1 Zealand Pharma A/S | Interim Financial Statements Q1 2023
Financial highlights and key
figures.
Financial highlights (DKK thousand)
Note Q1 2023
Q1 2022*
Revenue 13,628 10,957
Research and development expenses
-142,263 -155,553
Sales and marketing expenses -4,616 -12,008
Administrative expenses -42,484 -52,715
Net other operating items 7,061 -19,728
Net operating expenses -182,302 -240,004
Net financial items -26,650 133,034
Result before tax -195,323 -96,013
Corporate tax
1,691 974
Net result for the period from continuing operations -193,632 -95,039
Net result for the period from discontinued operations
- -127,806
Net result for the period -193,632 -222,845
Earnings/loss per share from continuing operations - basic/diluted (DKK)
-3.76 -2.20
Earnings/loss per share from discontinued operations - basic/diluted (DKK)
- -2.96
Earnings/loss per share - basic/diluted (DKK)
-3.76 -5.16
Statement of financial position (DKK thousand) Note
Q1 2023
Q1 2022
Cash and cash equivalents
(1) 831,078 1,123,235
Marketable securities
170,441 -
Total assets
1,340,507 1,837,392
Total shareholders' equity
673,239 709,697
Cash flow (DKK thousand) Note
Q1 2023
Q1 2022
Cash (used in)/provided by operating activities
-196,677 -317,011
Cash (used in)/provided by investing activities -64,846 294,248
Cash (used in)/provided by financing activities 30,158 -3,461
Purchase of property, plant and equipment
-1,117 -3,738
Free cash flow
(2) -197,794 -320,749
Other Note
Q1 2023
Q1 2022
Share price (DKK) 214.8 104.2
Number of shares ('000 shares)
52,003 43,634
Market capitalization (MDKK)
(2) 11,121 4,503
Equity ratio (%)
(2) 50% 39%
Equity per share (DKK)
(2) 13.00 16.42
Average number of employees
Number of full-time employees at the end of period
220 345
* Comparatives numbers for Q1, 2022 are adjusted to reflect the effect of discontinued operations. For further details refer to
note 2.8 in the 2022 Annual Report.
1) In April 2023 gross proceeds of DKK 1.5 billion were received following a private placement of 6,578,948 new shares.
2) For basis of calculation refer to 2022 Annual Report p. 110.
2 Zealand Pharma A/S | Interim Financial Statements Q1 2023
Financial Review.
• Net operating expenses in Q1 of DKK -182.3 million is
mainly driven by the progression of the late-stage rare
disease assets and the obesity pipeline.
• Financial items of DKK -26.7 million mainly comprise
interest on Oberland loan agreement and fair value
adjustment on investment in Beta Bionics.
• On March 30 Zealand announced completion of a
private placement of 6,578,948 new shares raising
gross proceeds of DKK 1.5 billion. Including the gross
proceeds Zealand’s cash position at the end of Q1
amounts to DKK 2.5 billion securing cash runway to
mid-2026.
Revenue
Revenue is driven by the license and development
agreement with Novo Nordisk A/S signed in September
2022.
Net operating expenses
Research and Development expenses in Q1 of 142.3
million is mainly driven by the progression of the late-stage
rare disease assets and the obesity pipeline. The spend is
slightly below Q1, 2022 due to timing of clinical activities.
Selling and marketing expenses in Q1 of DKK 4.6 million
and administrative expenses of DKK 42.5 million are
significantly below Q1 2022 due to cost reduction efforts
following the announced restructuring on March 30, 2022.
Net other operating items of DKK 7.1 million is related to
adjustment of Zegalogue inventory fair value.
Financial items
Financial items of DKK 26.7 million are driven by the loan
agreement with Oberland. The decrease in interest
expenses compared to Q1, 2022 is a result of the partial
settlement of the Oberland loan with USD 50 million in Q2,
2022. Interest expenses for the quarter was DKK -11.8
million compared to DKK -18.8 million for the same period
last year.
In Q1, 2023 the investment in Beta Bionics was subject to a
fair value adjustment of DKK -14.7 million.
The decrease in financial income compared to same
period last year is the impact of the fair value adjustment of
the Oberland prepayment option recognized in Q1, 2022
of DKK 144.4 million.
Liquidity
In Q1 2023 equity was DKK 673.2 million reflecting a slight
decrease compared to Q1 2022 mainly driven by the loss
for the period partly offset by the proceeds from issuance
of shares related to exercise of share-based compensation
in March 2023.
Cash position
Cash position at the end of Q1, 2023 was DKK 1,002
million reflecting a decrease of DKK 176.3 million
compared to end of 2022. This is driven by cash spent and
net cash flow (purchase/sale) of marketable securities
which is partly offset by proceeds from issuance of shares
related to exercise of share-based compensation in March
2023.
On March 12, 2023 the company provided a statement on
the closure of Silicon Valley Bank (SVB). On closure
Zealand’s cash deposits in SVB was DKK 162.6 million,
however it had no impact as all depositors were granted
access to their money from March 13. In the light of that
Zealand is seeking to achieve an even higher diversification
in its management of funds.
Subsequent to the period end, Zealand announced
completion of a private placement of 6,578,948 new
ordinary shares raising gross proceeds of DKK 1.5 billion.
The net proceeds from the offering are (in the following
prioritized order) intended to:
• Support the remaining late-stage rare disease
assets, and pursue a strong strategic partner for
future commercialization
• Advance the clinical-stage candidates, including
the obesity/metabolic disease portfolio that
-151
-53
-70
-54
-60
-40
-20
-12
-156
Q1 2022
2
-10
Q2 2022
-6
-145
Q3 2022
-4
-162
Q4 2022
7
-42
-5
-142
Q1 2023
-240
-230
-205
-265
-182
R&D S&M G&A Net other operating items
OPEX by quarter
DKK million
3 Zealand Pharma A/S | Interim Financial Statements Q1 2023
includes the clinical-stage GLP-1/GLP-2 dual
agonist (dapiglutide) and amylin analog (ZP8396);
and non-clinical stage GIP analog (ZP6590)
• Progress additional peptide candidates from non-
clinical development into early clinical
development
• Continue its early discovery and research to
develop additional peptide candidates
• Strengthen the Zealand’s capital base and cash
preparedness (general corporate purposes)
Zealand expects the new funds to provide cash runway to
mid-2026 and expects to advance the clinical pipeline and
as such reach several potential key milestones within this
time frame. Following the capital raise in April 2023
Zealand’s cash position increased to DKK 2.5 billion.
In May 2023 Zealand repaid the Oberland Capital loan in
full. With this final repayment, the loan agreement with
Oberland Capital is now terminated. The repayment is
refinanced through a new Credit Facility provided by
Danske Bank and expected near-term upcoming
milestones from existing partners. For further information
on the capital increase and repayment of Oberland loan
refer to note 11.
Outlook for the year
There are no changes to the outlook for the year and
guidance is confirmed. Net operating expenses for the year
are still expected between DKK 800-900 million. For
further information refer to p. 10 in the 2022 Annual
Report.
1,178
1,002
1,123
Cash
position*
Dec-2022
-197
Cash flow
from
operating
activities
21
Other cash
adjustments
Cash
position*
Mar-2023
1,500
Gross
proceeds
from
capital
increase
April 2023
Cash
position*
Mar-2022
2,502
* Cash, cash equivalents and
marketable securities
Cash position compared to FY22 and Q1, 2022
DKK million
4 Zealand Pharma A/S | Interim Financial Statements Q1 2023
Interim financial statements.
Unaudited interim condensed consolidated financial statements Q1 2023:
Interim income statement for Q1, 2023 .............................................................................................................................................................. 5
Interim statement of comprehensive loss for Q1, 2023 .................................................................................................................................. 6
Interim statements of financial position as of Q1, 2023 .................................................................................................................................. 7
Interim statements of cash flow for Q1, 2023 ................................................................................................................................................... 8
Interim statements of changes in equity as of Q1, 2023 ................................................................................................................................. 9
Notes to the interim condensed consolidated financial statements. ............................................................................................................. 10
1. Basis of preparation and changes to the Group’s accounting policies ................................................................................................. 10
2. Revenue ................................................................................................................................................................................................................. 11
3. Net other operating items ................................................................................................................................................................................. 11
4. Net financial items .............................................................................................................................................................................................. 12
5. Inventory ............................................................................................................................................................................................................... 12
6. Financial instruments ......................................................................................................................................................................................... 13
7. Cash and cash equivalents ............................................................................................................................................................................... 15
8. Share capital......................................................................................................................................................................................................... 15
9. Capital Management ......................................................................................................................................................................................... 16
10. Contingent assets and liabilities .................................................................................................................................................................... 16
11. Significant events after the reporting period .............................................................................................................................................. 16
Statement by the Executive Management and the Board of Directors .......................................................................................................... 17
Independent auditor's report .................................................................................................................................................................................... 18
5 Zealand Pharma A/S | Interim Financial Statements Q1 2023
Interim income statement for Q1, 2023.
DKK thousand Note Q1 2023 Q1 2022 *
(reviewed) (reviewed)
Revenue 2 13,628 10,957
Research and development expenses -142,263 -155,553
Sales and marketing expenses -4,616 -12,008
Administrative expenses -42,484 -52,715
Net other operating items 3 7,061 -19,728
Net operating expenses -182,302 -240,004
Operating result (EBIT) -168,673 -229,047
Financial income 4 7,437 153,505
Financial expenses 4 -34,086 -20,471
Result before tax -195,323 -96,013
Corporate tax 1,691 974
Net result for the period from continuing operations -193,632 -95,039
Net result for the period from discontinued operations* - -127,806
Net result for the period -193,632 -222,845
Earnings/loss per share from continuing operations - basic/diluted (DKK)
-3.76 2.20
Earnings/loss per share from discontinued operations - basic/diluted (DKK)
Earnings/loss per share - basic/diluted (DKK) -3.76 5.16
* Comparatives numbers for Q1, 2022 are adjusted to reflect the effect of discontinued operations. For further details refer to
note 2.8 in the 2022 Annual Report.
6 Zealand Pharma A/S | Interim Financial Statements Q1 2023
Interim statement of comprehensive loss
for Q1, 2023.
DKK thousand Note Q1 2023 Q1 2022
(reviewed) (reviewed)
Net result for the period -193,632 -222,845
Other comprehensive income
Items that will be reclassified to income statement when certain conditions
are met (net of tax):
Exchange differences on translation of foreign operations 3,785 2,026
Total comprehensive result for the period -189,846 -220,819
7 Zealand Pharma A/S | Interim Financial Statements Q1 2023
Interim statements of financial position
as of Q1, 2023.
DKK thousand Note
Mar-31,
2023
Dec-31,
2022
Assets (reviewed) (audited)
Property, plant and equipment 48,426 50,528
Right-of-use assets 111,811 114,960
Other investments 6 16,194 30,943
Corporate tax receivable 1,375 -
Deferred tax assets 1,981 2,017
Trade and other receivables 20,998 18,105
Other financial assets 6 6,951 6,901
Total non-current assets 207,736 223,454
Inventory 5 8,452 1,286
Trade and other receivables 101,321 115,622
Corporate tax receivable 21,480 21,599
Marketable securities 170,441 108,611
Cash and cash equivalents (including cash subject to certain
conditions)
7 831,078 1,069,234
Total current assets 1,132,772 1,316,352
Total assets 1,340,507 1,539,806
Shareholders equity and liabilities
Share capital 8 52,003 51,702
Currency translation reserve 18,402 14,617
Retained earnings 602,834 749,592
Total shareholders' equity 673,239 815,911
Trade and other payables 19,058 19,058
Borrowings including embedded derivatives 6 392,668 401,346
Lease liabilities 105,057 108,000
Total non-current liabilities 516,783 528,404
Leasing liabilities 14,827 14,729
Trade and other payables 135,658 180,762
Total current liabilities 150,485 195,491
Total liabilities 667,268 723,895
Total shareholders' equity and liabilities 1,340,507 1,539,806
8 Zealand Pharma A/S | Interim Financial Statements Q1 2023
Interim statements of cash flow for Q1,
2023.
DKK thousand Note Q1 2023 Q1 2022
(reviewed) (reviewed)
Net result for the period -193,632 -222,845
Adjustment for other non-cash items 42,677 -90,890
Changes in working capital -39,881 8,183
Interest received 3,782 -
Interest paid -9,680 -11,642
Income taxes paid/received 57 183
Cash flow from/(used in) operating activities -196,677 -317,011
Proceeds from sale of marketable securites 107,517 297,559
Purchase of marketable securities -171,246 -
Purchase of property, plant and equipment -1,117 -3,738
Change in deposits - 427
Cash flow from/(used in) investing activities -64,846 294,248
Proceeds from issuance of shares related to exercise of share-based
compensation
8 33,166 -
Repayment of leasing liabilities -3,008 -3,461
Cash flow from/(used in) financing activities 30,158 -3,461
(Decrease)/increase in cash and cash equivalents -231,365 -26,224
Cash and cash equivalents at beginning of period 1,069,234 1,129,103
Exchange rate adjustments -6,791 20,356
Cash and cash equivalents at end of period 831,078 1,123,235
9 Zealand Pharma A/S | Interim Financial Statements Q1 2023
Interim statements of changes in equity
as of Q1, 2023.
DKK thousand
Share capital
Translation
reserve
Other
reserves
Total
Shareholder's equity at Jan-1, 2023 51,702 14,617 749,592 815,911
Other comprehensive income for the period
Net result for the period - - -193,632 -193,632
Share-based compensation - - 14,009 14,009
Capital increase 301 - 32,865 33,166
Shareholder's equity at Mar-31, 2023 (reviewed) 52,003 18,402 602,834 673,239
Shareholder's equity at Jan-1, 2022 43,634 14,155 870,014 927,803
Other comprehensive income for the period
Net result for the period - - -222,845 -222,845
Share-based compensation - - 2,714 2,714
Shareholder's equity at Mar-31, 2022 (reviewed) 43,634 16,181 649,883 709,698
10 Zealand Pharma A/S | Interim Financial Statements Q1 2023
Notes to the interim condensed
consolidated financial statements.
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
Group’s annual financial statement for the year ended December 31, 2022.
Going concern assessment
Management’s judgement and assessment of the Group’s ability to continue as a going concern includes evaluation of the
Group's operational cash flow requirements for the forthcoming 12 months from the balance sheet date and future sources
and uses of cash. Following the capital increase completed in April 2023 the Group received gross proceeds of DKK 1.5 billion.
On this basis the interim condensed consolidated financial statements are prepared using the going concern assumption.
New standards, interpretations and amendments adopted by the Group
Several amendments apply for the first time in 2023, but do not have an impact on the interim condensed consolidated
financial statements of the Group. The Group has not early adopted any standard, interpretation or amendment that has been
issued but is not yet effective.
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.
Except for the items listed below, no material changes in significant accounting estimates and judgements have occurred since
the Annual Report 2022. Please refer to note 1.4 in the 2022 Annual Report for further information:
• Estimate of net realizable value of Zegalogue raw materials (Inventory). Refer to note 5.
• Estimate of fair value on investment in Beta Bionics (Other investments). Refer to note 6.
• Estimate of fair value of Oberland’s call option for repayment of loan (Borrowings including embedded derivatives).
Refer to note 6.
• Judgement in assessing operational cash-flow and capital requirements for the forthcoming 12 months from the
balance sheet date. Refer to the going concern assessment above.
11 Zealand Pharma A/S | Interim Financial Statements Q1 2023
2. Revenue
Revenue can be specified as follows:
DKK thousand Q1 2023 Q1 2022 *
(reviewed) (reviewed)
Alexion Pharmaceuticals Inc. 1,790 10,956
Novo Nordisk A/S 11,838 -
Total revenue from license and collaboration agreements
13,628 10,956
Total sale of goods revenue net - 39,830
- Hereof related to discontinued operations - -39,830
Sale of goods revenue net from continuing operations - -
Total revenue from continuing operations 13,628 10,956
Total revenue recognized over time 13,628 10,956
Total revenue recognized at a point in time from
discontinued operations
- 39,830
* Comparatives numbers for Q1, 2022 are adjusted to reflect the effect of discontinued operations. For further details refer to
note 2.8 in the 2022 Annual Report.
3. Net other operating items
Net other operating items can be specified as follows:
DKK thousand Q1 2023 Q1 2022
(reviewed) (reviewed)
Restructuring costs - -18,986
Loss on sale of fixed assets - -742
Reversal of inventory write-down 7,061 -
Net other operating items in total 7,061 -19,728
All restructuring costs in Q1, 2022 were incurred as a result of the March 30, 2022, company announcement on refocused
strategy.
As of March 31, 2023 management has estimated the net realizable value of raw materials to be DKK 8.5 million as all materials
are expected to be utilized in the production under the supply agreement with Novo Nordisk, and therefore a reversal of
inventory write-down of DKK 7.1 million has been made. Reference is made to note 5.
12 Zealand Pharma A/S | Interim Financial Statements Q1 2023
4. Net financial items
Financial items include interests, as well as foreign exchange rate adjustments, fair value adjustments of other investments,
embedded derivatives and marketable securities and dividends from marketable securities.
DKK thousand Q1 2023 Q1 2022
(reviewed) (reviewed)
Interest income
4,710
-
Interest expenses and banking fees
-11,794
-18,839
Fair value adjustment of lender's call option
2,289 -
Fair value adjustment of prepayment option
- 144,359
Fair value adjustment of marketable securities 389 -1,633
Fair value adjustment on other investments -14,749 -
Fair value adjustment on other financial assets 50 -
Amortization of loan costs
-656 -
Exchange rate adjustments
-6,888 9,146
Financial items in total -26,649 133,033
Presentation in income statement:
Financial income
7,437 153,506
Financial expenses
-34,086 -20,473
Interest income mainly relates to the USD 50 million from the Oberland loan which is placed on an investment account.
Interest expenses and banking fees mainly consists of interest payments due to the loan agreement with Oberland.
Fair value adjustment of lender call option (embedded derivative) relates to the value adjustments of Oberland's option to call
for repayment of the loan under certain conditions. Please refer to note 6 for further information.
Fair value adjustment on other investments comprises the accounting impact of the investment in Beta Bionics as described in
note 6.
Exchange rate adjustments primarily relates to USD deposits.
5. Inventory
In Q1, 2023 a reversal of Zegalogue inventory write-down has been made as the raw materials are expected to be utilized
under the license and development agreement with Novo Nordisk. The adjustment affects net other operating item by DKK 7.1
million, see note 3.
For further information regarding significant accounting estimates and judgements, refer to note 1.4 in the 2022 Annual Report.
13 Zealand Pharma A/S | Interim Financial Statements Q1 2023
6. Financial instruments
As of March 31, 2023, and December 31, 2022, the following financial instruments are measured at fair value through profit or
loss. The fair value of marketable securities is measured using inputs categorized as Level 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.
Embedded derivatives is measured using inputs categorized as Level 3 in the fair value hierarchy.
No transfers occurred between the levels of the fair value hierarchy in the three months ending 31 March 2023.
DKK thousand
Mar-31,
2023
Dec-31,
2022
(reviewed) (audited)
Assets measured at fair value:
Marketable securities (Level 2)
170,441
108,611
Other investments (Level 3)
16,194
30,943
Other financial assets (Level 3)
6,951
6,901
Financial assets measured at fair value 193,586 146,455
Liabilities measured at fair value:
Embedded derivatives (Level 3)
76,933
80,603
Financial liabilities measured at fair value 76,933 80,603
Financial
assets
(Level 3)
Financial
liabilities
(Level 3)
Carrying amount at start of period 37,844 80,603
Fair value adjustments through profit and loss -14,699 -2,289
Exchange rate effect through other comprehensive income - -1,381
Carrying amount at end of period 23,145 76,933
Fair value measurement of other investments
Other investments consist of an 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 relying on the implied value per share adjusted for a discount for lack of marketability, both
determined by third party valuation specialists.
Fair value of the investment amounted to DKK 16.2 million as of 31 March, 2023 (DKK 30.9 million as of December 31, 2022).
The fair value adjustment of DKK 14.7 million is included in financial items. The development in fair value reflects a change in
valuation method to third party valuation specialists from previously relying on the latest closed financing round.
Fair value measurement of lender's call option (Oberland loan)
Fair value of the lender call option is determined as the difference between the present value of the probability weighted
contractual cash flow upon the occurrence of a call option trigger event, as described in note 4.6 of the 2022 Annual Report,
and the present value of the contractual cash flows without a call option trigger event occurring, discounted at the expected
internal rate of return of 14.3%. It is assumed that any call option trigger event will result in full repayment of the loan. In line
with the announced company goals for 2023 to engage in strategic partnerships, the likelihood of a lender call option trigger
event within the next two years is assessed as realistic. Fair value of the option amounted to DKK 80.6 million as of 31
December, 2022 and DKK 76.9 million as of 31 March 2023. The fair value change, DKK 2.3 million, is included in financial
items, while the effect of changes to the exchange rate, DKK 1.4 million, is included in other comprehensive income.
14 Zealand Pharma A/S | Interim Financial Statements Q1 2023
Fair value measurement is to a significant extent based on unobservable input (level 3) being the likelihood and timing of a call
option trigger event. A decrease in likelihood of a trigger event occurring and occurrence at a later point in time than
anticipated will decrease the negative value. Further, the discount rate will impact the valuation. An increase in the discount rate
will increase the negative value and vice versa. The below table summarizes the effect of reasonably possible changes in the
assumption applied. Finally, an increase in the USD 3m Libor will decrease the negative value of the option, as it will increase
the contractual cash flow of the contract without a trigger event occurring. A decrease in USD 3m Libor will have the opposite
effect.
Change in variable Change in fair value
Trigger event 3 months later Decrease in negative value of DKK 11.2 million
Discount rate +1% Increase in negative value of DKK 7.6 million
Discount rate -1% Decrease in negative value of DKK 8.1 million
USD 3m libor +1% Decrease in negative value of DKK 11.6 million
USD 3m libor -1% Increase in negative value of DKK 11.6 million
On April 20, 2023, Oberland Capital exercised an option in the loan agreement to provide an additional loan of USD 12.5 million
bringing the total principal amount of all loans to USD 62.5 million. On May 10, 2023 Zealand repaid the Oberland Capital loans
in full thus the Oberland loan including the call option (carrying value as at March 31, 2023 of DKK 76.9 million) will be
derecognized in Q2 2023. For further description refer to note 11.
Other fair value measurements
For information about fair value measurements of other financial assets and marketable securities, please refer to note 3.7 and
4.3 of the 2022 Annual Report.
15 Zealand Pharma A/S | Interim Financial Statements Q1 2023
7. Cash and cash equivalents
Designated deposit account
Under the Oberland loan agreement the outstanding principal of USD 50 million is to be held in a designated deposit account.
As a result the amount is presented as cash and cash equivalents subject to certain conditions. The cash and securities can be
released in increments of minimum USD 10.0 million upon request from the group subject to the following conditions are met
1) Zealand has achieved the Qualified Glepaglutide Endpoint, and 2) All counterparties in Material Product agreements have
delivered consents.
Capital increase
On March 30, 2023 Zealand announced an issue of 6,578,948 new ordinary shares at a subscription price of DKK 228 per new
share resulting in gross proceeds of DKK 1.5 billion. The capital increase was completed in April 2023. Please refer to note 11 for
further information.
8. Share capital
Mar-31,
Dec-31,
DKK thousand (reviewed) (audited)
Share capital at January 1, 2023
51,702 43,634
Shares issued for cash
- 7,867
Exercise of warrants
301 201
Share capital at March 31, 2023 52,003 51,702
New shares in Q1, 2023 were issued at a weighed average subscription price of DKK 110.2. Total proceeds from exercise of
share-based compensation amounts to DKK 33.2 million.
On March 30, 2023 Zealand announced an issue of 6,578,948 new ordinary shares at a subscription price of DKK 228 per new
share resulting in gross proceeds of DKK 1.5 billion. The capital increase was completed in April 2023. Please refer to note 11 for
further information.
Treasury shares
At March 31, 2023, there were 230,063 treasury shares, equivalent to 0.4% of the share capital. The treasury shares are
allocated to performance share units (PSUs) and restricted stock units (RSUs). There have been no changes in Q1 2023 in the
number of treasury shares.
16 Zealand Pharma A/S | Interim Financial Statements Q1 2023
9. Capital Management
The Group’s capital management objectives and policies are unchanged from the ones described in the 2022 Annual Report.
On March 12 and 13, 2023 the company provided statements on the closure of Silicon Valley Bank (SVB), and in the light of that
line of events Zealand is seeking to achieve an even higher diversification in its management of funds. For further information
refer to note 4.1 in the 2022 Annual Report.
On March 30, 2023 Zealand announced an issue of 6,578,948 new ordinary shares at a subscription price of DKK 228 per new
share resulting in gross proceeds of DKK 1.5 billion. The capital increase was completed in April 2023. Please refer to note 11 for
further information.
10. Contingent assets and liabilities
Zealand is entitled to potential milestone payments and royalties on successful commercialization of products developed under
license and collaboration agreements with partners. Since the size and timing of such payments are uncertain until the
milestones are reached or sales are generated, the agreements may qualify as contingent assets. However, it is impossible to
measure the value of contingent assets, and as such, no assets have been recognized.
As part of the license and collaboration agreements that Zealand has entered into, once a product is developed and
commercialized, Zealand may be required to make milestone and royalty payments. It is not possible to measure the value of
such future payments, but Zealand expects to generate future income from such products which will exceed any milestone
and royalty payments due, and as such, no liabilities have been recognized. Refer to note 6.4 and 6.8 in the Annual Report
2022.
The Group has provided floating charge collateral covering with all assets in the company which can be collateralized,
including shares in subsidiaries, as collateral for the debt to Oberland.
11. Significant events after the reporting period
Capital increase
As announced on March 30, the Board of Directors exercised an authorization granted by Zealand's annual general meeting
held on 29 March 2023, to increase the Group's share capital by issue of 6,578,948 new ordinary shares at a subscription price
of DKK 228 per new share.
The issuance of the new shares follows an offering at market price in a private placement directed at institutional and
professional investors. The aggregate gross proceeds from the issue will amount to DKK 1.5 billion 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.
The new shares were issued on April 4, 2023 where Zealand also received the proceeds.
Repayment of Oberland loan
On April 20, 2023, Oberland Capital exercised an option in the loan agreement to provide an additional loan of USD 12.5 million
bringing the total principal amount of all loans to USD 62.5 million. On May 10, 2023 Zealand repaid the Oberland Capital loans
in full with a one-time payment of USD 89.8 million. With this final repayment, the Group’s loan agreement with Oberland
Capital is now terminated and Zealand will recognize an expected net loss of approximately USD 20 million (DKK 137.0 million)
under financial items in Q2 2023, including derecognition of Oberland Capital’s call option (carrying value as of March 31, 2023
of DKK 76.9 million). The Q2 2023 cash effect of the final repayment is expected to be a net outflow of USD 77.3 million (DKK
529.4 million). As a part of the final repayment, Oberland has released all rights to collateral provided for under the loan
agreement.
The repayment of the obligation to Oberland will be refinanced through a new DKK 350 million Revolving Credit Facility
provided by Danske Bank and expected near-term upcoming milestones from existing partners. The newly established facility
has a maturity date in 2 years and carried an interest of CIBOR + fixed margin.
Estimated financial impacts in Q2 2023 have been calculated with the March 31, 2023 exchange rate between USD and DKK.
17 Zealand Pharma A/S | Interim Financial Statements Q1 2023
Statement by the Executive
Management and the Board of
Directors
Management
Board of Directors
18 Zealand Pharma A/S | Interim Financial Statements Q1 2023
Independent auditor's report
Management's responsibilities for the interim condensed
consolidated financial statements
Auditor's responsibilities
Conclusion