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1. vALUES AND ETHICSAlgeta’s policy requires directors and employees to observe high standards of business and personal ethics in the conduct of their duties and responsi-bilities. Directors and employees must practice fair dealing, honesty and integrity in every aspect in dealing with other employees, business relations and customers, the public, the business community, shareholders, suppliers, competitors and government authorities.Algeta’s quality assurance policy states that the Company shall comply with the requirements set forth by the drug regulatory authorities regarding those activities the Company is engaged in at any time. For further information on corporate social responsibility, see page 31.

2. bUSINESSAlgeta’s business objective is to develop and commercialize pharmaceuticals against cancer as stated in the Articles of Association. The Company’s corporate strategy is described earlier in the annual report (page 6) and on the website.

3. EQUITY AND DIvIDENDSEquityAlgeta and its subsidiaries’ (the “Group’s”) equity at 31 December 2010 was NOK 193m, which corresponds to an equity ratio of 34.3%. The Board of Directors regards the present equity structure as appropriate and adapted

to the Company’s objectives, strategy and risk profile. Dividend policyAlgeta has paid no dividend to date. The Group is focused on the development of novel pharmaceutical products and does not anticipate paying any cash dividend in the foreseeable future.

Mandates The Annual General Meeting on 22 April 2010 granted the Board a mandate to increase the Company’s share capital by up to 10% of the current level. In addition, the Board was mandated to increase the Company’s share capital with regards to the Company’s existing employee Share Option Program. The mandates granted comply with The Norwegian Code of Practice for Corporate Governance. Further descrip-tion of the mandates can be found on page 28, the Algeta share. The Board did in 2010 not have an option to acquire own (Company) shares.

4. EQUAL TREATmENT OF SHARE-HOLDERS AND TRANSACTIONS wITH CLOSE ASSOCIATES Algeta ASA has one class of share and each share entitles the holder to one vote. The Company has not conducted trades in its own share. The Company is generally cautious regarding trans-actions with shareholders, members of the Algeta Board, employees or parties related to the above. In general, Algeta

seeks to conform to the principles for equal treatment of shareholders and possible transactions with related parties that are laid down in the Norwegian Code of Practice for Corporate Governance.

5. FREELY NEGOTIAbLE SHARES Algeta ASA’s shares are freely negoti-able. There are no restrictions on transferability in the Company’s Articles of Association.

6. GENERAL mEETINGS Algeta holds Annual General Meetings (AGMs) in accordance with the Norwe-gian Code of Practice for Corporate Governance. Notice of the AGM and supporting information will be distrib-uted three weeks prior to the AGM, and the final date for notification of atten-dance is two working days prior to the AGM. Shareholders who are unable to attend and vote in person may vote by proxy. The notice of the Annual General Meeting and other related documents will be posted on the Algeta website under ”Investor Relations” at least 21 days prior to the General Meeting. The Board is always represented in a General meeting, but due to the residency of the Board members the whole Board is normally not present. The Auditor is present when the annual accounts are resolved. The Company does not have formal routines that ensure independent chairing of the General meeting. However, the Board has on an ad hoc

Algeta’s (the “Company’s”) management and board of Directors annually review the principles for corporate governance and how they are implemented in the Group. Algeta complies with the Norwegian Code of Practice for Corporate Governance* dated 21 October 2010. The description below accounts for Algeta’s compliance with the 15 sections in the Code of Practice.

Corporate governance

* The Norwegian Code of Practice, issued by the Norwegian Corporate Governance Board, can be found on www.ncgb.no

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basis evaluated independent chairing and in the past ensured such if considered necessary. Algeta’s (the “Company’s”) management and Board of Directors annually review the principles for corporate governance and how they are implemented in the Group. Algeta complies with the Norwegian Code of Practice for Corporate Governance dated 21 October 2010. The description below accounts for Algeta’s compliance with the 15 sections in the Code of Practice. Corporate governance

7. NOmINATION COmmITTEE Algeta has a Nomination Committee which nominates Board members and the Chairman of the Board to the AGM and it has been laid down in the Company’s Articles of Association. In addition the Committee recommends remuneration of the Board to the AGM. The Committee is appointed by the Board in compliance with the Rules of procedure for the Nomination Commit-tee adopted by the general meeting. Before the appointment, the Board shall according to the Rules of Proce-dure contact representatives for the Company’s four largest shareholders and ask these to nominate one member each for the Nomination Committee. If the Company’s four largest shareholders do not nominate a minimum three representatives, the Board can, after consulting with the largest shareholders, appoint external members to the Committee, so that the Committee consists of at least three members. Company managers and Board members are not represented in the Nomination Committee. The Committee appoints its own Chairperson. If the Committee does not agree on who should be the Chair-person, the Board shall appoint one of the Nomination Committee’s members as the Chairperson. The Rules of Procedure recommends that the composition of the Board reflects the Group’s need for expertise, capacity and balanced decision-making, and aims to ensure that the Board can operate

independently of any special interests and can function effectively as a collegiate body.

Information on the members of the Nomination Committee is provided at the Company’s website www.algeta.com. 8. THE bOARD OF DIRECTORS – COm-POSITION AND INDEPENDENCE The Board comprises eight members, and the composition should ensure that the shareholders’ interests are main-tained, and that the Company’s need for a diversified and experienced Board with sufficient capacity is complied with. All Board members are considered unre-lated to the management and main business associations of Algeta. All Board members except Mr. Samuelsson and Mr. Anderson are independent of major shareholders (i.e. shareholder holding more than 10% of the issued shares). None of the members of management are elected members of the Board. The Chairman of the Board is elected by the AGM. The term of office for Board members is one year. The record of each Board member’s atten-dance at Board meetings is presented in the Board of directors section of the annual report (pages 34-36). Algeta is not aware of the existence of any agreements or business partnership between the Group and any third parties in which its directors have direct or indirect interests. The current composi-tion of the Board is presented on pages 34-36 in this annual report, and the Directors’ shareholdings are presented in Note 22 to the consolidated financial statements and also in section Review of operations. The shareholder-elected board members represent a combination of expertise, capabilities and experience from the finance business and pharma-ceutical industry.

9. THE wORK OF THE bOARD OF DIRECTORS The Board is actively supervising the activities of the Company through

frequent Board meetings and meetings with the management. The Board has adopted an annual plan for its work. The Board has furthermore resolved Board instructions and instructions for the CEO detailing the work and responsibilities of the Board and the CEO, respectively. The Board has elected a Deputy Chair-man who functions as Chairman if the Chairman is unable to function in his capacity. The Board continuously evaluates the need for sub-committees. In 2007 the Board established a Remuneration Committee, a Nomination Committee and an Audit Committee as sub-committees of the Board. The Remuneration Committee and the Audit Committee do not pass resolutions, but supervise the work of the executive management on behalf of the Board and prepare matters for the Board’s consideration within their specialized areas. The committees’ mandates are laid out in charters. The Remuneration Committee was chaired by Stein Annexstad during 2010. John Berriman and Joe Anderson acted as members. The Audit Committee was chaired by Per Samuelsson during 2010 and Hilde Steineger was a member during the year. The Board started to carry out annual evaluations of its own perform-ance and expertise in 2008. The evaluation report is presented annually to the Nomination Committee.

10. RISK mANAGEmENT AND I NTERNAL CONTROL The development of pharmaceuticals carries significant risk. Failure may occur at any stage during development due to safety or clinical efficacy issues. It cannot be predicted with certainty if or when Algeta will be able to submit an application to the regulatory authorities in the relevant markets. It can further not be assured that Algeta will receive marketing and regulatory approvals necessary to commercialize the final products, nor that Algeta will be successful in commercializing the product once on the market. Regulatory

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approvals may be denied, delayed or limited. In addition to clinical and regulatory risk, the major risk factors for Algeta during the next few years include timely upgrade of the commercial production facility, timely preparation of raw materials for production, commercialization and eventually launch of Alpharadin® together with Bayer. Cash is sufficient to take Alpharadin® to the market providing ALSYMPCA is positive. Currency risks in the development phase are managed by matching the main currencies with expected payments. To manage the risk inherent in the industry, and to comply with interna-tional and national regulations, Algeta has implemented a regular process to identify, analyze and handle the main risk factors facing the Group. Three times per year, the audit committee

receives a written report, highlighting the main risks and proposed actions to address these risks. Risk Management is further described under “Directors’ Report” and a discussion of Algeta’s financial risk factors can be found in the Note 19 to the consolidated financial statements.

11. REmUNERATION OF THE bOARD OF DIRECTORS All remuneration of the Board of Directors is disclosed in Note 22 to the consolidated financial statements. In order to attract and retain skilled individuals with international expertise and competence in the pharmaceutical business as Board members in Algeta, the Annual General Meeting on 22 April 2010 decided that the members of the Board may elect to receive 50% of the

total remuneration to which they are entitled as options for shares in Algeta. Five Board members have been issued options.

12. REmUNERATION OF THE EXECUTIvE mANAGEmENT The Board has prepared guidelines for the remuneration of the executive management which are included in Note 22 to the consolidated financial state-ments. The Board’s Remuneration Committee presents a recommendation concerning the terms and conditions for the CEO to the Board of Directors and monitors the general terms and conditions for other senior employees of the Group. The Board assesses the CEO and his terms and conditions once a year. Members of the management team can receive an annual bonus.

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Currently, the bonus is on a graded scale with a maximum annual award of 50% of the annual salary. In addition, manage-ment participates in an option based incentive system. See Note 10 and Note 22 to the consolidated financial state-ments for details.

13. INFORmATION AND COmmUNI-CATION Algeta wishes to maintain an open and continuous dialogue with shareholders and other market participants, both in Norway and abroad. Therefore, regular information will be published through interim and annual reports. In addition, management will attend selected investor conferences and presentations. Algeta distributes all information relevant to the share price to the Oslo Stock Exchange. Such information is

distributed without delay and simultane-ously to the capital market, the media and is also published on the Company’s website, www.algeta.com. All analysts, independent of their recommendations, will receive equal treatment at all times. The Company will arrange open investor presentations in connection with its annual and quarterly reporting. Presen-tations to investors in connection with the annual and quarterly reports will be made available on the Company’s website. The financial calendar for Algeta can be found on pages 2 and 30 of this annual report and it is also published on the Company’s website.

14. TAKEOvERS The Board will not seek to hinder or obstruct any takeover bid for the Company’s activities or shares unless

there are particular reasons for doing so. The Company is dedicated to treating all shareholders equally and to protect the interests of all shareholders in the event of a takeover bid.

15. AUDITOR The auditor will present a plan to the Audit Committee every year for the implementation of audit work. The auditor has a minimum of one meeting per year with the Board or the Audit Committee without the presence of the executive management. Whenever necessary, the Board or the Audit Committee will meet with the auditor to consider the auditor’s views on the Group’s accounting principles, risk areas and internal control routines.