Zealand Pharma

Copenhagen, 2013-11-15 08:39 CET (GLOBE NEWSWIRE) --

Company Announcement
No. 25/2013

-- Net result of DKK -139 (EUR -19) million for the first nine months of 2013
-- Cash and securities of DKK 358 (EUR 48) million on 30 September 2013
-- Financial outlook on net operating expenses for the full year 2013 revised
to DKK 195–205 (EUR 26–28) million from DKK 210–240 (EUR 28–32) million.
Revenue expectations are unchanged
-- Sanofi is continuing the progressive commercial roll-out of Lyxumia®,
including in Japan where the product was launched in October providing
adult Japanese patients with the first GLP-1 receptor agonist that is
approved for use in combination with basal insulin

Zealand Pharma A/S (CVR no. 20 04 50 78) (NASDAQ OMX Copenhagen: ZEAL)
(“Zealand”) today announced its un-audited interim report for the nine-month
period from 1 January to 30 September 2013.

Financial highlights for the first nine months of 2013

(Comparative figures for the same period 2012 are shown in brackets)

-- Revenue of DKK 3/EUR 0.5 million (DKK 224/EUR 30 million).
-- Net operating expenses of DKK 143/EUR 19 million (DKK 120/EUR 16 million).
-- Net result of DKK -139/EUR -19 million (DKK 89/EUR 12 million).
-- Earnings per share of DKK -6.1/EUR -0.8 (DKK 3.9/EUR 0.5).
-- End of period cash and securities of DKK 358/EUR 48 million (DKK 498/EUR 69
million).

Product and pipeline highlights for the third quarter of 2013 and the period
thereafter

Lyxumia® (lixisenatide) ? Type 2 diabetes (licensed to Sanofi)

-- Sanofi is continuing the progressive commercial roll-out of Lyxumia®
globally, including in Japan where
the product was launched in October and provides adult Japanese diabetes
patients with the first GLP-1 receptor agonist that is approved for use in
combination with basal insulin.
-- Lyxumia® is now approved in Europe, Japan, Mexico, Australia, Brazil,
Colombia, Chile and Euquador and under regulatory review in a number of
other countries.
-- At the 49th Annual Meeting of EASD in September, a sub-analysis of results
from the pivotal GetGoal-L study was presented showing that Lyxumia®, when
added to basal insulin, lowered blood sugar (HbA1c) especially when fasting
glucose was controlled. These data support the known complementary effects
of Lyxumia® as a prandial GLP-1 receptor agonist in combination with basal
insulin.
-- In September, Sanofi withdrew the New Drug Application (NDA) for
lixisenatide in the U.S which included early interim results from the
ongoing ELIXA cardiovascular outcome study. The decision was a consequence
of discussions with the FDA regarding its proposed process for the review
of interim results. Sanofi believes that potential public disclosure of
early interim data, even with safeguards, could compromise the integrity of
the ongoing ELIXA study. The withdrawal of the NDA was thus not related to
safety issues or deficiencies in the NDA and Sanofi will resubmit the NDA
for lixisenatide in 2015, after completion on the ELIXA study.

Lantus®/Lyxumia® combination product – Type 2 diabetes (licensed to Sanofi)

-- The combination of Lyxumia® and Lantus® (basal insulin), the
investigational LixiLan fixed-ratio product, remains on schedule to enter
into Phase III in the first half of 2014. The withdrawal of the US NDA for
Lyxumia® has not affected these plans.

Danegaptide ? Ischemic reperfusion injury

-- Zealand has completed preparations for a Phase II Clinical Proof-of-Concept
study of danegaptide to evaluate the efficacy and safety of this novel
peptide drug as a protective treatment against reperfusion injuries. Dosing
of the first patients with a myocardial infarction (heart attack)
undergoing
percutaneous coronary intervention
treatment is expected soon.
-- Danegaptide is a Zealand-invented peptide which has the potential to be the
first medicinal therapy to protect against tissue damage following
reperfusion.

ZP2929 ? Type 2 diabetes and/or obesity (partnered with Boehringer Ingelheim)

-- Zealand and Boehringer Ingelheim continue to work closely together on the
clinical Phase I development of ZP2929, a novel therapeutic approach in
diabetes and/or obesity. Current activities include extended preclinical
studies to fulfill FDA requirements for additional elucidation of the drug
candidate's therapeutic profile.
-- Zealand expects to be able to give a further update on the timelines for
the ZP2929 Phase I program in the first quarter of 2014.

Elsiglutide ? Chemotherapy induced diarrhea (partnered with Helsinn)

-- Helsinn continues preparation for the advancement of elsiglutide into a
Phase IIb clinical dose finding study to further evaluate the potential of
this promising peptide drug in the prevention of chemotherapy induced
diarrhea in colorectal cancer patients.
-- The start of Phase IIb is expected in 2014.

ZP3022 – a GLP-1-gastrin dual acting receptor agonist

-- At EASD in September, Zealand presented new preclinical data on ZP3022,
which support the disease modifying potential of this novel dual-acting
peptide. The data demonstrate the ability of ZP3022 to significantly
increase beta cell proliferation, reduce beta cell death (apoptosis) and
enhance glucose-stimulated insulin secretion in preclinical in-vitro models
of Type 2 diabetes.
-- Zealand continues to explore the properties of GLP-1-gastrin dual acting
receptor agonists as a novel approach for the treatment and potential
prevention of disease progression in Type 2 diabetes patients.

New collaboration agreement with Lilly in Type 2 diabetes and obesity

-- In August, Zealand signed a collaboration agreement with Lilly to jointly
design and develop potentially novel peptide drugs against a novel target
relevant for the treatment of Type 2 diabetes and obesity.
-- Zealand and Lilly will share funding, risk and reward in this potentially
multi-target collaboration which may also be expanded into other disease
areas.

Other highlights for the third quarter of 2013 and the period thereafter

Appointment of new Chief Scientific Officer

-- In October, Dr Torsten Hoffmann joined Zealand as Chief Scientific Officer
from a senior role at Roche where he was Head of Medicinal Chemistry.
Torsten Hoffmann brings with him almost two decades of experience from the
pharmaceutical industry and a broad scientific track record. At Zealand, he
is now responsible for the company’s research and development activities
and his focus is on enhancing peptide innovation and strengthening the
pipeline of peptide drug candidates as a base for continuous value
building, including partnering activities.

In a comment to this interim report, David Solomon, President and CEO of
Zealand, said: “In this past period, we have met important operational and
strategic goals for Zealand, while beginning slowly to also benefit financially
from Sanofi’s sales of Lyxumia®. Sanofi is continuing the commercial roll-out
of the product as a new medicinal option for diabetes patients and has
confirmed that preparations to start Phase III development of the
Lyxumia®/Lantus® combination product in the first half of 2014 are underway.

“In our efforts to advance and grow our proprietary pipeline of unique peptide
candidates, we also look forward to soon start dosing of patients in a Phase II
study of danegaptide, which represents a promising new treatment for the
potential prevention of reperfusion injuries. In support of our longer-term
value growth, we have entered into a new partnership collaboration with Lilly,
a further validation of Zealand’s competences in peptide drug design and
development.

“We were also delighted to welcome Torsten Hoffmann as our new Chief Scientific
Officer. Torsten will be instrumental in further leveraging the strong momentum
in our R&D organization going forward. With his broad experience and dedicated
focus on innovative peptide discovery and development we will continue to grow
our pipeline, targeting our next breakthrough peptide therapies.”

Financial outlook for 2013 revised:

Net operating expenses lowered – revenue expectations unchanged

Zealand retains expectation of further revenue from Lyxumia® sales royalties in
2013 beyond what has been reported for the first nine months’ period. As Sanofi
has given no guidance on expected sales of Lyxumia®, no more specific revenue
guidance can be provided at this point in time.

Expectations for net operating expenses in 2013 have been revised to a range of
DKK 195-205 (EUR 26-28) million from DKK 210-240 (EUR 28-32) million.

***

Conference call

Zealand will host a conference call today, at 2 pm CET/ 8 am EST to present
the interim report for the first nine months 2013, which will be followed by a
Q&A session. The call will be hosted by David Solomon, President and CEO, Mats
Blom, CFO and Hanne Leth Hillman, Vice President for 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: +45 32 72 80 18
US: (FreeCall dial-in) +1 866 682 8490

UK and international: +44 (0) 1452 555131

Conference ID-number: 9974 6033

A live audio cast of the call including an accompanying slide presentation will
be available via the following link:
http://storm.zoomvisionmamato.com/player/zealand_pharma/objects/8avr91f6/

The audiocast can also be accessed from the investor section of Zealand’s
website (www.zealandpharma.com) and participants are advised to register
approximately 10 minutes before the call starts. An on-demand version of the
audiocast will also be available on the website following the call.

For further information, please contact:

David Solomon, President and Chief Executive Officer

Tel: +45 22 20 63 00

Hanne Leth Hillman, Vice President, Investor Relations & Corporate
Communications Tel: +45 50 60 36 89, email: [email protected]

About Zealand Pharma
Zealand Pharma A/S (NASDAQ OMX Copenhagen: ZEAL) (“Zealand”) is a biotechnology
company based in Copenhagen, Denmark. Zealand 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 cardio-metabolic diseases,
diabetes and obesity in particular, and its lead drug invention is
lixisenatide, a once-daily prandial GLP-1 agonist, which is licensed to Sanofi
for the treatment of Type 2 diabetes. Lixisenatide (marketed by Sanofi as
Lyxumia®) is approved in several countries, including Europe and Japan, and
under regulatory review in a number of other countries globally. In the U.S.,
an NDA is planned to be submitted in 2015, after completion of the ELIXA CV
outcome study.

Zealand has a partnering strategy for the development and commercialization of
its products and in addition to the license agreement with Sanofi in Type 2
diabetes, the company has partnerships with Boehringer Ingelheim in
diabetes/obesity, Lilly in diabetes and obesity, Helsinn Healthcare in
chemotherapy induced diarrhea and AbbVie in acute kidney injury.

For further information: www.zealandpharma.com. @ZealandPharma

Key figures

The Board of Directors and Executive Management of Zealand have approved this
interim report containing condensed financial information for the first nine
months of 2013 ending 30 September 2013. The report is prepared in accordance
with IAS 34 as endorsed by the EU and the additional Danish disclosure
requirements for listed companies. The company’s accounting principles are
unchanged in the first nine months of 2013 and reference is made to the Annual
Report 2012 for a more detailed description of the accounting policies.

DKK thousand 2013 2012 2013 2012 2012
INCOME 1.7 - 30.9 1.7 - 30.9 1.1 - 30.9 1.1 - 30.9 1.1 - 31.12
STATEMENT
AND
COMPREHENSIVE Note Q3 Q3 Q1-Q3 Q1-Q3 Full year
INCOME

Revenue 2,318 37,368 3,398 223,565 223,565
Royalty -309 0 -455 -15,561 -15,933
expenses
Gross profit 2,009 37,368 2,943 208,004 207,632
Research and -30,419 -39,291 -126,186 -131,571 -182,759
development
expenses
Administrativ -7,476 -6,459 -23,494 -17,179 -27,611
e expenses
Other 890 8,343 6,512 28,503 35,135
operating
income
Operating -34,996 -39 -140,225 87,757 32,397
result
Net financial 408 -544 1,324 1,079 3,975
items
Net result -34,588 -583 -138,901 88,836 36,372
for the
period
(after tax)
Comprehensive -34,588 -583 -138,901 88,836 36,372
income for
the period
Earnings per -1.53 -0.03 -6.14 3.93 1.61
share -
basic (DKK)
Earnings per -1.53 -0.03 -6.14 3.90 1.60
share -
diluted
(DKK)

                                               2013        2012         2012

STATEMENT OF 30 Sep 30 Sep 31 Dec
FINANCIAL
POSITION

Cash and cash 332,887 371,673 358,922
equivalents
Securities 24,944 126,654 126,940
Total assets 385,834 564,085 520,983
Share capital 23,193 23,193 23,193
('000
shares)
Shareholder's 361,899 536,664 491,015
equity
Equity / 0.94 0.95 0.94
assets ratio

                       2013        2012        2013        2012         2012
                 1.7 - 30.9  1.7 - 30.9  1.1 - 30.9  1.1 - 30.9  1.1 - 31.12

CASH FLOW Q3 Q3 Q1-Q3 Q1-Q3 Full year

Depreciation 1,731 1,301 4,500 3,805 5,319
Change in -11,061 -28,490 -4,107 -24,542 13,782
working
capital
Purchase of -114 -165 -1,682 -4,490 -8,849
property, plant
and equipment
Free cash 1 -45,288 -27,395 -127,136 70,671 59,688
flow

                                               2013        2012         2012

OTHER 30 Sep 30 Sep 31 Dec

Share price 57.50 99.00 84.00
(DKK)
Market 1,333,598 2,296,107 1,948,216
capitalizati
on (MDKK)
Equity per 2 15.99 23.72 21.70
share (DKK)
Avg. number of employees 109 104 104
(full-time equivalents)
Compounds in clinical 6 7 7
development (end period)
Products on the market 1 0 0

Notes:
(1) Free cash flow is calculated as cash flow from operating activities less
purchase of property, plant and equipment
(2) Equity per share is calculated as shareholders equity divided by total
number of shares less treasury shares

Financial Review for the first nine months of 2013

(Comparative figures for the same period 2012 are shown in brackets)

Income statement
In line with expectations, the net result for the first nine months of 2013 was
a loss of DKK 138.9 million compared to a profit of DKK 88.8 million for the
same period of 2012. In 2013, no milestone payments have been received, whereas
major milestone payments were received from partners in the first nine months
of 2012. Further, net operating expenses in the first nine months of 2013 were
slightly higher than in the same period of 2012 due to a decrease in partner
funded R&D costs.

Revenue
Revenue for the first nine months of 2013 of DKK 3.4 million (223.6) relates to
initial royalty income to Zealand from Sanofi’s commercial sales of Lyxumia®.
No milestone payments were received during the first nine months of 2013. For
the same period in 2012, Zealand received milestone payments of DKK 223.6
million from its partners.

Royalty expenses
Royalty expenses for the period was DKK 0.5 million (15.6). The royalty
expenses for the same period in 2012 related to the milestone payments received
from partners.

Research and development expenses
Research and development expenses for the period amounted to DKK 126.2 million
(131.6). R&D expenses relating to ZP2929 and the research collaboration with
Boehringer Ingelheim have been refunded. Refunds are recorded as other
operating income, see below. The decrease in R&D expenses relates mainly to
lower expenses under the partnership with Boehringer Ingelheim, which have been
partly offset by higher personnel costs and an increase in clinical activities.

Administrative expenses
Administrative expenses for the period amounted to DKK 23.5 million (17.2). The
increase is mainly related to an increase in legal and personnel costs.

Other operating income
Other operating income for the period amounted to DKK 6.5 million (28.5). Other
operating income mainly consists of funding of development costs for ZP2929 and
funding of research costs under the two-year research and development
collaboration with Boehringer Ingelheim, which has ended in July 2013.

Operating result
The operating result for the period was DKK -140.2 million (87.8).

Net financial items
Net financial items consist of interest income, banking fees and regulations
based on changes in exchange rates. Net financial items for the period amounted
to DKK 1.3 million (1.1).

Result from ordinary activities before tax
Result from ordinary activities before tax for the period was DKK -138.9
million (88.8).

Tax on ordinary activities
With a negative result from ordinary activities, no tax has been recorded for
the period. No deferred tax asset has been recognized in the statement of
financial position due to uncertainty as to when tax losses can be utilized.

Net result
Net result for the period amounted to DKK -138.9 million (88.8).

Equity
Equity stood at DKK 361.9 million (536.7) at the end of the period,
corresponding to an equity ratio of 94 % (95).

Capital expenditure
Investments in new laboratory equipment for the period amounted to DKK 1.7
million (4.5).

Cash flow
The cash flow from operating activities amounted to DKK -125.4 million (76.6).
Cash flow from investing activities was DKK 99.3 million (18.1) of which DKK
101.0 million (22.7) relates to net sales of securities. The total cash flow
for the first nine months of 2013 amounted to DKK -26.2 million (94.8).

Cash and cash equivalents
As of 30 September 2013, Zealand had cash and cash equivalents including
securities of DKK 357.8 million (498.3).

Key financial developments in the third quarter of 2013
Revenue in the third quarter amounted to DKK 2.3 million (37.4) relates to
initial royalty income to Zealand from Sanofi’s commercial sales of Lyxumia®.
Revenue for the same period last year related to payments received in
connection with the advance of ZP2929 into clinical development.

Total operating expenses decreased to DKK 37.9 million (45.8) reflecting lower
expenses relating to the collaboration agreement with Boehringer Ingelheim. Of
the operating expenses in the third quarter of DKK 0.9 million (8.3) have been
financed under the Boehringer Ingelheim collaboration.

Net result for the third quarter amounted to DKK -34.6 million (-0.6).

Financial outlook for 2013 revised:

Net operating expenses lowered – revenue expectations unchanged

Expectations for net operating expenses in 2013 have been revised to a range of
DKK 195-205 (EUR 26-28) million from DKK 210-240 (EUR 28-32) million.

Subsidiaries

During the period Zealand’s fully owned subsidiary Betacure Holding A/S was
merged with Zealand Pharma A/S. The effective date for the merger is January
1st 2013. Betacure has for several years had no activities and the reason for
the merger is to reduce administration and costs.

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. 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 2012 Annual Report under the section Risk management and internal control.

Management’s Statements on the Interim Report

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
September 2013. The interim report has not been audited or reviewed by the
company’s 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 2013 and reference is made
to the Annual Report 2012 for a more detailed description of the accounting
policies.

In our opinion, the interim report gives a true and fair view of the company’s
assets, equity and liabilities and financial position at 30 September 2013 and
of the results of the company’s operations and the company’s cash flows for the
period 1 January – 30 September 2013.

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 period and the financial position while also describing the
most significant risks and uncertainty factors that may affect the company.

Copenhagen, 15 November 2013

Executive Management

David H. Solomon Mats Blom

President and CEO Senior Vice President and CFO

Board of Directors

Daniël J. Ellens Jørgen Lindegaard Peter Benson

Chairman Vice chairman

Alain Munoz Florian Reinaud Jutta af Rosenborg

Michael Owen Christian Thorkildsen Helle Størum

Hanne Heidenheim Bak

                                 2013     2012      2013      2012      2012

INCOME STATEMENT (DKK '000) Q3 Q3 Q1-Q3 Q1-Q3 Full
year

Revenue 2,318 37,368 3,398 223,565 223,565
Royalty expenses -309 0 -455 -15,561 -15,933

Gross profit 2,009 37,368 2,943 208,004 207,632

Research and development -30,419 -39,291 -126,186 -131,571 -182,759
expenses
Administrative expenses -7,476 -6,459 -23,494 -17,179 -27,611
Other operating income 890 8,343 6,512 28,503 35,135

Operating result -34,996 -39 -140,225 87,757 32,397

Financial income 812 211 2,423 2,776 5,627
Financial expenses -404 -755 -1,099 -1,697 -1,652

Result from ordinary activities -34,588 -583 -138,901 88,836 36,372
before tax

Tax on ordinary activities 0 0 0 0 0

Net result for the period -34,588 -583 -138,901 88,836 36,372

Comprehensive income for the -34,588 -583 -138,901 88,836 36,372
period

Earnings per share - basic (DKK) -1.53 -0.03 -6.14 3.93 1.61
Earnings per share - diluted -1.53 -0.03 -6.14 3.90 1.60
(DKK)

                                                    2013      2012      2012

STATEMENT OF FINANCIAL POSITION 30 Sep 30 Sep 31 Dec
(DKK '000)

ASSETS
Plant and machinery 16,490 15,814 18,736
Other fixtures and fittings, 473 505 517
tools and equipment
Leasehold improvements 1,623 2,235 2,151
Fixed assets under construction 0 4 0
Deposits 2,570 2,538 2,554

Non current assets total 21,156 21,096 23,958

Trade receivables 0 37,257 0
Prepaid expenses 5,557 5,676 3,648
Other receivables 1,290 1,729 7,515
Securities 24,944 126,654 126,940
Cash and cash equivalents 332,887 371,673 358,922

Current assets total 364,678 542,989 497,025

Total assets 385,834 564,085 520,983

LIABILITIES AND EQUITY
Share capital 23,193 23,193 23,193
Retained earnings 338,706 513,471 467,822

Equity total 361,899 536,664 491,015

Trade payables 7,356 8,288 9,831
Prepayment from customers 2,672 7,522 5,072
Other liabilities 13,907 11,611 15,065

Current liabilities 23,935 27,421 29,968

Total liabilities 23,935 27,421 29,968

Total equity and liability 385,834 564,085 520,983

                                                     2013     2012      2012

STATEMENT OF CASH FLOWS (DKK '000) Q1-Q3 Q1-Q3 Full
year

Net result for the period -138,901 88,836 36,372
Adjustments 13,124 9,157 14,590
Change in working capital -4,107 -24,542 13,782

Cash flow from operating activities before -129,884 73,451 64,744
financing items

Financial income received 4,489 3,318 3,979
Financial expenses paid -59 -103 -186

Cash flow from operating activities -125,454 76,666 68,537

Change in deposit -17 -45 -60
Purchase of property, plant and equipment -1,682 -4,490 -8,849
Purchase of securities -45,936 -85,411 -97,480
Disposal of securities 146,892 108,099 119,837

Cash flow from investing activities 99,257 18,153 13,448

Capital increase 0 0 0
Repurchase of own shares 0 0 0

Cash flow from financing activities 0 0 0

Decrease / increase in cash and cash equivalents -26,197 94,819 81,985
Cash and cash equivalents at beginning of period 358,922 278,343 278,342
Exchange rate adjustments 162 -1,489 -1,405

Cash and cash equivalents at end of period 332,887 371,673 358,922

                                         Share  Retained

STATEMENT OF CHANGES IN EQUITY (DKK '000) capital earnings Total

Equity at 1 January 2013 23,193 467,822 491,015
Warrants compensation expenses 0 9,785 9,785
Comprehensive income for the period 0 -138,901 -138,901
Equity at 30 September 2013 23,193 338,706 361,899

Equity at 1 January 2012 23,193 418,204 441,397
Warrants compensation expenses 0 6,431 6,431
Comprehensive income for the period 0 88,836 88,836
Equity at 30 September 2012 23,193 513,471 536,664

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 2012 23,193

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