Earnings Release • Aug 21, 2014
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Download Source FileCopenhagen, 2014-08-21 14:02 CEST (GLOBE NEWSWIRE) -- Company Announcement
No. 13/2014
-- Improved net result of DKK -19 / EUR -3 million (H1 2013: DKK -104 / EUR
-14 million), resulting from higher revenue of DKK 89 / EUR 12 million (H1
2013: DKK 1 / EUR 0 million) and an 8.5% reduction in net operating
expenses to DKK 97 / EUR 13 million
-- End period cash and securities of DKK 298 / EUR 40 million
-- Second Boehringer Ingelheim collaboration signed, covering a specific
preclinical Zealand peptide project; Payments to Zealand in H2 2014 of DKK
42 /EUR 6 million
-- Ex-US market roll-out of Lyxumia® by Sanofi continues with several new
launches in Q2 2014 and additional launches expected over the rest of the
year
-- Broad-based pipeline progress – internal and external
-- LixiLan Phase III trials advanced by Sanofi with completion expected in
H2 2015
-- Plans on track for US filing of Lyxumia® in Summer 2015 and of LixiLan
as early as end 2015, as per guidance by Sanofi
-- Danegaptide Phase II trial progressing according to plan with approx.
40% of enrollment (235 patients) now completed
-- Novel glucagon analogue in advanced preparations for clinical
development
Copenhagen, 21 August 2014 – Zealand Pharma A/S (Zealand) (CVR no. 20 04 50 78)
(NASDAQ OMX Copenhagen: ZEAL) announces its un-audited interim report for the
six-month period 1 January to 30 June 2014. The period is marked by a
significant increase in revenue compared to the same period last year, a net
result in accordance with the full year guidance and advances across Zealand’s
portfolio of peptide therapeutics both internally and externally.
Commenting on the report, David H. Solomon, President and CEO of Zealand, said:
“Zealand is advancing well on all fronts. I am satisfied with the status of our
activities and very confident about the outlook for the company.
“Lyxumia® roll-out by Sanofi outside the US is generating increasing revenue
and LixiLan is advancing in Phase III. For both products, we look forward to
the planned US regulatory filing by Sanofi in 2015. In parallel, we are growing
the value of Zealand’s proprietary pipeline with danegaptide in Phase II
development, and our novel glucagon analogue and other exciting preclinical
programs advancing well. As part of our strategy, we continue to look for
external high-value clinical assets to expand our pipeline and, across our
preclinical activities, we recently engaged in a new partnership with
Boehringer Ingelheim and have streamlined our resources to leverage our leading
peptide competences and exploit attractive new therapeutic opportunities.”
Financial highlights for H1 2014
(Comparative figures for the same period 2013 are shown in brackets)
-- Revenue of DKK
89.3/EUR 12.0 million (DKK 1.1/EUR 0.1 million).
-- Net operating expenses of DKK 96.7/EUR 13.0 million (DKK 106.2/EUR 14.2
million).
-- Net result of DKK
-18.9/EUR -2.5 million (DKK -104.3/EUR -14.0 million).
-- Earnings per share of DKK -0.83/EUR -0.11 (DKK -4.61/EUR -0.62).
-- End of period cash and securities of DKK 297.6/EUR 39.9 million (DKK
403.6/EUR 54.2 million).
Pipeline highlights and update for Q2 2014 and the period thereafter
Lyxumia® (lixisenatide): Marketed ex-US for Type 2 diabetes ? Global license
agreement with Sanofi
-- Lyxumia® was launched in the first markets by Sanofi mid-H1 2013. Royalty
revenue to Zealand in H1 2014 amounted to DKK 8.1 (EUR 1.1) million, an
increase of 125% compared to H2 2013 (excluding sales royalties from
Germany).
-- On 1 April 2014 (12 months after launch), Sanofi decided to withdraw
Lyxumia® from the market in Germany following the outcome of
price negotiations under AMNOG law. Since implementation of the German
AMNOG reference pricing system, several new diabetes products have either
not been marketed or been taken off the market in Germany.
-- Sanofi is continuing to roll-out Lyxumia® commercially ex-US and achieved a
number of new market launches in the second quarter of 2014. Additional
launches are expected in Europe and other markets ex-US for the rest of
2014. In the US, NDA resubmission is planned for Summer 2015.
LixiLan, fixed-ratio combination of Lyxumia® (lixisenatide) and Lantus®
(insulin glargine): In Phase III-development for Type 2 diabetes ? Global
license agreement with Sanofi
-- Two trials are recruiting patients in the Phase III program: LixiLan-O
evaluates the effect of LixiLan on HbA1c versus Lantus® alone and Lyxumia®
alone in a 3-arm study with up to 1,125 patients with Type 2 diabetes not
well-controlled on oral anti-diabetic medication (OAD). LixiLan-L evaluates
the effect of LixiLan in a placebo-controlled study in up to 700 Type 2
diabetes patients who are not well-controlled on Lantus® alone.
-- In l
ate July 2014, Sanofi confirmed the planned completion of Phase III
development in H2 2015 and a subsequent US regulatory filing of LixiLan
expected as early as end 2015.
Danegaptide: In Phase IIb development for the protection against reperfusion
injuries ? Fully Zealand owned
-- In Zealand’s ongoing Phase II Proof-of-Concept trial, the enrollment of
patients with a myocardial infarction (STEMI) is progressing well and
according to plan. Enrollment is close to the 40% mark with 235 patients
now enrolled and treated in the trial out of a planned total of 600
patients.
-- Zealand maintains its expectation that it will complete the danegaptide
trial and report results in H2 2015
.
Elsiglutide: In Phase II development for the prevention of chemotherapy-induced
diarrhea ? Partnered with Helsinn
-- Helsinn is progressing towards planned first patient dosing in a Phase IIb
study with elsiglutide by the end of 2014
.
ZP1848: Completed Phase Ia/Ib development in Inflammatory Bowel Disease ?
Fully Zealand owned
-- ZP1848 is a Phase II ready potent and selective GLP-2 peptide agonist. In
Phase Ia and Ib trials, this peptide has shown a favorable safety and
tolerability profile in patients with Crohn’s disease together with
indications of efficacy based on a surrogate marker.
-- In 2013, Zealand announced the decision not to advance ZP1848 into Phase II
trials without a development partner. While partnering activities have been
ongoing, Zealand has now decided no longer to present the program as part
of its active pipeline, until a potential partner has been identified.
Glucagon analogue: In preparation for Phase I development for severe
hypoglycaemia in diabetes ? Fully Zealand owned
-- Zealand has invented this novel glucagon analogue, suitable for use in a
liquid formulation as a “ready-to-use” rescue pen to treat severe events of
hypoglycemia. Severe hypoglycemia is a life-threatening condition
associated with diabetes.
-- In June 2014 at the American Diabetes Association’s (ADA) Annual Scientific
meeting, Zealand presented new preclinical data supporting the potential
for this peptide product.
-- Final preparations for the transition of the glucagon analogue into
clinical development are advancing with expected start of Phase I studies
before the end of 2014.
Additional and ongoing collaborations with Boehringer Ingelheim
-- In July 2014, Zealand signed its second research and development
collaboration agreement with Boehringer Ingelheim. The new collaboration
covers a specific, undisclosed therapeutic peptide program from Zealand’s
preclinical portfolio. Under the terms of the agreement, Zealand is
eligible to receive up to EUR 295 million (DKK 2.2 billion) in total
potential mile-stones for the first product developed and marketed from the
collaboration. Payments in H2 2014 will amount to DKK 42 (EUR 5.6) million
in the form of milestones and research funding.
-- The first collaboration agreement with Boehringer Ingelheim for the
development and commercialization of novel glucagon/GLP-1 dual-acting
peptide therapeutics to treat patients with Type 2 diabetes and/or obesity
is ongoing. Under this agreement, Boehringer Ingelheim is evaluating a
portfolio of peptide compounds with the objective of selecting a new
development candidate.
Internal preclinical pipeline prioritisation and new initiatives
-- Zealand has streamlined and prioritised its broad portfolio of proprietary
preclinical peptide projects with the objective of accelerating the most
promising towards clinical development and new partner collaborations. This
has freed resources to further leverage the company’s leading expertise in
the design, characterization and development of therapeutic peptides and
explore newly defined and attractive opportunities in exciting focus areas
including inflammation
.
Financial outlook for 2014
Zealand maintains its full year financial outlook as announced following the
new collaboration agreement with Boehringer Ingelheim (Company Announcement
No.11/2014 from 28 July 2014).
For 2014, Zealand expects revenue from milestone payments of DKK 133 (EUR 18)
million. This includes DKK 81 (EUR 11) million received from Sanofi in January,
DKK 37 (EUR 5) million from Boehringer Ingelheim in the third quarter and a
time-based milestone from Helsinn of DKK 15 (EUR 2) million payable in the
fourth quarter.
In addition, the company receives revenue in the form of Lyxumia® sales
royalties, which amounted to DKK 8.1 (EUR 1.1) million for the first half of
the year. No guidance can be provided for the level of royalty revenues for the
full year as Sanofi has given no guidance on sales.
Net operating expenses in 2014 are expected at a range of DKK 195-205 (EUR
25-28) million.
***
Conference Call
Today at 1400 CET/ 0800 EDT, Zealand will host a conference call to present the
interim results and give an update on the status and outlook for the company’s
main products, followed by a Q&A session. Participating in the call will be
David Solomon, President and CEO, Mats Blom, CFO, and Hanne Leth Hillman, Vice
President and Head of IR and Corporate Communications.
The conference call will be conducted in English and can be accessed via the
following numbers:
DK: + 45 3272 8018
US: + 1 866 6828 490
UK and international: +44 (0) 1452 555 131
A live audio cast of the call including an accompanying slide presentation will
be available via the following link: http://www.media-server.com/m/p/y9zpu4uq
The audio cast 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
audio cast 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,
Head of Investor Relations & Corporate Communications
Tel: +45 50 60 36 89, email: [email protected]
About Zealand
Zealand Pharma A/S (“Zealand”) (NASDAQ OMX 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 a mature
portfolio of therapeutic products, which are all based on internal inventions.
The company’s focus lies in the field of cardio-metabolic diseases, diabetes
and obesity in particular, and its lead product is lixisenatide, a once-daily
prandial GLP-1 agonist for the treatment of Type 2 diabetes, marketed as
Lyxumia® under a license agreement with Sanofi. Lyxumia® is approved in several
countries globally, including Europe and Japan. In the US, submission of an NDA
is expected in 2015, after completion of a cardiovascular outcome study, ELIXA.
A once-daily single injection combination of Lyxumia® and Lantus® (LixiLan) is
in Phase III development by Sanofi with planned first regulatory filing as
early as at the end of 2015.
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 two collaborations with Boehringer Ingelheim in
diabetes/obesity and cardio-metabolic diseases, one with Lilly in diabetes and
obesity, one with Helsinn Healthcare in chemotherapy induced diarrhea and a
license agreement with AbbVie in acute kidney injury.
For further information: www.zealandpharma.com
Follow us on Twitter @ZealandPharma
Key figures
The Board of Directors and Executive Management have approved this interim
report containing condensed financial information for the first six months of
2014 ending 30 June 2014. 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 six months of 2014
and reference is made to the Annual Report 2013 for a more detailed description
of the accounting policies.
DKK thousand 2014 2013 2014 2013 2013
INCOME 1.4 - 30.6 1.4 - 30.6 1.1 - 30.6 1.1 - 30.6 1.1 - 31.12
STATEMENT
AND
COMPREHENSIVE Note Q2 Q2 H1 H1 Full year
INCOME
Revenue 4,294 1,080 89,291 1,080 6,574
Royalty -581 -146 -12,055 -146 -872
expenses
Gross profit 3,713 934 77,236 934 5,702
Research and -45,115 -41,509 -82,041 -95,767 -164,467
development
expenses
Administrativ -6,841 -8,965 -14,830 -16,018 -34,155
e expenses
Other 131 2,227 131 5,622 7,302
operating
income
Operating -48,112 -47,313 -19,504 -105,229 -185,618
result
Net financial 371 327 613 916 1,942
items
Net result -47,741 -46,986 -18,891 -104,313 -183,676
for the
period
(after tax)
Comprehensive -47,741 -46,986 -18,891 -104,313 -183,676
income for
the period
Earnings per -2.11 -2.08 -0.83 -4.61 -8.10
share -
basic (DKK)
Earnings per -2.10 -2.08 -0.83 -4.61 -8.10
share -
diluted
(DKK)
2014 2013 2013
STATEMENT OF 30 June 30 June 31 Dec
FINANCIAL
POSITION
Cash and cash 297,624 325,558 286,178
equivalents
Securities 0 78,022 24,383
Total assets 333,097 432,716 346,913
Share capital 23,193 23,193 23,193
('000
shares)
Shareholder's 299,355 396,028 316,141
equity
Equity / 0.90 0.92 0.91
assets ratio
2014 2013 2014 2013 2013
1.4 - 30.6 1.4 - 30.6 1.1 - 30.6 1.1 - 30.6 1.1 - 31.12
Depreciation 1,432 1,585 2,952 3,071 5,911
Change in -7,303 7,828 2,259 8,851 -3,643
working
capital
Purchase of -353 -970 -2,036 -1,568 -4,569
property, plant
and equipment
Free cash 1 -51,986 -37,542 -12,862 -81,848 -174,187
flow
2014 2013 2013
Share price 70.00 69.00 59.00
(DKK)
Market 1,623,510 1,600,317 1,368,387
capitalizati
on (MDKK)
Equity per 2 13.23 17.46 13.97
share (DKK)
Avg. number of employees 105 108 111
(full-time equivalents)
Compounds in clinical 6 6 6
development (end period)
Products on 1 1 1
the marked
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 six months of 2014
(Comparative figures for the same period 2013 are shown in brackets)
Income statement
The net result for the first six months (“H1”) of 2014 was a loss of DKK 18.9
million compared to a loss of DKK 104.3 million for the same period of 2013.
The increase in net result is a consequence mainly of a milestone payment
received by Zealand in Q1 2014 under the license agreements with Sanofi, while
no milestone payments were received in H1 2013, and higher royalty income from
the sales of Lyxumia® during H1 2014 period.
Net operating expenses were also lower in H1 2014 compared to the same period
of 2013.
Revenue
In January, Sanofi commenced the LixiLan Phase III clinical development program
for the fixed-ratio single injection combination of Lyxumia® with Lantus®,
which triggered a milestone payment to Zealand of DKK 81.2 million (USD 15
million). In addition Zealand royalty revenue on Sanofi’s sales of Lyxumia®
amounted to DKK 8.1 (1.1) million H1 2014.
Royalty expenses
Royalty expenses for H1 2014 were DKK 12.1 million (0.1). Royalty expenses are
payments by Zealand to third parties based on license payments received for
Lyxumia®.
Research and development expenses
Research and development expenses for H1 2014 amounted to DKK 82.0 million
(95.8) which is in accordance with the company’s full year guidance. The
decrease of DKK 13.8 million compared to the same period in 2013 is due to
non-recurring costs related to warrant programs and other non-recurring costs
in 2013. Excluding non-recurrent items, research and development expenses are
at the same level as in the same period last year.
Administrative expenses
Administrative expenses for H1 2014 amounted to DKK 14.8 million (16.0). The
decrease compared to last year related to non-recurring costs relating to
warrant programs in 2013.
Other operating income
Other operating income for H1 2014 amounted to DKK 0.1 million (5.6). Other
operating income has mainly consisted of funding of development costs for
ZP2929 and research costs under the glucagon/GLP-1 collaboration with
Boehringer Ingelheim. Following a change in the development program under the
collaboration, announced in February 2014, ZP2929 is now in development by
Zealand outside the collaboration, and therefore limited operating income was
registered for the period.
Operating result
The operating result for H1 2014 was DKK -19.5 million (-105.2).
Net financial items
Net financial items consist of interest income, banking fees and exchange rate
adjustments. Net financial items for H1 2014 amounted to DKK 0.6 million (0.9).
Result from ordinary activities before tax
Result from ordinary activities before tax in H1 2014 was DKK -18.9 million
(-104.3).
Tax on ordinary activities
Since the result from ordinary activities before tax was negative, 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 whether tax losses can be utilized.
Net result
Net result for H1 2014 amounted to DKK -18.9 million (-104.3).
Equity
Equity stood at DKK 299.4 million (396.0) at the end of the period,
corresponding to an equity ratio of 90 % (92).
Capital expenditure
Investments in new laboratory equipment for the period amounted to DKK 2.0
million (1.6).
Cash flow
Cash flow from operating activities amounted to DKK -10.8 million (-80.3), and
cash flow from investing activities was DKK 22.6 million (46.7) of which DKK
24.4 million (48.3) relates to net sales of securities. The total cash flow for
H1 2014 amounted to DKK 11.4 million (-33.6).
Cash and cash equivalents
As of 30 June 2014, Zealand had cash and cash equivalents including securities
of DKK 297.6 million (403.6).
Key financial developments in Q2 2014
Revenue in the second quarter amounted to DKK 4.3 million (1.1) and relates to
royalty income to Zealand from Sanofi’s commercial sales of Lyxumia®.
Total operating expenses amounted to DKK 52.0 million (50.5).
Net result for the second quarter amounted to DKK -47.7 million (-47.0).
Financial outlook for 2014
For 2014, Zealand expects revenue from milestone payments of DKK 133 / EUR 18
million. This include DKK 81 /EUR 11 million received from Sanofi in January,
DKK 37 /EUR 5 million from Boehringer Ingelheim in the third quarter and a
time-based milestone from Helsinn of DKK 15 /EUR 2 million payable in the
fourth quarter.
Further, the company receives revenue in the form of Lyxumia® sales royalties,
which amounted to DKK 8.1 / EUR 1.1 million for the first half of the year. No
guidance can be provided for the level of royalty revenues for the full year as
Sanofi has given no guidance on sales.
Net operating expenses in 2014 are expected at a range of DKK 195-205 / EUR
25-28 million.
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 2013 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
June 2014. 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 2014 and reference is made
to the Annual Report 2013 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 June 2014 and of
the results of the company’s operations and cash flows for the period 1 January
– 30 June 2014.
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, 21 August 2014
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
Michael Owen
Christian Thorkildsen Helle Størum
Jens Peter Stenvang
2014 2013 2014 2013 2013
INCOME STATEMENT (DKK '000) Q2 Q2 H1 H1 Full
year
Revenue 4,294 1,080 89,291 1,080 6,574
Royalty expenses -581 -146 -12,055 -146 -872
Gross profit 3,713 934 77,236 934 5,702
Research and development expenses -45,115 -41,509 -82,041 -95,767 -164,467
Administrative expenses -6,841 -8,965 -14,830 -16,018 -34,155
Other operating income 131 2,227 131 5,622 7,302
Operating result -48,112 -47,313 -19,504 -105,229 -185,618
Financial income 383 557 638 1,611 3,185
Financial expenses -12 -230 -25 -695 -1,243
Result from ordinary activities -47,741 -46,986 -18,891 -104,313 -183,676
before tax
Comprehensive income for the -47,741 -46,986 -18,891 -104,313 -183,676
period
Earnings per share - basic (DKK) -2.11 -2.08 -0.83 -4.61 -8.10
Earnings per share - diluted -2.10 -2.08 -0.83 -4.61 -8.10
(DKK)
2014 2013 2013
STATEMENT OF FINANCIAL POSITION 30 June 30 June 31 Dec
(DKK '000)
ASSETS
Plant and machinery 17,424 17,563 16,014
Other fixtures and fittings, 341 542 409
tools and equipment
Leasehold improvements 1,381 1,796 1,459
Fixed assets under construction 0 0 2,180
Deposits 2,645 2,553 2,570
Non current assets total 21,791 22,454 22,632
Trade receivables 11 13 11
Prepaid expenses 12,623 5,450 3,642
Other receivables 1,048 1,219 10,067
Securities 0 78,022 24,383
Cash and cash equivalents 297,624 325,558 286,178
Current assets total 311,306 410,262 324,281
LIABILITIES AND EQUITY
Share capital 23,193 23,193 23,193
Retained earnings 276,162 372,835 292,948
Equity total 299,355 396,028 316,141
Trade payables 9,733 16,317 13,376
Prepayment from customers 2,672 2,704 2,329
Other liabilities 21,337 17,667 15,067
Current liabilities 33,742 36,688 30,772
2014 2013 2013
STATEMENT OF CASH FLOWS (DKK '000) H1 H1 Full
Year
Net result for the period -18,891 -104,313 -183,676
Adjustments 4,696 11,406 12,912
Change in working capital 2,259 8,851 -3,643
Cash flow from operating activities before -11,936 -84,056 -174,407
financing items
Financial income received 1,135 3,747 4,870
Financial expenses paid -25 29 -81
Cash flow from operating activities -10,826 -80,280 -169,618
Change in deposit -75 0 -17
Purchase of property, plant and equipment -2,036 -1,568 -4,569
Purchase of securities 0 -43,247 -47,356
Disposal of securities 24,383 91,515 148,750
Cash flow from investing activities 22,272 46,700 96,808
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 11,446 -33,580 -72,810
Cash and cash equivalents at beginning of period 286,178 358,922 358,847
Exchange rate adjustments 0 216 141
Share Retained
Equity at 1 January 2014 23,193 292,948 316,141
Warrants compensation expenses 0 2,105 2,105
Comprehensive income for the period 0 -18,891 -18,891
Equity at 30 June 2014 23,193 276,162 299,355
Equity at 1 January 2013 23,193 467,822 491,015
Warrants compensation expenses 0 9,326 9,326
Comprehensive income for the period 0 -104,313 -104,313
Equity at 30 June 2013 23,193 372,835 396,028
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 2013 23,193
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