Company announcement
No. 51 / 2022
1
Zealand Pharma Announces Financial
Results for the First Nine Months of 2022
company focused on the discovery and development of innovative peptide-based medicines, today announced the interim
report for the three and nine months ended September 30, 2022 and provided a corporate update.
Key strategic objectives achieved
Adam Steensberg, President and Chief Executive at Zealand Pharma said: "Zealand has continued to execute and deliver on
key objectives in the third quarter. In September, we completed our stated objective of securing partnerships for our marketed
products through a license and development agreement with Novo Nordisk, a global leader in diabetes, to commercialize
Zegalogue®.
“Within our R&D pipeline of investigational therapeutic peptides we have seen further positive clinical data. In September we
reported topline results from the Phase 3 EASE-1 trial showing that treatment of short bowel syndrome patients with twice
weekly glepaglutide, our long-acting GLP-2 analogue, resulted in a statistically significant 5.13 liters/week reduction from
baseline in the volume of parenteral support required. Importantly, approximately 1 in 8 patients treated with glepaglutide
weaned off parenteral support within 24 weeks, while no placebo treated patients were able to wean off parenteral support,
which we believe is differentiating from current treatments. We look forward to seeing the results of the ongoing glepaglutide
EASE-2 and 3 long term extension trials and engaging with the regulatory authorities in preparation for an NDA submission. In
obesity, our partner Boehringer Ingelheim, presented Phase 2 data for the dual GCGR/GLP-1R agonist BI 456906 in patients
with type 2 diabetes, showing encouraging glycemic control through a reduction in HbA1c, as well as body weight loss. We are
encouraged by these results and look forward to seeing the results from Boehringer's ongoing Phase 2 trial in patients with
obesity, which we expect next year. We also made progress with our own early-stage clinical candidates in obesity.
“Finally, we strengthened our balance sheet with gross proceeds of DKK 786 million from a directed issue and private
placement resulting in an adjusted cash position of DKK 1,515 million in early October.”
Financial results for the first nine months of 2022
• Revenue: DKK 80.1 million (DKK 95.1 million in the first nine months of 2021).
• Net operating expenses: DKK -675.7 million (DKK -652.8 million in the first nine months of 2021).
• Net operating result: DKK -596.2 million (DKK -568.7 million in the first nine months of 2021).
• Net financial items: DKK -53.4 million (DKK 21.5 million in the first nine months of 2021).
• Net result from Discontinued Operations: DKK -215.1 million (DKK -193.7 million in the first nine months of 2021).
• Cash, cash equivalents, and marketable securities: DKK 729.9 million as of September 30, 2022 (September 30, 2021:
DKK 1,049.0 million).
Highlights in the third quarter 2022
• Announced positive topline results from the pivotal Phase 3 EASE-1 trial of glepaglutide, a long-acting GLP-2
analogue designed for subcutaneous delivery via auto-injector, in patients with short bowel syndrome (SBS).
Glepaglutide treatment met the primary endpoint with twice weekly dosing achieving a statistically significant reduction in
weekly parenteral support volume by 5.13 Liters/week from baseline at 24 weeks. 66% of patients in the twice weekly group
2
2
had a clinically meaningful response (>20% reduction in parenteral support volume). In total 9 of 70 patients treated with
glepaglutide were weaned off parenteral support, while no placebo treated patients were able to wean off parenteral support.
Glepaglutide treatment appeared to be safe and was well-tolerated in the trial.
• Reported results from the Boehringer Ingelheim-sponsored Phase 2 clinical trial of BI 456906, a glucagon
receptor/glucagon-like peptide-1 receptor (GCGR/GLP-1R) dual agonist, in patients with type 2 diabetes (T2D) at the
58th Annual Meeting of the European Association for the Study of Diabetes (EASD). Treatment with BI 456906
resulted in dose dependent HbA1c reductions, with a mean of up to -1.88% at Week 16 compared with -0.25% seen with
placebo. Treatment with open-label weekly semaglutide at 1.0 mg led to a decrease in HbA1c of -1.47%. The safety and
tolerability profile, which included gastrointestinal disorders (such as nausea and vomiting) as the most frequently reported
adverse events, was as is expected with higher increasing doses of GLP-1 receptor agonists. Most adverse events were
reported during the dose-escalation phase of the trial, and therefore slower escalation schemes may mitigate the frequency
of such events.
• Presented results from the Phase 3 clinical trial of dasiglucagon in congenital hyperinsulinism (CHI) at the 60th
Annual Meeting of the European Society for Paediatric Endocrinology (ESPE). Dasiglucagon significantly reduced the
requirement for intravenous glucose to maintain glycemia in newborns and infants with CHI (Part 1 of Phase 3 trial).
Dasiglucagon reduced time in hypoglycemia and enabled discontinuation of intravenous glucose in most infants and limited
the need for pancreatectomy (Part 2 of Phase 3 trial). Results support the potential for dasiglucagon to be a novel, effective,
and well tolerated treatment for infants with CHI dependent on intravenous glucose.
• Completed dose escalation in the ongoing Phase 1a single ascending dose (SAD) trial of ZP8396, a long-acting
amylin analogue. In this Phase 1 SAD trial, subcutaneous ZP8396 appeared to be well tolerated with no unexpected side
effects and the single administration maximum tolerated dose (MTD) was reached. The pharmacokinetic (PK) profile is
suitable for once weekly dosing. Zealand expects to initiate dosing in a Phase 1b multiple ascending dose (MAD) trial of
ZP8396 by the end of 2022.
• Announced a global license and development agreement with Novo Nordisk to commercialize ZEGALOGUE®
(dasiglucagon) for injection. Agreement includes an upfront payment, development, regulatory, manufacturing and sales-
based milestones of up to DKK 290 million to Zealand in addition to high-single to low-double digit royalties on worldwide net
sales by Novo Nordisk. Zealand will be responsible for certain planned development, regulatory, and manufacturing activities
to support approval outside the U.S. to be reimbursed by Novo Nordisk.
• Appointed Henriette Wennicke as Chief Financial Officer. Henriette Wennicke brings broad finance and business
experience at large organizations, including in healthcare, where she has led financial planning, R&D portfolio management
and investor relations.
• Completed voluntary delisting of its American Depositary Shares (ADSs) from the New York-based Nasdaq Global
Select Market. One ADS currently represents one ordinary share in Zealand and on suspension of trading the company’s
ADSs accounted for less than 1.5% of the total share capital. Trading in Zealand shares is consolidated to Nasdaq
Copenhagen, the company’s primary and most liquid stock exchange. The decision is part of Zealand’s strategy to prioritize
R&D and streamline corporate operations.
Events after the reporting date
• Presented preclinical data at the Annual Meeting of the Obesity Society (Obesity Week) on Zealand’s amylin analogue
(ZP8396); its first-in-class GLP-1R/GLP-2R dual agonist (dapiglutide); and the GIP analogue (ZP6590).
3
3
• Reported results from the Boehringer Ingelheim-sponsored Phase 2 clinical trial of BI 456906 (GCGR/GLP-1R) in
patients with T2D at Obesity Week. BI 456906 resulted in dose-dependent bodyweight reductions of up to -9% at Week
16.
• Phase 2 trial of BI 456906 in patients with non-alcoholic steatohepatitis (NASH) conducted by Boehringer Ingelheim
has completed patient enrollment.
• Received gross proceeds of DKK 786 million from a directed issue and private placement. Zealand issued a total of
4,975,000 new shares at a subscription price of DKK 158 per share.
Upcoming events
• Initiate Phase 1b MAD trial of ZP8396, a long-acting amylin analogue in development for obesity by the end of the fourth
quarter 2022.
• Interim Phase 3 data from EASE-SBS 2 and 3 long term extension trials of glepaglutide expected by the end of the
fourth quarter 2022, and first quarter of 2023, respectively.
• Potential submission of new drug application (NDA) with the U.S. Food and Drug Administration (FDA) for dasiglucagon
treatment in the management of CHI in the first half of 2023, based on data from the full Phase 3 program.
Financial guidance for 2022
The company will no longer provide guidance on net product revenue, reflecting the completion of the asset purchase
agreement for V-Go® with MannKind Corporation and the completion of the global license and development agreement for
Zegalogue® with Novo Nordisk.
In 2022, Zealand expects revenue from existing license agreements. However, since such revenue is uncertain in terms of size
and timing, Zealand does not intend to provide guidance on such revenue.
Net operating expenses in 2022 are expected to be DKK 1,000 million +/-10%*. This is unchanged from our updated guidance
issued on March 30, 2022.
*Excluding discontinued operations
Conference call today at 4 PM CET / 10 AM ET
Zealand’s management will host a conference call today at 4 PM CET / 10 AM ET to present results through the first nine
months of 2022 followed by a Q&A session. Participating in the call will be Chief Executive Officer Adam Steensberg, Chief
Financial Officer Henriette Wennicke, and Chief Medical Officer David Kendall. The conference call will be conducted in English.
Telephone dial-in information and a unique personal access PIN will be provided upon registration at
https://register.vevent.com/register/BI2233344c2eff4f40be51448707df4e03. A live listen-only audio webcast of the call,
including an accompanying slide presentation, will be accessible at https://edge.media-server.com/mmc/p/untoz3rk. Participants
are advised to register for the call or webcast approximately 10 minutes before the start. A recording of the event will be
available following the call on the Investor section of Zealand’s website at https://www.zealandpharma.com/events-cal.
4
4
Total number of shares and voting rights in Zealand Pharma A/S as of
September 30, 2022
Number of shares (nominal value of DKK 1 each): 46,538,186 which is an increase of 2,895,044 from 43,634,142 as reported
on December 31, 2021.
Therefore, the current share capital is (nominal value in DKK): 46,538,186.
Number of voting rights: 46,538,186.
On October 4, 2022, The Group announced that a directed issue and private placement of 4,975,000 new shares had been
completed. Please refer to note 17 for further information.
About Zealand Pharma A/S
which two have reached the market and three candidates are in late-stage development. The company has development and
partnerships with a number of blue-chip pharma companies as well as commercial partnerships for its marketed products.
Zealand was founded in 1998 and is headquartered in Copenhagen, Denmark, with a presence in the U.S. that includes
Boston. For more information about Zealand’s business and activities, please visit www.zealandpharma.com .
Safe Harbor / Forward-Looking Statements
This press release and interim report contains “forward-looking statements”, as that term is defined in the Private Securities
Litigation Reform Act of 1995 in the United States, as amended, even though no longer listed in the United States this is used
as a definition to provide Zealand Pharma’s expectations or forecasts of future events regarding the research, development and
commercialization of pharmaceutical products, the timing of the company’s preclinical and clinical trials and the reporting of data
therefrom and the company’s Upcoming Events and Financial Guidance for 2022. These forward-looking statements may be
identified by words such as “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “plan,”
“possible,” “potential,” “will,” “would” and other words and terms of similar meaning. You should not place undue reliance on
these statements, or the scientific data presented. The reader is cautioned not to rely on these forward-looking
statements. Such forward-looking statements are subject to risks, uncertainties and inaccurate assumptions, which may cause
actual results to differ materially from expectations set forth herein and may cause any or all of such forward-looking statements
to be incorrect, and which include, but are not limited to, unexpected costs or delays in clinical trials and other development
activities due to adverse safety events or otherwise; unexpected concerns that may arise from additional data, analysis or
results obtained during clinical trials; our ability to successfully market both new and existing products; changes in
reimbursement rules and governmental laws and related interpretation thereof; government-mandated or market-driven price
decreases for our products; introduction of competing products; production problems; unexpected growth in costs and
expenses; our ability to effect the strategic reorganization of our businesses in the manner planned; failure to protect and
enforce our data, intellectual property and other proprietary rights and uncertainties relating to intellectual property claims and
challenges; regulatory authorities may require additional information or further studies, or may reject, fail to approve or may
delay approval of our drug candidates or expansion of product labeling; failure to obtain regulatory approvals in other
jurisdictions; exposure to product liability and other claims; interest rate and currency exchange rate fluctuations; unexpected
5
5
contract breaches or terminations; inflationary pressures on the global economy; political uncertainty, including due to the
ongoing military conflict in Ukraine; and the direct and indirect impacts of the ongoing COVID-19 pandemic on our business,
results of operations and financial condition. If any or all of such forward-looking statements prove to be incorrect, our actual
results could differ materially and adversely from those anticipated or implied by such statements. The foregoing sets forth
many, but not all, of the factors that could cause actual results to differ from our expectations in any forward-looking statement.
All such forward-looking statements speak only as of the date of this press release and are based on information available to
Zealand Pharma as of the date of this release. We do not undertake to update any of these forward-looking statements to reflect
events or circumstances that occur after the date hereof. Information concerning pharmaceuticals (including compounds under
development) contained within this material is not intended as advertising or medical advice.
NOTE: DKK/USD Exchange rates used: September 30, 2022 = 7.629 and September 30, 2021 = 6.422
V-Go® is a registered trademark of MannKind Corporation and Zegalogue® is a registered trademark of Novo Nordisk A/S
Contacts:
Anna Krassowska, PhD
Vice President, Investor Relations & Corporate Communications
Zealand Pharma
Email: ank@zealandpharma.com
David Rosen (U.S. Media)
Argot Partners
Email: media@zealandpharma.com
6
6
Refocused Strategy
On March 30, 2022, Zealand announced a strategy to prioritize research and development and to seek strategic commercial
partnering agreements. As part of this strategy, the company has restructured its commercial operations and expects the global
cost base by the end of 2022 will be reduced by approximately 35% from 2021 levels. In addition, Zealand completed the sale of
its V-Go® insulin delivery device to MannKind Corporation in the second quarter and announced a global license and
development agreement with Novo Nordisk to commercialize Zegalogue® in the third quarter.
Pipeline Update
Rare Diseases
Glepaglutide (long-acting GLP-2 analog) for short bowel syndrome (SBS)
Third quarter 2022 update:
• Announced positive topline results from the pivotal Phase 3 EASE-SBS 1 trial in SBS patients with intestinal failure
• Expects interim Phase 3 data from EASE-SBS 2 by the end of the fourth quarter, and EASE-SBS 3 in the first quarter of 2023
Background:
Glepaglutide is a long-acting GLP-2 analog that is stable in aqueous solution and can be administered as a ready-to-use liquid
formulation. Zealand is developing glepaglutide as a ready-to-use, fixed dose product designed for subcutaneous delivery via
auto-injector for the potential treatment of short bowel syndrome (SBS). The Phase 3 program includes four clinical trials
evaluating the potential for glepaglutide to reduce or eliminate the need for parenteral support in patients with SBS.
EASE-SBS 1 is a randomized, double-blind Phase 3 trial that enrolled a total of 106 SBS patients with intestinal failure who
were dependent on parenteral support (PS) for at least three days per week. Patients were evenly randomized to receive
treatment with 10 mg glepaglutide administered either once or twice weekly, or placebo. The primary endpoint in the trial was
the absolute change in weekly parenteral support volume from baseline at 24 weeks.
In EASE-SBS 1, glepaglutide given twice weekly significantly reduced the total weekly volume of parenteral support at 24 weeks
as compared to placebo (p=0.0039). When administered once weekly, glepaglutide treatment also resulted in a numeric
reduction in weekly parenteral support, however this did not achieve statistical significance. At 24 weeks, the average reduction
in parenteral support from baseline was 5.13 Liters/week for patients treated with glepaglutide twice weekly and was 3.13
Liters/week for patients treated with glepaglutide once weekly. Placebo treatment resulted in a reduction in parenteral support of
2.85 Liters/week. Clinical response, defined as a patient achieving at least 20% reduction in weekly parenteral support volume
from baseline at both 20 and 24 weeks, was significantly higher with twice weekly glepaglutide compared to placebo (p=0.0243).
Among patients receiving glepaglutide twice weekly 65.7% achieved a clinical response. While 45.7% and 38.9% of patients
achieved a clinical response in the once weekly and placebo treatment groups, respectively.
In the twice weekly dosing group, 14% of patients (n=5) were completely weaned off parenteral support (enteral autonomy). In
total 9 patients treated with glepaglutide achieved enteral autonomy, while no placebo treated patients were able to discontinue
parenteral support. Glepaglutide appeared to be safe and was well-tolerated in the trial. The most frequently reported adverse
events were injection site reactions and gastrointestinal events.
7
7
In total, 102 of 106 participating patients completed EASE-SBS-1, of which 96 continued into the ongoing long-term safety and
efficacy extension trials, EASE-SBS 2 and EASE-SBS 3. In addition, EASE-SBS 4 is a Phase 3b trial to assess long-term
effects of glepaglutide on intestinal fluid and energy uptake. The company expects efficacy and safety data from the full EASE-
SBS Phase 3 program data to form the basis of a new drug application (NDA) with the U.S. Food and Drug Administration
(FDA). For more information on the EASE-SBS trials, please visit ClinicalTrials.gov (IDs: NCT03690206, NCT03905707,
NCT04881825, NCT04991311).
FDA has granted orphan drug designation to glepaglutide for the treatment of SBS. Phase 2 data have shown the potential of
glepaglutide to increase intestinal absorption in people with SBS and were published in the journal The Lancet Gastroenterology
& Hepatology in 2019.
Dasiglucagon for congenital hyperinsulinism (CHI)
Third quarter 2022 update:
• Presented results at the 60th ESPE annual meeting from the Phase 3 trial of dasiglucagon in neonates and infants up to 12
months old, supporting the potential for dasiglucagon to be a novel, effective, and well tolerated treatment for infants with
CHI dependent on intravenous glucose.
• NDA submission to FDA based on data from full Phase 3 program anticipated in the first half of 2023.
Background:
Dasiglucagon is a glucagon analog that is stable in aqueous solution and is thus suitable for chronic pump use. The Phase 3
program comprises three clinical trials evaluating the potential for chronic dasiglucagon infusion delivered subcutaneously via a
pump to prevent hypoglycemia in children with CHI.
The global, 2-part, Phase 3 trial 17103 (ClinicalTrials.gov ID: NCT04172441) evaluated the efficacy of dasiglucagon in reducing
glucose requirements in 12 children (ranging in age from 7 days to 12 months) with persistent CHI requiring continuous
intravenous glucose administration to prevent or manage hypoglycemia.
In Part 1 of the Phase 3 trial, dasiglucagon significantly reduced the requirement for intravenous (IV) glucose to maintain
glycemia in newborns and infants with CHI. Dasiglucagon significantly reduced the mean IV glucose infusion rate (GIR) in the
last 12 hours of the 48 hour treatment period by 55% as compared to placebo (4.3 mg/kg/min for dasiglucagon and 9.4
mg/kg/min for placebo with a treatment difference of 5.2 mg/kg/min; p=0.0037). Dasiglucagon also reduced GIR over the entire
48-hour treatment period by 3.5 mg/kg/min compared to placebo (p=0.0107). Dasiglucagon treatment resulted in a reduction of
31 g/day in total carbohydrate intake (IV and gastric) compared to placebo (107 g/day for dasiglucagon vs 138 g/day for
placebo; p = 0.024), a 22% reduction in carbohydrate calories. Dasiglucagon was observed to be well tolerated in Part 1 of the
trial, with skin reactions and gastrointestinal disturbances as the most frequently reported adverse events (no serious adverse
events reported).
In the 21-day open-label Part 2 of the Phase 3 trial, dasiglucagon reduced time in hypoglycemia and enabled discontinuation of
intravenous glucose in most infants and limited the need for pancreatectomy. Continuous subcutaneous infusion of
dasiglucagon enabled reduction and either periodic or permanent discontinuation of IV glucose infusion in 10 out of 12 infants.
Seven infants, who did not require pancreatectomy, were completely weaned off IV glucose at the completion of the trial. During
the 21-day treatment with dasiglucagon, continuous glucose monitoring (CGM) measures of hypoglycemia trended lower with
median time <70 mg/dL reduced from 7.0% to 5.2% and <54 mg/dL reduced from 1.9% to 0.88%. There was no increase in
hyperglycemia. The safety profile of dasiglucagon in Part 2 was consistent with Part 1, with no adverse event requiring
discontinuation of treatment and no serious adverse events reported.
8
8
The open-label Phase 3 trial 17109 (ClinicalTrials.gov ID: NCT03777176) evaluated the efficacy of dasiglucagon in reducing
hypoglycemia in 32 children (ranging in age from 3 months to 12 years) with CHI with more than three hypoglycemic events per
week despite previous near-total pancreatectomy and/or maximum medical therapy. Data reported in December 2020 showed
that dasiglucagon on top of standard of care (SOC) did not significantly reduce the rate of hypoglycemia compared to SOC
alone when assessed by the primary endpoint, intermittent self-measured plasma glucose. However, dasiglucagon treatment
resulted in a 40–50% reduction in hypoglycemia compared to SOC alone, when assessed by blinded continuous glucose
monitoring.
The Phase 3 trial 17106 (ClinicalTrials.gov ID: NCT03941236) is evaluating the long-term safety of dasiglucagon in 42 of the 44
children older than 1 month with CHI who completed either of the Phase 3 trials 17103 or 17109.
The company expects safety and efficacy data from the full Phase 3 program to form the basis of an NDA submission to the
FDA for dasiglucagon treatment in the management of CHI in the first half of 2023. The FDA and the European Commission
have both granted orphan drug designation to dasiglucagon for the treatment of CHI.
Obesity
Dapiglutide (long-acting GLP-1R/GLP-2R dual agonist)
Background:
Dapiglutide is a long-acting dual GLP-1R/GLP-2R agonist for the potential treatment of obesity. Phase 1 results of dapiglutide in
healthy volunteers demonstrated dose dependent weight loss of up to 4.3% from baseline body weight after only four weeks of
treatment. Dapiglutide also delayed gastric emptying, and reduced plasma glucose and insulin concentrations, in a dose
dependent manner. The pharmacokinetics (PK) showed dose proportionality with a low inter-subject variability and a mean half-
life of 123-129 hours across the four dose cohorts and supported that dapiglutide is suitable for once-weekly dosing. No trial
participants developed anti-drug antibodies. Multiple weekly doses of dapiglutide were well-tolerated and the safety profile was
as expected for GLP-1 and GLP-2 receptor agonists. These results were presented at the at the 82nd ADA Scientific Sessions.
Zealand intends to support a Phase 2 investigator-initiated clinical trial of dapiglutide in obesity anticipated to commence in early
2023.
ZP8396 (long-acting amylin analogue)
Third quarter 2022 update:
• Dose escalation complete in the Phase 1a SAD trial and subcutaneous ZP8396 appears to be well tolerated with no
unexpected side effects and shows a PK profile suitable for once-weekly dosing
• Phase 1 MAD trial expected to begin by the end of 2022
• Preclinical data presented at Obesity Week in November confirm the feasibility of administering ZP8396 co-formulated with
semaglutide or dapiglutide and achieving greater body weight loss when compared to monotherapy with either agent
Background:
ZP8396 is a long-acting amylin analogue designed to improve solubility and allow for co-formulation with other peptides,
including GLP-1 analogues. Amylin analogues hold potential as both mono and combination therapies for obesity and type 2
diabetes.
9
9
Preclinical data presented at the 82nd ADA Scientific Sessions in June 2022, showed that ZP8396 significantly improved
glycemic control in an in vivo model of type 2 diabetes. A second presentation demonstrated that aqueous formulation of
ZP8396 at physiological pH induced significant body weight loss in an in vivo model of diet-induced obesity. Prior preclinical
observations presented at the Obesity Society Annual Meeting in 2021 showed potent anti-obesity effects of ZP8396, with up to
20% weight loss in in vivo models when combined with GLP-1 analogue semaglutide. New preclinical data presented at the
Obesity Society Annual Meeting in November 2022 showed body weight reduction was similar with ZP8396 and semaglutide
administered as separate injections (loose combinations) compared with co-formulation. In addition, a second presentation
showed that combination therapy with dual GLP-1R/GLP-2R agonist dapiglutide and ZP8396 achieved up to 19% weight loss in
an in vivo model of diet induced obesity compared to body weight reductions of 12% with dapiglutide alone and 6% with ZP8396
alone.
Zealand has completed the subcutaneous dose escalation phase of the Phase 1a, First-in-Human, randomized, single
ascending dose (SAD) trial to assess the safety, tolerability, pharmacokinetics, and pharmacodynamics of ZP8396 in healthy
volunteers. In this Phase 1 SAD trial, subcutaneous ZP8396 appears to be well tolerated with no unexpected side effects and
the single administration maximum tolerated dose (MTD) was reached. The pharmacokinetic (PK) profile is suitable for once-
weekly dosing. Zealand expects to initiate dosing in a Phase 1b multiple ascending dose (MAD) trial of ZP8396 by the end of
2022.
BI 456906 (long-acting dual GCGR/GLP-1R agonist) in collaboration with Boehringer Ingelheim
Third quarter 2022 update:
• Reported results from the Boehringer Ingelheim-sponsored Phase 2 clinical trial in patients with T2D, showing dose
dependent HbA1c reductions of up to -1.88% at Week 16 and dose-dependent bodyweight reductions of up to -9% at Week
16, presented at the 58th EASD annual meeting and Obesity Week, respectively.
Background:
BI 456906 is a long-acting dual GCGR/GLP-1R agonist for once-weekly subcutaneous administration that activates two key gut
hormone receptors simultaneously and may offer better efficacy than current single-hormone receptor agonist treatments. BI
456906 is targeting treatment of obesity and associated metabolic diseases.
A Phase 2 randomized, placebo-controlled, double-blind trial evaluated BI 456906 in people with T2D on stable metformin
background therapy. Participants received multiple rising doses of BI 456906 in one of six dose groups, placebo or open-label
weekly semaglutide 1.0 mg for 16 weeks. Different doses of BI 456906 were escalated every 1–2 weeks to ensure that 10
weeks were spent on a maintenance dose.
At the 58th EASD annual meeting in September, Boehringer Ingelheim presented results for the primary endpoint of change
from baseline in HbA1c after 16 weeks of treatment. Treatment with BI 456906 led to dose-dependent decreases in HbA1c, with
mean reductions of -0.93% to -1.88% at 16 weeks across the six dose groups, compared with -0.25% seen with placebo.
Treatment with open-label weekly semaglutide at 1.0 mg led to a decrease in HbA1c of -1.47%.
At Obesity Week in November, Boehringer Ingelheim presented results for the secondary endpoint of change from baseline in
bodyweight after 16 weeks of treatment. Treatment with BI 456906 led to dose-dependent decreases in bodyweight, with mean
reductions of -1.9% to -9.0% at 16 weeks across the six dose groups, compared with -1.2% seen with placebo. Treatment with
open-label weekly semaglutide at 1.0 mg led to a decrease in bodyweight of -5.4%. In addition, dose-dependent decreases in
waist circumference were observed following treatment with BI 456906, with mean decreases of -1.80 cm to -12.89 cm at 16
weeks across the six dose groups, compared with -1.95 cm seen with placebo. Treatment with open-label weekly semaglutide
at 1.0 mg led to a decrease in bodyweight of -3.63 cm.
10
10
In the Phase 2 trial, adverse events were reported in 78% of all participants receiving BI 456906. Drug-related adverse events
were reported for 59% of BI 456906-treated participants and 38% of participants treated with open-label semaglutide and were
most frequently GI disorders such as nausea and vomiting. Drug-related serious adverse events were reported for four
participants treated with BI 456906 across dose groups, all of which resolved once treatment was stopped, and for no
participants receiving placebo. Adverse events led to treatment discontinuation in 16% of patients receiving BI 456906, 5%
receiving placebo and 4% receiving open label semaglutide. Slower dose escalations over a longer duration are expected to
mitigate GI adverse events.
At Obesity Week in November 2021, results from the Phase 1b trial of BI 456906 (NCT03591718) in people with obesity or who
are overweight demonstrated up to 13.7% weight loss and no unexpected safety findings following 16 weeks of dosing.
Boehringer Ingelheim is conducting three parallel Phase 2 trials to assess BI 456906: in diabetes (ClinicalTrials.gov ID:
NCT04153929), obesity (ClinicalTrials.gov ID: NCT04667377), and non-alcoholic steatohepatitis, or NASH (ClinicalTrials.gov
ID: NCT04771273). The NASH program has received Fast Track Designation from the U.S. FDA.
BI 456906 was co-invented by Boehringer Ingelheim and Zealand. Boehringer Ingelheim is funding all research, development
and commercialization activities related to BI 456906. Zealand is eligible to receive up to EUR 345 million in outstanding
milestone payments, and high-single to low-double digit royalties on global sales.
Type 1 Diabetes Management
Dasiglucagon for Bihormonal Artificial Pancreas systems
Background:
Zealand is developing a pre-filled dasiglucagon cartridge intended for use in Bihormonal Artificial Pancreas systems, which
holds potential to improve the management of type 1 diabetes (T1D). Zealand is collaborating with Beta Bionics, developer of
the Bihormonal iLet® Bionic Pancreas (iLet Duo™), a pocket-sized, dual chamber (insulin and glucagon), autonomous,
glycemic control system. The iLet Duo™ is an investigational device, limited by federal (or United States) law to investigational
use only. The iLet® Bionic Pancreas platform is designed to use adaptive, self-learning, control algorithms, together with
continuous glucose monitoring and pump technology, to autonomously compute and administer doses of insulin and/or
glucagon and mimic the body’s natural ability to maintain tight glycemic control.
Zealand’s partner, Beta Bionics, initiated enrollment into the screening protocol for the Phase 3 Bihormonal iLet® Bionic
Pancreas Pivotal Program in late 2021. Dosing of the first patients is anticipated to begin in early 2023. The Phase 3 program
consists of three planned studies designed to support the marketing applications for the iLet Duo and an NDA for the use of
dasiglucagon in Bihormonal Artificial Pancreas systems for the treatment of T1D. The pivotal study plan includes an initial
crossover trial of approximately 60 participants to assess safety and efficacy of the bihormonal and insulin-only configurations of
the iLet® Bionic Pancreas. Subsequently, the companies plan to initiate full-scale, randomized, controlled pivotal trials in 350
adult and 350 pediatric participants with T1D to assess the efficacy of the iLet Duo™ as compared to the insulin-only system.
Dasiglucagon mini-dose pen
Background:
Zealand is developing a dasiglucagon mini-dose pen for the potential treatment of exercise-induced hypoglycemia in people
living with T1D and for people who suffer from meal-induced hypoglycemia following gastric bypass surgery (post bariatric
hypoglycemia, or PBH). Four investigator-initiated trials conducted in collaboration with Zealand evaluate mini-dose
dasiglucagon to support this development program.
11
11
At the 82nd ADA Scientific Sessions in June, investigators from the Steno Diabetes Center Copenhagen presented results from
the Phase 2 trial using the dasiglucagon mini-dose pen in people with T1D in free-living conditions (ClinicalTrials.gov ID:
NCT04764968). Dasiglucagon administered by pen improved glycemic control and reduced carbohydrate intake among the
study participants. These data build on prior clinical studies conducted in hospital settings that show the potential for using low
doses of dasiglucagon to correct moderate hypoglycemia: Results from the Phase 2a dose-finding trial in people with T1D
(ClinicalTrials.gov ID: NCT04449692) were presented at the ADA Scientific Sessions in 2021, and results of the Phase 2a trial in
PBH (ClinicalTrials.gov ID: NCT03984370) were published in the journal Diabetes Care in 2022.
The Phase 2 trial in PBH conducted in an out-patient setting (ClinicalTrials.gov ID: NCT04836273) has been completed and met
the primary endpoint. Zealand is encouraged by the results and anticipates that the investigator will submit data for presentation
at a scientific congress in 2023, at which time Zealand expects to provide an update on plans for the program.
Inflammation
Zealand is pursuing multiple pre-clinical programs in inflammatory diseases which will be detailed more as they progress
through development.
Complement inhibitors (collaboration with Alexion, AstraZeneca Rare Disease)
Zealand and Alexion are collaborating on the discovery and development of novel peptide therapies for complement-mediated
diseases. Under the terms of the agreement, Alexion and Zealand entered into an exclusive collaboration for the discovery and
development of subcutaneously delivered peptide therapies directed to up to four complement pathway targets. The lead
program is a long-acting inhibitor of Complement C3 which has the potential to treat a broad range of complement mediated
diseases. Zealand will lead the joint discovery and research efforts through the preclinical stage, and Alexion will lead
development efforts beginning with Investigational New Drug (IND) filing and Phase 1 trials.
For the lead target, Zealand is eligible to receive up to USD $610 million in development and sales milestone payments, plus
royalties on global sales in the high single to low double digits. In addition, Alexion has the option to select up to three additional
targets with Zealand eligible for USD $15 million upfront per target plus development/regulatory milestones for each target
selected similar to the lead target with slightly reduced commercial milestones and royalties.
12
12
Key figures
DKK thousand
INCOME STATEMENT AND
COMPREHENSIVE INCOME
Note
Q3 2022
Q3 2021*
Q1-Q3 2022
Q1-Q3 2021*
FY 2021*
Revenue
43,714
54,188
80,061
95,114
108,546
Gross margin
43,137
54,258
79,484
84,144
97,576
Research and development expenses
-145,076
-139,457
-451,988
-421,793
-582,270
Sales and Marketing expenses
-6,166
-11,127
-28,644
-51,341
-62,600
Administrative expenses
-53,998
-62,226
-177,050
-179,680
-235,609
Net operating expenses
-205,240
-212,810
-657,682
-652,814
-880,479
Other operating items, net
27
73
-17,986
8
-1,414
Operating result
-162,076
-158,479
-596,184
-568,662
-784,317
Net financial items
8,418
16,071
-53,421
21,520
25,430
Result before tax
-153,658
-142,408
-649,605
-547,142
-758,887
Income tax
(1)
1,776
998
5,056
2,944
3,949
Net result for the period from
continuing operations
-151,882
-141,410
-644,549
-544,198
-754,938
Net result for the period from discontinued
operations
3,540
-57,477
-215,138
-193,689
-263,211
Net result for the period
-148,342
-198,887
-859,687
-737,887
-1,018,149
Earnings/loss per share from continuing
operations – basic/diluted (DKK)
-3.29
-3.28
-14.46
-12.73
-17.61
Earnings/loss per share – basic/diluted (DKK)
-3.21
-4.61
-19.28
-17.26
-23.75
STATEMENT OF FINANCIAL POSITION
September
30, 2022
September
30, 2021
December
31, 2021
Cash and cash equivalents
(2)
493,755
753,599
1,129,103
Marketable securities
(2)
236,131
295,379
299,042
Cash, cash equivalents and Marketable securities
729,886
1,048,978
1,428,145
Other assets
361,722
611,721
639,484
Total assets
1,091,608
1,660,699
2,067,629
Share capital
46,538
43,582
43,634
Equity
366,440
1,185,746
927,803
Total liabilities
725,168
474,953
1,139,826
CASH FLOW
Q1-Q3 2022
Q1-Q3 2021
FY 2021
Cash (used in)/provided by operating activities
-669,927
-904,257**
-1,211,971
Cash (used in)/provided by investing activities
178,566
-6,255
-18,121
Cash (used in)/provided by financing activities
-178,535
686,440**
1,332,751
Purchase of property, plant and equipment
-5,083
-5,854
-22,133
Of which cash (used in)/provided by
discontinued operations
-31,788
-324,815
-371,956
Free cash flow
(3)
-675,010
-929,585
-1,234,104
OTHER
September
30, 2022
September
30, 2021
December
31, 2021
Share price (DKK)
173.8
185.0
145.1
Market capitalization (MDKK)
(4)
7,750
7,911
6,220
Equity ratio (%)
(5)
34
71
45
Equity per share (DKK)
(6)
8.22
27,73
21.26
Average number of employees
Number of full-time employees at the end of the period
203
346
355
13
13
Notes:
* Comparatives adjusted to reflect the effect of discontinued operations. For further details refer to note 2.
** DKK 19,474 reclassified from cash from financing activities to cash used in operating activities compared to reported figures from Q3, 2021.
(1) Zealand expects to be eligible to receive up to DKK 5.5 million in Danish corporate tax benefit related to R&D expenses incurred for 2022, of which DKK 4.1
million has been recognized for the nine months ended September 30, 2022, which is setoff against recognized tax expense in the US.
(2) As of September 30, 2022, the groups marketable securities (DKK 236.1 million) and a part of the groups cash (DKK 151.2 million) is restricted. Please refer to
note 10 for further information.
(3) Free cash flow is calculated as the sum of cash flows from operating activities and purchase of property, plant and equipment.
(4) Market capitalization is calculated as weighted outstanding shares at the balance sheet date times the share price at the balance sheet date.
(5) Equity ratio is calculated as equity at the balance sheet date divided by total assets at the balance sheet date.
(6) Equity per share is calculated as shareholders' equity divided by weighted total number of ordinary shares less weighted treasury shares.
14
14
Financial review
The condensed interim consolidated financial statements are prepared in accordance with IAS 34 Interim Financial Reporting,
as issued by the International Accounting Standards Board (IASB) and as adopted by the EU, and additional requirements of
the Danish Financial Statements Act. The interim condensed consolidated financial statements are presented in DKK, which is
also the functional currency of Zealand Pharma A/S (“the Company” or “the Group”).
Financial results
Revenue
DKK thousand
Q1-Q3 2022
Q1-Q3 2021
∆
∆ in percent
Sale of services
770
0
770
N/A
License and milestone revenue
79,291
95,114
-15,823
-17%
Revenue from continuing operations
80,061
95,114
-15,053
-16%
Sale of goods from discontinued operations
87,314
143,438
-56,124
-39%
Total revenue
167,375
238,552
-71,177
-30%
License and milestone revenue is related to milestones from the collaboration partners with a slight decrease due to milestones
being triggered in Q3, 2021.
Sale of goods from discontinued operations is related to sales of the V-Go insulin delivery device, Zegalogue via own sales
force and the one-off sale of the entire inventory of Zegalogue finished goods as a result of the commencement of the
partnership with Novo Nordisk. V-GO was divested in Q2, 2022, and the commercial rights to Zegalogue were transferred to
Novo Nordisk in Q3, 2022.
Gross margin
DKK thousand
Q1-Q3 2022
Q1-Q3 2021
∆
∆ in percent
Gross margin from continuing operations
79,484
84,144
-4,660
-6%
Gross margin from discontinued operations
16,753
59,433
-42,680
-72%
Gross margin in total
96,237
143,577
-47,340
-33%
The decrease in gross margin is due to the decrease in license and milestone revenue as described above.
15
15
Gross margin from discontinued operations is related to sales of the V-Go insulin delivery device and Zegalogue via own sales
force which is accounted for as discontinued operations as a result of the company’s refocused strategy. V-GO was divested in
Q2, 2022, and the commercial rights to Zegalogue were transferred to Novo Nordisk in Q3, 2022.
Research and development expenses
DKK thousand
Q1-Q3 2022
Q1-Q3 2021
∆
∆ in percent
Research and development expenses from
continuing operations
451,988
421,793
30,195
7%
Research and development expenses from
discontinued operations
4,156
4,473
-317
-7%
Research and development expenses in
total
456,144
426,266
29,878
7%
The increase in research and development expenses is primarily related to activities with our late-stage clinical programs for
dasiglucagon and glepaglutide.
Research and development expense from discontinued operations is related to the efforts to sell the V-Go insulin delivery
device and Zegalogue via own sales force which is accounted for as discontinued operations as a result of the company’s
refocused strategy. V-GO was divested in Q2, 2022, and the commercial rights to Zegalogue were transferred to Novo Nordisk
in Q3, 2022.
Sales and marketing expenses
DKK thousand
Q1-Q3 2022
Q1-Q3 2021
∆
∆ in percent
Sales and marketing expenses from
continuing operations
28,644
51,341
-22,697
-44%
Sales and marketing expenses from
discontinued operations
125,629
230,346
-104,717
-45%
Sales and marketing expenses in total
154,273
281,687
-127,414
-45%
The decrease in total sales and marketing expenses is due to reduced commercial efforts related to Zegalogue following the
company’s restructuring announcement on March 30, 2022.
Sales and marketing expenses from discontinued operations are related to the efforts to sell the V-Go insulin delivery device
and Zegalogue via own sales force which is accounted for as discontinued operations as a result of the company’s refocused
strategy. V-GO was divested in Q2, 2022 and the commercial rights to Zegalogue were transferred to Novo Nordisk in Q3, 2022.
16
16
Administrative expenses
DKK thousand
Q1-Q3 2022
Q1-Q3 2021
∆
∆ in percent
Administrative expenses from continuing
operations
177,050
179,680
-2,630
-1%
Administrative expenses from discontinued
operations
15,348
18,575
-3,227
-17%
Administrative expenses in total
192,398
198,255
-5,857
-3%
Administrative expenses decreased due to cost reduction efforts included as a part of the companies announced restructuring
on March 30, 2022.
Administrative expenses from discontinued operations are related to the efforts to sell the V-Go insulin delivery device and
Zegalogue via own sales force which is accounted for as discontinued operations as a result of the company’s refocused
strategy. V-GO was divested in Q2, 2022 and the commercial rights to Zegalogue were transferred to Novo Nordisk in Q3, 2022.
Other operating items
DKK thousand
Q1-Q3 2022
Q1-Q3 2021
∆
∆ in percent
Other operating income from continuing
operations
1,854
614
1,240
202%
Other operating expenses from continuing
operations
-19,840
-606
-19,234
-3,174%
Other operating income from discontinued
operations
21,338
0
21,338
N/A
Other operating expenses from
discontinued operations
-92,315
0
-92,315
N/A
Other operating items in total
-88,963
8
-88,971
-1,112,138%
Other operating expenses from continuing operations have increased due to employee-related restructuring costs incurred with
the March 30, 2022, company announcement.
The development in other operating income from discontinued operations primarily relates to the reversal of the loss on
Zegalogue finished goods triggered by the license and development agreement with Novo Nordisk.
Other operating expenses from discontinued operations comprise the net loss on the divestment of the V-GO activities,
employee-related restructuring cost and recognition of a loss for Zegalogue inventory following the March 30, 2022, company
announcement.
For further information, please refer to note 4.
17
17
Operating result
DKK thousand
Q1-Q3 2022
Q1-Q3 2021
∆
∆ in percent
Operating result from continuing operations
-596,184
-568,662
-27,522
-5%
Operating result from discontinued
operations
-199,357
-193,961
-5,396
-3%
Operating result in total
-795,541
-762,623
-32,918
-4%
The operating result reflects gross margin, research and development expenses, sales and marketing and administrative
expenses, as discussed above.
The operating result from discontinued operations is related to the efforts to sell the V-Go insulin delivery device and Zegalogue
via own sales force which is accounted for as discontinued operations as a result of the company’s refocused strategy. V-GO
was divested in Q2, 2022, and the commercial rights to Zegalogue were transferred to Novo Nordisk in Q3, 2022.
The development in operating result from discontinued operations comprise the upsides from the cost decrease in sales and
marketing cost due to the initiatives implemented with the March 30, 2022, company announcement and the reversal of reserve
for loss Zegalogue finished goods inventory. This is offset by a decrease in gross margin from sales, the recognised
restructuring costs and the net loss from the divestment of the V-GO disposal group.
Financial items
DKK thousand
Q1-Q3 2022
Q1-Q3 2021
∆
∆ in percent
Financial income
130,776
29,427
101,349
344%
Financial expenses
-184,197
-7,907
-176,290
-2,230%
Financial items in total
-53,421
21,520
-74,941
-348%
The increase in financial income is due to higher currency exchange adjustments on cash position caused by the change in
USD/DKK exchange rate (DKK 29.4 million) and a fair value adjustment of prepayment option on the Oberland loan (DKK 71.1
million).
The higher financial expenses comprise an increase in interest expenses (DKK 26.4 million) and loss on settlement of
borrowings (DKK 144.9 million) associated with the partial prepayment of the loan with Oberland, please refer to note 15 for
further information.
Result before tax
DKK thousand
Q1-Q3 2022
Q1-Q3 2021
∆
∆ in percent
Result before tax from continuing
operations
-649,605
-547,142
-102,463
-19%
18
18
Result before tax from discontinued
operations
-199,357
-193,961
-5,396
-3%
Result before tax in total
-848,962
-741,103
-107,859
-15%
Result before tax reflects the operating result and net financial items, as discussed above.
Income tax
DKK thousand
Q1-Q3 2022
Q1-Q3 2021
∆
∆ in percent
Income tax from continuing operations
5,056
2,944
2,112
72%
Income tax from discontinued operations
-15,781
272
-16,053
-5,902%
Income tax in total
-10,725
3,216
-13,941
-433%
The net income tax (expense) is mainly impacted by an impairment of deferred taxes in US as a result of the company’s
restructuring announcement on March 30,
2022.
The tax income from continuing operations is related to the corporate tax benefit on R&D expenses that the group expects to be
eligible to collect.
No deferred tax asset has been recognized in the statement of financial position due to uncertainty as to whether tax losses
carried forward can be utilized within the near term.
Net result
DKK thousand
Q1-Q3 2022
Q1-Q3 2021
∆
∆ in percent
Net result from continuing operations
-644,549
-544,198
-100,351
-18%
Net result from discontinued operations
-215,138
-193,689
-21,449
-11%
Net result
-859,687
-737,887
-121,800
-17%
The decrease in the net result from continuing operations is primarily due to the impact of the net financial items incurred as part
of the company’s restructuring including the amendment for the Oberland agreement signed on May 10, 2022.
Net result from discontinued operations is related to the efforts to sell the V-Go insulin delivery device and Zegalogue via own
sales force which is accounted for as discontinued operations as a result of the company’s refocused strategy. V-GO was
divested in Q2, 2022, and the commercial rights to Zegalogue were transferred to Novo Nordisk in Q3, 2022. The decrease in
the net result from discontinued operations is caused by the costs incurred following the March 30, 2022, restructuring
announcement and the divestment of V-GO partly offset by the lower costs due to lower activity level.
19
19
Liquidity and capital resources
Equity
DKK thousand
September 30,
2022
December 31,
2021
∆
∆ in
percent
Equity
366,440
927,803
-561,363
-61%
Equity ratio
34%
45%
N/A
N/A
Equity ratio is calculated as equity at the balance sheet date divided by total assets at the balance sheet date. The decrease in
equity was mainly driven by the loss for the period partly offset by the capital raise in June.
Subsequent to the period end, the Company announced completion of a directed issue and private placement of 4.975.000 new
ordinary shares raising gross proceeds of DKK 786 million.
Cash, cash equivalents and Marketable securities
DKK thousand
September 30,
2022
December 31,
2021
∆
∆ in
percent
Cash, cash equivalents and
Marketable securities
729,886
1,428,145
-698,259
-49%
The decrease in cash, cash equivalents and marketable securities is mainly driven by cash spent in the period and repayment of
portion of the loan to Oberland. The impact is partly offset by cash received from capital market financings and receivables
related to the company’s commercial programs, proceeds from the completed sale of V-Go® insulin delivery device to
MannKind Corporation and the positive effect from the development in the USD/DKK exchange rate.
Subsequent to the period end, the Company announced completion of a directed issue and private placement of 4.975.000 new
ordinary shares raising gross proceeds of DKK 786 million.
Cash flow
DKK thousand
Q1-Q3 2022
Q1-Q3 2021
∆
∆ in
percent
Cash from (used in) operating activities
-669,927
-904,257*
253,804
27%
Cash from (used in) investing activities
178,566
-6,255
184,420
2,955%
Cash from (used in) financing activities
-178,535
686,440*
-884,449
-125%
*DKK 19,474 reclassified from cash from financing activities to cash used in operating activities compared to reported figures from Q3, 2021.
The decrease in cash used in operating activities from the same period in 2021 is mainly related to reductions in sales and
marketing and administrative expenses as a result of decreased commercial activities and support for Zegalogue and the V-Go
wearable insulin delivery device.
20
20
Cash from investing activities increased with the consideration received from the deal with MannKind in Q2, 2022, and proceeds
received from marketable securities as they mature.
Cash from financing activities decreased from the same period in 2021 due to the financing that took place in January 2021 and
the repayment of USD 50m of the Oberland loan in May 2022. These effects are partly offset by the June 2022 capital market
financing.
Contrary to previous periods, it is managements judgement, that there are no substantial doubt that the groups’ interim
condensed consolidated financial statement can be prepared under the going concern assumption. It is management
assessment that the company’s non-restricted cash and cash equivalents of DKK 342.6 million as of September 30, 2022
together with the gross proceeds of DKK 786.0 million from private placement of new shares on October 4, 2022 as described in
note 17 will be sufficient to fund our operating activities as planned for at least 12 months from the balance sheet date.
21
21
Risk factors
This interim report contains forward-looking statements, including forecasts of future expenses as well as expected business-
related events. Such statements are subject to risks and uncertainties as various factors, some of which are beyond the control
of Zealand, may cause actual results and performance to differ materially from the forecasts made in this interim report. Without
being exhaustive, such factors include e.g. the impact of the global COVID-19 pandemic, interest rate and currency exchange
rate fluctuations, larger scale uncertainty about the state of the global economy and the possibility of a global slowdown in
economic growth, the effects of potentially increasing inflation on the global economy, costs in general or performance of the
equity markets that will make raising capital more difficult, the ongoing conflict in Ukraine, delay or failure of clinical trials, the
views of regulatory authorities and changing standards and other development activities, production problems, unexpected
contract breaches or terminations, government-mandated or market-driven price decreases for Zealand's products, introduction
of competing products, Zealand's ability to successfully market both new and existing products, exposure to product liability and
other lawsuits, changes in reimbursement rules and governmental laws and related interpretation thereof, unexpected growth in
costs and expenses, and Zealand’s ability to integrate businesses in varying geographies with different commercial and
operating characteristics. In particular, the global COVID-19 pandemic could potentially materially adversely impact our
business and financial performance, including the timing of our clinical trials, projected regulatory approval timelines, our supply
chain and sales of our approved products, as well as our Financial Guidance for 2022 in this interim report, particularly because
the COVID-19 pandemic continues to evolve, and its breadth and significance on our business and financial performance is
uncertain. In addition, Zealand’s classification as a going concern may hamper the ability to raise additional capital or may mean
that it will have to take additional cost saving measures that may cause further delays in the progress of its pre-clinical and
clinical programs beyond the internal or publicized projected dates. A more extensive description of risk factors can be found in
the 2021 Annual Report under the section Risk management and internal control.
22
22
Management’s statement on the interim report
The Board of Directors and the Management have considered and adopted the interim report of Zealand Pharma A/S for the
three- and nine-months periods ended September 30, 2022.
The condensed consolidated interim financial statements are prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU, and additional requirements of the Danish Financial Statements Act. In our opinion, the condensed
consolidated interim financial statements give a true and fair view of the Group’s assets, equity and liabilities and financial
position as of September 30, 2022 as well as of the results of the Group’s operations and cash flow for the three and nine month
periods ended September 30, 2022.
Moreover, in our opinion, the Management’s Review gives a true and fair view of the development in the Company’s operations
and financial conditions, of the net result for the periods and the financial position while also describing the most significant risks
and uncertainty factors that may affect the Group.
Management
Board of Directors
23
23
Independent auditor's report
To the shareholders of Zealand Pharma A/S
Management's responsibilities for the interim condensed consolidated financial statements
Auditor's responsibilities
Conclusion
CVR no. 30 70 02 28
24
24
Interim condensed consolidated financial statements
Interim condensed consolidated income statement for the three- and nine-
months periods ended September 30, 2022 and 2021.
DKK thousand
Note
Q3 2022
Q3 2021
Q1-Q3 2022
Q1-Q3 2021
FY 2021
Revenue
3
Cost of providing services
-577
-577
Royalty expenses
-10,970
-10,970
Gross margin
Research and development expenses
-145,076
-139,457
-451,988
-421,793
-582,270
Sales and marketing expenses
-6,166
-11,127
-28,644
-51,341
-62,600
Administrative expenses
-53,998
-62,226
-177,050
-179,680
-235,609
Total Operating expenses
-205,240
-212,810
-657,682
-652,814
-880,479
Other operating income
4
Other operating expenses
4
-53
-19,840
-606
-2,173
Operating result
-162,076
-158,479
-596,184
-568,662
-784,317
Financial income
5
Financial expenses
5
-10,467
-2,477
-184,197
-7,907
-15,781
Result before tax
-153,658
-142,408
-649,605
-547,142
-758,887
Income tax
6
Net result for the period from continuing
operations
-151,882
-141,410
-644,549
-544,198
-754,938
Net result for the period from discontinued
operations
2
-57,477
-215,138
-193,689
-263,211
Net result for the period
-148,342
-198,887
-859,687
-737,887
-1,018,149
Earnings/loss per share from continuing
operations – basic/diluted (DKK)
7
-3.29
-3.28
-14.46
-12.73
-17.61
Earnings/loss per share from discontinuing
operations – basic/diluted (DKK)
7
-1.33
-4.82
-4.53
-6.14
Earnings/loss per share – basic/diluted
(DKK)
7
-3.21
-4.61
-19.28
-17.26
-23.75
25
25
Interim condensed consolidated statement of comprehensive income (loss)
for the three- and nine-months periods ended September 30, 2022 and
2021.
DKK thousand
Note
Q3 2022
Q3 2021
Q1-Q3 2022
Q1-Q3 2021
FY 2021
Net result for the period
-148,342
-198,887
-859,687
-737,887
-1,018,149
Exchange differences on translation of
foreign operations
-511
Comprehensive result for the period
-148,853
-196,897
-855,311
-734,093
-1,012,971
26
26
Interim condensed consolidated statements of cash flow for the nine-months
periods ended September 30, 2022 and 2021.
DKK thousand
Note
Q1-Q3 2022
Q1-Q3 2021
FY 2021
Net result for the period
-859,687
-737,887
-1,018,149
Adjustments for other non-cash items
8
Change in working capital
-130,223 *
-166,325
Interests received
Interest paid
-20,004
-5,347
-3,296
Change in deferred revenue
3
-51,483
-16,844
-30,185
Income tax paid/received
-46,971
-41,631
Cash used in operating activities
-669,927
-904,257
-1,211,971
Payments of deposits
-434
-401
Purchase of marketable securities
-693,174
Proceeds from sale of marketable securities
Proceeds from sale of V-GO
2
Purchase of property, plant and equipment
-5,083
-5,854
-22,133
Cash used in investing activities
-6,255
-18,121
Repayment of borrowings
15
-436,088
Proceeds from borrowings
Proceeds from issuance of shares related to exercise of
share-based compensation
Proceeds from issuance of shares
Costs related to issuance of shares
-8,153
-46,894
-46,894
Purchase of treasury shares
-28,595
-28,590
Repayment of leasing liabilities
-10,246
-8,195 *
-14,716
Cash from financing activities
-178,535
Decrease/increase in cash and cash equivalents
-669,896
-224,072
Cash and cash equivalents at beginning of period
Exchange rate adjustments
Cash and cash equivalents at end of period
* Reclassifications of DKK 19,474 from leasing liabilities to adjustments for other non-cash items and DKK 34,004 from Change in working capital to adjustments
for other non-current transactions have occurred compared to reported figures from Q3, 2021.
27
27
Interim condensed consolidated statements of financial position as of
September 30, 2022 and December 31, 2021
Reviewed
Audited
DKK thousand
Note
September 30, 2022
December 31, 2021
ASSETS
Non-current assets
Intangible assets
2
Property, plant and equipment
2
Right-of-use assets
2
Other investments
9
Deposits
2
Corporate tax receivable
6
Deferred tax assets
6
Prepaid expenses
Other financial assets
9
Total non-current assets
Current assets
Inventories
2, 12
Trade receivables
Prepaid expenses
Corporate tax receivable
6
Other receivables
Marketable securities (restricted)
9, 10
Marketable securities
9
Cash (restricted)
10
Cash and cash equivalents
Total current assets
Total assets
28
28
Interim condensed consolidated statements of financial position as of
September 30, 2022 and December 31, 2021
Reviewed
Audited
DKK thousand
Note
September 30, 2022
December 31, 2021
EQUITY AND LIABILITIES
Share capital
13
Translation reserve
Retained earnings
Equity
Borrowings
15
Deferred revenue
Other liabilities
Lease liabilities
2
Non-current liabilities
Trade payables
Lease liabilities
2
Deferred revenue
Rebate and product return liabilities
Other liabilities
Current liabilities
Total liabilities
Total shareholders’ equity and liabilities
29
29
Interim condensed consolidated statements of changes in equity for the
nine-months periods ended September 30, 2022 and 2021
Reviewed
DKK thousand
Share
Translation
Retained*
capital
reserve
earnings
Total
Equity at January 1, 2021
Other comprehensive income for the
period
Net result for the period
-737,887
-737,887
Share-based compensation
Acquisition of treasury shares
-70,195
-70,195
Capital increase
Costs related to capital increases
-46,893
-46,893
Equity at September 30, 2021
Equity at January 1, 2022
Other comprehensive income for the
period
Net result for the period
-859,687
-859,687
Share-based compensation
Capital increase
Costs related to capital increase
0
-8,153
-8,153
Equity at September 30, 2022
*Columns Treasury shares, Share premium and Retained losses from the Company’s annual financial statements for the year ended December 31, 2021
have been merged into the column Retained earnings to ease accessibility of information.
For the period January 1, 2021 – September 30, 2021 the following amounts have been transferred (DKK thousand):
From Share premium to Retained earnings: Equity at January 1, 2021 (3,470,787), Share-based compensation (37,492), Treasury shares (-70,195), Capital increase
(766,342) and costs related to capital increase (-46,893). In total/Equity at September 30, 2021: 4,157,533.
30
30
Note 1 - Basis of preparation and changes to the Group’s accounting
policies
Basis of preparation
The interim condensed consolidated financial statements of Zealand Pharma A/S (The Group) have been prepared in
accordance with IAS 34, Interim Financial Reporting, as adopted by EU and additional requirements of the Danish Financial
Statements Act. The interim condensed consolidated financial statements are presented in Danish kroner (DKK) which is also
the functional currency of the parent company.
The accounting policies used in the interim condensed consolidated financial statements are consistent with those used in the
Company’s annual financial statement for the year ended December 31, 2021 except for discontinued operations which are
relevant account policies for the current interim period.
Discontinued operations
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose
of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of
discontinued operations are presented separately in the statement of profit or loss. Comparatives in the statement of profit and
loss for previous periods are restated to reflect the result of discontinued operations.
Revenue from delivery of services
Revenue from delivery of services is recognised in the accounting period in which the services are rendered. Amount is recog-
nised net of any pass-through cost incurred on behalf of the customer. The assessment of if a cost is incurred on behalf of the
customer is made by evaluating the nature of its promise to the customer including whether the specified good or service to be
provided to the customer are controlled by the Company before that good or service is transferred to the customer.
New standards, interpretations and amendments adopted by the Group
IASB has issued a number of new and amended standards which are not yet effective. The Group has not early adopted any
standard, interpretation or amendment that has been issued but is not yet effective. Several amendments apply for the first time
in 2022, but do not have an impact on the interim condensed consolidated financial statements of the Group.
31
31
Significant accounting estimates and judgements
The preparation of the interim condensed consolidated financial statements requires Management to make judgments and
estimates that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. In
applying our accounting policies, Management is required to make judgements and estimates about the carrying amounts of
assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The
estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in
the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
The estimates used are based on assumptions assessed to be reasonable by Management. However, estimates are inherently
uncertain and unpredictable. The assumptions may be incomplete or inaccurate, and unexpected events or circumstances may
occur. Furthermore, we are subject to risks and uncertainties that may result in deviations in actual results compared with
estimates.
Judgements and estimates applied
Discontinued operation
On March 30, 2022, the group announced its intension to exit the US sales activities including the V-Go activity. The activities
was successfully divested on May 29, 2022 through an asset purchase agreement with MannKind Corporation. On September
7, 2022, the group announced the transfer of the commercial rights for Zegalogue to Novo Nordisk effectively ending all efforts
to commercialize the groups products via own sales force. Management has determined that the activities around
commercialization of products via own sales force met all the criteria for classification as a discontinued operation as of
September 7, 2022. Accordingly, the activities, including the divestment of the V-GO disposal group, has been classified as a
discontinued operation in the condensed consolidated interim income statement for all periods presented. Reference is made to
note 2 for further information.
Going concern
Contrary to previous periods, it is managements judgement, that there are no substantial doubt that the groups interim
condensed consolidated financial statement can be prepared under the going concern assumption. It is management
assessment that the company’s non-restricted cash and cash equivalents of DKK 342.6 million as of September 30, 2022
together with the gross proceeds of DKK 786.0 million from private placement of new shares on October 4, 2022 as described in
note 17 will be sufficient to fund our operating activities as planned for at least 12 months from the balance sheet date.
On October 4, 2022 Zealand Pharma announced the completion of a private placement of new shares. Reference is made to
note 17.
32
32
Revenue from Novo Nordisk
On September 7, 2022, The Group announced a global license and development agreement with Novo Nordisk. Under the
agreement The Group have received DKK 25.0 million in upfront payments and is eligible for up to DKK 45.0 million in
development milestones and DKK 220.0 million in sales-based milestones. Management have applied judgement in identifying
the distinct performance obligations from the agreement and determining the transaction price in accordance with IFRS 15 –
revenue from contracts with customers. The transaction price has been allocated between the performance obligations based
on the estimated amount that The Group expects to be entitled to in exchange for fulfilling the performance obligation. Based on
the estimates The Group has recognised DKK 27.8 million as consideration for the license. The remaining consideration will be
recognised as performance obligations are delivered and milestones are triggered.
For further information, please refer to note 3.
Valuation of Zegalogue inventory
Following the March 30, 2022, restructuring announcement management elected to write off all Zegalogue inventories, except
what was forecasted to be sold in 2022, due to the uncertainties about the future sales channels for the product. With the
agreement with Novo Nordisk, the prior period write-off related to finished goods was reversed as these items were transferred
to Novo as a part of the agreement. Due to uncertainties whether the raw material will be utilized in the production of future
products to Novo Nordisk, it is management estimate that the net realisable value of the raw material is zero as of September
30, 2022. Please refer to note 12 for further information.
Valuation of US deferred tax assets
On March 30, 2022 the group announced intentions to exit US sales activities and thus reduce US operations significantly and
in Q2 V-Go was divested leading to US being projected for a negative taxable income for 2022. As a result, management has
revaluated the groups US deferred tax assets and concluded to measure them at zero due to the uncertainties around when
and if the deferred tax assets can be utilized. Please refer to note 6 for further information.
Valuation of Oberland prepayment option
As of December 31, 2021, it was estimated that the fair value of the prepayment option on the loan from Oberland was
immaterial under the circumstances present at the time. Following the March 30
th
, 2022, restructuring announcement where
Zealand announced their intention to scale back their commercial efforts, it became clear that Zealand would not be able to
comply with the revenue covenants from the contract, which was a prerequisite to release the proceeds from the loan for use.
As of March 31, 2022, the prepayment option was estimated at a fair value of DKK 142.1 million using third party valuation
experts. The amount was recognized as a financial income. During Q2, 2022, the prepayment option was partially utilized and
expensed and the remaining loan amount was released from any revenue related covenants. As a consequence, the fair value
of the prepayment option is estimated to be immaterial as of September 30, 2022.
33
33
Modification of Oberland loan agreement
During the financial year, the loan agreement with Oberland have been amended twice. It is managements judgement that the
amendments comprise terms which are substantially different from the term applicable prior to the amend. Consequently, the
modification has been accounted for as an extinguishment of the loan subject to the original terms and recognition of a new
liability. As a result, previously capitalized loan costs have been expensed. Management have estimated that any difference
between the fair value of the new liability as of the time of the amendments and the principal amount of the loan to be
immaterial. Please refer to note 15 for further information.
For further information regarding significant accounting estimates and judgments see note 1 in the Annual Report for 2021.
Note 2 – Discontinued operations
On March 30, 2022, the group announced its intension to exit the US sales activities including the V-Go activity. The activities
was successfully divested on May 29, 2022 through an asset purchase agreement with MannKind Corporation. On September
7, 2022, the group announced the transfer of the commercial rights for Zegalogue to Novo Nordisk effectually ending all efforts
to commercialize the groups products via own sales force. Management has determined that the activities around
commercialization of products via own sales force met all the criteria for classification as a discontinued operation as of
September 7, 2022. Accordingly, the activities, including the effect of the divestment of the V-GO disposal group, has been
presented separately as a discontinued operation in the interim income statement.
The results and the cash flow of the discontinued activities are presented below as a discontinued operations for the interim
period ended September 30, 2022 and September 30, 2021:
DKK thousand
Q3 2022
Q3 2021
Q1-Q3 2022
Q1-Q3 2021
FY 2021
Revenue
22,668
52,219
87,314
143,438
184,021
Cost of goods sold
-27,157
-28,743
-70,561
-84,005
-107,844
Gross margin
-4,489
23,476
16,753
59,433
76,177
Research and development expenses
-76
-1,841
-4,156
-4,473
-6,183
Sales and marketing expenses
-11,206
-67,697
-125,629
-230,346
-312,669
Administrative expenses
-1,961
-7,262
-15,348
-18,575
-25,378
Total Operating expenses
-13,243
-76,800
-145,133
-253,394
-344,230
Other operating income
21,338
0
21,338
0
0
Other operating expenses
-0
0
-92,315
0
0
Result before tax
3,606
-53,324
-199,357
-193,961
-268,053
Income tax
-66
-4,153
-15,781
272
4,842
Net result from discontinued operations
3,540
-57,477
-215,138
-193,689
-263,211
34
34
DKK thousand
Q1-Q3 2022
Q1-Q3 2021
FY 2021
Cash flows from discontinued operations
Net cash inflow (outflow) from operating activities
-135,532
-322,233
-368,052
Net cash inflow (outflow) from investing activities
104,808
-874
-1,585
Net cash (outflow) from financing activities
-1,064
-1,708
-2,319
Net cash increase (decrease) generated from the discontinued operation
-31,788
-324,815
-371,956
All assets and liabilities included in the V-Go disposal group was derecognized as of May 29, 2022 with the closure of the asset
purchase agreement with MannKind. As a result, no assets or liabilities are classified as held for sale in relation to the
discontinued operation as of September 30, 2022.
The derecognized assets and liabilities, recognized consideration and net impact on profit and loss from the divestment of V-Go
are presented below:
DKK thousand
May 29, 2022
Assets included in disposal group
Intangible assets
52,082
Property, plant and equipment
20,586
Right-of-use assets
8,128
Deposits and prepayments
1,871
Inventories
79,872
Total assets of disposal group
162,539
Liabilities directly associated with assets
included in disposal group
Lease liabilities
8,837
Total liabilities of disposal group
8,837
Net assets of disposal group
153,702
Consideration:
Cash consideration*
111,553
Other financial assets
6,573
Total consideration
118,126
Net loss - recognized as other operating expenses
from discontinued operations
-35,576
*As of September 30, 2022, DKK 104.9 million of the cash consideration was received. The remaining DKK 6.6 million is
included in a settlement account that will be settled upon completion of transition period.
35
35
Note 3 - Revenue
Revenue can be specified as follows:
DKK thousand
Q3 2022
Q3 2021
Q1-Q3 2022
Q1-Q3 2021
FY 2021
Alexion Pharmaceuticals Inc.
15,136
6,497
51,483
16,753
30,185
Boehringer Ingelheim International GmbH
0
22,311
0
22,311
22,311
Novo Nordisk
27,808
0
27,808
0
0
Protagonist Therapeutics Inc.
0
25,380
25,381
25,381
Sanofi-Aventis Deutschland GmbH
0
0
0
30,669
30,669
Total license and milestone revenue
42,944
54,188
79,291
95,114
108,546
Total revenue from sale of services
770
0
770
0
0
Total sale of goods revenue net
22,668
45,881
87,314
143,348
184,021
- Hereof related to discontinued operations
-22,668
-45,881
-87,314
-143,348
-184,021
Sale of goods revenue net from continuing
operations
0
0
0
0
0
Total revenue from continuing operations
43,714
54,188
80,061
95,114
108,546
Total revenue recognized over time
15,136
6,497
51,483
16,753
30,185
Total revenue recognized at a point in time
28,578
47,691
28,578
78,361
78,361
License revenue for the first nine months of 2022 is related to the research and development agreement with Alexion
Pharmaceuticals and the global license and development agreement with Novo Nordisk. Under the agreement with Novo
Nordisk an upfront fee of DKK 25.0 million was received upon signing in Q3, 2022, and the group is eligible to receive up to DKK
45.0 million in development milestones. DKK 27.8 million has been recognised upon signing while the remaining of the contract
value will be recognised as performance obligations are fulfilled and milestones are triggered.
Under the agreement with Alexion Pharmaceuticals, DKK 16.1 million is accounted for as deferred revenue as of September 30,
2022.
Revenue from sale of goods for the first nine months of 2022 comprise DKK 21.3 million related to the transfer of Zegalogue
finished goods to Novo Nordisk following the global license and development agreement as announced in Q3 2022 and DKK
66.0 million for the sale of V-GO and Zegalogue products sold via own sales force. Following the divestment of V-GO and the
global license and development agreement for Zegalogue such sales are accounted for as discontinued operations. Please
refer to note 2 for further information. The net sales of goods comprise of gross sales of DKK 164.7 million and discounts and
rebates of DKK -77.4 million (DKK 270.3 million and DKK -127.0 million respectively for the nine months ended September 30,
2021 and DKK 354.6 million and DKK -157.0 million respectively for the financial year ended December 31, 2021).
36
36
Zealand is managed and operated as one business unit, which is reflected in the organizational structure and internal reporting.
Beside from the V-Go activities which is presented separately as discontinued operations and disposal group held for sale, no
separate lines of business or separate business entities have been identified with respect to any of the product candidates or
geographical markets and no segment information is currently included in the internal reporting.
Note 4 – Other operating items
Recognized other operating income and expenses can be specified as follows:
DKK thousand
Q3 2022
Q3 2021
Q1-Q3
2022
Q1-Q3
2021
FY 2021
Proceeds from insurance claims
0
0
1,849
0
0
Government grants
27
126
5
614
759
Loss on sale of fixed assets
0
-53
-742
-606
-2,173
Restructuring costs – continuing operations
0
0
-19,098
0
0
Other operating items from continuing operations
27
73
-17,986
8
-1,414
Restructuring costs
0
0
-56,738
0
0
Reversal of prior periods inventory write-off
21,338
0
21,338
0
0
Divestment of V-GO
0
0
-35,577
0
0
Other operating items from discontinued operations
21,338
0
-70,977
0
0
Presentation in income statement:
Other operating income
27
126
1,854
614
759
Other operating expenses
0
-53
-19,840
-606
-2,173
Discontinued operations
21,338
0
-70,977
0
0
Restructuring costs from discontinued operations comprises severance costs (DKK -13.8 million), reversal of costs related to
forfeited share-based incentive programs (DKK 2.7 million) and an allowance for loss on Zegalogue inventories (DKK -45.6
million) while restructuring costs from continuing operations comprises severance costs (DKK -30.3 million) and reversal of
costs related to forfeited share-based incentive programs (DKK 11.2 million). All restructuring costs were incurred as a result of
the March 30, 2022, company announcement.
The partial reversal of prior periods inventory write-off of DKK 21.3 million relates to the Zegalogue finished goods inventory that
was transferred to Novo Nordisk in Q3, 2022, as a result of the global license and development agreement as announced in Q3,
2022.
37
37
Note 5 – Financial items
Recognized financial items can be specified as follows:
DKK thousand
Q3 2022
Q3 2021
Q1-Q3 2022
Q1-Q3 2021
FY 2021
Interest income
1,379
0
3,060
0
44
Interest expenses and banking fees
-10,349
-2,477
-36,705
-6,329
-4,091
Loss on settlement of borrowings
-172
0
-144,901
0
0
Fair value adjustments of other investments
0
0
2,259
0
-8,217
Fair value adjustments of prepayment option
0
0
71,050
0
0
Fair value adjustment of marketable securities
54
602
-2,591
-1,578
1,852
Currency exchange adjustments
17,506
17,946
54,407
29,427
39,315
Other financial expenses
0
0
0
0
-3,473
Financial items in total
8,418
16,071
-53,421
21,520
25,430
Presentation in income statement:
Financial income
18,885
18,548
130,776
29,427
41,211
Financial expenses
-10,467
-2,477
-184,197
-7,907
-15,781
Fair value adjustments of prepayment option relate to the prepayment option included in the loan agreement with Oberland. As
of December 31, 2021, it was assessed that the fair value of the option was immaterial under the circumstances present at the
time. Following the March 30
th
, 2022, restructuring announcement where Zealand announced their intention to scale back their
commercial efforts, it became clear that Zealand would not be able to comply with the revenue covenants from the contract,
which was a prerequisite to release the proceeds from the loan for use. As of March 31, 2022, the prepayment option was
valued at a fair value of DKK 142.1 million which was recognized as a financial income. During Q2, 2022, the prepayment option
was partially utilized and the remaining loan amount was released from any revenue related covenants. As a consequence, the
fair value of the prepayment option is assessed to be immaterial as of September 30, 2022.
Loss on settlement of borrowings both relates to the utilization of the prepayment option from the loan agreement with Oberland
and comprise the partial utilization of the prepayment option, the premium paid and the capitalized loan costs which have been
fully expensed. Reference is made to note 15 for further information.
Note 6 – Income tax
Recognised income tax is based on the groups’ projected effective tax rate for the year adjusted for separate events.
Tax from continuing operations recognized in 2022 comprise tax income of DKK 4.1 million relating to corporate tax benefit in
Denmark, and a tax income of DKK 0.9 million related to prior year taxes in Denmark.
Tax from discontinued operations for the first nine months of 2022 relates to revaluation of the deferred tax assets related to US.
Following the March 30, 2022 restructuring announcement the group expects reduced activities in the US going forward. As a
result, the value of the groups tax asset related to US activities have been remeasured leading to an impairment of the tax asset
of DKK 14.6 million.
38
38
As of September 30, 2022, no deferred tax assets are recognized for the group due to uncertainties about when the assets can
be utilized.
Receivable taxes relate to receivable tax benefits in Denmark and prepaid taxes in US.
Note 7 - Earnings/Loss per share
The earnings/loss and weighted average number of ordinary shares used in the calculation of basic and diluted earnings/loss
per share are as follows:
DKK thousand
Q3 2022
Q3 2021
Q1-Q3 2022
Q1-Q3 2021
FY 2021
Net earnings/loss used in the calculation of
basic/diluted earnings per share from continuing
operations
-151,882
-141,410
-644,549
-544,198
-754,938
Net earnings/loss used in the calculation of
basic/diluted earnings per share from
discontinuing operations
3,540
-57,477
-215,138
-193,689
-263,211
Total net earnings/loss
-148,342
-198,887
-859,687
-737,887
-1,018,149
Weighted average number of ordinary shares
46,530,186
43,552,583
44,917,346
43,053,533
43,192,383
Weighted average number of treasury shares
-248,848
-401,599
-327,075
-290,848
-322,988
Weighted average number of ordinary shares
used in the calculation of basic/diluted loss per
share
46,281,338
43,150,984
44,590,271
42,762,6845
42,869,395
Earnings/loss per share from continuing
operations – basic/diluted (DKK)
-3.29
-3.28
-14.46
-12.73
-17.61
Earnings/loss per share from discontinued
operations – basic/diluted
0.08
-1.33
-4.82
-4.53
-6.14
Total earnings/loss per share – basic/diluted
-3.21
-4.61
-19.28
-17.26
-23.75
The following potential ordinary shares are anti-dilutive and are therefore excluded from the weighted average
number of ordinary shares for the purpose of diluted earnings/loss per share:
September
30, 2022
September
30, 2021
December
31, 2021
Outstanding warrants under the 2015 Employee
incentive program
1,013,688
1,526,779
1,413,977
Outstanding warrants under the 2020 Employee
incentive program
10,490
63,217
63,217
Outstanding Performance Share Units (PSUs)
under the LTIP 2019 program
0
19,765
16,703
Outstanding Restricted Share Units (RSUs)
under the LTIP 2020 program
7,008
27,466
23,548
39
39
Outstanding Performance Share Units (PSUs)
under the LTIP 2021 program
88,734
282,852
255,058
Outstanding Restricted Share Units (RSUs)
under the LTIP 2021 program
147,886
452,450
436,541
Outstanding warrants under the LTIP 2022
program
833,165
0
0
Outstanding Performance Share Units (PSUs)
under the LTIP 2022 program
266,223
0
0
Outstanding Restricted Share Units (RSUs)
under the LTIP 2022 program
139,920
0
0
Total outstanding warrants/PSUs/RSUs
2,507,114
2,372,529
2,209,044
Total number of outstanding warrants, PSUs and RSUs for long-term incentive programs currently unexercised or under vesting
have been negatively impacted by 401,696 from the termination of employees end of March 2022 in connection with the
restructuring.
Note 8 – Adjustments for non-cash items
DKK thousand
Q1-Q3 2022
Q1-Q3 2021
FY 2021
Depreciation, amortization and impairment losses
96,734
30,774
40,249
Financial items
53,421
-21,520
-25,430
Share-based compensation
26,149
37,492
53,504
Income tax
10,725
-3,216
-8,791
Other non-cash items
5,931
-10,515
-11,917
Adjustments for non-cash items in total
192,960
33,015
47,615
Depreciation, amortization and impairment losses for Q1-Q3, 2022, includes the net loss on the V-GO divestment (DKK 35.6
million) and the net allowance for loss on Zegalogue inventory (DKK 24.3 million).
Note 9 - Financial instruments
As of September 30, 2022, and December 31, 2021, the following financial instruments are measured at fair value through profit
or loss:
DKK thousand
September
30, 2022
December
31, 2021
Marketable securities (Level 1)
118,129
299,042
Marketable securities (Level 2)
118,002
0
Other investments (Level 3)
33,857
26,907
Other financial assets (Level 3)
6,921
0
Financial assets measured at fair value
276,909
325,949
40
40
The fair value of marketable securities is measured using inputs categorized as Level 1 and 2 in the fair value hierarchy,
whereas the other investments and other financial assets are based on inputs categorized as Level 3 in the fair value hierarchy.
No transfers occurred between the levels of the fair value hierarchy in the nine months to 30 September 2022.
Marketable securities consist of investments in debt instruments (corporate bonds and asset-backed securities) and equity
instruments (commercial papers and money market funds). For marketable securities categorized as Level 2, the valuation is
mainly based on observable terms (e.g. maturity, interest rate, credit rating etc.).
Other investments consist of a USD 5.4 million (December 31, 2021: USD 5.4 million) investment in Beta Bionics, Inc., the
developer of iLet™, a fully integrated dual-hormone pump (bionic pancreas) for autonomous diabetes care.
In determining fair value, Zealand is using valuations from third party specialists combined with considerations around the
impact of any recent share capital issuances by Beta Bionics as an indicator of the fair value of the shares. In particular, Beta
Bionics closed a series C financing in February, 2022, which is used as the basis for determining fair value.
Based on an updated valuation report and the development in the USD/DKK exchange rate the fair value of the investment in
Beta Bionics has developed from DKK 26.9 million on December 31, 2021, to DKK 33.9 million on September 30, 2022. The
gain has been recognized as finance income.
Other financial assets comprise the sales-related milestones from the divestment of V-Go. A maximum of four milestones of
USD 2.5m each can be achieved under the contract based on annual sales. The fair value has been determined using the risk-
adjusted net present value method using a discount rate of 10% and an estimated probability of 50% and 25% respectively to
reach the first two sales-related milestones.
DKK thousand
Q3 2022
Q3 2021
Q1-Q3 2022
Q1-Q3 2021
Financial instruments categorized as level 3 in the fair
value hierarchy
Carrying amount at start of period
38,565
33,427
26,907
32,333
Additions during the period
0
0
6,573
0
Charges to profit and loss:
Fair value adjustments
142
0
2,401
0
Exchange rate adjustments
2,071
1,255
4,897
2,349
Carrying amount at end of period
40,778
34,682
40,778
34,682
Note 10 – Restricted cash and marketable securities
Under the second amendment to the Oberland loan agreement signed on September 20, 2022, the outstanding principal of $50
million is to be held in a designated deposit account controlled by Oberland.
The cash and securities can be released in chunks of USD 10.0 million upon request from the group.
41
41
Note 11 – Capital Management
The Company’s capital management objectives and policies are unchanged from the ones described in the Annual report of the
Company for 2021 with the exception of the company’s commercial objectives. On March 30, 2022 the company announced
that it will discontinue to support commercial operations in the United States and will prioritize research and development. With
the implementation of this strategy the company will cease generating revenue from the product sales of its commercial
programs and will instead look to out-license, sell, or partner their commercial and late-stage assets as a way of providing for
the company’s near and long-term capital requirements.
At the Zealand Annual Meeting held on April 6, 2022, the shareholders granted the company the ability during the period until 15
April 2026 to raise loans against issuance of convertible debt instruments with access to conversion to shares in the Company
(convertible debt instruments) of up to a total of nominally DKK 10,850,136 without pre-emption rights for existing shareholders
in accordance with the adopted new Articles 8.13-8.15 of the Company's Articles of Association.
In June of 2022 the company received gross proceeds of DKK 274.8 million from a directed issue and private placement.
Zealand issued a total of 2,892,368 new shares at a subscription price of DKK 95 per share.
In August 2022 the company announced Voluntary Delisting of American Depositary Shares from the U.S.-Based Nasdaq
Global Select Market.
Subsequent to the quarter, the company received gross proceeds of DKK 786 million from a directed issue and private
placement. Zealand issued a total of 4,975,000 new shares at a subscription price of DKK 158 per share.
Note 12 - Inventories
DKK thousand
September
30, 2022
December
31, 2021
Raw materials
0
35,816
Work in progress
0
29,588
Finished goods
0
53,032
Inventories
0
118,436
The development in inventories relates to the decision to discontinue the efforts to sell V-Go and Zegalogue via own sales force.
For further information related to V-Go please refer to note 2.
With the March 30, 2022, restructuring announcement an allowance for loss on Zegalogue inventory of DKK 45.6 million were
recognized due to uncertainties around the future sales channels for the product. The allowance is included as discontinued
operations under other operating expenses as a restructuring cost. As all Zegalogue finished goods was transferred to Novo
Nordisk as a result of the global license and development agreement announced in Q3, 2022, a partial reversal of the inventory
allowance of DKK 21.3 million was recognised under other operating income from discontinued operations in Q3, 2022.
42
42
As of September 30, 2022, Zegalogue related raw materials at costs amounts to DKK 28.7 million. Due to uncertainties if the
raw materials will be utilized in the production under the supply agreement with Novo Nordisk, management have estimated the
net realisable value to be immaterial. As a result, the inventory is measured at zero as of the reporting date.
Note 13 - Changes in share capital
The following changes have occurred in the share capital during the interim period:
No. of shares
(thousand)
Share capital at January 1, 2022
43,634
Increase due to issue of 2,892,368 new shares on June 1, 2022 at a subscription price
of DKK 95 per share
2,892
Increase due to issue of 3,874 new shares on August 18, 2022 at a subscription price
of DKK 100.8 per share
4
Increase due to issue of 7,802 new shares on September 8, 2022 at a subscription
price of DKK 100.8 per share
8
Share capital at September 30, 2022
46,538
On October 4, 2022, The Group announced that a directed issue and private placement of 4,975,000 new shares had been
completed. Please refer to note 17 for further information.
Note 14 – Treasury shares
The total number of treasury shares as of September 30, 2022 is 231,881 (December 31, 2021: 418,247). Treasury shares are
allocated to long term incentive compensation plans. The development in the number of treasury shares is due to the vesting of
employees RSUs and PSUs.
Note 15 – Borrowings
As further discussed in note 25 of the 2021 annual report, Zealand entered into a USD 100 million loan agreement with
Oberland in December 2021.
On September 20, 2022, Zealand entered into an agreement no. II to amend certain terms of the Oberland loan and
amendment No. I dated May 9. The amendments were as follows:
• Prepayment of 50% of the principal which including a prepayment premium of 20% amounts to 60 MUSD
• The outstanding principal of $50 million to be held in a designated deposit account.
• The funds can be released in increments of $10 million upon request
• 50% prepayment option premium irrespective of the date of prepayment
• Potential for a further $75 million incremental capital following specific events
Management considers the amendments to comprise terms which are substantially different from the term applicable prior to the
amend. Consequently, the modification has been accounted for as an extinguishment of the loan subject to the original terms
and recognition of a new liability.
43
43
Under the amended terms, Management estimates that fair value of the prepayment option for the remaining outstanding
amount is insignificant due to the fact that release from the liquidity covenant a market participant would not benefit from
prepaying the loan due to the fact that the funds are available for use for a market participant.
In the first nine months of 2022 DKK 144.9 million was recognised as loss on settlement of borrowings under financial
expenses. The amount comprises utilization of the prepayment option (DKK 71.1 million), premium on settlement of debts (DKK
64.9 million) and derecognition of capitalized loan costs (DKK 8.9 million). The cash outflow from debts of DKK 436.1 million
comprises the premium on settlement of debts (DKK 64.9 million), repayment of USD 51.2 million (DKK 365.4 million) and a
prepayment of USD 0.8 million (DKK 5.8 million) which will be offset against future repayments.
On 20 September 2022, the Company entered into the Second Amendment to the Note Purchase Agreement to address certain
non-financial events of default by Zealand, which Oberland Capital waived pursuant to the amendment.
The Second Amendment introduced two conditions for the release of the $50 million held in a Zealand Pharma A/S account that
is controlled by Oberland Capital, one of which was satisfied. Upon satisfaction of the second condition, which relates to the
fulfillment of certain post-closing obligations, Zealand may transfer funds from such account in increments of $10 million for pur-
poses of operating Zealand’s business in the ordinary course upon prior notice to Oberland Capital.
There are currently no other outstanding events of default under the Note Purchase Agreement.
Note 16 - Contingent assets, liabilities, other contractual obligations and
collateral provided
Contingent assets
As of September 30, 2022, Zealand is still eligible for a payment from Sanofi of up to USD 10.0 million which is expected in
2023. However, it is Management’s opinion that the amount of any payment cannot be determined on a sufficiently reliable
basis, and therefore the company has not recognized an asset in the statement of financial position of the Group.
Contingent liabilities and contractual obligations
As of September 30, 2022, total contractual obligations related to agreements with CRO’s and CMO’s amounted to DKK 268.1
million (DKK 71.4 million for 2022 and DKK 196.7 million for the years 2023 up to and including 2026).
Zealand may be required to pay future development, regulatory and commercial milestones related to the acquisition of Encycle
Therapeutics. Refer to note 13 in the Annual Report 2021.
Collateral provided
The Group has provided floating charge collateral with all assets which can be collateralized including shares in subsidiaries.
Note 17 - Significant events after the reporting period
Private placement of new shares
On October 4, 2022, The Group announced that a directed issue and private placement of 4,975,000 new shares had been
completed at a subscription price of DKK 158 per share.
The gross proceed from the issue was DKK 786 million and Zealand intends to use the net proceeds to help fund continued
development of Zealand's proprietary pipeline of investigational peptide-based therapeutics, support pre-commercial activities,
and general corporate purposes.