Growing as
a leader in peptide
therapeutics
Zealand Pharma
Annual Report
2020
Company reg. no. 20045078
2
About Zealand Pharma
We intend to be a
leader in specialty
medicines focusing
on metabolic and
gastrointestinal diseases
and other rare disease
areas with significant
unmet medical needs
Zealand Pharma ∞ Annual Report 2020 Contents
3
Contents
Management review
Overview
Zealand Pharma in short
Financial and sustainability highlights
Letter from the Chairman
Letter from the CEO
2020 Achievements
Consolidated key figures
2021 Outlook and objectives
Zealand Pharma’s first
independent launch
Established US Platform
Leveraging market presence
Five in 25
Zealand Pharma’s R&D platform
and pipeline
Peptide platform and pre-clinical
programs
Pre-Clinical Programs
Clinical Pipeline Overview
Three patient stories
Severe Hypoglycemia in diabetes
Congenital Hyperinsulinism
Type 1 Diabetes management
Other Hypoglycemic conditions
Obesity / Type 2 Diabetes
Short bowel syndrome
4
5
6
7
9
12
13
14
15
17
19
21
22
23
25
27
28
29
31
34
35
36
37
Corporate matters
Corporate governance
Corporate responsibility
Our People and culture
40
41
44
46
Financial statements
Consolidated financial statements
60
Income statement
Statement of comprehensive income
Statement of financial position
Risk management and internal control 48
Statement of cash flows
Financial review
Shareholder information
Board of Directors
Corporate Management
50
53
55
58
Statement of changes in equity
Business overview
Notes
Financial statements of
the parent company
Income statement
62
62
63
64
64
65
66
100
101
Statement of comprehensive income 101
Statement of financial position
Statement of cash flows
Statement of changes in equity
Notes
Alternative performance measures
for the group (non-audited)
Statement of the Board of Directors
and Executive Management
Independent auditor’s report
Other information
Sources
Addresses (company information)
102
103
103
104
117
118
119
123
124
124
Patient stories
Read more on page 28
CEO Letter
Read more on page 9
See our pipeline
Read more on page 22
Zealand Pharma ∞ Annual Report 2020 Overview
4
Overview
Zealand Pharma in short
5
Financial and sustainability highlights 6
Letter from the Chairman
Letter from the CEO
2020 Achievements
Consolidated key figures
2021 Outlook and objectives
7
9
12
13
14
Zealand Pharma ∞ Annual Report 2020 ZP in short
Zealand Pharma
Zealand Pharma at a glance
in short
Every day we work to pursue our
mission of transforming patients’
lives through peptide innovations
and novel treatment solutions.
5x25
5 commercialized products by 2025
Fully integrated biotech with
U.S. commercial presence
2
Strategic
partnerships
Boehringer Ingelheim and
Alexion Pharmaceuticals
2020
Commercial
operation established
Commercial platform in
place to launch metabolic
and gastrointestinal
franchises
Innovation
peptide research
platform and
robust pipeline
5
329
Employees
Offices in Copenhagen, DK;
New York City, NY; Boston
and Marlborough, MA.
4
Late stage assets
Three late-stage assets for
metabolic diseases, one for
GI diseases
Our ambition is to be a leading provider of innovative peptide
therapeutics and novel treatment solutions to address the
unmet medical needs of patients. We have a unique peptide
research platform that we leverage to discover, develop and
commercialize innovative treatments focusing on metabolic
and gastrointestinal diseases, including rare disease areas. This
platform has enabled us to develop a broad pipeline of both
clinical and pre-clinical programs.
Headquartered in Copenhagen, we are a global company with
locations in Boston and Marlborough, MA, and New York, NY.
In 2020, we established our commercial organization in the
U.S., where today we market the V-Go® insulin delivery device.
By 2025, we plan to have five products on the market and are
working to make a number of our pipeline candidates available to
patients, beginning with the dasiglucagon auto-injector and pre-
filled syringe for severe hypoglycemia this year, pending regulato-
ry approval by the U.S. Food and Drug Administration (FDA).
Find out more about Zealand at
zealandpharma.com/about-us
Zealand Pharma ∞ Annual Report 2020 Financial and sustainability highlights
6
Financial and
sustainability
highlights
R&D investment, DKK
604.1 m
+8%
(v. 2019)
Employees (average)
297
53% in R&D
Administrative expenses, DKK
203.5 m
(+200% v. 2019)
Revenue, DKK
ZEAL share price, DKK at Dec. 31, 2020
Cash position, DKKm
1,380
353.3 m
(+756% v. 2019)
220.60
(-6% since Dec. 31, 2019)
1.257
1,160
Net operating expenses, DKK
1,092.1 m
(+74% v. 2019)
K
K
D
,
e
c
i
r
p
e
r
a
h
S
300
250
200
150
Find out more at
zealandpharma.com/investor-relations
642
664
440
Jan 2020
Jul 2020
Dec 2020
2015
2016
2017
2018
2019
2020
Securities
Restricted cash
Cash and equivalents
Zealand Pharma ∞ Annual Report 2020
Letter from the chairman
7
Letter from the Chairman
The start of
a new era
2020 marked Zealand Pharma’s
transformation from a small research
and development-focused company
to a fully integrated biopharmaceutical
company.
Zealand Pharma ∞ Annual Report 2020 8
Our competitive and
distinguishing advantage is
our unique peptide platform
that allows us to design and
engineer highly innovative
peptide or peptide-like
medicines.
Martin Nicklasson
Chairman of the Board of Directors
When two visionary scientists founded the company
in 1998, it was only a dream that Zealand Pharma
would become an integrated biopharmaceutical
company. Today it is on the verge of its first poten-
tial independent product launch, has an established
commercial presence in the US, a broad and medi-
cally meaningful clinical pipeline, several promising
pre-clinical programs and a proven track record of
developing approved medicines. Thanks to a long-
term bold vision, exceptional global employees,
agility in an ever-evolving field and an unwavering
commitment to scientific discovery and patients,
Zealand Pharma is well positioned for success in a
new era.
Strength of our people
Zealand Pharma’s success is based on the collective
contributions from our talented employees, past and
present. Their creativity, teamwork, perseverance,
and ability to execute on our plans over the years
have contributed to our success. This really came
into focus in 2020, when we progressed against our
goals despite challenges presented by the COVID-19
pandemic. I am proud of and impressed by our grow-
ing team of talented professionals, who have chosen
to pursue their careers at Zealand Pharma.
Unique peptide platform
Our competitive and distinguishing advantage is our
unique peptide platform that allows us to design and
engineer highly innovative peptide or peptide-like
medicines. Since its inception, Zealand Pharma has
developed and commercialized two such medicines,
and in 2021, we expect to potentially achieve the
launch of dasiglucagon auto-injector and pre-filled
syringe for severe hypoglycemia by Zealand’s own
commercial subsidiary in the US. We are determined
to continue to build on our position of strength.
The courage to invest
Courage, boldness, and confidence are other influen-
tial elements that have transformed Zealand Pharma
into what it is today. In 2015, we made the bold de-
cision to rely less on partnerships so we could more
independently control our assets — and thereby our
future. We have demonstrated the courage to invest
significantly in our people and the R&D pipeline, as
well as our commercial capabilities in the US by ac-
quiring Valeritas.
The journey continues
While it has been a remarkable journey for Zealand
Pharma so far, our success is also built on a drive
for continual advancement. We feel an obligation to
always do more and create more value for patients,
shareholders, and society. We have significant poten-
tial, and we will continue to invest in developing new
medicines, expanding our research and development
efforts into new disease areas, and making our prod-
ucts available to as many patients as possible.
On behalf of the Board of Directors, I thank our
shareholders for your belief and support. I also thank
the CEO, Emmanuel Dulac, the Management team
and the rest of the organization for their fantastic
contributions and achievements in 2020. I look for-
ward to our continued collaboration to grow Zealand
Pharma even further.
Martin Nicklasson
Chairman of the Board of Directors
Zealand Pharma ∞ Annual Report 2020 Letter from the CEO
9
Letter from the CEO
Ready to execute
on our potential
first independent
launch and pursue
our 2025 ambition
Zealand Pharma demonstrated the resilience,
energy, and innovative thinking that makes our
company unique as we faced the unprecedented
challenges presented by the global pandemic in
2020. Thanks to our employees’ dedication, we
kept our company, labs, and trials running, and also
started our transformation into a fully integrated
biopharmaceutical company with a commercial
presence in the US. We are now set up for our
potential first independent product launch in the
first half of 2021.
Zealand Pharma ∞ Annual Report 2020 It is with a great sense of pride that we at Zealand
Pharma reflect on 2020. Like so many other com-
panies across the globe, we encountered numerous
challenges due to the COVID-19 pandemic. Yet, we
worked to overcome them and pursue our strategic
objectives to transform into a fully integrated bio-
pharmaceutical company. Today we are in a strong
position as we approach the historical milestone of
independently launching our first product with the
anticipated launch of the dasiglucagon auto-injector
and pre-filled syringe for severe hypoglycemia in the
US in the first half of 2021 (pending approval).
This launch will also be an important step towards
achieving our 2025 vision. In the coming four years,
we aim to build on all of our earlier accomplishments
and leverage our platform and investments to expand
our leadership in peptides, conduct research and
development in new indications, and launch several
products as we build a high-performing commercial
organization.
Addressing COVID-19
The pandemic and the associated pressure on health
care systems, shutdowns, and restrictive health care
measures presented challenges to all facets of our
business. From the outset, our priority has been to
keep our employees, patients, business, and clinical
partners safe, while also supporting our communi-
ties’ efforts to reduce the transmission of COVID-19.
We quickly adapted to a much more virtual way of
working and managed to keep our company, labs,
and trials running.
We took measures to secure our discovery activities,
minimizing the impact of COVID-19 on our research
activities. Employees who could work from home
did so, while team members in laboratory facilities
worked in shifts to reduce the number of people
gathered at one time. We continued our clinical trials
while working with authorities, investigators, trial
sites, and contract research organizations to mini-
mize site visits and ensure optimal trial follow-ups.
We minimized business travel and relied on digital
technologies to meet virtually rather than in person.
Virtual meetings, trainings, and support also trans-
formed our engagement with health care providers
and patients, with whom we met less in person.
Progressing our clinical programs
Despite the circumstances of 2020, we accomplished
a lot, thanks to the resilience, energy, and innovative
thinking from our dedicated employees. For the first
time ever, we independently submitted a US Food
and Drug Administration (FDA) New Drug Applica-
tion (NDA) — for the dasiglucagon auto-injector and
pre-filled syringe for severe hypoglycemia — which
the FDA accepted in May. We are hopeful and excited
that, if approved, the dasiglucagon auto-injector and
pre-filled syringe for severe hypoglycemia can be-
come an important option for people with diabetes
and their caregivers to treat severe hypoglycemia.
Pending approval, the dasiglucagon auto-injector
and pre-filled syringe for severe hypoglycemia is
expected to become the first dasiglucagon–based
medicine made available to patients. We are also
developing dasiglucagon in Congenital Hyperinsu-
linism, a devastating ultra-rare disease, and we were
able to carry through the first Phase 3-trial in 2020,
with the next trial expected to read out this year. For
the bi-hormonal artificial pancreas pump, which also
uses dasiglucagon, we plan to initiate the pivotal
Phase 3-trial in 2021.
10
On behalf of the
Management team, and all
my other Zealand Pharma
colleagues, I extend my
thanks to our partners and
patients for trusting us. We
are committed to fulfilling
the significant potential
of Zealand Pharma and
realizing our mission to
transform patients’ lives
through peptide innovations
and novel treatment options.
Emmanuel Dulac
President and Chief Executive Officer
Our partner, Boehringer Ingelheim (BI), progressed
the clinical development of BI-456909 with the initi-
ation of a Phase 2-trial in type 2 diabetes and obesity,
and plans to also pursue development in non-alco-
holic steatohepatitis (NASH).
We also made progress in the clinical development
of our gastrointestinal programs. Though the pan-
Zealand Pharma ∞ Annual Report 2020 11
US, we have filed our first own marketing applica-
tion, are ready for our first ever independent product
launch and have a broad late-stage pipeline. This year
may be the end of the beginning for Zealand Pharma
as we enter yet another transformational year for the
company.
On behalf of the Management team, and all my other
Zealand Pharma colleagues, I extend my thanks to
our partners and patients for trusting us. We are
committed to fulfilling the significant potential of
Zealand Pharma and realizing our mission to trans-
form patients’ lives through peptide innovations and
novel treatment options.
Emmanuel Dulac
President and Chief Executive Officer
demic impacted patient recruitment for our Phase 3
trial with glepaglutide in Short Bowel Syndrome (SBS),
we kept the trial running. We also completed the first
Phase 1 trial with dapiglutide, a potential next gener-
ation of SBS treatment, and initiated another Phase 1
trial to move the program forward.
Expanding and advancing our early pipeline
In addition to our many clinical development pro-
grams, Zealand Pharma also has a broad pre-clinical
pipeline that gives us opportunities to grow our drug
portfolio candidates by expanding into new indica-
tions.
We made strong progress in our early pipeline dur-
ing 2020. We regained the worldwide rights to the
amylin-analog program from BI, and we expect to
start clinical development for this program in 2021.
In our GIP-program, which has potential for devel-
opment in multiple major diseases and compris-
es mono-, dual-, and triple-agonists, we selected
the lead molecule and progressed towards clinical
development. We also progressed our Alpha4Be-
ta7-program, which has the potential to provide our
first-ever oral peptide therapeutic. We are excited by
this prospect, as oral delivery could potentially ease
the use of peptide treatments for patients. It could
also make administering peptides easier and possibly
improve treatment and compliance.
Transforming to a fully integrated
biopharmaceutical company
While successfully driving our research and devel-
opment activities, we also managed to complete our
strategic objective of building our own commercial
platform in the US, thus transforming Zealand Phar-
ma into a fully integrated, global biopharmaceutical
company. We integrated staff and assets from Valer-
itas, growing our total number of employees world-
wide by approximately 50%, and gaining the V-Go®
wearable insulin device. Through V-Go®, which is al-
ready on the market, Zealand has expanded its team
with a seasoned salesforce, laying the groundwork
for the potential launch of the dasiglucagon auto-in-
jector and pre-filled syringe for severe hypoglycemia.
Securing a strong financial position
With so many activities and achievements, we have
maintained a high level of investments across our
company. This is made possible by our strong financial
position, enhanced through a record-breaking capital
raise in Zealand’s history in June, raising DKK 658m.
This means we can continue to allocate adequate
resources, to ensure we achieve the highest value of
our assets.
Growing as a leader in peptide therapeutics
While 2020 was a successful year of transformation
for Zealand Pharma, we are focused and continue the
work needed to prepare to progress several products
as we build a high performing commercial organiza-
tion.
2021 will be a year of execution as we
set out to achieve our 2025 ambition
to expand our leadership in peptides,
conduct research and development in
new indications.
Five years ago, we were solely a Research &
Development- company with an early stage-pipeline.
Today, we have our own commercial presence in the
Zealand Pharma ∞ Annual Report 2020 2020 Achievements
12
2020
Achievements
In addition, we advanced our pipeline programs,
most prominently submitting our first NDA for the
dasiglucagon auto-injector and pre-filled syringe for
severe hypoglycemia.
During the year we successfully kept our operations
running with a highly engaged work force through
the COVID-19 health crisis.
In 2020, we took
a transformational
step by acquiring
and integrating our
US footprint, including
our commercialized
product V-Go.
2020 Achievement
Built Zealand Pharma U.S. and
advanced launch readiness
• Established Boston-area office for Zealand Pharma US operations
• Built US organization with key hires and through Valeritas acquisition
• Established launch readiness program for dasiglucagon auto-injector and pre-filled syringe
for severe hypoglycemia
Executed on the clinical
pipeline
• Dasiglucagon auto-injector and pre-filled syringe for severe hypoglycemia: Submitted NDA
to US FDA in Q1
• Dasiglucagon for congenital hyperinsulinism: First Phase 3 study completed, and second
Phase 3 study initiated
• Dasiglucagon for bi-hormonal artificial pancreas pump: End of Phase 2 meeting conducted
• Glepaglutide for short bowel syndrome: Patient enrolment in Phase 3 study advanced
• Dapiglutide for short bowel syndrome: Single Ascending Dose (SAD) executed, Multiple
Ascending Dose (MAD) trial initiated as part of Phase 1 program advancement
Advanced our early pipeline
• Advanced four programs in pre-clinical development towards Phase 1 initiation (ZP8396
Amylin analog; complement C3 inhibitor1, ZP 10000 α4β7 integrin inhibitor; ZP6590 GIP; ZP
9830 Kv1.3 ion channel blocker)
Expanded our strong financial
and organizational position
• Completed the acquisition of Valeritas, with successful integration of US organization and
our commercialized product V-Go
• Boehringer-Ingelheim advanced our GLP-1/GLU to Phase II in type 2/Obesity and decided
to initiate a second program in non-alcoholic steatohepatitis (NASH) triggered a EUR 20
million milestone payment
• Secured a total of DKK 795 million in private placement over two rounds
¹ Partnered with Alexion Pharmaceuticals.
Find out more about Zealand at
zealandpharma.com/about-us
Zealand Pharma ∞ Annual Report 2020 Consolidated key figures
13
Consolidated key figures*
DKK ’000
2020
2019
2018
2017
2016
DKK ’000
2020
2019
2018
2017
2016
Income statement and
comprehensive income
Revenue
Gross margin
Research and development
expenses
Sales and Marketing expenses
Administrative expenses
Net operating expenses
Operating result
Net financial items
Result before tax
Income tax¹
Net result for the period
Comprehensive result
for the period
Earnings/loss per share
– basic/diluted (DKK)
353,314
262,749
41,333
40,918
37,977
34,621
136,322
122,159
230,864
199,933
-604,081
-285,256
-202,771
-1,092,108
-792,361
-47,292
-839,653
-7,076
-846,729
-561,423
0
-67,881
-629,304
-587,942
11,265
-576,677
5,136
-571,541
-438,219
0
-43,543
-481,762
652,385
-27,334
625,051
-43,773
581,278
-323,949
0
-47,343
-371,292
-248,526
-31,387
-279,913
5,500
-274,413
-261,387
0
-50,514
-311,901
-110,271
-43,764
-154,035
5,500
-148,535
-837,752
-571,541
581,278
-274,413
-148,535
-22.07
-16.91
18.94
-9.85
-6.11
Statement of financial position
Cash and cash equivalents
Marketable securities
Cash, cash equivalents
and Marketable securities
Other assets
Total assets
Share capital ('000 shares)
Equity
Equity ratio²
960,221 1,081,060
299,448
297,345
860,635
298,611
588,718
75,111
323,330
0
219,006
504,383
1,257,566 1,380,508 1,159,246
70,551
1,761,949 1,599,514 1,229,797
30,787
1,229,311 1,242,673 1,116,281
0.91
39,800
36,055
0.70
0.78
663,829
57,456
721,285
30,751
514,669
0.71
323,330
359,786
683,116
26,142
267,381
0.39
Cash flow
Cash outflow/inflow from
operating activities
Cash outflow/inflow from
investing activities
Cash outflow/inflow from
financing activities
Purchase of property, plant
and equipment
-688,716
-409,455
-461,420
-278,746
40,904
-196,807
-51,666
882,925
221,351
-299,958
760,941
674,480
-155,449
337,930
157,146
-25,044
-21,036
-4,038
-7,226
-2,600
Free cash flow³
-713,760
-430,491
-463,418
-285,972
38,304
Other
Share price (DKK)
Market capitalization (DKKm)⁴
Equity per share (DKK)⁵
Average number of employees
Number of full time employees
at the end of the year
220.60
8,464
32.04
297
235.40
8,487
34.52
173
82.40
2,537
36.33
146
85.00
2,614
16.77
128
106.50
2,784
11.24
124
329
179
149
133
108
*
¹
²
³
⁴
⁵
The acquisition of the business from Valeritas is only reflected in key figures covering the period since April 2, 2020 being
the acquisition date.
Zealand expects to be eligible to receive up to DKK 5.5 million in Danish corporate tax benefit related to R&D expenses
incurred for 2020, of which DKK 5.5 million has been recognized for the period ended December 31, 2020.
Equity ratio is calculated as equity at the balance sheet date divided by total assets at the balance sheet date.
Free cash flow is calculated as the sum of cash flows from operating activities and purchase of property, plant and equip-
ment.
Market capitalization is calculated as outstanding shares at the balance sheet date times the share price at the balance sheet
date.
Equity per share is calculated as shareholders' equity divided by total number of shares less treasury shares.
Zealand Pharma ∞ Annual Report 2020
2021 Outlook
2021 Outlook
and Objectives
We will mobilize resources and galvanize our teams
to find ways to accelerate our late stage programs,
advance our early candidates and identify novel
treatment targets.
Financial guidance
In 2021, Zealand Pharma expects net product reve-
nue from the sales of its commercial products of DKK
220 million +/-10% compared to 2020 of DKK 161.3
million.
14
In 2021, Zealand Pharma expects revenue from exist-
ing license agreements. However, since such reve-
nue is uncertain in terms of size and timing, Zealand
Pharma does not intend to provide guidance on such
revenue.
Net operating expenses in 2021 are expected to be
DKK 1,250 million +/-10% compared to 2020 of DKK
1,092.1 million.
We expect 2021 to
be a year where we
continue to develop
as a fully integrated
biopharmaceutical
company, by launching
our first product and
thereby having two
marketed assets in the US
2021 Objectives
Launch Dasiglucagon
auto-injector and pre-filled
syringe and
optimize commercialization
• Deliver on net revenue targets for V-Go and the dasiglucagon auto-injector and pre-filled
syringe for severe hypoglycemia (assuming FDA approval in March 2021)
Execute on the clinical pipeline
• Dasiglucagon auto-injector and pre-filled syringe for severe hypoglycemia: Receive approv-
al from US FDA
• Dasiglucagon for congenital hyperinsulinism: Deliver second Phase 3 study and prepare
NDA/MAA for execution in 2022
• Dasiglucagon for bi-hormonal artificial pancreas pump: Initiate Phase 3 study
• Glepaglutide for short bowel syndrome: Finalize patient enrollment in Phase 3 study
• Dapiglutide for short bowel syndrome: Complete MAD Phase 1 program and decide on
Phase 2 study protocol
Enrich early pipeline and
develop our next generation
platform
• Advance pre-clinical drug candidates towards Phase 1
• Initiate new pre-clinical projects
• Develop our next generation peptide platform
Maintain a strong financial and
organizational position
• Ensure disciplined financial management and productive investments
• Focus company on operational performance and organizational health
Zealand Pharma ∞ Annual Report 2020 ZPs first independent launch - Indhold
15
"We are excited about the
prospect of launching
dasiglucagon auto-injector
and pre-filled syringe for
severe hypoglycemia as we
work tirelessly to deliver better
treatments to patients. With a
diversified pipeline and many
late-stage assets, we believe
‘Five in 25’ is possible."
Frank Sanders
President of Zealand Pharma U.S.
Zealand Pharma’s
first independent
launch
Established US Platform
Leveraging market presence
Five in 25
17
19
21
Zealand Pharma ∞ Annual Report 2020 Zealand Pharma’s first independent launch
16
Zealand Pharma’s
first independent
launch
With an established US platform
and commercial presence, we are
ready to introduce the dasiglucagon
auto-injector and pre-filled
syringe for severe hypoglycemia to
patients pending US FDA approval.
Dasiglucagon auto-injector
and pre-filled syringe for severe
hypoglycemia could potentially
become the first of five commercial
products to be launched by 2025.
Zealand Pharma ∞ Annual Report 2020 Established US Platform
17
Established US
Organization
In line with our strategy of
independently commercializing
our medicines, Zealand Pharma has
established its own fully-fledged
commercial operation in the US,
preparing us not only for the
dasiglucagon launch but for
the additional launches expected
by 2025.
In 2020, Zealand Pharma transformed from a primar-
ily R&D-focused company to a fully integrated bio-
tech company with an established footprint in the US
diabetes market. The establishment of our US com-
mercial platform is a pivotal element in our strategy,
and this transformation will allow us to independently
launch and market the medicines we develop on the
world’s biggest pharmaceutical market.
Accelerating commercial build-up
In April of 2020, we closed on a transaction with US-
based Valeritas Holdings, Inc., in which we acquired
all of the company’s assets including the marketed
V-Go® wearable insulin delivery device, providing us
with a commercial infrastructure and accelerating
our plans for build-up in the US. As part of the trans-
action, we gained an existing commercial organi-
zation and 110 employees, including approximately
75 sales representatives, all supporting systems,
processes, and the majority of established contracts,
as well as an operations site in Marlborough, Massa-
chusetts.
In parallel with the acquisition, we achieved an-
other historical milestone with the filing of our
first ever New Drug Application (NDA) with the US
Food and Drug Administration for the dasiglucagon
auto-injector and pre-filled syringe for severe hypo-
glycemia. Pending approval, the dasiglucagon au-
to-injector and pre-filled syringe for severe hypogly-
cemia will be the first product ever we launch on our
own, leveraging our US commercial platform.
By acquiring the already marketed V-Go® wearable
insulin delivery device, we immediately became a
commercially active company in the US, interacting
with key stakeholders in the diabetes space, including
patients, physicians and payors. Many of the these
stakeholders will also be essential for the successful
launch of the dasiglucagon auto-injector and pre-
Acquired US activities in brief
US-based
in Marlborough,
Massachusetts
110 employees
including approximately
75 sales representatives
V-Go®
One marketed product – a
wearable insulin delivery device
Zealand Pharma ∞ Annual Report 2020 18
filled syringe. On top of its strategic value, V-Go®
generates revenue that helps finance our significant
investments across commercial and Research & De-
velopment activities.
Successful integration
Due to the pandemic, the undertaking of integrating
our new colleagues and assets into Zealand Phar-
ma was done virtually with a very limited number of
physical meetings. We are proud to have risen to the
challenge and navigated this already complex task,
successfully completing the integration – increasing
the total number of employees by close to 50% –
according to plans and deadlines.
We also strengthened the US leadership team with
the appointment of Frank Sanders as President of
Zealand Pharma US. Having more than 25 years of
experience within commercial operations, Frank
joined from a position as general manager of the
US Commercial team at Sage Therapeutics and is a
member of Zealand Pharma’s global Corporate Man-
agement team.
We further expanded our operations in the US in July
of 2020 by opening a new office in Boston, where
commercial operations are headquartered.
V-Go® wearable insulin delivery device
Designed to deliver insulin like the body does—gradually, during the day
and night—and replace both long-acting basal insulin and multiple meal-
time insulin injections, V-Go delivers a continuous basal insulin rate over
24 hours that mimics the body’s natural approach to all-day-and-night
blood sugar control. With a continuous, preset rate of fast-acting insulin
along with convenient, on-demand dosing at mealtimes (bolus dosing).
V-Go is designed to meet insulin needs throughout the day. Studies have
shown that V-Go provides better control of blood sugar levels than multi-
ple daily insulin injections.¹
¹
Lajara R, Nikkel C. Poster presented at: the International Society for Pharmacoeconomics and Outcomes Research 22nd Annual International Meeting; May 2017; Boston, MA.
Zealand Pharma ∞ Annual Report 2020 Leveraging market presence for dasiglucagon m.v.
Leveraging market
presence for the
dasiglucagon
auto-injector and
pre-filled syringe
for severe
hypoglycemia
launch
With V-Go® marketed in the US, we
are well positioned with patients,
physicians and payors, to execute
an effective launch of dasiglucagon
auto-injector and pre-filled syringe
for severe hypoglycemia
pending approval.
Zealand Pharma is in a position of strength ahead
of the anticipated launch of the dasiglucagon
auto-injector and pre-filled syringe for severe
hypoglycemia, pending approval from the US Food
and Drug Administration. We plan to launch in late
June of 2021, following our PDUFA date of March 27,
2021.
With V-Go® already on the market, we will be able to
hit the ground running with the dasiglucagon launch.
Our sales representatives currently interact with
potential dasiglucagon prescribers including endo-
crinologists and diabetologists, covering the most
densely populated areas of the US.
Underdeveloped market
Dasiglucagon will address a US market where hy-
poglycemia is the most common cause for Emer-
gency Room (ER) visits for adults with diabetes, with
235,000 ER visits/year, of which 57,000 resulted in
hospitalizations1. Our highly experienced team of
sales, medical affairs, and market access profes-
sionals have a strong and active presence with US
medical opinion leaders, endocrinologists and diabe-
tologists, and major national and regional payors and
pharmacy benefit managers. Foundational marketing,
patient support, and commercial operations infra-
structure are being optimized ahead of the launch of
dasiglucagon.
19
Dasiglucagon
For illustration only
~10%
annual market growth following new
entrant launches in 2019
New entrants have captured
approximately
~40%
volume market share
in 2020
Market volume
largely driven by Type 1 Diabetes
utilization (80% of TRx), with
additional penetration potential
across both Type 1 and Type 2
Diabetes patients at risk of severe
hypoglycemic events
$300M
total Gross Market Value (excluding
rebates & discounts)
¹ Centers for Disease Control (CDC). Diabetes Statistics Report. 2020.
Symphony Health, 2020 December TRx Quantity share and
Integrated WAC Sales
Zealand Pharma ∞ Annual Report 2020 20
Severe hypoglycemia is an underdeveloped market.
While approximately 675,000 glucagon prescriptions
were filled in 2020, there are more than 8.2 million
adults on insulin therapy in the US.
The significant growth potential is already starting
to materialize, supported by introductions of new
treatment solutions.
The launch of dasiglucagon in this growing market,
may increase awareness of the benefits of the new
treatment options for this acute, life-threatening
condition.
Dasiglucagon auto-injector and pre-filled syringe
launches in growing market
USDm
350
300
250
200
150
100
50
0
2017
2018
2019
2020
2021*
Gross sales (WAC level)
* Assuming 10% market growth.
Source: Symphony, as referenced for previous actuals.
Zealand Pharma ∞ Annual Report 2020 Five in 25
Zealand Pharma’s broad pipeline
provides the potential to build a
diversified product portfolio with five
marketed products by 2025.
Five in 25
21
The anticipated launch of dasiglucagon auto-injector
and pre-filled syringe for severe hypoglycemia in the
US is potentially just the first of a number of launches
of new medicines from Zealand Pharma in the coming
years. Our goal is to have five commercialized products
in the US by 2025.
Dasiglucagon for severe hypoglycemia is the first
product in our franchise built on the dasiglucagon
molecule. The next potential launch is a continuous
infusion for the treatment of Congenital Hyperinsulin-
ism (CHI), a rare disease with often devastating conse-
quences for patients and their families. We expect our
second Phase 3 trial to readout in 2021.
We are also planning to start a Phase 3 trial with
dasiglucagon used in a fully automated bi-hormonal
pump, in collaboration with Beta Bionics. This "bionic"
pancreas has been shown in Phase 2 studies to achieve
more stable levels of blood glucose levels, while
reducing hypoglycemia. If successful, this opportunity
constitutes another potential launch of dasiglucagon in
the coming years.
In the gastrointestinal field we have the potential to
launch a new treatment for patients with Short Bowel
Syndrome (SBS). Glepaglutide, a long-acting GLP-2
analog, is being developed in an auto-injector with
potential for convenient weekly administration. It is
currently in Phase 3 and has been granted orphan drug
designation by the US FDA.
We are excited about the our first independent launch
of dasiglucagon for severe hypoglycemia and the
prospect of having multiple additional potential new
product launches in the metabolic and gastrointestinal
disease areas over the next 5 years.
NDA submission, established US commercial organization,
strengthened US leadership, opened Boston office
Accelerating late stage
development
Robust pipeline including
three late stage programs
Establishing our Peptide Platform
Founded 1998
World-leading peptide platform with
two medicines brought to market
Licensed partnerships
Approaching commercialization
Establishing operations in the US
NDA submission for
dasiglucagon auto-injector
and pre-filled syringe for
severe hypoglycemia
US leadership, commercial,
medical and corporate
infrastructure
Opened Boston facility
Dasiglucagon
auto-injector and
pre-filled syringe
for severe hypo-
glycemia
Dasiglucagon
for congenital
hyperinsulinism
Glepaglutide
for short bowel
syndrome
Dasiglucagon
bi-hormonel
artificial pancreas
4 potential product launches in 4 years
1998
2019
2020
2021
2022-2025
Zealand Pharma ∞ Annual Report 2020 Zealand Pharma’s R&D platform and pipeline
22
“Our R&D ambition is to establish the
next-generation peptide therapeutic
platform and a commitment to continue
building a high value pipeline.”
Adam Steensberg
CMO and Head of R&D.
Zealand Pharma’s
R&D platform
and pipeline
Peptide platform and pre-clinical programs
Pre-Clinical Programs
Clinical Pipeline Overview
Three patient stories
Severe Hypoglycemia in diabetes
Congenital Hyperinsulinism
Type 1 Diabetes management
Other Hypoglycemic conditions
Obesity / Type 2 Diabetes
Short bowel syndrome
23
25
27
28
29
31
34
35
36
37
Zealand Pharma ∞ Annual Report 2020 Peptide platform and pre-clinical programs
23
Peptide platform
Zealand Pharma’s peptide platform
allows us to engineer peptide
analogs with enhanced biological
activity, extended duration of action
and increased stability to provide
innovative and better treatments for
a range of different diseases.
Since our founding in 1998, Zealand Pharma’s sole
focus has been on the discovery and development
of peptide-based medicines to harness the power
of native peptides and enhancing their effects. We
have a unique peptide platform and design pro-
cess built around a deep understanding of peptide
chemistry, formulation know-how and intellectual
property rights combined with advanced computer
science. This allows us to engineer peptide analogs
with enhanced biological activity, extended duration
of action and increased stability to provide innovative
and better treatments for a range of diseases.
Our peptide platform is validated by the fact that
Zealand Pharma has now advanced more than ten
novel peptide-analogs into clinical development, two
of which are currently marketed. 2021 will hopefully
see the approval of a third Zealand Pharma mole-
cule; dasiglucagon as the active ingredient in the
dasiglucagon auto-injector and pre-filled syringe for
severe hypoglycemia.
Validated peptide platform and design process
Peptides
Chemistry &
Formulation
Peptide
Therapeutics
What do we want?
• Agonist/Antagonist of biological
function
• Mono/Dual pharmacology
• Inhibition of protein:protein
interactions (PPI)
Peptide
Protein
Peptide
Amino acid
Peptide starting points
• Rational design
• Libraries of venoms
• Libraries with linear or
cyclic peptides
Designed properties
• Potency
• Short or long-acting
• Physical stability
• Chemical stability
• Solubility
• Pharmacokinetics
ZP Peptide Properties
Patient Benefits
High potency
Small volume,
subcutaneous
High stability
Ready-to-use
Extended half-life
Reduced dosing
frequency
High specificity
Reduced side
effects
Find out more in our movie on
zealandpharma.com/peptide-platform-video
Zealand Pharma ∞ Annual Report 2020 We base our research and development on endog-
enous peptides found in humans and peptides from
venoms from various animals. We also manipulate
bacteria to produce peptide libraries. In other words,
we make broad use of nature’s own inventions to
improve human health and quality of life.
In line with Zealand’s strategy to access cutting-edge
technology, we have a range of research collabo-
rations providing us with access to novel peptide
libraries or new technologies for peptide stabilization
and delivery.
Because of their unique features – specificity, phys-
ical size and attractive risk profile – peptide-based
medicines may allow us to in the future treat diseases
that we can’t treat today. Furthermore, they may ena-
ble us to treat more patients, initiate treatment earlier
and ensure better treatment compliance, all of which
could improve health outcomes.
Vital to human health
Peptides are produced by all living organisms and
humans have peptides in every cell and tissue. They
can function as biological messengers (hormones)
carrying information between cells or organs and
thereby perform a wide range of essential functions,
e.g., regulating appetite and blood glucose and
stimulating tissue growth. This makes peptides vital to
keeping us functioning and healthy.
Native peptides are composed of amino acids (fifty
or less) in a linear or cyclic form, have powerful
biological functions but are inherently unstable and
short-lived in the bloodstream. To convert these
native peptides into effective peptide therapeutics
requires the instability and thus duration of action
to be corrected while maintaining or enhancing the
biological activity. This requires modifications to the
amino acid sequence of the peptide, generally using
substitution with another amino acid.
Nature’s own inventions
Zealand Pharma uses its unique in-depth understand-
ing of peptide chemistry and biology to focus the
substitution process on key amino acids to remove
the weak points that result in poor solubility, stability
or activity, and thus create new drug candidates. We
have successfully applied this approach to glucagon,
amylin, GLP-1, GLP-2 and GIP. Enhancing their natural
properties or combining their activities in single pep-
tides present multiple therapeutic opportunities.
24
Our peptide platform in brief
10 novel peptide-
analogs
in clinical development
Dasiglucagon
is a Zealand Pharma molecule; the
active ingredient in the dasiglucagon
auto-injector and pre-filled syringe for
severe hypoglycemia
23 years of
experience
where Zealand Pharma’s sole focus
has been on the discovery and
development of peptide-based
medicines
Zealand Pharma ∞ Annual Report 2020 Pre-Clinical Programs
25
Pre-Clinical
Programs
New technologies and scientific
advancements within peptides
enable Zealand Pharma to
continuously optimize our
peptide platform. Our Research
and Development capabilities
and current pre-clinical programs
provide opportunities to grow our
scientific and medical presence by
expanding into new indications like
obesity and inflammatory diseases.
Our pre-clinical pipeline contains
programs focused on analogs of
endogenous peptide hormones, as
well as programs with innovative
peptide candidates acting on
components of the complement
cascade, ion channels and other
target classes.
Programs focusing
on obesity
The global prevalence of obesity has tripled
since the mid-1970s with 650 million adults and
124 million children and adolescents suffering
from obesity. In the US alone, more than 40% of
the population are considered obese1. We hope
to address the obesety pandemic with peptide
molecules with built-in dual-acting pharmacology
or molecules with mono pharmacology that can
be combined or co-formulated with other anti-
obesity treatments
Long-acting amylin analog
Amylin is derived from B-cells in the pancreas
and is co-secreted with insulin. It both regu-
lates blood glucose by delaying gastric empty-
ing after meal ingestion and directly mod-
ulates satiety signals in the brain. Preclinical
studies also suggest that amylin, like glucagon,
can increase energy expenditure, contributing
to its weight loss effect.
Our lead molecule, ZP8396, is a long-acting
analog of amylin designed to allow for co-for-
mulation with other anti-obesity treatments.
It has demonstrated significant weight loss in
pre-clinical models of obesity.
We plan on Initiating Phase 1 clinical testing
In 2021.
Long-acting GIP analogs
Glucose-dependent insulinotropic peptide
(GIP) is synthesized by K cells, which are found
in the proximal intestine. GIP receptors are
expressed in many organs and tissues includ-
ing the central nervous system, enabling GIP
to influence regulation of appetite and satiety,
while showing antiemetic effects. Thus, GIP
can contribute to the efficacy of other an-
ti-obesity peptides by both a complementary
effect and by providing an improved thera-
peutic window of the other peptide.
Our lead molecule, ZP6590, has shown addi-
tive effects when co-administered with a GLP-
1RA in pre-clinical obese models. We expect
to bring the analog to Phase 1 in 2022.
Find out more in our movie on
zealandpharma.com/peptide-platform-video
1 Kumanyika S et al., N Engl J Med (2020) 383:2197-2200
Zealand Pharma ∞ Annual Report 2020 26
Programs focusing
on chronic inflammatory diseases
Peptide medicines have proven their effectiveness in other therapeutic
areas such as type 2 diabetes and obesity and we believe that they
represent a great opportunity for new innovation in the chronic
inflammatory diseases area. The programs we are progressing represent
high-profile peptide targets that have shown to be difficult to address with
small molecules and antibodies or orally available peptides against disease
targets that have already been clinically proven with injectable antibodies.
Complement C3 inhibitor
The complement system is a part of the innate
immune system and a central component of
the complement cascade is the C3 protein.
Altered activation of the complement cascade
is implicated in many immune-mediated
diseases and in particular rare diseases such
as paroxysmal nocturnal hemoglobinuria, cold
agglutinin disease, myasthenia gravis and C3
glomerulopathy. There is currently only one
approved drug to treat complement mediated
diseases: an antibody that blocks the comple-
ment cascade C5, the final step in comple-
ment activation. We have selected a candidate
molecule that acts on C3, upstream of C5
and thus offering potential differentiation and
broader utility than the current therapy. The
candidate peptide is potent, selective, and
long-acting and has the potential to be best-
in-class, which we are currently progressing
into the next stage of development in collabo-
ration with Alexion.
Integrin α4β7 inhibitor
ZP10000 is being developed as an orally
delivered peptide drug to target integrin α4β7,
which is involved in the pathogenesis of in-
flammatory bowel disease (IBD). Specific bind-
ing to surface α4β7 on the T cells prevents the
interaction with MAdCAM-1 on the endothelial
cells, which plays a critical role in immune cell
recruitment to the intestinal tissue. This mode
of action has been clinically validated in IBD
by vedolizumab, an approved injection-only
α4β7 integrin inhibitor antibody. ZP10000 is a
peptide ligand that selectively binds to α4β7,
and its efficacy has been demonstrated in vivo
in IBD models. ZP10000 has binding proper-
ties on par with marketed antibodies as well
as oral bioavailability as demonstrated in vivo.
We are currently exploring the optimal oral
formulation for this compound while we pro-
gress the program towards clinical testing.
Kv1.3 ion channel blockers
Kv1.3 is a potassium conducting ion channel,
which is selectively upregulated on T effector
memory cells. T effector memory cells play
a key role in autoimmunity and chronic
inflammation by releasing pro-inflammatory
cytokines, which drives tissue damage. The
anti-inflammatory effects of blocking the
Kv1.3 ion channel have been demonstrated in
multiple pre-clinical models of autoimmune
diseases. The specific and selective location
of the Kv1.3 on the effector memory T cells
makes it an attractive pharmaceutical target,
as blocking preserves the protective effects
of the rest of the immune system. ZP9830
is a potent and selective Kv1.3 blocker with
potential to treat a broad range of T cell
driven autoimmune diseases. Currently we are
progressing the molecule into IND enabling
toxicity studies and aim to target inflammatory
bowel diseases as a first indication, with the
expectation to initiate Phase 1 in 2022.
Zealand Pharma ∞ Annual Report 2020 Clinical Pipeline
overview
Zealand has a robust clinical pipeline
with programs across all stages of
development, including two ongoing
Phase 3 programs and another
expected to be initiated in 2021.
Clinical Pipeline Overview
Product Candidate
Phase 1
Phase 2
Phase 3
Registration
Marketed
27
Dasiglucagon auto-injector
and pre-filled syringe
Read more page 29
Severe hypoglycemia
Dasiglucagon
S.C. Continuous Infusion
Read more page 31
Dasiglucagon Bi-Hormonal
Artificial Pancreas Pump
Read more page 34
Dasiglucagon
Adjustable Mini-Dose
Read more page 34
BI 456906
GLP-1/GLU Dial Agonist
Read more page 36
Congenital hyperinsulinism
Type 1 Diabetes management
PBH/ T1D exercise-
induced hypo
Obesity/T2D/NASH
Glepaglutide GLP-2 Analog
Read more page 37
Short Bowel Syndrome (SBS)
Dapiglutide
GLP-1/GLP-2 Dual Agonist
SBS+
Read more page 37
c
i
l
o
b
a
t
e
M
y
r
o
t
a
m
m
a
fl
n
I
&
I
G
Zealand Pharma ∞ Annual Report 2020
28
Three patient
stories
Each story provides a backdrop for
how a disease can affect everyday
life for a patient, their family and
caregivers, and illustrates why we
are committed to delivering next
generation therapeutics to help
change lives.
Three patient stories
Severe hypoglycemia
Robert lives with type 2 diabetes. Despite wearing an insulin
delivery device, he has had multiple experiences with severe
hypoglycemia and he worries every day about the risk of yet
again being put in this situation by his disease. Robert tells
about what it feels like when you have a critical drop in blood
glucose levels.
Read more on page 29
Congenital Hyperinsulinism
Crosby was born with congenital hyperinsulinism. His parents
were warned that having a CHI baby was ”going to be a really
tough journey.” They tell about the challenges they have faced:
from receiving a rare prenatal diagnosis of the condition, trying
to manage his volatile blood glucose levels.
Read more on page 31
Short bowel syndrome
Dependent on parenteral support to survive, Mike must con-
nect to infusion equipment for eight hours a day, six days a
week. He tells about how reducing the complexity – and time
spent – for parenteral support enables him to make his disease
a smaller part of his life, and avoid that the disease defines him
in any way.
Read more on page 37
Zealand Pharma ∞ Annual Report 2020 Severe Hypoglycemia in diabetes
Severe
Hypoglycemia in
diabetes
Severe hypoglycemia is an acute,
life-threatening condition resulting
from a critical drop in blood glucose
levels. Unpredictable and among the
most feared complications of diabetes
treatment1, severe hypoglycemia
requires another person for rescue2.
~8 million people
With diabetes are on insulin therapy in the US³
~235,000 Emergency
Room Visits
Occur annualy in the US due to severe hypoglycemia³
Dasiglucagon auto-injector and pre-filled syringe
The dasiglucagon auto-injector is a ready-to-use auto-injec-
tor containing 0.6 mg dasiglucagon, designed to offer people
with diabetes fast, effective and reliable treatment for severe
hypoglycemia.
29
2020 Achievements
In March 2020, Zealand Pharma submitted the New Drug
Application (NDA) for the dasiglucagon auto-injector and pre-
filled syringe for severe hypoglycemia to the US Food and Drug
Administration (FDA), which accepted the submission for review
in May 2020.
The NDA is based on the clinical program which was conclud-
ed in 2019. In the pivotal and confirmatory Phase 3 trials, the
primary and all key secondary endpoints were successfully
achieved with a median time to blood glucose recovery of 10
minutes. Results from a pediatric Phase 3 trial demonstrated
that the median time to blood glucose recovery was also 10
minutes in this patient population.
Next steps
Under the Prescription Drug User Fee Act (PDUFA), the FDA has
set a target action date of March 27, 2021. Pending approval,
Zealand Pharma expects to launch dasiglucagon auto-injector
and pre-filled syringe for severe hypoglycemia later in 2021.
This will be our first independent product launch.
3
phase 3-trials met
all primary and key
secondary endpoints
Preferred
mode of administration by
patients, care givers and HCPs⁴
10 minutes
median time to recovery in all
three phase 3-trials
Find out more about Zealand at
zealandpharma.com/dasiglucagon-rescue
1 Strandberg RB, et al. Diabetes Res Clin Pract. 2017:11-19.
2 El-Menyar A, et al. J Emerg Trauma Shock. 2016:64-72.
3 Centers for Disease Control (CDC). Diabetes Statistics Report. 2020.
⁴ Zealand Pharma commissioned market research.
2021
PDUFA date
March 27
Zealand Pharma ∞ Annual Report 2020
30
Robert Floyd
Robert was diagnosed with type 2
diabetes about 12 years ago. Every-
day he has to deal with the chal-
lenges of the disease. When Robert
was diagnosed and started taking
insulin, the company he worked for
had complaints about him checking
his blood sugar and doing insulin
shots. There are still things Robert
can’t do anymore because of his
diabetes, things he used to do all the
time.
As part of living with type 2 diabe-
tes, Robert has also experienced
hypoglycemia multiple times. Mild
hypoglycemia is blood glucose less
than 70 mg/dL, moderate hypogly-
cemia is blood glucose less than 54
mg/dL, and severe hypoglycemia is
defined as having low blood glucose
levels that requires assistance from
another person to treat.
"It hit me like a ton of
bricks. No warnings,
one minute I was fine,
next minute I wasn’t."
Robert Floyd
Living with type 2 diabetes,
on the experience of severe
hypoglycemia
Read more of Robert’s story at
zealandpharma.com/roberts-story
Zealand Pharma ∞ Annual Report 2020 Congenital Hyperinsulinism
31
Congenital
Hyperinsulinism
Congenital hyperinsulinism (CHI)
is an ultra-rare and devastating
congenital disorder in newborns.
It is caused by a defect in
pancreatic beta cells, resulting
in insulin overproduction.
This leads to persistently and
dangerously low blood sugar
levels (hypoglycemia).
1/25,000-1/50,000
is the ratio of births in which CHI occurs in most
countries. It is the most frequent cause of severe,
persistent hypoglycemia in newborn babies and
children¹.
Substantial burden of disease²
• High resistance to existing medical treatment
• High risk of seizures and permanent brain injury
• Most severe cases require pancreatic surgery
• Prolonged hospitalization and intolerable burden
to patients, families, caregivers, and healthcare
systems
Dasiglucagon Subcutaneous Continuous Infusion
Dasiglucagon is a potential first-in-class glucagon analog for the treatment of children with CHI.
The potential of chronic dasiglucagon infusion delivered via a pump to prevent hypoglycemia in children with CHI is being evaluated
in a Phase 3 program. The aim is to reduce or eliminate the need for intensive hospital treatment, reduce the frequency of severe
hypo glycemia and need for constant feeding, and to potentially delay or eliminate the need for pancreatectomy. The US Food and
Drug Administration and the European Commission both granted orphan drug designation to dasiglucagon for the treatment of CHI.
Next Steps
A second Phase 3 trial with 12 children with CHI from 7 days up
to one year of age is ongoing, with topline results expected in
2021.
2020 Achievements
The first Phase 3 trial with 32 children with CHI aged 3 months
to 12 years completed enrollment in August, with topline
results announced in December. The trial showed that dasi-
glucagon, on top of standard of care (SOC), did not significantly
reduce the rate of hypoglycemia compared to SOC alone
when assessed by intermittent self-measured plasma glucose
(primary endpoint). However, hypoglycemia was reduced by
40–50% with dasiglucagon as compared to SOC alone when
assessed by blinded continuous glucose monitoring (explora-
tory analysis).
Dasiglucagon treatment was assessed to be safe and well tol-
erated in the study, and 31 out of 32 patients chose to continue
into the long-term extension study.
1 Orphanet. https://www.orpha.net/consor/cgi-bin/Disease_Search.php?lng=EN&data_id=1025&Disease_Disease_Search_diseaseGroup=Congenital-hyperinsulini%E2%80%A6.
Accessed March 1, 2021
2 Congenital Hyperinsulinism International. https://congenitalhi.org/congenital-hyperinsulinism/. Accessed March 1, 2021.
Zealand Pharma ∞ Annual Report 2020 Phase 3 program spanning newborns to 12-year-olds
Phase 3 program
spanning
newborns to
12-year-olds
Trial 17109
– Completed
Trial 17103
– Ongoing
32
Open-label
extension
study 17106
–Ongoing
32 patients, age 3 months-12 years.
Trial completed
12 patients, age 7 days-12 months.
First patients enrolled; phase 3 trial
readout expected in 2021
Maximum 44 patients,
age 1 month onwards
Hypo-prone, maximum therapy,
incl. pancreatic surgery
Newly diagnosed, dependent
on IV glucose
Patients from 17109 and 17103 with
ongoing positive benefit/risk
8 weeks of treatment
(4 weeks follow-up)
25 days of treatment
(4 weeks follow-up)
Allows for long-term data
Zealand Pharma ∞ Annual Report 2020 33
Crosby
Julie and her husband, Leighton, al-
ready knew during pregnancy that their
first child, Crosby, would be born with
CHI. The disorder may cause Crosby to
have cognitive and physical disabilities
if not treated adequately.
“I can close my eyes and
easily remember sitting
on the couch in our one-
bedroom apartment,
bawling hysterically,
trying to tell my mother
what's going on, not able
to speak about it”
Julie,
mother of Crosby, who has CHI
Read more of Crossby’s story at
zealandpharma.com/crosbys-story
Zealand Pharma ∞ Annual Report 2020 Type 1 Diabetes management
Type 1 diabetes
management
In spite of newer insulins and
better administration systems,
the vast majority of people with
Type 1 diabetes are unable to reach
glycemic goals as defined by the
American Diabetes Association.¹
Maintaining good control of blood glucose levels for
a person with type 1 diabetes requires continuous in-
tervention with insulin. The amount of insulin admin-
istered is subject to continuous adaptation dictated
by the individual’s blood glucose levels, food intake,
activities such as exercise, sickness, prior insulin
injections, etc.
When too much insulin is injected, dangerously low
blood glucose levels can develop and rapid intake of
sugar-rich food is needed to prevent development of
severe hypoglycemia. Conversely, injecting too little
insulin will lead to dangerously high blood glucose,
which is also associated with significant acute and
chronic complications.
The iLet® bionic pancreas is an investigational device limited by law to
investigational use. Not available for sale.
34
Despite progress with faster acting modern insu-
lins and novel insulin pumps connected to glucose
sensors, current therapies require considerable effort
by people with diabetes and their caregivers. As such,
Type 1 diabetes remains one of the most burdensome
diseases to manage.
iLet™
A pocket-sized, dual-
chamber, autonomous,
glycemic control system
(investigational device)
Dasiglucagon for bi-hormonal artificial pancreas pump systems
Zealand is developing a 1 ml cartridge containing 4 mg/ml dasiglucagon, intended for use in bi-hormonal artificial pancreas pumps.
We are collaborating with Beta Bionics, developer of the iLet™, a pocket-sized, dual-chamber, autonomous, glycemic control
system. The iLet mimics a biological pancreas by calculating and dosing insulin and/or glucagon (dasiglucagon) as needed, based
on data from the diabetic person’s continuous glucose monitor. The iLet is the world’s first autonomous bionic pancreas device — a
bi-hormonal system leveraging lifelong machine learning and artificial intelligence to deliver insulin and glucagon analogs for the
autonomous treatment of type 1 diabetes.
Top-line results from a phase 2-trial in patients with type 1 diabetes demonstrated that the bi-hormonal iLet using dasiglucagon
provided superior glycemic control over the insulin-only iLet. During the bi-hormonal period, 90% of participants had a mean CGM
glucose level of < 154 mg/dL, corresponding to the glycemic target recommended by the ADA. The corresponding number for the
insulin-only system was 50%. Importantly these glycemic targets were achieved while time spent with blood glucose levels < 54 mg/
dL was only 0.3% in the bihormonal and 0.6% in the insulin-only arm.²
2020 Achievements
Beta Bionics initiated the pivotal insulin-only iLet trial in people
with type 1 diabetes. Late in the year we had the End-of-
Phase 2 meeting with the FDA to agree on the scope of the
bi-homonal iLet.
Next Steps
Together with Beta Bionics we expect to initiate the pivotal
bi-hormonal phase 3-trial with dasiglucagon in 2021.
1 Pettus et al., Diabetes Care (2019) 42(12):2220–2227.
2 Russell S et al. 2020. Conference. DIABETES TECHNOLOGY & THERAPEUTICS. Page A-53.
Zealand Pharma ∞ Annual Report 2020 Other Hypoglycemic conditions
Other
Hypoglycemic
conditions
People with Type 1 diabetes often
experience hypoglycemia after
exercise and people who have
undergone bariatric surgery as a
treatment for obesity, experience
reactive hypoglycemia after
eating a meal. Today there are
no approved treatment options
for these conditions.
Dasiglucagon mini doses
Mini-dose dasiglucagon may provide an attractive treatment
solution for people who experience hypoglycemic events such
as Type 1 diabetics or those who experience post bariatric
hypoglycemia.
2020 Achievements
We reported positive results in from a Phase 2 trial in with
dasiglucagon in PBH in March 2020. The results demonstrated
a single mini-dose injection of dasiglucagon in post bariatric
hypoglycemic patients significantly reduced meal-induced
hypoglycemia compared to placebo in individuals who have
undergone gastric bypass bariatric surgery.
We also initiated a Phase 2 low-dose dasiglucagon trial for the
prevention of insulin-induced hypoglycemia in Type 1 diabetes
in 2020.
¹ Salehi M et al. JCEM 2018; 103(8):2815-26.
² Riddel MC et al. Lancet Diabetes Endocrinol. 2017;5(5):377-390.
35
Post-bariatric hypoglycemia
Post-bariatric hypoglycemia can be severe and disabling. The
prevalence is believed to be between 5-15% of people who un-
dergo bariatric surgery¹. There are no approved treatments for
these people and as such there is a large unmet medical need.
Exercise-induced hypoglycemia
Many people with Type 1 diabetes experience episodes of
hypoglycemia during or after physical activity. This can result in
improper diabetes management, with many people not getting
to their recommended long-term glycemic targets². We believe
their is a high unmet medical need for novel treatment oppor-
tunities in this setting.
Next Steps
Initiation of a Phase 2 outpatient study in people with Type 1
diabetes and in people with post-bariatric hypoglycemia in
2021. The studies will utilize a durable mini-dose pen, being
developed by Zealand Pharma.
Zealand Pharma ∞ Annual Report 2020 Obesity /
Type 2 diabetes
Excessive weight and obesity are
among the leading risk factors for
heart disease, ischemic stroke, liver
diseases and type 2 diabetes as well
as for a number of cancers.
Obesity / type 2 diabetes
There are insufficient therapeutic options available,
resulting in a high unmet medical need for safe and
effective treatments that achieve significant weight loss.
36
Long-acting GLP-1/GLU dual agonist (BI 456906)
The GLP-1/glucagon dual agonist activates two key hormone receptors simultaneously and may offer better blood sugar and
weight-loss control than current single-hormone receptor agonist treatments. The lead molecule, BI 456906, is targeting treatment
of obesity, type 2 diabetes and non-alcoholic steatohepatitis (NASH).
Clinical development is carried out by Boehringer Ingelheim with whom Zealand Pharma has a long and productive partnership.
Boehringer Ingelheim has a track record of excellence in research and development in cardiometabolic diseases which has resulted
in important breakthroughs in recent years, especially in thromboembolic diseases and type 2 diabetes.
Under the terms of the agreement, Boehringer Ingelheim funds all research, development and commercialization activities. Zealand
Pharma is entitled to receive up to EUR 345 million in outstanding milestone payments. The agreement also carries high-single digit
to low-double digit percentage royalties on global sales.
2020 Achievements
A Phase 2 trial in 410 patients with type 2 diabetes was initiated
in 2020, based on the safety, tolerability, and favorable weight
loss potential in individuals with a BMI up to 40 kg/m² observed
in Phase 1. This triggered a EUR 20 million milestone payment
to Zealand Pharma.
Next Steps
Two additional Phase 2-trials — one in obesity, one in NASH —
are planned for initiation in 2021. The first Phase 2 trial in type 2
diabetes is expected to complete this year.
Include reference next to “Excessive weight and obesity…” (subtitle): Hruby A et al. Am J Public Health. 2016; 106(9): 1656–1662.
Zealand Pharma ∞ Annual Report 2020 Short bowel syndrome
Short bowel
syndrome
Underlying causes for SBS include inflammatory
bowel syndrome, intestinal infarction, radiation dam-
age or trauma, and recurrent intestinal obstruction
or congenital disorders.¹,²,³ SBS affects an estimated
20,000-40,000 people in the US and Europe.⁴
Patients with Short bowel
syndrome (SBS) have undergone
massive intestinal surgery
resulting in significantly reduced
or complete loss of intestinal
function.
SBS patients cannot absorb adequate fluids and nutri-
tion taken orally, and those most severely affected
become dependent on home parenteral support to
survive. Home parenteral support is delivered through
daily infusion of intravenous fluids and nutrition via a
central venous catheter.¹,² Long-term use of paren-
teral support carries a risk of catheter-related blood
stream infections, blood clots, and organ impairment
including liver and kidney damage.² Patients are
required to connect to the infusion lines and pumps
for up to 16 hours every day, which can pose signifi-
cant restrictions on ability to engage in normal daily
activities.⁵
37
Limitations of current treatments
Management of SBS is a complex multidisciplinary
task with a focus on optimizing the patient’s hydra-
tion and nutritional status. It includes striking the right
balance between parenteral support and oral intake
of fluids and nutrition. Treatment with GLP-2 analogs
has demonstrated an increase in the absorptive ca-
pacity of the remaining intestine, thereby making the
patients less dependent on parenteral support with
some gaining full enteral autonomy.
Despite the clear benefits of reducing the depend-
ency on parenteral support, people treated with the
only currently available short-acting GLP-2 therapy
have shown high levels of treatment discontinua-
tion,¹,² emphasizing the need for more effective, less
complex and better tolerated treatments tailored to
the needs of SBS patients.
Glepaglutide
Glepaglutide is a long-acting GLP-2 analog being developed in an auto-injector with potential for convenient weekly administration.
GLP-2 molecules stimulate the growth of intestinal tissue, increase nutrient and fluid absorption, increase intestinal blood flow, and
reduce gastric secretion and emptying.
2020 Achievements
Worked diligently to support the patients and investigators
in the Pivotal Phase 3 trial to accommodate the constraints
Imposed by Covid-19. While recruitment into the trial was
impaired in 2020 we have started to see patient enrolment
increasing towards pre-Covid levels after the Introduction of
vaccinations.
Next Steps
We continue to work closely with investigators on recruiting
participants and progressing the Phase 3 trial.
Pending a continued positive development in enrolment we
expect the results of the trial in 2022.
1 Pironi L et al. Clin Nutr 2016;352:247–307
2 Jeppesen P. Expert Opinion Orphan Drugs 2013;1:515–25
3 Bielawska B. Nutrients 2017;9:466–60
4 Transparency Market Research; Short Bowel Syndrome Market, 2017
5 Torres C. Current Paediatr 2006;16:291–7; Bielawska B. Nutrients 2017;9:466–79; Pironi L et al. Clin Nutr 2016;352:247–307; Hofstetter S et al. Curr Med Res Opin
2013;29:495–504
Zealand Pharma ∞ Annual Report 2020 38
The gastrointestinal tract – in a healthy person and in a SBS patient
Normal person
Length of gastrointestinal tract
SBS patient
Length of gastrointestinal tract
~8.5 m / ~25 ft
<2 m / ~6.5 ft
Dapiglutide
Dapiglutide is a potential first-in-class and long-acting GLP-1R/
GLP-2R dual agonist. It’s designed to improve management of
SBS beyond what is achievable with regular GLP-2 treatments
and may represent a next level of innovation for helping SBS
patients to further realize the full potential for enteral autono-
my.
2020 Achievements
We completed the first Phase 1a single-ascending dose, safety
and tolerability trial in healthy volunteers in 3Q 2020. Dapiglu-
tide was found to have a good safety and tolerability profile,
and we observed a plasma half-life, of approximately 120
hours, allowing for once weekly dosing. We initiated and dosed
the first subjects in the Phase 1b multiple-ascending dose safe-
ty and tolerability trial in November.
Next Steps
We expect to complete the Phase 1b-trial in 2021 with the aim
of initiating Phase 2-development in 2022.
Zealand Pharma ∞ Annual Report 2020 Short bowel - case
39
Mike
Mike was born with an abnormal
cluster of veins in his small bow-
el. When that cluster had ruptured,
Mike progressed through a series of
surgeries that resulted in removing
approximately seven meters of his
intestine. Mike had now become a
patient with short bowel syndrome.
The remaining eight centimeters of his
intestine were not capable of absorbing
the nutrition and fluids Mike needed to
live, so he also became dependent on
parenteral support to survive. Reducing
the complexity – and time spent – for
parenteral support enables this driven
college football coach to get back in
the game.
“I want it (SBS) to be a
small part of my life. I
don’t want it to define
me in any way.”
Mike,
Living with short bowel syndrome
Read more of Mike's story at
zealandpharma.com/mikes-story
Zealand Pharma ∞ Annual Report 2020
Corporate matters
40
“2020 has been a year of
unparalleled growth and
transformation for Zealand and
we will continue to be financially
strong by efficiently managing
the investments we make in our
research and development and
commercial organizations.”
Matt Dallas
Senior Vice President and
Chief Financial Officer
Corporate
matters
Corporate governance
Corporate responsibility
Our People and culture
Risk management and internal control
Financial review
Shareholder information
Board of Directors
Corporate Management
41
44
46
48
50
53
55
58
Zealand Pharma ∞ Annual Report 2020 Corporate
Governance
Zealand’s approach to corporate
governance is founded on ethics and
integrity, and forms the basis of our
efforts to ensure strong confidence
from our shareholders, partners,
employees and other stakeholders.
Corporate Governance
As a company incorporated under the laws of Den-
mark, and with its shares admitted to trading and
official listing on Nasdaq Copenhagen, as well as
having American Depositary Shares representing Zea-
land shares trading on Nasdaq Global Select Market
in New York, Zealand is subject to various applicable
legislations, standards and other regulations for pub-
licly traded companies. These include Danish and US
securities law and the recommendations on corpo-
rate governance issued by the Danish Committee on
Corporate Governance (in the below ‘‘the Recom-
mendations’’).
Management structure
Zealand has a two-tier management structure com-
posed of the Board of Directors (“the Board”) and the
Corporate Management. The Board is responsible for
the overall visions, strategies and objectives, the fi-
nancial and managerial supervision of Zealand as well
as for regular evaluation of the work of the Corporate
Management. In addition, the Board provides general
oversight of Zealand's activities and ensures that it is
managed in a manner and in accordance with appli-
cable law and Zealand's articles of association.
The Board approves the policies and procedures,
and Corporate Management is responsible for the
day-to-day management of Zealand in compliance
with the guidelines and directions set by the Board of
Directors. The allocation of responsibilities between
the Board and the Corporate Management is stipulat-
ed in the Rules of Procedure.
41
Corporate governance structure
Annual General Meeting
Board of Directors
Nomination
Committee¹
Audit
Committee
Remuneration
Committee
Corporate Management
Organization
¹ The full board acts as its own nomination committee.
Zealand Pharma ∞ Annual Report 2020 CM - COVER
42
Board of Directors
The Board of Directors plays an active role in setting
Zealand's strategies and goals and in monitoring
the operations and results. The Board of Directors
functions according to its rules of procedure. Board
duties include establishing Zealand’s strategy, poli-
cies and activities to achieve Zealand's objectives in
accordance with the Articles of Association.
In line with the Recommendations, the Board of
Directors annually reviews and determines the qual-
ifications and experience needed on the Board. The
chairman supervises the Board of Director's annual
self-evaluation of its performance.
Board Committees
The Board has established a number of committees
to support the Board in its duties: Audit Committee,
Remuneration and Compensation Committee, and a
Nomination Committee.
Audit Committee
The Audit Committee assists the Board of Directors
with oversight of financial reporting, internal con-
trol and risk management systems, external auditing
of the annual report, and control of the auditor’s
independence, including oversight of non-audit
services and other activities delegated by the Board
of Directors.
The Board of Directors met eleven times in 2020.
Specific topics discussed in 2020 included account-
ing treatment of acquisition of certain assets from
Overview of meetings in 2020
Attended
Absent
Martin Nicklasson
Kirsten A. Drejer
Jeffrey Berkowitz
Bernadette Connaughton
Alain Munoz
Leonard Kruimer
Michael J Owen
Jens Peter Stenvang
Hanne Heidenheim Bak1
Frederik Barfoed Beck2
Gertrud Koefoed Rasmussen2
Iben Louise Gjelstrup2
1 retired as board member afterr AGM2020
2 started as board member after AGM2020
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Zealand Pharma ∞ Annual Report 2020
CM - Corporate Governance
Valeritas Holdings Inc., election of new external au-
ditor, auditor’s reports, accounting policies, internal
controls, including SOX (Sarbanes-Oxley Act) com-
pliance, risk management, insurance policy, year-end
issues and external financing.
Nomination committee
The Nomination Committee make recommendations
for decisions to the Board of Directors regarding
board and CEO positions and identifies and recom-
mend candidates for the Board of Directors.
The Audit Committee met ten times in 2020.
Remuneration Committee
The Remuneration Committee proposes the remu-
neration policy and general guidelines for incentive
pay for the Board of Directors and the CEO of Zea-
land as well as targets for company-operated per-
formance-related incentive programs. These policies
and guidelines set out the various components of the
remuneration, including fixed and variable remuner-
ation such as pension schemes, benefits, retention
bonuses, severance and incentive schemes as well as
the related bonus and evaluation criteria.
Specific topics discussed in 2020 included long-term
incentive programs for management and Board of
Directors, company goals, compensation policy for
eligible employees, CEO and Board compensation
and development of Zealand peer group.
The Remuneration Committee met virtually five times
in 2020.
Specific topics discussed in 2020 included the com-
position of the independent members of the Board
of Directors. One potential candidate was considered
but no formal vote was taken with respect to the
nomination of new members.
The Nomination Committee met after each board
meeting in 2020.
The charter of the Audit Committee is available at:
zealandpharma.com/audit-committee/
The charter of the Remuneration Committee, the re-
muneration report, the remuneration policy and the
guidelines for incentive pay are available at:
zealandpharma.com/remuneration-committee
The rules of procedure of the Nomination-Commit-
tee are available at:
zealandpharma.com/nomination-committee/
43
Evaluation of the Board of Directors
In 2020 an independent vendor, PWC, evaluat-
ed the Board of Directors.
The process included electronic ques-
tionnaires and one on one interviews with
members of the Board and members of the
Corporate Management. There were also one
on one meetings between the chairman and
each board member.
In general, there was a good level of satis-
faction reported with the operation of the
Board and its interaction with members of the
Corporate Management. The evaluation, in
general, revealed a good performance by the
Board of Directors as well as good collabora-
tion between the Board of Directors and the
Corporate Management.
Compliance with the Corporate
Governance Recommendations
Zealand complies with the Recommenda-
tions on Corporate Governance issued by the
Danish Committee on Corporate Governance,
November 23, 2017, with one exception:
3.4 Board committees (Recommendation,
section 3.4.8): The Remuneration and Com-
pensation Committee will be using the same
external advisers as the Executive Manage-
ment. The Board considers that the external
advisers will provide professional and unbiased
advice in both capacities: as advisers to the
Executive Management and to the Remunera-
tion Committee.
Zealand Pharma ∞ Annual Report 2020
Corporate Responsibility
44
Corporate
Responsibility
We have incorporated selected UN Sustainable De-
velopment Goals that are aligned to our business to
further connect Zealand’s efforts with those of other
companies to address global challenges.
As we work toward realizing our
ambition of becoming a fully
integrated biopharmaceutical
company, to improve care for
patients and deliver value for our
shareholders, we further recognize
the importance of protecting the
world around us. We believe in
operating as a responsible company
that serves broader economic,
societal, and environmental interests.
For the statutory reporting on corporate
social responsibility, gender distribution
and diversity in management cf. the Danish
Financial Statement Act §99a, §99b and
§107d, please see the Corporate Social
Responsibility Report 2020 at
zealandpharma.com/csr
Zealand’s CSR policy focuses on areas most relevant
to our core business:
• Working environment, employee well-being, and
diversity,
• Quality in relation to research, development, and
supply chain activities,
• Patient-centric approach,
• Environmental sustainability and climate, and
• Business ethics.
Commitment to Sustainable Development Goals
Zealand is committed to addressing global challeng-
es through support of the Sustainable Development
Goals established by the United Nations. Six goals
that are relevant to our business were placed into fo-
cus last year, and we continue to identify and imple-
ment initiatives and metrics to evaluate our progress
in these areas. Additional goals may be considered as
our company continues to grow and evolve.
Diversity
Diversity provides better understanding of the com-
munities in which we operate, so that we can create
value for patients and our stakeholders. Zealand aims
to achieve equal representation of both genders at all
management levels – from the Board of Directors to
the heads of departments.
Zealand has an even distribution of female and male
managers, and slightly more women than men across
the organization in general. Overall Zealand is made
Zealand Pharma ∞ Annual Report 2020 45
Zealand Board of Directors
%
36 (33)
2020
2019
Men
Women
64 (67)
Zealand Pharma
Board of Directors as of
December 31, 2020:
4 women and
7 men
giving a female
representation of 36%
(2019: 33%).
up of 58% females (2019: 58%) and is regarded to be
an even gender distribution.
As of December 31, 2020, the Board of Directors
consisted of four women and seven men, giving a
female representation of 36% (2019: 33%).
Quality in everything we do
Zealand’s quality policy describes compliance with
rigorous internationally recognized standards and
guidelines at all stages of research and development,
to ensure that we do not place patients or animals
at risk due to inadequate safety, quality or effica-
cy. Zealand maintains oversight of the outsourced
GxP activities to ensure vendor compliance with the
requirements of pharmaceutical quality standards as
articulated in Good Laboratory Practice (GLP), Good
Manufacturing Practice (GMP), Good Clinical Practice
(GCP), Good Pharmacovigilance Practice (GVP), and
others.
Focus on patients
At Zealand, we work to create better lives for patients
through collaborations with advocacy groups and
patient organizations. We aim to demonstrate our
commitment to patients and caregivers by serving
their interests with the aim of consolidating relations
and obtaining better treatment options.
Zealand Pharma ∞ Annual Report 2020 46
Zealand total
%
2020
42 (42)
2019
Men
Women
58 (58)
Our People
and culture
Our team's well-being, competency
development, and engagement
are key to realizing our ambitious
business goals. We strive to cultivate
a diverse, unique, energizing,
and respectful environment for
all employees, regardless of their
background.
Our People and culture
Engagement
We are proud that close to 100% of employees across
all geographies and functional areas believe in the
future of Zealand, according to our 2020 engage-
ment survey results. Our people are as dedicated and
ambitious as ever, helping to achieve major organiza-
tional goals despite the global COVID-19 pandemic.
We aspire to maintain this level of engagement as we
continue our journey.
Talent
Zealand strives to be among the very best employers
in our industry as we continue our strategic focus
on building a world-class, fully integrated biophar-
maceutical organization. While building on Zealand’s
unique strengths and culture, Zealand is increasing-
ly diversifying our workforce to meet tomorrow's
demands and keep our innovation power to attract
"Everyday, our team approaches
discovery and research projects with
a unique combination of curiosity,
determination and enthusiasm. This is
the core of Zealand's success."
Rie Schultz Hansen
Vice President,
Discovery and Innovation
Zealand Pharma ∞ Annual Report 2020 47
and retain global talent, we refreshed our company
DNA in 2020 and values to reflect a global organ-
ization and the values we represent. Through the
co-business ownership of our employees, we can
continue to grow a company with highly specialized
employees committed to changing lives by evolving
our business and our pipeline
In 2020, the executive management team and
board of directors engaged in talent and succession
planning discussions to ensure business continuity
and health. Through the co-business ownership of
our employees, we can continue to grow a com-
pany with highly specialized employees committed
to evolving our business and our pipeline, who also
share our dedication to changing lives.
Safe work environment
Zealand works systematically to maintain a safe and
healthy work environment. We maintain numerous
procedures to support our work environment, and
train all Zealand employees in standard safety proto-
cols to enable self-management of their own occu-
pational safety.
Zealand Pharma ∞ Annual Report 2020 Risk management and internal control
Risk management
and internal
control
This section contains a summary of Zealand’s key risk
areas and how we attempt to address and mitigate
such risks. Environmental and ethical risks are cov-
ered in our corporate social responsibility reporting,
and risks related to financial reporting are covered in
our corporate governance reporting.
We constantly monitor and assess
the overall risk of doing business in
the pharmaceutical/biotech industry
and the particular risks associated
with our current activities and
corporate profile.
Doing business in the pharmaceutical/biotech indus-
try involves major financial risks. The development of
novel medicines takes several years, costs are high,
and the probability of reaching the market is relatively
low due to developmental and regulatory hurdles.
Zealand’s Management is responsible for imple-
menting adequate systems and policies in relation
to risk management and internal control, and for
assessing the overall and specific risks associated
with Zealand’s business and operations. Furthermore,
Zealand’s Management seeks to ensure that such
risks are managed optimally and in a responsible and
efficient manner.
Risks of particular importance to Zealand are scientif-
ic and development risks, commercial risks, intellec-
tual property risks, clinical trial risks, regulatory risks,
partner interest risks, and financial risks. Risk and
mitigation plans are monitored by Management, and
the continuous risk assessment is an integral part of
the yearly reporting to the Board of Directors.
n
o
i
t
a
g
i
t
i
M
48
Zealand risk and mitigation
Commercial activities
– products in research
and development
Research and
development
Risks relating to the sales
of V-Go®, market size,
competition, develop-
ment time and costs,
partner interest and
pricing of products in
development.
k
s
i
R
Zealand maintains a
reporting system for
V-Go® to monitor the
product and will establish
a similar system for future
launches. From early in
the research phase and
throughout development,
commercial potential
and risks are assessed to
ensure that final products
have the potential to be
commercially viable. In
order to cope with the
restrictions imposed by
COVID-19 Zealand has
adapted its marketing ac-
titives to protect its staff
and patients.
Research and develop-
ment of new pharma-
ceutical medicines is
inherently a high-risk
activity. The probabil-
ity of discovering and
developing an efficient
and safe new medicine
with strong IP protection
is very low.
Throughout the research
and development pro-
cess, Zealand regularly
assesses these risks by
means of a quarterly risk
assessment of all the
Company’s research and
development projects,
conducted by Manage-
ment together with the
department heads and
project managers. This
assessment, which is
presented to the Board of
Directors, describes each
project and measures its
progress based on mile-
stones. It analyzes the
individual risks of each
project and prioritizes the
project portfolio.
Zealand Pharma ∞ Annual Report 2020 CM - Corporate responsibility
49
Zealand risk and mitigation – continued
Clinical trials
Intellectual property
Regulatory
Future partnerships
Financial
IT
Our product candidates will
need to undergo time-con-
suming and expensive trials to
document efficacy and safety,
the outcome of which is
unpredictable, and for which
there is a high risk of failure.
If clinical trials of our product
candidates fail to satisfactorily
demonstrate safety and effi-
cacy to the FDA, the EMA and
other comparable regulatory
authorities, Zealand may incur
additional costs or experi-
ence delays in completing,
or ultimately not be able to
complete, the development
of these product candidates.
Zealand’s clinical project
teams work closely with
external expert clinicians and
product development experts
within the industry to design,
set up and conduct the
clinical programs. Zealand’s
employees have been select-
ed due to their extensive ex-
perience within their field of
expertise, receive training and
are continuously developed
to fulfill requirements. Zea-
land also engages in meetings
with regulatory authorities to
ensure that there is alignment
on the regulatory strategy and
trial requirements.
k
s
i
R
n
o
i
t
a
g
i
t
i
M
If Zealand or its partners were
to face infringement claims
or challenges by third parties,
an adverse outcome could
subject Zealand or its part-
ners to significant liabilities to
such third parties. This could
lead Zealand or its partners to
curtail or cease the develop-
ment of some or all of their
candidate drugs, or cause
Zealand’s partners to seek
legal or contractual remedies
against Zealand, potentially
involving a reduction in the
royalties due to Zealand.
Zealand’s patent department
works closely with external
patent counsels and partners’
patent counsels to minimize
the risk of patent infringe-
ment claims as well as to
prepare any patent defense
should this be necessary.
Zealand’s employees receive
training and updates on
policies regarding the correct
and lawful management of
external intellectual property.
Entering into collaborations
with partners can bring
significant benefits as well
as involve risks. In addition,
full control of the product is
often given to the partner.
Financial risks relate to cash
and treasury management,
liquidity forecasts and financ-
ing opportunities.
The company’s information
technology systems are key
to its operations and need
protection from intrusion
from unauthorized entry.
The regulatory approval
processes of the FDA, the
EMA and other comparable
regulatory authorities are
lengthy, time consuming and
inherently unpredictable, and
if Zealand or its collaboration
partners are ultimately unable
to obtain regulatory approval
for their internal or outli-
censed product candidates,
Zealand’s business could be
substantially harmed.
Zealand’s regulatory de-
partment works closely with
external consultants and
regulatory agents to develop
regulatory strategies and
frequently interacts with
regulatory agencies.
Zealand has taken a decision
to increase its focus on pro-
prietary programs in order to
decrease its dependence on
partners in the development
process and capture more of
the value of its projects.
Partnerships may still be
relevant in the future and, to
maximize the value of such
partnerships, Zealand strives
to foster a close and open
dialogue with its partners,
thereby building strong part-
nerships that work effectively.
Financial risks are managed in
accordance with the Finance
Policy, regularly assessed by
the Company’s Management
and reported to the Audit
Committee and the Board of
Directors. During 2019 and
2020 Zealand has worked to
design and implement an In-
ternal Control Framework to
respond to the requirements
of the Sarbanes- Oxley Act as
a result of the US listing.See
also p. 94, note 28 - Financial
risks.
The company employs
qualified IT professionals
who use external assistance
from qualified vendors to
provide advice on cyber-
security and systems security
were relevant. All members
of staff are trained in IT
security and its IT systems
use authentication systems
to reduce the risk of
unauthorized entry into its
systems. It has appropriate
protection from viruses and
malware. Its most sensitive
data is encrypted and subject
to restricted internal use.
Zealand Pharma ∞ Annual Report 2020 Financial review
Financial review for the period
January 1 – December 31, 2020.
Financial review
50
Comparative figures for the corresponding period in
2019 are shown in brackets except for the financial
position, which expresses the comparative figures as
of December 31, 2019.
Research and development expenses
DKK million
2020
2019
∆ in
∆ percent
Research and
development expenses
604.1
561.4
42.7
8%
Financial results
Revenue, cost of goods sold, and gross margin re-
ported for V-Go are as of the closing of the Valeritas
Asset Purchase on April 2, 2020 and do not include
figures from the first quarter of 2020.
Revenue
DKK million
2020
2019
∆ in
∆ percent
Sale of goods
License and
milestone revenue
Total revenue
161.3
0
161.3
100%
192.0
353.3
41.3
41.3
150.7
312.0
365%
755%
Revenue was driven by net sales of the V-Go wear-
able insulin delivery device, the phase 2 milestone
payment triggered in June 2020 from our partnership
agreement with Boehringer Ingelheim and revenue
recognition related to our collaboration with Alexion.
Gross margin
DKK million
2020
2019
∆ in
∆ percent
Gross margin
262.8
40.9
221.8
542%
The increase in gross margin is due to V-Go sales
in 2020 and the revenue incurred as a result of the
Boehringer Ingelheim phase 2 milestone.
The increase in research and development expenses
mainly relates to the regulatory efforts to support the
NDA filing for the dasiglucagon auto-injector and
pre-filled syringe for severe hypoglycemia, the on-
going clinical development of the dasiglucagon and
glepaglutide programs, as well as pre-clinical and re-
search activities for the Zealand early stage pipeline.
The R&D share of the personnel expenses for the
year ended December 31, 2020 was DKK 204.2
million (178.1). The increase is mainly related to an
increase in the number of employees in the clinical
development organization.
Sales and marketing expenses
DKK million
2020
2019
∆ in
∆ percent
Sales and marketing
expenses
285.3
0
285.3
100%
Zealand’s commercial activities commenced in 2020
with the acquisition of the Valeritas business in April
2020.
Zealand Pharma ∞ Annual Report 2020
Administrative expenses
Financial income and financial expenses
Income tax
DKK million
2020
2019
∆ in
∆ percent
DKK million
2020
2019
∆ in
∆ percent
DKK million
2020
2019
∆ in
∆ percent
51
Net financial items
-47.3
11.2
-58.6
-520%
Income tax
-7.1
5.2
-12.2
-238%
Administrative
expenses
202.7
67.9
134.9
199%
The primary increase in administrative expenses is a
result of the expansion of the company through the
Valeritas acquisition including consulting and legal
costs related to the transaction, new compensation
expenses for employees brought on board as part
of the acquisition, and administrative support for the
V-Go program.
Financial income and financial expenses, which we
refer to collectively as net financial items, consist
of interest income and expense, dividend, banking
fees and impact from adjustments from changes in
currencies. The decrease is primarily driven by un-
favorable changes in currencies by DKK 39.5 million
and unfavorable impact from fair value adjustment by
DKK 2.1 million.
Operating result
Result before tax
DKK million
2020
2019
∆ in
∆ percent
DKK million
2020
2019
∆ in
∆ percent
Operating result
-792.4
-587.9
-204.4
-35%
Result before tax
-839.7
-576.7
-263.0
-46%
The net income tax benefit is mainly impacted by
DKK 5.5 million related to the Danish tax credit
scheme (Skattekreditordningen) under which compa-
nies may annually obtain payment of the tax base of
losses originating from R&D expenses of up to DKK
25.0 million (tax value of DKK 5.5 million) and offset
by income tax expenses in USA.
No deferred tax asset regarding the Danish parent
company has been recognized in the statement of
financial position due to uncertainty as to whether
tax losses carried forward can be utilized within the
near term.
The operating result reflects gross margin, research
and development expenses, sales and marketing and
administrative expenses, as discussed above and oth-
er operating expenses explained in note 7.
Result before tax reflects the operating result and net
financial items, as discussed above.
Net result
DKK million
2020
2019
∆ in
∆ percent
Net result
-846.7
-571.5
-263.0
-46%
The increase is primarily a result of the increases in
Research and development and sales and marketing
expenses.
Zealand Pharma ∞ Annual Report 2020
52
Cash from financing activities increased primarily as
a result of the March private placement and June
financing in an aggregate amount of DKK 794.9
million. Cash from financing activities for 2019 was
mainly related to a capital increase as part of the
agreement with Alexion and a private placement
completed in 2019.
Liquidity and capital resources
Cash flow
Equity
DKK million
Equity
Equity ratio
Dec.
Dec.
31, 2020 31, 2019
∆ in
∆ percent
1,229.3 1,242.7
78%
70%
-13.4
N/A
-1%
N/A
Equity ratio is calculated as equity at the balance
sheet date divided by total assets at the balance sheet
date. The decrease in equity is driven by the loss for
the period offset by the costs from the direct issue
and private placement in June of DKK 657.7 million,
the private placement in March of DKK 137.2 million,
and issue of shares related to exercise of warrants of
DKK 31.8 million offset by the loss for the period and
costs incurred in connection with the capital increas-
es.
Cash, cash equivalents and
Marketable securities
DKK million
Dec.
Dec.
31, 2020 31, 2019
∆ in
∆ percent
Cash, cash
equivalents and
Marketable securities
1,257.6 1,380.5
122.9
-9%
The year over year decrease in cash and cash equiv-
alents is partially due by the increase in cash used for
operations as well as the USD 24.5 million payment
for the Valeritas asset purchase agreement offset by
capital increases resulting from a private placement
in March, a financing completed in June as well as
the EUR 20.0 million Boehringer Ingelheim milestone
triggered in June.
DKK million
2020
2019
∆ in
∆ percent
Cash used in
operating activities
Cash used in
investing activities
Cash flow from
financing activities
Net cash flow
-688.7
-409.5
-279.2
68%
-196.8
-51.7
-145.1
281%
761.8
-713.8
674.5
-430.5
87.4
-283.3
13%
65%
The increase in cash used in operating activities from
the same period in 2019 is mainly related to our
research and development and sales and market-
ing expenses increasing as a result of the regulatory
and pre-commercial activities for the dasigluca-
gon auto-injector and pre-filled syringe for severe
hypoglycemia as well as the commercial activities
and support for the V-Go wearable insulin delivery
device. Cash used in operating activities was positive-
ly impacted by the upfront payment from the Alexion
license agreement received in 2019.
Cash used in investing activities in 2020 related
mainly to the acquisition of Valeritas business of
DKK 167.7 million. Cash flow from investing activities
for 2019 was primarily related to the Beta Bionics
investment and the payment from Royalty Pharma for
royalty expenses related to the sale of future royalty
and milestones (remainder balance from the 2018
transaction).
Zealand Pharma ∞ Annual Report 2020
Shareholder
information
Zealand is dual listed on Nasdaq
Copenhagen and Nasdaq Global
Select Market, New York, under the
ticker symbol ZEAL.
Shareholder information
At December 31, 2020, the nominal value of
Zealand’s share capital was DKK 39,799,706, divided
into 39,799,706 shares with a nominal value of DKK 1
each. Zealand Pharma completed a capital increase
in January 2021, following the registration of the new
shares, Zealand's nominal share capital amounts to
DKK 43,400,547 divided into 43,400,547 shares with a
nominal value of DKK 1 each.
In 2020 the share capital increased by a nominal
value of DKK 3.7 million through two directed issues
and private placements (DKK 3.4 million in total) and
exercise of employee warrants (DKK 0.3 million). All
Zealand shares are ordinary shares and belong to one
class. Each share listed by name in Zealand’s share-
holder register represents one vote at the annual
general meeting and other shareholders’ meetings.
Change in number of shareholders during 2020
The number of registered shareholders in Zealand
Pharma increased to 17,677 at December 31, 2020,
from 14,567 at December 31, 2019. In addition,
1,742,842 shares were represented by ADSs traded on
Nasdaq Global Select Market, New York.
At March 8, 2021, Zealand had 19,248 registered
shareholders, representing a total of 39,546,329
shares.
53
Ownership
The following shareholders are registered in
Zealand Pharma’s register of shareholders as being
the owners of a minimum of 5% of the voting rights
or a minimum of 5% of the share capital (one share
equals one vote) at March 2, 2021:
• Van Herk Investments, Netherlands (16.8% of
votes/16.8% of capital).
'See note 30 for information on ownership per December 31, 2020
Institutional shares by geography
%
2020
38 (2)
0 (6)
20 (43)
2019
5 (9)
1 (7)
5 (11)
31 (22)
United States
Denmark
United Kingdom
Sweden
France
Rest of Europe
Rest of World
Zealand Pharma ∞ Annual Report 2020 CM - Financial review
Share price performance
The price of Zealand’s shares decreased by 6% during
2020 with a share price at year-end of DKK 220.6,
compared to DKK 235.4 at year-end 2019.
As of January 4, 2021, Zealand Pharma moved to the
Large Cap from the Mid Cap segment at Nasdaq
Copenhagen. The Large Cap segment includes com-
panies with a market value of EUR 1 billion or more.
Annual General Meeting
The annual general meeting is scheduled to be
held on Thursday, April 15, 2021 at 3:00 PM CET, at
Zealand Pharma, Sydmarken 11, DK-2860 Søborg.
Additional information will become available at www.
zealandpharma.com/annual-general-meeting no lat-
er than 3 weeks before the annual general meeting.
Financial calendar 2021
Date
Event
April 15
May 12
August 12
November 11
All dates are subject to NASDAQ deadlines and reporting re-
quirements and are subject to change.
Annual General Meeting
Interim report for Q1 2021
Interim report for H1 2021
Interim report for Q3 2021
Nasdaq charting 2020 of Zealand's share price
Index
140
130
120
110
100
90
80
70
60
January
February
March
April
May
June
July
August
September October
November December
Zealand Pharma
OMX Copenhagen Mid Cap
NASDAQ Biotech
54
Analyst coverage
Zealand is followed by the financial institutions and analysts
listed below:
Institution
Analyst’s name
US
Guggenheim
Morgan Stanley
Needham
United Kingdom
Goldman, Sachs & Co.
Jefferies
France
Bryan, Garnier & Co
Netherlands
Kempen
Denmark
Carnegie
Danske Bank
Nordea
Core share data
Number of shares
and ADSs at
Dec. 31, 2020
Listing
Etzer Darout
David N. Lebowitz
Joseph Stringer
Graig C. Suvannavejh
Peter Welford
Eric Le Berrigaud
Suzanne van Voorthuizen
Jesper Ilsøe
Thomas Bowers
Michael Novod
Denmark
U.S.
39,799,706
1,742,842
Nasdaq Nasdaq Global Select
Market, New York
Copenhagen
Ticker symbol
ZEAL
ZEAL
Index memberships
Nasdaq
Copenhagen
STOXX Europe
TMI Pharm
Large Cap
Find out more about our investor relations at
zealandpharma.com/investor-relations
Zealand Pharma ∞ Annual Report 2020
Board of
Directors and
Corporate
Management
Board of Directors and Corporate Management
Zealand Board of Directors at March 11, 2021
55
Martin Nicklasson
Kirsten A. Drejer
Jeffrey Berkowitz
Position
Chairman
Vice Chairman
Board member
Year of birth
1955
Nationality
Swedish
Gender
First elected
Committee
Male
2015
AuC, RemCo chair and
NomCo chair
Independent
Yes
1956
Danish
Female
2018
NomCoo
Yes
1966
American
Male
2019
AuC, NomCo
Yes
Special
competencies
Extensive general management
and research and development
experience from AstraZeneca Plc
and Swedish Orphan Biovitrum
AB.
More than 30 years of interna-
tional experience in the phar-
maceutical and biotech industry.
Before co-founding Symphogen
A/S in 2000, held several scientific
and managerial positions at Novo
Nordisk A/S.
Global executive with extensive
branded and generic pharmaceu-
tical, retail pharmacy, wholesale
drug distribution, specialty, payor
and healthcare services leadership
experience in P&L accountable
roles.
Current positions
Chairman of the board of Kymab
Ltd. Board member of Basilea
Pharmaceutica Ltd.
Member of the Board of Directors
of H. Lundbeck A/S, Esperion
Theraptics, Inc. and Uniphar PLC.
Chairman of the board of Bioneer
A/S, Antag Therapeutics ApS, and
ResoTher Pharma ApS. Board
member of Bioporto A/S, Lyhne
& Co, and Alligator Bioscience.
Advisory board member of The
Faculty of Pharmaceutical Scienc-
es, Univ. of Copenhagen, and
DTU Bioengineering. Expert panel
member for InnoBooster grants.
Find out more about the Board of Directors at
zealandpharma.com/
board-of-directors-and-nomination-committee
Zealand shares at
December 31, 2020
2,570
Zealand warrants at
December 31, 2020
0
Change in owner-
ship in 2020
+1,570
800
0
+300
200
0
+200
Zealand Pharma ∞ Annual Report 2020
Zealand Board of Directors at March 11, 2021, continued
56
Bernadette Connaughton
Leonard Kruimer
Position
Board member
Board member
Year of birth
1958
Nationality
American
Gender
First elected
Female
2019
1958
Dutch
Male
2019
Alain Munoz
Board member
1949
French
Male
2005¹
Committee
AuC, NomCo
AuC Chair, NomCo
RemCo, NomCo
Independent
Yes
Yes
No
Michael John Owen
Board member
1951
British
Male
2012
RemCo, NomCo
Yes
Special
competencies
More than 30 years of global strategic,
commercial and leadership expertise,
and a broad perspective on the strategy,
capabilities and governance required for
successful execution in U.S. and interna-
tional markets.
More than 30 years of experience in
corporate finance, planning and strategy,
including 15 years in senior executive
positions in private and publicly listed
biotechnology companies.
Current positions
Board member of Halozyme Therapeu-
tics, Inc. and Syneos Health, Inc.
Chairman of the Board of BioInvent
International AB and independent board
member of Oncolytics. Member of the
investment advisory council of Karmijn
Kapitaal. Director AI Global Investments
(Netherlands) PCC Ltd.
Physician qualified cardiology and
intensive care. Experience in the pharma-
ceutical industry at senior management
level. Served as SVP for international
development in the Sanofi Group and in
the pharmaceutical division of Fournier
Laboratories.
Independent board member of Amryt
Pharma, Auris Medical and Oxthera.
Member of the Scientific advisory board
of Valneva SE.
Research experience focusing on the
immune system and more than 150 publi-
cations. Has held several leading positions
at GlaxoSmithKline, most recently as SVP
and head of biopharmaceuticals research.
Chairman of the board of Ossianix Inc.
Member of the board of Avacta Group
plc, ReNeuron Group plc, Sareum
Holdings plc, Iksuda Therapeutics and
GammaDelta Therapeutics. Adviser to the
CRT Pioneer Fund.
Zealand shares at
December 31, 2020
500
Zealand warrants at
December 31, 2020
Change in owner-
ship in 2020
0
0
4,000
0
0
5,250
0
0
300
0
0
¹ Resigned in 2006 and re-elected in 2007.
² Employee-elected board members are elected for a period of four years.
Zealand Pharma ∞ Annual Report 2020
Zealand Board of Directors at March 11, 2021, continued
57
Frederik Barfoed Beck
Gertrud Koefoed Rasmussen
Iben Louise Gjelstrup
Jens Peter Stenvang
Position
Employee-elected board member¹
Employee-elected board member¹
Employee-elected board member¹
Employee-elected board member ¹
Year of birth
Nationality
Gender
First elected
Committee
1967
Danish
Male
2020
Independent
No
Special
competencies
1972
Danish
Female
2020
No
1977
Danish
Female
2020
No
1954
Danish
Male
2014
No
Current positions
Senior Outsourcing Manager
Director, Clinical Operations, GI and
Translational Development
Principal Laboratory Technologist
Senior Application Specialist
Zealand shares at
December 31, 2020
4,798
Zealand warrants at
December 31, 2020
9,700
Change in owner-
ship in 2020
+2,000
0
10,750
0
840
2,750
+100
5,050
2,000
+2,250
¹ Employee-elected board members are elected for a period of four years..
Zealand Pharma ∞ Annual Report 2020
Corporate management
58
Zealand Corporate Management at March 11, 2021
Position
Year of birth
Nationality
Gender
Joined Zealand
Experience
Emmanuel Dulac
Executive Management
President and
Chief Executive Officer
1969
French
Male
2019
Matthew Dallas
Adam Steensberg
Ivan Møller
Executive Management
Senior Vice President and
Chief Financial Officer
Executive Management
Executive Vice President,
Research and Development, and Chief
Medical Officer
Senior Vice President,
Technical Development and Operations
1975
American
Male
2019
1974
Danish
Male
2010
1972
American/Danish
Male
2018
Prior to joining Zealand Pharma, Emmanuel
was Chief Commercial Officer for Alny-
lam Pharmaceuticals, a biopharmaceutical
company based in Boston, where he was
responsible for establishing country opera-
tions and building commercial capabilities
to successfully launch their first commercial
drug.
Emmanuel is a board member of Proteosta-
sis Therapeutics, Inc.
Prior to joining Zealand Pharma, Matt served
as chief financial officer at Aveo Pharmaceu-
ticals, leading finance for the publicly traded
biotechnology company and was addi-
tionally responsible for investor relations,
facilities and information technology. He was
previously CFO at CoLucid Pharmaceuticals,
which was acquired by Eli Lilly. His earlier
career included positions at Genzyme, NEN
Life Science Products, and Kimberly Clark.
Prior to joining Zealand, Adam led clini-
cal research teams as medical director at
Novo Nordisk and worked as a clinician at
Rigshospitalet, University of Copenhagen.
Adam was a medical and scientific advisor
in the areas of endocrinology, cardiology,
gastroenterology and rheumatology, and has
significant experience of leading regulatory
strategies.
Adam is a board observer at Beta Bionics, Inc.
and a board member of Cessatech ApS.
Prior to joining Zealand, Ivan worked for
Novartis in both generics and pharmaceu-
tical manufacturing, as well as in strategy,
quality assurance, contract manufacturing
and supply chain leadership in Germany, the
US and Switzerland.
Earlier, Ivan was project leader at Boston
Consulting Group in the pharmaceutical
R&D and manufacturing areas.
Zealand shares at
December 31, 2020
0
Zealand warrants at
December 31, 2020
113,848
Zealand PSUs at
December 31, 2020
RSUs at December
31, 2020
8,835
6,657
Change in ownership
in 2020
0
0
51,275
0
4,019
0
0
208,286
5,065
3,990
-17,011
0
81,420
2,803
3,018
0
Zealand Pharma ∞ Annual Report 2020 59
Position
Marino Garcia
Frank Sanders
Senior Vice President,
Business Development,
International Commercial and New Product
Planning
Senior Vice President,
President Zealand Pharma US, Inc.
Year of birth
1966
Nationality
Canadian/Spanish
Gender
Joined Zealand
Experience
Male
2018
Marino has almost 25 years of global pharma
and biotech experience in senior com-
mercial, corporate strategy, and business
development roles. He has held various US.
and international leadership positions of
increasing responsibility at pharmaceutical
companies, including Synergy Pharma, Apta-
lis Pharma, Vifor Pharma, Aspreva Pharma-
ceuticals, Pfizer and Eli Lilly & Co.
1969
American
Male
2020
Frank has an accomplished career with over 25 years of experience
in the pharmaceutical industry. Prior to Zealand, Frank was Senior
Vice President, US Commercial for Sage Therapeutics, a biopharma-
ceutical company based in Cambridge, Massachusetts. At Sage, he
had direct General Manager responsibility for Sales, Account Man-
agement, Marketing, Patient Services and Commercial Operations
and was responsible for the design, build, and overall performance
of the US commercial function. Prior to joining Sage, Frank served
as Vice President, Market Access Strategic Account Management
at Janssen Pharmaceutical Companies of Johnson & Johnson and
held a wide range of leadership roles for GlaxoSmithKline including
Vice President, Customer Strategy and Vice President, Field Sales.
Zealand shares at
December 31, 2020
0
Zealand warrants at
December 31, 2020
80,711
Zealand PSUs at
December 31, 2020
RSUs at December
31, 2020
3,062
3,918
Change in ownership
in 2020
0
0
43,217
0
5,864
0
Zealand Pharma ∞ Annual Report 2020 Financial statements
60
Financial
statements
Zealand Pharma ∞ Annual Report 2020 Con Fin – Content
Contents –
consolidated
financial
statements
Consolidated financial statements
Income statement
Statement of comprehensive income
Statement of financial position
Statement of cash flows
Statement of changes in equity
Business overview
Notes
1 Significant accounting policies, and significant
accounting estimates and assessments
2 Revenue
3 Royalty expenses
62
62
63
64
64
65
66
71
75
4 Research, development and administrative expenses 76
5 Fees to auditors appointed at the Annual
General Meeting
6 Information on staff and remuneration
7 Other operating, net
8 Financial income
9 Financial expenses
10 Income tax
11 Basic and diluted earnings per share
12
Impairment
13
Intangible assets
14 Property, plant and equipment
15 Right-of-use assets and lease liabilities
16
Inventory
17 Other investments
76
76
81
82
82
83
84
85
86
87
89
90
91
61
91
91
92
92
92
92
93
93
94
94
94
97
99
99
99
99
99
18 Trade receivables
19 Prepaid expenses
20 Other receivables
21 Marketable securities
22 Cash and cash equivalents
23 Share capital
24 Deferred revenue
25 Provision
26 Other liabilities
27
Contingent assets, liabilities and
other contractual obligations
28 Financial risks
29 Business combinations
30 Related parties
31 Adjustments for non-cash items
32 Change in working capital
33 Significant events after the balance sheet date
34 Approval of the annual report
Zealand Pharma ∞ Annual Report 2020 Con Fin – Income Statement
62
Consolidated financial statements
Consolidated income statement for the years ended
December 31, 2020, 2019 and 2018
Consolidated statements of comprehensive income for the years ended
December 31, 2020, 2019 and 2018
DKK thousand
Note
2020
2019
2018
DKK thousand
Note
2020
2019
2018
Net result for the year
Other comprehensive income
Items that will be reclassified to income statement
when certain conditions are met:
Exchange differences on translation of foreign operations
Comprehensive result for the year
-846,729
-571,541
581,278
8,977
-837,752
0
-571,541
0
581,278
Total comprehenvise income attributable to
shareholders of Zealand Pharma A/S
-837,752
-571,541
581,278
The Business overview on page 65 and the accompanying notes on pages 66 to 99 form an
integral part of these financial statements.
Revenue
Cost of goods sold
Royalty expenses
Gross margin
2
16
3
353,314
-90,565
0
262,749
41,333
0
-415
40,918
37,977
0
-3,356
34,621
Research and development expenses
Sales and marketing expenses
Administrative expenses
Operating expenses
Other operating items, net
Operating result
Financial income
Financial expenses
Result before tax
Income tax (expense) benefit
Net result for the period
Earnings/(loss) per share – basic (DKK)
Earnings/(loss) per share - diluted (DKK)
Net result attributable to shareholders
of Zealand Pharma A/S
4,6
4,6,12
4,6
-604,081
-285,256
-202,770
-1,092,107
36,997
-792,361
7
-561,423
0
-67,881
-629,304
-438,219
0
-43,543
-481,762
444 1,099,526
652,385
-587,942
8
9
10
11
11
2,022
-49,314
-839,653
14,655
-3,390
-576,677
9,988
-37,322
625,051
-7,076
-846,729
5,136
-571,541
-43,773
581,278
-22.07
-22.07
-16.91
-16.91
18.94
18.94
-846,729
-571,541
581,278
Zealand Pharma ∞ Annual Report 2020
Con Fin – Financial position
63
Consolidated financial statements
Consolidated statements of financial position
as of December 31, 2020 and 2019
DKK thousand
Note
2020
2019
DKK thousand
Note
2020
2019
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Deposits
Corporate tax receivable
Prepaid expenses
Deferred tax assets
Other investments
Total non-current assets
Current assets
Inventories
Trade receivables
Prepaid expenses
Corporate tax receivable
Other receivables
Marketable securities
Cash and cash equivalents
Total current assets
12,13
14
15
10
19
10
17
57,485
85,040
127,998
16,650
1,268
13,117
8,370
32,333
342,261
2,480
39,708
85,632
9,012
0
0
0
35,632
172,464
16
18
19
10
20
21
22
0
65,040
751
46,484
30,755
35,156
7,101
5,500
7,935
9,942
297,345
299,448
960,221 1,081,060
1,419,688 1,427,050
Liabilities and equity
Share capital
Share premium
Currency translation reserve
Accumulated loss
Shareholders' equity
Deferred revenue
Other liabilities
Lease liabilities
Non-current liabilities
Trade payables
Corporate tax payables
Lease liabilities
Deferred revenue
Discount and rebate provision
Other liabilities
Current liabilities
23
39,800
36,055
3,470,787 2,650,142
0
-2,290,253 -1,443,524
1,229,311 1,242,673
8,977
24
26
15
15
24
25
26
44,587
16,744
116,047
177,378
70,384
30,394
14,072
53,182
36,673
150,555
355,260
83,639
0
78,068
161,707
57,533
614
7,692
56,251
0
73,044
195,134
Total liabilities
532,638
356,841
Total assets
1,761,949 1,599,514
Total shareholder' equity and liabilities
1,761,949 1,599,514
Zealand Pharma ∞ Annual Report 2020
Con Fin – Cash Flow
Con Fin – Equity
Consolidated financial statements
Consolidated statements of cash flows for the years
ended December 31, 2020, 2019 and 2018
Consolidated statements of changes in shareholders' equity
at December 31, 2020, 2019 and 2018
DKK thousand
Note
2020
2019
2018
DKK thousand
Share
capital premium
Share Translation Retained
losses
reserve
64
Total
Net result for the year
Bargain purchase
Adjustments for other non-cash items
Change in working capital
Interest received
Interest paid
Deferred revenue
Sale of future royalties and milestones
Income tax paid/received
Cash flow from operating activities
29
31
32
24
Acquisition of Valeritas business, net of cash acquired 29
Transfer from restricted cash related to royalty bond
Sale of future royalties and milestones
Royalty expenses regarding sale of
future royalty and milestones
Change in deposits
Purchase of other investments and marked securities 17
14
Purchase of property, plant and equipment
13
Purchase of intangible assets
Sale of property, plant and equipment
Dividends on securities
Cash flow from investing activities
-846,729
-36,395
143,138
97,818
895
-4,562
-42,881
0
0
-688,716
-167,791
0
0
0
-3,972
0
-25,044
0
0
0
-196,807
-571,541
0
9,207
10,873
5,413
-3,390
139,890
581,278
0
101,930
12,785
4,263
-16,705
0
0 -1,105,471
-39,500
-461,420
93
-409,455
0
0
0
6,124
0 1,275,802
0
-6,250
-22,803
-21,036
-2,480
25
878
-51,666
Proceeds from issuance of shares related to
exercise of share based compensation
Proceeds from issuance of shares
Costs related to issuance of shares
Lease installments
Cash flow from financing activities
Decrease/increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Exchange rate adjustments
Cash and cash equivalents at end of period
23
23
15
41,363
791,503
-42,706
-29,219
760,941
52,468
645,145
-14,444
-8,689
674,480
-124,582
22 1,081,060
3,743
213,359
860,635
7,066
960,221 1,081,060
22
-170,331
-33
-225,719
-4,038
0
0
1,020
882,925
2,884
0
-22
-158,311
-155,449
266,056
588,718
5,861
860,635
Equity at January 1, 2020
36,055 2,650,142
0 -1,443,524 1,242,673
Other comprehensive income
Net result for the year
Share based compensation
Capital increases
Cost related to capital increases
Equity at December 31, 2020
0
0
0
3,745
0
0
0
30,485
832,866
-42,706
39,800 3,470,787
8,977
0
0
0
0
0
-846,729
0
0
0
8,977
-846,729
30,485
836,611
-42,706
8,977 -2,290,253 1,229,311
Equity at January 1, 2019
30,787 1,957,477
0
-871,983 1,116,281
Other comprehensive income
Net result for the year
Share based compensation
Capital increases
Cost related to capital increases
Equity at December 31, 2019
0
0
0
5,268
0
0
14,764
692,345
-14,444
36,055 2,650,142
0
0
0
-571,541
-571,541
0
14,764
0
0
697,613
0
0
0
-14,444
0
0 -1,443,524 1,242,673
Equity at January 1, 2018
30,751 1,937,179
0 -1,453,261
514,669
Other comprehensive income
Net result for the year
Share based compensation
Capital increases
Equity at December 31, 2018
0
0
0
36
0
0
17,472
2,826
30,787 1,957,477
0
0
0
0
0
0
581,278
0
0
0
581,278
17,472
2,862
-871,983 1,116,281
Zealand Pharma ∞ Annual Report 2020
Con Fin – Business overview
65
Consolidated financial statements
Business overview
Zealand (the “Company”, the “Group”, “Zealand” and “we”) was founded in 1998 and is a bio-
technology company focused on the discovery and development of innovative peptide-based
medicines. More than 10 drug candidates invented by Zealand have advanced into clinical de-
velopment, of which two have reached the market. Zealand’s current pipeline of internal prod-
uct candidates focus on specialty gastrointestinal and metabolic diseases. Zealand’s portfolio
also includes two clinical license collaborations with Boehringer Ingelheim and one discover
and develop collaboration with Alexion Pharmaceuticals.
In September 2018 we entered into an agreement with Royalty Pharma to transfer all the royal-
ties that we were due to earn from our 2003 agreement with Sanofi in exchange for an upfront
one-time payment of USD 205 million. Excluded from this agreement was a potential milestone
payment from Sanofi of up to USD 15 million.
In April 2020, we acquired substantially all of the medical technology business from Valeritas
Holdings, Inc. Refer to note 29.
Please refer to page 27 for an overview of our Pipeline.
Company summary
Zealand Pharma A/S subsidiaries
ZP Holding SPV K/S
ZP General Partner 1 ApS
Zealand Pharma US Inc.
Zealand Pharma California US, LLC.
Encycle Therapeutics Inc.
ZP SPV 3 K/S
ZP General Partner 3 ApS
ZP Holding SPV K/S subsidiaries
ZP SPV 1 K/S
ZP General Partner 2 ApS
Domicile
Owner-
ship
Voting
rights
Denmark
Denmark
United States
United States
Canada
Denmark
Denmark
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Denmark
Denmark
100%
100%
100%
100%
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 1
66
Notes
Note 1 – Significant accounting policies, and significant accounting estimates and assessments
Significant accounting policies
Basis of preparation
The consolidated financial statements of Zealand have been prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB) and as adopted by the EU and additional requirements under the Danish
Financial Statements Act (class D).
The Board of Directors considered and approved the 2020 Annual Report of Zealand on March
10, 2021. The Annual Report will be submitted to the shareholders of Zealand for approval at
the Annual General Meeting on April 15, 2021.
The consolidated financial statements are presented on a historical cost basis, except for cer-
tain financial assets and liabilities measured at fair value.
Historical cost is generally based on the fair value of the consideration given in exchange for
goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date, regardless of
whether that price is directly observable or estimated using another valuation technique.
For financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3
based on the degree to which the inputs to the fair value measurements are observable and
on the significance of the inputs to the fair value measurement as a whole. The inputs are
described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
that the entity can access at the measurement date
• Level 2 inputs are inputs, other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly
• Level 3 inputs are fair value measures derived from valuation techniques that include inputs
for the asset or liability that are not based on observable market data (unobservable inputs).
The consolidated financial statements are presented in Danish kroner (DKK), which is the func-
tional currency of the Parent Company.
In the narrative sections of the financial statements, comparative figures for 2019 and 2018 are
shown in brackets if not indicated otherwise.
Implementation of new and revised standards and interpretations
A few amendments apply for the first time in 2020, but do not have an impact on the consoli-
dated financial statements of the Group.
Amendments to IFRS 3: Definition of a Business
The amendment to IFRS 3 clarifies that to be considered a business, an integrated set of activ-
ities and assets must include, at a minimum, an input and a substantive process that together
significantly contribute to the ability to create output. Furthermore, it clarified that a business
can exist without including all of the inputs and processes needed to create outputs.
Amendments to IFRS 7, IFRS 9 and IAS 39: Interest Rate Benchmark Reform
The amendments to IFRS 7, IFRS 9 and IAS 39 Financial Instruments: Recognition and Meas-
urement provide a number of reliefs, which apply to all hedging relationships that are directly
affected by interest rate benchmark reform. A hedging relationship is affected if the reform
gives rise to uncertainties about the timing and or amount of benchmark-based cash flows of
the hedged item or the hedging instrument.
Amendments to IAS 1 and IAS 8: Definition of Material
The amendments provide a new definition of material that states “information is material if
omitting, misstating or obscuring it could reasonably be expected to influence decisions that
the primary users of general purpose financial statements make on the basis of those financial
statements, which provide financial information about a specific reporting entity.”
The amendments clarify that materiality will depend on the nature or magnitude of informa-
tion, either individually or in combination with other information, in the context of the financial
statements. A misstatement of information is material if it could reasonably be expected to
influence decisions made by the primary users.
Zealand Pharma ∞ Annual Report 2020 67
Notes
Note 1 – Significant accounting policies, and significant accounting estimates and assessments (continued)
Standards and interpretations issued, but not yet applied
IASB has issued a number of new and amended standards which are not yet effective. None of
these new standards or amendments are expected to impact the Group.
Functional currency
A functional currency is determined for each Group entity. The functional currency is the cur-
rency used in the primary financial environment in which the individual Group entity operates.
Accounting policies
The Group has applied new accounting policies to the following areas as a consequence of the
acquisition of the Valeritas business as disclosed in note 29.
Foreign currency translation
Transactions denominated in currencies other than the transacting entity's functional currency
are translated at the exchange rates on the transaction dates.
• Revenue (extended)
• Cost of goods sold
• Sales and marketing expenses (extended)
• Impairment testing (Extended)
• Inventories
• Trade receivables write-down (extended)
• Discount and rebate provision
• Business combinations
The accounting policies are apart from the line items above unchanged from last year. The
accounting policies for specific line items and transactions are included in the respective notes
to the financial statements except for basis and principles of consolidation, foreign currency
translation, classification of income statement, segment reporting, classification of financial
assets and the cash flow statement, which are included below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company
and entities (including structured entities) controlled by the Company and its subsidiaries. Con-
trol is achieved when the Company:
• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.
The Company reassesses whether it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of control listed above.
Principles of consolidation
The consolidated financial statements are prepared on the basis of the financial statements of
the parent company and the individual subsidiaries, which are based on uniform accounting
policies and accounting periods in all Group entities. Consolidation of Group entities is per-
formed after elimination of all intra-Group transactions, balances, income and expenses.
Exchange differences arising between the rate on the transaction date and the rate on the pay-
ment day are recognized in the income statement as financial income or financial expenses.
Receivables, payables and other monetary items denominated in foreign currencies that have
not been settled at the statement of financial position date are translated by applying the ex-
change rates at the statement of financial position date. Differences arising between the rate at
the statement of financial position date and the rate at the date on which the receivable or pay-
able arose are recognized in the income statement as financial income and financial expenses.
Recognition in the consolidated financial statements
On preparation of the consolidated financial statements, the income statements of entities with
a functional currency different from DKK are translated at the average exchange rate for the pe-
riod, and balance sheet items are translated at the exchange rate ruling at the reporting date.
Foreign exchange differences arising on translation of the equity of foreign entities and on
translation of receivables considered part of net investment are recognised directly in other
comprehensive income.
Foreign exchange differences arising on the translation of income statements from the average
exchange rate for the period to the exchange rate ruling at the reporting date are also recog-
nised in other comprehensive income. Adjustments are presented under a separate translation
reserve in equity.
Materiality in financial reporting
In preparing the Annual Report, Management seeks to improve the information value of the
consolidated financial statements, the notes to the statements and other measures disclosed by
presenting the information in a way that supports the understanding of the Group’s perfor-
mance in the reporting period.
This objective is achieved by presenting fair transactional aggregation levels on line items and
other financial information, emphasising information that is considered of material importance
to the user and making relevant rather than generic descriptions throughout the Annual Report.
Zealand Pharma ∞ Annual Report 2020 68
Notes
Note 1 – Significant accounting policies, and significant accounting estimates and assessments (continued)
All disclosures are made in compliance with the International Financial Reporting Standards, the
Danish Financial Statements Act and other relevant regulations, ensuring a true and fair view
throughout the Annual Report.
Consolidated financial statements
Income statement
The expenses recognized in the income statement is presented as an analysis using a classifica-
tion based on their function.
Cost of goods sold
Cost of goods sold includes raw materials, labor costs, manufacturing overhead expenses and
reserves for anticipated scrap and inventory obsolescence.
Segment reporting
The Group is managed by a Corporate Management team reporting to the Chief Executive
Officer. The Corporate Management team, including the Chief Executive Officer, represents the
chief operating decision maker (CODM). No separate business areas or separate business units
have been identified in connection with line of business, product candidates or geographical
markets. Consequently, there is no segment reporting concerning business areas or geograph-
ical areas.
Statement of financial position
Financial assets
Financial assets include receivables, marketable securities and cash. Financial assets are divided
into categories of which the following are relevant for the Group:
1. Financial assets at amortized cost comprising of receivables with contractual cash flows
solely comprising of payment of principal and interest and which are held for the purpose of
collecting the contractual cash flow.
2. Financial assets at fair value through the income statement, which are marketable securities
categorized as equity instruments are held for trading and classified at fair value through
profit and loss.
3. Equity investments. These investments are measured at fair value through the profit and loss.
Financial assets are assigned to the different categories by Management on initial recognition,
depending on the cash flow characteristics and purpose for which the assets were acquired.
All financial assets are recognized on their settlement date. All financial assets other than those
classified at fair value through the income statement are initially recognized at fair value, plus
transaction costs.
Statement of cash flows
The cash flow statement is prepared in accordance with the indirect method on the basis of the
operating result for the year. The statement shows the cash flows broken down into operating,
investing and financing activities, cash and cash equivalents at the beginning and end of the
year, and the impact of the calculated cash flows on cash and cash equivalents. The cash flow
statement cannot be derived directly from the balance sheet and income statement.
Cash flows in foreign currencies are translated into Danish kroner at the exchange rate on the
transaction date.
Cash flow from operating activities
Cash flow from operating activities is presented indirectly and is calculated as the net operating
result adjusted for depreciation and amortization, sale of royalties, non-cash operating items,
changes in net working capital, financial items paid, and income tax benefits received and paid.
Cash flow from investing activities
Cash flow from investing activities includes cash flows from the sale of future royalties and
milestone relating to the Sanofi license, purchase and sale of property, plant and equipment, in-
vestments and deposits, net cashflow from acquisition of Valertias activities, as well as transfers
to and from restricted cash related to the royalty bond.
Cash flow from financing activities
Cash flow from financing activities includes proceeds from issuance of new ordinary shares,
proceeds from issuance of shares related to exercise of sharebased compensation. and related
costs, finance lease installments and loan financing.
Cash and cash equivalents
Cash and cash equivalents comprise cash and bank balances. Cash and cash equivalents are
instruments with original maturities of 90 days or less. The Company does not have any cash
equivalents for the years ended December 31, 2020 and 2019.
Information on COVID-19
Our business, operations and clinical studies were, of course, impacted by the effects of
COVID-19. Although our clinical studies continued without interruption during 2020, there
were delays and increased total costs arising from the implications of COVID-19.
However, we have not recognized any write-offs, impairments of assets, or losses to onerous
contracts due to COVID-19. The impairment of V-Go IP as explained in note 12 was due to
Zealand Pharma ∞ Annual Report 2020 69
Notes
Note 1 – Significant accounting policies, and significant accounting estimates and assessments (continued)
Managements decision to allocate resources to support future product launches while limiting
the investment in the V-Go product.
Notes including management’s estimates and judgements
The COVID-19 pandemic is also having an effect on other aspects of our business, including:
our third-party manufacturers, and other third parties; albeit with no material effect or impact.
The COVID-19 pandemic may, in the long-term, affect the productivity of our staff; our ability
to attract, integrate, manage and retain qualified personnel or key employees; our global supply
chains and relationships with vendors and other parties; significant disruption of global financial
markets; and reduced ability to secure additional funding. We continuously monitor the
COVID-19 pandemic and its potential impact on our business and financials.
Significant accounting estimates and judgments
The preparation of the consolidated financial statements requires Management to make judg-
ments and estimates that affect the reported amounts of revenues, expenses, assets and liabil-
ities, and the accompanying disclosures. In applying our accounting policies, Management is
required to make judgements and estimates about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and associated assumptions are
based on historical experience and other factors that are considered to be relevant. Actual re-
sults may differ from these estimates. The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are recognized in the period in which
the estimate is revised if the revision affects only that period, or in the period of the revision and
future periods if the revision affects both current and future periods.
The estimates used are based on assumptions assessed to be reasonable by Management.
However, estimates are inherently uncertain and unpredictable. The assumptions may be
incomplete or inaccurate, and unexpected events or circumstances may occur. Furthermore,
we are subject to risks and uncertainties that may result in deviations in actual results compared
with estimates.
Please refer to the table below to see in which note the accounting estimates and judgements
are presented.
2 – Revenue
6 – Employee incentive programs
13 – Encycle Therapeutics, Inc. acquisition
25 – Discount and rebate provision
29 – Business Combinations
Estimates
Judgements
X
X
X
X
X
X
X
X
Additional description of Management estimates and judgements made are described below
Revenue recognition (management estimate and judgement)
Revenue comprises license payments, milestone payments, product revenue and royalty in-
come. License payments which provide the buyer with the right to use the license as it exists at
the date of transfer are recognized upon transfer of the associated licensing rights at the point
at which the buyer obtains the right to use the license. Upon entering into agreements with
multiple components, Management determines whether individual components are distinct,
which is the case if the buyer can obtain benefits from the goods or service and the promise is
distinct within the context of the contract. If no individual components are distinct, the contract
is treated as a single performance obligation. When entering into licensing and development
agreements, a critical judgment relates to whether the customer could continue development
of the Intellectual Property (IP) to the stage promised by Zealand under the promise to provide
R&D services. If this is not the case, the IP and the R&D services are considered a single perfor-
mance obligation.
Milestone payments are related to the collaborative research agreements with commercial
partners and are recognized when it is highly probable that Zealand Pharma will become enti-
tled to the milestone which is generally when the milestone is achieved. Royalty income from
licenses is based on third-party sales of licensed products and is recognized in accordance with
contract terms in the period in which the sales occur.
Revenue from transactions involving the rendering of services which are consumed by the cus-
tomer simultaneously with delivery is recognized along with delivery of the services.
Employee incentive programs (management estimates)
In accordance with IFRS 2, Share-based Payment, the fair value of the warrants classified
as equity settled is measured at the grant date and recognized as an expense in the income
statement over the vesting period. The fair value of each warrant granted during the year is
Zealand Pharma ∞ Annual Report 2020
Notes
Note 1 – Significant accounting policies, and significant accounting estimates and assessments (continued)
estimated using the Black– Scholes option pricing model. This requires the input of subjective
assumptions such as:
future successful development, regulatory, and commercial-related milestones. There is also a
potential mid-single digit royalty on global net sales from the lead asset.
70
The acquistion has been measured based on the overall cost of the transaction less the fair
value of the cash balance and trade payables also acquired. The fair value of the contingent
considerations related to Encycle Therapeutics was assessed to be zero as per the acquisition
date based on the significant uncertainty of the outcome of the development to be performed
by Zealand.
Business Combinations (management estimates and judgements)
In applying the acquisition method of accounting, estimates are an integral part of assessing fair
values of several identifiable assets acquired and liabilities assumed, as observable market prices
are typically not available.
Valuation techniques where estimates are applied typically relate to determining the present
value of future uncertain cash flows or assessing other events in which the outcome is uncer-
tain at the date of acquisition.
More significant estimates are typically applied in accounting for Intellectual properties, cus-
tomer relationships, trade receivables, deferred tax and debt.
The calculation of the fair value of intangible assets is most sensitive to the revenue and gross
margin growths. Please refer to note 29 for further information on Business Combinations.
As a result of the uncertainties inherent in fair value estimation, measurement period adjust-
ments may be applied.
• The expected stock price volatility, which is based on the historical volatility of Zealand’s
share price
• The selection of the risk-free interest rate, which is determined as the interest rate on Danish
government bonds with a maturity equal to the expected term
• The duration of the warrants, which is assumed to be until the middle of the exercise period
The total fair value of the warrants is recognized in the income statement over the vesting
period. An adjustment is made to reflect an expected attrition rate during the vesting period.
The attrition rate is re-estimated at year-end based on the historical attrition rate resulting
in recognition of an expense equal to grant date fair value of the number of warrants which
actually vest.
Discount and rebate (management estimate and judgement)
Provisions regarding sales rebates and discounts granted to government agencies, wholesal-
ers, retail pharmacies, managed care and other customers are recorded at the time the related
revenues are recorded or when the incentives are offered.
For both managed care rebates and the medicare part D rebates, the key assumptions relate
to the rebate percentages by each pharmacy as determined in each pharmacy's contract with
the Company and forecasted number of prescriptions that will be filled by each pharmacy (re-
ferred to as payor mix). For co-pay card redemptions, the key assumptions relate to expected
settlement rate for sales units remaining in the channel that have yet to be presented under
co-pay terms. These assumptions are made based on historical actuals, which are used to es-
timate forecasted trends, including payor mix and settlement rates, which are used to estimate
the expected settlement of managed care rebates and medicare part D rebates, and co-pay
card redemption, and the specific terms in the individual agreements. Unsettled rebates are
recognized as provisions when the timing or amount is uncertain. Where absolute amounts are
known, the rebates are recognized as provisions.Please refer to note 25 for further information
on sales rebates and provisions.
Encycle Therapeutics, Inc. acquisition (management judgement)
As of October 2019, Zealand acquired all outstanding shares in Encycle Therapeutics, Inc. and
all its intellectual property, including all rights to develop and commercialize the lead asset.
Zealand did not acquire any infrastructure or personnel costs with this transaction. The total
future consideration for the acquisition could potentially reach USD 80 million in one-time
contingent value rights (“earn-outs”), of which USD 10 million in earn-outs could be payable up
to the successful completion of a Phase 2 study. All earn-outs are payable in cash and/or Zea-
land equity at Zealand’s discretion, are linked to the lead asset only, and contingent on certain
Zealand Pharma ∞ Annual Report 2020 Con Fin – Note 2
71
Notes
Note 2 – Revenue
Accounting policies
Revenue comprises license payments, milestone payments, royalty income and sale of goods.
License payments which provide the buyer with the right to use the license as it exists at the date
of transfer are recognized upon transfer of the associated licensing rights at the point at which
the buyer obtains the right to use the license. Milestone payments related to the collaborative
research agreements with commercial partners are recognized when it is highly probable that
Zealand Pharma will become entitled to the milestone which is generally when the milestone is
achieved. Royalty income from licenses is based on third-party sales of licensed products and is
recognized in accordance with contract terms in the period in which the sales occur.
Revenue from transactions involving the rendering of services which are consumed by the
customer simultaneously with delivery is recognized along with delivery of the services.
Upon entering into agreements with multiple components, Management determines whether
individual components are distinct, which is the case if the buyer can obtain benefits from the
goods or service and the promise is distinct within the context of the contract. If no individual
components are distinct, the contract is treated as having a single performance obligation.
Revenue is recognized based on the percentage of completion of the R&D services, which is
estimated based on the expenses incurred during that period. Zealand applies the output based
method (budget cost) when determining the timing of satisfaction of performance obliga-
tions as the development services are performed by an indeterminate number of acts over the
development timeline and accordingly, time elapsed and budget costs as an output measure is
considered to be the unit which most appropriately depicts the transfer of control of services to
Alexion In total.
Trade receivables are recognised as services delivered are invoiced to the customer and are not
adjusted for any financing components as credit terms are short – typically between 14 to 60
days – and the financing component therefore insignificant. Where services delivered have yet
to be invoiced and invoices on services received from vendors have still to be received, con-
tract assets and accrued cost of services are recognised at the reporting date.
Revenue from sale of goods
Revenue from sale of goods is recognized at a point in time when control of the goods are
transferred to the customer and recorded net of adjustments for managed care rebates, whole-
sale distributions fees, cash discounts, prompt pay discounts, and co-pay card redemptions, all
of which are established at the time of sale.
In order to prepare the consolidated financial statements, the company is required to make es-
timates regarding the amounts earned or to be claimed on the related product sales, including
the following:
• Managed care and Medicare rebates, which are based on the estimated end user pay or mix
and related contractual rebates;
• distribution fees, prompt pay discounts and other discounts, which are recorded based on
specified payment terms, and which vary by customer and other incentive programs; and
• Co-pay card redemption charges which are based on the net transaction costs of prescrip-
tions filled via a company-subsidized card program and other incentive programs.
Zealand believes rebates and co-pay card redemptions related to sales in the U.S. are complex
in nature and establishing appropriate provisions requires assessment of multiple factors as well
as significant judgement and estimation by management as not all conditions are known at the
time of sale.
The Group has concluded that it is the principal in this revenue arrangements since it controls
the goods before transferring them to the customer.
Return Reserve
We record allowances for product returns as a reduction of revenue at the time product sales
are recorded. Several factors are considered in determining whether an allowance for product
returns is required, including the customers’ return rights and our historical experience with
returns and the amount of product sales in the distribution channel not consumed by patients
and subject to return. Management replies on historical return rates to estimate returns. In the
future, as any of these factors and/or the history of product returns change, adjustments to the
allowance for product returns will be reflected
Revenue from Alexion
In 2020, we recognized DKK 42.9 million (2019: 37.4 million) as income from the license,
research and development agreement signed in March 2019 reflecting the progress on the
lead project. Under the agreement DKK 97.8 million is accounted for as deferred revenue at
December 31, 2020.
In 2019, DKK 0.6 million of other revenue is recognized related to other projects with Alexion.
No revenue was recognized in 2018.
Revenue from Sanofi
No revenue was recognized in 2020 or 2019. In 2018, we recognized DKK 24.9 million as roy-
alty income, reflecting milestones related to sales of Lyxumia® of EUR 9.5 million and sales of
Soliqua® 100/33 of EUR 23.8 million. No milestone revenue was received.
Zealand Pharma ∞ Annual Report 2020 Notes
Note 2 – Revenue (continued)
Revenue from Boehringer Ingelheim (BI)
In 2020, we recognized DKK 149.1 million as income from milestone payments from BI related
to the initiation of the Phase 2 trial for the long-acting GLP-1/glucagon.
No revenue was recognized from BI in 2019 or 2018, as no milestone event was achieved.
Revenue from sale of goods
In 2020, we recognized DKK 161.3 million as net sales from goods sold generated from our
V-Go product. The rights to the V-Go product was acquired on April 2, 2020 as part of the busi-
ness combination described in note 29. Thus Revenue from sale of the V-Go product recog-
nized in 2020 solely relates to the period April 2 - December 31.
Revenue from other agreements
In 2020, we recognized zero revenue from other agreements.
In 2018 and 2019, we recognized DKK 9.8 million and DKK 3.3 million, respectively, in revenues
from a milestone payment and license option payments, respectively, from undisclosed coun-
terparties relating to two Material Transfer Agreements.
In 2018, we recognized DKK 3.3 million in revenue from milestone payments from Protagonist
Therapeutics in connection with the start of Phase 2 with the novel hepcidin mimetic PTG-300.
Zealand is managed and operated as one business unit, which is reflected in the organizational
structure and internal reporting. No separate lines of business or separate business entities have
been identified with respect to any of the product candidates or geographical markets and no
segment information is currently disclosed in the internal reporting.
Information about Geographical Areas
Net revenue in Germany comprise DKK 149.1 million in milestone revenue whereas net sales in
US comprise DKK 204.2 million including license revenues and sale of goods. No other country
accounts for more than 10% of the net total sales. In 2020 we had 3 significant customers with
revenue from sale of goods. Customer A, amounted to DKK 60.6 million (2019: DKK 0 million),
Customer B amounted to DKK 48.4 million (2019: DKK 0 million) and Customer C DKK 37.7 mil-
lion (2019: DKK 0 million).
Of the Company’s non-current assets, which comprise intangible assets, property, plant and
equipment, right-of-use assets and prepayments, DKK 184.0 million is located in Denmark and
DKK 71.1 million in US.
72
Recognized revenue can be specified as follows for all agreements:
DKK thousand
2020
2019
2018
Boehringer Ingelheim International GmbH
Alexion Pharmaceuticals Inc.
Undisclosed counterpart
Protagonist Therapeutics, Inc.
Total license and milestone revenue
Sanofi-Aventis Deutschland GmbH
Total royalty revenue
V-Go gross sales
Reductions*
Total revenue from sale of goods
149,120
42,881
0
0
192,001
0
38,021
3,312
0
41,333
0
0
303,658
-142,345
161,313
0
0
0
0
0
0
0
9,845
3,274
13,119
24,858
24,848
0
0
0
Total revenue
353,314
41,333
37,977
Royalty revenue can be specified as follows:
Soliqua®
Lyxumia®
Total royalty revenue
0
0
0
0
0
0
Total revenue recognized over time
Total revenue recognized at a point in time
* Discounts and rebates are specified below and discussed further in note 25..
42,881
310,433
38,021
3,312
17,786
7,072
24,848
0
37,977
Sales gross-to-net reconciliation
DKK thousand
2020
2019
2018
V-Go gross sales
Customer and Contractual price reductions
Returns and sales reductions
Net sales
303,658
-133,924
-8,421
161,313
0
0
0
0
0
0
0
0
Zealand Pharma ∞ Annual Report 2020
Notes
Note 2 – Revenue (continued)
Accounting for the Alexion Pharmaceuticals, Inc. Agreement
In March 2019, Zealand entered into a license, research and development agreement with
Alexion Pharmaceuticals, Inc. (Alexion) to develop novel therapies to treat complement medi-
ated diseases. This agreement provided Zealand an immediate cash injection as well as further
external validation of Zealand’s peptide platform.
The collaboration with Alexion is not limited to C3 but offers the potential to work on identifi-
cation of peptide inhibitors to up to three additional components of the complement cascade.
Zealand will have responsibility for the C3 project and other targets up to IND and Alexion will
then progress the peptides into clinical development.
Under the Alexion license, research and development agreement, Zealand has received an
upfront non-refundable payment of USD 25 million for the C3 program and a concurrent USD
15 million equity investment in Zealand at a premium to the market price. The agreement also
provides the potential for development-related milestones of up to USD 115 million, as well as
up to USD 495 million in sales-related milestones and high single- to low double-digit royalty
payments. The 3 additional programs will provide further non-refundable upfront payments
(USD 15 million each), development and sales milestone and royalties.
Accounting treatment
The non-refundable up-front fee was allocated to the combined license, research and devel-
opment services, and is being recognized as revenue along with provision of the research and
development services under the lead program. Expenses to provide the services is being recog-
nized when incurred. Further, the premium over the market share price on the Zealand shares
subscribed by Alexion, DKK 12.7 million, is attributed to the Agreement as further consideration
and consequently also recognized over the period over which the R&D services are provided. ,
Alexion has paid USD 40 million, corresponding to DKK 262.9 million that as of December 31,
2019 has affected equity by DKK 85.6 million, deferred revenue by DKK 139.9 million, and reve-
nue by DKK 37.4 million in 2019. Hence the cash flow from operating activities was DKK 177.3
million and the cash flow from financing activities was DKK 85.6 million.
In 2020 revenue of DKK 42.9 million was recognized.
Milestone payments, if any, will be recognized as revenue when the relevant milestones are
achieved as they relate to performance obligations already satisfied at this stage. Royalty pay-
ments, if any, will be recognized along with the underlying sales.
73
Significant judgement applied (performance obligations and revenue recognition)
Determination of whether the license transferred and the research and development services
constitute separate performance obligations, or form part a single performance obligation
comprising a combined output has a significant impact on the accounting treatment. Zealand
has applied significant judgment to determine whether the promised services are distinct and
concluded that Alexion cannot benefit from the license alone. It is Zealand assessment that the
R&D services under this agreement requires specific Zealand know-how and expertise which
cannot be easily identified or sourced externally. Therefore, Alexion would not in the absence
of the contractual provisions have had the practical ability to engage a third-party R&D service
provider to provide the agreed R&D services.
Judgments and estimates in respect of output is made when entering the agreement and is
based on research and development budgets and plans. The planned service periods (output)
and budget costs for the respective research and development projects are assessed on an
ongoing basis. If the expected service period is changed significantly, this will require a reas-
sessment.
All Zealand’s revenue-generating transactions have been subject to such evaluation by man-
agement.
As the nature of the collaboration with Alexion may affect the accounting treatment of the
agreement, Zealand has considered whether the agreement takes the form of a collaborative
partnership with Alexion rather than a customer-vendor agreement. After consideration of all
facts and circumstances, Zealand has assessed that the agreement takes the form of a custom-
er-vendor relationship. Accordingly, the agreement is treated under the guidelines of IFRS 15
Revenue from Contracts with Customers.
As any additional programs are optional and paid for separately, they are not considered part
of the initial agreement. It has been considered whether the options for additional compo-
nents represent a material right and, thus, a separate performance obligation under the initial
agreement to which a portion of the initial upfront payment should be allocated. Zealand has
determined that the probability of exercising the option is low and in combination with the fact
that the development is significantly less advanced than the lead target, we have determined
that the options do not represent a material right.
Accounting for the Sanofi License Agreement
In 2003, Zealand entered into a license agreement with Sanofi (the Sanofi License Agreement),
pursuant to which Zealand granted Sanofi exclusive rights to its patents, know-how and other
intellectual property relating to lixisenatide, for all fields. Pursuant to the Sanofi License Agree-
Zealand Pharma ∞ Annual Report 2020 Notes
Note 2 – Revenue (continued)
ment, which has been amended over the years, Sanofi assumed responsibility for the further
development, manufacturing and marketing of lixisenatide, and we cannot research or develop
lixisenatide while the Sanofi License Agreement remains in effect.
Under the Sanofi License Agreement, Zealand were eligible to receive remaining milestone
payments relating to commercialized products of up to USD 100 million, contingent on the
achievement of certain sales levels, as well as royalties on global sales of such products. Royal-
ties correspond to tiered, low-double-digit percentages of Sanofi’s global net sales of lixisenati-
de (branded as AdlyxinR in the U.S. and as LyxumiaR in the EU and in other countries) plus a
10% royalty on global net sales of a combination of lixisenatide and insulin glargine 100 units/ml
(LantusR) marketed under the brand name SoliquaR 100/33 in the U.S. and as SuliquaR in the EU.
In 2016, Sanofi challenged the validity of certain patents owned by a competitor, AstraZeneca
(and its affiliates), in both administrative and court proceedings in the U.S. and in certain other
countries, and AstraZeneca brought counterclaims in the U.S. proceedings asserting that prod-
ucts containing lixisenatide infringe its patents. Sanofi and AstraZeneca subsequently agreed to
settle all claims and counterclaims between them in various proceedings relating to lixisenatide.
Our financial obligations related to this now-resolved intellectual property dispute could reduce
our net revenue from the original commercial milestone payments from Sanofi relating to Soli-
qua R 100/33/SuliquaR. The amount and timing of any such reductions of future revenue are
not currently known, but they will not exceed USD 15 million in total.
Zealand pays Alkermes plc 13% of all payments received on lixisenatide while lixisenatide is sub-
ject to a commercialization agreement such as the Sanofi License Agreement. Zealand also pay
one of the inventors of the Structure Induced Probe (SIP) technology employed in lixisensatide
a 0.5% royalty on amounts received in connection with drug candidates that, like lixisenatide,
are produced using the SIP technology.
Milestone payments have been recognized as revenue when the relevant milestones are
achieved.
All future royalties and all but up to USD 15 million of future milestone payments relating to the
Sanofi License Agreement were sold to Royalty Pharma in September 2018. Refer to note 7.
Accounting for the Boehringer Ingelheim License Agreements
In 2011, Zealand entered into a license, research and development collaboration agreement
with Boehringer Ingelheim International GmbH (BI) to advance novel GLP-1/glucagon dual-
74
acting peptide receptor agonists (GGDAs) for the treatment of patients with type 2 diabetes and
obesity. Under the terms of the 2011 BI License Agreement, BI paid a fixed amount per full-time
employee and other costs related to all research, development and commercialization in re-
spect of the compounds covered by the agreement.
Zealand is eligible to receive license and milestone payments of up to EUR 386 million, of
which EUR 345 million was outstanding at December 31, 2020, related to the achievement of
pre-specified development, regulatory and commercial milestones for the lead product. We are
also eligible to receive tiered royalties ranging from high single-digit to low double-digit per-
centages on BI’s sales of all products stemming from this collaboration. In addition, we retain
copromotion rights in Scandinavia.
In 2014, Zealand entered into a second global license, research and development collaboration
agreement with BI (the 2014 BI License Agreement). This agreement pertained to a collabo-
ration on a specific therapeutic peptide project from our portfolio of preclinical programs for
a period of up to four and a half years, with the aim of developing novel drugs to improve the
treatment of patients with cardiometabolic diseases. In 2015, BI selected a novel peptide thera-
peutic to be advanced into preclinical development under this agreement.
No product candidates out licensed to BI are currently marketed, and accordingly we have not
received any royalty payments to date under our licensing agreements with BI.
Milestone payments are recognized as revenue when the relevant milestones are achieved.
Accounting for other license agreements
In 2019, Zealand recognized revenue related to a Material Transfer Agreement with an undis-
closed counterpart. The revenue related to a license option has been recognized in the period
in which the services were rendered.
In 2018, Zealand entered into a material transfer agreement with an undisclosed counterpart.
A milestone payment was recognized as revenue, when the relevant milestone was achieved.
Such Material Transfer agreement related to the delivery of an existing material to the undis-
closed third party. No remaining performance obligations exist related to such agreement.
Milestone payments are recognized as revenue when the relevant milestones are achieved.
Zealand Pharma ∞ Annual Report 2020 Con Fin – Note 3-4
75
Notes
Note 3 – Royalty expenses
Accounting policies
Royalty expenses comprise contractual amounts payable to third parties that are derived from
the milestone payments and royalty income earned from the corresponding collaboration
agreements.
We have agreed to pay some of our revenue in deferred payments or royalties to third parties.
At the time of the dissolution of a former joint venture with Elan Corporation, plc (Elan) and
certain of its subsidiaries that were party to the joint venture agreement with us, we agreed to
pay royalties to Elan – now Alkermes plc, as successor in interest to a termination agreement
between us and the Elan entities – including 13% of future payments we receive in respect of
lixisenatide under the Sanofi License Agreement.
In addition, we have agreed to pay a royalty of 0.5% of the total amounts we receive in connec-
tion with our SIP-modified peptides, including lixisenatide, to one of the inventors of our SIP
technology, who is one of our employees. The royalty to be paid to this inventor is calculated
on the basis of all the amounts we receive, including license payments, milestone payments
and sales. In 2019, the royalty expenses relate to mentioned inventor.
In 2018, the royalty expenses related to royalties from sales of Lyxumia® and Soliqua® 100/33
and milestone payments received from Sanofi. The arrangement was settled in 2018 as part of
transferring the right to future royalty and milestone payments under the Sanofi agreement.
Note 4 – Research, development, sales, marketing and administrative expenses
Accounting policies
Research expenses comprise salaries, share-based compensation, contributions to pension
schemes and other expenses, including patent expenses, as well as depreciation and amortiza-
tion directly attributable to the Group’s research activities. Research expenses are recognized in
the income statement as incurred.
Development expenses comprise salaries, share-based compensation, contributions to pension
schemes and other expenses, including depreciation and amortization, directly attributable to
the Group’s development activities. Development expenses are recognized in the income state-
ment as incurred, except where the capitalization criteria is met.
No indirect costs that are not directly attributable to research and development activities are
included in the disclosure of research and development expenses recognized in the income
statement. Overhead expenses have been allocated to research and development or adminis-
trative expenses based on the number of employees in each department, determined accord-
ing to the respective employees’ associated undertakings.
Judgment applied related to research and development expenses
A development project involves a single product candidate undergoing a large number of tests
to demonstrate its safety profile and its effect on human beings, prior to obtaining the nec-
essary final approval for the product from the appropriate authorities. The future economic
benefits associated with the individual development projects are dependent on obtaining such
approval. Considering the significant risk and duration of the development period for biological
products, Management has concluded that whether the intangible asset will generate probable
future economic benefits cannot be estimated with sufficient certainty until the project has
been finalized and the necessary final regulatory approval of the product has been obtained.
Accordingly, Zealand has not recognized such assets at this time, and all research and develop-
ment expenses are therefore recognized in the income statement when incurred.
Capitalization of development costs assumes that, in the Group’s opinion, the development
of the technology or the product has been completed, all necessary public registrations and
marketing approvals have been received, and expenses can be reliably measured. Furthermore,
it must be established that the technology or the product can be commercialized and that the
future income from the product can cover not only the production, selling and administra-
tive expenses but also development expenses. Zealand has not capitalized any development
expenses in 2020, 2019 or 2018.
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 5-6
76
Notes
Note 4 – Research, development, sales, marketing and administrative expenses
(continued)
DKK thousand
2020
2019
2018
Staff costs (note 6)
Depreciation and impairment losses, property,
plant and equipment and right-of-use assets (note 14,15)
Other external research and development costs
Total research and development costs
-204,210
-178,089
-153,601
-17,417
-382,454
-604,081
-4,422
-378,912
-561,423
-4,423
-280,195
-438,219
Sale and Marketing expenses
Sales and marketing expenses include expenses for sales personnel and expenses related to
company premises in the US used for sales activities. Other significant expenses include prod-
uct demonstration samples, trade show expenses, professional fees for our contracted cus-
tomer support center and other consultants, insurance, facilities and information technology
expenses. Overhead expenses have been allocated to sales and marketing expenses according
to the number of employees in each department, based on the respective employees’ associat-
ed undertakings.
Administrative expenses
Administrative expenses include expenses for administrative personnel, expenses related to
company premises, depreciation on tangible assets and right-of-use assets, investor relations,
etc. Overhead expenses have been allocated to research and development or administrative
expenses according to the number of employees in each department, based on the respective
employees’ associated undertakings.
Note 5 – Fees to auditors appointed at the Annual General Meeting
DKK thousand
2020
2019
2018
Audit
Audit-related services and other assurance engagements
Tax advice
Other
Total fees
5,941
1,002
0
0
6,943
1,847
1,731
0
12
3,590
1,661
718
106
0
2,485
The fee for audit-related services and other assurance engagements and other services provid-
ed to the Group by EY godkendt Revisionspartnerselskab in 2020 consisted of Audit of Annual
Report, Audit of 20-F SEC filing, including SOX 404b attestation procedures, quarterly reviews,
other auditor’s reports on various statements for public authorities, and other accounting advi-
sory services. (Deloitte Statsautoriseret Revisionspartnerselskab in 2019 and 2018)
Note 6 – Information on staff and remuneration
DKK thousand
2020
2019
2018
Total staff costs can be specified as follows:
Wages and salaries
Sharebased payment costs
Pension schemes (defined contribution plans)
Other payroll and staff-related costs
Total
The amount is charged as:
Research and development expenses
Sale and marketing expenses
Administrative expenses
Cost of goods sold
Inventory
Total
337,295
30,485
16,716
37,241
421,737
175,104
14,764
13,430
14,932
218,230
141,661
17,474
11,065
9,783
179,983
204,210
130,568
78,639
3,713
4,607
421,737
178,089
0
40,141
0
0
218,230
153,601
0
26,382
0
0
179,983
Average number of employees
297
173
146
Zealand Pharma ∞ Annual Report 2020
Notes
Note 6 – Information on staff and remuneration (continued)
DKK thousand
2020
2019
2018
Base
board fee
Committee
fees
Total
fees
Base
board fee
Committee
fees
Total
fees
Base
board fee
Committee
fees
Total
fees
77
Remuneration to the Board of Directors
Martin Nicklasson
Kirsten Drejer¹
Alain Munoz
Michael Owen
Bernadette Mary Connaughton
Jeffrey Berkowitz
Leonard Kruimer
Jens Peter Stenvang²
Gertrud Koefoed Rasmussen²
Frederik Barfoed Beck²
Iben Louise Gjelstrup²
Hanne Heidenheim Bak⁵
Rosemary Crane⁴
Catherine Moukheibir⁴
Helle Haxgart², ³
Total
1
2
3
4
5
The disclosed remuneration for board members excludes minor mandatory social security costs paid by the company.
It also excludes reimbursed expenses incurred in connection with board meetings, such as travel and accomodation.
Kirsten Drejer was appointed vice chairman at the General Meeting on April 4 in 2019.
Employee-elected board members; the table only includes remuneration for board work.
This board member resigned from the Board in 2018.
These board members resigned from the Board in 2019.
These board members resigned from the Board in 2020.
750
500
400
400
400
400
400
400
267
267
267
133
0
0
0
4,584
100
0
50
50
33
50
150
0
0
0
0
0
0
0
0
433
850
500
450
450
433
450
550
400
267
267
267
133
0
0
0
5,017
750
467
400
400
267
267
267
400
0
0
0
400
133
133
0
3,884
100
0
50
50
0
33
100
0
0
0
0
0
17
50
0
400
850
467
450
450
267
300
367
400
0
0
0
400
150
183
0
4,284
650
200
300
300
0
0
0
300
0
0
0
300
333
300
100
2,783
100
0
50
50
0
0
0
0
0
0
0
0
50
150
0
400
750
200
350
350
0
0
0
300
0
0
0
300
383
450
100
3,183
Zealand Pharma ∞ Annual Report 2020
Notes
Note 6 – Information on staff and remuneration (continued)
DKK thousand
Base salary
Pension
Bonus contribution
2020
Remuneration to the Executive Management
Emmanuel Dulac¹
Adam Sinding Steensberg²
Matthew Donald Dallas³
Total
Total Other Coporate Management⁵
Total
2019
Remuneration to the Executive Management
Emmanuel Dulac¹
Adam Sinding Steensberg²
Matthew Donald Dallas³
Britt Meelby Jensen⁴
Mats Blom⁴
Total
Total other Corporate Management⁵
4,950
2,967
2,721
10,638
6,386
17,024
3,100
2,807
588
1,745
655
8,895
6,559
3,267
1,266
1,191
5,724
2,739
8,463
9,072
1,032
534
419
248
11,305
2,580
Total
15,454
13,885
2018
Remuneration to the Executive Management
Britt Meelby Jensen
Mats Blom
Total
4,189
2,621
6,810
2,513
1,031
3,544
Total Other Coporate Management⁵
6,689
2,653
990
593
36
1,619
313
1,932
620
505
0
175
66
1,366
389
1,755
419
262
681
604
Total
¹ Emmanuel Dulac was appointed as CEO at April 25, 2019.
² Former Interim CEO Adam Sinding Steensberg was appointed EVP, R&D and CMO at April 25, 2019.
³ Matthew Donald Dallas was appointed CFO at October 10, 2019.
⁴ Former CEO Britt Meelby Jensen and former CFO Mats Blom resigned from Zealand at February 28, 2019 and March 28, 2019, respectively.
⁵ Other Corporate Management in 2020 comprised three members (2019: three and 2018: four.)
13,499
6,197
1,285
Other
Sharebased
short term compensation
expenses
benefits
699
282
15
996
286
1,282
855
269
5
60
61
1,250
46
1,296
320
273
593
1,035
1,628
2,534
2,281
1,707
6,522
3,423
9,945
832
2,304
82
0
1,677
4,895
1,972
6,867
0
1,888
1,888
4,471
6,359
78
Accounting policies
The value of services received as consider-
ation for granted warrants is measured at
the fair value of the warrant. The fair value
of equity settled share based compensa-
tion is determined at the grant date and
is recognized in the income statement as
employee benefit expense over the period
in which the warrants vest. The offsetting
entry to this is recognized under equity. An
estimate is made of the number of warrants
expected to vest. Subsequently, an adjust-
ment is made for changes in the estimate of
the number of warrants, which will vest, so
the total expense is equal to fair value of the
actual number of warrants which vest. The
fair value of warrants granted is estimated
using the Black–Scholes pricing model and
Monte Carlo model in programs with value
caps whereas the average share price prior
to grant is used for RSU and PSUs
Total
12,440
7,389
5,670
25,499
13,147
38,646
14,479
6,917
1,209
2,399
2,707
27,711
11,546
39,257
7,441
6,075
13,516
15,452
28,968
Zealand Pharma ∞ Annual Report 2020
79
2020
2019
234.7
101.2
169.2
158.5
160.7
0
125.4
124.5
Notes
Note 6 – Information on staff and remuneration (continued)
The employee
incentive programs of
Warrant programs existing during the period
2020
2015
2010
Warrants exercised during the period
Maximum years of options granted
Method of settlement
2020
Outstanding at the beginning of the period
Granted during the period
Forfeited during the period
Exercised during the period
Expired during the period
Outstanding at the end of the period
Exercisable at the end of the period
Warrants outstanding at the end of the period
Range of exercise prices
Weighted-average remaining contractual life
Number held by Executive Management
2019
Outstanding at the beginning of the period
Granted during the period
Forfeited during the period
Exercised during the period
Expired during the period
Outstanding at the end of the period
Exercisable at the end of the period
Warrants outstanding at the end of the period
Range of exercise prices
Weighted-average remaining contractual life
Number held by Executive Management
10 years
5 years
5 years
equity-
settled
Weighted-average share price at the date of exercise
Weighted-average exercise price for expired during the period
Weighted-average exercise price for forfeited during the period
Weighted-average exercise price for outstanding at period end
Determination of fair value of the warrants granted during the period
The exercise price is determined by the closing price of Zealand’s shares on Nasdaq Copenha-
gen on the day prior to the grant date. For warrants granted before April 19, 2018, the exercise
price is determined by the closing price of Zealand’s shares on Nasdaq Copenhagen on the day
prior to the grant date plus 10%.
Warrants granted prior to April 15, 2020 expire automatically after five years. Warrants vest
either after 3 years of service, with 1/36 each month from the grant date, or with 1/3 after
one year, 1/3 after two years and 1/3 after three years. The service cost is recognized over the
respective vesting periods. Warrants granted from April 15, 2020 and going forward expires
automatically after 10 years.
Warrants may be exercised four times a year during a four-week period starting from the date
of the publication of Zealand’s Annual Report or interim reports. Dividend is not expected.
For warrants granted before January 1, 2019, the volatility rate used is based on the 5-year
historical volatility of the Zealand share price. For warrants granted after January 1, 2019, the
volatility rate used is based on a historical volatility of the Zealand share price calculated as the
vesting period of 3 years plus 50% of the exercise period (2020: 7 years, 2019: 2 years).
63,217
0
0
0
0 1,647,788
631,288
-53,747
-276,409
-40,000
63,217 1,908,920
301,529
0
42,359
0
0
-42,359
0
0
0
216.8
9.5
0
90.0-
224.4
4.9
373,409
101.2-
127.1
0
0
0 1,635,000
641,029
0
-314,266
0
-313,975
0
0
0
0 1,647,788
300,725
0
218,359
0
0
-176,000
0
42,359
42,359
0
0
0
90.0-
142.5
2.3
372,171
101.2-
127.1
0.3
0
Zealand Pharma ∞ Annual Report 2020
Notes
Note 6 – Information on staff and remuneration (continued)
The fair value of the warrants compensation granted in 2020 was determined using the Black-
Scholes and Monte Carlo model using the following inputs as at day of grant and using average
fair market value for RSUs and PSUs:
Grant year
2020
2020
2019
2019
2018
RSUs
Warrants
PSU
Warrants
Warrants
Type
Term
Weighted average
share price (DKK)
36 months
185.9
to 220.5
Up to 78
months
216.8
to 224.4
36 months
127.3
Exercise price (DKK)
0
224.1
Volatility (%)
Risk-free interest rate (%)
Exercise period to-from
No granted
Cost price (DKK)
N/A
N/A
N/A
44.68
to 46.45
-0.31
to -0.41
Apr'21
to Apr'30
21,602
631,288
22,915
641,029
655,500
216.8
to 224.4
48.4
to 95.4
138.6
41.9
to 69.5
32.8
to 37.0
Up to 48
months
127.0
to 220.0
127.0
to 220.0
41.9
to 43.5
-0.45
to -0.63
Up to 36
months
90.0
to 100.8
90.0
to 100.8
42.5
to 42.6
-0.03
to 0.05
Jun'20
to Dec'24
May 21
to Oct'23
0
N/A
N/A
N/A
Expense arising from share-based payment transactions
Research and development expenses
Sale and Marketing expenses
Administrative expenses
Total
2020
2019
2018
14,005
6,045
10,435
30,485
12,191
0
2,573
14,764
13,919
0
3,555
17,474
Effect on income statement
In 2020, the fair value of Warrants, RSU and PSUs recognized in the income statement amounts
to DKK 30.5 million in total of which DKK 0.9 million relate to PSUs and DKK 1.1 million relate to
RSUs (2019: DKK 14.8 million and 2018: DKK 17.5 million). DKK 6.5 million relate to the Execu-
80
tive Management (2019: DKK 3.2 million and 2018: DKK 1.9 million) is recognized in the income
statement..
Fair value RSUs
The number of restricted share units granted in 2020 totals 27,466, of which 21,602 is granted
on April 15, 2020 and 5,864 granted on September 14, 2020. For the 21,602 granted on April 15,
2020, the value is determined based on the simple average of the closing price of the Compa-
ny's share on Nasdaq Copenhagen A/S for a period of five trading days following the publica-
tion of the annual report of the Company for 2019. For the 5,864 granted on September 14,
2020, the value is determined based on the simple average of the closing price of the Compa-
ny's share on Nasdaq Copenhagen A/S for a period of five trading days prior to the grant date.
The programs granted in 2020 are initially valued at DKK 6.1 million.
Fair value PSUs
The number of performance share units granted is 22,915 determined based on the average
share price of the shares of the Company for the three-day trading period following the latest
open trading window preceding the allotment.
The program is initially valued at DKK 3.2 million.
Employee warrant programs
In order to motivate and retain key employees and encourage the achievement of common
goals for employees, Management and shareholders, the Group has established an incentive
plan based on warrant programs. Incentive programs have been offered in 2005, 2007 and in
the 2009-2020 period.
The warrants are granted in accordance with the authorizations given to the Board of Directors
by the shareholders. The Board of Directors has fixed the terms of and size of the grants, taking
into account authorizations from the shareholders, the Group’s guidelines for incentive pay,
an assessment of expectations of the recipient’s work efforts and contribution to the Group’s
growth, as well as the need to motivate and retain the recipient. Grant takes place on the
date of establishment of the program. Exercise of warrants is by default subject to continuing
employment with the Group. The warrants granted are subject to the provisions of the Danish
Public Companies Act regarding termination of employees prior to their exercise of warrants in
the case of recipients covered by the Act.
2010 employee incentive program
This program was established in 2010 for Zealand’s Board of Directors, Executive Management,
employees and consultants.
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 7
Notes
Note 6 – Information on staff and remuneration (continued)
The Board of Directors was authorized to issue up to 2,750,000 warrants in the period until No-
vember 2, 2015. The program has expired and a total of 2,355,495 warrants have been granted.
As of December 31, 2020, 1,798,168 warrants have been exercised, The total proceeds amount
to DKK 150.2 million (2019: DKK 145.1 million and 2018: DKK 127.4 million). As of December
31, 2020, zero warrants can still be exercised.
2015 employee incentive program
This program was established in 2015 for Zealand’s Executive Management and employees.
The Board of Directors was authorized to issue up to 2,750,000 warrants in the period un-
til April, 2020. As of December 31, 2020, 3,419,883 warrants have been granted, 2,032,218
warrants have been exercised, 40,000 have expired and 873,079 warrants have forfeited. The
program has expired and no further warrants can be granted. The total proceeds amount to
DKK 72.1 million (2019: DKK 35.5 million and 2018: DKK 0.8 million). As of December 31, 2019,
1,908,920 warrants can still be exercised.
2020 employee incentive program
This program was established in 2020 for Zealand’s Executive Management and employees.
The Board of Directors was authorized to issue up to 821,544 warrants in the period until April,
2021. As of December 31, 2020, 63,217 warrants have been granted, This means that the re-
maining number of warrants that can be granted is 758,327. The total proceeds amount to DKK
0.0 million (2019: DKK 0.0 million and 2018: DKK 0.0 million). As of December 31, 2020, zero
warrants can be exercised.
2019 long-term incentive program (LTIP) for Corporate Management
This program was established in 2019 for Zealand’s Corporate Management.
Under the LTIP, the Executive Management and Other Corporate Management are eligible to
receive a number of performance share units (“PSUs”) at no cost, as determined by the Board of
Directors. Thereafter, PSUs are expected to be granted annually (together with any share-based
long-term incentive program, up to a maximum of 10% of Zealand’s share capital). The targets
for the first PSUs granted on June 13, 2019 under the LTIP are related to Zealand's filing of a
submission for a New Drug Approval ("NDA") to the Food and Drug Administration ("FDA") in the
United States and Zealand's receipt of an approval letter from the FDA for this NDA application.
The PSUs will vest over a three-year period. The PSUs that have not vested will lapse without
any compensation. Each vested PSU entitles the holder to receive one share in Zealand at no
cost provided that the targets are met.
81
2020
2019
19,765
0
0
0
19,765
0
22,915
0
-3,150
19,765
2020
2019
0
27,466
0
0
27,466
0
0
0
0
0
No of PSUs
Number of shares
At January 1
Granted during the year
Vested during the year
Forfeited during the year
At December 31
No of RSUs
Number of shares
At January 1
Granted during the year
Vested during the year
Forfeited during the year
At December 31
Note 7 – Other operating items, net
Accounting policies
Other operating items comprises gains from sale of intangible assets, research funding from
business partners and government grants. A gain from disposal of intangible assets is recog-
nized when control over the asset is transferred to the buyer. The gain is determined as the
disposal proceeds less the carrying amount, if any, and disposal costs.
Research funding is recognized in the period when the research activities have been performed
and government grants are recognized periodically when the work supported by the grant has
been reported.
Bargain purchase are recognized when the purchase price allocation is finalized.Government
grants are recognized when a final and firm right to the grant has been obtained. Government
grants are included in Other operating income, as the grants are considered to be cost refunds.
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 8-9
82
Notes
Note 7 – Other operating items, net (continued)
Note 8 – Financial income
DKK thousand
2020
2019
2018
Accounting policies
602
36,395
444
0
630
0
Financial income includes interest from trade receivables, as well as realized and unrealized ex-
change rate adjustments, fair value adjustments of other investments and marketable securities
and dividends from marketable securities.
0
0
0 1,310,237
Interest income is recognized in the income statement in accordance with the effective interest
rate method.
0
-176,882
DKK thousand
2020
2019
2018
Government grants
Gain from Bargain Purchase, cf, note 29
Gross proceeds from sale of future
royalties and milestones
Royalty expenses regarding the above sale of
future royalties and milestones
Fee, advisors regarding the above sale of
future royalties and milestones
Total other operating income
0
36,997
0
-34,459
444 1,099,526
Zealand entered in September 2018 into an agreement to sell future royalties and USD 85.0 mil-
lion of potential commercial milestones for Soliqua® 100/33/ Suliqua® and Lyxumia®/ Adlyxin®
to Royalty Pharma. Under the agreement, all rights and obligations under the Sanofi Licensing
agreement apart from potential payments from Sanofi of up to USD 15.0 million, expected in
2021 and 2022 have been transferred to the buyer. Zealand had in 2018 received USD 205.0
million (DKK 1,310.2 million) upon closing of the transaction on September 17, 2018. In 2018,
royalty expenses to third parties amounted to 13.5% or DKK 176.9 million and fees to advisors
amounted to DKK 34.5 million. The Sanofi license agreement was classified as an intangible as-
set upon adoption of IFRS 15, and the agreement with Royalty Pharma was treated as a sale of
this license. The payment to the third parties was considered additional cost price for a license
forming part of the rights under the Sanofi agreement and therefore forming part of the gain.
As part of the license agreements with Boehringer Ingelheim ('BI'), BI is responsible for con-
ducting preclinical and clinical development, as well as for commercializing the products
stemming from the agreement and funding all activities under the agreement.
In addition, Zealand received government grants in 2020, 2019 and 2018.
A gain from the Bargain purchase of DKK 36 million is recognized as part of the acquistion
explained in note 29.
Interest income from financial assets measured
at amortized costs
Fair value adjustments of other investments
and marketable securities, cf. note 21
Exchange rate adjustments
Dividend, Marketable securities
Total financial income
895
5,413
4,263
936
0
191
2,022
2,846
5,518
878
14,655
0
4,705
1,020
9,988
Note 9 – Financial expenses
Accounting policies
Financial expenses include interest expenses, as well as realized and unrealized exchange rate
adjustments, interest on lease obligations and fair value adjustments of securities. In addition,
expenses related to the royalty bond until settlement in September 2018 were amortized over
the expected duration of the bond and recognized as financial expenses until it was settled in
September 2018.
Interest expense is recognized in the income statement in accordance with the effective inter-
est rate method.
DKK thousand
2020
2019
2018
Interest expenses from liabilities at amortized costs
Amortization of financing costs
Fair value adjustments of marketable securities, cf. note 21
Loss on sale of marketable securities, cf. note 21
Other financial expenses
Exchange rate adjustments
Total financial expenses
2,895
0
2,103
0
4,829
39,487
49,314
3,205
0
0
0
185
0
3,390
15,080
18,347
1,389
881
1,625
0
37,322
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 10
83
Notes
Note 10 – Income tax
Accounting policies
Income tax on results for the year, which comprises current tax and changes in deferred tax,
is recognized in the income statement, whereas the portion attributable to entries in 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 the 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 liabilities are generally recognized for all taxable temporary differences, and de-
ferred tax assets are recognized to the extent that it is probable that taxable profits will be avail-
able against which deductible temporary differences can be utilized. Such deferred tax assets
and liabilities are not recognized if the temporary difference arises from the initial recognition
(other than in a business combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not
recognized if the temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognized for taxable temporary differences arising on investments
in subsidiaries except where the Group is able to control the reversal of the temporary differ-
ence and it is probable that the temporary difference will not be reversed in the foreseeable
future. Deferred tax assets arising from deductible temporary differences associated with such
investments and interest are only recognized to the extent that it is probable that there will be
sufficient taxable profits against which to utilize the benefits of the temporary differences and
they are expected to be reversed in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each statement of financial position
date and reduced to the extent that it is no longer probable that sufficient taxable profits will
be available to allow all or part of the asset to be recovered. In case of ongoing tax disputes a
provisions for are included as part of deferred tax assets, tax receivables and tax payables.
This judgment is made on an ongoing basis and is based on recent historical losses carrying
more weight than factors such as budgets and business plans for the coming years, including
planned commercial initiatives. The creation and development of therapeutic products within
the biotechnology and pharmaceutical industry is subject to considerable risks and uncertain-
ties. Zealand has so far reported significant losses and, consequently, has unused tax losses.
Management has concluded that deferred tax assets should not be recognized at December
31, 2020. (None recognized in 2019.)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off
current tax assets against current tax liabilities, they relate to income taxes levied by the same
taxation authority and the Group intends to settle its current tax assets and liabilities on a net
basis.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the
liability is settled or the asset is realized, based on tax laws and rates that have been enacted
or substantively enacted at the statement of financial position date.Deferred tax from business
combinations is initially recognized at fair value.
Income tax receivables are recognized in accordance with the Danish tax credit scheme (Skat-
tekreditordningen). Companies covered by the tax credit scheme may obtain payment of the
tax base of losses originating from research and development expenses of up to DKK 25 million
(tax value of DKK 5.5 million).
Under Danish tax legislation, Zealand is eligible to receive DKK 5.5 million in 2020 (DKK 5.5
million in 2019 and DKK 0.0 million 2018) in cash relating to the surrendered tax loss of DKK
183 million (DKK 108 million in 2019 and DKK 0 million for 2018) based on qualifying research
and development expenses. These tax receipts comprise the entire current tax benefit in 2020
and 2019, respectively.
The income from sale of future royalties and milestones in 2018 resulted in a positive net re-
sult, meaning that Zealand was not in 2018 eligible for similar tax income based on qualifying
research and development expenses, but was able to utilize a portion of the unrecognized
deferred tax asset
When considering tax and duties disputes, Management applies significant estimates of the
likely outcome based on the knowledge available of the actual substance of the disputes,
including opinions and estimates by external tax experts and case law, if available. The
resolution of disputes may take several years, and the outcome is subject to considerable
uncertainty.
Zealand Pharma ∞ Annual Report 2020 Con Fin – Note 11
84
Notes
Note 10 – Income tax (continued)
Note 11 – Basic and diluted earnings per share
DKK thousand
2020
2019
2018
Accounting policies
Net result for the year before tax
Corporate tax rate in Denmark
Expected tax benefit/(expenses)
Adjustment for foreign tax rates
Adjustment for non-deductible expenses
Adjustment for non-taxable income
Adjustment for exercised warrants
Adjustment for R&D extra deduction
Tax effect on exercise of warrants
Tax effect on expired warrants
Warrant - share price development
Adjustment to prior year
Change in tax assets (not recognized)
Total income tax expense/benefit
-839,653
22.0%
-576,677
22.0%
625,051
22.0%
184,724
-769
1,927
-6,844
11,522
-8,811
-5,592
-118
-3,425
931
-180,621
-7,076
126,869
0
-947
964
-1,653
1,676
6,092
175
4,050
0
-132,090
5,136
-137,511
0
-65
0
-2,228
1,427
8
151
0
0
94,445
-43,773
DKK thousand
2020
2019
2018
Specification of deferred tax assets:
Tax losses carried forward (available indefinitely)
Research and development expenses
Intangible assets
Non-current assets
Liabilities
Other
Total temporary differences
1,281,505
732,389
40,373
66,419
188,787
58,483
681,531
460,007
35,849
51,677
139,890
70,306
2,365,956 1,439,260
580,937
136,755
35,849
50,308
0
79,986
883,835
Calculated potential deferred tax asset at local tax rate
Deferred tax asset not expected to be utilized
Recognized deferred tax asset
514,239
-505,869
8,370
316,637
-316,637
0
194,444
-194,444
0
Basic result per share
Basic result per share is calculated as the net result for the period that is allocated to the parent
company’s ordinary shares, divided by the weighted average number of ordinary shares out-
standing. This includes the treasury shares held by the company.
Diluted result per share
Diluted result per share is calculated as the net result for the period that is allocated to the
parent company’s ordinary shares, divided by the weighted average number of ordinary shares
outstanding and adjusted by the dilutive effect of potential ordinary shares.
The result and weighted average number of ordinary shares used in the calculation of basic and
diluted result per share are as follows:
DKK thousand
2020
2019
2018
Net result for the year
Net result used in the calculation of basic and
diluted earnings/losses per share
Weighted average number of ordinary shares
Weighted average number of treasury shares
Weighted average number of ordinary shares used
in the calculation of basic earnings per share
Weighted average number of ordinary shares used
in the calculation of diluted earnings per share
-846,729
-571,541
581,278
-846,729
-571,541
581,278
38,433,923 33,866,709 30,754,948
-64,223
-64,223
-64,223
38,369,700 33,802,486 30,690,725
38,369,700 33,802,486 30,696,404
Basic earnings/loss per share (DKK)
Diluted earnings/loss per share (DKK)
-22.07
-22.07
-16.91
-16.91
18.94
18.94
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 12
85
Notes
Note 11 – Basic and diluted earnings per share (continued)
Note 12 – Impairment
The following potential ordinary shares are anti-dilutive at December 31, 2020 (anti-dilutive
at December 31, 2019 and dilutive December 31, 2018) and are therefore not included in the
weighted average number of ordinary shares for the purpose of diluted earnings per share:
Accounting policies
Assets with indefitie usefull time are annually assesed for impairment whereas assets with defi-
nite usefull lifetime are assessed for impairment indicators.
DKK thousand
2020
2019
2018
Outstanding warrants under the 2010 employee
incentive program
Outstanding warrants under the 2015 employee
incentive program
Outstanding Restricted Share Units (RSUs) under
the LTIP 2019 program
Outstanding Performance Share Units (PSUs) under
the LTIP 2019 program
Outstanding warrants under the 2020 employee
incentive program
Total outstanding warrants
- out of which these are dilutive
- out of which these are anti-dilutive
0
42,359
218,359
1,908,920 1,647,788 1,635,000
27,466
0
19,765
19,765
0
0
63,217
0
2,019,368 1,709,912 1,853,359
0
72,000
2,019,368 1,709,912 1,781,359
0
0
Each year, the assets are reviewed in order to assess whether there are indications of impair-
ment. If such indications exist, the recoverable amount, determined as the higher amount of
the fair value of the asset adjusted for expected costs to sell and the value in use of the asset, is
calculated. The value in use is calculated based on the estimated future cash flows, discounted
by using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
If the recoverable amount of an asset or its cash-generating unit is lower than the carrying
amount, an impairment charge is recognized in respect of the asset. The impairment loss is
recognized in the income statement. In addition, for goodwill and other intangible assets with
indefinite useful lives, impairment tests are performed at each balance sheet date, regardless
of whether there are any indications of impairment. For acquisitions, the first impairment test is
performed before the end of the year of acquisition.
Key assumptions in the impairment test
The impairment assessment for 2020 identified a need for impairment on the V-Go related
Intellectual property of DKK 12.7 million. The impairment loss was primarily related to Man-
agement’s decision to allocate resources to support future product launches while limiting the
investment in the V-Go product.
No impairment indicators were identified in 2019.
Through the assessment of impairment indicators regarding the V-Go intellectual property,
Management identified impairment indicators and an impairment test was performed by calcu-
lating recoverable amount of the V-Go intellectual property.
The recoverable amount was determined based on a value in use calculation using cash flow
and projections for subsequent years up to and including 2030, equivalent to the expected
useful life of the intangible asset. The expected future net cash flows are determined based on
budgets and business plans approved by Management Board. From 2031 onwards, a perpetual
cash flow decreasing by the terminal growth rate of -50% is used. The pre-tax discount rate
applied to the cash flow projections was 13 %. The analysis showed a need of an impairment of
DKK 12.7 million regarding the V-Go Intellectual property. The amount is recognized as sales
and marketing expenses in the income statement.
Due to the full impairment of the V-Go related intellectual property, no additional sensitivity
analysis is performed.
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 13
86
Notes
Note 13 – Intangible assets
Accounting policies
Separately acquired licenses, rights and patents are initially measured at cost. Licenses, rights
and patents acquired in connection with the purchase of a legal entity where substantially all
of the fair value of the gross assets acquired is concentrated in a single asset are considered an
asset acquisition and initially recognized at cost at the acquisition date. The cost accumulation
model has been applied for accounting for contingent considerations, whereby all further con-
sideration is added when incurred, to the cost of the asset initially recorded.
The acquired intangibles have a finite useful life and are subsequently carried at cost less
accumulated amortizations using the straight-line method over the estimated useful life and
impairment losses. The amortization periods are as follows:
• License, rights and patents: Based on lifetime of patent etc.
• Intellectual property: 10 years
• Physician relationsship: 8 years
Amortizations will recognized in the income statement as R&D expenses when the intangibles
are available for use based on the determined useful life. Useful lifetime is assessed continuous-
ly for all new acquried assets.
If circumstances or changes in Zealand's operations indicate that the carrying amount of the
intangibles may not be recoverable, Management will review the intangibles for impairment.
Refer to note 12.
At December 31, 2020, licenses, rights and patents comprise a right that will be included in a
future development project originating from the acquisition of Encycle Therapeutics in October
2019 and the intangible assets arising from the acquisition of Valertias activities.
The right has been measured based on the overall cost of the transaction less the fair value of
the cash balance and trade payables also acquired. The fair value of the contingent consider-
ations related to Encycle Therapeutics was assessed to be zero as per the acquisition date due
to Zealand applying the cost accumulation model for accounting for contingent considera-
tions, whereby all further consideration is added when incurred, to the cost of the asset initially
recorded.
Physician relationships and IP rights acquired through business combinations are measured
at fair value at the acquisition date and amortized on a systematic basis over their useful life 8
and 10 years respectively (unless the asset has an indefinite useful life, in which case it is not
amortized).
DKK thousand
Cost at January 1, 2020
Additions due to business combinations, cf. note 29
Additions
Currency translation
Cost at December 31, 2020
Amortization at January 1, 2020
Amortization for the year
Impairment, cf. note 12
Currency translation
Amortization at December 31, 2020
Carrying amount at December 31, 2020
Amortization and impairment for the financial year
has been charged as:
Research and development expenses
Administrative expenses
Sale and marketing expenses
Total
Cost at January 1, 2019
Additions
Cost at December 31, 2019
Amortization at January 1, 2019
Amortization at December 31, 2019
Carrying amount at December 31, 2019
Amortization for the financial year has been charged as:
Research and development expenses
Sale and marketing expenses
Administrative expenses
Total
Licenses
rights Intellectual Physician
property relationship
and patents
2,480
0
0
50
2,530
0
0
0
0
0
2,530
0
13,692
0
0
13,692
0
957
12,735
0
13,692
0
0
68,459
0
-7,883
60,576
0
5,901
0
-280
5,621
54,955
0
0
0
0
0
0
13,692
13,692
0
0
5,901
5,901
0
2,480
2,480
0
0
2,480
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 14
87
Notes
Note 14 – Property, plant and equipment
Accounting policies
Plant and machinery, other fixtures and fittings, tools and equipment and leasehold improve-
ments are measured at cost less accumulated depreciation.
Cost comprises acquisition price and costs directly related to acquisition until the time when
the Group starts using the asset.
Tangible assets under construction are recorded as work in progress until construction has
been completed and use of asset commenced.
The basis for depreciation is cost less estimated residual value at the end of the useful life. As-
sets are depreciated using the straight-line method over the expected useful lives of the assets.
The depreciation periods are as follows:
• Buildings 5-13 years
• Plant and machinery 5-10 years
• Other fixtures and fittings, tools and equipment 3-5 years
Gains and losses arising from disposal of plant and equipment are stated as the difference
between the selling price less the costs of disposal and the carrying amount of the asset at the
time of the disposal. Gains and losses are recognized in the income statement under Research
and development expenses, Sale and marketing expenses and Administrative expenses.
At the end of each reporting period, the Group reviews the carrying amount of property, plant
and equipment as well as non-current asset investments to determine whether there is an
indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated to determine the extent of the impairment loss (if
any). If it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs. If
a reasonable and consistent basis of allocation can be identified, assets are also allocated to
cash-generating units, or allocated to the smallest group of cash-generating units for which a
reasonable and consistent allocation basis can be identified.
The recoverable amount is the higher of fair value less costs of disposal and value in use. The
estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects the current market assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been adjusted.
No impairments to property. plant and equipment have been recognized for 2020, 2019 and
2018.
Zealand Pharma ∞ Annual Report 2020 Notes
Note 14 – Property, plant and equipment (continued)
DKK thousand
Cost at January 1, 2020
Transfer
Addition from
business combinations
Additions
Retirements
Currency translation
Cost at December 31, 2020
Accumulated depreciation
at January 1, 2020
Transfer
Depreciation for the year
Retirements
Currency translation
Accumulated depreciation
at December 31, 2020
Carrying amount
at December 31, 2020
Depreciation for the
financial year has been
charged as:
Research and
development expenses
Administrative expenses
Sale and marketing expenses
Total
Plant and
machinery
Other fixtures
and fittings
Building
improvements
Assets under
construction
57,153
0
33,875
8,479
-5,935
-7,674
85,898
43,696
0
4,974
-4,304
-379
43,987
41,911
-4,128
-846
0
-4,974
12,501
0
2,572
1,566
-985
-375
15,279
4,164
0
2,301
-985
1,462
6,942
8,337
-1,378
-282
-640
-2,301
13,773
13,796
1,707
14,889
-9,856
-205
34,104
9,860
0
2,301
-9,804
-22
2,335
14,001
-13,796
2,984
109
0
-275
3,023
0
0
0
0
0
0
31,769
3,023
-1,910
-391
0
-2,301
0
0
0
0
88
DKK thousand
Cost at January 1, 2019
Transfer
Additions
Retirements
Cost at December 31, 2019
Accumulated depreciation
at January 1, 2019
Transfer
Depreciation for the year
Retirements
Accumulated depreciation
at December 31, 2019
Carrying amount
at December 31, 2019
Depreciation for the
financial year has been
charged as:
Research and
development expenses
Administrative expenses
Sale and marketing expenses
Total
Plant and
machinery
Other fixtures
and fittings
Building
improvements
Assets under
construction
55,545
0
3,419
-1,811
57,153
41,895
0
3,483
-1,682
43,696
13,457
3,483
0
0
3,483
5,130
27
7,630
-286
12,501
3,336
27
1,085
-284
4,164
8,337
926
159
0
1,085
10,800
-27
3,918
-918
13,773
10,614
-27
157
-884
9,860
3,913
134
23
0
157
0
0
14,001
0
14,001
0
0
0
0
0
14,001
0
0
0
0
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 15
89
Notes
Note 15 – Right-of-use assets and lease liabilities
Accounting policies
The Group leases an office buildings, equipment and vehicles. The rental contract for the HQ
office building has been made for a minimum period of 13 years (terminable by the landlord
after 15 years). Management has assessed the lease period to be 13 years. The rental contract
for the US office site has been made for a minimum period of 16 years. Equipment and vehicles
are leased over a period of 3-4 years with no extension option.
to lease payments based on an index or rate take effect, the lease liability is reassessed and
adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged
to the income statement over the lease period to ensure a constant periodic rate of interest on
the remaining balance of the liability for each period.
Contracts may contain both lease and non-lease components. The group allocates the con-
sideration in the contract to the lease and non-lease components according to the specific
pricing of the services in the agreements.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives
Lease terms are negotiated on an individual basis and contain a wide range of different terms
and conditions. The lease agreements do not impose any covenants other than the security
interests in the leased assets that are held by the lessor.
Until the 2018 financial year, all leases were classified as operating leases, but are from January
1, 2019 recognized as a right-and-use asset and corresponding liability at the date at which the
asset is available for use by Zealand. IFRS 16 determines whether a contract contains a lease on
the basis of whether the customer has the right to control the use of an identified asset for a pe-
riod of time in exchange for consideration. Zealand applies the definition of a lease and related
guidance set out in IFRS 16 to all contracts entered into or changed on or after January 1, 2019.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease
liabilities include the net present value of the following lease payments:
• fixed payments less any lease incentives receivable
• variable lease payment that are based on an index or a rate, initially measured using the index
or rate as at the commencement date
Lease payments to be made under reasonably certain extension options are also included in
the measurement of the liability.
Short-term and low value leases are also recognized as right-of-use assets.
received
• any initial direct costs and restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the
lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase
option, the right-of-use asset is depreciated over the underlying asset’s useful life.
Amounts recognized in the statement of financial position
The statement of financial position shows the following amounts relating to right-of-use assets:
DKK thousand
As at January 1, 2020
Additions due to business combination, cf. note 29
Additions
Retirements
Reversal of depreciations
Depreciation expense
Currency translation
As at December 31, 2020
Other
Office fixtures and
fittings
Buildings
84,148
14,299
42,725
-6,035
6,035
-12,779
-1,572
126,821
7,750
84,122
-7,724
84,148
1,484
0
581
-144
0
-744
0
1,177
2,298
280
-1,094
1,484
The lease payments are discounted using the interest rate implicit in the lease. If that rate
cannot be readily determined, which is generally the case for leases in the Group, the Group’s
incremental borrowing rate is used, being the rate that the group would have to pay to borrow
the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar
economic environment with similar terms, security and conditions.
As at January 1, 2019
Additions
Depreciation expense
As at December 31, 2019
The Group is exposed to potential future increases in variable lease payments based on an in-
dex or rate, which are not included in the lease liability until they take effect. When adjustments
Set out below are the carrying amounts of lease liabilities and the movements
during the period.
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 16
90
Notes
Note 15 – Right-of-use assets and lease liabilities (continued)
Note 16 – Inventories
2020
2019
Accounting policies
As at January 1
Additions due to business combinations, cf. note 29
Additions
Accretion of interest
Payments
Currency translation
As at December 31
Current
Non-current
The following are the amounts recognised in income statement:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Total amount recognised in profit and loss
Cashflow
Total cash outflow for leases
Depreciation for the financial year has been charged as:
Research and development expenses
Administrative expenses
Sale and marketing expenses
Total
85,760
14,046
43,151
2,763
-14,098
-1,503
130,119
10,048
0
83,521
621
-8,430
0
85,760
14,072
116,047
7,692
78,068
-13,524
-2,763
-16,287
-8,818
621
-9,439
-14,098
-14,098
-8,430
-8,430
-10,001
-3,523
0
-13,524
-7,583
-1,235
0
-8,818
Raw materials, work in progress and finished goods are stated at the lower of cost and net
realizable value. Cost is determined on a first in, first out basis and comprises direct materials,
direct labor and an appropriate proportion of variable and fixed overhead expenditure, the latter
being allocated on the basis of normal operating capacity. Costs of purchased inventory are
determined after deducting rebates and discounts. Net realizable value is the estimated selling
price in the ordinary course of business less the estimated costs of completion and the estimat-
ed costs necessary to make the sale.
Inventory manufactured prior to regulatory approval (prelaunch inventory) is capitalised but
immediately provided for, until there is a high probability of regulatory approval for the product.
A write-down is made against inventory, and the cost is recognised in the income statement as
research and development costs. Once there is a high probability of regulatory approval being
obtained, the write-down is reversed, up to no more than the original cost.
We review our inventory for excess or obsolescence and write down inventory that has no
alternative uses to its net realizable. Economic conditions, customer demand and changes in
purchasing and distribution can affect the carrying value of inventory. As circumstances war-
rant, we record provisions for potentially obsolete or slow moving inventory and lower of cost
or net realizable value inventory adjustments. In some instances, these adjustments can have
a material effect on the financial results of an annual or interim period. In order to determine
such adjustments, we evaluate the age, inventory turns, future sales forecasts and the estimated
fair value of inventory.
Inventories comprise:
DKK thousand
Raw materials
Work in process
Finished goods
Total
Direct costs
Indirect production costs
2020
2019
14,398
13,723
36,919
65,040
48,224
16,816
0
0
0
0
0
0
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 17-19
91
Notes
Note 16 – Inventories (continued)
Write downs recognized on inventories were reflected in the cost of goods sold. They were
comprised as follows:
DKK thousand
2020
2019
Accumulated write downs, January 1
Addition from business combination, cf. note 29
Write downs in the reporting period
Reversals or utilization of write downs
Exchange differences
Accumulated write downs, December 31
DKK 90.6 million is recognized as cost of goods sold during 2020.
0
-11,294
486
3,860
0
-6,948
0
0
0
0
0
0
Note 17 – Other investments
Accounting policies
Other investments are measured on initial recognition at cost, and subsequently at fair value.
Changes in fair value are recognized in the income statement under financial items.
The Group’s other investments consist of a USD 5.4 million (2019: USD 5.3 million) investment
in Beta Bionics, Inc., the developer of iLet™, a fully integrated dual-hormone pump (bionic
pancreas) for autonomous diabetes care. The investment in Beta Bionics, Inc. is recorded at fair
value through profit and loss. This investment represents 1.6% (2019:1.6%) ownership of Beta
Bionics, Inc., and is recorded at a fair value of DKK 32.3 million as of December 31, 2020 (DKK
35.6 million as of December 31, 2019).
In determining fair value, Zealand considered the impact of any recent share capital issuances
by Beta Bionics as an indicator of the fair value of the shares. In particular, Beta Bionics under-
took a capital offering in June 2019 and subsequent infliction points was used as the basis for
determining fair value. Measurement is considered a level 3 measurement.
A fair value adjustment of DKK 0.1 million and currency conversion impact of DKK -3.3 million,
respectively, have been recognized in financial income in 2020 (2019: DKK 2.2 million and DKK
0.8 million respectively).
Note 18 – Trade receivables
Accounting policies
On initial recognition, receivables are measured at fair value. The Group holds the trade receiv-
ables with the objective to collect the contractual cash flows and therefore measures them
subsequently at amortized cost.
Trade receivables are written down for expected credit losses. The Group applies the simplified
approach in IFRS 9 to measuring expected credit losses which uses a lifetime expected loss
allowance for trade receivables and contract assets. A write-down is recognized in sales and
marketing expenses.
There are no material overdue receivables and the write-down for expected credit losses is not
material.
At December 31, 2020 and 2019, Zealand had no trade receivables related to milestone pay-
ments.
Note 19 – Prepaid expenses
Accounting policies
Prepaid expenses comprise amounts paid in respect of goods or services to be received in
subsequent financial periods. Clinical trials, which are outsourced to Clinical Research Organ-
izations (“CROs”), take several years to complete. As such, Management is required to make
estimates based on the progress and costs incurred to-date for the ongoing trials. Judgements
are made in determining the amount of costs to be expensed during the period, or recognized
as prepayments or accruals on the statement of financial position.
Other receivables are measured at amortized cost less impairment. Prepayments include ex-
penditures related to future financial periods and are measured at nominal value
The increase by DKK 17.5 million from 2019 (DKK 30.8 million) to 2020 (DKK 48.3 million) is
primarily related to an increase in prepaid insurance, taken as a result of higher insurance costs
because of the increased premiums required for Director & Officer insurance.
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 20-23
92
Notes
Note 20 – Other receivables
Accounting policies
Other receivables are measured on initial recognition at cost and subsequently at amortized
cost.
Note 23 – Share capital
Accounting policies
Consideration paid and proceeds from selling treasury shares recognized directly in equity
within retained losses. Capital reductions through cancellation of treasury shares reduce the
share capital by an amount equal to the original cost price of the shares. Dividend payments are
recognized as a deduction of equity and a corresponding liability when declared.
2020
2019
3,887
6,055
9,942
5,437
2,498
7,935
No, of shares (thousand)
January 1
Increase due to issue of new shares
December 31
2020
2019
36,055
3,745
39,800
30,787
5,268
36,055
DKK thousand
VAT
Other
Total other receivables
Note 21 – Marketable securities
Accounting policies
The Group’s Marketable securities portfolio comprises a investmetn in a bond portfolio. The
investment is categorized as equity instruments held for trading. Consequently, the securities
are classified at fair value through profit or loss. Refer to note 28, Financial risks.
A net fair value adjustment of DKK -2.1 million from marketable securities have been recog-
nized in financial expenses, respectively, in 2020 (2019: DKK 0.8 million in financial income.
Note 22 – Cash and cash equivalents
Accounting policies
Cash is measured on initial recognition at cost.
DKK thousand
DKK
USD
EUR
Total cash and cash equivalents
2020
2019
732,405
286,222
306,748
568,444
105,555
41,907
960,221 1,081,060
The share capital solely consists of one class of ordinary shares all issued of DKK 1 each and all
shares rank equally. The shares are negotiable instruments with no restrictions on their trans-
ferability. All shares have been fully paid. At the annual general meeting on April 2, 2020 Zealand
was authorized to increase the nominal share capital by nominally DKK 9,013,665 during the
period until April 2, 2025. At December 31,2020 nominally DKK 5,587,388 of the authorization
remains. Further please refer to note 33 for the capital increase made in January 2021.
On June 22, 2020 a total of 2,684,461 new shares have been subscribed through a private and
direct shares issue with a net proceeds pf DKK 655.0 million. On March 26, a total of 741,816
new shares have been subscribed through a private share issue to US based investors with a net
proceeds of DKK 136.5 million. The cost of share issues amounts to DKK 42.7 million.
On March 20, 2019, a total of 802,859 new shares have been subscribed through a direct share
issue to Alexion Pharmaceuticals, Inc. in connection with entering into the license agreement
with Zealand Pharma A/S with net proceeds of DKK 85.6 million, including costs of DKK 0
million. On September 5, 2019, a total of 3,975,000 new shares have been subscribed through
a private placement and directed share issue to existing shareholder Van Herk Investments
B.V. with net proceeds of DKK 545.6 million, including costs of DKK 14.0 million. Other capital
increases in 2019 and 2018 related to exercise of warrant programs.
Expenses directly related to capital increases are deducted from equity.
At December 31, 2020, there were 64,223 treasury shares (2019: 64,223), equivalent to 0.2%
(2019: 0.2%) of the share capital and corresponding to a market value of DKK 14.1 million (2019:
DKK 15.1 million). 22,915 treasury shares have been allocated to performance shares units (PSUs)
as part of Zealand Pharma’s long-term incentive program (LTIP) granted June 13, 2019. Of these
a total of 19,765 PSU’s remain. See note 6 for a further description of the LTIP program.
Rules on changing the Articles of Association
All resolutions put to the vote of shareholders at general meetings are subject to adoption by
a simple majority of votes, unless the Danish Companies Act (Selskabsloven) or our Articles of
Association prescribe other requirements.
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 24-25
93
Notes
Note 24 – Deferred revenue
Note 25 – Provision
The Group has recognized the following liabilities related to contracts with customers.
DKK thousand
Provision Provision
for sales for product
returns
rebates
2020
total
2019
total
DKK thousand
Deferred revenues at January 1
Customer payment received, cf. note 2.
Revenue recognized during the year
Total deferred revenue
Non-current deferred revenue
Current deferred revenue
2020
2019
139,890
0
-42,881
97,769
0
177,315
-37,425
139,890
44,587
53,182
97,769
83,639
56,251
139,890
Deferred revenue occurred in connection with the agreement with Alexion Pharmaceuticals,
Inc. as disclosed in Note 2. An up-front payment of DKK 177.3 million was received of which
DKK 37.4 million has been recognized during 2019 and DKK 42.9 million in 2020.
Management expects that approx. DKK 53 million of the up-front payment received will be rec-
ognized as revenue during 2021. The remaining payment is expected to be recognized during
2022 and 2023 according to the progress of the development project.
0
4,343
137,104
-102,521
Provision at the beginning of the year
Addition due to acquisition cf note 29
Adjustments for the year
Utilization during the period
Reversal of provisions from
previous years
Currency translation adjustments
Provision at year-end
Provisions comprise current sales rebates and discounts granted to government agencies,
wholesalers, retail pharmacies, Managed Care and other customers, which are recorded at the
time the related revenues are recorded or when the incentives are offered.
0
6,969
137,321
-103,766
0
2,626
217
-1,245
0
-2,493
36,433
-1,184
-2,668
36,673
-1,184
-175
239
0
0
0
0
0
0
0
Provisions are calculated based on historical experience and the specific terms in the individ-
ual agreements. Unsettled rebates are recognised as provisions when the timing or amount is
uncertain. Where absolute amounts are known, the rebates are recognised as other liabilities.
Please refer to note 1 and note 2 for further information on sales rebates and provisions and
managements estimates and judgements.
Zealand Pharma issues credit notes for expired goods as a part of normal business. Where there
is historical experience or a reasonably accurate estimate of expected future returns can other-
wise be made, a provision for estimated product returns is recorded. The provision is measured
at gross sales value.
Accounting policies
Provisions are recognized when the Company has an existing legal or constructive obligation as
a result of events occurring prior to or on the balance sheet date, and it is probable that the uti-
lization of economic resources will be required to settle the obligation. Provisions are measured
at management’s best estimate of the expenses required to settle the obligation.
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 26-28
94
Notes
Note 26 – Other liabilities
Accounting policies
Financial liabilities are recognized initially at cost less transaction costs. In subsequent periods,
financial liabilities are measured at amortized cost corresponding to the capitalized value using
the effective interest method.
DKK thousand
Employee benefits
Royalty payable to third party
Development project costs
Other payables
Total other liabilities
Current
Non-current
2020
2019
101,028
5,732
28,267
32,272
167,299
36,082
6,843
16,329
13,790
73,044
150,555
16,744
73,044
0
Note 27 – Contingent assets, liabilities and other contractual obligations
Contingent assets include potential future milestone payments. Contingent liabilities and other
contractual obligations include contractual obligations related to agreements with contract
research organizations (CROs), milestone payments and lease commitments.
Accounting policies
Contingent assets and liabilities are disclosed, unless the possibility of an inflow or outflow of
resources embodying economic benefits is virtually certain.
Contingent Assets
At December 31, 2020, Zealand is still eligible for a payment from Sanofi of up to USD 15.0 mil-
lion, of which DKK 5.0 million is expected in 2021 and DKK 10.0 million in 2022. However, it is
Management’s opinion that the amount of any payment cannot be determined on a sufficiently
reliable basis, and therefore have not recognized an asset in the statement of financial position
of the Group.
Contingent liabilities and Contractual obligations
At December 31, 2020, total contractual obligations related to agreements with CROs amount-
ed to DKK 252.6 million (DKK 198.1 million for 2021 and DKK 54.5 million for the years 2022 up
to and including 2024).
Zealand may be required to pay future development, regulatory and commercial milestones
related to the acquisition of Encycle Therapeutics. Refer to note 13.
Note 28 – Financial risks
The objective of Zealand’s financial management policy is to reduce the Group’s sensitivity
to fluctuations in exchange rates, interest rates, credit rating and liquidity. Zealand’s financial
management policy has been endorsed by Zealand’s Audit Committee and ultimately approved
by Zealand’s Board of Directors.
Zealand is exposed to various financial risks, including foreign exchange rate risk, interest rate
risk, credit risk and liquidity risk.
Capital structure
Zealand aims to have an adequate capital structure in relation to the underlying operating
results and research and development projects, so that it is always possible to provide sufficient
capital to support operations and long-term growth targets.
The Board of Directors finds that the current capital and share structure is appropriate for the
shareholders and the Group.
Exchange rate risk
Most of Zealand’s financial transactions are in DKK, USD and EUR.
Due to Denmark’s long-standing fixed exchange rate policy vis-à-vis the EUR, Zealand has
evaluated that there is no material transaction exposure or exchange rate risk regarding trans-
actions in EUR.
Zealand’s milestone payments have been agreed in foreign currencies, namely USD and EUR.
However, as milestone payments are unpredictable in terms of timing, the payments are not
included in the basic exchange rate risk evaluation.
Currency exposure regarding our US activities are managed by having revenue and expenses in
the same currency.
As Zealand conducts clinical trials and toxicology studies around the world, Zealand will be
exposed to exchange rate risks associated with the denominated currency, which is primarily
USD based on volume and fluctuations against DKK. To date, Zealand’s policy has been to man-
age the transaction and translation risk associated with the USD passively, placing the revenue
received from milestone payments in USD in a USD account for future payment of Zealand’s
expenses denominated in USD, covering payments for the next 12-24 months and thus match-
ing Zealand’s assets with its liabilities.
As of December 31, 2020, Zealand holds DKK 568.4 million (2019: DKK 306.7 million) of its cash
in USD.
Zealand Pharma ∞ Annual Report 2020
95
Contractual maturity (liquidity risk)
A breakdown of the Group’s aggregate liquidity risk on financial assets and liabilities is given
below.
The following table details the Group’s remaining contractual maturity for its financial liabilities
with agreed repayment periods. The table has been prepared using the undiscounted cash
flows for financial liabilities, based on the earliest date on which the Group can be required to
pay. The table includes both interest and principal cash flows. To the extent that the specific
timing of interest or principal flows is dependent on future events, the table has been prepared
based on Management’s best estimate of such timing at the end of the reporting period. The
contractual maturity is based on the earliest date on which the Group may be required to pay.
With the exception of leasing, there are no interest cash-flows to be included in the table below
for the existing financial liabilities as they are not interest-bearing financial liabilities.
DKK thousand
months 1-5 Years
> 5 Years
Total
< 12
Trade payables
Leasing
Other liabilities
Total financial liabilities
at December 31, 2020
Trade payables
Leasing
Other liabilities
Total financial liabilities
at December 31, 2019
71,442
14,072
150,555
0
53,039
16,744
0
76,354
0
71,442
146,465
167,299
236,069
69,783
76,354
382,209
57,533
7,692
73,044
0
23,359
0
0
54,709
0
57,533
85,760
73,044
138,269
23,359
54,709
216,337
All cash flows are non-discounted and include all liabilities under contracts.
Notes
Note 28 – Financial risks (continued)
Interest rate risk
Zealand has a policy of avoiding financial instruments that expose the Group to any unwanted
financial risks. As of December 31, 2020, Zealand only has Lesae liabilities as interest bearing
debt amounting to DKK 130.1 million. Up until the redemption in September 2018, Zealand had
a fixed rate royalty bond.
During 2020, all cash has been held in current bank accounts in USD, EUR and DKK. Interest
rates on bank deposits in DKK and EUR have been negative since 2018, while USD accounts
have generated a low level of interest income.
During 2020 and 2019, Zealand has invested in low risk marketable securities. The Group’s mar-
ketable securities portfolio comprises bonds in Danish kroner. The average weighted duration
of the bond portfolio on the statement of financial position date was 3 years in both years.
Credit risk
Zealand is exposed to credit risk in respect of receivables, bank balances and bonds. The max-
imum credit risk corresponds to the carrying amount. Management believes that credit risk is
limited, as the counterparties to the trade receivables are large global pharmaceutical compa-
nies and wholesalers.
Cash and bonds are not deemed to be subject to credit risk, as the counterparties are banks
with investment-grade ratings (i.e. BBB- or higher from Standard & Poor’s).
Liquidity risk
The purpose of Zealand’s cash management is to ensure that the Group has sufficient and
flexible financial resources at its disposal at all times.
Zealand’s short-term liquidity is managed and monitored by means of the Company’s quarter-
ly budget revisions to balance the demand for liquidity and maximize the Company’s interest
income by matching its free cash in fixed-rate, fixed-term bank deposits and bonds with its
expected future cash burn.
Sensitivity analysis
The table shows the effect on profit/loss and equity of reasonably likely changes in the financial
variables in the statement of financial position.
DKK thousand
Fluctuation Effect
Fluctuation
Effect
2020
2019
USD
+/-10% 58,124
+/-10% 30,657
Zealand Pharma ∞ Annual Report 2020
96
Capital Management
Zealand’s goal is to maintain a strong capital base to maintain investor, creditor and market
confidence, and a continuous advancement of Zealand’s product pipeline and business in
general. Zealand is primarily financed through capital increases and partnership collaboration
income and had, as of December 31, 2020, a cash position of DKK 960.2 million (2019: 1,081.1
million). The cash position supports the advancement of our product pipeline and operations.
The adequacy of our available funds will depend on many factors, including progress in our
research and development programs, the magnitude of those programs, our commitments
to existing and new clinical collaborators, our ability to establish commercial and licensing
arrangements, our capital expenditures, market developments, and any future acquisitions. Ac-
cordingly, we may require additional funds and may attempt to raise additional funds through
equity or debt financings, collaborative agreements with partners, or from other sources.
The Board of Directors monitors the share and capital structure to ensure that Zealand’s capital
resources support the strategic goals. There was no change in the group’s approach to capital
management procedures in 2020.
Neither Zealand Pharma A/S nor any of its subsidiaries are subject to externally imposed capital
requirements.
Notes
Note 28 – Financial risks (continued)
DKK thousand
2020
2019
Categories of financial instruments
Deposits
Trade receivables
Other receivables
Cash and cash equivalents
Financial assets at amortized costs
Marketable securities
Other investments
Financial assets measured at fair value through profit or loss
Lease liabilities
Trade payables
Other liabilities
Financial liabilities measured at amortized cost
16,650
46,484
9,942
9,012
751
7,935
960,221 1,081,060
1,033,297 1,098,758
297,345
32,333
329,678
299,448
35,632
335,080
130,119
70,384
167,299
367,802
85,760
57,533
73,044
216,337
The fair value of marketable securities is based on Level 1 in the fair value hierarchy.
The fair value of other investments is based on level 3 in the fair value hierarchy. Refer to note 17.
There were no transfer between levels 1, 2 and 3 for recurring fair value measurement during
the period ended December 31, 2020 or 2019.
The carrying amount of financial assets and financial liabilities approximated the fair value.
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 29
97
Notes
Note 29 – Business combinations
Accounting policy
Business combinations are accounted for using the acquisition method of accounting. At the
date of the acquisition, the Company initially recognizes the fair value of the identifiable assets
acquired, the liabilities assumed and any non-controlling interest in the acquired business.
The consideration transferred is measured at fair value at the date of acquisition and the excess
of the consideration transferred over the fair value of net identifiable assets of the business
acquired is recorded as goodwill. In circumstances where the consideration transferred is less
than the fair value of net identifiable assets of the business acquired, the difference is recog-
nized directly in the consolidated statement of profit or loss as a bargain purchase.
Where the settlement of any part of cash consideration is deferred, the amounts payable in the
future are discounted to their present value. Contingent consideration is classified either as eq-
uity or a financial liability and is recognized at fair value on the acquisition date. Amounts clas-
sified as a financial liability are subsequently remeasured to fair value in accordance with IFRS 9
(Financial Instruments), with changes in fair value recognized in the consolidated statement of
comprehensive loss as an administrative expense.
Business combinations require management making an assessment of the fair value of the
net assets acquired as well as an assessment regarding whether control exists. Management
judgement is particularly involved in the recognition and measurement of the following items at
fair value:
• intellectual property: this may include patents, licenses, trademarks and similar rights for
currently marketed products, and also the rights and scientific knowledge associated with
projects that are currently in research or development phases, and requires the projection
of estimated future cash inflows and outflows and relevant risks, the terminal value of these
assets, discount rates and weighted average costs of capital,
• working capital items such as trade receivables, inventory (raw materials, work in process,
parts and finished goods), prepaid expenses, trade payables, and fixed assets
• Guarantees, warranties, indemnities, rights, claims, counterclaims etc. set off against third
parties relating to the acquired assets or assumed liabilities, including rights under vendors’
and manufacturers’ warranties, indemnities, guaranties and avoidance claims and causes of
action under any applicable Law, employee liabilities and other contingencies
In all cases, management makes an assessment based on the underlying economic substance
of the items concerned, and not only on the contractual terms, in order to fairly present these
items. In making these assessments, management relies to a significant extent on the work of
valuation experts. However, the assessments are highly subjective and sensitive to the assump-
tions used.
In accordance with IFRS 3, if a business combination indicates a bargain gain all applied as-
sumptions will be reassessed by Management before recognition.
Directly attributable acquisition-related costs are expensed as incurred within the consolidated
statement of comprehensive loss.
Customer relationships and IP rights acquired through business combinations are measured
at fair value at the acquisition date and amortized on a systematic basis over their useful life 8
and 10 years respectively (unless the asset has an indefinite useful life, in which case it is not
amortized).
Acquisition of medical technology business from Valeritas, Inc.
On April 2, 2020 (or “the acquisition date”) Zealand acquired substantially all of the medical
technology business from Valeritas Holdings, Inc. (or “Valeritas”) pursuant to the terms of the
stalking horse asset purchase agreement previously entered into with Valeritas and following
approval by the U.S. Bankruptcy Court for the District of Delaware on March 20, 2020.
Valeritas was a U.S. based commercial-stage company whose activities comprised develop-
ment, production and sale of wearable disposable insulin pumps and has therefore been ac-
quired to accelerate Zealand’s plans for establishing U.S. operations to support the anticipated
launch of the auto-injector and pre-filled syringe for severe hypoglycemia.
The acquisition comprises all medical technology business related tangible and intangible
assets that pursuant to the Bankruptcy Code was transferred to Zealand free and clear of all
claims, liabilities and encumbrances including the Valeritas workforce. Additionally, the acquisi-
tion includes most of the working capital assets and selected liabilities.
Under IFRS 3, Business Combinations, the acquisition has been accounted for as a business
combination using the acquisition method. The consolidated financial statements include the
results of Valeritas for the from the acquisition date.
The consideration transferred was DKK 167.7 million (USD 24.5 million), and the fair values of
the identifiable assets and liabilities of Valeritas as at the date of acquisition were:
Zealand Pharma ∞ Annual Report 2020 98
Note 29 – Business combinations (continued)
DKK thousand
Fair value recognized on acquisition
Assets
Physician Relationship
V-Go IP
Property, plant and equipment
Right-of-use assets
Inventories
Trade receivables
Other assets
Cash and cash equivalents
Liabilities
Deferred tax liability
Trade payables
Lease liabilities
Other liabilities
Total identifiable net assets at fair value
Bargain purchase recognized
Purchase consideration transferred
Analysis of cash flows on acquisition:
Net cash acquired
(included in cash flows from investing activities)
Cash paid
Net cash flow on acquisition
68,459
13,692
41,138
14,299
55,796
50,603
10,132
66
-11,880
-4,050
-14,046
-19,792
204,417
-36,692
167,725
66
-167,725
-167,659
The fair value attributable to intangible assets (DKK 82.2 million as of the acquisition date)
consists of the value arising from the existing Valeritas physician network and relationships,
valued at DKK 68.5 million which is based on the estimated cost it would require to establish
similar network and relationships, or a so-called with/without valuation method, and intel-
lectual property related to the V-Go technology, valued at DKK 13.7 million using an excess
earnings model. (Subsequently impaired. Refer to note 12) The valuations is calculated using
cash flow projections from financial budget approved by Corporate Management covering a
10 year period. The discount rate applied to the cash flow projections is 13%. The growth rate
used to extrapolate the cash flows of the unit beyond the 10 year period is -50% which reflects
our estimate of the expected lifetime of the product of 10 years with a significant decrease in
revenues afterwards.
The calculation of the fair value of intangible assets is most sensitive to the revenue and gross
margin growths.Revenue and gross margin: Revenue and gross margin are based on historical
trends. The revenue growth applied in the calculation is between 1-20% in the 10-year budget
period with the first years having the highest revenue growth in percentage.Operating costs:
Operating costs are based on historical trends and industry knowledge. Operating costs over
the 10-year budget period has been adjusted to incorporate the allocation related to shared
efforts of future product launches.
Trade receivables have been measured at the contractual amount expected to be received
which approximates the fair value of DKK 50.6 million. The amounts have not been discounted,
as maturity on receivables is generally very short and the discounted effect therefore immate-
rial.
The acquisition resulted in a bargain purchase gain of DKK 36.7 million which was recognized
within other operating income in the consolidated income statement. The gain arose as the
fair value of the net assets acquired (DKK 204.4 million) exceeded the fair value of the purchase
consideration (DKK 167.7 million). The gain is primarily attributable to the Company purchasing
the medical technology business of Valeritas out of bankruptcy. Valeritas encountered opera-
tional and financial difficulties in late 2019 and filed for Bankruptcy in February 2020.Specifically,
the fair value of the tangible and financial assets acquired (DKK 147.5 million), such as invento-
ries, trade receivables, and property, plant and equipment, represents a significant component
of the purchase price prior to consideration of the fair value of the identified intangible assets.
Acquisition-related costs of DKK 7.1 million have been expensed and are included in adminis-
trative expenses in profit or loss and are part of operating cash flows in the statement of cash
flows have all been incurred in the three months period ended March 31, 2020.Adjustments
may be applied to the various net asset categories when full alignment to Zealand accounting
policies is finalized. Consequently, adjustments may be applied for a period of up to twelve
months from the acquisition date in accordance with IFRS 3.
The Valeritas business acquisition has contributed with net revenues of approximately DKK
161.3 million in net revenue and profit and loss of approximately DKK -278.8 million to the
Group for the period ending December 31, 2020 since the acquisition on April 2, 2020.
If the acquisition had occurred on 1 January 2020, the consolidated pro forma revenue and
operating result of Zealand Pharma Group for the period ended 31 December 2020 would have
been approximately DKK 395.8 million and DKK -868.9 million, respectively.
Zealand Pharma ∞ Annual Report 2020
Con Fin – Note 30-34
99
Notes
Note 30 – Related parties
Note 32 – Change in working capital
Zealand has no related parties with controlling interest.
DKK thousand
2020
2019
2018
Zealand’s other related parties comprise the Company’s Board of Directors and Corporate
Management.
Remuneration to the Board of Directors and Corporate Management is disclosed in note 6.
No further transactions with related parties were conducted during the year.
Ownership
The following shareholder is registered in Zealand’s register of shareholders as owning min-
imum 5% of the voting rights or minimum 5% of the share capital (1 share equals 1 vote) at
December 31, 2020:
• Van Herk Investments, Rotterdam, Netherlands
(Increase)/decrease in receivables
(Increase)/decrease in Inventory
Increase/(decrease) in payables and other liabilities
Adjustment for non-cash investing activities
Cash outflow for investment in Beta Bionics
Change in working capital
-7,716
-14,404
119,938
0
0
97,818
-21,059
0
17,061
-7,932
22,803
10,873
-471
0
13,256
0
0
12,785
Note 33 – Significant events after the balance sheet date
On January 27, 2021 a total of 3,600,841 new shares have been subscribed through a private
share issue with gross proceeds of DKK 749 million.
No other significant events have occurred after the end of the reporting period.
Note 31 – Adjustments for non-cash items
DKK thousand
2020
2019
2018
Note 34 – Approval of the annual report
Depreciation, amortization and impairment
Sharebased compensation expenses
Income tax income
Income tax expense
Financial income
Financial expenses
Non paid royalty expenses regarding sale of
future royalties and milestones
Exchange rate adjustments
Total adjustments
42,692
30,485
-5,543
15,408
-1,127
3,511
0
57,712
143,138
13,682
14,763
-5,999
614
-9,306
3,390
0
-7,937
9,207
4,508
17,474
0
43,773
0
19,736
6,575
9,864
101,930
The Annual Report has been approved by the Board of Directors and Executive Management
and authorized for issue on March 11, 2021.
Zealand Pharma ∞ Annual Report 2020
Par Fin – Contents
Contents –
Parent company
Financial statements of the parent company
Income statement
Statement of comprehensive income
Statement of financial position
Statement of cash flows
Statement of changes in equity
Notes
1
Significant accounting policies, and significant
accounting estimates and assessments
2 Revenue
3
Fees to auditors appointed at the Annual
General Meeting
4
Information on staff and remuneration
5 Financial income
6 Financial expenses
7 Other operating items
8
Income tax
9 Basic and diluted earnings per share
10
Intangible assets
11 Property, plant and equipment
12 Right-of-use assets and lease liabilities
13
Inventories
14
Investments in subsidiaries
101
101
102
103
103
104
104
105
105
108
108
108
108
109
109
110
111
112
113
15 Other investments
16 Prepaid expenses
17 Other receivables
18 Cash and cash equivalents
19 Share capital
20 Other liabilities
21
Contingent assets, liabilities and other
contractual obligations
22 Financial risks
23 Transactions with related parties
24 Adjustments for non-cash items
25 Change in working capital
26 Allocation of result
27 Significant events after the balance sheet date
28 Approval of the annual report
100
113
114
114
114
114
114
114
115
116
116
116
116
116
116
Zealand Pharma ∞ Annual Report 2020
Par Fin – Income Statement
101
Financial statements of the parent company
Income statement
DKK thousand
Revenue
Cost of goods sold
Gross margin
Research and development expenses
Sale and marketing expenses
Administrative expenses
Other operating items
Operating result
Income from subsidiaries
Financial income
Financial expenses
Result before tax
Corporate tax
Net result for the year
Earnings per share – DKK
Basic earnings/loss per share
Diluted earnings/loss per share
Note
2020
2019
DKK thousand
Note
2020
2019
Statement of comprehensive income
Net result for the year
Other comprehensive income (loss)
Comprehensive result for the year
-826,799
0
-826,799
-570,167
0
-570,167
2
4
3,4
7
337,808
-85,878
251,930
-604,081
-334,118
-138,671
36,996
-787,944
41,333
0
41,333
-553,085
0
-75,977
444
-587,285
0
7,139
-51,537
-832,342
0
14,755
-3,137
-575,667
5,543
-826,799
5,500
-570,167
-21.55
-21.55
-16.87
-16.87
5
6
8
9
9
Zealand Pharma ∞ Annual Report 2020
Par Fin – Financial position
102
Financial statements of the parent company
Statement of financial position at December 31
DKK thousand
Note
2020
2019
DKK thousand
Note
2020
2019
Assets
Non-current assets
Intangibles (Intellectual property)
Property, plant and equipment
Right of use asset/lease liabilities
Investment in subsidiaries
Intercompany
Corporate tax receivable
Deposits
Prepaid expenses
Other investments
Total non-current assets
Current assets
Trade receivables
Inventory
Receivables from subsidiaries
Prepaid expenses
Corporate tax receivable
Other receivables
Marketable securities
Cash and cash equivalents
Total current assets
Liabilities and equity
Share capital
Share premium
Retained loss
Shareholders' equity
Deferred revenue
Other liabilities
Lease liabilities
Non-current liabilities
Trade payables
Payables to subsidiaries
Lease liabilities
Deferred revenue
Other liabilities
Current liabilities
Total liabilities
Total shareholders' equity and liabilities
19
39,800
36,055
3,452,850 2,646,418
-2,315,561 -1,488,763
1,177,089 1,193,710
20
13
13
20
44,587
16,744
108,456
169,787
59,307
359,869
11,392
53,182
93,983
577,733
83,639
0
78,068
161,707
57,082
0
7,692
56,251
64,399
185,424
747,520
347,131
1,924,610 1,540,841
10
11
12
14
16
15
35,691
82,377
118,002
62,228
325,645
1,268
8,920
13,117
32,333
679,581
0
39,708
85,632
2,601
0
0
8,968
0
35,557
172,466
13
16
17
18
0
733
45,700
0
0
3,271
28,517
30,494
5,500
6,682
7,195
7,936
299,448
297,345
860,772 1,019,811
1,245,029 1,368,375
Total assets
1,924,610 1,540,841
Zealand Pharma ∞ Annual Report 2020
Par Fin – Cash flow
Par Fin – Equity
Financial statements of the parent company
Statement of cash flows
Statement of changes in equity
DKK thousand
Note
2020
2019
DKK thousand
Share
capital premium
Share Retained
loss
103
Total
Net result for the year
Adjustments for non-cash items
Change in working capital
Financial income received
Financial expenses paid
Deferred revenue
Income tax receipt
Cash inflow/outflow from operating activities
Change in deposit
Investment in subsidiaries
Purchase of other investments
Purchase of intangible assets
Dividends on marketable securities
Purchase of property, plant and equipment
Sale of fixed assets
Cash outflow from investing activities
Proceeds from issuance of shares related to exercise of warrants
Proceeds from issuance of shares
Costs related to issuance of shares
Leasing installments
Cash inflow from financing activities
18
19
8
9
-826,799
54,758
30,682
897
-4,562
-42,881
0
-787,905
48
-59,627
0
-41,167
0
-51,846
0
-152,592
38,832
794,929
-42,706
-12,449
778,606
-570,167
7,975
5,284
5,387
-3,137
139,890
93
-414,675
-6,206
-2,221
-22,803
00
878
-21,036
25
-51,363
52,468
645,145
-14,444
-8,689
674,480
Decrease/increase in cash and cash equivalents
Cash and cash equivalents at January 1
Exchange rate adjustments
Cash and cash equivalents at December 31
-161,891
1,019,811
2,852
208,442
804,303
7,066
860,772 1,019,811
Equity at January 1, 2020
36,055 2,646,417 -1,488,762 1,193,710
Comprehensive income for the year
Net result for the year
Warrant compensation expenses
Capital increases
Costs related to capital increases
Equity at December 31, 2020
0
0
-826,799
-826,799
0
3,745
0
16,273
836,611
-42,706
39,800 3,452,850 -2,315,561 1,177,089
16,273
832,866
-42,706
Equity at January 1, 2019
30,787 1,954,720
-918,595 1,066,912
Comprehensive income for the year
Net result for the year
Warrant compensation expenses
Capital increases
Costs related to capital increases
Equity at December 31, 2019
0
0
-570,167
-570,167
0
5,268
0
13,796
697,613
-14,444
36,055 2,646,417 -1,488,762 1,193,710
13,796
692,345
-14,444
0
0
Zealand Pharma ∞ Annual Report 2020
Par Fin – Note 1-2
Notes
Note 1 – Significant accounting policies, and significant accounting
estimates and assessments
Note 2 – Revenue
Recognized revenue can be specified as follows for all agreements:
Significant accounting policies
Basis of preparation
The financial statements of the parent company have been prepared in accordance with Inter-
national Financial Reporting Standards (IFRS) as adopted by the EU and additional requirements
under the Danish Financial Statements Act (Class D).
The accounting policies for the financial statements of the parent company are unchanged
from the previous financial year. A number of new or amended standards became applicable
for the current reporting period. The parent company did not change its accounting policies
as a result of the adoption of these standards. The accounting policies are the same as for the
consolidated financial statements with the supplementary accounting policies for the parent
described below. For a description of the accounting policies of the group, please refer to the
consolidated financial statements.
Note disclosures have only been included in the Parent Financial Statement where amounts
differ from the Consolidation financial statement.
DKK thousand
Boehringer Ingelheim International GmbH
Alexion Phamaceuticals Inc.
Undisclosed counterpart
ZP SPV 3 K/S
Total license and milestone revenue
Intercompany sales
Total revenue from good sold
Total revenue
Total revenue recognised over time
Total revenue recognised at a point in time
104
2020
2019
149,120
42,881
0
7,410
199,411
138,397
138,397
0
38,021
3,312
0
41,333
0
0
337,808
41,333
42,881
294,927
38,021
3,312
In the narrative sections of the financial statements, comparative figures for 2019 are shown in
brackets.
Please refer to note 2 in the consolidated financial statements for additional information
regarding revenue.
Supplementary accounting policies for the Parent Company
Other operating income
Capital contributions to subsidiaries is recognized at fair value. Any gain or loss based on the
difference from the carrying amount of the assets will be recognized as other operating items
provided the increase does not result in the impairment of the investment, or an expense
(based on the carrying amount of the asset given away)
Investments in subsidiaries
Please refer to note 14 Investments in subsidiaries.
Zealand Pharma ∞ Annual Report 2020
Par Fin – Note 3-4
105
Notes
Note 3 – Fees to auditors appointed at the Annual General Meeting
Note 4 – Information on staff and remuneration
DKK thousand
2020
2019
DKK thousand
2020
2019
Audit
Audit-related services and other assurance engagements
Tax advice
Other
Total fees
5,941
1,002
0
0
6,943
1,783
1,731
0
12
3,526
Total staff salaries can be specified as follows:
Wages and salaries
Share based payment costs
Pension schemes (defined contribution plans)
Other payroll and staff-related costs
Total
The fee for audit-related services and other assurance engagements and other services provid-
ed to the Parent Company by EY godkendt Revisionspartnerselskab in 2020 consisted of Audit
of Annual Report, Audit of 20-F SEC filing, including SOX 404b attestation procedures, quarterly
reviews, other auditor’s reports on various statements for public authorities, and other account-
ing advisory services. (Deloitte Statsautoriseret Revisionspartnerselskab in 2019)
The amount is charged as:
Research and development expenses
Administrative expenses
Total
Average number of employees
200,732
16,273
14,605
9,615
241,225
168,237
13,715
13,420
14,227
209,599
204,210
37,015
241,225
170,575
39,024
209,599
195
169
For remuneration to the Board of Directors please refer to note 6 to the consolidated financial
statements and for additional information regarding staff costs.
Zealand Pharma ∞ Annual Report 2020
Par Fin – Note 4
Notes
Note 4 – Information on staff and remuneration (continued)
DKK thousand
Base salary
Bonus
Pension
contribution
Other
short term
benefits
Warrant
compensation
expenses
2020
Remuneration to the Executive Management
Emmanuel Dulac¹
Adam Sinding Steensberg²
Matthew Donald Dallas4
Total
Total Other Corporate Management5
Total
2019
Remuneration to the Executive Management
Emmanuel Dulac¹
Adam Sinding Steensberg²
Britt Meelby Jensen³
Mats Blom³
Total
Total Other Coporate Management 5
4,950
2,967
408
8,325
2,604
10,929
3,100
2,807
1,745
655
8,307
3,889
Total
¹ Emmanuel Dulac was appointed as CEO at April 25, 2019.
² Former Interim CEO Adam Sinding Steensberg was appointed EVP, R&D and CMO at April 25, 2019.
3 Former CEO Britt Meelby Jensen and former CFO Mats Blom resigned from Zealand at February 28, 2019 and March 28, 2019, respectively.
4 Matthew Dallas has tax obligations in Denmark, so a part of his salary is paid out in Denmark.
5 Other Corporate Management in 2020 comprised one member (2019: Three).
12,196
3,267
1,266
192
4,725
1,135
5,860
9,072
1,032
419
248
10,771
1,512
12,283
990
593
0
1,583
260
1,843
620
505
175
66
1,366
389
1,755
699
282
2
983
51
1,034
855
269
60
61
1,245
5
1,250
2,534
2,281
0
4,815
1,544
6,359
832
2,304
0
1,677
4,813
1,074
5,887
106
Total
12,440
7,389
602
20,431
5,594
26,025
14,479
6,917
2,399
2,707
26,502
6,869
33,371
Zealand Pharma ∞ Annual Report 2020
107
2020
2019
14,254
0
2,513
16,273
11,658
0
2,057
13,715
Notes
Note 4 – Information on staff and remuneration (continued)
The employee
incentive programs of
Expense arising from share-based payment transactions
Warrant programs existing during the period
2020
2015
2010
Maximum term of options granted
Method of settlement
N/A
10
5
equity-settled
2020
Outstanding at the beginning of the period
Granted during the period
Forfeited during the period
Exercised during the period
Expired during the period
Outstanding at the end of the period; and
Exercisable at the end of the period
Warrants outstanding at the end of the period
Range of exercise prices
Weighted-average remaining contractual life
Number held by Executive Management
2019
Outstanding at the beginning of the period
Granted during the period
Forfeited during the period
Exercised during the period
Expired during the period
Outstanding at the end of the period; and
Exercisable at the end of the period
Warrants outstanding at the end of the period
Range of exercise prices
Weighted-average remaining contractual life
Number held by Executive Management
0 1,532,897
363,132
0
-42,000
0
-267,750
0
0
-40,000
0 1,546,279
285,225
0
0
0
0
101.20-
224.40
4.9
322,134
42,359
0
0
-42,359
0
0
0
101.20-
127.05
0
0
0 1,595,000
566,138
0
-314,266
0
-313,975
0
0
0
0 1,532,897
300,725
0
218,359
0
0
-176,000
0
42,359
42,359
0
0
0
101.20-
142.45
2.3
344,894
101.20-
127.05
0.3
0
Warrants exercised during the period
2020
2019
Weighted-average share price at the date of exercise
234.75
160.77
Research and development expenses
Sale and marketing expenses
Administrative expenses
Total
Effect of fair value of PSUs recognised in the income statement is DKK 0.8 (2019: DKK 0.5
million.
Effect of fair value of RSUs recognised in the income statement is DKK 0.6 (2019: DKK 0.0
million.
The 2019 long-term incentive program (LTIP) for Corporate Management
No of PSUs
Number of shares
At January 1
Granted during the year
Vested during the year
Forfeited during the year
At December 31
No of RSUs
Number of shares
At January 1
Granted during the year
Vested during the year
Forfeited during the year
At December 31
2020
2019
16,703
0
0
0
16,703
0
19,853
0
-3,150
16,703
2020
2019
0
13,665
0
0
13,665
0
0
0
0
0
Zealand Pharma ∞ Annual Report 2020
Par Fin – Note 5-8
Notes
Note 5 – Financial income
Note 8 – Income tax
DKK thousand
2020
2019
DKK thousand
Interest income from financial assets measured at amortized costs
Interest income
Fair value adjustments of Other investments and marketable securities
Dividend, marketable securities
Exchange rate adjustments
Total financial income
Please refer to note 8 in the consolidated financial statements for additional information
regarding financial income.
936
5,306
897
0
0
7,139
5,387
0
2,846
878
5,644
14,755
Note 6 – Financial expenses
DKK thousand
2020
2019
Other financial expenses
Fair value adjustments of Marketable securities
Interest on financial assets
Exchange rate adjustments
Total financial expenses
Please refer to note 9 in the consolidated financial statements for additional information
regarding finacial expenses.
4,931
2,103
2,391
42,112
51,537
3,137
0
0
0
3,137
Note 7 - Other operating items
DKK thousand
2020
2019
Government grants
Contributed IP rights to Zealand Pharma SPV 3 K/S
Other
Total other operating items
Please refer to note 7 in the consolidated financial statements for additional information
regarding other operating items.
645
35,496
638
36,779
444
0
0
444
Net result for the year before tax
Corporate tax rate in Denmark
Expected tax benefit/(expenses)
Adjustment for non-deductible expenses
Adjustment for non-taxable income
Adjustment for exercised warrants
Adjustment for R&D extra deduction
Tax effect on exercise of warrants
Tax effect on expired warrants
Warrant - share price development
Adjustment to prior years
Change in tax assets (not recognized)
Total income tax expense/benefit
DKK thousand
Specification of unrecognized deferred tax assets:
Tax losses carried forward (available indefinitely)
Research and development expenses
Licenses, rights and patents
Non-current assets
Liabilities
Other
Total temporary differences
108
2020
2019
-832,342
22.0%
-575,677
22.0%
183,115
1,873
-7,181
9,063
-8,811
-5,592
-118
-3,425
0
-191,450
5,543
126,740
-947
964
-1,653
1,676
6,092
175
4,050
-19,178
-112,419
5,500
2020
2019
1,269,107
732,389
36,260
66,179
131,147
51,413
681,531
460,007
35,849
51,677
139,890
70,306
2,286,495 1,439,260
Calculated potential deferred tax asset at local tax rate
Deferred tax asset not expected to be utilized
Recognized deferred tax asset
Please refer to note 10 in the consolidated financial statements for additional information
regarding income tax.
503,029
-503,029
0
316,637
-316,637
0
Zealand Pharma ∞ Annual Report 2020
Par Fin – Note 9-10
Notes
Note 9 – Basic and diluted earnings per share
Note 10 – Intangible assets
The result and weighted average number of ordinary shares used in the calculation of basic and
diluted result per share are as follows:
DKK thousand
Net result for the year
Net result used in the calculation of basic and diluted
earnings/losses per share
Weighted average number of ordinary shares
Weighted average number of treasury shares
Weighted average number of ordinary shares used in the
calculation of basic earnings/losses per share
Weighted average number of ordinary shares used in the
calculation of basic and diluted earnings/losses per share
Basic earning/loss per share (DKK)
Diluted earning/loss per share (DKK)
2020
2019
-826,799
-570,167
-826,799
-570,167
38,433,923 33,866,709
-64,223
-64,223
38,369,700 33,802,486
38,369,700 33,802,486
-21.55
-16.87
-21.55
-16.87
Regarding a specification of potential ordinary shares, which are dilutive or antidilutive, please refer to note 11 to the consoli-
dated financial statements.
DKK thousand
Cost at January 1, 2020
Additions
Retirements
Cost at December 31, 2020
Depreciation at January 1, 2020
Depreciation for the year
Impairment
Depreciation at December 31, 2020
Carrying amount at December 31, 2020
Depreciation for the financial year has been charged as:
Research and development expenses
Sale and marketing expenses
Administrative expenses
Total
Cost at January 1, 2019
Additions
Cost at December 31, 2019
Amortization at January 1, 2019
Amortization at December 31, 2019
Carrying amount at December 31, 2019
109
Licenses,
rights
and patents
0
41,167
0
41,167
0
411
5,065
5,476
35,691
411
5,065
0
5,476
0
0
0
0
0
0
0
0
0
Depreciation for the financial year has been charged as:
Research and development expenses
Administrative expenses
Total
Please refer to note 13 in the consolidated financial statements for additional information
regarding intangible assets.
Zealand Pharma ∞ Annual Report 2020
Par Fin – Note 11
110
Notes
Note 11 – Property, plant and equipment
Note 11 – Property, plant and equipment (continued)
DKK thousand
Cost at January 1, 2020
Transfer
Additions
Retirements
Cost at December 31, 2020
Accumulated depreciation
at January 1, 2020
Depreciation for the year
Retirements
Accumulated depreciation
at December 31, 2020
Carrying amount
at December 31, 2020
Depreciation for the
financial year has been
charged as:
Research and
development expenses
Sale and marketing expenses
Administrative expenses
Total
Plant and Other fixtures
and fittings
machinery
Building
improvements
Assets under
construction
57,153
0
33,103
-4,379
85,877
43,696
4,585
-4,304
43,977
41,900
4,000
0
585
4,585
12,501
0
1,190
-985
12,706
4,164
2,533
-986
5,711
6,995
2,133
0
400
2,533
13,773
13,796
14,735
-9,856
32,448
9,860
1,933
-9,805
1,988
14,001
-13,796
2,817
0
3,022
0
0
0
0
30,460
3,022
1,634
0
299
1,933
0
0
0
0
DKK thousand
Cost at January 1, 2019
Transfer
Additions
Retirements
Cost at December 31, 2019
Accumulated depreciation
at January 1, 2019
Transfer
Depreciation for the year
Retirements
Accumulated depreciation
at December 31, 2019
Carrying amount
at December 31, 2019
Depreciation for the
financial year has been
charged as:
Research and
development expenses
Administrative expenses
Total
Plant and Other fixtures
and fittings
machinery
Building
improvements
Assets under
construction
55,545
0
3,419
-1,811
57,153
41,895
0
3,483
-1,682
43,696
13,457
3,483
0
3,483
5,130
27
7,630
-286
12,501
3,336
27
1,085
-284
4,164
8,337
10,800
-27
3,918
-918
13,773
10,614
-27
157
-884
9,860
3,913
0
0
14,001
0
14,001
0
0
0
0
0
14,001
926
159
1,085
134
23
157
0
0
0
Please refer to note 14 in the consolidated financial statements for additional information regarding
property, plant and equipment.
Zealand Pharma ∞ Annual Report 2020
Par Fin – Note 12
111
Notes
Note 12 – Right-of-use assets and lease liabilities
Note 12 – Right-of-use assets and lease liabilities (continued)
Amounts recognized in the statement of financial position
The statement of financial position shows the following amounts relating to leases:
Set out below are the carrying amounts of lease liabilities and the movements
during the period.
DKK thousand
As at January 1, 2020
Additions
Retirements
Reversal of depreciations
Depreciation expense
As at December 31, 2020
As at January 1, 2019
Additions
Depreciation expense
As at December 31, 2019
Other
fixtures and
fittings
Buildings
84,148
43,698
-6,036
6,036
-11,022
116,824
7,750
84,122
-7,724
84,148
1,484
581
-143
0
-744
1,178
2,298
280
-1,094
1,484
As at January 1
Additions
Accretion of interest
Payments
As at December 31
Current
Non-current
The following are the amounts recognised in profit and loss:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Expense relating to short-term leases (included in cost of sales)
Expense relating to leases of low-value assets
(included in administrative expenses)
Variable lease payments (included in cost of sales)
Total amount recognised in profit and loss
2020
2019
85,760
44,209
2,386
-12,507
119,848
11,392
108,456
-11,766
2,391
0
0
0
-9,375
10,048
83,521
621
-8,430
85,760
7,692
78,068
-11,766
621
0
0
0
-11,145
Cashflow
Total cash outflow for leases
Please refer to note 15 in the consolidated financial statements for additional information re-
garding right-of-use assets and lease liabilities.
-12,507
-12,507
-8,430
-8,430
Zealand Pharma ∞ Annual Report 2020
Par Fin – Note 13
112
Note 13 – Inventories
Inventories were comprised as follows:
DKK thousand
Raw materials
Work in process
Finished goods
Total
Direct costs
Indirect production costs
2020
2019
14,398
13,665
17,637
45,700
35,653
10,047
0
0
0
0
0
0
Write downs recognized on inventories were reflected in the cost of goods sold. They were
comprised as follows:
DKK thousand
2020
2019
Accumulated write downs, January 1
Additions
Write downs in the reporting period
Reversals or utilization of write downs
Exchange differences
Accumulated write downs, December 31
Please refer to note 16 in the consolidated financial statements for additional information
regarding inventory.
-5,707
-718
0
0
-6,425
0
0
0
0
0
0
Zealand Pharma ∞ Annual Report 2020
Par Fin – Note 14-15
Notes
Note 14 – Investments in subsidiaries
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 writ-
ten down to this lower value.
DKK thousand
Cost at January 1, 2020
Additions
Cost at December 31, 2020
Value adjustments at January 1, 2020
Value adjustments for the year
Value adjustments at December 31, 2020
Carrying amount at December 31, 2020
Cost at January 1, 2019
Additions
Cost at December 31, 2019
Value adjustments at January 1, 2019
Value adjustments for the year
Value adjustments at December 31, 2019
2,601
59,627
62,228
0
0
.0
62,228
380
2,221
2,601
0
0
0
113
Voting
rights
100%
100%
100%
100%
100%
100%
100%
Company summary
Domicile Ownership
Zealand Pharma A/S subsidiaries:
ZP Holding SPV K/S
ZP General Partner 1 ApS
Zealand Pharma US, Inc.
Zealand Pharma California US, LLC.
Encycle Therapeutics, Inc.
ZP SPV 3 K/S
ZP General Partner 3 ApS
ZP Holding SPV K/S subsidiaries:
ZP SPV 1 K/S
ZP General Partner 2 ApS
Denmark
Denmark
United States
United States
Canada
Denmark
Denmark
100%
100%
100%
100%
100%
100%
100%
Denmark
Denmark
100%
100%
100%
100%
Pursuant to section 146(1) of the Danish Financial Statements Act, Management has chosen to
submit an exemption declaration ('Undtagelseserklæring' in Danish) and has not issued annual
reports for ZP SPV 1 K/S, ZP Holding SPV K/S and ZP SPV 3 K/S.
The financial statements of the two companies are fully consolidated in the consolidated finan-
cial statements of Zealand Pharma A/S.
No income has been received from subsidiaries during the 2020 or 2019.
Carrying amount at December 31, 2019
2,601
Note 15 – Other investments
Please refer to note 15 to the consolidated financial statements.
Zealand Pharma ∞ Annual Report 2020
Par Fin – Note 16-21
Notes
Note 16 – Prepaid expenses
Note 20 – Other liabilities
The increase in Prepaid expenses of DKK 11.5 million from 2019 to 2020 is primarily related to
higher insurance coverage for Management and Board members due to increase liability risk.
DKK thousand
Please refer to note 19 in the consolidated financial statements for additional information
regarding prepaid expenses.
Note 17 – Other receivables
DKK thousand
VAT
Other
Total other receivables
2020
2019
3,887
3,308
7,195
5,448
2,488
7,936
Please refer to note 20 in the consolidated financial statements for additional information
regarding other receivables.
Note 18 – Cash and cash equivalents
DKK thousand
DKK
USD
EUR
Total cash and cash equivalents
2020
2019
253,262
521,977
85,533
698,666
299,695
21,450
860,772 1,019,811
Please refer to note 22 in the consolidated financial statements for additional information re-
garding cash and cash equivalents.
Note 19 – Share capital
Please refer to note 21 to the consolidated financial statements.
114
2020
2019
67,173
28,266
15,287
110,727
34,446
16,329
13,623
64,399
93,983
16,744
64,399
0
Employee benefits
Development project costs
Other payables
Total other liabilities
Current:
Non-currenct
Please refer to note 26 in the consolidated financial statements for additional information
regarding other liabilities.
Note 21 – Contingent assets, liabilities and other contractual obligations
Zealand Pharma A/S is part of a Danish joint taxation. Consequently, referring to the Danish
Corporation Tax Act regulations, Zealand Pharma A/S is liable for any income taxes, etc. for the
jointly taxed companies and Zealand Pharma A/S is likewise liable for any obligations to with-
hold tax at source on interest, royalties and returns for the jointly taxed companies.
Please refer to note 25 to the consolidated financial statements for information on contractual
obligations.
Zealand Pharma ∞ Annual Report 2020
Par Fin – Note 22
115
Notes
Note 22 – Financial risks
Please refer to note 26 to the consolidated financial statements.
DKK thousand
2020
2019
Contractual maturity (liquidity risk)
A breakdown of the Company’s aggregate liquidity risk on financial assets and liabilities is given
below.
The following table details the Company’s remaining contractual maturity for its financial liabil-
ities with agreed repayment periods. The table has been prepared using the undiscounted cash
flows for financial liabilities, based on the earliest date on which the Company can be required
to pay. The table includes both interest and principal cash flows. To the extent that the specific
timing of interest or principal flows is dependent on future events, the table has been prepared
based on Management’s best estimate of such timing at the end of the reporting period. The
contractual maturity is based on the earliest date on which the Company may be required to
pay.
There are no interest cash-flows to be included in the table below for the existing financial
liabilities as they are not interest-bearing financial liabilities.
DKK thousand
months 1-5 Years
>5 years
Total
< 12
Trade payables
Leasing
Other liabilities
Total financial liabilities
at December 31, 2020
Trade payables
Leasing
Other liabilities
Total financial liabilities
at December 31, 2019
59,307
11,392
92,983
0
43,949
0
0
78,648
0
59,307
133,989
92,983
163,682
43,949
78,648
286,279
57,082
7,692
64,399
0
23,359
0
0
54,709
0
57,082
85,760
64,399
129,173
23,359
54,709
207,241
All cash flows are undiscounted and include all liabilities under contracts.
Categories of financial instruments
Deposits
Trade receivables
Receivables from subsidiaries
Other receivables
Cash and cash equivalents
Financial assets measured at amortized cost
Marketable securities
Other investments
Financial assets measured at fair value through profit or loss
Trade payables
Payables to subsidiaries
Lease liabilities
Other liabilities
Financial liabilities measured at amortized cost
8,920
0
325,645
7,195
8,968
733
3,271
7,936
860,772 1,019,811
1,502,532 1,040,719
297,345
32,333
329,678
299,448
35,557
335,005
59,307
8,562
119,848
109,292
297,009
57,082
0
85,760
64,399
207,241
The fair value of marketable securities is based on Level 1 in the fair value hierarchy.
The fair value of other investments is based on level 3 in the fair value hierarchy.
At December 31, 2020 and 2019, the carrying amount of other financial assets and financial
liabilities approximated the fair value.
Zealand Pharma ∞ Annual Report 2020
Par Fin – Note 23-28
116
Notes
Note 23 – Transactions with related parties
Note 26 – Allocation of result
‘Zealand Pharma A/S' related parties are the board of directors, executive management, and
close members of the family of these persons. Refer to note 6 in the consolidated financial
statements for remuneration of Board of Directors. Refer to note 4 in these parent company
financial statements for remuneration of the executive management team.
The Board of Directors proposes that the parent company’s 2020 net result of DKK -826.8
million (2019: net result of DKK -570.2 million) be carried forward to next year by transfer to
retained loss.
Note 27 – Significant events after the balance sheet date
Please refer to note 30 in the consolidated financial statements.
Note 28 – Approval of the annual report
Please refer to note 31 in the consolidated financial statements.
The parent company had the following transactions with subsidiaries:
Revenue: DKK 138 million (DKK 0 million)
Other income: DKK 35.5 million (DKK 0 million)
Sale and marketing costs: DKK 327.8 million (DKK 0 million)
Receivables: DKK 325.6 million (DKK 3,271 million)
Payables: DKK 359.9 million (DKK 8,562 million)
Note 24 – Adjustments for non-cash items
DKK thousand
Depreciation
Warrant compensation expenses
Income tax receipt
Income tax expense
Financial income
Financial expenses
Exchange rate adjustments
Total adjustments
Note 25 – Change in working capital
DKK thousand
Increase/decrease in receivables
Increase/decrease in inventory
Increase/decrease in payables
Increase/decrease in other liabilities
Adjustment for non-cash investing activities
Adjustment for cash outflow for investment in Beta Bionics
Change in working capital
2020
2019
26,293
16,273
0
0
0
5,327
9,623
57,516
13,682
13,796
-5,497
0
-9,227
3,137
-7,916
7,975
2020
2019
-9,666
-45,700
39,720
46,328
0
0
30,682
-29,616
0
20,029
0
-7,932
22,803
5,284
Zealand Pharma ∞ Annual Report 2020
Par Fin – Alternative performance measures
117
Alternative performance measures for the Group (non-audited)
Free cash flow
Free cash flow is calculated as the sum of cash flows from operating activities less purchase of
property, plant and equipment. A positive free cash flow shows that the Group is able to finance
its activities and that external financing or capital raises is thus not necessary for the Group’s
operating activities. Therefore, Executive Management believes that this non-IFRS liquidity
measure provides useful information to investors in addition to the most directly comparable
IFRS financial measure “Net cash flow from operating activities.” The table below shows a rec-
onciliation of free cash flow for 2020, 2019 and 2018:
DKK thousand
2020
2019
2018
Cash (outflow)/inflow from operating activities
Less purchase of property, plant and equipment
Free cash flow
-688,716
-25,044
-713,760
-409,455
-21,036
-430,491
-461,420
-4,038
-465,458
Zealand Pharma ∞ Annual Report 2020
Statement – Management
118
Statement of the
Board of Directors
and Executive
Management
The Board of Directors and Executive Management have today
discussed and approved the Annual Report of Zealand Pharma
A/S for the financial year January 1 – December 31, 2020.
parent company’s operations and cash flows for the financial
year January 1 – December 31, 2030.
The consolidated financial statements and parent company
financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the
EU and additional requirements under the Danish Financial
Statements Act.
We consider the accounting policies used to be appropriate. In
our opinion, the financial statements give a true and fair view of
the Group’s and the parent company’s financial position as of
December 31, 2020, and of the results of the Group’s and the
In our opinion, the Management’s review includes a fair review
of the development of the Group’s and the parent company’s
operations and economic conditions, the results for the year,
and the Group’s and the parent company’s financial position, as
well as a review of the principal risks and uncertainties to which
the Group and the parent company are exposed.
We recommend that the Annual Report be approved at the
Annual General Meeting.
Søborg, March 11, 2021
Executive Management
Emmanuel Dulac
President and
Chief Executive Officer
Matthew Douglas Dallas
Senior Vice President and
Chief Financial Officer
Adam Sinding Steensberg
Executive Vice President,
Research & Development, and
Chief Medical Officer
Board of Directors
Alf Gunnar Martin Nicklasson
Chairman
Kirsten Aarup Drejer
Vice Chairman
Jeffrey Berkowitz
Board member
Bernadette Connaughton
Board member
Leonard Kruimer
Board member
Alain Munoz
Board member
Michael John Owen
Board member
Iben Louise Gjelstrup
Board member
Employee elected
Jens Peter Stenvang
Board member
Employee elected
Frederik Barfoed Beck
Board member
Employee elected
Gertrud Koefoed Rasmussen
Board member
Employee elected
Zealand Pharma ∞ Annual Report 2020 Independent
auditor’s report
Statement – Independent auditor
119
To the shareholders of Zealand Pharma A/S
Report on the audit of the Consolidated Financial
Statements and Parent Company Financial
Statements
Opinion
We have audited the consolidated financial state-
ments and the parent company financial statements
of Zealand Pharma A/S for the financial year January
1 – December 31, 2020, which comprise income
statement, statement of comprehensive income,
statement of financial position, statement of changes
in equity, cash flow statement and notes, including
accounting policies, for the Group and the Parent
Company. The consolidated financial statements
and the parent company financial statements are
prepared in accordance with International Financial
Reporting Standards as issued by the International
Accounting Standards Board (IASB) and as adopted
by the EU and additional requirements of the Danish
Financial Statements Act.
In our opinion, the consolidated financial statements
and the parent company financial statements give
a true and fair view of the financial position of the
Group and the Parent Company at December 31,
2020 and of the results of the Group's and the Parent
Company's operations and cash flows for the finan-
cial year January 1 – December 31, 2020 in accord-
ance with International Financial Reporting Standards
as issued by the International Accounting Standards
Board (IASB) and as adopted by the EU and additional
requirements of the Danish Financial Statements Act.
Our opinion is consistent with our long-form au-
dit report to the Audit Committee and the Board of
Directors.
Basis for opinion
We conducted our audit in accordance with Inter-
national Standards on Auditing (ISAs) and additional
requirements applicable in Denmark. Our responsi-
bilities under those standards and requirements are
further described in the "Auditor's responsibilities for
the audit of the consolidated financial statements and
the parent company financial statements" (hereinafter
collectively referred to as "the financial statements")
section of our report. We believe that the audit evi-
dence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with
the International Ethics Standards Board for Account-
ants' Code of Ethics for Professional Accountants
(IESBA Code) and additional requirements applicable
in Denmark, and we have fulfilled our other ethical
responsibilities in accordance with these rules and
requirements.
To the best of our knowledge, we have not provided
any prohibited non-audit services as described in
article 5(1) of Regulation (EU) no. 537/2014.
Appointment of auditor
We were initially appointed as auditor of Zealand
Pharma A/S on April 2, 2020 for the financial year
2020.
Zealand Pharma ∞ Annual Report 2020 120
Key audit matters
Key audit matters are those matters that, in our pro-
fessional judgement, were of most significance in our
audit of the financial statements for the financial year
2020. These matters were addressed during our audit
of the financial statements as a whole and in forming
our opinion thereon. We do not provide a separate
opinion on these matters. For each matter below, our
description of how our audit addressed the matter is
provided in that context.
We have fulfilled our responsibilities described in the
"Auditor's responsibilities for the audit of the financial
statements" section, including in relation to the key
audit matters below. Accordingly, our audit includ-
ed the design and performance of procedures to
respond to our assessment of the risks of material
misstatement of the financial statements. The results
of our audit procedures, including the procedures
performed to address the matters below, provide the
basis for our audit opinion on the financial state-
ments.
Valeritas business combination and bargain
purchase gain
As disclosed in Note 29 to the consolidated financial
statements, on April 2, 2020, Zealand Pharma A/S
acquired substantially all the medical technology
business from Valeritas Holding, Inc. a U.S. based
commercial-stage company. The consideration
transferred was DKK 167.7 million. The acquisition,
which was accounted for as a business combina-
tion, resulted in a bargain purchase gain of DKK 36.7
million.
The Company has accounted for the Valeritas
business combination by applying the acquisition
method of accounting, including the recognition and
measurement of the identified assets acquired and
liabilities assumed at the acquisition-date fair values
and the recognition of the gain from the bargain
purchase.
Purchase price allocation is complex and bargain
purchases are uncommon in nature. Auditing this
matter required the involvement of valuation spe-
cialists due to the highly judgmental nature of the
initial and reassessed fair value assumptions. These
fair value assumptions included prospective financial
information relating to revenue and gross margin
growth and operating expense assumptions used
in the fair value measurement process of intangible
assets in the form of the V-Go technology and phy-
sician network and relationships. These assumptions
have a significant effect on the bargain purchase.
How our audit addressed the key audit matter
We obtained an understanding of the processes for
accounting for business combinations and evaluated
the design and tested the operating effectiveness of
controls relating to the measurement and valuation
of the identified assets acquired and liabilities as-
sumed. For example, we tested controls over man-
agement’s use of external valuation specialists, man-
agement’s review of the purchase price allocation,
management’s reassessment of the purchase price
allocation, the revenue and gross margin growth and
operating expense assumptions and related prospec-
tive financial information.
To test the purchase price allocation, our audit
procedures included, among others, evaluating
the methodology used, the significant prospective
financial information used in the initial fair value
assumptions and reassessed fair value assumptions
of the V-Go technology and physician network and
relationships, and the underlying data used by the
Company. We compared the assumptions used by
management to historical trends and market partic-
ipant expectations. For example, we evaluated man-
agement’s methodology for determining revenue and
gross margin growth and operating expense assump-
tions compared to relevant publicly available market
data, including market participant expectations, and
methodology for reassessment of the purchase price
allocation. We involved valuation specialists to assist
with our procedures.
To evaluate the fair value of acquired intangible
assets, we compared the initial fair value assump-
tions and reassessed fair value assumptions applied
with publicly available market data and assessed any
entity-specific adjustments that were applied. We
also tested the completeness and accuracy of the
underlying data, including the market data provided
by management’s external valuation specialists.
Accounting for rebates and discounts related to
the Company’s sales in the United States
As disclosed in Note 2 to the consolidated finan-
cial statements revenue from products sold by the
Company in the United States (U.S.) is impacted by
estimates related to managed care rebates, medicare
part D rebates, and co-pay card redemption.
The estimates for managed care rebates, medicare
part D rebates, and co-pay card redemption and
related provisions are recognised as a reduction to
gross sales in the period in which the underlying sales
are recognised. As of December 31, 2020, the provi-
sions for sales discounts and rebates amounts to DKK
Zealand Pharma ∞ Annual Report 2020 36.4 million, as disclosed in Note 25 in the consoli-
dated financial statements.
channel that have yet to be presented under co-pay
terms for co-pay card redemptions.
Auditing managed care rebates and medicare part
D rebates, and co-pay card redemption and related
provisions is complex due to the judgmental nature
of management’s estimates, which involves multi-
ple assumptions, as not all conditions are known at
the time of sale. For both managed care rebates and
the medicare part D rebates, the key assumptions
relate to the rebate percentages by each pharmacy
as determined in each pharmacy's contract with the
Company and forecasted number of prescriptions
that will be filled by each pharmacy (referred to as
payor mix). For co-pay card redemptions, the key
assumptions relate to expected settlement rates for
sales units remaining in the channel that have yet to
be presented under co-pay terms. These assump-
tions are made based on historical actuals, which are
used to estimate forecasted trends, including payor
mix and settlement rates, which are used to estimate
the expected settlement of managed care rebates
and medicare part D rebates, and co-pay card re-
demption, and the specific terms in the individual
agreements.
How our audit addressed the key audit matter
We gained and obtained an understanding of the
Company’s processes for accounting for managed
care rebates, medicare part D rebates, and co-pay
card redemptions related to sales in the U.S. including
the methods for which management developed their
assumptions used in the estimates, such as rebate
percentages and payor mix for both managed care
rebates and the medicare part D rebates and expect-
ed settlement rate for sales units remaining in the
We obtained management’s calculation of provisions
for managed care rebates, medicare part D rebates,
and co-pay card redemptions and assessed the
assumptions applied by management and compared
them to applicable commercial policies, historical
experience and the specific terms in the individu-
al agreements. We further examined subsequent
settlement obligations to assess completeness and
accuracy of the recorded provisions. We performed
an independent assessment on the key assumptions
of the provisions as of December 31, 2020, including
the payor mix and expected settlement rates, and
compared these to the actual provisions recognised.
In addition, we have assessed the adequacy of the
Company’s disclosures on rebates and discounts
related to the matter described above.
Statement on the Management's review
Management is responsible for the Management's
review.
Our opinion on the financial statements does not
cover the Management's review, and we do not ex-
press any form of assurance conclusion thereon.
In connection with our audit of the financial state-
ments, our responsibility is to read the Manage-
ment's review and, in doing so, consider whether the
Management's review is materially inconsistent with
the financial statements or our knowledge obtained
during the audit, or otherwise appears to be material-
ly misstated.
121
Moreover, it is our responsibility to consider whether
the Management's review provides the information
required under the Danish Financial Statements Act.
Based on the work we have performed, we conclude
that the Management's review is in accordance with
the financial statements and has been prepared in ac-
cordance with the requirements of the Danish Finan-
cial Statements Act. We did not identify any material
misstatement of the Management's review.
Management's responsibilities for the financial
statements
Management is responsible for the preparation of
consolidated financial statements and parent compa-
ny financial statements that give a true and fair view
in accordance with International Financial Report-
ing Standards as adopted by the EU and additional
requirements of the Danish Financial Statements
Act and for such internal control as Management
determines is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, Management is
responsible for assessing the Group's and the Parent
Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of ac-
counting in preparing the financial statements unless
Management either intends to liquidate the Group or
the Parent Company or to cease operations, or has
no realistic alternative but to do so.
Zealand Pharma ∞ Annual Report 2020 122
Auditor's responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance
as to whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs and
additional requirements applicable in Denmark will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggre-
gate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of
the financial statements.
As part of an audit conducted in accordance with
ISAs and additional requirements applicable in Den-
mark, we exercise professional judgement and main-
tain professional scepticism throughout the audit. We
also:
• Identify and assess the risks of material misstate-
ment of the financial statements, whether due to
fraud or error, design and perform audit procedures
responsive to those risks and obtain audit evidence
that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrep-
resentations or the override of internal control.
• Obtain an understanding of internal control rele-
vant to the audit in order to design audit proce-
dures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the
effectiveness of the Group's and the Parent Com-
pany's internal control.
and performance of the group audit. We remain
solely responsible for our audit opinion.
• Evaluate the appropriateness of accounting pol-
icies used and the reasonableness of accounting
estimates and related disclosures made by Man-
agement.
• Conclude on the appropriateness of Management's
use of the going concern basis of accounting in
preparing the financial statements and, based on
the audit evidence obtained, whether a material
uncertainty exists related to events or conditions
that may cast significant doubt on the Group's and
the Parent Company's ability to continue as a going
concern. If we conclude that a material uncertain-
ty exists, we are required to draw attention in our
auditor's report to the related disclosures in the
financial statements or, if such disclosures are in-
adequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the
date of our auditor's report. However, future events
or conditions may cause the Group and the Parent
Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and
contents of the financial statements, including the
note disclosures, and whether the financial state-
ments represent the underlying transactions and
events in a manner that gives a true and fair view.
• Obtain sufficient appropriate audit evidence re-
garding the financial information of the entities or
business activities within the Group to express an
opinion on the consolidated financial statements.
We are responsible for the direction, supervision
We communicate with those charged with govern-
ance regarding, among other matters, the planned
scope and timing of the audit and significant audit
findings, including any significant deficiencies in in-
ternal control that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with relevant
ethical requirements regarding independence, and to
communicate with them all relationships and other
matters that may reasonably be thought to bear on
our independence, and where applicable, related
safeguards.
From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the consol-
idated financial statements and the parent company
financial statements of the current period and are
therefore the key audit matters. We describe these
matters in our auditor's report unless law or regula-
tion precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine
that a matter should not be communicated in our
report because the adverse consequences of doing
so would reasonably be expected to outweigh the
public interest benefits of such communication.
Report on compliance with the ESEF Regulation
As part of our audit of the financial statements of
Zealand Pharma A/S we performed procedures to
express an opinion on whether the annual report for
the financial year January 1 – December 31, 2020
with the file name [name of file] is prepared, in all
Zealand Pharma ∞ Annual Report 2020 123
material respects, in compliance with the Commis-
sion Delegated Regulation (EU) 2019/815 on the
European Single Electronic Format (ESEF Regulation)
which includes requirements related to the prepara-
tion of the annual report in XHTML format and iXBRL
tagging of the Consolidated Financial Statements.
Management is responsible for preparing an annual
report that complies with the ESEF Regulation. This
responsibility includes:
The preparing of the annual report in XHTML format;
The selection and application of appropriate iXBRL
tags, including extensions to the ESEF taxonomy and
the anchoring thereof to elements in the taxonomy,
for financial information required to be tagged using
judgement where necessary;
Testing whether the annual report is prepared in
XHTML format;
Obtaining an understanding of the company’s iXBRL
tagging process and of internal control over the tag-
ging process;
Evaluating the completeness of the iXBRL tagging of
the Consolidated Financial Statements;
Evaluating the appropriateness of the company’s use
of iXBRL elements selected from the ESEF taxono-
my and the creation of extension elements where
no suitable element in the ESEF taxonomy has been
identified;
Evaluating the use of anchoring of extension ele-
ments to elements in the ESEF taxonomy; and
Ensuring consistency between iXBRL tagged data and
the Consolidated Financial Statements presented in
human readable format; and
Reconciling the iXBRL tagged data with the audited
Consolidated Financial Statements.
For such internal control as Management determines
necessary to enable the preparation of an annual
report that is compliant with the ESEF Regulation.
Our responsibility is to obtain reasonable assurance
on whether the annual report is prepared, in all mate-
rial respects, in compliance with the ESEF Regulation
based on the evidence we have obtained, and to
issue a report that includes our opinion. The nature,
timing and extent of procedures selected depend on
the auditor’s judgement, including the assessment
of the risks of material departures from the require-
ments set out in the ESEF Regulation, whether due to
fraud or error. The procedures include:
In our opinion, the annual report for the financial year
January 1 – December 31, 2020 with the file name
549300ITBB1ULBL4CZ12-2020-12-31_en.zip is pre-
pared, in all material respects, in compliance with the
ESEF Regulation.
Copenhagen, March 11, 2021
EY Godkendt Revisionspartnerselskab
Christian Schwenn Johansen
State Authorised
Public Accountant
mne33234
Rasmus Bloch Jespersen
State Authorised
Public Accountant
mne35503
Zealand Pharma ∞ Annual Report 2020
Other – COVER
124
Other
information
Zealand Pharma ∞ Annual Report 2020 Other – Sources - Company info
Sources
Transforming Peptides
1 J. Lau and M. Dunn, Therapeutic peptides: Historical perspectives, current devel-
opment trends, and future directions. Bioorganic & Medicinal Chemistry, version 26,
issue 10, 1 June 2018, p. 2700-2707
Pipeline Overview
1
Partnered with Boehringer Ingelheim. Zealand eligible for EUR 366m in outstand-
ing milestones
2
3
Partnered with Boehringer Ingelheim. Zealand eligible for EUR 283m in outstand-
ing milestones
Partnered with Aexion Pharmaceuticals. Zealand eligible for USD 610m in out-
standing milestones
4 Acquired with Encycle Therapeutics
Severe hypoglycemia
¹ Kalra 2013, UK Hypoglycemia Study Group
2 American Diabetes Association, diabetes.org
3
cdc.gov and diabetes.org and www.diabetesselfmanagement.com/diabetes-
resources/tools-tech/insulin-pumps
4 National Diabetes Statistics Report. CDC. 2014
5
Company announcement No. 23/2018, Zealand Pharma achieves primary and
key secondary endpoints in pivotal Phase 3 trial with dasiglucagon for severe
hypoglycemia
Company announcement No. 15/2019, Zealand Pharma achieves primary and key
secondary endpoints in second pivotal Phase 3 trial with dasiglucagon for severe
hypoglycemia
Company announcement No. 35/2019, Zealand Pharma achieves primary and
key secondary endpoints in pediatric Phase 3 trial with dasiglucagon for severe
hypoglycemia
6
7
125
Company
information
Zealand Pharma A/S
Sydmarken 11
2860 Søborg
Denmark
CVR no.: 20 04 50 78
Tel: +45 88 77 36 00
Fax: +45 88 77 38 98
Zealand Pharma U.S., Inc.
34 Farnsworth Street
4th Floor
Boston, MA 02210
info@zealandpharma.com
www.zealandpharma.com
Established
April 1, 1997
Registered office
Gladsaxe
Auditors
EY Godkendt Revisionspartnerselskab
CVR no.: 30 70 02 28
Congenital hyperinsulinism
1
https://www.orpha.net/consor/cgi-bin/ (not including transient cases due to
perinatal stress or diabetic mother)
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3 Thornton PS et al., J Pediatr. 2015;167(2):238-45
4
Meissner T et al., Long-term follow-up of 114 patients with congenital hyper-
insulinism. Eur J Endocrinol 2003;149:43-510
5 Yorifuji et al. Pediatrics International 2014;56:467
6 Eljamel et al. Orphanet Journal of Rare Diseases 2018;13:123
Automated diabetes management
¹ ADA Section 8 2017: p71A
2 ADA Section 6 2017: p60C; p61A
3
Nicole C. Foster, et al, and for the T1D Exchange Clinic Network. Diabetes
Technology & Therapeutics. Feb 2019.
Short bowel syndrome
¹ Pironi L et al. Clin Nutr 2016;352:247–307
2 Jeppesen P. Expert Opinion Orphan Drugs 2013;1:515–25
3 Bielawska B. Nutrients 2017;9:466–60
4 Transparency Market Research; Short Bowel Syndrome Market, 2017
5
Torres C. Current Paediatr 2006;16:291–7; Bielawska B. Nutrients 2017;9:466–79;
Pironi L et al. Clin Nutr 2016;352:247–307; Hofstetter S et al. Curr Med Res Opin
2013;29:495–504
Obesity/Type 2 diabetes
¹ Company announcement No. 29/2019, September 3, 2019
2
Skarbaliene, J., Pagler, T., Eickelmann, P., and Just, R. Anti-obesity effects of the
novel long-acting amylin analogue ZP4982 in high-fat diet fed rats. Poster, the
American Diabetes Association’s (ADA) 76th Scientific Sessions, New Orleans,
2016
Zealand Pharma ∞ Annual Report 2020 Zealand Pharma A/S
Sydmarken 11
DK-2860 Søborg
Denmark
Tel: +45 88 77 36 00
Fax: +45 88 77 38 98
CVR no.: 20 04 50 78
zealandpharma.com
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