Zealand Pharma A/S
Company Announcement

Zealand announces Full Year results in line with guidance and publication of the Annual Report for 2014

Copenhagen, 2015-03-13 07:52 CET --

• Substantially improved net result of DKK -65 / EUR -9 million (2013: DKK -184 / EUR -25 million)
• Revenue of DKK 154 / EUR 21 million, including DKK 20 / EUR 3 million in Lyxumia^® sales royalties, which grew 214% in 2014
• End of year cash position of DKK 538 / EUR 72 million, including proceeds from a DKK 299 / EUR 40 million royalty bond financing in December 2014, un-locking the value of Lyxumia^® to accelerate development of wholly-owned pipeline products
• Important advances in the product pipeline in Q4 2014 and the period thereafter:

• Start of Phase I clinical development of Zealand’s wholly-owned stable glucagon analogue, ZP4207 to treat severe hypoglycemia events in diabetes  
• The first cancer patients were dosed in the Phase IIb trial with elsiglutide, partnered with Helsinn, for the prevention of chemotherapy-induced diarrhea    

Copenhagen, 13 March 2015 – Zealand Pharma A/S (“Zealand”) (CVR no. 20 04 50 78) (Nasdaq Copenhagen: ZEAL) announces financial results in line with guidance and important advances for its portfolio of therapeutic peptides, for the twelve month period from 1 January to 31 December 2014.

In a comment to this announcement, Britt Meelby Jensen, President and CEO of Zealand, said:

“2014 was an important year in which Zealand put in place the building blocks for accelerated value growth. We raised USD 50 million, or close to DKK 300 million, in a royalty bond financing, unlocking the value of Lyxumia^® to fund further expansion of our pipeline of wholly-owned peptide medicines - an essential element in our strategy going forward. In light of this, we are pleased to see both the Phase II trial with danegaptide for protection against cardiac ischemia injuries and the Phase I trial with our stable glucagon analogue, ZP4207 for severe hypoglycemia in diabetes, on track for completion later this year.

“We have also seen substantial progress in our partnered portfolio. Sanofi continues to roll out Lyxumia^® globally, patient enrolment is completed in the LixiLan Phase III trials, and several pivotal development and regulatory events are in view for both products this year, starting with ELIXA results expected in Q2. In our partnership with Helsinn, an important milestone was met in February 2015 with treatment of the first cancer patients in the Phase IIb trial with elsiglutide.

“So, overall we have started 2015 on a strong note, and I look with confidence into the year with several catalysts in view to take Zealand into its next era.”

Financial highlights for 2014

• Revenue of DKK 153.8 / EUR 20.7 million (2013: DKK 6.6 / EUR 0.9 million).
• Royalty expenses of DKK 13.8 / EUR 1.9 million (2013: DKK 0.9 / EUR 0.1 million).
• Net operating expenses of DKK 213.5 / EUR 28.7 million (2013: DKK 191.3 / EUR 25.7 million).
• Net result of DKK -65.0 / EUR 8.7 million (2012: DKK -183.7 / EUR 24.7 million).
• Cash and securities amounted to DKK 538.3 / EUR 72.3 million on 31 December 2014 (2013: DKK 310.6 / EUR 41.7 million).

Financial highlights for Q4 2014 – Royalty bond financing

• Revenue of DKK 6.3 / EUR 0.8 million (Q4 2013: DKK 3.2 / EUR 0.4 million).
• Net operating expenses of DKK 73.4 / EUR 9.9 million (Q4 2013: DKK 48.2 / EUR 6.5 million).
• Net result of DKK - 63.0 / EUR - 8.5 million (Q4 2013: DKK -44.8 / EUR –6.0 million).

• In December 2014, Zealand raised DKK 299 / EUR 40 million in a royalty bond financing with net proceeds of DKK 272 / EUR 37 million. The financing has unlocked the value of Lyxumia^® to underpin the company’s capital resources and support the advancement and expansion of the pipeline of novel wholly-owned peptide medicines. The financing is provided on 86.5% of the future annual royalty revenue received from Sanofi on sales of stand-alone lixisenatide (Lyxumia^®), which will be used to pay interest and principal until the bond is fully repaid. Further sales royalty revenue thereafter will all be retained by Zealand.
   

Pipeline highlights and update for Q4 2014 and the period thereafter

Lyxumia^® for Type 2 diabetes ─ Marketed globally ex-US in license collaboration with Sanofi:

• In 2014, Lyxumia^® royalty revenue to Zealand amounted to DKK 20.3 / EUR 2.7 million. This represents an increase of 214% over 2013, when Lyxumia^® was launched in the first European country in March. Royalty revenue for Q4 was DKK 6.2 / EUR 0.8 million, an increase of 3% compared to Q3 2014, and an increase of 93% compared to Q4 2013. Of the revenue in Q4 2014, the main contributing countries were the UK, Spain, and Japan.
• Lyxumia^® is now approved in over 50 countries ex-US. So far, Sanofi has made the product available for patients with Type 2 diabetes in more than 30 of these countries – and further launches planned in 2015.
• In January 2015, Sanofi confirmed its plans to resubmit a regulatory application for Lyxumia^® in the US in Q3 2015 pending results from the ELIXA cardio-vascular safety study, expected in Q2 2015.

LixiLan (fixed-ratio combination of Lyxumia^® and Lantus^®) for Type 2 diabetes ─ In Phase III in license collaboration with Sanofi:

• End 2014, Sanofi completed the enrolment of 1,906 patients with Type 2 diabetes into the two ongoing Phase III trials, LixiLan-O and LixiLan-L, with LixiLan, the fixed-ratio single injection combination of Lyxumia^® and Lantus^® (Sanofi’s worldwide most prescribed basal insulin).
• Following this, Sanofi earlier this year specified its expectations to report top-line results from both Phase III trials in Q3 2015 and plans to subsequently submit for regulatory approval of LixiLan in the US and EU in Q4 2015.

Danegaptide for cardiac reperfusion injuries ─ In Phase II development as a Zealand wholly-owned product:

• In October 2014, at the Annual Peptide Therapeutics Symposium in the US, Zealand presented results from studies of danegaptide in large animal models of ischemic reperfusion injuries. The results demonstrated the ability of this first-in-class therapeutic peptide to protect cardiac tissue from damage. 

• Zealand’s ongoing Phase II Proof-of-Concept trial to evaluate the efficacy and safety of danegaptide as a potential new treatment to prevent cardiac tissue damage in patients after an acute myocardial infarction is advancing well. As of 9 March 2015, 450 patients were treated in the trial, representing 75% of the enrolment target. The trial is on track for completion in Q4 2015 with results expected in early 2016.

Elsiglutide for chemotherapy-induced diarrhea – In Phase IIb development in partnership with Helsinn:

• In January 2015, Zealand and Helsinn announced that the first patients had been dosed in the Phase IIb trial of elsiglutide for the prevention of chemotherapy-induced diarrhea in patients with colorectal cancer. Results from the trial are expected in H1 2016.

ZP4207 (stable glucagon analogue) for severe hypoglycemia in diabetes ─ In Phase I development as a wholly-owned Zealand product

• Zealand has invented this novel glucagon analogue, ZP4207, which has demonstrated a strong stability profile, supportive of its use in a liquid formulation as a “ready-to-use” rescue pen for the treatment of severe events of hypoglycemia. Severe hypoglycemia is a life-threatening acute condition associated with insulin treatment in diabetes. 
• In November 2014, Zealand announced it had dosed the first human subjects in the Phase I trial. The trial is advancing well towards expected completion mid-2015 and results in Q3 2015.

Progress in the collaborations with Boehringer Ingelheim

• Under the first collaboration between Zealand and Boehringer Ingelheim, covering novel glucagon/GLP-1 dual acting agonists for the treatment of Type 2 diabetes and/or obesity, Boehringer Ingelheim in late 2014 selected a new lead candidate to be advanced for clinical development. The new candidate has been selected from a portfolio of novel glucagon/GLP-1 dual agonists, invented under the collaboration. Under the terms of the collaboration agreement, Zealand is eligible to remaining potential milestone payments of up to a total of EUR 365 million related to the achievement of pre-specified development, regulatory and commercial milestones.
• In July 2014, a second collaboration was signed between Zealand and Boehringer Ingelheim, covering an un-disclosed specific therapeutic peptide program from Zealand's preclinical portfolio. This collaboration is also advancing very well. Under the terms of the agreement, Zealand is eligible to receive up to EUR 295 million / DKK 2.2 billion in total potential milestones for the first product developed and marketed from the collaboration. In 2014, Zealand received payment under this agreement of DKK 54.1 / EUR 7.3 million.

Advancement towards clinical development of new products and opportunities

• Through 2014 and accelerating towards the end of the year and into 2015, Zealand has identified and advanced the preparation of new in-house pipeline opportunities for potential entry into clinical development later in 2015. Furthermore, a number of early stage novel therapeutic peptide projects have been initiated for expansion of Zealand’s preclinical pipeline.

Appointment of new CEO

• Zealand announced in November 2014 a management transition and as of 15 January 2015, Britt Meelby Jensen took up the position as new Chief Executive Officer replacing David H. Solomon, who had been leading the company since 2008.

Financial guidance for 2015

For 2015, Zealand expects revenue in the form of growing royalty payments from Sanofi on global sales of Lyxumia^®. No specific guidance on the level of royalties can be provided for the year, as Sanofi has given no guidance on 2015 sales of Lyxumia^®.

Additional revenue of up to DKK 140 / EUR 19 million may be received from event driven milestones from partners.

Net operating expenses in 2015 are expected at a range of DKK 225-235 / EUR 30-32 million.

The Annual Report 2014

This full year announcement should be read in conjunction with Zealand’s Annual Report for 2014, published today and attached to the announcement in a PDF-version. Following publication, an online version of the Annual Report 2014 will be made accessible via the following link: http://www.annualreport2014.zealandpharma.com/ and from the front page of Zealand’s website (www.zealandpharma.com) where the PDF-version can also be accessed and downloaded.

Printed versions of the Annual Report 2014 will be available from the beginning of April and can be provided by Zealand upon request (info@zealandpharma.com or investors@zealandpharma.com). The full report is only available in English, but both pdf and printed versions of the Management Review will be made available in Danish before the company’s Annual General Meeting on 21 April 2015. 

Conference call

Zealand will host a conference call today, at 2 pm CET/ 9 am EDT to present the Full Year 2014 results announcement and the Annual Report, which will be followed by a Q&A session. The call will be hosted by Britt Meelby Jensen, President and Chief Executive Officer, Mats Blom, Chief Financial Officer, Torsten Hoffmann, Chief Scientific Officer and Hanne Leth Hillman, Vice President, Head of Investor Relations and Corporate Communications.

The call will be conducted in English and the dial-in details to access the call are as follows:

DK standard access    +45 3272 8018

UK and international   +44 (0) 1452 555131

US (free dial-in)           +1 866 682 8490

A live audio cast of the call including an accompanying slide presentation will be available via the following link: http://edge.media-server.com/m/p/dds2yh7m, which can also be accessed from the Investor section of the company’s website (www.zealandpharma.com). Participants are advised to register for the audio cast approximately 10 minutes before the start.

A replay of the event will be made available from the Investor section of Zealand’s website following the call.

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For further information, please contact:

Britt Meelby Jensen, President and Chief Executive Officer

Tel: +45 51 67 61 28, email: bmj@zealandpharma.com

Hanne Leth Hillman, Vice President, Head of Investor Relations & Corporate Communications

Tel: +45 50 60 36 89, email: hlh@zealandpharma.com

About Zealand Pharma

Zealand Pharma A/S (“Zealand”) (Nasdaq Copenhagen: ZEAL) is a biotechnology company based in Copenhagen, Denmark. Zealand has leading expertise in the discovery, design and development of novel peptide medicines and possesses in-house competences in clinical trial design and management with a therapeutic focus on metabolic diseases and acute care indications. The company is advancing a proprietary pipeline of novel medicines alongside a partnered product and development portfolio.

Zealand’s first invented medicine, lixisenatide, a once-daily prandial GLP-1 agonist for the treatment of Type 2 diabetes, is marketed globally (ex-US) as Lyxumia® and in Phase III development as a single-injection combination with Lantus® (LixiLan), both under a global license agreement with Sanofi. US regulatory submission of  Lyxumia^® is planned for Q3 2015 and US/EU regulatory submissions  for LixiLan in Q4 2015.

Zealand proprietary pipeline includes danegaptide (prevention of Ischemic Reperfusion Injury) and the stable glucagon product, ZP4207 (treatment of severe hypoglycemia) as well as several preclinical peptide therapeutics. Partnering represents an important component of strategy to leverage in-house expertise, share development risk in large clinical trials, provide funding and commercialize the company’s products. Zealand currently has global license agreements and partnerships with Sanofi, Helsinn Healthcare, Boehringer Ingelheim and Eli Lilly.

For further information: www.zealandpharma.com         Follow us on Twitter @ZealandPharma