Company announcement – No. 16 / 2019

Zealand Pharma initiates several Phase 3 studies and grows cash position in the first quarter of 2019

Copenhagen, May 16, 2019 – Zealand Pharma A/S (“Zealand”) (Nasdaq: ZEAL) (CVR No. 20 04 50 78), a Copenhagen-based biotechnology company focused on the discovery and development of next generation peptide medicines, today announced financial results for the quarter ended March 31, 2019.

Emmanuel Dulac, President and Chief Executive Officer at Zealand Pharma, comments:
“Zealand Pharma is off to a strong start in 2019. Already this year, we have initiated three Phase 3 studies: one study in short bowel syndrome and two studies in congenital hyperinsulinism. Earlier this week, we announced results from a confirmatory Phase 3 study for dasiglucagon HypoPal® that reiterated the speed and efficacy of this as potential treatment for severe hypoglycemia. In addition, a collaboration announced in March with Alexion leverages their leadership in complement-mediated diseases to expand the reach of our validated peptide platform. 2019 will continue to be a year that is rich in news flow. We are enthusiastic about the progress being made on all fronts.”

Financial results for the first three months of 2019

• Revenue of DKK 0.0 million / USD 0.0 million (DKK 9.7 million / USD 1.6 million in the first three months of 2018).
• Net operating expenses of DKK 135.9 million / USD 20.4 million (DKK 96.9 million / USD 16.1 million in the first three months of 2018).
• Net operating result of DKK -135.8 million / USD -20.4 million (DKK -88.5 million / USD -14.7 million in the first three months of 2018).
• Cash including securities amounted to DKK 1,263.3 million / USD 190.1 million as of March 31, 2019 (March 31, 2018: DKK 561.1 million / USD 93.4 million).
• Restatement: A restatement related to the accounting treatment of warrants has been incorporated in the interim report for the first three months of 2019. Refer to Note 1 of the condensed consolidated interim financial statements.

Business highlights for Q1 2019 and subsequent events

• Collaboration with Alexion secured USD 25 million upfront payment, USD 15 million equity investment, and signing potential over USD 2 billion. For the accounting treatment please refer to Note 2 of the condensed consolidated interim financial statements.
• Phase 3 extension study initiated with glepaglutide for short bowel syndrome, while ongoing pivotal Phase 3 remains on-track.
• Primary and key second endpoints achieved in confirmatory Phase 3 study with dasiglucagon HypoPal® rescue pen.
• First children dosed in first pivotal Phase 3 and Phase 3 extension studies with dasiglucagon for the treatment of congenital hyperinsulinism.
• Completed investment of DKK 22.8 million (USD 3.5 million) in strategic partner Beta Bionics in continued development of dual-hormone artificial pancreas using dasiglucagon.
• Emmanuel Dulac appointed as President and Chief Executive Officer, effective April 22, 2019.

Financial guidance for 2019

In 2019, Zealand expects revenue from new potential partnership agreements, and from milestones from existing license agreements. However, since such revenue is uncertain in terms of size and timing, Zealand does not guide on such revenue.

Net operating expenses in 2019 are expected to be within DKK 550-570 million, which is in line with the financial guidance provided in the Annual Report 2018.

Pipeline

Short bowel syndrome

Glepaglutide
Zealand is developing treatments for gastrointestinal diseases, with current focus on short bowel syndrome (SBS). One of the leading programs in Zealand’s pipeline is glepaglutide, a long-acting GLP-2 analog being developed in an auto-injector with potential for convenient weekly administration. The pivotal Phase 3 trial was initiated in 2018 and results are expected in 2020. The trial seeks to establish the efficacy and safety of once- and twice-weekly administration of glepaglutide in patients with SBS. The primary endpoint is to evaluate the reduction in weekly parenteral support volume from baseline to week 24. Orphan drug designation is granted in the U.S.

ZP7570 GLP-1/GLP-2 Dual Agonist
ZP7570 is a potential first-in-class long-acting GLP-1/GLP-2 dual agonist. ZP7570 is designed to improve management of SBS beyond what is achievable with mono GLP-2 treatments, and may represent a next level of innovation for helping SBS patients to further realize full potential for intestinal rehabilitation. ZP7570 is set to enter Phase 1 in 2019.

Diabetes / Obesity

Dasiglucagon is Zealand’s lead drug in development to improve the treatment of metabolic diseases.  Dasiglucagon is a stable glucagon analog being developed in three distinct forms and indications:

• Dasiglucagon HypoPal® rescue pen for severe hypoglycemia

The ready-to-use dasiglucagon rescue pen, the HypoPal®, is designed to offer people with diabetes fast and effective treatment for severe hypoglycemia. In the pivotal Phase 3 trial, all primary and key secondary endpoints were successfully achieved. Results from a confirmatory Phase 3 study just announced on May 14 demonstrates that the median time to blood glucose recovery was 10 minutes for dasiglucagon, which was superior to placebo (median: 35 min; p<0.001) and identical to a median time to rescue of 10 minutes observed in the pivotal Phase 3 trial. Likewise, the dasiglucagon pharmacokinetic profiles were consistent between the two trials.

A pediatric trial is ongoing with results expected in late 2019, slightly later than originally anticipated due to difficulty in recruiting patients. As this study is critical within the clinical program, the planned submission of the New Drug Application (NDA) with the U.S. FDA has been adjusted to early 2020.

• Dasiglucagon for congenital hyperinsulism (CHI)

In Phase 3, we are evaluating the potential of chronic dasiglucagon infusions delivered via a pump to prevent hypoglycemia in children with CHI. The aim is to reduce or eliminate the need for intensive hospital treatment, and to also potentially delay or eliminate the need for pancreatectomy. The U.S. FDA and the European Commission both granted orphan drug designation to dasiglucagon for the treatment of CHI, and the U.S. FDA approved Zealand’s investigational new drug (IND) application.

The first Phase 3 trial with children aged three months to 12 years has been initiated. The second Phase 3 trial with children up to one year of age is expected to start in 2019. The Phase 3 extension study has also been initiated, with the first patients enrolled in May 2019.

• Dasiglucagon dual-hormone artificial pancreas for automated diabetes management

Zealand is developing a 1 ml cartridge containing 4 mg dasiglucagon, intended for use in dual-hormone artificial pancreas pumps.

We are collaborating with Beta Bionics, developer of the iLet™: a pocket-sized, dual-chamber, autonomous, glycemic control system. The iLet mimics a biological pancreas by calculating and dosing insulin and/or glucagon (dasiglucagon) as needed, based on data from the diabetic person’s continuous glucose monitor.

A Phase 2 study comparing dual-hormone to insulin-only artificial pancreas pump performance in people with type 1 diabetes is expected to start and conclude within mid 2019.

Long-acting GLP1-GLU dual agonist for obesity and/or diabetes (with Boehringer Ingelheim)
The glucagon/GLP-1 dual agonist activates two key gut hormone receptors simultaneously and may offer better blood sugar and weight-loss control than current single-hormone receptor agonist treatments. Based on encouraging Phase 1a clinical trial results, a Phase 1b trial with the once-weekly GLP1/Glu dual agonist for treatment of diabetes/obesity was initiated by Boehringer Ingelheim in August. Results from that trial are expected mid 2019.

Boehringer Ingelheim is funding all research, development and commercialization activities related to the treatment. Zealand is eligible to receive up to EUR 386 million in milestone payments (of which EUR 365 million is outstanding) and royalties on global sales.

Long-acting amylin analog for obesity and/or diabetes (with Boehringer Ingelheim)
The current once-weekly amylin analog lead molecule for treatment of diabetes/obesity has been replaced by a stronger back-up candidate with improved pharmaceutical properties. This new lead is anticipated to enter Phase 1 clinical testing in 2019. In pre-clinical studies, Zealand and Boehringer Ingelheim observed that the novel, long-acting amylin analog may prevent the development of obesity in pre-clinical models, suggesting its potential use in treating obesity and obesity-related comorbidities.
Boehringer Ingelheim is funding all research, development and commercialization activities related to the treatment. Zealand is eligible to receive up to EUR 295 million in milestone payments (of which EUR 283 million is outstanding) and royalties on global sales.

Pre-Clinical Programs

Complement inhibitors (with Alexion Pharmaceuticals)
Zealand and Alexion Pharmaceuticals announced in March that they will collaborate on the discovery and development of novel peptide therapies for complement-mediated diseases. Under the terms of the agreement, Alexion and Zealand will enter 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 IND filing and Phase 1 studies. Zealand received an immediate upfront payment of USD 25 million for the first target, with Alexion making a concurrent USD 15 million equity investment in Zealand Pharma at a premium to the market prices. 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. Each of the three subsequent targets can be selected for an option fee of USD 15 million and has potential for additional development and sales milestones, and royalty payments at a reduced level to the lead target. For the accounting treatment please refer to Note 2 of the condensed consolidated interim financial statements.

GIP analogs
Expanding on our GLP-1 experience, we have discovered potent selective analogs of gastric inhibitory peptide (GIP) and extended this to single peptides that have dual activity at both GIP and GLP-1 as well as single peptides with triple activity (GIP/GLP-1/glucagon). These peptides have therapeutic potential to treat metabolic diseases such as type 2 diabetes and obesity with early clinical validation of GIP/GLP-1 dual agonist provided by a Phase 2 study reported in 2018 (Frias et al, The Lancet 392:2180-2193).

Ion Channel Blockers
We have identified novel peptides that are potent and selective blockers of ion channels that may play roles in gastrointestinal inflammation. Further optimization is required and we expect these programs to contribute to the clinical pipeline in the future.

Conference call today at 4:00 pm CET / 10:00 am ET

Zealand’s Management will host a conference call today at 4:00 pm CET to present results through the first three months of 2019. Participating in the call will be Chief Executive Officer Emmanuel Dulac, Chief Medical and Development Officer Adam Steensberg, and Interim Chief Financial Officer Ivan Møller. The presentation will be followed by a Q&A session.

The conference call will be conducted in English, and the dial-in numbers are:
Denmark................................. +45 32 72 80 42
United Kingdom...................... +44 (0) 844 571 8892
United States.......................... +1 631 510 7495
Passcode                                 4598964

A live audio webcast of the call, including an accompanying slide presentation, will be available via the following link, https://edge.media-server.com/m6/p/gfvryi5x, also accessible from the Investor section of Zealand’s website (www.zealandpharma.com). Participants are advised to register for the webcast approximately 10 minutes before the start.

A recording of the event will be available on the Investor section of Zealand’s website following the call.

For further information, please contact:

Emmanuel Dulac, President and Chief Executive Officer
Tel: +45 50 60 36 36, e-mail: edu@zealandpharma.com

Lani Pollworth Morvan, Investor Relations and Communication
Tel: +45 50 60 37 78, e-mail: lpm@zealandpharma.com 

NOTE: DKK/USD Exchange rates used: March 31, 2019 = 6.6446 and March 31, 2018 = 6.0101

About Zealand Pharma A/S
Zealand Pharma A/S (Nasdaq Copenhagen and New York: ZEAL) ("Zealand") is a biotechnology company focused on the discovery and development of innovative peptide-based medicines. More than 10 drug candidates invented by Zealand have advanced into clinical development, of which two have reached the market. Zealand’s current pipeline of internal product candidates focus on specialty gastrointestinal and metabolic diseases. Zealand’s portfolio also includes two clinical license collaborations with Boehringer Ingelheim and pre-clinical license collaboration with Alexion Pharmaceuticals.

Zealand is based in Copenhagen (Glostrup), Denmark. For further information about the Company's business and activities, please visit www.zealandpharma.com or follow Zealand on LinkedIn or Twitter @ZealandPharma.

Safe Harbor/Forward-Looking Statements
The above information contains forward-looking statements that provide our expectations or forecasts of future events such as new product introductions, clinical development activities and anticipated results, product approvals and financial performance. Such forward-looking statements are subject to risks, uncertainties and inaccurate assumptions. This may cause actual results to differ materially from expectations and it may cause any or all of our forward-looking statements here or in other publications to be wrong. Factors that may affect future results include interest rate and currency exchange rate fluctuations, delay or failure of clinical trials 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, and unexpected growth in costs and expenses.

Certain assumptions made by Zealand are required by Danish Securities Law for full disclosure of material corporate information. Some assumptions, including assumptions relating to sales associated with a product that is prescribed for unapproved uses, are made taking into account past performances of other similar drugs for similar disease states or past performance of the same drug in other regions where the product is currently marketed. It is important to note that although physicians may, as part of their freedom to practice medicine in the United States, prescribe approved drugs for any use they deem appropriate, including unapproved uses, at Zealand, promotion of unapproved uses is strictly prohibited.

Attachment

• 16-19_0516 Zealand Pharma 2019 Q1 interim report