Annual Report
2022
Company reg. no. 20045078
Contents
Management review
Overview
Zealand Pharma in short
Letter from the CEO and the Chairman
2022 Achievements
Consolidated key figures
2023 Outlook and objectives
R&D programs
Peptide platform
R&D pipeline
Rare diseases
Obesity
Type 1 diabetes
Inflammation
Corporate matters
Corporate matters
Corporate social responsibility
Our people and culture
Risk management and internal control
Financial review
Shareholder information
Board of Directors and
Corporate Management
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CEO Letter
Read more on page 5
See our pipeline
Read more on page 13
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Financial statements
Consolidated financial statements
Income statement
Statement of comprehensive income
Statement of financial position
Statement of cash flows
Statement of changes in equity
Notes
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Financial statements of the parent company
Statement of financial position
Statement of cash flows
Statement of changes in equity
Notes
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Alternative performance measures for
the Group (non-audited)
Reports
Statement of the Board of Directors and
Executive Management
Independent auditor’s report
Other information
Company information
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Other supplementary
reports 2022
Corporate Social
Responsibility Report
Remuneration Report
Corporate Governance Report
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Zealand Pharma ∞ Annual Report 2022 3
Overview
Zealand Pharma in short
Letter from the CEO and the Chairman
2022 Achievements
Consolidated key figures
2023 Outlook and objectives
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Zealand Pharma ∞ Annual Report 2022 Zealand Pharma
in short
Our mission is to change lives
with next generation peptide
therapeutics.
4
1998
Our company
was founded in 1998 and head-
quartered in Copenhagen, with
207 full and part time employees
globally at end of 2022.
Our ambition
to be the leading peptide drug
discovery and development
company.
Our aim
to lead in rare diseases with high
unmet need:
Congenital Hyperinsulinism and
Short Bowel Syndrome
to be a key player in the fast devel-
oping obesity treatment space
to create a paradigm shift in Type 1
Diabetes management
to advance potential treatments
options for chronic inflammatory
diseases
Our peptide expertise
and platform has been built
during our 25-year history and is
the foundation that has enabled us
to develop a broad pipeline of both
clinical and pre-clinical programs.
We discovered and developed
two novel peptide therapies that
are marketed (with our partners
Sanofi and Novo Nordisk).
Our strategy
to pursue global co-development
and commercialization partner-
ships that complement and extend
our capabilities to deliver new
therapies to patients with unmet
medical needs.
Our DNA
defines our values and unique
company culture .
We are bold.
We empower people.
We work as one team.
We can be trusted.
Find out more about Zealand at
zealandpharma.com/about-us
Zealand Pharma ∞ Annual Report 2022 5
Letter from the CEO
and the Chairman
In 2022, we announced a change in strategy to
prioritize investment in peptide R&D and scale
back commercial operations. Our core strength as
a company is in therapeutic peptide design and
development, which has led to our rich pipeline
of promising candidates targeting rare diseases,
obesity and inflammation. We have demonstrated
our ability to independently bring a product
from discovery to market through our launch of
Zegalogue® in the U.S. We have also recognized
that to reach more patients in more regions
around the world we should partner with global
and regional leaders.
Martin Nicklasson
Chairman of
the Board of Directors
Adam Steensberg
President and
Chief Executive Officer
Zealand Pharma ∞ Annual Report 2022 6
Significant progress
During 2022 we reported positive
results from two of our late-stage
clinical programs evaluating our
novel peptide therapies for the
treatment of rare diseases. Our
expertise in peptide design has
generated four differentiated
obesity assets in late pre-clinical
through Phase 2 clinical trials.
Advancing our R&D pipeline
We have achieved significant progress with our R&D pipe-
line. During 2022 we reported positive results from two
of our late-stage clinical programs evaluating our novel
peptide therapies for the treatment of rare diseases. The
first was for dasiglucagon in infants with congenital hyper-
insulinism (CHI), an ultrarare pediatric disease in which
patients suffer from recurrent and persistent hypoglycemia
due to excess insulin release. The findings from our Phase
3 program have deepened our understanding of dasi-
glucagon's potential as an innovative treatment for children
with CHI who have significant unmet need managing this
challenging disease. The second clinical trial evaluated
glepaglutide, our long-acting GLP-2 analog, designed for
subcutaneous delivery by an auto-injector in patients with
short bowel syndrome (SBS). The results from the EASE-1
trial represented a tremendous milestone for our company
and people living with SBS.
A key objective for our company is to progress these rare
disease programs towards regulatory submissions in 2023
and engage in discussions with potential partners who
have the commercial infrastructure to help us bring such
treatments to patients.
We also aim to advance our pipeline of peptide candidates
targeting obesity, a complex metabolic disease and one of
the greatest healthcare challenges of our time. Our exper-
tise in peptide design has generated four differentiated
obesity assets in late pre-clinical through Phase 2 clinical
trials. These peptides are designed to provide diverse, yet
complementary mechanisms of action. These mecha-
nisms are aimed at achieving greater weight loss, as well
as the potential for addressing specific clinical needs of
obese or overweight patients, while maintaining tolera-
bility. We have used two approaches: dual pharmacology
to target two receptors with one peptide and single
receptor agonists that can be combined or co-formulated
with other peptides.
In 2022, our partner Boehringer Ingelheim reported
promising Phase 2 results in type 2 diabetes for BI
456906, a long-acting dual glucagon/GLP-1 receptor
agonist that was co-invented by our two companies.
Pending results from their Phase 2 trial in patients with
obesity in 2023, we anticipate Boehringer Ingelheim’s
decision whether to initiate Phase 3 clinical development
of the molecule.
Among our three wholly owned peptides targeting
obesity, dapiglutide, our long-acting dual GLP-1/GLP-2
receptor agonist, showed very encouraging weight loss
in a four-week Phase 1 trial in healthy volunteers. We look
forward to gaining clinical insights into the mechanism
of this first-in-class molecule through an investigator
led Phase 2 trial in obesity being initiated in 2023. Of our
single receptor agonists, we are advancing a long-acting
amylin analog, ZP8396, through initial Phase 1 dose-es-
calation studies, and expect to report results during 2023.
We also expect to advance our long-acting GIP receptor
agonist, ZP6590, into Phase 1.
Zealand Pharma ∞ Annual Report 2022 Thank you
We would like to thank our
dedicated colleagues, the patients
who take part in our clinical trials
and their caregivers, our partners,
and our shareholders for their
continued support of
Zealand Pharma.
7
We look forward to increasing our momentum within
obesity into the future.
the value of our assets by leveraging our strengths
and capabilities in a commercial partnership.
Partnering our commercial products
We believe we can maximize the potential of our pipeline
through global co-development and commercialization
partnerships that complement and extend our capabili-
ties to deliver new peptide-based therapies for patients
with unmet medical needs. During the past year we have
accomplished key objectives to implement this strategy.
Having made the decision to scale back our commercial
operations, we moved quickly to ensure that patients
would continue to have access to our two marketed
products. In May we sold the V-Go® insulin delivery device
to MannKind Corporation and in September we entered
into a global license and development agreement with
Novo Nordisk to commercialize Zegalogue®. Our part-
nership with Novo Nordisk leverages our strength and
experience in peptide drug development and we continue
to contribute to the program. Under the agreement, we
remain responsible for certain activities to support further
development and approval outside of the U.S., including
the planned Marketing Authorization Application (MAA) in
the EU this year.
As we evaluate future partnerships for other pipeline
assets, one important element for us will be our ability
to continue to participate in the partnered programs
across the value chain. We will seek to maximize
Extending our runway
Our strategy to prioritize investment in R&D included
a commitment to streamline operating infrastructure
and reduce corporate costs. This led to our decision to
remove Zealand Pharma’s American Depositary Shares
(ADSs) from listing on the New York-based Nasdaq Global
Select Market. At that time the ADSs accounted for less
than 1.5% of the company’s share capital. Ordinary shares
in Zealand Pharma continue to trade on the Copenhagen
Nasdaq in DKK.
Finally, despite the challenging financial markets, we were
able to strengthen our balance sheet in 2022 through
equity raises in June and October that together amounted
to approximately one billion DKK, or USD $140 million,
extending our cash runway.
We would like to thank our dedicated colleagues, the
patients and their caregivers who take part in our clin-
ical trials, our partners and our shareholders for their
continued support of Zealand Pharma.
Martin Nicklasson
Chairman of
the Board of Directors
Adam Steensberg
President and
Chief Executive Officer
Zealand Pharma ∞ Annual Report 2022 2022
Achievements
In 2022, we delivered on
our strategic objectives and
achieved significant pipeline
progress.
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2022 Achievement
Executed partnership agreements
for commercial products
• Sold V-Go® to MannKind Corporation and entered into a partnership with Novo Nordisk for
Zegalogue®
Delivered on the late-stage
clinical pipeline
• Reported positive results from Phase 3 trials in two rare disease programs: dasiglucagon
for congenital hyperinsulinism and glepaglutide for short bowel syndrome
Enriched our early pipeline and developed
our next generation platform
• ZP 8396 amylin for obesity: completed dose escalation in the Phase 1 single ascending
dose trial; initiated Phase 1 multiple ascending dose trial
• Dapiglutide for obesity: reported Phase 1 results and announced decision to pursue further
clinical development in obesity
Maintained a strong financial position
• Met financial operating guidance
Delivered on our environmental, social,
and governance responsibility
• Implemented activities to reduce carbon footprint: revised policies and practices for travel
and vendor selection; sourced power from wind energy for headquarters
• Extended cash runway to mid-2024 by securing approximately USD 140 million through
private placements in June and October 2022
Zealand Pharma ∞ Annual Report 2022 Consolidated key figures
9
DKK thousand
2022
2021
2020
2019
2018
DKK thousand
2022
2021
2020
2019
2018
Income statement
Revenue
Gross margin
Research and development
expenses
103,986
103,986
108,546
97,576
192,001
192,001
41,333
40,918
37,977
34,621
-614,044
-581,511
-595,847
-561,423
-438,219
Marketable securities
Cash, cash equivalents
and Marketable securities
Statement of financial position
Cash and cash equivalents
1,069,234
1,129,103
960,221
1,081,060
108,611
299,042
297,345
299,448
860,635
298,611
1,177,845
1,428,145
1,257,566
1,380,508
1,159,246
Sales and marketing expenses
-32,298
-62,600
-20,795
0
0
Total assets
1,539,806
2,067,629
1,761,949
1,599,514
1,229,797
General and administrative ex-
penses
-237,210
-235,609
-201,594
-67,881
-43,543
Other operating items
-57,587
-2,173
0
444
1,099,526
Net operating expenses
-941,139
-881,893
-818,838
-628,860
Operating result
Net financial items
Result before tax
Income tax
-837,153
-784,317
-626,235
-587,942
-134,888
25,430
-47,292
11,265
-972,041
-754,887
-673,527
-576,677
6,431
3,949
4,814
5,136
617,764
652,385
-27,334
625,051
-43,773
-965,610
-754,938
-668,713
-571,541
581,278
Net result for the period from con-
tinuing operations
Net result for the period from dis-
continued operations
Total shareholders' equity
815,911
927,803
1,229,311
1,242,673
1,116,281
Cash flow
Cash (used in)/provided by
operating activities
Cash (used in)/provided by
investing activities
Cash (used in)/provided by
financing activities
Purchase of property, plant
and equipment
-942,209
-1,211,971
-688,716
-409,455
-461,420
281,259
-18,121
-196,807
-51,666
882,925
587,398
1,332,751
760,941
674,480
-155,449
-11,710
-22,133
-25,044
-21,036
-4,038
-236,525
-263,211
-178,016
0
0
Free cash flow
-953,919
-1,234,104
-713,760
-430,491
-463,418
Net result for the period
-1,202,135
-1,018,149
-846,729
-571,541
581,278
Earnings/loss per share from
continuing operations
– basic/diluted (DKK)
Earnings/loss per share from
discontinued operations
– basic/diluted (DKK)
Earnings/loss per share
– basic/diluted (DKK)
-20.90
-17.61
-17.43
-16.91
18.94
-5.12
-6.14
-4.64
0
0
-26,02
-23,75
-22.07
-16.91
18.94
Other
Share price (DKK)
Number of shares ('000 shares)
Market capitalization (DKKm)
Equity ratio
Equity per share (DKK)
Average number of full time em-
ployees
Number of full time
employees at the end of the year
201.40
51,702
9,305
53%
17.66
247
196
145.10
43,634
6,220
45%
21.26
346
355
220.60
39,800
8,464
70%
32.04
297
329
235.40
36,055
8,487
78%
34.52
173
179
82.40
30,787
2,537
91%
36.33
146
149
Zealand Pharma ∞ Annual Report 2022 2023 Outlook
and objectives
In 2023 we are focused on
maximizing the value potential
of our pipeline.
2023 Objectives
Engage in strategic partnership
discussions
• Engage in partnership(s) in line with commercialization strategy
Deliver on the late-stage clinical pipeline
Prepare regulatory filings for our rare disease programs:
10
Enrich our early pipeline and develop
our next generation platform
• dasiglucagon for the treatment of congenital hyperinsulinism
• glepaglutide for the treatment of short bowel syndrome
Advance programs in type 1 diabetes:
• prepare regulatory filing ex-US for Zegalogue® partnered with Novo Nordisk
• initiate Phase 3 program of dasiglucagon in a bi-hormonal artificial pancreas pump with
Beta Bionics
Advance our obesity programs:
• report results from 6-week Phase 1 trials and advance to 16-week Phase 1 trial of long-
acting amylin analog ZP 8396
• support Phase 2 investigator-initiated trial of dapiglutide and advance dose titration trial
Develop our early pipeline and next generation peptide platform
Maintain a strong financial position
• Meet financial guidance and ensure disciplined financial management
• Maintain sufficient cash runway
Deliver on our environmental, social, and
governance responsibility
• Advance ESG initiatives, including continued employee engagement, focus on maintaining
our unique culture and phasing out of non-electric vehicles
Financial guidance
DKK million
2023 Guidance
2022 Actual
Revenue anticipated from existing and new license
and partnership agreements
No guidance due to uncertain size
and timing
Net operating expenses1
800 - 900
104
941
1 Net operating expenses consist of R&D, S&M, G&A and other operating items
Financial guidance based on foreign exchange rates as of March 2, 2023
Zealand Pharma ∞ Annual Report 2022 11
R&D
programs
Peptide platform
R&D pipeline
Rare diseases
Congenital Hyperinsulinism (CHI)
Short Bowel Syndrome (SBS)
Obesity
Type 1 diabetes
Inflammation
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13
14
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15
16
18
19
Zealand Pharma ∞ Annual Report 2022 Peptide platform
We engineer
peptides
Our core expertise is the
discovery, design and
development of peptide-based
medicines. We engineer peptide
analogs to enhance biological
activity, extend duration of
action and increase stability to
provide innovative and better
treatments for a broad range of
diseases.
Our platform
Since our founding in 1998, we have built a unique
peptide platform and design process based on a deep
understanding of peptide chemistry, formulation
know-how and intellectual property rights combined with
advanced computer science.
The success of our peptide disovery and development
platform has been validated by bringing two approved
products marketed respectively by Sanofi and Novo
Nordisk, as well as the novel peptide analogs currently in
clinical development.
Why peptides?
Peptides are composed of amino acids and are produced
by all living organisms, including humans. Many peptides
are hormones that carry information between cells or
organs to perform a wide range of essential functions,
such as regulating appetite, blood glucose or stimulating
tissue growth.
Native peptides have powerful biological functions but
many are inherently unstable and short-lived in the blood-
stream. To convert native peptides into effective peptide
therapeutics, these characteristics must be modified,
while maintaining or enhancing the biological activity.
This involves modifying the amino acid sequence of the
peptide, usually by substituting with another amino acid.
12
We use nature’s own inventions
Through our deep understanding of peptide chemistry
and biology, we focus this substitution process on key
amino acids to remove the weak points that result in poor
solubility, stability or activity. We have successfully applied
this approach to glucagon, amylin, GLP-1, GLP-2 and GIP
to create new drug candidates.
Enhancing the natural property of a peptide or combining
activities of two or more peptides into single peptides can
present new therapeutic opportunities.
We use endogenous human peptides and peptides from
animal venoms to develop new therapeutic candidates.
We also manipulate bacteria to produce peptide libraries.
In other words, we make broad use of nature’s own inven-
tions in an effort to improve human health and quality of
life.
We continue to optimize our peptide platform through
new technologies and scientific advancements. We also
access cutting-edge technology through research collab-
orations. Our R&D capabilities and pre-clinical programs
provide opportunities to grow our scientific and medical
presence.
Zealand Pharma ∞ Annual Report 2022 R&D
pipeline
Our R&D pipeline of
investigational candidates aims
to address unmet medical needs
across therapeutic areas.
Product Candidate
Preclinical
Phase 1
Phase 2
Phase 3
Registration
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Dasiglucagon: Continuous
Subcutaneous Infusion
Congenital Hyperinsulinism
Glepaglutide (GLP-2 Analog)
Short Bowel Syndrome
BI 456906
(GCGR/GLP-1R Dual Agonist)1
Obesity, NASH and Type 2 Diabetes
Dapiglutide
(GLP-1/GLP-2 Dual Agonist)
Obesity
ZP 8396 (Amylin Analog)
Obesity
ZP 6590 (GIP Receptor Agonist)
Obesity
Dasiglucagon: Bi-Hormonal
Artificial Pancreas Systems
Type 1 Diabetes management
Dasiglucagon: Mini-Dose Pen
Type 1 Diabetes exercise-induced hypoglycemia
ZP 10068
(Complement C3 Inhibitor)2
Undisclosed
ZP 9830 (Kv1.3 Ion Channel Blocker)
Undisclosed
ZP 10000 (ɑ4β7 Integrin Inhibitor)
IBD
All product candidates listed are investigational compounds whose safety and efficacy have not been evaluated or approved by the FDA or any other regulatory authority
1 Co-invented by Boehringer Ingelheim and Zealand: EUR 345 million outstanding potential development, regulatory and commercial milestones + high single to low double digit %
royalties on global sales to Zealand
2 Licensed to Alexion: USD $610 million potential development, regulatory and commercial milestones + high single to low double digits % royalties on net sales
GCGR, glucagon receptor; GLP, glucagon-like peptide; GIP, glucose-dependent insulinotropic polypeptide; IBD, inflammatory bowel disease; NASH, non-alcoholic steatohepatitis; T1D,
type 1 diabetes
Zealand Pharma ∞ Annual Report 2022
14
and dasiglucagon reduced time in hypoglycemia by
approximately 50% and hypoglycemic events by 37-40%
when measured by continuous glucose monitoring in the
study. The most frequently reported adverse events in
both trials were skin reactions and gastrointestinal distur-
bances. Forty-two out of the 44 patients who participated
in these two Phase 3 trials enrolled into a long-term
extension trial that is ongoing.
Rare diseases
Rare diseases
Our approach
to Congenital
Hyperinsulinism
(CHI)
CHI is a rare disease affecting
newborns, infants and children
caused by a defect in pancreatic
beta-cells, resulting in insulin
overproduction and leading to
frequent, recurrent and often
severe episodes of low glucose
(hypoglycemia). Every year, an
estimated one in 28,000 to 50,000
newborns are diagnosed with
genetically determined CHI in the
U.S. and Europe.
A significant burden
Frequent, recurrent and severe episodes of hypoglycemia
in patients with CHI may result in brain damage. Complex
care, including continuous enteral feeding or intravenous
glucose, can result in lengthy and frequent hospitaliza-
tions that make daily life difficult. More than half of CHI
patients may be sub-optimally treated with current ther-
apies. The most severely affected children may need to
have their pancreas removed within months of birth to
prevent hypoglycemia, which results in the development
of life-long type 1 diabetes. The burden of managing CHI
is significant for the affected children and their families
and caregivers.
We are seeking to improve the lives of
patients and their caregivers
Dasiglucagon is an investigational glucagon analog
designed to allow for continuous subcutaneous infu-
sion via a wearable pump system1. The potential of dasi-
glucagon in the management of CHI is supported by two
Phase 3 clinical trials in newborns and children up to 12
years of age.
In one Phase 3 trial (17103), dasiglucagon reduced the
requirement for intravenous glucose in newly diag-
nosed newborns and infants who were being treated in
a hospital setting. By the end of the 25-day, two-part
clinical study, 7 of 12 patients had weaned off intravenous
glucose without needing a pancreatectomy. The second
Phase 3 trial (17109) was conducted with children aged
between 3 months and 12 years in a homecare setting,
1 Zealand Pharma has a collaborative development and supply agreement with DEKA
Research & Development Corporation and affiliates for infusion pump system.
Zealand Pharma ∞ Annual Report 2022 Rare diseases
Our approach
to Short Bowel
Syndrome (SBS)
Short bowel syndrome
(SBS) is a rare, chronic and
debilitating condition resulting
in significantly reduced or
complete loss of intestinal
function. In the U.S. there are
an estimated 7,500 people living
with SBS with intestinal failure.
Life-long dependency on parenteral support
Short bowel syndrome (SBS) is a complex disease that
occurs due to the physical loss, most often due to surgical
removal, of half or more of the small intestine. As a result,
individuals with SBS often have a reduced ability to absorb
nutrients and fluids. In more severe cases, referred to
as SBS with intestinal failure, patients are dependent on
complex parenteral support (PS) to sustain life. SBS with
intestinal failure is associated with significant medical
complications including liver and renal failure, metabolic
complications, chronic fatigue, and life-threatening infec-
tions. Although lifesaving, management of PS is associ-
ated with a significant burden on health care systems and
reduction in the patients’ and caregivers’ quality of life.
Need for improved treatment options
SBS can be treated in highly specialized, multi-disciplinary
centers, involving the use of agents that promote reha-
bilitation of the intestinal lining, such as GLP-2 analogs.
The only currently available GLP-2 treatment requires
weight-adjusted, daily subcutaneous dosing via vial and
syringe that involves a multi-step reconstitution process.
More effective and convenient treatments to further
reduce PS are needed, with the ultimate goal of enteral
autonomy.
15
We are developing a next generation
GLP-2 therapy for patients with SBS
Glepaglutide is a long-acting GLP-2 analog that is stable
in aqueous solution. We are developing glepaglutide as
a ready-to-use, fixed dose product designed for subcu-
taneous delivery via auto-injector. The Phase 3 program
includes four clinical trials evaluating the potential for
glepaglutide to reduce or eliminate the need for PS in SBS
patients with intestinal failure.
In the EASE-1 trial, glepaglutide administered twice a
week reduced weekly PS volume at week 24 compared to
placebo with statistical significance. Nine of 70 patients
treated with glepaglutide in the trial weaned off paren-
teral support within 24 weeks, while no placebo treated
patients were able to wean off parenteral support. Glepa-
glutide appeared to be well tolerated; the most frequently
reported adverse events in the trial were injection site
reactions and gastrointestinal events.
Glepaglutide continues to be evaluated in two long-term
safety and efficacy extension studies, EASE-2 and EASE-3,
as well as in a mechanistic study, EASE-4.
Zealand Pharma ∞ Annual Report 2022 Obesity
Obesity
Facing one of the greatest healthcare
challenges of our time
16
Our approach
to Obesity
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 some
cancers.
The global prevalence of obesity has nearly tripled since
the mid-1970s, with 650 million adults and 124 million
children and adolescents suffering from obesity. In the
U.S. alone, more than 40% of adults are considered obese.
Obesity is a complex disease that may be treated by
targeting a number of unique metabolic pathways. While
single-modality therapies have shown profound weight
loss, it is expected that dual or triple-hormonal treatments
are needed to achieve weight loss comparable to that
seen following bariatric surgery.
We are targeting obesity with
differentiated peptide molecules
We have designed peptides with built-in dual-acting
pharmacology or with mono pharmacology that can be
combined or co-formulated with other anti-obesity treat-
ments. Our goal is to achieve increased weight loss and/or
provide supplementary effects to address specific needs
of obese and overweight subpopulations.
Dual GLP-1/GLP-2 receptor agonist: dapiglutide
GLP-1 and GLP-2 are co-secreted by intestinal L cells in
response to food. GLP-1 decreases appetite reduces food
intake, delays gastric emptying after ingesting food, and
improves glycemia. GLP-2 may improve intestinal barrier
function and tolerability of GLP-1 agonists.
Zealand Pharma ∞ Annual Report 2022 17
A Phase 1 trial of BI456906 in people with obesity or
who are overweight resulted in up to 13.7% weight loss
and no unexpected safety findings following 16 weeks of
treatment. These data supported further clinical testing.
A Phase 2 trial reduced both blood sugar, as measured by
HbA1c, as well as bodyweight and waist circumference
in people living with type 2 diabetes after 16 weeks of BI
456906 treatment. Two further Phase 2 trials are ongoing
in patients with obesity and in patients with non-alcoholic
steatohepatitis (NASH).
Boehringer Ingelheim is funding and conducting all
research, development and commercialization activities
related to BI456906. Zealand is eligible to receive up to
EUR 345 million in outstanding milestone payments, and
high-single to low-double digit royalties on global sales.
Dapiglutide is a first-in-class, long-acting dual GLP-1/
GLP-2 receptor agonist suitable for weekly administra-
tion. The amino acid sequence was derived from a GLP-2
peptide backbone with GLP-1 activity ‘dialed-in’.
A Phase 1 multiple ascending dose trial in healthy volun-
teers showed dose-dependent weight loss of up to 4.3%
at 4 weeks, supporting further clinical development in
obesity.
Amylin analog: ZP8396
Amylin is derived from β-cells in the pancreas and is
co-secreted with insulin. Amylin improves glycemic
control by delaying gastric emptying and targeting post-
prandial glucose. It also modulates satiety signals in the
brain to reduce food intake.
ZP8396, is a long-acting analog of amylin suitable for
weekly dosing that is designed with the potential for
monotherapy as well as to allow for co-formulation with
other anti-obesity peptides, including GLP-1 receptor
agonists, to enhance weight loss.
ZP8396 has shown significant weight loss in pre-clinical
models of obesity. A Phase 1 single ascending dose clin-
ical trial in healthy volunteers showed a pharmacokinetic
and safety profile that supports further development as a
potential obesity treatment. A Phase 1 multiple ascending
dose trial is ongoing.
GIP analog: ZP6590
Glucose-dependent insulinotropic peptide (GIP) is
released by K cells in the upper small intestine in response
to food intake. GIP acts via receptors in the hindbrain
to suppress appetite and can have a potent anti-emetic
effect. Thus, GIP may contribute to the efficacy of other
anti-obesity peptides, such as GLP-1 receptor agonists,
by both contributing a complementary effect and by
improving the therapeutic window of the other peptide.
ZP6590 is a long-acting analog of GIP with a predicted
half-life supporting weekly dosing. The molecule is
designed to allow for co-formulation with other anti-obe-
sity peptides, including GLP-1 receptor agonists.
Pre-clinical models of obesity have shown that ZP6590
can potentiate the weight loss effect of a GLP-1 receptor
agonist. Moreover, anti-emetic properties of GIP may
improve tolerance to GLP-1 receptor agonists.
Dual glucagon/GLP-1 receptor agonist: BI456906
Engaging the glucagon and GLP-1 receptors simultane-
ously may reduce bodyweight by both increasing energy
expenditure and reducing energy intake. Co-invented by
Boehringer Ingelheim and Zealand Pharma, BI456906 is a
long-acting, dual GCGR/GLP-1R agonist for once-weekly
administration.
Zealand Pharma ∞ Annual Report 2022 Type 1 diabetes
Type 1 diabetes
Our approach
to Type 1
Diabetes
Despite newer insulins and
better administration systems,
most people with type 1 diabetes
are unable to reach the glycemic
goals defined by the American
Diabetes Association.
Advances have been made in insulin chemistry and
delivery systems to help patients more effectively manage
their disease. Despite this, achieving tight control over
blood-glucose levels remains a daily challenge for those
living with type 1 diabetes. The risk of diabetes complica-
tions persists particularly in those who cannot optimize
glucoce control, or are at significant risk of hupoglycmia.
Type 1 diabetes is not a single-hormone disease, and
glucagon secretion is dysfunctional in these patients. We
believe that insulin-only treatment approaches do not
mimic physiology and that therapies should be aimed at
restoring physiology through bi-hormonal supplementa-
tion. The aqueous formulation of dasiglucagon potentially
renders it suitable for chronic administration.
We aspire to change type 1 diabetes management
We are developing a pre-filled dasiglucagon cartridge
intended for use in Bihormonal Artificial Pancreas
systems. We are collaborating with Beta Bionics, devel-
oper of the Bihormonal iLet® Bionic Pancreas (iLet Duo™),
a pocket-sized, dual chamber (insulin and dasiglucagon),
autonomous, glycemic control system. The iLet Duo™ is
an investigational device that is limited to investigational
use only. The iLet® Bionic Pancreas platform is designed
to use adaptive, self-learning, control algorithms, together
with continuous glucose monitoring and pump tech-
nology, to autonomously compute and administer doses
of insulin and/or glucagon and mimic the body’s natural
ability to maintain tight glycemic control.
18
With Beta Bionics, we are planning a Phase 3 program
designed to support the marketing applications for the
iLet Duo and a New Drug Application for the use of dasi-
glucagon in Bihormonal Artificial Pancreas systems for the
treatment of type 1 diabetes.
Zealand Pharma ∞ Annual Report 2022 Inflammation
Inflammation
Our approach
to Chronic
Inflammatory
Diseases
We believe that peptide
medicines represent an
opportunity for innovation
in the treatment of chronic
inflammatory diseases.
19
We are progressing programs that represent high-profile
targets shown to be difficult to address with small mole-
cules and antibodies, as well as orally available peptides
against disease targets that have been proven clinically
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-me-
diated 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 C5, the final step in complement activation. We have
selected a candidate molecule that acts on C3, upstream
of C5, and thus offers potential differentiation and broader
utility than the current therapy. The candidate investi-
gational peptide is selective and long-acting, with the
potential to be best-in-class.
We are currently progressing this molecule in collabora-
tion with Alexion (AstraZeneca). We are leading the joint
discovery and research efforts through the preclinical
stage, and Alexion will lead development efforts begin-
ning with Investigational New Drug (IND) filing and Phase
1 trials.For the lead target, Zealand is eligible to receive up
to USD $610 million in development and sales milestone
payments, plus royalties on global sales in the high single
to low double digits.
Integrin α4β7 inhibitor
ZP10000, is being developed as an orally delivered peptide
drug to target integrin α4β7, which is involved in the patho-
genesis of inflammatory bowel disease (IBD). Specific
binding to surface α4β7 on the T cells prevents the interac-
tion 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 demon-
strated in vivo in IBD models. ZP10000, has binding prop-
erties on par with marketed antibodies and oral bioavaila-
bility as demonstrated in vivo. We are currently exploring
the optimal oral formulation for this compound while we
progress 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 drive tissue damage. The anti-inflam-
matory effects of blocking the Kv1.3 ion channel have
been demonstrated in 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 pharma-
ceutical 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.
Zealand Pharma ∞ Annual Report 2022 20
Corporate
matters
Corporate matters
Corporate social responsibility
Our people and culture
Risk management and internal control
Financial review
Shareholder information
Board of Directors and
Corporate Management
21
24
26
27
30
32
34
Zealand Pharma ∞ Annual Report 2022 Corporate
matters
Our 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.
As a company incorporated under the laws of Denmark,
and with our shares admitted to trading and official listing
on Nasdaq Copenhagen, we are subject to various appli-
cable legislations, standards and other regulations for
publicly traded companies. These include Danish securities
law and the recommendations on corporate governance
issued by the Danish Committee on Corporate Governance
(in the below ‘‘the Recommendations’’). On 8 August 2022
we gave notice to the Security and Exchange Commis-
sion (SEC) that Zealand Pharma would delist from the
US-based Nasdaq Global Select Market and end our Amer-
ican Depository Receipt (ADR) program. On 30 September
2022, we filed the necessary notices with the SEC in New
York to complete this process and Zealand is therefore no
longer listed on the US-based Nasdaq and will continue
with Nasdaq Copenhagen as our only listing.
Management structure
Zealand has a two-tier management structure composed
of the Board of Directors (“the Board”) and the Corporate
Management. The Board is responsible for the overall
visions, strategies and objectives, the financial and mana-
gerial supervision of Zealand as well as for regular evalua-
tion of the work of the Corporate Management. In addition,
the Board provides general oversight of our activities and
ensures that it is managed in a manner and in accordance
with applicable law and our 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.
Corporate governance structure
21
Annual General Meeting
Board of Directors
Nomination
Committee¹
Audit
Committee
Remuneration
Committee
Scientific
Committee
Corporate Management
Organization
¹ The Nomination Committee is a sub-set of the board..
Zealand Pharma ∞ Annual Report 2022 The allocation of responsibilities between the Board and
the Corporate Management is stipulated in the Rules of
Procedure.
Board of Directors
The Board of Directors plays an active role in setting our
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 our
strategy, policies and activities to achieve our objectives in
accordance with the Articles of Association.
In line with the Recommendations, the Board of Directors
annually reviews and determines the qualifications and
experience needed on the Board. The chairman supervises
the Board of Director's annual self-evaluation of its perfor-
mance.
The Board of Directors met, using a mixture of virtual and
in-person meetings, for a total of 13 times in 2022.
Board Committees
The Board has established four committees to support
the Board in its duties: Audit Committee, Remuneration
Committee, Scientific Committee, and a Nomination
Committee.
Overview of meetings in 2022
Attended
Absent
Board
Audit Committee
Martin Nicklasson
Kirsten A. Drejer
Jeffrey Berkowitz
Bernadette Connaughton
Alain Munoz
Leonard Kruimer
Michael J Owen
Jens Peter Stenvang
Frederik Barfoed Beck
Anneline Nansen
Iben Louise Gjelstrup
•••••••••••••
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N/A
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••••••••
N/A
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N/A
N/A
N/A
N/A
N/A
Remuneration
Committee
••••••••
N/A
N/A
N/A
••••••••
N/A
••••••••
N/A
N/A
N/A
N/A
Scientific
Committee
Nomination
Committee
N/A
••••
N/A
N/A
••••
N/A
••••
N/A
N/A
N/A
N/A
••
••
••
••
••
••
••
N/A
N/A
N/A
N/A
22
Audit Committee
The Audit Committee assists the Board of Directors with
oversight of financial reporting, internal control 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 activi-
ties delegated by the Board of Directors.
In 2022, specific topics discussed included auditor’s
reports, accounting policies, internal controls, including
SOX (Sarbanes-Oxley Act) compliance, finance, risk
management, insurance policy, de-listing of the American
Depository Shares, year-end issues and external financing.
The Audit Committee met eight times in 2022.
Remuneration Committee
The Remuneration Committee proposes the remuneration
policy as well as targets for company-operated perfor-
mance-related incentive programs. These policies and
guidelines set out the various components of the remu-
neration, including fixed and variable remuneration such as
pension schemes, benefits, retention bonuses, severance
and incentive schemes as well as the related bonus and
evaluation criteria.
In 2022, specific topics discussed included long-term
incentive programs for management and Board of Direc-
tors, US based employees, company goals, compensation
policy for eligible employees, termination package for
the former CEO and CFO, compensation package for the
new CEO and the new CFO and Board compensation and
development of Zealand peer group.
Zealand Pharma ∞ Annual Report 2022
The Remuneration Committee met virtually eight times in
2022.
Nomination Committee
The Nomination Committee makes recommendations for
decisions to the Board of Directors regarding Board and
CEO positions and identifies and recommend candidates
for the Board of Directors.
Specific topics discussed in 2022 included the composition
of the independent members of the Board of Directors
and a review of the organization’s needs from the revised
company strategy announced on 30 March 2022. The
Nomination Committee met twice in 2022.
Scientific Committee
The Scientific Committee is a forum with the purpose of
leveraging the scientific expertise of the appointed Board
of Directors, understanding, and challenging the approach
and assumptions of the Company’s Research & Develop-
ment strategy, provide technical assistance to the Board on
Research & Development related issues and provide guid-
ance to the Board on the risks of the Company’s Research
& Development strategy.
Specific topics discussed in 2022 included the develop-
ment of the clinical pipeline, preparation for potential
interactions with regulatory authorities and a review of the
pre-clinical pipeline. The Scientific Committee met four
times in 2022.
23
The charter of the Audit Committee
is available at:
zealandpharma.com/audit-committee
The charter of the Remuneration Committee,
the remuneration report, the remuneration
policy and the guidelines for incentive pay are
available at:
zealandpharma.com/remuneration-committee
The charter of the Nomination Committee is
available at:
zealandpharma.com/nomination-committee
The charter of the Scientific Committee is
available at:
zealandpharma.com/scientific-committee
Compliance with the Corporate Governance
Recommendations
Zealand complies with the Recommendations on
Corporate Governance in all material respects,
with notes on those areas where is has chosen
to depart from those recommendations set out
below. Zealand has chosen to depart or had
provided explanations in respect of the following
areas of the Recommendations:
1.1.2. The Committee recommends that the
company adopts policies on the company’s rela-
tionships with its shareholders.
1.4.2. The Committee recommends that the
board of directors adopts a tax policy to be made
available on the company’s website.
2.1.1. The Committee recommends that the board
of directors in support of the company’s statutory
objects according to its articles of association
and the long-term value creation considers the
company’s purpose and ensures and promotes a
good culture and sound values in the company.
The company should provide an account thereof
in the management commentary and/or on the
company's website.
3.1.2. The Committee recommends that the
board of directors on an annual basis discusses
the company’s activities to ensure relevant diver-
sity at the different management levels of the
company and adopts a diversity policy, which is
included in the management commentary and/or
available on the company's website.
Zealand Pharma ∞ Annual Report 2022 24
Corporate
social
responsibility
We are committed to being
a socially responsible
biotechnology 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 2022 at
zealandpharma.com/csr
Our commitment to corporate social responsibility (CSR)
is embedded in our mission to change lives with next
generation peptide therapeutics. Our ambition to be the
best peptide drug discovery and development company is
inspired by patients and the opportunity to address their
unmet medical needs. We are committed to ensuring
that our actions benefit our direct stakeholders (patients,
shareholders, partners and colleagues) as well as society.
Our 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
product supply activities
• Putting patients first
• Creating strong partnerships
• Environmental sustainability
• Business ethics
Commitment to Sustainable Development Goals
We are committed to addressing global challenges
through support of the Sustainable Development Goals
established by the United Nations. Six goals that are rele-
vant to our business remain in focus, and we continue
to identify and implement initiatives and metrics to eval-
uate our progress in these areas. Additional goals may be
considered as our company evolves.
Zealand Pharma ∞ Annual Report 2022 Gender Diversity
Diversity provides better understanding of the commu-
nities in which we operate, so that we can better serve
patients and other stakeholders. We aim 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, with more women than men across the organ-
ization (female represenation is 59%; 2021: 58%). As of
December 31, 2022, Zealand's Corporate Management
included two women and four men, giving a female
representation of 33% (2021: 17%) and the Board of Direc-
tors consisted of four women and seven men, giving a
female representation of 36% (2021: 36%).
We are committed to providing equal opportunities for all
employees, by recruiting, hiring, training, promoting, and
making other personnel decisions, without regard to race,
colour, gender identity/expression, religion, age, sexual
orientation, national origin, disability, military or veteran
status or any other protected basis.
Quality in everything we do
Our quality policy describes compliance with rigorous
internationally recognized standards and guidelines at all
stages of research, development and commercial produc-
tion to ensure that we do not place patients or animals
at risk due to inadequate safety, quality or efficacy. We
maintain oversight of outsourced GxP activities to ensure
vendor compliance with the requirements of pharmaceu-
tical quality standards including Good Laboratory Practice
(GLP), Good Manufacturing, Practice (GMP), Good Clinical
Practice (GCP), Good Pharmacovigilance Practice (GVP),
appropriate standards for medical devices and others.
Focus on patients
At Zealand, we work to improve the lives of people with
unmet medical needs through collaborations with advo-
cacy groups and patient organizations. We have a long-
term commitment to patients and their caregivers to
develop better treatment options for improved outcomes.
Data Ethics
This statement forms part of the management commen-
tary of the annual report of Zealand Pharma for the last
financial year. The Danish regulation - Section 99d of the
Danish Financial Statements Act - requires larger compa-
nies, which have a policy for data ethics, to supplement
the management commentary of the annual report with
a report on data ethics. As an innovative fast-moving
biotech company the importance of responsible data
sharing and data ethics is appreciated within the organi-
zation. Zealand Pharma is committed to apply data ethics
that are consistent with the appropriate privacy regu-
lations and consistent with accepted industry practice.
Zealand Pharma currently has policies on Data Integrity
and Good Documentation that apply to the integrity and
quality of data for its clinical trials and a Data Governance
Manual that governs the way that certain categories are
handled and used. Zealand believes that these policies
provide adequate safeguards for its data.
25
Board of Directors
%
36 (36)
2022
2021
Men
Women
64 (64)
Corporate Management
2 (1)
2022
2021
4 (5)
Men
Women
Company
%
2022
41 (42)
2021
Men
Women
59 (58)
Zealand Pharma ∞ Annual Report 2022 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.
26
Talent
Zealand strives to be among the very best employers. We
are building on Zealand's unique strengths and culture,
while we evolve and diversify our workforce to meet
tomorrow's demands and keep our innovation power.
To attract and retain global talent, we foster a strong
company culture, exemplified by our "DNA". These lived
and shared values are that our employees are bold, work
as one team, can be trusted and empower each other.
Through our employees, we can continue to grow a
company with highly specialized employees committed
to changing lives by evolving our business and advancing
our pipeline.
Safe work environment
Zealand works systematically to maintain a safe and
healthy work environment. We maintain numerous proce-
dures to support our work environment and train all
Zealand employees in standard safety protocols to enable
self-management of their occupational safety.
Engagement
We are proud that close to 100% of employees across
geographies and functional areas believe in the future
of Zealand, according to our 2022 engagement survey
results. Our people are dedicated and ambitious, helping
to achieve major organizational goals, even with a change
in company strategy during 2022. We aspire to maintain
this level of engagement into the future.
One Team
We aim to change lives through next generation thera-
peutics, and our employees are at the center of the solu-
tions. We pride ourselves on our ability to work together
as one team, and foster a strong company culture
founded on collaboration, bold innovation, empower-
ment, and trust.
To support our employees’ well-being, we work system-
atically to maintain a safe and healthy work environment.
We have designed our policies and governance systems to
promote physical and psychosocial health. Our commit-
tees include a Works Council and an Occupational Safety
and Health Committee (OSHA Committee), on which
both management and employees are represented and
regularly discuss matters related to our work environment.
Employees are also represented on the company’s Board
of Directors per Danish law.
Zealand Pharma ∞ Annual Report 2022 Risk
management
and internal
control
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.
This section contains a summary of our key risk areas and
how we attempt to address and mitigate such risks. Envi-
ronmental and ethical risks are covered in our corporate
social responsibility reporting, and risks related to finan-
cial reporting are covered in our corporate governance
reporting.
Doing business in the pharmaceutical/biotech industry
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.
Our Management is responsible for implementing
adequate systems and policies in relation to risk manage-
ment and internal control, and for assessing the overall
and specific risks associated with our business and opera-
tions. Furthermore, our Management seeks to ensure that
such risks are managed optimally and in a responsible and
efficient manner.
27
The main risks related to our activities include employees’
and business partners’ violation of our anti-corruption
commitment and potential legal and financial conse-
quences thereof. Zealand’s whistle-blower program
and insider information list are two methods for miti-
gating such risk. We are developing programs to support
ongoing maintenance of code of business conduct
understanding among employees, as well as a more
robust program to ensure data privacy and protection.
Risks of particular importance to us are scientific and
development risks, commercial risks, intellectual 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.
Zealand Pharma ∞ Annual Report 2022 Zealand risk and mitigation
28
Commercial activities – products in
research and development
Research and
development
Clinical trials
Intellectual property
Risks relating to the sales of our products, market
size, competition, development time and costs,
partner interest and pricing of products in develop-
ment.
Research and development of new pharmaceutical
medicines is inherently a high-risk activity. The
probability of discovering and developing an effica-
cious and safe new medicine with strong IP protec-
tion is challenging.
Our product candidates will need to undergo
time-consuming and expensive trials to document
efficacy and safety, the outcome of which is unpre-
dictable, and for which there is a high risk of failure.
If clinical trials of our product candidates fail to
satisfactorily demonstrate safety and efficacy to
the FDA, the EMA and other comparable regulatory
authorities, we may incur additional costs or experi-
ence delays in completing, or ultimately not be able
to complete, the development of these product
candidates.
If we or our partners were to face infringement
claims or challenges by third parties, an adverse
outcome could subject us or our partners to signif-
icant liabilities to such third parties or lead to the
withdrawal of the product. This could lead us or
our partners to curtail or cease the development
of some or all of their candidate drugs, or cause
our partners to seek legal or contractual remedies
against us, potentially involving a reduction in the
royalties due to us.
Our revised strategy is to be the partner of choice
for next generation peptides. The partnership model
works by maintaining a close dialogue with partners
to monitor the progress on the partnership with the
commercial assets.
Throughout the research and development process,
we regularly assess these risks by means of a risk
assessment of all our research and development
projects, conducted by Management together with
the department heads and project managers. This
is reviewed and escalated as appropriate during the
lifetime of the project. Highlights of this assessment
are presented to the Board of Directors, and this
includes a description of each project and measures
its progress based on milestones. It analyses the
individual risks of each project and prioritizes the
project portfolio.
Our 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. Our employees have
been selected due to their extensive experience
within their field of expertise, receive training and
are continuously developed to fulfil requirements.
We also engage in meetings with regulatory author-
ities to ensure that there is alignment on the regula-
tory strategy and trial requirements.
Our patent department works closely with external
patent counsels and partners’ patent counsels to
minimize the risk of patent infringement claims as
well as to prepare any patent defence should this be
necessary.
Our employees receive training and updates on
policies regarding the correct and lawful manage-
ment of internal and external intellectual property.
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Zealand Pharma ∞ Annual Report 2022 Zealand risk and mitigation – continued
29
Regulatory
Future partnerships
Financial
IT
The regulatory approval processes of the FDA, the
EMA and other regulatory authorities can be lengthy,
time consuming and inherently unpredictable, and
if we or our collaboration partners are ultimately
unable to obtain regulatory approval for internal or
out licensed product candidates, our business could
be substantially harmed.
Entering into collaborations with partners can bring
significant benefits as well as involve risks. In addi-
tion, full control of the product is often given to the
partner.
Financial risks relate to cash and treasury manage-
ment, liquidity forecasts and financing opportuni-
ties.
Our information technology systems are key to its
operations and need protection from intrusion from
unauthorized entry.
In addition to the above there are macroeconomic
risks relating to rising interest rates and volatility in
the financial markets.
Our regulatory department works closely with
external consultants and regulatory agents to
develop regulatory strategies. We also engage in
meetings with regulatory authorities to ensure that
there is alignment on the regulatory strategy and
trial requirements.
Under our revised corporate strategy, partnerships
are a key part of our future. To maximize the value
of such partnerships, we strive to foster a close and
open dialogue with our partners, thereby building
strong partnerships that work effectively.
Financial risks are regularly assessed by our
Company's Management and reported to the Audit
Committee and the Board of Directors.
The company regularly assesses its exposure to the
markets and assess all its options for its financing
needs.
We employ qualified IT professionals who use
external assistance from qualified vendors to
provide advice on cybersecurity and systems secu-
rity were relevant. All members of staff are trained
in IT security and our IT systems use multi-authen-
tication systems as appropriate to reduce the risk of
unauthorized entry into the systems. Our company
has appropriate protection systems from viruses
and malware. The most sensitive data is encrypted
and subject to restricted internal use.
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Zealand Pharma ∞ Annual Report 2022
Financial
review
Financial review for the period
January 1 – December 31, 2022.
Financial results
In March 2022 Zealand announced a change in strategy
and intention to scale back commercial operations.
As a consequence, the result from activities related to
commercialization of products via own sales force is clas-
sified as discontinued operations. Comparative figures for
2021 have been restated to match the classification.
Revenue
DKK million
Revenue from collabora-
tion agreements
Product sales from
discontinued operations
Total revenue
2022
2021
∆ in
percent
∆
104.0
108.6
-4.6
-4%
87.6
191.6
184.0
292.6
-96.4
-101.0
-52%
-35%
Revenue from collaboration agreements is positively
impacted by the license and development agreement
with Novo Nordisk A/S related to Zegalogue. The positive
effect is offset by a decrease in received milestones from
other collaboration agreements.
Research and development expenses
DKK million
2022
2021
30
∆ in
percent
∆
Research and develop-
ment expenses from
continuing operations
Research and develop-
ment expenses from
discontinued operations
Total research and devel-
opment expenses
614.0
581.5
32.5
6%
4.9
6.2
-1.3
-21%
618.9
587.7
31.2
5%
Research and development expenses are increased
compared to last year due to the new strategy to prioritize
pipeline activities.
Sales and marketing expenses
DKK million
2022
2021
∆ in
percent
∆
Sales and marketing
expenses from continuing
operations
Sales and marketing ex-
penses from discontinued
operations
Total sales and marketing
expenses
32.3
62.6
-30.3
-48%
113.7
312.7
-199.0
-64%
146.0
375.3
-229.3
-61%
Sales and marketing expenses are decreased compared to
2021 as a result of the change in strategy as announced in
March, 2022.
Zealand Pharma ∞ Annual Report 2022 General and administrative expenses
Corporate tax
DKK million
2022
2021
∆ in
percent
∆
DKK million
2022
2021
∆ in
percent
∆
General and adminis-
trative expenses from
continuing operations
General and adminis-
trative expenses from
discontinued operations
Total general and admin-
istrative expenses
237.2
235.6
1.6
1%
17.1
25.4
-8.3
-33%
254.3
261.0
-6.7
-3%
The decrease in general and administrative expenses from
discontinued operations is a result of the reduced activi-
ties in US following the change in strategy.
Corporate tax from con-
tinuing operations
Corporate tax from dis-
continued operations
Total corporate tax
6.4
-13.1
-6.7
3.9
4.8
8.7
2.5
64%
-17.9
-15.4
-373%
-177%
The corporate tax is impacted by an impairment of
deferred taxes related to our US operations as a conse-
quense of the changed strategy.
Liquidity and capital resources
31
Cash, cash equivalents and
Marketable securities
DKK million
Cash, cash equivalents
and marketable securities
Dec 31,
2022
Dec 31,
2021
∆ in
percent
∆
1,177.8
1,428.1
-250.3
-18%
Cash flow
DKK million
Cash used in
operating activities
Cash used in
investing activities
Cash flow from
financing activities
Free cash flow
2022
2021
∆ in
percent
∆
-942.2
-1,212.0
269.8
22%
281.3
-18.1
299.4
1,654%
587.4
1,332.8
-953.9
-1,234.1
-745.4
-280.2
-56%
23%
Financial items
DKK million
2022
2021
∆ in
percent
∆
Equity
DKK million
Financial income
Financial expenses
Net financial items
133.3
-268.2
-134.9
41.2
-15.8
25.4
92.1
224%
Equity
-252.4
-160.3
1,597%
-631%
Equity ratio
Dec 31,
2022
Dec 31,
2021
∆ in
percent
∆
815.9
53%
927.8
45%
-111.9
N/A
-12%
N/A
The decrease in cash used in operating activities is caused
by a postive impact from working capital due to the
reduced sales activities.
Financial items is driven by the loan agreement with
Oberland. The increase in financial income is a result of
a fair value adjustment on Zealands option to prepay the
loan. The increase in expense is caused by a recognized
loss on the partial repayment of the loan, fair value adjust-
ments of Oberlands option to call for repayment of the
loan under certain conditions and the ongoing interests
on the loan.
The decrease in equity was mainly driven by the loss for
the period offset by capital increases in June and October
2022 amounting to DKK 1,085 million.
Cash used in investing activities in 2022 relates to settle-
ment of the Groups marketable securities and proceeds
received from the divestment of V-GO.
Cash from financing activities is from the capital raises in
June and October 2022, offset by the partial repayment of
the Oberland loan.
Zealand Pharma ∞ Annual Report 2022 Shareholder
information
We are listed on Nasdaq
Copenhagen under the ticker
symbol ZEAL.
At December 31, 2022, the nominal value of our share
capital was DKK 51,702,098, divided into 51,702,098
shares with a nominal value of DKK 1 each.
In 2022 the share capital increased by a nominal value of
DKK 8.1 million through two directed issues and private
placements (DKK 7.9 million in total) and exercise of
employee warrants (DKK 0.2 million). All Zealand shares
are ordinary shares and belong to one class. Each share
listed by name in Zealand’s shareholder register represents
one vote at the annual general meeting and other share-
holders’ meetings.
Change in number of shareholders during 2022
The number of registered shareholders in Zealand Pharma
increased to 24,283 at December 31, 2022, from 24,097 at
December 31, 2021.
Find out more about our investor relations at
zealandpharma.com/investor-relations
32
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 December
31, 2022:
• Van Herk Investments, Netherlands (14.8% of
votes/14.8% of capital)
• Polar Capital LLP, United Kingdom (11.5% of votes/11.5%
of capital)
Institutional shares by geography
%
37 (29)
2022
0 (0)
2021
18 (28)
20 (1)
25 (41)
United States
Denmark
United Kingdom
Rest of Europe
Rest of World
Based on Nasdaq Corporate Solutions aggregated data
per October 2022 and Computershare aggregated data
per December 2021.
Zealand Pharma ∞ Annual Report 2022 33
Share price performance
The price of Zealand’s shares increased by 38.8% during
2022 with a market closing share price at year-end of DKK
201.40, compared to DKK 145.10 at year-end 2021.
Analyst coverage
Zealand is followed by the financial institutions and
analysts listed below:
Institution
Analyst
Annual General Meeting
The annual general meeting is scheduled to be held elec-
tronically and in-person on Wednesday, March 29, 2023 at
3:00 PM CET. Additional information will become available
at https://www.zealandpharma.com/annual- general-
meeting no later than 3 weeks before the annual general
meeting.
Financial Calendar 2023
Date
March 29
May 11
August 17
November 9
Event
Annual General Meeting
Q1 Earnings Release /
Interim Report First Quarter 2023
H1 Earnings Release /
Interim Report First Half 2023
Q3 Earnings Release /
Interim Report Third Quarter 2023
All dates are subject to NASDAQ deadlines and reporting
requirements and are subject to change
United Kingdom
Goldman Sachs
Jefferies
Morgan Stanley
Netherlands
Kempen
Denmark
Carnegie
Danske Bank
Nordea
Rajan Sharma
Lucy Codrington
Sarita Kapila
Suzanne van Voorthuizen
Jesper Ilsøe
Thomas Bowers
Michael Novod
Core share data
Number of shares and
ADSs at Dec. 31, 2022
Listing
Denmark
51,702,098
U.S.*
0
Nasdaq
Copenhagen
Nasdaq Global Select
Market, New York
Ticker symbol
ZEAL
ZEAL
Index
memberships
Nasdaq
Copenhagen
* In 2022, Zealand voluntarily removed its American Depositary Shares (ADSs) from listing
on the New York-based Nasdaq Global Select Market. One ADS represented one ordi-
nary share in Zealand Pharma, and the company’s ADSs accounted for less than 1.5% of
the total share capital.
Zealand Pharma ∞ Annual Report 2022 Board of
Directors and
Corporate
Management
Find out more about the Board of Directors at
zealandpharma.com/board-of-directors-
and-nomination-committee
Zealand Board of Directors at March 2, 2023
34
Position
Year of birth
Nationality
Gender
First elected
Committee
Martin Nicklasson
Kirsten A. Drejer
Jeffrey Berkowitz
Chairman
1955
Swedish
Male
2015
Vice Chairman
Board member
1956
Danish
Female
2018
1966
American
Male
2019
AdCom, RemCom chair and
NomCom chair
NomCom and SciCom
NomCom and AdCom
Independent
Yes
Yes
Yes
Special
competencies
Extensive general management and
research and development experience
from AstraZeneca Plc and Swedish
Orphan Biovitrum AB.
Current positions
Board member of Basilea Pharmaceutica
Ltd. and chairman of Nykode Therapeu-
tics AS.
More than 30 years of international
experience in the pharmaceutical 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 pharmaceutical, retail
pharmacy, wholesale drug distribution,
specialty, payor and healthcare services
leadership experience in P&L accountable
roles.
Chairman of the board of Antag Thera-
peutics, Bioneer and ResoTher Pharma.
Board member of Curasight A/S and Malin
Corporation.
CEO and Director of Real Endpoints.
Board member of H. Lundbeck A/S,
Esperion Therapeutics, Inc. and Uniphar
PLC.
Zealand shares at
December 31, 2022
10,570
Zealand warrants at
December 31, 2022
0
Zealand RSUs at
December 31, 2022
8,000
Change in owner-
ship in 2022
+8,000
4,800
0
4,000
+4,000
4,200
0
4,000
+4,000
Zealand Pharma ∞ Annual Report 2022
Zealand Board of Directors at March 2, 2023, continued
35
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
Michael John Owen
Board member
1951
British
Male
2012
Committee
NomCom and AdCom
NomCom and AdCom
NomCom, RemCom and ScCom
NomCom, RemCom and ScCom
Independent
Yes
Yes
No2
Yes
Special
competencies
More than 30 years of global strategic, commer-
cial and leadership expertise, and a broad
perspective on the strategy, capabilities and
governance required for successful execution in
U.S. and international 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.
Physician qualified cardiology and intensive care.
Experience in the pharmaceutical industry at senior
management level. Served as SVP for international
development in the Sanofi Group and in the phar-
maceutical division of Fournier Laboratories.
Research experience focusing on the immune
system and more than 150 publications. Has
held several leading positions at GlaxoSmith-
Kline, most recently as SVP and head of
biopharmaceuticals research.
Current positions
Board member of the board of Halozyme Thera-
peutics Inc., Editas Medicine and Syneos Health.
Chairman of the board of BioInvent Interna-
tional AB, board member of Oncolytics Biotech
Inc., board member and Chairman of Audit
Committee of Pharming Group NV., and Basilea
Pharmaceutica Ltd. Director AI Global (Nether-
lands) PCC Ltd.
Chairman of the board of directors of Acticor
Biotech and a board member of Auris Medical
and Amryt Pharma Plc.
Chairman of the board of Ossianix Inc. and is a
member of the board of ReNeuron Group plc,
and Sareum Holdings plc.
Zealand shares at
December 31, 2022
4,500
Zealand warrants at
December 31, 2022
0
Zealand RSUs at
December 31, 2022
4,000
Change in owner-
ship in 2022
+4,000
8,000
0
5,500
+4,000
9,750
0
4,500
4,500
3,820
0
4,500
3,520
1 Resigned in 2006 and re-elected in 2007.
2 Not considered independent in accordance with the Danish Recommendations on Corporate Governance of 2 December 2020.
Zealand Pharma ∞ Annual Report 2022
Zealand Board of Directors at March 2, 2023, continued
36
Frederik Barfoed Beck
Anneline Nansen
Louise Gjelstrup
Jens Peter Stenvang
Position
Employee-elected board member1
Employee-elected board member1
Employee-elected board member1
Employee-elected board member¹
Year of birth
Nationality
Gender
First elected
Committee
Independent
1967
Danish
Male
2020
None
No
1969
Danish
Female
2021
None
No
1977
Danish
Female
2020
None
No
1954
Danish
Male
2014
None
No
Current positions
Senior Outsourcing Manager
Principal Scientist.
Principal Laboratory Technologist.
Senior Application Specialist.
Zealand shares at
December 31, 2022
Zealand warrants at
December 31, 2022
Zealand RSUs at
December 31, 2022
Change in owner-
ship in 2022
5,738
7,928
1,500
+940
1 Employee-elected board members are elected for a period of four years.
1,571
10,047
1,500
0
2,230
2,523
1,500
+975
7,800
1,773
1,500
+1,500
Zealand Pharma ∞ Annual Report 2022
Zealand Corporate Management at March 2, 2023
37
Position
Year of birth
Nationality
Gender
Joined Zealand
Experience
Adam Steensberg
Executive Management
President and Chief Executive Officer
Henriette Wennicke
David Kendall
Executive Management
Executive Vice President and Chief Financial Officer
Senior Vice President and Chief Medical Officer
1974
Danish
Male
2010
1983
Danish
Female
2022
1961
American
Male
2020
Adam was appointed to the position of CEO in March 2022 having
served most recently as our Executive Vice President, Research &
Development, and Chief Medical Officer. Prior to joining Zealand,
Adam led clinical 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 rheu-
matology, and has significant experience of leading regulatory
strategies.
Adam is a chairman of the board of directors of Cessatech ApS
and board member of Dansk Biotek
Henriette has served as the Vice President and Head of Investor
Relations and Treasury at GN Store Nord, a global leader in intel-
ligent audio solutions listed on the Nasdaq Copenhagen. Prior to
that role, she was Vice President and Head of Global Finance at
GN Hearing. Henriette began her career with Novo Nordisk, rising
through financial leadership roles.
David has served as Chief Medical Officer for MannKind Corpo-
ration, Vice President, Medical Affairs and Distinguished Medical
Fellow at Eli Lilly and Company, and as Chief Scientific and Medical
Officer for the American Diabetes Association. His clinical career
includes roles as both Chief of Clinical Services and Medical
Director at the International Diabetes Center and as faculty at the
University of Minnesota.
David is a board observer of Beta Bionics, Inc.
Zealand shares at
December 31, 2022
Zealand warrants at
December 31, 2022
Zealand PSUs at
December 31, 2022
Zealand RSUs at
December 31, 2022
Change in owner-
ship in 2022
17,611
254,063
176,984
11,711
+17,611
0
14,038
20,590
0
0
1,536
10,490
0
32,829
0
Zealand Pharma ∞ Annual Report 2022 Zealand Corporate Management at March 2, 2023, continued
38
Ivan Møller
Christina Sonnenborg Bredal
Ravinder Chahil
Position
Executive Vice President and Chief Operating Officer
Senior Vice President, People & Organization
Senior Vice President and General Counsel
Year of birth
1972
Nationality
American/Danish
Gender
Joined Zealand
Experience
Male
2018
1985
Danish
Female
2020
1968
British
Male
2017
Ivan has served at Novartis in both generics and pharmaceutical
manufacturing, as well as in strategy, quality assurance, contract
manufacturing and supply chain leadership in Germany, the U.S.
and Switzerland.
Ivan was project leader at The Boston Consulting Group in the
pharmaceutical R&D and manufacturing areas.
Christina brings experience in employment law and workforce
challenges. Prior to joining Zealand, Christina served as a consul-
tant at PwC Legal, specializing in employment law and employee
share programs, and at EY People Advisory Services, specializing in
global mobility tax and rewards.
Christina was previously a trial lawyer litigating civil court cases
and an attorney specializing in M&A and legal due diligence.
Ravinder brings international experience in intellectual property
law in the life science sector, with expertise in litigation, licensing,
mergers, acquisitions. Additionally, he has experience with
financing, securitization, and capital markets. Prior to his in-house
roles as Director of Intellectual Property at Polpharma SA and
Actavis Group Hf, he worked for 10 years in private practice in
London, practicing contentious and non-contentious intellectual
property law.
Zealand shares at
December 31, 2022
15,349
Zealand warrants at
December 31, 2022
129,915
Zealand PSUs at
December 31, 2022
Zealand RSUs at
December 31, 2022
Change in owner-
ship in 2022
90,927
10,739
+15,349
542
31,761
35,400
333
+542
0
50,261
33,900
2,376
0
Zealand Pharma ∞ Annual Report 2022 39
Financial
statements
Zealand Pharma ∞ Annual Report 2022 Consolidated
financial statements
40
Income statement
Statement of comprehensive income
Statement of financial position
Statement of cash flows
Statement of changes in equity
Notes overview
41
41
42
43
43
44
Zealand Pharma ∞ Annual Report 2022 Income statement
Income statement
Statement of comprehensive income
Statement of comprehensive income
Consolidated financial statements
Consolidated income statement for the years ended
December 31, 2022, 2021 and 2020
Consolidated statements of comprehensive income for the years ended
December 31, 2022, 2021 and 2020
41
DKK thousand
Revenue
Royalty expenses
Gross margin
Research and development expenses
Selling and marketing expenses
General and administrative expenses
Other operating items
Net operating expenses
Operating result
Financial income
Financial expenses
Result before tax
Corporate tax
Note
2022
2021
2020
DKK thousand
Note
2022
2021
2020
Net result for the year
Other comprehensive income
Items that will be reclassified to income
statement when certain conditions are met (net
of tax):
Exchange differences on translation of foreign
operations
-1,202,135
-1,018,149
-846,729
462
5,178
8,977
Total comprehensive result for the year
-1,201,673
-1,012,971
-837,752
2.1
103,986
0
103,986
108,546
-10,970
97,576
192,001
0
192,001
2.3
2.4
2.5
2.7
-614,044
-581,511
-595,847
-32,298
-62,600
-20,795
-237,210
-235,609
-201,594
-57,587
-2,173
0
-941,139
-881,893
-818,236
-837,153
-784,317
-626,235
4.7
4.7
133,270
-268,158
41,211
-15,781
2,022
-49,314
-972,041
-758,887
-673,527
5.1
6,431
3,949
4,814
Net result for the year from continuing operations
-965,610
-754,938
-668,713
Net result for the year from discontinued
operations
2.8
-236,525
-263,211
-178,016
Net result for the year
-1,202,135
-1,018,149
-846,729
Earnings/(loss) per share from continuing
operations – basic/diluted (DKK)
Earnings/(loss) per share from discontinued
operations – basic/diluted (DKK)
Earnings/(loss) per share – basic/diluted (DKK)
2.9
2.9
2.9
-20.90
-17.61
-17.43
-5.12
-26.02
-6.14
-23.75
-4.64
-22.07
Zealand Pharma ∞ Annual Report 2022 Statement of financial position
Statement of financial position
Consolidated financial statements
Consolidated statements of financial position
as of December 31, 2022 and 2021
42
DKK thousand
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Other Investments
Corporate tax receivable
Deferred tax assets
Trade and other receivables
Other financial assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Corporate tax receivable
Marketable securities
Cash and cash equivalents (including cash subject to certain
conditions)
Total current assets
Total assets
Note
2022
2021
DKK thousand
Note
2022
2021
3.1
3.2
3.3
3.4
5.1
5.1
3.6
3.7
3.5
3.6
5.1
4.5
0
50,528
114,960
30,943
0
2,017
18,105
6,901
53,790
86,455
134,994
26,907
1,268
13,525
29,094
0
223,454
346,033
1,286
115,622
21,599
108,611
118,436
153,453
21,562
299,042
4.4
1,069,234
1,129,103
1,316,352
1,721,596
1,539,806
2,067,629
Shareholders equity and liabilities
Shareholders equity
Share capital
Currency translation reserve
Other reserves
Total shareholders' equity
Non-current liabilities
Borrowings including embedded derivatives
Lease liabilities
Deferred revenue
Trade and other payables
Total non-current liabilities
Current liabilities
Lease liabilities
Deferred revenue
Trade and other payables
Total current liabilities
Total liabilities
4.8
4.6
3.3
3.8
3.9
3.3
3.8
3.9
51,702
14,617
749,592
815,911
401,346
108,000
0
19,058
43,634
14,155
870,014
927,803
647,906
124,626
14,551
18,426
528,404
805,509
14,729
0
180,762
195,491
14,897
53,033
266,387
334,317
723,895
1,139,826
Total shareholders' equity and liabilities
1,539,806
2,067,629
Zealand Pharma ∞ Annual Report 2022
Statement of cash flows
Statement of cash flows
Statement of changes in equity
Statement of changes in equity
Consolidated financial statements
Consolidated statements of cash flows for the years
ended December 31, 2022, 2021 and 2020
Consolidated statements of changes in shareholders' equity
at December 31, 2022, 2021 and 2020
43
DKK thousand
Note
2022
2021
2020
Net result for the year
Adjustments for other non-cash items
Change in working capital
Interest received
Interest paid
Corporate tax received/(paid)
Cash flow from/(used in) operating activities
Acquisition of Valeritas business, net of cash acquired
Change in deposits
Purchase of marketable securities
Proceeds from sale of marketable securities
Proceeds from sale of V-GO
Purchase of property, plant and equipment
Cash flow from/(used in) investing activities
Proceeds from issuance of shares related to
exercise of share based compensation
Proceeds from issuance of shares
Purchase of treasury shares
Repayment of borrowings
Proceeds from borrowings
Costs related to issuance of shares
Lease installments
Cash flow from/(used in) 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
6.7
6.7
2.8
4.6
3.3
-1,202,135
269,622
10,263
5,178
-34,414
9,277
-942,209
0
0
-700,477
887,060
106,386
-11,710
281,259
23,836
1,060,825
0
-436,088
0
-47,456
-13,719
587,398
-73,552
1,129,103
13,683
1,069,234
-1,018,149
17,430
-166,325
0
-3,296
-41,631
-1,211,971
0
4,012
0
0
0
-22,133
-18,121
26,070
748,975
-28,590
0
647,906
-46,895
-14,715
1,332,751
102,659
960,221
66,223
1,129,103
-846,729
63,862
97,818
895
-4,562
0
-688,716
-167,791
-3,972
0
0
0
-25,044
-196,807
41,363
791,503
0
0
0
-42,706
-29,219
760,941
-124,582
1,081,060
3,743
960,221
DKK thousand
Share
capital
Trans-
lation
reserve
Other
reserves
Total
Equity at January 1, 2022
43,634
14,155
870,014
927,803
Equity at January 1, 2021
39,800
8,977
1,180,534
1,229,311
Other comprehensive income
Net result for the year
Share-based compensation
Capital increases
Cost related to capital increases
Equity at December 31, 2022
Other comprehensive income
Net result for the year
Treasury shares
Share-based compensation
Capital increases
Cost related to capital increases
Equity at December 31, 2021
0
0
0
8,068
0
0
0
0
0
3,834
0
462
0
462
-1,202,135
-1,202,135
52,576
52,576
1,076,593
1,084,661
-47,456
749,592
-47,456
815,911
51,702
14,617
5,178
0
5,178
-1,018,149
-1,018,149
-70,190
53,504
771,211
-46,896
870,014
-70,190
53,504
775,045
-46,896
927,803
43,634
14,155
0
0
0
0
0
0
0
0
0
Equity at January 1, 2020
36,055
0
1,206,618
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
8,977
0
8,977
0
0
0
0
-846,729
-846,729
30,485
832,866
-42,706
30,485
836,611
-42,706
39,800
8,977
1,180,534
1,229,311
Zealand Pharma ∞ Annual Report 2022 Notes overview
Notes
Consolidated financial statements
Notes overview
1 Basis of preparation
2 Results for the year
3 Operating assets and liabilities
1.1
Basis of preparation, going concern assumption,
nature of the business and accounting policies
1.2 New accounting policies and disclosures
1.3 Changes in accounting policies
1.4 Management's judgements and estimates under IFRS
45
48
48
49
2.1 Revenue
2.2 Information about geographic areas
2.3 Research and development expenses
2.4 Selling and marketing expenses
2.5 General and administrative expenses
2.6 Staff costs
2.7 Other operating items
2.8 Discontinued operations
2.9 Earnings per share
50
53
54
54
55
55
57
58
60
3.1 Intangible assets
3.2 Property, plant and equipment
3.3 Right-of-use assets and lease liabilities
3.4 Other investments
3.5 Inventories
3.6 Trade and other receivables
3.7 Other financial assets
3.8 Deferred revenue
3.9 Trade and other payables
4 Capital structure, financial risk and related items
5 Tax
6 Other disclosures
4.1 Capital management
4.2 Financial risks
4.3 Financial assets and liabilities
4.4 Cash and cash equivalents
4.5 Marketable securities
4.6 Borrowings
4.7 Financial items
4.8 Share capital
4.9 Share-based instruments
70
71
73
75
75
76
81
82
82
5.1 Corporate tax
85
6.1 Remuneration of the Board of Directors
and Executive Management
6.2 Business overview
6.3 Fees to auditors appointed at
the annual general meeting
6.4 Contingent assets and liabilities
6.5 Commitments
6.6 Related parties
6.7 Cash flow adjustments
6.8 Collaborations and technology licenses
6.9 Subsequent events
44
61
63
65
66
67
68
68
69
69
88
90
90
90
90
90
91
91
93
Zealand Pharma ∞ Annual Report 2022 1 Basis of preparation
Notes to the Consolidated financial statements
1
Basis of
preparation
1.1
Basis of preparation, going concern
assumption, nature of the business and
accounting policies
1.2 New accounting policies and disclosures
1.3 Changes in accounting policies
1.4
Management's judgements and estimates
under IFRS
45
48
48
49
45
1.1
Basis of preparation, going concern assumption, nature of the business
and accounting policies
Basis of preparation
These consolidated financial statements include Zealand Pharma A/S (the parent company) and subsidi-
aries over which the parent company has control. The Zealand consolidated Group is referenced herein
as "Zealand" or the "Group".
This section describes Zealand's significant financial accounting policies including management's
judgements and estimates under International Financial Reporting Standards as adopted by the EU
(IFRS). New or revised EU endorsed accounting standards and interpretations are described, in addition
to how these changes are expected to impact the financial performance and reporting of Zealand.
Zealand describes the significant accounting policies in conjunction with each note with the aim to
provide a more understandable description of each accounting area.
Going concern assessment
The Company's refocused strategy to prioritize research and development allows the Company to focus
on the research and development of innovative peptide-based medicines and leverage its peptide plat-
form though strategic collaborations.
Until such time where the Company becomes able to generate positive cash-flows from its operations,
additional funding is expected to be necessary to fund future research and development activities.
Therefore, the Company plans to raise additional funds through either public financing, debt financing,
collaboration agreements, strategic alliances and licensing arrangements, or a combination of such.
Managements judgement and assessment of the Company ability to continue as a going concern
includes evaluation of the Company's operational cash-flow requirements for the forthcoming 12
months from the balance sheet date and future sources and uses of cash. Management has assessed
factors such as its product pipeline, cash position, planned research and development activities, current
license and collaboration agreements, and financing opportunities.
Management currently expects that the Company's cash and cash equivalents at 31 December 2022,
excluding cash and cash equivalents subject to certain conditions (refer to note 4.4), will be sufficient
to fund the Company's research and development activities as planned and capital requirements for at
least 12 months from the 31 December 2022 balance sheet date.
On this basis, these consolidated financial statements is prepared using the going concern assumption.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
1.1
Basis of preparation, going concern assumption, nature of the business
and accounting policies (continued)
Nature of the Business
Zealand is a biotechnology company focused on the discovery and development of peptide-based
medicines. More than 10 drug candidates invented by Zealand have advanced into clinical develop-
ment, of which two have reached the market and three candidates are in late-stage development. The
company has development and partnerships with a number of blue-chip pharma companies as well as
commercial partnerships for its marketed products.
Zealand Pharma A/S is incorporated in Denmark, founded in 1998 and is headquartered in Copenhagen,
Denmark, with a presence in the U.S. that includes Boston.
Zealand has previously aimed to be a fully integrated pharmaceutical company, but in March 2022, the
strategy was refocused to concentrate on development activities. Please refer to note 2.8 for further
information.
Accounting policies
The consolidated financial statements have been prepared in accordance with IFRS as adopted by the
EU and further requirements in the Danish Financial Statements Act (class D). The consolidated financial
statements were approved by the Board of Directors and authorized for issue on March 2, 2023. Except
as outlined in note 1.2 and 1.3, the financial statements have been prepared using the same accounting
policies as 2021.
Please refer to the overview below to see in which note/section the detailed accounting policy is
included.
Section 2 – Results for the year
2.1 Revenue
2.3 Research and development expenses
2.4 Selling and marketing expenses
2.5 General and administrative expenses
2.6 Staff costs
2.7 Other operating items
2.8 Discontinued operations
2.9 Earnings per share
46
Section 3 – Operating assets and liabilities
3.1 Intangible assets
3.2 Property plant and equipment
3.3 Right-of-use assets and lease liabilities
3.4 Other investments
3.5 Inventories
3.6 Receivables
Section 4 – Capital structure, financial risk and related items
4.3 Financial assets and liabilities
4.6 Borrowings
4.7 Financial items
4.8 Share capital
Section 5 – Tax
5.1 Corporate tax
Materiality
Zealand's Annual Report is based on the concept of materiality and the Company focuses on informa-
tion that is considered material and relevant to the users of the consolidated financial statements. The
consolidated financial statements consist of a large number of transactions. These transactions are
aggregated into classes according to their nature or function and presented in classes of similar items
in the consolidated financial statements as required by IFRS and the Danish Financial Statements Act. If
items are individually immaterial, they are aggregated with other items of similar nature in the financial
statements or in the notes.
The disclosure requirements are substantial in IFRS and for Danish listed companies. Zealand provides
these specific required disclosures unless the information is considered immaterial to the economic
decision making of the readers of the consolidated financial statements or not applicable.
Consolidated Financial Statements
The consolidated financial statements include Zealand A/S and subsidiaries over which the parent
company has control. The parent controls a subsidiary when the parent is exposed to, or has rights
to, variable returns from its involvement with the subsidiary and has the ability to affect those returns
through its power to direct the activities of the subsidiary. A Company overview is included in note 6.2.
Zealand Pharma ∞ Annual Report 2022 47
Notes to the Consolidated financial statements
1.1 Basis of preparation, nature of the business and accounting policies (continued)
Zealand's consolidated financial statements have been prepared on the basis of the financial statements
of the parent company and subsidiaries- prepared under Zealand's accounting policies- by combining
similar accounting items on a line-by-line basis. On consolidation, intercompany income and expenses,
intercompany receivables and payables, and unrealized gains and losses on transactions between the
consolidated companies are eliminated.
The recorded value of the equity interests in the consolidated subsidiaries is eliminated with the propor-
tionate share of the subsidiaries' equity. Subsidiaries are consolidated from the date when control is
transferred to the Group.
The income statements for subsidiaries with a different functional currency than Zealand's presentation
currency are translated into Zealand's presentation currency at average exchange rates, and the balance
sheets are translated at the exchange rate in effect at the balance sheet date.
Exchange rate differences arising from the translation of foreign subsidiaries shareholders' equity at the
beginning of the year and exchange rate differences arising as a result of foreign subsidiaries' income
statements being translated at average exchange rates are recorded in translation reserves in share-
holders' equity.
Functional and Presentation Currency
The consolidated financial statements have been prepared in Danish Kroner (DKK), which is the func-
tional and presentation currency of the parent company.
Foreign Currency
Transactions in foreign currencies are translated at the exchange rates in effect at the date of the trans-
action.
Exchange rate gains and losses arising between the transaction date and the settlement date are recog-
nized in the income statement as financial income or expense.
Unsettled monetary assets and liabilities in foreign currencies are translated at the exchange rates in
effect at the balance sheet date. Exchange rate gains and losses arising between the transaction date
and the balance sheet date are recognized in the income statement as financial income or expense.
Statements of Cash Flows
The cash flow statement is presented using the indirect method with basis in the net profit before tax.
Cash flows from operating activities are stated as the net profit before tax adjusted for net financial
items, non-cash operating items such as depreciation, amortization, impairment losses, share-based
compensation expenses, provisions, and for changes in operating assets and liabilities, interest paid and
received, interest elements of lease payments and corporate taxes paid or received. Operating assets
and liabilities are mainly comprised of changes in receivables and other payables excluding the items
included in cash and cash equivalents. Changes in non-current assets and liabilities are included in
operating assets and liabilities, if related to the main revenue-producing activities of Zealand.
Cash flows from investing activities consist of purchases and sales of marketable securities and other
investments, as well as purchases of intangible assets and property and equipment.
Cash flows from financing activities relate to the issuance of shares, purchase of treasury shares and
payments of loans including installments on lease liabilities.
Cash and cash equivalents are comprised of cash, bank deposits, and marketable securities with a
maturity of less than ninety days on the date of acquisition.
The statements of cash flows cannot be derived solely from the financial statements.
iXBRL reporting
Zealand Pharma is required to file its annual report in the European Single Electronic Format (‘ESEF’)
and The Annual Report is therefore prepared in the XHTML format that can be displayed in a standard
browser. The primary statements in the consolidated financial statements are tagged using inline eXten
sible Business Reporting Language (iXBRL). The iXBRL tags comply with the ESEF taxonomy, which
is included in the ESEF Regulation and developed based on the IFRS taxonomy published by the IFRS
Foundation. Where a financial statement line item is not defined in the ESEF taxonomy, an extension to
the taxonomy has been created. Extensions are anchored to elements in the ESEF taxonomy, except
for extensions which are subtotals. The Annual Report submitted to the Danish Financial Supervisory
Authority consists of the XHTML document together with certain technical files, all included in a file
named 549300ITBB1ULBL4CZ12-2022-12-31-en.zip.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
1.2 New accounting policies and disclosures
1.3 Changes in accounting policies
New accounting policies and disclosures for 2022
Zealand has, with effect from January 1, 2022, implemented the following standards and amendments:
• Onerous contracts – Cost of fulfilling a contract – amendments to IAS 37
• Reference to the conceptual framework – amendments to IFRS 3
• Property, Plant and Equipment – Proceeds before intended use – amendments to IAS 16
Reclassification of government grants related to refund of staff costs
Government grants related to PhD scholarships have previously been presented as other income.
Management have assessed that it will provide more relevant information to present the received
amounts as a reduction of staff costs under research and development. The change has been applied
retrospectively and as a result DKK 0.8 million for 2021 and DKK 0.6 million for 2020 has been reclassi-
fied from other operating income to research and development expenses.
48
The implementation of the above amendments did not have any impact on amounts recognized in prior
periods and is not expected to have a material impact in the current or future reporting periods.
New accounting policies and disclosures effective in 2022 or later
The IASB has issued a number of new standards and updated some existing standards, the majority of
which are effective for accounting periods beginning on January 1, 2023 or later. Therefore, they are
not incorporated in these consolidated financial statements. There are no standards presently known
that are not yet effective and that would be expected to have a material impact on Zealand in current or
future reporting periods and on foreseeable future transactions.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
1.4 Management's judgements and estimates under IFRS
In preparing financial statements under IFRS, certain provisions in the standards require management's
judgements, including various accounting estimates and assumptions. These judgements and estimates
affect the application of accounting policies, as well as reported amounts within the consolidated finan-
cial statements and disclosures.
Accounting topic
Revenue recognition
Determining the carrying amount of certain assets and liabilities requires judgements, estimates and
assumptions concerning future events that are based on historical experience and other factors, which
by their very nature are associated with uncertainty and unpredictability.
Accounting estimates are based on historical experience and various other factors relative to the
circumstances in which they are applied. Estimates are generally made based on information available
at the time. An example would include management's estimation of useful lives of intangible assets.
Accounting judgements are made in the process of applying accounting policies. These judgements are
typically made based on the guidance and information available at the time of application. Examples
would include management's judgements utilized in determining revenue recognition.
These estimates and judgements may prove incomplete or incorrect, and unexpected events or circum-
stances may arise. Zealand is also subject to risks and uncertainties which may lead actual results to
differ from these estimates, both positively and negatively. Specific risks for Zealand are discussed in the
relevant section of this Annual Report and in the notes to the consolidated financial statements.
The areas involving a high degree of judgement and estimation that are significant to the consolidated
financial statements are summarized below. Refer to the identified notes for further information on the
key accounting estimates and judgements utilized in the preparation of the consolidated financial state-
ments.
49
Key accounting estimates and
judgements
Judgement in assessing the nature of combined per-
formance obligations
within contracts
Judgement in assessing the probability of attainment
of milestones
Estimation of stand-alone selling price for each iden-
tified performance obligation
Note
reference
Estimation
risk
2.1
Moderate
Low
Moderate
Share-based
compensation
Judgement in determine assumptions required for
valuation of warrant grants
2.5
Moderate
Estimate of instruments expected to vest
Moderate
Discontinued opera-
tions
Judgments exercised by management in applying
IFRS 5 as a result of the divestment of the US sales
activities, including the V-Go activity and the transfer
of the commercial rights for Zegalogue
2.8
Moderate
Borrowings
Estimate of fair value of Oberland's call option for
repayment of loan
4.6
High
Judgement in respect of identification of embedded
derivatives and debt modifications
Moderate
Inventory
Deferred taxes
Estimate of net realizable value of
Zegalogue raw materials
Judgement and estimate regarding
valuation of deferred income tax assets
Capitalization of
research and develop-
ment costs
Judgement involved in determining
when a development project reached technological
feasibility
Going concern as-
sumption
Judgement in assessing operational cash-flow and
capital requirements for the forthcoming 12 months
from the balance sheet date
3.5
5.1
3.1
Low
Low
Low
1.1
Low
Zealand Pharma ∞ Annual Report 2022 2 Results for the year
Notes to the Consolidated financial statements
2
Results for
the year
2.1 Revenue
2.2 Information about geographic areas
2.3 Research and development expenses
2.4 Selling and marketing expenses
2.5 General and administrative expenses
2.6 Staff costs
2.7 Other operating items
2.8 Discontinued operations
2.9 Earnings per share
50
53
54
54
55
55
57
58
60
50
2.1 Revenue
Accounting policies
Zealand recognizes revenue when its customer obtains control of promised goods or services, in an
amount that reflects the consideration that the entity expects to receive in exchange for those goods
or services. To determine revenue recognition for arrangements that Zealand determines are within the
scope of IFRS 15, Zealand performs the following five steps: (i) identify the contract(s) with a customer;
(ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate
the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or
as) the entity satisfies a performance obligation. Zealand only applies the five-step model to contracts
when it is probable that the Company will collect the consideration it is entitled to in exchange for the
goods or services it transfers to the customer. At contract inception, once the contract is determined to
be within the scope of IFRS 15, Zealand assesses the goods and services promised within each contract
and identifies as a performance obligation each good or service that is distinct. Revenue is recognized
in the amount of the transaction price that is allocated to the respective performance obligation when
(or as) the performance obligation is satisfied.
Royalties:
Certain of Zealand's license and collaboration agreements include sales-based royalties including
commercial milestone payments based on the level of sales. The license has been deemed to be the
predominant item to which the royalties relate under Zealand's license and collaboration agreements.
As a result, Zealand recognizes revenue when the related sales occur.
Reimbursement Revenue for R&D Services:
Zealand’s research and development collaboration agreements include the provisions for reimburse-
ment or cost sharing for research and development services and payment for full-time equivalent
employees (FTEs) at contractual rates. R&D services are performed over time given that the customer
simultaneously receives and consumes the benefits provided by Zealand and revenue for research
and development services is therefore recognized over time. Amount is recognized net of any pass-
through cost incurred on behalf of the customer. The assessment of if a cost is incurred on behalf of the
customer is made by evaluating the nature of its promise to the customer including whether the speci-
fied good or service to be provided to the customer are controlled by the Company before that good or
service is transferred to the customer.
Zealand Pharma ∞ Annual Report 2022 51
Notes to the Consolidated financial statements
2.1 Revenue (continued)
Milestone Revenue:
At the inception of each arrangement that includes milestone payments, Zealand evaluates whether
the achievement of milestones is considered highly probable and estimates the amount to be included
in the transaction price using the most likely amount method. If it is highly probable that a significant
revenue reversal would not occur, the associated milestone value is included in the transaction price.
Milestone payments that are not within the control of Zealand or the license and collaboration partner,
such as milestones conditioned of regulatory approvals, are not considered probable of being achieved
until such regulatory approvals are received. The transaction price is then allocated to each perfor-
mance obligation on a relative stand-alone selling price basis, for which Zealand recognizes revenue as
or when the performance obligations under the contract are satisfied. At the end of each subsequent
reporting period, Zealand re-evaluates the probability of achievement of such milestones and any
related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjust-
ments are recorded on a cumulative catch-up basis, which would affect revenue and earnings in the
period of adjustment.
License Revenue for Intellectual Property:
If the license to Zealand's functional intellectual property is determined to be distinct from the other
performance obligations identified in the arrangement, Zealand recognizes revenues from non-refund-
able upfront fees allocated to the license at the point in time the license is transferred to the licensee
and the licensee is able to use and benefit from the license. For licenses that are bundled with other
promises, Zealand utilizes judgement to assess the nature of the combined performance obligation to
determine whether the combined performance obligation is satisfied over time or at a point in time and,
if over time, the appropriate method of measuring progress for purposes of recognizing revenue from
non-refundable, upfront fees.
Product sales:
Revenue from sale of goods is recognized at a point in time when control of the goods is transferred to
the customer and recorded net of adjustments for rebates and chargebacks, all of which are estimated
at the time of sale.
Recognized revenue can be specified as follows for all agreements and product sales:
DKK thousand
Boehringer Ingelheim International GmbH
Alexion Pharmaceuticals Inc.
Protagonist Therapeutics, Inc.
Sanofi-Aventis Deutschland GmbH
Novo Nordisk A/S
2022
2021
2020
0
69,027
0
0
34,959
22,311
30,185
25,381
30,669
0
149,120
42,881
0
0
0
Total revenue from license and collaboration agreements
103,986
108,546
192,001
Gross product sales
Sales rebates
Returns and sales reductions
Total net product sales
164,651
-69,526
-7,513
87,612
354,599
-157,016
-13,562
184,021
303,658
-133,924
-8,421
161,313
- Hereof related to discontinued operations
-87,612
-184,021
-161,313
Total net product sales from continuing operations
0
0
0
Total revenue from continuing operations
103,986
108,546
192,001
Total revenue recognized over time from continuing operations
76,181
30,185
42,881
Total revenue recognized at a point in time from continuing
operations
Total revenue recognized at a point in time from discontinued
operations
27,805
78,361
149,120
87,612
184,021
161,313
Zealand Pharma ∞ Annual Report 2022 52
Notes to the Consolidated financial statements
2.1 Revenue (continued)
Novo Nordisk A/S License and Development Agreement
On September 7, 2022, Zealand announced a global license and development agreement with Novo
Nordisk to commercialize ZEGALOGUE (dasiglucagon) for injection. Under the agreement Zealand
received DKK 25 million in upfront payments and is eligible for up to DKK 45 million in development
milestones and DKK 220 million in net sales-based milestones as well as compensation on a time and
material basis. The agreement with Novo Nordisk is considered a contract with a customer as defined
in IFRS 15. Thus, Zealand recognizes as revenue from research and development services under the
collaboration agreement the amount of the transaction price that is allocated to the respective perfor-
mance obligation when (or as) the performance obligation is satisfied.
ties. The allocation has been based on management’s estimate of relative stand-alone selling prices.
For performance obligations in respect of services related to submission of EU marketing authorization
application and delivery of specified development activities, the stand-alone selling prices have been
based on internal budgets and the same time and material compensation schedules as agreed between
Zealand and Novo Nordisk. The stand-alone selling price for delivering of license to ZEGALOGUE was
estimated using the residual approach. The allocation of the transaction price to the performance obli-
gations not compensated on a time a material basis is summarized below:
1. Delivery of license for ZEGALOGUE: DKK 28 million
Within this Novo Agreement, Zealand identified five distinct performance obligations:
4. Submission of EU marketing authorization application: DKK 13 million
1. delivery of license for ZEGALOGUE,
2. delivery of transitional services,
3. delivery of R&D services,
4. submission of EU marketing authorization application,
5. delivery of specified development activities.
The total transaction price under the agreement was determined to be DKK 55 million which includes
the upfront payment of DKK 25 million and DKK 30 million of the future potential milestone amounts.
While determining the transaction price to be allocated to performance obligations, management has
deemed milestones of DKK 30 million to be highly probable and unlikely that a significant revenue
reversal would occur. As the remaining milestones are contingent of the occurrence of future events
outside the control of the company, such milestones will be recognized when their achievement is
deemed to be highly probable, and a significant revenue reversal would not occur. Royalties and net
sales-based milestones under this agreement, will be recognized when the related sales occur.
As Zealand is compensated on a time and material basis for delivery of transition services and R&D
services as listed above, the total transaction price of DKK 55 million has been allocated to the three
remaining performance obligations, being delivering of license to ZEGALOGUE, services related to
submission of EU marketing authorization application and delivery of specified development activi-
5. Delivery of specified development activities: DKK 14 million
The performance obligations related to the delivery of license to ZEGALOGUE were completed at a point
in time (September 2022) as such revenue of DK 28 million was recognised in 2022. For the remaining
performance obligations related to services related to submission of EU marketing authorization appli-
cation and delivery of specified development activities such are completed over time as the activities
progress. Revenue is measured based on Zealand’s estimate of actual expenses incurred while rendering
the services during the period compared to planned service periods and budgeted expenses. As such,
Zealand applies an input based method (budget expenses) when determining the timing of satisfaction of
performance obligations as the services related to submission of EU marketing authorization application
and delivery of specified development activities are performed by an indeterminate number of acts over
the development timeline.
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 mediated 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 the project C3 but offers
the potential to work on identification 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
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
2.1 Revenue (continued)
2.2 Information about geographic areas
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.
Revenue
Non-current
assets
Revenue
Non-current
assets
Revenue
Non-current
assets
(DKK million)
2022
2021
2020
53
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. The non-refundable up-front fee
was allocated to the combined license, research and development 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 recognized 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.
Management judgements and estimates
Revenue Recognition
Evaluating the criteria for revenue recognition under license and collaboration agreements requires
management's judgement to assess and determine the following:
• Identification of performance obligations within the contract and determine the nature of perfor-
mance obligations and whether they are distinct or should be combined with other performance
obligations to determine whether the performance obligations are satisfied over time or at a point in
time.
• Determine the transaction price, including an assessment of whether the achievement of milestone
payments is highly probable.
• Allocation of transaction price to performance obligations to determine the stand-alone selling price
of each performance obligation identified in the contract using key assumptions which may include
forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates
and probabilities of technical and regulatory success.
Denmark
Germany
United States
Total continuing
operations
United States
Total discontin-
ued operations
35.0
0
69.0
104.0
87.6
87.6
143.8
0
21.7
165.5
0
0
0
53.0
55.5
108.5
184.0
184.0
184.8
0
106.9
291.7
0
0
0
149.1
42.9
192.0
161.3
161.3
184.0
0
71.1
255.1
0
0
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 licensed products, marketed products, product candidates or geographical markets
and no segment information is currently prepared for internal reporting.
Accordingly, it has been concluded that it is not relevant to include segment disclosures in the consoli-
dated financial statements as Zealand's business activities are not organized on the basis of differences
in related product and geographical areas.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
2.3 Research and development expenses
2.4 Selling and marketing expenses
Accounting policies
Accounting policies
54
Research and development expenses primarily include salaries, benefits and other employee related
costs of Zealand's research and development staff, license costs, manufacturing costs, preclinical costs,
clinical trials, contractors and outside service fees, amortization and impairment of licenses and rights
related to intangible assets, and depreciation of property and equipment, to the extent that such costs
are related to the Group's research and development activities.
Research and development expenses are recognized in the income statement as incurred and in the
period in which they relate, except for development expenses for which the capitalization criteria are
met.
Please see note 3.1 for a more detailed description on the treatment of Zealand's research and develop-
ment expenses related to internal development projects.
DKK thousand
Staff costs
Selling and marketing expenses relate to Zealands commercial activities, including costs related to
preparing the market for Zealands products and administration of commercial partnerships. This
includes salaries, benefits and other headcount costs related to commercial minded departments as
well as third-party costs.
In addition, depreciation and impairment of property and equipment, to the extent such expenses are
related to commercial functions are also included. Selling and marketing expenses are recognized in the
income statement in the period to which they relate.
DKK thousand
Staff costs
Amortization, depreciation, impairment losses on intangible
assets, property plant and equipment, and right of use assets
2022
2021
2020
-233,474
-238,753
-203,608
Depreciation and impairment losses on property,
plant and equipment and right-of-use assets
Other external selling and marketing expenses
Total selling and marketing expenses
-23,851
-20,636
-17,417
- Hereof related to discontinued operations
Other external research and development expenses
-361,632
-328,305
-382,454
Total research and development expenses
- Hereof related to discontinued operations
Total research and development expenses from
continuing operations
-618,957
-587,694
-603,479
4,913
6,183
7,632
-614,044
-581,511
-595,847
Total selling and marketing expenses from
continuing operations
2022
2021
2020
-75,346
-145,245
-130,568
-23
-92
-640
-88,567
-229,932
-154,048
-163,936
-375,269
-285,256
131,638
312,669
264,461
-32,298
-62,600
-20,795
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
2.5 General and administrative expenses
Accounting policies
2.6 Staff costs
Accounting policies
General and administrative expenses relate to the recurring management and administration of Zealand.
This includes salaries, benefits and other headcount costs related to management and support func-
tions including human resources and the finance departments.
Wages and saleries
Wages and salaries are being recognized in the income statement in the period in which services for
wages and salaries is rendered to the Company.
55
In addition, depreciation and impairment of property and equipment, to the extent such expenses are
related to administrative functions are also included. General and administrative expenses are recog-
nized in the income statement in the period to which they relate.
DKK thousand
Staff costs
Depreciation and impairment losses on property,
plant and equipment and right-of-use assets
2022
2021
2020
-118,308
-127,630
-78,639
-5,662
-4,390
-5,042
Other external general and administrative expenses
-130,365
-128,967
-119,089
Total general and administrative expenses
- Hereof related to discontinued operations
Total general and administrative expenses from
continuing operations
-254,335
-260,987
-202,770
17,125
25,378
1,176
-237,210
-235,609
-201,594
Share-based compensation
The value of services received as consideration for share-based compensation is measured at the fair
value of the granted instrument. The fair value of equity settled share-based compensation is determined
at the grant date and is recognized in the income statement as employee benefit expense over the period
in which the instrument vest. The offsetting entry to this is recognized under equity. An estimate is made
of the number of instruments expected to vest. Subsequently, an adjustment is made for changes in the
estimate of the number of instruments, which will vest, so the total expense is equal to fair value of the
actual number of instruments which vest. The fair value of instruments granted is estimated using the
Black–Scholes pricing model whereas the closing share price of the day prior to grant is used for RSU
and PSUs.
Management's judgements and estimates
Estimate of fair value of share-based compensation programs
In accordance with IFRS 2, the fair value of the warrants at grant date is recognized as an expense in the
income statement over the vesting period, the period of delivery of work. Subsequently, the fair value is
not remeasured.
The fair value of each warrant granted during the year is calculated using the Black-Scholes pricing
model. This pricing model requires the input of subjective assumptions such as:
• The expected stock price volatility, which is based upon the historical volatility of Zealand's stock price;
• The risk-free interest rate, which is determined based om the interest rate on Danish government
bonds (bullet issues) with a maturity similar to the expected life of the option;
• The expected life of warrants, which is based on vesting terms, expected rate of exercise and life terms
in the current warrant program.
• These assumptions can vary over time and can change the fair value of future warrants granted.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
2.6 Staff costs (continued)
Estimate of forfeiture rate for share-based compensation programs
The estimated number of shares expected to vest is based on a series of factors such as:
• The historic rate of employee turnover adjusted for significant events.
• Remaining time until vesting.
• Expected achivement of performance goals for PSUs.
Total share-based costs split on share-based type
2022
2021
PSUs
RSUs
Warrants
Total
11,510
16,789
23,987
52,286
14,765
23,701
15,271
53,737
56
2020
900
1,100
28,485
30,485
DKK thousand
2022
2021
2020
Total share-based costs split on cost type
2022
2021
2020
Total staff costs can be specified as follows:
Wages and salaries
Share-based compensation
Pension schemes (defined contribution plans)
Government grants
Other payroll and staff-related costs
Total staff costs
The amount is charged as:
Research and development expenses
Selling and marketing expenses
General and administrative expenses
Other operating items - restructuring costs cf. note 2.7
Discontinued operations
Total staff costs
369,311
52,286
19,672
-5
31,676
410,007
337,295
53,737
23,993
-759
54,541
30,485
16,716
-602
37,241
472,940
541,519
421,135
231,022
236,060
200,335
7,870
104,524
19,098
110,426
472,940
13,568
108,668
0
183,223
541,519
0
72,059
0
149,041
421,435
Average number of employees
247
346
297
Research and development expenses
Selling and Marketing expenses
General and administrative expenses
Other operating items cf. note 2.7
Discontinued operations
Total
33,837
649
31,696
-11,241
-2,655
52,286
22,038
415
26,627
0
4,657
53,737
13,939
0
9,998
0
6,548
30,485
The comparative figures for 2020 and 2021 have been restated as a consequence of the accounting
treatment of discontinued operations cf. note 2.8. The total costs in 2020 and 2021 remain unchanged.
Determination of fair value of the instruments granted during the period
For warrants granted after 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. For warrants granted before
April 19, 2018, the exercise price was 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 5 or 10 years for
warrants granted to Corporate Management and employees, repectively.
Zealand Pharma ∞ Annual Report 2022 57
Notes to the Consolidated financial statements
2.6 Staff costs (continued)
2.7 Other operating items
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. Dividends are not expected.
Accounting policies
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 of 7 years i.e. 6.5 years (2021 and 2020:6.5 years)
For RSUs and PSUs the fair value of instruments granted is determined as the closing share price of the
day prior to grant.
Other operating items comprises non-revenue income and expenses related to Zealand’s operation that
is assessed to be non-recurring and significant for the understanding of the financial performance of
Zealand.
Other operating items also includes expenses as result of restructuring activities, including insurance
costs, impairment charges, reversal of inventory write downs, loss on revaluation of disposal group and
other significant one-time transaction expenses.
The fair value of the warrants granted in 2022 and 2020 was determined using the Black-Scholes model
using the following inputs as at day of grant:
DKK thousand
2022
2021
2020
Grant year
2022
2022
2022
2021
2021
2020
2020
Type
Term
Share price at
grant date (DKK)
Exercise price
(DKK)
Warrants
Up to 120
months
90.7 to
203.0
90.7 to
203.0
Volatility (%)
48.6 to 61.2
Risk-free
interest rate (%)
Exercise period
to-from
0.86 to 2.14
May '23 to
Sep '32
PSUs
RSUs
PSUs
RSUs
RSUs
Warrants
Up to 36
months
Up to 36
months 36 months 36 months 36 months
Up to 120
months
90.7 to
203.0
90.7 to
100.2
185.9 to
191.6
131.2 to
207.6
216.8 to
224.4
0
N/A
N/A
N/A
0
N/A
N/A
N/A
0
N/A
N/A
N/A
0
N/A
N/A
N/A
0
N/A
N/A
N/A
216.8 to
224.4
216.8 to
224.4
44.68 to
46.45
-0.31
to -0.41
Apr'21 to
Apr'30
No. granted
896,990
286,813
148,431
282,852
507,461
27,466
631,288
Cost price (DKK)
36.7 to 89.8 90.7 to 203
90.7 to
100.2
185.9 to
191.6
131.2 to
207.6
216.8
to 224.4
48.4
to 95.4
Please refer to note 4.9 for information about status of the share-based compensation programs.
Restructuring costs - continuing operations
Insurance
Loss on retirement of fixed assets
Total other operating items from continuing operations
Restructuring costs - discontinued operations
Impairment of production eqiupment (Note 3.2)
Reversal of inventory write-off (Note 3.5)
Loss on disposal group V-GO (Note 2.8)
Gain from bargain purchase
-19,098
-37,033
-1,456
-57,587
-56,738
-9,725
22,564
-40,743
0
Total other operating items from discontinued operations
-84,642
0
0
-2,173
-2,173
0
0
0
0
0
0
0
0
0
0
0
0
0
0
36,395
36,395
Insurance comprises a one-off costs to cover any claims against directors and officers that would arise
following the delisting from the US stock exchange.
Restructuring costs from discontinued operations comprises severance costs (DKK -13.8 million),
reversal of costs related to forfeited share-based incentive programs (DKK 2.7 million) and an allowance
for loss on Zegalogue inventories (DKK -45.6 million) while restructuring costs from continuing oper-
ations comprises severance costs (DKK -30.3 million) and reversal of costs related to forfeited share-
based incentive programs (DKK 11.2 million). All restructuring costs were incurred as a result of the
March 30, 2022, company announcement.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
2.7 Other operating items (continued)
2.8 Discontinued operations
The partial reversal of the inventory write-off of DKK 22.6 million primarely relates to Zegalogue finished
goods which was transferred to Novo Nordisk as a result of the global license and development agree-
ment as announced in September, 2022.
Impairment of production equipment relates to equipment acquired in order to be able to upscale the
production of Zegalogue.
Divestment of V-GO covers the accoutning loss incurred as a result of the divestment of the V-GO
activities. Please refer to note 2.8 for further information.
Accounting policies
A discontinued operation is a component of the entity that has been disposed of or is classified as held
for sale and that represents a separate major line of business or geographical area of operations, is part
of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary
acquired exclusively with a view to resale. The results of discontinued operations are presented sepa-
rately in the statement of profit or loss. Comparatives in the statement of profit and loss for previous
periods are restated to reflect the result of discontinued operations.
58
Management's judgements and estimates
On March 30, 2022, the group announced its intension to exit the US sales activities including the V-Go
activity. The activities were successfully divested through an asset purchase agreement with Mann-
Kind Corporation dated May 29, 2022. On September 7, 2022, the group announced the transfer of the
commercial rights for Zegalogue to Novo Nordisk effectually ending all efforts to commercialize the
group's products via own sales force in 2022.
Management has exercised judgement in determining that the activities around commercialization
of V-Go products via own sales force and transfer of commercial rights to Zegalogue met the criteria
for classification as a discontinued operations and in the segregation of results from discontinued
operation from results from continued operations for all periods presented. Accordingly, the activities,
including the effect of the divestment of the V-GO disposal group, has been presented separately as a
discontinued operation in the income statement.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
2.8 Discontinued operations (continued)
The results and the cash flow of the discontinued activities are presented below as a discontinued oper-
ations for the period ended December 31, 2022, December 31, 2021 and December 31, 2020:
59
All assets and liabilities included in the V-Go disposal group was derecognized as of May 29, 2022 with
the closure of the asset purchase agreement with MannKind. As a result, no assets or liabilities are clas-
sified as held for sale in relation to the discontinued operation as of December 31, 2022.
The derecognized assets and liabilities, recognized consideration and net impact on profit and loss from
the divestment of V-Go are presented below:
DKK thousand
Revenue
Cost of goods sold
Gross margin
Research and development expenses
Sales and marketing expenses
General and administrative expenses
Other operating items
Total Operating expenses
Result before tax
Corporate tax
2022
2021
2020
87,613
184,021
-70,688
-107,844
16,925
76,177
161,313
-90,565
70,748
-4,913
-6,183
-7,632
-133,695
-312,669
-264,461
-17,125
-84,642
-25,378
0
-1,176
36,395
-240,375
-344,230
-236,874
DKK thousand
Assets included in disposal group
Intangible assets
Property, plant and equipment
Right-of-use assets
Deposits and prepayments
Inventories
-223,450
-268,053
-166,126
Total assets of disposal group
-13,075
4,842
-11,890
Liabilities directly associated with assets included in disposal group
Net result from discontinued operations
-236,525
-263,211
-178,016
Lease liabilities
Total liabilities of disposal group
Net assets of disposal group
DKK thousand
2022
2021
2020
Cash flows from discontinued operations
Net cash inflow (outflow) from operating activities
-155,238
-368,052
Consideration:
Cash consideration
Purchase price adjustment
Other financial assets
Total consideration
-131,927
-170,034
-1,506
106,380
-1,064
-1,585
-2,319
Net cash inflow (outflow) from investing activities
Net cash (outflow) from financing activities
Net cash increase (decrease) generated from
the discontinued operation
-49,922
-371,956
-303,467
Loss on sale of disposal group - recognized as other operating items from discontinued
operations
As a part of the license and development agreement with Novo Nordisk A/S as described in note 2.1,
finished goods with a value of DKK 21.3 was transfered as a part of the contract.
May 29, 2022
52,082
20,586
8,128
1,871
79,872
162,539
8,837
8,837
153,702
111,553
-5,167
6,573
112,959
-40,743
Zealand Pharma ∞ Annual Report 2022 60
Notes to the Consolidated financial statements
2.9 Earnings per share
Accounting policies
Basic result per share
Basic result per share is calculated as the net result for the period, divided by the weighted average
number of ordinary shares outstanding, excluding treasury shares held by the company.
Diluted result per share
Diluted result per share is calculated as the net result for the period, divided by the weighted average
number of ordinary shares outstanding, excluding the treasury shares, and adjusted for the dilutive
effect of share equivalents.
DKK thousand
2022
2021
2020
Net result used in the calculation of basic and diluted earnings/
losses per share from continuing operations
Net result used in the calculation of basic and diluted earnings/
losses per share from discontinued operations
Net result used in the calculation of basic and diluted
earnings/losses per share
-965,610
-754,938
-668,713
-236,525
-263,211
-178,016
-1,202,135
-1,018,149
-846,729
Weighted average number of ordinary shares
46,502,969
43,192,383
38,433,923
Weighted average number of treasury shares
-302,817
-322,988
-64,223
Weighted average number of ordinary shares used
in the calculation of basic/diluted earnings per share
46,200,152 42,869,395 38,369,700
Earnings/(loss) per share from continuing operations –
basic/diluted (DKK)
Earnings/(loss) per share from discontinued operations –
basic/diluted (DKK)
Total earnings/(loss) per share – basic/diluted (DKK)
-20.90
-17.61
-17.43
-5.12
-26.02
-6.14
-23.75
-4.64
-22.07
In the calculation of the diluted loss per share for 2022, 2,190,503 potential ordinary shares related to
share-based payment instruments have been excluded as they are anti-dilutive (2,209,044 for 2021 and
2,019,368 for 2020).
Zealand Pharma ∞ Annual Report 2022 3 Operating assets and liabilities
Notes to the Consolidated financial statements
3
Operating assets
and liabilities
3.1 Intangible assets
3.2 Property, plant and equipment
3.3 Right-of-use assets and lease liabilities
3.4 Other investments
3.5 Inventories
3.6 Trade and other receivables
3.7 Other financial assets
3.8 Deferred revenue
3.9 Trade and other payables
61
63
65
66
67
68
68
69
69
61
3.1 Intangible assets
Accounting policies
Research and development
Zealand currently has not recognized internally generated intangible assets from development, as the
criteria for recognition of an asset are not met as described below.
Acquired licenses and rights
Acquired licenses, rights, and patents are initially measured at cost and include the net present value
of any future payments. The net present value of any future payments is recognized as a liability. When
triggered, milestone payments are accounted for as an increase in the cost to acquire licenses, rights,
and patents unless such subsequent expenditures are recognized in the income statement as Research
& Development expenses if they do not satisfy the conditions for recognition as an asset.
Amortization
Licenses, rights, and patents are amortized using the straight-line method over the estimated useful life
which is determined when the asset is available for use. Amortizations, impairment losses and gain or
losses on the disposal of intangible assets are recognized in the income statement as Research & Devel-
opment expenses.
Impairment
If circumstances or changes in Zealand's operations indicate that the carrying amount of the intangible
assets may not be recoverable, Management will review the intangibles for impairment. Intangible
assets not ready for use are reviewed for impairment on an annual basis.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
3.1 Intangible assets (continued)
Management's judgements and estimates
According to IAS 38, intangible assets arising from development projects should be recognized in the
balance sheet. The criteria that must be met for capitalization are that:
DKK thousand
Cost at January 1, 2022
• the development project is clearly defined and identifiable and the attributable costs can be meas-
Disposals
ured reliably during the development period;
• the technological feasibility, adequate resources to complete and a market for the product or an
internal use of the product can be documented; and
Transferred to V-GO disposal group (Note 2.8)
Currency translation
Cost at December 31, 2022
• management has the intent to produce and market the product or to use it internally.
Amortization and impairment at January 1, 2022
Such an intangible asset should be recognized if sufficient certainty can be documented that the future
income from the development project will exceed the aggregate cost of production, development and
sale and administration of the product.
Impairment for the year
Amortization for the year
Disposals
A development project involves a single product candidate undergoing a high number of tests to illus-
trate its safety profile and its effect on humans prior to obtaining the necessary final approval of the
product from the authorities. The future economic benefit associated with the individual development
projects are dependent on obtaining such approval. Considering the significant risk and duration of the
development period related to the development of biological products, management has concluded
that the future economic benefits associated with the individual projects 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 there-
fore all research and development costs are recognized in the income statement when incurred.
Transferred to V-GO disposal group (Note 2.8)
Currency translation
Amortization and impairment at December 31, 2022
Carrying amount at December 31, 2022
Amortization and impairment for the financial year has been
charged as:
Research and development expenses
Discontinued operations
Total
62
Licenses,
rights and
patents
2,530
-2,530
0
0
0
0
2,530
0
-2,530
0
0
0
0
-2,530
0
-2,530
Intellectual
property
Physician
relationship
13,692
65,613
0
0
-13,692
-69,443
0
0
13,692
0
0
0
3,830
0
14,353
0
2,057
0
-13,692
-17,361
0
0
0
0
0
0
951
0
0
0
-2,057
-2,057
Assets listed under Intellectual property and Physician relationship were all disposed of as a part of the
V-GO disposal group. Please refer to note 2.8 for further information.
Licenses, rights and patents at January 1, 2022, comprised the license to the lead product candidate
acquired with Encycle Therapeutics in October 2019. During 2022 the development program with the
lead candidate was abandoned and it was decided to move on with another product candidate from the
same patent instead. As a result the recognized asset was impaired and disposed.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
3.1 Intangible assets (continued)
3.2 Property, plant and equipment
63
DKK thousand
Cost at January 1, 2021
Additions
Currency translation
Cost at December 31, 2021
Amortization and impairment at January 1, 2021
Amortization for the year
Currency translation
Amortization and impairment at December 31, 2021
Carrying amount at December 31, 2021
Amortization for the financial year has been charged as:
Discontinued operations
Total
Remaining amortization period
Licenses,
rights and
patents
Intellectual
property
Physician
relationship
2,530
13,692
60,576
0
0
0
0
2,530
13,692
0
0
0
0
2,530
0
0
-
13,692
0
0
13,692
0
0
0
-
0
5,037
65,613
5,621
7,859
873
14,353
51,260
-7,859
-7,859
6.25 years
Accounting policies
Property, plant and equipment is mainly comprised of plant and machinery, other fixtures and fittings,
leasehold improvements and assets under construction, which are measured at cost less accumulated
depreciation. and any impairment losses.
The cost is comprised of the acquisition price and costs directly related to the acquisition until the asset
is ready for use. Costs include direct costs and costs to subcontractors.
Depreciaion
Depreciation is calculated on a straight-line basis to allocate the cost of the assets, net of any residual
value, over the estimated useful lives, which are as follows:
Leasehold improvements 5-13 years, but never longer than the lease term
Plant and machinery 5-10 years
Other fixtures and fittings 3-5 years
The useful lives and residual values are reviewed and adjusted if appropriate on a yearly basis. Assets
under construction are not depreciated.
Impairment
If circumstances or changes in Zealand's operations indicate that the carrying amount of property, plant
and equipment may not be recoverable, management reviews that asset for impairment.
The basis for the review is the recoverable amount of the assets, determined as the greater of the fair
value less cost to sell or its value in use. Value in use is calculated as the net present value of future cash
inflow or savings generated from the asset.
If the carrying amount is greater than the recoverable amount, the asset is written down to the
recoverable amount. An impairment loss is recognized in the income statement when the impairment
is identified.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
3.2 Property, plant and equipment (continued)
Plant and
machinery
Other
fixtures and
fittings
Leasehold
improve-
ments
Assets
under con-
struction
Transferred to V-GO disposal group (Note 2.8)
-25,790
DKK thousand
Cost at January 1, 2022
Transfer
Additions
Disposals
Currency translation
Cost at December 31, 2022
Accumulated depreciation at January 1, 2022
Depreciation for the year
Impairment
Disposals
Transferred to V-GO disposal group (Note 2.8)
Currency translation
Accumulated depreciation and impairment
at December 31, 2022
Carrying amount at December 31, 2022
Depreciation for the financial year has been
charged as:
90,797
268
2,985
-1,433
1
15,835
1,644
73
-905
-763
113
66,828
15,997
54,216
7,903
742
-1,433
-9,090
1
52,339
14,489
9,240
3,145
71
-905
-357
39
11,233
4,764
36,600
2,915
293
0
-1,801
186
38,193
5,434
3,187
0
0
-884
51
7,788
30,405
-2,417
0
-770
0
0
12,112
-4,827
6,089
-10,092
-2,563
151
870
0
0
10,092
-10,092
0
0
0
870
0
0
0
-362
-9,730
Research and development expenses
-6,214
-2,315
Selling and marketing expenses
General and administrative expenses
Other operating items
Discontinued operations
Total
0
0
-742
-1,689
-8,645
-23
-779
-71
-28
Impairment of assets under construction relates to production equipment for Zegalogue which is not expected
to be used by the company. The amount is recognized as other operating items from discontinued operations.
-3,216
-3,187
-10,092
64
Plant and
machinery
Other
fixtures and
fittings
Leasehold
improve-
ments
Assets
under con-
struction
DKK thousand
Cost at January 1, 2021
Transfer
Addition from business combinations
Additions
Disposals
Currency translation
Cost at December 31, 2021
Accumulated depreciation at January 1, 2021
Transfer
Depreciation for the year
Disposals
Currency translation
Accumulated depreciation and impairment
at December 31, 2021
Carrying amount at December 31, 2021
Depreciation for the financial year has been
charged as:
85,898
949
7,118
-3,169
1
90,797
43,987
0
11,558
-1,330
1
54,216
36,581
15,279
664
1,444
-1,630
78
34,104
0
2,449
-84
131
15,835
36,600
6,942
0
3,461
-1,203
40
9,240
6,595
2,335
0
3,128
-73
44
5,434
31,166
Research and development expenses
-3,621
-2,568
-2,715
Selling and marketing expenses
General and administrative expenses
Discontinued operations
Total
0
-786
-7,151
-92
-680
-121
0
-413
0
-11,558
-3,461
-3,128
3,023
-1,613
11,122
-419
-1
12,112
0
0
0
0
0
0
12,112
0
0
0
0
0
Zealand Pharma ∞ Annual Report 2022 65
Notes to the Consolidated financial statements
3.3 Right-of-use assets and lease liabilities
Accounting policies
Amounts recognized in the statement of financial position
The statement of financial position shows the following amounts relating to right-of-use assets:
Zealand determines if an arrangement is a lease at inception. Zealand leases comprise various proper-
ties and cars. Rental contracts are typically made for fixed periods. Lease terms are negotiated on an
individual basis and contain a wide range of different terms and conditions.
All leases are recognized in the balance sheet as a right-of-use ("ROU") asset with a corresponding lease
liability, except for short term assets in which the lease term is 12 months or less, or low value assets.
ROU assets represent Zealand's right to use an underlying asset for the lease term and lease liabilities
represent Zealand's obligation to make lease payments arising from the lease.
Liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the
net present value of fixed payments, less any lease incentives. As Zealand's leases do not provide an
implicit interest rate, Zealand uses an incremental borrowing rate based on the information available at
the commencement date of the lease in determining the present value of lease payments. Lease terms
utilized by Zealand may include options to extend or terminate the lease when it is reasonably certain
that Zealand will exercise that option. In determining the lease term, management considers all facts
and circumstances that create an economic incentive to exercise an extension option, or not exercise
a termination option. Extension options (or periods after termination options) are only included in the
lease term if the lease is reasonably certain to be extended (or not terminated). Interest expenses related
to the lease liability are classified in financial items.
DKK thousand
As at January 1, 2022
Additions
Depreciation expense
Transfer to V-GO disposal group (Note 2.8)
Currency translation
As at December 31, 2022
As at January 1, 2021
Additions
Depreciation expense
Currency translation
As at December 31, 2021
Office
Buildings
Other
fixtures and
fittings
133,371
0
-13,710
-8,128
1,846
113,379
126,821
18,677
-13,177
1,050
133,371
1,623
736
-778
0
0
1,581
1,177
1,512
-1,066
0
1,623
ROU assets are measured at cost and include the amount of the initial measurement of lease liability,
any lease payments made at or before the commencement date less any lease incentives received, any
initial direct costs, and restoration costs. ROU assets are depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis over the lease term. The ROU assets are also
subject to impairment considerations. Refer to accounting policies in note 3.2.
The Group leases 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 with the oportunity to sublease. Equipment and vehicles
are leased over a period of 3-4 years with no extension option.
Payments associated with short-term leases and leases of low-value assets are recognized on a straight-
line basis as an expense in the income statement. Short-term leases are leases with a lease term of 12
months or less and low-value assets comprise IT equipment and small items of office furniture.
Zealand Pharma ∞ Annual Report 2022 66
Notes to the Consolidated financial statements
3.3 Right-of-use assets and lease liabilities (continued)
Set out below are the carrying amounts of lease liabilities and the movements during the period:
3.4 Other investments
Accounting policies
DKK thousand
As at January 1
Additions
Accretion of interest
Payments
Transfer to V-GO disposal group (Note 2.8)
Currency translation
As at December 31
Current
Non-current
The following are the amounts recognized in income statement:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Total amount recognized in profit and loss
Cash flow
Total cash outflow for leases
Depreciation for the financial year has been charged as:
Research and development expenses
General and administrative expenses
Total
2022
2021
Other investments are measured at fair value on initial recognition and subsequently. Changes in fair
value are recognized in the income statement under financial items.
The Group’s other investments consist of an 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 measured at fair value through profit and loss. This investment represents 1.5 %
(2021 :1.6%) ownership of Beta Bionics, Inc., and is measured at a fair value of DKK 30.9 million as of
December 31, 2022 (DKK 26.9 million as of December 31, 2021).
Zealand is using the share price determined in the most recent share capital issuances by Beta Bionics,
adjusted for value infliction points, as an indicator of the fair value of the shares. In particular, Beta
Bionics closed a series C financing in February, 2022, which is used as the basis for determining fair
value.
The following have been recognized as financial items:
DKK thousand
Other investments at January 1
Fair value adjustments
Other investments at December 31
Reference is made to note 4.3 for fair value disclosures.
2022
2021
26,907
4,036
30,943
32,333
-5,426
26,907
139,523
992
3,286
-13,719
-8,836
1,483
130,119
20,189
2,953
-14,715
0
977
122,729
139,523
14,729
108,000
14,897
124,626
-14,488
-3,286
-17,774
-13,825
-13,825
-14,243
-2,953
-17,196
-14,715
-14,715
-10,375
-4,113
-14,488
-11,732
-2,511
-14,243
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
3.5 Inventories
Accounting policies
Raw materials, work in progress and finished goods are measured at the lower of cost and net realiz-
able 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 busi-
ness less the estimated costs of completion and the estimated costs necessary to complete the sale.
Inventory manufactured prior to regulatory approval (prelaunch inventory) is capitalized but immedi-
ately 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 recognized in the income statement as research and devel-
opment 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 warrant, 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.
Cost of goods sold
Cost of goods sold includes raw materials, labor costs, manufacturing overhead expenses and reserves
for anticipated scrap and inventory obsolescence
DKK thousand
Raw materials
Work in process
Finished goods
Total
2022
1,286
0
0
2021
35,816
29,588
53,032
1,286
118,436
Write downs on inventory were comprised as follows:
DKK thousand
Accumulated write downs, January 1
Write downs in the reporting period
Utilization of write downs
Reversal of write downs
Exchange differences
67
2022
2021
-25,653
-45,547
16,867
22,623
-547
-27,409
-10,766
12,641
0
-119
Accumulated write downs, December 31
-32,257
-25,653
The write down and the reversal of write downs on inventory recognized in 2022 are included in other
operating items. Please refer to note 2.7.
Management's judgements and estimates
With the March 30, 2022, restructuring announcement an allowance for loss on Zegalogue raw mate-
rials and finished goods of DKK 45.6 million were recognized due to uncertainties around the future
sales channels for the product. The allowance is included as discontinued operations under other
operating expenses as a restructuring cost. As all Zegalogue finished goods were transferred to Novo
Nordisk as a result of the global license and development agreement announced in Q3, 2022, a partial
reversal of the inventory allowance of DKK 22.6 million was recognized under other operating income
from discontinued operations in 2022.
As of December 31, 2022, Zegalogue related raw materials and semi-finished goods at costs amounts to
DKK 33.6 million. Due to uncertainties whether the materials will be utilized in the production under the
supply agreement with Novo Nordisk, management has estimated the net realizable value to be DKK 1.3
million. The estimated is based on current projections.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
3.6 Trade and other receivables
Accounting policies
3.7 Other financial assets
Accounting policies
Receivables are designated as financial assets measured at amortized cost and are initially measured at
fair value or transaction price and subsequently measured in the balance sheet at amortized cost, which
generally corresponds to nominal value less expected credit loss provision.
Please refer to accounting policies for financial assets and liabillities in note 4.3.
DKK thousand
2022
2021
Zealand utilizes a simplified approach to measuring expected credit losses and uses a lifetime
expected loss allowance for all receivables. To measure the expected credit losses, receivables have
been grouped based on credit risk characteristics and the days past due. Expected credit losses as of
December 31, 2022 and December 31, 2021 is immaterial.
Prepaid expenses include expenditures related to a future financial period. Prepaid expenses are meas-
ured at nominal value.
Other financial assets at January 1
Additions during the year
Fair value adjustments
Currency adjustments
Other financial assets at December 31
0
6,573
319
9
6,901
0
0
0
0
0
68
DKK thousand
Trade receivables
Receivables related to collaboration agreements
Prepaid expenses
Deposits
Other receivables
Total other receivables
Non-current
Current
2022
2021
1,361
56,431
63,088
9,409
3,438
66,257
6,768
81,082
12,638
15,802
133,727
182,547
18,105
115,622
29,094
153,453
Other financial assets comprise the sales-related milestones from the divestment of V-Go. A maximum
of four milestones of USD 2.5 million each can be achieved under the contract based on annual sales.
The fair value has been determined using the risk-adjusted net present value method using a discount
rate of 10% and an estimated probability of 50% and 25% respectively to reach the first two sales-related
milestones.
Reference is made to note 4.3 for fair value disclosures.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
3.8 Deferred revenue
The Group has recognized the following liabilities related to contracts with customers.
3.9 Trade and other payables
Accounting policies
DKK thousand
Deferred revenue at January 1
Revenue recognized during the year
Total deferred revenue
Non-current
Current
Total deferred revenue
2022
2021
Please refer to accounting policies for financial assets and liabillities in note 4.3.
67,584
-67,584
0
0
0
0
97,769
-30,185
67,584
14,551
53,033
67,584
Discount and rebate liabilities represent amounts payable or credited to customers, usually based on
the quantity or value of product sales to the customer for specific products in a certain period. Product
sales rebates, which relate to product sales that occur over a period of time, are normally issued retro-
spectively. At the time product sales are invoiced, rebates and deductions that the Group expects
to pay, are estimated. These rebates typically arise from sales contracts with 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.
69
Deferred revenue occurred in connection with the agreement with Alexion Pharmaceuticals, Inc. as
disclosed in Note 6.8. An up-front payment of DKK 177.3 million was received of which DKK 67.6 million
has been recognized during DKK 2022 (2021: DKK 30.2 million and 2020: DKK 42.9 million).
All performance obligations associated with the upfront payment have been delivered by December 31,
2022. Future services delivered under the agreement with Alexion Pharmaceuticals will be compensated
on a time and material basis.
DKK thousand
Trade payables
Employee benefits
Accruals development projects
Payable treasury shares
Discount and rebate liabilities
Other payables
Total trade and other payables
Non-current
Current
2022
2021
53,156
58,348
34,063
41,600
2,201
10,452
88,996
84,800
22,547
41,600
28,695
18,175
199.820
284,813
19,058
180,762
18,426
266,387
Zealand Pharma ∞ Annual Report 2022 4 Capital structure, financial risk and related items
Notes to the Consolidated financial statements
4
Capital structure,
financial risk and
related items
4.1 Capital management
4.2 Financial risks
4.3 Financial assets and liabilities
4.4 Cash and cash equivalents
4.5 Marketable securities
4.6 Borrowings
4.7 Financial items
4.8 Share capital
4.9 Share-based instruments
70
71
73
75
75
76
81
82
82
70
4.1 Capital management
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, long-term borrowings and partnership collaboration income. The Group had, as of
December 31, 2022, a cash position of DKK 1,069.2 million of which DKK 348.6 million was subject to certain
conditions as described in note 4.4. The cash position supports the advancement of our product pipeline and
operations.
The adequacy of our available funds will depend on varius factors, including progress in our research and
development 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
partnerships and acquisitions. Accordingly, we plan to raise additional funds through equity or debt financ-
ings, collaborative agreements with partners, or from other sources.
At the Zealand Annual Meeting held on April 6, 2022, the shareholders authorized the company to issue
convertible debt instruments with access to conversion to shares in the Company of up to a total of nominally
DKK 10,850,136 without pre-emption rights for existing shareholders in accordance with the Company’s
Articles of Association. This authorization covers the period until 15 April 2026, but has not been utilized as of
December 31, 2022. At the annual general meeting on April 2, 2020 Zealand was authorized to increase the
share capital by nominally DKK 9,013,665 during the period until April 2, 2025. At December 31, 2022 nomi-
nally DKK 1,630,000 of the authorization remains.
In December 2021 Zealand entered a USD 100.0 million long term borrowings agreement with Oberland. The
loan was amended and partially repaid during 2022. Please refer to note 4.6 for further details.
In June of 2022 the company received gross proceeds of DKK 274.8 million from a directed issue and private
placement. Zealand issued a total of 2,892,368 new shares at a subscription price of DKK 95 per share. In
October 2022, the company received gross proceeds of DKK 786 million from a directed issue and private
placement. Zealand issued a total of 4,975,000 new shares at a subscription price of DKK 158 per share.
In August 2022, the company announced Voluntary Delisting of American Depositary Shares from the U.S.-
Based Nasdaq Global Select Market. The delisting was completed during Q4 2022.
The Company and 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 2022. Neither Zealand Pharma A/S nor any of its subsidiaries are subject to exter-
nally imposed capital requirements other than the conditions related to the borrowing agreement (note 4.6).
Zealand Pharma ∞ Annual Report 2022 71
Notes to the Consolidated financial statements
4.2 Financial risks
Zealand is exposed to various financial risks, including foreign exchange rate risk, interest rate risk, credit
risk and liquidity risk.
The objective of Zealand’s financial management policy is to reduce the Group’s sensitivity to fluctua-
tions 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 Direc-
tors.
During 2022, all cash has been held in current bank accounts in USD, EUR and DKK. Interest rates on
bank deposits have been low to negative for an extended period of time, but have risen in late 2022 with
the worldwide changes to the economical landscape.
Zealand has invested in low-risk marketable securities. The Group’s marketable securities portfolio
comprises company bonds and asset backed securities in USD. All bonds held as of the balance sheet
date matures within the first three months of 2023.
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 transactions 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 exposures regarding our US activities are managed by having revenue and expenses in the
same currency. An ongoing exposure assessment is conducted.
As Zealand conducts clinical trials and toxicology studies around the world and has activities in US,
Zealand is 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 manage the
transaction and translation risk associated with the USD passively, by having a portion of the Group's
cash and cash equivalents in a USD account to cover future payment of Zealand’s expenses denomi-
nated in USD.
As of December 31, 2022, Zealand holds DKK 460.4 million (2021: DKK 862.9 million) of its cash in USD.
Of these DKK 348.6 million (USD 50 million) is subject to certain conditions (note 4.4). Additionally,
Zealand has a financial debt of DKK 336.8 million as well as embedded derivatives of DKK 80.6 million,
both denominated in USD.
Interest rate risk
Zealand has a policy of avoiding financial instruments that expose the Group to any unintended finan-
cial risks.
As of December 31, 2022, Zealand has borrowings amounting to DKK 336.8 million (2021: DKK 656.1
million), embedded derivatives amounting to DKK 80.6 million (2021: DKK 0) and lease liabilities
amounting to DKK 122.7 million (2021: DKK 139.5 million). Borrowings is measured at a fixed interest rate
at 14.3%. Changes in interest rates has an effect on the fair value of the embedded derivatives. Please
refer to note 4.6 for further. An increase in interest rates would be reflected in a increase in interest
income from the group's cash balances.
Credit risk
Zealand is exposed to credit risk in respect of receivables, bank balances and bonds. The maximum
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 companies and wholesalers.
Cash and bonds are not deemed to be subject to credit risk, as the counterparties are banks with invest-
ment-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 quarterly 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.
Reference is made to going concern considerations in note 1.1 for further description of the going
concern assessment.
Zealand Pharma ∞ Annual Report 2022 72
Notes to the Consolidated financial statements
4.2 Financial risks (continued)
Sensitivity analysis
The table shows the effect on profit/loss and equity of reasonably likely changes in the financial varia-
bles in the statement of financial position.
With the exception of leasing and borrowings, 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
< 12 months
1-5 Years
> 5 Years
Total
Carrying
amount
DKK thousand
USD
2022
2021
Fluctuation
Effect Fluctuation
Effect
+10%
21,209
+10%
20,675
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 finan-
cial 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.
Borrowings including
embedded derivatives
Leasing liabilities
Trade and other payables
Total financial liabilities
at December 31, 2022
Borrowings
Leasing liabilities
Trade and other payables
Total financial liabilities
at December 31, 2021
260,970
14,995
180,762
191,515
59,553
0
37,996
62,237
19,058
490,481
136,785
199,820
401,346
122,729
199,820
456,727
251,068
119,291
827,086
723,895
50,954
14,608
266,387
252,042
736,410
1,039,406
62,558
0
75,415
18,426
152,581
284,813
647,906
139,523
284,813
331,949
314,600
830,251
1,476,800
1,072,242
All cash flows are non-discounted and include all liabilities under contracts but not contractual obliga-
tions related to payments under agreements for development projects, including CROs, as disclosed in
note 6.5 , as their maturity dates are uncertain.
The expected future cash flows from borrowings including embedded derivatives are presented
as management's probability weighted estimate for payments under the contract. The cash flow is
expected cash flow is sensitive to the occurance of an call option trigger event as described in note 4.6.
Payments in USD are estimated based on USD 3m Libor rates as of 31 December 2022 translated into
DKK at the USD/DKK rates applicable as of 31 December 2022.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
4.3 Financial assets and liabilities
Accounting policies
Classification of Categories of Financial Assets and Liabilities:
Zealand classifies its financial assets held into the following measurement categories:
• those to be measured subsequently at fair value (either through other comprehensive income, or
through profit or loss), and
• those to be measured at amortized cost.
The classification depends on the business model for managing the financial assets and the contractual
terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income.
The fair value of an asset or a liability is measured using the assumptions that market participants would
use when pricing the asset or liability, assuming that market participants act in their economic best
interest.
Zealand uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximizing the use of relevant observable inputs and mini-
mizing the use of unobservable inputs.
For financial instruments that are measured in the balance sheet at fair value, IFRS 13 for financial instru-
ments requires disclosure of fair value measurements by level of the following fair value measurement
hierarchy for:
• Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices)
Zealand reclassifies debt investments only when its business model for managing those assets changes.
• Level 3 - Inputs for the asset or liability that are not based on observable market data (that is, unob-
73
Further details about the accounting policy for each of the categories are outlined in the respective
notes.
Fair Value Measurement
Zealand measures financial instruments, such as marketable securities, at fair value at each balance
sheet date. Management assessed that the fair value of financial assets and liabilities measured at amor-
tized cost such as bank deposits, receivables and other payables approximate their carrying amounts
largely due to the short-term maturities of these instruments.
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. The fair value measurement is based
on the presumption that the transaction to sell the asset or transfer the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by Zealand.
servable inputs).
For assets and liabilities that are recognized in the financial statements on a recurring basis, Zealand
determines whether transfers have occurred between levels in the hierarchy by re-assessing categoriza-
tion (based on the lowest level input that is significant to the fair value measurement as a whole) at the
end of each reporting period. Any transfers between the different levels are carried out at the end of the
reporting period.
Zealand Pharma ∞ Annual Report 2022 74
Notes to the Consolidated financial statements
4.3 Financial assets and liabilities (continued)
DKK thousand
Categories of financial instruments
Trade and other receivables excluding prepaid expenses
Financial assets at amortized costs
Marketable securities
Other investments
Other financial assets
2022
2021
70,640
70,640
108,611
30,943
6,901
101,465
101,465
299,042
26,907
0
Financial assets measured at fair value through profit or loss
146,455
325,949
Borrowings
Lease liabilities
Trade and other payables
Financial liabilities measured at amortized cost
Embedded derivates cf. note 4.6
Financial liabilities measured at fair value through profit or loss
320,743
122,729
199,820
647,906
139,523
284,813
643,292
1,072,242
80,603
80,603
0
0
DKK thousand
Assets measured at fair value:
Marketable securities
Other investments
Other financial assets
Financial assets measured at fair value through profit or loss
Liabilities measured at fair value:
Embedded derivates
Financial liabilities measured at fair value through profit or loss
Note
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
2022
2021
4.5
3.4
3.7
4.6
0
0
0
0
0
0
108,611
0
0
108,611
0
30,943
6,901
37,844
108,611
30,943
6,901
299,042
0
0
146.455
299,042
0
0
80,603
80,603
80,603
80,603
0
0
0
0
0
0
0
0
0
26,907
0
299,042
26,907
0
26,907
325,949
0
0
0
0
No transfer between fair value levels have occurred during 2022. The shift between level 1 and level 2 for marketable securities is caused by sale and acquisition of the portfolio.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
4.4 Cash and cash equivalents
Accounting policies
Cash is measured on intitial recognition at cost.
DKK thousand
Cash and cash equivalents
Cash and cash equivalents (subject to certain conditions)
Total cash and cash equivalents
2022
2021
720,626
472,525
348,608
656,578
1,069,234
1,129,103
As of December 31, 2021, USD 100 million was subject to a liquidity covenant under which the Group
had to hold the cash in a designated account until certain conditions were met. This covenant was lifted
in 2022 as a consequense of the amendments to the loan agreement with Oberland as described in
note 4.6.
Under the second amendment to the Oberland loan agreement signed on September 20, 2022, the
outstanding principal of USD 50 million is to be held in a designated deposit account. As a result the
amount is presented as cash and cash equivalents subject to certain conditions. The cash and securities
can be released in increments of minimum USD 10.0 million upon request from the group subject to
certain conditions as described in note 4.6.
75
4.5 Marketable securities
Accounting policies
Marketable securities consist of investments in securities with a maturity of ninety days or greater at
the time of acquisition. Measurement of marketable securities depends on the business model for
managing the asset and the cash flow characteristics of the asset. There are two measurement catego-
ries into which Zealand classifies its marketable securities:
• Amortized cost: Assets that are held for collection of contractual cash flows, where those cash flows
represent solely payments of principal and interest, are measured at amortized cost. Interest income
from these financial assets is included in finance income using the effective interest rate method. Any
gain or loss arising on derecognition is recognized directly in profit or loss and presented in other
gains/(losses), together with foreign exchange gains and losses. Impairment losses are presented as a
separate line item in the statement of profit or loss.
• Fair value through profit and loss (FVPL): Assets that do not meet the criteria for amortized cost or fair
value through other comprehensive income (FVOCI) are measured at FVPL. A gain or loss on a debt
investment that is subsequently measured at FVPL is recognized in profit or loss and presented net
within financial income or expenses in the period in which it arises.
Zealand's portfolio is managed and evaluated on a fair value basis in accordance with its stated invest-
ment guidelines and the information provided internally to management. This business model does not
meet the criteria for amortized cost or FVOCI and as a result marketable securities are measured at fair
value through profit and loss. This classification is consistent with the prior year's classification.
Transactions are recognized at trade date.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
4.5 Marketable securities (continued)
4.6 Borrowings
76
DKK thousand
USD portfolio:
Asset backed securities
Corporate bonds
Total USD portfolio
DKK portfolio:
Equity investment in bond portfolio
Total DKK portfolio
Total portfolio
Per December 31, 2022, all outstanding securities matures within 3 months.
2022
2021
Accounting policies
24,392
84,219
108,611
0
0
0
0
0
108,611
299,042
299,042
299,042
On initial recognition borrowings are measured at fair value which is generally equal to the proceeds
received. Fair value is allocated between the debt host contract and, if applicable, an embedded deriva-
tive. Transaction costs attributable to the debt host contract are deducted from the initial fair value and
amortised over the term of the loan as part of the effective interest rate on the loan. Transaction costs
attributable to a non-closely related embedded derivatives are expensed on initial recognition. Subse-
quently, borrowings are measured at amortised cost.
On initial recognition, borrowings are evaluated for the existence of non-closely related embedded
derivatives, i.e. cash flows or potential cash flows whose economic characteristics and risks are not
closely related to the economic characteristics and risks in the debt host contract such as prepayment
options at amounts which are not substantially equal to the loan’s amortised cost. The cash flows attrib-
utable to such non-closely related embedded derivatives are separated and accounted for as derivative
financial instruments.
Loan commitments are not recognised. Lender fees and transaction costs attributable to uncondi-
tional loan commitments are treated as prepaid transaction costs if the Group expect to draw down on
the facility. If the Group has no specific plans for draw down on the loan commitment, the transaction
costs are amortised over the commitment period.
If a loan commitment is subject to meeting certain conditions, it is considered an unconditional loan
commitment if the Group considers it probable that the conditions will be met.
Amendment of the terms of a loan is accounted for as an extinguishment of the original loan and
recognition of a new liability reflecting the amended terms if the amended terms are substantially
different from the original terms. Both quantitative and qualitive factors are considered. If the present
value of the amended cash flows discounted at the original effective interest rate differs by 10% or
more, the amendment is treated as an extinguishment. If the presented value of the amended cash
flows differs by less than 10%, Management evaluates qualitative factors such as:
• Change in collateral and restrictions of the use of proceeds
• Significant change in the term of the loan
• Change in loan currency and interest base
All fees incurred in connection with a modification of the terms accounted for as an extinguishment are
recognised as an expense.
Zealand Pharma ∞ Annual Report 2022
Notes to the Consolidated financial statements
4.6 Borrowings (continued)
DKK thousand
Borrowings at amortised cost
Embedded derivates at fair value
Total borrowings including embedded derivatives
2022
2021
320,743
647,906
80,603
0
401,346
647,906
On December 31, 2021, Zealand entered into a USD 100 million loan agreement with Oberland.
Following a change in the strategy announced on 30 March 2022, the conditions for release of the
included liquidity covenant being trailing 6 months cumulative revenue of at least USD 50 million was
considered unlikely to be met. Therefore, Zealand was as of this point in time effectively restricted from
obtaining access to the funds, and Zealand's prepayment option, whose fair value was assessed to be
immaterial upon issue of the loan, was considered to have a significant postive value as Zealand effec-
tively would not gain access to the cash. The positive fair value was determined as the present value of
future cash flows under the contract, compared with the cost of prepayng the loan. The basis for meas-
uring fair value was determined to be an entity (market participant) which was expected not to meet
the liquidity covenant and which needed the funds. Fair value was determined to amount to DKK 142.1
million based on the following assumptions:
Assumption
Value assigned to assumption
Cash flow loan
Deposit income
Discount rate
US LIBOR rate (annual forward rates) + 6% + “catch up”
payment to arrive at an IRR of 9.75%
US LIBOR rate (annual forward rates)
11%
Fair value was determined mainly based on unobservable data (level 3). Please refer to the movement
table presented on the following pages.
Following the first amendment 50% of Zealand's prepayment option was utilized (DKK 71.0 million was
recognized under loss on settlement of borrowings). As a part of the amendment, all revenue-related
liquidity covernants were lifted and Zealand gained assess to the cash. The premium on repayment of
the loan within the first four years of the agreement was also increased. As a result it is management's
assessment the value of Zealand's prepayment option as of December 31, 2022 is immaterial.
77
During the financial year, the loan agreement with Oberland have been amended twice.
Oberland amendment no. I
On May 10, 2022, Zealand entered into an agreement to amend certain terms of the Oberland loan. The
amendments were as follows:
• Prepayment of 50% of the USD 100 million principal which including a prepayment premium of 20%
amounts to USD 60 million
• Removal of the liquidity covenant meaning that Zealand has no limitations in respect of utilizing the
cash held by the Group
• Lender option renegotiated to include aditional assets
• Increase in premium which Zealand is required to pay in case of repayment within the first four years
of the agreement (refer to repayment amount section below)
• Potential for a further $75 million incremental capital following specific events
Management considers the amendments to comprise terms which are substantially different from the
term applicable prior to the amendment. Consequently, the modification has been accounted for as
an extinguishment of the loan subject to the original terms and recognition of a new liability. Under
the amended terms, Management estimates that fair value of the Zealand prepayment option for the
remaining outstanding amount is insignificant due to the fact that release from the liquidity covenant a
market participant would not benefit from prepaying the loan due to the fact that the funds are available
for use for a market participant. For the prepaid notional amount of USD 50 million, DKK 131.4 million
was recognised as loss on settlement of borrowings under financial expenses. The amount comprises
utilization of the prepayment option (DKK 71.0 million) and premium on settlement of debts (DKK 60.4
million). The cash outflow from debts of DKK 436.1 million comprises the premium on settlement of
debts (DKK 56.7 million), repayment of USD 51.7 million (DKK 365.4 million) and a prepayment of USD
2.0 million (DKK 14.0 million) which will be offset against future repayments.
Fair value of the amended loan (USD 50 million) was measured at DKK 367.1 million of which the fair
value of the lender call option accounted for DKK 18.0 million. A loss of DKK 14.6 was recognized as a
consequence of the derecognition. As discussed below under the section “Fair value measurement”, the
lender call option is assessed to have a significant fair value as of the modification date and has been
separated from the debt host contract.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
4.6 Borrowings (continued)
Oberland amendment no. II
On 20 September 2022, the Company entered into the Second Amendment to the Note Purchase
Agreement to address certain non-financial events of default by Zealand, which Oberland Capital
waived pursuant to the amendment. The Second Amendment introduced two conditions for the release
of the USD 50 million held in a Zealand Pharma A/S account that is controlled by Oberland Capital,
one of which was satisfied. Upon satisfaction of the second condition, which relates to the fulfillment
of certain post-closing obligations, Zealand may transfer funds from such account in increments of
USD 10 million for purposes of operating Zealand’s business in the ordinary course upon prior notice to
Oberland Capital. There are currently no other outstanding events of default under the Note Purchase
Agreement.
Fair value of the amended loan (USD 50 million) was assessed to be DKK 398.8 million of which the fair
value of the lender call option accounted for DKK 45.0 million. A gain of DKK 23.5 was recognized as
a consequence of the derecognition. Please refer to the section “Fair value measurement” for further
information about the measurment of the option.
Loan terms following amendment 2
Loan amount, tranche 1:
Maturity date:
USD 50 million
December 30, 2028
Repayment profile:
Repayment at maturity:
Base Interest:
Credit spread:
Revenue participation payments:
Lender call option to require repayment
of the debt:
3 months US Libor with a floor of 0.25%
6% p.a., fixed over the term of the contract
Draw down on tranche 1: 1.33% of consolidated revenue per
financial year, not exceeding 75 MUSD.
Change of control event
Sale of assets or licenses – proceeds from sale to be used to
repay the loan, however, no more than up to 75% of the net
proceeds.
Zealand option to prepay the debt:
Throughout the term of the loan
78
Repayment amount:
Until January 1, 2027:
From January 1, 2027 until maturity:
At maturity:
An amount equal to the greater of 150.0% of the principal
amount of the Notes issued and the amount (greater than zero)
that would generate an internal rate of return to the lender equal
to 12.0% on the aggregate purchase price paid for such Notes,
calculated from the First Purchase Date to the fifth anniversary
of the First Purchase Date.
In any case less any interests and revenue participation amounts
already paid.
An amount equal to the greater of 150.0% of the principal
amount of the Notes issued and the amount (greater than zero)
that would generate an internal rate of return to the lender equal
to 11.0% on the aggregate purchase price paid for such Notes,
calculated from the First Purchase Date to the date of repay-
ment.
In any case less any interests and revenue participation amounts
already paid.
At the principal amount or if investor IRR is lower than 9.75% p.a.
including interest payments, revenue participation payments
and lender-required repayments, an additional amount
Designated deposit account
The outstanding principal of USD 50 million must be held in an Designated Deposit Account until the
following conditions have been met:
• Zealand has achieved the Qualified Glepaglutide Endpoint, and
• All counterparties in Material Product agreements have delivered consents
A Designated Deposit Account is an account subject to a so-called control agreement, i.e. an agree-
ment under which a bank account in the name of Zealand Pharma is controlled by the lender. The funds
can be released in increments of USD 10 million for purposes of operating Zealand’s business in the
ordinary course upon prior notice to Oberland Capital.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
4.6 Borrowings (continued)
Accounting Assessment
Management has assessed the contract for non closely related embedded derivatives and has
concluded that the prepayment option and the lender call option are not closely related to the debt
host contract due to the fact that the repayment amount could differ with more than an insignificant
amount from the debts amortised cost.
The revenue based payments are not separated from the debt host contract but are initially consid-
ered part of the expected cash flows and included in determining the effective interest rate. The loan is
remeasured upon a reassessment of the expected revenue-based payment. The loan is remeasured to
the present value of the revised payments, discounted at the original effective rate, adjusted for subse-
quent changes in the 3 Month Libor rate.
Management's judgements and estimates
Fair value measurement of lender's call option
Following Zealand's change in strategy to actively seek partnerships and the renegotiation of the lender
call option to include more assets with the amendment made on 10 May 2022, the likelihood of an
event triggering repayment was significantly increased. Fair value of the lender call option was deter-
mined as the difference between the present value of the probability weighted contractual cash flow
upon the occurrence of a call option trigger event and the present value of the contractual cash flows
without a call option trigger event occurring, discounted at the expected internal rate of return of 14.3%.
It is assumed that any call option trigger event will result in full repayment of the loan. Fair value as of
31 December 2022 was determined using the same method, based on revised probabilities and market
rates for comparable investments as of 31 December 2022. In line with the announced company goals
for 2023 to engage in strategic partnerships, the likelyhood of a lender call option trigger event within
the next two years is assessed as realistic. Fair value of the option amounted to DKK 18.0 million as of
10 May, 2022 and DKK 80.6 million as of 31 December 2022. The fair value change, DKK 62.6 million, is
included in financial items.
Fair value measurement is to a significant extent based on unobservable input (level 3) being the like-
lihood and timing of a call option trigger event. A decrease in likelihood of a trigger event occurring
and occurrence at a later point in time than anticipated will decrease the negative value. Further, the
discount rate will impact the valuation. An increase in the discount rate will increase the negative value
79
and vice versa. The below table summarizes the effect of reasonably possible changes in the assump-
tion applied. Finally an increase in the USD 3m Libor will decrease the negative value of the option, as
it will increase the contractual cash flow of the contract without a trigger event occuring. A decrease in
USD 3m Libor will have the opposite effect.
Change in variable
Change in fair value
Trigger event 3 months later
Decrease in negative value of DKK 11.2 million
Discount rate + 1%
Discount rate – 1%
USD 3m Libor + 1%
USD 3m Libor - 1%
Increase in negative value of DKK 7.2 million
Decrease in negative value of DKK 7.8 million
Decrease in negative value of DKK 12.1 million
Increase in negative value of DKK 12.1 million
The Group has up until now not held complex financial instruments measured at fair value and has only
recently implemented processes for determining fair value of such instruments. Third party valuation
specialists have been engaged to assist in determining the fair value of both the Zealand prepayment
option and the lender call option as of 10 May, 20 September and 31 December 2022.
Fair value of the loan agreement including embedded derivatives as of 31 December 2022 is assessed
to be equal to its carrying amount of DKK 401 million (31 December 2021: DKK 656 million). The assess-
ment is based on comparison of the effective yield of quoted bonds for CCC rated entities as of 31
December 2022. Valuation is based mainly on unobservable data (level 3).
Fair value measurement of Zealand's prepayment option
Following the first amendment of the Oberland loan all revenue-related liquidity covenants were lifted
and Zealand gained assess to the cash. The premium on repayment of the loan within the first four
years of the agreement was also increased. As a result it is management's assessment the the value of
Zealand's prepayment option as of December 31, 2022 is immaterial.
Collateral provided
The Group has provided floating charge collateral covering with all assets in the company which can be
collateralized, including shares in subsidiaries, as collateral for the debt to Oberland.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
4.6 Borrowings (continued)
Changes arising from Oberland loan agreement - including changes for level 3 embedded derivatives
Cash changes
Non-cash changes
Carrying
value as at
December
31, 2021
Repayment
of debt,
including
premium
Payment of
interests
Loss on
settlement
Loss on debt
recognition -
amendment I
Bifurcation
of embedded
derivatives
Gain on debt
recognition -
amendment II
Fair value
adjustments Amortization
Interests
accrued
Currency
adjustments
80
Carrying
value as at
December
31, 2022
Borrowings as amortized costs
647,906
-422,085
22,381
-18,017
-18,581
0
1,337
0
0
0
0
0
-14,003
-32,651
0
0
0
60,387
71,050
0
0
0
0
-7,764
0
0
-4,890
-71,050
62,613
0
0
0
0
0
0
0
47,829
320,743
0
0
-27
80,603
54,052
-2,928
-8,184
Embedded derivatives at fair value
- Zealand prepayment option
Embedded derivatives at fair value
- Lender call option
Other receivables
Total impact from
Oberland loan agreement
647,906
-436,088
-32,651
131,437
14,617
-23,471
-8,437
1,337
54,052
44,460
393,162
0
18,017
0
0
Zealand Pharma ∞ Annual Report 2022 81
Interst expeses and banking fees have increased due to the loan agreement with Oberland as described in
note 4.6.
Fair value adjustments of Zealand's prepayment option relate to the prepayment option included in the
loan agreement with Oberland. Please refer to note 4.6 for further information.
Loss on settlement of borrowings relates to the utilization of the prepayment option from the loan agree-
ment with Oberland and comprise the partial utilization of the prepayment option, the premium paid and
the capitalized loan costs which have been fully expensed. Reference is made to note 4.6 for further infor-
mation.
Gain on debt modifications comprise the accounting impact of the two amendments to the Oberland
agreement as described in note 4.6.
Fair value adjustment of lender call option relates to the value adjustments of Oberland's option to call for
repayment of the loan under certain conditions. For further information please refer to note 4.6.
Notes to the Consolidated financial statements
4.7 Financial items
Accounting policies
Financial items include interests, as well as foreign exchange rate adjustments, fair value adjustments
of other investments, embedded derivatives and marketable securities and dividends from marketable
securities.
DKK thousand
Interest income
Interest expenses and banking fees
Fair value adjustments of embedded derivatives - Zealand
prepayment option
Loss on settlement of borrowings
Loss on debt recognition - amendment I
Gain on debt recognition - amendment II
Fair value adjustments of embedded derivatives - lender call
option
Fair value adjustments of marketable securities
Fair value adjustments of other investments
Exchange rate adjustments (primarily on USD deposits)
Amortization of loan costs
Other financial items
Financial items in total
Presentation in financial statement:
Financial income
Financial expense
2022
2021
2020
6,542
-56,455
71,050
-131,437
-14,617
23,471
-62,613
-1,699
4,036
25,602
-1,337
2,569
-134,888
44
-4,091
895
-2,895
0
0
0
0
1,852
-5,426
36,524
0
-3,473
25,430
0
0
0
0
-2,103
936
-39,487
0
-4,620
-47,274
133,270
-268,158
41,211
-15,781
1,831
-49,105
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
4.8 Share capital
Accounting policies
The total amount paid to acquire treasury shares including directly attributable costs and the proceeds
from the sale of treasury shares are recognized in retained earnings. Expenses directly related to capital
increases are recognized in equity.
DKK thousand
January 1
Shares issued for cash
Exercise of warrants
December 31
2022
2021
43,634
7,867
201
39,800
3,834
0
51,702
43,634
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 transferability. 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, 2022 nominally DKK 1,630,000 of the authorization remains. The company have a unused
authorizaion to issue convertible debt instruments with access to conversion to shares in the Company of
up to a total of nominally DKK 10,850,136.This authorization covers the period until 15 April 2026.
On June 1, 2022 Zealand announced a directed issue and private placement of a total of 2,892,368 new
shares at a subscription price of DKK 95 per share. On October 4, 2022, The Group announced that a
directed issue and private placement of 4,975,000 new shares had been completed at a subscription
price of DKK 158 per share.
During 2022, a total of 200,588 new shares have been issued due to exercise of warrant programs with
a net proceeds of DKK 23.8 million corresponding to an average exercise price of DKK 118.8.
Treasury shares
At December 31, 2022, there were 230,063 treasury shares (2021: 418,247), equivalent to 0.4% (2021:
1.0%) of the share capital. The treasury shares are allocated to performance share units (PSUs) and
restricted stock units (RSUs).
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.
82
4.9 Share-based instruments
In order to motivate and retain key employees, management and board of directors and to encourage
the achievement of common goals for employees, management and shareholders, the Group has
established incentive plans based on Restricted stock units (RSUs), Performance stock units (PSUs) and
warrants.
RSUs grants the beneficiary the right to receive one of the company's already issued shares upon
vesting. There are no vesting conditions except time.
PSUs also grant the beneficiary the right to receive one already exsisting share upon vesting. Vesting
conditions for PSUs contains both a time and a performance element.
Warrants grants the beneficiary the option to purchase a new share at a fixed price upon vesting. The
only vesting condition is time.
PSU programs
The number of performance share units granted in 2022 consists of 266,223 granted on May 25 and
20,590 granted on Dec 2. The value is determined based on the Company's share price on Nasdaq
Copenhagen A/S on the day of the grant.
The programs granted in 2022 are initially valued at DKK 28.3 million (2021: DKK 51.7 million). The PSU's
vest linear or gradually over 3 years.
Movement table of PSU granted shares below:
No of PSUs
Number of share units
At January 1
Adjustments due to performance targets
Granted during the year
Vested during the year
Forfeited during the year
At December 31
2022
2021
2020
271,761
35,948
286,813
-71,780
-164,941
357,801
19,765
19,765
0
282,852
0
-30,856
271,761
0
0
0
0
19,765
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
4.9 Share-based instruments (continued)
RSU programs
The number of restricted share units granted in 2022 consists of 8,511 granted on February 22, 40,500
granted on April 20, and 99,420 granted on May 25. The value is determined based on the Company's
share price on Nasdaq Copenhagen A/S on the day of the grant.
Warrant programs
Incentive programs with outstanding warrants and the end of 2022 and 2021, respectively, have been
offered under different warrant programs. The number of warrants granted in 2022 consists of 863,156
granted on May 25, 19,796 granted on September 13 and 14,038 granted on December 2.
The RSUs granted in 2022 are initially valued at DKK 13.6 million (2021: DKK 92.2 million). The RSU's vest
linear or gradually over 3 years.
The warrants granted in 2022 are initially valued at DKK 38.9 million (2021: DKK 0.0 million). The
warrants vest linearly or gradually over 3 years.
Movement table of RSU granted shares below:
Warrant programs existing during the period
2022
2020
2015
The employee incentive programs of
83
No of RSUs
Number of share units
At January 1
Granted during the year
Vested during the year
Forfeited during the year
At December 31
2022
2021
2020
Maximum years of options granted
460.089
148,431
-116,563
27,466
507,461
-163
-208,685
-74,675
0
27,466
0
0
Method of settlement
2022
5 and 10
years
equity-
settled
5 and 10
years
equity-
settled
5 years
equity-
settled
Warrants outstanding at the beginning of the period
0
510,522
966,672
283,272
460,089
27,466
Granted during the period
Forfeited during the period
Exercised during the period
Expired during the period
896,990
0
0
-76,158
-134,051
-20,093
0
0
0
-200,588
-95,281
-298,583
Number of warrants outstanding at the end of the period
820,832
281,190
Exercisable at the end of the period
0
17,750
447,408
447,408
Warrants outstanding at the end of the period
Range of exercise prices
Weighted-average remaining contractual life
Number held by Executive Management
The Board of Directors have not been granted warrants.
90.7-203 216.8-224.4
90-220
7.9
7.3
0.9
136,815
23,325
107,961
Zealand Pharma ∞ Annual Report 2022 84
Warrants exercised during the period
Weighted-average share price at the date of exercise
Weighted-average exercise price for warrants expired during the period
Weighted-average exercise price for warrants forfeited during the period
Weighted-average exercise price for warrants outstanding at period end
2022
189.0
158.1
175.2
124.7
2021
186.1
142.5
206.2
159.6
Notes to the Consolidated financial statements
4.9 Share-based instruments (continued)
Warrant programs existing during the period
Maximum years of options granted
Method of settlement
2021
Warrants outstanding at the beginning of the period
Granted during the period
Forfeited during the period
Exercised during the period
Expired during the period
Number of warrants 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
The employee incentive
programs of
2020
2015
10 years
equity-
settled
5 years
equity-
settled
672,258
1,299,879
0
0
-137,403
-44,917
0
-233,595
-24,333
510,522
67,346
-54,695
966,672
483,323
216.8-224.4
90-220
8.3
1.7
86,238
267,171
Zealand Pharma ∞ Annual Report 2022 5 Tax
Notes to the Consolidated financial statements
5
Tax
5.1 Corporate tax
85
85
5.1 Corporate tax
Accounting policies
Income tax on results for the year, which comprises current tax and changes in deferred tax, is recog-
nized in the income statement, except to the extent that the tax is attributable to items which directly
relate to shareholders' equity or other comprehensive income.
Current tax liabilities and current tax receivables are measure at the amounts expected to be paid to or
recovered from the tax authorities.
Deferred tax is accounted for under the liability method which requires recognition of deferred tax on
all temporary differences between the carrying amount of assets and liabilities and the tax base of such
assets and liabilities. This includes the tax value of tax loses carried forward.
Deferred tax is calculated in accordance with the tax regulations in the local countries and the tax rates
expected to be in force at the time the deferred tax is utilized. Changes in deferred tax as a result of
changes in tax rates are recognized in the income statement.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be
available against which the differences can be utilized.
Management's judgements and estimates
Zealand recognizes deferred tax assets, including the tax base of tax loss carryforwards, if management
assesses that these tax assets can be offset against positive taxable income within a foreseeable future.
This judgment is made on an ongoing basis and is based on numerous factors, including actual results,
budgets and business plans for the coming years.
The creation and development of therapeutic products within the biotechnology and pharmaceutical
industry is subject to considerable risks and uncertainties. Zealand's future taxable income will be driven
by future events that are highly susceptible to factors outside of the groups control including outcomes
of clinical trials, regulatory approvals and other matters.
Due to the uncertainties described, Management has concluded no deferred tax assets should be
recognized at December 31, 2022 (none recognized in 2021 or 2020), except for the US entity, which is
expected to have profitable taxable income due to the groups transfer pricing setup.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
5.1 Corporate tax (continued)
DKK thousand
2022
2021
2020
DKK thousand
2022
2021
2020
86
Net result for the year before tax
Corporate tax rate in Denmark
Expected tax benefit
Adjustment for foreign tax rates
Adjustment for non-deductible expenses
Adjustment for non-taxable income
Adjustment for warrants
Adjustment for R&D extra deduction
Adjustment to prior year
Change in tax assets (not recognized)
Total income tax expense/(benefit)
- hereoff related to discontinued operations
Total income tax expense/(benefit) from
continuing operations
.
-1,195,491
-1,026,940
-839,653
Specification of deferred tax assets:
22.0%
22.0%
22.0%
Tax losses carried forward (available indefinitely)
3,312,022
2,231,049
1,281,505
-263,008
-225,927
-184,724
-806
1,052
-468
5,935
-20,960
800
283,493
6,644
-13,075
461
888
0
11,573
-14,379
-12,602
769
-1,927
6,844
-2,387
8,811
-931
-8,790
-4,842
7,076
-11,890
-6,431
-3,949
-4,814
Research and development expenses
Intangible assets
Non-current assets
Liabilities
Other
956,816
107,231
105,323
77,168
103,278
842,775
732,389
51,154
89,414
126,174
55,075
40,373
66,419
188,787
58,483
Total temporary differences
4,661,838
3,395,641
2,367,956
Calculated potential deferred tax asset at local tax rate
1,026,257
749,198
514,239
Recognized deferred tax asset
2,017
13,525
8,370
Under Danish tax legislation, Zealand is eligible to receive DKK 5.5 million in 2022 (DKK 5.5 million in
2021 and 2020) in tax return based on qualifying research and development expenses.
Unrecognized deferred tax assets relate to tax jurisdictions in Denmark and US.
231,195
180,621
Deferred tax asset not expected to be utilized
-1,024,240
-735,673
-505,869
Zealand Pharma ∞ Annual Report 2022 6 Other disclosures
Notes to the Consolidated financial statements
87
6
Other
disclosures
6.1
Remuneration of the Board of Directors
and Executive Management
6.2 Business overview
6.3 Fees to auditors appointed at
the annual general meeting
6.4 Contingent assets and liabilities
6.5 Commitments
6.6 Related parties
6.7 Cash flow adjustments
6.8 Collaborations and technology licenses
6.9 Subsequent events
88
90
90
90
90
90
91
91
93
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
6.1 Remuneration of the Board of Directors and Executive Management
88
DKK thousand
Remuneration to the Board of Directors
Martin Nicklasson
Kirsten Drejer
Alain Munoz
Michael Owen
Bernadette Mary Connaughton
Jeffrey Berkowitz
Leonard Kruimer
Jens Peter Stenvang1
Gertrud Koefoed Rasmussen1,2
Frederik Barfoed Beck1
Iben Louise Gjelstrup¹
Hanne Heidenheim Bak1,2
Anneline Nansen1,3
Total
Base
board fees
2022
Share-based
compensation
Total
fees
Base
board fees
2021
Share-based
compensation
Total
fees
Base
board fees
2020
Committee
fees
Total
fees
100
100
100
100
100
100
100
100
0
100
100
0
100
968
484
545
545
484
484
666
182
0
182
182
0
96
1,068
584
645
645
584
584
766
282
0
282
282
0
196
100
100
100
100
100
100
100
100
67
100
100
0
33
1,181
1,281
590
664
664
590
590
812
221
0
221
221
0
0
690
764
764
690
690
912
321
67
321
321
0
33
750
500
400
400
400
400
400
400
267
267
267
133
0
100
0
50
50
33
50
150
0
0
0
0
0
0
850
500
450
450
433
450
550
400
267
267
267
133
0
1,100
4,818
5,918
1,100
5,754
6,854
4,584
433
5,017
1 Employee-elected board members; the table only includes remuneration for board work.
2 Hanne Heidenheim Bak resigned from the board in 2020 and Gertrud Koefod Rasmussen resigned from the Board in 2021.
3 Anneline Nansen joined the Board in 2021.
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 accommodation.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
6.1 Remuneration of the Board of Directors and Executive Management (continued)
89
DKK thousand
2022
Remuneration to the Executive Management
Adam Sinding Steensberg1
Henriette Wennicke2
Emmanuel Dulac3
Matthew Donald Dallas4
Total
Total Other Corporate Management⁵
Total
2021
Remuneration to the Executive Management
Adam Sinding Steensberg1
Emmanuel Dulac3
Matthew Donald Dallas4
Total
Total Other Corporate Management⁵
Total
2020
Remuneration to the Executive Management
Adam Sinding Steensberg1
Emmanuel Dulac3
Matthew Donald Dallas4
Total
Total other Corporate Management⁵
Total
Base
salary
Bonus
Pension
contribution
Other
short term
benefits
Share-based
compensation
Severance
payments
Total
4,162
420
2,626
2,248
9,456
9,826
19,282
3,056
5,099
2,878
11,033
9,022
20,055
2,967
4,950
2,721
10,638
6,386
17,024
2,366
168
1,575
860
4,969
4,204
9,173
1,193
3,059
1,182
5,434
3,429
8,863
1,266
3,267
1,191
5,724
2,739
8,463
832
84
525
46
1,487
1,009
2,496
611
1,020
37
1,668
497
2,165
593
990
36
1,619
313
1,932
725
41
122
234
1,122
879
2,001
286
243
48
577
564
1,141
282
699
15
996
286
1,282
11,061
225
-3,265
-581
7,440
10,986
0
0
6,564
3,194
9,758
3,033
19,146
938
8,147
6,001
34,232
29,938
18,426
12,791
64,170
4,829
12,182
4,086
21,097
8,319
29,416
2,281
2,534
1,707
6,522
3,423
9,945
0
0
0
0
2,772
2,772
0
0
0
0
0
0
9,975
21,603
8,232
39,809
24,603
64,412
7,389
12,440
5,670
25,499
13,147
38,646
1 Former EVP, R&D and CMO
Adam Sinding Steensberg
was appointed CEO at March
30, 2022.
2 Henriette Wennicke was
appointed as CFO at
November 1, 2022.
3 Former CEO Emmanuel
Dulac resigned from
Zealand at March 30, 2022.
4 Former CFO Matthew
Donald Dallas resigned from
Zealand at August 31, 2022.
5 Other Corporate Manage-
ment in 2022 comprised
four members (2021: three
and 2020: three.)
Zealand Pharma ∞ Annual Report 2022 90
Notes to the Consolidated financial statements
6.2 Business overview
6.4 Contingent assets and liabilities
Zealand Pharma A/S (Nasdaq: ZEAL) ("Zealand", the “Company”, the “Group”, “Zealand” and “we”) is a
biotechnology company focused on the discovery and development of innovative peptide-based medi-
cines. The Groups' domicile is in Copenhagen, Denmark.
DKK thousand
Domicile
Owner-
ship
Voting
rights
Zealand Pharma A/S (ultimate parent) direct and indirect subsidiaries
ZP Holding SPV K/S
ZP General Partner 1 ApS
Zealand Pharma US Inc.
ZP SPV 3 K/S
ZP General Partner 3 ApS
ZP SPV 1 K/S
ZP General Partner 2 ApS
Zealand Pharma California US, LLC.
Denmark
Denmark
United States
Denmark
Denmark
Denmark
Denmark
United States
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
6.3 Fees to auditors appointed at the annual general meeting
DKK thousand
Audit
Audit-related services and other assurance engagements
Other
Total fees
2022
7,862
1,760
389
10,011
2021
2020
7,053
1,265
282
8,600
5,941
1,002
0
6,943
The fee for audit-related services and other assurance engagements and other services provided to the
Group by EY Godkendt Revisionspartnerselskab in 2022, 2021 and 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 advisory services.
Contingent Assets and liabilities
Zealand is entitled to potential milestone payments and royalties on successful commercialization of
products developed under license and collaboration agreements with partners. Since the size and
timing of such payments are uncertain until the milestones are reached or sales are generated, the
agreements may qualify as contingent assets. However, it is impossible to measure the value of contin-
gent assets, and as such, no assets have been recognized.
As part of the license and collaboration agreements that Zealand has entered into, once a product is
developed and commercialized, Zealand may be required to make milestone and royalty payments. It
is not possible to measure the value of such future payments, but Zealand expects to generate future
income from such products which will exceed any milestone and royalty payments due, and as such, no
liabilities have been recognized.
Reference is made to note 6.8 for descriptions of Zealands collaboration and license agreements.
6.5 Commitments
Guarantees and Collaterals
The Group has provided floating charge collateral covering with all assets in the company which can be
collateralized, including shares in subsidiaries, as collateral for the debt to Oberland.
Other Purchase Obligations
At December 31, 2022, total contractual obligations related to agreements for development projects,
including CROs, amounted to DKK 220.5 million (DKK 140.7 million for 2023 and DKK 79.8 million for
the years 2024 up to and including 2026).
6.6 Related parties
Zealand has no related parties with controlling interest.
Zealand’s other related parties comprise the Company’s Board of Directors and Corporate Manage-
ment. Other than the remuneration and other transactions relating to the Board of Directors and Exec-
utive Management described in note 6.1. There were no other material related party transactions during
2022, 2021 and 2020.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
6.7 Cash flow adjustments
6.8 Collaborations and technology licenses
91
DKK thousand
2022
2021
2020
Depreciation, amortization and impairment
Deferred revenue
Bargain purchase
Share-based compensation expenses
Income tax
Financial income
Financial expenses
Fair value adjustments
Exchange rate adjustments
Total adjustments
117,961
-67,584
0
52,576
9,893
-37,780
174,927
-3,590
23,219
269,622
42,946
-30,185
0
53,504
-1,190
-1,896
16,674
6,520
-68,943
17,430
42,692
-42,881
-36,395
30,485
9,865
-1,127
3,511
0
57,712
63,862
DKK thousand
2022
2021
2020
(Increase)/decrease in receivables
(Increase)/decrease in Inventory
Increase/(decrease) in payables and other liabilities
Change in working capital
18,221
50,691
-58,649
-64,494
-52,772
-49,059
10,263
-166,325
-7,716
-14,404
119,938
97,818
Collaboration and license agreements
Zealand enters into collaborations with biotechnology and pharmaceutical companies to advance the
development and commercialization of our product candidates and to supplement our internal pipeline.
Zealand seeks collaborations that will allow Zealand to retain significant future participation in product
sales through either profit-sharing or royalties paid on net sales. Below is an overview of Zealand's
collaboration and license agreements that have had a significant impact or are expected in the near
term to have a significant impact on financial results.
With reference to note 6.4, each agreement is marked with CA (contingent asset) and CL (contingent
liability) if applicable.
Alexion (Inflammation) (CA)
In March 2019, Zealand entered into a license, research and development agreement with Alexion to
develop novel therapies to treat complement-mediated diseases.
The collaboration with Alexion includes a lead program targeting the Complement pathway and the
potential to work on the identification of peptide inhibitors to up to three additional components of the
complement cascade. Zealand will lead the joint discovery and research efforts through the preclinical
stage, and Alexion will lead development efforts beginning with IND filing and Phase 1 studies. The
agreement provides Alexion with exclusive worldwide licenses and commercial rights to the peptide
therapies developed in the collaboration.
Under the Alexion license, research and development agreement, Zealand received an upfront non-re-
fundable payment of USD 25.0 million for the complement inhibitor program and a concurrent USD
15.0 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 115.0 million, as well as up to
USD 495.0 million in sales-based milestones and high single- to low double-digit royalty payments.
Zealand is eligible to receive further non-refundable upfront payments of USD 15.0 million each for up
to three additional targets, as well as development/regulatory and sales milestones plus royalties at a
reduced rate to the lead target.
Zealand receives compensation on a time and material basis for certain research and development
services delivered under the contract.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
6.8 Collaborations and technology licenses (continued)
Beta Bionics (Dasiglucagon for bi-hormonal artificial pancreas systems)
Dasiglucagon is in clinical development for use in investigational bi-hormonal artificial pancreas (BHAP)
systems containing both insulin and dasiglucagon.
In 2016, Zealand entered into collaboration with Beta Bionics, Inc., a medical technology company
leveraging lifelong, machine-learning, artificial intelligence to develop and commercialize the world’s
first autonomous bionic pancreas. The partnership aims to combine product rights from each party
to advance a new dual-hormonal artificial pancreas system. Such a system has the potential to offer
people with diabetes on insulin therapy more efficacious, safer and easier blood sugar control for better
long-term disease management and outcomes.
As a part of the collaboration Zealand has made an investment in Beta Bionics. Reference is made to
note 3.4 for further information.
Boehringer Ingelheim (Obesity/BI 456906) (CA)
In June 2011, Zealand entered into a license, research and development collaboration agreement with
Boehringer Ingelheim International GmbH (BI) to advance novel dual acting glucagon/GLP-1 peptide
receptor agonists for the treatment of patients with type 2 diabetes and obesity. As part of the agreement,
BI obtained global development and commercialization rights to the lead drug candidate, BI 456906. BI
funds all research, development and commercialization activities under the agreement.
As of December 31, 2022 Zealand is eligible to receive license and milestone payments of up to EUR 345.0
million, related to the achievement of pre-specified development, regulatory and commercial milestones
for the lead product. Zealand is also eligible to receive tiered royalties ranging from high single-digit to low
double-digit percentages on global sales by BI of all products stemming from this collaboration. In addi-
tion, Zealand retains co-promotion rights in Scandinavia.
DEKA Research & Development Corp. (CHI/dasiglucacon) (CL)
In November 2021 Zealand announced a collaboration agreement with DEKA to develop a continuous
infusion pump, for which Zealand receives a worldwide, exclusive license, to be used in combination
with dasiglucagon for treatment of CHI.
DEKA is responsible for pump development and pump manufacturing activities. Zealand is responsible
for clinical development around the drug-device combination and commercialization in all territories.
As consideration for a global license to use the infusion pump for treatment of CHI, DEKA is eligible to
receive a low to high single digit royalty rate of the global net sales of the combination product.
92
Encycle Therapeutics (CL)
In October 2019, Zealand announced the acquisition of Encycle Therapeutics to obtain a pre-clin-
ical asset that complements Zealand’s focus on developing next-generation peptide therapeutics for
gastrointestinal diseases. The asset is being developed as an orally delivered peptide drug to target inte-
grin alpha-4-beta-7, which is involved in the pathogenesis of inflammatory bowel disease (IBD).
As compensation for the acquisition, the former owners of Encycle are eligible for up to USD 80.0
million in development and sales-based milestones as well as a potential mid-single digit royalty on
global net sales.
MannKind Corporation (V-Go) (CA)
In May 2022, Zealand announced Asset Purchase Agreement with MannKind Corporation to sell the
V-Go Insulin Delivery Device. V-Go is a once-daily, wearable, insulin delivery device that helps provide
blood sugar control for everyday lifestyles. Designed to be patient-friendly, V-Go is worn like a patch
and eliminates the need for taking multiple daily shots.
Under the agreement Zealand is eligible to receive up to USD 10.0 million in sales-based milestones.
The milestones is recognized as other financial assets cf. note 3.7.
Novo Nordisk (ZEGALOGUE/dasiglucagon (CA)
In September 2022, Zealand announced a global license and development agreement with Novo
Nordisk to commercialize ZEGALOGUE (dasiglucagon) for injection. ZEGALOGUE is approved by the
U.S. Food and Drug Administration (FDA) for the treatment of severe hypoglycemia in pediatric and
adult patients with diabetes aged 6 and above. Under the agreement Novo Nodisk is responsible for the
global commercialization of ZEGALOGUE while Zealand is responsible for certain planned regulatory,
development and manufacturing activities to support further development and approval outside of the
U.S. for which Zealand is eligible to receive a mix of development milestones, as well as time and mate-
rial compensation.
Zealand retained all non-licensed intellectual property rights to the company’s other dasiglucagon
development programs.
Zealand received an upfront payment of DKK 25.0 million and is eligible for up to DKK 45.0 million in
development milestones and DKK 220.0 million in sales-based milestones as well as tiered royalties
ranging from high single-digit to low double-digit percentages on worldwide net sales by Novo Nordisk.
Zealand is also eligible for compensation on a time and material basis for certain product supply,
research and development services delivered under the contract.
Zealand Pharma ∞ Annual Report 2022 Notes to the Consolidated financial statements
6.8 Collaborations and technology licenses (continued)
6.9 Subsequent events
93
Protagonist Therapeutics (Rusfertide) (CA)
In June, 2012, Zealand and Protagonist entered into a collaboration to develop disulfide-rich peptides.
Protagonist has since taken over the full responsibility of the development.
Zealand is eligible to receive up to USD 60.0 millions in regulatory and commercial milestones, as well
as a low single digit royalty rate on global net sales.
Sanofi/Royalty Pharma (Soliqua/Suliqua/Lyxumia/Adlyxin) (CA)
In September 2018, Zealand announced that all future royalties and all but up to USD 15.0 million of
future milestone payments relating to the Sanofi License Agreement were sold to Royalty Pharma.
As of December 31, 2022 USD 10.0 million was still outstanding.
No events have occurred subsequent to the balance sheet date that could significantly affect the finan-
cial statements as of December 31, 2022.
Zealand Pharma ∞ Annual Report 2022 94
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
1
2
3
4
Significant accounting policies, and
significant accounting estimates and assessments
Revenue
Information on staff and remuneration
Financial items
5 Other operating items
6
Income tax
7 Discontinued operations
8
9
Intangible assets
Property, plant and equipment
10 Right-of-use assets and lease liabilities
11
Investments in subsidiaries
12
Inventories
13 Trade and other receivables
14 Trade and other payables
15 Fees to auditors appointed at
the annual general meeting
16 Contingent assets, liabilities and
other contractual obligations
17 Transactions with related parties
18 Adjustments for non-cash items
19 Change in working capital
20 Significant events after the balance sheet date
Alternative performance measures for the Group
(non-audited)
95
95
96
97
97
98
98
99
101
101
102
102
104
105
106
107
107
108
108
108
108
109
109
109
109
110
Zealand Pharma ∞ Annual Report 2022
Financial statements of the parent company
Financial statements of the parent company
Financial statements of the parent company
95
Income statement
DKK thousand
Revenue
Royalty expenses
Gross margin
Research and development expenses
Sale and marketing expenses
General and administrative expenses
Other operating items
Net operating expenses
Operating result
Dividend from subsidiaries
Financial income
Financial expenses
Result before tax
Income tax (expense)/benefit
Net result for the year from continuing operations
Net result for the year from discontinued operations
Net result for the year
Note
2022
2021
DKK thousand
Note
2022
2021
Statement of comprehensive income
Net result for the year
Other comprehensive income (loss)
Comprehensive result for the year
-1,019,962
-1,004,603
0
0
-1,019,962
-1,004,603
2
141,741
-37,756
103,985
87,063
-10,133
76,930
-613,993
-573,919
-32,285
-74,455
-236,977
-235,093
5
-88,188
-2,161
-971,443
-885,628
-867,458
-808,698
38,624
36,710
-9,268
36,745
48,898
-15,080
-801,392
-738,135
5,005
6,925
-796,387
-731,210
-223,575
-273,393
-1,019,962
-1,004,603
4
4
6
7
Zealand Pharma ∞ Annual Report 2022 Statement of financial position
Statement of financial position
96
Financial statements of the parent company
Statement of financial position at December 31
DKK thousand
Assets
Non-current assets
Intangibles (Intellectual property)
Property, plant and equipment
Right of use assets
Investment in subsidiaries
Other investments
Trade and other receivables
Corporate tax receivable
Other financial assets
Total non-current assets
Current assets
Inventory
Trade and other receivables
Corporate tax receivable
Marketable securities
Cash and cash equivalents
Total current assets
Total assets
Note Group note
2022
2021
DKK thousand
Note Group note
2022
2021
Liabilities and shareholders' equity
Share capital
Other reserves
Total Shareholders' equity
Deferred revenue
Trade and other payables
Lease liabilities
Total non-current liabilities
Trade and other payables
Lease liabilities
Deferred revenue
Total current liabilities
Total liabilities
Total shareholders' equity and liabilities
14
10
14
10
4.8
3.8
3.8
51,702
915,849
967,551
0
19,058
91,096
43,634
855,388
899,022
14,551
18,426
99,769
110,154
132,746
163,274
11,522
0
222,823
11,686
53,033
174,796
287,542
284,950
420,288
1,252,501
1,319,310
8
9
10
11
13
6
12
13
6
3.4
3.7
0
46,169
97,571
62,228
30,943
157,039
0
6,901
35,691
80,075
107,781
62,228
26,906
161,193
1,268
0
400,851
475,142
1,286
134,760
5,500
0
710,104
851,650
78,767
83,670
5,500
299,042
377,189
844,168
1,252,501
1,319,310
Zealand Pharma ∞ Annual Report 2022 Statement of cash flows
Statement of changes in equity
Financial statements of the parent company
Statement of cash flows
Statement of changes in equity
DKK thousand
Note
2022
2021
Net result for the year
Adjustments for non-cash items
Change in working capital
Financial expenses paid
Income tax received/(paid)
Cash flow from/(used in) operating activities
Proceeds from sale of marketable securities
Proceeds from sale of V-GO
Purchase of property, plant and equipment
Cash flow from/(used in) investing activities
Proceeds from issuance of shares related
to exercise of warrants
Proceeds from issuance of shares
Costs related to issuance of shares
Purchase of treasury shares
Leasing installments
Cash flow from/(used in) financing activities
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at January 1
Exchange rate adjustments
Cash and cash equivalents at December 31
18
19
7
-1,019,962
-1,004,603
13,049
-53,712
-999
7,698
97,038
-257,057
-3,296
5,500
-1,053,926
-1,162,418
297,559
64,475
-8,838
353,196
23,836
1,060,825
-47,456
0
10
-11,714
1,025,491
0
0
-16,903
-16,903
26,070
748,975
-46,894
-28,590
-12,260
687,301
324,761
377,189
8,154
-492,020
860,772
8,437
710,104
377,189
97
Share
capital
Other
reserves
Total
43,634
855,388
899,022
0 -1,019,962 -1,019,962
0
51,286
51,286
8,068
1,076,593
1,084,661
0
-47,456
-47,456
51,702
915,849
967,551
DKK thousand
Equity at January 1, 2022
Comprehensive income for the year
Net result for the year
Share-based compensation
Capital increases
Costs related to capital increases
Equity at December 31, 2022
Equity at January 1, 2021
39,800
1,137,289
1,177,089
Comprehensive income for the year
Net result for the year
Treasury shares
Share-based compensation
Capital increases
Costs related to capital increases
Equity at December 31, 2021
0 -1,004,603 -1,004,603
0
0
3,834
-70,190
-70,190
68,577
771,211
68,577
775,045
0
-46,896
-46,896
43,634
855,388
899,022
Zealand Pharma ∞ Annual Report 2022 Notes to the Financial statements of the parent company
Notes
Notes to the Financial statements of the parent company
1 Significant accounting policies, and significant accounting estimates and assessments
2 Revenue
98
Note disclosures have only been included in the Parent Financial Statement where amounts differ from
the Consolidation financial statement.
Total revenue from collaboration agreements
Significant accounting policies
Basis of preparation
The separate financial statement of the parent company have been prepared in accordance with Inter-
national Financial Reporting Standards as adopted by the EU (IFRS) 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.
Supplementary accounting policies for the Parent Company
Revenue from research and development services rendered to ZP SPV 3 K/S
Revenue from research and development services are performed and satisfied over time given that ZP
SPV 3 K/S simultaneously receives and consumes the benefits provided by Zealand Pharma A/S.
Investments in subsidiaries
Please refer to note 11 Investments in subsidiaries.
Please refer to note 2.1 in the consolidated financial statements for accounting policies for the revenue
streams.
Recognized revenue can be specified as follows for all agreements:
DKK thousand
2022
2021
Boehringer Ingelheim International GmbH
Alexion Pharmaceuticals Inc.
Novo Nordisk A/S
Protagonist Therapeutics Inc.
ZP SPV 3 K/S
Product sales - External
Product sales - Intercompany
Total net product sales
- Hereof related to discontinued operations
0
69,028
34,013
0
38,700
141,741
21,292
-10,791
10,501
10,501
22,311
30,185
0
25,380
9,187
87,063
0
168,713
168,713
168,713
Total net product sales from continuing operations
0
0
Total revenue from continuing operations
Total revenue recognized over time
Total revenue recognized at a point in time
141,741
87,063
114,881
39,372
37,361
216,404
Please refer to note 2.1 in the consolidated financial statements for additional information regarding
revenue.
Zealand Pharma ∞ Annual Report 2022 99
Notes to the Financial statements of the parent company
3
Information on staff and remuneration
DKK thousand
2022
2021
Total staff salaries can be specified as follows:
Wages and salaries
Share based payment costs
Pension schemes (defined contribution plans)
Government grants
Other payroll and staff-related costs
Total
The amount is charged as:
Research and development expenses
Administrative expenses
Other operating items
Discontinued operations
Total
Average number of employees
220,310
51,286
17,616
-5
5,682
217,995
39,890
18,700
-759
132
294,888
275,958
210,971
208,790
62,627
14,015
7,275
63,881
0
3,287
294,888
276,717
197
219
For remuneration to the Board of Directors please refer to note 4.8 in the consolidated financial state-
ments and for additional information regarding staff costs.
Zealand Pharma ∞ Annual Report 2022 Notes to the Financial statements of the parent company
3
Information on staff and remuneration (continued)
DKK thousand
2022
Remuneration to the Executive Management
Adam Sinding Steensberg1
Henriette Wennicke2
Emmanuel Dulac3
Matthew Donald Dallas4
Total
Total Other Corporate Management5
Total
2021
Remuneration to the Executive Management
Emmanuel Dulac3
Adam Sinding Steensberg1
Matthew Donald Dallas4
Total
Total Other Corporate Management5
Total
Base salary
Bonus
Pension
contribution
Other
short term
benefits
Share-based
compensation
Severance
payment
4,162
420
2,626
308
7,516
6,131
13,647
5,099
3,056
449
8,604
3,873
12,477
2,366
168
1,575
123
4,232
2,689
6,921
3,059
1,193
184
4,436
1,469
5,905
832
84
525
0
1,441
898
2,339
1,020
611
0
1,631
387
2,018
725
41
122
103
991
599
1,590
243
286
38
567
186
753
11,061
225
-3,265
0
8,021
10,569
18,590
12,182
4,829
0
17,011
4,791
21,802
0
0
6,564
0
6,564
0
6,564
0
0
0
0
0
0
100
Total
19,146
938
8,147
534
28,765
20,287
49,652
21,603
9,975
671
32,249
10,706
42,955
1 Former EVP, R&D and CMO Adam Sinding Steensberg was appointed CEO at March 30, 2022.
4 Former CFO Matthew Donald Dallas resigned from Zealand at August 31, 2022. He had tax obligations in Denmark, so a part of his salary was paid out in Denmark.
2 Henriette Wennicke was appointed as CFO at November 1, 2022.
5 Other Corporate Management in 2022 comprised four members (2021: three).
3 Former CEO Emmanuel Dulac resigned from Zealand at March 30, 2022.
Zealand Pharma ∞ Annual Report 2022
101
Notes to the Financial statements of the parent company
4 Financial items
DKK thousand
Interest income
Interest expenses and banking fees
Interest income from group companies
Loss on receivables to group companies
Fair value adjustments of other investments
Fair value adjustments of marketables securities
Currency exchange rate adjustments
Other financial epenses
Financial items in total
Presentation in financial statement
Financial income
Financial expense
5 Other operating items
2022
2021
DKK thousand
2022
2021
380
-6,031
7,682
-2,073
4,036
-1,164
24,805
0
27,442
6,788
-3,639
0
0
-8,217
1,852
40,258
-3,224
33,818
Restructuring costs - continuing operations
Insurance
Impairment Encycle IP rights
Loss on sale of fixed assets
Total other operating items from continuing operations
Divestment of V-GO
Restructuring costs - discontinued operations
Reversal of inventory write-off
Impairment of production equipment
Total other operating items from discontinued operations
-14,015
-37,033
-35,691
-1,449
-88,188
-3,072
-30,615
1,284
-9,730
-42,133
0
0
0
-2,161
-2,161
0
0
0
0
0
36,710
-9,268
48,898
-15,080
Impairment of Encycle IP rights is described further in note 8. Please refer to note 2.7 in the consoli-
dated financial statements for additional information regarding other operating items.
Please refer to note 4.7 in the consolidated financial statements for additional information regarding
financial items.
Zealand Pharma ∞ Annual Report 2022 Notes to the Financial statements of the parent company
102
7 Discontinued operations
Management's judgements and estimates
On March 30, 2022, the group announced its intension to exit the US sales activities including the V-Go
activity. The activities were successfully divested on May 29, 2022 through an asset purchase agreement
with MannKind Corporation. On September 7, 2022, the group announced the transfer of the commer-
cial rights for Zegalogue to Novo Nordisk effectually ending all efforts to commercialize the group's
products via own sales force. Management has determined that the activities to supply subsidiaries
with products and aquired services from subsidiaries related to commercialization of products via own
sales force met all the criteria for classification as a discontinued operation as of September 7, 2022.
Accordingly, the activities, including the effect of the divestment of the V-GO disposal group, has been
presented separately as a discontinued operation in the income statement.
6
Income tax
DKK thousand
Net result for the year before tax
Corporate tax rate in Denmark
Expected tax benefit
Adjustment for non-deductible expenses
Adjustment for non-taxable income
Adjustment for warrants
Adjustment for R&D extra deduction
Adjustment to prior years
Change in tax assets (not recognized)
Total income tax expense/(benefit)
Tax on equity
Warrants shareprice development
Change in tax assets (not recognized)
Total income tax expense (income)
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
2022
2021
-1,024,967
-1,011,529
22.0%
22.0%
-225,493
-222,536
868
0
6,274
-20,960
1,839
240,963
-5,005
-7,362
7,362
0
5,469
-8,084
6,501
-14,379
-5,143
231,247
-6,925
5,588
-5,588
0
3,299,214
2,231,010
956,816
71,540
105,961
-98,695
102,156
842,775
41,512
88,676
73,444
30,822
4,436,991
3,308,239
Please refer to note 11 in the consolidated financial statements for additional information regarding
income tax.
Zealand Pharma ∞ Annual Report 2022 Notes to the Financial statements of the parent company
103
7 Discontinued operations (continued)
The results and the cash flow of the discontinued activities are presented below as a discontinued oper-
ations for the period ended December 31, 2022 and December 31, 2021:
DKK thousand
Revenue
Cost of goods sold
Gross margin
Research and development expenses
Sales and marketing expenses
General and administrative expenses
Other operating items
Total Operating expenses
Result before tax
2022
2021
10,546
-41,113
-30,567
168,713
-121,240
47,473
-4,035
-10,780
-129,827
-292,054
-17,014
-42,132
-18,032
0
-193,008
-320,866
-223,575
-273,393
Net result from discontinued operations
-223,575
-273,393
Lease liabilities
All assets and liabilities included in the V-Go disposal group was derecognized as of May 29, 2022 with
the closure of the asset purchase agreement with MannKind. As a result, no assets or liabilities are clas-
sified as held for sale in relation to the discontinued operation as of December 31, 2022.
The derecognized assets and liabilities, recognized consideration and net impact on profit and loss from
the divestment of V-Go are presented below:
DKK thousand
Assets included in disposal group
Property, plant and equipment
Right-of-use assets
Deposits and prepayments
Inventories
Total assets of disposal group
Liabilities directly associated with assets included in disposal group
Total liabilities of disposal group
Net assets of disposal group
Consideration:
Cash consideration
May 29, 2022
19,380
9
665
54,085
74,139
19
19
74,120
67,828
-3,353
6,573
71,048
-3,072
DKK thousand
2022
2021
Cash flows from discontinued operations
Net cash inflow (outflow) from operating activities
Net cash inflow (outflow) from investing activities
Net cash (outflow) from financing activities
Net cash increase (decrease) generated from
the discontinued operation
-17,717
64,383
0
-146,218
-1,585
Purchase price adjustment
Other financial assets
0
Total consideration
46,666
-147,803
Net loss - recognized as other operating items from discontinued operations
Zealand Pharma ∞ Annual Report 2022 Notes to the Financial statements of the parent company
8
Intangible assets
DKK thousand
Cost at January 1, 2022
Transfer to V-GO disposal group (Note 7)
Disposals
Cost at December 31, 2022
Depreciations and impairment at January 1, 2022
Transfer to V-GO disposal group
Impairment
Disposals
Depreciation and impairment at December 31, 2022
Carrying amount at December 31, 2022
Licenses
rights and
patents
41,167
-5,476
-35,691
DKK thousand
Cost at January 1, 2021
Additions
Retirements
0
Cost at December 31, 2021
5,476
-5,476
35,691
Depreciations and impairment at January 1, 2021
Depreciation for the year
Impairment
-35,691
Depreciation and impairment at December 31, 2021
0
0
Carrying amount at December 31, 2021
Depreciation and impairment for the financial year has been charged as:
Depreciation and impairment for the financial year has been charged as:
Research and development expenses
Other operating items
Total
35,691
35,691
Sale and marketing expenses
Administrative expenses
Licenses, rights and patents at January 1, 2022, comprised the license to the lead product candidate
acquired with Encycle Therapeutics in October 2019. During 2022 the development program with the
lead candidate was abandoned and it was decided to move on with another product candidate from the
same patent instead. As a result the recognized asset was impaired and disposed.
Total
104
Licenses
rights and
patents
41,167
0
0
41,167
5,476
0
0
5,476
35,691
0
0
0
0
Zealand Pharma ∞ Annual Report 2022 105
Notes to the Financial statements of the parent company
9 Property, plant and equipment
DKK thousand
Cost at January 1, 2022
Transfer
Additions
Transfer to V-GO disposal group (note 7)
Retirements
Cost at December 31, 2022
Accumulated depreciation at January 1, 2022
Depreciation for the year
Impairment for the year
Transfer to V-GO disposal group (note 7)
Retirements
Accumulated depreciationat December 31, 2022
Carrying amountat December 31, 2022
Depreciation for the financial year has
been charged as:
Research and development expenses
General and administrative expenses
Other operating items
Discontinued operations
Total
Plant and
machinery
Other
fixtures and
fittings
Building
improve-
ments
Assets
under con-
struction
DKK thousand
Plant and
machinery
Other
fixtures and
fittings
Building
improve-
ments
Assets
under con-
struction
90,778
268
2,985
-25,770
-1,433
66,828
54,201
7,901
742
-9,072
-1,433
52,339
14,489
6,214
0
742
1,687
8,643
14,349
34,897
0
72
-268
0
0
293
0
0
14,153
35,190
8,388
2,749
0
0
-150
10,987
3,166
2,315
406
0
28
4,703
2,843
0
0
0
7,546
27,644
2,417
426
0
0
2,749
2,843
7,343
-268
6,088
-2,563
-9,730
870
0
0
9,730
-9,730
0
0
870
0
0
0
9,730
9,730
Cost at January 1, 2021
85,877
12,706
32,448
Transfer
Additions
Retirements
Cost at December 31, 2021
Accumulated depreciation at January 1, 2021
Depreciation for the year
Retirements
Accumulated depreciationat December 31, 2021
Carrying amountat December 31, 2021
Depreciation for the financial year has
been charged as:
Discontinued operations
Research and development expenses
Administrative expenses
Total
949
7,118
-3,166
90,778
43,977
11,551
-1,327
54,201
36,577
7,143
3,621
786
11,550
204
1,444
-5
0
2,449
0
14,349
34,897
5,711
2,681
-4
8,388
5,961
117
2,564
0
2,681
1,988
2,715
0
4,703
30,194
0
2,716
0
2,716
3,022
-1,153
5,893
-419
7,343
0
0
0
0
7,343
0
0
0
0
Please refer to note 3.2 in the consolidated financial statements for additional information regarding
property, plant and equipment.
Zealand Pharma ∞ Annual Report 2022 Notes to the Financial statements of the parent company
10 Right-of-use assets and lease liabilities
Amounts recognized in the statement of financial position
The statement of financial position shows the following amounts relating to lease assets:
Set out below are the carrying amounts of lease liabilities and the movements
during the period.
DKK thousand
As at January 1, 2022
Additions
Transfer to V-GO disposal group (note 7)
Depreciation
As at December 31, 2022
As at January 1, 2021
Additions
Depreciation expense
As at December 31, 2021
Other
fixtures and
fittings
1,623
736
0
-778
1,581
1,178
1,511
-1,066
1,623
Buildings
106,158
0
-9
-10,159
95,990
116,824
0
-10,666
106,158
DKK thousand
As at January 1
Additions
Accretion of interest
Transfer to V-GO disposal group (note 7)
Payments
As at December 31
Current
Non-current
The following are the amounts recognized in profit and loss:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Total amount recognized in profit and loss
Cashflow
Total cash outflow for leases
106
2022
2021
111,455
119,848
689
2,207
-19
-11,714
102,618
11,522
91,096
1,418
2,449
0
-12,260
111,455
11,686
99,769
-10,937
-2,207
-13,144
-11,732
-2,449
-14,181
-11,714
-11,714
-12,260
-12,260
Zealand Pharma ∞ Annual Report 2022 107
2022
1,286
0
0
1,286
2021
35,816
29,498
13,453
78,767
12 Inventories
Inventories were comprised as follows:
DKK thousand
Raw materials
Work in process
Finished goods
Total
Notes to the Financial statements of the parent company
11 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 written down to
recoverable amount.
DKK thousand
Cost at January 1
Cost at December 31
Carrying amount at December 31
2022
2021
62,228
62,228
62,228
62,228
62,228
62,228
DKK thousand
Voting Domicile Ownership
Rights
Zealand Pharma A/S subsidiaries:
ZP Holding SPV K/S
ZP General Partner 1 ApS
Zealand Pharma US, 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
Zealand Pharma US Inc. subsidiary
Zealand Pharma California US, LLC.
Denmark
Denmark
United States
Denmark
Denmark
Denmark
Denmark
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
United States
100%
100%
Write downs recognized on inventories were reflected in the cost of goods sold. They were comprised
as follows:
DKK thousand
Accumulated write downs, January 1
Write downs in the reporting period
Utilization of write downs
Reversal of write downs
Accumulated write downs, December 31
2022
2021
-12,813
-30,615
9,887
1,284
-16,426
-8,089
11,702
0
-32,257
-12,813
Please refer to note 3.5 in the consolidated financial statements for additional information regarding
inventory.
Zealand Pharma ∞ Annual Report 2022 Notes to the Financial statements of the parent company
13 Trade and other receivables
15 Fees to auditors appointed at the annual general meeting
DKK thousand
2022
2021
DKK thousand
108
2022
2021
4,880
1,310
389
6,579
3,728
780
361
4,869
Audit
Audit-related services and other assurance engagements
Other
Total fees
16 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 compa-
nies and Zealand Pharma A/S is likewise liable for any obligations to withhold tax at source on interest,
royalties and returns for the jointly taxed companies.
The parent company has provided floating charge collateral covering with all assets in the company
which can be collateralized, including shares in subsidiaries, as collateral for the debt to Oberland.
Please refer to note 6.5 in the consolidated financial statements for information on commitments.
Receivables related to collaboration agreements
Intercompany receivables
Deposits
Other receivables
Prepaid expenses
Total trade and other receivables
Non-current
Current
14 Trade and other payables
DKK thousand
Trade payables
Employee benefits
Accruals development projects
Treasury share payables
Intercompany payables
Other payables
Total trade and other payables
Non-current:
Current
56,431
170,931
8,900
1,454
54,083
13,546
144,904
8,920
1,866
75,628
291,799
244,864
157,039
134,760
161,193
83,671
2022
2021
51,803
50,275
34,063
41,600
1,425
3,166
54,859
52,736
22,547
41,600
59,078
10,429
182,332
241,249
19,058
163,274
18,426
222,823
Zealand Pharma ∞ Annual Report 2022 Notes to the Financial statements of the parent company
17 Transactions with related parties
19 Change in working capital
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 6.1 in the consolidated financial statements for
remuneration of Board of Directors. Refer to note 3 in these parent company financial statements for
remuneration of the executive management team.
The parent company had the following transactions with subsidiaries:
DKK thousand
Increase/decrease in receivables
Increase/decrease in inventory
Increase/decrease in payables
Change in working capital
109
2022
2021
-106,679
-184,413
23,396
29,571
-33,067
-39,577
-53,712
-257,057
20 Significant events after the balance sheet date
Please refer to note 6.9 in the consolidated financial statements.
DKK thousand
Revenue
Research and development expenses
Sale and marketing expenses
Admin Expenses
Financial items
Discontinued operations
18 Adjustments for non-cash items
DKK thousand
Depreciation
Share-based compensation expenses
Deferred revenue
Corporate tax
Financial items
Exchange rate adjustments
Total adjustments
2022
2021
38,701
-26,337
-32,285
-69,955
5,609
9,186
50,184
-74,456
-74,380
6,744
-156,638
-44,904
2022
2021
70,572
51,286
-67,584
-5,005
-27,443
-8,777
13,049
30,936
68,577
-30,185
1,426
6,833
19,451
97,038
Zealand Pharma ∞ Annual Report 2022 Alternative performance measures for the Group (non-audited)
Alternative performance measures for the Group (non-audited)
Alternative performance measures for the Group (non-audited)
110
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. There-
fore, 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 oper-
ating activities.” The table below shows a reconciliation of free cash flow for 2022, 2021 and 2020:
DKK thousand
2022
2021
2020
Cash (outflow)/inflow from operating activities
-942,209
-1,211,971
-688,716
Less purchase of property, plant and equipment
-11,710
-22,133
-25,044
Free cash flow
-953,919
-1,234,104
-713,760
Equity ratio
Equity ratio is calculated as equity at the balance sheet date divided by total assets at the balance sheet
date.
Market capitalization
Market capitalization is calculated as weighted outstanding shares at the balance sheet date times the
share price at the balance sheet date.
Equity per share
Equity per share is calculated as shareholders' equity divided by weighted total number of shares less
weighted treasury shares.
Zealand Pharma ∞ Annual Report 2022 Reports
Statement
of the Board
of Directors
and Executive
Management
111
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, 2022.
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 consolidated financial statements and parent company
financial statements give a true and fair view of the Group’s and the
parent company’s financial position as of December 31, 2022, and of
the results of the Group’s and the parent company’s operations and
cash flows for the financial year January 1 – December 31, 2022.
In our opinion, the Management’s review includes a fair review of
the development of the Group’s and the parent company’s oper-
ations 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.
In our opinion, the Annual Report of Zealand Pharma A/S for
the financial year January 1 - December 31, 2022 identified as
549300ITBB1ULBL4CZ12-2022-12-31-en.zip has in all material
respects been prepared in compliance with the ESEF Regulation.
We recommend that the Annual Report be approved at the Annual
General Meeting.
Søborg, March 2, 2023
Executive Management
Adam Sinding Steensberg
President and
Chief Executive Officer
Henriette Wennicke
Executive Vice President and
Chief Financial 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
Frederik Barfoed Beck
Board member
Employee elected
Anneline Nansen
Board member
Employee elected
Michael John Owen
Board member
Iben Louise Gjelstrup
Board member
Employee elected
Jens Peter Stenvang
Board member
Employee elected
Zealand Pharma ∞ Annual Report 2022 Independent
auditor’s report
112
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 statements and the
parent company financial statements of Zealand Pharma A/S for
the financial year January 1 – December 31, 2022, which comprise
income statement, statement of comprehensive income, state-
ment of financial position, statement of cash flow, statement of
changes in equity and notes, including accounting policies, for the
Group and the Parent Company. The consolidated financial state-
ments and the parent company financial statements are prepared
in accordance with International Financial Reporting Standards
as adopted by the EU and additional requirements of the Danish
Financial Statements Act.
Independence
We are independent of the Group in accordance with the Interna-
tional Ethics Standards Board for Accountants' International Code
of Ethics for Professional Accountants (IESBA Code) and the addi-
tional ethical requirements applicable in Denmark, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code.
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. We have been reappointed
annually by resolution of the general meeting for a total consec-
utive period of three years up to and including the financial year
2022.
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, 2022 and of the results of the Group's and the
Parent Company's operations and cash flows for the financial year
January 1 – December 31, 2022 in accordance with International
Financial Reporting Standards as adopted by the EU and additional
requirements of the Danish Financial Statements Act.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the finan-
cial statements for the financial year 2022. 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.
Our opinion is consistent with our long-form audit report to the
Audit Committee and the Board of Directors.
Basis for opinion
We conducted our audit in accordance with International Stand-
ards on Auditing (ISAs) and additional requirements applicable in
Denmark. Our responsibilities under those standards and require-
ments 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 evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
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 included 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 statements.
Accounting for discontinued operations for the sale of the
V-Go and Zegaloge Activities
On March 30, 2022, the group announced its intention to exit the
US sales activities including the V-Go activity. The activities were
Zealand Pharma ∞ Annual Report 2022 divested on May 29, 2022 through an asset purchase agreement
with MannKind Corporation. On September 7, 2022, the group
announced the transfer of the commercial rights for Zegalogue
to Novo Nordisk A/S through a global license and development
agreement effectually ending all efforts to commercialize the
group’s products via own sales force. Management has determined
that the activities around commercialization of V-Go and Zega-
logue products via own sales force met all the criteria for classifi-
cation as a discontinued operations in accordance with IFRS 5. As
such, the results from these activities are separately classified as
“discontinued” for all periods presented within the income state-
ment of the financial statements as required by IFRS 5.
Given the significant judgments exercised by management in
applying IFRS 5 as a result of the divestment of the US sales activ-
ities, including the V-Go activity and the transfer of the commer-
cial rights for Zegalogue, the performance of audit procedures to
evaluate management’s identification of the cash generating units
being disposed of, and procedures over presentation of results
from discontinued operations for all periods presented in the
financial statements required a high degree of auditor judgement
and increased extent of audit effort.
How our audit addressed the key audit matter
Our audit procedures related to the identification of the cash
generating units being disposed of and procedures over pres-
entation of results from discontinued operations for all periods
presented in the financial statements, included the following:
• obtaining an overall understanding of management’s identifica-
tion of the cash generating units being disposed off,
• test of the net results from divestment of the US sales activities
related to commercialization of V-Go and Zegalogue products via
own sales force including, among others, audit procedures over
the existence and valuation of considerations received; inspecting
the related agreements to obtain an understanding of the assets
and liabilities included in the scope of the two divestments;
testing of the completeness and accuracy of assets and liabil-
ities included in the net result calculation on a sample basis by
comparing amounts to the Group’s accounting records,
• test of management’s segregation of results from discontinued
operations from results from continued operations for all periods
presented.
Accounting for lender call option embedded into the Oberland
loan agreement
In 2021, the Group entered into a USD 100 million loan agreement
with Oberland. During the financial year 2022, the loan agree-
ment with Oberland has been amended twice. As part of these
amendments, the Group has provided Oberland an option to
require partial early repayment of the outstanding debt in the event
that the Group completes a qualifying sale of assets. Thus, under
the agreement Oberland can require that up to 75% of the net
proceeds from sale of assets is used to early repay the loan (“the
lender call option”).
Management has assessed the entire Oberland contract and
related amendments for non-closely related embedded derivatives
and has concluded that the lender call option is not closely related
to the debt host contract because the lender call option amount
may differ with more than an insignificant amount from the debts
amortized cost. The lender call option is measured at fair value
based on unobservable data (level 3).
Given the significant estimation exercised by management in fair
value measuring of the lender call option based on unobservable
data (level 3), the performance of audit procedures over valuation
of the lender call option required a high degree of auditor judge-
ment and increased extent of audit effort.
How our audit addressed the key audit matter
Our audit procedures related to the fair value measurement of
lender call option included the following:
• obtaining an overall understanding of management’s identifica-
tion of embedded derivatives in debt arrangement and process for
establishing fair value of the lender call option obligation based
on unobservable inputs, including interest rate assumptions and
assumptions regarding a future potential sale of assets such as:
likelihood of ability to enter into a qualifying asset sale; estimated
113
"net proceeds" of a future collaboration agreement; and timing of
potential execution of collaboration agreement,
• inspection and reading the note purchase agreement with Ober-
land and related amendments,
• test of the unobservable data in respect of ability to enter into
a qualifying asset sale through inquiries to management and
inspection of internal and external supporting evidences related to
business development activities and ability to execute a relevant
future collaboration agreement,
• test of management’s disclosures regarding lender call option and
related sensitivity disclosures related to key unobservable data,
such as interest assumptions and timing of potential execution of
collaboration agreement.
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 express any form of assur-
ance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the Management's review and, in doing so,
consider whether the Management's review is materially incon-
sistent with the financial statements or our knowledge obtained
during the audit, or otherwise appears to be materially misstated.
Moreover, it is our responsibility to consider whether the Manage-
ment'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 state-
ments and has been prepared in accordance with the requirements
of the Danish Financial Statements Act. We did not identify any
material misstatement of the Management's review.
Zealand Pharma ∞ Annual Report 2022 Management's responsibilities for the financial statements
Management is responsible for the preparation of consolidated
financial statements and parent company financial statements
that give a true and fair view in accordance with International
Financial Reporting 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
accounting in preparing the financial statements unless Manage-
ment either intends to liquidate the Group or the Parent Company
or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial state-
ments
Our objectives are to obtain reasonable assurance as to whether
the financial statements as a whole are free from material misstate-
ment, 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 aggregate, 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 addi-
tional requirements applicable in Denmark, we exercise profes-
sional judgement and maintain professional scepticism throughout
the audit. We also:
• Identify and assess the risks of material misstatement 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,
misrepresentations or the override of internal control.
• Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Group's and the Parent Company's
internal control.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures
made by Management.
• 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 Compa-
ny's ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention
in our auditor's report to the related disclosures in the finan-
cial statements or, if such disclosures are inadequate, 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 statements represent the underlying transactions and
events in a manner that gives a true and fair view.
• Obtain sufficient appropriate audit evidence regarding 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 and
114
performance of the group audit. We remain solely responsible for
our audit opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with a state-
ment that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all rela-
tionships and other matters that may reasonably be thought to
bear on our independence, and where applicable, actions taken to
eliminate threats or safeguards applied.
From the matters communicated with those charged with govern-
ance, we determine those matters that were of most significance
in the audit of the consolidated financial statements and the parent
company financial statements of the current period and are there-
fore the key audit matters. We describe these matters in our audi-
tor's report unless law or regulation precludes public disclosure
about the matter.
Report on compliance with the ESEF Regulation
As part of our audit of the Consolidated Financial Statements and
Parent Company Financial Statements of Zealand Pharma A/S,
we performed procedures to express an opinion on whether the
annual report of Zealand Pharma A/S for the financial year January
1 –December 31, 2022 with the file name 549300ITBB1UL-
BL4CZ12-2022-12-31-en.zip is prepared, in all material respects,
in compliance with the Commission Delegated Regulation (EU)
2019/815 on the European Single Electronic Format (ESEF Regula-
tion) which includes requirements related to the preparation of the
annual report in XHTML format and iXBRL tagging of the Consoli-
dated Financial Statements including notes.
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;
Zealand Pharma ∞ Annual Report 2022 115
• Reconciling the iXBRL tagged data with the audited Consolidated
Financial Statements.
In our opinion, the annual report of Zealand Pharma A/S for the
financial year January 1 – December 31, 2022 with the file name
549300ITBB1ULBL4CZ12-2022-12-31-en.zip is prepared, in all
material respects, in compliance with the ESEF Regulation.
Copenhagen, March 2, 2023
EY Godkendt Revisionspartnerselskab
Christian Schwenn Johansen
State Authorised
Public Accountant
mne33234
Rasmus Bloch Jespersen
State Authorised
Public Accountant
mne35503
• The selection and application of appropriate iXBRL tags, including
extensions to the ESEF taxonomy and the anchoring thereof to
elements in the taxonomy, for all financial information required to
be tagged using judgement where necessary;
• Ensuring consistency between iXBRL tagged data and the Consol-
idated Financial Statements presented in human readable format;
and
• 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 material respects, in compli-
ance 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 mate-
rial departures from the requirements set out in the ESEF Regula-
tion, whether due to fraud or error. The procedures include:
• 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 tagging process;
• Evaluating the completeness of the iXBRL tagging of the Consoli-
dated Financial Statements including notes;
• Evaluating the appropriateness of the company’s use of iXBRL
elements selected from the ESEF taxonomy and the creation
of extension elements where no suitable element in the ESEF
taxonomy has been identified;
• Evaluating the use of anchoring of extension elements to
elements in the ESEF taxonomy; and
Zealand Pharma ∞ Annual Report 2022 116
Other
information
Zealand Pharma ∞ Annual Report 2022 117
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.
44 Farnsworth Street
4th Floor
Boston, MA 02210
info@zealandpharma.com
www.zealandpharma.com
Established
1998
Registered office
Gladsaxe
Auditors
EY Godkendt Revisionspartnerselskab
CVR no.: 30 70 02 28
Zealand Pharma ∞ Annual Report 2022 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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