Earnings Release • Aug 24, 2012
Earnings Release
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Company Announcement No. 18/2012
- Positive net results of DKK 89 (EUR 12) million for the period
- Cash and securities of DKK 525 (EUR 71) million on 30 June 2012
- Financial guidance for 2012 raised to an expected positive net result at a range of DKK 37-57 (EUR 5-8) million
Copenhagen, 24 August 2012 – Zealand Pharma A/S (NASDAQ OMX Copenhagen: ZEAL), a biotech company dedicated to the discovery and development of peptide drugs, reports revenue growth, a net profit and an increase in cash and securities combined with the achievement of several important pipeline milestones for the six month period 1 January to 30 June 2012.
First Phase I study planned for initiation before the end of Q3 2012.
Elsiglutide for the prevention of chemotherapy-induced diarrhea (partnership with Helsinn Healthcare):
"We are very pleased with the advances achieved across our pipeline in the first half of 2012 and to report that we continue building upon Zealand Pharma's strong financial position. Our lead invention, Lyxumia® (lixisenatide) for Type 2 diabetes, completed the global Phase III program, GetGoal, and in addition to the filing in Europe, was submitted for approval in Japan by our partner, Sanofi. Other important milestones for our pipeline in the reported period include the agreement with Abbott on ZP1480 for the prevention of acute kidney injury and the completion of clinical preparations with ZP2929 for the treatment of Type 2 diabetes and/or obesity.
"For the rest of 2012, we look forward to the expected start of clinical studies with ZP2929 before end of Q3, to a response on lixisenatide from the European regulatory authorities in Q4 and to an expected NDA filing in the US in December."
In addition to revenues from milestone payments of DKK 186 (EUR 25) million received in H1 2012, Zealand Pharma expects other payments under an existing partnership agreement. The company therefore raises its revenue guidance for 2012 to DKK 223 (EUR 30) million from previously announced DKK 182 (EUR 24) and with related royalty expenses of DKK 16 (EUR 2) million. The timing of other potential milestone based payments from partners is largely outside the control of Zealand Pharma, and therefore no further revenue guidance is provided for the full year at this point.
Guidance on net operating expenses remains unchanged at a range of DKK 150-170 (EUR 20-23) million, and as a result of the raised revenue guidance Zealand Pharma now expects a positive net result for 2012 at a range of DKK 37-57 (EUR 5-8) million.
# # #
Zealand Pharma will host a conference call today, at 14:00 CET/ 8:00 EST. David Solomon, President and Chief Executive Officer, Mats Blom, Chief Financial Officer and Hanne Leth Hillman, Vice President for IR and
Corporate Communication, will host the call to present the Interim report for H1 2012 which will be followed by a Q&A session. The conference call will be conducted in English and the dial-in numbers are as follows:
DK: +45 3272 9273 UK and international: +44 (0) 20 3003 2666 US: +1 212 999 6659
Pass code for all participants: Zealand Pharma
A live audio cast of the call including an accompanying slide presentation will be available via the following link: http://livecast.wehay.com/stockontv/120824/zealandpharma/, 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 also be available on the company's website following the call.
David H. Solomon, President and Chief Executive Officer Tel: +45 2220 6300
Hanne Leth Hillman, Vice President and Head of IR & Corporate Communication Tel: +45 5060 3689, email: [email protected]
Zealand Pharma A/S (NASDAQ OMX Copenhagen: ZEAL) is a biotechnology company based in Copenhagen, Denmark. Zealand Pharma specializes in the discovery, optimization and development of novel peptide drugs and has a broad and mature pipeline of drug candidates identified through its own drug discovery activities. The company's focus lies in the field of diabetes/metabolic diseases, and its lead drug invention is lixisenatide (Lyxumia®)1 , a once-daily GLP-1 agonist, which is licensed to Sanofi for the treatment of Type 2 diabetes. In November 2011, Sanofi filed for registration of lixisenatide in Europe and regulatory filing in the United States is expected in Q4 2012.
Zealand Pharma has a partnering strategy for the development and commercialization of its products and in addition to the collaboration with Sanofi in Type 2 diabetes, the company has partnerships with Boehringer Ingelheim in diabetes/obesity, Abbott in acute kidney injury and Helsinn Healthcare in chemotherapy induced diarrhea. Zealand Pharma focuses its activities in disease areas where existing treatments fail to adequately serve patient needs and where the market potential for improved treatments through the use of peptide drugs is high. For further information: www.zealandpharma.com.
1 Lyxumia is the proprietary name submitted to the EMA for lixisenatide. The proprietary name for lixisenatide in the United States is under consideration. Lixisenatide is not currently approved or licensed anywhere in the world.
o In June, Sanofi announced that the development of a fix-flex lixisenatide/Lantus® combination device has advanced and entered phases for industrialisation, validation, usability and manufacturing. The combination device is expected to be available mid-2013 for the start of Phase III studies.
o Zealand Pharma has opened an Investigational New Drug (IND) application on ZP2929 with the U.S. Food and Drug Administration (FDA), and the start of clinical studies are expected before the end of Q3 2012. The first Phase I study will be conducted by Zealand Pharma, while Boehringer Ingelheim will be responsible for clinical development thereafter and for financing all clinical development including Phase I.
o In May, Zealand Pharma signed a new license agreement with Abbott on ZP1480 (ABT-719) following Abbott's acquisition of all rights to the compound from Zealand Pharma's former partner, Action Pharma. This triggered a milestone payment to the company of USD 11 (DKK 66) million from Action Pharma. On 19 June, Zealand Pharma announced the final closing of the agreement following U.S. Antitrust clearance of Abbott's acquisition of the product.
o In June, at ADA, Zealand Pharma revealed new preclinical results on ZP3022, a novel candidate from the company's GLP-1-gastrin dual agonist program for the treatment of diabetes. The results demonstrated
that in diabetes models, ZP3022 led to a significant improvement in glycemic control and an increase in pancreatic beta-cell mass.
The Board of Directors and Executive Management have approved this interim report containing condensed financial information for the first six month period of 2012 ending 30 June 2012. The report is prepared in accordance with IAS 34 as endorsed by the EU and the additional Danish disclosure requirements for listed companies. The accounting principles are unchanged in the period and reference is made to the Annual Report 2011 for a more detailed description of the accounting policies.
| DKK thousands | 2012 | 2011 | 2012 | 2011 | 2011 |
|---|---|---|---|---|---|
| 1.4 - 30.6 | 1.4 - 30.6 | 1.1 - 30.6 | 1.1 - 30.6 | 1.1 - 31.12 | |
| INCOME STATEMENT AND COMPREHENSIVE INCOME | Q2 | Q2 | H1 | H1 | Full year |
| Revenue | 65,912 | 119,298 | 186,197 | 119,298 | 142,284 |
| Royalty expenses | -289 | 0 | -15,561 | 0 | -112 |
| Gross profit | 65,623 | 119,298 | 170,636 | 119,298 | 142,172 |
| Research and development expenses | -50,092 | -33,409 | -92,280 | -70,786 | -126,938 |
| Administrative expenses | -4,667 | -9,665 | -10,720 | -17,485 | -34,905 |
| Other operating income | 11,300 | 15,491 | 20,160 | 17,374 | 28,435 |
| Operating result | 22,164 | 91,715 | 87,796 | 48,401 | 8,764 |
| Net financial items | 1,569 | 41 | 74 | -1,549 | 4,613 |
| Net result for the period | 23,733 | 91,756 | 89,419 | 46,852 | 13,377 |
| Comprehensive income for the period | 23,733 | 91,756 | 89,419 | 46,852 | 13,377 |
| Earnings per share - basic (DKK) | 3.95 | 2.10 | 3.95 | 2.10 | 0.60 |
| Earnings per share - diluted (DKK) | 3.93 | 2.08 | 3.93 | 2.08 | 0.60 |
| 30 June | 30 June | 31 December | |||
|---|---|---|---|---|---|
| BALANCE SHEET | 2012 | 2011 | 2011 | ||
| Cash and cash equivalents | 325,725 | 296,023 | 278,342 | ||
| Securities | 199,235 | 149,512 | 149,358 | ||
| Total assets | 558,716 | 513,417 | 469,481 | ||
| Share capital ('000 shares) | 23,193 | 22,871 | 23,193 | ||
| Shareholder's equity | 536,788 | 461,538 | 441,397 | ||
| Equity / assets ratio | 0.96 | 0.90 | 0.94 | ||
| 2012 | 2011 | 2012 | 2011 | 2011 | |
| 1.4 - 30.6 | 1.4 - 30.6 | 1.1 - 30.6 | 1.1 - 30.6 | 1.1 - 31.12 | |
| CASH FLOW | Q2 | Q2 | H1 | H1 | Full year |
| Depreciation | 1.283 | 974 | 2.504 | 1,934 | 4,130 |
| Change in working capital | -23,928 | -35,782 | 3,948 | -36,694 | -5,194 |
| Investments in fixed assets | -1,642 | -3,702 | -4,325 | -6,488 | -11,475 |
| Free cash flow | -941 | 55,373 | 97,276 | 12,557 | -99,685 |
| 30 June | 30 June | 31 December | |
|---|---|---|---|
| OTHER | 2012 | 2011 | 2011 |
| Share price DKK | 80 | 72 | 57 |
| Equity per share DKK | 23.72 | 20.68 | 19.51 |
| Average number of employees | 104 | 89 | 91 |
| Compounds in clinical development (end period) | 6 | 6 | 6 |
(Comparative figures for the same period last year are shown in brackets)
The net result for H1 was a profit of DKK 89.4 million (46.9). The increase in profit is mainly a result of milestone payments received under the license agreements with Sanofi, Helsinn Healthcare and former partner Action Pharma.
Revenue in H1 increased to DKK 186.2 million (119.3), consisting of milestone payments from the company's partners Sanofi, Helsinn Healthcare and former partner Action Pharma. Revenue for the same period in 2011 came from milestone payments from Boehringer Ingelheim.
Royalty expenses for H1 was DKK 15.6 million (0.0) and related to the milestone payments received from Sanofi, Helsinn Healthcare and former partner Action Pharma.
Research and development expenses for H1 amounted to DKK 92.3 million (70.8) which were in line with expectations. R&D expenses relating to ZP2929 and the research collaboration with Boehringer Ingelheim have been refunded and with the refunding recorded as other operating income, see below.
Administrative expenses for H1 amounted to DKK 10.7 million (17.5), which were in line with expectations. The decrease was mainly due to lower legal costs as compared to H1 2011 when the Boehringer Ingelheim agreement was negotiated and signed.
Other operating income for H1 amounted to DKK 20.2 million (17.4) mainly associated with refunding from Boehringer Ingelheim of development costs for ZP2929 and costs related to the research collaboration.
Operating result H1 was a profit of DKK 87.8 million (48.4).
Net financial items for H1 amounted to DKK 1.6 million (-1.5). Net financial items consist of interest income, banking fees and regulations based on changes in exchange rate.
Result from ordinary activities before tax in H1 amounted to a profit of DKK 89.4 million (46.9).
No tax on the result from ordinary activities has been recorded since Zealand Pharma for 2012 can offset any tax through tax losses carry forward from previous years.
No deferred tax asset has been recognized in the balance sheet due to uncertainty as to whether tax losses can be utilized.
Net result for H1 amounted to a profit of DKK 89.4 million (46.9).
Equity stood at DKK 536.8 million (461.5) at the end of the period, corresponding to an equity ratio of 96 % (90). The increase in equity is a result of profits made during the last 12 months as well as the exercise of warrants in December of 2011.
Investments in new laboratory equipment for the period amounted to DKK 4.3 million (6.5).
As of 30 June 2012, Zealand Pharma had cash and cash equivalents including securities of DKK 525.0 million (445.5). The cash flow from operating activities amounted to DKK 101.6 million (19.0), and cash flow used for investing activities to DKK -54.2 million (-106.3) of which DKK -49.9 million (-99.8) has been invested in securities. The total cash flow for H1 amounted to DKK 47.4 million (-87.3).
Revenue in Q2 amounted to DKK 65.9 million (119.3), consisting of milestone payments from the company's former partner Action Pharma related to the acquisition of ZP1480 (ABT-719 (formerly AP214)) by Abbott. Revenue for the same period in 2011 consisted of milestone payments from Boehringer Ingelheim.
Total operating expenses increased to DKK 54.8 million (43.1) reflecting a higher activity level within R&D mainly as a result of the research collaboration with Boehringer Ingelheim. Of the operating expenses in Q2 DKK 11.3 million (15.5) have been financed under the Boehringer Ingelheim collaboration.
Net result for Q2 amounted to DKK 23.7 million (91.8).
In addition to revenues from milestone payments of DKK 186 (EUR 25) million received in H1 2012, Zealand Pharma expects other payments under an existing partnership agreement. The company therefore raises its revenue guidance for 2012 to DKK 223 (EUR 30) million from previously announced DKK 182 (EUR 24) and with related royalty expenses of DKK 16 (EUR 2) million. The timing of other potential milestone based payments from partners is largely outside the control of Zealand Pharma, and therefore no further revenue guidance is provided for the full year at this point.
Guidance on net operating expenses remains unchanged at a range of DKK 150-170 (EUR 20-23) million, and as a result of the raised revenue guidance Zealand Pharma now expects a positive net result for 2012 at a range of DKK 37-57 (EUR 5-8) million.
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 Pharma, 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. general economic and business conditions, including legal issues, scientific and clinical results, fluctuations in currencies etc. A more extensive description of risk factors can be found in the 2011 Annual Report under the section Risk management and internal control.
The Board of Directors and the Executive Management have today considered and adopted the interim report of Zealand Pharma A/S for the period 1 January – 30 June 2012. The interim report has not been audited or reviewed by the company's independent auditor.
The report is prepared in accordance with IAS 34 as endorsed by the EU and the additional Danish disclosure requirements for listed companies. The accounting principles are unchanged in the first six months of 2012 and reference is made to the Annual Report 2011 for a more detailed description of the accounting policies.
In our opinion, the interim report gives a true and fair view of the Group's assets, equity and liabilities and financial position at 30 June 2012 and of the results of the Group's operations and the Group's cash flows for the period 1 January – 30 June 2012.
Moreover, in our opinion, the Management's Review and Financial Review gives a true and fair view of developments in the Group's operations and financial position and describes the most significant risks and uncertainty factors that may affect the Group.
Copenhagen, 24 August 2012
| Jørgen Lindegaard Chairman |
Daan J. Ellens Vice chairman |
Peter Benson |
|---|---|---|
| Alain Munoz | Florian Reinaud | Jutta af Rosenborg |
| Michael Owen | Christian Thorkildsen | Helle Størum |
| 2012 | 2011 | 2012 | 2011 | 2011 | |
|---|---|---|---|---|---|
| CONSOLIDATED INCOME STATEMENT (DKK '000) | Q2 | Q2 | H1 | H1 | Full year |
| Revenue | 65,912 | 119,298 | 186,197 | 119,298 | 142,284 |
| Royalty expenses | -289 | 0 | -15,561 | 0 | -112 |
| Gross profit | 65,623 | 119,298 | 170,636 | 119,298 | 142,172 |
| Research and development expenses | -50,092 | -33,409 | -92,280 | -70,786 | -126,938 |
| Administrative expenses | -4,667 | -9,665 | -10,720 | -17,485 | -34,905 |
| Other operating income | 11,300 | 15,491 | 20,160 | 17,374 | 28,435 |
| Operating result | 22,164 | 91,715 | 87,796 | 48,401 | 8,764 |
| Financial income | 1,600 | 325 | 2,565 | 2,702 | 6,564 |
| Financial expenses | -31 | -284 | -942 | -4,251 | -1,951 |
| Results from ordinary activities before tax | 23,733 | 91,756 | 89,419 | 46,852 | 13,377 |
| Tax on ordinary activities | 0 | 0 | 0 | 0 | 0 |
| Net result for the period | 23,733 | 91,756 | 89,419 | 46,852 | 13,377 |
| Comprehensive income for the period | 23,733 | 91,756 | 89,419 | 46,852 | 13,377 |
| Earnings per share - basic (DKK) | 3.95 | 2.10 | 3.95 | 2.10 | 0.60 |
| Earnings per share - diluted (DKK) | 3.93 | 2.08 | 3.93 | 2.08 | 0.60 |
| 30 June | 30 June | 31 December | |||
| CONSOLIDATED BALANCE SHEET (DKK '000) | 2012 | 2011 | 2011 | ||
| ASSETS | |||||
| Plant and machinery | 16,523 | 12,598 | 14,856 | ||
| Other fixtures and fittings, tools and equipment | 541 | 304 | 543 | ||
| Leasehold improvements | 2,153 | 2,179 | 1,968 | ||
| Fixed assets under construction | 478 | 0 | 507 | ||
| Deposits | 2,508 | 2,440 | 2,493 | ||
| Non current assets total | 22,203 | 17,521 | 20,367 | ||
| Trade receivables | 11 | 47,123 | 14,894 | ||
| Prepaid expenses | 10,508 | 1,251 | 1,080 | ||
| Other receivables | 1,034 | 1,987 | 5,440 | ||
| Securities | 199,235 | 149,512 | 149,358 | ||
| Cash and cash equivalents | 325,725 | 296,023 | 278,342 | ||
| Current assets total | 536,513 | 495,896 | 449,114 | ||
| Total assets | 558,716 | 513,417 | 469,481 | ||
| LIABILITIES AND EQUITY | |||||
| Share capital | 23,193 | 22,871 | 23,193 | ||
| Retained earnings | 513,595 | 438,667 | 418,204 | ||
| Equity total | 536,788 | 461,538 | 441,397 | ||
| Trade payables | 8,410 | 7,644 | 8,592 | ||
| Prepayment from customers | 0 | 0 | 9,284 | ||
| Other liabilities | 13,518 | 44,235 | 10,208 | ||
| Current liabilities | 21,928 | 51,879 | 28,084 | ||
Total equity and liability 558,716 513,417 469,481
| 2012 | 2011 | 2011 | |
|---|---|---|---|
| CONSOLIDATED STATEMENT OF CASH FLOWS (DKK '000) | H1 | H1 | Full year |
| Profit / loss for the period | 89,419 | 46,852 | 13,377 |
| Adjustments | 6,853 | 11,062 | 12,372 |
| Change in working capital | 3,948 | -36,694 | -30,943 |
| Cash flow from operating activities before financing items | 100,220 | 21,220 | -5,194 |
| Financial income | 2,323 | 2,076 | 5,339 |
| Financial expenses paid | -942 | -4,251 | -1,951 |
| Cash flow from operating activities | 101,601 | 19,045 | -1,806 |
| Change in deposit | -16 | 0 | -53 |
| Investments in fixed assets | -4,325 | -6,488 | -11,475 |
| Purchase of securities | -49,877 | -99,839 | -99,685 |
| Cash flow from investing activities | -54,218 | -106,327 | -111,213 |
| Capital increase | 0 | 0 | 8,482 |
| Repurchase of own shares | 0 | 0 | -426 |
| Cash flow from financing activities | 0 | 0 | 8,056 |
| Decrease / increase in cash and cash equivalents | 47,383 | -87,282 | -104,963 |
| Cash and cash equivalents at beginning of period | 278,342 | 383,305 | 383,305 |
| Cash and cash equivalents at end of period | 325,725 | 296,023 | 278,342 |
| Share | Retained | ||
|---|---|---|---|
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DKK '000) | capital | Earnings | Total |
| Equity at 1 January 2012 | 23,193 | 418,204 | 441,397 |
| Warrants compensation expenses | 0 | 5,972 | 5,972 |
| Comprehensive income for the period | 0 | 89,419 | 89,419 |
| Equity at 30 June 2012 | 23,193 | 513,595 | 536,788 |
| Equity at 1 January 2011 | 22,871 | 384,237 | 407,108 |
| Warrants compensation expenses | 0 | 7,578 | 7,578 |
| Comprehensive income for the period | 0 | 46,852 | 46,852 |
| Equity at 30 June 2011 | 22,871 | 438,667 | 461,538 |
| Changes in share capital | |||
| Share capital at 31 December 2006 | 17,682 | ||
| Capital increase at 23 November 2010 | 4,337 | ||
| Capital increase at 9 December 2010 | 852 | ||
| Capital increase at 12 December 2011 | 322 | ||
| Share capital at 31 December 2011 | 23,193 | ||
| Share capital at 30 June 2012 | 23,193 |
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