | **27 435** | **24 722** | **23 114** |

---

The fair values of straight and floating rate bonds are determined by quoted market prices. Other financial debts are recorded at notional amounts, which are a reasonable approximation of the fair values.

20. Provisions and other non-current liabilities

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| Accrued liability for employee benefits: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Defined benefit pension plans <sup>1</sup> | 1 635 | 1 571 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other long-term employee benefits and deferred compensation | 692 | 591 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other post-employment benefits <sup>1</sup> | 237 | 311 |
| Environmental remediation provisions | 534 | 486 |
| Provisions for product liabilities, governmental investigations and other legal matters | 78 | 75 |
| Contingent consideration <sup>2</sup> | 452 | 527 |
| Other non-current liabilities | 505 | 514 |
| **Total provisions and other non-current liabilities** | **4 133** | **4 075** |
|  <sup>1</sup> Note 24 provides additional disclosures related to post-employment benefits. | <sup>1</sup> Note 24 provides additional disclosures related to post-employment benefits. | <sup>1</sup> Note 24 provides additional disclosures related to post-employment benefits. |
|  <sup>2</sup> Note 28 provides additional disclosures related to contingent consideration. | <sup>2</sup> Note 28 provides additional disclosures related to contingent consideration. | <sup>2</sup> Note 28 provides additional disclosures related to contingent consideration. |

---

Novartis believes that its total provisions are adequate based upon currently available information. However, given the inherent difficulties in estimating liabilities in this area, Novartis may incur additional costs beyond the amounts provided. Management believes that such additional amounts, if any, would not be material to the Company's financial condition but could be material to the results of operations or cash flows in a given period.

**Environmental remediation provisions**

The following table shows the movements in the environmental liability provisions:

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| **January 1** | **498** | **538** | **588** |
| Provisions related to discontinued operations <sup>1</sup> |  |  | -53 |
| Cash payments | -9 | -4 | -4 |
| Releases of provisions | -3 | - 32 | -54 |
| Additions to provisions |  | 30 | 14 |
| Currency translation effects | 67 | -34 | 47 |
| **December 31** | **553** | **498** | **538** |
| Less current provision | -19 | -12 | -20 |
| **Non-current environmental remediation provisions at December 31** | **534** | **486** | **518** |
|  <sup>1</sup> Represents the environmental remediation provision at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the environmental remediation provision at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the environmental remediation provision at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the environmental remediation provision at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. |

---

The significant components of the environmental remediation provisions consist of costs to sufficiently clean and refurbish contaminated sites to the extent necessary, and to continue surveillance at sites where the environmental remediation exposure is less significant.

A substantial portion of the environmental remediation provisions relate to the remediation of Basel regional landfills in the adjacent border areas in Switzerland and France. The provisions are reassessed on an annual basis and adjusted as necessary.

In the United States, Novartis has been named under federal legislation (the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended) as a potentially responsible party (PRP) in respect of certain sites. Novartis actively participates in, or monitors, the cleanup activities at the sites in which it is a PRP. The provision takes into consideration the number of other PRPs at each site as well as the identity and financial position of such parties in light of the joint and several nature of the liability.

The expected timing of the related cash outflows as of December 31, 2025, is currently projected as follows:

---

| | |
|:---|:---|
| <br>(USD millions) | Expected <br> cash outflows |
| Due within two years | 54 |
| Due later than two years, but within five years | 205 |
| Due later than five years, but within 10 years | 221 |
| Due after 10 years | 73 |
| **Total environmental remediation provisions** | **553** |

---

**Provisions for product liabilities, governmental investigations and other legal matters** 

Novartis has established provisions for certain product liabilities, governmental investigations and other legal matters where a potential cash outflow is probable, and Novartis can make a reliable estimate of the amount of the outflow. These provisions represent the Company's current best estimate of the total financial effect for the matters described below and for other less significant matters. Potential cash outflows reflected in a provision might be fully or partially offset by insurance in certain circumstances.

Novartis has not established provisions for potential damage awards for certain additional legal claims against its subsidiaries if Novartis currently believes that a payment is either not probable or cannot be reliably estimated. These not-provisioned-for matters include individual product liability cases and certain other legal matters. Plaintiffs have alleged claims in these matters and the Company does not believe that information about the amount sought by plaintiffs, if that is known, would be meaningful with respect to those legal proceedings. This is due to a number of factors, including, but not limited to, the stage of proceedings, the entitlement of parties to appeal a decision and clarity as to theories of liability, damages and governing law. It is therefore, not practicable to provide information about the potential financial impact of these matters. In addition, in some of these matters there are claims for punitive or multiple (treble) damages, civil penalties and disgorgement of profits that in the view of Novartis are either wholly or partially unspecified, or wholly or partially unquantifiable at present. The Company believes that information about these amounts claimed by plaintiffs generally is not meaningful for purposes of determining a reliable estimate of a loss that is probable or more than remote.

A number of other legal matters are in such early stages, or the issues presented are such that the Company has not made any provisions, since it cannot currently estimate either a potential outcome or the amount of any potential losses. For these reasons, among others, the Company generally is unable to make a reliable estimate of possible loss with respect to such cases. It is therefore not practicable to provide information about the potential financial impact of those cases.

There might also be cases for which the Company was able to make a reliable estimate of the possible loss or the range of possible loss, but the Company believes that publication of such information on a case-by-case basis would seriously prejudice the Company's position in ongoing legal proceedings or in any related settlement discussions. Accordingly, in such cases, information has been disclosed with respect to the nature of the contingency, but no disclosure is provided as to an estimate of the possible loss or range of possible loss.

Note 27 contains additional information on contingent liabilities.

**Summary of significant legal proceedings**

The following is a summary of significant legal proceedings to which Novartis or its subsidiaries are currently a party, or were a party and that concluded in 2025.

**Investigations and related litigations**

#### Southern District of New York (S.D.N.Y.) Gilenya marketing practices investigation and litigation
In 2013, Novartis Pharmaceuticals Corporation (NPC) received a civil investigative demand from the United States Attorney's Office for the S.D.N.Y. requesting the production of documents and information relating to marketing practices for *Gilenya*, including the remuneration of healthcare providers in connection therewith. In 2017, the S.D.N.Y. and New York State declined to intervene in claims raised by an individual relator in a qui tam complaint. In 2022, NPC's motion to dismiss this complaint was granted. In December 2024, the appeals court affirmed in part but remanded in part, sending the case back to the district court for further proceedings. The claims are being vigorously contested.

#### Lucentis/Avastin® matters
In 2019, the French Competition Authority (FCA) issued a Statement of Objections against Novartis entities, alleging anti-competitive practices on the French market from 2008 to 2013. In 2020, the FCA issued a decision finding that the Novartis entities had infringed competition law by abusing a dominant position and imposing a fine equivalent to approximately USD 452 million. Novartis paid the fine and appealed the FCA's decision. In February 2023, the Paris Court of Appeal (Court) overturned the FCA's decision which triggered the reimbursement of the originally paid fine (recorded as "Other income" in the Company's consolidated income statement), and, in March 2023, the FCA appealed the Court's decision. In June 2025, France's Supreme Court overturned the Court's decision and sent the case back to the Court for further proceedings. As a result of the June 2025 ruling, the Company recorded a provision of USD 443 million as "Other expense." The FCA has re-imposed its original fine on Novartis pending appeal, which Novartis has paid. Novartis is the subject of similar investigations and proceedings involving the competition authority in Greece and is currently in an appeal process in Türkiye. Novartis continues to vigorously contest all claims.

#### Greece investigation
The Greek authorities are investigating legacy allegations of potentially inappropriate economic benefits to healthcare providers (HCPs), government officials and others in Greece. These authorities include the Greek Coordinating Body for Inspection and Control, and the Greek Body of Prosecution of Financial Crime (SDOE), from which the Company received a summons in 2018 and 2020. Novartis has cooperated in these investigations. In 2021, SDOE imposed on Novartis Hellas a fine equivalent to approximately USD 1.2 million; Novartis Hellas appealed the fine and, in September 2023, the Court overturned the decision and fine. The Greek State filed an appeal. In 2022, the Greek State served a civil lawsuit on Novartis Hellas, seeking approximately USD 225 million for moral damages allegedly arising from the conduct that was the subject of the Company's 2020 settlement with the US Department of Justice regarding allegations of inappropriate economic benefits in Greece that was disclosed in the 2020 Annual Report and the 2020 Form 20-F. In May 2025, the court issued its decision rejecting the claims of the Greek State, which the Greek State appealed in October 2025. In June 2025, the National Social Security Fund of Greece filed a civil lawsuit against Novartis seeking approximately EUR 229 million for moral damages arising from the same facts. The claims will be vigorously contested.

#### 340B Drug Pricing Program litigation
NPC has brought litigation challenging a number of state statutes purporting to add further obligations on manufacturers under the federal 340B program as to the use of contract pharmacies in those states. NPC has also brought litigation challenging the federal government's refusal to allow NPC to apply a rebate payment model for the 340B program.

In addition, in 2021 and 2023, two medical centers ﬁled Administrative Dispute Resolution proceedings against NPC, seeking the return of alleged overcharges resulting from NPC's contract pharmacy policy. In 2025, HRSA informed NPC that it found no overcharge in either case and dismissed the petitions.

#### Inflation Reduction Act (IRA) litigation
In 2023, following the U.S. government's selection of *Entresto* for the ﬁrst round of the IRA's "Medicare Drug Price Negotiation Program," NPC ﬁled a complaint in the U.S. District Court (USDC) for the District of New Jersey on the grounds that those drug price-setting provisions are unconstitutional under the First, Fifth and Eighth Amendments to the U.S. Constitution. In October 2024, the court granted the government's motion for summary judgment. NPC appealed to the Third Circuit and in September 2025, the Third Circuit affirmed. In January 2026, NPC petitioned the U.S. Supreme Court to review the Third Circuit's decision. That petition is pending.

**Product liability litigation**

#### Tasigna
NPC is a defendant in more than 400 US product liability actions involving *Tasigna*, alleging that the product caused various cardiovascular effects and that NPC failed to provide adequate warnings about those alleged side effects. State court actions are pending in a multicounty litigation in Bergen County, New Jersey, and federal cases are pending in a multidistrict litigation in the Middle District of Florida. Most of the cases have been resolved through voluntary dismissals, pre-trial motion practice, or through extra-judicial resolution. NPC will vigorously contest the remaining claims.

**Concluded legal matters**

***Shareholder derivative lawsuit***

In 2021, NPC, Sandoz Inc., Novartis Capital Corporation and certain present and former directors and officers of Novartis were named as defendants, and Novartis was named as a nominal defendant, in a purported shareholder derivative lawsuit filed in New York State Court.

The plaintiffs, derivatively as purported Novartis shareholders on behalf of Novartis, sought damages and other remedies based on alleged conduct by the corporate and individual defendants. In 2022, the court granted Novartis motion to dismiss the lawsuit, which the plaintiffs appealed. In July 2025, the plaintiffs dismissed their appeal, concluding this matter.

**Summary of product liability, governmental investigations and other legal matters provision movements**

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| **January 1** | **164** | **124** | **702** |
| Provisions related to discontinued operations <sup>1</sup> |  |  | -97 |
| Cash payments | -526 | -102 | -448 |
| Releases of provisions | -13 | -12 | -219 |
| Additions to provisions | 517 | 160 | 170 |
| Currency translation effects | 5 | -6 | 16 |
| **December 31** | **147** | **164** | **124** |
| Less current portion | -69 | -89 | -42 |
| **Non-current product liabilities, governmental investigations and other legal matters provisions at December 31** | **78** | **75** | **82** |
|  <sup>1</sup> Represents the provisions for product liability, governmental investigations and other legal matters at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the provisions for product liability, governmental investigations and other legal matters at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the provisions for product liability, governmental investigations and other legal matters at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the provisions for product liability, governmental investigations and other legal matters at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. |

---

Novartis believes that its total provisions for investigations, product liability, arbitration and other legal matters are adequate based upon currently available information. However, given the inherent difficulties in estimating liabilities, there can be no assurance that additional liabilities and costs will not be incurred beyond the amounts provided.

**Discontinued operations**

On October 4, 2023, the separation and spin-off of the Sandoz business was completed (Note 2). Pursuant to the Separation and Distribution Agreement that Novartis and Sandoz entered into in connection with that separation and spin-off, Sandoz and Novartis agreed, subject to certain limitations, exclusions and conditions, that Sandoz would retain or assume (as applicable) liabilities, including pending and future claims that relate to the spun-off Sandoz business (whether arising prior to, at or after the date of execution of the Separation and Distribution Agreement). Additionally, pursuant to the Separation and Distribution Agreement, Sandoz agreed to indemnify Novartis and each of its directors, officers, managers, members, agents and employees against liabilities incurred in connection with the spun-off Sandoz business.

21. Current financial debts and derivative financial instruments

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| Bank and other financial debts <sup>1</sup> | 682 | 642 |
| Commercial paper | 4 045 | 4 091 |
| Current portion of non-current financial debts | 794 | 3 356 |
| Derivative financial instruments | 81 | 143 |
| **Total current financial debts and derivative financial instruments** | **5 602** | **8 232** |
|  <sup>1</sup> Weighted average interest rate during the year 2025: 20.2% (2024: 20.8%) | <sup>1</sup> Weighted average interest rate during the year 2025: 20.2% (2024: 20.8%) | <sup>1</sup> Weighted average interest rate during the year 2025: 20.2% (2024: 20.8%) |

---

The carrying amounts of current financial debts, other than the current portion of non-current financial debts, approximate the estimated fair value due to the short-term nature of these instruments.

Details on commercial papers and short-term borrowings are provided under "Liquidity risk" in Note 28.

22. Provisions and other current liabilities

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024<sup>1</sup> |
| Provisions for deductions from revenue | 7 809 | 7 004 |
| Accruals for compensation and benefits, including social security | 2 251 | 2 181 |
| Accruals for royalties | 1 234 | 1 099 |
| Accrued expenses | 1 045 | 901 |
| Accruals for taxes other than income taxes | 612 | 626 |
| Restructuring provisions | 332 | 424 |
| Contingent consideration <sup>2</sup> | 215 | 281 |
| Accrued interests on financial debts | 201 | 169 |
| Other provisions and other current liabilities | 1 289 | 1 369 |
| **Total provisions and other current liabilities** | **14 988** | **14 054** |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |
|  <sup>1</sup> In 2025, certain previously disclosed provisions and current liabilities items were included within the line Other provisions and other current liabilities. 2024 was reclassified to conform with 2025 presentation. | <sup>1</sup> In 2025, certain previously disclosed provisions and current liabilities items were included within the line Other provisions and other current liabilities. 2024 was reclassified to conform with 2025 presentation. | <sup>1</sup> In 2025, certain previously disclosed provisions and current liabilities items were included within the line Other provisions and other current liabilities. 2024 was reclassified to conform with 2025 presentation. |
|  <sup>2</sup> Note 28 provides additional disclosures related to contingent consideration. | <sup>2</sup> Note 28 provides additional disclosures related to contingent consideration. | <sup>2</sup> Note 28 provides additional disclosures related to contingent consideration. |

---

Provisions are based upon management's best estimate and adjusted for actual experience. Such adjustments to historic estimates have not been material.

**Provisions for deductions from revenue**

The following table shows the movement of the provisions for deductions from revenue:

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| **January 1** | **7 004** | **6 315** | **6 732** |
| Provisions related to discontinued operations <sup>1</sup> |  |  | -1 415 |
| Effect of currency translation and business acquisitions and divestments | 348 | -197 | 68 |
| Payments/utilizations | -24 944 | -19 829 | -16 703 |
| Adjustments of prior years charged to income statement | -389 | -315 | -206 |
| Current year income statement charge | 25 818 | 21 157 | 17 798 |
| Change in provisions offset against gross trade receivables | -28 | -127 | 41 |
| **December 31** | **7 809** | **7 004** | **6 315** |
|  <sup>1</sup> Represents the provision for deductions from revenue at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the provision for deductions from revenue at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the provision for deductions from revenue at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the provision for deductions from revenue at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. |

---

The provisions for deductions from revenue include specific healthcare plans and program rebates as well as non-healthcare plans and program-related rebates, returns and other deductions. The provisions for deductions from revenue are adjusted to reflect experience and to reflect actual amounts as rebates, refunds, discounts and returns are processed. The provision represents estimates of the related obligations, requiring the use of judgment when estimating the effect of these deductions from revenue.

**Restructuring provisions movements**

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| **January 1** | **424** | **703** | **1 131** |
| Provisions related to discontinued operations <sup>1</sup> |  |  | -51 |
| Additions to provisions | 364 | 362 | 658 |
| Cash payments | -403 | -514 | -816 |
| Releases of provisions | -58 | -100 | -193 |
| Transfers | -32 |  | - 57 |
| Currency translation effects | 37 | -27 | 31 |
| **December 31** | **332** | **424** | **703** |
|  <sup>1</sup> Represents the restructuring provisions at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the restructuring provisions at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the restructuring provisions at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the restructuring provisions at January 1, 2023, related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. |

---

Restructuring provisions are recognized for the direct expenditure arising from the restructuring, where the plans are sufficiently detailed and where appropriate communication to those affected has been made.

Charges to increase restructuring provisions are included in "Other expense" in the consolidated income statements and release of provisions are included in "Other income" in the consolidated income statements.

In 2025, additions to provisions of USD 364 million were mainly related to initiatives to streamline business processes and organizational structures, and to focus resources on priority brands.

In 2024, additions to provisions of USD 362 million were mainly related to the continuation of the initiative announced in April 2022 to implement a new streamlined organizational model designed to support innovation, growth and productivity.

In 2023, additions to provisions of USD 658 million were mainly related to the continuation of the initiative announced in April 2022 to implement a new streamlined organizational model designed to support innovation, growth and productivity.

23. Details to the consolidated statements of cash flows

**23.1) Non-cash items and other adjustments from continuing operations**

The following table shows the reversal of non-cash items and other adjustments in the consolidated statements of

cash flows.

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| Depreciation, amortization and impairments on: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment | 975 | 932 | 1 006 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Right-of-use assets | 276 | 256 | 263 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intangible assets | 4 074 | 4 881 | 7 008 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial assets <sup>1</sup> | -50 | 45 | 106 |
| Change in provisions and other non-current liabilities | 1 083 | 696 | 61 |
| Losses/(gains) on disposal on property, plant and equipment; intangible assets; other non-current assets; and other adjustments on financial assets and other non-current assets, net | 116 | -74 | -180 |
| Equity-settled compensation plans | 1 096 | 1 044 | 865 |
| Loss from associated companies | 12 | 38 | 13 |
| Income taxes | 2 385 | 1 701 | 551 |
| Net financial expense | 1 280 | 866 | 633 |
| Other | -18 | -153 | 43 |
| **Total** | **11 229** | **10 232** | **10 369** |
|  <sup>1</sup> Includes fair value changes | <sup>1</sup> Includes fair value changes | <sup>1</sup> Includes fair value changes | <sup>1</sup> Includes fair value changes |

---

In 2025, other than through acquisitions applying the optional concentration test, there were no additions to intangible assets with deferred payments.

For 2024 and 2023, other than through business combinations, there were no additions to intangible assets with deferred payments.

In 2025, there were USD 458 million (2024: USD 304 million; 2023: USD 421 million) additions to right-of-use assets recognized.

**23.2) Total amount of income taxes paid** 

In 2025, income taxes paid by continuing operations and the total Company were USD 2 562 million (discontinued operations were nil).

In 2024, income taxes paid by continuing operations and the total Company were USD 2 258 million (discontinued operations were nil).

In 2023, income taxes paid by continuing operations were USD 2 787 million and by discontinued operations were USD 162 million, which were included within "Net cash flows from operating activities from discontinued operations." In 2023, income taxes paid by the total Company were USD 2 949 million.

**23.3) Cash flows from changes in working capital and other operating cash flow items included in the net cash flows from operating activities from continuing operations**

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| Decrease/(increase) in inventories | 34 | -225 | -546 |
| Increase in trade receivables | -1 124 | -931 | -1 504 |
| (Decrease)/increase in trade payables | -273 | -105 | 479 |
| Change in other current and non-current assets | -461 | -502 | -125 |
| Change in other current liabilities | 247 | 1 057 | 1 327 |
| **Total** | **-1 577** | **-706** | **-369** |

---

**23.4) Cash flows related to acquisitions of businesses from continuing operations** 

The following table is a summary of the cash flow impact of acquisitions of businesses:

---

| | | | | |
|:---|:---|:---|:---|:---|
| (USD millions) | Note | **2025** | 2024 | 2023 |
| **Total purchase consideration for business combinations** | 2 |  | **-4 629** | **-3 925** |
| Acquired cash and cash equivalents |  |  | 242 | 226 |
| Fair value of previously held equity interests |  |  |  | 26 |
| Contingent consideration payables, net |  | -147 | 377 | 146 |
| Payments, deferred considerations and other adjustments, net |  |  | -8 | -34 |
| **Acquisitions of businesses <sup>1</sup>** |  | **-147** | **-4 018** | **-3 561** |
|  <sup>1</sup> 2024 included the payments for purchases of MorphoSys shares by Novartis during the Offer period totaling EUR 0.3 billion (USD 0.3 billion), see Note 2 for further information. Also included in 2024 is a payment of EUR 53 million (USD 58 million) in relation to the MorphoSys acquisition. | <sup>1</sup> 2024 included the payments for purchases of MorphoSys shares by Novartis during the Offer period totaling EUR 0.3 billion (USD 0.3 billion), see Note 2 for further information. Also included in 2024 is a payment of EUR 53 million (USD 58 million) in relation to the MorphoSys acquisition. | <sup>1</sup> 2024 included the payments for purchases of MorphoSys shares by Novartis during the Offer period totaling EUR 0.3 billion (USD 0.3 billion), see Note 2 for further information. Also included in 2024 is a payment of EUR 53 million (USD 58 million) in relation to the MorphoSys acquisition. | <sup>1</sup> 2024 included the payments for purchases of MorphoSys shares by Novartis during the Offer period totaling EUR 0.3 billion (USD 0.3 billion), see Note 2 for further information. Also included in 2024 is a payment of EUR 53 million (USD 58 million) in relation to the MorphoSys acquisition. | <sup>1</sup> 2024 included the payments for purchases of MorphoSys shares by Novartis during the Offer period totaling EUR 0.3 billion (USD 0.3 billion), see Note 2 for further information. Also included in 2024 is a payment of EUR 53 million (USD 58 million) in relation to the MorphoSys acquisition. |

---

Note 2 provides disclosure of the fair value of assets and liabilities acquired through business combinations. All considerations paid for acquisitions were in cash.

**23.5) Cash flows related to acquisitions by applying the optional concentration test from continuing operations**

In 2025, the total cash consideration paid for acquisitions where the Company elected to apply the optional concentration test (resulting in the transaction being accounted for as assets separately acquired rather than a business combination within the meaning of IFRS Accounting Standards) amounted to USD 2.8 billion, net of cash and cash equivalents acquired of USD 320 million. In 2024 and 2023 there were no acquisitions where the Company elected to apply the optional concentration test.

Note 2 provides disclosure of the identifiable net assets acquired through acquisitions where the Company elected to apply the optional concentration test. All considerations paid for acquisitions were in cash.

**23.6) Cash flows related to divestments of businesses from continuing operations**

Cash flows related to divestments of businesses from continuing operations were not material. All considerations received from divestments were in cash.

**23.7) Reconciliation of liabilities arising from financing activities**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2023 | 2023 | 2023 |
| <br>(USD millions) | <br> Financial <br> debts | Derivative <br> financial <br> instruments | <br> Lease<br> liabilities | <br> Financial <br> debts | Derivative <br> financial <br> instruments | <br> Lease<br> liabilities | <br> Financial <br> debts | Derivative <br> financial <br> instruments | <br> Lease<br> liabilities |
| **January 1** | **29 455** | **143** | **1 803** | **24 520** | **91** | **1 828** | **26 120** | **55** | **1 789** |
| Financial debts, derivative financial instruments and lease liabilities related to discontinued operations <sup>1</sup> |  |  |  |  |  |  | -214 | -1 | -98 |
| Proceeds from non-current financial debts | 6 098 |  |  | 6 143 |  |  |  |  |  |
| Repayments of the current portion of non-current financial debts <sup>2</sup> | -3 392 |  |  | -2 160 |  |  | -2 223 |  |  |
| Change in current financial debts | 5 |  |  | 958 |  |  | 546 |  |  |
| Repayments of other current financial debts |  |  |  | -289 |  |  |  |  |  |
| Payments of lease liabilities |  |  | -281 |  |  | -262 |  |  | -258 |
| Interest payments for amounts included in lease liabilities classified as cash flows from operating activities |  |  | -65 |  |  | -62 |  |  | -52 |
| New, modified and terminated leases, net |  |  | 300 |  |  | 241 |  |  | 349 |
| Impact of acquisitions and divestments of businesses, net | -24 |  | -1 | 852 |  | 42 |  |  | 51 |
| Impact of acquisitions applying the optional concentration test |  |  | 8 |  |  |  |  |  |  |
| Changes in fair values, lease interest and other changes, net | 90 | -62 | 77 | -8 | 52 | 72 | -2 | 37 | 28 |
| Amortization of bonds discount | 40 |  |  | 33 |  |  | 17 |  |  |
| Currency translation effects | 1 184 |  | 79 | -594 |  | -56 | 276 |  | 19 |
| **December 31** | **33 456** | **81** | **1 920** | **29 455** | **143** | **1 803** | **24 520** | **91** | **1 828** |
| Non-current <sup>3</sup> | 27 935 |  | 1 657 | 21 366 |  | 1 568 | 18 436 |  | 1 598 |
| Current <sup>3</sup> | 5 521 | 81 | 263 | 8 089 | 143 | 235 | 6 084 | 91 | 230 |
|  <sup>1</sup> Represents the financial debts, derivative financial instruments and lease liabilities at January 1, 2023 related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the financial debts, derivative financial instruments and lease liabilities at January 1, 2023 related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the financial debts, derivative financial instruments and lease liabilities at January 1, 2023 related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the financial debts, derivative financial instruments and lease liabilities at January 1, 2023 related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the financial debts, derivative financial instruments and lease liabilities at January 1, 2023 related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the financial debts, derivative financial instruments and lease liabilities at January 1, 2023 related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the financial debts, derivative financial instruments and lease liabilities at January 1, 2023 related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the financial debts, derivative financial instruments and lease liabilities at January 1, 2023 related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the financial debts, derivative financial instruments and lease liabilities at January 1, 2023 related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. | <sup>1</sup> Represents the financial debts, derivative financial instruments and lease liabilities at January 1, 2023 related to the Sandoz business reported as discontinued operations. Notes 1, 2 and 29 provide disclosures related to discontinued operations. |
|  <sup>2</sup> Repayments of the current portion of non-current financial debts were only recorded in the consolidated statements of cash flows from continuing operations. | <sup>2</sup> Repayments of the current portion of non-current financial debts were only recorded in the consolidated statements of cash flows from continuing operations. | <sup>2</sup> Repayments of the current portion of non-current financial debts were only recorded in the consolidated statements of cash flows from continuing operations. | <sup>2</sup> Repayments of the current portion of non-current financial debts were only recorded in the consolidated statements of cash flows from continuing operations. | <sup>2</sup> Repayments of the current portion of non-current financial debts were only recorded in the consolidated statements of cash flows from continuing operations. | <sup>2</sup> Repayments of the current portion of non-current financial debts were only recorded in the consolidated statements of cash flows from continuing operations. | <sup>2</sup> Repayments of the current portion of non-current financial debts were only recorded in the consolidated statements of cash flows from continuing operations. | <sup>2</sup> Repayments of the current portion of non-current financial debts were only recorded in the consolidated statements of cash flows from continuing operations. | <sup>2</sup> Repayments of the current portion of non-current financial debts were only recorded in the consolidated statements of cash flows from continuing operations. | <sup>2</sup> Repayments of the current portion of non-current financial debts were only recorded in the consolidated statements of cash flows from continuing operations. |
|  <sup>3</sup> Note 10 provides additional disclosures related to lease liabilities, Note 19 provides additional disclosures related to non-current financial debts, and Note 21 provides additional disclosures related to current financial debts and derivative financial instruments. | <sup>3</sup> Note 10 provides additional disclosures related to lease liabilities, Note 19 provides additional disclosures related to non-current financial debts, and Note 21 provides additional disclosures related to current financial debts and derivative financial instruments. | <sup>3</sup> Note 10 provides additional disclosures related to lease liabilities, Note 19 provides additional disclosures related to non-current financial debts, and Note 21 provides additional disclosures related to current financial debts and derivative financial instruments. | <sup>3</sup> Note 10 provides additional disclosures related to lease liabilities, Note 19 provides additional disclosures related to non-current financial debts, and Note 21 provides additional disclosures related to current financial debts and derivative financial instruments. | <sup>3</sup> Note 10 provides additional disclosures related to lease liabilities, Note 19 provides additional disclosures related to non-current financial debts, and Note 21 provides additional disclosures related to current financial debts and derivative financial instruments. | <sup>3</sup> Note 10 provides additional disclosures related to lease liabilities, Note 19 provides additional disclosures related to non-current financial debts, and Note 21 provides additional disclosures related to current financial debts and derivative financial instruments. | <sup>3</sup> Note 10 provides additional disclosures related to lease liabilities, Note 19 provides additional disclosures related to non-current financial debts, and Note 21 provides additional disclosures related to current financial debts and derivative financial instruments. | <sup>3</sup> Note 10 provides additional disclosures related to lease liabilities, Note 19 provides additional disclosures related to non-current financial debts, and Note 21 provides additional disclosures related to current financial debts and derivative financial instruments. | <sup>3</sup> Note 10 provides additional disclosures related to lease liabilities, Note 19 provides additional disclosures related to non-current financial debts, and Note 21 provides additional disclosures related to current financial debts and derivative financial instruments. | <sup>3</sup> Note 10 provides additional disclosures related to lease liabilities, Note 19 provides additional disclosures related to non-current financial debts, and Note 21 provides additional disclosures related to current financial debts and derivative financial instruments. |

---

24. Post-employment benefits for employees

**Defined benefit plans**

In addition to the legally required social security schemes, the Company has numerous independent pension and other post-employment benefit plans. In most cases, these plans have externally administered funding in entities that are legally separate from the Company. For certain Company entities, however, no independent plan assets exist for the pension and other post-employment benefit obligations of employees. In these cases, the related unfunded liability is included in the balance sheet. The defined benefit obligations (DBOs) of all major pension and other post-employment benefit plans are reappraised annually by independent actuaries using the projected unit credit method. Plan assets are recognized at fair value.

The major plans are based in Switzerland, the United States, the United Kingdom and Germany, which represent 96% (2024: 96%) of the Company's total DBO for pension plans. Details of the plans in the two most significant countries, Switzerland and the United States, which represent 85% (2024: 85%) of the Company's total DBO for post-employment benefit plans, are provided below.

Swiss-based pension plans represent the most significant portion of the Company's total DBO and plan assets. For active insured members the benefits are linked to contributions paid into the plan, interest credits granted and conversion rates applied.

All benefits granted under Swiss-based pension plans are vested, and Swiss legislation prescribes that the employer has to contribute a fixed percentage of an employee's pay to an external pension fund. Additional employer contributions may be required whenever the plan's statutory funding ratio falls below a certain level. The employee also contributes to the plan. The pension plans are run by separate legal entities, each governed by a board of trustees that – for the principal plans – consists of representatives nominated by Novartis and the active insured employees. The boards of trustees are responsible for the plan design and asset investment strategy.

The United States pension plans represent the second-largest component of the Company's total DBO and plan assets. The principal plans (Qualified Plans) are funded, whereas plans providing additional benefits for executives (Restoration Plans) are unfunded. Employer contributions are required for Qualified Plans whenever the statutory funding ratio falls below a certain level.

Furthermore, in certain countries, employees are covered under other post-employment benefit plans and post-retirement medical plans.

In the US, other post-employment benefit plans consist primarily of post-employment healthcare benefits, which have been closed to new members since 2015. There is no statutory funding requirement for these plans. The Company is funding these plans to the extent that it is tax efficient.

The following tables are a summary of the funded and unfunded defined benefit obligation for pension and other post-employment benefit plans of employees at December 31, 2025 and 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Pension plans  | Pension plans  | Other post-employment benefit plans | Other post-employment benefit plans |
| (USD millions) | **2025** | 2024 | **2025** | 2024 |
| **Benefit obligation at January 1** | **17 775** | **19 037** | **392** | **440** |
| Current service cost | 292 | 259 | 8 | 9 |
| Interest cost | 365 | 398 | 22 | 23 |
| Past service costs and settlements | 63 | -85 | -23 | 12 |
| Administrative expenses | 26 | 24 |  |  |
| Remeasurement (gains)/losses arising from changes in financial assumptions <sup>1</sup> | -587 | 431 | 7 | -10 |
| Remeasurement (gains)/losses arising from changes in demographic assumptions |  | -98 | -7 |  |
| Experience-related remeasurement losses/(gains) | 273 | 76 | -41 | -43 |
| Currency translation effects | 1 988 | -1 065 | 7 | -13 |
| Benefit payments | -1 428 | -1 373 | -31 | -26 |
| Contributions of employees | 177 | 176 |  |  |
| Effect of acquisitions, divestments or transfers | 28 | -5 |  |  |
| **Benefit obligation at December 31** | **18 972** | **17 775** | **334** | **392** |
| **Fair value of plan assets at January 1** | **18 868** | **19 934** | **81** | **71** |
| Interest income | 333 | 369 | 4 | 3 |
| Return on plan assets excluding interest income | 960 | 682 | 12 | 7 |
| Currency translation effects | 2 297 | -1 187 |  |  |
| Novartis contributions | 418 | 381 | 31 | 26 |
| Contributions of employees | 177 | 176 |  |  |
| Settlements |  | -110 |  |  |
| Benefit payments | -1 428 | -1 373 | -31 | -26 |
| Effect of acquisitions, divestments or transfers | -3 | -4 |  |  |
| **Fair value of plan assets at December 31** | **21 622** | **18 868** | **97** | **81** |
| **Funded status** | **2 650** | **1 093** | **-237** | **-311** |
| **Limitation on recognition of fund surplus at January 1** | **-60** | **-2 167** |  |  |
| Change in limitation on recognition of fund surplus <sup>2</sup> | 2 | 2 034 |  |  |
| Currency translation effects |  | 100 |  |  |
| Interest income on limitation of fund surplus | -2 | -27 |  |  |
| **Limitation on recognition of fund surplus at December 31** | **-60** | **-60** |  |  |
| **Net asset/(liability) in the balance sheet at December 31** | **2 590** | **1 033** | **-237** | **-311** |
|  <sup>1</sup> The remeasurement (gains)/losses arising from changes in the financial assumptions is driven mainly by changes in the actuarial discount rates used to determine the benefit obligation. | <sup>1</sup> The remeasurement (gains)/losses arising from changes in the financial assumptions is driven mainly by changes in the actuarial discount rates used to determine the benefit obligation. | <sup>1</sup> The remeasurement (gains)/losses arising from changes in the financial assumptions is driven mainly by changes in the actuarial discount rates used to determine the benefit obligation. | <sup>1</sup> The remeasurement (gains)/losses arising from changes in the financial assumptions is driven mainly by changes in the actuarial discount rates used to determine the benefit obligation. | <sup>1</sup> The remeasurement (gains)/losses arising from changes in the financial assumptions is driven mainly by changes in the actuarial discount rates used to determine the benefit obligation. |
|  <sup>2</sup> As at December 2024, the limitation on recognition of fund surplus (the asset ceiling) on pension plans in Switzerland that was recognized in 2023 was no longer required to be applied and therefore was reversed in 2024. | <sup>2</sup> As at December 2024, the limitation on recognition of fund surplus (the asset ceiling) on pension plans in Switzerland that was recognized in 2023 was no longer required to be applied and therefore was reversed in 2024. | <sup>2</sup> As at December 2024, the limitation on recognition of fund surplus (the asset ceiling) on pension plans in Switzerland that was recognized in 2023 was no longer required to be applied and therefore was reversed in 2024. | <sup>2</sup> As at December 2024, the limitation on recognition of fund surplus (the asset ceiling) on pension plans in Switzerland that was recognized in 2023 was no longer required to be applied and therefore was reversed in 2024. | <sup>2</sup> As at December 2024, the limitation on recognition of fund surplus (the asset ceiling) on pension plans in Switzerland that was recognized in 2023 was no longer required to be applied and therefore was reversed in 2024. |

---

The reconciliation of the net asset/(liability) from January 1 to December 31 is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Pension plans  | Pension plans  | Other post-employment benefit plans | Other post-employment benefit plans |
| (USD millions) | **2025** | 2024 | **2025** | 2024 |
| **Net asset/(liability) at January 1** | **1 033** | **-1 270** | **-311** | **-369** |
| Current service cost | -292 | -259 | -8 | -9 |
| Net interest expense | -34 | -56 | -18 | -20 |
| Administrative expenses | -26 | -24 |  |  |
| Past service costs and settlements | -63 | -25 | 23 | -12 |
| Remeasurements | 1 274 | 273 | 53 | 60 |
| Currency translation effects | 309 | -22 | -7 | 13 |
| Novartis contributions | 418 | 381 | 31 | 26 |
| Effect of acquisitions, divestments or transfers | -31 | 1 |  |  |
| Change in limitation on recognition of fund surplus <sup>1</sup> | 2 | 2 034 |  |  |
| **Net asset/(liability) at December 31** | **2 590** | **1 033** | **-237** | **-311** |
| **Amounts recognized in the consolidated balance sheet** |  |  |  |  |
| Prepaid post-employment benefit plans | 4 225 | 2 604 |  |  |
| Accrued liability for defined benefit pension plans | -1 635 | -1 571 | -237 | -311 |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |
|  <sup>1</sup> As at December 2024, the limitation on recognition of fund surplus (the asset ceiling) on pension plans in Switzerland that was recognized in 2023 was no longer required to be applied and therefore was reversed in 2024. | <sup>1</sup> As at December 2024, the limitation on recognition of fund surplus (the asset ceiling) on pension plans in Switzerland that was recognized in 2023 was no longer required to be applied and therefore was reversed in 2024. | <sup>1</sup> As at December 2024, the limitation on recognition of fund surplus (the asset ceiling) on pension plans in Switzerland that was recognized in 2023 was no longer required to be applied and therefore was reversed in 2024. | <sup>1</sup> As at December 2024, the limitation on recognition of fund surplus (the asset ceiling) on pension plans in Switzerland that was recognized in 2023 was no longer required to be applied and therefore was reversed in 2024. | <sup>1</sup> As at December 2024, the limitation on recognition of fund surplus (the asset ceiling) on pension plans in Switzerland that was recognized in 2023 was no longer required to be applied and therefore was reversed in 2024. |

---

The following table shows a breakdown of the DBO for pension plans by geography and type of member, and the breakdown of plan assets into the geographical locations in which they are held:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 | 2024 |
| <br>(USD millions) | <br> Switzerland | United<br> States | Rest of<br> the world | <br> Total | <br> Switzerland | United<br> States | Rest of<br> the world | <br> Total |
| **Benefit obligation at December 31** | **13 820** | **2 408** | **2 744** | **18 972** | **12 843** | **2 374** | **2 558** | **17 775** |
| *Thereof unfunded* |  | *498* | *437* | *935* |  | *501* | *378* | *879* |
| *By type of member* |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Active | 5 823 | 237 | 705 | 6 765 | 5 447 | 259 | 652 | 6 358 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred pensioners |  | 782 | 767 | 1 549 |  | 743 | 824 | 1 567 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pensioners | 7 997 | 1 389 | 1 272 | 10 658 | 7 396 | 1 372 | 1 082 | 9 850 |
| **Fair value of plan assets at December 31** | **17 831** | **1 784** | **2 007** | **21 622** | **15 225** | **1 746** | **1 897** | **18 868** |
| **Funded status** | **4 011** | **-624** | **-737** | **2 650** | **2 382** | **-628** | **-661** | **1 093** |

---

The following table shows a breakdown of the DBO for other post-employment benefit plans by geography and type of member, and the breakdown of plan assets into the geographical locations in which they are held:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | 2024 | 2024 | 2024 |
| <br>(USD millions) | United<br> States | Rest of<br> the world | <br> Total | United<br> States | Rest of<br> the world | <br> Total |
| **Benefit obligation at December 31** | **245** | **89** | **334** | **314** | **78** | **392** |
| *Thereof unfunded* | *148* | *89* | *237* | *233* | *78* | *311* |
| *By type of member* |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Active | 47 | 11 | 58 | 28 | 10 | 38 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pensioners | 198 | 78 | 276 | 286 | 68 | 354 |
| **Fair value of plan assets at December 31** | **97** |  | **97** | **81** |  | **81** |
| **Funded status** | **-148** | **-89** | **-237** | **-233** | **-78** | **-311** |

---

The following table shows the principal weighted average actuarial assumptions, for the major plans, used for calculating defined benefit plans and other post-employment benefits of employees:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Pension plans  | Pension plans  | Pension plans  | Other post-employment benefit plans | Other post-employment benefit plans | Other post-employment benefit plans |
|  | **2025** | 2024 | 2023 | **2025** | 2024 | 2023 |
| **Weighted average assumptions used to determine benefit obligations at December 31** |  |  |  |  |  |  |
| Discount rate | 2.1% | 1.9% | 2.2% | 5.2% | 5.5% | 5.5% |
| Expected rate of pension increase | 0.3% | 0.3% | 0.3% |  |  |  |
| Expected rate of salary increase | 2.3% | 2.6% | 3.0% |  |  |  |
| Interest on savings account | 2.0% | 2.0% | 1.3% |  |  |  |
| Current average life expectancy for a 65-year-old male in years | 22 | 22 | 22 | 21 | 21 | 21 |
| Current average life expectancy for a 65-year-old female in years | 24 | 24 | 24 | 23 | 23 | 23 |

---

Changes in the aforementioned actuarial assumptions can result in volatility in the accounting for the Company's pension plans in the consolidated financial statements. This can result in substantial changes in the Company's other comprehensive income, long-term liabilities and other non-current assets.

The DBO is significantly impacted by assumptions regarding the rate that is used to discount the actuarially determined post-employment benefit liability. This rate is based on yields of high-quality corporate bonds in the country of the plan. Decreasing corporate bond yields decrease the discount rate, so that the DBO increases and the funded status decreases.

The impact of decreasing interest rates on a plan's assets is more difficult to predict. A significant part of the plan assets is invested in bonds. Bond values usually rise when interest rates decrease and may therefore partially compensate for the decrease in the funded status. Furthermore, pension assets also include significant holdings of equity instruments. Share prices usually tend to rise when interest rates decrease and therefore often counteract the negative impact of the rising defined benefit obligation on the funded status (although the correlation of interest rates with equities is not as strong as with bonds, especially in the short term).

The expected rate for pension increases significantly affects the DBO of most plans in Switzerland, Germany and the United Kingdom. Such pension increases also decrease the funded status, although there is no strong correlation between the value of the plan assets and pension/inflation increases.

Assumptions regarding life expectancy significantly impact the DBO. An increase in longevity increases the DBO. There is no offsetting impact from the plan assets, as no longevity bonds or swaps are held by the pension funds. The Company's actuaries use mortality tables that take into account historic patterns and expected changes, such as further increases in longevity.

The mortality assumptions used for the pension plans in Switzerland were based on BVG 2020 tables with future improvements based on the Continuous Mortality Investigation ('CMI') model. For the pension and postretirement medical benefit plans in the US, the Society of Actuaries Pri-2012 mortality tables with generational improvements based on Scale MP-2021 are used.

The following table shows the sensitivity of the defined benefit pension obligation to the principal actuarial assumptions for the major plans in Switzerland, the United States, the United Kingdom and Germany on an aggregated basis:

---

| | | |
|:---|:---|:---|
| <br>(USD millions) | Change in 2025 <br> year-end defined <br> benefit pension <br> obligation | Change in 2024 <br> year-end defined <br> benefit pension <br> obligation |
| 25 basis point increase in discount rate | -501 | -484 |
| 25 basis point decrease in discount rate | 528 | 511 |
| One-year increase in life expectancy | 638 | 611 |
| 25 basis point increase in rate of pension increase | 344 | 329 |
| 25 basis point decrease in rate of pension increase | -53 | -52 |
| 25 basis point increase of interest on savings account | 45 | 43 |
| 25 basis point decrease of interest on savings account | -44 | -41 |
| 25 basis point increase in rate of salary increase | 40 | 41 |
| 25 basis point decrease in rate of salary increase | -41 | -41 |

---

The healthcare cost trend rate assumptions used for other post-employment benefits in the US are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | 2024 | 2023 |
| Healthcare cost trend rate assumed for next year | 6.3% | 6.5% | 6.3% |
| Rate to which the cost trend rate is assumed to decline | 4.5% | 4.5% | 4.5% |
| Year that the rate reaches the ultimate trend rate | 2033 | 2033 | 2031 |

---

The following table shows the fair value of plan asset allocation of funded defined benefit pension plans at December 31, 2025 and 2024 on an aggregated basis:

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| Equity securities | 5 771 | 5 052 |
| Debt securities | 6 885 | 6 309 |
| Real estate | 4 284 | 3 775 |
| Alternative investments | 3 681 | 3 167 |
| Cash and cash equivalents and other investments | 1 001 | 565 |
| **Total** | **21 622** | **18 868** |

---

Cash and cash equivalents and most of the equity and debt securities have a quoted market price in an active market. Real estate, alternative investments (comprising hedge funds investments (approximately 64% in 2025; 66% 2024), infrastructure investments (approximately 33% in 2025; 31% in 2024), and private equity investments (approximately 3% in both 2025 and 2024)) and other investments (comprising mainly diversified investment funds and insurance contracts) generally have a quoted market price or a regularly updated net asset value.

The strategic allocation of assets of the different pension plans is determined, based upon the local requirements and the market and economic environment, with the objective of achieving an investment return that, together with the contributions paid by the Company and its employees, is sufficient to maintain reasonable control over the various funding risks of the respective pension plans. The asset allocation currently includes investments in shares of Novartis AG as per the below table:

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2025** | December 31, <br> 2024 |
| Investment in shares of Novartis AG |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Number of shares (in millions) | 2.3 | 2.3 |
| Market value (in USD billions) | 0.3 | 0.2 |

---

The weighted average duration of the major plans defined benefit pension obligation is 11.6 years (2024: 12.0 years).

The Company's ordinary contribution to the various pension plans is based on the rules of each plan. Additional contributions are made whenever this is required by statute or law (i.e., usually when statutory funding levels fall below predetermined thresholds). None of the major plans are foreseen to require additional funding in the next year, as statutory funding levels remain above the predetermined thresholds.

The expected future cash flows over the upcoming 10 years in respect of pension and other post-employment benefit plans at December 31, 2025, were as follows:

---

| | | |
|:---|:---|:---|
| <br>(USD millions) | <br>Pension plans | Other post-<br> employment<br> benefit plans |
| **Company contributions** |  |  |
| 2026 (estimated) | 394 | 27 |
| **Expected future benefit payments** |  |  |
| 2026 | 1 631 | 28 |
| 2027 | 1 380 | 29 |
| 2028 | 1 272 | 30 |
| 2029 | 1 228 | 30 |
| 2030 | 1 188 | 30 |
| 2031–2035 | 5 510 | 142 |

---

**Defined contribution plans**

In many subsidiaries, employees are covered by defined contribution plans. Contributions charged to the consolidated income statement for continuing operations for the defined contribution plans were:

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| Contributions for defined contribution plans continuing operations | 556 | 556 | 477 |

---

The Company's total personnel costs for continuing operations amounted to USD 13.2 billion in 2025 (2024: USD 12.7 billion; 2023: USD 12.7 billion).

25. Equity-based participation plans for employees

The equity-based compensation expense from continuing operations related to all equity-based participation plans, and the liabilities arising from equity-based payment transactions were as follows:

---

| | | | |
|:---|:---|:---|:---|
| (USD millions) | **2025** | 2024 | 2023 |
| Expense related to equity-based participation plans | 1 330 | 1 307 | 1 142 |
| *Of which* |  |  |  |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Equity settled <sup>1</sup>* | *1 096* | *1 044* | *865* |
| &nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;Cash settled* | *234* | *263* | *277* |
| Accrued share-based payments | 253 | 262 | 322 |
|  <sup>1</sup> Includes voluntary payroll deductions on Novartis Employee Share Purchase Plan of USD 140 million (2024: USD 112 million, 2023: USD 71 million). | <sup>1</sup> Includes voluntary payroll deductions on Novartis Employee Share Purchase Plan of USD 140 million (2024: USD 112 million, 2023: USD 71 million). | <sup>1</sup> Includes voluntary payroll deductions on Novartis Employee Share Purchase Plan of USD 140 million (2024: USD 112 million, 2023: USD 71 million). | <sup>1</sup> Includes voluntary payroll deductions on Novartis Employee Share Purchase Plan of USD 140 million (2024: USD 112 million, 2023: USD 71 million). |

---

Equity-based participation plans can be separated into the following plans:

**Annual Incentive**

Starting in 2024, at least 30% of the Annual Incentive for the Novartis Company CEO (the CEO) and other Executive Committee of Novartis (ECN) members are required to be deferred in Novartis AG shares, if the CEO and other ECN members shareholding requirement is met, with the remainder being paid in cash. If the mandatory shareholding requirements are not met, at least 50% is required to be deferred in Novartis AG shares and the remainder paid in cash. The CEO and other ECN members can opt to invest up to the maximum cash portion of their Annual Incentive to receive further Novartis AG shares. In 2025 and 2024, the CEO and certain other ECN members met their mandatory shareholding requirements.

In 2023 the Annual Incentive for the CEO and other ECN members was paid 50% in cash and 50% in Novartis AG restricted shares (RSs) or restricted share units (RSUs).

In 2023, for a select portion of the Novartis management leadership team, the Annual Incentive was paid 70% in cash and 30% in RSs or RSUs, with an option to invest up to the maximum cash portion of their Annual Incentive to receive further shares. Starting in 2024, the select portion of the Novartis management leadership team is no longer eligible for the Annual Incentive. Instead, they are compensated through the other existing cash and equity-based participation plans for employees.

The cash portion of the Annual Incentive is paid out during March in the year following the end of the performance period, and the Novartis AG shares, RSs and RSUs are granted during January in the year following the end of the performance period.

**Employee share savings plan**

Novartis operates employee share savings and purchase plans in certain countries. The most significant is described below.

The ESOP in Switzerland offers participants the choice to receive their Annual Incentive in cash or in shares. For the 2025 performance year, participants could elect to receive the incentive in 100% cash, or partially in shares in increments of 10% from 30% to 100%, with any remaining portion paid in cash. For 2024 and prior performance years, participants were offered the choice to receive their Annual Incentive (i) 100% in shares, (ii) 50% in shares and 50% in cash, or (iii) 100% in cash. After the expiration of a three-year holding period for Novartis shares invested under the ESOP, participants receive one matching share for every two invested shares. A select portion of Novartis management leadership team is eligible to invest their annual cash bonus in Novartis AG shares from 2024 onwards. Employees eligible for the equity plan "Select" and the select portion of the Novartis management leadership team are not eligible to receive ESOP matching.

The CEO and other ECN members are not eligible to participate in the ESOP plan.

**Novartis Employee share purchase plan**

In 2022 Novartis started to grant shares under the Employee Share Purchase Plan (ESPP). The ESPP enables employees to voluntarily purchase Novartis AG shares through payroll deductions at a 15% discounted price, up to a defined maximum amount. While the ESPP is global in scope, the first phase covered employees in North America (the US, Puerto Rico and Canada). Other countries' employees became eligible to participate in the ESPP commencing in 2024, according to a multi-year phased implementation plan. The shares are not subject to a vesting period.

**Novartis equity plan "Select"**

The equity plan "Select" is a global equity incentive plan under which eligible employees may annually be awarded an equity grant. In 2025 and 2024, the equity grants awarded under the "Select" plan are subject to a three-year staggered vesting period. In 2023, equity grants awarded under the Select plan were subject to a three- year cliff vesting period, and for eligible selected groups of employees a four-year staggered vesting period. The CEO and other ECN members, and prior to 2025 a select portion of Novartis management leadership team, are not eligible to participate in the equity plan "Select."

The equity plan "Select" currently allows participants employed and living in Switzerland to choose the form of their equity compensation in RSs or RSUs. In all other jurisdictions, RSs or RSUs are granted unilaterally.

Until 2013, participants could also choose to receive part or the entire grant in the form of tradable share options. All tradable share options expired on their 10th anniversary from the grant date, which was in January 2023. As a result, at December 31, 2023, there were no outstanding options under the Novartis equity plan "Select."

**Long-Term Performance Plan**

The Long-Term Performance Plan (LTPP) is a global equity plan for the ECN, a select portion of the Novartis management leadership team and up to 2023 select groups of employees with specific targets.

Participants are granted a target number of performance share units (PSUs) at the beginning of every performance period, which are converted into unrestricted Novartis shares after the performance period. The actual payout depends on the achievement of the performance measures and ranges between 0% and 200% of the granted amount. PSUs granted under the LTPP do not carry voting rights, but do carry dividend equivalents that are paid in unrestricted Novartis AG shares at the end of the performance period.

The LTPP awards are subject to a three-year performance and vesting period. The performance criteria for the ECN are based on both Novartis internal performance metrics and variable that can be observed in the market, which is the ranking of the Novartis total shareholder return (TSR) relative to a global healthcare peer group of 14 other companies, over rolling three-year performance periods. Only ECN members, as from performance cycle 2023, are subject to the TSR performance metric under the LTPP.

TSR for Novartis and the peer companies is calculated as the change in the company share price, which is translated to USD at the relevant exchange rate, including the reinvestment return of dividends, over the three-year performance period. The calculation is based on Bloomberg standard published TSR data, which is publicly available. The position of Novartis in the peer group determines the payout range based on a payout matrix.

**Other share awards**

Selected employees may exceptionally receive Special Share Awards of RSs or RSUs. These Special Share Awards provide an opportunity to reward outstanding achievements or exceptional performance, and aim to retain key contributors. They are based on a formal internal selection process, through which the individual performance of each selected employee is assessed at several management levels. Special Share Awards had a minimum three-year vesting period before 2021 and mainly three years thereafter. In exceptional circumstances, Special Share Awards may be awarded to attract special expertise and new talents to the organization (not applicable to ECN). Externally recruited ECN members are eligible only for special awards that are "buyouts" in the case that it is to replace equity forfeited with their former employer. The equity is provided on a like-for-like basis as the forfeited equity, at a similar value with a similar vesting period, and with or without a performance condition.

Worldwide, employees at different levels in the organization were awarded RSs and RSUs in 2025, 2024 and 2023.

In addition, in 2025, 2024 and 2023, Board members received unrestricted shares as part of their regular compensation.

At the Sandoz Distribution date, all RSU and PSU holders, who were not entitled to the dividend in kind in the form of Sandoz Group AG shares received "keep whole awards" in Novartis AG shares to compensate for the loss of the Sandoz value from their Novartis AG shares. These keep whole awards were accounted for as a modification, which did not significantly change the fair value of the original grant. The change in fair value was measured by comparing the fair value of the grant before the spin-off against the fair value of the grant plus keep whole award right after spin-off.

**Summary of share grants**

The table below provides a summary of share grants (shares, RSs, RSUs and PSUs) for all plans.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | 2024 | 2024 |
|  | <br> Number<br> of shares<br> in millions | Weighted <br> average fair<br> value at grant<br> date in USD | <br> Number<br> of shares<br> in millions | Weighted <br> average fair<br> value at grant<br> date in USD |
| **Annual Incentive** |  |  |  |  |
| – RSU | 0.1 | 88.6 | 0.2 | 96.7 |
| – Restricted shares |  |  | 0.1 | 107.8 |
| **Share savings plans** |  |  |  |  |
| – RSU | 0.4 | 88.5 | 0.5 | 96.8 |
| – Shares | 1.3 | 99.7 | 1.3 | 107.8 |
| **Novartis Employee Share Purchase Plan <sup>1</sup>** | 1.2 | 116.7 | 1.0 | 104.9 |
| **Select North America (RSU)** | 3.7 | 92.4 | 3.4 | 100.1 |
| **Select outside North America** |  |  |  |  |
| – RSU | 1.4 | 92.3 | 1.4 | 100.2 |
| – Restricted shares | 0.7 | 99.8 | 0.6 | 107.8 |
| **Long-Term Performance Plan (PSU)** | 1.6 | 86.2 | 1.1 | 98.6 |
| **Other share awards** |  |  |  |  |
| – RSU | 0.5 | 100.2 | 0.4 | 96.8 |
| – Restricted shares | 0.1 | 111.3 |  |  |
|  <sup>1</sup> The Novartis Employee Share Purchase Plan (ESPP) enables employees to voluntarily purchase Novartis AG shares through payroll deductions at a 15% discount to the fair value of the Novartis AG share price at the respective ESPP grant dates. The weighted average fair value at grant date in USD in the table shows the weighted average Novartis AG share price at the respective ESPP grant dates during the year. | <sup>1</sup> The Novartis Employee Share Purchase Plan (ESPP) enables employees to voluntarily purchase Novartis AG shares through payroll deductions at a 15% discount to the fair value of the Novartis AG share price at the respective ESPP grant dates. The weighted average fair value at grant date in USD in the table shows the weighted average Novartis AG share price at the respective ESPP grant dates during the year. | <sup>1</sup> The Novartis Employee Share Purchase Plan (ESPP) enables employees to voluntarily purchase Novartis AG shares through payroll deductions at a 15% discount to the fair value of the Novartis AG share price at the respective ESPP grant dates. The weighted average fair value at grant date in USD in the table shows the weighted average Novartis AG share price at the respective ESPP grant dates during the year. | <sup>1</sup> The Novartis Employee Share Purchase Plan (ESPP) enables employees to voluntarily purchase Novartis AG shares through payroll deductions at a 15% discount to the fair value of the Novartis AG share price at the respective ESPP grant dates. The weighted average fair value at grant date in USD in the table shows the weighted average Novartis AG share price at the respective ESPP grant dates during the year. | <sup>1</sup> The Novartis Employee Share Purchase Plan (ESPP) enables employees to voluntarily purchase Novartis AG shares through payroll deductions at a 15% discount to the fair value of the Novartis AG share price at the respective ESPP grant dates. The weighted average fair value at grant date in USD in the table shows the weighted average Novartis AG share price at the respective ESPP grant dates during the year. |

---

26. Transactions with related parties

**Novartis Pension Fund**

A company subsidiary provided an uncommitted overnight credit facility to the Novartis Pension Fund, Switzerland, for up to USD 500 million with interest at the US Federal Funds Rate. This credit facility was not utilized during 2025, 2024 and 2023.

**Executive Officers and Non-Executive Directors compensation**

As at December 31, 2025, there were 10 Executive Committee members ("Executive Officers"). During 2025, 1 Executive Officer stepped down.

As at December 31, 2024, there were 11 Executive Officers. During 2024, no Executive Officer stepped down.

As at December 31, 2023, there were 11 Executive Officers. During 2023, 1 Executive Officer stepped down.

The total IFRS Accounting Standards compensation expense for Executive Committee members and the Non-Executive Directors (12 in 2025, 13 in 2024 and 14 in 2023) calculated in accordance with the Company's accounting policies for equity-based compensation and pension benefits was as follows:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Executive Officers | Executive Officers | Executive Officers | Non-Executive Directors | Non-Executive Directors | Non-Executive Directors | Total | Total | Total |
| (USD millions) | **2025** | 2024 | 2023 | **2025** | 2024 | 2023 | **2025** | 2024 | 2023 |
| Cash and other compensation | 21.0 | 19.0 | 18.0 | 5.2 | 4.9 | 4.9 | 26.2 | 23.9 | 22.9 |
| Post-employment benefits | 2.5 | 2.4 | 2.1 |  |  |  | 2.5 | 2.4 | 2.1 |
| Equity-based compensation | 75.6 | 61.9 | 62.2 | 5.1 | 5.4 | 5.0 | 80.7 | 67.3 | 67.2 |
| **Total** | 99.1 | 83.3 | 82.3 | 10.3 | 10.3 | 9.9 | 109.4 | 93.6 | 92.2 |

---

During 2025, compensation expense for Executive Officers increased compared to 2024, mainly driven by higher realized and expected payouts based on the achievement of the defined performance criteria, higher other compensation, and higher USD-reported expense due to the strengthening of the Swiss Franc against the US dollar.

During 2024, there was a slight increase in the compensation expense for Executive Officers compared with 2023, mainly as a result of higher cash and other compensation paid for current Executive Officers.

During 2023, there was an increase in the compensation expense for Executive Officers compared with 2022, primarily driven by higher equity-based compensation, mainly due to higher realized and expected payouts on the achievement of the defined performance criteria, partly offset by lower cash and other compensation, due to lower accelerated expenses from stepped down Executive Officers compared with 2022.

The Annual Incentive award, which is fully included in equity-based compensation even when paid out in cash, is granted in January in the year following the reporting period.

The disclosures on Board and executive compensation required by the Swiss Code of Obligations are shown in the Compensation Report of the Company.

27. Commitments and contingent liabilities

**Research and development commitments**

The Company has entered into long-term research and development agreements related to intangible assets with various third parties. The Company has also entered into acquisition agreements related to intangible assets with third parties that were accounted for as assets separately acquired by electing to apply the optional concentration test. These agreements may provide for potential milestone payments by Novartis, which are dependent on successful achievement of specified clinical development, regulatory approval, or sales milestones, or other conditions specified in the agreements.

As of December 31, 2025, the amount and estimated timing of the Company's commitments to make payments under those agreements, which are shown without risk adjustment and on an undiscounted basis, were as follows:

---

| | |
|:---|:---|
| (USD millions) | **2025** |
| 2026 | 465 |
| 2027 | 1 376 |
| 2028 | 1 246 |
| 2029 | 802 |
| 2030 | 1 180 |
| Thereafter | 12 404 |
| **Total** | **17 473** |

---

**Commitments for capital calls**

The Company holds investments in funds in which it has committed to invest further upon future capital calls. As at December 31, 2025, the total uncalled capital commitments for the Company's investments in funds amount to USD 50 million. Note 28 contains further information on the Company's investments in funds.

**Other commitments**

The Company has entered into various purchase commitments for services and materials as well as for equipment in the ordinary course of business. These commitments are generally entered into at current market prices and reflect normal business operations. For the disclosure of property, plant and equipment purchase commitments, see Note 9.

The Company routinely acquires businesses and interests in intellectual property focused on key disease areas and indications that the Company expects to be growth drivers in the future.

Pending acquisition commitment to acquire Avidity Biosciences, Inc. - On October 25, 2025, Novartis entered into an agreement to acquire Avidity Biosciences, Inc. (Avidity), a U.S-based biotechnology company specializing in RNA therapeutics, for a total consideration of approximately USD 12 billion, payable in cash. Under the terms of the agreement, Novartis will acquire all outstanding common shares of Avidity at a price of USD 72 per share in cash at closing. The completion of the transaction is subject to the satisfaction or waiver of certain closing conditions specified in the agreement. As of the date the consolidated financial statements were approved for publication, the transaction remains pending and is expected to close in the first half of 2026. Novartis expects to fund the acquisition through available cash and third party debt financing.

Pending long-term research and development agreement – In January 2026, Novartis entered into a long-term research and development agreement which is expected to close in the first quarter of 2026. The agreement provides for potential milestone payments by Novartis that may be capitalized and royalties. Based on their estimated timing, the payments for this transaction are expected to amount to USD 0.2 billion in 2026, USD 0.2 billion in 2031, and USD 0.4 billion thereafter.

**Guarantees issued**

The Company has issued guarantees to third parties in the ordinary course of business, including for tax, customs or other governmental agencies.

**Contingent liabilities**

Novartis companies have to observe the laws, government orders and regulations of the country in which they operate.

A number of Novartis companies are, and will likely continue to be, subject to various legal proceedings and investigations that arise from time to time. These matters may involve, among others, proceedings pertaining to: pricing; bribery and corruption; trade regulation and embargo legislation; product liability; commercial disputes; employment and wrongful discharge; antitrust and competition; securities; government benefit programs; reimbursement; rebates; healthcare fraud; sales and marketing practices; insider trading; occupational health and safety; environmental regulations; tax; cyber and data security; use of technologies, including AI; data privacy; regulatory interactions; disclosure compliance; and intellectual property. As a result, the Company may become subject to substantial liabilities that may not be covered by insurance and that could affect our business, financial position and reputation. While Novartis does not believe that any of these legal proceedings will have a material adverse effect on its financial position, litigation is inherently unpredictable and large judgments sometimes occur. Consequently, we may in the future incur judgments that could involve large payments, including the potential repayment of amounts allegedly obtained improperly, and other penalties, including treble damages, any of which could have a material adverse effect on our results of operations or cash flow.

Governments and regulatory authorities around the world have been stepping up their compliance and law enforcement activities in recent years in key areas, including marketing practices, pricing, corruption, trade restrictions, embargo legislation, insider trading, antitrust, cyber security and data privacy. Furthermore, when a government or regulatory authority undertakes an investigation, it is not uncommon for other governments or regulators to undertake investigations regarding the same or similar matters. Responding to such investigations is costly and requires an increasing amount of management's time and attention. In addition, such investigations may affect our reputation, create a risk of potential exclusion from government reimbursement programs in the United States and other countries, and lead to (or arise from) litigation. These factors have contributed to decisions by Novartis and other companies in the healthcare industry, when deemed in their interest, to enter into settlement agreements with governmental authorities around the world prior to any formal decision by the authorities or a court. These government settlements have involved and may in the future involve large

cash payments, sometimes in the hundreds of millions of dollars or more, including the potential repayment of amounts allegedly obtained improperly and other penalties, including treble damages. In addition, settlements of government healthcare fraud cases and antitrust cases often require companies to enter into corporate integrity agreements (or other similar types of agreements), which are intended to regulate company behavior for a period of years. Our affiliate Novartis Corporation was party to such an agreement, which expired in 2025. In addition, matters underlying governmental investigations and settlements may be the subject of separate private litigation.

While provisions have been made for probable outflows of economic resources, which management deems to be reasonable or appropriate, there are uncertainties connected with these estimates.

Note 20 contains additional information on these matters.

A number of Novartis companies are involved in legal proceedings concerning intellectual property rights. The inherent unpredictability of such proceedings means that there can be no assurances as to their ultimate outcome. A negative result in any such proceeding could potentially adversely affect the ability of certain Novartis companies to sell their products, or require the payment of substantial damages or royalties. The timing and the outcome of legal proceedings and their potential financial effect are not predictable.

In the opinion of management, however, the outcome of these actions will not materially affect the Company's financial position but could be material to the results of operations or cash flow in a given period.

The Company's potential environmental remediation liability is assessed based on a risk assessment and investigation of the various sites identified by the Company as at risk for environmental remediation exposure. The Company's future remediation expenses are affected by a number of uncertainties. These uncertainties include, but are not limited to, the method and extent of remediation, the percentage of material attributable to the Company at the remediation sites relative to that attributable to other parties, and the financial capabilities of the other potentially responsible parties.

Note 20 contains additional information on environmental liabilities.

28. Financial instruments – additional disclosures

The following tables show the carrying values of financial instruments by measurement category as at December 31, 2025 and 2024. Except for straight bonds and floating rate bonds (see Note 19), the carrying values are equal to, or a reasonable approximation of, the fair values.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **2025** | **2025** | **2025** | **2025** |
| <br>(USD millions) | <br>Note | **<br>Financial<br> instruments at<br> amortized<br> costs** | **<br> Financial<br> instruments at<br> fair value<br> through other<br> comprehensive<br> income** | **Financial<br> instruments at<br> fair value<br> through the<br> consolidated<br> income<br> statement** | **<br>Other<br> financial<br> liabilities at<br> amortized<br> costs** |
| Cash and cash equivalents | 16 | 11 435 |  |  |  |
| Time deposits and short-term investments with original maturity more than 90 days | 16 | 98 |  |  |  |
| Trade receivables | 15 | 8 937 |  |  |  |
| Other receivables and current assets |  | 1 279 | 27 |  |  |
| Long-term financial investments - equity securities | 13 |  | 442 | 282 |  |
| Long-term financial investments - debt securities | 13 |  | 23 | 44 |  |
| Long-term financial investments - fund investments | 13 |  |  | 202 |  |
| Long-term loans, advances, security deposits and other long-term receivables | 13 | 597 |  |  |  |
| Associated companies at fair value through profit and loss |  |  |  | 88 |  |
| Derivative financial instruments | 16 |  |  | 57 |  |
| Contingent consideration receivables | 13/17 |  |  | 859 |  |
| **Total financial assets** |  | **22 346** | **492** | **1 532** |  |
| Bank and other short-term financial debts | 21 | 682 |  |  |  |
| Commercial paper | 21 | 4 045 |  |  |  |
| Straight bonds | 19 | 27 131 |  |  |  |
| Floating rate bonds | 19 | 798 |  |  |  |
| Other bonds | 19 | 500 |  |  |  |
| Other financial debts | 19 | 300 |  |  |  |
| Trade payables |  | 4 456 |  |  |  |
| Contingent consideration liabilities | 20/22 |  |  | 667 |  |
| Derivative financial instruments | 21 |  |  | 81 |  |
| Lease liabilities | 10 |  |  |  | 1 920 |
| **Total financial liabilities** |  | **37 912** |  | **748** | **1 920** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | 2024 | 2024 | 2024 | 2024 |
| <br>(USD millions) | <br>Note | <br>Financial<br> instruments at<br> amortized<br> costs | <br> Financial<br> instruments at<br> fair value<br> through other<br> comprehensive<br> income | Financial<br> instruments at<br> fair value<br> through the<br> consolidated<br> income<br> statement | <br>Other<br> financial<br> liabilities at<br> amortized<br> costs |
| Cash and cash equivalents | 16 | 11 409 | 50 |  |  |
| Time deposits and short-term investments with original maturity more than 90 days | 16 | 1 892 |  |  |  |
| Trade receivables | 15 | 7 423 |  |  |  |
| Other receivables and current assets |  | 1 286 | 42 |  |  |
| Long-term financial investments - equity securities | 13 |  | 464 | 282 |  |
| Long-term financial investments - debt securities | 13 |  | 27 | 26 |  |
| Long-term financial investments - fund investments | 13 |  |  | 210 |  |
| Long-term loans, advances, security deposits and other long-term receivables | 13 | 335 |  |  |  |
| Associated companies at fair value through profit and loss |  |  |  | 109 |  |
| Derivative financial instruments | 16 |  |  | 106 |  |
| Contingent consideration receivables | 13/17 |  |  | 791 |  |
| **Total financial assets** |  | **22 345** | **583** | **1 524** |  |
| Bank and other short-term financial debts | 21 | 642 |  |  |  |
| Commercial paper | 21 | 4 091 |  |  |  |
| Straight bonds | 19 | 24 112 |  |  |  |
| Other bonds | 19 | 523 |  |  |  |
| Other financial debts | 19 | 87 |  |  |  |
| Trade payables |  | 4 572 |  |  |  |
| Contingent consideration liabilities | 20/22 |  |  | 808 |  |
| Derivative financial instruments | 21 |  |  | 143 |  |
| Lease liabilities | 10 |  |  |  | 1 803 |
| **Total financial liabilities** |  | **34 027** |  | **951** | **1 803** |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |

---

**Derivative financial instruments**

The following tables show the contract or underlying principal amounts and fair values of derivative financial instruments analyzed by type of contract as at December 31, 2025 and 2024. Contract or underlying principal amounts indicate the gross volume of business outstanding at the consolidated balance sheet date and do not represent amounts at risk. The fair values are determined by reference to market prices or standard pricing models that use observable market inputs as at December 31, 2025 and 2024.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Contract or underlying principal amounts | Contract or underlying principal amounts | Positive fair values  | Positive fair values  | Negative fair values  | Negative fair values  |
| (USD millions) | **2025** | 2024 | **2025** | 2024 | **2025** | 2024 |
| Forward foreign exchange rate contracts | 15 332 | 10 194 | 34 | 81 | -79 | -143 |
| Commodity purchase contracts | 207 | 159 | 23 | 25 | -2 |  |
| **Total derivative financial instruments included in marketable securities and in current financial debts** | **15 539** | **10 353** | **57** | **106** | **-81** | **-143** |

---

The following table shows a breakdown by currency of the contract or underlying principal amounts of derivative financial instruments as at December 31, 2025 and 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | **2025** |
| (USD millions) | EUR | USD | Other | Total |
| Forward foreign exchange rate contracts | 2 648 | 1 157 | 11 527 | 15 332 |
| Commodity purchase contracts | 181 | 11 | 15 | 207 |
| **Total derivative financial instruments** | **2 829** | **1 168** | **11 542** | **15 539** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | 2024 | 2024 | 2024 | 2024 |
| (USD millions) | EUR | USD | Other | Total |
| Forward foreign exchange rate contracts | 1 024 | 1 717 | 7 453 | 10 194 |
| Commodity purchase contracts | 149 | 10 |  | 159 |
| **Total derivative financial instruments** | **1 173** | **1 727** | **7 453** | **10 353** |

---

**Derivative financial instruments effective for hedge accounting purposes**

At the end of 2025 and 2024, there were no open hedging instruments for anticipated transactions.

**Fair value by hierarchy**

As required by the IFRS Accounting Standards, financial assets and liabilities recorded at fair value in the consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. There are three hierarchical levels, based on increasing subjectivity associated with the inputs to derive fair valuation for these assets and liabilities, which are as follows:

The assets carried at Level 1 fair value are equity and debt securities as well as fund investments listed in active markets.

The assets generally included in the Level 2 fair value hierarchy are derivatives, and certain debt securities. The liabilities generally included in this fair value hierarchy consist of derivatives. These are valued using corroborated market data.

Level 3 inputs are unobservable for the asset or liability. The assets generally included in Level 3 fair value hierarchy are various investments in funds and unquoted equity security investments. Contingent consideration and other financial liabilities carried at fair value are included in this category.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | **2025** |
| (USD millions) | Level 1 | Level 2 | Level 3 | Total |
| **Financial assets** |  |  |  |  |
| **Marketable securities** |  |  |  |  |
| Derivative financial instruments |  | 57 |  | 57 |
| **Total marketable securities and derivative financial instruments at fair value** |  | **57** |  | **57** |
| **Equity securities current** | **15** |  | **12** | **27** |
| **Current contingent consideration receivables** |  |  | **101** | **101** |
| **Long-term financial investments** |  |  |  |  |
| Debt and equity securities | 255 | 7 | 529 | 791 |
| Fund investments | 19 |  | 183 | 202 |
| Non-current contingent consideration receivables |  |  | 758 | 758 |
| **Total long-term financial investments at fair value** | **274** | **7** | **1 470** | **1 751** |
| **Associated companies at fair value through profit and loss** |  |  | **88** | **88** |
| **Financial liabilities** |  |  |  |  |
| Current contingent consideration liabilities |  |  | -215 | -215 |
| Derivative financial instruments |  | -81 |  | -81 |
| **Total current financial liabilities at fair values** |  | **-81** | **-215** | **-296** |
| Non-current contingent consideration liabilities |  |  | -452 | -452 |
| **Total non-current financial liabilities at fair value** |  |  | **-452** | **-452** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | 2024 | 2024 | 2024 | 2024 |
| (USD millions) | Level 1 | Level 2 | Level 3 | Total |
| **Financial assets** |  |  |  |  |
| **Cash and cash equivalents** |  |  |  |  |
| Debt securities <sup>1</sup> | 50 |  |  | 50 |
| **Total cash and cash equivalents at fair value** | **50** |  |  | **50** |
| **Marketable securities** |  |  |  |  |
| Derivative financial instruments |  | 106 |  | 106 |
| **Total marketable securities and derivative financial instruments at fair value** |  | **106** |  | **106** |
| **Equity securities current** | **24** |  | **18** | **42** |
| **Current contingent consideration receivables** |  |  | **120** | **120** |
| **Long-term financial investments** |  |  |  |  |
| Debt and equity securities | 193 | 7 | 599 | 799 |
| Fund investments | 15 |  | 195 | 210 |
| Non-current contingent consideration receivables |  |  | 671 | 671 |
| **Total long-term financial investments at fair value** | **208** | **7** | **1 465** | **1 680** |
| **Associated companies at fair value through profit and loss** |  |  | **109** | **109** |
| **Financial liabilities** |  |  |  |  |
| Contingent consideration liabilities |  |  | -281 | -281 |
| Derivative financial instruments |  | -143 |  | -143 |
| **Total current financial liabilities at fair value** |  | **-143** | **-281** | **-424** |
| Non-current contingent consideration liabilities |  |  | -527 | -527 |
| **Total non-current financial liabilities at fair value** |  |  | **-527** | **-527** |
|  <sup>1</sup> Includes short-term highly rated government-backed debt securities, with an original maturity of three months or less | <sup>1</sup> Includes short-term highly rated government-backed debt securities, with an original maturity of three months or less | <sup>1</sup> Includes short-term highly rated government-backed debt securities, with an original maturity of three months or less | <sup>1</sup> Includes short-term highly rated government-backed debt securities, with an original maturity of three months or less | <sup>1</sup> Includes short-term highly rated government-backed debt securities, with an original maturity of three months or less |

---

The change in carrying values associated with Level 3 financial instruments, using significant unobservable inputs during the year ended December 31, is set forth below:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | 2025 | 2025 | 2025 | 2025 | 2025 |
| <br>(USD millions) | Associated <br> companies at <br> fair value through<br> profit and loss | <br>Fund<br> investments | <br> Debt and<br> equity<br> securities | <br> Contingent <br> consideration <br> receivables | <br> Contingent <br> consideration <br> liabilities |
| **January 1** | **109** | **195** | **617** | **791** | **-808** |
| Fair value gains and other adjustments, including from divestments recognized in the consolidated income statement | 7 | 11 | 122 | 109 | 68 |
| Fair value losses (including impairments and amortizations) and other adjustments recognized in the consolidated income statement | -14 | -14 | -73 |  | -117 |
| Fair value adjustments recognized in the consolidated statement of comprehensive income and currency translation effects | 2 | 5 | 16 | 95 | -15 |
| Purchases | 1 | 12 | 108 |  |  |
| Cash receipts and payments |  |  |  | -136 | 205 |
| Disposals | -6 | -26 | -242 |  |  |
| Reclassification | -11 |  | -7 |  |  |
| **December 31** | **88** | **183** | **541** | **859** | **-667** |
| Total of fair value gains and losses recognized in the consolidated income statement for assets and liabilities held at December 31, 2025 | -7 | -3 | 49 | 109 | -49 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
| <br>(USD millions) | Associated <br> companies at <br> fair value through<br> profit and loss | <br>Fund<br> investments | <br> Debt and<br> equity<br> securities | <br> Contingent <br> consideration <br> receivables | <br> Contingent <br> consideration <br> liabilities | <br> Other<br> financial<br> liabilities |
| **January 1** | **101** | **184** | **647** | **618** | **-403** | **-88** |
| Fair value gains and other adjustments, including from divestments recognized in the consolidated income statement | 24 | 38 | 22 | 236 | 41 |  |
| Fair value losses (including impairments and amortizations) and other adjustments recognized in the consolidated income statement | -12 | -14 | -110 |  | -100 |  |
| Fair value adjustments recognized in the consolidated statement of comprehensive income and currency translation effects | -2 | -2 | -9 | -39 | 7 |  |
| Purchases | 16 | 12 | 130 | 53 | -376 |  |
| Cash receipts and payments |  |  |  | -77 | 23 | 88 |
| Disposals | -18 | -21 | -44 |  |  |  |
| Reclassification |  | -2 | -19 |  |  |  |
| **December 31** | **109** | **195** | **617** | **791** | **-808** |  |
| Total of fair value gains and losses recognized in the consolidated income statement for assets and liabilities held at December 31, 2024 | 12 | 24 | -88 | 236 | -59 |  |

---

During 2025, there was one transfer of equity securities from Level 3 to Level 1 for USD 3 million (2024: USD 19 million), due to the Initial Public Offering of the invested company.

Realized gains and losses associated with Level 3 long-term financial investments measured at fair value through the consolidated income statement are recorded in the consolidated income statement under "Other income" or "Other expense," respectively. Realized gains and losses associated with Level 3 long-term financial investments measured at fair value through other comprehensive income are not recycled through the consolidated income statement but are instead reclassified to retained earnings.

During the year, the net gain and net loss recorded on associated companies, fund investments and long-term financial investments at fair value through profit and loss were USD 149 million and USD 101 million, respectively.

To determine the fair value of a contingent consideration, various unobservable inputs are used. A change in these inputs might result in a significantly higher or lower fair value measurement. The inputs used are, among others, the probability of success, sales forecast, assumptions regarding the discount rate and timing, and different scenarios of triggering events. The inputs are interrelated. The significance and usage of these inputs to each contingent consideration may vary due to differences in the timing and triggering events for payments or in the nature of the asset related to the contingent consideration.

If the most significant parameters for the Level 3 input were to change by 10% positively or negatively, or where the probability of success (POS) is the most significant input parameter, 10% were added or deducted from the applied probability of success, for contingent consideration payables and contingent consideration receivables, this would change the amounts recorded in the 2025 consolidated income statement by USD 111 million and USD 107 million, respectively.

**Equity securities measured at fair value through other comprehensive income**

Equity securities held as strategic investments, typically held outside the Novartis Venture Fund, are generally designated at date of acquisition as financial assets valued at fair value through other comprehensive income with no subsequent recycling through profit and loss. Except for the investment in Sandoz Group AG with a fair value of USD 595 million as at December 31, 2023, these are made up of individually non-significant investments. In 2024, the consolidated foundations' investments in Sandoz Group AG shares were fully sold, and the USD 169 million gain on disposal was transferred from other comprehensive income to retained earnings. As at December 31, 2025, the Company holds 44 non-listed equity securities (December 31, 2024: 52) and 13 listed equity securities (December 31, 2024: 16) in this category with the following fair values:

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| Listed equity securities | 242 | 185 |
| Non-listed equity securities | 227 | 321 |
| **Total equity securities** | **469** | **506** |
| <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> | <sup>&nbsp;&nbsp;&nbsp;&nbsp;</sup> |

---

During 2025 and 2024, dividends received from these equity securities were insignificant. In 2025, equity securities that were no longer considered strategic, with a fair value of USD 52 million (2024: USD 95 million), were sold, and the USD 36 million loss on disposal net of taxes (2024: USD 70 million) was transferred from other comprehensive income to retained earnings. During 2024, a total of USD 81 million gain, including the disposal of the Sandoz Group AG shares and net of taxes, was transferred from other comprehensive income to retained earnings (see Note 8).

**Nature and extent of risks arising from financial instruments**

**Market risk**

Market risk in general comprises currency risk, interest rate risk and price risk, such as commodity and equity prices. Novartis is exposed to market risk, primarily related to foreign currency exchange rates, interest rates and the market value of investments. The Company actively monitors and seeks to reduce, where it deems it appropriate to do so, fluctuations in these exposures. It is the Company's policy and practice to enter into a variety of derivative financial instruments to manage the volatility of these exposures. It does not enter into any financial transactions containing a risk that cannot be quantified at the time the transaction is concluded. In addition, it does not sell short assets it does not have, or does not know it will have, in the future. The Company only sells existing assets or enters into transactions and future transactions (in the case of anticipatory hedges) that it confidently expects that it will have in the future, based on past experience.

**Foreign currency exchange rate risk**

The Company uses the US dollar as its reporting currency. As a result, the Company is exposed to foreign currency exchange movements, primarily in European, Japanese and emerging market currencies. Fluctuations in the exchange rates between the US dollar and other currencies can have a significant effect on both the Company's results of operations, including reported sales and earnings, as well as on the reported value of our assets, liabilities and cash flows. This, in turn, may significantly affect the comparability of period-to-period results of operations.

Because our expenditures in Swiss francs are significantly higher than our revenues in Swiss francs, volatility in the value of the Swiss franc can have a significant impact on the reported value of our earnings, assets and liabilities, and the timing and extent of such volatility can be difficult to predict.

There is also a risk that certain countries could experience a devaluation of their currency. If this occurs, it could impact the effective prices we would be able to charge for our products and also have an adverse impact on both our consolidated income statement and balance sheet.

Subsidiaries whose functional currencies have experienced a cumulative inflation rate of more than 100% over the past three years apply the principles of IAS Standards 29 "Financial reporting in Hyperinflationary Economies." The hyperinflationary economies in which Novartis operates are Argentina, Venezuela and Türkiye and these were hyperinflationary for all periods presented. The impacts of applying IAS Standards 29 are recorded in "Other financial income and expense" and are presented separately in Note 5 – Other financial income and expense.

The Company manages its global currency exposure by engaging in hedging transactions where management deems appropriate. Novartis may enter into various contracts that reflect the changes in the value of foreign currency exchange rates to preserve the value of assets, commitments and anticipated transactions. Novartis also uses forward contracts and may enter into foreign currency option contracts to hedge.

Net investments in subsidiaries in foreign countries are long-term investments. Their fair value changes through movements of foreign currency exchange rates. The Company has designated a certain portion of its long-term euro-denominated straight bonds, maturing in 2028, 2030 and 2038, as hedges of the translation risk arising on certain of these net investments in foreign operations with euro functional currency. As of December 31, 2025, bonds with a carrying amount of EUR 3.3 billion (USD 3.9 billion; December 31, 2024: EUR 1.8 billion, USD 1.9 billion), have been designated as hedge instruments. During 2025, USD 232 million of net of taxes unrealized loss (2024: USD 91 million gains) was recognized in other comprehensive income and accumulated in currency translation effects in relation with these net investment hedges. The hedges remained effective since inception, and no amount was recognized in the consolidated income statement in 2025 and 2024. In 2023, USD 8 million of accumulated net investment hedge reserve was recognized in the consolidated income statement at the time of the Sandoz spin-off.

**Commodity price risk**

The Company has only a very limited exposure to price risk related to anticipated purchases of certain commodities used as raw materials by the Company's businesses. A change in those prices may alter the gross margin of a specific business, but generally by not more than 10% of the margin and thus below the Company's risk management tolerance levels. Accordingly, the Company does not enter into significant commodity futures, forward or option contracts to manage fluctuations in prices of anticipated purchases.

**Interest rate risk**

The Company addresses its net exposure to interest rate risk mainly through the ratio of its fixed-rate financial debts to variable-rate financial debts contained in its total financial debts portfolio. To manage this mix, Novartis may enter into interest rate swap agreements, in which it exchanges periodic payments based on a notional amount and agreed-upon fixed and variable interest rates.

**Equity risk**

The Company may purchase equities as investments of its liquid funds. As a policy, it limits its holdings in an unrelated company to less than 5% of its liquid funds. Potential investments are thoroughly analyzed. Call options are written on equities that the Company owns, and put options are written on equities that the Company wants to buy and for which cash is available.

**Credit risk**

Credit risks arise from the possibility that customers may not be able to settle their obligations as agreed. To manage this risk, the Company periodically assesses country and customer credit risk, assigns individual credit limits, and takes actions to mitigate credit risk where appropriate (for example payment guarantees, credit insurance and factoring).

The provisions for expected credit losses for customers are based on a forward-looking expected credit loss, which includes possible default events on the trade receivables over the entire holding period of the trade receivables.

In measuring the expected credit losses, trade receivables are grouped based on shared credit risk characteristics (such as private versus public receivables) and days past due. In determining the expected credit loss rates, the Company considers current and forward-looking macroeconomic factors that may affect the ability of customers to settle the receivables, and historical loss rates for each category of customers.

The Company's largest customer accounted for approximately 18% of net sales to third parties from continuing operations, and the second largest and third largest customers accounted for 13% and 7% of net sales to third parties from continuing operations, respectively (2024: 17%, 13% and 7%, respectively; 2023: 15%, 13% and 8%, respectively).

The top three largest customer's trade receivables outstanding amounted to 16%, 12% and 6%, respectively, of the Company's trade receivables as at December 31, 2025 (2024: 19%, 12% and 7%, respectively). There is no other significant concentration of customer credit risk.

**Counterparty risk**

Counterparty risk encompasses issuer risk on marketable securities and money market instruments; credit risk on cash, time deposits and derivatives; as well as settlement risk for different instruments. Issuer risk is reduced by only buying securities that are at least A- rated. Counterparty credit risk and settlement risk are reduced by a policy of entering into transactions with counterparties (banks or financial institutions) that feature a strong credit rating. Exposure to these risks is closely monitored and kept within predetermined parameters. The limits are regularly assessed and determined based upon credit analysis, including financial statement and capital adequacy ratio reviews. In addition, reverse repurchasing agreements are contracted, and Novartis has entered into credit support agreements with various banks for derivative transactions. To further reduce the settlement risk, the Company has implemented a multi-currency payment system, Continuous Linked Settlement (CLS), which provides multilateral netting (payment-versus-payment settlement) of cash flows from foreign exchange transactions.

The Company's cash and cash equivalents are held with major regulated financial institutions, the three largest of which hold approximately 13.3%, 11.1% and 8.7%, respectively (2024: 9.6%, 7.9% and 7.7%, respectively).

The Company does not expect any losses from non-performance by these counterparties and does not have any significant grouping of exposures to financial sector or country risk.

**Liquidity risk**

Liquidity risk is defined as the risk that the Company could not be able to settle or meet its obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Novartis Treasury is responsible for liquidity, funding and settlement management. In addition, liquidity and funding risks, and related processes and policies, are overseen by management. Novartis manages its liquidity risk on a consolidated basis according to business needs and tax, capital or regulatory considerations, if applicable, through numerous sources of financing in order to maintain flexibility.

Certain countries have legal or economic restrictions on the ability of subsidiaries to transfer funds to the Company in the form of cash dividends, loans or advances, but these restrictions do not have an impact on the ability of the Company to meet its cash obligations.

Management monitors the Company's net debt or liquidity position through rolling forecasts on the basis of expected cash flows.

Novartis has a US commercial paper program under which it can issue up to USD 9.0 billion in the aggregate of unsecured commercial paper notes. Under this program, commercial paper notes totaling USD 3.4 billion were outstanding as at December 31, 2025, (2024: USD 3.5 billion) with a weighted average interest rate of 3.7% (2024: 4.5%). Novartis also has a Japanese commercial paper program under which it can issue up to JPY 150 billion (approximately USD 1.0 billion) of unsecured commercial paper notes. Under this program, commercial paper notes totaling USD 0.6 billion were outstanding as at December 31, 2025 (2024: USD 0.6 billion) with a weighted average interest rate of 0.8% (2024: 0.5%). Novartis further has a committed credit facility of USD 6.0 billion. This credit facility is intended to be used as a backstop for the US commercial paper program. This facility matures in May 2029, and was undrawn as at December 31, 2025.

The following table sets forth how management monitors net debt or liquidity based on details of the remaining contractual maturities of selected financial assets and liabilities as at December 31, 2025, and December 31, 2024:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | **2025** | **2025** | **2025** |
| <br>(USD millions) | <br>Due within <br> one month | Due later than <br> one month <br> but less than <br> three months | Due later than<br> three months <br> but less than <br> one year | Due later than <br> one year <br> but less than <br> five years | <br>Due after <br> five years | <br>Total |
| **Current assets** |  |  |  |  |  |  |
| Marketable securities, time deposits and short-term investments with original maturity more than 90 days and accrued interest | 6 | 39 | 53 |  |  | 98 |
| Derivative financial instruments | 17 | 15 | 1 | 9 | 15 | 57 |
| Cash and cash equivalents | 7 634 | 3 801 |  |  |  | 11 435 |
| **Total current financial assets** | **7 657** | **3 855** | **54** | **9** | **15** | **11 590** |
| **Non-current liabilities** |  |  |  |  |  |  |
| Financial debts |  |  |  | -14 211 | -13 724 | -27 935 |
| *Financial debts - undiscounted* |  |  |  | *-14 245* | *-13 865* | *-28 110* |
| **Total non-current financial debts** |  |  |  | **-14 211** | **-13 724** | **-27 935** |
| **Current liabilities** |  |  |  |  |  |  |
| Financial debts | -4 130 | -410 | -981 |  |  | -5 521 |
| *Financial debts - undiscounted* | *-4 134* | *-410* | *-981* |  |  | *-5 525* |
| Derivative financial instruments | -29 | -26 | -26 |  |  | -81 |
| **Total current financial debts** | **-4 159** | **-436** | **-1 007** |  |  | **-5 602** |
| **Net debt** | **3 498** | **3 419** | **-953** | **-14 202** | **-13 709** | **-21 947** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 2024 | 2024 | 2024 | 2024 | 2024 | 2024 |
| <br>(USD millions) | <br>Due within <br> one month | Due later than <br> one month <br> but less than <br> three months | Due later than<br> three months <br> but less than <br> one year | Due later than <br> one year <br> but less than <br> five years | <br>Due after <br> five years | <br>Total |
| **Current assets** |  |  |  |  |  |  |
| Marketable securities, time deposits and short-term investments with original maturity more than 90 days and accrued interest |  | 1 858 | 34 |  |  | 1 892 |
| Derivative financial instruments | 37 | 38 | 7 |  | 24 | 106 |
| Cash and cash equivalents | 7 918 | 3 541 |  |  |  | 11 459 |
| **Total current financial assets** | **7 955** | **5 437** | **41** |  | **24** | **13 457** |
| **Non-current liabilities** |  |  |  |  |  |  |
| Financial debts |  |  |  | -8 484 | -12 882 | -21 366 |
| *Financial debts - undiscounted* |  |  |  | *-8 505* | *-13 010* | *-21 515* |
| **Total non-current financial debts** |  |  |  | **-8 484** | **-12 882** | **-21 366** |
| **Current liabilities** |  |  |  |  |  |  |
| Financial debts | -3 963 | -1 620 | -2 506 |  |  | -8 089 |
| *Financial debts - undiscounted* | *-3 963* | *-1 620* | *-2 508* |  |  | *-8 091* |
| Derivative financial instruments | -14 | -129 |  |  |  | -143 |
| **Total current financial debts** | **-3 977** | **-1 749** | **-2 506** |  |  | **-8 232** |
| **Net debt** | **3 978** | **3 688** | **-2 465** | **-8 484** | **-12 858** | **-16 141** |

---

The carrying amounts of financial liabilities included in the above analysis are not materially different to the contractual amounts due on maturity. The positive and negative fair values on derivative financial instruments represent the net contractual amounts to be exchanged at maturity.

The Company's contractual undiscounted potential cash flows from derivative financial instruments to be settled on a gross basis are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 2025 | 2025 | 2025 | 2025 | 2025 | 2025 |
| <br>(USD millions) | <br>Due within <br> one month | Due later than <br> one month <br> but less than <br> three months | Due later than<br> three months <br> but less than <br> one year | Due later than <br> one year <br> but less than <br> five years | <br>Due later than <br> five years | <br>Total |
| **Derivative financial instruments and accrued interest on derivative financial instruments** |  |  |  |  |  |  |
| Potential outflows in various currencies - from financial derivative | -6 651 | -5 733 | -2 453 | -1 | -1 | -14 839 |
| Potential inflows in various currencies - from financial derivative | 6 637 | 5 695 | 2 447 | 96 | 66 | 14 941 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | 2024 | 2024 | 2024 | 2024 |
| <br>(USD millions) | <br>Due within <br> one month | Due later than <br> one month <br> but less than <br> three months | Due later than<br> three months <br> but less than <br> one year | <br>Total |
| **Derivative financial instruments and accrued interest on derivative financial instruments** |  |  |  |  |
| Potential outflows in various currencies - from financial derivative | -3 421 | -6 075 | -475 | -9 971 |
| Potential inflows in various currencies - from financial derivative | 3 443 | 5 948 | 640 | 10 031 |

---

Other contractual liabilities that are not part of management's monitoring of the net debt or liquidity consist of the following items:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2025** | **2025** | **2025** |
| <br>(USD millions) | <br>Due within <br> three months | Due later than<br> three months <br> but less than <br> one year | Due later than <br> one year <br> but less than <br> five years | <br>Due after <br> five years | <br>Total |
| Contractual interest on non-current financial debts, including current portion | -141 | -656 | -2 720 | -5 534 | -9 051 |
| Lease liabilities <sup>1</sup> | -70 | -193 | -586 | -1 071 | -1 920 |
| Trade payables | -4 218 | -238 |  |  | -4 456 |
| Contingent consideration liabilities | -85 | -130 | -352 | -100 | -667 |
|  <sup>1</sup> Note 10 provides additional disclosures related to lease liabilities. | <sup>1</sup> Note 10 provides additional disclosures related to lease liabilities. | <sup>1</sup> Note 10 provides additional disclosures related to lease liabilities. | <sup>1</sup> Note 10 provides additional disclosures related to lease liabilities. | <sup>1</sup> Note 10 provides additional disclosures related to lease liabilities. | <sup>1</sup> Note 10 provides additional disclosures related to lease liabilities. |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | 2024 | 2024 | 2024 | 2024 | 2024 |
| <br>(USD millions) | <br>Due within <br> three months | Due later than<br> three months <br> but less than <br> one year | Due later than <br> one year <br> but less than <br> five years | <br>Due after <br> five years | <br>Total |
| Contractual interest on non-current financial debts, including current portion | -141 | -442 | -1 884 | -4 603 | -7 070 |
| Lease liabilities <sup>1</sup> | -65 | -170 | -574 | -994 | -1 803 |
| Trade payables | -4 432 | -140 |  |  | -4 572 |
| Contingent consideration liabilities | -17 | -264 | -395 | -132 | -808 |
|  <sup>1</sup> Note 10 provides additional disclosures related to lease liabilities. | <sup>1</sup> Note 10 provides additional disclosures related to lease liabilities. | <sup>1</sup> Note 10 provides additional disclosures related to lease liabilities. | <sup>1</sup> Note 10 provides additional disclosures related to lease liabilities. | <sup>1</sup> Note 10 provides additional disclosures related to lease liabilities. | <sup>1</sup> Note 10 provides additional disclosures related to lease liabilities. |

---

**Capital risk management**

Novartis strives to maintain a strong credit rating. In managing its capital, Novartis focuses on maintaining a strong balance sheet. As at December 31, 2025, Moody's Ratings rated the Company Aa3 for long-term maturities and P-1 for short-term maturities, and S&P Global Ratings rated the Company AA- for long-term maturities and A-1+ for short-term maturities.

**Sensitivity analysis**

The Company uses sensitivity analysis disclosures to provide quantitative information about market risks to which it is exposed.

The sensitivity analysis disclosures are in line with the Company's financial risk management policy, and are based on a one-parameter risk model that considers a one-factor linear relationship between risk factors and exposures. They consider aggregated risk exposures arising from the most significant risk factors (currency risk, interest rate risk and equity price risk) and include

all financial assets and financial liabilities as set forth in the table on page F-63.

The disclosures below illustrate the potential impact on the Company's consolidated financial statements as a result of hypothetical market movements in foreign currency exchange rates, interest rates and equity prices. The range of variables chosen reflects management's view of changes that are reasonably possible over a one-year period.

**Foreign currency exchange rate sensitivity**

The Company uses the US dollar as its reporting currency. As a result, the Company is exposed to foreign currency exchange movements, primarily in European, Japanese and emerging market currencies, as well as in the Swiss franc. A strengthening (weakening) of the US dollar against these currencies as at December 31, 2025 and 2024 would have affected the measurement of financial instruments denominated in these foreign currencies. This analysis assumes that all other variables, in particular interest rates, remain constant. A hypothetical 5% increase or decrease in the foreign currency exchange rates against the US dollar would have impacted the Company's consolidated income statement as presented below:

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| 5% increase in foreign currency exchange rates against USD | 4 | -8 |
| 5% decrease in foreign currency exchange rates against USD | -5 | 9 |

---

As of December 31, 2025, the Company designated EUR 3.3 billion (December 31, 2024: EUR 1.8 billion) of its long-term euro-denominated straight bonds as hedges of the translation risk arising on certain net investments in foreign operations with euro functional currency. This analysis assumes that all other variables, in particular interest rates, remain constant. A hypothetical 5% increase, or decrease, in the foreign currency exchange rates against the US dollar, without considering the translation effect of these net investments, would have impacted the Company's consolidated equity as presented below:

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| 5% increase in foreign currency exchange rates against USD | 187 | 91 |
| 5% decrease in foreign currency exchange rates against USD | -196 | -96 |

---

**Interest rate sensitivity**

Our portfolio of fixed-income instruments as at December 31, 2025, was mainly composed of time deposits.

Novartis uses duration models to approximate the possible change in the value of fixed-income instruments. Based on these models, management believes that a 100-basis point change in interest is deemed a reasonable possible change over a one-year period.

Based on exposures in 2025 and 2024, a hypothetical 100-basis point increase (decrease) in interest rates would not have resulted in a significant increase (decrease) in the fair values of the fixed-income instruments nor in a significant increase (decrease) of cash flows attributable to such instruments.

The majority of our outstanding financial debts are straight bonds with fixed interest rates and are therefore not affected by movements in interest rates.

**Equity price sensitivity**

Fund investments and equity securities held by the Novartis Venture Fund are valued at fair value through profit and loss. Equity securities held as strategic investments, typically held outside the Novartis Venture Fund, are generally designated at date of acquisition as financial assets valued at fair value through other comprehensive income with no subsequent recycling through profit and loss.

The fair value of these fund investments and equity securities was USD 1.0 billion as at December 31, 2025 (December 31, 2024: USD 1.1 billion). The fair values of these investments are impacted by the volatility of the stock market, valuation parameters applied (for non-listed equities classified in Level 3 of the fair value hierarchy) and changes in general economic factors. This analysis assumes that all other variables, in particular interest rates, remain constant. A hypothetical increase or decrease of 15% in the risk factors would have impacted the Company's consolidated income statement as presented below:

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| 15% increase in equity prices | 86 | 90 |
| 15% decrease in equity prices | -86 | -90 |

---

A hypothetical increase or decrease of 15% in the risk factors would have impacted the Company's consolidated equity as presented below:

---

| | | |
|:---|:---|:---|
| (USD millions) | **2025** | 2024 |
| 15% increase in equity prices | 66 | 70 |
| 15% decrease in equity prices | -66 | -70 |

---

29. Discontinued operations

Discontinued operations include the operational results from the Sandoz generic pharmaceuticals and biosimilars division and certain corporate activities attributable to the Sandoz business, as well as certain other expenses related to the spin-off. Also included in 2023 is the IFRS Accounting Standards non-cash, non-taxable net gain on the distribution of Sandoz Group AG to Novartis AG shareholders (refer to Notes 1 and 2 for further details).

The Sandoz business operated in the off-patent medicines segment and specialized in the development, manufacturing, and marketing of generic pharmaceuticals and biosimilars. The Sandoz business was organized globally into two franchises: Generics and Biosimilars.

**Net income from discontinued operations**

---

| | |
|:---|:---|
| (USD millions) | 2023<sup>1</sup> |
| **Net sales to third parties from discontinued operations** | **7 128** |
| Sales to continuing segments | 300 |
| **Net sales from discontinued operations** | **7 428** |
| Other revenues | 19 |
| Cost of goods sold | -4 044 |
| **Gross profit from discontinued operations** | **3 403** |
| Selling, general and administration | -1 728 |
| Research and development | -671 |
| Other income | 56 |
| Other expense | -795 |
| **Operating income from discontinued operations** | **265** |
| Income from associated companies | 2 |
| Interest expense | -33 |
| Other financial income and expense | -20 |
| **Income before taxes from discontinued operations** | **214** |
| Income taxes <sup>2</sup> | 208 |
| **Net income from discontinued operations before gain on distribution of Sandoz Group AG to Novartis AG shareholders** | **422** |
| Gain on distribution of Sandoz Group AG to Novartis AG shareholders <sup>3</sup> | 5 860 |
| **Net income from discontinued operations** | **6 282** |
|  <sup>1</sup> The net income from discontinued operations for 2023 is for the period from January 1, 2023, to the October 3, 2023, Distribution date. | <sup>1</sup> The net income from discontinued operations for 2023 is for the period from January 1, 2023, to the October 3, 2023, Distribution date. |
|  <sup>2</sup> The tax rate in 2023 was impacted by non-recurring items such as tax benefits arising from intercompany transactions to effect the spin-off of the Sandoz business, net decreases in uncertain tax positions of the Sandoz business and the favorable settlement of a tax matter related to the Alcon business, which was spun-off in 2019. Excluding these impacts, the tax rate would have been 31.2% in 2023. | <sup>2</sup> The tax rate in 2023 was impacted by non-recurring items such as tax benefits arising from intercompany transactions to effect the spin-off of the Sandoz business, net decreases in uncertain tax positions of the Sandoz business and the favorable settlement of a tax matter related to the Alcon business, which was spun-off in 2019. Excluding these impacts, the tax rate would have been 31.2% in 2023. |
|  <sup>3</sup> See Note 2 for further details on the non-taxable, non-cash gain on distribution of Sandoz Group AG to Novartis AG shareholders. | <sup>3</sup> See Note 2 for further details on the non-taxable, non-cash gain on distribution of Sandoz Group AG to Novartis AG shareholders. |

---

**Supplemental disclosures related to discontinued operations**

**Revenue**

In addition to the elements of variable consideration listed in the revenue accounting policy described in Note 1, the Sandoz business granted shelf stock adjustments to customers to cover the inventory held by them at the time a price decline becomes effective. Revenue deduction provisions for shelf stock adjustments were recorded when the price decline was anticipated, based on the impact of the price decline on the customer's estimated inventory levels.

**Net income from discontinued operations**

Included in net income from discontinued operations are:

---

| | |
|:---|:---|
| (USD millions) | 2023<sup>1</sup> |
| Interest income | 2 |
| Depreciation of property, plant and equipment | -144 |
| Depreciation of right-of-use assets | -32 |
| Amortization of intangible assets | -171 |
| Impairment charges on property, plant and equipment | -5 |
| Impairment charges on right-of-use assets | -8 |
| Impairment charges on intangible assets | -44 |
| Impairment reversals of property, plant and equipment | 1 |
| Additions to restructuring provisions | -27 |
| Equity-based compensation expense related to Novartis equity-based participation plans | -60 |
|  <sup>1</sup> 2023 amounts are for the period from January 1, 2023, to the October 3, 2023, Distribution date. | <sup>1</sup> 2023 amounts are for the period from January 1, 2023, to the October 3, 2023, Distribution date. |

---

In 2023 there were no reversals of impairment charges on right-of-use assets or on intangible assets of discontinued operations.

**Net cash flows used in investing activities from discontinued operations**

Net cash flows used in investing activities from discontinued operations include the investing activities of the Sandoz business. In 2023, other cash flows used in investing activities, net, include cash outflows of USD 22 million for the acquisitions and divestments of businesses, net.

---

| | |
|:---|:---|
| (USD millions) | 2023 |
| Payments out of provision for transaction cost attributable to the spin-off of the Sandoz business | -52 |
| Derecognized cash and cash equivalents attributable to the spin-off of the Sandoz business | -686 |
| Other cash flows used in investing activities, net | -385 |
| **Net cash flows used in investing activities from discontinued operations** | **-1 123** |

---

**Net cash flows from financing activities from discontinued operations**

In 2023, the net cash inflows from financing activities from discontinued operations of USD 3.3 billion were mainly driven by USD 3.6 billion cash inflows from bank borrowings (including the USD 3.3 billion Sandoz business borrowings from a group of banks on September 28, 2023) in connection with the Distribution (spin-off) of the Sandoz business to Novartis AG shareholders, partly offset by transaction cost payments of USD 0.2 billion directly attributable to the Distribution (spin-off) of the Sandoz business (see Notes 1 and 2).

For additional information related to the October 3, 2023 Distribution (spin-off) of the Sandoz business to Novartis AG shareholders, effected through a dividend in kind distribution of Sandoz Group AG shares to Novartis AG shareholders and ADR holders, refer to Note 1 and Note 2.

30. Events subsequent to the December 31, 2025, consolidated balance sheet date

**Dividend proposal for 2025 and approval of Novartis 2025 consolidated financial statements** 

On February 3, 2026, the Novartis AG Board of Directors proposed the acceptance of the 2025 consolidated financial statements of Novartis for approval by the Annual General Meeting on March 6, 2026. Furthermore, also on February 3, 2026, the Board proposed a dividend of CHF 3.70 per share to be approved at the Annual General Meeting on March 6, 2026. If approved, the total dividend payments would amount to approximately USD 8.9 billion (2024: USD 7.8 billion), using the CHF/USD December 31, 2025, exchange rate.

**Significant transaction entered into in January 2026**

In January 2026, Novartis entered into a long-term research and development agreement which is expected to close in the first quarter of 2026. For additional information see Note 27.

31. Novartis principal subsidiaries and associated companies

The following table lists the principal subsidiaries controlled by Novartis, associated companies in which Novartis is deemed to have significant influence, and foundations required to be consolidated under IFRS Accounting Standards. It includes Novartis AG direct subsidiaries and its indirect subsidiaries, associated companies and consolidated foundations with total assets or net sales to third parties from continuing operations in excess of USD 25 million. The equity interest percentage shown in the table also represents the share in voting rights in those entities.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **<br>As at December 31, 2025** |  |  | Share<br> capital<sup>1</sup> | Equity <br> interest |
| **Argentina** |  |  |  |  |
| Novartis Argentina S.A. | Ciudad de Buenos Aires | ARS | 906.1<br> m | 100% |
| **Australia** |  |  |  |  |
| Novartis Australia Pty Ltd | Macquarie Park, NSW | AUD | 2 | 100% |
| Novartis Pharmaceuticals Australia Pty Ltd | Macquarie Park, NSW | AUD | 3.8<br> m | 100% |
| **Austria** |  |  |  |  |
| Novartis Holding GmbH | Vienna <sup>5</sup> | EUR | 35 000 | 100% |
| Novartis Pharmaceutical Manufacturing GmbH | Langkampfen | EUR | 763 070 | 100% |
| Novartis Pharma GmbH | Vienna | EUR | 1.1<br> m | 100% |
| **Belgium** |  |  |  |  |
| Novartis Pharma NV | Vilvoorde | EUR | 7.1<br> m | 100% |
| Novartis Manufacturing NV | Puurs-Sint-Amands <sup>5</sup> | EUR | 110.6<br> m | 100% |
| **Bermuda** |  |  |  |  |
| Novartis Investment Ltd. | Hamilton | USD | 12 000 | 100% |
| Triangle International Reinsurance Limited | Hamilton | CHF | 1.0<br> m | 100% |
| Trinity River Insurance Co Ltd. | Hamilton <sup>5</sup> | USD | 370 000 | 100% |
| **Brazil** |  |  |  |  |
| Novartis Biociências S.A. | São Paulo | BRL | 507.1<br> m | 100% |
| **Canada** |  |  |  |  |
| Novartis Pharmaceuticals Canada Inc. | Montreal, Quebec | CAD | 420 717 | 100% |
| **Chile** |  |  |  |  |
| Novartis Chile S.A. | Santiago de Chile <sup>5</sup> | CLP | 2.0<br> bn | 100% |
| **China** |  |  |  |  |
| Beijing Novartis Pharma Co., Ltd. | Beijing <sup>5</sup> | USD | 30.0<br> m | 100% |
| Novartis Pharmaceutical Technology Zhejiang Co., Ltd. | Haiyan | USD | 30.0<br> m | 100% |
| Novartis Pharmaceuticals (HK) Limited | Hong Kong | HKD | 200 | 100% |
| China Novartis Institutes for BioMedical Research Co., Ltd. | Shanghai | USD | 320.0<br> m | 100% |
| Suzhou Novartis Technical Development Co., Ltd. | Changshu | USD | 12.0<br> m | 100% |
| Shanghai Novartis Trading Ltd. | Shanghai | USD | 3.2<br> m | 100% |
| **Colombia** |  |  |  |  |
| Novartis de Colombia S.A. | Santafé de Bogotá | COP | 7.9<br> bn | 100% |
| **Czechia** |  |  |  |  |
| Novartis s.r.o. | Prague <sup>5</sup> | CZK | 51.5<br> m | 100% |
| **Denmark** |  |  |  |  |
| Novartis Healthcare A/S | Copenhagen | DKK | 14.0<br> m | 100% |
| **Dominican Republic** |  |  |  |  |
| Novartis Caribe, S.A. | Santo Domingo <sup>5</sup> | DOP | 20.0<br> m | 100% |
| **Ecuador** |  |  |  |  |
| Novartis Ecuador S.A. | Quito | USD | 4.0<br> m | 100% |
| **Egypt** |  |  |  |  |
| Novartis Pharma S.A.E. | Cairo | EGP | 2.1<br> bn | 99.98% |
| **Finland** |  |  |  |  |
| Novartis Finland Oy | Espoo | EUR | 459 000 | 100% |
| **France** |  |  |  |  |
| Novartis Groupe France S.A.S. | Rueil-Malmaison <sup>5</sup> | EUR | 903.0<br> m | 100% |
| Novartis Pharma S.A.S. | Rueil-Malmaison | EUR | 44.3<br> m | 100% |
| Advanced Accelerator Applications S.A. | Rueil-Malmaison | EUR | 9.6<br> m | 99% |
| Société Civile Immobilière de la Schiffmühle | Huningue <sup>5</sup> | EUR | 15 245 | 100% |
| **Germany** |  |  |  |  |
| Novartis Business Services GmbH | Nuremberg | EUR | 25 000 | 100% |
| Novartis Pharma GmbH | Nuremberg | EUR | 25.6<br> m | 100% |
| Novartis Pharma Produktions GmbH | Wehr | EUR | 2.0<br> m | 100% |
| MorphoSys GmbH | Planegg | EUR | 50 000 | 100% |
| **Greece** |  |  |  |  |
| Novartis (Hellas) S.A.C.I. | Metamorphosis / Athens | EUR | 56.5<br> m | 100% |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **<br>As at December 31, 2025** |  |  | Share<br> capital<sup>1</sup> | Equity <br> interest |
| **Hungary** |  |  |  |  |
| Novartis Hungary Healthcare Limited Liability Company | Budapest | HUF | 545.6<br> m | 100% |
| **India** |  |  |  |  |
| Novartis India Limited | Mumbai <sup>5</sup> | INR | 123.5<br> m | 70.68% |
| Novartis Healthcare Private Limited | Mumbai | INR | 60.0<br> m | 100% |
| **Indonesia** |  |  |  |  |
| PT. Novartis Indonesia | Jakarta | IDR | 10.6<br> bn | 100% |
| **Ireland** |  |  |  |  |
| Novartis Ireland Limited | Dublin | EUR | 25 000 | 100% |
| Novartis Integrated Services Limited | Dublin | EUR | 100 | 100% |
| **Israel** |  |  |  |  |
| Novartis Israel Ltd. | Tel Aviv | ILS | 1 000 | 100% |
| **Italy** |  |  |  |  |
| Novartis Farma S.p.A. | Milan | EUR | 18.2<br> m | 100% |
| Advanced Accelerator Applications (Italy) S.r.l. | Colleretto Giacosa | EUR | 119 000 | 99.23% |
| **Japan** |  |  |  |  |
| Novartis Pharma K.K. | Tokyo | JPY | 100.0<br> m | 100% |
| Ciba-Geigy Japan Limited | Tokyo | JPY | 100.0<br> m | 100% |
| **Latvia** |  |  |  |  |
| Novartis Baltics SIA | Riga | EUR | 3.0<br> m | 100% |
| **Luxembourg** |  |  |  |  |
| Novartis Investments S.à r.l. | Howald | USD | 50 000 | 100% |
| Novartis Finance S.A. | Howald | USD | 100 000 | 100% |
| **Malaysia** |  |  |  |  |
| Novartis Corporation (Malaysia) Sdn. Bhd. | Petaling Jaya <sup>5</sup> | MYR | 3.3<br> m | 100% |
| **Mexico** |  |  |  |  |
| Novartis Farmacéutica, S.A. de C.V. | Mexico City | MXN | 206.7<br> m | 100% |
| **Morocco** |  |  |  |  |
| Novartis Pharma Maroc SA | Casablanca | MAD | 80.0<br> m | 100% |
| **Netherlands** |  |  |  |  |
| Novartis Pharma B.V. | Amsterdam | EUR | 4.5<br> m | 100% |
| Aduro Netherlands Coöperatief U.A. | Amsterdam <sup>4</sup> | -- | -- | -- |
| Aduro Biotech Holdings, Europe B.V. | Amsterdam | EUR | 46 216 | 100% |
| IDB Holland BV | Baarle-Nassau | EUR | 80.0<br> m | 99.23% |
| **New Zealand** |  |  |  |  |
| Novartis New Zealand Ltd | Auckland <sup>5</sup> | NZD | 820 000 | 100% |
| **Norway** |  |  |  |  |
| Novartis Norge AS | Oslo | NOK | 1.5<br> m | 100% |
| **Panama** |  |  |  |  |
| Novartis Pharma (Logistics), Inc. | Panama City | USD | 10 000 | 100% |
| **Peru** |  |  |  |  |
| Novartis Biosciences Perú S.A. | Lima <sup>5</sup> | PEN | 1.4<br> m | 100% |
| **Philippines** |  |  |  |  |
| Novartis Healthcare Philippines, Inc. | Makati City <sup>5</sup> | PHP | 500.0<br> m | 100% |
| **Poland** |  |  |  |  |
| Novartis Poland Sp. z o.o. | Warsaw | PLN | 44.2<br> m | 100% |
| **Portugal** |  |  |  |  |
| Novartis Portugal, S.G.P.S., Lda. | Porto Salvo <sup>5</sup> | EUR | 500 000 | 100% |
| Novartis Farma - Produtos Farmacêuticos, S.A. | Porto Salvo | EUR | 2.4<br> m | 100% |
| **Romania** |  |  |  |  |
| Novartis Pharma Services Romania S.R.L. | Bucharest | RON | 3.0<br> m | 100% |
| Novartis Pharmaceuticals S.R.L. | Targu-Mures | RON | 119.5<br> m | 100% |
| **Russian Federation** |  |  |  |  |
| Novartis Pharma LLC | Moscow | RUB | 20.0<br> m | 100% |
| Novartis Neva LLC | St. Petersburg | RUB | 500.0<br> m | 100% |
| **Saudi Arabia** |  |  |  |  |
| Novartis Saudi Company | Riyadh | SAR | 30.0<br> m | 100% |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **<br>As at December 31, 2025** |  |  | Share<br> capital<sup>1</sup> | Equity <br> interest |
| **Singapore** |  |  |  |  |
| Novartis (Singapore) Pte Ltd. | Singapore <sup>5</sup> | SGD | 100 000 | 100% |
| Novartis Singapore Pharmaceutical Manufacturing Pte Ltd | Singapore | SGD | 440.0<br> m | 100% |
| Novartis Asia Pacific Pharmaceuticals Pte Ltd | Singapore | SGD | 39.0<br> m | 100% |
| **Slovakia** |  |  |  |  |
| Novartis Slovakia s.r.o. | Bratislava | EUR | 2.0<br> m | 100% |
| **Slovenia** |  |  |  |  |
| Novartis farmacevtska proizvodnja d.o.o. | Ljubljana | EUR | 50.0<br> m | 100% |
| **South Africa** |  |  |  |  |
| Novartis South Africa (Pty) Ltd | Midrand | ZAR | 86.3<br> m | 100% |
| **South Korea** |  |  |  |  |
| Novartis Korea Ltd. | Seoul | KRW | 24.5<br> bn | 100% |
| **Spain** |  |  |  |  |
| Novartis Farmacéutica, S.A. | Barcelona | EUR | 63.0<br> m | 100% |
| Advanced Accelerator Applications Iberica, S. L. U. | La Almunia de Dona Godina | EUR | 22.6<br> m | 99.23% |
| Abadia Retuerta S.A. | Sardón de Duero / Valladolid | EUR | 6.0<br> m | 100% |
| **Sweden** |  |  |  |  |
| Novartis Sverige AB | Stockholm <sup>5</sup> | SEK | 5.0<br> m | 100% |
| **Switzerland** |  |  |  |  |
| Novartis International AG | Basel <sup>5</sup> | CHF | 10.0<br> m | 100% |
| Novartis Holding AG | Basel <sup>2</sup> | CHF | 100.2<br> m | 100% |
| Novartis International Pharmaceutical Investment AG | Basel | CHF | 100 000 | 100% |
| Novartis Kapital AG | Basel | CHF | 100 000 | 100% |
| Novartis Bioventures AG | Basel | CHF | 100 000 | 100% |
| Friedrich Miescher Institute for Biomedical Research | Basel <sup>3</sup> | -- | -- | -- |
| Novartis Forschungsstiftung | Basel <sup>3</sup> | -- | -- | -- |
| Novartis Stiftung für Kaderausbildung | Basel <sup>3</sup> | -- | -- | -- |
| Novartis-Mitarbeiterbeteiligungsstiftung | Basel <sup>3</sup> | -- | -- | -- |
| Novartis Stiftung für Mensch und Umwelt | Basel <sup>3</sup> | -- | -- | -- |
| Stiftung der Novartis AG für Erziehung, Ausbildung und Bildung | Basel <sup>3</sup> | -- | -- | -- |
| Novartis Overseas Investments AG | Basel | CHF | 1.0<br> m | 100% |
| Japat AG | Basel | CHF | 100 000 | 100% |
| Novartis Pharma AG | Basel <sup>2 / 5</sup> | CHF | 350.0<br> m | 100% |
| Novartis Pharma Services AG | Basel | CHF | 20.0<br> m | 100% |
| Novartis Pharma Schweizerhalle AG | Muttenz <sup>5</sup> | CHF | 18.9<br> m | 100% |
| Novartis Pharma Stein AG | Stein <sup>5</sup> | CHF | 251 000 | 100% |
| Novartis Pharma Schweiz AG | Risch | CHF | 5.0<br> m | 100% |
| Pharmanalytica SA | Locarno <sup>5</sup> | CHF | 240 000 | 100% |
| Renor AG | Basel <sup>5</sup> | CHF | 50 000 | 100% |
| Novartis Innovative Therapies AG | Risch <sup>5</sup> | CHF | 100 000 | 100% |
| Advanced Accelerator Applications International SA | Geneva | CHF | 9.3<br> m | 100% |
| **Taiwan** |  |  |  |  |
| Novartis (Taiwan) Co., Ltd. | Taipei <sup>5</sup> | TWD | 170.0<br> m | 100% |
| **Thailand** |  |  |  |  |
| Novartis (Thailand) Limited | Bangkok <sup>5</sup> | THB | 302.0<br> m | 100% |
| **Türkiye** |  |  |  |  |
| Novartis Saglik, Gida ve Tarim Ürünleri Sanayi ve Ticaret A.S. | Istanbul | TRY | 1.2<br> bn | 100% |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **<br>As at December 31, 2025** |  |  | Share<br> capital<sup>1</sup> | Equity <br> interest |
| **United Arab Emirates** |  |  |  |  |
| Novartis Middle East FZE | Dubai | AED | 7.0<br> m | 100% |
| **United Kingdom** |  |  |  |  |
| Novartis UK Limited | London <sup>5</sup> | GBP | 25.5<br> m | 100% |
| Novartis Pharmaceuticals UK Limited | London | GBP | 5.4<br> m | 100% |
| **United States of America** |  |  |  |  |
| Novartis Corporation | East Hanover, NJ | USD | 72.2<br> m | 100% |
| Novartis Finance Corporation | East Hanover, NJ <sup>2</sup> | USD | 1 000 | 100% |
| Novartis Capital Corporation | East Hanover, NJ <sup>2</sup> | USD | 1 | 100% |
| Novartis Services, Inc. | East Hanover, NJ | USD | 1 | 100% |
| Novartis Pharmaceuticals Corporation | East Hanover, NJ <sup>2</sup> | USD | 650 | 100% |
| Advanced Accelerator Applications USA, Inc. | Millburn, NJ | USD | 1 | 99.23% |
| Novartis Gene Therapies, Inc. | Bannockburn, IL | USD | 1 | 100% |
| Novartis Technology LLC | East Hanover, NJ <sup>4</sup> | -- | -- | -- |
| Novartis Manufacturing LLC | East Hanover, NJ <sup>4</sup> | -- | -- | -- |
| Novartis Institutes for BioMedical Research, Inc. | Cambridge, MA | USD | 1 | 100% |
| Kate Therapeutics Inc. | San Diego, CA | USD | 100 | 100% |
| Cadent Therapeutics, Inc. | Cambridge, MA | USD | 0.1 | 100% |
| Constellation Pharmaceuticals, Inc. | Boston, MA | USD | 50 | 100% |
| Endocyte, Inc. | East Hanover, NJ | USD | 1 | 100% |
| Mariana Oncology Inc. | Watertown, MA | USD | 1 | 100% |
| MorphoSys US Inc. | Boston, MA | USD | 50 | 100% |
| Navigate BioPharma Services, Inc. | Carlsbad, CA | USD | 1 | 100% |
| The Medicines Company | East Hanover, NJ | USD | 1 | 100% |
| Chinook Therapeutics, Inc. | Seattle, WA | USD | 1 | 100% |
| Chinook Therapeutics U.S., Inc. | Seattle, WA | USD | 1 | 100% |
| Anthos Therapeutics, Inc. | East Hanover, NJ | USD | 1 | 100% |
| Regulus Therapeutics Inc. | San Diego, CA | USD | 1 | 100% |
| Tourmaline Bio, Inc. | New York, NY | USD | 1 | 100% |
| **Uruguay** |  |  |  |  |
| Novartis Uruguay S.A. | Montevideo <sup>5</sup> | UYU | 7.3<br> m | 100% |
| **Venezuela** |  |  |  |  |
| Novartis de Venezuela, S.A. | Caracas <sup>5</sup> | VES | 0 | 100% |
| **Vietnam** |  |  |  |  |
| Novartis Vietnam Company Limited | Ho Chi Minh City | VND | 70.0<br> bn | 100% |
| In addition, the Company is represented by subsidiaries and associated companies with total assets or net sales to third parties from continuing operations below USD 25 million in the following countries: Bosnia and Herzegovina, Bulgaria, Cameroon, Cayman Island, Croatia, Ghana, Guatemala, Ivory Coast, Kazakhstan, Kenya, Kuwait, Nigeria, Senegal and Ukraine. | In addition, the Company is represented by subsidiaries and associated companies with total assets or net sales to third parties from continuing operations below USD 25 million in the following countries: Bosnia and Herzegovina, Bulgaria, Cameroon, Cayman Island, Croatia, Ghana, Guatemala, Ivory Coast, Kazakhstan, Kenya, Kuwait, Nigeria, Senegal and Ukraine. | In addition, the Company is represented by subsidiaries and associated companies with total assets or net sales to third parties from continuing operations below USD 25 million in the following countries: Bosnia and Herzegovina, Bulgaria, Cameroon, Cayman Island, Croatia, Ghana, Guatemala, Ivory Coast, Kazakhstan, Kenya, Kuwait, Nigeria, Senegal and Ukraine. | In addition, the Company is represented by subsidiaries and associated companies with total assets or net sales to third parties from continuing operations below USD 25 million in the following countries: Bosnia and Herzegovina, Bulgaria, Cameroon, Cayman Island, Croatia, Ghana, Guatemala, Ivory Coast, Kazakhstan, Kenya, Kuwait, Nigeria, Senegal and Ukraine. | In addition, the Company is represented by subsidiaries and associated companies with total assets or net sales to third parties from continuing operations below USD 25 million in the following countries: Bosnia and Herzegovina, Bulgaria, Cameroon, Cayman Island, Croatia, Ghana, Guatemala, Ivory Coast, Kazakhstan, Kenya, Kuwait, Nigeria, Senegal and Ukraine. |
|  <sup>1</sup> Share capital may not reflect the taxable share capital and does not include any paid-in surplus. | <sup>1</sup> Share capital may not reflect the taxable share capital and does not include any paid-in surplus. | <sup>1</sup> Share capital may not reflect the taxable share capital and does not include any paid-in surplus. | <sup>1</sup> Share capital may not reflect the taxable share capital and does not include any paid-in surplus. | <sup>1</sup> Share capital may not reflect the taxable share capital and does not include any paid-in surplus. |
|  <sup>2</sup> Significant subsidiary under SEC Regulation S-X Rule 1-02(w) | <sup>2</sup> Significant subsidiary under SEC Regulation S-X Rule 1-02(w) | <sup>2</sup> Significant subsidiary under SEC Regulation S-X Rule 1-02(w) | <sup>2</sup> Significant subsidiary under SEC Regulation S-X Rule 1-02(w) | <sup>2</sup> Significant subsidiary under SEC Regulation S-X Rule 1-02(w) |
|  <sup>3</sup> Fully consolidated foundation | <sup>3</sup> Fully consolidated foundation | <sup>3</sup> Fully consolidated foundation | <sup>3</sup> Fully consolidated foundation | <sup>3</sup> Fully consolidated foundation |
|  <sup>4</sup> Fully consolidated entity | <sup>4</sup> Fully consolidated entity | <sup>4</sup> Fully consolidated entity | <sup>4</sup> Fully consolidated entity | <sup>4</sup> Fully consolidated entity |
|  <sup>5</sup> Directly held by Novartis AG | <sup>5</sup> Directly held by Novartis AG | <sup>5</sup> Directly held by Novartis AG | <sup>5</sup> Directly held by Novartis AG | <sup>5</sup> Directly held by Novartis AG |
| m = million; bn = billion | m = million; bn = billion | m = million; bn = billion | m = million; bn = billion | m = million; bn = billion |

---

## Report of Independent Registered Public Accounting Firm

#### To the shareholders and the Board of Directors of Novartis AG
**Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting** 

We have audited the accompanying consolidated balance sheets of Novartis AG and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in equity, and consolidated statements of cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with International Financial Reporting Standards (IFRS) Accounting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

**Basis for Opinions** 

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Novartis Management on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's consolidated financial statements and an opinion on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

**Definition and Limitations of Internal Control Over Financial Reporting** 

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

**Critical Audit Matter**

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Provisions for deductions from revenue related to US Managed Care, Medicare Part D and Medicaid rebate programs

As discussed in Note 1 to the consolidated financial statements, the Company records provisions for estimated rebates as a deduction from revenue when the related revenue is recognized. Rebates involve the use of assumptions and judgments in the determination of the provision rates at the time revenues are recorded. Provision rates are influenced by the terms and conditions in the individual agreements, historical experience, product sales and growth rate, population growth, product pricing, the mix of contracts and products, the level of inventory in the distribution channel, regulations, channels and payers. As discussed in Note 22, provisions for deductions from revenue totaled USD 7 809 million as of December 31, 2025, a portion of which related to US Managed Care, Medicare Part D and Medicaid rebate programs (hereafter US rebates).

We identified the evaluation of the US rebates provisions as a critical audit matter. The evaluation of the rebate provision rates required a high degree of subjective auditor judgment as it involved estimating the portion of the Company's consolidated revenue which will ultimately be subject to a related rebate.

The following are the primary procedures we performed to address this critical audit matter:

• We evaluated the design and tested the operating effectiveness of certain internal controls over the Company's US rebates process related to the development of the rebate provision rates;

• We developed our own independent expectation of the US rebates provisions, by using internal and external information, including historical experience and trend analysis of actual rebate claims paid, and comparing it to management's actual recorded balances; and

• We assessed management's ability to accurately estimate the US rebates provisions by comparing historically recorded provisions to the actual amount that was ultimately paid by the Company.

/s/ KPMG AG

We have served as the Company's auditor since 2022.

Basel, Switzerland

February 3, 2026

![picture](x_coverback.jpg)

## Ex-12

#### Exhibit 12.1

#### CERTIFICATION
I, Vasant Narasimhan, certify that:

1. I have reviewed this annual report on Form 20-F of Novartis AG;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

&nbsp;&nbsp;&nbsp;&nbsp;a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;c) evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;d) disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

5. The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b) any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.

Date: February 4, 2026

<u>By: /s/ VASANT NARASIMHAN</u>

Name: Vasant Narasimhan

Title: *Chief Executive Officer*

## Ex-12

#### Exhibit 12.2

#### CERTIFICATION
I, Harry Kirsch, certify that:

1. I have reviewed this annual report on Form 20-F of Novartis AG;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

&nbsp;&nbsp;&nbsp;&nbsp;a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;c) evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;d) disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

5. The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;b) any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.

Date: February 4, 2026

<u>By: /s/ HARRY KIRSCH</u>

Name: Harry Kirsch

Title: *Chief Financial Officer*

## Ex-13

#### Exhibit 13.1
**CERTIFICATION OF VASANT NARASIMHAN, CHIEF EXECUTIVE OFFICER OF NOVARTIS AG PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002** 

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Novartis AG, a Swiss corporation (the "Company"), hereby certifies, to the best of such officer's knowledge, that:

1. The Annual Report on Form 20-F for the year ended December 31, 2025 (the "Form 20-F") of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 4, 2026

<u>By: /s/ VASANT NARASIMHAN</u>

Name: Vasant Narasimhan

Title: *Chief Executive Officer*

## Ex-13

#### Exhibit 13.2
**CERTIFICATION OF HARRY KIRSCH, CHIEF FINANCIAL OFFICER OF NOVARTIS AG PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002** 

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of Novartis AG, a Swiss corporation (the "Company"), hereby certifies, to the best of such officer's knowledge, that:

1. The Annual Report on Form 20-F for the year ended December 31, 2025 (the "Form 20-F") of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 4, 2026

<u>By: /s/ HARRY KIRSCH</u>

Name: Harry Kirsch

Title: *Chief Financial Officer*

## Ex-15

#### Exhibit 15.1

#### CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the registration statements (Nos. 333-171739, 333-198706, 333-250207 and 333-258081) on Form S-8 and in the registration statement (No. 333-282133) on Form F-3 of our report dated February 3, 2026, with respect to the consolidated financial statements of Novartis AG and the effectiveness of internal control over financial reporting.

/s/ KPMG AG

Basel, Switzerland

February 4, 2026

## Ex-1

![](cover-image_2.jpg)<br>

## Articles of Incorporation of Novartis AG

### These Articles of Incorporation were adopted at the General Meeting of Novartis AG held on March 7, 2025.

<br> ![](image00002.jpg)

------

---

| | |
|:---|:---|
|  **2<br>**  | Articles of Incorporation of Novartis AG |

---

---

| | | |
|:---|:---|:---|
| **Section 1** | <br> Corporate Name, Registered Office, Purpose and Duration <br>| 3 |
| **Section 2** | <br> Share Capital<br>| 3 |
| **Section 3** | <br> Corporate Bodies<br>| 5 |
|  | A. General Meeting of Shareholders | 5 |
|  | B. Board of Directors | 8 |
|  | C. Auditors | 11 |
| **Section 4** | <br> Compensation of the Board of Directors and the Executive Committee<br>| 11 |
| **Section 5** | <br> Annual Financial Statements, Consolidated Financial Statements and Profit Allocation<br>| 15 |
| **Section 6** | <br> Publications and Place of Jurisdiction<br>| 15 |

---

------

---

| | |
|:---|:---|
|  **3<br>**  | Articles of Incorporation of Novartis AG |

---

---

| | | |
|:---|:---|:---|
| **Section 1** |  | **Corporate Name, Registered Office, Purpose and Duration**<br>|
|  |  | Article 1 |
| Corporate name, Registered office |  | Under the Corporate name<br> Novartis AG<br> Novartis SA<br> Novartis Inc.<br> there exists a company limited by shares with its registered office in Basel.<br>|
|  |  | Article 2 |
| Purpose | 1 | Purpose of the Company is to hold interests in enterprises in the area of health care or nutrition. The Company may also hold interests in enterprises in the areas of biology, chemistry, physics, information technology or related areas. |
|  | 2 | The Company may acquire, mortgage, liquidate or sell real estate and intellectual property rights in Switzerland or abroad. |
|  | 3 | In pursuing its purpose, the Company strives to create sustainable value.<br>|
|  |  | Article 3 |
| Duration |  | The duration of the Company is unlimited.<br>|
| **Section 2** |  | **Share Capital**<br>|
|  |  | Article 4 |
| Share capital |  | The share capital of the Company is CHF 1 035 086 714.83, fully paid-in and divided into 2 112 421 867 registered shares. Each share has a nominal value of CHF 0.49 <br>|
|  |  | Article 5 |
| Shareholders register and restrictions of registration, Nominees | 1 | The Company shall maintain a shareholders register showing the last names, first names, domicile, address and nationality (in the case of legal entities the registered office) of the holders or usufructuaries of registered shares. |
|  | 2 | Upon request acquirers of registered shares are registered in the shareholders register as shareholders with the right to vote, provided that they declare explicitly to have acquired the registered shares in their own name and for their own account. Subject to the restrictions set forth in paragraph 6 of this article, no person or entity shall be registered with the right to vote for more than 2% of the registered share capital as set forth in the commercial register. This restriction of registration also applies to persons who hold some or all of their shares through nominees pursuant to this article. All of the foregoing is subject to Article 685d paragraph 3 of the Swiss Code of Obligations. |

---

------

---

| | |
|:---|:---|
|  **4<br>**  | Articles of Incorporation of Novartis AG |

---

---

| | | |
|:---|:---|:---|
|  | 3 | The Board of Directors may register nominees with the right to vote in the share register to the extent of up to 0.5% of the registered share capital as set forth in the commercial register. Registered shares held by a nominee that exceed this limit may be registered in the shareholders register if the nominee discloses the names, addresses and the number of shares of the persons for whose account it holds 0.5% or more of the registered share capital as set forth in the commercial register. Nominees within the meaning of this provision are persons who do not explicitly declare in the request for registration to hold the shares for their own account and with whom the Board of Directors has entered into a corresponding agreement. |
|  | 4 | Corporate bodies and partnerships or other groups of persons or joint owners who are interrelated to one another through capital ownership, voting rights, uniform management or otherwise linked as well as individuals or corporate bodies and partnerships who act in concert to circumvent the regulations concerning the limitation of participation or the nominees (especially as syndicates), shall be treated as one single person or nominee within the meaning of paragraphs 2 and 3 of this article. |
|  | 5 | After hearing the registered shareholder or nominee, the Board of Directors may cancel registrations in the shareholders register with retroactive effect as of the date of registration if the registration was effected based on false information. The respective shareholder or nominee shall be informed immediately of the cancellation of the registration. |
|  | 6 | The Board of Directors shall specify the details and give the necessary orders concerning the adherence to the preceding regulations. In particular cases it may allow exemptions from the limitation for registration in the share register or the regulation concerning nominees. It may delegate its duties. |
|  | 7 | The limitation for registration in the share register provided for in this article shall also apply to shares acquired or subscribed by the exercise of subscription, option or conversion rights. <br>|
|  |  | Article 6 |
| Form of shares | 1<br>| Subject to paragraphs 2 and 4 of this article, the registered shares of the Company are issued as uncertificated securities (in terms of the Swiss Code of Obligations) and as book entry securities (in terms of the Book Entry Securities Act). |
|  | 2 | The Company may withdraw shares issued as book entry securities from the custodian system (Verwahrungssystem). |
|  | 3 | Provided that the shareholder is registered in the shareholders register, the shareholder may request from the Company a statement of his or her registered shares at any time. |

---

------

---

| | |
|:---|:---|
|  **5<br>**  | Articles of Incorporation of Novartis AG |

---

---

| | | |
|:---|:---|:---|
|  | 4 | The shareholder has no right to the printing and delivery of certificates. The Company may, however, print and deliver certificates (individual share certificates, certificates or global certificates) for shares at any time. The Company may, with the consent of the shareholder, cancel issued certificates that are returned to the Company.<br>|
|  |  | Article 7 |
| Exercise of rights | 1 | The shares are not divisible. The Company accepts only one representative per share. |
|  | 2 | The right to vote and the other rights associated with a registered share may only be exercised vis-à-vis the Company by a shareholder, usufructuary or nominee who is registered in the share register.<br>|
| **Section 3** |  | **Corporate Bodies** <br> A. General Meeting of Shareholders<br>|
|  |  | Article 8 |
| Competence |  | The General Meeting of Shareholders is the supreme body of the Company. <br>|
|  |  | Article 9 |
| General Meetings<br> a. Annual General Meeting |  | The Annual General Meeting of Shareholders shall be held each year within six months after the close of the financial year of the Company. |
|  |  | Article 10 |
| b. Extraordinary General Meetings of Shareholders | 1 | Extraordinary General Meetings of Shareholders shall take place upon request of the Board of Directors or the Auditors. |
|  | 2 | Furthermore, Extraordinary General Meetings of Shareholders shall be convened upon resolution of a General Meeting of Shareholders or if it is required by one or more shareholders who are representing in the aggregate not less than 5% of the share capital and submit a petition signed by such shareholder or shareholders specifying the items for the agenda and the proposals.<br>|
|  |  | Article 11 |
| Convening of General Meetings of Shareholders | 1 | General Meetings of Shareholders shall be convened by the Board of Directors at the latest twenty days before the date of the meeting. The meeting shall be convened by way of a notice appearing once in the Swiss Official Gazette of Commerce |
|  | 2 | The content of a notice of meeting is governed by the law. |

---

------

---

| | |
|:---|:---|
|  **6<br>**  | Articles of Incorporation of Novartis AG |

---

---

| | | |
|:---|:---|:---|
|  |  | Article 12 |
| Agenda | 1 | One or more shareholders whose combined shareholdings represent an aggregate nominal value of at least CHF 1 million may demand that an item be included in the agenda of a General Meeting of Shareholders. Such a demand must be made in writing at the latest forty-five days before the meeting and shall specify the items and the proposals of such a shareholder. If an explanatory statement is to be included in the notice of meeting, it must be submitted within the same period and formulated in a short, clear and concise manner. |
|  | 2 | No resolution shall be passed at a General Meeting of Shareholders on matters for which no proper notice was given. This provision shall not apply to proposals to convene an Extraordinary General Meeting of Shareholders or to initiate a special investigation.<br>|
|  |  | Article 12a |
| Electronic<br> Participation | 1 | The Board of Directors may foresee that shareholders who cannot be present at the venue of the General Meeting of Shareholders may exercise their rights through electronic means. |
|  | 2  | The Board of Directors may at any time until June 30, 2028 also order that the General Meeting of Shareholders be held electronically without a venue.<br>|
|  |  | Article 13 |
| Presiding officer, Minutes, Vote counters | 1 | The General Meeting of Shareholders shall take place at the registered office of the Company, unless the Board of Directors decides otherwise. The Chair of the Board of Directors or in the Chair's absence a Vice-Chair or any other member of the Board of Directors designated by the Board of Directors shall take the chair.  |
|  | 2 | The presiding officer shall appoint a secretary and the vote counters. The minutes shall be signed by the presiding officer and the secretary. <br>|
|  |  | Article 14 |
| Proxies | 1 | The Board of Directors may issue regulations regarding the participation and the representation at the General Meeting of Shareholders and may allow electronic proxies without qualified signatures.  |
|  | 2  | A shareholder can be represented by a legal representative or, by means of a written proxy, by a representative of choice. Furthermore, a shareholder may be represented by the Independent Proxy (in German: *Unabhängiger Stimmrechtsvertreter*). |
|  | 3  | The General Meeting of Shareholders shall elect the Independent Proxy for a term of office lasting until completion of the next Annual General Meeting of Shareholders. Re-election is possible. |
|  | 4  | If the Company does not have an Independent Proxy, the Board of Directors shall appoint the Independent Proxy for the next General Meeting of Shareholders.  |

---

------

---

| | |
|:---|:---|
|  **7<br>**  | Articles of Incorporation of Novartis AG |

---

---

| | | |
|:---|:---|:---|
|  |  | Article 15 |
| Voting rights |  | Each share provides entitlement to one vote.<br>|
|  |  | Article 16 |
| Resolutions, Elections | 1 | Unless the law requires otherwise, the General Meeting passes resolutions and elections with the absolute majority of the votes validly represented. |
|  | 2 | Resolutions and elections shall be taken either on a show of hands or by electronic voting, unless the General Meeting decides for, or the presiding officer orders, a secret ballot. |
|  | 3 | The presiding officer may at any time order to repeat an election or resolution taken on a show of hands with a secret ballot, if the presiding officer doubts the results of the vote. In this case, the preceding election or resolution taken on a show of hands is deemed not to have taken place.  |
|  | 4 | If no election has taken place at the first ballot and if there is more than one candidate, the presiding officer shall order a second ballot in which the relative majority shall be decisive.<br>|
|  |  | Article 17 |
| Powers of the General Meeting of Shareholders |  | The following powers shall be vested exclusively in the General Meeting of Shareholders:<br> a) To adopt and amend the Articles of Incorporation;<br> b) To elect and remove the members of the Board of Directors, the Chair of the Board of Directors, the members of the Compensation Committee, the Independent Proxy and the Auditors; <br> c) To approve the management report (if required), the consolidated financial statements and the report on non-financial matters; <br> d) To approve the financial statements and to decide on the appropriation of available earnings shown on the balance sheet, in particular with regard to dividends (including any repayment of the statutory capital reserves and the approval of interim dividends and the interim financial statements required for such purpose);<br> e) To approve the aggregate amounts of compensation of the Board of Directors and the Executive Committee in accordance with Article 29 of these Articles of Incorporation; <br> f) To grant discharge to the members of the Board of Directors and to the members of the Executive Committee;<br> g) To delist the shares of the Company; and <br> h) To decide on matters that are reserved by law or by the Articles of Incorporation to the General Meeting of Shareholders. |

---

------

---

| | |
|:---|:---|
|  **8<br>**  | Articles of Incorporation of Novartis AG |

---

---

| | | |
|:---|:---|:---|
|  |  | Article 18 |
| Special quorum |  | The approval of at least two-thirds of the votes represented is required for resolutions of the General Meeting of Shareholders on: <br> a) An alteration of the purpose of the Company; <br> b) The consolidation of shares, unless the approval of all affected shareholders is required; <br> c) An increase of the share capital out of equity, by contributions in kind or by way of set off against a receivable and the grant of special rights; <br> d) A restriction or suspension of rights of option to subscribe; <br> e) The introduction of a conditional capital or a capital band; <br> f) An implementation of restrictions on the transfer of registered shares and the removal of such restrictions; <br> g) The creation of shares with increased voting powers; <br> h) The change of the currency of the share capital;<br> i) The introduction of the deciding vote for the presiding officer at the General Meeting of Shareholders; <br> j) A provision in the Articles of Incorporation allowing to hold the General Meeting of Shareholders abroad; <br> k) The delisting of the shares of the Company; <br> l) A change of location of the registered office of the Company;<br> m) The introduction of an arbitration clause in the Articles of Incorporation; <br> n) The merger, split or transformation of the Company under the Merger Act (subject to mandatory statutory provisions); and<br> o) The dissolution of the Company. <br>|
|  |  | B. Board of Directors<br>|
|  |  | Article 19 |
| Number of Directors |  | The Board of Directors shall consist of a minimum of 8 and a maximum of 16 members.<br>|
|  |  | Article 20 |
| Term of office | 1 | The members of the Board of Directors and the Chair of the Board of Directors shall be elected individually by the General Meeting of Shareholders for a term of office lasting until completion of the next Annual General Meeting of Shareholders. |
|  | 2  | Members whose term of office has ended may be immediately reelected, subject to paragraph 3 hereinafter. |
|  | 3  | A member shall not serve on the Board for more than 12 years. The Board of Directors may, under certain circumstances and if deemed in the best interests of the Company, recommend exceptions to this rule to the General Meeting of Shareholders. |

---

------

---

| | |
|:---|:---|
|  **9<br>**  | Articles of Incorporation of Novartis AG |

---

---

| | | |
|:---|:---|:---|
|  |  | Article 21 |
| Organization | 1 | The Board of Directors constitutes itself in compliance with legal requirements and taking into consideration the resolutions of the General Meeting of Shareholders. It shall elect one or two Vice-Chairs. It shall appoint a secretary, who need not be a member of the Board of Directors. |
|  | 2 | If the office of the Chair of the Board of Directors is vacant, the Board of Directors shall appoint a new Chair from amongst its members for the remaining term of office.<br>|
|  |  | Article 22 |
| Convening of meetings |  | The Chair shall convene meetings of the Board of Directors if and when the need arises or if a member so requires in writing. <br>|
|  |  | Article 23 |
| Meetings, Resolutions | 1 | The organization of the meetings, including the quorum and the passing of resolutions, is regulated by the Board of Directors in the organizational regulations.  |
|  | 2 | The presiding officer shall not have the deciding vote. <br>|
|  |  | Article 24 |
| Powers of the Board of Directors | 1 | The Board of Directors has in particular the following non-delegable and inalienable duties: <br> a) The ultimate direction of the Company's business and issuing of the necessary directives; <br> b) The determination of the organization of the Company; <br> c) The determination of the principles of accounting, financial controlling and financial planning; <br> d) The appointment and removal of the persons entrusted with the management and representation of the Company (including the CEO and the other members of the Executive Committee); <br> e) The ultimate supervision of the persons entrusted with the management of the Company, specifically in view of their compliance with the law, Articles of Incorporation, regulations and directives; <br> f) The preparation of the annual report, the compensation report and the report on non-financial matters in accordance with the provisions of the law and the Articles of Incorporation, as well as further reports which must be approved by the Board of Directors; <br> g) The preparations for the General Meeting of Shareholders and carrying out of the resolutions of the General Meeting of Shareholders; <br> h) The filing of a request for a moratorium and the notification to the court in the event of over-indebtedness;<br>|

---

------

---

| | |
|:---|:---|
|  **10<br>**  | Articles of Incorporation of Novartis AG |

---

---

| | | |
|:---|:---|:---|
|  |  | i) The adoption of resolutions concerning the implementation of changes in share capital to the extent that such power is vested in the Board of Directors, as well as resolutions concerning the confirmation of changes in share capital and respective amendments to the Articles of Incorporation; and<br> j) All further non-delegable and inalienable duties of the Board of Directors provided for by the law.<br>|
|  | 2 | In addition, the Board of Directors can pass resolutions with respect to all matters which are not reserved to the authority of the General Meeting of Shareholders by law or by these Articles of Incorporation.<br>|
|  |  | Article 25 |
| Delegation of powers |  | The Board of Directors may, within the limits of the law and the Articles of Incorporation, delegate the management of the Company in whole or in part to one or several of its members (including to ad hoc or permanent committees of the Board of Directors) or to third persons (Executive Committee).<br>|
|  |  | Article 26 |
| Signature power |  | The Board of Directors shall designate those of its members as well as those third persons who shall have legal signatory power for the Company, and shall further determine the manner in which such persons may sign on behalf of the Company.<br>|
|  |  | Article 27 |
| Organization and powers of the Compensation | 1  | The Compensation Committee shall consist of a minimum of 3 and a maximum of 5 members of the Board of Directors. |
| Committee | 2  | The members of the Compensation Committee shall be elected individually by the General Meeting of Shareholders for a term of office lasting until completion of the next Annual General Meeting of Shareholders. Members of the Compensation Committee whose term of office has expired shall be immediately eligible for re-election. |
|  | 3  | If there are vacancies on the Compensation Committee, the Board of Directors shall appoint substitutes for the remaining term of office. |
|  | 4  | The Board of Directors shall elect a chair of the Compensation Committee. The Board of Directors shall, within the limits of the law and the Articles of Incorporation, define the organization of the Compensation Committee in regulations. |
|  | 5  | The Compensation Committee has the following powers:<br> a) Develop a compensation strategy in line with the principles described in the Articles of Incorporation and submit it for approval to the Board of Directors;<br> b) Propose to the Board of Directors the principles and structure of the compensation plans; |

---

------

---

| | |
|:---|:---|
|  **11<br>**  | Articles of Incorporation of Novartis AG |

---

---

| | | |
|:---|:---|:---|
|  |  | c) Support the Board of Directors in preparing the proposals to the General Meeting of Shareholders regarding the compensation of the members of the Board of Directors and the Executive Committee;<br> d) Submit the compensation report to the Board of Directors for approval;<br> e) Inform the Board of Directors about policies, programs and key decisions as well as comparisons of compensation levels at key competitors;<br> f) Regularly report to the Board of Directors on the decisions and deliberations of the Compensation Committee;<br> g) Assume other responsibilities assigned to it by law, the Articles of Incorporation or by the Board of Directors. |
|  | 6 | The Board of Directors issues regulations to determine for which positions of the Board of Directors and of the Executive Committee the Compensation Committee shall submit proposals regarding compensation, and for which positions it shall determine the compensation in accordance with the Articles of Incorporation.<br>|
|  |  | C. Auditors<br>|
|  |  | Article 28 |
| Term, Powers and Duties |  | The Auditors, who shall be elected by the General Meeting of Shareholders each year, shall have the powers and duties vested in them by law.<br>|

---

---

| | | |
|:---|:---|:---|
| **Section 4** |  | **Compensation of the Board of Directors and the Executive Committee**<br>|
|  |  | Article 29 |
| Approval of compensation by the <br> General Meeting of Shareholders | 1 | The General Meeting of Shareholders shall approve annually and separately the proposals of the Board of Directors in relation to the maximum aggregate amount of:<br> a) Compensation of the Board of Directors for the period until the next Annual General Meeting of Shareholders; and<br> b) Compensation of the Executive Committee paid, promised or granted for the following financial year.<br> The Board of Directors may submit for approval by the General Meeting of Shareholders additional proposals relating to the same or different periods. |

---

------

---

| | |
|:---|:---|
|  **12<br>**  | Articles of Incorporation of Novartis AG |

---

---

| | | |
|:---|:---|:---|
|  | 2 | If the General Meeting of Shareholders rejects the proposal of the Board of Directors for the total compensation of the Board of Directors and/or the Executive Committee, the decision on how to proceed shall reside with the Board of Directors. The options for the Board of Directors shall be to either convene an Extraordinary General Meeting to submit a new compensation proposal, or to determine the compensation for the corresponding period on an interim basis, subject to approval at the next Annual General Meeting of Shareholders. |
|  | 3 | Notwithstanding the preceding paragraphs, the Company or companies controlled by it may pay out compensation prior to approval by the General Meeting of Shareholders subject to subsequent approval by a General Meeting of Shareholders. |
|  | 4 | The Board of Directors shall submit the compensation report to an advisory vote of the General Meeting of Shareholders.<br>|
|  |  | Article 30 |
| Additional amount |  | If the maximum aggregate amount of compensation already approved by the General Meeting of Shareholders is not sufficient to also cover the compensation of one or more members who become members of the Executive Committee during a compensation period for which the General Meeting of Shareholders has already approved the compensation of the Executive Committee, the Company or companies controlled by it shall be authorized to pay or grant to such member(s) an additional amount during the compensation period(s) already approved. The total additional amount for each relevant compensation period for which approval by the General Meeting of Shareholders has already been obtained shall not exceed (in full and not pro rata temporis) 40% of the aggregate amount of compensation of the Executive Committee last approved by the General Meeting of Shareholders per compensation period.<br>|

---

---

| | | |
|:---|:---|:---|
|  |  | Article 31 |
| General compensation principles | 1 | Compensation of the non-executive members of the Board of Directors comprises fixed compensation elements only. In particular, non-executive members of the Board of Directors shall receive no company contributions to any pension plan, no performance-related elements and no financial instruments (e.g. options).  |
|  | 2 | Compensation of the members of the Executive Committee comprises fixed and variable compensation elements. Fixed compensation comprises the base salary and may comprise other compensation elements and benefits. Variable compensation may comprise short-term and long-term compensation elements. |

---

------

---

| | |
|:---|:---|
|  **13<br>**  | Articles of Incorporation of Novartis AG |

---

---

| | | |
|:---|:---|:---|
|  | 3 | Compensation (to non-executive members of the Board of Directors and to members of the Executive Committee) may be paid or granted in the form of cash, shares, other benefits or in kind. Compensation to members of the Executive Committee may also be paid or granted in the form of financial instruments or similar units. Compensation may be paid by the Company or companies controlled by it. The Board of Directors determines the valuation of each compensation element on the basis of the principles that apply to the establishment of the compensation report.<br>|
|  |  | Article 32 |
| Variable compensation | 1 | The variable compensation paid or granted to the members of the Executive Committee in a certain year shall consist of compensation elements from short- and long-term compensation plans (as defined in this Article 32). |
|  | 2 | The short-term compensation plans are based on performance metrics that take into account the performance of the Novartis Group and/or parts thereof, and/or individual targets. Achievements are generally measured based on the one-year period to which the short-term compensation relates. The short-term compensation pay-outs shall be subject to caps that may be expressed as predetermined multipliers of the respective target levels. |
|  | 3 | The long-term compensation plans are based on performance metrics that take into account strategic objectives of the Novartis Group (such as financial, innovation, Shareholder return and/or other metrics). Achievements are generally measured based on a period of not less than three years. The long-term compensation pay-outs shall be subject to caps that may be expressed as predetermined multipliers of the respective target levels. |
|  | 4 | The Board of Directors or, to the extent delegated to it, the Compensation Committee determines performance metrics, target levels, and their achievement. |

---

---

| | |
|:---|:---|
| 5 | The Board of Directors or, to the extent delegated to it, the Compensation Committee determines grant, vesting, blocking, exercise and forfeiture conditions of the compensation; they may provide for continuation, acceleration or removal of vesting and exercise conditions, for payment or grant of compensation assuming target achievement or for forfeiture in the event of predefined events such as death, disability, retirement or termination of an employment or mandate agreement. |

---

------

---

| | |
|:---|:---|
|  **14<br>**  | Articles of Incorporation of Novartis AG |

---

---

| | | |
|:---|:---|:---|
|  |  | Article 33 |
| Agreements with Members <br> of the Board of Directors and <br> of the Executive Committee | 1 | The Company or companies controlled by it may enter into agreements with members of the Board of Directors relating to their compensation for a term not exceeding the term of office of the respective members of the Board of Directors. The Company or companies controlled by it may enter into contracts of employment with members of the Executive Committee for a fixed term not exceeding one year or for an indefinite period of time with a notice period not exceeding 12 months. |
|  | 2 | Contracts of employment with members of the Executive Committee may contain a prohibition of competition for the time after the end of employment if this is commercially justified. The overall consideration for such prohibition shall not exceed the average annual compensation for the three preceding business years. <br>|
|  |  | Article 34 |
| Mandates outside <br> of the Novartis Group | 1 | No member of the Board of Directors may hold more than 10 additional mandates in other companies, of which no more than 4 additional mandates shall be in other listed companies. Chairs of the board of directors of other listed companies count as two mandates. Each of these mandates shall be subject to approval by the Board of Directors. |
|  | 2  | No member of the Executive Committee may hold more than 6 additional mandates in other companies, of which no more than 2 additional mandates shall be in other listed companies. Each of these mandates shall be subject to approval by the Board of Directors. Members of the Executive Committee are not allowed to hold chairs of the board of directors of other listed companies. |
|  | 3 | The following mandates are not subject to these limitations:<br> a) Mandates in companies which are controlled by the Company; and<br>b) Mandates which a member of the Board of Directors or of the Executive Committee holds at the request of the Company or companies controlled by it. No member of the Board of Directors or of the Executive Committee shall hold more than 5 such mandates. |

---

---

| | |
|:---|:---|
| 4 | Mandates shall mean any membership in the board of directors, in the executive board or in the advisory board, or a comparable function under foreign law, in a company with an economic purpose. Mandates in different legal entities which are under joint control are deemed one mandate. |
| 5 | The Board of Directors may issue regulations that may determine additional restrictions, taking into account the position of the respective member. |

---

------

---

| | |
|:---|:---|
|  **15<br>**  | Articles of Incorporation of Novartis AG |

---

---

| | | |
|:---|:---|:---|
|  |  | Article 35 |
| Loans |  | No loans or credits shall be granted to the members of the Board of Directors or the Executive Committee.<br>|
| **Section 5** |  | **Annual Financial Statements, Consolidated Financial Statements and Profit Allocation**<br>|
|  |  | Article 36 |
| Financial year |  | The Board of Directors shall prepare for each financial year as of 31 December an annual report consisting of financial statements with a management report if required and the consolidated financial statements.<br>|
|  |  | Article 37 |
| Allocation of profit shown on the balance sheet, Reserves | 1 | The allocation of the profit shown on the balance sheet shall be determined by the General Meeting of Shareholders subject to the legal provisions. The Board of Directors shall submit to the General Meeting of Shareholders its proposals. |
|  | 2 | In addition to statutory reserves additional reserves may be accrued. |
|  | 3 | Dividends which have not been claimed within five years after the due date fall back to the Company and shall be allocated to the general reserves.<br>|
| **Section 6** |  | **Publications and Place of Jurisdiction**<br>|
|  |  | Article 38 |
| Publications | 1  | Notifications to shareholders and external communications of the Company shall be made in the Swiss Official Gazette of Commerce. The Board of Directors may designate additional publication organs. |
|  | 2  | Notices to shareholders may instead or in addition be sent (i) by regular mail to their addresses entered in the share register, (ii) by email or (iii) in any other form that the Board of Directors deems appropriate.<br>|
|  |  | Article 39 |
| Place of jurisdiction |  | The exclusive place of jurisdiction for any disputes arising from or in connection with the shareholdership in the Company shall be at the registered office of the Company.  |

---

------

## Ex-2

#### Exhibit 2.3

#### DESCRIPTION OF SECURITIES REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT
As of December 31, 2025 Novartis AG ("we," "us," and "our") had the following series of securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"):

&nbsp;&nbsp;&nbsp;&nbsp;**<u>Title of each class</u>**

&nbsp;&nbsp;&nbsp;&nbsp;**<u>Trading symbol(s)</u>**

**<u>Name of each exchange on which registered</u>**

**Ordinary shares, nominal value CHF 0.49 per share**

**—\*** 

<br> **New York Stock Exchange\*** 

<br> **American Depositary Shares, each representing 1 share**

**NVS**

**New York Stock Exchange**

\*Not for trading but only in connection with the registration of American Depositary Shares representing such ordinary shares.

Our shares are listed in Switzerland on the SIX Swiss Exchange (the "SIX"). American Depositary Shares ("ADSs"), each representing one ordinary share, nominal value 0.49 Swiss Francs per share of Novartis AG (the "shares"), have been available in the US through an American Depositary Receipt ("ADR") program since December 1996. This program was established pursuant to the deposit agreement, as amended and restated from time to time, that we entered into with JPMorgan Chase Bank, N.A., New York ("JPMorgan Chase"), as depositary (the "Deposit Agreement"). Our ADRs have been listed on the New York Stock Exchange (the "NYSE") since May 2000 and are traded under the symbol NVS. In connection with this listing (but not for trading), the shares are registered under Section 12(b) of the Exchange Act. This exhibit contains a description of the rights of (i) the holders of the shares and (ii) ADR holders. Shares underlying the ADSs are held by JPMorgan Chase, the depositary, and holders of ADSs will not be treated as holders of the shares.

The following summary is subject to and qualified in its entirety by Novartis AG's Articles of Incorporation (the "Articles"), Regulations (the "Board Regulations") of the Novartis AG Board (the "Board"), and by Swiss law, particularly the Swiss Code of Obligations (the "Swiss CO"). This is not a summary of all the significant provisions of the Articles, the Board Regulations, or of Swiss law and does not purport to be complete. Capitalized terms used but not defined herein have the meanings given to them in Novartis AG's annual report on Form 20-F for the fiscal year ended December 31, 2025 (the "Annual Report") and in the Deposit Agreement, which is an exhibit to the Post-Effective Amendment to our registration statement on Form F-6 filed with the SEC on December 16, 2022.

#### ORDINARY SHARES

#### Item 9. General

#### 9.A.3 Pre-emptive rights
If a capital increase is approved, then our shareholders would generally have certain pre-emptive rights to obtain newly issued shares in an amount proportional to the nominal value of the shares they already hold. These pre-emptive rights could be excluded in certain limited circumstances with the approval of a resolution adopted at a General Meeting of Shareholders ("General Meeting") by a supermajority of two thirds of the votes. Pre-emptive rights, if not excluded, are transferable during the subscription period relating to a particular offering of shares and may be quoted on the SIX. US holders of shares, or US holders of ADRs, may not be able to exercise the pre-emptive rights attached to the shares or to the shares underlying their ADRs unless a registration statement under the US Securities Act of 1933, as amended (the "Securities Act"), is effective with respect to such rights and the related shares, or an exemption from this registration requirement is available. If pre-emptive rights could not be exercised by an ADR holder, the depositary would, if possible, sell the holder's pre-emptive rights and distribute the

------

net proceeds of the sale to the holder. If the depositary determines, in its discretion, that the rights could not be sold, the depositary might allow such rights to lapse.

#### 9.A.5 Type and class of securities
Each share has nominal value of 0.49 Swiss Francs per share. The respective number of shares that have been issued as of December 31, 2025 is given in Item 6.C of the Annual Report. Novartis AG shares are issued as uncertificated securities (in the sense of the Swiss Code of Obligations) and as book entry securities (in terms of the Swiss Act on Intermediated Securities). All shares have equal voting rights and carry equal entitlements to dividends. No participation certificates, non-voting equity securities (*Genussscheine*) or profit-sharing certificates have been issued.

#### Item 9.A.6. Limitations or qualifications
Not applicable.

#### Item 9.A.7. Other rights
Not applicable.

#### Item 10.B Memorandum and articles of association

#### 10.B.3 Shareholder rights
Because Novartis AG has only one class of registered shares, the following information applies to all shareholders.

(a) Under the Swiss CO, we may only pay dividends out of balance sheet profits or out of distributable reserves. In any event, under the Swiss CO, while the Board may propose that a dividend be paid, we may only pay dividends upon shareholders' approval at a General Meeting. Furthermore, the Swiss CO requires us to accrue general legal reserves under certain circumstances so long as these reserves amount to less than 20% of our registered share capital, and Swiss law and the Articles permit us to accrue additional reserves beyond the statutory reserves. Our auditors must confirm that the dividend proposal of our Board conforms with the Swiss CO and the Articles. Our Board expects to recommend the payment of a dividend in respect of each financial year. See "Item 6. Directors, Senior Management and Employees—Item 6.C Board Practices—Capital Structure—Limitation on transferability—Per-share information" and "Item 8. Financial Information—Item 8.A. Consolidated statements and other financial information—Dividend policy." of our Annual Report.

Dividends are usually due and payable shortly after the shareholders have passed a resolution approving the payment. Dividends that have not been claimed within five years after the due date revert to us and are allocated to our general reserves. For information about deduction of the withholding tax or other duties from dividend payments, see "Item 10. Additional Information—Item 10.E Taxation" of our Annual Report.

(b) Each share is entitled to one vote at a General Meeting. Voting rights may only be exercised for shares registered with the right to vote on the record date for the applicable General Meeting. In order to do so, the shareholder must file a share registration form with us, setting forth the shareholder's name, address and citizenship (or, in the case of a legal entity, its registered office). If the shareholder has not timely registered its shares, then the shareholder may not vote at, or participate in, a General Meeting.

To vote its shares, the shareholder must also explicitly declare that it has acquired the shares in its own name and for its own account. If the shareholder refuses to make such a declaration, the shares may not be voted unless the Board recognizes such shareholder as a nominee.

The Articles provide that no shareholder shall be registered with the right to vote shares comprising more than 2% of the registered share capital. The Board may, upon request, grant an

------

exemption from this restriction. Considerations include whether the shareholder supports our goal of creating sustainable value and has a long-term investment horizon. Furthermore, the Articles provide that no nominee shall be registered with the right to vote shares comprising more than 0.5% of the registered share capital. The Board may, upon request, grant an exemption from this restriction if the nominee discloses the names, addresses, and number of shares of the persons for whose account it holds 0.5% or more of the registered share capital. The same restrictions indirectly apply to ADR holders. We have in the past granted exemptions from the 2% rule for shareholders and the 0.5% rule for nominees.

For purposes of the 2% rule for shareholders and the 0.5% rule for nominees, groups of companies and groups of shareholders acting in concert are considered to be one shareholder. These rules also apply to shares acquired or subscribed by the exercise of subscription, option or conversion rights.

After hearing the registered shareholder or nominee, the Board may cancel, with retroactive effect as of the date of registration, the registration of the shareholders if the registration was effected based on false information.

Registration restrictions in the Articles may only be removed upon a resolution carrying a two thirds majority of the votes represented at a General Meeting.

Except as noted below, shareholders' resolutions require the approval of an absolute majority of the votes present at a General Meeting. As a result, abstentions have the effect of votes against such resolutions. Examples of shareholders' resolutions requiring a vote by such "absolute majority of the votes" include:

&nbsp;&nbsp;&nbsp;&nbsp;• Adoption and amendment of the Articles

&nbsp;&nbsp;&nbsp;&nbsp;• Election and removal of the Board Chair, the Board and Compensation Committee members, the Independent Proxy and the external auditor

&nbsp;&nbsp;&nbsp;&nbsp;• Approval of the management report (if required), the consolidated financial statements and the report on non-financial matters

&nbsp;&nbsp;&nbsp;&nbsp;• Approval of the financial statements of Novartis AG, and the decision on the appropriation of available earnings shown on the balance sheet, in particular with regard to dividends (including any repayment of the statutory capital reserves and the approval of interim dividends and the interim financial statements required for such purpose), if any

&nbsp;&nbsp;&nbsp;&nbsp;• Approval of the maximum aggregate compensation of the Board (from an Annual General Meeting of Shareholders ("AGM") until the next AGM) and of the Executive Committee (for the financial year following the AGM)

&nbsp;&nbsp;&nbsp;&nbsp;• Discharge of Board and Executive Committee members from liability for matters disclosed to the General Meeting

&nbsp;&nbsp;&nbsp;&nbsp;• Decision on other matters that are reserved by law or by the Articles (e.g., advisory vote on the Compensation Report) to the General Meeting

According to the Articles and Swiss law, the following matters require the approval of a "supermajority" of at least two thirds of the votes present at a General Meeting:

&nbsp;&nbsp;&nbsp;&nbsp;• Alteration of the purpose of Novartis AG

&nbsp;&nbsp;&nbsp;&nbsp;• The consolidation of shares, unless the approval of all affected shareholders is required

&nbsp;&nbsp;&nbsp;&nbsp;• Increase of the share capital out of equity, by contributions in kind or by way of set-off against receivable, or the grant of special rights

&nbsp;&nbsp;&nbsp;&nbsp;• Restriction or cancellation of subscription rights

&nbsp;&nbsp;&nbsp;&nbsp;• Introduction of a conditional capital or capital band

&nbsp;&nbsp;&nbsp;&nbsp;• Creation of shares with increased voting powers

&nbsp;&nbsp;&nbsp;&nbsp;• Implementation of restrictions on the transfer of registered shares, and the removal of such restrictions

&nbsp;&nbsp;&nbsp;&nbsp;• Change of the currency of the share capital

&nbsp;&nbsp;&nbsp;&nbsp;• Introduction of the deciding vote for the presiding officer at the General Meeting

&nbsp;&nbsp;&nbsp;&nbsp;• A provision in the Articles allowing the General Meeting to be held abroad

&nbsp;&nbsp;&nbsp;&nbsp;• Delisting of the shares of the Company

&nbsp;&nbsp;&nbsp;&nbsp;• Change of the registered office of Novartis AG

&nbsp;&nbsp;&nbsp;&nbsp;• Introduction of an arbitration clause in the Articles

&nbsp;&nbsp;&nbsp;&nbsp;• Merger, split or transformation of Novartis AG under the Swiss Merger Act (subject to mandatory statutory provisions)

&nbsp;&nbsp;&nbsp;&nbsp;• Dissolution of Novartis AG

------

Our shareholders are required, on an annual basis, to elect all Directors (including the Board Chair), the Compensation Committee members, the external auditor and the Independent Proxy. The Articles do not provide for cumulative voting of shares.

At a General Meeting, shareholders can be represented by a legal representative or, by means of a written proxy, by a representative of choice. Furthermore, a shareholder may be represented by the Independent Proxy. Votes are taken either by a show of hands or by electronic voting, unless the General Meeting resolves to have a ballot or where a ballot is ordered by the chair of the meeting.

ADSs, each representing one Novartis AG share and evidenced by ADRs, are issued by our depositary JPMorgan Chase Bank, N.A., New York, and not by us. The ADR is vested with rights defined and enumerated in the Deposit Agreement (such as the rights to vote, to receive a dividend and to receive a share of Novartis AG in exchange for a certain number of ADRs). The enumeration of rights, including any limitations on those rights in the Deposit Agreement, is final. There are no other rights given to the ADR holders. Only the ADS depositary, holding our shares underlying the ADRs, is registered as shareholder in our share register. An ADR is not a Novartis AG share and an ADR holder is not a Novartis AG shareholder.

The Deposit Agreement between our depositary, the ADR holder and us has granted certain indirect rights to vote to the ADR holders. ADR holders may not attend a General Meeting in person. ADR holders exercise their voting rights by instructing JPMorgan Chase Bank, N.A., New York, our depositary, to exercise the voting rights attached to the registered shares underlying the ADRs. Each ADR represents one Novartis AG share. JPMorgan Chase, as depositary, exercises the voting rights for registered shares underlying ADRs for which no voting instructions have been given by providing a discretionary proxy to an uninstructed independent designee. The same voting restrictions apply to ADR holders as to those holding Novartis AG shares (i.e., the right to vote up to 2% of the Novartis AG registered share capital – unless otherwise granted an exemption by the Board – and the disclosure requirement for nominees).

(c) Shareholders have the right to allocate the profit shown on our balance sheet and to distribute dividends by vote taken at the General Meeting, subject to the legal requirements described in "—Item 10.B.3(a) Shareholder rights" of the Annual Report.

(d) Under the Swiss CO, any surplus arising out of a liquidation of Novartis AG (i.e., after the settlement of all claims of all creditors) would be distributed to the shareholders in proportion to the paid in nominal value of their shares.

(e) The Swiss CO limits a corporation's ability to hold or repurchase its own shares. We and our subsidiaries may only repurchase shares if we have sufficient freely disposable equity in the amount of the purchase price of the acquired shares. The aggregate nominal value of all Novartis AG shares held by us and our subsidiaries may not exceed 10% of our registered share capital. However, it is accepted that a Swiss corporation may repurchase its own shares beyond the statutory limit of 10% if the repurchased shares are clearly earmarked for cancellation. In addition, we are required to recognize a negative position, or if our subsidiaries acquire our shares, to create a special reserve on our balance sheet in the amount of the purchase price of the acquired shares. Repurchased shares held by us or our subsidiaries do not carry any rights to vote at a General Meeting, but are entitled to the economic benefits generally connected with the shares.

Under the Swiss CO, we may not cancel treasury shares without the approval of a capital reduction by our shareholders given that shareholders have not approved the introduction of a capital band.

(f) Not applicable.

(g) Since all of our issued and outstanding shares have been fully paid in, our shareholders are not obliged to make further contributions with respect to their shares.

(h) See "—Item 10.B.3(b) Shareholder rights" and "—Item 10.B.7 Change in control."

#### 10.B.4 Changes to shareholder rights
Under the Swiss CO, we may not issue new shares without the prior approval of a capital increase by our shareholders. If a capital increase is approved, then our shareholders would generally have certain pre-emptive rights to obtain newly issued shares in an amount proportional to the nominal value of the

------

shares they already hold. These pre-emptive rights could be excluded in certain limited circumstances with the approval of a resolution adopted at a General Meeting by a supermajority of two-thirds of the votes. In addition, we may not create shares with increased voting powers or place restrictions on the transfer of registered shares without the approval of a resolution adopted at a General Meeting by a supermajority of votes. In addition, see "—Item 10.B.3(b) Shareholder rights" of the Annual Report with regard to the Board's ability to cancel the registration of shares under limited circumstances.

#### 10.B.6 Limitations
There are no limitations under the Swiss CO or our Articles on the right of non-Swiss residents or nationals to own or vote shares other than the restrictions applicable to all shareholders and holders of ADRs described in "—Item 10.B.3(b) Shareholder rights" of the Annual Report regarding conditions for exercising an ADR holder's right to vote at a shareholder meeting.

#### 10.B.7 Change in control
The Articles and the Board Regulations contain no provision that would have an effect of delaying, deferring or preventing a change in control of Novartis AG and that would operate only with respect to a merger, acquisition or corporate restructuring involving us or any of our subsidiaries.

According to the Swiss Merger Act, shareholders may pass a resolution to merge with another corporation at any time. Such a resolution would require the consent of at least two thirds of all votes present at the necessary General Meeting.

Under the Swiss Financial Market Infrastructure Act, shareholders and groups of shareholders acting in concert who acquire more than 33 1/3% of our shares would be under an obligation to make an offer to acquire all remaining Novartis AG shares. Novartis AG has neither opted out of the mandatory takeover offer obligation nor opted to increase the threshold for mandatory takeover offers in its Articles.

#### 10.B.8 Disclosure of shareholdings
Under the Swiss Financial Market Infrastructure Act, persons who directly, indirectly or in concert with other parties acquire or dispose of our shares or purchase or sale rights relating to our shares are required to notify us and the SIX of the level of their holdings whenever such holdings reach, exceed or fall below certain thresholds – 3%, 5%, 10%, 15%, 20%, 25%, 33 1/3%, 50% and 66 2/3% – of the voting rights represented by our share capital (whether exercisable or not). This also applies to anyone who has discretionary power to exercise voting rights associated with our shares. Following receipt of such notification, we are required to inform the public by publishing the information via the electronic publication platform operated by the SIX.

An additional disclosure obligation exists under rules of the SIX that requires us to disclose the identity of all of our shareholders (or related groups of shareholders) as published pursuant to the paragraph above, in Item 6.C of the Annual Report. See "Item 6. Directors, Senior Management and Employees—Item 6.C Board practices—Group structure and shareholders—Shareholders—Significant shareholders."

#### 10.B.9 Differences in the law
See the references to Swiss law throughout this Exhibit 2.3.

#### 10.B.10 Changes in capital
The requirements of the Articles regarding changes in capital are not more stringent than the requirements of Swiss law.

------

#### AMERICAN DEPOSITARY SHARES

#### Item 12. Other securities
Disclosures under Items 12.A, 12.B, and 12.C are not applicable.

#### 12.D.1 Depositary
JPMorgan Chase has been appointed as the depositary pursuant to the Deposit Agreement. JPMorgan Chase's principal executive office is located at 270 Park Avenue, Floor 8, New York, New York 10017.

#### 12.D.2 Provisions
ADSs are issued by the depositary, and not by us. The ADR is vested with rights defined and enumerated in the Deposit Agreement (such as the rights to vote, to receive a dividend and to receive a share of Novartis AG in exchange for a certain number of ADRs). The enumeration of rights, including any limitations on those rights in the Deposit Agreement, is final. There are no other rights given to the ADR holders. Only the depositary is registered as shareholder in our share register. An ADR is not a Novartis AG share and an ADR holder is not a Novartis AG shareholder.

The following is a summary of the material provisions of the Deposit Agreement. For more complete information, you should read the Deposit Agreement and form of ADR. The Deposit Agreement has been filed with the SEC as an exhibit to the Post-Effective Amendment to our registration statement on Form F-6 filed with the SEC on December 16, 2022.

#### Voting rights
The Deposit Agreement has granted certain indirect rights to vote to the ADR holders. ADR holders may not attend Novartis AG general meetings in person. ADR holders exercise their voting rights by instructing the depositary to exercise the voting rights attached to the registered shares underlying the ADRs. The same voting restrictions apply to ADR holders as to those holding Novartis AG shares (i.e., the right to vote up to 2% of the Novartis AG registered share capital – unless otherwise granted an exemption by the Board – and the disclosure requirement for nominees).

As soon as practicable after receipt from Novartis AG of notice of any meeting or solicitation of consents or proxies of holders of shares or other deposited securities, the depositary shall fix the ADR record date in accordance with the Deposit Agreement, provided that if the depositary receives a written request from Novartis AG in a timely manner and at least 30 days prior to the date of such vote or meeting the depositary shall, at Novartis AG's expense, distribute to holders a notice (the "Voting Notice") stating (a) such information as is contained in such notice and any solicitation materials (or a summary thereof), (b) that each holder on the record date set by the depositary therefor will be entitled, subject to applicable law and the provisions of or governing deposited securities to instruct the depositary as to the exercise of the voting rights, if any, pertaining to the deposited securities represented by the ADSs evidenced by such holder's ADRs and (c) the manner in which such instructions may be given, including instructions to give a discretionary proxy to a person designated by Novartis AG.

Upon actual receipt of instructions of a holder on such record date in the manner and on or before the date established by the depositary for such purpose, the depositary will endeavor insofar as practicable and permitted under the provisions of or governing deposited securities to vote or cause to be voted (or to grant a discretionary proxy to a person designated by Novartis AG) the deposited securities represented by the ADSs evidenced by such holder's ADRs in accordance with such instructions. The depositary will not itself exercise any voting discretion in respect of any deposited securities. To the extent that (a) the depositary has been provided 35 days' notice of the proposed meeting from Novartis AG, (b) the Voting Notice is sent to holders and beneficial owners no less than 14 days prior to the date of the meeting or the cut-off date for the solicitation of consents and (c) the depositary does not receive

------

instructions on a particular agenda item from a holder in a timely manner, such holder shall be deemed and the depositary shall deem such holder to have so instructed the depositary to give a discretionary proxy to a person designated by Novartis AG and the depositary shall endeavor insofar as practicable and permitted under the provisions of or governing deposited securities to give a discretionary proxy to a person designated by Novartis AG to vote the deposited securities represented by the ADSs evidenced by such holder's ADRs as to which such instructions are so given with respect to such agenda item(s), provided that no such instruction shall be deemed given unless Novartis AG promptly informs the depositary in writing that Novartis AG wishes such proxy be given with respect to such agenda item(s).

Notwithstanding anything contained in the Deposit Agreement or any ADR, the depositary may, to the extent not prohibited by any law, rule or regulation or the rules and/or requirements of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the depositary in connection with any meeting of or solicitation of consents or proxies from holders of deposited securities, distribute to the holders a notice that provides holders with or otherwise publicizes to holders instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials). Holders are strongly encouraged to forward their voting instructions as soon as possible. Voting instructions will not be deemed received until such time as the ADR department responsible for proxies and voting has received such instructions, notwithstanding that such instructions may have been physically received by JPMorgan, prior to such time.

#### Share dividends and other distributions
The depositary will distribute to each ADR holder on the record date set by the depositary at such ADR holder's address shown on the ADR Register, in proportion to the number of deposited securities (on which the following distributions on deposited securities are received by the custodian) represented by ADSs evidenced by such holder's ADRs:

(a) Cash: Any US dollars available to the depositary resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof authorized in paragraph 10 ("Cash") of the form of ADR, on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain holders, and (iii) deduction of the depositary's and/or its agent's fees and expenses in (1) converting any foreign currency to US dollars by sale or in such other manner as the depositary may determine to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or US dollars to the US by such means as the depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any commercially reasonable manner.

(b) Shares. (i) Additional ADRs evidencing whole ADSs representing any shares available to the depositary resulting from a dividend or free distribution on deposited securities consisting of shares (a "Share Distribution") and (ii) US dollars available to it resulting from the net proceeds of sales of shares received in a Share Distribution, which shares would give rise to fractional ADSs if additional ADRs were issued therefor, as in the case of Cash.

(c) Rights. (i) Warrants or other instruments in the discretion of the depositary representing rights to acquire additional ADRs in respect of any rights to subscribe for additional shares or rights of any nature available to the depositary as a result of a distribution on deposited securities ("Rights"), to the extent that Novartis AG timely furnishes to the depositary evidence satisfactory to the depositary that the depositary may lawfully distribute the same (Novartis AG has no obligation to so furnish such evidence), or (ii) to the extent Novartis AG does not so furnish such evidence and sales of Rights are practicable, any US dollars available to the depositary from the net proceeds of sales of Rights as in the case of Cash, or (iii) to the extent Novartis AG does not so furnish such evidence and such sales cannot practicably be accomplished by reason of the nontransferability of the Rights, limited markets therefor, their short duration or otherwise, nothing (and any Rights may lapse).

------

(d) Other Distributions. (i) Securities or property available to the depositary resulting from any distribution on deposited securities other than Cash, Share Distributions and Rights ("Other Distributions"), by any means that the depositary may deem equitable and practicable, or (ii) to the extent the depositary deems distribution of such securities or property not to be equitable and practicable, any US dollars available to the depositary from the net proceeds of sales of Other Distributions as in the case of Cash. The depositary shall endeavor to conduct any sales hereunder in a commercially reasonable manner.

The depositary will distribute US dollars by checks drawn on a bank in the US for whole dollars and cents (any fractional cents being withheld without liability for interest and dealt with by the depositary in accordance with its then current procedures), pursuant to paragraph 10 of the form of ADR.

#### Deposit, withdrawal and cancellation
Subject to paragraphs 4 and 5 of the form of ADR, upon surrender of (i) a certificated ADR in a form satisfactory to the depositary at the transfer office or (ii) proper instructions and documentation in the case of a Direct Registration ADR, the holder hereof is entitled to delivery at, or to the extent in dematerialized form from, the custodian's office of the deposited securities at the time represented by the ADSs evidenced by this ADR. At the request, risk and expense of the holder, the depositary may deliver such deposited securities at such other place as may have been requested by the holder. Notwithstanding any other provision of the Deposit Agreement or the ADR, the withdrawal of deposited securities may be restricted only for the reasons set forth in General Instruction I.A.(1) of Form F-6 (as such instructions may be amended from time to time) under the Securities Act.

#### Reclassification, recapitalizations and mergers
The depositary may, in its discretion, and shall if reasonably requested by Novartis AG, amend the ADR or distribute additional or amended ADRs (with or without calling existing ADRs for exchange) or cash, securities or property on the record date set by the depositary therefor to reflect any change in par value, split-up, consolidation, cancellation or other reclassification of deposited securities, any share distribution or other distribution not distributed to holders or any cash, securities or property available to the depositary in respect of deposited securities from (and the depositary is authorized under the Deposit Agreement to surrender any deposited securities to any person and, irrespective of whether such deposited securities are surrendered or otherwise cancelled by operation of law, rule, regulation or otherwise, to sell by public or private sale any property received in connection with) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all the assets of Novartis AG.

To the extent the depositary does not so amend the ADR or make a distribution to holders to reflect any of the foregoing, or the net proceeds thereof, whatever cash, securities or property results from any of the foregoing shall constitute deposited securities and each ADS evidenced by the ADRs shall automatically represent its pro rata interest in the deposited securities as then constituted.

Promptly upon the occurrence of any of the aforementioned changes affecting deposited securities, Novartis AG shall notify the depositary in writing of such occurrence and as soon as practicable after receipt of such notice from Novartis AG, may instruct the depositary to give notice thereof, at Novartis AG's expense, to holders in accordance with the provisions hereof. Upon receipt of such instruction, the depositary shall give notice to the holders in accordance with the terms thereof, as soon as reasonably practicable.

#### Amendment and termination
The ADRs and the Deposit Agreement may be amended by Novartis AG and the depositary, provided that any amendment that imposes or increases any fees or charges on a per ADS basis (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, a transaction fee per cancellation request (including through SWIFT, telex or facsimile transmission), applicable delivery expenses or other such fees, charges or expenses), or that shall otherwise prejudice any substantial existing right of holders or beneficial owners, shall become effective 30 days after notice of such

------

amendment shall have been given to the holders. Every holder and beneficial owner at the time any amendment to the Deposit Agreement so becomes effective shall be deemed, by continuing to hold such ADR, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby. Any amendments or supplements which (i) are reasonably necessary (as agreed by Novartis AG and the depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act or (b) the ADSs or Shares to be traded solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by holders, shall be deemed not to prejudice any substantial rights of holders or beneficial owners. Notwithstanding the foregoing, if any governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the Deposit Agreement or the form of ADR to ensure compliance therewith, Novartis AG and the depositary may amend or supplement the Deposit Agreement and the ADR at any time in accordance with such changed laws, rules or regulations.

Such amendment or supplement to the Deposit Agreement in such circumstances may become effective before a notice of such amendment or supplement is given to holders or within any other period of time as required for compliance. Notice of any amendment to the Deposit Agreement or form of ADRs shall not need to describe in detail the specific amendments effectuated thereby, and failure to describe the specific amendments in any such notice shall not render such notice invalid, provided, however, that, in each such case, the notice given to the holders identifies a means for holders and beneficial owners to retrieve or receive the text of such amendment (i.e., upon retrieval from the SEC's, the depositary's or Novartis AG's website or upon request from the depositary).

The depositary may, and shall at the written direction of Novartis AG, terminate the Deposit Agreement and this ADR by mailing notice of such termination to the holders at least 30 days prior to the date fixed in such notice for such termination; provided, however, if the depositary shall have (i) resigned as depositary hereunder, notice of such termination by the depositary shall not be provided to holders unless a successor depositary shall not be operating hereunder within 60 days of the date of such resignation, or (ii) been removed as depositary hereunder, notice of such termination by the depositary shall not be provided to holders unless a successor depositary shall not be operating hereunder on the 60th day after Novartis AG's notice of removal was first provided to the depositary.

Notwithstanding anything to the contrary in the Deposit Agreement, the depositary may terminate the Deposit Agreement without notice to Novartis AG, but subject to giving 30 days' notice to the holders, under the following circumstances: (i) in the event of Novartis AG's bankruptcy or insolvency, (ii) if the shares cease to be listed on an internationally recognized stock exchange, (iii) if Novartis AG effects (or will effect) a redemption of all or substantially all of the deposited securities, or a cash or share distribution representing a return of all or substantially all of the value of the deposited securities, or (iv) there occurs a merger, consolidation, sale of assets or other transaction as a result of which securities or other property are delivered in exchange for or in lieu of deposited securities.

After the date so fixed for termination, the depositary and its agents will perform no further acts under the Deposit Agreement and this ADR, except to receive and hold (or sell) distributions on deposited securities and deliver deposited securities being withdrawn. As soon as practicable after the date so fixed for termination, the depositary shall use its reasonable efforts to sell the deposited securities and shall thereafter (as long as it may lawfully do so) hold in an account (which may be a segregated or unsegregated account) the net proceeds of such sales, together with any other cash then held by it under the Deposit Agreement, without liability for interest, in trust for the pro rata benefit of the holders of ADRs not theretofore surrendered. After making such sale, the depositary shall be discharged from all obligations in respect of the Deposit Agreement and this ADR, except to account for such net proceeds and other cash. After the date so fixed for termination, Novartis AG will be discharged from all obligations under the Deposit Agreement except for its obligations to the depositary and its agents.

#### Limitation on obligations and liability to ADR holders
The depositary, Novartis AG, their respective directors, officers, employees, agents and affiliates and each of them shall: (i) incur no liability to holders or beneficial owners (a) if any present or future law, rule, regulation, fiat, order or decree of the US, Switzerland or any other country or jurisdiction, or of any governmental or regulatory authority or any securities exchange or market or automated quotation system, the provisions of or governing any deposited securities, any present or future provision of Novartis AG's Articles, any act of God, war, terrorism, nationalization, epidemic, pandemic, expropriation,

------

currency restrictions, work stoppage, strike, civil unrest, revolutions, rebellions, explosions, computer failure or circumstance beyond its direct and immediate control shall prevent or delay, or shall cause any of them to be subject to any civil or criminal penalty in connection with, any act which the Deposit Agreement or the ADR provides shall be done or performed by it, or (b) by reason of any non-performance or delay, caused as aforesaid, in the performance of any act or things which by the terms of the Deposit Agreement it is provided shall or may be done or performed or any exercise or failure to exercise any discretion given it in the Deposit Agreement or the ADR (including, without limitation, any failure to determine that any distribution or action may be lawful or reasonably practicable); (ii) not incur or assume any liability to holders or beneficial owners except to perform its obligations to the extent they are specifically set forth in the ADR and the Deposit Agreement without gross negligence or willful misconduct and the depositary shall not be a fiduciary or have any fiduciary duty to holders or beneficial owners; (iii) in the case of the depositary and its agents, be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities, ADSs or the ADR; (iv) Novartis AG and its agents are under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities, the ADSs, or the ADR, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it in its sole discretion against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be required; and (v) not be liable to holders or beneficial owners for any action or inaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting shares for deposit, any holder, any other person believed by it to be competent to give such advice or information, or in the case of the depositary only, Novartis AG.

The depositary shall not be responsible for, and shall incur no liability in connection with or arising from, the insolvency of any custodian that is not a branch or affiliate of JPMorgan. The depositary shall not have any liability for the price received in connection with any sale of securities, the timing thereof or any delay in action or omission to act nor shall it be responsible for any error or delay in action, omission to act, default or negligence on the part of the party so retained in connection with any such sale or proposed sale. Notwithstanding anything to the contrary contained in the Deposit Agreement and any ADRs, the depositary shall not be responsible for, and shall incur no liability in connection with or arising from, any act or omission to act on the part of the custodian except to the extent that any holder has incurred liability directly as a result of the custodian having (i) committed fraud or willful misconduct in the provision of custodial services to the depositary or (ii) failed to use reasonable care in the provision of custodial services to the depositary as determined in accordance with the standards prevailing in the jurisdiction in which the custodian is located. Notwithstanding anything to the contrary contained in the Deposit Agreement or any ADRs, the depositary and the custodian(s) may use third-party delivery services and providers of information regarding matters such as pricing, proxy voting, corporate actions, class action litigation and other services in connection herewith and the Deposit Agreement, and use local agents to provide services such as, but not limited to, attendance at any meetings of security holders. Although the depositary and the custodian will use reasonable care (and cause their agents to use reasonable care) in the selection and retention of such third-party providers and local agents, they will not be responsible for any errors or omissions made by them in providing the relevant information or services.

The depositary has no obligation to inform holders or beneficial owners about the requirements of the laws, rules or regulations or any changes therein or thereto of any country or jurisdiction or of any governmental or regulatory authority or any securities exchange or market or automated quotation system. Additionally, the depositary is under no obligation to provide the holders and beneficial owners, or any of them, with any information about the tax status of Novartis AG. The depositary and Novartis AG shall not incur any liability for any tax or tax consequences that may be incurred by holders or beneficial owners on account of their ownership or disposition of the ADRs or ADSs. None of the depositary, the custodian or Novartis AG shall be liable for the failure by any holder or beneficial owner to obtain the benefits of credits or refunds of non-US tax paid against such holder's or beneficial owner's income tax liability.

The depositary, its agents and Novartis AG may rely and shall be protected in acting upon any written notice, request, direction, instruction or document believed by them to be genuine and to have been signed, presented or given by the proper party or parties. The depositary and its agents will not be responsible for any failure to carry out any instructions to vote any of the deposited securities, for the manner in which any such vote is cast or for the effect of any such vote. Additionally, the depositary may rely upon instructions from Novartis AG or its counsel in respect of any approval or license required for

------

any currency conversion, transfer or distribution. The depositary shall not incur any liability for the content of any information submitted to it by or on behalf of Novartis AG for distribution to the holders or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the deposited securities, for the validity or worth of the deposited securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of the deposit agreement or for the failure or timeliness of any notice from Novartis AG. The depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the depositary or in connection with any matter arising wholly after the removal or resignation of the depositary. Novartis AG has agreed to indemnify the depositary and its agents under certain circumstances and the depositary has agreed to indemnify Novartis AG under certain circumstances.

Neither Novartis AG, the depositary nor any of their respective agents shall be liable to holders or beneficial owners for any indirect, special, punitive or consequential damages (including, without limitation, legal fees and expenses) or lost profits, in each case of any form incurred by any person or entity (including, without limitation, holders and beneficial owners), whether or not foreseeable and regardless of the type of action in which such a claim may be brought.

No provision of the Deposit Agreement or the ADR is intended to constitute a wavier or limitation of any rights which holders or beneficial owners may have under the Securities Act or the Exchange Act, to the extent applicable.

The depositary and its agents may own and deal in any class of securities of Novartis AG and its affiliates and in ADRs.

#### Books of depositary
The depositary or its agent will maintain, at a designated office, a register for the registration, registration of transfer, combination and split-up of ADRs, and, in the case of Direct Registration ADRs, shall include the Direct Registration System. Holders of ADRs may inspect such records at the depositary's office at all reasonable times, but solely for the purpose of communicating with other holders in the interest of the business Novartis AG or a matter relating to the deposit agreement. The depositary will maintain facilities for the delivery and receipt of ADRs.

#### Governing Law
The Deposit Agreement, the ADSs and the ADRs are governed by and construed in accordance with the internal laws of the State of New York. In the Deposit Agreement, Novartis AG irrevocably agrees that any legal suit, action or proceeding against Novartis AG brought by the depositary or any holder, arising out of or based upon this Deposit Agreement, the ADSs or the ADRs or the transactions contemplated hereby or thereby, may be instituted in any state or federal court in New York, NY, and irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding. Novartis AG also irrevocably agrees that any legal suit, action or proceeding against the depositary brought by it, arising out of or based upon this Deposit Agreement or the transactions contemplated hereby, may only be instituted in a state or federal court in New York, NY.

Under the Deposit Agreement, by holding an ADS or an interest therein, holders and beneficial owners each irrevocably agree that any legal suit, action or proceeding against or involving Novartis AG or the depositary, arising out of or based upon the Deposit Agreement, the ADSs, the ADRs or the transactions contemplated thereby, may only be instituted in a state or federal court in New York, NY, and by holding an ADS or an interest therein each irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.

Notwithstanding the foregoing, any action against Novartis AG based on the Deposit Agreement, the ADSs or the ADRs or the transactions contemplated thereby, may be instituted by the depositary in any competent court in Switzerland and/or the US.

------

#### Jury Trial Waiver
Each party to the Deposit Agreement (including, for avoidance of doubt, each holder and beneficial owner and/or holder of interests in ADSs and ADRs) irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any suit, action or proceeding against the depositary and/or us directly or indirectly arising out of or relating to the shares or other deposited securities, the ADSs or the ADRs, the deposit agreement or any transaction contemplated therein, or the breach thereof (whether based on contract, tort, common law or any other theory), including any suit, action, claim or proceeding under the US federal securities laws.

------

## Ex-4

**Exhibit 4.3** 

AGREEMENT AND PLAN OF MERGER

DATED AS OF OCTOBER 25, 2025

AMONG

NOVARTIS AG,

AJAX ACQUISITION SUB, INC.

AND

AVIDITY BIOSCIENCES, INC.,

------

<u>**Table of Contents**</u> 

---

| | | |
|:---|:---|:---|
|  ARTICLE 1 DEFINITIONS; INTERPRETATION | ARTICLE 1 DEFINITIONS; INTERPRETATION | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 1.1. | Definitions | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 1.2. | Interpretation | 19 |
|  ARTICLE 2 THE MERGER | ARTICLE 2 THE MERGER | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 2.1. | The Merger | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 2.2. | Effects of the Merger | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 2.3. | Closing | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 2.4. | Effective Time | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 2.5. | Surviving Corporation | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 2.7. | ROFN | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 2.8. | Permitted Third Party Sale | 22 |
|  ARTICLE 3 CONSIDERATION; EXCHANGE OF CERTIFICATES | ARTICLE 3 CONSIDERATION; EXCHANGE OF CERTIFICATES | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 3.1. | Conversion of Merger Sub Capital Stock | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 3.2. | Conversion of Company Common Stock | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 3.3. | Exchange of Certificates | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 3.4. | Company Equity Awards and Warrants | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 3.5. | Employee Stock Purchase Plan | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 3.6. | Adjustments to Prevent Dilution | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 3.7. | Withholding Rights | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 3.8. | Appraisal Rights | 29 |
|  ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY | ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.1. | Organization | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.2. | Capitalization | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.3. | Authorization; No Conflict | 31 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.4. | Subsidiaries | 32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.5. | SEC Documents | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.6. | Company Financial Statements | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.7. | Absence of Material Adverse Effect | 36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.8. | Proceedings | 36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.9. | Information Supplied | 36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.10. | Broker's or Finder's Fees | 36 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.11. | Employee Plans | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.12. | Employment Matters | 39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.13. | Opinion of Financial Advisor | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.14. | Taxes | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.15. | Compliance | 45 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.16. | Intellectual Property | 46 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.17. | Data Protection | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.18. | Material Contracts | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.19. | Regulatory Matters | 54 |

---

-ii-

------

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.20. | Real Property | 58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.21. | Environmental Matters | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.22. | Insurance | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.23. | Affiliate Transactions | 60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.24. | Takeover Provisions | 60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.25. | Assets | 60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.26. | Books and Records | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.27. | Anti-Corruption Compliance | 61 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.28. | Trade Controls | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.29. | National Security | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.30. | Solvency | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.31. | SpinCo Activities | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 4.32. | No Other Representations or Warranties | 63 |
|  ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB | ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 5.1. | Organization | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 5.2. | Merger Sub | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 5.3. | Authorization; No Conflict | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 5.4. | Information Supplied | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 5.5. | Sufficient Funds | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 5.6. | Proceedings | 64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 5.7. | Ownership of Company Common Stock | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 5.8. | Broker's or Finder's Fees | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 5.9. | No Other Representations or Warranties | 65 |
|  ARTICLE 6 COVENANTS | ARTICLE 6 COVENANTS | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.1. | Conduct of the Company | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.2. | Proxy Statement; Stockholders' Meeting | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.3. | Employee Matters | 73 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.4. | Further Assurances | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.5. | Public Statements | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.6. | Standard of Efforts; Governmental Approvals | 76 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.7. | Notification of Certain Matters; Interactions with Governmental Authorities | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.8. | Access to Information | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.9. | No Solicitation | 81 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.10. | Indemnification and Insurance | 85 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.11. | Section 16 Matters | 87 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.12. | Transaction Litigation | 87 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.13. | Deregistration; Stock Exchange Delisting | 87 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.14. | Takeover Provisions | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.15. | Obligations of Merger Sub | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.16. | Merger Sub Stockholder Consent | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.17. | Certain Pre-Closing Actions | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.18. | Tax Matters | 88 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 6.19. | Spin-Off Matters | 88 |

---

-iii-

------

---

| | | |
|:---|:---|:---|
|  ARTICLE 7 CONDITIONS | ARTICLE 7 CONDITIONS | 90 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 7.1. | Conditions to Each Party's Obligation to Effect the Merger | 90 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 7.2. | Additional Conditions to Obligations of Parent and Merger Sub to Effect the Merger | 91 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 7.3. | Additional Conditions to the Company's Obligations to Effect the Merger | 92 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 7.4. | Frustration of Closing Conditions | 92 |
|  ARTICLE 8 TERMINATION | ARTICLE 8 TERMINATION | 92 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 8.1. | Termination | 92 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 8.2. | Effect of Termination | 94 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 8.3. | Termination Fees and Expenses | 95 |
|  ARTICLE 9 GENERAL PROVISIONS | ARTICLE 9 GENERAL PROVISIONS | 97 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 9.1. | Notices | 97 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 9.2. | Amendments and Waivers | 99 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 9.3. | Representations and Warranties | 99 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 9.4. | Governing Law; Jurisdiction | 99 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 9.5. | WAIVER OF JURY TRIAL | 99 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 9.6. | Counterparts; Effectiveness | 100 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 9.7. | Assignment; Third Party Beneficiaries | 100 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 9.8. | Severability | 101 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 9.9. | Entire Agreement; No Reliance | 101 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 9.10. | Enforcement | 101 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SECTION 9.11. | Remedies | 101 |

---

---

| | |
|:---|:---|
|  SCHEDULES AND EXHIBITS | SCHEDULES AND EXHIBITS |
|  Schedule I | Antitrust Proceedings |
|  Exhibit A | Form of Certificate of Incorporation of the Surviving Corporation |

---

-iv-

------

This AGREEMENT AND PLAN OF MERGER (this "*Agreement*"), is made and entered into as of October 25, 2025, among NOVARTIS AG, a company limited by shares (*Aktiengesellschaft*) incorporated under the laws of Switzerland ("*Parent*"), AJAX ACQUISITION SUB, INC., a Delaware corporation and an indirect wholly owned subsidiary of Parent ("*Merger Sub*"), and AVIDITY BIOSCIENCES, INC., a Delaware corporation (the "*Company*").<br>

<u>INTRODUCTION</u> 

WHEREAS, on the terms and subject to the conditions set forth herein, the parties intend that Merger Sub will be merged (the "*Merger*") with and into the Company, with the Company surviving the Merger as a wholly owned Subsidiary of Parent, in accordance with the General Corporation Law of the State of Delaware (the "*DGCL*");

WHEREAS, in connection with the transactions contemplated hereby, the parties wish to effect the separation of the SpinCo Business and the RemainCo Business, prior to the Effective Time, through a spin-off of the SpinCo Business (or a portion thereof) into a separate, publicly traded company, which may be preceded or followed by a sale of certain SpinCo Assets pursuant to a certain right of first negotiation, in each case, in accordance with this Agreement and the Spin-Off Agreements;

WHEREAS, the Company Board has unanimously (i) determined that this Agreement, the Separation and Distribution Agreement and the Transactions are advisable, fair to and in the best interests of the Company and the stockholders of the Company (the "*Stockholders*"), (ii) adopted, approved and declared advisable this Agreement, the Separation and Distribution Agreement and the Transactions in accordance with the DGCL, and approved the execution, delivery and performance by the Company of this Agreement and the Separation and Distribution Agreement and the consummation by the Company of the Transactions, (iii) resolved to recommend that the Stockholders vote to approve the adoption of this Agreement and the Separation and Distribution Agreement on the terms and subject to the conditions set forth herein and in the Separation and Distribution Agreement (the "*Company Recommendation*") and (iv) to the extent necessary, adopted a resolution having the effect of causing this Agreement and the Transactions not to be subject to any Takeover Provision that might otherwise apply to the Transactions, in each case on the terms and subject to the conditions of this Agreement;

WHEREAS, the respective boards of directors of Parent and Merger Sub have adopted, approved and declared advisable this Agreement and the Transactions and the board of directors of Merger Sub has recommended that the sole stockholder of Merger Sub adopt this Agreement; and

WHEREAS, concurrently with the execution and delivery of this Agreement, the Company and SpinCo are executing and delivering the Separation and Distribution Agreement and the License Agreement.

------

NOW, THEREFORE, in consideration of the foregoing and of the representations, warranties, covenants and agreements set forth in this Agreement, the parties agree as follows:

ARTICLE 1

DEFINITIONS; INTERPRETATION

SECTION 1.1. <u>Definitions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) As used in this Agreement, the following terms have the respective meanings set forth below:

"*Acquisition Proposal*" means any inquiry, offer, proposal or indication of interest (in writing or otherwise) from any Person or "group" (as defined under Section 13(d) of the Exchange Act) relating to any transaction or series of related transactions (other than the Transactions) involving (i) any acquisition or purchase by any Person or "group" (as defined under Section 13(d) of the Exchange Act), directly or indirectly, of 20% or more of any class of outstanding voting or equity securities of the Company, or any tender offer or exchange offer that, if consummated, would result in any Person or "group" (as defined under Section 13(d) of the Exchange Act) beneficially owning 20% or more of any class of outstanding voting or equity securities of the Company, (ii) any merger, amalgamation, consolidation, share exchange, business combination, liquidation, dissolution or similar transaction involving the Company or any Company Subsidiary that, if consummated, would result in any Person or "group" (as defined under Section 13(d) of the Exchange Act), directly or indirectly, (A) acquiring assets (including equity interests of any Company Subsidiary) of the Company or any Company Subsidiary representing 20% or more of the Company's consolidated assets (based on the fair market value thereof) or (B) beneficially owning 20% or more of any class of outstanding voting or equity securities of the Company or of the surviving entity or of the resulting direct or indirect parent of the Company or such surviving entity, (iii) any acquisition or license (other than any non-exclusive and non-material license granted by the Company in the ordinary course of business consistent with past practice) of, or joint venture, collaboration or other similar transaction involving, (A) assets (including equity interests of any Company Subsidiary) of the Company or any Company Subsidiary representing 20% or more of the Company's consolidated assets (based on the fair market value thereof), or (B) delpacibart etedesiran (del-desiran), delpacibart braxlosiran (del-brax) or delpacibart zotadirsen (del-zota) or (iv) any combination of the foregoing; *provided*, *however*, that none of the Spin-Off Distribution, the ROFN Sale or any inquiry, offer, proposal or indication of interest solely to effect the ROFN Sale shall be an Acquisition Proposal.

"*Affiliate*" means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person. For this purpose, "*control*" (including, with its correlative meanings, "*controlled by*" and "*under common control with*") means the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.

"*Anti-Corruption Laws*" means all Laws regarding corruption, bribery, ethical business conduct, money laundering, political contributions, gifts, gratuities, and improper payments, including the U.S. Foreign Corrupt Practices Act (15 U.S.C. §78-dd-1, et seq.), the UK Bribery Act 2010, and Laws implementing the Organisation for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

------

"*Antitrust and Judgment/Illegality Conditions*" means the conditions set forth in <u>Section</u> <u>7.1(b)</u>, <u>Section</u> <u>7.1(c)</u> and <u>Section</u> <u>7.2(a)</u> (it being understood that for purposes of <u>Section</u> <u>8.3(c)(ii)</u>, <u>Section</u> <u>7.2(a)</u> constitutes an Antitrust and Judgment/Illegality Condition even if Parent or Merger Sub waives such condition).

"*Business Day*" (i) means any day other than Saturday, Sunday or any day on which commercial banks in New York, New York or Basel or Zurich, Switzerland are authorized or required by applicable Law to remain closed, and (ii) solely for the purposes of determining the Closing Date, means any day other than a Saturday or Sunday or any day on which the Secretary of State of Delaware is authorized or required by applicable Law to remain closed.

"*Cardiovascular Product*" has the meaning set forth in the License Agreement.

"*Code*" means the Internal Revenue Code of 1986.

"*Collaboration Partners*" means any of the Company's or any Company Subsidiary's licensees or licensors or any Third Party with which the Company or any Company Subsidiary has entered into a Contract for the research, development, supply, manufacturing, testing, distribution, import, export or commercialization of the Company Platform or any Company Product.

"*Company Board*" means the Board of Directors of the Company.

"*Company Charter Documents*" means the Amended and Restated Certificate of Incorporation and the Amended and Restated Bylaws of the Company.

"*Company Common Stock*" means shares of common stock, par value $0.0001 per share, of the Company.

"*Company Employee Benefit Plan*" means any benefit plan, program, policy, practice, trust, fund, arrangement or Contract (i) maintained, contributed to or required to be contributed to by the Company or any Company Subsidiary or (ii) under which the Company or any Company Subsidiary has or would reasonably be expected to have any liability (including on account of any ERISA Affiliate of the Company or any Company Subsidiary) (whether or not an "employee benefit plan" within the meaning of Section 3(3) of ERISA), in each case of <u>clauses</u> <u>(i)</u> and <u>(ii)</u>, that provides benefits to current or former employees, non-employee directors, or individual independent contractors (or beneficiaries thereof), including any pension, profit-sharing, 401(k) retirement, bonus, incentive compensation, deferred compensation, loan, vacation, sick pay, employee stock ownership, stock purchase, stock option or other equity-based compensation plans, severance, indemnification, employment, Contractor, unemployment, death, hospitalization, sickness, or other medical, dental, vision, life, or other insurance, long- or short-term disability, change of control, fringe benefit, cafeteria plan or any other employee or fringe benefit plan, program, policy, practice, trust, fund, arrangement or Contract (in each case prior to giving effect to the Spin-Off). Company Employee Benefit Plan shall not include any plan or arrangement maintained by a Governmental Authority.

"*Company Equity Awards*" means the Company Stock Options and the Company RSUs.

------

"*Company Intellectual Property*" means all Intellectual Property owned or purported to be owned by (whether wholly or jointly with others), licensed or sublicensed to, or used or held for use by, the Company or any Company Subsidiary that, in each case, (i) are used or practiced in, intended to be used with or practiced in, developed, filed or registered for, or necessary to, the conduct of the RemainCo Business as presently conducted and as presently contemplated to be conducted, (ii) relate to the Company Platform or (iii) relate to any Company Product that is included in the RemainCo Assets, including all Owned Company Intellectual Property and all Non-Owned Company Intellectual Property.

"*Company Material Adverse Effect*" means any event, condition, change, effect, circumstance, occurrence or development of a state of facts (each, an "*Effect*" and, collectively, "*Effects*"), individually or in the aggregate with all other Effects, that has had, or would reasonably be expected to have, a material adverse effect on (i) the business, operations, assets, properties, liabilities (contingent or otherwise), condition (financial or otherwise) or results of operations of the Company and the Company Subsidiaries, taken as a whole, or (ii) the ability of the Company to consummate the Transactions on or before the Outside Date; *provided* that no such Effect shall be considered in determining whether a Company Material Adverse Effect has occurred for purposes of <u>clause</u> <u>(i)</u> of this definition to the extent that it results from:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) changes in any applicable Law or GAAP or interpretation thereof occurring after the date hereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) changes generally affecting the economy or financial or securities markets (including changes in interest rates and exchange rates);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) general conditions in the biopharmaceutical industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) acts of terrorism, war, armed hostilities, natural disasters, weather-related events or fires, epidemics, pandemics or disease outbreaks, or any escalation or general worsening of any of the foregoing in this <u>clause</u> <u>(D)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E) changes in the market price or trading volume of the shares of Company Common Stock (it being understood and agreed that the facts and circumstances giving rise to such changes may be taken into account in determining whether there has been a Company Material Adverse Effect);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(F) any failure, in and of itself, by the Company to meet any internal or published industry analyst projections or forecasts or estimates of revenues or earnings for any period ending on or after the date hereof (it being understood and agreed that the facts and circumstances giving rise to such failure may be taken into account in determining whether there has been a Company Material Adverse Effect);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(G) the announcement, pendency, or consummation of the Transactions (including any resulting loss of or adverse change in the relationship of the Company and the Company Subsidiaries with their respective customers, partners or suppliers) (it being understood and agreed that this <u>clause</u> <u>(G)</u> shall not apply with respect to any representation or warranty the purpose of which is to address the consequences of the execution and delivery of this Agreement or the Spin-Off Agreements, the consummation of the Transactions or the ROFN Sale or the performance of obligations hereunder);

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(H) any results, outcomes or data arising from the non-clinical studies or clinical trials of the Company or any competitors of the Company (or the announcements thereof);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(I) results of meetings with, or any guidance, announcement or publication, by the FDA or other Governmental Authority relating to any Company Product or product or product candidate of any competitor of the Company, including any decision by the FDA or any other Governmental Authority with respect to approval, market entry or threatened market entry of any product competitive with any Company Product;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(J) any manufacturing or supply chain disruptions or delays affecting any Company Product (to the extent not caused by any action or failure to take any action of the Company or any Company Subsidiary);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(K) any developments relating to reimbursement, coverage or payor rules with respect to any Company Product, and any recommendations, statements or other pronouncements published or proposed by professional medical organizations or any Governmental Authority, or any panel or advisory body empowered or appointed thereby, relating to pricing, reimbursement or coverage of any Company Product or product or product candidate of any competitor of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(L) any Transaction Litigation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(M) Effects solely to the extent that they (1) relate to the SpinCo Assets or SpinCo Liabilities, (2) would not, individually or in the aggregate, reasonably be expected to adversely affect the Company, any other member of the RemainCo Group, the RemainCo Business, Parent or any of Parent's Affiliates and (3) would not, individually or in the aggregate, reasonably be expected to have a material and adverse effect on the ability of SpinCo to perform its obligations under the Third Party Agreements (as defined in the Separation and Distribution Agreement); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(N) the matter(s) set forth in <u>Section</u> <u>1.1(a)</u><u>(i)</u> of the Company Disclosure Letter;

in each case with respect to <u>clauses (A)</u>, <u>(B)</u>, <u>(C)</u>, and <u>(D)</u>, only to the extent the Company and the Company Subsidiaries, taken as a whole, are not disproportionately affected by such changes or events relative to other companies in the biopharmaceutical industry (and only to the extent of such disproportionate impact), and with respect to <u>clauses (H)</u>, <u>(I),</u> <u>(J)</u> and <u>(K)</u>, only to the extent such condition or event does not result from (1) any action taken (or the failure to take any action) by or at the direction of the Company or any Company Subsidiary constituting common law fraud or a violation of applicable Law or (2) any willful or material failure on the part of the Company or any Company Subsidiary to comply with the then-approved clinical protocol for the development of any Company Product, unless Parent shall have consented in writing to the taking of, or the failure to take, any such action.

------

"*Company Platform*" means the Company's platform technology relating to oligonucleotide-based therapeutics or delivery technologies, including all uses and processes involved in the use of such platform technologies, and all modifications thereto, including the technologies set forth in Exhibit 1.128 of the License Agreement.

"*Company Product*" means any product or product candidate (including any pharmaceutical or medicinal therapy agents, compounds or molecules) subject to a non-clinical or clinical trial, or being researched, tested, developed, manufactured, imported, exported or otherwise exploited by, or on behalf of, the Company or any Company Subsidiary or any other product with respect to which the Company or any Company Subsidiary has royalty rights, (a) including delpacibart etedesiran (del-desiran), delpacibart braxlosiran (del-brax), delpacibart zotadirsen (del-zota), and AOC 1045 and (b) other than for purposes of <u>Section</u> <u>4.19</u> and <u>Section</u> <u>6.7</u>, excluding any Cardiovascular Products that are SpinCo Assets, in each case, in any dosage form or formulation.

"*Company RSUs"* means all restricted stock units denominated in Company Common Stock, whether subject to time-based or performance-based vesting, that are granted under any Stock Plan.

"*Company Stock Options*" means all options to purchase shares of Company Common Stock granted under any Stock Plan.

"*Company Subsidiaries*" means the Subsidiaries of the Company.

"*Company Subsidiary Charter Documents*" means the certificate of incorporation and bylaws, or applicable equivalent documents, of the Company Subsidiaries.

"*Company Tax Group*" means the Company or any Company Subsidiary (including SpinCo and its Subsidiaries for any period ending on or before the date of the Spin-Off Distribution (if any) or the closing of the ROFN Purchase Agreement (if any), as applicable), and any grouping among the Company and the Company Subsidiaries for Tax purposes.

"*Company Warrants*" means all warrants to purchase shares of Company Common Stock, including the pre-funded warrants originally issued by the Company on March 4, 2024.

"*Confidentiality Agreement*" means the Confidentiality Agreement, dated as of July 15, 2025, between the Company and Novartis International AG, as amended on July 27, 2025.

"*Contract*" means, with respect to any Person, any contract, agreement, lease, sublease, license, sublicense, commitment, sale or purchase order, indenture, note, bond, loan, mortgage, deed of trust, instrument or other arrangement, whether written or oral, that is or purports to be legally binding and to which such Person is a party or by which such Person or such Person's properties or assets are bound.

"*Copyrights*" means all copyrights (including all copyrights in any packaging, package inserts, website content, social media content, marketing or promotional materials, labeling information or other text provided to consumers), mask works, fonts and typefaces and similar rights, whether registered or unregistered, and all rights in any copyrightable works, in each case, throughout the world, all registrations and applications for any of the foregoing and all extensions, restorations and renewals for any of the foregoing, and all rights and priorities afforded under any Law with respect to any of the foregoing in any jurisdiction.

------

"*Data Room*" means the electronic data room hosted by Donnelley Financial Solutions and maintained by the Company in connection with the Transactions.

"*Employee Company RSU*" means any Company RSU granted to a then-current employee of the Company or any Company Subsidiary.

"*Employee Company Stock Option*" means any Company Stock Option granted to a then-current employee of the Company or any Company Subsidiary.

"*Environmental Laws*" means any Law, Judgment or Authorization relating to pollution, the environment, natural resources, or human health and safety, including any of the foregoing relating to (i) the presence, receipt, management, manufacture, processing, generation, use, distribution, transport, treatment, handling, storage, disposal, removal or remediation of any Hazardous Substance, (ii) air, indoor air, water (including ground, surface and drinking water), land surface or subsurface strata, noise or odor pollution, (iii) the Release or threatened Release into the environment of any Hazardous Substance, or (iv) the health and safety of employees and other individuals.

"*ERISA*" means the Employee Retirement Income Security Act of 1974.

"*ERISA Affiliate*" means any Person which is (or at any relevant time was or will be) a member of a "controlled group of corporations" with, under "common control" with, or a member of an "affiliate service group" with the Company as such terms are defined in Sections 414(b), (c), (m) or (o) of the Code.

"*Exchange Act*" means the Securities Exchange Act of 1934.

"*Exclusively Licensed Intellectual Property*" means all Non-Owned Company Intellectual Property that is exclusively licensed to the Company or any Company Subsidiary, including any Non-Owned Company Intellectual Property that is exclusively licensed to the Company or any Company Subsidiary relating to (i) the Company Platform or any Company Product or the exploitation thereof, in each case, to the extent such exclusively in-licensed Non-Owned Company Intellectual Property (A) is used or practiced in, intended to be used with or practiced in, developed, filed or registered for, or necessary to, the conduct of the RemainCo Business as presently conducted and as presently contemplated to be conducted or (B) relates to any Company Product that is included in the RemainCo Assets, (ii) reagents for manufacturing, (iii) methods of manufacturing or (iv) methods or fields of use, whether or not the license is subject to retained rights of the licensor or other Persons, of any of the foregoing.

"*Expenses*" means all out-of-pocket costs and expenses (including all fees and expenses of counsel, accountants, investment bankers, financing sources, experts and consultants to a party hereto and its Affiliates) incurred by a party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement, the Spin-Off Agreements, the ROFN Purchase Documents and the Transactions, including the preparation, printing, filing and mailing of the Proxy Statement and the Spin-Off Registration Statement and all other matters related to the Transactions.

------

"*FDA*" means the United States Food and Drug Administration or any successor agency thereto.

"*FDCA*" means the United States Federal Food, Drug, and Cosmetic Act.

"*Foreign Investment Laws*" means all applicable Laws in effect from time to time that are designed or intended to prohibit, restrict or regulate actions by foreigners to acquire interests in or control over domestic equities, securities, entities, assets, land or other holdings for reasons of national security or other public policy.

"*GAAP*" means United States generally accepted accounting principles, consistently applied.

"*Good Clinical Practices*" means all applicable requirements and standards for the design, conduct, performance, monitoring, auditing, recording, analysis, and reporting of clinical trials of pharmaceuticals (including drugs and biologics) (including all applicable requirements relating to protection of human subjects), as set forth in the FDCA (including 21 C.F.R. Parts 11, 50, 54, 56, and 312), and such standards of good clinical practice (including all applicable requirements relating to protection of human subjects), or as are required by Governmental Authorities in any other countries, including applicable regulations or guidelines from the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use, where the Company currently intends to sell Company Products.

"*Good Documentation Practices*" means all applicable requirements and standards and practices of creating and maintaining records that are accurate, attributable, verified as genuine, legible, contemporaneous and complete, and are created and stored using security measures that protect the confidential nature (if applicable) and integrity of the records, and prevent unauthorized access to, and alteration, corruption or loss of such records in a manner sufficient to satisfy the requirements contained in 21 C.F.R. Parts 58, 312, 210, and 211, the FDA's relevant guidance documents including E6(R2) Good Clinical Practice: Integrated Addendum to ICH E6(R1) (March 2018), and all comparable standards of any other applicable Governmental Authority.

"*Good Laboratory Practices*" means all applicable requirements and standards for conducting non-clinical laboratory studies of pharmaceuticals (including drugs and biologics), as set forth in the FDCA (including 21 C.F.R. Parts 11 and 58), and such standards of good laboratory practices as are required by Governmental Authorities in any other countries, including applicable regulations or guidelines from the Organisation for Economic Co-operation and Development, where the Company currently intends to sell Company Products.

"*Good Manufacturing Practices*" means all applicable requirements and standards for the manufacture, processing, packaging, testing, transportation, handling and holding of drug products, as set forth in the FDCA (including 21 C.F.R. Parts 11, 210, 211, and 610), and such standards of good manufacturing practices as are required by Governmental Authorities in any other countries, including applicable regulations or guidelines from the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use, where the Company currently intends to sell the Company Products.

------

"*Governmental Authority*" means any transnational, supranational, national, federal, state, provincial, municipal, local or foreign governmental, judicial, quasi-judicial, legislative, executive, regulatory (including stock exchange) or administrative authority, department, agency, organization, body, court, arbitration tribunal or panel, instrumentality or official, including any political subdivision thereof.

"*Hazardous Substance*" means (i) any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substance, waste or material, (ii) any substance, waste or material having any constituent elements displaying any of the foregoing characteristics, including any medical or biological waste, reagent, petroleum product or byproduct, asbestos or asbestos-containing material, lead, polychlorinated biphenyls, per- and poly-fluoroalkyl substances or (iii) any substance, waste or material regulated under any Environmental Law or that is capable of causing harm or injury to human health, natural resources or the environment or would reasonably be expected to give rise to liability or any obligation to remediate under any applicable Law.

"*Health Care Laws*" means (i) the FDCA, the PHSA and all other Laws applicable to the ownership, testing, research, development, manufacture, quality, safety, packaging, storage, use, distribution, labeling, promotion, sale, offer for sale, import, export or disposal of pharmaceutical products; (ii) all U.S. federal and state fraud and abuse Laws, including the Federal Healthcare Program Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), the Stark Law (42 U.S.C. §1395nn), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the Program Fraud Civil Remedies Act (31 U.S.C. § 3801 et seq.), the Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a), the Anti-Inducement Law (42 U.S.C. § 1320a-7a(a)(5)), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), the Exclusion Laws (42 U.S.C. § 1320a-7); (iii) the Health Insurance Portability and Accountability Act of 1996 (commonly referred to as "*HIPAA*"), as amended by the Health Information Technology for Economic and Clinical Health Act (commonly referred to as the "*HITECH Act*") (Pub. L. 104–191; Pub. L. 111-5); (iv) Titles XVIII (42 U.S.C. §1395 et seq.) and XIX (42 U.S.C. §1396 et seq.) of the U.S. Social Security Act of 1935; (v) the U.S. federal Physician Payments Sunshine Act (42 U.S.C. § 1320a-7h); (vi) Laws governing all federal and state health care programs defined in 42 U.S.C. §1320a-7b(f), government pricing or price reporting programs, including Medicare (Title XVIII of the Social Security Act), Medicaid (Title XIX of the Social Security Act), the Medicaid Drug Rebate Program (42 U.S.C. § 1396r-8) and any state supplemental rebate program, the VA Federal Supply Schedule (38 U.S.C. § 8126), TRICARE (10 U.S.C. § 1071 et seq.) or any state pharmaceutical assistance program or U.S. Department of Veterans Affairs agreement; (vii) all applicable Laws or Judgments administered by the FDA and other applicable Regulatory Authorities, including those governing or relating to Good Clinical Practices, Good Documentation Practices, Good Laboratory Practices, and Good Manufacturing Practices, including FDA's regulations at 21 C.F.R. Parts 11, 50, 54, 56, 58, 210, 211, 312, 600 and 610; and (viii) any other applicable Laws related to healthcare regulatory matters, including any comparable state, local and foreign equivalent Laws in respect of any of the foregoing.

"*HSR Act*" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

------

"*Intellectual Property*" means all intellectual property, industrial and proprietary rights of any kind or nature, whether protected, created or arising under any Law in any jurisdiction, including the following: (i) Patents, (ii) Trademarks, (iii) Copyrights, (iv) Know-How, (v) all rights in software, designs, databases, data, collections of data, and compilations of data, (vi) domain names (both gTLDs, including traditional and new gTLDs, and ccTLDs), URLs, web addresses, social media tags, handles and other identifiers and all accounts therefor, (vii) all rights to sue, at law or in equity, for past, present and future infringements, misappropriations or other violations of any of the foregoing, (viii) all rights to secure or recover the proceeds, including licenses, royalties, income, payments, claims and damages, and all injunctive and other relief, with respect to any such infringements, misappropriations or other violations, and (ix) all other rights similar or pertaining to any of the foregoing in any jurisdiction worldwide.

"*Intervening Event*" means any Effect occurring or arising after the date hereof that did not result from or arise out of the announcement or pendency of, or any actions required to be taken by the Company (or to be refrained from being taken by the Company) pursuant to, this Agreement and that was neither known to, nor reasonably foreseeable by, or the effects of which were neither known to, nor reasonably foreseeable by, the Company Board as of the date hereof, that materially and positively affects the business, assets or operations of the Company and the Company Subsidiaries, taken as a whole, and is not related to any Acquisition Proposal, which Effect becomes known to the Company Board after the date hereof and prior to obtaining the Requisite Company Vote to approve the adoption of this Agreement and the Separation and Distribution Agreement, other than (i) the receipt, existence of or terms of an Acquisition Proposal, (ii) any inquiry, indication of interest, proposal or offer that could reasonably be expected to lead to an Acquisition Proposal, or the consequences thereof, (iii) developments or changes in the biopharmaceutical industry, (iv) changes, in and of itself, in the market price or trading volume of the shares of Company Common Stock, or (v) the fact that, in and of itself, the Company exceeds any internal or published industry analyst projections or forecasts or estimates of revenues or earnings.

"*IRS*" means the Internal Revenue Service of the United States of America.

"*IT Assets*" means computers, computer software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines and all other information technology equipment, and all associated documentation (excluding any public networks).

"*Judgment*" means any judgment, ruling, order, writ, injunction, award, decision, assessment or decree of any Governmental Authority (whether temporary, preliminary or permanent).

"*Know-How*" means all trade secrets (including those trade secrets defined in the Uniform Trade Secrets Act and under corresponding statutory or common law of any jurisdiction), know-how, and similar proprietary rights in confidential information of any kind, inventions (whether patentable or not and whether or not reduced to practice), discoveries, analytic models, improvements, compounds, processes, techniques, assays, chemical and biological materials, devices, methods, patterns, formulations and specifications.

------

"*Law*" means any and all applicable federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, ordinance, code, rule, regulation, ruling, guidance, decree, treaty, Judgment or other legal requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Authority.

"*License Agreement*" has the meaning set forth in the Separation and Distribution Agreement.

"*Lien*" means, with respect to any property or asset, any mortgage, lien, license, sublicense, pledge, claim, charge, hypothecation, option, right of first or last refusal, right of first or last offer, covenant not to sue, assert or exercise, security interest or other encumbrance of any kind or nature whatsoever.

"*made available to Parent*" means that such information, document or material was: (i) publicly available and filed as an exhibit to a Company SEC Document available on the SEC EDGAR database after January 1, 2024, and at least three days prior to the date hereof, (ii) delivered to Parent or Parent's Representatives via electronic mail or in hard-copy form at least 24 hours prior to the execution and delivery of this Agreement, or (iii) made available for review by Parent or Parent's Representatives at least 24 hours prior to the execution and delivery of this Agreement in the Data Room.

"*Nasdaq*" means the Nasdaq Stock Market.

"*Non-Employee Company RSU*" means any Company RSU that is not an Employee Company RSU.

"*Non-Employee Company Stock Option*" means any Company Stock Option that is not an Employee Company Stock Option.

"*Non-Owned Company Intellectual Property*" means all Company Intellectual Property that is not Owned Company Intellectual Property.

"*Owned Company Intellectual Property*" means all Company Intellectual Property owned or purportedly owned (whether wholly or jointly with others, as applicable) by the Company or any Company Subsidiary (or, with respect to Company Intellectual Property owned or purportedly owned by and licensed from SpinCo, by SpinCo).

"*Parent Material Adverse Effect*" means any Effect that, individually or in the aggregate with all other Effects, that has had, or would reasonably be expected to have, a material adverse effect on the ability of Parent or Merger Sub to consummate the Transactions on or before the Outside Date.

"*Patents*" means all national, regional and international statutory invention registrations, issued patents and patent applications of any kind, including all applications and filings made pursuant to the Patent Cooperation Treaty (PCTs), provisionals, non-provisionals, converted provisionals, requests for continued examination, continuations, continuations-in-part, divisionals, substitutions, additions, reexaminations, reissues, supplemental examinations,

------

oppositions, *inter partes* review, post-grant review, transitional program for covered business method patent review, interference proceedings, derivation proceedings, all rights in respect of design patents, utility models, certificates of invention and any similar rights, including so-called pipeline protection, patent term extension, and supplemental protection certificates, all inventions disclosed in each such registration, patent or patent application, and all rights and priorities afforded under any Law with respect to any of the foregoing in any jurisdiction, including all earlier-filed applications from which benefit or priority rights are derived, and all extensions, restorations, and renewals of any of the foregoing.

"*Permitted Lien*" means (i) any Lien that arises out of or with respect to Taxes of the Company Tax Group not yet due and payable that arose by operation of Law or that are being contested in good faith and for which adequate reserves have been established in accordance with GAAP, (ii) any materialmen's, mechanics', carriers', workers', warehousemen's, repairers' and similar Liens arising in the ordinary course of business, securing obligations as to which there is no default and which are not yet due and payable, or the validity or amount of which is being contested in good faith by appropriate proceedings which have the effect of preventing the forfeiture or sale of the property subject thereto and for which adequate reserves have been established in accordance with GAAP, (iii) with respect to real property, any nonmonetary Lien or other requirement or restriction arising under any zoning, entitlement, building, conservation restriction or other land use or Environmental Law that is not violated by the current or proposed use of such real property or the operation of the business of the Company and the Company Subsidiaries, and (iv) any non-exclusive licenses to or under Intellectual Property granted by the Company or any Company Subsidiary to any vendor or contractor pursuant to an agreement entered into in the ordinary course of business consistent with past practice in which such license is incidental to and not material to performance under such agreement.

"*Permitted Sale Proceeds*" means the cash proceeds received by the Company, any of its Affiliates or SpinCo in a ROFN Sale or Permitted Third Party Sale *less* the total amount of Expenses incurred by or on behalf of the Company or SpinCo in connection with or related to the authorization, preparation, negotiation, execution and performance of such transaction and any definitive agreements related thereto.

"*Permitted Third Party Sale*" means a sale of SpinCo by the Company to a Third Party in exchange for payment of an agreed purchase price in accordance with <u>Section</u> <u>2.8</u>.

"*Person*" means an individual, corporation, partnership, joint venture, association, trust, unincorporated organization, limited liability company or other entity, including any Governmental Authority.

"*Personal Data*" means all data or information that relates to an identified or identifiable person and any other data or information that constitutes personal data or personal information under any applicable Law relating to privacy, data protection, or other Laws pertaining to data protection and information security, which information includes any genetic data, financial, credit, medical information, names, addresses, social security or insurance numbers, telephone numbers, facsimile numbers, email addresses or other contact information, any device identifier, or any other information that constitutes protected health information under 45 C.F.R. § 160.103.

------

"*PHSA*" means the Public Health Service Act.

"*Pre-Closing Period*" means the period from the date hereof until the earlier of the Effective Time and the valid termination of this Agreement pursuant to <u>Article 8</u>.

"*Proceeding*" means any suit, claim, action, proceeding, arbitration, mediation, investigation, litigation, hearing, demand, inquiry or request for documents, whether by subpoena or informal letter.

"*Proxy Statement*" means the proxy statement relating to the Stockholders' Meeting, as amended or supplemented from time to time, together with all annexes, schedules or exhibits thereto (including the letter to stockholders, notice of meeting and form of proxy), as required to be filed with the SEC.

"*Regulatory Authority*" means the FDA, the European Medicines Agency, the U.K. Medicines and Healthcare products Regulatory Agency, the China National Medical Products Administration, China's Center for Drug Evaluation, the Japan Pharmaceuticals and Medical Devices Agency, Health Canada and any other Governmental Authority with jurisdiction over the research, development, commercialization, manufacture, marketing or exploitation of the Company Platform or any Company Product, or any successor agency to any of the foregoing.

"*Release*" means any release, spill, emission, discharge, leaking, pouring, dumping or emptying, pumping, injection, deposit, disposal, dispersal, leaching or migration into the indoor or outdoor environment (including soil, ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property.

"*RemainCo Assets*" has the meaning set forth in the Separation and Distribution Agreement.

"*RemainCo Business*" has the meaning set forth in the Separation and Distribution Agreement.

"*RemainCo Group*" has the meaning set forth in the Separation and Distribution Agreement.

"*Representatives*" means, with respect to any Person, such Person's directors, officers, employees, investment bankers, financial advisors, attorneys, accountants, auditors, consultants, agents and other representatives.

"*Requisite Company Vote*" means the affirmative vote of the holders of not less than a majority of the outstanding Company Common Stock.

"*ROFN*" means the right of first negotiation granted to the ROFN Holder by the Company under the ROFN Side Letter.

"*ROFN Assets*" means the assets of the Company and its Subsidiaries that are subject to the ROFN in the ROFN Side Letter; *provided*, *however*, in no case shall any RemainCo Assets be included in the ROFN Assets.

------

"*ROFN Holder*" has the meaning set forth in <u>Section</u> <u>1.1(a)(ii) of the Company Disclosure Letter.</u>

"*ROFN Purchase Agreement*" means a definitive written agreement entered into between the Company or any of its Subsidiaries, on the one hand, and the ROFN Holder or one of its Affiliates, on the other hand, in which the parties agree to effect the ROFN Sale.

"*ROFN Purchase Documents"* mean collectively, the ROFN Purchase Agreement and any written Contracts between the Company or any of its Subsidiaries, on the one hand, and the ROFN Holder or one of its Affiliates, on the other hand, or other instruments and documents delivered in connection therewith.

"*ROFN Sale*" means a transaction or series of related transactions that directly result from any exercise by the ROFN Holder of the ROFN pursuant to the terms and conditions of the ROFN Side Letter in which the ROFN Assets (but no other assets of the Company or its Subsidiaries) are sold, licensed or transferred, directly or indirectly, and in accordance with <u>Section</u> <u>2.7</u>.

"*ROFN Side Letter*" means the side letter agreement, dated as of November 27, 2023, between the Company and the ROFN Holder, but excluding any subsequent amendments, modifications or restatements thereof.

"*SEC*" means the United States Securities and Exchange Commission.

"*Securities Act*" means the Securities Act of 1933.

"*Separation and Distribution Agreement*" means the Separation and Distribution Agreement entered into between SpinCo and the Company on or about the date hereof.

"*Solvent*" when used with respect to any Person, means that, as of any date of determination, (a) the amount of the "fair saleable value" of the assets of such Person will, as of such date, exceed the sum of (i) the value of all "liabilities of such Person, including contingent and other liabilities," as of such date, as such quoted terms are generally determined in accordance with applicable Law governing determinations of the insolvency of debtors, and (ii) the amount that will be required to pay the probable liabilities of such Person, as of such date, on its existing debts (including contingent and other liabilities) as such debts become absolute and mature, (b) such Person will not have, as of such date, an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged following such date, (c) such Person will be able to pay its liabilities, as of such date, including contingent and other liabilities, as they mature, and (d) such Person is not insolvent under applicable Law. For purposes of this definition, "not have an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged" and "able to pay its liabilities, as of such date, including contingent and other liabilities, as they mature" means that such Person will be able to generate enough cash from operations, asset dispositions or refinancing, or a combination thereof, to meet its obligations as they become due.

*"SpinCo*" means Bryce Therapeutics, Inc., a Delaware corporation.

------

*"SpinCo Assets*" has the meaning set forth in the Separation and Distribution Agreement.

"*SpinCo Business*" has the meaning set forth in the Separation and Distribution Agreement.

"*SpinCo Employees*" has the meaning set forth in the Separation and Distribution Agreement.

*"SpinCo Liabilities*" has the meaning set forth in the Separation and Distribution Agreement.

"*Spin-Off*" means the transactions contemplated by the Separation and Distribution Agreement and the Spin-Off Registration Statement, including the formation of SpinCo, the assignment or license of assets and liabilities of the Company to SpinCo, and the Spin-Off Distribution.

*"Spin-Off Agreements*" means the Separation and Distribution Agreement, the License Agreement and the Transition Services Agreement.

"*Spin-Off Distribution*" means the Distribution, as such term is defined in the Separation and Distribution Agreement.

"*Stock Plans*" means the Company's 2013 Amended and Restated Equity Incentive Plan, 2020 Incentive Award Plan, 2022 Employment Inducement Incentive Award Plan, each as amended from time to time, and any other equity plans, agreements or arrangements of the Company or any Company Subsidiary, other than the ESPP.

"*Subsidiary*" means, with respect to any Person, any other Person of which (i) such first Person or any of its subsidiaries is a general partner or holds a majority of the voting interests of a partnership or (ii) securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other corporate bodies performing similar functions (or, if there are no such ownership interests having ordinary voting power, 50% or more of the equity interests of which) are at any time directly or indirectly owned or controlled by such first Person.

"*Superior Proposal*" means a *bona fide* written Acquisition Proposal made by any Person or "group" (as defined under Section 13(d) of the Exchange Act) after the date hereof and prior to obtaining the Requisite Company Vote to approve the adoption of this Agreement and the Separation and Distribution Agreement that is on terms that the Company Board determines in good faith (after consultation with outside legal counsel and a financial advisor of nationally recognized reputation), taking into account all legal, financial, regulatory, and other aspects of the Acquisition Proposal and the Person or "group" (as defined under Section 13(d) of the Exchange Act) making the Acquisition Proposal (including any conditions to closing and certainty of closing, timing, any applicable break-up fees and expense reimbursement provisions, and ability of such Person or "group" (as defined under Section 13(d) of the Exchange Act) to consummate the Acquisition Proposal), (a) would, if consummated, result in a transaction that is more favorable to the holders of Company Common Stock (solely in their capacity as such) from a financial point of view than the Transactions (including any revisions to the terms of this Agreement proposed by

------

Parent pursuant to <u>Section</u> <u>6.9(d)</u>) and (b) is reasonably likely to be consummated on the terms proposed without undue delay; *provided* that, for purposes of the definition of "Superior Proposal", the references to "20%" in the definition of Acquisition Proposal shall be deemed to be references to "50%"; *provided further* that in no event shall an Acquisition Proposal be deemed to be a Superior Proposal (i) if consummation of the transaction contemplated thereby is subject to any financing condition or otherwise requires financing that is not fully committed or (ii) solely as a result of such Acquisition Proposal not including a condition relating to a spin-off or separation of any business or assets of the Company or any ROFN Sale as a condition to the consummation thereof.

"*Takeover Provisions*" means any "moratorium," "control share acquisition," "fair price," "interested stockholder," "affiliate transaction," "business combination" or other anti-takeover Laws, including Section 203 of the DGCL, or similar state anti-takeover laws and regulations, and any similarly restrictive provision in the Company Charter Documents or the Company Subsidiary Charter Documents.

"*Tax*" means all federal, state, local or foreign taxes, levies, imposts, duties or other like assessments, charges or fees (including estimated taxes, charges and fees), including any customs duties and any income, franchise, profits, gross receipts, minimum, base-erosion and anti-abuse, digital services, diverted profits, transfer, conveyance, documentary, excise, property, escheat, unclaimed property, windfall profit, sales, use, value-added, goods and services, ad valorem, license, capital, wage, employment, payroll, withholding, worker's compensation, social security, severance, occupation, import, stamp, stamp duty, alternative, add-on minimum, environmental and other governmental taxes and charges, including any interest, penalties and additions to tax with respect thereto and any penalties imposed for any failure to timely, correctly or completely file any Tax Return.

"*Tax Return*" means any report, return, statement, declaration, election, schedule, voucher, document or other written information supplied to or filed with, or required to be supplied to or filed with, any Governmental Authority in connection with Taxes, including any amendments thereof, or schedules or attachments thereto.

"*Tax Sharing Agreement*" means any Tax allocation, apportionment, sharing, or indemnification agreement or arrangement, other than any agreement that is pursuant to an ordinary course commercial Contract the primary purpose of which does not relate to Taxes.

"*Taxing Authority*" means any Governmental Authority responsible for the collection, administration, assessment or regulation of Taxes or the enforcement of Tax Laws.

"*Third Party*" means any Person or "group" (as defined under Section 13(d) of the Exchange Act) of Persons, other than Parent, the Company or any of their respective Affiliates.

"*To the knowledge of the Company*" and similar phrases mean (i) the actual knowledge of the individuals listed on <u>Section</u> <u>1.1(a)(iii)</u> of the Company Disclosure Letter, after making reasonable inquiry, and (ii) all knowledge which was, or would reasonably have been expected to be, obtained by such Persons after such reasonable inquiry, which, for purposes of <u>Section</u> <u>4.16</u> shall include such actual knowledge after making due inquiry of the Company's outside intellectual property counsel, but in no event shall any such inquiry for purposes of this definition require a freedom to operate analysis if such analysis was not conducted prior to the date hereof.

------

"*Trade Controls Laws*" means any applicable Law pertaining to economic and trade sanctions, export and import controls, customs, and antiboycott laws, rules, and regulations including U.S. economic and trade sanctions administered by the U.S. Department of the Treasury's Office of Foreign Assets Control, the International Traffic in Arms Regulations administered and enforced by the Department of State's Directorate of Defense Trade Controls, the Export Administration Regulations administered and enforced by the U.S. Department of Commerce's Bureau of Industry and Security, Section 999 of the Code and U.S. customs regulations.

"*Trademarks*" means all trademarks, trade names, trade dress, service marks, logos, trade styles, certification marks, collective marks, designs, product get-up and product configuration rights, industrial designs and other identifiers of source, origin or quality, whether registered or unregistered, all registrations and applications for any of the foregoing and all renewals thereof, all rights and priorities afforded under any Law with respect to any of the foregoing in any jurisdiction and all goodwill associated with any of the foregoing.

"*Transaction Litigation*" means any Proceeding asserted, threatened or commenced against the Company or any of its directors or officers in such individual's capacity as such by any Stockholder (in its capacity as such or through a derivative action) challenging or seeking to restrain or prohibit the consummation of the Transactions.

"*Transactions*" means the transactions contemplated by this Agreement and the Spin-Off Agreements, including the Merger and the Spin-Off.

"*Transition Services Agreement*" has the meaning set forth in the Separation and Distribution Agreement.

"*U.S. Bulk Data Final Rule*" means the U.S. DOJ Final Rule Implementing Executive Order 14117 of February 28, 2024 (Preventing Access to Americans' Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern), 90 Fed. Reg. 1636, codified at 28 C.F.R. Part 202.

"*WARN Act*" means the Worker Adjustment and Retraining Notification Act of 1988, and any similar provision of state Law that applies to the Company or any Company Subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The following terms are defined in the following sections of this Agreement:

---

| | |
|:---|:---|
| Term | Section |
|  Acceptable Confidentiality Agreement | 6.9(a) |
|  Agreement | Preamble |
|  Antitrust Laws | 4.3(c) |
|  Appraisal Shares | 3.8 |

---

------

---

| | |
|:---|:---|
| Term | Section |
|  Authorizations | 4.15(b) |
|  Bankruptcy and Equity Exception | 4.3(a) |
|  Book-Entry Shares | 3.2(a) |
|  Callan Road Facility | 4.20(c) |
|  Callan Road Master Lease | 4.20(c) |
|  Candidate Date | 4.19(h) |
|  Capitalization Date | 4.2(a) |
|  Certificate | 3.2(a) |
|  Certificate of Merger | 2.4 |
|  Closing | 2.3 |
|  Closing Date | 2.3 |
|  Company | Preamble |
|  Company Adverse Recommendation Change | 6.9(c) |
|  Company Disclosure Letter | Article 4 |
|  Company Financial Statements | 4.6(a) |
|  Company Recommendation | Introduction |
|  Company Registered IP | 4.16(a) |
|  Company SEC Documents | 4.5(a) |
|  Company Securities | 4.2(b) |
|  Company Subsidiary Securities | 4.4(b) |
|  Continuation Period | 6.3(a) |
|  Continuing Employees | 6.3(a) |
|  Contractor Census | 4.12(c) |
|  Contractors | 4.12(c) |
|  Data Protection and Information Security Requirements | 4.17(a) |
|  Delaware Courts | 9.4(b) |
|  DGCL | Introduction |
|  Effective Time | 2.4 |
|  Employee Census | 4.12(b) |
|  ESPP | 3.5 |
|  Exchange Fund | 3.3(a) |
|  Excluded Share | 3.2(a) |
|  Federal Health Care Programs | 4.19(k) |
|  Final Offering Period | 3.5 |
|  Government Official | 4.27 |
|  IND | 4.19(d) |
|  Indemnified Party | 6.10(a) |
|  Insurance Policies | 4.22 |
|  IP Contractor | 4.16(i) |
|  Lease | 4.20(b) |
|  Leased Real Property | 4.20(b) |
|  Material Contract | 4.18(a) |
|  Maximum Amount | 6.10(c) |
|  Merger | Introduction |
|  Merger Consideration | 3.2(a) |

---

------

---

| | |
|:---|:---|
| Term | Section |
|  Merger Sub | Preamble |
|  Misconduct Allegation | 4.12(h) |
|  Option Consideration | 3.4(a) |
|  Outside Date | 8.1(b)(i) |
|  Parent | Preamble |
|  Paying Agent | 3.3(a) |
|  Reverse Termination Fee | 8.3(c) |
|  Review Board | 4.19(a) |
|  RSU Consideration | 3.4(b) |
|  Sanctions | 4.28 |
|  Security Incident | 4.17(b) |
|  Specified Agreement | 8.1(d)(i) |
|  Spin-Off Carveout | 6.1(c) |
|  Spin-Off Registration Statement | 6.19(b) |
|  Stockholders | Introduction |
|  Stockholders' Meeting | 6.2(b) |
|  Surviving Corporation | 2.1 |
|  Termination Fee | 8.3(b) |
|  Willful Breach | 8.2 |

---

SECTION 1.2. <u>Interpretation</u>. The words "hereof," "herein" and "hereunder" and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions, table of contents and headings included herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits, Annexes and Schedules are to Articles, Sections, Exhibits, Annexes and Schedules of this Agreement unless otherwise specified in this Agreement. All Exhibits, Annexes and Schedules appended hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation," whether or not they are in fact followed by those words or words of like import. "Extent" in the phrase "to the extent" means the degree to which a subject or other thing extends, and such phrase does not mean simply "if." The word "or" shall not be exclusive. References to "dollars" or "$" are to United States of America dollars. References (a) to any Law shall be deemed to refer to such Law as amended from time to time and to any rules, regulations or interpretations promulgated thereunder as of the applicable date or during the applicable time, (b) to any Contract are to that Contract as amended, modified or supplemented from time to time in accordance with the terms hereof, if applicable, and thereof, unless otherwise expressly provided herein; *provided* that with respect to any Contract listed on the Company Disclosure Letter, all such amendments, modifications or supplements must also be listed in the appropriate section of the Company Disclosure Letter, (c) to any Person include the successors and permitted assigns of that Person, (d) from or through any date means, unless otherwise specified, from and including or through and including, respectively, (e) to the "date hereof" means the date of this Agreement and (f) to a "party" or the "parties" mean the parties to this Agreement unless otherwise specified in this Agreement or the context otherwise

------

requires. Unless otherwise specified in this Agreement, (i) any action required to be taken by or on a day or Business Day may be taken until 11:59 p.m. Eastern Time on such day or Business Day, (ii) all references to "days" shall be to calendar days unless otherwise indicated as a "Business Day" and (iii) all days, Business Days, times and time periods contemplated by this Agreement will be determined by reference to Eastern Time. Unless otherwise specified in or required by this Agreement, neither the specification of any dollar amount in any representation or warranty contained in this Agreement nor the inclusion of any specific item in the Company Disclosure Letter is intended to imply that such amount, or higher or lower amounts, or the item so included or other items, are or are not material. Unless otherwise specified in or required by this Agreement, neither the specification of any item or matter in any representation or warranty contained in this Agreement nor the inclusion of any specific item in any section of the Company Disclosure Letter is intended to imply that such item or matter, or other items or matters, are or are not in the ordinary course of business. The parties agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any Law, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against any particular party.

ARTICLE 2

THE MERGER

SECTION 2.1. <u>The Merger</u>. At the Effective Time, on the terms and subject to the conditions of this Agreement and in accordance with the DGCL, Merger Sub shall be merged with and into the Company, whereupon the separate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation and a wholly owned Subsidiary of Parent (the "*Surviving Corporation*").

SECTION 2.2. <u>Effects of the Merger</u>. The Merger shall have the effects set forth in this Agreement and the applicable provisions of the DGCL, including that from and after the Effective Time, the Surviving Corporation shall possess all the properties, rights, powers, privileges, immunities, licenses, franchises and authority and be subject to all of the obligations, liabilities, restrictions and disabilities of the Company and Merger Sub, all as provided under this Agreement and the DGCL.

SECTION 2.3. <u>Closing</u>. Subject to the provisions of <u>Article 7</u>, the closing of the Merger (the "*Closing*") shall take place remotely by electronic exchange of documents on a date to be specified by the parties, which shall be no later than one Business Day after the date the conditions set forth in <u>Article 7</u> (other than any such conditions which by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted, waiver of those conditions at the Closing) have been satisfied or, to the extent permitted, waived by the party or parties entitled to the benefit of such conditions, or at such other place, at such other time, or on such other date as Parent and the Company may mutually agree (such date upon which the Closing occurs, the "*Closing Date*").

SECTION 2.4. <u>Effective Time</u>. As soon as practicable on the Closing Date, the parties shall cause the Merger to be consummated by filing with the Secretary of State of the State of Delaware a certificate of merger (the "*Certificate of Merger*") in such form as reasonably agreed upon between the parties and as required by, and executed in accordance with, the relevant provisions of the DGCL and shall make all other filings or recordings required under the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with such Secretary of State, or at such later time as Parent and the Company shall agree and specify in the Certificate of Merger (the "*Effective Time*").

------

SECTION 2.5. <u>Surviving Corporation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Certificate of Incorporation</u>. The certificate of incorporation of the Surviving Corporation shall, by virtue of the Merger and without any action on the part of the parties, be amended and restated at the Effective Time so as to read in its entirety as set forth in <u>Exhibit A</u>, and, as so amended and restated, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended, restated or amended and restated as provided therein and under the DGCL.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Bylaws</u>. The bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation, except that references to Merger Sub's name shall be replaced with references to the Surviving Corporation's name, until thereafter amended, restated or amended and restated as provided therein and under the DGCL.

SECTION 2.6. <u>Directors and Officers</u>. The directors of Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the initial directors of the Surviving Corporation and shall serve until the earlier of their resignation, removal or death or until their respective successors have been duly elected or appointed and qualified, as the case may be. The officers of Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the initial officers of the Surviving Corporation and shall serve until the earlier of their resignation, removal or death or until their respective successors have been duly elected or appointed and qualified, as the case may be. The Company shall use reasonable best efforts to cause each director of the Company immediately prior to the Effective Time to resign from the Company Board, to be effective as of, and conditioned upon the occurrence of, the Effective Time. 

SECTION 2.7. <u>ROFN</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall deliver to the ROFN Holder the ROFN Notice (as defined in the ROFN Side Letter) no later than 24 hours after the public announcement of this Agreement and, if the ROFN Holder delivers a ROFN Exercise Notice in accordance with (and as defined in) the ROFN Side Letter within the time period set forth therein, the Company shall comply with its obligations under the ROFN Side Letter and, notwithstanding any other provision of this Agreement requiring written consent of Parent, shall be permitted to enter into the ROFN Purchase Documents and consummate the ROFN Sale.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the ROFN Holder delivers a ROFN Exercise Notice in accordance with (and as defined in) the ROFN Side Letter, the Company shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) not disclose in connection with the potential ROFN Sale any information of the Company or any of its Subsidiaries related to the RemainCo Business, any RemainCo Assets or any RemainCo Liabilities, keep Parent informed in reasonable detail of developments in connection with the potential ROFN Sale, including by promptly providing Parent with the ROFN Notice, the ROFN Exercise Notice, drafts of any ROFN Purchase Agreement or other ROFN Purchase Documents and summaries of substantive communications relating thereto that are exchanged between the ROFN Holder and the Company (or their respective Representatives) relating in any way to the ROFN;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) promptly respond to Parent's reasonable requests for, and regularly discuss, updates on the status of the potential ROFN Sale;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) if the ROFN Purchase Documents are entered into by the Company, use its reasonable best efforts to ensure that the ROFN Sale is consummated prior to the anticipated Closing Date and to satisfy on a timely basis all conditions precedent to the transactions contemplated by the ROFN Purchase Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) provide Parent with prompt written notice of any material default or material breach (or any event that, with or without notice, lapse of time or both, would give rise to any material default or material breach) under the ROFN Purchase Documents of which the Company becomes aware that would reasonably be expected to result in termination of the ROFN Purchase Agreement or any rights with respect to the ROFN or the incurrence of a material liability or other material obligation of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the Company or SpinCo, as applicable, (i) does not receive from the ROFN Holder a ROFN Exercise Notice prior to expiry of the ROFN Exercise Period (each as defined in the ROFN Side Letter) or (ii) does receive a valid ROFN Exercise Notice within the ROFN Exercise Period but has not entered into definitive agreements to effect a ROFN Sale by the end of the ROFN Negotiation Period (as defined in the ROFN Side Letter), then the Company shall cease all discussions with the ROFN Holder regarding the ROFN Assets and a potential ROFN Sale and shall thereafter no longer agree or enter into any arrangement in respect of a ROFN Sale, except in each case to the extent necessary to comply with the Company's obligations under the ROFN Side Letter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The ROFN Sale shall (i) not delay the Company's obligations to conduct the Spin-Off in accordance with the Spin-Off Agreements and this Agreement; *provided*, that the ROFN Assets may be sold to the ROFN Holder prior to or following the Spin-Off, (ii) not include any assets of the Company that would constitute RemainCo Assets and (iii) not impose any obligations or other liabilities on the Surviving Corporation or any of its Affiliates after the Closing other than those expressly set forth in the Spin-Off Agreements, from which time all such other obligations and other liabilities relating to the ROFN Sale shall be entirely for SpinCo's account, or include provisions that adversely impact the Surviving Corporation or any of its Affiliates or their respective businesses.

SECTION 2.8. <u>Permitted Third Party Sale</u>. Any Permitted Third Party Sale shall (a) not delay the Company's obligations to conduct the Spin-Off in accordance with the Spin-Off Agreements and this Agreement; (b) be consummated on the same terms as the Spin-Off Agreements (except that the Distribution of SpinCo by the Company to its shareholders shall be replaced by the sale of SpinCo by the Company to such Third Party as contemplated by the Separation and Distribution Agreement and except for the payment of an agreed purchase price to the Company for SpinCo), (c) not include any assets of the Company that would constitute RemainCo Assets, (d) not impose any obligations or other liabilities on the Surviving Corporation

------

or any of its Affiliates after the Closing other than those expressly set forth in the Spin-Off Agreements, from which time all such other obligations and other liabilities relating to such sale shall be entirely for SpinCo's account, or include provisions that adversely impact the Surviving Corporation or any of its Affiliates or their respective businesses, (e) include a full release of claims by the applicable acquirer (on behalf of itself and its Affiliates) in favor of the Company and its Affiliates relating to the Transactions, and (f) be completed, if at all, within 60 days from the date of entry into a definitive agreement to effect the Permitted Third Party Sale.

ARTICLE 3

CONSIDERATION; EXCHANGE OF CERTIFICATES

SECTION 3.1. <u>Conversion of Merger Sub Capital Stock</u>. At the Effective Time, by virtue of the Merger and without any action on the part of the parties, each share of Merger Sub capital stock will be converted into and become one fully paid and non-assessable share of common stock of the Surviving Corporation.

SECTION 3.2. <u>Conversion of Company Common Stock</u>. At the Effective Time, by virtue of the Merger and without any action on the part of the parties or any Stockholder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (including any shares issued as a result of the exercise of any Company Warrants prior to the Effective Time, but excluding (i) any shares to be cancelled pursuant to <u>Section</u> <u>3.2(b)</u> and (ii) any Appraisal Shares (each share described in <u>clauses (i)</u> and <u>(ii)</u> of this <u>Section</u> <u>3.2(a)</u>, an "*Excluded Share*")) shall be cancelled and shall be converted automatically into the right to receive an amount in cash equal to $72.00, without interest, subject to any applicable withholding Taxes (the "*Merger Consideration*"). As of the Effective Time, all shares of Company Common Stock (other than the Excluded Shares) shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of either a certificate representing any such shares of Company Common Stock (each, a "*Certificate*") or non-certificated shares of Company Common Stock represented by book-entry ("*Book-Entry Shares*") shall cease to have any rights with respect thereto, except the right to receive, as the case may be, (A) the Merger Consideration payable with respect to such shares of Company Common Stock upon surrender of such Certificate or Book-Entry Shares in accordance with <u>Section</u> <u>3.3</u>, without interest, or (B) the payment referred to in <u>Section</u> <u>3.8</u>, in the case of each Appraisal Share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each share of Company Common Stock held in the treasury of the Company and each share of Company Common Stock owned by Parent or Merger Sub or any direct or indirect wholly owned Subsidiary of Parent or the Company immediately prior to the Effective Time shall automatically be cancelled without any conversion thereof and shall cease to exist and no payment or distribution shall be made with respect thereto.

------

SECTION 3.3. <u>Exchange of Certificates</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Paying Agent</u>. Prior to the Effective Time, Parent shall enter into an agreement with such bank or trust company as may be designated by Parent and reasonably acceptable to the Company to act as agent (the "*Paying Agent*") for the holders of shares of Company Common Stock, holders of Non-Employee Company Stock Options, holders of Non-Employee Company RSUs and holders of Company Warrants to receive the funds to which holders of such shares of Company Common Stock (other than the Excluded Shares) shall become entitled pursuant to <u>Section</u> <u>3.2(a)</u>, Non-Employee Company Stock Options shall become entitled to pursuant to <u>Section</u> <u>3.4(a)</u>, Non-Employee Company RSUs shall become entitled to pursuant to <u>Section</u> <u>3.4(b)</u>, or Company Warrants shall become entitled to pursuant to <u>Section</u> <u>3.4(e)</u>. As and when necessary to comply with its and Merger Sub's obligations hereunder, Parent shall deposit, or shall cause to be deposited, with the Paying Agent for the benefit of such holders of shares of Company Common Stock (other than Excluded Shares), holders of Non-Employee Company Stock Options, and holders of Non-Employee Company RSUs a cash amount in immediately available funds necessary for the Paying Agent to make payments under <u>Section</u> <u>3.2(a)</u>, <u>Section</u> <u>3.4(a)</u>, <u>Section</u> <u>3.4(b)</u> or <u>Section</u> <u>3.4(e)</u>, as applicable (such cash being hereinafter referred to as the "*Exchange Fund*"). The Exchange Fund shall not be used for any other purpose. The Exchange Fund shall be invested by the Paying Agent as directed by Parent; *provided* that (i) no such investment or losses thereon shall relieve Parent from making the payments required by <u>Section</u> <u>3.2(a)</u>, <u>Section</u> <u>3.4(a)</u>, <u>Section</u> <u>3.4(b)</u> or <u>Section</u> <u>3.4(e)</u> or affect the amount of Merger Consideration payable in respect of such shares of Company Common Stock, the Option Consideration payable in respect of the Non-Employee Company Stock Options, the RSU Consideration payable in respect of the Non-Employee Company RSUs or the amounts payable in respect of the Company Warrants, and (ii) no such investment of the Exchange Fund shall have maturities that could prevent or delay payments to be made pursuant to this Agreement. Any and all interest or other amounts earned with respect to such funds shall become part of the Exchange Fund, and any amounts in excess of the amounts payable under <u>Section</u> <u>3.2(a)</u>, <u>Section</u> <u>3.4(a)</u>, <u>Section</u> <u>3.4(b)</u> or <u>Section</u> <u>3.4(e)</u> shall be promptly returned to Parent and any and all interest or other amounts earned with respect to such funds shall be treated for all U.S. federal (and applicable state or local) income Tax purposes as earned by Parent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Exchange Procedures</u>. As promptly as practicable (but no later than five Business Days) after the Effective Time, Parent and the Surviving Corporation shall cause the Paying Agent to mail to each holder of record of Certificates and to each holder of record of Book-Entry Shares, in each case whose shares were converted into the right to receive the Merger Consideration pursuant to <u>Section</u> <u>3.2(a)</u>, (i) a letter of transmittal, which shall be in reasonable and customary form, which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent (or effective affidavits in lieu thereof in accordance with <u>Section</u> <u>3.3(f)</u>) and which shall be in such form and have such other provisions as Parent may reasonably specify and (ii) instructions for use in surrendering the Certificates or Book-Entry Shares in exchange for the Merger Consideration payable with respect thereto. Upon surrender to the Paying Agent of a Certificate for cancellation (or effective affidavits in lieu thereof in accordance with <u>Section</u> <u>3.3(f)</u>), together with a duly completed and validly executed letter of transmittal, or receipt of an "agent's message" by the Paying Agent (or such other evidence, if any, of transfer as the Paying Agent may reasonably request) in the case of Book-Entry Shares, the holder of such Certificate or Book-Entry Shares shall receive in exchange therefor the Merger Consideration which the shares of Company Common Stock theretofore represented by such Certificate or book-entries entitle such holder to receive pursuant to the provisions of this <u>Article 3</u> and the Certificate or Book-Entry Shares so surrendered shall then be cancelled. No interest shall be paid or shall accrue on any Merger Consideration payable to holders of Certificates or Book-Entry Shares pursuant to the provisions of this <u>Article 3</u>. In the event of a transfer of ownership of Company Common Stock that is not

------

registered in the transfer records of the Company, payment may be made to a Person other than the Person in whose name the Certificate or Book-Entry Shares so surrendered are registered if such Certificate shall be properly endorsed or otherwise be in proper form for transfer or such Book-Entry Shares shall be properly transferred and the Person requesting such issuance shall pay any stock transfer Taxes required by reason of the payment to a Person other than the registered holder of such Certificate or Book-Entry Shares or establish to the reasonable satisfaction of Parent that such Tax has been paid or is not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>No Further Ownership Rights in Company Common Stock</u>. The Merger Consideration paid upon the surrender or exchange of Certificates and Book-Entry Shares in accordance with the terms of this <u>Article 3</u> shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common Stock theretofore represented by such Certificates or book entries, and, after the Effective Time, there shall be no further registration of transfers on the stock transfer books of the Company of the shares of Company Common Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates or Book-Entry Shares are presented to the Surviving Corporation or the Paying Agent for any reason, they shall be cancelled and exchanged as provided in this <u>Article 3</u>, except as otherwise provided by applicable Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Termination of Exchange Fund</u>. Any portion of the Exchange Fund which remains undistributed to the holders of Certificates or Book-Entry Shares, Non-Employee Company Stock Options or Non-Employee Company RSUs for 12 months after the Effective Time shall be delivered to Parent or one of its Affiliates, upon demand, and any holders of Certificates or Book-Entry Shares, Non-Employee Company Stock Options or Non-Employee Company RSUs who have not theretofore complied with the applicable exchange procedures contemplated by this <u>Article 3</u> shall thereafter look only to Parent (subject to applicable abandoned property, escheat or similar Laws), as general creditors thereof, for payment of their claim for Merger Consideration, Option Consideration or RSU Consideration, as applicable, without any interest thereon and subject to any withholding of Taxes required by applicable Law in respect of such holder's surrender of their Certificates or Book-Entry Shares and compliance with the procedures in <u>Section</u> <u>3.3(b)</u>, in respect of their Non-Employee Company Stock Options, or in respect of their Non-Employee Company RSUs, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>No Liability</u>. None of Parent, Merger Sub, the Company, the Surviving Corporation, the Paying Agent or their respective Affiliates shall be liable to any Person in respect of any Merger Consideration or any cash from the Exchange Fund delivered to a Governmental Authority pursuant to any applicable abandoned property, escheat or similar Laws. If any Certificate or Book-Entry Share shall not have been surrendered prior to the earlier of (i) two years after the Effective Time and (ii) immediately prior to the date on which the Merger Consideration payable with respect to the shares of Company Common Stock represented by such Certificate or Book-Entry Share pursuant to this <u>Article 3</u> would otherwise escheat to or become the property of any Governmental Authority, then any such Merger Consideration shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interests of any Person previously entitled thereto.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Lost, Stolen or Destroyed Certificates</u>. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent or the Paying Agent, the posting by such Person of a bond in such reasonable amount as Parent or the Paying Agent, as the case may be, may direct as indemnity against any claim that may be made against it with respect to such Certificate (which amount shall not exceed the Merger Consideration payable with respect to the shares of Company Common Stock represented by such Certificate), the Paying Agent shall, subject to such Person's compliance with the exchange procedures set forth in <u>Section</u> <u>3.3(b)</u> (other than the surrender of a Certificate), issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration payable with respect to the shares of Company Common Stock represented by such Certificate in accordance with this <u>Article 3</u>.

SECTION 3.4. <u>Company Equity Awards and Warrants</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Treatment of Options</u>. Each Company Stock Option that is outstanding as of immediately prior to the Effective Time shall (i) to the extent unvested, become fully vested and exercisable effective immediately prior to, and contingent upon, the Effective Time, and (ii) at the Effective Time, by virtue of the Merger and without any further action on the part of the holder thereof or the parties, (x) if such Company Stock Option has a per share exercise price that is less than the Merger Consideration, be cancelled and, in exchange therefor, the former holder thereof shall be entitled to receive, in consideration of the cancellation of such Company Stock Option and in settlement therefor, a payment in cash (without interest and subject to any applicable withholding Taxes required by applicable Law) equal to the product of (1) the total number of shares of Company Common Stock subject to such Company Stock Option immediately prior to the Effective Time and (2) the excess of the Merger Consideration over the per share exercise price payable under such Company Stock Option immediately prior to the Effective Time (the "*Option Consideration*"), and (y) if such Company Stock Option has a per share exercise price that is equal to or greater than the Merger Consideration, be cancelled at the Effective Time without consideration payable in respect thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Treatment of Restricted Stock Units</u>. Except as provided in the Company Disclosure Letter, each Company RSU that is outstanding as of immediately prior to the Effective Time shall (i) to the extent unvested, become fully vested effective immediately prior to, and contingent upon, the Effective Time, and (ii) at the Effective Time, by virtue of the Merger and without any further action on the part of the holder thereof or the parties, be cancelled and converted automatically into the right of the holder thereof to receive a payment in cash (without interest and subject to any applicable withholding Taxes required by applicable Law) equal to the product of (1) the Merger Consideration multiplied by (2) the total number of shares of Company Common Stock subject to such Company RSU immediately prior to the Effective Time (the "*RSU Consideration*").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Payment</u>. On or prior to its first applicable payroll payment date that is no earlier than 10 days following the Closing, (i) the Surviving Corporation shall make (or cause to be made) a payment subject to withholding, if any, required by applicable Law, to each former holder of Employee Company Stock Options or Employee Company RSUs, such holder's Option Consideration or RSU Consideration, as applicable and (ii) Parent shall deposit with the Paying Agent a cash amount for the Paying Agent to pay to each former holder of Non-Employee Company Stock Options or Non-Employee Company RSUs such holder's Option Consideration or RSU Consideration, as applicable, in accordance with <u>Section</u> <u>3.4</u> and cause the Paying Agent to make such payments to such holders in accordance with the agreement to be entered into between the Paying Agent and Parent or its Affiliate.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Termination of Stock Plans</u>. As of the Effective Time, all Stock Plans and all outstanding equity and equity-based awards shall be terminated, effective as of immediately prior to the Closing and contingent upon the occurrence of the Closing, and no further shares of Company Common Stock, Company Equity Awards, equity interests or other rights with respect to shares of Company Common Stock shall be granted thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Treatment of Company Warrants</u>. During the Pre-Closing Period, the Company shall take all required actions to effect the treatment of the Company Warrants hereunder and shall use reasonable best efforts to comply with its obligations under the Company Warrants, including to deliver any notices required under the terms of any outstanding Company Warrants to the holders thereof, and the Company shall provide Parent with a reasonable opportunity to review and comment on such notices and will give reasonable and good faith consideration to any comments provided by Parent to such notices. Each Company Warrant that is outstanding immediately prior to the Effective Time will, upon the Effective Time, become exercisable by the holder thereof solely for the same Merger Consideration as such holder would have been entitled to receive following the Effective Time pursuant to <u>Section</u> <u>3.2(a)</u> if such holder had been, immediately prior to the Effective Time, the holder of the number of shares of Company Common Stock then issuable upon exercise in full of such warrant without regard to any limitations on exercise contained therein. Following the Effective Time, no holder of any Company Warrant shall have any right hereunder or thereunder to acquire any Company Securities or any securities in the Surviving Corporation, SpinCo, Parent or any of their respective Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Impact of Permitted Sale Proceeds</u>. In the event of a distribution of Permitted Sale Proceeds prior to the Effective Time, as soon as practicable following the distribution of Permitted Sale Proceeds to holders of Company Common Stock and prior to the Effective Time, the Company shall pay each holder of Company RSUs or Company Stock Options as of the record date used by the Company for such distribution an amount in cash from the Permitted Sale Proceeds, subject to applicable tax withholding, equal to the product of (i) the aggregate number of shares of Company Common Stock underlying the outstanding Company RSUs and Company Stock Options held by such holder as of such record date (whether vested or unvested) and (ii) the per share amount payable to holders of Company Common Stock in such distribution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Board Actions</u>. Prior to the Effective Time, the Company Board (or, if appropriate, any committee thereof) shall adopt appropriate resolutions and take all other actions necessary and appropriate, including obtaining any consents, required to, prior to the Effective Time, effect the transactions described in this <u>Section</u> <u>3.4</u>, including delivering written notice (in form reasonably approved by Parent) to each holder of a Company Equity Award of the treatment of such award pursuant to this <u>Section</u> <u>3.4</u>.

------

SECTION 3.5. <u>Employee Stock Purchase Plan</u>. The Company, the Company Board or the applicable committee thereof, as applicable, shall take all actions necessary to terminate the Company's 2020 Employee Stock Purchase Plan (the "*ESPP*") and all outstanding rights thereunder no later than the day immediately prior to the Closing Date, contingent upon the occurrence of the Closing, and to otherwise effectuate the treatment of the ESPP as contemplated in this <u>Section</u> <u>3.5</u>. From and after the date hereof, the Company shall (a) take all actions necessary to ensure that (i) no new participants are permitted to participate in the ESPP and that participants may not increase their payroll deductions or purchase elections from those in effect on the date hereof and (ii) except for the offering or purchase period (if any) under the ESPP that is in progress as of the date hereof (the *"Final Offering Period*"), no offering or purchase period shall be commenced following the date hereof and (b) to the extent required by the ESPP, provide notice to participants describing the treatment of the ESPP pursuant to this <u>Section</u> <u>3.5</u>. The Final Offering Period shall terminate no later than fifteen (15) Business Days following the date hereof, and the Company shall cause the exercise date applicable to the Final Offering Period to accelerate and occur on such termination date with respect to any then-outstanding purchase rights. Notwithstanding anything in this Agreement to the contrary, (A) all amounts allocated to each participant's account under the ESPP at the end of the Final Offering Period shall thereupon be used to purchase whole shares of Company Common Stock under the terms of the ESPP for such offering period, which shares of Company Common Stock shall be cancelled at the Effective Time in exchange for the right to receive the Merger Consideration in accordance with <u>Section</u> <u>3.2(a)</u> following the purchase of shares of Company Common Stock and (B) the Company shall return to each participant the funds, if any, that remain in such participant's account after such purchase.

SECTION 3.6. <u>Adjustments to Prevent Dilution</u>. Without limiting the other provisions of this Agreement, in the event that, during the period between the date hereof and the Effective Time, the number of outstanding shares of Company Common Stock or securities convertible into or exchangeable or exercisable for shares of Company Common Stock shall be changed into a different number of shares or securities or a different class as a result of a reclassification, stock split (including a reverse stock split), stock dividend or distribution, recapitalization, merger, issuer tender or exchange offer or other similar transaction, then the Merger Consideration and any other amounts payable pursuant to this Agreement shall be equitably adjusted, without duplication, to reflect such change; *provided* that, in any case, nothing in this <u>Section</u> <u>3.6</u> shall be construed to permit the Company to take any action with respect to its securities that is prohibited by the terms of this Agreement and for the avoidance of doubt, no adjustments shall be made solely as a result of the Spin-Off Distribution or any distribution of the Permitted Sale Proceeds.

SECTION 3.7. <u>Withholding Rights</u>. Notwithstanding anything in this Agreement to the contrary, each of Parent, Merger Sub, the Surviving Corporation, the Paying Agent, and their respective agents shall be entitled to deduct and withhold from any payment to be made to any Person pursuant to this Agreement any amount that Parent, Merger Sub, the Surviving Corporation, the Paying Agent, or their respective agents, as applicable, is required to deduct or withhold under any applicable Tax Law (including as a result of the Spin-Off Distribution or any distribution of the Permitted Sale Proceeds). Any amount so deducted shall be paid to the applicable Taxing Authority in accordance with applicable Tax Law and treated for all purposes of this Agreement as having been paid to the Person in respect of which such amount was withheld.

------

SECTION 3.8. <u>Appraisal Rights</u>. Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock that are outstanding immediately prior to the Effective Time (other than any shares to be cancelled pursuant to <u>Section</u> <u>3.2(b)</u>) and that are held by any Person who is entitled to demand and properly demands appraisal of such shares ("*Appraisal Shares*") pursuant to, and who complies in all respects with, Section 262 of the DGCL shall not be converted into the right to receive Merger Consideration and shall entitle the holder only to payment for such Appraisal Shares in accordance with and to the extent provided by Section 262 of the DGCL; *provided* that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to appraisal under Section 262 of the DGCL, then such Appraisal Shares shall automatically be deemed to have been converted as of the Effective Time into, and become exchangeable solely for the right to receive, Merger Consideration as provided in <u>Section</u> <u>3.2(a)</u>. The Company shall promptly provide notice to Parent of any demands received by the Company for appraisal of any shares of Company Common Stock, and Parent shall have the right to participate in and direct (*provided* that such direction may not result in a binding obligation on the part of the Company that is effective prior to the Effective Time) all negotiations and proceedings with respect to such demands. The Company shall not, without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed), make any payment with respect to, or settle or offer to settle, any such demands, or agree to do any of the foregoing. Any cash deposited with the Paying Agent pursuant to <u>Section</u> <u>3.3(a)</u> with respect to shares of Company Common Stock that become Appraisal Shares shall be returned to Parent upon demand therefor.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in (a) the disclosure letter delivered by the Company to Parent prior to the execution of this Agreement (the "*Company Disclosure Letter*"), which Company Disclosure Letter identifies the particular Section (or, if applicable, subsection) of this <u>Article 4</u> to which such exception relates, (b) any disclosure contained in any other section (or, if applicable, subsection) of the Company Disclosure Letter to the extent that it is reasonably apparent from the face of such disclosure that such disclosure is intended to qualify such other representation and warranty or (c) disclosure in the Company SEC Documents publicly filed after January 1, 2024, and at least three days prior to the date hereof, excluding, in each case, any exhibits or schedules to such Company SEC Documents, any information in the "Risk Factors" or "Forward-Looking Statements" sections thereof and any other statements therein that are similarly cautionary, predictive or forward-looking in nature (it being acknowledged and agreed that <u>clause (c)</u> shall not apply to the representations and warranties set forth in <u>Section</u> <u>4.1</u> (*Organization*) <u>Section</u> <u>4.2</u> (*Capitalization*), <u>Section</u> <u>4.3</u> (*Authorization; No Conflict*), <u>Section</u> <u>4.4</u> (*Subsidiaries*), <u>Section</u> <u>4.5</u> (*SEC Documents*), <u>Section</u> <u>4.9</u> (*Information Supplied*), <u>Section</u> <u>4.10</u> (*Broker's or Finder's Fees*), <u>Section</u> <u>4.13</u> (*Opinion of Financial Advisor*) and <u>Section</u> <u>4.24</u> (*Takeover Provisions*)), the Company hereby represents and warrants to Parent and Merger Sub as follows:

SECTION 4.1. <u>Organization</u>. The Company (a) is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, (b) has all requisite corporate power and authority to carry on its business as now conducted, and (c) is duly qualified or licensed to do business and (where applicable) is in good standing as a foreign corporation in each jurisdiction where the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified, licensed or in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company has made available to Parent accurate and complete copies of the Company Charter Documents as in effect as of the date hereof. The Company Charter Documents are in full force and effect, and the Company is not in violation of the Company Charter Documents in any material respect.

------

SECTION 4.2. <u>Capitalization</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The authorized capital stock of the Company consists of (i) 400,000,000 shares of Company Common Stock and (ii) 40,000,000 shares of preferred stock, par value $0.0001 per share. At the close of business on October 23, 2025 (the "*Capitalization Date*"), there were (A) 146,910,657 shares of Company Common Stock issued and outstanding, (B) no shares of preferred stock outstanding, (C) no shares of Company Common Stock held by the Company in its treasury, (D) outstanding Company Stock Options to purchase an aggregate of 13,668,203 shares of Company Common Stock, (E) 3,919,806 shares of Company Common Stock subject to or otherwise deliverable in connection with outstanding Company RSUs, (F) 6,822,737 shares of Company Common Stock issuable pursuant to the Company Warrants, (G) 5,144,614 shares of Company Common Stock reserved for issuance in respect of future awards under the Stock Plans, and (H) 1,299,919 shares of Company Common Stock reserved for issuance under the ESPP. All such issued and outstanding shares of capital stock of the Company have been, and all such shares that may be issued prior to the Effective Time will be when issued, duly authorized and validly issued, fully paid and non-assessable, and free of preemptive rights. All outstanding shares of Company Common Stock and all Company Equity Awards and Company Warrants have been issued or granted, as applicable, in compliance in all material respects with applicable Law. <u>Section</u> <u>4.2(a)</u> of the Company Disclosure Letter sets forth an accurate and complete list as of the Capitalization Date of each outstanding Company Equity Award and Company Warrant, including, as applicable, the holder, the type of Company Equity Award, date of grant, expiration date, exercise price, vesting schedule or forfeiture conditions and number of shares of Company Common Stock subject thereto, and the Stock Plan under which the award is granted. From the close of business on the Capitalization Date to the date hereof, the Company has not issued any shares of capital stock, or any other Company Securities, except upon the exercise or settlement of the Company Equity Awards or Company Warrants, in each case outstanding as of the close of business on the Capitalization Date. Accumulated payroll deductions in respect of the Final Offering Period were $1,657,170.33 as of the close of business on the Capitalization Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Other than the Company Common Stock, there are no outstanding bonds, debentures, notes, other indebtedness or securities of the Company having the right to vote or, other than the outstanding Company Equity Awards, Company Warrants, or purchase rights under the ESPP, that are convertible into or exchangeable or exercisable for, securities having the right to vote on any matters on which the Stockholders may vote. Except as set forth in this <u>Section</u> <u>4.2</u>, as of the date hereof, there are no issued, reserved for issuance or outstanding (i) shares of capital stock or other voting securities of or ownership interests in the Company, (ii) securities of the Company convertible into or exchangeable or exercisable for shares of capital stock or other voting securities of, or ownership interests in, the Company, (iii) warrants, calls, options or other rights to acquire from the Company, or other obligation (including under any stockholder rights plan or other arrangement commonly referred to as a "poison pill") of the Company to issue, any capital stock or other voting securities, or ownership interests in, or any securities convertible into or exchangeable or exercisable for capital stock or other voting securities, or ownership interests in, the Company, or (iv) restricted shares, stock appreciation rights, performance units, contingent

------

value rights, "phantom" stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of any capital stock or other voting securities of, or ownership interests in, the Company (the items in <u>clauses (i)</u> through <u>(iv)</u> being referred to collectively as "*Company Securities*"). There are no outstanding contractual obligations of the Company or of any Company Subsidiary of any kind to redeem, purchase or otherwise acquire any Company Securities other than the Company Warrants. There are no stockholder agreements, voting trusts or other agreements or understandings to which the Company or any Company Subsidiary is a party relating to the voting or disposition of any Company Securities or granting to any Person or group of Persons the right to elect, or to designate or nominate for election, a director to the Company Board or any Company Subsidiary.

SECTION 4.3. <u>Authorization; No Conflict</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company has the requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and the Spin-Off Agreements and to consummate the Transactions. The execution, delivery and performance of the Company's obligations under this Agreement and the Spin-Off Agreements and the consummation of the Transactions have been duly and validly authorized by the Company Board. No other corporate proceedings on the part of the Company or its Stockholders are necessary to authorize the consummation of the Transactions and the performance of the Company's obligations under this Agreement and the Spin-Off Agreements, except for (i) the approval of this Agreement and the Separation and Distribution Agreement by the Requisite Company Vote, and (ii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware. At a meeting duly called and held, the Company Board unanimously (A) determined that this Agreement, the Separation and Distribution Agreement and the Transactions are advisable, fair to and in the best interests of the Company and the Stockholders, (B) adopted, approved and declared advisable this Agreement, the Separation and Distribution Agreement and the Transactions in accordance with the DGCL, and approved the execution, delivery and performance by the Company of this Agreement and the Separation and Distribution Agreement and the consummation by the Company of the Transactions, (C) resolved to recommend that the Stockholders vote to approve the adoption of this Agreement and the Separation and Distribution Agreement on the terms and subject to the conditions set forth herein and in the Separation and Distribution Agreement, and (D) to the extent necessary, adopted a resolution having the effect of causing this Agreement and the Transactions not to be subject to any Takeover Provision that might otherwise apply to the Transactions, in each case on the terms and subject to the conditions of this Agreement. As of the date hereof, none of the foregoing resolutions of the Company Board have been amended, rescinded or modified. This Agreement and the Separation and Distribution Agreement have been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof by Parent and Merger Sub (in the case of this Agreement) and by Parent (in the case of the Separation and Distribution Agreement), constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar Laws of general application affecting or relating to the enforcement of creditors' rights generally and equitable principles of general applicability (the "*Bankruptcy and Equity Exception*").

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) None of the execution, delivery or performance of this Agreement or the Spin-Off Agreements by the Company, the consummation by the Company of the Transactions, or compliance by the Company with any of the provisions herein or therein will (i) result in a violation or breach of, contravene or conflict with, (x) the Company Charter Documents or (y) any Company Subsidiary Charter Documents, (ii) assuming compliance with the matters referred to in <u>Section</u> <u>4.3(c)</u>, conflict with or result in a violation or breach of any applicable Judgment or any provision of any applicable Law, (iii) assuming compliance with the matters referred to in <u>Section</u> <u>4.3(c)</u>, require any consent or other action by any Person under, constitute a default, or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which the Company or any Company Subsidiary is entitled under any provision of any Contract binding upon the Company or any Company Subsidiary or any Authorization affecting, or relating in any way to, the assets or business of the Company and the Company Subsidiaries or (iv) result in the creation or imposition of any Lien on any asset of the Company or any Company Subsidiary, except in the case of each of <u>clauses (ii)</u>, <u>(iii)</u> and <u>(iv)</u> of this <u>Section</u> <u>4.3(b)</u>, as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The execution, delivery and performance by the Company of this Agreement and the Spin-Off Agreements and the consummation by the Company of the Transactions require no action by or in respect of, or filing by or with, any Governmental Authority, except for (i) filing the Certificate of Merger with the Secretary of State of the State of Delaware, (ii) compliance with and filings pursuant to the HSR Act, applicable non-U.S. competition and antitrust Laws (collectively, "*Antitrust Laws*") and applicable Foreign Investment Laws, if any, (iii) compliance with any applicable requirements of the Securities Act, the Exchange Act and any other United States state or federal securities Laws, (iv) compliance with any Nasdaq rules and the listing of the shares of common stock of SpinCo on Nasdaq, and (v) actions or filings the failure of which to make or obtain has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

SECTION 4.4. <u>Subsidiaries</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Section 4.4</u> of the Company Disclosure Letter sets forth an accurate and complete list of the Company Subsidiaries, indicating for each such Subsidiary its respective jurisdiction of organization and amount and ownership of equity securities thereof issued and outstanding. Each Company Subsidiary (i) is an entity duly organized, validly existing and (where applicable) in good standing under the Laws of its jurisdiction of organization, (ii) has all requisite entity power and authority to carry on its business as now conducted, and (iii) is duly qualified or licensed to do business and (where applicable) is in good standing as a foreign corporation in each jurisdiction where the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified, licensed or in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company has made available to Parent accurate and complete copies of each of the Company Subsidiary Charter Documents as in effect on the date hereof. The Company Subsidiary Charter Documents are in full force and effect, and none of the Company Subsidiaries are in violation of the Company Subsidiary Charter Documents in any material respect.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) All of the outstanding capital stock or other voting securities of, or other ownership interests in, the Company Subsidiaries is owned by the Company, directly or indirectly, free and clear of any Liens or any other limitation or restriction (including on the right to vote, sell or otherwise dispose of such capital stock or other voting securities or ownership interests, but excluding any such restriction on the right to sell or otherwise dispose of such capital stock or other voting securities under applicable securities Laws). Except as set forth in <u>Section</u> <u>4.4</u> of the Company Disclosure Letter, there are no issued, reserved for issuance or outstanding (i) shares of capital stock or other voting securities of or ownership interests in any Company Subsidiary, (ii) securities of the Company or any Company Subsidiary convertible into or exchangeable or exercisable for shares of capital stock or other voting securities of, or ownership interests in, any Company Subsidiary, (iii) warrants, calls, options or other rights to acquire from the Company or any Company Subsidiary, or other obligations of the Company or any Company Subsidiary to issue, any capital stock or other voting securities of, or ownership interests in, or any securities convertible into or exchangeable or exercisable for any capital stock or other voting securities of, or ownership interests in, any Company Subsidiary or (iv) restricted shares, stock appreciation rights, performance units, contingent value rights, "phantom" stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of any capital stock or other voting securities of, or ownership interests in, any Company Subsidiary (the items in <u>clauses (i)</u> through <u>(iv)</u> of this <u>Section</u> <u>4.4(b)</u>, collectively, "*Company Subsidiary Securities*"). There are no outstanding contractual obligations of the Company or of any Company Subsidiary of any kind to redeem, purchase or otherwise acquire any Company Subsidiary Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Except for the capital stock or other voting securities of, or ownership interests in, the Company Subsidiaries, the Company does not own, directly or indirectly, any capital stock or other voting securities of, or ownership interests in, any Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) No former Subsidiary of the Company (other than the Company Subsidiaries) carried on any business, conducted any operations, held any assets or had any liabilities for which the Company or any Company Subsidiary is or would reasonably be expected to be liable.

SECTION 4.5. <u>SEC Documents</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Since January 1, 2022, the Company has filed with or furnished to the SEC all forms, reports, schedules, statements, prospectuses, registration statements, definitive proxy statements and other documents (collectively, including all exhibits thereto and information incorporated by reference therein, the "*Company SEC Documents*") required to be filed by the Company with or furnished by the Company to the SEC in a timely manner. As of their respective filing dates (and as of the date of any amendment or supplement thereto), (i) each Company SEC Document complied in all material respects with the requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002, as the case may be, and the applicable requirements of Nasdaq, in each case, applicable to such Company SEC Documents and (ii) except to the extent that information contained in such Company SEC Documents has been revised, amended, modified, superseded (prior to the date hereof) by a later filed Company SEC Document, the Company SEC Documents when filed or furnished pursuant to the Securities Act or the Exchange Act did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. No Company Subsidiary is required to file any forms, reports or other documents with the SEC pursuant to Section 13 or 15 of the Exchange Act or similar non-U.S. authority.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company and the Company Subsidiaries have established, have maintained and maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) and such disclosure controls and procedures are designed to ensure that all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management as appropriate to allow timely decisions regarding required disclosure and to enable the "principal executive officer" and "principal financial officer" (as such terms are defined in the Sarbanes-Oxley Act of 2002) of the Company to make the certifications required under the Exchange Act with respect to such reports.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company and the Company Subsidiaries have established, have maintained and maintain a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act): (i) designed to provide reasonable assurance regarding the reliability of the Company's financial reporting and the preparation of Company financial statements for external purposes in accordance with GAAP, (ii) that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company and the Company Subsidiaries, (iii) that provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company and the Company Subsidiaries are being made only in accordance with authorizations of the Company's management and the Company Board, and (iv) that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's or the Company Subsidiaries' assets that could have a material effect on the financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company is, and since January 1, 2022, has been, in compliance in all material respects with all applicable listing and corporate governance requirements of Nasdaq, and is, and since January 1, 2022, has been, in compliance in all material respects with all applicable rules, regulations and requirements of the Sarbanes-Oxley Act of 2002 and the SEC. There are no outstanding loans or other extension of credit made by the Company or any Company Subsidiary to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of the Company. Since January 1, 2022, neither the Company nor, to the knowledge of the Company, the Company's independent registered public accounting firm, has identified or been made aware of (i) any material deficiencies or weaknesses in the design or operation of internal controls that are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information, (ii) any fraud, whether or not material, that involves management or other employees who have a role in internal controls or (iii) any claim or allegation regarding any of the foregoing.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Neither the Company nor any Company Subsidiary is a party to, or has any commitment to become a party to, any joint venture, off balance sheet partnership or any similar Contract or arrangement (including any Contract or arrangement relating to any transaction or relationship between or among the Company and any Company Subsidiary, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any off balance sheet arrangements (as defined in Item 303(a) of Regulation S-K under the Securities Act)), where the result, purpose or intended effect of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any Company Subsidiary in the Company's published financial statements or other Company SEC Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Company has made available to Parent accurate and complete copies of all material correspondence through the date hereof between the SEC, on the one hand, and the Company or any Company Subsidiary, on the other hand, including comment letters from the staff of the SEC relating to the Company SEC Documents containing unresolved comments and all written responses of the Company thereto. To the knowledge of the Company, as of the date hereof, no Company SEC Document is the subject of ongoing review, comment or investigation by the SEC. As of the date hereof, there are no outstanding or unresolved comments in comment letters received from the SEC staff with respect to any Company SEC Document.

SECTION 4.6. <u>Company Financial Statements</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The consolidated financial statements of the Company contained in the Company SEC Documents (including, in each case, any related notes and schedules thereto) (collectively, the "*Company Financial Statements*") comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in conformity with GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) during the periods involved and present fairly, in all material respects, the consolidated financial position and the consolidated results of operations, changes in stockholders' equity and cash flows of the Company and the Company Subsidiaries as of the dates or for the periods presented therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments as permitted by GAAP and the applicable rules and regulations of the SEC).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company and the Company Subsidiaries have no liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise), and there is no existing condition, situation or set of circumstances that would reasonably be expected to result in any such liability or obligation, except liabilities or obligations that (i) are accrued or reserved against in the most recent Company Financial Statements included in the Company SEC Documents filed prior to the date hereof or are reflected in the notes thereto, (ii) are current liabilities incurred in the ordinary course of business consistent with past practice since the date of such Company Financial Statements and, individually and in the aggregate, are not material to the Company and the Company Subsidiaries, taken as a whole, (iii) are performance or compliance obligations under the terms of any Contract to which the Company or any Company Subsidiary is a party or by which it is bound (and do not arise from any failure by the Company or any Company Subsidiary to perform or comply with such Contract) and that has been made available to Parent or (iv) are incurred in connection with the Transactions.

------

SECTION 4.7. <u>Absence of Material Adverse Effect</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Since December 31, 2024, through the date hereof, there has not been or occurred any Effect, individually or in the aggregate with all other Effects, that has had, or would reasonably be expected to have, a Company Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Since December 31, 2024, through the date hereof, the Company and the Company Subsidiaries have conducted their business in the ordinary course of business consistent with past practice and there has not been or occurred any event, condition, action or occurrence that, if taken during the period from the date hereof through the Effective Time without Parent's consent, would constitute a breach of any of the covenants in <u>clauses (i)</u> through <u>(vi)</u>, <u>(viii)</u>, <u>(ix)</u>, <u>(xiii)</u>, <u>(xv)</u>, <u>(xvi)</u>, <u>(xxi)</u>, <u>(xxiv)</u>, and, solely as it relates to the foregoing, <u>(xxix)</u> of <u>Section</u> <u>6.1(b)</u>.

SECTION 4.8. <u>Proceedings</u>. There are no Proceedings, pending or, to the knowledge of the Company, threatened, against or affecting the Company or any Company Subsidiary or any present or former officer, director or employee of the Company or any Company Subsidiary in such individual's capacity as such, and neither the Company nor any Company Subsidiary is subject to any outstanding Judgment, in each case, that would reasonably be expected to be, individually or in the aggregate, material to the Company and the Company Subsidiaries, taken as a whole.

SECTION 4.9. <u>Information Supplied</u>. Each of (a) the Proxy Statement, at the time of the filing thereof, at the time of any amendment of or supplement thereto, and at the time of any publication, mailing, distribution or dissemination thereof, and on the date of the Stockholders' Meeting (as it may be adjourned or postponed in accordance with this Agreement), and (b) the Spin-Off Registration Statement, at the time of the confidential submission or the filing thereof, at the time of any amendment of or supplement thereto, on the date it is declared effective by the SEC and at the time of any publication, mailing, distribution or dissemination thereof, (i) will comply as to form in all material respects with the requirements of the Exchange Act, and (ii) will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. For clarity, the representations and warranties in this <u>Section</u> <u>4.9</u> will not apply to statements included or incorporated by reference in the Proxy Statement or the Spin-Off Registration Statement based upon information supplied to the Company by Parent or Merger Sub or any of their Representatives specifically for inclusion therein.

SECTION 4.10. <u>Broker</u><u>'</u><u>s or Finder</u><u>'</u><u>s Fees</u>. Except for Goldman Sachs & Co. LLC and Barclays Capital Inc., no broker, investment banker, finder, or other Person performing similar functions on behalf of the Company or any Company Subsidiary or under the Company's or any Company Subsidiary's authority is or will be entitled to any advisory, commission or broker's or finder's fee or similar fee or commission or reimbursement of expenses from the Company or any Company Subsidiary in connection with any of the Transactions based upon arrangements made by or on behalf of the Company or any Company Subsidiary.

------

SECTION 4.11. <u>Employee Plans</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Section 4.11(a)</u> of the Company Disclosure Letter sets forth an accurate and complete list of all Company Employee Benefit Plans that are subject to ERISA, that provide for severance, change of control, retention, termination or similar pay, compensation, bonus or benefits, or that are otherwise material (in each case prior to giving effect to the Spin-Off).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) With respect to each Company Employee Benefit Plan set forth in <u>Section</u> <u>4.11(a)</u> of the Company Disclosure Letter, the Company has made available to Parent an accurate and complete copy of: (i) the most recent plan document, including all amendments thereto (or, in either case, with respect to any unwritten material Company Employee Benefit Plan, a written description of the terms thereof), and any related trusts, (ii) the current summary plan description, including any summaries of material modifications, (iii) the most recent determination letter (or if applicable, advisory or opinion letter) from the Internal Revenue Service, if any, and any pending applications for a determination or opinion letter, (iv) the most recent annual report on Form 5500 required to be filed with the Internal Revenue Service with respect thereto (if any), including all schedules and attachments thereto, (v) the most recently prepared coverage and non-discrimination testing results (if any), and (vi) all material non-routine notices or other written correspondence regarding such Company Employee Benefit Plan from the Internal Revenue Service, Department of Labor, Pension Benefit Guarantee Corporation, or other Governmental Authority received by the Company within the last three years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Each Company Employee Benefit Plan that is intended to be "qualified" within the meaning of Section 401(a) of the Code has been the subject of a favorable and up-to-date determination, advisory or opinion letter from the Internal Revenue Service on which the Company is entitled to rely, and no event has occurred, and no conditions, facts, or circumstances exist, that would reasonably be expected to cause the loss of such qualification or the imposition of liability, penalty or Tax under ERISA, the Code or other applicable Law related to such qualification. All assets of the Company Employee Benefit Plans consist of cash or actively traded securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Each Company Employee Benefit Plan has been operated, established, maintained and administered in all material respects in accordance with its terms and with all provisions of ERISA, the Code and other applicable Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Neither the Company nor any Company Subsidiary has engaged in any non-exempt prohibited transaction, within the meaning of Section 4975 of the Code or Section 406 of ERISA, and, to the knowledge of the Company, no such prohibited transaction has occurred with respect to any Company Employee Benefit Plan. No fiduciary, within the meaning of Section 3(21) of ERISA, has breached their fiduciary duty with respect to a Company Employee Benefit Plan.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) No Company Employee Benefit Plan is (i) subject to Title IV of ERISA or Section 412 of the Code, (ii) a "multiemployer plan" within the meaning of Section 3(37) of ERISA, (iii) a "multiple employer plan" within the meaning of Section 4063 or 4064 of ERISA, (iv) a "multiple employer welfare arrangement" (as defined in Section 3(40) of ERISA), or (v) any health or other welfare arrangement that is self-insured, and none of the Company, any Company Subsidiary or any ERISA Affiliate of the Company or any Company Subsidiary has in the past six years sponsored, maintained, contributed to, been required to contribute to, or had any obligations or incurred any liability under any plan described in the foregoing <u>clauses (i)</u> through <u>(v)</u> of this <u>Section</u> <u>4.11(f)</u>. No Company Employee Benefit Plan is funded by a "voluntary employees' beneficiary association" within the meaning of Section 501(c)(9) of the Code or other funding arrangement for the provision of welfare benefits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Neither the Company nor any Company Subsidiary provides, or has any liability or obligation to provide life insurance, health or medical benefits to any individual, or to the dependent of any individual, extending beyond the termination of the individual's employment, except to the extent required by the Consolidated Omnibus Budget Reconciliation Act of 1985 or similar provisions of state Law for which the individual pays for the full cost of coverage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Neither the execution and delivery of this Agreement or the Spin-Off Agreements nor the consummation of the Transactions, alone or in combination with any other event (such as a termination of employment), will (i) result in any payment becoming due, or increase the amount of any compensation due, to any current or former employee or other service provider of the Company or any Company Subsidiary under any Company Employee Benefit Plan, (ii) increase any benefits otherwise payable under any Company Employee Benefit Plan, (iii) except as provided in <u>Section</u> <u>3.4</u>, result in the acceleration of the time of payment or vesting of any compensation or benefits, (iv) result in the payment of any amount that would, individually or in combination with any other such payment, reasonably be expected to constitute an "excess parachute payment," as defined in Section 280G(b)(1) of the Code, or (v) result in the triggering or imposition of any restrictions or limitations on the rights of the Company or any Company Subsidiary to amend or terminate any Company Employee Benefit Plan. Neither the Company nor any of the Company Subsidiaries has any obligation to pay any "gross up" or other reimbursement payment for any income or other Taxes, including under Section 409A or Section 4999 of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) All Company Equity Awards and all other equity or equity-based awards granted under any Stock Plan have been granted in accordance with the terms of the applicable Stock Plan and have been administered in accordance with the terms of the applicable award agreement. Each Company Stock Option has an exercise price that is no less than the fair market value of the underlying Company Common Stock on the date of grant, as determined in accordance with Section 409A of the Code, and is otherwise exempt from Section 409A of the Code. Each Company Stock Option intended to qualify as an "incentive stock option" under Section 422 of the Code so qualifies. The Company has made available to Parent accurate and complete copies of (i) each Stock Plan, (ii) the forms of standard award agreement under the Stock Plans, and (iii) copies of any award agreements that materially deviate from such forms. The treatment of the Company Equity Awards under this Agreement and the Spin-Off Agreements does not violate the terms of the Stock Plans or any Contract governing the terms of such awards and will not cause adverse tax consequences under Section 409A of the Code.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) At all times, the ESPP has qualified as an "employee stock purchase plan" under Section 423 of the Code, and has been administered in accordance with its terms and all applicable Laws. All options to purchase shares under the ESPP (now outstanding or previously exercised or forfeited) have satisfied applicable Law, including the requirements of Section 423 of the Code. The treatment of the ESPP and purchase rights thereunder under this Agreement and the Spin-Off Agreements does not violate the terms of the ESPP.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) Each Company Employee Benefit Plan or other arrangement that constitutes a "nonqualified deferred compensation plan" subject to Section 409A of the Code has been written, executed and operated in compliance with Section 409A of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) No Company Employee Benefit Plan is subject to any Laws other than those of the United States or any state, county, or municipality in the United States, nor is any Company Employee Benefit Plan maintained outside of the United States or for the benefit of employees, directors, consultants or other independent contractors located outside of the United States, and neither the Company nor any Company Subsidiary contributes to or has any obligation to contribute to any scheme, plan or arrangement mandated by a Governmental Authority other than the United States federal government.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) Other than routine claims for benefits, no Proceedings with respect to any Company Employee Benefit Plan are pending or, to the knowledge of the Company, threatened, and there are no facts that reasonably would be expected to give rise to any such Proceedings, with respect to any Company Employee Benefit Plan or the assets of a Company Employee Benefit Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) There has been no amendment to, or written interpretation of or announcement by the Company or any of its Affiliates relating to, or change in employee participation or coverage under, any Company Employee Benefit Plan that would materially increase the expense of maintaining such Company Employee Benefit Plan above the level of expense incurred in respect thereof for the most recent fiscal year ending prior to the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) For each Company Employee Benefit Plan, all contributions, premiums and payments that have become due have been made within the time periods prescribed by the terms of such plan and applicable Law (or, to the extent not required to be made or paid on or before the date hereof, have been properly reflected on the financial statements of the Company in accordance with GAAP).

SECTION 4.12. <u>Employment Matters</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Neither the Company nor any Company Subsidiary is or has ever been a party to or otherwise bound by any collective bargaining agreement, Contract or other understanding with a labor union or labor organization, nor is any such Contract presently being negotiated, nor, to the knowledge of the Company, is there, nor has there been, a representation campaign or certification process with respect to any of the employees of the Company or any Company Subsidiary. There is no pending or, to the knowledge of the Company, threatened, labor

------

strike, labor dispute, concerted walkout, concerted work stoppage, concerted slow-down or lockout involving the Company or any Company Subsidiary. There are no Proceedings pending or, to the knowledge of the Company, threatened, between the Company or any Company Subsidiary, on the one hand, and (i) any of their current or former employees, consultants, leased employees, temporary employees, or individual independent contractors or any other individual who provides (or formerly provided) personal services to the Company or any Company Subsidiary or (ii) any person seeking employment with the Company or any Company Subsidiary, on the other. No review, complaint or Proceeding by any Governmental Authority or employee or independent contractor or former employee or independent contractor with respect to the Company or any Company Subsidiary in relation to the employment or engagement of any employee or individual independent contractor is pending or, to the knowledge of the Company, threatened, nor has the Company or any Company Subsidiary received any notice from any Governmental Authority indicating an intention to conduct the same.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company has made available to Parent an accurate and complete list of each officer and employee of the Company or any Company Subsidiary as of the date hereof and any prospective employee to whom the Company or any Company Subsidiary has made an offer of employment as of the date hereof, by name or, for individuals located outside the United States or who are citizens of the European Union, employee identification number, together with, as applicable, each such person's job title, date of hire (actual or prospective), exempt classification status under the Fair Labor Standards Act, full-time or part-time status, immigration status, work location (identified by street address), annual base salary or wages, accrued vacation or other leave, annual incentive or bonus compensation target for the current calendar year (or other applicable bonus period), and whether such employee is currently on disability or other leave of absence, other than short-term absences of less than six weeks (such list, the "*Employee Census*"). All employees of the Company and any Company Subsidiary are employed on an "at-will" basis and their employment can be terminated at any time for any reason without any material amounts being owed to such individual other than with respect to wages accrued before termination, unreimbursed expenses, accrued but unused vacation and other paid time off, and any amounts required to be paid to such individual pursuant to applicable Law. <u>Section</u> <u>4.12(b)</u> of the Company Disclosure Letter contains an accurate and complete list of all SpinCo Employees who are or at any relevant time have been involved in any research and development activities as part of the RemainCo Business, other than in a *de minimis* manner. All employment agreements and proprietary information and inventions agreements executed by the SpinCo Employees have been made available to Parent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company has made available to Parent an accurate and complete list of each natural person who serves as an independent contractor, consultant, or other non-employee service provider of the Company or any Company Subsidiary who (i) is reasonably expected to receive payments in excess of $100,000 per annum, (ii) has provided services as an independent contractor in three or more calendar years, or (iii) has provided more than 1,500 hours of services in either of the past two calendar years, or is reasonably expected to provide more than 1,500 in the current calendar year (such persons, collectively, "*Contractors*") as of the date hereof, together with each such person's description of services, consulting or contracting term and consulting or contracting fee (such list, the "*Contractor Census*"). Each of the Company's and the Company Subsidiaries' relationships with any individual independent contractor, consultant, or other non-employee service provider can be terminated on not more than 30 days' notice for any reason without any amounts being owed to such individuals, other than with respect to compensation or payments accrued before the effective time of termination.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company and the Company Subsidiaries are, and in the past three years have been, in compliance in all material respects with all Laws governing labor and employment, including those relating to wages, hours, benefits, worker classification, labor, immigration (including with respect to Forms I-9), affirmative action, collective bargaining, discrimination, civil rights, pay equity and transparency, paid sick leave, protected leave (including family, medical and parental leave), disability rights and accommodations, safety and health, workers' compensation, the collection and payment of withholding or Social Security Taxes and similar Taxes. Neither the Company nor any Company Subsidiary is, or in the past three years has been, a government contractor. All employees of the Company and the Company Subsidiaries are employed in the United States, and all of the terms and conditions of their employment are governed exclusively by United States Law and not the Law of any other jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Company has made available to Parent an accurate and complete list of each former employee whose employment with the Company, or any Company Subsidiary has been terminated within the past 12 months, together with the job title, termination date of each such former employee, and whether the termination was voluntary or involuntary. Neither the Company nor any Company Subsidiary has experienced a "plant closing," "business closing," or "mass layoff" as defined in the WARN Act or any similar state, local or non-U.S. Law affecting any site of employment of the Company or any Company Subsidiary or one or more facilities or operating units within any site of employment or facility of the Company in the past three years, and, during the 90-day period preceding the date hereof, no employee of the Company or Company Subsidiary has suffered an "employment loss," with respect to the Company as defined in the WARN Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) To the knowledge of the Company, no employee of the Company or any Company Subsidiary or any Contractor is a party to, or is otherwise bound by any non-competition agreement, or other restrictive covenant that in any material way prohibits, adversely affects or restricts the performance of such employee's or such Contractor's duties to the Company or any Company Subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Company and the Company Subsidiaries have properly classified, pursuant to the Code and any other applicable Laws, all individual independent contractors, consultants, or other non-employee service providers used by the Company and any Company Subsidiary during the three-year period immediately preceding the date hereof. Neither the Company nor any Company Subsidiary has any "leased employees" within the meaning of Section 414(n) of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) In the past three years, no formal (or to the knowledge of the Company on the date hereof, informal) allegation, complaint, charge, or claim of harassment on the basis of gender, sex or race, sexual assault, sexual misconduct, gender discrimination, racial or ethnic discrimination has been made against any Person who is or was an officer, director, manager or supervisory-level employee of the Company or any Company Subsidiary (a "*Misconduct Allegation*"), and neither the Company nor any Company Subsidiary has entered into any settlement agreement, tolling agreement, nondisparagement agreement, confidentiality agreement or non-disclosure agreement, or any similar Contract with respect to any Misconduct Allegation.

------

SECTION 4.13. <u>Opinion of Financial Advisor</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company Board has received the opinion of Goldman Sachs & Co. LLC, to be subsequently confirmed by delivery of written opinion to the Company Board, to the effect that, as of the date of such opinion and based upon and subject to the matters set forth therein, including the various assumptions made, procedures followed, matters considered, and qualifications and limitations set forth therein, (i) the Merger Consideration to be paid to the holders of Company Common Stock pursuant to this Agreement and (ii) the shares of SpinCo common stock to be issued to the holders of Company Common Stock in the Spin-Off Distribution pursuant to the Separation and Distribution Agreement are fair, from a financial point of view, to the holders of Company Common Stock (other than Parent and its affiliates), and such opinion has not been withdrawn, revoked or modified. The Company shall provide a copy of such written opinion to Parent solely for informational purposes promptly after receipt thereof by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company Board has received the opinion of Barclays Capital Inc., to be subsequently confirmed by delivery of written opinion to the Company Board, to the effect that, as of the date of such opinion and based upon and subject to the matters set forth therein, including the various assumptions made, procedures followed, matters considered, and qualifications and limitations set forth therein, (i) the Merger Consideration to be paid to the holders of Company Common Stock (other than the holders of Excluded Shares) pursuant to this Agreement and (ii) the shares of SpinCo common stock to be issued to the holders of Company Common Stock in the Spin-Off Distribution pursuant to the Separation and Distribution Agreement is fair, from a financial point of view, to such holders, and such opinion has not been withdrawn, revoked or modified. The Company shall provide a copy of such written opinion to Parent solely for informational purposes promptly after receipt thereof by the Company.

SECTION 4.14. <u>Taxes</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All income and other material Tax Returns required to be filed by or with respect to the Company Tax Group have been timely filed when due (taking into account applicable extensions automatically granted). All Tax Returns filed by or with respect to the Company Tax Group are accurate and complete in all material respects. All material Taxes of the Company Tax Group that are due have been timely paid in full. The Company has made adequate provision in accordance with GAAP for all accrued Taxes of the Company Tax Group not yet due and payable, and all other Tax matters. There are no Liens on any of the assets, rights or properties of the Company Tax Group with respect to Taxes, other than Liens for Taxes not yet due and payable that arose by operation of Law or Permitted Liens. No extension or waiver of the statute of limitations with respect to the time to assess Taxes of the Company Tax Group has been granted, which grant will remain in effect after Closing or has been requested where such request is currently pending, in each case, other than pursuant to an automatically granted extension of time to file Tax Returns.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No material claims or deficiencies have been asserted in writing or otherwise in connection with any audit or examination by any Taxing Authority against the Company Tax Group, and no issue has been raised with the Company Tax Group (or any of its agents) by any examination conducted by any Taxing Authority that, by application of the same principles, would reasonably be expected to result in a material proposed deficiency for any other period not so examined which deficiency (or deficiencies), in either case, is not (or are not) adequately reserved for in the most recent Company Financial Statements. Any material deficiency resulting from any audit or examination relating to Taxes of the Company Tax Group by any Taxing Authority has been paid or is being contested in good faith and in accordance with applicable Law and is adequately reserved for on the balance sheets contained in the Company Financial Statements in accordance with GAAP.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) There is no material audit, examination or other proceeding (including any refund litigation, deficiency, proposed adjustment or other matter in controversy) now pending or, to the knowledge of the Company, threatened, against or with respect to the Company Tax Group in respect of any amount of Taxes or any Tax Return.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company Tax Group has not been involved in any transaction or series of transactions the main purpose, or one of the main purposes, of which was the avoidance of Tax, or any transaction that produced a loss for Tax purposes with no corresponding commercial or economic loss. The Company Tax Group is not currently, and has never been, a party to a "listed transaction" within the meaning of Treasury Regulation Section 1.6011-4(b)(2) or any similar transaction under any corresponding provision of state, local or non-U.S. Law or any "tax shelter" within the meaning of Section 6622 of the Code or any other transaction requiring disclosure under any similar provision of state, local or non-U.S. Tax Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Neither the Company nor any Company Subsidiary has ever entered into any joint venture, partnership or other arrangement (including any collaboration agreement) that could reasonably be treated as a partnership for United States federal, state, local, or non-U.S. Tax purposes or holds interest in any Person (other than a Company Subsidiary) that are treated as equity for U.S. federal income Tax purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Neither the Company nor any Company Subsidiary is a party to any Tax Sharing Agreement (other than any Tax Sharing Agreement to which only the Company Tax Group is party).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Since April 1, 2019, no claim has been made by any Governmental Authority in a jurisdiction in which the Company or any Company Subsidiary does not file a Tax Return to the effect that the Company or such Company Subsidiary is or may be subject to taxation by, or required to file any Tax Return in, such jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Neither the Company nor any Company Subsidiary has, or has ever had, a permanent establishment, fixed place of business, or branch in any jurisdiction outside of the country under the laws of which it was formed.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Company Tax Group will not be required to include any material item of income in, or exclude any material item of deductions from, taxable income from any Tax period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting made prior to Closing for a Tax period (or portion thereof) ending prior to the Closing, (ii) closing agreement as described in Section 7121 of the Code executed prior to the Closing, (iii) change in method of accounting adopted prior to the Closing, (iv) open transaction disposition entered into prior to Closing outside the ordinary course of business, (v) prepaid amount received prior to Closing outside of the ordinary course of business, (vi) application of Sections 951, 951A, 956, 965 of the Code or any related provisions applicable to "controlled foreign corporations" (within the meaning of Section 957 of the Code) under federal, state, local or any foreign Tax Law, (vii) any deferred intercompany transaction in a Tax period (or portion thereof) ending prior to the Closing or excess loss account, (viii) any transaction under which previously utilized Tax losses or credits may be recaptured (including a dual consolidated loss or an excess loss account), (ix) Section 1400Z-2(a)(1)(A) of the Code, or (x) any comparable provision of state, local or foreign Tax Law. The Company Tax Group has not made an election under Section 965(h) of the Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) As of December 31, 2024, the United States federal income Tax Returns of the Company have been examined by and settled with the IRS or have expired or otherwise have been closed by virtue of the expiration of the relevant statute of limitations for all taxable periods ending on or before December 31, 2019.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) The Company Tax Group has not entered into a closing agreement pursuant to Section 7121 of the Code or any material closing agreement under any similar provision of state, local or non-U.S. Tax Law since conversion to a corporation in 2019. There is no request for a private letter ruling, technical advice memorandum or similar document with respect to the Company or any Company Subsidiary now pending with the IRS. The Company has made available to Parent accurate and complete copies of all private letter rulings, technical advice memoranda, and similar documents received by the Company or any Company Subsidiary from the IRS or any other Taxing Authority since conversion to a corporation in 2019.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) Neither the Company nor any Company Subsidiary (i) has been a member of an affiliated group filing a consolidated United States federal income Tax Return (other than a group the common parent of which is the Company) or (ii) has any liability for Taxes of any Person (other than the Company and Company Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or non-U.S. Tax Law), by contract (other than any contract the primary purpose of which does not relate to Taxes), or as a transferee or successor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) The Company and the Company Subsidiaries have duly and timely withheld, collected, paid and reported to the proper Governmental Authorities all material Taxes required to have been withheld, collected, paid or reported and complied with all information collection and record maintenance provisions in relation thereto under applicable Tax Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) Neither the Company nor any Company Subsidiary has ever (i) constituted a "distributing corporation" or a "controlled corporation" in a distribution of stock purported to or intended to be governed by Section 355 or 361 of the Code within the past two years from the date hereof or (ii) been a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) or made an election under Section 897(i)(1) of the Code.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) As of the Closing Date, there is no limitation on the availability or use of any carryforward of net operating loss, Tax credit or other Tax attribute as a result of the application of Sections 382 or 383 of the Code (or similar provision of state, local or non-U.S. Tax Law) other than any such limitation arising as a result of the Transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) The Company Tax Group has possession, custody or control of all records and documentation that it is obliged to hold, preserve and retain for the purposes of any Tax and sufficient information to enable it to compute correctly the Company Tax Group's liability for Taxes, and such records and documentation have been delivered to Parent. All agreements between or among members of the Company Tax Group have been adequately documented, and such documents have been duly executed in a timely manner. The prices for any property or services (or for the use of any property) provided by or to the Company Tax Group are arm's-length prices for purposes of all applicable transfer pricing Laws, including Section 482 of the Code and any similar provision of state, local or non-U.S. applicable Law. All transactions and other dealings between the Company Tax Group and a Third Party have been (and can be demonstrated to have been) conducted on arm's-length commercial terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) For purposes of this Agreement, the representations contained in this <u>Section</u> <u>4.14</u> and, to the extent referencing the Code or Taxes, <u>Section</u> <u>4.11</u> and <u>Section</u> <u>4.12</u>, are the sole and exclusive representations of the Company Tax Group with respect to Taxes. All representations made pursuant to this <u>Section</u> <u>4.14</u> are made equally with respect to each predecessor of any member of the Company Tax Group (other than any predecessor of any member of the Company Tax Group prior to April 1, 2019) and any former Subsidiary of the Company Tax Group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) As of the date immediately prior to the Closing Date, the Company Tax Group has filed all material income Tax Returns for the tax year ending December 31, 2024, required to be filed by or with respect to the Company Tax Group in a manner consistent with past practice and paid any amount of Taxes shown as due to be paid on such Tax Returns.

SECTION 4.15. <u>Compliance</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company and the Company Subsidiaries are, and, to the knowledge of the Company and to the extent related to the Company Platform or any Company Product, their Collaboration Partners are, and since January 1, 2022, have been, in material compliance with all Laws applicable to the Company or any Company Subsidiary or by which any of their respective properties or other assets or any of their businesses or operations are bound. Since January 1, 2022, none of the Company, any Company Subsidiary or, to the knowledge of the Company and to the extent related to the Company Platform or any Company Product, their Collaboration Partners, have received any notice or other communication from any Governmental Authority of any violation or any investigation with respect to any such Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each of the Company, the Company Subsidiaries, and, to the knowledge of the Company and to the extent related to the Company Platform or any Company Product, their Collaboration Partners possess all material registrations, licenses, franchises, permits, exemptions, clearances, certificates, approvals, consents and authorizations, and supplements or amendments to, the foregoing (collectively, "*Authorizations*") from Governmental

------

Authorities, or required by Governmental Authorities to be obtained, in each case, necessary for the lawful conduct of their respective businesses as now conducted. All such Authorizations are in full force and effect, the Company and the Company Subsidiaries and, to the knowledge of the Company and to the extent related to the Company Platform or any Company Product, their Collaboration Partners are in compliance in all material respects with the terms of all Authorizations and since January 1, 2022, none of the Company, any Company Subsidiary, or, to the knowledge of the Company and to the extent related to the Company Platform or any Company Product, any of their Collaboration Partners has received notice to the effect that a Governmental Authority was considering the amendment, termination, revocation or cancellation of any Authorization. The consummation of the Transactions, in and of itself, will not cause the revocation, termination or cancellation of any Authorization, except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

SECTION 4.16. <u>Intellectual Property</u>. 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Section 4.16(a)</u> of the Company Disclosure Letter sets forth, as of the date hereof, an accurate and complete list of all (i) Patents and Patent applications (including any abandoned, withdrawn or expired Patents or Patent applications on which priority is claimed), (ii) Trademark registrations and applications, (iii) domain name registrations and applications (both gTLDs, including traditional and new gTLDs, and ccTLDs) and social media tags, handles and identifiers (including any account therefor), and (iv) Copyright registrations and applications that, in each case, are Owned Company Intellectual Property, Exclusively Licensed Intellectual Property or Company Intellectual Property owned or purportedly owned by and licensed from SpinCo (collectively, "*Company Registered IP*"). For each item of Company Registered IP, <u>Section</u> <u>4.16(a)</u> of the Company Disclosure Letter sets forth an accurate and complete list of, as applicable: (A) all jurisdictions in which such Intellectual Property is registered, issued or granted or has been applied for and, in the case of any domain names, the registrar through which such domain name has been registered, (B) all registration, issuance, grant, serial and application numbers, (C) all filing, registration, issuance and grant dates and, in the case of any domain names, next renewal date, and (D) the legal (and, if different, record) owner(s) thereof and, if co- or jointly-owned, all co- or joint-owner(s). All Company Registered IP that is registered or has been issued or granted is valid, enforceable, subsisting and in full force and effect and all Company Registered IP that is the subject of a pending application for registration, issuance or grant is valid and subsisting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) (i) None of the Owned Company Intellectual Property has been or currently is the subject of any pending Proceeding, (ii) to the knowledge of the Company, none of the Non-Owned Company Intellectual Property has been or currently is the subject of any pending Proceeding, and (iii) to the knowledge of the Company, none of the Owned Company Intellectual Property and none of the material Non-Owned Company Intellectual Property, in each case, has been or currently is the subject of any threatened Proceeding (including, in each case, <u>clauses (i)</u> through <u>(iii)</u>, with respect to Patents, inventorship challenges, post-grant review proceedings, *inter partes* review proceedings, derivation proceedings, interferences, reexaminations and pre- and post-grant oppositions and invalidity challenges, and, with respect to Trademarks, invalidity, nullity, opposition, cancellation, concurrent use, substantive office actions (e.g., third party citations, lack of distinctiveness, genericness and other substantive refusals or objections), reexamination, expungement or similar Proceeding). No Owned Company Intellectual Property

------

and, to the knowledge of the Company, no material Non-Owned Company Intellectual Property has been or currently is the subject of any Judgment restricting the Company's or any Company Subsidiary's rights in, to and under such Company Intellectual Property or the validity, enforceability, use, right to use, ownership, registration, right to register, priority, duration, scope or effectiveness of any such Company Intellectual Property or triggering any additional payment obligations with respect to any such Company Intellectual Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) (i) The Company or a Company Subsidiary (A) solely and exclusively held the right to claim priority to each of the Patents within the Owned Company Intellectual Property at the respective times that the Patents were filed, (B) solely and exclusively owned each of the Patents within the Owned Company Intellectual Property at the respective times that the Patents were filed, and (C) is the sole and exclusive owner of all Owned Company Intellectual Property, (ii) all Owned Company Intellectual Property and, to the knowledge of the Company, all Exclusively Licensed Intellectual Property, is free and clear of all Liens, except for Permitted Liens and, with respect to the Exclusively Licensed Intellectual Property, the terms of the written license agreement granting to the Company or any Company Subsidiary an exclusive license to use or practice under such Exclusively Licensed Intellectual Property, and (iii) the Owned Company Intellectual Property and the Exclusively Licensed Intellectual Property constitute all of the Intellectual Property that is material and necessary to operate and conduct the RemainCo Business as such business is currently operated and conducted and as such business is currently contemplated to be operated and conducted. 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) None of the Company, any Company Subsidiary, or to the knowledge of the Company, any Third Party licensor of Exclusively Licensed Intellectual Property, is party to any Contracts with any Third Parties that materially limit or materially restrict use of the Company Intellectual Property by the Company or any Company Subsidiary or that require any payments for such use. Neither the Company nor any Company Subsidiary has entered into any Contract granting another Person, or permitting another Person to retain, with respect to any Owned Company Intellectual Property or Exclusively Licensed Intellectual Property, the right (i) to bring any infringement, misappropriation or other enforcement actions with respect to, or otherwise to enforce, any such Company Intellectual Property, (ii) to defend any claim of infringement, misappropriation or other violation arising from the practice or other exploitation of any such Company Intellectual Property (or pursuant to which the Company or a Company Subsidiary expressly agrees to indemnify any Person against any such claim) or to defend the validity or patentability of any Patent within the Owned Company Intellectual Property or (iii) to control the prosecution of any such Company Intellectual Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) To the knowledge of the Company, there has been no unauthorized use, or infringement, misappropriation or other violation, by any Third Party of any Company Intellectual Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The conduct of the RemainCo Business as such business has been conducted, as it currently is being conducted or as it currently is contemplated to be conducted (including with respect to the Company Platform or with respect to any Company Product, whether or not yet commercialized, that is included in the RemainCo Assets), has not, and does not presently, infringe, misappropriate or otherwise violate any Intellectual Property or other proprietary rights of any Third Party, except as would not, individually or in the aggregate,

------

reasonably be expected to be material to the Company and the Company Subsidiaries. Neither the Company nor any Company Subsidiary has received any notice from any Third Party (including any unsolicited written offer to license such Third Party's Intellectual Property or any request for indemnification) claiming or alleging that the conduct of the RemainCo Business as such business has been conducted, as it currently is being conducted or as it currently is contemplated to be conducted (including relating to the use or practice of any Company Intellectual Property or with respect to the Company Platform or with respect to any Company Product, whether or not yet commercialized, that is included in the RemainCo Assets) infringes, misappropriates or otherwise violates such Third Party's Intellectual Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) All issuance, renewal, maintenance and other payments that have become due with respect to any Owned Company Intellectual Property and, to the knowledge of the Company, with respect to any Exclusively Licensed Intellectual Property, in each case, have been timely paid in full. All documents and other material required to be filed with respect to the Owned Company Intellectual Property and, to the knowledge of the Company, with respect to any Exclusively Licensed Intellectual Property, in each case, for the purposes of maintaining such Company Intellectual Property and updating the chain of title have been filed in a timely manner. Each of the Patents included in the Company Registered IP that is Owned Company Intellectual Property and, to the knowledge of the Company, that is Non-Owned Company Intellectual Property, in each case, properly identifies each inventor of the claims thereof as determined in accordance with the applicable Law of the jurisdiction in which such Patent is issued or is pending, or, in the case of abandoned Patents, was pending.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Company and the Company Subsidiaries have taken commercially reasonable measures to protect, preserve and maintain the secrecy, confidentiality and value of all Know-How and all other confidential and non-public data and other information included within the Company Intellectual Property, and to the knowledge of the Company and each Company Subsidiary, there has been no unauthorized disclosure or use of any material Know-How of the Company or any Company Subsidiary included within the Company Intellectual Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Company and the Company Subsidiaries have (i) caused each Person who was or is involved in the creation or development of any Intellectual Property as an employee of or independent contractor, consultant, or other non-employee service provider (each, an "*IP Contractor*") to the Company or any Company Subsidiary to execute a binding and enforceable written agreement which includes provisions (including a present assignment of all right, title and interest therein and thereto) sufficient to ensure that the Company or such Company Subsidiary is the exclusive owner of any and all Intellectual Property created or developed by such Person within the scope of, or resulting from, their employment with the Company or such Company Subsidiary and, in the case of such IP Contractor, from the services such IP Contractor performs for the Company or such Company Subsidiary and (ii) caused all employees and other Persons (who are not otherwise bound by confidentiality and nondisclosure obligations to the Company by operation of law) with access to any non-public Company Intellectual Property to execute a binding and enforceable written confidentiality agreement that includes customary confidentiality terms and restrictions on use sufficient to protect the proprietary interests of the Company or such Company Subsidiary with respect to such Company Intellectual Property. No current or former employee of, or IP Contractor to, the Company or any Company Subsidiary owns

------

any right, title, or interest in or to any Intellectual Property created or developed by such employee or IP Contractor during their employment or other engagement with the Company or such Company Subsidiary that either (A) is (or should have been) Company Intellectual Property or (B) is necessary for the conduct of the RemainCo Business as such business currently is being conducted or as it currently is contemplated to be conducted, and neither the Company nor any Company Subsidiary has received any written notice or claim to the contrary. To the knowledge of the Company, there has been no disclosure of any non-public Company Intellectual Property to any employee or other Person who has not executed a binding and enforceable written confidentiality agreement or is not otherwise bound by confidentiality and nondisclosure obligations to the Company by operation of law, as described in <u>clause (ii)</u> of this <u>Section</u> <u>4.16(i)</u>. To the knowledge of the Company, no employee or other Person who has executed such confidentiality agreement is in breach of, or is threatening to breach, any such written confidentiality agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) To the knowledge of the Company, the Company and each Company Subsidiary have complied with any and all obligations pursuant to the Patent and Trademark Law Amendments Act, 35 U.S.C. §200 et seq., or other similar obligations under the Laws of any jurisdiction with respect to any Patents that are part of the Company Intellectual Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) No Owned Company Intellectual Property and, to the knowledge of the Company, no material Non-Owned Company Intellectual Property has been developed or otherwise obtained, in whole or in part, through the use of funding or other resources of any Governmental Authority or institution of higher learning.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Section 4.16(l)</u> of the Company Disclosure Letter sets forth an accurate and complete list of (i) all licenses, sublicenses, rights, interests and options granted by the Company or a Company Subsidiary to any Third Party with respect to any Intellectual Property (including coexistence agreements, prior rights agreement, rights of first or last refusal, covenants not to sue, exercise or assert, immunities from suit and rights to indemnification) (other than non-disclosure agreements and non-material and non-exclusive licenses granted by the Company or a Company Subsidiary to advertising agencies, vendors and other similar contractors, including non-material and non-exclusive licenses granted by the Company or a Company Subsidiary under material transfer agreements, clinical trial agreements, supply agreements, and manufacturing agreements, in each case, entered into in the ordinary course of business consistent with past practices), and (ii) all licenses, sublicenses, rights, interests and options granted by any Third Party to the Company or a Company Subsidiary with respect to any Intellectual Property (other than (A) licenses to generally commercially available software licensed pursuant to a standard "off-the-shelf" or "shrink wrap" or "click wrap" agreements and (B) agreements, including material transfer agreements, clinical trial agreements, supply agreements, and manufacturing agreements, to the extent, in each case, the grant of rights to use Intellectual Property thereunder are non-exclusive and incidental to and not material to performance under such agreement and such agreement is entered into in the ordinary course of business consistent with past practices), and in each case of <u>clauses (i)</u> and <u>(ii)</u> of this <u>Section</u> <u>4.16(l)</u>, other than licenses, sublicenses, rights, interest and options solely related to the SpinCo Business. Other than pursuant to a Contract set forth in <u>Section</u> <u>4.16(l)</u> of the Company Disclosure Letter, there are no royalties, license fees, honoraria or other payment obligations of the Company or any Company Subsidiary or any of its or their Affiliates, excluding maintenance fees payable to Governmental Authority, with respect to any of the Non-Owned Company Intellectual Property.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) Neither the Company nor any Company Subsidiary has received any written opinions from counsel with respect to the validity, invalidity, enforceability, unenforceability, non-infringement or infringement of any Company Intellectual Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) None of (i) the execution and delivery of this Agreement, (ii) the consummation of the Transactions, or (iii) the performance by the Company or any Company Subsidiary of its obligations hereunder, in each case of <u>clauses (i)</u>, <u>(ii)</u> and <u>(iii)</u> of this <u>Section</u> <u>4.16(n)</u> conflicts or will conflict with, or alters or impairs or will alter or impair, any of the Company's or any Company Subsidiary's rights in, to and under any Company Intellectual Property or the validity, enforceability, use, right to use, ownership, registration, right to register, priority, duration, scope, or effectiveness of any Company Intellectual Property or will alter any, or trigger any additional, royalties, license fees, honoraria or other payment obligations of the Company or any Company Subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) There is no Company Registered IP or other material Company Intellectual Property that, as of the Closing, will be owned or purported to be owned (wholly or jointly with others) by, or exclusively licensed to, SpinCo, and which is necessary for the RemainCo Business as such business has been conducted, as it currently is being conducted or as it is currently contemplated to be conducted (including with respect to the Company Platform or with respect to any Company Product, whether or not yet commercialized, that is included in the RemainCo Assets), which is not subject to the licenses granted to the Company pursuant to the License Agreement. Subject to the Spin-Off and, to the extent consummated prior to the Closing, the ROFN Sale, as of the Closing, the Company and the Company Subsidiaries will (i) continue to own or have valid and enforceable rights or licenses in and to all Company Intellectual Property in the same manner as the Company and Company Subsidiaries owned or held rights in such Company Intellectual Property immediately prior to Closing, and (ii) have rights to all material Intellectual Property that, in each case, is owned by, is licensed or sublicensed to, or used or held for use by, the Company or any of its Subsidiaries relating to the RemainCo Business at any time between the date of this Agreement and the Closing as are sufficient for the Company and the Company Subsidiaries to use such material Intellectual Property to the same extent as used by the Company and the Company Subsidiaries in the RemainCo Business in the twelve-month period prior to the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) The statements set forth on <u>Section</u> <u>4.16(p)</u> of the Company Disclosure Letter are true and complete.

SECTION 4.17. <u>Data Protection</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Since January 1, 2022, the Company and Company Subsidiaries have complied in all material respects with all Laws and all published rules, policies, and procedures established by the Company and Company Subsidiaries related to cyber security, privacy or data protection (collectively, "*Data Protection and Information Security Requirements*"), including with respect to the collection, use, disclosure, transfer, safeguarding, deletion, and other processing of Personal Data by and on behalf of the Company and Company

------

Subsidiaries. Since January 1, 2022, except as would not reasonably be expected to be, individually or in the aggregate, material to the Company and the Company Subsidiaries, taken as a whole, each of the Company and Company Subsidiaries has provided all requisite notices and obtained all required consents that are necessary for the conduct of business as currently conducted, and the Transactions will comply in all material respects with all Data Protection and Information Security Requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each of the Company and the Company Subsidiaries has implemented and maintains a comprehensive written information security program and has organizational, administrative, physical and technical safeguards designed to secure any Personal Data and any IT Assets from loss, damage, and unauthorized access, acquisition, interruption, alteration, modification, use or other processing, or any other compromise of confidentiality, integrity or availability of Personal Data or the IT Assets (any such incident, a "*Security Incident*"). Since January 1, 2022, there have not been any Security Incidents or claims related to Security Incidents and there are no information security or other vulnerabilities that could cause a material Security Incident. To the knowledge of the Company, there are no data security, information security, or other technological vulnerabilities with respect to the IT Assets that could adversely impact their operations or cause a Security Incident.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) All IT Assets used by Company or any Company Subsidiary are (i) owned by the Company or any Company Subsidiary, (ii) currently in the public domain or otherwise available to the Company or the relevant Company Subsidiary without the approval or consent of any Person or (iii) licensed or otherwise used by the Company or the relevant Company Subsidiary pursuant to terms of valid, binding written agreements. The IT Assets operate and perform in a manner that permits the Company and the Company Subsidiaries to conduct their respective businesses as currently conducted in all material respects and, to the knowledge of the Company, since January 1, 2022, no Person has gained unauthorized access to the IT Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) None of the Company, any Company Subsidiary or, to the knowledge of the Company, any Collaboration Partner or other Third Party from which the Company or any Company Subsidiary receives Personal Data is (i) a "covered entity" as that term is defined at 45 C.F.R. § 160.103, (ii) a "business associate" as that term is defined at 45 C.F.R. § 160.103, or (iii) to the knowledge of the Company, in breach of any "business associate contract," as described in 45 C.F.R. § 164.504(e). Since January 1, 2022, neither the Company nor any Company Subsidiary is in violation of the applicable portions of the administrative simplification provisions of Health Insurance Portability and Accountability Act or the regulations contained in 45 C.F.R. Parts 160 and 164, if applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) None of the Company, any Company Subsidiary, or, to the knowledge of the Company, any Third Party acting on behalf of the Company or any of the Company Subsidiaries, has, since January 1, 2022, received any (i) written or, to the knowledge of the Company, oral notice of an investigation into compliance with, or a complaint alleging non-compliance with, Data Protection and Information Security Requirements, (ii) written or, to the knowledge of the Company, oral claim for compensation for loss or unauthorized collection, processing or disclosure of Personal Data, or (iii) written or, to the knowledge of the Company, oral notification of an application for rectification, erasure or destruction of Personal Data that is still outstanding.

------

SECTION 4.18. <u>Material Contracts</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Except for this Agreement and the Separation and Distribution Agreement, <u>Section</u> <u>4.18(a)</u> of the Company Disclosure Letter contains an accurate and complete list of the following Contracts to which the Company or any Company Subsidiary is a party or by which it is bound as of the date hereof (each such Contract, whether or not set forth in such section of the Company Disclosure Letter, together with each Contract required to be listed in <u>Section</u> <u>4.16(l)</u> of the Company Disclosure Letter and each Contract required to be filed by the Company as a "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC), a "*Material Contract*"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) each Contract (A) the terms of which obligate or may in the future obligate the Company or any Company Subsidiary to make any severance, termination or similar payment to any current or former employee or (B) pursuant to which the Company or any Company Subsidiary may be obligated to make any transaction, retention bonus or similar payment to any current or former employee or director;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) each Contract (A) materially limiting the freedom or right of the Company or any Company Subsidiary (or, after the Effective Time, Parent or any of its Affiliates) to engage in any line of business or compete with any other Person in any geographic area, (B) containing any "most favored nations" terms and conditions (including with respect to pricing) or exclusivity obligations, (C) granting any right of first refusal, right of first offer, right of negotiation or similar right with respect to any material assets or business of the Company or any Company Subsidiary, or (D) that requires the Company or any Company Subsidiary to purchase a minimum quantity of goods or supplies relating to any Company Product;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) each Contract that provides for indemnification (or reimbursement or advancement of legal fees or expenses) of any current or former officer, director or employee of the Company or any Company Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) each Lease under which the Company or any Company Subsidiary leases, subleases or licenses any real property (whether as lessor or lessee);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) each Contract not otherwise disclosed pursuant to this <u>Section</u> <u>4.18(a)</u> requiring or otherwise expected to involve (together with all other Contracts with the counterparty thereto) the potential payment by or to the Company and the Company Subsidiaries of more than an aggregate of $2,800,000 in any 12-month period following the date hereof and that is not terminable without penalty or further payment by the Company or any Company Subsidiary on less than 90 days' notice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) each Contract (A) for the disposition of any material assets or business of the Company or any Company Subsidiary, (B) for the acquisition, directly or indirectly, of a material portion of the assets or business of any other Person (whether by merger, sale of stock or assets or otherwise) or (C) related to any disposition or acquisition of material assets or business of the Company that contains continuing representations, covenants, indemnities or other obligations (including "earn out" or other contingent payment obligations);

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) each Contract for any material joint venture, partnership, strategic alliance, collaboration or similar revenue sharing or partnering arrangement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) each Contract that is material to the Company and the Company Subsidiaries, taken as a whole, and (A) that relates to the research, testing, clinical trial, development, commercialization, manufacture, marketing, importation, exportation, sale, distribution, supply or license of the Company Platform or any Company Product or (B) under which non-clinical or clinical data relating to the Company Platform or any Company Product is or may be generated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) each Contract (other than in respect of trade debt incurred in the ordinary course of business consistent with past practice) related to indebtedness for borrowed money or any guarantees of any of the foregoing or the granting of Liens (other than Permitted Liens) over the property or assets of the Company or any Company Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) each Contract under which the Company or any Company Subsidiary (A) is required to make any expenditure including a capital commitment, loan or capital expenditure, of more than an aggregate of $5,000,000 after the date of this Agreement or (B) has, directly or indirectly, made any loan, extension of credit or capital contribution to, or other investment in, any Person (other than the Company or any Company Subsidiary and other than investments in marketable securities in the ordinary course of business consistent with past practice);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) each Contract involving (A) "milestone" or other similar contingent payments, including upon the achievement of regulatory or commercial milestones, or (B) payment of royalties or other amounts calculated based upon sales, revenue, income or similar measure of the Company, any Company Subsidiary or any Company Product;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) each Contract with a Collaboration Partner requiring the Company or any Company Subsidiary (or following Closing, Parent or any of its Affiliates) to use commercially reasonable (or similar) efforts related to research, development, regulatory approval, commercialization, sales, or marketing of any Company Product or any other product;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) each hedging, swap, derivatives or similar Contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) each Contract with a third-party professional employer organization;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) each Contract with any Governmental Authority or any academic institution (except for clinical trial agreements, material transfer agreements and non-disclosure agreements (1) that are entered into in the ordinary course of business and (2) pursuant to which no material Intellectual Property has been or is contemplated to be generated);

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) each stockholders', investor rights, registration rights, tax receivables or similar or related Contract or any Contract relating to the exercise of any voting rights with respect to any Company Securities or Company Subsidiary Securities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii) each Contract that involves the settlement of any past, pending or threatened Proceeding which (A) requires payment obligations after the date hereof in excess of $250,000 or (B) imposes material nonmonetary obligations or restrictions on the Company or any Company Subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each of the Material Contracts is legal, valid, binding and in full force and effect and enforceable in accordance with its terms by the Company and any applicable Company Subsidiary party thereto, subject to the Bankruptcy and Equity Exception. Neither the Company nor any Company Subsidiary is in material breach or default under any Material Contract, nor, to the knowledge of the Company, does any condition exist that, with notice or lapse of time or both, would constitute a material breach or default thereunder by the Company or any Company Subsidiary party thereto. To the knowledge of the Company, no other party to any Material Contract is in material breach or default thereunder, nor does any condition exist that, with notice or lapse of time or both, would constitute a material breach or default thereunder of such other party. Neither the Company nor any Company Subsidiary has received or given any notice of termination or cancellation under any Material Contract or received or given any notice of breach or default in any material respect under any Material Contract, which breach or default has not been cured. The Company has made available to Parent accurate and complete copies of all of the Material Contracts, together with all amendments thereto and waivers thereunder.

SECTION 4.19. <u>Regulatory Matters</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All activities of the Company, the Company Subsidiaries and, to the knowledge of the Company and to the extent relating to the Company Platform or any Company Product, their Collaboration Partners are being, and since January 1, 2022, have been, conducted in compliance in all material respects with all Health Care Laws applicable to the Company, the Company Subsidiaries, the Company Platform or any Company Product, or by which any property, business, product or other asset of the Company and the Company Subsidiaries is bound or affected. Since January 1, 2022, none of the Company or any Company Subsidiary or, to the knowledge of the Company, any of their Collaboration Partners (to the extent relating to any Company Product) has received any notice or other written communication from the FDA, or any other Governmental Authority, or any institutional review boards, privacy boards, data safety monitoring boards or ethics committees responsible for review, oversight, or approval of any clinical trial involving a Company Product or the Company Platform in any jurisdiction (a "*Review Board*"), alleging any violation of any applicable Law or otherwise indicating an investigation into a potential violation of any applicable Law with respect to such activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Section 4.19(b)</u> of the Company Disclosure Letter sets forth an accurate and complete listing of all human clinical trials, together with the dates and brief descriptions of such trials, previously or currently undertaken or sponsored by or on behalf of the Company, any Company Subsidiary, or to the knowledge of the Company, any Collaboration Partner, or any third-party investigator for whom the Company or any Company Subsidiary provides material or financial support for any such clinical trial, in each case, with respect to any Company Product. To the knowledge of the Company, accurate and complete copies of all material data, material reports and other material documentation with respect to such non-clinical and clinical trials have been made available to Parent.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) All non-clinical studies conducted by or on behalf of the Company and the Company Subsidiaries (i) have been and are being conducted, as applicable, in compliance with all requirements of the Animal Welfare Act, the United States Department of Agriculture's implementing regulations, and the Guide for the Care and Use of Laboratory Animals, if applicable, and with all requirements of 21 C.F.R. Part 58, (ii) which constitute *in vivo* activities have been approved by an external ethical review or animal welfare body, to the extent required by applicable Laws, and have been conducted with purpose bred animals (*i.e.*, not wild caught), and (iii) have employed the procedures and controls required under Good Laboratory Practices if applicable. None of the Company or any Company Subsidiary or, to the knowledge of the Company, any Collaboration Partner has received any notice or other communication from a Governmental Authority or a Review Board requiring the termination or suspension or material modification of any non-clinical study with respect to any Company Product or otherwise involving the use of the Company Platform.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) All human clinical trials with respect to any Company Product conducted by or on behalf of the Company, any Company Subsidiary or, to the knowledge of the Company, any Collaboration Partner (i) have been, and are being, conducted in material compliance with all applicable Health Care Laws, including by filing annual and periodic reports, amendments and safety reports for the Company Products required to be made to any Regulatory Authority, and (ii) have been properly registered in compliance with all applicable Laws and the results of all such clinical trials have been disclosed in accordance with such Laws, in each case, including 42 C.F.R. Part 11, to the extent applicable. None of the Company or any Company Subsidiary, or, to the knowledge of the Company, any Collaboration Partner, has received any notice that the FDA, any Review Board, or any domestic or non-U.S. Governmental Authority, has initiated, or threatened to initiate, any clinical hold or other action to suspend any clinical trial sponsored by or on behalf of the Company or any Company Subsidiary, any action to suspend or terminate any Investigational New Drug application in the United States or other non-U.S. equivalent documents (each, an "*IND*") sponsored by or on behalf of the Company or any Company Subsidiary or otherwise restrict the clinical study of any Company Product.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) None of the Company, any Company Subsidiary or any of their respective officers or employees, and to the knowledge of the Company, none of their respective Collaboration Partners, representatives or agents (in each case, acting in the capacity of a representative or agent of the Company or any Company Subsidiary), has engaged in any conduct that is not compliant in any material respect with applicable Health Care Laws relating to the integrity of data generated or used in any clinical trials or other studies related to the development, use, handling, safety, efficacy, quality, reliability or manufacturing of any Company Product or the Company Platform. Since January 1, 2022, none of the Company, any Company Subsidiary, any officer, director, employee or contractor of the Company or any Company Subsidiary or, to the knowledge of the Company, any Collaboration Partner or agent of the Company or any of the Company Subsidiaries has made any materially false statements on, or material omissions from, any notifications, applications, approvals, reports and other submissions to the FDA or any similar Regulatory Authority.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) All development and manufacture of the Company Products, including any components thereof and any clinical supplies used in any clinical trials, by or on behalf of the Company of the Company Subsidiaries has been conducted in compliance in all material respects with the applicable specifications and requirements of Good Manufacturing Practices and Health Care Laws. None of the Company, any of the Company Subsidiaries or any of their respective officers or employees, and to the knowledge of the Company, none of their respective Collaboration Partners, representatives or agents acting on behalf of the Company or any of the Company Subsidiaries has, with respect to any Company Product, (i) been subject to a Regulatory Authority shutdown or import or export prohibition or (ii) received any Form FDA 483, or other Regulatory Authority written notice of inspectional observations, "warning letters," "untitled letters" or written requests or requirements to make any material change to any Company Product or any of the Company's or the Company Subsidiaries' processes or procedures. The Company and the Company Subsidiaries have instituted and maintain policies and procedures reasonably designed to ensure the integrity of data generated in manufacturing all Company Products and reasonably designed to encourage employees to report any compliance issues related thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Company has no knowledge of (i) any adverse event or adverse finding in non-clinical or clinical testing that should have been reported but was not yet reported to any applicable Regulatory Authority or Review Board with respect to the safety, efficacy or quality of any Company Product, (ii) as of the date of this Agreement, any adverse event or adverse finding occurring in any ongoing clinical trial where the investigator or any Review Board or Regulatory Authority has prior to the execution of this Agreement requested or recommended verbally or in writing, as a result of such event or finding, a change, modification or cessation of such clinical trial, or (iii) any scientific or technical fact or circumstance that has had or would reasonably be expected to have, individually or in the aggregate, a material and adverse effect on the scientific, therapeutic or commercial viability of the Company Platform or any Company Product in light of the particular stage of development of such Company Product and taking into account all relevant facts and circumstances at the time such facts or circumstances arose, including medical and clinical considerations, the regulatory environment and competitive market conditions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Company has made available to Parent accurate and complete copies of: (i) all Authorizations from the FDA and all material Authorizations from any other applicable Regulatory Authority held by the Company or any of the Company Subsidiaries related to any Company Product, (ii) all material written submissions made to and material written regulatory communications with the FDA or any other applicable Regulatory Authority related to any Company Product after the date on which the Company designated such Company Product as a clinical candidate (the "*Candidate Date*") that are in the Company's or any of the Company Subsidiaries' possession or control as of the date hereof and (iii) all reports, results, data and information obtained, developed, or prepared after the Candidate Date in the Company's or any of the Company Subsidiaries' possession or control as of the date hereof relating to the safety, quality, or efficacy of the Company Platform or any of the Company Products, including all final reports prepared under 21 C.F.R. 58.185, all information collected pursuant to 21 C.F.R. Part 58 and all adverse event (as such term is defined or described in 21 C.F.R. 312.32) and other safety and quality information. For purposes of this <u>Section</u> <u>4.19(h)</u> and <u>Section</u> <u>6.7(b)</u>, "control" shall mean the legal, contractual or other right to access, including access to the information and materials of Collaboration Partners.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) None of the Company or any Company Subsidiary or, to the knowledge of the Company, any Collaboration Partner, is currently marketing, distributing, selling or otherwise commercializing, or has ever marketed, distributed, sold or otherwise commercialized, the Company Platform or any Company Product, whether in or outside the United States.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Neither the Company nor any Company Subsidiary is a party to or has any ongoing reporting obligations under any corporate integrity agreement, monitoring agreement, consent decree, settlement order or similar agreement with or imposed by any Governmental Authority and, to the knowledge of the Company, no such agreement, decree or order is currently contemplated, proposed or pending. To the knowledge of the Company, no Collaboration Partner is a party to any corporate integrity agreement, monitoring agreement, consent decree, settlement order or similar agreement with or imposed by any Governmental Authority to which the Company Platform or any Company Product is subject. None of the Company, any Company Subsidiary, or, to the knowledge of the Company, any of their respective Representatives (acting in such capacity) are subject to any investigation by any Governmental Authority or enforcement, regulatory or administrative proceeding relating to or arising under any Health Care Law and, to the knowledge of the Company, no such investigation or enforcement, regulatory or administrative proceeding has been threatened.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) None of the Company, any Company Subsidiary, any officer, director, managing employee of the Company or any Company Subsidiary or, to the knowledge of the Company and to the extent relating to the Company Platform or any Company Product, any Collaboration Partner: (i) has been placed under or otherwise made subject to, or committed an act, made a statement, or failed to make a statement that, at the time such disclosure was made or failure to disclose occurred, would reasonably be expected to provide a basis for, the FDA to invoke its policy respecting "Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities," set forth in 56 Fed. Reg. 46191 (September 10, 1991) or for any comparable non-U.S. Governmental Authority to invoke a similar policy, (ii) has been charged with or convicted of any criminal offense relating to the delivery of an item or service under Medicare, Medicaid, TRICARE or any similar government health care program (collectively, "*Federal Health Care Programs*"), (iii) has been subject to, or convicted of any crime or engaged in any conduct that would reasonably be expected to result in, debarment, exclusion, or suspension from participation in any Federal Health Care Program, or otherwise under 21 U.S.C. Section 335a or any similar Law, (iv) has had a civil monetary penalty assessed against it, him or her under Section 1128A of the Social Security Act, codified at Title 42, Chapter 7, of the United States Code, (v) is currently listed on the United States General Services Administration published list of parties excluded from federal procurement programs and non-procurement programs or the List of Excluded Individuals/Entities published by the Department of Health and Human Services Office of Inspector General, or (vi) to the knowledge of the Company, is the target or subject of any current or potential investigation relating to any Federal Health Care Program-related offense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) To the Company's knowledge, neither the Company nor any of its Affiliates has been involved in any "covered data transactions" subject to the U.S. Bulk Data Final Rule that violate the U.S. Bulk Data Final Rule since the effective date of such rule on April 8, 2025.

------

SECTION 4.20. <u>Real Property</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Neither the Company nor any Company Subsidiary owns any real property or interests therein, nor has the Company or any Company Subsidiary ever owned any real property or interests therein. Neither the Company nor any Company Subsidiary is a party to an option, or any other agreement, to purchase any real property or interests therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Each lease, sublease, license or any other instrument (each, a "*Lease*") under which the Company or any Company Subsidiary leases, subleases or licenses any real property (each, "*Leased Real Property*"), or under which it has assigned such a lease, sublease or license, is valid and binding on the Company and each other party thereto and is in full force and effect. No event has occurred or circumstance exists that, with notice or lapse of time or both, would permit the termination, modification or acceleration of rent under such Lease. The Company and any Company Subsidiary has a good and valid leasehold interest in each Leased Real Property free and clear of all Liens except Permitted Liens. To the knowledge of the Company, the Leased Real Property and its continued use, occupancy and operation as currently used, occupied and operated, does not constitute a nonconforming use under any applicable building, zoning, subdivision or similar Law applicable to the Leased Real Property, or under the applicable Lease or any restrictive covenant affecting the Leased Real Property. Neither the Company nor any Company Subsidiary has received any notice of any pending or threatened condemnation Proceeding with respect to any Leased Real Property, and no portion of the Leased Real Property has been damaged or destroyed by fire or other casualty, which damage remains unrepaired. No Person leases, subleases, licenses or otherwise has the right to use or occupy any of the Leased Real Property other than, as applicable, the Company or relevant Company Subsidiary and no Person, other than the Company or a Company Subsidiary, is in possession of any Leased Real Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company has made available to Parent an accurate and complete copy of the Lease, dated as of May 20, 2021, between 3020-3030 Callan Road Owner, L.L.C. (as-successor-in-interest to HCP Callan Road, LLC) and Turning Point Therapeutics, Inc., as amended by the First Amendment to Lease, dated as of August 31, 2021, the other First Amendment to Lease, dated as of September 16, 2022, the Second Amendment to Lease, dated as of August 2, 2023, and the Fourth Amendment to Lease, dated as of April 29, 2024, with respect to the premises located at 3020/3030 Callan Road, San Diego, CA 92121 (collectively, the "*Callan Road Master Lease*" and such premises, the "*Callan Road Facility*"), together with all amendments thereto and waivers thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Callan Road Master Lease is legal, valid, binding and in full force and effect and enforceable in accordance with its terms by any party thereto. To the knowledge of the Company, no party to the Callan Road Master Lease is in material breach or default thereunder, nor does any condition exist that, with notice or lapse of time or both, would constitute a breach or default thereunder of such other party. To the knowledge of the Company, no party to the Callan Road Master Lease has received or given any notice of termination or cancellation under the Callan Road Master Lease or received or given any notice of breach or default in any material respect under Callan Road Master Lease, which breach or default has not been cured. To the knowledge of the Company, the Callan Road Master Lease is the only agreement between the parties thereto related to the Callan Road Facility.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Company has made available to Parent accurate and complete copies of all material and current plans, designs and budgets for the construction being undertaken by or on behalf of the Company at the Callan Road Facility, which materials include the current expected completion date and amount of the Company's tenant improvement allowance for the Callan Road Facility that has been spent.

SECTION 4.21. <u>Environmental Matters</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Except as has not had, or would reasonably be to not have, individually or in the aggregate, a Company Material Adverse Effect:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Company and the Company Subsidiaries are, and since January 1, 2018, have been, in compliance with all applicable Environmental Laws. There are no pending or, to the knowledge of the Company, threatened, Proceedings, Judgments, requests for information, or notices relating to the Company or any Company Subsidiary or any property currently or formerly leased, operated or used by the Company or any Company Subsidiary, related to or arising under any Environmental Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) There has been no Release by the Company or any Company Subsidiary, or for which the Company or any Company Subsidiary would reasonably be expected to be liable by Contract or by operation of Law, of any Hazardous Substance into the environment. Neither the Company nor any Company Subsidiary has generated, treated, stored, disposed of, arranged for, transported, Released, or otherwise handled any Hazardous Substances in a manner that might give rise to any liability under any Environmental Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Neither the Company nor any Company Subsidiary has received any written notice of, entered into, assumed (by contract or operation of Law or otherwise), undertaken or otherwise become subject to any liability of another Person relating to Environmental Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company has made available to Parent all Phase I and Phase II environmental site assessments and other material environmental, occupational health and safety, or industrial hygiene records and assessments, including all reports, analyses or modelling of risk of accidental or catastrophic releases of any Hazardous Substances required under Environmental Laws, environmental remedial and investigation reports, brownfields agreements, environmental sampling reports, environmental compliance audits, assessments, and environmental permits, that are in the possession or custody of the Company or any Company Subsidiary, or under their reasonable control.

SECTION 4.22. <u>Insurance</u>. There is no material claim by the Company or any Company Subsidiary pending under any of the material insurance policies of the Company and the Company Subsidiaries that are currently in effect (other than in connection with any Company Employee Benefit Plan) (the "*Insurance Policies*") or under policies that were previously in effect.

------

All Insurance Policies are in full force and effect. Neither the Company nor any Company Subsidiary is in breach or default, and neither the Company nor any Company Subsidiary has taken any action or failed to take any action which, with notice or the lapse of time or both, would reasonably be expected to constitute such a breach or default under, or permit rescission or termination of, any of such Insurance Policies. No notice of rescission, cancellation, termination, nonrenewal or material modification has been received with respect to any such Insurance Policy, except for customary notices of cancellation in advance of scheduled expiration.

SECTION 4.23. <u>Affiliate Transactions</u>. No (i) present or former officer or director of the Company or any Company Subsidiary, (ii) beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of five percent or more of the shares of Company Common Stock or (iii) Affiliate, "associate" or member of the "immediate family" (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the Exchange Act) of any of the foregoing is a party to any actual or proposed loan, lease or other Contract with or binding upon the Company, any Company Subsidiary or any of their respective properties or assets or has any interest in any property owned by the Company or any Company Subsidiary or has engaged in any transaction with any of the foregoing since January 1, 2022.

SECTION 4.24. <u>Takeover Provisions</u>. Assuming the accuracy of Parent's and Merger Sub's representation and warranty set forth in <u>Section</u> <u>5.7</u>, the Company Board has taken and will take all actions so that the restrictions (whether procedural, voting, approval, fairness or otherwise) applicable to business combinations contained in Section 203 of the DGCL and any other Takeover Provisions are, and will be, inapplicable to the execution, delivery and performance of this Agreement, and the timely consummation of the Merger and any other Transaction and will not restrict, impair or delay the ability of Parent or Merger Sub to vote or otherwise exercise all rights as a Stockholder. No "fair price," "moratorium," "control share acquisition" or other similar Takeover Provisions or any anti-takeover provision in the Company Charter Documents is, or at the Effective Time will be, applicable to the Company Securities, the Merger or the other Transactions.

SECTION 4.25. <u>Assets</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company or a Company Subsidiary has good and marketable title to, or good and valid leasehold interests in, all of the tangible assets reflected as owned, leased or used by it on the most recent consolidated balance sheet of the Company contained in the Company SEC Documents filed prior to the date hereof (except for properties or assets that have been sold or disposed of in the ordinary course of business consistent with past practice since the date of such balance sheet or as part of the Spin-Off or the ROFN Sale) free and clear of any Liens, except for Permitted Liens.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) At the Effective Time, the Company or another member of the RemainCo Group will have good and marketable title to, or good and valid leasehold interests in, all RemainCo Assets free and clear of any Liens, except for Permitted Liens.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Other than with respect to Intellectual Property, upon the receipt by the Company of the services, benefits and licenses to be provided to the Company under the Spin-Off Agreements, the Company shall have, directly or indirectly, immediately following the Closing, the assets, properties and rights of every type and description, whether real or personal, tangible or intangible, material to the conduct of the RemainCo Business of the Company and the Company Subsidiaries as such business has been conducted, as it currently is being conducted or as it is currently contemplated to be conducted by the Company immediately prior to Closing, and such assets, properties and rights shall be adequate for the continued conduct of such business after the Effective Time in the same manner as conducted by the Company immediately prior to the Effective Time in all material respects.

SECTION 4.26. <u>Books and Records</u>. Since January 1, 2022, the books and records of the Company and the Company Subsidiaries have been maintained in accordance with GAAP (to the extent applicable) and any other applicable Law and accounting requirements, in each case, in all material respects, and reflect only actual transactions.

SECTION 4.27. <u>Anti-Corruption Compliance</u>. None of the Company, any Company Subsidiary, any officer, director or employee of the Company or any Company Subsidiary or, to the knowledge of the Company, any other Representative acting at the direction of or on behalf of the Company or any Company Subsidiary, in the past six years, directly or indirectly, has (a) violated or is violating in any respect any Anti-Corruption Laws applicable to the Company or any Company Subsidiary; (b) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses or renumerations relating to foreign or domestic political activity; (c) made, offered, authorized, facilitated or promised any payment, contribution, gift, entertainment, bribe, rebate, kickback, financial or other advantage, or anything else of value, regardless of form or amount, to any (i) any Representative of any Governmental Authority, (ii) any Representative of any commercial enterprise that is owned or controlled by a Governmental Authority, including any state-owned or controlled medical facility, (iii) any Representative of any public international organization, such as the International Monetary Fund, the United Nations or the World Bank, (iv) any Person acting in an official capacity for any Governmental Authority, enterprise, or organization identified above, (v) any political party, party official or candidate for political office (each of <u>clauses (i)</u> through <u>(v)</u> of this <u>Section</u> <u>4.27</u>, a "*Government Official*"), (vi) any health care professional, or (vii) any other Person for the purpose of securing an unlawful advantage, inducing the recipient to violate an official or lawful duty or a duty to the recipient's employer, reward the recipient for an unlawful advantage already given, or for any other improper purpose; (d) requested, agreed to receive, or accepted a payment, gift or hospitality from a Person if it is known or suspected that it is offered with the expectation that it will obtain a business advantage for them; or (e) established or maintained, or is maintaining, any unlawful fund of corporate monies or other properties. Neither the Company nor any Company Subsidiary is, or in the past six years has been, under administrative, civil, or criminal investigation, indictment, information, suspension, debarment, or audit by any party, in connection with alleged or possible violations of any Anti-Corruption Laws, or has received written notice from, or made a voluntary disclosure to, the U.S. Department of Justice, the SEC, the UK Serious Fraud Office, or any other Governmental Authority regarding alleged or possible violations of any Anti-Corruption Laws. The Company maintains internal controls that are reasonably tailored to the size, complexity, operations, business lines, geographic footprint, and business model of the Company and the Company Subsidiaries, and which are reasonably designed to ensure compliance with the applicable Anti-Corruption Laws.

------

SECTION 4.28. <u>Trade Controls</u>. Since April 24, 2019, none of the Company, any Company Subsidiary, any officer, director or employee of the Company or, to the knowledge of the Company, any other Representative acting at the direction of or on behalf of the Company or any Company Subsidiary, (i) has violated any applicable Trade Controls Laws, (ii) is listed on any list of sanctioned persons administered or enforced by the United States, the United Nations Security Council, the European Union, any European Union member state, or the United Kingdom, or is owned or controlled by, or acting on behalf of, any such Person, (iii) is located, organized or resident in a country or region that is subject to comprehensive sanctions (which as of the date hereof are Cuba, Iran, North Korea, and the Crimea and separatist-controlled portions of the Donetsk and Luhansk regions of Ukraine), (iv) is otherwise targeted under any economic or financial sanctions, trade or export controls imposed, administered, or enforced by the United States, the United Kingdom, the European Union or any of its member states, or any other applicable sanctions authority with jurisdiction over the Company (collectively, "*Sanctions*"); or (v) is engaged in any dealings with any Person or country subject to Sanctions. There is no pending or, to the knowledge of the Company, threatened, investigation, inquiry, enforcement action, claim, complaint, voluntary or directed disclosure, administrative subpoena, or proceeding against the Company, any Company Subsidiary, or against any of the Company's officers, directors or employees, related to any violation or potential violation of any Trade Controls Laws.

SECTION 4.29. <u>National Security</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Neither the Company nor any Company Subsidiary produces, designs, tests, manufactures, fabricates or develops one or more critical technologies, as defined at 31 C.F.R. § 800.215, that would require a U.S. regulatory authorization, as defined at 31 C.F.R. § 800.254, to Parent's principal place of business as defined at 31 C.F.R. § 800.239. The foregoing representations and warranties in this <u>Section</u> <u>4.29(a)</u> relate to the Laws referenced herein solely as in effect as of the date of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company (i) does not perform the functions set forth in column 2 of Appendix A to 31 C.F.R. part 800 with respect to covered investment critical infrastructure, as defined at 31 C.F.R. § 800.212, (ii) does not maintain or collect, directly or indirectly, U.S. citizens' sensitive personal data, as defined at 31 C.F.R. § 800.241 and (iii) is not a covered foreign person within the meaning of 31 C.F.R. § 850.209. The foregoing representations and warranties in this <u>Section</u> <u>4.29(b)</u> relate to the Laws referenced herein solely as in effect as of the date of this Agreement.

SECTION 4.30. <u>Solvency</u>. As of immediately after giving effect to the Transactions (including the payment of all fees and expenses in connection therewith), SpinCo will be Solvent. 

SECTION 4.31. <u>SpinCo Activities</u>. SpinCo is a newly formed wholly owned Subsidiary of the Company, has not engaged in any business or conducted any operations and has no, and prior to the Spin-Off will have no, assets, liabilities or obligations of any nature other than as required in connection with the Transactions and as incidental to its organization and existence.

------

SECTION 4.32. <u>No Other Representations or Warranties</u>. Except for the representations and warranties made by the Company in this Agreement, neither the Company nor any other Person makes any express or implied representation or warranty with respect to the Company or the Company Subsidiaries, or their respective businesses, operations, assets, liabilities or conditions (financial or otherwise) in connection with this Agreement or the transactions contemplated by this Agreement, and the Company hereby disclaims any such other representations and warranties.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent and Merger Sub hereby jointly and severally represent and warrant to the Company as follows:

SECTION 5.1. <u>Organization</u>. Each of Parent and Merger Sub (a) is a corporation duly organized, validly existing and (where applicable) in good standing under the Laws of its jurisdiction of incorporation and (b) has all requisite corporate power and authority to carry on its business as now conducted.

SECTION 5.2. <u>Merger Sub</u>. Merger Sub is a wholly owned Subsidiary of Parent that was formed solely for the purpose of engaging in the transactions contemplated by this Agreement. Since the date of its incorporation, Merger Sub has not carried on any business or conducted any operations other than activities incident to Merger Sub's formation, the execution of this Agreement, the performance of its obligations hereunder and matters ancillary thereto.

SECTION 5.3. <u>Authorization; No Conflict</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Each of Parent and Merger Sub has the requisite corporate power and authority, and has taken all corporate action necessary, to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by Parent and Merger Sub and, assuming the due authorization, execution and delivery hereof by the Company, constitutes a legal, valid and binding obligation of Parent and Merger Sub enforceable against Parent and Merger Sub in accordance with its respective terms, subject in each case to the Bankruptcy and Equity Exception.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) None of the execution, delivery or performance of this Agreement by Parent or Merger Sub, the consummation by Parent or Merger Sub of the transactions contemplated by this Agreement, or compliance by Parent or Merger Sub with any of the provisions herein will (i) result in a violation or breach of, contravene or conflict with the certificate of incorporation or bylaws, or similar organizational documents, of Parent or Merger Sub, (ii) assuming compliance with the matters referred to in <u>Section</u> <u>5.3(c)</u>, conflict with or result in a violation or breach of any applicable Judgment or any provision of any applicable Law, (iii) assuming compliance with the matters referred to in <u>Section</u> <u>5.3(c)</u>, require any consent or other action by any Person under, constitute a default, or an event that, with or without notice or lapse

------

of time or both, would constitute a default or termination under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which Parent or Merger Sub is entitled under any provision of any Contract binding upon Parent or Merger Sub or any Authorization affecting, or relating in any way to, the assets or the business of Parent and its Subsidiaries or (iv) result in the creation or imposition of any Lien on any asset of Parent or any of its Subsidiaries, with only such exceptions, in the case of each of <u>clauses (ii)</u> through <u>(iv)</u>, as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the transactions contemplated by this Agreement require no action by or in respect of, or filing by or with, any Governmental Authority, except for (i) filing the Certificate of Merger with the Secretary of State of the State of Delaware, (ii) compliance with and filings pursuant to Antitrust Laws and Foreign Investment Laws, if any, (iii) compliance with any applicable requirements of the Securities Act, the Exchange Act and any other United States state or federal securities Laws, (iv) compliance with any Nasdaq or New York Stock Exchange rules and (v) actions, approvals or filings the failure of which to make or obtain has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

SECTION 5.4. <u>Information Supplied</u>. None of the information with respect to Parent or Merger Sub supplied or to be supplied in writing by or on behalf of Parent or Merger Sub for inclusion in the Proxy Statement will, at the time of the filing of, or at the time of any amendment of or supplement to, or at the time of any publication, mailing, distribution or dissemination of, the Proxy Statement, or on the date of the Stockholders' Meeting (as it may be adjourned or postponed in accordance with this Agreement), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. None of the information with respect to Parent or Merger Sub supplied or to be supplied in writing by or on behalf of Parent or Merger Sub for inclusion in the Spin-Off Registration Statement will, at the time of the confidential submission or the filing thereof, at the time of any amendment of or supplement thereto, on the date it is declared effective by the SEC, and at the time of any publication, mailing, distribution or dissemination thereof, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.

SECTION 5.5. <u>Sufficient Funds</u>. Parent has access to, and will cause Merger Sub to have, at the Effective Time and at the Closing, the funds necessary to consummate the Merger and the other Transactions, including payment of the aggregate Merger Consideration on the Closing Date, and to pay all related fees and expenses required to be paid by Parent and Merger Sub under this Agreement.

SECTION 5.6. <u>Proceedings</u>. There is no Proceeding pending or, to the knowledge of Parent, threatened, against Parent or any of its controlled Affiliates that would, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect. Neither Parent nor any of its controlled Affiliates is subject to any Judgment that has had or would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

------

SECTION 5.7. <u>Ownership of Company Common Stock</u>. Neither Parent nor any of its Affiliates directly or indirectly owns, and at all times for the past three years, neither Parent nor any of its Affiliates has owned, beneficially or otherwise, any shares of Company Common Stock or any securities, contracts or obligations convertible into or exercisable or exchangeable for shares of Company Common Stock.

SECTION 5.8. <u>Broker</u><u>'</u><u>s or Finder</u><u>'</u><u>s Fees</u>. No agent, broker, investment banker, finder, or other Person acting on behalf of Parent or any of its Affiliates or under Parent's or any of its Affiliates' authority is or will be entitled to any advisory, commission or broker's or finder's fee or similar fee or commission or reimbursement of expenses in connection with any of the transactions contemplated by this Agreement except for Persons, if any, whose fees and expenses shall be paid by Parent.

SECTION 5.9. <u>No Other Representations or Warranties</u>. Except for the representations and warranties made by Parent and Merger Sub in this Agreement, none of Parent, Merger Sub nor any other Person makes any express or implied representation or warranty with respect to Parent, Merger Sub, their respective Subsidiaries or their respective businesses, operations, assets, liabilities or conditions (financial or otherwise) in connection with this Agreement or the transactions contemplated by this Agreement, and each of Parent and Merger Sub hereby disclaims any such other representations and warranties.

ARTICLE 6

COVENANTS

SECTION 6.1. <u>Conduct of the Company</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) During the Pre-Closing Period, subject to the Spin-Off Carveout and except (i) as set forth in <u>Section</u> <u>6.1</u> of the Company Disclosure Letter, (ii) as expressly required by this Agreement or the Separation and Distribution Agreement, (iii) as required to effect the ROFN Sale in accordance with <u>Section</u> <u>2.7</u>, (iv) for a distribution of Permitted Sale Proceeds to holders of Company Common Stock (less the amount of Permitted Sales Proceeds paid to holders of Company Equity Awards pursuant to <u>Section</u> <u>3.4(f)</u>), (v) with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed), or (vi) as required by applicable Law, the Company shall, and shall cause the Company Subsidiaries to, (1) conduct their respective businesses, including the RemainCo Business, in the ordinary course of business consistent with past practice in all material respects, and (2) use reasonable best efforts to preserve intact their material assets, maintain their material Authorizations, keep available the services of their respective directors, officers, key employees and key Contractors, and maintain and preserve their present material business relationships with Collaboration Partners, suppliers and other Persons having material business relationships with the Company or any Company Subsidiary.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding <u>Section</u> <u>6.1(a)</u>, subject to the Spin-Off Carveout and except as set forth in <u>Section</u> <u>6.1(b)</u> of the Company Disclosure Letter or as expressly required by this Agreement, by the Separation and Distribution Agreement or by applicable Law, or as required to effect the ROFN Sale in accordance with <u>Section</u> <u>2.7</u>, the Company shall not, and shall not permit the Company Subsidiaries to, during the Pre-Closing Period, directly or indirectly, do any of the following without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed, except in the case of <u>clause (vii)</u> (but solely with respect to Company Subsidiary Securities) or <u>clause (iii)</u> of this <u>Section</u> <u>6.1(b)</u>, for which consent shall be in Parent's sole discretion):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) sell, pledge, dispose of, assign, lease, license, sublicense, dedicate to the public, or otherwise transfer, abandon or permit to lapse, or create or incur any Lien (other than Permitted Liens) on, any of the Company's or the Company Subsidiaries' material assets (including any Company Intellectual Property, all of which are material assets), securities, properties, interests, businesses or Authorizations, other than (A) (except in the case of any Company Intellectual Property) sales of obsolete equipment in the ordinary course of business consistent with past practice, or (B) non-exclusive grants of rights to use Company Intellectual Property that are incidental to and not material to performance under the applicable agreement, which agreement is entered into in the ordinary course of business consistent with past practice, such as a material transfer agreement, clinical trial agreement, supply agreement or manufacturing agreement to the extent the grant of rights to use Company Intellectual Property in such agreements is non-exclusive and incidental to and not material to performance thereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any material assets, securities, properties, interests or businesses, other than supplies in the ordinary course of business consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) merge or consolidate the Company or any Company Subsidiary with any Person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of the Company Subsidiaries (other than the Merger) or form any Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) adopt or implement any stockholder rights plan or similar arrangement or enter into any agreement with respect to the voting or registration of any Company Securities or Company Subsidiary Securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) amend, waive, rescind or otherwise modify the Company Charter Documents or the Company Subsidiary Charter Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) (A) split, combine or reclassify any shares of its capital stock, (B) establish a record date for, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, except for dividends payable by any Company Subsidiary to the Company or to any other Company Subsidiary, the Spin-Off Distribution or the distribution of the Permitted Sale Proceeds to holders of Company Common Stock (less the amount of Permitted Sale Proceeds paid to holders of Company Equity Awards pursuant to <u>Section</u> <u>3.4(f)</u>) or (C) redeem, repurchase or otherwise

------

acquire, or offer to redeem, repurchase or otherwise acquire, directly or indirectly, any Company Securities or any Company Subsidiary Securities, except, in the case of this <u>clause (C)</u>, (1) acquisitions of shares of Company Common Stock in connection with the surrender of shares of Company Common Stock by holders of Company Stock Options in order for such holders to pay the exercise price of Company Stock Options outstanding as of the date hereof, (2) the withholding of shares of Company Common Stock to satisfy Tax obligations with respect to Company Equity Awards outstanding as of the date hereof, (3) the acquisition by the Company of shares of Company Common Stock or Company Equity Awards in connection with the forfeiture of such shares or awards, and (4) the exercise, cancellation or conversion of Company Warrants, in each case, in accordance with their terms as of the date hereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) (A) issue, sell, grant, or authorize the issuance, sale or grant of, any Company Securities or Company Subsidiary Securities, other than in the Spin-Off Distribution or the issuance of (1) any shares of Company Common Stock upon the exercise of Company Stock Options, Company Warrants or purchase rights under the ESPP or upon the settlement of vested Company RSUs, in each case, that are outstanding on the date hereof (or, in the case of the ESPP, made pursuant to elections in effect on the date hereof) in accordance with their terms on the date hereof and (2) any Company Subsidiary Securities to the Company or (B) amend any term of any Company Security or any Company Subsidiary Security (in each case, whether by merger, consolidation or otherwise);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) create, incur, assume or otherwise become liable (whether directly, contingently or otherwise) with respect to any indebtedness for borrowed money or guarantees thereof, or issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company or any Company Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) make any loans, advances or capital contributions to, or investments in, any other Person, or re-invest any funds or monies in any assets or securities with a credit rating lower than those assets or securities into which such funds or monies are invested as of the date hereof, other than (A) advances to its employees and consultants in the ordinary course of business consistent with past practice and (B) advances of expenses as required under the Company Charter Documents, the Company Subsidiary Charter Documents or any Contract made available to Parent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) except as required by the terms of any Company Employee Benefit Plan as in effect on the date hereof and listed in <u>Section</u> <u>4.11(a)</u> of the Company Disclosure Letter, (A) with respect to any current or former director, officer, employee or individual independent contractor of the Company or any Company Subsidiary, (1) grant or increase any severance, change of control, retention, termination or similar pay, compensation, bonus or benefits, or amend any existing arrangement relating thereto, (2) enter into any employment, consulting, severance, retention, change in control, termination, retirement, deferred compensation or other similar agreement (or amend or terminate any such existing agreement), (3) pay any compensation or benefit not provided for under the terms of any Company Employee Benefit Plan as of the date hereof or (4) grant any promotion, other than to fill a vacated role; (B) establish, adopt or amend any Company Employee Benefit Plan, including any collective bargaining agreement, or terminate any Company Employee

------

Benefit Plan; (C) recognize any union, works council or similar employee representative with respect to any such individual; (D) enter into any trust, annuity or insurance Contract or similar agreement or take any other action to fund or otherwise secure the payment of any compensation or benefit; (E) establish, adopt or enter into any plan, agreement or arrangement, or otherwise commit to, gross up or indemnify, or otherwise reimburse any current or former service provider for any Tax incurred by such service provider, including under Section 409A or Section 4999 of the Code; or (F) hire or engage the services of any individual as a director, officer, employee or individual independent contractor, other than in the ordinary course of business consistent with past practice for employees or Contractors (x) who are not in commercial or marketing roles and (y) who are below the level of Vice President or whose annual base compensation is less than $200,000 per year, or terminate the service of any such Person other than for cause;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) commence any offering or offering period under the ESPP;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) grant, amend or modify, or exercise any discretionary authority to accelerate the vesting of, any Company Equity Awards under any Stock Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) (A) forgive any loans to directors, officers, employees or any of their respective Affiliates or (B) enter into any transactions or Contracts with any Affiliates or other Person that would be required to be disclosed by the Company under Item 404 of Regulation S-K of the SEC;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) (A) waive, release, pay, discharge or satisfy any material liabilities or obligations (absolute, accrued, contingent or otherwise), except in the ordinary course of business consistent with past practice and in accordance with the terms thereof; (B) accelerate or delay collection in any material respect of notes or accounts receivable in advance of or beyond their regular due dates or the dates when the same would have been collected in the ordinary course of business consistent with past practice; or (C) delay or accelerate in any material respect payment of any account payable in advance of its due date or the date such liability would have been paid in the ordinary course of business consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) make any material change in the Company's methods of accounting, except as required by GAAP, Regulation S-X of the Exchange Act or applicable rules and regulations of the SEC;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) (A) make any material Tax election unless consistent with prior practice in filing Tax Returns, (B) change or rescind any material Tax election, (C) change any annual Tax accounting period, adopt or change any material method of Tax accounting, (D) amend any material Tax Returns, (E) extend the statute of limitations with respect to any material Tax Return (other than an extension for the filing of a Tax Return that is automatically granted), (F) enter into any closing agreement with any Taxing Authority with respect to a material Tax, (G) settle or compromise any material Tax claim, audit or assessment, or (H) surrender any right to claim a material Tax refund;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii) write up, write down or write off the book value of any assets, in the aggregate, except in accordance with GAAP consistently applied;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xviii) compromise, settle, or offer or propose to settle, any Proceeding, except with respect to matters that (A) involve the payment of monetary damages not in excess of $500,000 per Proceeding (assuming the payment in full of all future fixed or contingent payments) or $1,000,000 in the aggregate for all such Proceedings, and (B) do not (1) include any other obligation to be performed by, or limitation upon, the Company or any Company Subsidiary, Parent, Merger Sub or their Affiliates that is, individually or in the aggregate, material to the Company, any Company Subsidiary, Parent, Merger Sub or their respective Affiliates; or (2) result in any imposition of any material non-monetary obligation on, or the admission of wrongdoing by, the Company or any Company Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xix) commence any Proceeding, except with respect to: (A) routine matters in the ordinary course of business, (B) in such cases where the Company reasonably determines in good faith that the failure to commence suit would result in a material impairment of a valuable aspect of its business (*provided* that the Company consults with Parent and considers the views and comments of Parent with respect to such Proceedings prior to commencement thereof), or (C) in connection with any actual or alleged breach of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx) except in connection with any transaction to the extent specifically permitted by any other subclause of this <u>Section</u> <u>6.1(b)</u>, (A) terminate, cancel, assign, renew or agree to any material amendment of, change in or waiver under any Material Contract or any ROFN Purchase Document, (B) enter into any Contract that, if existing on the date hereof, would be a Material Contract (except for any statement of work, purchase order or similar ancillary agreement or documentation issued under an existing Material Contract, in each case not in excess of $1,000,000 individually), or amend or modify any such Contract or (C) amend or modify any Contract in existence on the date hereof that, after giving effect to such amendment or modification, would be a Material Contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxi) incur or authorize any capital expenditures or any obligations or liabilities in respect thereof, except in accordance with the capital expenditure budget set out in <u>Section</u> <u>6.1(b)(xxi)</u> of the Company Disclosure Letter;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxii) convene any regular or special meeting (or any adjournment or postponement thereof) of the Stockholders other than, to the extent required by applicable Law or a Judgment of a court of competent jurisdiction, an annual meeting of stockholders for purposes of election of directors, ratification of the Company's auditors and other routine matters; *provided* that the Company shall use its reasonable best efforts to oppose any Stockholder proposal presented at any such meeting (*provided*, for the avoidance of doubt, that such efforts shall not require the directors of the Company to take any action that would reasonably be expected to result in a breach of their fiduciary duties under applicable Law);

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxiii) fail to keep in full force and effect the Insurance Policies or replacement or revised provisions providing insurance coverage in a manner consistent with past practice with respect to the assets, operations and activities of the Company and the Company Subsidiaries as are currently in effect;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxiv) (A) extend, amend, condition, restrict, waive, cancel, abandon, withdraw, fail to renew, permit to lapse, modify or otherwise alter any rights in or to any Company Intellectual Property, (B) fail to diligently prosecute any material Patent application or to maintain any issued Patent, in each case, owned by the Company or any Company Subsidiary that is included in Company Intellectual Property or fail to diligently prosecute or maintain any material Company Intellectual Property as to which the Company or any Company Subsidiary controls the prosecution or maintenance thereof, as applicable, (C) terminate or fail to renew (to the extent renewable at the option of the Company) any Contract under which material Company Intellectual Property is licensed to the Company or (D) disclose to any Third Party, other than under a confidentiality agreement or other legally binding confidentiality undertaking, any trade secret or other Know-How of the Company that is included in the Company Intellectual Property in a way that results in loss of material trade secret protection thereon, except for any such disclosures made as a result of publication of a Patent application filed by the Company or in connection with any required regulatory filing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxv) (A) commence any clinical trial of which Parent has not been informed prior to the date hereof, (B) unless mandated by any Governmental Authority, (x) make any material change to, discontinue, terminate or suspend any ongoing clinical study or (y) withdraw any application for marketing approval of any Company Product from a Regulatory Authority or (C) make any material change to, discontinue, terminate or suspend any ongoing IND-enabling non-clinical study, in each case of <u>clauses (A)</u> through <u>(C)</u> of this <u>Section</u> <u>6.1(b)(xxv)</u>, without first consulting Parent in good faith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxvi) select, update, change, test for safety and marketing purposes, or initiate use of any new Trademark or potential new Trademark (including any branding, logo, trade dress, tagline or get up) or any new domain name proposed to be used in connection with, or as a brand for, any Company Product (in each case internally or externally to the Company), including branding (including logo, trade dress, tagline or get up), naming, or product descriptions that are submitted as part of any review in connection with any such Trademark activities, including name related reviews, with a Governmental Authority,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxvii) engage in any transfer of data subject to the U.S. Bulk Data Final Rule unless it is exempt under subpart E of the U.S. Bulk Data Final Rule;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxviii) materially revise, alter, update, or otherwise change the current plans and designs for the construction being undertaken by or on behalf of the Company at the Callan Road Facility; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxix) agree, resolve or commit to do any of the foregoing.

------

Notwithstanding the foregoing, nothing contained herein shall give to Parent or Merger Sub, directly or indirectly, the right to control or direct the operations of the Company or any Company Subsidiary prior to the Effective Time and nothing contained herein is intended to give the Company or any Company Subsidiary, directly or indirectly, the right to control or direct Parent's or its Subsidiaries' operations. Prior to the Effective Time, each of Parent and the Company shall exercise, consistent with the terms and conditions hereof, complete control and supervision of its and its Subsidiaries' respective operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any action taken or not taken by the Company or the Company Subsidiaries with respect to SpinCo, the SpinCo Assets or SpinCo Liabilities (other than in connection with a Permitted Third Party Sale), shall be subject to <u>Section</u> <u>6.1(a)</u> or <u>Section</u> <u>6.1(b)</u> solely to the extent that such action (i) would be inconsistent with the terms of the Spin-Off Agreements, (ii) would reasonably be expected to adversely affect the Company after giving effect to the Spin-Off, the other members of the RemainCo Group, the RemainCo Business, or, following the Effective Time, Parent or its Affiliates, (iii) would reasonably be expected to prevent, impede or materially delay the consummation of the transactions contemplated by this Agreement or the Spin-Off Agreements or (iv) would reasonably be expected to have a material and adverse effect on the ability of SpinCo to perform its obligations under the Third Party Agreements (as defined in the Separation and Distribution Agreement) (the "*Spin-Off Carveout*").

SECTION 6.2. <u>Proxy Statement; Stockholders</u><u>'</u> <u>Meeting</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) As promptly as reasonably practicable (and no later than 30 days) after the date hereof, or such other date as mutually agreed by the parties in writing, the Company shall prepare, in consultation with Parent, and file with the SEC the preliminary Proxy Statement. Except to the extent a Company Adverse Recommendation Change has been made in accordance with <u>Section</u> <u>6.9(d)</u> or <u>Section</u> <u>6.9(e)</u> and has not been rescinded, the Company and the Company Board shall include the Company Recommendation in the Proxy Statement. Each of the Company and Parent shall furnish all information concerning itself and its respective Affiliates that is required to be included in the Proxy Statement or that is customarily included in proxy statements prepared in connection with transactions of the type contemplated by this Agreement. The Company agrees that the Proxy Statement shall comply as to form in all material respects with the requirements of the Exchange Act and that none of the information included or incorporated by reference in the Proxy Statement shall, at the date the Proxy Statement is filed with the SEC or mailed to the Stockholders, at the time of the Stockholders' Meeting, or at the time of any amendment or supplement thereof, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no covenant is made by the Company with respect to statements made in the Proxy Statement based on information supplied in writing by or on behalf of Parent or Merger Sub specifically for inclusion or incorporation by reference therein. Parent agrees that no information supplied in writing by or on behalf of Parent or Merger Sub specifically for inclusion or incorporation by reference in the Proxy Statement shall, at the date the Proxy Statement is filed with the SEC or mailed to the Stockholders, at the time of the Stockholders' Meeting, or at the time of any amendment or supplement thereof, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Company shall use its

------

reasonable best efforts to respond as promptly as practicable to any comments (written or oral) of the SEC or its staff with respect to the Proxy Statement. The Company shall promptly notify Parent upon the receipt of any comments (written or oral) from the SEC or its staff or any request from the SEC or its staff for amendments or supplements to the Proxy Statement and shall furnish to Parent a copy of any written comments from the SEC or its staff. Except to the extent a Company Adverse Recommendation Change has been made in accordance with <u>Section</u> <u>6.9(d)</u> or <u>Section</u> <u>6.9(e) and has not been rescinded</u>, prior to filing or mailing the Proxy Statement (or any amendment or supplement thereto) or responding to any comments (written or oral) of the SEC or its staff thereto, the Company (i) shall give Parent and its counsel a reasonable opportunity to review and comment on such document or response; (ii) shall consider any comments proposed by Parent in good faith and (iii) shall not file or mail such document, or respond to the SEC or its staff, prior to receiving the approval of Parent, which approval shall not be unreasonably withheld, conditioned or delayed. The Company will cause the definitive Proxy Statement to be mailed to the Stockholders entitled to vote at the Stockholders' Meeting no less than 20 days before the date of the Stockholders' Meeting. If, at any time prior to the Stockholders' Meeting, any information relating to the Company, Parent or any of their respective Affiliates, officers or directors is discovered by the Company or Parent that should be set forth in an amendment or supplement to the Proxy Statement so that the Proxy Statement does not contain any untrue statement of any material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, at the time and in light of the circumstances under which they were made, not false or misleading, the party that discovers such information shall promptly notify the other party and correct such information, and the Company shall file an appropriate amendment or supplement describing such information with the SEC and, to the extent required by applicable Law, disseminate such information to the Stockholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company shall conduct a "broker search" in accordance with Rule 14a-13 of the Exchange Act and upon the reasonable request of Parent. The Company shall duly call, give notice of, convene and hold a meeting of its Stockholders for the purpose of obtaining the Requisite Company Vote to approve the adoption of this Agreement and the Separation and Distribution Agreement (the "*Stockholders' Meeting*") with a record date and meeting date to be selected after reasonable consultation with Parent, which meeting date shall be as promptly as practicable, and in no event later than 10 days, after the date on which the Spin-Off Registration Statement has become effective, unless <u>Section</u> <u>7.1(e)(ii)</u> has previously been satisfied, in which case as promptly as practicable, and in no event later than 10 days, after the date on which <u>Section</u> <u>7.1(e)(ii)</u> has been satisfied. The notice of such Stockholders' Meeting shall state that a resolution to adopt this Agreement and the Separation and Distribution Agreement shall be considered at the Stockholders' Meeting. Subject to a Company Adverse Recommendation Change in accordance with <u>Section</u> <u>6.9(d)</u> or <u>Section</u> <u>6.9(e)</u>, the Company shall use its reasonable best efforts to solicit and obtain the Requisite Company Vote in favor of such resolution. The Company shall (A) provide Parent reasonably detailed periodic updates concerning proxy solicitation results on a timely basis following the initial mailing of the Proxy Statement and (B) give written notice to Parent one day prior to the Stockholders' Meeting, and on the day of, but prior to, the Stockholders' Meeting, indicating whether as of such date sufficient proxies representing the Requisite Company Vote has been obtained in favor of such resolution. Notwithstanding anything to the contrary contained herein, the Company shall not postpone or adjourn the Stockholders' Meeting without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed); *provided* that if at any time following the

------

dissemination of the Proxy Statement, either the Company or Parent reasonably determines in good faith that the Requisite Company Vote to approve the adoption of this Agreement and the Separation and Distribution Agreement is unlikely to be obtained at the Stockholders' Meeting, including due to an absence of a quorum, then subject to applicable Law, each of the Company and Parent shall have the right to require an adjournment or postponement of the Stockholders' Meeting for the purpose of soliciting additional votes in favor of this Agreement; *provided*, further, that no such single adjournment or postponement shall delay the Stockholders' Meeting by more than seven days from the prior-scheduled date or to a date on or after the fifth Business Day preceding the Outside Date. Notwithstanding the foregoing, the Company may postpone or adjourn the Stockholders' Meeting if (1) the Company is required to postpone or adjourn the Stockholders' Meeting by applicable Law, or (2) the Company Board or any authorized committee thereof shall have determined in good faith (after consultation with outside legal counsel) that it is necessary or appropriate to postpone or adjourn the Stockholders' Meeting in order to give the Stockholders sufficient time to evaluate any information or disclosure that the Company has sent or otherwise made available to such holders by issuing a press release, filing materials with the SEC or otherwise (in each case so long as any such information or disclosure was made in compliance with this Agreement); *provided* that the Company shall be permitted to postpone or adjourn the Stockholders' Meeting pursuant to this clause (2) on no more than two occasions and in each case no such adjournment or postponement shall delay the Stockholders' Meeting by more than seven days from the prior-scheduled date or to a date on or after the fifth Business Day preceding the Outside Date. In no event shall the record date of the Stockholders' Meeting be changed without Parent's prior written consent, not to be unreasonably withheld, conditioned or delayed, unless the Company is required to do so by applicable Law. Without limiting the generality of the foregoing, but subject to <u>Section</u> <u>6.9</u> and the Company's rights to terminate this Agreement under the circumstances set forth in <u>Section</u> <u>8.1</u>, the Company agrees that its obligations pursuant to this <u>Section</u> <u>6.2</u> shall not be affected by the commencement, public proposal, public disclosure or communication to the Company or any other person of any Acquisition Proposal or by any event constituting or that could constitute an Intervening Event. Notwithstanding any Company Adverse Recommendation Change, unless this Agreement has been validly terminated pursuant to <u>Section</u> <u>8.1</u>, (A) the Company shall submit this Agreement to the Stockholders for approval at the Stockholders' Meeting and (B) the only matters to be voted upon at the Stockholders' Meeting shall be the adoption of this Agreement and the Separation and Distribution Agreement and routine proposals required in connection with such vote, including for the avoidance of doubt adjournments proposed in compliance with this <u>Section</u> <u>6.2(b)</u> and any non-binding advisory vote required under applicable Law (and not any other matters, including any Acquisition Proposal).

SECTION 6.3. <u>Employee Matters</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) For a period of one year immediately following the Closing Date, but not beyond the date on which a Continuing Employee's employment with the Company or any of its Subsidiaries terminates (the "*Continuation Period*"), Parent agrees to provide, or to cause one of its Affiliates (including after the Closing, the Company and the Company Subsidiaries) to provide, each individual employed by the Company or any of the Company Subsidiaries immediately prior to the Closing who is retained by Parent (after giving effect to the Spin-Off and the Separation and Distribution Agreement) (each, a "*Continuing Employee*") with (i) the base salary or hourly wages and annual cash bonus targets that are, in each case, at least equal to those

------

provided to the Continuing Employee immediately prior to the Closing, and (ii) retirement, health and welfare benefits (excluding any change in control, transaction, retention, equity or equity-based compensation, severance, termination protection, defined benefit pension, deferred compensation, retiree health or welfare, or other similar compensation or benefits) that are substantially comparable in the aggregate to either (A) the employee benefits provided to the Continuing Employee immediately prior to the Closing or (B) in the discretion of Parent, employee benefits provided to similarly-situated new hire employees of Parent and its Affiliates. Nothing herein shall prevent Parent or any of its Affiliates (including, after the Closing, the Company or any of its Subsidiaries) from terminating the employment of any Continuing Employee during the Continuation Period. For all purposes of this <u>Section</u> <u>6.3</u>, the obligations of Parent and its Affiliates with respect to any Continuing Employee engaged outside of the United States through an employer of record shall be subject to the terms and conditions of the applicable Contract with the employer of record and shall be modified accordingly to the extent necessary to comply with such terms and conditions. For the one year period following the Closing Date, Parent shall, or shall cause its applicable Affiliate (including, following the Closing, the Surviving Corporation) to, provide each Continuing Employee with severance benefits described in <u>Section</u> <u>6.3(a)</u> of the Company Disclosure Letter. 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Following the Effective Time, Parent will, subject to applicable Laws, give each Continuing Employee full credit for prior service with the Company and the Company Subsidiaries for purposes of vesting and eligibility to participate in employee benefit plans maintained by Parent or its Affiliates for which the Continuing Employee is otherwise eligible to participate (but such service credit shall not be provided for purposes of benefit accrual, except for vacation and severance, as applicable); *provided* that service of a Continuing Employee prior to the Effective Time shall not be recognized for any purpose, including any entitlement to participate in or receive benefits with respect to, any equity or equity-based plans or compensation, any retiree medical programs or other retiree welfare benefit programs, any defined benefit plan or any frozen or grandfathered benefit or frozen or grandfathered plan maintained by Parent or its Affiliates. In no event shall anything contained in this <u>Section</u> <u>6.3(b)</u> result in any duplication of benefits. In addition, Parent shall use reasonable best efforts (i) to waive, or cause to be waived, any limitations on benefits relating to pre-existing conditions to the same extent such limitations are waived under any comparable plan of the Company or any Company Subsidiary applicable to such Continuing Employee prior to the Effective Time and (ii) either to (A) recognize, for purposes of annual deductible and out-of-pocket limits under its medical and dental plans, deductible and out-of-pocket expenses paid by Continuing Employees in the calendar year in which the Effective Time occurs, or (B) pro-rate annual deductibles and out-of-pocket limits under its medical and dental plans for Continuing Employees for the portion of the calendar year containing the Closing Date in which they participate in such plans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) (i) Neither Parent nor any of its Affiliates shall be obligated to continue to employ any Continuing Employee for any period of time following the Effective Time, (ii) Parent or its Affiliates may revise, amend or terminate any Company Employee Benefit Plan or any other employee benefit plan, program or policy in effect from time to time, (iii) nothing in this Agreement shall be construed as an amendment of any Company Employee Benefit Plan or any employee benefit plan, program or policy of Parent and its Affiliates, and (iv) nothing in this Agreement shall create any third party beneficiary rights or obligations in any person (including any current or former service provider or employee of Parent or any of its Affiliates (or any beneficiaries or dependents thereof)).

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The provisions of this <u>Section</u> <u>6.3</u> shall in no event apply to any employee of the Company or any Company Subsidiary whose employment has been terminated and who is later employed by Parent, the Surviving Corporation or any of their respective Subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Except for communications to SpinCo Employees that do not relate to this Agreement, to any employment, compensation or benefits matters addressed in the Separation and Distribution Agreement or the Transactions, all formal written communications to the officers or employees of the Company and the Company Subsidiaries pertaining to employment, compensation or benefit matters in connection with or following the Transactions, or that are affected by this Agreement, shall be subject to Parent's prior consent (not to be unreasonably withheld, conditioned or delayed). The Company shall provide Parent with a copy of the intended communication, and Parent shall have a reasonable period of time to review and comment on each such communication (such review and comments not to be unreasonably withheld, conditioned or delayed). Any group oral presentations with respect to the subject matter described in this <u>Section</u> <u>6.3(e)</u> shall be consistent with such formal written communications in all material respects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Company and Parent shall cooperate and work together in good faith, and following consultation with Parent, the Company shall use reasonable best efforts to take, or cause to be taken, all actions necessary or advisable, to comply with the obligations set forth in <u>Section</u> <u>6.3(f)</u> of the Company Disclosure Letter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) If the Effective Time occurs prior to the date on which the Company pays annual bonuses for calendar year 2025, the Company and Parent agree that such annual bonuses shall be treated as set forth in <u>Section</u> <u>6.1(b)(x)</u> of the Company Disclosure Letter.

SECTION 6.4. <u>Further Assurances</u>. At and after the Effective Time, the officers and directors of the Surviving Corporation and Parent shall be authorized to execute and deliver, in the name and on behalf of the Company or Merger Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company, any Company Subsidiary or Merger Sub, any other actions and things necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title, interest and possession in, to and under any of the rights, properties, assets, privileges, powers and franchises of the Company acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger.

SECTION 6.5. <u>Public Statements</u>. So long as this Agreement is in effect, Parent and the Company shall not, and shall not permit any of their respective Subsidiaries or Representatives to, issue any press release or make any public statement with respect to the Transactions without the prior written consent of the other (which consent shall not be unreasonably withheld, conditioned or delayed) and shall consult with each other prior to issuing any press release or otherwise making any public statement with respect to the Transactions and

------

provide to each other for review an advance copy of any such press release or statement, except (a) as may be required by applicable Law, court process or the rules and regulations of any stock exchange on which such party's securities (or those of any of a party's Affiliates) are listed, as applicable, in which case the party required to make the release or announcement shall use its reasonable best efforts to allow the other reasonable time to comment on such release or announcement in advance of such issuance, (b) with respect to any press release or other public statement by the Company expressly permitted by <u>Section</u> <u>6.9</u>, (c) with respect to any press releases or other public statements by Parent or Merger Sub in response to any public announcement permitted by <u>clause (b)</u> of this <u>Section</u> <u>6.5</u>, and (d) each party may make any public statement, including in response to questions from the press, analysts, investors or those attending industry conferences, or (subject to <u>Section</u> <u>6.3(e)</u> in the case of announcements by the Company) make internal announcements to employees and make disclosures in Company SEC Documents, to the extent that such statements are consistent with previous press releases, public disclosures or public statements made jointly by the parties or previously approved by the other parties and otherwise in compliance with this <u>Section</u> <u>6.5</u>. Each of the parties agrees that, promptly following execution of this Agreement, (i) the Company and Parent shall each issue an initial press release with respect to the Transactions, each in a form mutually agreed to by the Company and Parent, and (ii) the Company shall file a current report on Form 8-K with the SEC attaching the Company's initial press release and copies of this Agreement and the Separation and Distribution Agreement as exhibits.

SECTION 6.6. <u>Standard of Efforts; Governmental Approvals</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Subject to the terms and conditions provided herein, each party agrees to use (and, as applicable, shall cause its respective controlled Affiliates to use) its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable and in any event prior to the Outside Date, the Transactions, including (i) preparing and filing as promptly as practicable with any Governmental Authority all documentation to effect all necessary notices, reports and other filings (or draft notices, reports and other filings, as applicable), (ii) obtaining as promptly as practicable and maintaining all Authorizations necessary or advisable to be obtained from any Governmental Authority in order to consummate the Transactions and (iii) defending or contesting any Proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the Transactions, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Authority in respect of any such Proceeding vacated or reversed; *provided* that in no event shall Parent or Merger Sub be obligated to, and none of Company or any Company Subsidiary shall, without the prior written consent of Parent, agree to or proffer, any consent fee, concession or other modification to the terms and conditions of any Contract in order to obtain the Authorizations contemplated by <u>clause (ii)</u> of this <u>Section</u> <u>6.6(a)</u>. The Company, Parent and Merger Sub agree that they will consult with each other with respect to the obtaining of all such necessary Authorizations and (A) the Company shall have the right to review and approve in advance all characterizations of the information relating to the Company and the Company Subsidiaries, (B) Parent shall have the right to review and approve in advance all characterizations of the information relating to Parent or Merger Sub, and (C) each of the Company and Parent shall have the right to review and approve in advance all characterizations of the information relating to the Transactions, in each case, that appear in any filing or submission

------

made in connection with obtaining such Authorizations in respect of the Transactions. Notwithstanding anything to the contrary set forth in this Agreement, Parent, upon reasonable consultation with the Company, shall (1) control the strategy and timing for, and make all decisions (and shall take the lead in all meetings and communications with any Governmental Authority) for obtaining any Authorizations from any Governmental Authority in connection with the Transactions and (2) control the overall development of the positions to be taken and any regulatory actions to be requested in any filing or submission with a Governmental Authority in connection with obtaining any Authorizations with respect to the Transactions and in connection with any investigation or other inquiry or Proceeding by or before, or any negotiations with, a Governmental Authority relating to the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In furtherance of, and not in limitation of the foregoing, each of the Company and Parent shall (and shall cause their respective controlled Affiliates, if applicable, to): (i) as promptly as practicable, and in any event within 20 Business Days (or such other time as mutually agreed by the parties) after the date hereof, file or cause to be filed with the United States Federal Trade Commission and the United States Department of Justice any Notification and Report Forms required to be filed under the HSR Act with respect to the Transactions, (ii) as promptly as practicable, and in any event within 20 Business Days (or such other time as mutually agreed by the parties) after the date hereof, make required filings (or draft filings, as applicable) pursuant to any other applicable Antitrust Law or Foreign Investment Laws, if any, with respect to the Transactions and (iii) appropriately supply as promptly as practicable any additional information and documentary material that may be requested and to use their reasonable best efforts to take all other actions necessary to cause the expiration or termination of the applicable waiting periods or obtain any required Authorizations under such Antitrust Laws or Foreign Investment Laws as soon as practicable. No party shall consent to any voluntary delay of the consummation of the transactions contemplated by this Agreement, except with the prior written consent of the other parties hereto, *provided* that Parent has the right to cause its filing under the HSR Act to be withdrawn and refiled, consistent with 16 C.F.R. 803.12(c), to provide the applicable Governmental Authority with additional time to review any of the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Each party will (i) cooperate in all respects with each other in connection with any filing or submission to any Governmental Authority and in connection with any investigation or other inquiry by any Governmental Authority, in each case with respect to the Transactions, (ii) promptly notify the other party of any communication received from, or given to, any Governmental Authority with respect to the Transactions and keep the other party informed as to the status of any such request, inquiry, investigation, proceeding, or other communication, (iii) subject to applicable Law, provide the other party with a reasonable opportunity to review in advance any proposed communication or other undertakings, such as proposed notices, filings, submissions, or applications (including draft notices, filings, submissions or applications) by it to any Governmental Authority with respect to the Transactions, and consider the other party's comments in good faith, (iv) not agree to participate in any substantive meeting or discussion with any Governmental Authority, in respect of any filing, investigation, inquiry or proceeding concerning this Agreement or the Transactions unless it consults with the other party in advance and, to the extent permitted by such Governmental Authority, gives the other party the opportunity to attend, and (v) furnish the other party with copies of all correspondence, filings and written communications between them and their Affiliates and their respective Representatives, on the one

------

hand, and any such Governmental Authority or its staff, on the other hand, with respect to this Agreement or the Transactions except for the parties' HSR filings; *provided* that materials required to be provided pursuant to this section may be redacted (1) to remove references concerning valuation, (2) as necessary to comply with contractual arrangements, (3) as necessary to comply with applicable law, and (4) as necessary to address reasonable privilege or confidentiality concerns; *provided further*, that a party may reasonably designate any competitively sensitive material provided to another party under this section as "Outside Counsel Only."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) At Parent's written request, the Company shall give (or shall cause the applicable Company Subsidiary to give) any notices to Third Parties required to be given under any Contracts in connection with consummation of the Transactions, and use, and cause the Company Subsidiaries to use, reasonable best efforts to obtain any Third Party consents, approvals or waivers required to be obtained under any Contracts in connection with consummation of the Transactions; *provided* that neither the Company nor any Company Subsidiary shall, without the prior written consent of Parent, agree to, or proffer, any consent fee, concession or other modification to the terms and conditions of any Contract in order to obtain any such consent. The Company shall coordinate and cooperate with Parent in determining whether any actions, consents, approvals or waivers are required to be obtained from parties to any Material Contracts in connection with consummation of the Transactions and seeking any such actions, consents, approvals or waivers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding the foregoing provisions of this <u>Section</u> <u>6.6</u> or any other provision of this Agreement, (i) nothing in this <u>Section</u> <u>6.6</u> shall limit any applicable rights a party may have to terminate this Agreement pursuant to <u>Section</u> <u>8.1</u> so long as such party has up to then complied in all material respects with its obligations under this <u>Section</u> <u>6.6</u> and (ii) in no event shall Parent or Merger Sub be required to offer, accept, or agree to, and the Company shall not, without Parent's prior written consent, offer, accept, or agree to, (A) sell, divest, dispose of, lease, license or hold separate, or cause any Company Subsidiary to sell, divest, dispose of, lease, license or hold separate, any portion of the businesses, operations, assets or product lines of Parent, the Company or any of their respective Subsidiaries (or a combination of the respective businesses, operations, assets or product lines of Parent, the Company or any of their respective Subsidiaries), except for the Spin-Off or a ROFN Sale, (B) restrict, prohibit or limit the ability of Parent, the Company or any of their respective Subsidiaries to conduct the businesses or own the assets of Parent, the Company or the Surviving Corporation, or any of their respective Affiliates, (C) restrict, prohibit or limit the ownership or operation by the Company, Parent or any of their respective Subsidiaries of all or any portion of the business or assets of Parent, the Company, the Surviving Corporation or any of their respective Affiliates, (D) cause Parent or any of its Subsidiaries to divest any shares of Company Common Stock, or (E) impose limitations on the ability of Parent or any of its Subsidiaries effectively to acquire, hold or exercise full rights of ownership of, any shares of Company Common Stock, including the right to vote the Company Common Stock acquired or owned by Parent or any of its Subsidiaries on all matters properly presented to the Stockholders.

------

SECTION 6.7. <u>Notification of Certain Matters;</u> <u>Interactions with Governmental Authorities</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) During the Pre-Closing Period, each of the Company, on the one hand, Parent and Merger Sub, on the other hand, shall give prompt notice to the other of (i) any Proceedings commenced or, to such party's knowledge, threatened, by or against, relating to or involving or otherwise affecting the Company or any Company Subsidiary or Parent or any of its controlled Affiliates, as the case may be, that relate to this Agreement or the consummation of the Transactions, (ii) any event, condition, change, occurrence or development of a state of facts that would reasonably be expected to cause the failure of any of the conditions set forth in <u>Article 7</u>, and (iii) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with any of the Transactions; *provided* that the delivery of notice pursuant to this <u>Section</u> <u>6.7</u> shall not limit or otherwise affect the remedies available hereunder to any party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) During the Pre-Closing Period, subject to applicable Law, the Company shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) promptly inform Parent in writing of any material submission, filing or other material correspondence submitted or transmitted to, or that is received from, the FDA or any other Regulatory Authority related to the Company Platform or any Company Product and provide Parent with a reasonable opportunity to consult with the Company with respect to and review any filing proposed to be made with the FDA or any other Regulatory Authority by or on behalf of the Company or any of its Subsidiaries and any material correspondence or other material communication proposed to be submitted or otherwise transmitted to the FDA or any other Regulatory Authority by or on behalf of the Company or any of the Company Subsidiaries, in each case, relating to any Company Product, and shall consider in good faith any comments or other input timely provided by Parent in respect of the foregoing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) promptly inform Parent, including furnishing copies, of (A) all Authorizations from the FDA and all material Authorizations from any other applicable Regulatory Authority held by the Company or any of the Company Subsidiaries related to any Company Product, (B) all material written submissions made to and material written regulatory communications with the FDA or any other applicable Regulatory Authority related to any Company Product that are in the Company's or any of the Company Subsidiaries' possession or control, and (C) all reports, results, data and information relating to the safety, quality, or efficacy of the Company Platform or any of the Company Products, including all final reports prepared under 21 C.F.R. 58.185, all information collected pursuant to 21 C.F.R. Part 58 and all adverse event (as such term is defined or described in 21 C.F.R. 312.32) and other information in respect of safety, adverse events and quality relating to the Company Platform or any Company Product notified to the Company or that are in the Company's or any of the Company Subsidiaries' possession or control, in each case ((A) through (C)), which arise during the Pre-Closing Period;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) (A) provide notice to Parent prior to any requested, proposed or scheduled meeting with the FDA or any other Regulatory Authority (including, as applicable, any scheduled pre-IND meeting referenced in 21 C.F.R. 312.82), relating to the Company Platform or any Company Product, (B) consult with Parent regarding any such meeting and consider in good faith any input with respect thereto timely provided by Parent and (C) to the extent permitted under applicable Law, provide Parent with an opportunity to attend, or participate in, any such meeting that the Company or any of the Company Subsidiaries has with the FDA or any other Regulatory Authority (*provided* that, if Parent is unable to attend or participate, the Company shall promptly provide Parent with a reasonably detailed written summary of any such meeting); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) (A) if the FDA or any other Regulatory Authority desires to conduct an inspection or audit of the Company or any of the Company Subsidiaries or any of their respective Collaboration Partners, to the extent related to the Company Platform or any Company Product, promptly notify Parent upon the Company becoming aware thereof; (B) to the extent in the Company's or any of the Company Subsidiaries' possession or control, promptly provide Parent with a copy (or detailed written report) of any findings of the FDA or such other Regulatory Authority following any such audit or inspection; and (C) consider Parent's comments regarding any such inspection or audit in good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company shall promptly post all information required to be disclosed or provided to Parent pursuant to <u>Section</u> <u>6.7(b)</u> to the Data Room to which Parent and its Representatives shall have continuous access through the Closing Date, and any failure by the Company to post and provide continuous access to such information in the Data Room shall be considered a failure by the Company to disclose such information and a breach of <u>Section</u> <u>6.7(b)</u>; provided that any break in the continuity of access not attributable to actions by the Company or its Representatives shall not be deemed a breach of <u>Section</u> <u>6.7(b)</u>. No investigation, notice or disclosure pursuant to <u>Section</u> <u>6.7(b)</u> shall (i) supplement or amend any representation or warranty in this Agreement of the Company (or cure any breach thereof), (ii) supplement or amend the Company Disclosure Letter or (iii) otherwise limit the rights or remedies available hereunder to Parent.

SECTION 6.8. <u>Access to Information</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) During the Pre-Closing Period, the Company shall, and shall cause the Company Subsidiaries and the Representatives of the Company and the Company Subsidiaries to, (i) afford to Parent, Merger Sub and their respective Representatives reasonable access to its officers, employees, agents, properties, facilities, books, records, Contracts and other assets, and (ii) promptly furnish to Parent, Merger Sub and their respective Representatives copies of all existing financial, operating and other data and information, in each case of the immediately preceding <u>clauses (i)</u> and <u>(ii)</u> of this <u>Section</u> <u>6.8(a)</u> as such Persons may from time to time reasonably request, for any reasonable business purpose in furtherance of the consummation of the Transactions, including for integration planning purposes; *provided* that any such access (including to employees) shall be conducted at Parent's expense, under the supervision of appropriate personnel of the Company or the Company Subsidiaries, at a reasonable time and in such a manner as to not interfere unreasonably with the normal operation of the business of the Company. During the Pre-Closing Period, the Company shall, and shall cause each Company Subsidiary to, use reasonable best efforts to, at the reasonable request of Parent, facilitate site visits by any of Parent, Merger Sub or their respective Representatives at any facility of a Third Party

------

contract manufacturer of the Company or any Company Subsidiary. The Company shall instruct its Representatives to cooperate with Parent and Merger Sub in their investigation of the Company and the Company Subsidiaries in accordance with the terms of this <u>Section</u> <u>6.8(a)</u>. No additional investigations or disclosures shall affect the Company's representations and warranties contained herein, or limit or otherwise affect the remedies available to Parent and Merger Sub pursuant to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Nothing herein shall require the Company or any Company Subsidiary to disclose any information to (including by way of facilitating site visits by) Parent, Merger Sub or their respective Representatives if such disclosure would, in the Company's reasonable discretion (i) jeopardize any attorney client or other legal privilege (*provided* that the Company will nonetheless provide Parent and the applicable Representatives of Parent with appropriate information regarding the factual basis underlying any circumstances that resulted in the preparation of such privileged analyses so long as such privilege will not be jeopardized thereby) or (ii) contravene any applicable Law, fiduciary duty or binding agreement entered into prior to the date hereof, including any confidentiality agreement to which the Company or any Company Subsidiary is a party (*provided* that the Company shall use its reasonable best efforts to obtain the consent of any such agreement's counterparty to such inspection or disclosure). The Company and Parent will each use its reasonable best efforts to make appropriate substitute arrangements to permit reasonable disclosure under circumstances in which the restrictions of the preceding sentence apply. Notwithstanding the foregoing, nothing in this <u>Section</u> <u>6.8</u> shall require the Company nor any Company Subsidiary to disclose any information to Parent, Merger Sub or their respective Representatives if such information relates to the applicable portions of the minutes of the meetings of the Company Board or any committee thereof (including any presentations or other materials prepared by or for the Company Board or such committee thereof) where the Company Board or committee thereof discussed (x) the Transactions, or any similar transaction involving the Company, (y) any Acquisition Proposal or (z) a Company Adverse Recommendation Change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The information disclosed pursuant to this <u>Section</u> <u>6.8</u> shall be treated in accordance with the provisions of the Confidentiality Agreement, which shall remain in full force and effect in accordance with its terms.

SECTION 6.9. <u>No Solicitation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) At all times during the Pre-Closing Period, the Company shall not, shall cause the Company Subsidiaries not to, and shall not authorize or knowingly permit its or the Company Subsidiaries' respective Representatives to, directly or indirectly (other than with respect to Parent or Merger Sub): (i) solicit, initiate, propose or take any action to knowingly encourage any inquiries or the submission of any proposal or offer that constitutes, or could reasonably be expected to lead to, an Acquisition Proposal or otherwise knowingly facilitate any effort or attempt to make an Acquisition Proposal, (ii) except as otherwise expressly permitted by this <u>Section</u> <u>6.9(a)</u>, enter into, continue or otherwise participate in any discussions or negotiations regarding, furnish to any Person or "group" (as defined under Section 13(d) of the Exchange Act) any non-public information or data relating to, afford access to the business, personnel, properties, assets, books or records of the Company and the Company Subsidiaries in connection with, or otherwise cooperate with any Person with respect to, any Acquisition Proposal or any inquiry,

------

proposal or offer that could reasonably be expected to lead to an Acquisition Proposal, (iii) grant any waiver, amendment or release of or under, or fail to enforce, any confidentiality, standstill or similar agreement (or any confidentiality, standstill or similar provision of any other Contract); *<u>provided</u>* that, if the Company Board determines in good faith, after consultation with outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary duties under applicable Law, the Company may waive any such standstill or similar provision solely to the extent necessary to permit the applicable Person (if such Person has not been solicited in breach of this <u>Section</u> <u>6.9(a)</u>) to make, on a confidential basis to the Company Board, an Acquisition Proposal, conditioned upon such Person agreeing that the Company shall not be prohibited from providing any information to Parent (including regarding any such Acquisition Proposal) in accordance with, and otherwise complying with, this <u>Section</u> <u>6.9(a)</u>, (iv) enter into any letter of intent, Contract, commitment or agreement in principle with respect to an Acquisition Proposal (other than an Acceptable Confidentiality Agreement) or enter into any Contract or commitment requiring the Company to abandon, terminate or fail to consummate the Transactions, (v) exempt any Person or "group" (as defined under Section 13(d) of the Exchange Act) from the restriction on "business combinations" or any similar provision contained in applicable Takeover Provisions or the Company Charter Documents or grant a waiver under Section 203 of the DGCL or (vi) resolve, propose or agree to do any of the foregoing. Notwithstanding anything in this Agreement to the contrary, if in response to an unsolicited *bona fide* written Acquisition Proposal made by a Person or "group" (as defined under Section 13(d) of the Exchange Act) after the date hereof in circumstances not involving a breach of this <u>Section</u> <u>6.9</u>, the Company Board determines in good faith (after consultation with outside legal counsel and a financial advisor of nationally recognized reputation) that such Acquisition Proposal constitutes, or could reasonably be expected to lead to, a Superior Proposal and, after consultation with outside legal counsel, that the failure to take such action would be inconsistent with the fiduciary duties of the Company Board under applicable Law, then the Company may, at any time prior to obtaining the Requisite Company Vote to approve the adoption of this Agreement and the Separation and Distribution Agreement (but in no event after such time), enter into a customary confidentiality agreement (A) containing confidentiality, non-use and other terms that are no less favorable to the Company in the aggregate than those contained in the Confidentiality Agreement and (B) that does not prevent the Company from providing any information to Parent in accordance with this Agreement or otherwise complying with its obligation under this Agreement (an "*Acceptable Confidentiality Agreement*") with such Person or "group" (as defined under Section 13(d) of the Exchange Act) making such an Acquisition Proposal and thereafter (1) furnish information and data with respect to the Company and the Company Subsidiaries and afford access to the business, personnel, properties, assets, books or records of the Company and the Company Subsidiaries, in each case, pursuant to such Acceptable Confidentiality Agreement, and (2) enter into, maintain and participate in discussions or negotiations with, the Person or "group" (as defined under Section 13(d) of the Exchange Act) making such Acquisition Proposal and its Representatives; *provided* that the Company will concurrently provide to Parent any information and data concerning the Company or any Company Subsidiary or access provided to such Person or "group" (as defined under Section 13(d) of the Exchange Act) that was not previously made available to Parent. The Company shall ensure that its Representatives are informed of the provisions of this <u>Section</u> <u>6.9(a)</u>. Without limiting the foregoing, it is agreed that any violation of the foregoing restrictions by any Company Subsidiary or any Representative of the Company or any Company Subsidiary shall be deemed to be a breach of this <u>Section</u> <u>6.9</u> by the Company. The Company shall provide Parent with an accurate and complete copy of any Acceptable Confidentiality Agreement as entered into as contemplated by this <u>Section</u> <u>6.9(a)</u> promptly (and in any event within 24 hours) following the execution thereof and the Company shall not terminate, waive, amend, release or modify any material provision of any Acceptable Confidentiality Agreement.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company shall, as promptly as practicable, and in any event no later than 24 hours after receipt thereof, notify Parent of any Acquisition Proposal or any inquiry, proposal or offer that expressly contemplates or could reasonably be expected to lead to an Acquisition Proposal, which notification shall include (i) a copy of the applicable written Acquisition Proposal, inquiry, proposal or offer (or, if oral, a summary of the material terms and conditions of such Acquisition Proposal, inquiry, proposal or offer) and (ii) the identity of the Person or "group" (as defined under Section 13(d) of the Exchange Act) making such Acquisition Proposal. The Company shall thereafter keep Parent reasonably informed on a reasonably current basis of the status of, or any material developments, discussions or negotiations regarding, any such Acquisition Proposal, or inquiry, proposal or offer that expressly contemplates or could reasonably be expected to lead to an Acquisition Proposal, and the material terms and conditions thereof (including any change in price or form of consideration or other material amendment thereto), including by providing a copy of material documentation and summary of substantive communications (which shall include any proposals or offers) relating thereto that is exchanged between the Person or "group" (as defined under Section 13(d) of the Exchange Act) (or its Representatives) making such Acquisition Proposal and the Company (or its Representatives) within 24 hours after the receipt or delivery thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Except as expressly permitted by <u>Section</u> <u>6.9(d)</u> or <u>Section</u> <u>6.9(e)</u>, neither the Company Board nor any committee thereof shall (i) (A) withhold, fail to include in (or remove from) the Proxy Statement, withdraw, qualify or modify (or publicly propose or resolve to withhold, fail to include in (or remove from) the Proxy Statement, withdraw, qualify or modify), in a manner adverse to Parent, the Company Recommendation, (B) adopt, approve, recommend, submit to the Stockholders or declare advisable or make any recommendation other than a rejection of (or publicly propose to adopt, approve, recommend, submit to the Stockholders or declare advisable, or make any recommendation other than a rejection of), any Acquisition Proposal, (C) fail to (1) reaffirm the Company Recommendation and (2) recommend against acceptance of a tender or exchange offer by the Stockholders pursuant to Rule 14d-2 under the Exchange Act for outstanding shares of Company Common Stock, in each case, within 10 Business Days after receipt of a written request of Parent following an Acquisition Proposal that has been publicly announced (in the case of <u>clause (1)</u>) or the commencement of such tender offer or exchange offer (in the case of <u>clause (2)</u>); *provided* that the taking of no position or a neutral position by the Company Board in respect of the acceptance of any such tender offer or exchange offer as of the end of such period shall constitute a failure to recommend against acceptance of any such offer, or (D) take any action to exempt any Person (other than Parent or its Subsidiaries) or any action taken by any Person (other than Parent or its Subsidiaries) from any Takeover Provision (any action described in this <u>Section</u> <u>6.9(c)</u> being referred to as a "*Company Adverse Recommendation Change*") or (ii) cause or allow the Company to enter into a Specified Agreement, or resolve or agree to take any such action described in the immediately preceding <u>clause (i)</u> or <u>(ii)</u> of this <u>Section</u> <u>6.9(c)</u>.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Notwithstanding anything in this Agreement to the contrary, at any time prior to obtaining the Requisite Company Vote to approve the adoption of this Agreement and the Separation and Distribution Agreement, the Company Board may effect a Company Adverse Recommendation Change in connection with an Acquisition Proposal or terminate this Agreement to enter into a Specified Agreement, in each case if, and only if, (i) the Company is not in breach of this <u>Section</u> <u>6.9</u> with respect to the Acquisition Proposal that is the subject of such Company Adverse Recommendation Change or Specified Agreement, (ii) the Company Board determines in good faith, after consultation with the Company's outside legal counsel, that the failure to make the Company Adverse Recommendation Change or terminate this Agreement to enter into a Specified Agreement would be inconsistent with the fiduciary duties of the Company Board under applicable Law, (iii) the Company has given Parent written notice of the Company Board's intention to make a Company Adverse Recommendation Change or terminate this Agreement to enter into a Specified Agreement not earlier than 11:59 p.m. New York City time on the fourth Business Day after Parent receives such written notice and (iv) the Company shall have complied with <u>clauses (1)</u> through <u>(5)</u> of this <u>Section</u> <u>6.9(d)</u>, as follows: (1) prior to giving effect to <u>clauses (3)</u> through <u>(5)</u> of this <u>Section</u> <u>6.9(d)</u>, the Company Board shall have determined that such Acquisition Proposal is a Superior Proposal, (2) the Company shall have provided to Parent information with respect to such Acquisition Proposal in accordance with <u>Section</u> <u>6.9(b)</u>, (3) the Company shall have negotiated in good faith with Parent (and caused its Representatives to negotiate with Parent), to the extent that Parent desires to negotiate, during the four Business Day period provided in the foregoing <u>clause (iii)</u> of this <u>Section</u> <u>6.9(d)</u> with respect to such proposed revisions to this Agreement or other proposals made by Parent, if any, so that the Acquisition Proposal would no longer constitute a Superior Proposal, (4) after considering the results of negotiations with Parent and taking into account the proposals made by Parent, if any, after consultation with its outside legal counsel and a financial advisor of nationally recognized reputation, the Company Board shall have determined in good faith that such Acquisition Proposal remains a Superior Proposal, and, after consultation with its outside legal counsel, that the failure to make the Company Adverse Recommendation Change or terminate this Agreement to enter into a Specified Agreement would be inconsistent with the fiduciary duties of the Company Board under applicable Law and (5) if the Company intends to terminate this Agreement to enter into a Specified Agreement, the Company shall only do so in compliance with <u>Section</u> <u>8.1(d)(i)</u>. For clarity, the provisions of this <u>Section</u> <u>6.9(d)</u> shall also apply to any amendment to the financial terms or any other material amendment to any Acquisition Proposal (except that any reference to four Business Days shall instead be three Business Days) or any successive Acquisition Proposals.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding anything in this Agreement to the contrary, at any time prior to obtaining the Requisite Company Vote to approve the adoption of this Agreement and the Separation and Distribution Agreement, the Company Board may make a Company Adverse Recommendation Change with respect to an Intervening Event, if and only if: (i) the Company Board determines in good faith, after consultation with the Company's outside legal counsel, that the failure to make the Company Adverse Recommendation Change would be inconsistent with the fiduciary duties of the Company Board under applicable Law, (ii) Parent shall have received from the Company written notice not later than 11:59 p.m. New York City time on the fourth Business Day prior to the making of any Company Adverse Recommendation Change, describing the Intervening Event in reasonable detail, (iii) during the fourth Business Day period provided in the foregoing <u>clause (ii)</u>, the Company shall have negotiated in good faith with Parent (and caused its Representatives to negotiate with Parent), to the extent that Parent desires to

------

negotiate, with respect to any proposed revisions to this Agreement or other proposals made by Parent, if any, that would obviate the requirement to make a Company Adverse Recommendation Change, and (iv) after considering the results of negotiations with Parent and taking into account the proposals made by Parent, if any, after consultation with its outside legal counsel, the Company Board shall have determined in good faith that the failure to make the Company Adverse Recommendation Change would be inconsistent with the fiduciary duties of the Company Board under applicable Law. For the avoidance of doubt, the provisions of this <u>Section</u> <u>6.9(e)</u> shall also apply to any material change to the facts and circumstances relating to such Intervening Event (except that any reference to four Business Days shall instead be three Business Days).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Nothing in this <u>Section</u> <u>6.9</u> shall prohibit the Company from taking and disclosing a position contemplated by Rule 14d-9 or Rule 14e-2(a) under the Exchange Act or complying with Item 1012(a) of Regulation M-A under the Exchange Act, or making any disclosure that constitutes a "stop, look and listen" communication pursuant to Rule 14d-9(f) under the Exchange Act, and none of the actions described in this <u>Section</u> <u>6.9(f)</u> shall be considered a Company Adverse Recommendation Change; *provided* that this <u>Section</u> <u>6.9(f)</u> shall not permit the Company Board to make a Company Adverse Recommendation Change, except to the extent permitted by <u>Section</u> <u>6.9(d)</u> or <u>Section</u> <u>6.9(e)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Company shall, and shall cause the Company Subsidiaries and the Company's and the Company Subsidiaries' respective Representatives to, (i) immediately cease and cause to be terminated any existing solicitations, encouragements, facilitations, discussions or negotiations with any Person or "group" (as defined under Section 13(d) of the Exchange Act) conducted as of or prior to the execution and delivery of this Agreement by the Company, any Company Subsidiary or their respective Representatives with respect to an Acquisition Proposal, (ii) immediately terminate access to any physical or electronic data rooms relating to a possible Acquisition Proposal, and (iii) promptly (but in no event later than two Business Days following the execution of this Agreement) request and use reasonable best efforts to obtain the return from all such Persons, or cause the destruction, of all copies of confidential information previously provided to such Persons by or on behalf of the Company, any Company Subsidiary or their respective Representatives (and all analyses and other materials prepared by or on behalf of such Persons that contain, reflect or analyze such confidential information). The Company shall use its reasonable best efforts to enforce the terms of each confidentiality agreement entered into with any such Person or "group" (as defined under Section 13(d) of the Exchange Act).

SECTION 6.10. <u>Indemnification and Insurance</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) After the Effective Time, the Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, fulfill and honor all rights and obligations to indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time (whether asserted or claimed prior to, at or after the Effective Time) by the Company now existing in favor of each Person who is now or has been at any time prior to the date hereof or who becomes prior to the Effective Time an officer or director of the Company or any Company Subsidiary (each an "*Indemnified Party*") as provided in the Company Charter Documents, in each case as in effect on the date hereof, or pursuant to any other Contract in effect on the date hereof and set forth in <u>Section</u> <u>6.10</u> of the Company Disclosure

------

Letter, accurate and complete copies of which Contracts have been made available to Parent. Without limiting the foregoing, after the Effective Time, Parent shall cause its Subsidiaries to, indemnify and hold harmless each Indemnified Party, against all claims, losses, liabilities, damages, Judgments, inquiries, fines and reasonable fees, costs and expenses, including attorneys' fees and disbursements, incurred in connection with any claim, action, suit or Proceeding, whether civil, criminal, administrative or investigative (including with respect to matters existing or occurring at or prior to the Effective Time, including this Agreement and the Transactions), arising out of or pertaining to the fact that the Indemnified Party is or was a director or officer of the Company or any Company Subsidiary or is or was serving at the request of Company or any Company Subsidiary as a director or officer of another Person, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent provided in the Company Charter Documents, as in effect on the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Parent's and the Surviving Corporation's obligations under <u>Section</u> <u>6.10(a)</u> shall continue in full force and effect for a period of six years from the Effective Time; *provided*, *however*, that all rights to indemnification, exculpation and advancement of expenses in respect of any claim asserted or made within such period shall continue until the final disposition of such claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) From the Effective Time until the sixth anniversary of the Closing Date, the Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, maintain officers' and directors' liability insurance in respect of acts or omissions occurring on or prior to the Effective Time covering each such Person currently covered by the Company's officers' and directors' liability insurance policies or provide substitute policies for such Persons currently covered by the Company's officers' and directors' liability insurance policies, in either case, on terms with respect to coverage and amount no less favorable than those of such policies in effect on the date hereof; *provided* that in satisfying its obligation under this <u>Section</u> <u>6.10(c)</u>, the Surviving Corporation shall not be obligated to pay an amount per year in excess of 300% of the last annual premium paid by the Company prior to the date hereof (the "*Maximum Amount*") and if such insurance is unavailable or the premiums for such insurance would at any time exceed the Maximum Amount, then the Surviving Corporation shall cause to be maintained policies of insurance that, in the Surviving Corporation's good faith judgment, provide the maximum coverage available at an annual premium equal to the Maximum Amount. The provisions of the immediately preceding sentence shall be deemed to have been satisfied if prepaid "tail" or "runoff" policies have been obtained by the Company prior to the Effective Time, which policies provide each such Person currently covered by the Company's officers' and directors' liability insurance policies with coverage in an amount not less than the existing coverage and with other terms not less favorable to the insured persons than the existing directors' and officers' liability insurance policies for an aggregate period of six years with respect to claims arising from acts or omissions that occurred on or before the Effective Time, including, in respect of the Transactions; *provided*, *however*, that the amount paid for such prepaid policies does not exceed the Maximum Amount. If such prepaid policies have been obtained by the Company prior to the Effective Time, the Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, maintain such policies in full force and effect for their full term, and continue to honor the obligations thereunder.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The provisions of this <u>Section</u> <u>6.10</u> are (i) intended to be for the benefit of, and shall be enforceable by, each Indemnified Party, their heirs and their representatives and (ii) in addition to, and not in substitution for, any other rights to indemnification or contribution that any such individual may have under any certificate of incorporation or bylaws, by contract or otherwise. The obligations of Parent and the Surviving Corporation under this <u>Section</u> <u>6.10</u> shall survive the consummation of the Merger and shall not be terminated or modified in such a manner as to adversely affect any Indemnified Party to whom this <u>Section</u> <u>6.10</u> applies without the consent of such affected Indemnified Party (it being expressly agreed that the Indemnified Party to whom this <u>Section</u> <u>6.10</u> applies shall be third party beneficiaries of this <u>Section</u> <u>6.10</u>, each of whom may enforce the provisions of this <u>Section</u> <u>6.10</u>).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) In the event that the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all its properties and assets to any Person, or if Parent dissolves the Surviving Corporation, then, and in each such case, Parent shall cause proper provision to be made so that the successors and assigns of the Surviving Corporation assume the obligations set forth in this <u>Section</u> <u>6.10</u>.

SECTION 6.11. <u>Section 16 Matters</u>. Prior to the Effective Time, the Company and the Company Board shall take all such steps as may be required to cause any dispositions of equity securities of the Company (including derivative securities) in connection with this Agreement by each Company director or officer who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company's equity securities to be exempt under Rule 16b-3 under the Exchange Act.

SECTION 6.12. <u>Transaction Litigation</u>. The Company shall promptly (and in any event within two Business Days) advise Parent in writing upon becoming aware of any Transaction Litigation and shall keep Parent informed on a reasonably prompt basis regarding any such Transaction Litigation. The Company shall give Parent the opportunity to (a) participate in the defense, prosecution, settlement or compromise of any Transaction Litigation, and (b) consult with counsel to the Company regarding the defense, prosecution, settlement or compromise with respect to any such Transaction Litigation. For purposes of this <u>Section</u> <u>6.12</u>, "participate" means that Parent will be kept reasonably apprised on a reasonably prompt basis of proposed strategy and other significant decisions with respect to the Transaction Litigation (to the extent that the attorney-client privilege between the Company and its counsel is not undermined or otherwise adversely affected), and Parent may offer comments or suggestions with respect to such Transaction Litigation which the Company shall consider in good faith; *provided* that the Company shall not settle or compromise or agree to settle or compromise any Transaction Litigation without Parent's prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), and the Company shall not file any supplemental disclosures to moot or otherwise address the claims in any Proceeding without giving Parent the opportunity to offer comments or suggestions with respect thereto which the Company shall consider in good faith.

SECTION 6.13. <u>Deregistration; Stock Exchange Delisting</u>. Prior to the Effective Time, the Company shall cooperate with Parent and use its reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done all things, necessary, proper or advisable on its part under applicable Law and rules and policies of Nasdaq to cause the delisting of the Company and of the Company Common Stock from Nasdaq as promptly as practicable after the Effective

------

Time and deregistration of the Company Common Stock under the Exchange Act as promptly as practicable after such delisting, and in any event no more than 10 days after the Closing Date, which shall include providing Parent with substantially final drafts of any quarterly or annual periodic reports which the Company would be required to file pursuant to the Exchange Act during the 10 days after the Closing Date. The Company shall not cause the Company Common Stock to be delisted from Nasdaq prior to the Effective Time.

SECTION 6.14. <u>Takeover Provisions</u>. If any Takeover Provision becomes or is deemed to be applicable to the Company, Parent, Merger Sub, the Merger or any other Transaction, then each of the Company, Parent, Merger Sub, and their respective Boards of Directors shall grant such approvals and take such actions as are necessary so that the Transactions may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to render such Takeover Provision inapplicable to the foregoing.

SECTION 6.15. <u>Obligations of Merger Sub</u>. Parent shall cause Merger Sub to comply in all respects with each of the representations, warranties, covenants, obligations, agreements and undertakings made or required to be performed by Merger Sub in accordance with the terms of this Agreement, the Merger, and the other transactions contemplated by this Agreement.

SECTION 6.16. <u>Merger Sub Stockholder Consent</u>. Promptly following the execution of this Agreement, Parent shall execute and deliver, in accordance with Section 228 of the DGCL and in its capacity as the sole stockholder of Merger Sub, a written consent adopting this Agreement.

SECTION 6.17. <u>Certain Pre-Closing Actions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company shall use reasonable best efforts to deliver all notices and take all other actions that are required to terminate, in accordance with the terms thereof, the Common Stock Sales Agreement, dated as of August 9, 2024, between the Company and TD Securities (USA) LLC, prior to the Effective Time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company shall take the actions set forth on <u>Section</u> <u>6.17(b)</u> of the Company Disclosure Letter.

SECTION 6.18. <u>Tax Matters</u>. Prior to the Effective Time, the Company shall reasonably cooperate with Parent if Parent undertakes a study to determine whether or not one or more Persons are in "control" (within the meaning of Section 304(c) of the Code) of both the Company and Parent.

SECTION 6.19. <u>Spin-Off Matters</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) On the terms and subject to the conditions of the Spin-Off Agreements and this Agreement and to compliance with applicable Law, immediately prior to the Closing, the Company will consummate, to the extent not previously consummated, the transactions contemplated as part of the Pre-Closing Reorganization (as such term is defined in the Separation and Distribution Agreement) and, unless the condition in <u>Section</u> <u>7.1(e)(ii)</u> has previously been satisfied, the Company will consummate the Spin-Off Distribution.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Without limiting the foregoing, the Company will cause each condition set forth in Section 7.1 of the Separation and Distribution Agreement and, unless the condition in <u>Section</u> <u>7.1(e)(ii)</u> has previously been satisfied, in <u>Section</u> <u>7.1(d)</u> of this Agreement to be satisfied as promptly as practicable following the date hereof, including by preparing and (as may be determined by the Company) confidentially submitting or filing with the SEC, a registration statement on Form 10 (or Form S-1 if the Company so determines after consultation with Parent) (together with any amendments, supplements, prospectuses or information statements in connection therewith, the "*Spin-Off Registration Statement*") to register the common stock of SpinCo to be issued or retained in the Spin-Off, which the Company will use reasonable best efforts to submit or file with the SEC within 60 days after the date of this Agreement, and which will be submitted or filed with the SEC within 90 days after the date of this Agreement or such other date as is mutually agreed by the parties. The Company will (i) timely provide drafts of the Spin-Off Registration Statement (and any amendments or supplements thereto) to Parent for review and comment (which comments will be considered by the Company in good faith) and (ii) give Parent and its counsel a reasonable opportunity to review and comment on such drafts. Following such initial submission or filing of the Spin-Off Registration Statement, the Company shall use its reasonable best efforts to respond to all comments from the staff of the SEC and file all necessary amendments to the Spin-Off Registration Statement as promptly as possible following receipt of such comments and shall use its reasonable best efforts to have the Spin-Off Registration Statement declared effective as promptly as practicable. The Company shall promptly notify Parent upon the receipt of any comments (written or oral) from the SEC or its staff or any request from the SEC or its staff for amendments or supplements to the Spin-Off Registration Statement and shall furnish to Parent a copy of any written comments from the SEC or its staff. The Company will seek effectiveness of the Spin-Off Registration Statement as promptly as possible following resolution of the SEC staff's comments, and thereafter will use reasonable best efforts to maintain the effectiveness of the Spin-Off Registration Statement. The Company shall promptly notify Parent of the time when the Spin-Off Registration Statement has become effective and the issuance of any stop order or similar Proceeding under the Exchange Act or suspension of the qualification of the shares of SpinCo common stock issuable in the Spin-Off for offer or sale in any jurisdiction. As promptly as practicable after effectiveness of the Spin-Off Registration Statement, the Company shall cause the information statement and/or prospectus, as applicable, relating to the Spin-Off Distribution to be mailed or made available to Stockholders. Each of the Company and Parent will cooperate reasonably with each other, and will cause their respective Affiliates to so cooperate, to effectuate the Spin-Off. If, at any time prior to the Spin-Off, any information relating to the Company, Parent, SpinCo or any of their respective Affiliates, officers or directors is discovered by the Company or Parent that should be set forth in an amendment or supplement to the Spin-Off Registration Statement so that the Spin-Off Registration Statement does not contain any untrue statement of any material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, at the time and in light of the circumstances under which they were made, not false or misleading, the party that discovers such information shall promptly notify the other party and correct such information, and the Company shall file an appropriate amendment or supplement describing such information with the SEC and, to the extent required by applicable Law, disseminate such information to the Stockholders. Neither the Company nor any Company Subsidiary will amend, modify or supplement, or agree to amend, modify or supplement, any Spin-Off Agreement without the prior written consent of Parent. The Company shall use reasonable best efforts to cause Nasdaq to list the common stock of SpinCo prior to the Distribution Effective Time (as defined in the Separation and Distribution Agreement). This <u>Section</u> <u>6.19(b)</u> shall not apply if the condition set forth in <u>Section</u> <u>7.1(e)(ii)</u> has previously been satisfied.

------

ARTICLE 7

CONDITIONS

SECTION 7.1. <u>Conditions to Each Party</u><u>'</u><u>s Obligation to Effect the Merger</u>. The respective obligations of each party to effect the Merger are subject to the satisfaction or, to the extent permitted by applicable Law, waiver on or prior to the Closing Date of each of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Requisite Company Vote</u>. This Agreement and the Separation and Distribution Agreement will have been duly adopted by Stockholders constituting the Requisite Company Vote in accordance with applicable Law and the Company Charter Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>No Injunctions or Restraints</u>. No Judgment preventing the consummation of the Merger shall have been issued by any Governmental Authority of competent jurisdiction and remain in effect, and there shall not be any Law enacted or deemed applicable to the Merger by any Governmental Authority of competent jurisdiction that makes consummation of the Merger illegal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Antitrust Approval</u>. Any waiting period (and any extension thereof entered into in compliance with this Agreement, including under any agreement between a party and a Governmental Authority agreeing not to consummate the Merger prior to a certain date entered into in compliance with this Agreement) applicable to the consummation of the Merger under the HSR Act shall have been terminated or shall have expired. No matter described in item 2 of Schedule I shall have occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Registration</u>. Unless the condition set forth in <u>Section</u> <u>7.1(e)(ii)</u> has been satisfied, the Spin-Off Registration Statement shall have become effective under the Exchange Act and will not be subject of any stop order or similar Proceeding under the Exchange Act and no Proceeding for that purpose will have been initiated or overtly threatened by the SEC and not concluded or withdrawn.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>The Spin-Off or Permitted Third Party Sale</u>. Either (i) the Spin-Off Distribution and the Pre-Closing Reorganization (as such term is defined in the Spin-Off Agreements) shall have been completed in accordance with the terms of Spin-Off Agreements, or (ii) a Permitted Third Party Sale shall have been consummated in accordance with definitive agreements entered into for such Permitted Third Party Sale, in the case of this <u>Section</u> <u>7.1(e)(ii)</u>, with the prior written consent of Parent, not to be unreasonably withheld, conditioned or delayed.

------

SECTION 7.2. <u>Additional Conditions to Obligations of Parent and Merger Sub to Effect the Merger</u>. The obligations of Parent and Merger Sub to effect the Merger are subject to the satisfaction or, to the extent permitted by applicable Law, waiver on or prior to the Closing Date of each of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Antitrust Proceedings</u>. No matter described in item 1 of <u>Schedule I</u> shall have occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Representations and Warranties</u>. (i) The representations and warranties of the Company set forth in <u>Section</u> <u>4.1</u> (other than <u>clause (c)</u> in the first sentence therein), the third and fourth sentences of <u>Section</u> <u>4.2(a),</u> <u>Section</u> <u>4.3(a)</u>, <u>Section</u> <u>4.3(b)</u><u>(i)</u>, <u>Section</u> <u>4.4</u> (other than <u>clause (iii)</u> in the second sentence of <u>Section</u> <u>4.4(a)</u>), <u>Section</u> <u>4.10</u>, <u>Section</u> <u>4.13</u>, <u>Section</u> <u>4.16(p)</u>, <u>Section</u> <u>4.19(e)</u>, <u>Section</u> <u>4.19(g)(i)</u> and <u>(ii)</u>, <u>Section</u> <u>4.19(h)</u>, <u>Section</u> <u>4.24</u>, <u>Section</u> <u>4.29(a)</u> and <u>Section</u> <u>4.30</u> shall be true and correct (without giving effect to any limitation on any representation or warranty indicated by the words "Company Material Adverse Effect," "in all material respects," "in any material respect," "material" or "materially") in all material respects as of the date hereof and as of the Closing Date as though made on and as of such date (except to the extent expressly made as of an earlier date, in which case as of such earlier date), (ii) the representations and warranties of the Company set forth in <u>Section</u> <u>4.2</u> (other than the third and fourth sentences of <u>Section</u> <u>4.2(a)</u>) shall be true and correct in all respects (other than *de minimis* inaccuracies) as of the date hereof and as of the Closing Date as though made on and as of such date (except to the extent expressly made as of an earlier date, in which case as of such earlier date), (iii) the representations and warranties of the Company set forth in <u>Section</u> <u>4.7(a)</u> shall be true and correct in all respects as of the date hereof and as of the Closing Date as though made on and as of such date (except to the extent expressly made as of an earlier date, in which case as of such earlier date), or (iv) the other representations and warranties of the Company set forth in this Agreement (other than those listed in the preceding <u>clause</u> <u>(i)</u>, <u>clause (ii)</u>, or <u>clause (iii)</u>) shall be true and correct (without giving effect to any limitation on any representation or warranty indicated by the words "Company Material Adverse Effect," "in all material respects," "in any material respect," "material" or "materially") as of the date hereof and as of the Closing Date as though made on and as of such date (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except, in the case of this <u>clause (iv)</u>, where the failure of any such representations and warranties to be so true and correct would not, and would not be reasonably expected to, have, individually or in the aggregate, a Company Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Performance of Obligations of the Company</u>. The Company shall have performed or complied with in all material respects all obligations, agreements and covenants required to be performed or complied with by it under this Agreement prior to the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>No Company Material Adverse Effect</u>. Since the date hereof, there shall not have occurred any Effect that has had, or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Closing Certificate</u>. Parent shall have received a certificate signed on behalf of the Company by the chief executive officer or chief financial officer of the Company, dated as of the Closing Date, to the effect that the conditions in <u>Section</u> <u>7.2(b)</u>, <u>Section</u> <u>7.2(c)</u> and <u>Section</u> <u>7.2(d)</u> have been satisfied.

------

SECTION 7.3. <u>Additional Conditions to the Company</u><u>'</u><u>s Obligations to Effect the Merger</u>. The obligations of the Company to effect the Merger are subject to the satisfaction or, to the extent permitted by applicable Law, waiver on or prior to the Closing Date of each of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Representations and Warranties</u>. (i) The representations and warranties of Parent and Merger Sub set forth in <u>Section</u> <u>5.1</u>, <u>Section</u> <u>5.3(a)</u>, <u>Section</u> <u>5.3(b)(i)</u> and <u>Section</u> <u>5.8</u> shall be true and correct in all material respects as of the date hereof and as of the Closing Date as though made on and as of such date (except to the extent expressly made as of an earlier date, in which case as of such earlier date), and (ii) each other representation and warranty of Parent and Merger Sub set forth in this Agreement (other than those listed in the preceding <u>clause</u> <u>(i)</u>) shall be true and correct (without giving effect to any limitation on any representation or warranty indicated by the words "Parent Material Adverse Effect," "in all material respects," "in any material respect," "material" or "materially") as of the date hereof and as of the Closing Date as though made on and as of such date (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except, in the case of this <u>clause</u> <u>(ii)</u>, where the failure of any such representations and warranties to be so true and correct would not, and would not be reasonably expected to, have, individually or in the aggregate, a Parent Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Performance of Obligations of Parent</u>. Parent shall have performed or complied in all material respects with all of the obligations, agreements and covenants required to be performed or complied with by it under this Agreement prior to the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Closing Certificate</u>. The Company shall have received a certificate signed on behalf of Parent, dated as of the Closing Date, by an authorized representative of Parent to the effect that each of the conditions in <u>Section</u> <u>7.3(a)</u> and <u>Section</u> <u>7.3(b)</u> have been satisfied.

SECTION 7.4. <u>Frustration of Closing Conditions</u>. No party may rely on the failure of any condition set forth in <u>Article 7</u> to be satisfied if such failure was caused by such party's failure to act in good faith or use its reasonable best efforts to consummate the transactions contemplated by this Agreement.

ARTICLE 8

TERMINATION

SECTION 8.1. <u>Termination</u>. This Agreement may be terminated, and the Transactions may be abandoned at any time prior to the Effective Time:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) by mutual written consent of Parent and the Company at any time prior to the Effective Time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) by either the Company or Parent by written notice to the other, if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Effective Time shall not have occurred on or prior to 5:00 p.m. New York City time on July 27, 2026 (as it may be extended pursuant to the following proviso, the "*Outside Date*"); *provided* that the Outside Date shall be automatically extended for one additional period of three months, ending no later than 5:00 p.m. New York City time on October 26, 2026, in the event that as of the then-scheduled Outside Date all of the

------

conditions in <u>Section</u> <u>7.1</u> (other than the Antitrust and Judgment/Illegality Conditions in each case solely in respect of the HSR Act or applicable pursuant to <u>Schedule I</u> of this Agreement, or the conditions set forth in <u>Section</u> <u>7.1(a)</u>, <u>Section</u> <u>7.1(d)</u> or <u>Section</u> <u>7.1(e)</u>) have been satisfied or waived by Parent or Merger Sub, to the extent waivable by Parent or Merger Sub (other than conditions that by their nature are to be satisfied at Closing, each of which is then capable of being satisfied); *provided further* that the right to terminate this Agreement pursuant to this <u>Section</u> <u>8.1(b)(i)</u> shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the primary cause of, or resulted in, the failure of the Effective Time to have occurred on or prior to the Outside Date; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) any final, non-appealable Judgment preventing the consummation of the Merger shall have been issued by any Governmental Authority of competent jurisdiction and remain in effect, or there shall be any Law enacted or deemed applicable to the Merger by any Governmental Authority of competent jurisdiction that makes consummation of the Merger permanently illegal; *provided* that the right to terminate this Agreement pursuant to this <u>Section</u> <u>8.1(b)(ii)</u> shall not be available to any party if the Judgment or Law preventing or making permanently illegal the consummation of the Merger under this <u>Section</u> <u>8.1(b)(ii)</u> was primarily caused by or the result of the failure of such party to perform any of its obligations under this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) by Parent by written notice to the Company at any time prior to the Effective Time, if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) at any time prior to obtaining the Requisite Company Vote to approve the adoption of this Agreement and the Separation and Distribution Agreement, a Company Adverse Recommendation Change shall have occurred; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) a breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Company set forth in this Agreement shall have occurred that would cause the conditions in either of <u>Section</u> <u>7.2(b)</u> or <u>Section</u> <u>7.2(c)</u>, as applicable, not to be satisfied; *provided* that, for purposes of this <u>Section</u> <u>8.1(c)(ii)</u>, if such a breach is curable by the Company within the earlier of the Outside Date and 20 Business Days after the date Parent gives the Company notice of such breach, then Parent may not terminate this Agreement under this <u>Section</u> <u>8.1(c)(ii)</u> on account of such breach unless such breach shall remain uncured upon the earlier of the Outside Date and the expiration of such 20 Business Day period; *provided further* that Parent shall not be entitled to terminate this Agreement pursuant to this <u>Section</u> <u>8.1(c)(ii)</u> if either Parent or Merger Sub is in breach of its obligations under this Agreement such that the Company would be entitled to terminate this Agreement pursuant to <u>Section</u> <u>8.1(d)(ii)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) by the Company by written notice to Parent at any time prior to the Effective Time:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) at any time prior to obtaining the Requisite Company Vote to approve the adoption of this Agreement and the Separation and Distribution Agreement, in order to accept a Superior Proposal and enter into the Specified Agreement relating to such Superior Proposal, if (A) such Superior

------

Proposal shall not have resulted from any breach of <u>Section</u> <u>6.9</u> with respect to such Superior Proposal and any Acquisition Proposal that was a precursor thereto, (B) the Company Board, after satisfying all of the requirements set forth in <u>Section</u> <u>6.9(d)</u>, shall have authorized the Company to enter into a binding written definitive acquisition agreement providing for the consummation of a transaction constituting a Superior Proposal (a "*Specified Agreement*") and (C) the Company shall have paid the Termination Fee, and have entered into the Specified Agreement, substantially concurrently with the termination of this Agreement pursuant to this <u>Section</u> <u>8.1(d)(i)</u>; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) if a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Parent or Merger Sub set forth in this Agreement shall have occurred, which breach or failure to perform has a Parent Material Adverse Effect; *provided* that, for purposes of this <u>Section</u> <u>8.1(d)(ii)</u>, if such a breach is curable by Parent within the earlier of the Outside Date and 20 Business Days after the date the Company gives Parent notice of such breach, then the Company may not terminate this Agreement under this <u>Section</u> <u>8.1(d)(ii)</u> on account of such breach unless such breach shall remain uncured upon the earlier of the Outside Date and the expiration of such 20 Business Day period; *provided further* that the Company shall not be entitled to terminate this Agreement pursuant to this <u>Section</u> <u>8.1(d)(ii)</u> if the Company is in breach of its obligations under this Agreement such that Parent would be entitled to terminate this Agreement pursuant to <u>Section</u> <u>8.1(c)(i)</u> or <u>Section</u> <u>8.1(c)(ii)</u>.

Any written notice of termination pursuant to this <u>Section</u> <u>8.1</u> shall specify the provision of this <u>Section</u> <u>8.1</u> pursuant to which such termination is intended to be effected and, if such termination is pursuant to <u>Section</u> <u>8.1(c)(i)</u>, <u>Section</u> <u>8.1(c)(ii)</u> or <u>Section</u> <u>8.1(d)(ii)</u>, shall specify the nature of the breach in reasonable detail (whether or not curable).

SECTION 8.2. <u>Effect of Termination</u>. If terminated pursuant to <u>Section</u> <u>8.1</u>, this Agreement shall be of no further force or effect without liability of any party (or any stockholder or Representative of such party) to any other party; *provided* that the provisions of this <u>Section</u> <u>8.2</u>, <u>Section</u> <u>6.8(c)</u>, <u>Section</u> <u>8.3</u> and <u>Article 9</u> (and any related definitions contained in any such Section) shall survive any termination hereof pursuant to <u>Section</u> <u>8.1</u>. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, none of Parent, Merger Sub or the Company shall be relieved or released from any liabilities or damages (which, in the case of liabilities or damages payable by Parent and Merger Sub, the parties acknowledge and agree may include, to the fullest extent permitted by Section 261(a)(1) of the DGCL, amounts representing, or based on the loss of, any premium or other economic entitlement the Stockholders would be entitled to receive under this Agreement if the Closing were to occur in accordance with the terms of this Agreement, which shall be deemed in such event to be damages of the Company) arising out of any common law fraud or Willful Breach of any provision of this Agreement or any other agreement delivered in connection herewith. For purposes of this Agreement, "*Willful Breach*" means an intentional and willful material breach, or an intentional and willful material failure to perform, in each case, that is the consequence of an act or omission by a party with the knowledge that the taking of such act or failure to take such act would cause a breach of this Agreement. The Confidentiality Agreement shall survive the termination of this Agreement and shall remain in full force and effect in accordance with its terms.

------

SECTION 8.3. <u>Termination Fees and Expenses</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Except as otherwise set forth in this <u>Section</u> <u>8.3</u>, all Expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such Expenses, whether or not the Transactions are consummated; *provided* that Parent shall pay all filing fees required in connection with the Merger pursuant to the HSR Act or applicable pursuant to <u>Schedule I</u> to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) this Agreement is terminated by Parent pursuant to <u>Section</u> <u>8.1(c)(i)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) this Agreement is terminated by the Company pursuant to <u>Section</u> <u>8.1(d)(i)</u>; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) (A) this Agreement is terminated by Parent or the Company pursuant to <u>Section</u> <u>8.1(b)(i)</u> or by Parent pursuant to <u>Section</u> <u>8.1(c)(ii)</u>, (B) after the date hereof, an Acquisition Proposal shall have been made to the Company or shall have been publicly made directly to the Stockholders or otherwise shall have been publicly disclosed and, in each case, not withdrawn (in the case of an Acquisition Proposal that has been communicated to the Stockholders or that shall have been publicly disclosed, publicly withdrawn) prior to the date of such termination, and (C) (1) the Company or any Company Subsidiary consummates such Acquisition Proposal within 12 months after such termination or (2) enters into a definitive agreement to effect such Acquisition Proposal within 12 months after such termination (in each case under this <u>clause (C)</u>, replacing "20%" in the definition of Acquisition Proposal with "50%");

then, in any such event under <u>clause (i)</u>, <u>(ii)</u> or <u>(iii)</u> of this <u>Section</u> <u>8.3(b)</u>, the Company shall pay to Parent, in cash at the time specified in the next sentence, a nonrefundable termination fee of $450,000,000 (the "*Termination Fee*"). Any payment of the Termination Fee required to be made pursuant to: (1) <u>Section</u> <u>8.3(b)(i)</u> shall be made to Parent within one Business Day after termination of this Agreement by Parent as set forth in <u>Section</u> <u>8.3(b)(i)</u>; (2) <u>Section</u> <u>8.3(b)(ii)</u> shall be made to Parent at the time set forth in <u>Section</u> <u>8.1(d)(i)</u>; and (3) <u>Section</u> <u>8.3(b)(iii)</u> shall be made to Parent concurrently with the occurrence of the applicable event described in <u>clause (C)</u> of <u>Section</u> <u>8.3(b)(iii)</u>. All payments under this <u>Section</u> <u>8.3(b)</u> shall be made by wire transfer of immediately available funds to an account to be designated by Parent. Except in the case of common law fraud or a Willful Breach, in the event that Parent receives full payment pursuant to this <u>Section</u> <u>8.3(b)</u> following the termination of this Agreement, receipt of the Termination Fee shall be deemed to be liquidated damages for any and all losses or damages suffered or incurred by Parent, Merger Sub, any of their respective Affiliates or any other Person in connection with this Agreement (and the termination hereof), the Transactions (and the abandonment thereof) or any matter forming the basis for such termination, and none of Parent, Merger Sub, any of their respective Affiliates or any other Person shall be entitled to bring or maintain any claim, action or Proceeding against the Company or any of its Affiliates for damages or any equitable relief arising out of or in connection

------

with this Agreement, any of the Transactions or any matters forming the basis for such termination. Notwithstanding the foregoing, nothing in this <u>Section</u> <u>8.3(b)</u> shall prevent, limit or otherwise restrict the right of Parent and Merger Sub to bring or maintain any claims arising out of the Company's common law fraud or Willful Breach of any provision of this Agreement or any other agreement or certificate delivered in connection herewith and any Termination Fee paid to Parent hereunder will be offset against any award for damages given to Parent pursuant to any claim for fraud or Willful Breach. For the avoidance of doubt, any payment made by the Company under this <u>Section</u> <u>8.3(b)</u> shall be payable only once with respect to this <u>Section</u> <u>8.3(b)</u> and not in duplication even though such payment may be payable under one or more provisions hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) In the event that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) this Agreement is terminated by either Parent or the Company pursuant to <u>Section</u> <u>8.1(b)(ii)</u> as the result of a Judgment or Law imposed by any Governmental Authority having jurisdiction under any Antitrust Laws, in each case, solely to the extent such Judgment arises under any Antitrust Laws or such Law is an Antitrust Law; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) this Agreement is terminated by either Parent or the Company pursuant to <u>Section</u> <u>8.1(b)(i)</u> and (A) any of the Antitrust and Judgment/Illegality Conditions is not satisfied (as the result of a Judgment or Law imposed by any Governmental Authority having jurisdiction under any Antitrust Laws and, in each case, solely to the extent such Judgment arises under any Antitrust Laws or such Law is an Antitrust Law) and (B) all of the other conditions set forth in <u>Article 7</u> (other than the conditions that are by their nature to be satisfied at Closing) have been satisfied or waived (to the extent waivable);

then, in any such event under <u>clause (i)</u> or <u>(ii)</u> of this <u>Section</u> <u>8.3(c)</u>, Parent shall promptly, but in no event later than two Business Days after such termination, pay or cause to be paid to the Company, in cash, a nonrefundable termination fee of $600,000,000 (the "*Reverse Termination Fee*"). All payments under this <u>Section</u> <u>8.3(c)</u> shall be made by wire transfer of immediately available funds to an account to be designated by the Company. In the event that the Company receives full payment pursuant to this <u>Section</u> <u>8.3(c)</u> following the termination of this Agreement, receipt of the Reverse Termination Fee shall be deemed to be liquidated damages for any and all losses or damages suffered or incurred by the Company, its Affiliates or any other Person in connection with this Agreement (and the termination hereof), the Transactions (and the abandonment thereof) or any matter forming the basis for such termination, and none of the Company nor any of its Affiliates or any other Person shall be entitled to bring or maintain any claim, action or Proceeding against Parent, Merger Sub or any of their respective Affiliates or any of their respective Representatives for damages or any equitable relief arising out of or in connection with this Agreement, any of the Transactions or any matters forming the basis for such termination. Notwithstanding the foregoing, nothing in this <u>Section</u> <u>8.3(c)</u> shall prevent, limit or otherwise restrict the right of the Company to bring or maintain any claims arising out of Parent's or Merger Sub's common law fraud or Willful Breach of any provision of this Agreement and any Reverse Termination Fee paid to the Company hereunder will be offset against any award for damages given to the Company pursuant to any claim for fraud or Willful Breach. For the avoidance of doubt, any payment made by Parent under this <u>Section</u> <u>8.3(c)</u> shall be payable only once with respect to this <u>Section</u> <u>8.3(c)</u> and not in duplication even though such payment may be payable under one or more provisions hereof.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company and Parent acknowledge that the agreements contained in <u>Section</u> <u>8.3(b)</u> and <u>Section</u> <u>8.3(c)</u> are an integral part of the Transactions, and that, without those agreements, the Company, Parent and Merger Sub would not enter into this Agreement. Accordingly, (i) if the Company fails to make payment of any amount payable under <u>Section</u> <u>8.3(b)</u> within the applicable time period specified in <u>Section</u> <u>8.3(b)</u>, as the case may be, and Parent commences a Proceeding to collect such amount that results in a judgment against the Company, the Company shall reimburse Parent for its fees and expenses (including reasonable attorneys' fees and expenses) incurred in connection with such Proceeding and shall pay interest on the amount of the payment at the prime rate as published in *The Wall Street Journal* in effect on the date the amount was payable pursuant to <u>Section</u> <u>8.3(b)</u>, with such interest to accrue beginning on the date such amount first was payable pursuant to <u>Section</u> <u>8.3(b)</u>, to the date of payment; and (ii) if Parent fails to make payment of any amount payable under <u>Section</u> <u>8.3(c)</u> within the applicable time period specified in <u>Section</u> <u>8.3(c)</u>, as the case may be, and the Company commences a Proceeding to collect such amount that results in a judgment against Parent, Parent shall reimburse the Company for its reasonable and documented fees and expenses (including reasonable and documented attorneys' fees and expenses) incurred in connection with such Proceeding and shall pay interest on the amount of the payment at the prime rate as published in *The Wall Street Journal* in effect on the date the amount was payable pursuant to <u>Section</u> <u>8.3(c)</u>, with such interest to accrue beginning on the date such amount first was payable pursuant to <u>Section</u> <u>8.3(c)</u>, to the date of payment.

ARTICLE 9

GENERAL PROVISIONS

SECTION 9.1. <u>Notices</u>. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given and received (a) upon receipt, if delivered personally, (b) two Business Days after deposit in the mail, if sent by registered or certified mail, (c) on the next Business Day after deposit with an overnight courier, if sent by overnight courier, (d) upon transmission, if sent by email transmission and no "bounce back" or similar message of non-delivery is received with respect thereto; *provided* that the notice or other communication is sent to the address or email address set forth beneath the name of such party below (or to such other address or email address as such party shall have specified in a written notice to the other parties):

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) if to Parent or Merger Sub (or, following the Effective Time, the Surviving Corporation):

Novartis AG

c/o Novartis International AG

Lichtstrasse 35

4056 Basel

Switzerland

Attention: [\*\*\*]

[\*\*\*]

Email: [\*\*\*]

[\*\*\*]

with a copy to (which shall not constitute notice):

Covington & Burling LLP

One CityCenter

850 Tenth Street, NW

Washington, DC 20001

Attention: Catherine J. Dargan

Michael J. Riella

Alicia Zhang

Email: cdargan@cov.com

mriella@cov.com

azhang@cov.com

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) if to the Company (prior to the Effective Time):

Avidity Biosciences, Inc.

3020 Callan Road

San Diego, CA 92121

Attention: [\*\*\*]

Email: [\*\*\*]

with a copy to (which shall not constitute notice):

Kirkland & Ellis LLP

200 Clarendon Street

Boston, MA 02116

Attention: Graham Robinson

Laura Knoll

Merric Kaufman

Greg Schuster

Email: graham.robinson@kirkland.com

laura.knoll@kirkland.com

merric.kaufman@kirkland.com

greg.schuster@kirkland.com

------

SECTION 9.2. <u>Amendments and Waivers</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any provision of this Agreement may be amended or waived prior to the Effective Time if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective; *provided* that, after the Requisite Company Vote to approve the adoption of this Agreement and the Separation and Distribution Agreement is obtained, if any amendment requires further approval of the Stockholders under applicable Law, the effectiveness of such amendment shall be subject to such approval.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No failure or delay by any party in exercising any right, power, remedy or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege.

SECTION 9.3. <u>Representations and Warranties</u>. The representations and warranties contained in this Agreement or in any certificate or other writing delivered pursuant hereto shall not survive the Effective Time.

SECTION 9.4. <u>Governing Law; Jurisdiction</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Agreement shall be governed by, and construed in accordance with, and all disputes arising out of or in connection with this Agreement or the Transactions shall be resolved under, the Law of the State of Delaware regardless of the Law that might otherwise govern under applicable principles of conflicts of laws thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The parties agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the Transactions (whether brought by any party or any of its Affiliates or against any party or any of its Affiliates) shall be brought in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court, and each of the parties irrevocably consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) (the "*Delaware Courts*") in any such suit, action or proceeding and irrevocably and unconditionally waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in <u>Section</u> <u>9.1</u> shall be deemed effective service of process on such party.

SECTION 9.5. <u>WAIVER OF JURY TRIAL</u>. EACH OF THE PARTIES TO THIS AGREEMENT IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS.

------

SECTION 9.6. <u>Counterparts; Effectiveness</u>. This Agreement may be executed (including by means of electronic signature) in several counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. The authorized release of executed signature pages to this Agreement by or on behalf of each party (in counterparts or otherwise) by email (in .pdf or .tiff format) shall be sufficient to bind the parties to the terms and conditions of this Agreement.

SECTION 9.7. <u>Assignment; Third Party Beneficiaries</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. No party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party, except that Parent or Merger Sub may transfer or assign, in whole or in part, (i) its rights and obligations under this Agreement to any of its Affiliates and (ii) after the Effective Time, its rights and obligations under this Agreement to any Person; *provided* that such transfer or assignment shall not relieve Parent or Merger Sub of its obligations hereunder or enlarge, alter or change any obligation of any other party or due to Parent or Merger Sub and shall not result in additional withholding or deduction of, or any additional requirement to withhold or deduct, any amount of Tax pursuant to <u>Section</u> <u>3.7</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties or their respective heirs, successors, executors, administrators and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except for (i) the provisions of <u>Section</u> <u>6.10</u> with respect to the Indemnified Parties and (ii) if the Effective Time occurs, the right of the Stockholders to receive the Merger Consideration in accordance with the terms of this Agreement, the right of the holders of Company Stock Options to receive the payments contemplated by <u>Section</u> <u>3.4(a)</u>, the rights of the holders of Company RSUs to receive the payments contemplated by <u>Section</u> <u>3.4(b)</u>, and the right of participants in the ESPP to receive the applicable treatment pursuant to <u>Section</u> <u>3.5</u>, in each case which shall inure to the benefit of such Persons or holders, as applicable, benefiting therefrom who shall be third-party beneficiaries thereof and who may enforce the covenants contained therein. The representations and warranties in this Agreement are the product of negotiations among the parties. Any inaccuracies in such representations and warranties are subject to waiver by the parties in accordance with <u>Section</u> <u>9.2</u> without notice or liability to any other Person. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties of risks associated with particular matters regardless of the knowledge of any of the parties. Consequently, Persons other than the parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date hereof or as of any other date. The parties agree that the Company shall have the right, on its own behalf and, in accordance with and to the fullest extent permitted by Section 261(a)(2) of the DGCL, as representative on behalf of the Stockholders and the holders of Company Equity Awards to pursue specific performance as set forth in <u>Section</u> <u>9.10</u> or damages to the fullest extent permitted by Section 261(a)(1) of the DGCL. For the avoidance of doubt, (x) only the Company (and not the Stockholders or the holders of Company Equity Awards) may bring an action pursuing liability for such damages and (y) the Company may retain, without distribution to the Stockholders or the holders of Company Equity Awards, any damages received.

------

SECTION 9.8. <u>Severability</u>. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the Transactions be consummated as originally contemplated to the fullest extent possible.

SECTION 9.9. <u>Entire Agreement; No Reliance</u>. This Agreement (including the Company Disclosure Letter and all Exhibits, Annexes and Schedules referred to herein and therein) and the Confidentiality Agreement constitute the entire agreement between the parties with respect to the subject matter of this Agreement, and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement.

SECTION 9.10. <u>Enforcement</u>. The parties agree that irreparable damage would occur and that the parties would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, except as expressly provided in the following sentence. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the Delaware Courts and, in any action for specific performance, each party waives the defense of adequacy of a remedy at law and waives any requirement for the securing or posting of any bond in connection with such remedy, this being in addition to any other remedy to which they are entitled at law or in equity (subject to the limitations set forth in this Agreement). The parties further agree that (a) by seeking the remedies provided for in this <u>Section</u> <u>9.10</u>, a party shall not in any respect waive its right to seek any other form of relief that may be available to a party under this Agreement (including monetary damages) for breach of any of the provisions of this Agreement or in the event that this Agreement has been terminated or in the event that the remedies provided for in this <u>Section</u> <u>9.10</u> are not available or otherwise are not granted, and (b) nothing set forth in this <u>Section</u> <u>9.10</u> shall require any party hereto to institute any Proceeding for (or limit any party's right to institute any Proceeding for) specific performance under this <u>Section</u> <u>9.10</u> prior to or as a condition to exercising any termination right under <u>Article 8</u> (and pursuing damages after such termination).

SECTION 9.11. <u>Remedies</u>. Except as otherwise provided in this Agreement, any and all remedies expressly conferred upon a party to this Agreement will be cumulative with, and not exclusive of, any other remedy contained in this Agreement, at law or in equity. The exercise by a party to this Agreement of any one remedy will not preclude the exercise by it of any other remedy.

[*The remainder of this page is intentionally blank.*]

------

IN WITNESS WHEREOF, the Company, Parent, and Merger Sub have caused this Agreement to be executed as of the date first written above.

---

| | |
|:---|:---|
| AVIDITY BIOSCIENCES, INC. | AVIDITY BIOSCIENCES, INC. |
| By: | /s/ Sarah Boyce |
| Name: | Sarah Boyce |
| Title: | President & Chief Executive Officer |
| NOVARTIS AG | NOVARTIS AG |
| By: | /s/ David Quartner |
| Name: | David Quartner |
| Title: | Attorney-in-Fact |
| By: | /s/ Tanay Kanti Ghosh |
| Name: | Tanay Kanti Ghosh |
| Title: | Attorney |
| AJAX ACQUISITION SUB, INC. | AJAX ACQUISITION SUB, INC. |
| By: | /s/ Tariq ElRafie |
| Name: | Tariq ElRafie |
| Title: | Attorney |

---

[*Signature Page to Agreement and Plan of Merger*]

------

<u>EXHIBIT A</u> 

Form of Certificate of Incorporation of the Surviving Corporation

------

**Amended and Restated** 

**Certificate of Incorporation** 

**of** 

**Avidity Biosciences, Inc.** 

1. The name of the corporation is "Avidity Biosciences, Inc." (the
" **Corporation** ").

2. The address of the Corporation's registered office is Corporation Service Company, 251 Little Falls
Drive, Wilmington, New Castle County, Delaware 19808. The Corporation Service Company is the Corporation's registered agent at that address.

3. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware (the "**DGCL** "). The Corporation shall have all power necessary or convenient to the conduct, promotion or attainment of such acts and activities.

4. The Corporation shall have authority to issue a total of 1,000 shares of common stock, par value $0.001 per
share.

5. In furtherance and not in limitation of the powers conferred upon it by law, the Board of Directors of the
Corporation is expressly authorized to adopt, amend or repeal the Bylaws of the Corporation.

6. The number of directors of the Corporation shall be such number as from time to time shall be fixed by, or
in the manner provided in, the Bylaws of the Corporation. The election of directors of the Corporation need not be by written ballot.

7. Except to the extent that the DGCL prohibits the elimination or limitation of liability of directors for
breaches of fiduciary duty, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such
liability. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such
amendment or repeal. If the DGCL is amended to permit further elimination or limitation of the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the
DGCL as so amended.

8. Any repeal or modification of Article 7 shall be prospective and shall not affect the rights under Article 7
in effect at the time of the alleged occurrence of any act or omission to act giving rise to liability or indemnification.

9. The Corporation elects not to be governed by Section 203 of the DGCL.

## Ex-97

#### Exhibit 97.1

#### NOVARTIS AG <br>POLICY GOVERNING THE RECOVERY OF <br>ERRONEOUSLY AWARDED COMPENSATION
1. <u>Purpose</u>

This Policy Governing the Recovery of Erroneously Awarded Compensation ("Policy") has been adopted by the Board of Directors of Novartis AG ("Board") to comply with the requirements of United States Securities and Exchange Commission Rule 10D-1 ("Rule 10D-1") and Section 303A.14 of the New York Stock Exchange Listed Company Manual ("Section 303A.14").

Pursuant to this Policy, the Company will recover, to the fullest extent permitted by law and in a manner determined by the Board and consistent with Rule 10D-1 and Section 303A.14, any Erroneously Awarded Compensation Received by a current or former Executive Officer on or after October 2, 2023 if:

&nbsp;&nbsp;&nbsp;&nbsp;• the grant, vesting or payment of the Incentive-Based Compensation was based wholly or in part upon the attainment of a Financial Reporting Measure that was subsequently the subject of a Restatement of the Company's financial statements; and

&nbsp;&nbsp;&nbsp;&nbsp;• the amount of the Incentive-Based Compensation that would have been Received by the Executive Officer had the Financial Reporting Measure been properly reported would have been lower than the amount actually Received.

2. <u>Recovery of Erroneously Awarded Compensation</u>

&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company will recover reasonably promptly the amount of Erroneously Awarded Compensation in the event that the Company is required to prepare a Restatement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) This Policy shall apply to all Incentive-Based Compensation Received by a person:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) After beginning service as an Executive Officer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Who served as an Executive Officer at any time during the performance period for that Incentive-Based Compensation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) While the Company has a class of securities listed on a United States national securities exchange or a United States national securities association; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) During the Recovery Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Company may exercise discretion in how to accomplish recovery acting in a manner that effectuates the purpose of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010: to prevent current or former Executive Officers from retaining Incentive-Based Compensation they Received and to which they were not entitled under the Restatement. Depending on the particular facts and circumstances, different methods of recovery may be appropriate in different circumstances.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Company shall recover Erroneously Awarded Compensation in compliance with this Policy except to the extent that the conditions of paragraphs (1), (2), or (3) of this subsection 2(a)(iii) are met, and the Compensation Committee of the Board has made a determination that recovery would be impracticable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on expense of enforcement, the Company shall make a reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to recover, and provide that documentation to the NYSE.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Recovery would violate Swiss law where that law was adopted prior to November 28, 2022. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on violation of Swiss law, the Company shall obtain an opinion of Swiss counsel, acceptable to the NYSE, that recovery would result in such a violation, and must provide such opinion to the NYSE.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Recovery would likely cause an otherwise United States tax- qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the anti-alienation requirements of 26 U.S.C. 401(a)(13) or the non-forfeitability requirements of 26 U.S.C. 411(a) and regulations thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The Company shall not indemnify any current or former Executive Officers against the loss of Erroneously Awarded Compensation.

&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company shall file all disclosures with respect to this Policy in accordance with the requirements of the United States Federal securities laws, including the disclosure required by the applicable Commission filings.

------

3. <u>Definitions</u>

&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Commission</u> means the United States Securities and Exchange Commission.

&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Company</u> means Novartis AG.

&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Executive Officer</u> means the Company's president, principal financial officer, principal accounting officer (or if no such officer, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance), or an officer who performs a policy-making function, or any other person who performs similar policy making functions for the Company, such person shall be so designated as an Executive Officer. At the Company, this includes all members of the ECN, who have been delegated by the Board with the management of the Company, and Company's principal accounting officer (if such individual is not also the Company's principal financial officer).

&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>ECN</u> means the Executive Committee of Novartis.

&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Erroneously Awarded Compensation</u> means the amount of Incentive-Based Compensation Received that exceeds the amount of Incentive-Based Compensation that otherwise would have been Received had it been determined based on the amounts pursuant to a Restatement, and must be computed without regard to any taxes paid. For Incentive-Based Compensation based on the Company's stock price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in a Restatement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The amount must be based on a reasonable estimate of the effect of the Restatement on the Company's stock price or total shareholder return upon which the Incentive-Based Compensation was Received; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Company shall maintain documentation of the determination of that reasonable estimate and provide such documentation to the NYSE.

&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Financial Reporting Measures</u> mean measures that are determined and presented in accordance with the accounting principles used in preparing the Company's financial statements, and any measures that are derived wholly or in part from such measures. Company stock price and total shareholder return are also Financial Reporting Measures. A Financial Reporting Measure need not be presented within the Company's financial statements or included in a filing with the Commission.

&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Group</u> means the Company and all its direct and indirect subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Incentive-Based Compensation</u> means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure.

&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>NYSE</u> means the New York Stock Exchange.

&nbsp;&nbsp;&nbsp;&nbsp;(j) Incentive-Based Compensation is deemed <u>Received</u> in the Company's fiscal period during which the Financial Reporting Measure specified in the Incentive-Based Compensation award is attained, even if the payment or grant of the Incentive-Based Compensation occurs after the end of that period.

------

&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Recovery Period</u> means three completed fiscal years of the Company immediately preceding the date that the Company is required to prepare a Restatement. In addition to these last three completed fiscal years of the Company, this Policy shall apply to any transition period (that results from a change in the Company's fiscal year) within or immediately following those three completed fiscal years. However, a transition period between the last day of the Company's previous fiscal year end and the first day of its new fiscal year that comprises a period of nine to twelve months would be deemed a completed fiscal year. The Company's obligation to recover Erroneously Awarded Compensation is not dependent on if or when the Restatement is filed with the Commission.

For purposes of determining the relevant Recovery Period, the date that the Company is required to prepare a Restatement is the earlier to occur of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The date the Company's Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare a Restatement; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The date a court, regulator, or other legally authorized body directs the Company to prepare a Restatement.

&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Restatement</u> means an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under United States Federal securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

4. <u>Miscellaneous</u>

The Compensation Committee of the Board shall have full and final authority to make all determinations under this Policy, including but not limited to, determining the amount of the Erroneously Awarded Compensation to be recovered from the Executive Officer and the manner in which such Erroneously Awarded Compensation shall be recovered. All determinations and decisions made by the Compensation Committee's independent directors pursuant to the provisions of this Policy shall be final, conclusive and binding on all persons, including the Company, its affiliates, its shareholders and employees.

Each award agreement or other document setting forth the terms and conditions of any Incentive-Based Compensation granted to an Executive Officer (or any person who becomes an Executive Officer) shall be deemed to include and incorporate the provisions of this Policy. The remedies specified in this Policy shall not be exclusive and shall be in addition to every other right or remedy at law or in equity that may be available to the Company.

As adopted by the Board of Directors of the Company on August 29, 2023 and amended by the Board of Directors on January 28, 2026.