Zealand Pharma
Annual Report 2015

Plain-text annual report

ANNUAL REPORT 2015 From peptide to patient Zealand Pharma A/S 01_Our business 01_Zealand in brief and Highlights Our business Our portfolio Corporate matters Financial statements Zealand in brief and 2015 highlights Value creation at Zealand Key figures, financial highlights and 2016 guidance Letters from the Chairman & the CEO Zealand’s strategy Key Performance Indicators Contents Zealand in brief Highlights in 2015 and early 2016 – Progress on all fronts Management review Our business Value creation at Zealand – Turning peptides into medicines 2 Key figures, financial highlights and 2016 guidance 4 Letters from the Chairman and the CEO Zealand’s strategy Key Performance Indicators Our portfolio Portfolio overview 2015 achievements 2016 achievements and news outlook Out-licensed portfolio Proprietary pipeline Corporate matters Board of Directors and senior management Risk management and internal control Corporate Governance, Corporate Social Responsibility and Human Resources Shareholder information Financial review Financial statements Financial statements Notes Statements Company information 6 10 11 14 16 17 18 24 34 38 41 44 48 50 55 78 80 Zealand is a maturing biotech company with established scientific expertise and a leading-edge position in turning peptides into medicines (see p. 2). The company has a mature portfolio with five products out-licensed to Sanofi, Helsinn and Boehringer Ingelheim, including one marketed medicine and two under regulatory review in the US. Zealand’s strategic focus is on its growing proprietary pipeline, which includes four investigational medicines in clinical development. Out-licensed products: Lixisenatide (Type 2 diabetes), marketed as Lyxumia® outside the US and under US regulatory review, and a combination of lixisenatide and Lantus® (LixiLan) (Type 2 diabetes), also under US regulatory review, both by Sanofi; elsiglutide (chemotherapy induced diarrhea) in Phase IIb development by Helsinn; and two preclinical projects (diabetes and/or obesity) by Boehringer Ingelheim. On all our out-licensed products, Zealand has no financial obligations and is eligible to potential milestone payments and sales royalties. Proprietary pipeline (all rights with Zealand): ZP4207 glucagon rescue treatment (acute, severe hypoglycemia) in Phase II; ZP1848 (short bowel syndrome) in Phase II; ZP4207 multiple-dose version (hypoglycemia control) in preparation for next clincal Phase; and ZP2929 (diabetes/obesity) in Phase I. In addition, Zealand has several therapeutic peptides in preclinical development. Zealand’s management is highly international with broadly diversified competencies. The organization is agile and efficient with established in-house expertise from early research to late-stage clinical development. At the beginning of 2016, the company had just over 110 employees of wich 80% work in R&D functions. Zealand is publicly listed on Nasdaq Copenhagen (ZEAL.CO) with a market value of DKK 3 billion / EUR 397 million as of 1 March 2016. (Market value 31 December 2015: DKK 3.7 billion / EUR 498 million). Zealand’s financial position is solid including cash resources of DKK 440 / EUR 59 million by end 2015. In 2016 and onwards, royalty and milestone revenues from the out-licensed portfolio are expected to grow, providing financing for the continued advancement and expansion of Zealand’s proprietary pipeline. Our business has considerably matured since the beginning of 2015. Under our agreement with Sanofi, both lixisenatide and LixiLan have been filed for US approvals with prospects of significant revenue growth and a path to profitability for our company in the years to come. We have advanced our own pipeline, including initiation of two Phase II trials with two Zealand invented investigational medicines. All in line with our strategy for accelerated value creation, where we will take select specialty peptide medicines all the way through registration ourselves for the benefit of patients and shareholders. President & CEO / Britt Meelby Jensen Out-licensed products: Lyxumia 20mcg injection lixisentatide Fixed-ratio combination of lixisenatide and insulin Lixisenatide (Type 2 diabetes): glargine (Type 2 diabetes) Elsiglutide (chemotherapy Boehringer Ingelheim ∞ Cardiovascular safety ∞ Successfully completed induced diarrhea): ∞ A new lead drug candidate established (ELIXA trial) Phase III ∞ Filed for US approval ∞ Filed for US approval with ∞ ∞ Started in Phase IIb Completed patient priority review enrollment advanced into preclinical development under each of two collaborations Proprietary pipeline (all rights with Zealand): ZP4207 (acute, severe ZP1848 (Short bowel ZP4207 (hypoglycemia Danegaptide (cardiac hypoglycemia): syndrome): control): reperfusion injuries): ∞ Phase I trial completed with positive results ∞ ∞ Advanced into Phase II ∞ Advanced into Phase Ib ∞ Completed Phase II Start of patient dosing in development Proof-of-Concept trial, ∞ Advanced into Phase II with Phase II Proof-of-Concept ∞ Phase Ib completed with unfortunately with start of patient dosing trial positive results negative results Expansion of clinical competencies, including in-house regulatory, quality and medical expertise New Board members with broad international competencies New CEO and senior management team 92% increase in market value in 2015 Doubling of shareholders to > 10,000* US ownership share of 17-20%* * As per 1 March 2016 2015 YEAR END CASH POSITION DKKm 440 DKKm 22 DKKm 29 DKKm 137 2015 REVENUE DKKm 188 Lyxumia® royalties Sanofi milestone payments Boehringer Ingelheim milestone payments Front cover features Zealand employees from left to right: Nina from Medicinal Chemistry, Thomas from Clinical Development and Hanne from Project Management. 1 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 01_Value creation at Zealand Our business Our portfolio Corporate matters Financial statements Zealand in brief and 2015 highlights Value creation at Zealand Key figures, financial highlights and 2016 guidance Letters from the Chairman & the CEO Zealand’s strategy Key Performance Indicators Value creation at Zealand – Turning peptides into medicines Preclinical development Dynamic interaction in R&D to optimize therapeutic profile ~7,400 Zealand peptides with optimized profile What are peptides? Peptides are naturally occurring biological molecules. Zealand’s approach and focus Zealand has an established leading scientific expertise in the Like proteins, they are made up of chains of amino field of peptide-based medicines. Our in-house competencies acids, however typically shorter (2-50 amino acids long). include a deep understanding of peptide chemistry and In the human body alone, there is an estimated 7,000 functionality coupled with extensive experience applying native peptides, which are involved in many essential structural design principles to develop novel medicines. physiological functions. Due to their important roles, peptides represent a highly relevant basis for medicines. For each new project we apply our capabilities to identify Peptides generally have high potency (strong biological novel peptides with optimal therapeutic profiles in terms of effect at low concentrations) and strong selectivity (effect efficacy and safety as well as ensuring cost effectiveness primarily on the intended biological target), which is of and development of strong intellectual property (IP) therapeutic relevance. Due to their smaller size, peptides protection. Our R&D organization is structured to progress also offer advantages over proteins in terms of therapeutic a novel investigational peptide medicine effectively through administration routes and cost of manufacturing. preclinical development, including the establishment of Key steps in the value chain for a new medicine proof-of-mechanism in cell based disease assays (in vitro) and in key animal disease models (in vivo). Over the past few years, we have expanded and strengthened our development competencies downstream The development of a new investigational medicine to include a strong clinical experience team including is a long, expensive and highly regulated process. quality assurance and regulatory. Today, Zealand has the Addressing patients’ unmet medical needs is of high necessary in-house capacity to advance investigational long-term value, when taking into consideration also medicines from idea to pre-clinical IND-enabling studies that new medicines usually are protected by patents or and through the clinical development Phases I to III. data exclusivity for several years after launch. It takes on average 12–15 years from the identification of a new Our therapeutic focus lies in specialty disease areas where drug project idea to market launch of a new medicine. peptide-based medicines have particular relevance and As a project successfully advances from design phase to where the patient populations are easily identifiable and selection of a lead investigational medicine candidate treated by specialists. In such areas, the complexity and for preclinical development (laboratory and animal size of the clinical development program will typically be studies) and subsequently into and through the clinical manageable for Zealand to take the proprietary medicine all development Phases I to III, its probability of success, the way through registration. i.e. of market approval, and value increases significantly. This is a result of additional supportive efficacy and safety data being generated and validated by healthcare authorities at each step. Partnering is an essential element for our value creation With reference to the table below, on average one out Partnering activities (in-licensing, out-licensing, acquisitions of 10 investigational medicines advanced into clinical and R&D collaborations) are becoming an increasingly development will succeed all the way to the market. essential component in the development of Zealand’s Probabilities of success to market for biotech companies, but also with medical centers and portfolio. We collaborate with academia, pharma and an investigational medicine Development stage Clinical Clinical Clinical Phase II Phase III Phase I Under regulatory review Market probability 10% 16% 50% 83% Source: Hay, M. et al. (2014): Clinical development success rates for investigational drugs, Nature biotechnology patient organizations as we progress along our strategic focus “From peptide to patient” taking select medicines all the way through registration. We look for new opportunities in specialty disease areas where peptides have strong potential, but also relevant non-peptide clinical opportunities where Zealand’s competencies can be applied. Idea generation We initiate new peptide medicine projects by focusing on a selected biological target of relevance in a specialty disease area. Key in the idea phase is to carefully evaluate and define the IP space and opportunities to create novel IP. Intellectual Property Peptide structure optimization Based on the native peptide, we optimize the molecular structure in order to get: • Strong therapeutic effect • High stability of the peptide to provide a Establish Proof-of-Principle We study the effect of the peptide medicine in relevant disease models and preclinical evaluation of the products’ safety profile. convenient dosing profile • Strong patent protection • Good safety profile Protection of our proprietary peptide therapeutics, processes, technologies and know-how are important for us. Partnerships: Value enhancement and sourcing of new opportunities Access to competencies and external opportunities via partnerships with academia, biotech and clinical centers is important to grow our pipeline while retaining a dynamic organization. New external opportunities are persued in preclinical and early clinical development, where Zealand competencies can be applied. Clinical development Efficacy 2 medicines based on Zealand peptide advanced into Phase III 8 Zealand peptide medicines advanced into Phase II ~670 active patents 10 Zealand peptides advanced into clinical development Phase III In Phase III the therapeutic benefits of an investigatonal peptide medicine are confirmed in a representative number of patients. The objective is to provide evidence to support regulatory filings. 2 medicines based on Zealand peptides filed for approval Phase II The objective is to show relevant therapeutic effect in patients (clinical Proof-of-Concept). Often 2-3 different doses are investigated in parallel (dose- finding). The number of patients enrolled depends on the disease indication. 1 marketed medicine Phase I First dosing in a small number of humans to investigate the clinical safety of an investigational medicine. This Phase typically involves healthy volunteers but can also include patients. Regulatory review process On the market Submissions of files for regulatory approvals in the US, EU and Japan. Acceptance and review processes by the respective authorities US Food and Drug Administration (FDA) and European Medicines Agency (EMA). Zealand peptide-based medicines are made available for patients. Lyxumia 20mcg injection lixisentatide 2 3 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 01_Key figures and Financial highlights Our business Our portfolio Corporate matters Financial statements Zealand in brief and 2015 highlights Value creation at Zealand Key figures, financial highlights and 2016 guidance Letters from the Chairman & the CEO Zealand’s strategy Key Performance Indicators Consolidated key figures Financial highlights of 2015 and 2016 financial guidance DKK ’000 Note 2015 2014 2013 2012 2011 Financial highlights of 2015 Income statement and comprehensive income Revenue Royalty expenses Gross profit 187,677 -22,267 153,773 -13,776 165,410 139,997 6,574 -872 5,702 223,565 142,284 -15,933 -112 207,632 142,172 Research and development expenses -214,959 -180,036 -164,467 -182,759 -126,938 Administrative expenses Other operating income Operating result Net financial items -44,606 -39,826 -34,155 12,828 -81,327 -38,505 6,328 7,302 -73,537 -185,618 1,047 1,942 Result from ordinary activities before tax -119,832 -72,490 -183,676 Tax on ordinary activities 1 5,875 7,500 0 Net result Comprehensive income Earnings per share – basic (DKK) Earnings per share – diluted (DKK) Statement of financial position -113,957 -64,990 -183,676 -113,957 -64,990 -183,676 -4.82 -4.82 -2.87 -2.87 -8.10 -8.10 Cash, cash restricted and cash equivalents 440,199 538,273 286,178 -27,611 35,135 32,397 3,975 36,372 0 36,372 36,372 1.61 1.60 358,922 126,940 23,193 -34,905 28,435 8,764 4,613 13,377 0 13,377 13,377 0.60 0.60 278,342 149,358 469,481 23,193 Securities Total assets Share capital (‘000 shares) Shareholders’ equity Equity/assets ratio Royalty bond Cash flow Depreciation Change in working capital Investments in fixed assets Free cash flow 0 0 24,383 634,688 596,756 346,913 520,983 24,353 23,193 252,231 252,828 0.40 0.42 312,951 272,170 23,193 316,141 0.91 0 491,015 441,397 0.94 0 0.94 0 6,215 -138,871 -4,040 5,932 15,521 -4,497 5,911 -3,643 -4,569 2 -221,373 -46,680 -174,187 5,319 13,782 -8,849 59,688 4,129 -30,943 -11,475 -13,281 Other Share price (DKK) Market capitalization (DKKm) Equity per share (DKK) Average number of employees Products in clinical development (year end) Products in registration phase (year end) Medicines on the market 151,50 3,689 10.60 110 6 2 1 83.00 1,925 11.17 103 5 0 1 59.00 1,368 13.97 107 6 0 1 84.00 1,948 21.70 104 7 0 0 3 4 5 57.00 1,322 19.51 91 6 0 0 Notes: (1) According to Danish tax legislation Zealand is eligible to receive DKK 5.9 million in cash relating to the tax loss of 2015 (2) Free cash flow is calculated as cash flow from operating activities less purchase of property, plant and equipment (3) Equity per share is calculated as shareholders’ equity divided by total number of shares less treasury shares (4) On 20 May 2015, Zealand initiated clinical Phase Ib development of ZP4207 for mulitple-dose use, and on 17 September 2015, ZP1848 was advanced into clinical Phase II development (5) End of July 2015, Sanofi filed lixisenatide for regulatory approval in the US, and the file was accepted for review by the FDA in September 2015. In December 2015, Sanofi filed LixiLan for regulatory approval in the US. The file was accepted for review by the FDA in February 2016. Revenue DKKm 250 200 150 100 50 0 Net operating expenses DKKm 250 200 150 100 50 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Milestone income Royalty income Net R&D expenses Administrative expenses Revenue Net operating expenses Zealand’s revenue amounted to DKK 188 million in 2015, which Total net operating expenses were DKK 247 million in 2015, was an increase of 22% over 2014. up 16% compared to 2014. The increase was mainly driven by higher net research and development (R&D) expenses The main revenue component was milestone payments of DKK as a result of accelerated development activities. These 159 million, generated under the license collaborations with included clinical Phase I and Ib single and multiple dose Sanofi and Boehringer Ingelheim. Milestone payments were up trials with ZP4207 (stable glucagon for hypoglycemia) and 19% compared to 2014. the preparation and advancement of ZP1848 (short bowel syndrome) into clinical Phase II development. Royalty revenue to Zealand from Sanofi’s sales of Lyxumia® increased 41% in 2015 to DKK 29 million. Financial guidance for 2016 In 2016, Zealand expects continuously growing royalty payments from Sanofi on sales of Lyxumia® outside the US. Pending positive US regulatory decisions on both lixisenatide Net operating expenses in 2016 are expected to increase to a range of DKK 340-360 / EUR 45-48 million. The increase over 2015 is explained primarily by a higher level of clinical and LixiLan in Q3 2016 and potential subsequent commercial development costs associated with the advancement of launches by Sanofi also in 2016, royalty payments on US sales Zealand’s proprietary clinical pipeline. may be received as well. However, no specific guidance on the level of royalties can be provided, as Sanofi has given no guidance on 2016 sales of Lyxumia® or LixiLan. Operating loss before royalty income/expenses is therefore expected in a range of DKK 140-160 / EUR 19-21 million. Additional revenue of up to DKK 200 / EUR 27 million may be received from event driven partner related milestones. 4 5 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 01_Letters from the chairman and the CEO Our business Our portfolio Corporate matters Financial statements Zealand in brief and 2015 highlights Value creation at Zealand Key figures, financial highlights and 2016 guidance Letters from the Chairman & the CEO Zealand’s strategy Key Performance Indicators Letter from the Chairman In this context, I see substantial potential for Zealand based on its well-established scientific competencies to design and develop novel peptide medicines, which represents a field of significant unexplored potential. Since innovation and effective execution are key success components in the biotech industry and in Zealand, we continuously strive to support innovation and improve our processes, to remain efficient in terms of the time and cost required to bring new medicines through development to meet patients’ needs. A highly international Board – And new senior management team in place In 2015, we strengthened both Zealand’s Board composition and its senior management. I am pleased that the new Board composition has led to a strengthened diversity of skills and Martin Nicklasson, Chairman of the Board of Directors international experience to effectively govern Zealand through Dear Shareholder the next phases of its exciting development. Furthermore, our new CEO Britt Meelby Jensen joined Zealand at the beginning of 2015 and she has brought additional important leadership In 2015 and into 2016, Zealand’s business has advanced qualities to the company. Under her firm leadership, a new remarkably. I am very pleased to state that Zealand is in its competent senior management team has been put in place strongest position ever. as well as we have launched a new value creating business The corporate objective of Zealand is to invent and provide strategy. new and better medicines with clear benefits to patients Diligent growth strategy for accelerated value creation in areas of unmet medical need. Towards this end, we are The new strategy for accelerated value creation at Zealand determined to create a sustainable, innovative and profitable has its foundation in both Zealand’s achievements to date business with strong shareholder value. In order to support and its prospects for significant royalty revenue growth in these objectives, we have in 2015 significantly enhanced the the coming years. The aim of the strategy is to take select capabilities and competencies of our Board, installed a new specialty peptide medicines all the way from design through dynamic management team and launched a strategy for development to registration. Thereby, we aim long term to accelerated value creation under the headline “From peptide retain the full value creation and control of our own products. to patient”. I am confident that with these initiatives, we have the right foundation for Zealand to continue to succeed. All lights on green for Zealand in 2016 The need for better medicines is eternal and Zealand development prospects. 2015 was a transforming year, firmly has established a leading position setting the foundation for meeting our strategic goals. The fundamentals for the pharmaceutical/biotech industry remain solid with significant needs for new and better I am convinced that Zealand has what it takes to remain I am optimistic about Zealand’s future opportunities and medicines in many disease areas. ”I am confident that Zealand has the right management, the right strategy and the necessary competencies to remain successful and continue to develop its business for the benefit of patients and our shareholders.” successful and continue to grow its business for the benefit of our shareholders. I wish to thank you all for your trust while expressing, on behalf of the Zealand board, a strong commitment to work diligently also in the future in the best interests of the company and in the best of your interests. Martin Nicklasson Chairman, Board of Directors Zealand’s corporate objective Accelerate value creation for patients and share holders 6 7 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review Our business Our portfolio Corporate matters Financial statements Zealand in brief and 2015 highlights Value creation at Zealand Key figures, financial highlights and 2016 guidance Letters from the Chairman & the CEO Zealand’s strategy Key Performance Indicators Letter from the CEO – Building for accelerated value creation Dear Zealand shareholders Launch of an ambitious strategy: “From peptide to patient” 2015 was an exciting and eventful year where our business Building on our current position of strength and the prospects considerably matured. of significant revenue growth from our portfolio of out- We had defined 2015 as a catalyst year for our company. licensed products, we launched an ambitious growth strategy Looking back, it became a catalyst year as we reached all the in November 2015. The new strategy sets the direction milestones defined and we delivered more than we had guided for accelerated value creation for Zealand, and it marks an on. We have seen advancements for both our proprietary and important change of focus with regard to our proprietary out-licensed products, we have developed our organization portfolio and future playing field. We want to advance and and competencies, we have strengthened the Board and the expand our proprietary pipeline with the intention to take senior management team, and we have launched our new select proprietary medicines through to registration. We focus ambitious strategy “From peptide to patient”. on specialty disease areas where peptides have high relevance, Entering 2016 there is no doubt that Zealand is in a stronger in-house and external innovation, maintaining a dynamic and and advancement of new products will be based on both position than ever. agile organization. Engagement in strategic partnerships from early research to commercialization is a key element in the In 2015, Zealand’s business advanced to a higher level strategy as well as we will consider potential asset acquisitions Over the years, Zealand has built both a proprietary and an if attractive opportunities appear. out-licensed portfolio. Zealand fully owns and controls the proprietary pipeline, leaving us the potential of a significant Building on more than 17 years’ leading-edge scientific share of future sales revenue. The out-licensed portfolio is expertise and today’s strong in-house capabilities, we are resourced and financed by our partners, and it represents excited about our journey to invent and bring new and better medicines with broad potential and a maturity stage, which medicines to patients. can generate important milestone and royalty revenues in the years to come. In 2015, important progress was delivered for Prospects for 2016 point to another great year with both parts of the portfolio. potential of considerable revenue growth For our proprietary pipeline, we reached the following was initiated in two Phase II trials with ZP4207 for better milestones: hypoglycemia management in diabetes and with ZP1848 • Danegaptide, a novel gap junction modifier for reperfusion for treatment of short bowel syndrome, respectively. For injuries: Completion of the enrollment of almost 600 danegaptide, the readout of Phase II unfortunately showed no patients with an acute myocardial infarction in Phase II effect against cardiac reperfusion injuries. We have had a strong beginning of 2016. Dosing of patients • ZP4207, a glucagon analogue for acute, severe hypoglycemia in diabetes, completed Phase I with positive As a key milestone in February, FDA accepted LixiLan for results priority review, and we are now awaiting regulatory decisions • ZP1848, a long acting GLP-2 analogue, advanced into on both lixisenatide and LixiLan this year in July and August, Phase II for treatment of Short Bowel Syndrome respectively. This leaves hope that two medicines based on a • ZP4207 for multiple dose use to better manage Zealand invention will be available for US diabetes patients in hypoglycemia in patients on insulin, advanced into and 2016 – with prospects of considerable revenue growth for our completed Phase Ib with positive results. company in the years to come. The increased level of late stage clinical development activities For our out-licensed portfolio, we also reached very important leads to higher operating expenses. This is reflected in our milestones: 2016 financial guidance and will be financed via our solid cash • Lixisenatide, the first once-daily prandial GLP-1 agonist, position and expected revenue growth from both milestone was filed in the US payments and royalties. • The fixed-dose single-injection combination of lixisenatide and Lantus® (LixiLan), was submitted for regulatory review in the US using a priority review voucher I am proud to conclude, that we have built a strong foundation and kicked-off a very exciting journey for accelerated growth • Elsiglutide, a GLP-2 analogue for chemotherapy induced and continued success. We have a strong scientific platform, diarrhea, was advanced into Phase IIb a high-value portfolio of out-licensed products and a • Progress under both license agreements with Boehringer growing proprietary pipeline, which I am confident will create Ingelheim with the selection of new preclinical lead significant value for both patients and shareholders in the candidates and an associated milestone payment. coming years. Also, we more than doubled our number of shareholders, and I would like to deeply thank everybody for the strong confidence in our company. Our diligent growth strategy has four elements We will build a proprietary portfolio, taking select medicines through registration with full ownership retained We will focus on specialty disease areas of high relevance for peptide medicines We will strengthen our leading position in therapeutic peptide R&D while maintaining a dynamic organization with both in-house and external innovation We will accelerate growth via strategic partnerships and reduce focus on full out-licensing Britt Meelby Jensen President and Chief Executive Officer 8 9 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 01_Zealands strategy 01_Key Performance Indicators Our business Our portfolio Corporate matters Financial statements Zealand in brief and 2015 highlights Value creation at Zealand Key figures, financial highlights and 2016 guidance Letters from the Chairman & the CEO Zealand’s strategy Key Performance Indicators Zealand’s strategy Key Performance Indicators Building on Zealand’s position of strength, in November 2015, management launched a diligent growth strategy for accelerated value creation. The strategy is labelled “From peptide to patient” and consists of four main elements. Every year, Zealand defines Key Performance Indicators (KPIs) to measure its performance towards continued success of the company. These are a combination of financial, pipeline and organizational objectives. For 2016, our KPIs reflect our new strategic direction. Build a portfolio of proprietary medicines Focus on specialty disease areas 2015: Zealand performed strongly on all KPIs defined for the year 1. Advance and grow our portfolio of medicines for the 3. Grow the portfolio of partnerships benefit of patients As a key element in our strategy, we will take a We will build on over 17 years’ experience in There were substantial advancements in both the out-licensed During 2015, the company strategy was redefined with growing number of existing and new investigational optimizing the therapeutic benefits of peptides and and proprietary portfolio (the latter covered below), with increasing focus on growing our proprietary pipeline. As medicines further in development ourselves – and we focus on carefully selected specialty disease successful progress to the next phase on four of the five a consequence, it was decided not to extend the research in select specialty disease areas, all the way through areas, where peptide-based medicines have high out-licensed projects: collaboration with Eli Lilly and instead allocate the related registration and to launch for patients. By keeping relevance. More specifically, we pay attention to four • Lixisenatide and LixiLan (both Type 2 diabetes) were R&D resources to the proprietary preclinical specialty disease the ownership of commercial rights to our products, different parameters: we will retain the full value creation and control. For submitted for US regulatory approvals, including the activities. decision by Sanofi to redeem a priority review voucher for our out-licensed products, we generate milestone 1) the patient population is well-defined; LixiLan On 1 December 2015, a new Chief Business Officer with broad revenue and high-single to low-double digit 2) there is a clear unmet medical need to be fulfilled • Elsiglutide (chemotherapy induced diarrhea) was advanced international experience was appointed to drive Zealand’s percentages in sales royalties, which is vital to fund by better medicines; into Phase IIb by Helsinn strategic partnership activities. our growth strategy. 3) the relevant group of health care providers is Over time proprietary medicines will provide higher distinct and addressable; and • A lead product candidate (diabetes/obesity) was selected and entered preclinical development under the Boehringer revenue shares, determined by the go-to-market 4) the clinical development path through to Ingelheim collaboration. model. registration is considered manageable to Zealand in size and complexity. Enhance our peptide expertise and maintain a dynamic R&D organization Accelerate growth via strategic partnerships Zealand has an established and validated leading- We aim to grow the value of our proprietary pipeline edge expertise in design and development of while maintaining a dynamic and agile organizational peptide-based medicines. We continue to invest in model. We will increasingly engage in strategic enhancing and expanding our competencies, and partnerships and leverage strategic collaborations 2. Increase the proprietary part of the pipeline 4. Generate growing revenues and retain a solid financial position During 2015, the proprietary portfolio was expanded with two new medicines in clinical development: • Start and completion of a Phase Ib trial with ZP4207 for Royalty revenues in 2015 increased based on Sanofi’s growing sales of lixisenatide (Lyxumia®). However, the majority of the total revenues of DKK 188 / EUR 25 million came from multiple-dose use (hypoglycemia control) milestone payments from Sanofi and Boehringer Ingelheim, • Initiation of new Phase II development program for ZP1848 which financed a considerable part of our operational costs (short bowel syndrome). and helped to retain a solid financial position. 2016: The KPIs for 2016 are set to measure our performance in accordance with the strategy combine internal scientific innovation with externally across the value chain, i.e. from early research to 1. Advance and expand the pipeline of proprietary 3. Enter new strategic partnerships in support of pipeline sourced projects to expand both our preclinical and commercialization, with academia, biotech and investigational specialty medicines value creation early-stage clinical pipeline. pharma companies, as well as clinical centers and The objective is to advance at least two existing proprietary In alignment with the updated strategy, Zealand will engage in commercialization partners. products to the next development phase during 2016 and to strategic collaborations across the value chain to increase and It is essential for our continued success that we expand the proprietary pipeline with at least one new specialty accelerate pipeline value creation. maintain a dynamic and agile organization, to be able We have a couple of existing projects that are better drug candidate; either invented internally or externally sourced. to act fast on new opportunities. suited for out-licensing, but overall, the past focus on As we grow our pipeline, we will stepwise build pure out-licensing will be reduced as the proprietary 2. Enhance our leading-edge peptide competencies 4. Retain a solid financial position with growing revenues critical competencies in-house and supplement portfolio of specialty medicines grows. The objective is to: The aim is to secure growing revenue for Zealand, from these with external expertise. • Engage in new technology or research based collaborations milestone payments and royalty payments on global sales to strengthen or broaden our peptide competencies while retaining a strong cash position. • Expand clinical competencies via new collaborations with clinical centers of excellence in specialty disease areas. 10 1 1 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 02_Our portfolio Our business Our portfolio Corporate matters Financial statements Portfolio overview 2015 achievements 2016 achievements and news outlook Lixisenatide LixiLan Elsiglutide Boehringer Ingelheim collaborations ZP4207 ZP1848 ZP2929 Preclinical proprietary projects Our portfolio 12 Our portfolio includes several out-licensed products and projects, including one medicine marketed outside the US (Lyxumia®) and two products under regulatory review. Our strategic focus is to continuously advance our growing pipeline of proprietary investigational medicines, of which four are in clinical development. All products and projects currently in our portfolio are based on in-house invented therapeutic peptides. In this section, we present an overview of the portfolio and each product in detail. Portfolio overview 2015 achievements 2016 achievements and news outlook Out-licensed portfolio Proprietary pipeline Photo features Zealand employee: Jens, industrial PhD student in Pharmaceutical Development, working in one of Zealand’s laboratories. 14 16 17 18 24 1 3 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 02_Portfolio overview Our business Our portfolio Corporate matters Financial statements Portfolio overview 2015 achievements 2016 achievements and news outlook Lixisenatide LixiLan Elsiglutide Boehringer Ingelheim collaborations ZP4207 ZP1848 ZP2929 Preclinical proprietary projects Portfolio overview Out-licensed products and projects Proprietary pipeline Five products and projects are under license collaborations: Two with Sanofi, one with Helsinn and two with Boehringer We have a growing number of novel proprietary investigational medicines in development, which all stem from our profound Ingelheim. These include one medicine on the market outside the US, two investigational medicines under US regulatory review, expertise in peptide therapeutics. It is our strategic focus to continue to expand and advance our proprietary pipeline targeting one in clinical development, and two preclinical projects. For all products under license collaborations, Zealand has no financial unmet medical needs in specialty disease areas. obligations and is eligible to potential milestone payments of up to a total of DKK 4.8 billion / EUR 652 million and on future sales We have four products in clinical development and several preclinical projects. royalties. Lyxumia® (lixisenatide) – ex-US Type 2 diabetes ZP4207 (Single-dose) Rescue treatment for acute, severe hypoglycemia Preclinical Phase I Phase II Phase III Reg. Marketed Preclinical Phase I Phase II A once-daily prandial GLP-1 receptor agonist for the treatment of Type 2 diabetes developed and commercialized as Lyxumia® by Sanofi in 50 countries outside the US. Lixisenatide significantly lowers blood glucose with a profound effect on prandial or meal-related glucose, making it relevant to use for insulin intensification. A novel glucagon analogue with high stability in liquid formulation, intended for use as a convenient ready-to-use rescue pen for acute, severe hypoglycemia. Phase I results have demonstrated good safety and tolerability of ZP4207 after single-dosing in healthy volunteers and Type 1 diabetes patients. In February 2016, Zealand initiated patient dosing in a Phase II trial, expected to complete in H2 2016. Lixisenatide – US Type 2 diabetes ZP1848 Short bowel syndrome Preclinical Phase I Phase II Phase III Under regulatory review Preclinical Phase I Phase II Lixisenatide was filed by Sanofi for regulatory approval in the US in July 2015. The FDA accepted the file in September and regulatory review is ongoing with a decision expected in July 2016. A long-acting GLP-2 analogue with high stability in liquid formulation. In February 2016, the first patients were dosed in a clinical Phase II trial expected with enrollment of 18 patients with short bowel disease. Clinical update on enrollment and timeline for completion in Q4 2016. Lixisenatide/insulin glargine fixed-ratio combination Type 2 diabetes ZP4207 (Multiple-dose) Component in artificial pancreas for hypoglycemia management in diabetes Preclinical Phase I Phase II Phase III Under regulatory review Preclinical Phase I In preparation for next clinical Phase An investigational single-injection combination of lixisenatide and insulin glargine, referred to as LixiLan. Phase III successfully completed showing significant HbA1c reduction over both Lantus® alone and lixisenatide alone. Under regulatory priority review in the US with FDA decision expected in August 2016. EU filing expected in March 2016. A multiple-dose version of our stable glucagon analogue in development as hypoglycemia component of a dual-hormone artificial pancreas system for better management of insulin dependent diabetes. Phase Ib results showed good safety and tolerability of the product and its ability to provide a clinically relevant blood glucose response after repeat daily dosing in healthy subjects. Elsiglutide Chemotherapy induced diarrhea Preclinical Phase I Phase II ZP2929 Diabetes/obesity Preclinical Phase I A novel GLP-2 receptor agonist licensed to Helsinn in Cancer Supportive Care. In Phase IIb development by Helsinn. The enrollment of approximately 500 patients with colon cancer has been completed. Results expected in H2 2016. A once-daily dual acting glucagon/GLP-1 receptor agonist for subcutaneous administration. ZP2929 is in Phase I clinical development as a potential new treatment for patients with Type 2 diabetes and/or obesity. Additional preclinical data provided for discussion with the FDA. Glucagon/GLP-1 dual agonists Diabetes/obesity Several peptide projects & indications Preclinical Preclinical Global license collaboration with Boehringer Ingelheim for the treatment of diabetes and/or obesity. In February 2016, Boehringer selected a new once-weekly lead product candidate for advancement into preclinical development. Our proprietary preclinical pipeline comprises of several projects. Those disclosed include a novel GIP receptor agonist, a GLP-1-gastrin dual agonist, a GLP-1-GIP receptor dual agonist, which all represent potentially more efficacious approaches for treatment of diabetes and/or obesity. We also have a dual-acting GLP-1/GLP-2 receptor agonist in preclinical development. Undisclosed target Cardio-metabolic disease Preclinical Global license collaboration with Boehringer Ingelheim in the field of cardio-metabolic diseases. In September 2015, Boehringer selected a lead product candidate which has been advanced into preclinical development. 14 1 5 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 02_2015 achievements 02_2016 achievements and news outlook Our business Our portfolio Corporate matters Financial statements Portfolio overview 2015 achievements 2016 achievements and news outlook Lixisenatide LixiLan Elsiglutide Boehringer Ingelheim collaborations ZP4207 ZP1848 ZP2929 Preclinical proprietary projects 2015 achievements 2016 achievements and news outlook Out-licensed products and projects Out-licensed products and projects Lixisenatide (Lyxumia®) – Sanofi H1 Positive results from the ELIXA cardiovascular (CV) safety outcomes trial presented as key note at ADA, demonstrating lixisenatide to be safe on all CV parameters Positive results from GetGoal Duo-2 trial presented at ADA, showing advantages of lixisenatide versus rapid-acting insulin as add-on to Lantus® for insulin intensification Submission of a New Drug Application to the FDA for regulatory approval in the US (by Sanofi) H2 H2 H1 Fixed-ratio combination of lixisenatide and insulin glargine (Lantus®) – Sanofi Elsiglutide – Helsinn FDA acceptance of Sanofi’s New Drug Application and initiation of the regulatory review process Full year royalty revenue of DKK 29 / EUR 4 million Positive outcome of the first pivotal Phase III trial, LixiLan-O, meeting the primary endpoint Positive outcome of the second pivotal Phase III trial, LixiLan-L, meeting the primary endpoint Submission of a New Drug Application to the FDA for regulatory priority review in the US (by Sanofi) with a DKK 137 / USD 20 million milestone payment to Zealand Initiation of Phase IIb dose-finding trial by Helsinn in up to 480 patients with colorectal cancer Enrollment of app. 1,700 patients with colorectal or breast cancer completed in observational study by Helsinn to analyze the incidence and severity of chemotherapy induced diarrhea in Europe and the US Lixisenatide (Lyxumia®) – Sanofi Fixed-ratio combination of lixisenatide and insulin glargine (Lantus®) – Sanofi Elsiglutide – Helsinn H1 • Quarterly royalty reports and status updates H2 • Quarterly royalty reports and status updates • US regulatory decision by the FDA (July) H1 FDA acceptance of Sanofi’s New Drug Application for priority review in the US • Submission for regulatory approval in Europe (by Sanofi) • Presentation of results from the two Phase III trials, LixiLan-O and LixiLan-L, at a medical conference H2 • US regulatory decision by the FDA (August) H1 Confirmed completion of enrollment in Phase IIb with approximately 500 patients enrolled H2 • Top-line results from Phase IIb dose-finding trial • Publication of results from observational study of chemotherapy induced diarrhea in the EU and US Boehringer Ingelheim collaborations H2 2nd license collaboration – Undisclosed target for diabetes/obesity: Selection of a novel lead peptide therapeutic for advancement into preclinical development (by Boehringer Ingelheim) and a DKK 22 / EUR 3 million milestone payment to Zealand. Boehringer Ingelheim collaboration H1 1st license collaboration – Glucagon/GLP-1 dual agonists for diabetes/obesity: Selection of a novel once-weekly lead peptide therapeutic candidate for advancement into preclinical development Proprietary pipeline Proprietary pipeline Danegaptide H2 Completion of enrollment (585 patients with an acute myocardial infarction (STEMI)) in Phase II Proof-of-Concept trial Danegaptide H1 Results from Phase II Proof-of-Concept trial ZP4207 Single-dose ZP1848 ZP4207 Multiple-dose ZP2929 Preclinical proprietary projects Other H1 Positive results from Phase I trial ZP4207 Single-dose H1 Initiation and dosing of the first patients with Type 1 diabetes in clinical Phase II trial H2 Advancement of ZP1848, a novel long-acting GLP-2 analogue, into clinical Phase II development for short bowel syndrome H2 • Top-line results from clinical Phase II trial ZP1848 H1 Dosing of the first patients with short bowel syndrome in Phase II trial H2 • Update on patient enrollment and timelines for study completion H1 H2 H2 H1 H1 H2 Advancement into clinical Phase Ib multiple ascending dose trial backed by a DKK 12 / USD 1.8 million grant from Helmsley Charitable Trust ZP4207 Multiple-dose H2 • Advance into next stage of clinical development for use as component in a dual-hormone artificial pancreas device for better glucose management in diabetes Positive results from the Phase Ib trial, showing ZP4207 to be safe and well tolerated after multiple dosing Completion of additional supportive preclinical studies Presentation of preclinical data on novel GLP-1/GIP dual agonist, showing support for its potential as a novel treatment for Type 2 diabetes/obesity Presentation of preclinical data on novel GLP-1-gastrin dual agonist, showing the ability of the compound to increase beta-cell mass and improve glycemic control in diabetes models New management team and enhancement of international Board competencies Presentation of growth strategy, labelled “From peptide to patient” for accelerated value creation Appointment of new Chief Business Officer ZP2929 Preclinical proprietary projects H1 H1 • Decision on next clinical step – engagement with the FDA Collaboration with BioSolveIT to create unique therapeutic peptide design software • Presentations of new data on proprietary preclinical peptide therapeutics at medical conference H2 • Presentations of new data on preclinical peptide therapeutics at medical conference Other H1 Appointment of new Chief Science Officer 16 17 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 02_Lixisenatide Our business Our portfolio Corporate matters Financial statements Portfolio overview 2015 achievements 2016 achievements and news outlook Lixisenatide LixiLan Elsiglutide Boehringer Ingelheim collaborations ZP4207 ZP1848 ZP2929 Preclinical proprietary projects Out-licensed portfolio Five products and projects are under license collaborations with Sanofi, Helsinn and Boehringer Ingelheim. These include lixisenatide, which is marketed as Lyxumia® outside the US and is part of two regulatory filings in the US, plus one product in clinical development and two preclinical projects. On the out-licensed portfolio, Zealand has no financial obligations and is eligible to remaining potential milestone payments of up to a total of DKK 4.8 billion / EUR 652 million and on future sales royalties. Lixisenatide (Lyxumia® & LixiLan) – Sanofi Elsiglutide – Helsinn Two preclinial projects – Boehringer Ingelheim 19 22 23 Photo features Zealand employee: Jens from Business Development working on both in-licensing and out-licensing opportunities. Lixisenatide – Type 2 diabetes Lixisenatide – First Zealand invented medicine on the market Lixisenatide is a once-daily GLP-1 receptor agonist, invented by Zealand for the treatment of Type 2 diabetes. Lixisenatide is licensed globally to Sanofi (EURONEXT: SAN) who has developed the product both as a stand-alone medicine and as part of a fixed-ratio combination product with insulin glargine (Lantus®), refered to as LixiLan. Lixisenatide was launched in 2013 outside the US under the name Lyxumia®. Both lixisenatide and the combination product are under regulatory review in the US and with regulatory decisions expected in July and August, respectively. Type 2 diabetes – A serious chronic disease Key to effective management of Type 2 diabetes is to Type 2 diabetes is a metabolic disorder with hyperglycemia control hyperglycemia. Diabetes is associated with a (high blood sugar levels) resulting from inadequate insulin significantly increased risk of heart disease and stroke, secretion or insulin resistance. It is the most common form of limb amputations, blindness and kidney failure – and is diabetes as it represents 90% of all cases. It is estimated that projected to be the 7th leading cause of death in 2030. over 500 million people worldwide are affected by diabetes, with management costs exceeding USD 600 billion annually. What is GLP-1? Glucagon-like peptide 1 (GLP-1) is a native peptide hormone produced in the human body by intestinal L-cells in response to meal intake. The main actions of GLP-1 are to stimulate insulin secretion and regulate appetite and food intake. GLP-1 receptor agonists for the treatment of Type 2 diabetes GLP-1 receptor agonists are a new class of injected medicines for the treatment of Type 2 diabetes. They mimic the action of GLP-1 and stimulate the release of insulin only upon ingestion and with additional effects on slowing gastric emptying and inducing satiety with beneficial impact on weight. In clinical practice, GLP-1 therapy is associated with significant HbA1c (blood sugar) lowering, weight loss and a low risk of hypoglycemia. Lixisenatide (Lyxumia®) royalty revenue 2013-2015 DKKm 10 8 6 4 2 0 Q1 Q2 Q3 2013 Q4 Q1 Q4 Q1 Q3 Q2 2014 Q4 Q2 Q3 2015 Invented by Zealand Global rights licensed to Sanofi License collaboration with Sanofi – Terms of agreement: Sanofi has the global development and commercialization rights to lixisenatide and any combination product including lixisenatide. All financing of products under the agreement is covered by Sanofi. Zealand is eligible to total milestones of up to USD 275 million (of which up to USD 140 million are outstanding). In terms of royalties on global sales, Zealand is entitled to tiered low double-digit percentages on lixisenatide and a fixed, low double- The US market represents ~70% of the total market for GLP-1 digit percentage on sales of LixiLan and any other medicines. With US regulatory decisions on both lixisenatide and the lixisenatide/Lantus® combination product expected in 2016, royalty revenue is projected to increase significantly. combination including lixisenatide. 18 19 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 02_Lixilan Our business Our portfolio Corporate matters Financial statements Portfolio overview 2015 achievements 2016 achievements and news outlook Lixisenatide LixiLan Elsiglutide Boehringer Ingelheim collaborations ZP4207 ZP1848 ZP2929 Preclinical proprietary projects Lixisenatide (Lyxumia®) Fixed-ratio combination of lixisenatide and insulin glargine (Lantus®) ex-US Preclinical Phase I Phase II Phase III Reg. Marketed Preclinical Phase I Phase II Phase III Under regulatory review US Preclinical Phase I Phase II Phase III Under regulatory review First Zealand invented medicine on the market – A once-daily GLP-1 agonist with a pronounced prandial effect Lixisenatide belongs to a sub-class of GLP-1 receptor agonists with a short acting profile. The medicine has demonstrated a pronounced lowering effect on meal-related blood sugar increase (post-prandial glucose) in addition to its effect on fasting New combination drug for Type 2 diabetes: Fixed-ratio combination of lixisenatide and insulin glargine (LixiLan) Lixisenatide has been developed by Sanofi as part of a fixed-ratio, single-injection combination with insulin glargine 100 Units/mL (Lantus®). Lantus® is a Sanofi product and the most prescribed basal insulin worldwide. The therapeutic relevance of a combination treatment with basal insulin and a GLP-1 receptor agonist for patients with Type 2 diabetes has been shown in several clinical trials. glucose. With this profile, lixisenatide has particular therapeutic relevance as an add-on treatment to basal insulin for better Advancements in 2015 and 2016 (until 16 March) glucose management. Advancements in 2015 and 2016 (until 16 March) • Launched by Sanofi in more than 50 countries (Lyxumia®) • Total Sanofi sales of Lyxumia® in 2015: EUR 38 million • Key supportive safety (cardiovascular) and efficacy (insulin intensification) results presented at ADA • September 2015: FDA accepted Sanofi’s NDA for lixisenatide in the US. • • • • The primary endpoints were met in two pivotal Phase III trials, LixiLan-O and LixiLan-L, showing significant HbA1c lowering December 2015: Sanofi submitted an NDA for regulatory review of the combination product in the US and redeemed a Priority Review Voucher as part of the submission The NDA for the combination product was associated with a USD 20 million milestone payment from Sanofi to Zealand February 2016: FDA accepted the NDA for priority review, shortening the regulatory review time for the combination product from ten months to six months. Lixisenatide’s therapeutic profile • Significantly lowers HbA1c • Reduces body weight In 2015: Additional strong support for lixisenatide’s Positive results from two pivotal Phase III trials therapeutic profile LixiLan-O LixiLan-L • Associated with a low risk of hypoglycemia ELIXA results – Cardiovascular safety profile established Enrollment: 1,170 patients with Type 2 diabetes insufficiently • Slows gastric emptying with pronounced lowering of post Top-line results from ELIXA, a Cardiovascular Safety Outcome controlled on oral medication (OAD). Enrollment: 736 patients with Type 2 diabetes insufficiently controlled on basal insulin (insulin glargine (Lantus®)). prandial glucose (PPG) Trial, have demonstrated lixisenatide to be safe versus Lixisenatide is administered as a once-daily injection. For the population of more than 6,000 adults with Type 2 diabetes. a statistically superior lowering of average blood glucose showing a statistically superior lowering of average blood placebo on all cardiovascular safety parameters in a high-risk Results: LixiLan met the primary efficacy endpoint of showing Results: LixiLan met the primary efficacy endpoint of first two weeks after initiation of treatment with 10 mgr. per day, thereafter with a maintenance dose of 20 mgr. per day. Results from GetGoal Duo-2 Lyxumia 20mcg injection lixisentatide In a Phase IIIb trial, lixisenatide has shown to have a similar effect on glucose reduction with advantages on body weight (HbA1c) compared with lixisenatide, and compared with insulin glargine (Lantus®) in Type 2 diabetes patients treated with metformin. glucose (HbA1c) in Type 2 diabetes patients insufficiently controlled with insulin glargine (Lantus®) alone with or without metformin. compared to rapid-acting insulin, when added to basal insulin Relevant Type 2 diabetes populations to target: Relevant Type 2 diabetes populations to target: for treatment intensification in patients with Type 2 diabetes. In the US, ~5.5 million are not well controlled on OADs* In the US, ~4 million are not well controlled on basal insulin* * Source: 2017 projections based on model from Adelphi Effective diabetes management: Both fasting and prandial (meal-related) glucose levels must be controlled HbA1c is a measure of average 2-3 months plasma glucose (sugar) levels. To effectively control diabetes, an HbA1c target value of <7% or even <6.5% is recommended. It is important also to keep glucose fluctuations to a minimum, which means to effectively control both fasting plasma glucose (FPG) and postprandial (meal-related) plasma glucose (PPG). So, the following applies: effective HbA1c control=effective FPG control & effective PPG control. Trademarks for lixisenatide Lyxumia® is the trademark approved for lixisenatide outside the US. In the US, no trademark has yet been approved. 2016 – Next steps and news flow outlook • July: US regulatory decision by the FDA on lixisenatide • Expected increase in royalty revenue from Sanofi’s sales of lixisenatide (Lyxumia®) outside the US Lantus® SoloStar® 100 units/ml (U-100) 0 1 + Lyxumia 20mcg injection lixisentatide 2016 – Next steps and news flow outlook • March: Submission for regulatory approval in the EU • June: Sanofi will present results from the two Phase III trials at a medical congress • August: US regulatory decision by the FDA on the fixed-ratio combination of lixisenatide and insulin glargine (Lantus®) in the US 20 21 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 02_Elsiglutide 02_Boehringer Ingelheim collaborations Our business Our portfolio Corporate matters Financial statements Portfolio overview 2015 achievements 2016 achievements and news outlook Lixisenatide LixiLan Elsiglutide Boehringer Ingelheim collaborations ZP4207 ZP1848 ZP2929 Preclinical proprietary projects Elsiglutide Boehringer Ingelheim collaborations Preclinical Phase I Phase II Preclinical Preclinical Elsiglutide, a potential first-ever treatment for the prevention of chemotherapy induced diarrhea Elsiglutide is a novel GLP-2 analogue invented by Zealand. Global development and commercial rights in the field of cancer supportive care are licensed to Helsinn, who is developing elsiglutide as a potential first ever treatment to help prevent chemotherapy induced diarrhea in cancer patients. Two license collaborations ongoing with Boehringer Ingelheim for the treatment of diabetes and/or obesity Zealand has two collaborations ongoing with Boehringer Ingelheim, each covering novel therapeutic peptides invented by Zealand for the treatment of Type 2 diabetes and/or obesity. Under both collaborations, Boehringer Ingelheim is progressing a selected lead development candidate in preclinical development for the potential advancement into clinical development. Advancements in 2015 and 2016 (until 16 March) • • In February 2015, Helsinn initiated dosing of patients in a Phase IIb dose-finding trial In June 2015, Helsinn completed the enrollment of approximately 1,700 cancer patients in an observational study of chemotherapy induced diarrhea In February 2016, Helsinn completed the enrollment of approximately 500 patients in the Phase IIb trial. • Advancements in 2015 and 2016 (until 16 March) • Collaboration on undisclosed target (obesity/diabetes): In October 2015, Boehringer Ingelheim selected a novel lead peptide therapeutic for preclinical development with an associated DKK 22 / EUR 3 million milestone payment to Zealand. Collaboration on glucagon/GLP-1 dual agonists (diabetes/obesity): In February 2016, Boehringer Ingelheim selected a novel lead glucagon/GLP-1 peptide therapeutic for preclinical development. • Phase IIb trial – Enrollment has been completed A randomized, double-blind, placebo-controlled trial to assess the effect of elsiglutide in the prevention of CID. The trial has enrolled approximately 500 colorectal cancer patients receiving 5-FU based chemotherapy regimens (FOLFOX or FOLFIRI), randomized to treatment with one of three doses of elsiglutide (10 mg, 20 mg. and 40 mg.) or placebo. The primary endpoint is the proportion of patients with diarrhea of grade ≥2 during the first cycle of chemotherapy. Topline results are expected in H2 2016. For further details on the Phase IIb trial, see: ClinicalTrials.gov – Identifier: NCT02383810. Large observational study in CID conducted by Helsinn Helsinn has conducted a large international, multi-center, prospective, cohort observational study involving more than a hundred sites in six European countries and in the US. The study objective is to gain a better understanding of the incidence rate and clinical impact of CID in colorectal and breast cancer patients. Together with the results from the Phase IIb trial, this study is important to guide the design of a potential pivotal Phase III program for elsiglutide. Elsiglutide – Supportive preclinical and clinical results Results from Phase IIa trials have shown that elsiglutide reduces the severity of CID in colorectal cancer patients and has a good safety profile. In preclinical models, elsiglutide has shown to stimulate growth of the intestinal mucosa and decrease the incidence and severity of CID. 2016 – Next steps and news flow outlook • H2: Top-line results from Phase IIb dose-finding trial H2: Results from observational study of CID incidence and severity in 1,700 patients • Chemotherapy induced diarrhea (CID) CID is a severe and potentially life-threatening condition affecting cancer patients undergoing chemotherapy primarily with regimens containing 5-fluorouracil (5-FU). The condition is associated with: • Dehydration and electrolyte imbalance • Renal insufficiency and immune dysfunction • Hospitalization and reduced quality of life • Sub-optimal cancer treatment 5-FU based chemotherapy regimens can result in up to 50-80% of cancer patients developing CID*. Today, no effective treatments are available for patients. * Source: Stein, Voigt and Jordan, Ther. Adv. Med. Oncol. 2010 Terms of the license agreement with Helsinn Helsinn has global development and commercial rights to elsiglutide for its use in Cancer Supportive Care. Zealand is eligible to milestone payments of up to EUR 140 million (of which EUR 16 million have been received) on elsiglutide and to royalties on global sales of the product. Zealand retains an option to obtain commercial rights to elsiglutide in the Nordic countries. Helsinn (www.helsinn.com)is a privately owned pharmaceutical group with an extensive portfolio of marketed products and a broad development pipeline. Collaboration on glucagon/GLP-1 dual agonists (diabetes/obesity) This collaboration covers the development and commercialization of novel dual acting glucagon/GLP-1 peptide agonists for the treatment of Type 2 diabetes and/or obesity. In February 2016, Boehringer Ingelheim selected a new lead development candidate from the portfolio of novel glucagon/ GLP-1 dual agonists designed by Zealand under a former reseach part of the collaboration. This new lead candidate has now been progressed into preclinical development by Boehringer Ingelheim. Collaboration on undisclosed target (obesity/diabetes) This collaboration was initiated in July 2014 based on a novel therapeutic peptide project from Zealand’s preclinical portfolio. Under the collaboration, Zealand and Boehringer Ingelheim have jointly designed and developed novel therapeutic peptides for the improved treatment of patients with cardio- metabolic diseases, specifically in the field of obesity and diabetes. The biological target has not been disclosed. With the selection of a first preclinical development candidate in October 2015, Boehringer Ingelheim became sole responsible for the conduct and financing of the preclinical and potentially clinical development as well as commercialization. The lead candidate is being progressed through preclinical development. Terms of the agreement on glucagon/GLP-1 dual agonists Boehringer Ingelheim retains global development and commercialization rights to all compounds covered by the agreement, while being solely responsible for all development, manufacturing and commercial activities including the necessary financing. Zealand is eligible to milestone payments of up to EUR 376 million (up to EUR 365 million are outstanding) related to the achievement of pre-specified development, regulatory and commercial milestones for the first product, and to tiered royalties ranging from high single to low double digit percentages on global sales of products developed and commercialized under the agreement. Zealand also retains co- commercialization rights in the Scandinavian countries. Terms of the agreement on an undisclosed target Boehringer Ingelheim retains global development and commercialization rights to all compounds invented and covered under the agreement, while being solely responsible for all development, manufacturing and commercial activities including the necessary financing. Zealand is eligible to milestone payments of up to EUR 295 million (up to EUR 287 million are outstanding) related to the achievement of pre-specified development, regulatory and commercial milestones for the first lead product. Zealand is also entitled to tiered high single digit percentages on global sales of products developed and commercialized under the agreement, while retaining co-commercialization rights in the Scandinavian countries. 2016 – Next steps and news flow outlook Advancement towards clinical Phase I • development 2016 – Next steps and news flow outlook Advancement towards clinical Phase I • development 22 23 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 02_ZP4207 Our business Our portfolio Corporate matters Financial statements Portfolio overview 2015 achievements 2016 achievements and news outlook Lixisenatide LixiLan Elsiglutide Boehringer Ingelheim collaborations ZP4207 ZP1848 ZP2929 Preclinical proprietary projects Proprietary pipeline Zealand has a growing pipeline of novel proprietary investigational medicines in development, focused on the field of specialty diseases: Two products are in clinical Phase II development, another in preparation for next clinical Phase, one in clinical Phase I and a number of projects are in preclinical development. ZP4207 (Stable Glucagon) – Hypoglycemia in diabetes – Rescue treatment – Component in an artificial pancreas device ZP1848 – Short bowel syndrome (SBS) ZP2929 – Diabetes and/or obesity Preclinical proprietary projects 25 26 27 28 30 31 Photo features Zealand employee: Anne from Clinical Development working on the Phase II trial of ZP4207 ZP4207 (Stable Glucagon) Hypoglycemia in diabetes Hypoglycemia is a challenge for more effective diabetes control The most feared side effect associated with effective insulin treatment in diabetes Substantial clinical evidence shows that the fear of hypoglycemia is a serious obstacle for better glucose control in diabetes, as patients often are inclined to take less insulin than prescribed to reduce the risk of hypoglycemia. Inoptimal control of diabetes is associated with serious long-term complications. Hypoglycemia – When blood glucose levels get too low Symptoms include anxiety, sweating, tremors, palpitations, Hypoglycemia is a condition where blood glucose (sugar) nausea and pallor. In severe cases, hypoglycemia can lead to levels drop to low levels. It is most frequently associated with loss of consciousness, seizures and coma, and in some cases diabetes and primarily in patients on insulin therapy only. death. Type-1 diabetes patients are the most likely to experience episodes of hypoglycemia since they inject themselves with • In the US alone, 2.9 million diabetes patients are on insulin insulin several times per day or use an insulin pump. Diabetes only therapy1. patients on insulin can experience episodes of low blood • All patients with Type-1 diabetes and approximately 20% of sugar levels with varying frequency and severity. Type-2 diabetes patients in the US are treated with insulin2. Sources: 1 www.diabetesselfmanagement.com/diabetes-resources/tools-tech/insulin-pumps; 2 Decision Resource, 2012. About glucagon Glucagon is a native peptide, which plays an important increase blood sugar levels. The therapeutic use of native role in the control of blood sugar levels. The effects glucagon in cases of hypoglycemia is challenging due to of glucagon are opposite to those of insulin – it helps the peptide’s low solubility and very poor stability in liquid to release stored glucose into the blood stream to solution. Two parallel clinical development programs ongoing for ZP4207 ZP4207 is a novel analogue of human glucagon, invented by Zealand. ZP4207 shows superior stability compared to native glucagon, which is unstable in liquid formulation. The features of ZP4207 support its potential use to improve management of hypoglycemia associated with insulin treatment in diabetes patients. Two product routes are pursued in parallel: 1) As a single-dose ready-to-use rescue treatment for severe hypoglycemia and 2) As an essential component in an insulin-glucagon dual hormone artificial pancreas system. ZP4207 – Rescue treatment ZP4207 – As component in an artificial pancreas A liquid glucagon, which is readily available for use can provide patients and relatives with a much more An artificial pancreas device could significantly improve For illustration only glucose control. An artificial pancreas in the form of a dual- SENSOR 108 convenient product, than what is currently available. In cases hormone (insulin + glucagon) of an acute, severe hypoglycemia event, this may lead to a pump has the potential to For illustration only faster treatment. significantly improve glucose control in diabetes. ZP4207 as the most advanced glucagon available for liquid formulation could provide basis for important advancements in the field. 24 25 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review Our business Our portfolio Corporate matters Financial statements Portfolio overview 2015 achievements 2016 achievements and news outlook Lixisenatide LixiLan Elsiglutide Boehringer Ingelheim collaborations ZP4207 ZP1848 ZP2929 Preclinical proprietary projects ZP4207 (single-dose) Rescue treatment ZP4207 (multiple-dose) Component in artificial pancreas Preclinical Phase I Phase II Preclinical Phase I In preparation for next clinical Phase ZP4207 – A single-dose ready-to-use rescue treatment for severe hypoglycemia ZP4207 for multiple-dose use has potential as an important component in an artificial pancreas Zealand is developing its novel, stable glucagon analogue, ZP4207, as a single-dose rescue treatment for acute, severe The properties of ZP4207 indicate its relevance for multiple-dose use as a more general treatment to better manage low blood hypoglycemia. ZP4207 is well suited for liquid formulation and has potential to be offered as a ready-to-use rescue medication to sugar levels, reducing the risk of hypoglycemia in patients with diabetes who are treated with insulin. This could translate into an provide diabetes patients and caregivers a more convenient and faster treatment. Advancements in 2015 and 2016 (until 16 March) overall more effective glucose control to avoid long-term complications. We are preparing a multiple-dose version of ZP4207 for advancement into clinical Phase II trials as a potential component in a dual-hormone artificial pancreas system. • Phase I completed with positive results showing that ZP4207 is safe and well tolerated in healthy volunteers and patients with Advancements in 2015 and 2016 (until 16 March) Type 1 diabetes • In February 2016, Zealand dosed the first patients in a Phase II trial. • • In 2015, Zealand initiated and succesfully completed a Phase Ib trial of its stable glucagon analogue for multiple-dose use A grant of USD 1.8 million from the Helmsley Charitable Trust received to fund initial clinical and pre-clinical activities. ZP4207 Phase I results: Good safety and tolerability effect to that of a marketed native glucagon product. Patients Phase Ib trial design and results – safe and well-tolerated Current treatments and the potential of an artificial pancreas with the ability to effectively raise glucose levels in the trial will be randomized to one of four groups and four ZP4207 has been evaluated in a Phase Ib trial. Results have Currently, patients with Type 1 diabetes manually measure Zealand has evaluated ZP4207 in a single-dose Phase I different single doses of ZP4207 administered subcutaneously demonstrated that ZP4207 is safe and well-tolerated with the levels of glucose in their blood by either using the traditional two-part trial comparing ZP4207 to a marketed glucagon. after an insulin-induced hypoglycemia event. In the lowest ability to provide a clinically relevant blood glucose response method of pricking one’s finger, or by using a continuous In the trial: 64 healthy volunteers and 20 patients with Type dose group, a parallel design is applied, and in dosing groups after repeat daily dosing in healthy volunteers. glucose monitor (CGM). Based on these measurements, they 1 diabetes were enrolled. They were treated with single 2-4, patients will be dosed with both ZP4207 and a marketed must adjust glucose levels by taking multiple injections of ascending doses of 0.01 mg to 2.0 mg. glucagon in a crossover design. The Phase Ib clinical trial with ZP4207 was a randomized, insulin daily or by continually infusing insulin with a pump via Results showed that ZP4207 is safe and well-tolerated across For further details on the Phase II trial, see: primarily the safety and tolerability of the compound tremendous amount of manual effort by the user. all doses evaluated. Furthermore, blood glucose levels were ClinicalTrials.gov – Identifier: NCT02660008. after multiple dosing. Secondary endpoints measured the increased as expected across a broad dose range. In addition, pharmacokinetics and pharmacodynamics (blood sugar levels) By automating detection of blood sugar levels and delivery ZP4207 showed the expected effects in raising blood glucose Existing glucagon rescue treatments of ZP4207 after multiple dosing. The trial was conducted at a of insulin in response to those levels, an artificial pancreas levels after insulin induced hypoglycemia in Type 1 diabetes – An underpenetrated market clinical diabetes center in Germany and is planned to enroll 24 has the potential to transform the lives of people with patients, similar to the effects of marketed glucagon. Current glucagon treatments are solely available in the form healthy volunteers, who will receive three different cohorts of type 1 diabetes. Zealand is part of the Artificial Pancreas Phase II trial ongoing of a lyophilized powder, which requires reconstitution with sterile water in a multi-step process before use. In the case of daily doses of ZP4207, each over five days. Project driven forward by JDRF (Juvenile Diabetes Research Foundation). double blind and placebo-controlled study to evaluate needles placed under the skin. This requires diligence and a In February 2016, Zealand dosed the first patients in a Phase II an acute, severe hypoglycemia event, this can lead to handling For further information on the Phase Ib trial, see: trial. errors, delayed administration of glucagon and results in Clinical Trials.gov Identifier: NCT02390141 The Phase II trial is a single-center, randomized, double-blind trial, which will enroll 56 patients with Type 1 diabetes. The Due to the complexity of the current glucagon rescue kits primary trial objective is to evaluate the pharmacokinetics and many patients do not have a rescue kit with them at all times sub-optimal treatment. pharmacodynamics of ZP4207 to be able to fully compare its even though this is recommended by the ADA. Professor, MD, Ph.D Kirsten Nørgaard, University Hospital of Hvidovre: A severe hypoglycemic event – An abnormal drop in blood sugar Hypoglycemia can happen suddently. Type 1 and Type 2 diabetes patients on insulin therapy are at risk of hypoglycemia because glucagon is not automatically released to raise blood glucose level. 23% of Type 1 diabetes patients on insulin therapy fear to die of low blood sugar while they are sleeping.1 1 Survey conducted by YouGov 2013 Rikke Mikkelsen who has Type 1 diabetes – from the book “Angsten er der jo altid” (The fear is always there): “It has always been difficult for me to control my blood sugar and it has for example resulted in two car accidents.” 2016 – Next steps and news flow outlook • H2: Results from ongoing clinical Phase II trial “Insulin pumps improve glucose control and reduce the risk of hypoglycemia. An important next step for better diabetes treatment would be the introduction of fully automated dual-hormone pumps providing both insulin and glucagon.” S E N S O R 1 0 8 For illustration only 2016 – Next steps and news flow outlook • H2: Advancement into the next clinical Phase to explore the use of ZP4207 in a dual-hormone artificial pancreas system. 26 27 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 02_ZP1848 Our business Our portfolio Corporate matters Financial statements Portfolio overview 2015 achievements 2016 achievements and news outlook Lixisenatide LixiLan Elsiglutide Boehringer Ingelheim collaborations ZP4207 ZP1848 ZP2929 Preclinical proprietary projects ZP1848 Preclinical Phase I Phase II ZP1848 Short bowel syndrome (SBS) SBS is a growing disease area of high unmet medical needs Short bowel syndrome (SBS) is a serious and complex chronic disease associated with severely reduced or complete loss of intestinal function. The main underlying causes of SBS are Crohn’s disease, ischemia, radiation damage and colon cancer, which often result in surgical removal of smaller or larger parts of the small intestine and colon. Reduced intestinal function can also occur as a result of bowel damage. Short bowel syndrome is a specialty disease area of increasing awareness. This is the result of improved treatment of the underlying causes combined with the increasing availability of nutritional support to help patients with SBS. ZP1848 – An attractive treatment for short bowel syndrome (SBS) ZP1848 is a novel, long-acting GLP-2 analogue with a unique stability profile in liquid formulation, which is invented and fully owned by Zealand. ZP1848 can be administered in a ready-to-use/pen devise which will give patients an easy-to-use treatment for SBS. Many patients are dependent on several hours of parental nutrition per day, and we are truly excited about the potential of releasing these patients of their burden. ZP1848 can potentially improve patients’ quality of life by reducing time on infusion and reduce number of days Healthy person Patient with short bowel syndrome on parenteral nutrition. Advancements in 2015 and 2016 (until 16 March) • • In September 2015, Zealand advanced ZP1848 into clinical Phase II development In February 2016, the first patients with SBS were dosed in a clinical Phase II Proof-of-Concept trial Short bowel syndrome – Treatment options Serious challenges for SBS patients: In preclinical studies, ZP1848 has shown efficacy on small In February 2016, Zealand dosed the first patients in the Phase II Depending on the severity of the disease the following treatment options for patients with SBS are available: • • • Increased food intake Parenteral (intravenous) nutrition from a catheter in up to 16 hours a day Teduglutide (Gattex®), a short-acting GLP-2 analogue* • • • • Lack of ability to retain a proper fluid and nutritional balance intestine growth and demonstrated the physico-chemical Proof-of-Concept trial with ZP1848. It is a randomized, double- Dependency on nutritional support, in the most severe cases properties of a long-acting, stable and soluble peptide blind, dose-finding trial to investigate the clinical efficacy and parenterally administered via central catheter Enormous fecal (often via stoma) and urinary output Severe co-morbidities in the form of malnutrition, liver and kidney damage and infections therapeutic with the potential for convenient administration in safety of the compound in the treatment of SBS. The trial is liquid formulation. conducted at the world-leading gastrointestinal center at the University Hospital of Copenhagen (Rigshospitalet), Denmark, Zealand has also investigated ZP1848 in a combined single and will enroll 18 patients with SBS. • Hospitalization and severely reduced quality of life (SAD) and multiple (MAD) ascending dose Phase I trial. Results ZP1848 has attractive therapeutic potential for SBS Clinical Phase II trial design and primary objective SBS prevalence is increasing due to higher awareness and improving care: EU = ~10,000-20,000 patients1 US = ~10,000-20,000 patients2 * Annual cost of USD 410,000 per patient in the US. Sources: 1 Jeppesen PB. J Parenter Enteral Nutr. 2014;38 (suppl 1): 8S-13S. 2 Byrne TA, et al. Ann Surg. 1995;222(3): 243-255 GLP-2 is an important intestinal hormone Patient with short bowels syndrome: GLP-2 (glucagon like peptide 2) is a naturally occurring peptide hormone produced primarily by the small intestine. It is secreted together with GLP-1 in response to food ingestion and acts by binding to the GLP-2 receptor, which is predominantly found in the gastrointestinal tract. GLP-2 plays a key role in intestinal growth and formation by promoting regeneration of the epithelial surface of the gut and thus is an obvious therapeutic target in the field of gastrointestinal diseases. “It has turned our life upside down. We can’t travel, or plan anything. We don’t go out, we invite in, on our terms. You can’t live a normal life.” from this trial demonstrated that ZP1848 is safe and well- The primary objective of the trial is to assess the effect of tolerated with a supportive effect on bowel function. ZP1848 on improving patients’ intestinal absorption capacity measured as reduction in fecal wet weight output. For further information on the Phase II trial, see: ClinicalTrials.gov Identifier: NCT02690025 Phase II trial design: Double-blind, Proof-of-Concept, dose-finding trial (18 patients) DOSE High CROSSOVER DOSE High Screening and recruitment Medium Wash out Medium Follow-up Timeline (days) -21 T1 0 Low Low T2 21 T3 49 T4 70 105 Thomas Breuer, Clinical Trial Manager at Zealand: “Our Phase II trial is uniquely designed to provide clinical support for ZP1848 as a potential new therapy and generate data to also better understand the disease and patients’ needs.” 2016 – Next steps and news flow outlook • In 2016, further development updates on the advancements of Phase II trial will be announced • Completion of end results from the Phase II trial are expected in 2017 28 29 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 02_ZP2929 02_Preclinical proprietary projects Our business Our portfolio Corporate matters Financial statements Portfolio overview 2015 achievements 2016 achievements and news outlook Lixisenatide LixiLan Elsiglutide Boehringer Ingelheim collaborations ZP4207 ZP1848 ZP2929 Preclinical proprietary projects ZP2929 Glucagon/GLP-1 dual agonist Preclinical proprietary projects Preclinical Phase I ZP2929 – A once-daily dual acting glucagon/GLP-1 peptide receptor agonist ZP2929 is a once-daily dual acting glucagon/GLP-1 peptide receptor agonist, invented by Zealand. ZP2929 is in Phase I clinical development as a potential new treatment for patients with Type 2 diabetes and/or obesity. Several late-stage preclinical projects Our proprietary pipeline comprises several therapeutic peptides in preclinical development. Of these, the most advanced primarily target diabetes and obesity, while earlier projects focus more on specialty diseases. The below listed preclinical projects are the most advanced and they have been presented at diabetes conferences in the US and Europe. ZP2929 acts with high potency on both the glucagon and the GLP-1 (glucagon-like peptide-1) receptors. In preclinical studies, ZP-I-98 is a novel GIP receptor agonist which in preclinical In preclinical studies ZP3022 has been shown to increase ZP2929 has shown the ability to improve glycemic control while causing a significant and sustained weight loss. studies has shown an enhanced effect on the treatment of ß cell mass and improve glycemic control in db/db mice and GIP receptor agonist (ZP-I-98) – Type 2 diabetes GLP-1-gastrin dual agonist (ZP3022) Preclinical results Obesity model (DIO mice) Diabetes model (db/db mice) be suitable for convenient once-weekly dosing. GLP-1/GLP-2 dual agonist Type 2 diabetes when combined with a GLP-1 receptor agonist Zucker Diabetic Fatty (ZDF) rats. ZP3022 produces a unique by inducing both robust glycemic control as well as a greater gene expression response compared to exendin-4 given alone loss of body weight than seen with standalone treatments. or in combination with gastrin17 and may have therapeutic ZP-1-98 has a long-acting profile, which indicates that it could potential in the prevention/delay of ß cell dysfunction. Body weight gain (g) 4 n = 9-10 3 2 1 0 -1 -2 -3 -4 HbA1c (%) Relative to day 0 1.50 n = 11 * * 1.25 1.00 0.75 0.50 0.25 0.00 -0.25 -0.50 0 7 14 21 Days of treatment 28 35 42 0 7 * p<0.001 14 21 Days of treatment 28 * 35 42 * p<0.001 GLP-1-GIP receptor dual agonist (ZP-DI-70) GLP-2 receptor agonists promote intestinal barrier function The potent and selective GLP-1-GIP receptor dual agonist is and can thereby help to reduce inflammation, associated a promising candidate for the treatment of Type 2 diabetes with obesity and diabetes. The hypothesis that by adding the with superior body weight lowering effect compared to effect of a GLP-2 receptor agonist to the established beneficial existing therapies. The in-vivo profile of the compound effects of a GLP-1 receptor agonist on glycemic control, may further suggests that ZP-DI-70 could be used as a therefore represent a novel strategy for treating diabetes. A convenient once-weekly treatment. The pharmacokinetic novel Zealand invented GLP-1/GLP-2 dual agonist, ZP-GG-72 and pharmacodynamic preclinical results demonstrate has been evaluated for potency on GLP-1 and GLP-2 receptors the possibility of prolonging the activity of GLP1-GIP dual with pharmacological effects investigated in DIO (Diet agonists, which builds on existing evidence from animal Induced Obese) mice versus teduglutide (a GLP-2 analogue) studies which suggests that the anti-obesity efficacy of GLP-1 and exendin-4 (a GLP-1 analogue). Results have shown that can be enhanced by co-administration with the incretin treatment with ZP-GG-72 cause an increase in intestinal ZP2929 Marketed GLP-1 agonist Placebo ZP2929 Marketed GLP-1 agonist Placebo hormone GIP. weight and improved glycemic control. ZP2929: Additional data for FDA review ZP2929 has been evaluated in the first part of a single-dose Phase I trial in healthy volunteers with no safety issues. Subsequently, the FDA has raised concerns regarding findings in a preclinical study and requested additional data to support ZP2929’s profile before accepting further clinical evaluation. We have been in an ongoing dialogue with the FDA to agree on what additional preclinical data to provide, and this data is currently being generated. 2016 – next steps and news flow outlook • H1: Submission of additional preclinical data to the FDA. Protecting our peptide innovations through Intellectual Property Protection of our proprietary peptide therapeutics, processes, technologies and know-how are essential. We own and license patents and focus intensively on building broad coverage and establishing a very solid patent portfolio that ensures maximum protection of our products and core technologies. The strategy also involves seeking broad protection for specific products and their formulation. The ultimate goal is to ensure that Zealand and its collaborative partners avoid or are aware of patent challenges that could obstruct any of their projects. Photo features Zealand employee: Kennet from Molecular Pharmacology working in one of Zealand’s laboratories. Photo features Zealand employees: Charlotte from Pharmacology and Nina from Medicinal Chemistry working together in Zealand’s laboratories. 30 31 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 03_Corporate matters Our business Our portfolio Corporate matters Financial statements Board of Directors Senior management Risk management and internal control Corporate Governance Corporate Social Responsibility Human Resources Shareholder information Financial review Corporate matters 32 The people at Zealand and how we organize and manage our business. Efficient management systems and a dynamic organization are important for developing our business and creating value for our patients and shareholders. However, the most essential element for our success is the skills and dedication of the people who work for and at Zealand. In 2015, we introduced new members to our Board of Directors as well as to our senior management team. We strive to ensure openness and transparency and to provide stakeholders with relevant insight into our business and the way it is managed. Board of Directors Senior management Risk management and internal control Corporate Governance Corporate Social Responsibility Human Resources Shareholder information Financial review Photo features Zealand employees: Gitte, Marion and Helle from the Finance Department talking with Hans-Christian from Legal on the preparations for the Annual General Meeting 2016. 34 36 38 41 42 43 44 48 33 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 03_Board of Directors Our business Our portfolio Corporate matters Financial statements Board of Directors Senior management Risk management and internal control Corporate Governance Corporate Social Responsibility Human Resources Shareholder information Financial review Board of Directors Martin Nicklasson Rosemary Crane Catherine Moukheibir Chairman of the Board Vice Chairman of the Board Board member Chairman of the Remuneration and Compensation Committee Qualifications Chairman of the Audit Committee Chairman of the Nomination Committee Qualifications Certified pharmacist BA in communication from the State University of New York, MBA from Kent State University Qualifications MBA from Yale University Alain Munoz Board member Peter Benson Board member Michael J. Owen Board member Qualifications Qualifications MD in Cardiology and Anesthesiology MA in Business Economics Qualifications PhD in Biochemistry Competencies Competencies Competencies Competencies Medical insight, substantial clinical Extensive managerial and strategic Broad operational, drug discovery and PhD in Pharmaceutical Technology Competencies Extensive experience with European and strategic experience in the field of experience and understanding within clinical expertise from the international Business insight and commercial biotech business models, financial pharmaceutical R&D. the biotech industry. biotech and pharmaceutical industries. Competencies understanding of the US strategy and reporting. Broad-based executive experience from pharmaceutical market. positions in European pharmaceutical Member of the executive board of: and biotech companies. Member of the Board of: Innate Pharma S.A. Teva Pharmaceuticals Industries Chairman of the Board of: Ltd., Oswego State University Member of the Board of: Orexo AB, Farma Holding AS and Business School (Advisory board), Creabilis Ltd. (chairman), Ablynx S.A., Basilea Pharmaceutica Ltd. The Foundation Board of Oswego Cerenis Therapeutics Holding S.A. State University (Advisory board), and Imperial College Business School Member of the Board of: The Transplant House Committee at (Advisory Board). Biocrine AB, PledPharma AB, Premier University of Pennsylvania (Advisory Research Group Ltd and the Swedish board). Heart-Lung Foundation. Christian Thorkildsen Helle Størum Jens Peter Stenvang Board member/employee elected Board member/employee elected Board member/employee elected Project Director Director of Business Development Senior Application Specialist Qualifications Cand.pharm. PMP 34 Qualifications M.Sc. Business Administration Diploma in Basic Pharmaceutical Medicine Qualifications Degree in biology Chairman of the Board of: Hybrigenics Managing partner in: Sunstone Capital Member of the Board of: Blink Biomedical SAS, Ossianix Inc., Avacta Group plc and ReNeuron Ltd. Member of the Board of: Valneva SE and Oxthera AB. Advisor to: Kurma Biofund Member of the Board of plc. Arcoma AB., Alligator Bioscience AB. and Opsona Therapeutics Ltd. Advisor to: Kymab Ltd., Qure Invest SARL and CRT Pioneer Fund LP. Zealand’s Board of Directors Name Year of birth Natio- nality First time election Position Zealand ownership per 1 March 2016 (no. of shares) Martin Nicklasson Rosemary Crane Catherine Moukheibir Alain Munoz Peter Benson Michael J Owen Christian Thorkildsen Helle Størum Jens Peter Stenvang 1955 1960 1959 1949 1955 1951 1968 1967 1954 Swedish American British French Swedish British Danish Danish Danish 2015 2015 2015 Chairman Vice Chairman Chairman of Audit Committee 2005* Board member 2007 2012 2006 2008 2014 Board member Board member Employee elected** Employee elected** Employee elected** - - - 5,250 - - 15,000 7,500 1,000 * Resigned in 2006 and was re-elected 2007 ** Employee elected board members are elected for a period of four years 35 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 03_Senior management Our business Our portfolio Corporate matters Financial statements Board of Directors Senior management Risk management and internal control Corporate Governance Corporate Social Responsibility Human Resources Shareholder information Financial review Senior management Adam Steensberg Senior Vice President, Chief Medical and Development Officer Hanne Leth Hillman Senior Vice President, Investor Relations & Communications Adam Steensberg (Danish, born 1974) joined Zealand in 2010 Hanne Leth Hillman (Danish, born 1965) joined Zealand as as Head of Clinical Development. Since 2011 he has been Vice President for IR and Communications in 2011 and was leading all development activities and was promoted to Senior promoted to Senior Vice President in March 2015. Vice President and Chief Medical and Development Officer in March 2015. Prior to joining Zealand, Hanne served in positions with responsibility for Investor Relations, financial market relations Prior to joining Zealand, Adam led clinical research teams as and corporate communications at two other publicly listed medical director at Novo Nordisk A/S, and worked as clinician biotech companies. She has more than ten years of broad- at the University hospital of Copenhagen. Adam has served as based experience from Life Science banking, having held medical and scientific advisor within endocrinology, cardiology, senior positions in equity research, asset management and gastroenterology, and rheumatology. He has significant corporate finance. experience with leading regulatory strategies and has been instrumental in implementing a patient-centric discovery and Hanne holds an MBA in International Finance from the Aarhus development process at Zealand. Adam has published more University School of Business and has studied International than 45 peer-reviewed scientific papers in international journals. Economics at the University of Montréal’s Business School and Adam holds a Doctor of medicine followed by a Doctor of Co-Chairman of the Board in the Danish Investor Relations at École Superieure de Commerce in Marseille, France. She is Medical Sciences (DMSc/ dr.med) from the University of Association (DIRF). Copenhagen, Denmark and an MBA from IMD, Switzerland. Ownership: 72,000 warrants / 11,500 shares Ownership: 62,000 warrants From left to right: Mats Blom, Hanne Leth Hillman, Britt Meelby Jensen, Adam Steensberg and Carlos de Sousa Zealand’s Executive management comprises of Britt Meelby Jensen and Mats Blom. Britt Meelby Jensen President and Chief Executive Officer (CEO) Mats Blom Senior Vice President and Chief Financial Officer (CFO) Carlos de Sousa Senior Vice President and Chief Business Officer (CBO) Andrew Parker (Joining Zealand 1 July 2016) Senior Vice President and Chief Science Officer (CSO) Britt Meelby Jensen (Danish, born 1973) joined Zealand as Mats Blom (Swedish, born 1965) joined Zealand as CFO in Carlos de Sousa (Portuguese, born 1958) joined Zealand in Andrew Parker (1965, British) comes from a position as General CEO in January 2015. Prior to joining Zealand, she headed the March 2010. Prior to joining Zealand, Mats served as CFO at December 2015 as Senior Vice President, and Chief Business Partner and Scientific Director for the Life Sciences Investment world leading Agilent-owned Danish diagnostics company, Swedish Orphan International a leading European orphan drug Officer. Dako, as the company’s CEO. company. Fund Eclosion2 & Cie SCPC in Switzerland. In parallel, he has held the position as CEO for Arisgen SA (an Eclosion2 portfolio For the last 25 years, Carlos held numerous senior company developing an oral peptide drug delivery technology). Britt has extensive experience from a range of managerial Mats has extensive managerial experience and has held CFO management positions in the international pharmaceutical positions within the life science industry, including 11 years of positions at Active Biotech and Anoto both publicly listed on and biotech industries, including roles at Nycomed/ Andrew has more than twenty years of experience from international experience with Novo Nordisk. At Novo Nordisk, Nasdaq Stockholm. Previously, Mats worked for several years Takeda, Pfizer, Novartis, BBB Therapeutics and Newron senior leadership and managerial positions in international she held various global leadership positions, including head as a management consultant at Gemini Consulting and at Pharmaceuticals. Throughout his career, Carlos has worked pharmaceutical, biotech and start-up companies, including of Diabetes Marketing Nordic, Global Diabetes Lifecycle Ernst & Young’s Transaction Services division. extensively with business development including in-licensing, several years with Shire Pharmaceuticals, Opsona Management, prelaunch commercial projects and more partnering, mergers and acquisition, corporate leadership, Therapeutics, and AstraZeneca to mention a few. recently Corporate Vice President for Global Marketing, Market Mats holds a BA in Business Administration and Economics strategy, marketing and medical affairs. Access and Commercial Excellence. from the University of Lund followed by an MBA from IESE He holds a Ph.D. from the National Institute for Medical University of Navarra, Barcelona. Carlos de Sousa is a Medical Doctor by training and holds an Research at Mill Hill, London, conducted post-doctoral Previously, Britt has worked for McKinsey and Company and executive MBA from the Stern School of Business, New York. research at Johns Hopkins Medical School, Baltimore, USA, within the EU Institutions in Brussels. She has a M.Sc. from Mats is Chairman of the Board for Medical Need AB. Copenhagen Business School, Denmark and an MBA from Solvay Business School in Brussels, Belgium. and also has an MBA from the University of Warwick Business School, UK. Andrew has published more than 25 scientific articles in renowned international journals. Ownership: 100,000 warrants Ownership: 137,038 warrants / 110,000 shares Ownership: - Ownership: - 36 37 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 03_Risk management Our business Our portfolio Corporate matters Financial statements Board of Directors Senior management Risk management and internal control Corporate Governance Corporate Social Responsibility Human Resources Shareholder information Financial review Risk management and internal control At Zealand, we constantly monitor and assess both the overall risk of doing business in the pharmaceutical biotech industry and the particular risks associated with our current activities and corporate profile. Below is a summary of Zealand’s key risk areas and how we Doing business in the pharmaceutical / biotech industry Zealand’s management is responsible for implementing Risks of specific/particular importance to Zealand are scientific attempt to address and mitigate such risks. Environmental and involves major financial risk. The development period for novel adequate systems and policies on risk management and and development risks, commercial risks, intellectual property ethical risks are covered in our Corporate Social Responsibility medicines typically stretches over many years; costs are high internal control and to assess the overall risks and specific risks, partner interest risks, financial risks and risks relating to reporting. and the probability of reaching the market is relatively low due risks associated with Zealand’s business and operations. financial reportings. Risk and mitigation plans are monitored to developmental and regulatory hurdles. Furthermore, Zealand’s management seeks to ensure that by Management and this continuous risk assessment is such risks are managed best possible in a responsible and an integral part of the quarterly reporting to the Board of efficient manner. Directors. Risk related to Risk description Risk mitigation Risk related to Risk description Risk mitigation Research and Research and development of new During the course of the research and Intellectual If Zealand or its partners were to face Zealand’s internal patent department work in close development pharmaceutical medicines is by its nature development process Zealand regularly assesses these property infringement claims or challenges by collaboration with external patent councils and partners a very risky activity. The probability of risks through a quarterly risk assessment of all the third parties, an adverse outcome could patent councils to minimize the risks of patent infringement discovering and developing an efficient company’s research and development projects conducted subject Zealand or its partners to significant claims as well as to prepare any patent defense should it be and safe new medicine with strong IP by Management in collaboration with the department protection is very low. heads and project managers and presented to the Board of Directors. Each project is described and progress is measured based on milestones. An individual risk analysis for each of the projects is conducted and a prioritizing of the project portfolio is performed. Commercial Commercial activities relates to market From early on in the research phase and all the way activities size, competition, development time and through development, commercial risks are assessed to costs, partner interest and pricing. make sure that final products are potentially commercially By having the first products on the market the risks relating to pricing, reimbursement and competition has increased. viable. Any major changes in the commercial potential for a drug candidate can lead to reduced value prospects and eventually discontinued development. When it comes to the launched partnered products, it is Zealand’s partners that are responsible for managing the commercial risks. However, Zealand stay in close contact with its partners to be able to assess these risks and if possible support our partners in managing them. liabilities to such third parties. This could necessary. lead Zealand or its partners to curtail or cease the development of some or all of their candidate drugs, or cause Zealand’s partners to seek legal or contractual remedies against Zealand including, in some cases, a reduction of royalties owing to Zealand. Zealand employees are educated and kept updated on policies regarding the proper and legal management of external intellectual property. Partner interest Entering into collaborations with partners In order to mitigate these risks, Zealand strives to foster a can bring significant benefits but also close and open dialogue with its partners, thereby building potentially involves risks. In addition, full strong partnerships that work effectively. control of the products is often given over to the collaborator. Zealand has also taken a decision to increase the focus on proprietary programs in order to decrease the dependency of partners in the development process and to capture more of the value of its projects. Financial Financial risks relate to cash and treasury The financial risks are managed in accordance with the management, liquidity forecasts and Finance Policy and regularly assessed by the company’s financing opportunities. management and reported to the audit committee and the Board of Directors. See also page 77; Note 21 – Financial and operational risk. 38 39 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 03_Corporate Governance Our business Our portfolio Corporate matters Financial statements Board of Directors Senior management Risk management and internal control Corporate Governance Corporate Social Responsibility Human Resources Shareholder information Financial review Corporate Governance Risk management and internal control related to financial reporting Zealand follows the Danish securities law and as a company listed on Nasdaq Copenhagen, we are guided by the Corporate Governance Recommendations designated by Nasdaq Copenhagen. Zealand has a number of internal control and risk The Board of Directors approves policies and procedures and Nasdaq Copenhagen has incorporated the Recommendations recommendations. The reason is that the Board of Directors’ management systems in place to ensure that its financial senior management has the daily responsibility. The Board by the Danish Committee of Corporate Governance, and is of the conviction that the external advisors will provide statements provide a true and fair view and is in accordance of Directors has established an audit committee with an Zealand intends to meet these recommendations in all professional and unbiased advice in both their capacities as with the International Financial Reporting Standards as advisory role relative to the Board of Directors. The Board of respects of material relevance to our company. As part of advisers to the executive management and to the remuneration adopted by the EU and Danish disclosure requirements for Directors has concluded that it is not relevant to establish an our Corporate Governance policy, we apply the “comply or committee. listed companies. On a yearly basis, an evaluation – with internal audit function in Zealand, considering Zealand’s legal explain” principle as recommended. special emphasis on risk management and internal control structure, size and the fact that operations are carried out at Recommendations section 4.1.4: The Committee related to the financial reporting – is done to ensure that risks one single site. are managed in a responsible and efficient manner. Zealand regularly reviews its rules, policies and practices recommends that if share-based remuneration is provided, related to the overall governance of our company with such programs should be established as roll-over programs, Description of management reporting the purpose of ensuring that we meet our obligations to i.e. the options are granted periodically and should have a Zealand has several policies and procedures in key areas of systems and internal control systems shareholders, employees, regulatory authorities and other maturity of at least three years from the date of allocation. financial reporting. The internal control and risk management Zealand has management reporting and internal control stakeholders, while serving to maximize long-term value. Some of the warrants granted to executive management can systems are designed to mitigate, detect and correct material systems in place that enables it to monitor performance, be exercised in a period from one to five years after grant. misstatements rather than eliminate the risks identified in the strategy, operations, business environment, organization, It is the view of management that Zealand complies with the financial reporting process. procedures, funding, risk and internal control. The company recommendations set forward with two exceptions, which is Zealand’s statutory report on Corporate Governance, which A review and prioritization of material accounting items is also to avoid misstatements in the financial reporting. Statements Act, section 107b, is available in full at the performed. Items in the financial statements that are based on Recommendations section 3.4.8: The remuneration committee company’s website: estimates or that are generated through complex processes A full description of the risk management and internal control will be using the same external advisors as the executive www.zealandpharma.com/investors/corporategovernance carry a relatively higher risk for error. Zealand performs system in relation to financial reporting is included in the management, even if this is against the Corporate Governance believes that the reporting and internal controls are adequate highlighted and explained below: has been prepared in accordance with the Danish Financial continual risk assessments to identify such items and to assess statutory report on Corporate Governance, cf. section 107b of the scope and related risk. the Danish Financial Statements Act, which can be found on the company’s website: www.zealandpharma.com/investors/corporategovernance 40 41 Photo features Zealand employee: Mette from Medicinal Chemistry working in Zealand’s laboratories. ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 03_CSR 03_HR Our business Our portfolio Corporate matters Financial statements Board of Directors Senior management Risk management and internal control Corporate Governance Corporate Social Responsibility Human Resources Shareholder information Financial review Corporate Social Responsibility (CSR) Human Resources At Zealand we are developing our company both through in-house development and through external collaborations while we are committed to be socially and environmentally responsible and comply with relevant laws, standards and guidelines. We have a lean organization that helps to keep us agile and efficient. We have an inclusive corporate culture where we care about our colleagues, our external stakeholders and not least the people we develop medicines for. Zealand’s policies with regards to CSR cover many areas of our business. Our CSR status report describe the status and activities within the following focus areas considered important to Zealand’s business: At Zealand, we have an engaging and dynamic work environment that is driven by our core values: 1. Employee well-being including health, safety and labor practices 2. Ethics and quality in relation to research and development activities We prioritize the well-being of our employees and it is Our quality policies comply with international our policy to actively ensure the physical and mental recognized standards and guidelines in all stages health and safety of all our employees. of research and development. Passionate Courageous Ambitious Curious Empathetic We are dedicated We speak our We challenge We approach every We care for our and determined to mind and dare to ourselves everyday new idea and colleagues and the excel our goals challenge opportunity in an open people we discover and receptive way medicine for 3. Environmental sustainability and climate 4. Business ethics We aim to reduce the impact on the environment and climate. We strive to conduct business according to the highest ethical standards. We strive to attract and retrain the most qualified employees Key employee ratios Employees at Zealand are our most important resource, and it is important for us to attract and retain skilled people with curiosity, engagement and determination who have the ability with integrity and rational to interact constructively with both colleagues and partners to deliver on our ambitious corporate goals. 2015 2014 Male Female Male Female 2014 2015 Zealand Pharma A/S 48% 52% 46% 54% Executive management 50% 50% 100% 0% Senior management 60% 40% 60% 40% Head of departments 59% 41% 73% 27% Diversity at Zealand whereas the senior management team constitutes 40% Zealand’s culture and policy is rooted in a respect of diversity women end of 2015 (2014: 40%). When looking at the gender We work with developing our employees’ competencies as knowledge and experience are the key to our success and is fully compliant with Danish regulation regarding equal split for the head of departments, 41% were female end of as a biotech company. We believe that an experienced Other employees 46% 54% 40% 60% opportunity employment. 2015 (2014: 27%). management team and a talented pool of employees’ with profound experience in the pharmaceutical and biotech Other employee figures Zealand is committed to hiring and retaining the most Furthermore, when looking at the members of the Board of industry and with diverse backgrounds is the best way to drive qualified employees without regard to race, creed, gender or Directors, we currently constitute 3 women and 6 men, of performance and innovative thinking. age, but strives for diversity throughout the organization with which 2 women and 4 men have been elected at the Annual respect to age, nationality and gender. Moreover, Zealand aims General Meeting (AGM) 2015 (33% female representation). The We have an even distribution of female and male employees to achieve a reasonable representation of both genders on target in 2014 was a minimum of 25% AGM elected female and approximately 19% of our employees are non-Danish. all management levels – from Board of Directors to head of board members within 2 years. This target has been achieved >80% of the employees work in R&D and 37 of our employees departments. We will encourage female candidates’ interest in by the election of Rosemary Crane and Catherine Moukheibir holds a PhD. taking on managerial tasks. at the AGM in 2015. Our split of female vs. male employees can be seen on page Read the full CSR report 43 in the table “key employee ratios”. Zealand has in accordance with the Danish Financial The executive management has an even split of female and report on CSR, which can be found on the company’s website: male representation in 2015 (2014: 0% female representation), www.zealandpharma.com/investors/csr Statements Act, section 99a and 99b, prepared a statutory Employees in R&D Employees in administration Average age of workforce % of non-Danish employees Employees holding a PhD PhD students Other trainees 2015 2014 91 21 46,1 19% 37 3 3 78 19 45.0 22% 34 3 1 FTE at the end of the year 110 103 42 43 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 03_Shareholder information Our business Our portfolio Corporate matters Financial statements Board of Directors Senior management Risk management and internal control Corporate Governance Corporate Social Responsibility Human Resources Shareholder information Financial review Shareholder information Zealand’s shares are publicly listed on Nasdaq Copenhagen Significant share price increase in 2015 Number of shares, end 2015 24,352.769 Listing Ticker symbol Nasdaq Copenhagen ZEAL.CO Index membership OMX Copenhagen Midcap Share capital and ownership structure Zealand’s share capital increased in 2015 due to exercise of representing an increase of 112%. In February, we crossed a employee warrants milestone, when the number of shareholders passed 10,000. As per 31 December 2015, Zealand’s share capital had a nominal value of DKK 24,352,769 divided into 24,352,769 On 1 March 2016, Zealand had 10,720 registered shareholders, shares with a nominal value of DKK 1 each. The share capital representing a total of 21,917,836 shares or 90% of the total has remained unchanged in 2016 (as per 15 March). outstanding share capital of the company. In 2015, the share capital was increased by a nominal value of Ownership distribution DKK 1,159,722 as a result of the exercise of employee warrants. Of Zealand’s share capital, 60% is held by Danish investors. All Zealand shares are ordinary shares, belonging to one class. LD, represent combined 34% and retail investors about 19%. Each share listed by name in Zealand’s shareholder registry Of registered non-Danish shareholders, 15% are US-based represents 1 vote at the Annual General Meeting and other and another 15% are European, with France and the UK Hereof, the two largest shareholders, Sunstone Capital and DKK 200 175 150 125 100 75 50 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 2015 2016 Zealand Pharma Euro STOXX Pharmaceuticals & Biotechnology Nasdaq Biotechnology OMX Copenhagen Mid Cap Share price performance and liquidity shareholder assemblies. representing the largest holdings. Zealand’s share price increased 83% in 2015 In parallel, we succeeded in progressing and expanding In 2015, Zealand’s share price increased 83%, closing at DKK our own proprietary pipeline, including the initiation of A doubling of the number of shareholders since Through 2015, there has been a slight shift in ownership from 151.50 on 30 December 2015 compared to a closing price of two new clinical development programs with ZP4207 for the start of 2015 Denmark to Europe. The number of registered Zealand shareholders has more DKK 83 at the end of 2014. With this increase, Zealand shares hypoglycaemia management and with ZP1848 for short bowel significantly outperformed all relevant benchmark indexes, syndrome. than doubled during 2015 and further increased into 2016. Of the 10% of non-registered shareholdings, about half is including the OMX Copenhagen Midcap index, the EuroSTOXX From 4,549 registered shareholders on 31 December 2014, estimated to be held by US institutional shareholders and Pharmaceutical and Biotechnology index as well as Nasdaq Our strong news flow has continued into 2016, where our the number has grown to 9,689 on 31 December 2015, another half by non-Danish European institutional shareholders. Biotechnology index. With this share price development share price, however, has been negatively affected by a Geographical distribution and ownership Ownership The strong outperformance of Zealand’s shares was driven investors in the US. During January and February, our shared and the increase in share capital, Zealand’s Market Value has strong deterioration in investor appetite due to growing almost doubled in 2015 from DKK 1.9 billion to DKK 3.7 billion. macroeconomic uncertainly – in particular as a spill-over effect from a very negative sentiment among biotech 10% 15% 15% Denmark North America EU Non-registered 60% 44 The following shareholders are registered in Zealand’s register mainly by a positive and high-frequent news flow through underperformed both Danish midcap and biotech indexes in of shareholders as being the owners of minimum 5% of the voting rights or minimum 5% of the share capital (1 share equals 1 vote): Sunstone BI Funds and Life Science Ventures Fund, Copenhagen, Denmark LD Pension (Lønmodtagernes Dyrtidsfond), Copenhagen, Denmark Legg Mason (Royce) Inc., Maryland, US 2015 with considerable progress for both our portfolio the US and Europe, but performance has picked up positively of out-licensed products and our pipeline of proprietary since mid-February. investigational medicines. In particular, have the important advancements for lixisenatide, which was filed for US Positive development in share liquidity regulatory review in July, and most notably for the fixed-ratio combination of lixisenatide and Lantus® (referred to as LixiLan) with positive results in two Phase III trial, under our license Liquidity in Zealand’s share has also increased significantly in 2015. Average daily turnover on Nasdaq Copenhagen in 2015 has almost 10-doubled to an average of close to DKK collaboration with Sanofi, impacted positively. This positive 14 million compared to DKK 1.4 million in 2014. In 2016, with development was accentuated in December 2015 with Sanofi’s the downturn in market sentiment and in particular a marked submission of LixiLan for regulatory approval in the US, increase in risk aversion, liquidity in our shares has fallen to redeeming a Priority Review Voucher in the filing to decrease approximately DKK 12 million in daily turnover. the regulatory review time from 10 to six months. 45 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review Our business Our portfolio Corporate matters Financial statements Board of Directors Senior management Risk management and internal control Corporate Governance Corporate Social Responsibility Human Resources Shareholder information Financial review Investor Relations at Zealand In line with the disclosure requirements for companies IR Newsletters listed on Nasdaq Copenhagen, Zealand issues company In addition, we issue online IR newsletters on a regular announcements to inform publicly of material news relating basis to update on recent news and the status of our to the company and its activities. This include issuance of activities. Under the investor section of Zealand’s website: Calendar 2016 Event calendar Date Event quarterly interim financial reports. In addition, Zealand issues zealandpharma.com/investors, we provide access to relevant 31 Mar Oddo Biotech / Medtech Investor Forum, Paris press releases to inform of business news of non-material information in the form of all our news releases, our IR character, and Investor News to inform of upcoming IR news newsletters. investor presentations, our IR event calendar, and events. and recent financial and annual reports. Zealand can also be Direct access to management Zealand’s objective is to have an open, accessible and Register on our website to get news proactive interaction with the investor community. Our main and IR newsletters directly followed on Twitter and LinkedIn. 4-6 Apr Bio-Europe Spring, Stockholm 12-13 Apr Needham & Company’s 15th Annual Healthcare Conference, New York 12-13 Apr 2016 Danish Biotech Conference, New York 10-11 May BioEquity Europe 2016, Copenhagen 6-9 Jun 2016 BIO Internaional Convention, San Francisco IR activities consist of direct access to the management team Zealand has shifted almost entirely to online 7-9 Jun Goldman Sachs 37th Annual Global Healthcare conference, Palos Verdes, CA via conference calls and webcasts, Capital Market Days, communication and provision of information in order conference attendance and 1-to-1 meetings in both the US to protect the environment and minimize administrative and the main cities in Europe. expenditures. Therefore, we kindly ask all our shareholders to register their email address via our homepage under zealandpharma.com/investors/shareholder-portal Zealand shares are covered by eight Scandinavian Hanne Leth Hillman, M.Sc., Senior Vice President and and International banks: Head of Investor Relations & Communications: Institution Analyst Bryan, Garnier & Co Danske Bank Goldman Sachs Handelsbanken Jefferies Nordea Eric le Berrigaud Thomas Bowers Eleanor Fung Peter Sehested Peter Welford Michael Novod Oddo Securities – Oddo & Cie Sébastien Malafosse Rx Securities Samir Devani Retaining strong and trustful relations is essential for our success. Therefore it remains a key focus area for us, across our business, to have an open, engaging and respectful dialogue with our shareholders and all other stakeholders as we progress our company. Contact IR We encourage our shareholders, Zealand Pharma A/S Hanne Leth Hillman investors, analysts and other Smedeland 36 Senior Vice President, Head of Investor Relations stakeholders to contact us with DK-2600 Glostrup and Communications questions or enquiries relating to Denmark Phone: +45 50 60 36 89 Zealand – and if there is an interest e-mail: investors@zealandpharma.com to meet. 46 7-10 Jun Jefferies 2016 Healthcare Conference, New York 7 Jun InvestorDagen, Aarhus 10-14 Jun American Diabetes Association (ADA) 76th Scientific Sessions, New Orleans 21 Jun Citi’s EU Healthcare Conference, London 9 Sep Goldman Sachs Third Annual Biotech Symposium, London 12-16 Sep 52nd EASD Annual Meeting, Munich 20 Sep InvestorDagen, Copenhagen 27-28 Oct 11th Annual Peptide Therapeutics Symposium, La Jolla, California An updated version of the event calendar is always available on zealandpharma.com/investors/events Financial calendar Date Event 19 Apr Annual General Meeting for 2016 18 May Interim report for Q1 2016 25 Aug Interim report for H1 2016 9 Nov Interim report for 9 months 2016 Photo features Zealand employee: Hanne from IR and Communications presenting Zealand at an international IR conference. 47 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 03_Financial review Our business Our portfolio Corporate matters Financial statements Board of Directors Senior management Risk management and internal control Corporate Governance Corporate Social Responsibility Human Resources Shareholder information Financial review Financial review Financial review for the period 1 January – 31 December 2015 Operating result Royalty bond Operating result for the period was a loss of DKK -81.3 million On 12 December 2014, Zealand raised USD 50 / DKK 298.7 Since there is no significant difference in the development Royalty expenses of the group and the parent company, except for the royalty Royalty expenses for the year amounted to DKK 22.3 million Net financial items (-73.5). million in a non-dilutive and non-recourse bond financing backed by 86.5% of the future annual royalties and other payments which the company is entitled to on lixisenatide bond, the financial review is based on the group’s consolidated (13.8) and relates to royalty paid to third parties on received Net financial items amounted to DKK -38.5 million (1.0). Net as stand-alone product under its license agreement with financial information for the year ended 31 December, 2015, milestone payments and royalty income relating to the license financial items consist of interest income and expenses, Sanofi. Repayment of the bond is based solely on lixisenatide with comparative figures for 2014 in brackets. agreement with Sanofi. amortized costs relating to the royalty bond financing, banking stand-alone royalty revenue with no recourse to future royalty fees and changes in exchange rates. Of the net financial items revenue on LixiLan. Regulatory milestone payments, to which Income statement Research and development expenses DKK 32.0 million is related to interest on the royalty bond and Zealand is entitled on lixisenatide and LixiLan, will as part of The net result for the year 2015 was a loss of DKK -114.0 Research and development expenses amounted to DKK 215.0 DKK 9.3 million is related to amortized costs of the royalty bond the financing be placed in a collateral reserve account, which million (-65.0). The decrease in net result is a consequence million (180.0). The increase is related to accelerated financing. mainly of increased financial costs relating to interest on the development activities amounting to DKK 27.1 million, mainly can never exceed the remaining principal on the loan, and which will be released to Zealand upon full repayment of the royalty bond, increased net operating expenses partly offset development costs for the ZP4207 Phase I trial conducted Result from ordinary activities before tax bond. The outstanding principal of the loan at year end 2015 by increased revenues. Revenue in Germany and preparation costs for the ZP1848 (short bowel syndrome) Phase II trial conducted at Rigshospitalet, Copenhagen. The research and development share of the Result from ordinary activities before tax came to a loss of DKK were DKK 341.5 million (306.1). The increase is a result of the -119.8 million (-72.5). strengthening of the US dollar versus the Danish crown. Revenue in 2015 amounted to DKK 187.7 million (153.8). personnel costs amounted to DKK 93.0 million (85.7), an Tax on ordinary activities The bond carries an annual interest rate of 9.375% and upon increase of DKK 7.3 million which is related to employee With a negative result from ordinary activities, no tax has been full repayment of the bond, all further future lixisenatide In October, Boehringer Ingelheim selected a novel peptide warrant programs granted in 2015. In 2014, only one program recorded for the period. However, according to Danish tax revenue will be fully retained by Zealand. therapeutic to be advanced into preclinical development was granted to one member of senior management. legislation Zealand is eligible to receive DKK 5.9 million (7.5) in under one of two ongoing collaboration agreements resulting in a milestone of DKK 22.4 / EUR 3 million. In December, Administrative expenses cash relating to the tax loss of 2015. Cash flow Cash flow from operating activities amounted to DKK Sanofi submitted an NDA for LixiLan leading to a milestone Administrative expenses amounted to DKK 44.6 million (39.8). No deferred tax asset has been recognized in the statement of -225.4 million (-42.2), and cash flow from investing activities payment of DKK 136.6 / USD 20 million. Total milestones in The increase is mainly due to employee warrant programs financial position due to uncertainty as to when and whether amounted to DKK -4.0 million (19.8) of which DKK 0.0 2015 amounted to DKK 159.1 million (133.5) corresponding to granted in 2015. tax losses can be utilized. a 19% increase versus previous year. million (24.4) relates to disposal of securities. Cash flow from financing activities amounted to DKK 96.4 million (272.2) and Royalty revenue from sales of Lyxumia® continued to grow and amounted to DKK 28.6 million (20.3) corresponding to a 41% Other operating income Net result and comprehensive income relates to capital increase due to exercise of warrants and Other operating income amounted to DKK 12.8 million (6.3). Net result and comprehensive income both amounted to DKK the 2014 amount related to net proceeds from the royalty Other operating income mainly consists of funding from -114.0 million (-65.0) in each case due to the factors described bond financing. The total cash flow for the full year of 2015 increase versus previous year. Boehringer Ingelheim covering the development costs in one above. amounted to DKK -133.0 million (249.8). of the research collaborations. Allocation of result Cash and cash equivalents No dividend has been proposed and the year’s net loss of DKK As of 31 December 2015, cash and cash equivalents amounted Lyxumia® royalty revenue Net operating expenses -114.0 million (-65.0) has been transferred to retained earnings. to DKK 440.2 million (538.3). DKKm 30 25 20 15 10 5 0 DKKm 250 200 150 100 50 0 2013 2014 2015 2011 2012 2013 2014 2015 Net R&D expenses Administrative expenses Equity Equity amounts to DKK 252.2 million (252.8) at the end of the Cash and securities year, corresponding to an equity ratio of 38% (42). The decrease in equity is a result of the net loss for the year of DKK -114.0 million (-65.0) compensated by new equity relating to the exercise of warrants by employees during the year of DKK 96.4 million (0.0) and warrant compensation expenses of DKK 16.9 million (1.7). Capital expenditure Investments in plant and equipment for the period amounted to DKK 4.0 million (4.5) mainly related to new laboratory equipment. DKKm 600 500 400 300 200 100 0 2011 2012 2013 2014 2015 48 49 ZEALAND PHARMA A/S ANNUAL REPORT 2015Management reviewZEALAND PHARMA A/S ANNUAL REPORT 2015Management review 04_Financial statements 04_Statement of comprehensive income 04_Income statements Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statement of the Board of Directors and executive management Independent auditors report 51 51 52 53 54 55 78 79 Financial statements Income statement DKK ’000 Revenue Royalty expenses Gross profit Research and development expenses Administrative expenses Other operating income Operating result Financial income Financial expenses Result from ordinary activities before tax Tax on ordinary activities Net result for the year Earnings per share Basic Diluted Note Group 2015 Group 2014 Parent 2015 Parent 2014 2 3 4, 21 4, 21 5 6 7 8 9 9 187,677 -22,267 153,773 -13,776 22,491 0 141,585 -12,129 165,410 139,997 22,491 129,456 -214,959 -180,036 -214,167 -180,036 -44,606 -39,826 12,828 -81,327 6,328 -73,537 -43,938 12,828 -39,826 6,328 -222,786 -84,078 3,889 -42,394 3,064 -2,017 1,444 -306 3,064 -64 -119,832 -72,490 -221,648 -81,078 5,875 7,500 5,875 7,500 -113,957 -64,990 -215,773 -73,578 -4.82 -4.82 -2.87 -2.87 -9.13 -9.13 -3.25 -3.25 Statement of comprehensive income DKK ’000 Group 2015 Group 2014 Parent 2015 Parent 2014 Net result for the year Other comprehensive income -113,957 -64,990 -215,773 -73,578 0 0 0 0 Comprehensive income for the year -113,957 -64,990 -215,773 -73,578 50 51 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements 04_Statement of financial position 04_Statement of changes in equity Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Financial statements Financial statements Statement of financial position at 31 December Statement of changes in equity DKK ’000 Note Group 2015 Group 2014 Parent 2015 Parent 2014 DKK ’000 Assets Plant and machinery Other fixtures and fittings, tools and equipment Leasehold improvements Investment in subsidiaries Deposits Non current assets total Trade receivables Receivable from subsidiaries Prepaid expenses Tax receivable Other receivables Cash restricted Cash and cash equivalents Current assets total Total assets Liabilities and equity Share capital Retained earnings Equity total Royalty bond Non-current liabilities Trade payables Royalty bond Prepayments from customers Other liabilities Current liabilities Total liabilities 10 10 10 11 12 13 8 14 15 15 16 17 17 18 19 14,672 1,153 628 0 2,666 19,119 15,994 1,573 1,060 0 2,693 21,320 141,120 25,031 0 2,262 5,875 0 2,209 6,250 26,113 3,6733,673 21,403 2121,424 418,796 615,569 516,849 575,436 14,672 1,153 628 380 2,666 19,499 313 3,549 2,242 5,875 10,627 0 15,994 1,573 1,060 380 2,693 21,700 12,843 11,727 2,209 6,250 22,694 0 Group Equity at 1 January 2014 Warrants compensation expenses Comprehensive income for the year Equity at 31 December 2014 Equity at 1 January 2015 Warrants compensation expenses Capital increase Comprehensive income for the year Equity at 31 December 2015 140,783 163,389 255,335 291,058 DKK ’000 Parent Equity at 1 January 2014 Warrants compensation expenses Comprehensive income for the year Equity at 31 December 2014 Equity at 1 January 2015 Warrants compensation expenses Capital increase Comprehensive income for the year Equity at 31 December 2015 634,688 596,756 182,888 312,758 24,353 227,878 252,231 23,193 229,635 252,828 24,353 117,471 141,824 23,193 221,044 244,237 312,951 312,951 267,170 267,170 0 0 0 0 21,676 0 2,091 45,739 69,506 18,487 5,000 14,383 38,888 76,758 21,580 18,487 0 2,063 17,421 41,064 0 14,383 35,651 68,521 382,457 343,928 41,064 68,521 Total equity and liabilities 634,688 596,756 182,888 312,758 Share capital Retained earnings Total 23,193 292,948 316,141 0 0 1,677 1,677 -64,990 -64,990 23,193 229,635 252,828 23,193 229,635 252,828 0 1,160 16,947 95,253 16,947 96,413 0 -113,957 -113,957 24,353 227,878 252,231 Share capital Retained earnings Total 23,193 292,948 316,141 0 0 1,674 1,674 -73,578 -73,578 23,193 221,044 244,237 23,193 221,044 244,237 0 1,160 16,947 95,253 16,947 96,413 0 -215,773 -215,773 24,353 117,471 141,824 Significant accounting policies, and significant Financial and operational risks accounting estimates and assesments Lease commitments Information on staff and remuneration 1 20 21 Related parties Fees to auditors appointed at the Annual General Meeting 26 Significant events after the balance sheet date 27 22 23 52 53 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements 04_Statement of cash flows 04_Notes Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Financial statements Notes Statement of cash flows DKK ’000 Note Group 2015 Group 2014 Parent 2015 Parent 2014 Net result for the year Adjustments Change in working capital Cash flow from operating activities before financing items Financial income received Financial expenses paid Tax received 24 25 8 -113,957 -64,990 -215,773 -73,578 43,553 -138,871 6,559 15,521 20,714 -20,827 4,606 13,722 -209,275 -42,910 -215,886 -55,250 1,269 -23,657 6,250 1,494 -2,017 1,250 340 1,004 6,250 1,494 -64 1,250 Cash flow from operating activities -225,413 -42,183 -208,292 -52,570 Change in deposit Net finansing of foreign subsidiaries Purchase of property, plant and equipment Disposal of securities Cash flow from investing activities Proceeds from issuance of royalty bonds Royalty bond issuance costs Capital increase Cash flow from financing activities Decrease / increase in cash, cash restricted and cash equivalents Cash and cash equivalents at 1 January Exchange rate adjustments 27 0 -123 0 -4,040 -4,497 0 242424,383 -4,013 19,763 0 0 96,413 96,413 298,675 -26,505 0 272,170 27 28 -4,040 0 -3,985 0 0 96,413 96,413 -123 -380 -4,497 24,383 19,383 0 0 0 0 -133,013 538,273 34,939 249,750 286,178 2,345 -115,864 255,335 1,312 -33,187 286,178 2,344 Note 1 – Significant accounting policies and significant accounting estimates and assesments Significant accounting policies recognized depending on whether certain criteria are met. Before implementation of the standard, Zealand will assess The financial statements of Zealand Pharma A/S (Zealand) whether IFRS 15 Revenue from Contracts with Customers has for 2015 has been prepared in accordance with International an impact on the current and new significant contracts. The Financial Reporting Standards (IFRS) as adopted by the EU new standard is not expected to have any material impact on and Danish disclosure requirements for listed companies. The the future financial statements. Board of Directors considered and approved the 2015 Annual Report of Zealand on 16 March 2016. The Annual Report will IFRS 16 Leases was issued in January 2016 and is effective be submitted to the shareholders of Zealand for approval at for annual periods beginning on or after 1 January 2019. the Annual General Meeting on 19 April 2016. The standard has not yet been endorsed by the EU. In the Functional and presentation currency (except for short term leases and leases of asset of low value) The consolidated financial statements are presented in Danish to be reognized as a right-of-use asset and lease liability, kroner (DKK ´000) which is also the functional currency of the respectively, measured at the present value of future lease financial statements of the lessees IFRS 16 requires all leases parent company. payments. The right-of-use asset is subsequently depreciated in a similar way to other depreciable assets over the lease term During 2014 four subsidiaries were established by Zealand in and interest shall be calculated on the lease liability similar relation to the royalty bond financing that was concluded in to finance leases under IAS 17. Consequently, the change will December 2014. also impact the presentation in the income statement and the statement of cash flows. As the standard is newly issued, The notes comprise both the parent company and the group Zealand has not yet assessed the impact on the future financial unless specifically stated otherwise. statements, but it is not expected to have any material impact on the future financial statements. Future IFRS changes At the date of the approval of the consolidated financial The consolidated financial statements statements, a number of new and amended standards and The consolidated financial statements and the financial interpretations have not yet entered into force or have not yet statements comprise the parent company Zealand Pharma been adopted by the EU. Therefore, they are not incorporated A/S and the group enterprises, for which Zealand is entitled to Cash, cash restricted and cash equivalents at 31 December 440,199 538,273 140,783 255,335 in the financial statements. determine finance and operational policies and which normally applies on ownership interests of more than half of the voting Cash could be specified as: Cash and cash equivalents according to financial statements 418,796 516,849 140,783 255,335 IASB has issued IFRS 9 Financial Instruments, effective for rights. The consolidated financial statements are prepared annual periods beginning on or after 1 January 2018. IFRS 9 based on uniform accounting policies in all group entities. Cash restricted 21,403 21,424 0 0 Financial Instruments is part of the IASB’s project to replace Consolidation of group entities is performed after elimination Cash, cash restricted and cash equivalents at 31 December 440,199 538,273 140,783 255,335 IAS 39 Financial Instruments: Recognition and Measurement, of all intra-group transactions, balances, income and expenses. and the new standard will change the classification, presentation and measurement of financial instruments and Foreign currency translation hedging requirements. Zealand is assessing the impact of the Transactions denominated in foreign currencies are translated standard, but it is not expected to have any material impact on at the exchange rates at the dates of transaction. the future financial statements. IFRS 15 Revenue from Contracts with Customers was issued transaction and the rate on the payment day are recognized in in May 2014 and is effective for annual periods beginning the income statement as financial income or financial expenses. Exchange differences arising between the rate on the date of on or after 1 January 2018. The standard has not yet been endorsed by the EU. Entities will apply a five-step model to Receivables, payables and other monetary items denominated determine when, how and at what amount revenue is to be in foreign currencies that have not been settled at the balance 54 55 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Notes Notes sheet date are translated by applying the exchange rates at the items, changes in the net working capital, financial items paid have been transferred to the buyer. Collaboration agreements currently not deemed to meet the criteria for recognition as balance sheet date. Differences arising between the rate at and income taxes paid. balance sheet date and the rate at the date of the arising of the are reviewed carefully to understand the nature of risks and management is not able to provide any convincing positive rewards of the arrangement. All the company’s revenue- evidence that deferred tax assets should be recognized. receivable or payable are recognized in the income statement Cash flow from investment activities generating transactions, including those with Sanofi S.A, under financial income and expenses. Cash flow from investment activities includes payments Helsinn Group and Boehringer Ingelheim International GmbH Research and development Fixed assets purchased in foreign currencies are measured at investments. the rate of the date of transaction. Employee incentive programs arising from development projects should be recognized in the statement of financial position. The criteria that must be associated with the purchase and sale of fixed assets and have been subject to such evaluation by management. According to the IAS 38, “Intangible Assets,” intangible assets Consolidated financial statements Cash flow from financing activities In accordance with IFRS 2 “Share-based Payment,” the fair met for capitalization are that: Cash flow from financing activities comprises new equity, loan value of the warrants, classified as equity settled, are measured financing and repayment of interest bearing debt. at grant date and is recognized as an expense in the income • The development project is clearly defined and identifiable statement over the vesting period and the period of delivery and the attributable costs can be measured reliably during Income statement Cash and cash equivalents of work. Subsequently, the fair value is not re-measured. The the development period; The income statement is classified by function. Cash and cash equivalents comprise cash and bank balances. fair value of each warrant granted during the year is calculated Segment reporting The group is managed by a management team reporting to the Chief Executive Officer. No separate business areas or separate business units have been identified in connection with product candidates or geographical markets. As Significant accounting estimates and assesments using the Black Scholes pricing model. This pricing model • The technological feasibility, adequate resources to requires the input of subjective assumptions such as: complete and a market for the product or an internal use of The expected stock price volatility, which is based upon the historical volatility of Zealand’s stock price; • Management has the intent to produce and market the the product can be documented; and product or to use it internally. a consequence of this, no segment reporting is made In the statement of the carrying amounts of certain assets The risk-free interest rate, which is determined as the interest concerning business areas or geographical areas. and liabilities estimates are required on how future events will rate on Danish government bonds (bullet issues) with a Such an intangible asset should be recognized if sufficient Statement of financial position the balance sheet date. affect the carrying amounts of these assets and liabilities at maturity of five years; certainty can be documented that the future income from the development project will exceed the aggregate cost of The expected life of warrants, which is based on vesting terms, production, development and the sale and administration of Financial assets The used estimates are based on assumptions assessed expected rate of exercise and life terms in current warrant the product. A development project involves a single product Financial assets include receivables, securities and cash. reasonable by management, however, estimates are Financial assets can be divided into the following categories: inherently uncertain and unpredictable. The assumptions loans and receivables, financial assets at fair value through can be incomplete or inaccurate and unexpected events or program. Deferred tax candidate undergoing a high number of tests to illustrate its safety profile and the effect on human beings prior to obtaining the necessary final approval of the product from the income statement, available-for-sale financial assets and circumstances might occur. Furthermore, the enterprise is Zealand recognizes deferred tax assets, including the tax base the appropriate authorities. The future economic benefits held-to maturity investments. Financial assets are assigned to subject to risks and uncertainties that might result in deviations of tax loss carry-forwards, if management assesses that these associated with the individual development projects are the different categories by management on initial recognition, in actual results compared to estimates. tax assets can be offset against positive taxable income within dependent on obtaining such approval. Considering the depending on the purpose for which the investments were acquired. All financial assets are recognized on their Revenue a foreseeable future. significant risk and duration of the development period related to the development of biological products, management has settlement date. All financial assets that are not classified Evaluating the criteria for revenue recognition with respect to This judgment is made on an ongoing basis and is based on concluded that the future economic benefits associated with as fair value through the income statement are initially the company’s research and development and collaboration budgets and business plans for the coming years, including the individual projects cannot be estimated with sufficient recognized at fair value, plus transaction costs. agreements requires management’s judgment to ensure planned commercial initiatives. The creation and development certainty until the project has been finalized and the necessary Statement of cash flows that all criteria have been fulfilled prior to recognizing any amount of revenue. In particular, such judgments are made of therapeutic products within the biotechnology and regulatory final approval of the product has been obtained. pharmaceutical industry is subject to considerable risks and Accordingly, Zealand has not recognized such assets at this The statement of cash flows shows the cash flow for the year with respect to determination of the nature of transactions, uncertainties. Zealand has so far reported significant losses, time and therefore all research and development costs are together with the cash and cash equivalents at the beginning whether simultaneous transactions shall be considered as and as a consequence, has unused tax losses. Management recognized in the income statement when incurred. The total and end of the year. Cash flow from operating activities one or more revenue-generating transactions, allocation of the contractual price (upfront and milestone payments subscribed in connection with a collaboration agreement) Cash flow from operating activities is presented indirectly and to several elements included in an agreement, and the is calculated as the net result adjusted for non-cash operating determination of whether the significant risks and rewards has concluded, that deferred tax assets should not be research and development costs amounted to DKK 215.0 recognized as of 31 December 2015. The tax assets are million in 2015 compared to DKK 180.0 million in 2014. 56 57 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Notes Note 2 – Revenue DKK ’000 Sanofi S.A. Boehringer Ingelheim Int. GmbH Helsinn Group Total milestone payments Sanofi S.A. Total royalty income Group 2015 Group 2014 Parent 2015 Parent 2014 136,600 22,379 112 81,191 37,279 15,015 0 22,379 112 81,191 37,279 15,015 159,091 133,485 22,491 133,485 28,586 28,586 20,288 20,288 0 0 8,100 8,100 Total revenue 187,677 153,773 22,491 141,585 All Zealand revenue can be attributed to other countries than Denmark. § ACCOUNTING POLICIES Revenue comprises royalties and milestone payments. These The income from agreements with multiple components revenues are recognized in accordance with the agreements and where the individual components cannot be separated and is recognized when it is probable that future economic is recognized over the period of the agreement. In addition, benefits will flow to the group and these economic benefits recognition requires that all material risks and benefits related can be measured reliably. to the ownership of the goods and services included in the Royalty income from licenses is based on third-party sales of licensed products and is recognized in accordance with If all risks and benefits have not been transferred, the revenue contract terms when third-party results are available and are is recognized as deferred income until all components in the deemed to be reliable. transaction have been completed. transaction are transferred to the purchaser. Note 3 – Royalty expenses In 2015, the royalty expenses are related to royalty from sales of Lyxumia® and milestone payments received from Sanofi S.A. In 2014, the royalty expenses are related to royalty from sales of Lyxumia® received from Sanofi S.A. and milestone payments received from Sanofi S.A. and Helsinn Group. § ACCOUNTING POLICIES Royalty expenses comprise royalty paid to third parties on certain milestone payments and royalty income from collaboration agreements. Notes Note 4 – Research, development and administrative expenses § ACCOUNTING POLICIES Research and development expenses that the technology or the product can be commercialized Research expenses comprise salaries, contributions to pension and that the future income from the product can cover, not schemes and other expenses, including patent expenses, only the production, selling and administrative expenses, as well as depreciation and amortization attributable to the but also development expenses. Currently, Zealand has not group’s research activities. Research expenses are recognized capitalized any development expenses. in the income statement as incurred. Development expenses comprise salaries, contributions to development based on the salaries to employees in research Overhead expenses have been allocated to research and pension schemes and other expenses, including depreciation and amortization, attributable to the group’s development and development. activities. Administrative expenses Capitalization assumes that the development of the personnel, expenses related to company premises, operating technology or the product in the group’s opinion has been leases, investor relation, etc. Overhead expenses have been completed, that all necessary public registrations and allocated to administration based on the salaires to employees Administrative expenses include expenses for administrative marketing approvals have been received, and that expenses in administration. can be reliably measured. Furthermore, it has to be established Note 5 – Other operating income DKK ’000 Research funding Government grants Total other operating income Group 2015 Group 2014 Parent 2015 Parent 2014 11,576 1,252 12,828 5,812 516 6,328 11,576 1,252 12,828 5,812 516 6,328 In 2015 and 2014, Zealand has, in addition to government grants, also received research funding from Boehringer Ingelheim International GmbH. § ACCOUNTING POLICIES Other operating income comprises research funding from Government grants are recognized when a final and firm business partners and government grants. Research funding right to the grant has been obtained. Government grants is recognized in the period where the research activities have are included in other operating income as the grants are been performed and government grants are recognized considered to be cost refunds. Grants related to investments periodically when the work supported by the grant has been are set off against the purchase price. reported. 58 59 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Notes Notes Note 6 – Financial income Note 8 – Tax expenses DKK ’000 Group 2015 Group 2014 Parent 2015 Parent 2014 DKK ’000 Group 2015 Group 2014 Parent 2015 Parent 2014 Interest income Exchange rate adjustments Total financial income § ACCOUNTING POLICIES 139 3,750 3,889 719 2,345 3,064 132 1,312 1,444 720 2,344 3,064 Financial income are recognized in the income statement with Financial income include interest receivable, as well as realized the amounts related to the financial year. and unrealized exchange rate adjustments Note 7 – Financial expenses DKK ’000 Group 2015 Group 2014 Parent 2015 Parent 2014 Interest expenses, royalty bond Amortization financing costs Other interest expenses Total financial expenses § ACCOUNTING POLICIES 32,372 9,689 333 42,394 0 0 2,017 22,017 0 0 306 306 0 0 64 64 Financial expenses are recognized in the income statement Further, expenses related to the royalty financing are with the amounts related to the financial year. Financial amortized over the expected duration of the bond and expenses include interest payable, as well as realized and recognized as financial expenses. unrealized exchange rate adjustments. Net result for the year before tax -119,832 -72,490 -221,648 -81,078 Tax rate Expected tax expenses Adjustment for non-deductible expenses Adjustment for exercised warrant programs Tax effect from subsidiaries Reduction of corporate tax rate from 25% to 22% Prior year adjustments Tax effect on warrant programs Tax effect on expired warrant programs Change in tax assets (not recognized) Total tax expenses Breakdown of unrecognized deferred tax assets: 23.5% -28,161 54 -8,357 0 1,557 0 -318 6,500 22,849 -5,875 24.5% -17,760 69 0 0 1,180 -1,375 0 0 10,386 -7,500 23.5% -52,087 54 -8,357 23,621 1,557 0 0 6,500 22,837 -5,875 24.5% -19,864 69 000000 2,583 1,131 -1,375 0 0 9,956 -7,500 Tax losses carried forward (available indefinitely) 742,771 591,326 742,716 591,271 Research and development expenses 31,054 92,885 31,054 92,885 Rights Non-current assets Other 43,019 57,543 43,019 51,329 43,019 57,543 43,019 51,329 58,890 50,856 58,890 50,856 Total temporary differences 933,277 829,415 933,222 829,360 Tax rate 22% 22% 22% 22% Calculated potential deferred tax asset at local tax rate 205,321 182,471 205,309 182,042 Write-down of deferred tax asset Recognized deferred tax asset -205,321 -182,471 -205,309 -182,042 0 0 0 0 As a consequence of tax losses from previous years, there are no deferred taxes. Deferred tax reductions (tax assets) has not been recognized in the statement of financial position due to uncertainty as to when and whether this can be utilized. The deferred tax for the parent company include the tax positions of ZP Holding SPV K/S as well as ZP SPV 1 K/S, as these entities are transparent from a tax point of view. Hence the activity of these entities is subject to taxation in the parent company. According to Danish tax legislation Zealand is eligible to receive DKK 5.9 million (6.3) in cash relating to the tax loss of 2015. § ACCOUNTING POLICIES Tax on results for the year which comprises current tax and changes in deferred tax is recognized in the income statement with the portion of taxes related to the taxable income for the year whereas the portion attributable to entries on equity is recognized directly in equity. Current tax liabilities and current tax receivables are recognized in the statement of financial position as tax calculated on the taxable income for the year adjusted for tax on previous years’ taxable income and taxes paid on account/ prepaid. Deferred tax is measured according to statement of financial position liability method in respect of temporary differences between the carrying amount and the tax base of assets and liabilities. Deferred tax assets including the tax value of tax losses carry forward, are measured at the expected realizable value, either by elimination in tax on future earnings or by set-off against deferred tax liabilities within the same legal tax entity and jurisdiction. Deferred tax is measured on the basis of the tax rules and tax rates in force at the balance sheet date when the deferred tax is expected to crystallize as current tax. Any changes in deferred tax as a consequence of amendments to tax rates are recognized in the income statement. 60 61 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Notes Notes Note 9 – Basic and diluted earnings per share DKK ’000 Group 2015 Group 2014 Parent 2015 Parent 2014 DKK ’000 Plant and machinery Other fixtures and fittings Leasehold Fixed assets under improve- ments construction Net result for the year Adjusted net profit/loss accruing to the company’s ordinary shares -113,957 -64,990 -215,773 -73,578 Cost at 1 January 2015 -113,957 -64,990 -215,773 -73,578 Average number of ordinary shares Average number of treasury shares 24,203,657 23,193,047 24,203,657 23,193,047 -564,223 -564,223 -564,223 -564,223 Adjusted average number of ordinary shares outstanding 23,639,434 22,628,824 23,639,434 22,628,824 Basic earnings per share -4.82 -2.87 -9.13 -3.25 Reversal of impairment and depreciation on disposed assets Depreciation at 31 December 2015 Additions Transfers Cost at 31 December 2015 Depreciation at 1 January 2015 Depreciation for the year 62,771 3,735 0 8,663 10,598 131 0 174 0 66,506 8,794 10,772 46,777 5,057 0 7,090 9,537 551 0 607 0 51,834 7,641 10,144 Diluted earnings per share -4.82 -2.87 -9.13 -3.25 Carrying amount at 31 December 2015 14,672 1,153 628 0 0 0 0 0 0 0 0 0 0 0 0 § ACCOUNTING POLICIES Basic earnings per share Diluted earnings per share Basic earnings per share is calculated as the net result for the Diluted earnings per share is calculated as the net result for period that accrue to the parent company’s ordinary shares the period that accrue to the parent company’s ordinary divided by the weighted average number of ordinary shares shares divided by the weighted average number of ordinary outstanding. shares outstanding adjusted by the dilutive effect of potential ordinary shares. Note 10 – Property, plant and equipment DKK ’000 Cost at 1 January 2014 Additions Transfers Cost at 31 December 2014 Depreciation at 1 January 2014 Depreciation for the year Depreciation at 31 December 2014 Plant and machinery Other fixtures and fittings Leasehold Fixed assets under improve- ments construction 57,807 2,784 2,180 62,771 41,793 4,984 46,777 7,201 1,462 0 10,346 252 0 8,663 10,598 6,792 298 7,090 8,887 650 9,537 2,180 0 -2,180 0 0 0 0 0 0 0 0 Carrying amount at 31 December 2014 15,994 1,573 1,060 Depreciation for the financial year has been charged as: Research and development expenses Administrative expenses Total 4,984 0 4,984 235 63 298 514 136 650 Depreciation for the financial year has been charged as: Research and development expenses Administrative expenses Total 5,057 0 5,057 413 138 551 455 152 607 § ACCOUNTING POLICIES Plant and machinery, other fixtures and fittings, tools and the selling costs and the carrying amount of the asset at the equipment and leasehold improvements are measured at cost time of the disposal. Profits and losses are recognized in the less accumulated depreciation. income statement under research and development expenses and administrative expenses. Cost comprises acquisition price and costs directly related to acquisition until the time when the group starts using the The carrying amount of property, plant and equipment as well asset. as non-current asset investments is reviewed for impairment when events or changed conditions indicate that the carrying The basis for depreciation is cost less estimated residual value amount may not be recoverable. If there is such an indication, after the end of useful life. Assets are depreciated under the an impairment test is made. An impairment loss is recognized straight-line method over the expected useful lives of the in the amount with which the carrying amount exceeds the assets. The depreciation periods are as follows: recoverable amount of the asset, which is the higher of the net • Leasehold improvements 5 years • Plant and machinery 5 years present value and the net selling price. In order to assess the impairment, the assets are grouped on the least identifiable group of assets that generates cash flows (cash flow • Other fixtures and fittings, tools and equipment 3–5 years generating units). Impairments are recognized in the income statement under the same items as the related depreciation Profits and losses arising from disposal of plant and equipment and amortization. are stated as the difference between the selling price less 62 63 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Notes Notes Note 11 – Investments in subsidiaries Note 12 – Trade receivables DKK ’000 Cost at 1 January 2014 Additions Cost at 31 December 2014 Revaluation at 1 January 2014 Revaluation at 31 December 2014 Carrying amount at 31 December 2014 Cost at 1 January 2015 Additions Cost at 31 December 2015 Revaluation at 1 January 2015 Revaluation at 31 December 2015 Carrying amount at 31 December 2015 Parent Trade receivables are mainly related to milestones and royalty from our collaboration agreements, and are due within 30 - 60 days. There are no overdue receivables and there is no provision for bad debts as no losses are expected on trade receivables. 0 380 380 0 0 380 380 0 380 0 0 380 Part of the receivables has been withheld by the German Tax Authorities (app. 15% royalty received on Lyxumia®), and is expected to be paid in 2016. § ACCOUNTING POLICIES Trade receivables are provided against when objective the receivables. The amount of the write-down is determined evidence is received that the group will not be able to collect as the difference between the assets’ carrying amount and the all amounts due to it in accordance with the original terms of present value of estimated future cash flows. Note 13 – Prepaid expenses § ACCOUNTING POLICIES Prepaid expenses comprise incurred expenses related to the following financial year. Subsidiaries: As a consequence of the royalty bond financing in December 2014 four new subsidiaries were established. Name Zealand Pharma A/S subsidiaries: ZP Holding SPV K/S ZP General Partner 1 ApS ZP Holding SPV K/S subsidiaries: ZP SPV 1 K/S ZP General Partner 2 ApS Ownership and votes 2015 Domicile Denmark Denmark 100 % 100 % Denmark Denmark 100 % 100 % Note 14 – Other receivables DKK ’000 Group 2015 Group 2014 Parent 2015 Parent 2014 Helmsley Charitable Trust (ZP4207) Royalty income Other Total other receivables 4,592 15,366 6,155 26,113 0 0 3,673 333,673 4,592 0 6,035 10,627 0 00 2,694 2,694 The management has in accordance with the Danish Financial Statements Act, §5, chosen to submit an exeption declaration (“undtagelseserklæring”) in accordance with the Danish Financial Statements Act, 146:1, and has not issued Annual Reports for ZP Note 15 – Cash and cash equivalents SPV 1 K/S and ZP Holding SPV K/S. The accounts of the two companies are fully consolidated in the consolidated financials statements of Zealand. § ACCOUNTING POLICIES Investments in subsidiaries are measured at cost in the parent company’s financial statements. Where the recoverable amount of the investment is lower than cost, the investments are written down to this lower value. DKK ’000 DKK USD EURO Group 2015 Group 2014 Parent 2015 Parent 2014 66,239 306,296 46,261 227,922 280,215 8,712 64,900 30,744 45,139 227,542 19,081 8,712 Total cash and cash equivalents 418,796 516,849 140,783 255,335 Restricted cash: DKK 21.4 million (21.4) is restricted based on the royalty bond issuance agreement until the royalty bond has been fully repaid. 64 65 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Notes Notes Note 16 – Share capital and treasury shares Note 18 – Prepayments from customers Changes in share capital (‘000 shares) Share capital at 31 December 2010 Capital increase at 12 December 2011 Share capital at 31 December 2014 Share capital at 1 January 2015 Capital increase at 21 March 2015 Capital increase at 11 April 2015 Capital increase at 2 June 2015 Capital increase at 20 June 2015 Capital increase at 8 September 2015 Capital increase at 26 September 2015 Capital increase at 4 November 2015 Capital increase at 13 November 2015 Capital increase at 4 December 2015 Share capital at 31 December 2015 22,871 322 23,193 23,193 121 106 51 47 383 151 61 177 63 24,353 The share capital consists of 24,352,769 (23,193,047) ordinary shares of DKK 1 each. All shares have been fully paid. Capital increases in 2015 relates to exercise of warrant programs. At the end of 2015, treasury shares amounted to 564,223 (564,223), equivalent to 2.3% (2.4) of the share capital at 31 December. The number of treasury shares corresponds to a market value of DKK 85,479,785 (46,830,509) at 31 December. The full number of treasury shares have been purchased for DKK 1.7 million. § ACCOUNTING POLICIES Purchase and sales prices as well as dividend from own shares are recognized directly under retained earnings under equity. Capital reductions by cancellation of own shares reduce the share capital by an amount equaling the nominal values of the shares. Profit from sale of own shares, respectively issue of shares in connection with exercise of warrants is entered directly on equity. Note 17 – Royalty bond In December 2014, Zealand established four subsidiaries in connection with the royalty bond issuance. Part of the establishment was a contribution/transfer from the parent of certain rights, including intellectual property rights to future royalty payments from the sale of Lyxumia® and LixiLan. The principal amount, USD 50 million, is payable in full at 15 March 2026 if not redeemed before. It is possible for Zealand to make voluntary repayments as of 2016. Royalty payments in excess of interest payments are used for (and shall be used for) principal repayments of the notes at each payment date. Upon full repayment of the royalty bond, the right to future royalty payments belongs to Zealand. See note 22 – Financial and operational risks, for information about due date, interests etc. § ACCOUNTING POLICIES The royalty bond is measured at the time of borrowing at fair value less any transaction costs. The difference between the proceeds of the loan and the amount to be repaid is recognized in the income statement over the term of the loan as a financial expense using the effective interest method. § ACCOUNTING POLICIES Prepayments from customers comprise not yet consumed prepayments relating to the research collaboration with Boehringer Ingelheim International GmbH. Note 19 – Other liabilities DKK ’000 Severance payment Employee benefits Provision for clinical study on ZP1609 Royalty to third-party Interest, royalty bond Other Total other liabilities § ACCOUNTING POLICIES Group 2015 Group 2014 Parent 2015 Parent 2014 613 15,085 0 18,713 9,516 1,812 45,739 18,802 10,511 4,432 0 00 5,143 38,888 613 15,085 0 0 0 1,723 17,421 18,802 10,511 4,432 00 00 1,906 35,651 Financial liabilities are recognized initially at fair value less transaction costs. In subsequent periods, financial liabilities are measured at amortized cost corresponding to the capitalized value using the effective interest method; consequently the difference between the proceeds and the nominal value is recognized in the income statement over the maturity period of the loan. Other payables are measured at amortized cost corresponding to nominal value. Note 20 – Lease commitments DKK ’000 Operating lease agreements: Within 1 year 2 to 5 years Total 2015 2014 3,940 1,241 5,181 4,376 908 5,284 Operating lease agreements include rental agreement of building, company cars and office equipment. The leases are subject to terms of interminability of between 6 and 60 months. In 2015 DKK 7.6 million (7.8) was recognized in the income statement. § ACCOUNTING POLICIES Lease agreements are classified as either financial or operating leases based on the criteria in IAS 17. Lease payments under operating leases and other rental agreements are recognized in the income statement over the term of the agreements. 66 67 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Notes Note 21 – Information on staff and remuneration DKK ’000 The total staff salaries can be specified as follows: Salaries Pension schemes Other social security costs Total The amount is charged as: Research and development expenses Administrative expenses Total Average number of employees 2015 2014 105,336 98,740 7,243 10,752 6,560 8,763 123,331 114,063 93,039 30,292 85,684 28,379 123,331 114,063 110 103 Average number of employees has been calculated based on ATP expenses. DKK ’000 Remuneration included above to the: Base board fee 2015 Other 2015 Total 2015 Base board fee 2014 Other 2014 Total 2014 Board of Directors Martin Nicklasson Rosemary Crane Catherine Moukheibir Peter Benson Alain Munoz Michael Owen Christian Thorkildsen¹ Jens Peter Stenvang¹ Helle Størum¹ Daniel Ellens2 Jørgen Lindegaard2 Florian Reinaud2 Jutta af Rosenborg3 Hanne Heidenheim Bak1 3 Total 450 200 250 150 150 150 150 150 150 150 150 13 0 0 2,113 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 450 200 250 150 150 150 150 150 150 150 150 13 0 0 0 0 0 150 150 150 150 75 150 450 375 150 150 75 0 0 0 0 715 0 0 0 0 0 0 0 0 0 0 0 0 150 865 150 150 75 150 450 375 150 150 75 2,113 2,025 715 2,740 1 The table only includes remuneration related to board work for the employee elected board members. 2 The board members resigned from the board in 2015. 3 The board members resigned from the board in 2014. Notes 2014 DKK ’000 Remuneration included above to the: Executive management David Solomon Mats Blom Total Other senior management Total Total 2015 DKK ’000 Remuneration included above to the: Executive management Britt Meelby Jensen Mats Blom Total Other senior management Total Base salary Bonus Pension contri- bution Warrant Other Severance compens. payment expenses benefits Total 6,079 1,735 7,814 5,382 5,382 0 400 400 1,083 1,083 304 137 441 535 535 238 242 480 540 540 16,440 0 16,440 0 0 0 23,061 2,514 25,575 2,362 2,362 2,105 2,105 12,007 12,007 13,196 1,483 976 1,020 18,802 2,105 37,582 Base salary Bonus Pension contri- bution Warrant Other Severance compens. payment expenses benefits Total 3,353 2,400 5,753 8,776 8,776 0 200 200 928 928 335 240 575 877 877 190 260 450 1,101 1,101 0 0 0 3,163 2,372 5,535 7,041 5,472 12,513 353 353 3,321 3,321 15,356 15,356 Total senior management 14,529 1,128 1,452 1,551 353 8,856 27,869 Other senior management in 2015 counts 6 members, including 3 members resigned during the year. Other senior management in 2014 counts 3 members. 68 69 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Notes DKK ’000 Number of warrants Program of 2010 Program of 2010 02-Nov-10 10-Feb-11 17-Nov-11 10-Feb-12 19-Nov-12 08-Feb-13 01-Apr-14 Program of 2010 Program of 2010 Program of 2010 Program of 2010 Program of 2010 Total Outstanding as per 1 Jan. 2014 595.406 423.000 227.085 231.500 214.883 367.262 0 2.059.136 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding as per 31 December 2014 Specified as follows: Board of Directors Executive management 0 0 0 0 0 -20.000 0 0 0 0 0 0 0 -11.250 0 0 0 0 0 0 0 100.000 100.000 -23.750 0 0 0 0 0 -55.000 0 0 595.406 403.000 227.085 220.250 214.883 343.512 100.000 2.104.136 134,024 327,358 0 0 0 165,047 0 0 0 0 0 134,024 152,845 67,012 100,000 812,262 Other employees 134,024 403,000 62,038 220,250 62,038 276,500 0 1,157,850 Total 595,406 403,000 227,085 220,250 214,883 343,512 100,000 2,104,136 Number of warrants Outstanding as per 1 Jan. 2015 595.406 403.000 227.085 220.250 214.883 343.512 100.000 2.104.136 Granted during the year Forfeited during the year 0 0 0 -7.500 0 0 0 -3.750 Exercised during the year -589.237 -383.900 -121.826 -64.759 Expired during the year -6.169 0 0 0 0 0 0 0 0 -17.500 0 0 0 0 0 -28.750 0 -1.159.722 0 -6.169 Outstanding as per 31 December 2015 Specified as follows: Board of Directors Executive management Other employees Total Exercise period From until Black & Scholes parameters Term (months) Volatility* Share price Exercise price DKK Dividend 0 11.600 105.259 151.741 214.883 326.012 100.000 909.495 0 0 0 0 0 0 0 31.019 0 0 0 31.019 0 0 0 0 0 62.038 11.600 74.240 151.741 183.864 326.012 100.000 847.457 11.600 105.259 151.741 214.883 326.012 100.000 909.495 3-Nov-13 10-Feb-14 17-Nov-14 10-Feb-15 19-Nov-15 10-Feb-16 01-Apr-17 3-Nov-15 10-Feb-16 17-Nov-16 10-Feb-17 19-Nov-17 10-Feb-18 01-Apr-19 60 56% 86.0 94.6 60 33% 70.0 77.0 60 34% 45.70 50.27 60 44% 70.0 77.0 60 56% 86.0 113.3 60 39.3% 79.50 87.45 60 37.5% 69.0 75.9 not expected not expected not expected not expected not expected not expected not expected Risk free interest rate 2.64% 3.09% 1.02% 0.37% 0.86% 0.66% 0.71% * The volatility rate used is based on the actual volatility in the Zealand share price. Notes Programs granted in 2015: DKK ’000 Number of warrants Program of 2010 Program of 2015 25-Mar-15 5-May-15 5-May-15 5-May-15 Program of 2010 Program of 2015 Total Outstanding as per 1 Jan. 2015 0 0 0 0 0 Granted during the year 100.000 46.359 100.000 366.250 612.609 Forfeited during the year Exercised during the year Expired during the year Outstanding as per 31 December 2015 Specified as follows: Board of Directors Executive management 0 0 0 0 0 0 0 0 0 -3.000 -3.000 0 0 0 0 100.000 46.359 100.000 363.250 609.609 0 0 0 0 0 0 0 100.000 75.000 175.000 Other employees 100.000 46.359 0 288.250 434.609 Total 100.000 46.359 100.000 363.250 609.609 Exercise period From until Black & Scholes parameters Term (months) Volatility* Share price Exercise price DKK 25-Mar-18 5-May-18 5-May-16 5-May-18 25-Mar-20 5-May-20 5-May-20 5-May-20 60 41.9% 115.50 127.05 60 43.7% 92.0 101.2 60 43.7% 92.0 101.2 60 43.7% 92.0 101.2 Dividend not expected not expected not expected not expected Risk free interest rate -0,21% -0,10% -0,10% -0,10% * The volatility rate used is based on the actual volatility in the Zealand share price. Employee warrant programs The 2010 employee warrant program Employee warrant programs have been established, which The program was established in 2010 for the Board of have to be settled in the enterprise’s equity instruments, and Directors, executive management, employees and consultants are offered to a number of employees and the executive of Zealand. management. Incentive programs were offered in 2005, 2007, 2009-2015. The Board of Directors is authorized to issue up to 2,750,000 warrants until 2 November 2015. The program has expired and a total of 2,355,495 warrants have been granted. By December 31, 2015 1,159,722 warrants have been exercised and the total proceeds amount to DKK 96.4 million. Per December 31, 2015 1,055,084 warrants can still be exercised. 70 71 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Notes Notes The 2015 employee warrant program Effect on income statement The program was established in 2015 for the executive In 2015 the fair value of warrants recognized in the income management and employees of Zealand. statement amounts to DKK 16.9 million (1.7) of which DKK 5.5 Note 22 – Financial and operational risks The Board of Directors is authorized to issue up to 2,750,000 million (0.0) relates to the executive management. Further, The goal of Zealand’s financial policy is to create a set of to hedge against this Zealand intend to hold a similar portion warrants until 20 April 2020. By December 31, 2015 2,283,750 costs for the warrant programs have been adjusted at the end general guidelines for the financial risk management in order of its cash position in USD. warrants of the authorization have not yet been granted. Per of the year by DKK 0.2 million (0.4) due to actual attrition rate. to reduce the group’s sensitivity towards fluctuations in December 31, 2015 463,250 warrants can be exercised. exchange rates, interest rates, credit rating and liquidity. By 31 December 2015 Zealand holds USD 48.0 million in cash, DKK ’000 The amount is charged as: Research and development expenses Administrative expenses Total § ACCOUNTING POLICIES 2015 2014 9.504 7.443 16.947 1.764 -90 1.674 The value of services received as consideration for granted number of warrants that the employees are expected to obtain warrants is measured at the fair value of the warrant. The fair rights to. Subsequently, an adjustment is made for changes value is determined at the grant date and is recognized in in the estimate of the number of shares that the employees the income statement as staff costs over the period in which have obtained rights to so the total recognition is based on the final right to the warrant is obtained. The contra entry the actual number of shares that the employees have obtained to this is recognized under equity. In connection with the rights to. The fair value of the granted options is estimated by initial recognition of the warrants, an estimate is made of the application of the Black and Scholes pricing model. Zealand’s financial policy has been endorsed by Zealand’s audit committee and ultimately approved by Zealand’s Board Interest rate risk of Directors. Zealand has the policy to avoid any financial instrument which exposes the group to any unwanted financial risk. Zealand Zealand is a biopharmaceutical company with revenues does not speculate in the underlying trends in the basic while the value of the royalty bond is USD 50.0 million. consisting of royalties, up-front payments and milestones economy. received as part of Zealand’s partnering activities. Zealand receives milestone payments from its current partners in USD The royalty bond has a fixed interest rate of 9.375%. and EUR and royalty payments in EUR. Zealand is mainly exposed to research and development deposits. During 2015, interest rates have been negative on expenditures. In addition Zealand has an USD loan as well as a bank deposits in DKK and EUR. Zealand invests its free cash in fixed rate, time defined bank significant cash position, as such Zealand is exposed to various financial risks, which among other relate to foreign exchange Credit risks rate risk, interest rate risk, credit risk and liquidity risk. Zealand is exposed to credit risks in respect of receivables Exchange rate risk and bank balances. The maximum credit risk corresponds to the carrying amount. Management believes that credit risk is Most of Zealand’s financial transactions are made in DKK, USD limited as counter parties to the accounts receivables are large and EUR. global pharmaceutical companies. The EUR/DKK exchange rate has politically been fixed within Cash is not deemed to be subject to any credit risks, as the very narrow limits and Zealand has evaluated that there are counterparts are banks with investment grade ratings. (i.e no transaction exposure or exchange rate risk regarding BBB- or higher by Standard&Poors). transactions in EUR. Although there has been some pressure on the DKK, Zealand does not expect the EUR/DKK exchange Liquidity risk rate to be changed. The purpose of Zealand’s cash management is to ensure that the group at all times has sufficient and flexible financial Zealand’s milestone payments have been agreed in foreign resources at its disposal. currency, USD and EUR. However, as milestone payments are unpredictable in terms of timing, the payments are not Zealand’s short-term liquidity situation is matched with included in the basic exchange risk evaluation. Zealand’s quarterly budget revisions to balance the demand for liquidity and maximize Zealand’s interest income by As Zealand from time to time conduct clinical trials and matching Zealand’s free cash in fixed rate, time defined bank toxicology studies in the US, Zealand will be exposed to deposits with Zealand’s expected future cash burn. the exchange rate fluctuation and risks associated with transactions in USD. Zealand’s policy has up until now been Capital structure to manage the transaction and translation risk associated It is Zealand’s aim to have an adequate capital structure in with the USD passively, placing the revenues received from relation to the underlying operating results and R&D projects, milestone payments in USD on an USD account for future so that it is always possible to provide sufficient capital to payment of Zealand’s expenses denominated in USD, covering support operations and its long term growth targets. payments for the next 12 – 24 months, hereby matching Zealand’s assets with its liabilities. In December 2014, Zealand issued a royalty bond of USD 50 million and created a large exposure against the USD. In order The Board of Directors finds that the current capital and share structure is appropriate to the shareholders and to the group. 72 73 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Notes USD Interest rate Notes 2015 Fluctuation 2015 2014 Effect Fluctuation 2014 Effect We expect interest payment next year of DKK 40 million on the royalty bond (interest rate 9.375%). See the cash flow statement for a specification of capital resources as of 31 December 2015 and 2014. +/- 10% 6,574 +/- 10% 10,399 Fair value measurement of financial instruments +/- 100 4,735 +/- 100 3,074 The fair value of the royalty bond is based on amortized costs. basis point basis point In 2015 and 2014 there are no financial instruments carried at fair value. The fair value of the royalty bond disclosed in the note is based on Level 3 in the fair value hierarchy. The table shows the effect on the profit/loss and equity of probable changes in the financial variables on the statement of financial position. Liquidity risk A breakdown of the group and parent company’s aggregate liquidity risk on financial assets and liabilities is given below: DKK ’000 Group 2015 Group 2014 Parent 2015 Parent 2014 Categories of financial instruments 0 0 0 0 Trade receivables Receivable from subsidiaries Tax receivable0 Other recivables Prepaid expenses Cash restricted 30,797 Cash and cash equivalents Loans and receivables Royalty bond Trade payables Prepayment from customers Other liabilities 141,120 25,031 0 5,875 26,113 2,262 21,403 418,796 615,569 0 6,250 3,673 2,209 221,424 516,849 575,436 312,951 272,170 21,676 2,091 45,739 18,487 14,383 38,888 Financial liabilities measured at amortized cost 382,457 343,928 313 3,549 5,875 10,627 2,242 0 12,843 11,727 6,250 2,694 2,209 0 140,783 255,335 163,389 291,058 0 21,580 2,063 17,421 41,064 0 18,487 14,383 35,651 68,521 DKK ’000 Group At amortized cost Trade and other creditors Royalty bond Other liabilities Total financial liabilities at 31 December 2014 At amortized cost Trade and other creditors Royalty bond Interests, royalty bond Other liabilities Total financial liabilities at 31 December 2015 DKK ’000 Parent At amortized cost Trade and other creditors Other liabilities Total financial liabilities at 31 December 2014 At amortized cost Trade and other creditors Other liabilities Total financial liabilities at 31 December 2015 <6 months 6<12 months 1-5 years Carrying amount/ Total* Fair value** 18,487 0 0 0 5,000 267,170 0 0 18,487 272,170 38,888 18,487 272,170 38,888 38,888 57,375 21,676 0 0 45,739 67,415 5,000 267,170 329,545 329,545 0 0 0 21,676 21,676 341,486 341,486 341,486 32,000 76,000 108,000 108,000 0 0 45,739 45,739 32,000 417,486 516,901 516,901 <6 months 6<12 months 1-5 years Carrying amount/ Total* Fair value** 18,487 35,651 54,138 21,580 17,421 39,001 0 0 0 0 0 0 0 0 0 0 0 0 18,487 35,651 54,138 21,580 17,421 39,001 18,487 35,651 54,138 21,580 17,4211 39,001 * All cash flows are non-discounted and include all liabilities under contracts. ** The fair value of financial liabilities is determined as the discounted cash flows based on the market rates and credit conditions at the balance sheet date. Interests on royalty bond is calculated on basis of the fixed interest rate 9.375% and the expected payback time. 74 75 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Notes Notes Note 23 – Related parties Note 25 – Change in working capital SPV K/S. ZP Holding SPV K/S has then sold and contributed Zealand has receivables from group companies of DKK 3.6 Other assurance engagements Zealand has no related parties with controlling interest. lixisenatide as stand-alone product and certain milestones to a second 100% owned subsidiary, ZP SPV 1 K/S. No gain has been Zealand’s related parties with significant influence comprise of recognized in the separate financial statements of Zealand the company’s Board of Directors and senior management. and costs of the subsidiaries are the carrying amount of the Transactions with related parties assets contributed to the subsidiaries, i.e. the nominal value of cash contribution and nil with respect of the contribution of Compensation to the Board of Directors and senior the intellectual property as the intellectual property was not management is described in note 21. recognized in the financial statements of Zealand before the No further transactions with related parties were conducted transactions. during the year. In 2014, transactions with the Board of ZP SPV 1 K/S has then issued a royalty bond against these Directors for consultancy fee amounted to DKK 0.7 million. assets. The purpose of this structure is to make the royalty bond non-recourse to Zealand and at the same time protect Zealand has in 2014, contributed all IP and rights relating to the the bond investors from a parent company bankruptcy. agreement with Sanofi to its fully owned subsidiary ZP Holding rights to 86.5% of the future annual royalties relating to (11.7) million at year end. Ownership The following shareholders are registered in Zealand’s register of shareholders as being the owners of minimum 5% of the voting rights or minimum 5% of the share capital (1 share equals 1 vote): Sunstone BI Funds and Life Science Ventures Fund, Copenhagen, Denmark LD Pension (Lønmodtagernes Dyrtidsfond), Copenhagen, Denmark Legg Mason (Royce) Inc., Maryland, US Note 24– Adjustments DKK ’000 Depreciation Warrants compensation expenses Financial income Financial expenses Exchange rate adjustments Total adjustments Group 2015 Group 2014 Parent 2015 Parent 2014 6,215 16,947 -3,889 42,394 -18,114 43,553 5,932 1,674 -3,064 2,017 000000 66,559 6,215 16,947 -1,444 306 -1,310 20,714 5,932 1,674 -3,064 64 0 4,606 DKK ’000 Group 2015 Group 2014 Parent 2015 Parent 2014 Change in receivables Increase in payables Change in working capital -215,594 -25,467 6,631 -24,027 76,723 -138,871 40,988 15,521 -27,458 -20,827 37,749 13,722 Note 26 – Fees to auditors appointed at the Annual General Meeting DKK ’000 Audit Tax advice Non-audit services Total fees 2015 2014 315 30 104 29 478 400 61 818 677 1,956 Note 27 – Significant events after the balance sheet date No events have occurred after the balance sheet date of importance to the consolidated financial statements. 76 7 7 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements 04_Statements Our business Our portfolio Corporate matters Financial statements Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes Statements Statement of the Board of Directors and executive management Independent auditors report Today the Board of Directors and executive management have In our opinion the management’s review includes a fair review discussed and approved the Annual Report of Zealand Pharma about the development of the Group and Parent’s operations A/S for the financial year 1 January – 31 December 2015. and economical conditions, the results for the year and the Group and Parent’s financial position as well as a review of the The consolidated financial statements and parent financial more significant risks and uncertainty the Group and Parent statements have been prepared in accordance with faces, in accordance with the Danish disclosure requirements International Financial Reporting Standards as adopted by the for listed companies. EU and Danish disclosure requirements for listed companies. To the shareholders of Zealand Pharma A/S Report on the consolidated financial statements and parent financial statements statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also We have audited the consolidated financial statements and includes evaluating the appropriateness of accounting We recommend that the Annual Report be approved at the parent financial statements of Zealand Pharma A/S for the policies used and the reasonableness of accounting estimates We consider the accounting policies used to be appropriate. Annual General Meeting. In our opinion the financial statements give a true and fair view of the Group and the Parent’s financial position as of Glostrup, 16 March 2016 31 December 2015 and of the results of the Group and Parents operations and cash flows for the financial year 1 January – 31 December 2015. Executive management Britt Meelby Jensen President and Chief Executive Officer Mats Blom Senior Vice President and Chief Financial Officer Board of Directors Martin Nicklasson Chairman Rosemary Crane Vice Chairman Catherine Moukheibir Board member Alain Munoz Board member Peter Benson Board member Michael J. Owen Board member Christian Thorkildsen Board member Employee elected Helle Størum Board member Employee elected Jens Peter Stenvang Board member Employee elected financial year 1 January – 31 December 2015, which comprise made by management, as well as the overall presentation of the income statement, statement of comprehensive income, the consolidated financial statements and parent financial statement of financial position, statement of changes statements. in equity, cash flow statement and notes, including the accounting policies, for the Group as well as for the Parent. We believe that the audit evidence we have obtained is The consolidated financial statements and parent financial sufficient and appropriate to provide a basis for our audit statements are prepared in accordance with International opinion. Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies. Our audit has not resulted in any qualification. Management’s responsibility for the consolidated Opinion financial statements and parent financial statements In our opinion, the consolidated financial statements and Management is responsible for the preparation of consolidated parent financial statements give a true and fair view of the financial statements and parent financial statements that Group’s and the Parent’s financial position at 31 December give a true and fair view in accordance with International 2015, and of the results of their operations and cash flows for Financial Reporting Standards as adopted by the EU and Danish the financial year 1 January - 31 December 2015 in accordance disclosure requirements for listed companies and for such with International Financial Reporting Standards as adopted internal control as management determines is necessary to by the EU and Danish disclosure requirements for listed enable the preparation and fair presentation of consolidated companies. financial statements and parent financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our responsibility is to express an opinion on the consolidated Statement on the management commentary Pursuant to the Danish Financial Statements Act, we have read financial statements and parent financial statements based the management commentary. We have not performed any on our audit. We conducted our audit in accordance further procedures in addition to the audit of the consolidated with International Standards on Auditing and additional financial statements and parent financial statements. requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform On this basis, it is our opinion that the information provided the audit to obtain reasonable assurance about whether in the management commentary is consistent with the the consolidated financial statements and parent financial consolidated financial statements and parent financial statements are free from material misstatement. statements. An audit involves performing procedures to obtain audit Copenhagen, 16 March 2016 evidence about the amounts and disclosures in the consolidated financial statements and parent financial Deloitte statements. The procedures selected depend on the Statsautoriseret Revisionspartnerselskab auditor’s judgement, including the assessment of the risks CVR no.: 33 96 35 56 of material misstatements of the consolidated financial statements and parent financial statements, whether due to fraud or error. In making those risk assessments, the auditor Martin Faarborg considers internal control relevant to the entity’s preparation State Authorised of consolidated financial statements and parent financial Public Accountant Flemming Larsen State Authorised Public Accountant 78 79 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statementsZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements Our business Our portfolio Corporate matters Financial statements Company information Zealand Pharma A/S Smedeland 36 DK-2600 Glostrup Denmark Tel: +45 88 77 36 00 Fax: +45 88 77 38 98 info@zealandpharma.com www.zealandpharma.com CVR no.: 20 04 50 78 Established 1 April 1997 Registered office Albertslund Auditors Deloitte Statsautoriseret Revisionspartnerselskab CVR no.: 33 96 35 56 Design and production: In-Mind Design 80 ZEALAND PHARMA A/S ANNUAL REPORT 2015Financial statements ANNUAL REPORT 2015 Zealand Pharma A/S Smedeland 36 2600 Glostrup (Copenhagen) Denmark Tel +45 88 77 36 00 www.zealandpharma.com 82 

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