Changing lives with next-generation
peptide therapeutics
Annual Report
2023
Zealand Pharma A/S
Sydmarken 11
DK-2860 Søborg
Company reg. no. 20045078
Contents
2
Contents
Management review
Financial statements
The big picture
Our business
Sustainability:
Our patients, people and operations
Corporate Governance
3
12
29
45
Consolidated financial statements
80
Financial statements of the parent company
139
Reports
Other information
156
160
See our pipeline
Read more on page 15
Obesity
Read more on pages 16-18
Other supplementary
reports 2023
Remuneration Report
Follow us
Zealand Pharma ∞ Annual Report 2023 The big picture
Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
3
The big
picture
Our purpose
Zealand Pharma at a glance
Letter from the CEO and the Chair
2023 Achievements
Financial highlights and key figures
2024 Outlook and objectives
4
5
6
9
10
11
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
4
Our purpose
Changing lives
with next-generation
peptide therapeutics
Our ambition
is to be the world's best peptide drug
discovery and development company.
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
5
Zealand Pharma at a glance
Find out more about Zealand at
zealandpharma.com/about-us
Zealand Pharma A/S was founded in 1998 and is a biotechnology company focused on the
discovery, design and development of innovative peptide-based medicines.
25 years
of expertise in peptide R&D with a validated platform that has delivered two drugs
to market and a rich pipeline of both clinical and pre-clinical programs.
Our strategy
is to pursue global co-development and commercialization
partnerships that complement and extend our capabilities to
bring new medicine to patients with unmet medical needs.
Employees
as of December 31, 2023, with 80% in research and
development and related functions.
253
4
R&D focus areas include
becoming a key player in the fast-
developing obesity space
leading in the rare diseases
congenital hyperinsulinism and
short bowel syndrome
advancing potential treatment
options for chronic inflammatory
diseases and type 1 diabetes
expanding our pipeline through
in-house research and external
opportunities
Zealand Pharma ∞ Annual Report 2023
Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
6
Letter from the CEO
and the Chair
In 2023, we celebrated 25 years as a
biotechnology company focused on the
discovery, design and development of
peptide therapeutics. It was an extraordinary
year for Zealand Pharma. We delivered on
key strategic objectives, including significant
advancement of our obesity portfolio, two
regulatory submissions to the US FDA for
our rare disease assets, and a strengthened
financial position, all of which pave the way
for a very exciting 2024.
Positioning our differentiated obesity portfolio
By focusing on R&D, we have been able to prioritize
investments and organizational resources in our differ-
entiated obesity assets, which we believe hold substantial
value potential and could represent some of the thera-
peutic keys needed to unlock solutons for the greatest
healthcare challenge of our time: the obesity pandemic.
In 2023, we reported clinical data that have helped to
position and significantly increase our confidence in our
Martin Nicklasson
Chair of
the Board of Directors
Adam Steensberg
President and
Chief Executive Officer
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
7
differentiated obesity portfolio. We highlighted these data,
along with the scientific rationale behind our programs,
at an R&D Event in December that featured key external
experts in the field of obesity.
Survodutide - differentiated glucagon/
GLP-1 receptor dual agonist
In 2023, our partner Boehringer Ingelheim reported data
from the Phase 2 trial in people living with overweight or
obesity with survodutide, the glucagon/GLP-1 receptor
dual agonist co-invented with Zealand Pharma. After 46
weeks, survodutide dose-dependently reduced body
weight by up to 18.7% on average. Of note, the weight loss
had not plateaued by the end of treatment on the trial,
indicating potential for additional weight loss in trials of
longer duration. Boehringer subsequently initiated a Phase
3 program with survodutide in people living with over-
weight or obesity, SYNCHRONIZETM, which includes three
global registrational trials. If successful, Boehringer and
Zealand could be third to market in this new era of weight-
loss medications. Finally, positive topline results reported
from the Phase 2 trial in metabolic dysfunction-associated
steatohepatitis, or MASH, provide evidence of clear differ-
entiation and potentially position survodutide as a leading
GLP-1-containing weight-loss medication in the future.
Dapiglutide - first-in-class GLP-1/
GLP-2 receptor dual agonist
Our first-in-class GLP-1/GLP-2 receptor dual agonist,
dapiglutide, adds GLP-2 pharmacology to a potent GLP-1
receptor agonist, designed to improve gut integrity and
address low-grade inflammation that is associated with
obesity and can result in several comorbidities, including
cardiovascular disease, liver disease, and neuro-inflam-
mation. Dapiglutide is being evaluated in two clinical trials
initiated in 2023, the Phase 2a investigator-led DREAM trial
and a company-sponsored Phase 1b dose-titration trial.
The data from these trials are expected in 2024 and will
provide insights into the effects of dapiglutide on body
weight as well as biomarkers of inflammation.
Petrelintide - long-acting amylin analog
We believe that long-acting amylin analogs may represent
an alternative to GLP-1 receptor agonists for the treatment
of overweight and obesity. Used as monotherapy, long-
acting amylin analogs have the potential to achieve GLP-1
receptor agonist-like weight loss, but with improved tolera-
bility and the potential to offer a better patient experience.
Pre-clinical data also suggest a high-quality weight loss
with the preferential loss of fat and a preservation of lean
muscle mass. We believe our long-acting amylin analog,
petrelintide, shows potential to be best-in-class. In March,
we reported data from the first-in-human clinical trial with
petrelintide, demonstrating an average weight loss of 4.2%
(4.8% placebo-corrected) at day 7 after a single subcuta-
neous 2.4 mg dose. Subsequently in July, clinical data from
Part 1 of a multiple ascending dose (MAD) trial, six, once-
weekly, low doses of 0.6 mg and 1.2 mg of petrelintide led
to average weight loss above 5%. Petrelintide was well-tol-
erated with no serious or severe treatment-emergent
adverse events and no withdrawals. Importantly, all gastro-
intestinal events reported in the trial were mild. We are now
Important data read-out
"We believe our long-acting
amylin analog, petrelintide,
shows potential to be best-in-
class. We are now investigating
significantly higher doses of
petrelintide over 16 weeks in
Part 2 of the MAD trial and
anticipate these important
results in the first half of 2024."
Watch the recording of our Obesity
R&D Event on December 5, 2023
https://event.webcasts.
com/viewer/landing.
jsp?ei=1647538&tp_key=93047ac522
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
8
Strong financial position
"Despite the challenging
financing environment
for many biotechnology
companies, we have
significantly strengthened
our financial position to
invest in our R&D pipeline."
investigating significantly higher doses of petrelintide over
16 weeks, in Part 2 of the MAD trial, and anticipate these
important results in the first half of 2024.
Approaching patients with our rare disease assets
During 2023, we submitted New Drug Applications to the
US FDA for dasiglucagon, our glucagon analog, for the
treatment of congenital hyperinsulinism (CHI) and glepa-
glutide, our long-acting GLP-2 analog, for the treatment
of short bowel syndrome (SBS).
In the first half of 2024, we expect to resubmit the appli-
cation for dasiglucagon in CHI for up to three weeks
of dosing, contingent on a successful reinspection of
the third-party manufacturing site where the FDA has
identified deficiencies to be addressed. Importantly, the
deficiencies were not specific to dasiglucagon, and no
concerns regarding the clinical trial conduct and clinical
data package for dasiglucagon were cited. The third-party
manufacturer believes it has resolved these deficiencies
and is ready for a reinspection. Also in the first half of
2024, we look forward to continued dialogue with the FDA
as we work to complete the second part of the New Drug
Application covering use of dasiglucagon beyond three
weeks of dosing.
Separately, we expect the US FDA to notify us of the
PDUFA date for glepaglutide in SBS in the coming weeks.
In parallel with these regulatory activities, and in line with
our strategy to focus on R&D, we will pursue agreements
with commercial partners for both our rare disease assets
so that these treatments may reach as many patients as
possible.
Strong financial position to support
an exciting and eventful 2024
Despite the challenging financing environment for many
biotechnology companies, we have significantly strength-
ened our financial position to invest in our R&D pipeline.
In April, we raised DKK 1.5 billion (USD ~220 million) from
a directed issue and private placement of 6,578,948 new
ordinary shares. We also simplified our balance sheet,
repaying a loan to Oberland Capital in full and securing
a new credit facility provided by Danske Bank, which is
undrawn. In December, we were proud to announce the
backing from the European Investment Bank, supporting
the continued journey of Zealand Pharma with a EUR
90 million finance agreement. During 2023, we received
milestone payments from existing partners, including
Boehringer Ingelheim, Sanofi and Novo Nordisk. Finally, in
January 2024, we announced a directed issue and private
placement to two reputable institutional investors, raising
an additional DKK 1.45 billion (USD 214 million) to further
strengthen the investment in our differentiated obesity
assets. As we embark on a very exciting 2024, we believe
we are very well-positioned to invest significantly in our
differentiated obesity assets and advance our rare disease
assets towards patients.
Dr. Alain Munoz and Dr. Mike Owen will step down from
the Board of Directors at the next AGM. As exemplary
members of the Board, they have made substantial contri-
butions and helped to steer Zealand's robust pipeline to
its present success. We thank them for their dedicated
service and wise counsel over the years.
Finally, we thank our dedicated colleagues who have
contributed to the company's success in the past year, the
patients and their caregivers who have taken part in our
clinical trials, as well as our partners and our shareholders
for their continued support of Zealand Pharma.
Martin Nicklasson
Chair of
the Board of Directors
Adam Steensberg
President and
Chief Executive Officer
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
9
2023 Achievements
In 2023, we delivered on our strategic objectives and achieved significant pipeline progress.
2023 Achievement
Advanced obesity portfolio
Survodutide (glucagon/GLP-1 receptor dual agonist)
• Boehringer Ingelheim and Zealand Pharma reported positive Phase 2 results with survodutide in people living with overweight or obesity
• Boehringer Ingelheim initiated the Phase 3 program SYNCHRONIZETM with survodutide in people living with overweight or obesity
Petrelintide (long-acting amylin analog)
• Reported positive results with petrelintide from both the single ascending dose trial and Part 1 of the multiple ascending dose trial (6-week trial)
• Initiated Part 2 of the multiple ascending dose trial with petrelintide, investigating significantly higher doses in people living with overweight or obesity over a longer
duration (16 weeks) using a dose-escalation scheme
Dapiglutide (GLP-1/GLP-2 receptor dual agonist)
• Investigator-led Phase 2a trial DREAM, investigating the effects of dapiglutide on body weight, gut permeability, and inflammation, was initiated
• Initiated the 13-week Phase 1b dose-titration trial with dapiglutide, investigating higher doses than the previous multiple ascending dose trial and the DREAM trial
Progressed rare disease assets
towards regulatory submission
Dasiglucagon in congenital hyperinsulinism
• Submitted New Drug Application to the US FDA for dasiglucagon in congenital hyperinsulinism
Glepaglutide in short bowel syndrome
• Submitted New Drug Application to the US FDA for glepaglutide in short bowel syndrome
Ensured Phase 1 readiness
for inflammation assets
• Completed pre-clinical activities with ZP10068 (complement C3 inhibitor in collaboration with Alexion Pharmaceuticals) to ensure Phase 1 readiness
• Completed pre-clinical activities with ZP9830 (Kv1.3 Ion Channel Blocker) to ensure Phase 1 readiness
Strengthened financial position
• Met financial guidance on Net Operating Expenses between DKK 800-900 million
• Extended cash runway into 2027, driven by a capital raise of DKK 1.5 billion, a loan facility with the European Investment Bank of DKK 670 million, and a Revolving Credit
facility of DKK 350 million provided by Dansle Bank, as well as a capital raise of DKK 1.45 billion in early January 2024
Other significant activities
• Submitted the marketing authorization application to the European Medicines Agency for dasiglucagon injection
for the treatment of severe hypoglycemia in people with diabetes
• Advanced double materiality assessment to identify ESG focus areas, forming the basis of refined ESG strategy
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
10
Financial highlights and key figures
DKK thousand
2023
2022
2021
2020
2019
DKK thousand
2023
2022
2021
2020
2019
Income statement
Revenue
Royalty expenses
Gross profit
Research and development
expenses
342,788
-9,138
103,986
-
323,614
103,986
108,546
-10,970
97,576
192,001
-
192,001
41,333
-415
40,918
Statement of financial position
Cash and cash equivalents
449,311
1,069,234
1,129,103
960,221
1,081,060
Marketable securities
Cash, cash equivalents
and marketable securities
Total assets
1,183,746
108,611
299,042
297,345
299,448
1,633,057
1,177,845
1,428,145
1,257,566
1,380,508
1,979,993
1,539,806
2,067,629
1,761,949
1,599,514
-684,902
-614,044
-581,511
-595,847
-561,423
Total shareholders' equity
1,592,839
815,911
927,803
1,229,311
1,242,673
Sales and marketing expenses
-30,627
-32,298
-62,600
-20,795
-
General and administrative
expenses
-185,302
-237,210
-235,609
-201,594
-67,881
Cash used in operating activities
-425,668
-942,311 -1,211,971
-688,716
-409,455
Cash flow
Other operating items
4,979
-57,587
-2,173
-
444
Net operating expenses
-895,852
-941,139
-881,893
-818,838
-628,860
Cash (used in)/provided by investing
activities
-1,094,033
281,259
-18,121
-196,807
-51,666
Operating result
-572,238
-837,153
-784,317
-626,235
-587,942
Net financial items
Result before tax
-136,627
-134,888
25,430
-47,292
11,265
-708,865
-972,041
-754,887
-673,527
-576,677
Corporate tax
5,126
6,431
3,949
4,814
5,136
Cash provided by financing
activities
Purchase of intangible assets
Purchase of property, plant
and equipment
907,014
-12,508
587,500
1,332,751
760,941
674,480
-
-
-
-
-11,241
-11,710
-22,133
-25,044
-21,036
Free cash flow
-436,909
-954,021 -1,234,104
-713,760
-430,491
-703,739
-965,610
-754,938
-668,713
-571,541
Other
Net result for the year from
continuing operations
Net result for the year from
discontinued operations
-
-236,525
-263,211
-178,016
-
Net result for the year
-703,739
-1,202,135
-1,018,149
-846,729
-571,541
Loss per share from continuing
operations, basic/diluted (DKK)
Loss per share, basic/diluted (DKK)
-12.44
-12.44
-20.90
-26.02
-17.61
-23.75
-17.43
-22.07
-16.91
-16.91
Undrawn borrowing facilities (note 4.2)
722,645
Share price (DKK)
Number of shares ('000 shares)
Market capitalization (MDKK)
Equity ratio (%)
Equity per share (DKK)
Average number of full time
employees
Number of full-time employees
at the end of the year
373.2
58,751
21,787
80%
27.28
235
253
-
201.4
51,702
9,305
53%
17.66
247
196
-
145.1
43,634
6,220
45%
21.26
346
355
-
220.6
39,800
8,464
70%
32.04
297
329
-
235.4
36,055
8,487
78%
34.52
173
179
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
11
2024 Outlook and objectives
In 2024 we are focused on maximizing the value potential of our pipeline.
2024 Objectives
Advance obesity portfolio
Survodutide
• Boehringer Ingelheim to report data from Phase 2 trial in NASH
• Boehringer Ingelheim to enroll patients in Phase 3 obesity trials SYNCHRONIZETM-1 and SYNCHRONIZETM-2
Dapiglutide
• Report data from Phase 2a investigator-led trial DREAM
• Report data from Phase 1b 13-week dose-titration trial
Petrelintide
• Report data from Part 2 of Phase 1b MAD trial (16-week trial)
• Initiate Phase 2b trial
Progress rare disease assets towards patients
Dasiglucagon for congenital hyperinsulinism
• Resubmit Part 1 of NDA covering up to three weeks of dosing
• Submit analyses from continuous glucose monitoring datasets supporting approval beyond three weeks of dosing
• Engage in commercial partnership discussions
Glepaglutide for short bowel syndrome
• Engage in commercial partnership discussions
Initiate first-in-human trials with inflammation assets
• Initiate first-in-human trial with ZP9830 (Kv1.3 Ion Channel Blocker)
• Alexion to initiate first-in-human trial with ZP10068 (Complement C3 Inhibitor)
Maintain a strong financial position
• Meet financial guidance and ensure disciplined financial management
• Maintain sufficient cash runway
Deliver on environmental, social
and governance responsibility
• Launch refined ESG strategy based on double materiality assessment
• Establish ESG reporting framework to prepare for CSRD, including CO2 baselining
Financial guidance
DKK million
2024 Guidance
2023 Actual
Revenue anticipated from existing and new license and partnership agreements
No guidance due to uncertain size and timing
Net operating expenses1
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 February 27, 2024
1,100 - 1,200
343
896
Zealand Pharma ∞ Annual Report 2023 Our business
Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
12
Our
business
25 years of peptide expertise
R&D pipeline
Obesity
Rare diseases
Inflammation
Type 1 Diabetes
Financial review
13
15
16
19
23
25
26
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
13
25 years of peptide expertise
25 years of peptide expertise
We have 25 years of expertise in 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 journey towards becoming experts in peptide R&D
1998
Foundation
Zealand Pharma is founded by SIP®
inventor Dr. Bjarne Due Larsen and
Lars Hellerung Christiansen
2010
Initial Public Offering
Zealand Pharma shares are listed
on Nasdaq OMX Copenhagen
2016
First drug product
approval by US FDA
Adlyxin (lixisenatide) and Soliqua
(insulin glargine and lixisenatide),
partnered with Sanofi, are approved
by the US FDA for the treatment of
T2DM in the United States (approved
in Europe by EMA in 2013)
2020
Approval by US FDA
of Zegalogue®
for the treatment of severe
hypoglycemia in people
with diabetes
2023
Celebration of 25-year anniversary
Zealand Pharma celebrates 25-year anniver-
sary in eventful year that includes regulatory
submissions to the US FDA for dasiglucagon
in congenital hyperinsulinism and glepa-
glutide in short bowel syndrome, as well
as strong clinical advancement of obesity
portfolio
25
1999
2011
2019
2022
Invention of Lixisenatide
GLP-1 agonist lixisenatide
is invented
Partnership with
Boehringer Ingelheim
Partnership with Alexion
Pharmaceuticals
Zealand Pharma enters partnership
agreement with Boehringer Ingelheim to
develop drug candidates for T2DM and
obesity
Zealand Pharma enters partnership agreement
with Alexion Pharmaceuticals to discover and
develop therapies for complement-mediated
diseases
New strategy and CEO
- Zealand Pharma launches new strategy, focusing on
R&D and scaling back commercial activities, and Dr.
Adam Steensberg (former Chief Medical Officer) is
appointed as new CEO
- Sale of V-Go to MannKind Corporation and partner-
ship agreement with Novo Nordisk for Zegalogue®
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
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Corporate governance
Financial statements
14
Validated peptide platform
Since our foundation 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 discovery and development
platform has been validated by bringing two drug prod-
ucts to market in collaboration with partners Sanofi and
Novo Nordisk, as well as advancing our novel peptide
analogs currently in clinical development.
What are 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.
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 endoge-
nous human peptides and peptides from animal venoms
to develop new therapeutic candidates. We also manipu-
late bacteria to produce peptide libraries. In other words,
we make broad use of nature’s own inventions 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 2023 Pipeline
Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
15
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
Dapiglutide (GLP-1R/GLP-2R Dual Agonist)
Petrelintide (amylin analog)
ZP6590 (GIP receptor agonist)
Obesity
Obesity
Obesity
Survodutide (GCGR/GLP-1R dual agonist)1
Obesity and MASH
Dasiglucagon: Continuous Subcutaneous Infusion
Congenital Hyperinsulinism
Glepaglutide (GLP-2 Analog)
Short Bowel Syndrome
ZP 9830 (Kv1.3 Ion Channel Blocker)
ZP 10068 (Complement C3 Inhibitor)2
Undisclosed
Undisclosed
Dasiglucagon: Bi-Hormonal Artificial Pancreas Systems
Type 1 Diabetes management
Dasiglucagon: Mini-Dose Pen
Type 1 Diabetes exercise-induced hypoglycemia
y
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i
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*
1
Investigational compounds whose safety and efficacy have not been evaluated or approved by the FDA or any other regulatory authority.
Co-invented with Zealand Pharma, Boehringer Ingelheim is funding all activities and is exclusively responsible for clinical development. Up to EUR €315 million outstanding potential development, regulatory and commercial milestones to Zealand Pharma, plus high single to low double
digit percentage royalties on global sales;
2 Licensed to Alexion: USD $610 million potential development, regulatory and commercial milestones and high single to low double digits percentage royalties on net sales.
Zealand Pharma ∞ Annual Report 2023
Obesity
Obesity
Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
16
Obesity
Obesity
Watch our CEO discuss the obesity pandemic at
https://vimeo.com/916606203
Overweight and obesity are associated with more than 220 complications and
co-morbidities, including cardiovascular disease, liver disease, type 2 diabetes, kidney
disease, and neuroinflammation.
An obesity pandemic - the greatest
healthcare challenge of our time
The worldwide prevalence of obesity has nearly tripled
since the mid-1970s, with 650 million adults and 389 million
adolescents and children suffering from obesity today. In
the U.S. alone, more than 40% of the population are consid-
ered obese. More than 3 million people die each year due
to complications from overweight or obesity.1 This is equiv-
alent to the estimated number of global deaths attributable
to COVID-19 during 2020, just every year.2
The obesity pandemic we are witnessing today is the
result of an increasing number of people having been
obese since their 30s and 40s. In the next few decades,
we could start seeing the consequences of adults having
been obese since they were children or teenagers.
Shockingly, in the U.S. today, the prevalence of over-
weight and obesity among 2-4 year old children is 30%.3
A complex, multifactorial disease
requiring more treatment options
Obesity is a complex disease that may be treated by
targeting a number of unique metabolic pathways.
For many years, the weight-loss medications available
have had limited efficacy and/or, for many, been asso-
ciated with considerable side effects. Since 2021, two
weight-loss medications with better efficacy and safety
profiles have been approved. Nevertheless, the treatment
rate today is approximately 2%.4 Thus, there remains a
substantial unmet medical need for more and better
treatment options for the very heterogeneous popula-
tion suffering from overweight and obesity, for example
treatments based on emerging modalities with potential
to deliver similar efficacy as the recently approved treat-
ments but with better tolerability, fat-specific weight loss,
or treatments targeting obesity-related comorbidities.
1 World Health Organization (WHO). Fact sheet. Obesity. 9 June 2021. https://www.who.int/news-room/facts-in-pictures/detail/6-facts-on-obesity
2 World Health Organization (WHO). Data stories. The true death toll of COVID-19. https://www.who.int/data/stories/the-true-death-toll-of-covid-19-estimating-global-excess-mortality
3 Trust for America's Health (TFAH). The State of Obesity 2023. 20-Year Report Anniversary Retrospective. September 2023.
4
IQVIA. Insights Brief. Obesity Treatment Rates Increase as GLP-1 Inhibitors Prosper. 17 March 2023. https://www.iqvia.com/library/white-papers/obesity-treatment-rates-increase-as-glp-1-inhibitors-prosper
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
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Corporate governance
Financial statements
17
Obesity
Targeting obesity with differentiated product candidates
Survodutide
Targeting obesity and NASH with a glucagon/
GLP-1 receptor dual agonist
Survodutide (BI456906) is a long-acting glucagon/GLP-1
receptor dual agonist for once-weekly subcutaneous
administration. Activating the glucagon and GLP-1 recep-
tors simultaneously may reduce body weight by both
increasing energy expenditure and reducing food intake.
The molecule is designed with a strong relative potency
of 8:1 in favor of GLP-1 receptors compared to glucagon
receptors. This design leverages the weight loss and
glycemic control of GLP-1 receptors with some activity on
the glucagon receptors, which are present in the liver.
Development status
A Phase 2 trial with survodutide in people with type
2 diabetes demonstrated average dose-dependent
decreases in blood sugar, HbA1c, of up to -1.88% after 16
weeks compared to -1.47% with open-label weekly sema-
glutide 1.0 mg. In addition, a Phase 2 trial with survodutide
in people living with overweight or obesity demonstrated
1
Quek et al. Lancet Gastroenterol Hepatol 2023;8(1):20–30; 2.
average body weight reductions of up to -18.7% after 46
weeks. Based on the positive results seen in these Phase 2
trials, Boehringer Ingelheim has in 2023 initiated a Phase
3 program, SYNCHRONIZETM, in people living with over-
weight or obesity. Finally, positive topline phase 2 results
were recently reported with survodutide in metabolic
dysfunction-associated steatohepatitis (MASH), formerly
nonalcoholic steatohepatitis (NASH), one of the most prev-
alent and serious obesity-related comorbidities, providing
evidence for differentiation from current GLP-1 based
therapies. In people living with overweight and obesity, it is
estimated that 75% have metabolic dysfunction-associated
fatty liver disease (MAFLD), formerly non-alcoholic fatty
liver disease (NAFLD) and 34% have MASH.1
Survodutide was co-invented by Boehringer Ingelheim
and Zealand Pharma. Boehringer Ingelheim is funding all
activities and is exclusively responsible for clinical devel-
opment related to survodutide. Zealand has EUR 315
million in outstanding potential milestone payments and
is eligible for high-single to low-double digit percentage
royalties on global sales.
Zealand Pharma ∞ Annual Report 2023 Contents
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18
Obesity
Dapiglutide
Petrelintide
Targeting obesity and low-grade inflammation with
a GLP-1/GLP-2 receptor dual agonist
A next-generation weight-loss medication, representing
an alternative to GLP-1 receptor agonists
Dapiglutide is a long-acting GLP-1/GLP-2 receptor dual agonist for once-weekly
subcutaneous administration. This is a first-in-class peptide designed to leverage
the weight loss effects of a potent GLP-1 agonist and address comorbidities
associated with low-grade inflammation through improved intestinal barrier
function by GLP-2. People living with obesity have increased translocation of
bacteria from the gut lumen into the bloodstream due to a reduced integrity of
the intestinal barrier, or “leaky gut”, driving a state of low-grade inflammation.1
This obesity-related low-grade inflammation can result in comorbidities, such as
cardiovascular disease, liver disease, and neuro-inflammation.
Development status
A Phase 1 multiple ascending dose (MAD) trial with dapiglutide in healthy volun-
teers demonstrated average dose-dependent weight loss of up to -4.3% after
four weeks, supporting further clinical development in obesity. Two clinical trials
with dapiglutide are currently ongoing: DREAM, the investigator-led 12-week
trial evaluating the effects of dapiglutide on body weight, gut permeability, and
inflammation; and the Phase 1b 13-week dose-titration trial investigating higher
doses of dapiglutide than the previous trials. Results from DREAM are expected
in the first half of 2024, whereas results from the Phase 1b dose-titration trial are
expected in the second half of 2024.
1
Vetrani et al. Nutrients 2022;14(10):2103.
2 Mathiesen et al. Eur J Endocrinol 2022;186(6):R93–R111
3 Roth et al. Proc Natl Acad Sci U S A 2008;105(20):7257–7262
Petrelintide (ZP8396) is a long-acting amylin analog suitable for once-weekly subcu-
taneous administration that has been designed with chemical and physical stability at
neutral pH, minimizing fibrillation and allowing for co-formulation with other peptides.
Amylin is produced in the pancreatic beta cells and co-secreted with insulin in response
to ingested nutrients. Amylin analogs have been shown to increase satiety by a direct
effect on the amylin receptor and by restoring sensitivity to the hormone leptin.2,3 This is in
contrast to GLP-1 receptor agonists that primarily lower body weight by reducing appetite.
Current clinical or preclinical data suggest a potential of long-acting amylin analogs to
deliver weight loss comparable to GLP-1 receptor agonists but with improved tolerability
for a better patient experience and high-quality weight loss by preserving lean muscle.
Development status
In 2023, we reported results from both a single ascending dose (SAD) trial and Part 1 of a
MAD trial with petrelintide. In the SAD trial, one single dose of petrelintide 2.4 mg led to
average weight loss of -4.2% after one week (placebo-corrected -4.8%), whereas six once-
weekly doses of petrelintide in low doses of 0.6 mg and 1.2 mg in Part 1 of the MAD trial
showed average weight loss of -5.3% and -5.1%, respectively. Petrelintide was well-toler-
ated with no serious or severe treatment-emergent adverse events and no withdrawals.
All gastrointestinal adverse events reported were mild. Part 2 of the MAD trial is currently
ongoing, exploring significantly higher doses of petrelintide over a longer duration of 16
weeks, with results expected in the first half of 2024.
Zealand Pharma ∞ Annual Report 2023 Rare diseases
Contents
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19
Rare diseases
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 Europe1.
Julie Raskin
CEO of
Congenital
Hyperinsulinism
International
A significant burden for the
affected children and their families
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.
External expert perspective
"CHI leads to serious
challenges for affected
families. Brain injuries resulting
in permanent disabilities
occur all too frequently.
There are also significant
psychosocial effects as well as
extra financial burdens on the
family. The limited availability
of safe and effective treatment
options represents an urgent
unmet medical need."
Crosby lives with congenital
hyperinsulinism
1 Amoux JB et al. (2011). Orphanet J Rare Dis, 6:63; Yau et al. (2020). Plos One, 15(2): e0228417.
Zealand Pharma ∞ Annual Report 2023 Contents
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20
Rare diseases
We are seeking to improve the
lives of patients and their caregivers
Dasiglucagon is an investigational glucagon analog
designed to allow for continuous subcutaneous infusion via
a wearable pump system.1 The potential of dasiglucagon in
the management of CHI is supported by three Phase 3 clin-
ical 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. In
this trial, dasiglucagon reduced time in hypoglycemia by
approximately 50% and hypoglycemic events by 37-40%
when measured by continuous glucose monitoring. The
most frequently reported adverse events in both trials
were skin reactions and gastrointestinal disturbances. 42
out of the 44 patients who participated in these two Phase
3 trials enrolled into a long-term extension trial that is
ongoing.
We expect to resubmit the New Drug Application
for dasiglucagon in CHI for up to three weeks of
dosing in the first half of 2024, contingent on a
successful reinspection of the third-party manufac-
turing site where the FDA has identified deficiencies
to be addressed. Importantly, these deficiencies
were not specific to dasiglucagon, and there were
no concerns regarding the clinical trial conduct and
clinical data package submitted for dasiglucagon. In
the first half of 2024, we also expect to submit the
second part of the New Drug Application covering
use of dasiglucagon in CHI beyond three weeks of
dosing.
Dasiglucagon
Zealand is pursuing a partnership
agreement for the commerciali-
zation of dasiglucagon for CHI
Investigational compound and
device that have not yet been
approved for marketing by any
regulatory authority
1
Zealand Pharma has a collaborative development and supply agreement with DEKA Research & Development Corporation and affiliates for the infusion pump system
Zealand Pharma ∞ Annual Report 2023 Contents
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21
Rare diseases
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. alone, there are an estimated 7,500 people living with SBS with intestinal
failure who are dependent on parenteral support.1
Life-long dependency on parenteral support
Short bowel syndrome (SBS) is a complex disease that
occurs due to the physical loss of half or more of the
small intestine, most often due to surgical removal. 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 (SBS-IF), 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-threat-
ening infections. Although lifesaving, management of
PS is associated with a significant burden on healthcare
systems and reduction in quality of life for patients and
their families.
Unmet medical need for more efficacious
and convenient treatment options
SBS can be treated in highly specialized, multi-dis-
ciplinary centers, involving the use of agents that
promote rehabilitation of the intestinal lining, such
as GLP-2 analogs. The only currently available GLP-2
treatment requires weight-adjusted, daily subcu-
taneous dosing via vial and syringe that involves a
multi-step reconstitution process. More efficacious
and convenient treatments to further reduce PS are
needed, with the ultimate goal of achieving enteral
autonomy.
1 SBS-IF patient estimates based on Zealand Pharma claims analysis, 2020 and Mundi et al. (2020), Characteristics of Chronic IF in the US Based on Analysis of Claims Data, JPEN in Press.
Marianne lives with short
bowel syndrome
Zealand Pharma ∞ Annual Report 2023 Contents
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Rare diseases
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.
Glepaglutide appeared to be well tolerated; the most
frequently reported adverse events in the trial were injec-
tion site reactions and gastrointestinal events.
Glepaglutide
Zealand is pursuing a partnership
agreement for the commercialization
of glepaglutide
Investigational compound and device
that have not yet been approved for
marketing by any regulatory authority
Zealand has submitted the New Drug Application (NDA) to
the US FDA in December 2023. The regulatory submission
is based on results from EASE-1 and two long-term (104
weeks) safety and efficacy extension trials, EASE-2 and
EASE-3, where interim analyses conducted after 6 months
showed that clinical response to glepaglutide across key
endpoints was generally maintained or improved, as well
as EASE-4, a mechanistic trial assessing the effects of
glepaglutide on intestinal fluid and energy uptake.
Palle Bekker Jeppesen
Clinical Professor, Department
of Clinical Medicine (Gastro-
enterology and Hepatology)
at the University of Copenhagen
External expert perspective
"Short Bowel Syndrome with Intestinal Failure
(SBS-IF) is a rare, often neglected, debilitating
disease, severely impacting patient quality of
life. Severe nutrient malabsorption may lead
to severe malnutrition and dehydration if not
treated with parenteral support (PS) through
a central venous catheter. Both symptoms of
SBS-IF and potential PS complications impose
significant life restrictions and daily challenges.
Thus, there is an unmet need for new,
convenient long-acting GLP-2 analog treatment
options. If approved by the health authorities,
the long-acting GLP-2 analog glepaglutide,
provided in a ready-to-use autoinjector, offers
a beneficial efficacy and safety profile with a
twice-weekly dosing regimen."
Zealand Pharma ∞ Annual Report 2023 Inflammation
Contents
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Financial statements
23
Inflammation
Inflammation
We believe that peptide medicines
represent an opportunity for innovation
in the treatment of chronic inflammatory
diseases.
We are progressing programs that represent high-profile
targets shown to be difficult to address with small mole-
cules and 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 comple-
ment cascade is implicated in many immune-mediated
diseases and in particular rare diseases such as paroxysmal
nocturnal hemoglobinuria, cold agglutinin disease, myas-
thenia gravis and C3 glomerulopathy. There is currently
only one approved drug to treat complement-mediated
diseases: an antibody that blocks the complement C5,
the final step in complement activation. We have selected
a lead candidate molecule that acts on C3 (ZP10068),
Henrik works in Medicinal Chemistry
Zealand Pharma ∞ Annual Report 2023 Contents
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24
Inflammation
upstream of C5, and thus offers potential differentiation
and broader utility than the current therapy. The candidate
investigational peptide is selective and long-acting, with the
potential to be best-in-class.
For the lead candidate molecule, 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.
We are currently progressing this molecule in collaboration
with Alexion Pharmeceuticals (AstraZeneca Rare Disease).
We have, in 2023, completed the pre-clinical activities with
the lead candidate molecule to ensure readiness for the
first-in-human clinical trials. Alexion will lead development
efforts beginning with Investigational New Drug (IND) filing
and Phase 1 trials, which we exoect Alexion to initiate in
2024.
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.
We have, in 2023, completed the pre-clinical activities with
ZP9830 and expect to initiate the first-in-human clinical
trial in 2024.
Zealand Pharma ∞ Annual Report 2023 Type 1 Diabetes
Contents
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Corporate governance
Financial statements
25
Type 1 diabetes
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
glucose control, or are at significant risk of hypoglycemia.
Type 1 diabetes is not a single-hormone disease. Both
insulin and glucagon secretion are 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 supple-
mentation. 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 have a collaboration with Beta Bionics, developer
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.
With Beta Bionics, we are planning a Phase 3 program
designed to support the marketing applications for the
iLet DuoTM and a New Drug Application for the use of dasi-
glucagon in Bihormonal Artificial Pancreas systems for the
treatment of type 1 diabetes.
Ditte works in Translational
Pharmacology
Zealand Pharma ∞ Annual Report 2023 Contents
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26
Financial review
• Revenue in 2023 of DKK 343 million was mainly driven
by a EUR 30 million milestone payment from Boehringer
Ingelheim associated with survodutide and USD 10
million from a milestone payment from Sanofi associ-
ated with lixisenatide.
• Net operating expenses in 2023 of DKK -896 million
were mainly driven by investments in the clinical
advancement of the obesity pipeline and progression
of the late-stage rare disease assets towards regulatory
submission.
• Runway is extended into 2027 following the directed
issue and private placements in April 2023 and in
January 2024, bringing in gross proceeds of combined
DKK 3 billion, and the new EUR 90 million (DKK
671 million) finance agreement with the European
Investment Bank (EIB) announced in December 2023.
Revenue
Revenue in 2023 of DKK 343 million was mainly driven
by EUR 30 million in milestone payment from Boehringer
Ingelheim related to the Phase 3 initiation with survodu-
tide in obesity in November 2023 and USD 10 million
in milestone payment from Sanofi associated with
lixisenatide. Out of the USD 10 million from Sanofi,
Zealand has paid USD 1.3 million in royalty expenses to
Alkermes, which was entitled to 13% of payments received
by Zealand in respect of lixisenatide under the Sanofi
License Agreement. As of December 31, 2023, there are
no other outstanding milestone payments associated with
the license agreement with Sanofi. All royalties related to
lixisenatide were sold to Royalty Pharma in 2018.
The remaining revenue of 2023 is mainly related to the
license and development agreement for Zegalogue® with
Novo Nordisk as well as proceeds from the agreement
with Alexion.
Net operating expenses
Research and development expenses in 2023 of DKK -685
million were mainly driven by the clinical advancement of
the obesity pipeline and progression of the late-stage rare
disease assets towards regulatory submission. The spend
for research and development expenses in 2023 has
increased compared to 2022 due to the progression of
clinical and regulatory activities with the main cost drivers
being preparing the submission of the two NDAs for our
DKK millions
Revenue
Gross profit
Research and development expenses
Sales and marketing expenses
General and administrative expenses
Other operating items
Net operating expenses
Operating result
Net financial items
Result before tax
Cash and cash equivalents
Marketable securities
Cash, cash equivalents and
marketable securities
Equity
Other
2023
2022
343
324
-685
-31
-185
5
-896
-572
-137
-709
449
1,184
1,633
1,593
104
104
-614
-32
-237
-58
-941
-837
-135
-972
1,069
109
1,178
816
Share price (DKK)
Number of shares ('000 shares)
Market capitalization (mDKK)
Number of full-time employees
at year-end
373
58,751
21,787
201
51,702
9,305
253
196
Zealand Pharma ∞ Annual Report 2023 Contents
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Financial statements
27
rare disease assets to the US FDA and the significant clin-
ical advancement of the obesity pipeline.
In 2023, the investment in Beta Bionics was subject to a
fair value adjustment of DKK -16 million.
Selling and marketing expenses were at DKK -31 million
(2022: DKK -32 million) and general and administrative
expenses at DKK -185 million in 2023 (2022: DKK -237
million). The latter is significantly below 2022 due to cost
reduction efforts following the announced restructuring
on March 30, 2022.
Equity
On December 31, 2023, equity was DKK 1,593 million,
reflecting a significant increase compared to December
31, 2022, mainly driven by the proceeds from the directed
issue and private placement of new shares in April 2023
and partly offset by the loss for the period.
Other operating items of DKK 5 million in 2023 comprise
other operating income of DKK 16 million related to
a reversal of inventory write-down associated with
Zegalogue® and other operating expenses of DKK -11
million related to an impairment of the US Boston office
lease.
Financial items
Financial items in 2023 of DKK -137 million (2022: -135
million) are mainly driven by the final repayment and
termination of the loan with Oberland Capital in May
2023, partly offset by interest income on marketable
securities. The significant increase in interest income
compared to 2022 as described in note 4.7 Financial items,
comes mainly from placement of surplus funds from the
capital increase in April 2023 into marketable securities.
In 2023, Zealand has purchased 300,000 new treasury
shares. The treasury shares are allocated to performance
share units (PSUs) and restricted share units (RSUs) as
described further in note 4.8 Share capital.
Cash position
Cash, cash equivalents and marketable securities as of
December 31, 2023, was DKK 1.6 billion and DKK 2.4
billion including the undrawn DKK 350 million Revolving
Credit Facility provided by Danske Bank and the EIB loan
(Tranche A), reflecting a significant increase compared to
the DKK 1.2 billion in cash, cash equivalents and market-
able securities as of December 31, 2022. The develop-
ment in 2023 is mainly driven by the DKK 1.5 billion in
gross proceeds from the directed issue and private place-
ment of new shares in April 2023 partly offset by cash
used in operating activities during the period (DKK -426
million) and settlement and repayment of the Oberland
loan (DKK -526 million).
As of December 31, 2023, Zealand has placed DKK 1.2
billion in low-risk marketable securities with an invested
graded rating of AAA to -BBB, whereas cash and cash
equivalents amount to DKK 0.4 billion. This is in line with
the Company’s treasury policy. As of December 31, 2022,
the split between marketable securities and cash and cash
equivalents was largely opposite, with marketable secu-
rities at DKK 0.1 billion and cash and cash equivalents at
DKK 1.1 billion.
The final repayment and termination of the loan agree-
ment with Oberland Capital in May 2023 was refi-
nanced through the undrawn Revolving Credit Facility
provided by Danske Bank and the milestone payments
from Boehringer Ingelheim and Sanofi associated with
survodutide and lixisenatide, respectively. Both milestone
payments totaling DKK 249 million have been received
late 2023.
In December 2023, Zealand entered into a new EUR 90
million (DKK 671 million) finance agreement with the
European Investment Bank (EIB). The loan is structured
Zealand Pharma ∞ Annual Report 2023 Contents
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Financial statements
28
with part of the interest paid at recurring intervals during
the term and part being deferred (non-compounding) for
payment at maturity of each tranche. In addition, the EIB
has entered into a warrant agreement with Zealand that
will entitle the EIB to receive warrants in Zealand when
each tranche is drawn down. The warrants will, subject to
the warrant terms, entitle the warrant holder to subscribe
for ordinary shares in Zealand at market price.
Events after the reporting date
As announced on January 8, 2024, the Board of Directors
exercised the remaining authorization granted by
Zealand's annual general meeting held on March 29, 2023,
to increase the Group's share capital by issue of 3,761,470
new ordinary shares at a subscription price of DKK 386.45
per new share.
The aggregate gross proceeds from the private placement
amounts to DKK 1.45 billion and Zealand intends to use
the net proceeds to further strengthen Zealand’s invest-
ment in its differentiated assets targeting obesity.
The new shares were issued on January 12, 2024, and
Zealand received the proceeds on January 16, 2024.
conditions for disbursement of the first tranche (Tranche
A) have been met. In February 2024, Zealand Pharma
has accepted disbursement offer for Tranche A and the
related EUR 50 million (DKK 373 million) is expected to be
received in March 2024.
Aside from the above mentioned no events have occurred
subsequent to the balance sheet date that could signifi-
cantly affect the financial statements as of December 31,
2023.
As announced on December 22, 2023, Zealand entered
into a new EUR 90 million (DKK 671 million) finance
agreement with the European Investment Bank (EIB). The
Guidance
Net operating expenses in 2023 of DKK -896 million was
within the guidance of DKK 800-900 million.
Cash position compared to FY22 (DKK million)
5000
Undrawn borrowing facilities
Cash and cash equivalents
Marketable securities
1
Cash position includes cash, cash equivalents and
marketable securities. Undrawn borrowing facilities
comprise DKK 350 million RCF in Danske Bank and
Tranche A from EIB loan of EUR 50 million.
2
The two tranches are subject to pre-specified
milestones being met.
4000
3000
2000
1000
0
4,104
1,450
298
1,178
1,069
109
-426
-93
-526
1,500
2,356
723
449
1,184
Cash position
Dec-20221
Cash flow from
operating activities
Other cash
adjustments
Gross proceeds
from capital increase
April 2023
Repayment
Oberland Capital
loan May 2023
Cash position
Dec-20231
EIB loan signed in
December, 2023
(EUR 40 million for
Tranche B and C)2
Gross proceeds
from capital increase
January 2024
Cash position
including Jan-24
capital raise and
EIB loan
Zealand Pharma ∞ Annual Report 2023 Sustainability
Contents
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Financial statements
29
Sustainability:
Our patients, people
and operations
Our responsibility
Our business model
Double Materiality Assessment
Our patients
Our people
Our operations
30
32
34
35
38
42
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Our responsibility
At Zealand, we are committed to changing lives with next-generation peptide
therapeutics. Through our innovative pipeline, we seek to make a difference for
people living with chronic diseases while acknowledging our responsibility to
society, our employees, and the environment.
Our focus areas
As we pursue our ambition of becoming the world's
best peptide drug discovery and development company,
our impact on global health and society continues to
increase. We recognize the importance of operating a
responsible and sustainable business as we grow and
expand our pipeline.
In 2023, Zealand further refined the company's
Environmental, Social and Governance (ESG) strategy.
We have identified three pillars within sustainability that
are affected by our activities: our patients, our people,
and our operations. For each pillar, we have or will
set clear goals and ambitions to ensure that Zealand
continues to act responsibly and sustainably. You can
read more about our work within each pillar throughout
this chapter.
Our patients
We leverage innovation to
advance the health and well-
being of patients
Our people
We foster an engaging
and enriching workplace
for our people
Our operations
We take responsibility
for the impact of our
operations
The Sustainable Development Goals (SDGs)
We have adopted and incorporated selected UN
Sustainable Development Goals that are aligned with our
business impact and connect Zealand’s efforts with those
of other companies to address global challenges. We
remain committed to these UN Sustainable Development
Goals:
SDG 3: Ensure healthy lives and promote well-being for all
at all ages
SDG 5: Achieve gender equality and empower all women
and girls
SDG 10: Reduce inequality within and among countries
SDG 12: Ensure sustainable consumption and production
patterns
SDG 16: Promote peaceful and inclusive societies for
sustainable development, provide access to justice for all
and build effective, accountable and inclusive institutions
at all levels
SDG 17: Strengthen the means of
implementation and revitalize the
global partnership for sustain-
able development
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Our patients
Our people
Our operations
We leverage innovation to advance
the health and well-being of patients
We foster an engaging and
enriching workplace for our people
We take responsibility
for the impact of our operations
Health and quality of life
We work to develop patient-centric treatments
that solve severe unmet medical needs
Patient collaboration
We engage with patients to ensure their voices are
heard by the medical system
Engagement
We strive to make Zealand an enriching place to work
Growth
We support our employees
in developing to their full potential
Diversity and inclusion
We foster an inclusive workplace for all
groups and backgrounds
Climate
We recognize the importance of minimizing and
mitigating our climate impact
Ethics
We ensure safeguards and controls to avoid adverse
outcomes from our research and our business
Zealand Pharma ∞ Annual Report 2023 Contents
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Our business model
Our business model is focused on delivering best-in-class treatment options that
address patient needs and ease the burden on healthcare systems.
Engaging with partners so that
we can focus on our core competencies
Our core strength as a company lies in therapeutic
peptide design and development, which has led to our
R&D pipeline of promising candidates targeting obesity,
rare diseases, and inflammation. You can read more about
our peptide platform on pages 13-14.
Our strategy is to pursue global co-development and
commercialization partnerships that complement and
extend our capabilities to deliver new therapies to patients
with unmet medical needs. We aim to engage with part-
ners across the value chain. We also have partnerships
with academic and scientific institutions, leading contract
research organizations (CROs), contract manufacturing
organizations (CMOs), and distribution partners.
Find out more about
our peptide platform
Go to pages 13-14
Research
Development
Manufacturing
Distribution
Commercial execution
Zealand core focus
Partner-led
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Working with sustainability at Zealand
Sustainability is anchored with Corporate Management to ensure that our organization’s
ethical compass is set from the helm, fostering accountability and guiding responsible
decision-making.
Governance
The Board of Directors sets the overall corporate strategy
for Zealand Pharma as well as our ESG strategy. The
Audit Committee oversees ESG policies, governance, and
reporting. Within Corporate Management, ESG is anchored
with our Chief Financial Officer and our Chief People
Officer. This ensures top-level commitment and underpins
the importance of this emerging area.
Accountability
Our ESG steering committee, represented by members
of the Corporate Management team from P&O, Finance,
Operations and Legal, is responsible for executing our
sustainability strategy and works diligently to ensure that
ESG is embedded throughout the organization and inte-
grated in our business model as well as to assure legal
compliance.
ESG governance structure
Board of Directors
Audit Committee
Corporate Management
ESG Steering Committee
ESG is considered an integral part of the Zealand culture
and DNA. We have undertaken extensive work to refine and
formalize our efforts within ESG. Since 2022, ESG goals
have been an integrated part of our Company Goals linked
to our performance-based remuneration. This includes
all employees as well as Corporate Management. In 2023,
all sub-goals related to ESG were achieved. The 2024 ESG
priorities therefore focus on CSRD readiness, ESG strategy,
as well as efforts to enable measurable target setting within
the "Our operations" pillar.
Nicole works in Clinical
Operations
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Double Materiality
Assessment
We have advanced our double materiality
assessment to shape the ESG strategy, pinpointing
focus areas that align both with internal business
impacts and external stakeholder priorities.
Preparing for CSRD
In 2023, we advanced our double materiality assessment
to prepare for the upcoming Corporate Sustainability
Reporting Directive (CSRD). The preliminary inside-out
and outside-in assessment has been an important part of
formalizing the appropriate ESG strategy for Zealand and
identifying our ESG strategy pillars, highlighting the most
material and impactful topics for Zealand and across the
value chain.
Zealand must comply with the CSRD by the financial year
2025. Based on the outcome of the double materiality
assessment, Zealand is required to report on data points
related to the 12 material topics and we are currently
working on closing the identified data gaps for these to
ensure compliance with CSRD. This chapter continues
to be based on the requirements of the Danish Financial
Statements Act and complies with relevant laws, standards,
and guidelines for reporting on corporate social responsi-
bility activities.
Preliminary assessment of material topics
Environmental
Social
Governance
Climate change (incl. green
house gas) Emissions)
Employee engagement
and development
Animal welfare
Energy management
Diversity Equity and Inclusion
Risk mgmt. and ethical
business practices
Patient access to medicines
IP and Anti-trust
Patient health and safety
Privacy and data protection
Health and Safety
Ethical and responsible
marketing
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Our patients
Zealand’s most important contribution to a sustainable society is through improvement of the health
and well-being of patients by developing new medical treatments. Our first strategy pillar focuses on
Health and Quality of Life and Patient Collaboration.
Health and
quality of life
We work to develop patient-
centric treatments that solve
severe unmet medical needs
Patient
collaboration
We engage with patients to
ensure their voices are heard
by the medical system
Our investments in research and development are
driven by the goal of addressing unmet medical needs,
ultimately improving outcomes and care for patients
Patients are the heart of our business. We work with
patient communities, thought leaders and external
experts as we aim to improve the lives of people by
addressing unmet medical needs. Our commitment is
within Research and Development (R&D). In 2023, 76% of
our operating expenditure (OPEX) was focused on R&D
and 80% of our employees work within the R&D organi-
zation. This ratio is expected to remain steady in 2024, as
we continue to invest in R&D and seek partnerships for
commercialization of our late-stage assets.
During 2023, Zealand was sponsoring seven active clinical
trials. Over the course of these trials, Zealand expects up
to 337 trial participants to be enrolled.1 In 2024, we expect
this figure to increase, as we plan to initiate a compre-
hensive Phase 2b trial with petrelintide in obesity and a
Phase 1 trial with our Kv1.3 Ion Channel Blocker targeting
inflammation. As part of our work to increase awareness
of our medical advances, we attend scientific congresses
to update the community on the development of our
product candidates. In 2023, we attended 20 congresses
and delivered 30 scientific communications, including
12 abstracts, four posters and eight oral presentations,
as well as six manuscripts. As we move into 2024, the
number of scientific publications and congress attend-
ances are expected to be at a similar level.
Health and quality of life
We work to develop patient-centric treatments that
address unmet medical needs. Our current pipeline
includes potential treatment options for two rare diseases,
chronic inflammation, as well as the greatest healthcare
challenge of our time - obesity. You can read more about
our pipeline and these disease areas on pages 15-25.
Addressing the greatest healthcare
challenge of our time
For 300,000 years, the rate of obesity among humans has
been low and stable… until now. During the last 50 years,
obesity has become a global pandemic and arguably the
greatest healthcare challenge of our time. Worldwide
prevalence of obesity has nearly tripled between 1975 and
today where 2 billion people are considered overweight
1 Petrelintide (Ph1b), Dapiglutide (Ph1b), Glepaglutide (EASE-2, EASE-3, EASE-4) Dasiglucagon for CHI (long-term extension trial), Dasiglucagon rescue pen (pediatric trial).
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or obese. Obesity places a substantial burden on indi-
vidual patients’ quality of life, impacting physical health,
emotional well-being, and daily activities, often leading
to challenges in mobility, increased risk of comorbid-
ities, and psychological distress. More than 3 million
people die each year as a consequence of obesity. This
is equivalent to the estimated number of global deaths
attributable to COVID-19 during 2020, just every year.
We believe that our product candidates targeting obesity
and obesity-related comorbidities represent some of
the potential keys that can help unlock the challenges
associated with the obesity pandemic. With more and
better treatment options, our vision is that we can address
obesity and obesity-related comorbidities during the next
50 years, preventing healthcare systems from becoming
overwhelmed.
reinspection of the third-party manufacturing site where
the FDA has identified some deficiencies to be addressed.
We also plan to submit the second part of the NDA
supporting treatment beyond three weeks in the first half
of 2024. In parallel, we will pursue a commercial partner-
ship agreement to reach as many patients as possible.
In 2023, we also submitted an NDA for glepaglutide
for the treatment of short bowel syndrome (SBS). SBS
with intestinal failure (SBS-IF) is a rare, often neglected,
debilitating disease, severely impacting patient quality
of life. Severe nutrient malabsorption may lead to severe
malnutrition and dehydration if not treated with paren-
teral support (PS) through a central venous catheter.
Both symptoms of SBS-IF and potential PS complications
impose significant life restrictions and daily challenges.
Our long-acting GLP-2 analog, glepaglutide, provided in
a ready-to-use autoinjector, may offer beneficial efficacy,
safety/tolerability and convenience, reducing patient
burden and improving quality of life. As with dasiglucagon
for CHI, we will pursue a partnership agreement for the
commercialization of glepaglutide to ensure maximum
patient reach.
Addressing unmet medical needs in rare diseases
Dasiglucagon is designed to serve a critical need for
newborns, infants, and children with congenital hyperin-
sulinism (CHI). CHI imposes a drastically different lifestyle
on affected families and is associated with significant
morbidity as well as psychosocial and financial burden.
The absence of safe and efficacious treatment options
represents an urgent unmet medical need. We believe
that dasiglucagon can substantially improve the quality of
life of patients living with CHI and their families.
In the first half of 2024, we expect to resubmit the New
Drug Application (NDA) for dasiglucagon in CHI for up
to three weeks of dosing, contingent on a successful
Our patients KPIs
76%
of operating expenditure
(OPEX) allocated to R&D
in 2023.
80%
of full-time equivalents
(FTEs) working in R&D in
2023.
337
sponsoring seven active
clinical trials in 2023
in which up to 337 trial
participants are expected
to be enrolled.
30
scientific
communications in 2023.
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Patient collaboration
We engage with patients to ensure that their voices are
heard by the medical system. As we develop our novel
treatments, we have a focus on patients' needs informed
by strong collaborations with patient organizations.
Many continue to consider obesity a lifestyle choice, as
opposed to a serious chronic disease, impacting the payer
sentiment, patients’ desire to seek medical advice and
treatment, as well as the attitude of healthcare profes-
sionals towards prescribing anti-obesity medications.
In rare diseases, this collaboration is especially critical
to raise awareness and understanding of the diseases
and improve access to care. At Zealand, we have long-
standing relationships with organizations, including
Congenital Hyperinsulinism International and The Oley
Foundation (working with short bowel syndrome) through
various initiatives such as funding support and clinical trial
collaboration. We work with thought leaders and external
experts in both disease areas of CHI and SBS to inform
communities and maximize the reach of our potential
medical treatment options. In 2023, we held both SBS and
CHI Summits at our headquarters outside Copenhagen to
gather key external experts and medical staff from sites
that had participated in our clinical trials, as well as patient
organizations, to exchange perspectives and insights
directly relevant to our programs.
Once our rare disease products are on the market, we
will continue to monitor impacts on patient outcomes as
well as expand efforts to inform and improve treatment
decisions.
As our obesity pipeline matures, we will engage with
patient organizations where we, amongst other things,
will work on changing the perception of the disease.
Never compromising on quality
When conducting clinical trials, quality is of essence to
ensure patient safety, product quality and data integ-
rity. To remain compliant and in control, we ensure that
we integrate quality and data integrity in our processes.
Our Development and Operations areas outsource
good practice (GxP) activities to qualified and approved
suppliers, where the sponsor and product ownership
responsibilities remain with us. Our reliance on external
partners to perform GxP activities poses an inherent risk
that partners may not follow requirements of pharma-
ceutical quality standards. Such non-compliance could in
turn jeopardize patient safety, quality, access, and safety
and efficacy of our medicines. Oversight of the activities
is carried out to ensure compliance with the applicable
requirements including Good Laboratory Practice (GLP),
Good Manufacturing Practice (GMP), Good Clinical
Practice (GCP), Good Pharmacovigilance Practice (GVP),
appropriate standards for medical devices and others. We
work in close partnerships with our suppliers to achieve
quality products and processes. Our partners are selected
and maintained through a rigorous process where we
focus on business ethics and business continuity as
well as capability and capacity of the services provided.
This includes, but is not limited to, use of specialized
Mike lives with short bowel
syndrome
computer systems, process understanding, regulatory
understanding and suitability of the supplier’s own quality
system. Elements in the assessment include quality audits,
frequent follow-up and oversight, supplier management
assessment, and evaluation of financial stability.
Our Pharmaceutical Quality System is described in our
Quality Manual, which also defines our Quality Policy.
Ongoing evaluation of our quality system is performed
through both internal audits and external inspections from
relevant health authorities, including the Danish Medicines
Agency and the US Food and Drug Administration.
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Our people
We foster an engaging and enriching workplace for our people through
our focus on Engagement, Growth, and Diversity & Inclusion.
Id works
in IT
Kamal works
in Medical Affairs
Engagement
We strive to make Zealand an
enriching place to work
Growth
We support our employees
in developing to their full
potential
Diversity and
inclusion
We foster an inclusive
workplace for all groups and
backgrounds
At Zealand, we believe that engaged and motivated
employees with a passion for making a difference bring
a positive mindset and inspiring level of energy to work.
Our highly skilled employees are at the center of the
medical treatment options that we design and develop
for patients. We pride ourselves on our ability to work
together as one team and to foster a strong and engaging
company culture founded on collaboration, courage,
empowerment, and trust.
The Zealand family continues to grow. We started 2023
with 196 employees and we ended 2023 with 253
employees. A total of 88 employees have been onboarded
during the year. The turnover rate of 10.3% during 2023
is considered low, showcasing Zealand’s ability to attract
and retain highly skilled workers even in a highly compet-
itive market.
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We are
BOLD
We EMPOWER
people
Our
DNA
We can be
TRUSTED
We work as
ONE TEAM
Engagement
We strive to make Zealand an enriching place to work.
We do so by leveraging our DNA: We are BOLD, we
EMPOWER people, we work as ONE TEAM, and we can be
TRUSTED. Throughout our 25-year history, we have built
a unique company culture where employees are given
autonomy to shape their work with a strong focus on a
deeper purpose.
To support our employees’ well-being, we work
systematically to maintain a safe, inclusive, secure, and
healthy work environment. We have designed our poli-
cies and governance systems to promote physical and
psychosocial health, including a Works Council and
an Occupational Safety and Health Committee (OSHA
Committee), on which both management and employees
are represented and where matters related to our work
environment are regularly discussed. We have a hybrid
working environment that allows our employees to work
from home when it suits the individual employee and the
specific work tasks. We continue to focus on optimizing
the work-life balance of all our employees to ensure their
well-being.
Our commitment to an engaged workforce is evident
from our latest engagement survey where Zealand
employees responded with a high response rate (92%) and
reported a high level of positive engagement (8.8/10). As
part of our ESG strategy development in 2023, we aim for
a continuous high target of a positive engagement score
of +8.
Zealand Pharma
employees in brief
253
employees at the
end of 2023
10.3%
turnover rate
during 2023
8.8
overall engagement
score (target of >8.0
out of 10)
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Results from the 2023 engagement survey also high-
lighted future focus areas to ensure high engagement
is maintained. We will continue to focus on work-life
balance, optimization of processes and available technol-
ogies, and clear communication around the strategy and
direction for Zealand.
In 2024, we will launch a new leadership development
program for leaders across the organization. The lead-
ership development program will, among other things,
focus on creating a shared leadership framework,
enhance strategic thinking, and provide better tools for
open conversations and assembling the right team. We
will also strengthen our HR Business Partner function to
equip managers with the right tools to promote employee
engagement and to assist people managers in their
employee development skills.
Health and safety
Laboratory operations contain inherent risks; therefore,
we work systematically to maintain a safe and healthy
work environment for all employees. Several procedures
are in place, including a manual describing our policies on
occupational safety and health (OSHA). All our employees
are trained in the standard safety protocol and they are
given the tools to manage their own occupational safety.
We conduct quarterly safety walk throughs of our facili-
ties and a near-accident reporting system is maintained
to build on our strong safety track record and safeguard
against potential future accidents. In 2023, one near-
accident was reported under our near-accident reporting
initiative (2022: 4) and we had one "obligated to notify"
accident (2022: 0).
Growth
At Zealand, we support our employees in developing to
their full potential. We prioritize employee growth via
hands-on practical learning and delegating new respon-
sibilities in a supportive environment. This strategy is
backed by structured regular review processes to discuss
performance and identify plans for future learning oppor-
tunities. While individuals have ownership of their own
development, they are constantly supported with tools
and mentorship to grow.
To support our growth initiatives, we plan to launch
a consistent and transparent career framework for all
employees, and offer relevant training. We are also devel-
oping and launching an internal mentorship program
during 2024 to leverage our strong internal competencies.
Diversity and Inclusion
We foster an inclusive workplace for all individuals regard-
less of their background. We value diversity not only
because we believe that this is the socially responsible
thing to do, but because we believe that diverse teams
arrive at better solutions, eventually benefitting patients,
our company, and society at large.
We are committed to providing equal employment oppor-
tunities for all employees, and we evaluate recruitment of
new employees, training and development opportunities
Christin works in Molecular
Pharmacology
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for existing employees, promotions, and other personnel
decisions regardless of race, color, gender identity or
expression, religion, age, sexual orientation, national
origin, disability, military or veteran status, part-time or
full-time employee status, or any other basis.
We acknowledge that diversity goes beyond gender and
that we as a company embrace diverse backgrounds in
terms of experience and competencies. In Zealand, we
do not only have a diverse team in terms of gender, but
also value different educational, cultural, and industry
backgrounds. The age range of our employees is 27 to 68
(average of 47.1), showcasing our ability to attract young
as well as experienced talent. One of the founders of
Zealand, as well as the first employee to be hired, are still
with us today, having celebrated their 25th anniversary
along with the company. Inclusion is a focus area in our
annual engagement survey with dedicated questions and
a commitment to showcase this in future annual reports.
In 2024, we plan to formalize and communicate our diver-
sity and inclusion policy.
Diversity in management
Under Danish law, when reporting diversity in manage-
ment, the Board of Directors and Executive Management
(Zealand's CEO and CFO) are considered. We acknowl-
edge that diversity in management as well as the organ-
ization creates a better position for fruitful dicision
making. As with the remaining organization, Management
is selected and evaluated based on their capabilities,
regardless of race, color, gender identity or expression,
religion, age, sexual orientation, national origin or disa-
bility. In 2023, there were no changes to the Executive
Management nor Board of Directors, but as described
the Board composition will change in 2024. If the Board
observers are elected as members, they will bring exten-
sive pharmaceutical industry experience and contribute to
our diversity in terms of nationality, ethnicity and educa-
tional background.
Statutory gender reporting under Danish law
We strive to achieve balanced representation of genders
at all management levels, from the Board of Directors to
the heads of departments.
Board of Directors1
Total number of members
Underrepresented gender (%)
Other management positions2
Total number of members
Underrepresented gender (%)
41
2023
7
29%
22
45%
The Board of Directors consisted of two women and five
men elected at the Annual General Meeting in 2023 and is
therefore regarded as having an equal gender distribution
(underrepresented gender: 29%). Consequently, Zealand
is not obligated to set a gender distribution target for the
Board. At the Annual General Meeting in 2024, two Board
observers stand for election, one woman and one man.
If elected, they will replace two male members of the
Board, resulting in a female representation of 43% going
forward.
As of December 31, 2023, Other Management Positions2
consisted of 22 employees of which 45% were women,
thus giving an equal gender distribution. A target is there-
fore not required.
1 Shareholder elected board members of Zealand Pharma A/S
2 Corporate Management and their direct reports with managerial responsibilities, all employed by Zealand Pharma A/S
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Our operations
At Zealand, we take proactive responsibility for the impact of our operations.
Our Operations pillar is centered around Climate and Ethics.
Climate
We recognize the importance of
minimizing and mitigating our
climate impact
Ethics
We ensure safeguards and controls
to avoid adverse outcomes from
our research and our business
Climate
While Zealand’s environmental footprint and risks associ-
ated with climate-related matters are currently considered
relatively low, we recognize the importance of minimizing
and mitigating our climate impact. We are continuously
evaluating and implementing initiatives that can reduce
any negative impact on the environment from our oper-
ations. This is very close to the heart of our employees
who have organized a Green Initiatives Group with the
ambition of minimizing resource consumption, waste, and
energy usage in our laboratory facilities.
During 2024, we plan to calculate our CO2 baseline,
including scope 1-3 emissions. This will enable us to set a
formal decarbonization roadmap to prioritize our efforts
where they have the biggest impact. Furthermore, this is
an important step towards meeting CSRD requirements.
During 2024, we plan to explore setting an emission
reduction target as part of our work with decarbonization
following establishing the CO2 emission baseline.
Ethics
As an R&D company working within pharmaceuticals,
we recognize the importance of having safeguards and
controls to avoid adverse outcomes from our activities.
We strive to operate according to the highest ethical
standards and safeguard our business against corruption,
bribery, and non-compliance.
In 2023, we continued to have certified electricity at our
Copenhagen facilities to ensure that 100% is sourced
from sustainable energy, such as wind or hydro power.
We also implemented a new policy to ensure that all
new company paid cars are electric and that by 2027 all
company cars will be electric. We significantly expanded
our charging stations to facilitate the increasing demand
from our employees. We have also included environ-
mental criteria for selecting and evaluating contract
manufacturing organizations as part of our Supplier Code
of Conduct.
Our reputation as a trusted business and scientific
partner is crucial to our ability to engage successfully in
existing and potentially new partnerships. Therefore, we
ensure that our employees are continuously trained and
kept updated with policies on good business practice
and compliance, insider trading, and appropriate legal
management of third-party intellectual property. We
proactively engage in positive dialogue with all regula-
tory and advisory authorities and with stakeholders from
relevant industries in order to be inspired to make further
improvements.
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As part of our program of maintaining a robust ethical
working environment, Zealand maintains a whistle-blower
program that is monitored by an external law firm to
ensure that issues that need to be examined by Corporate
Management and members of the Board of Directors
are brought to their attention when appropriate. All
employees are introduced to the whistle-blower service
when they join the company to ensure that they are
able to use it if the occasion arises. In 2023, we had zero
whistle- blower cases.
We actively promote and maintain a policy of transpar-
ency and honesty with our employees. At Zealand, we do
not accept bribery, corruption or fraud. Zealand’s Code of
Conduct, which all employees are regularly trained in, and
the Employee Handbook stipulate a set of policies speci-
fying the company’s standards regarding our employees’
general and legal conduct. We set the same standards for
key suppliers through our Supplier Code of Conduct. All
our suppliers have confirmed that Zealand's supplier Code
of Conduct correspond to their own internal Code of
Conducts, thereby living up to our anti-bribery, corruption
and fraud standards.
At Zealand, we believe in being transparant about our
global tax positions and tax policies. We are committed to
always paying taxes in due time in the countries in which
we operate in accordance with applicable tax laws and
regulations. We aim to keep the business setup as simple
as possible and therefore have a limited number of entities
present in Denmark and the United States. Transactions
Dino works in Alliance Management
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between the Group companies are conducted on market
terms in accordance with the arms' length principle. In
general, we assess that the risk regarding transfer pricing
is limited due to the simple business structure.
We have taken every precaution to keep all employees,
board members and certain stakeholders up to date and
compliant with our internal rules. We distinguish carefully
between those who are listed on the permanent insiders’
list and those who are exposed to what is deemed insider
information. In the latter case, we take every precaution
to keep an up-to-date list of employees’ knowledge of
insider information. All new employees are introduced to
our internal rules and are required to digitally sign off stip-
ulating that they have read and understood these rules.
We have strict policies regarding the proper use and
transfer of intellectual property. We continuously refine
our confidentiality and material transfer agreements to
reflect critical changes in the industry, building on the
extensive industry experience of many of our employees.
At Zealand, we are committed to apply data ethics that are
consistent with the appropriate privacy regulations and
consistent with accepted industry practice. We currently
have policies on Data Integrity and Good Documentation
that apply to the integrity and quality of data for clinical
trials, as well as a Data Governance Manual that governs
the way that certain categories are handled and used. We
believe these policies provide adequate safeguards for our
data.
During vendor selection, we review the capabilities of
potential partners as part of the process to engage with
them in supply agreements. At present, our major vendors
are located in the United States, Taiwan, and Europe (with
additional facilities for some elements of their work in
China). We believe our vendors operate to an appropriate
standard of human rights protection as far as our prod-
ucts are concerned. All suppliers have confirmed that
our human rights and labor requirements in our Supplier
Code of Conduct are met and correspond to their own
internal Code of Conducts.
Animal welfare
In the discovery of new therapies and to ensure the effi-
cacy and safety of new pharmaceuticals as required by
regulatory authorities, it is necessary to conduct in-vivo
experiments using laboratory animals.
Our policy on animal ethics and welfare is to use animal
studies only where no available and acceptable in vitro
alternative exists. All laboratory animals used under our
responsibility must be treated gently and with respect, and
only purpose-bred animals are used. We adhere to the
principles of the 3Rs (reduce, refine, replace) and work to
integrate these principles in all studies.
All in-house animal studies are carried out in accord-
ance with specific licenses issued by the Ministry of
Environment and Food of Denmark and international
guidelines, as appropriate. Danish law stipulates regular
inspections of the animal facilities as well as compre-
hensive reporting protocols overseeing experiments
conducted during the year, processed through The Animal
Experiments Inspectorate. Continuous dialogue between
lab technicians, veterinarians, academic staff, and heads
of departments ultimately ensures the highest animal
welfare standards in all studies conducted.
All employees working with laboratory animals have
appropriate and documented education and training,
proactively monitoring developments in the field.
Veterinary checks of our animals are performed regularly.
In addition, our internal ethics committee scrutinizes all
proposed in-house in-vivo pharmacology, toxicology,
and pharmacokinetic experiments for compliance with
regulatory permissions and highest ethical standards.
The necessity of animal experiments to our research and
development activities cannot be overstated, which is why
we constantly strive for the greatest vigilance and care in
our treatment of animals.
Zealand Pharma ∞ Annual Report 2023 Corporate Governance
Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
45
Corporate
Governance
Introduction
Corporate governance structure
Board of Directors and Corporate Management
Internal controls and Risk management
Risk and risk mitigation
Shareholder information
Annex: Recommendations on
Corporate Governance
46
47
53
59
63
66
68
Zealand Pharma ∞ Annual Report 2023 Contents
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Corporate governance
Financial statements
46
Introduction
This chapter on the corporate governance of Zealand Pharma A/S (“Zealand”)
has been integrated into the management review of the Annual Report 2023
and covers the period January 1 – December 31, 2023.
As a company incorporated under the laws of Denmark,
and with its shares admitted to trading and official listing
on Nasdaq Copenhagen, Zealand is subject to various
applicable legislation, 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’’) updated on
December 2, 2020.
In addition to the reviews set out above, the Board of
Directors and Corporate Management constantly seek to
ensure that Zealand's management structure and control
systems are efficient, function properly, and provide the
right degree of control and management to the organi-
zation. Several internal procedures have been developed
and are continuously updated, with external assistance if
required, to ensure active, secure, and efficient manage-
ment of our company.
Find out more about Zealand at
zealandpharma.com/corporate-governance/
At Zealand, we regularly review our activities to ensure that
we meet our obligations to shareholders, employees, regu-
latory authorities, and other stakeholders while maximizing
long-term value. Zealand also regularly reviews its rules,
policies and practices within risk management and internal
control to improve guidelines and policies for corporate
governance, ensuring that the standards that we set are up
to date with accepted practice for a company like Zealand.
In addition to these, when relevant, we have corporate
governance activities reviewed by a third party who carries
out an evaluation of the Board and how it is governed.
Jakob works in Finance
Zealand Pharma ∞ Annual Report 2023 Contents
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Corporate governance structure
Corporate governance structure
Zealand has a two-tier management structure composed of the Board of Directors
(‘the Board’) and Corporate Management.
The Board is responsible for the overall vision, strategies
and objectives, the financial and managerial supervision
of Zealand, as well as for regular evaluation of the work of
Corporate Management. In addition, the Board provides
general oversight of Zealand's activities and ensures that
it is managed in a manner and in accordance with appli-
cable law, Zealand's articles of association, and the poli-
cies and procedures that are put in place to ensure sound
governance.
and results. The Board functions according to its Rules of
Procedure. The duties include establishing Zealand’s poli-
cies to achieve Zealand's objectives in accordance with its
articles of association that form an important set of guard-
rails for how the company should be governed. These
also define the responsibilities of the Board, for example
ensuring that Zealand’s bookkeeping, accounting, asset
management, information technology systems, budgeting
and internal control are properly organized.
The Board approves the policies and procedures, and
Corporate Management is responsible for the day-to-day
management of Zealand in compliance with the guide-
lines and directions set by the Board. The allocation
of responsibilities between the Board of Directors and
Corporate Management is stipulated in the Rules of
Procedure that are reviewed and signed every year by
the members of the Board of Directors and Corporate
Management after the Annual General Meeting.
Board of Directors
The Board plays an active role in setting Zealand's strat-
egies and goals as well as in monitoring its operations
As of December 31, 2023, Zealand’s Board is comprised
of seven Board members elected at the Annual General
Meeting, four employee representatives elected by
Zealand's employees, and two Board observers. The
Annual General Meeting appoints each sharehold-
er-elected member of the Board for a one-year term,
whereas employee representatives are elected for a four-
year term. The two Board observers appointed in 2023 will
stand for election as Board members at the 2024 Annual
General Meeting, whereas two current members of the
Board do not stand for re-election. The other five current
members of the Board and all the employee-elected
members of the Board are up for re-election in 2024.
Annual General Meeting
Board of Directors
Nomination Committee
Audit Committee
Remuneration Committee
Scientific Committee
Corporate Management
Organization
Zealand Pharma ∞ Annual Report 2023 Contents
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48
Board members elected by the shareholders:
• Martin Nicklasson, Chair
• Kirsten A. Drejer, Vice Chair
• Jeffrey Berkowitz
• Bernadette Connaughton
• Leonard Kruimer
• Alain Munoz (not for re-election at AGM 2024)
• Michael J. Owen (not for re-election at AGM 2024)
Board members elected by the employees:
• Jens Peter Stenvang
• Frederik Barfoed Beck
• Anneline Nansen
• Iben Louise Gjelstrup
Board observers for election as Board members at AGM
2024:
• Enrique Conterno
• Elaine Sullivan
In line with the Recommendations, the Board reviews and
determines the qualifications and experience needed on
the Board with respect to:
• Scientific knowledge within bioscience and innovation
of pharmaceutical products
• Financial experience and knowledge
• Experience in leading an innovative business and insight
into the biopharmaceutical market
• Experience with market entry and relationship with payers
• Experience in handling and managing partnering
agreements
• Competency in ensuring that the obligations of a listed
company are fulfilled
In 2023, the Board decided to carry out a full inde-
pendent review of its performance. This performance
was carried out independently by the Leadership Advisory
Group (LAG) in compliance with article 3.5 of Danish
Recommendations on Corporate Goverence 2020. They
used a mixture of anonymous on-line questionnaires and
one to one interviews with members of the Board and
members of management. The results were presented to
the Board before the 2023 annual general meeting and
provided areas where the governance of the company
could be the subject of annual review and further
strengthened. These recommendations were instituted
as part of the company’s annual review as a matter of
routine.
At the beginning of 2024, the Board decided to follow this
evaluation to check its progress and to ensure that there
was independence when the Board was evaluated. Once
again, the Board decided to use the services of the LAG
to follow up from its last review of the Board in 2023. The
LAG used an anonymous on-line questionnaire that was
sent to each member of the Board and management.
LAG produced a report that was sent to the Chair and the
Company Secretary. The Chair also met one to one with
the members of the Board to discuss the functioning of
the Board.
Paola works in Medicinal and
Computational Chemistry
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The report that is compiled measures 11 separate catego-
ries and scores them based on an average of the scores
from the member of the Board and Management (11 + 6
people in total). Of these 11 categories. The scores indi-
cate the following performance against benchmarks for
Danish companies.
The results indicate that in six of the 11 categories (indi-
cated in blue font in the chart below) Zealand’s perfor-
mance was regarded as exceptional across various
categories. The LAG’s assessment was that in these six
categories Zealand represented a role model company
board.
LAG report results
Category
Strategy Development and implementation
Risk awareness, monitoring and reporting
Co-operation with CEO and Management
Board Composition and dynamics
On and Off Boarding
Meeting Structure and operation
Meeting effectiveness
Shareholders and stakeholder relations
Committee and Vice Chair value contribution
Evaluation of the Chair
General
Overall Score
The Board should meet at least 6 times a year and when-
ever the Chair decides that it is necessary. The Board of
Directors met for a total of 10 times in 2023 and of these 6
meetings were virtual.
functions according to its Charter that is reviewed on an
annual basis. The duties include the internal controls and
risk management systems related to financial reporting
and evaluating the need for an internal audit.
Audit Committee
The Audit Committee consists of Leonard Kruimer,
Martin Nicklasson, Jeffrey Berkowitz, and Bernadette
Connaughton. The committee is chaired by Leonard
Kruimer.
The Audit Committee plays an active role in setting
Zealand's strategies and goals as well as in monitoring its
operations and results, including ESG. The Committee
• establishing procedures for the receipt, retention and
treatment of complaints received regarding accounting,
internal controls, auditing and financial reporting
matters (whistle-blower function);
• nominating the statutory external auditor to be elected
at the Annual General Meeting and preparing the
recommendation to the Annual General Meeting
regarding the election of our external auditor, as well
as, if relevant, proposing to the Annual General Meeting
that an external auditor is discharged;
Score from
a total of 5
4.10
Benchmark
3.53
Difference
+0.57
Role Model
Benchmark
4.19
• monitoring the strategy, plan, scope and approach of
the external auditor’s annual audit;
3.96
4.47
4.13
3.39
4.36
4.31
4.03
4.23
4.67
4.41
4.23
3.48
3.61
3.57
3.08
3.70
3.72
3.41
3.75
4.09
3.79
3.61
+0.48
+0.86
+0.56
+0.21
+0.66
+0.59
+0.62
+0.48
+0.58
+0.62
+0.62
4.14
4.47
4.13
3.90
4.36
4.31
4.29
4.24
4.67
4.41
4.23
• monitoring and approving the terms and compensation
of the external auditor;
• monitoring the external auditor’s reports to the
Executive Management and the Board of Directors,
including management letters and long-form reports,
discussing any reports with the Executive Management
and the external auditor and be mainly responsible
for resolving any disagreements between the external
auditor and the Executive Management;
Zealand Pharma ∞ Annual Report 2023 Contents
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50
• considering (at least on an annual basis) the performance
and independence of the external auditor and obtaining
and reviewing of a report from the external auditor
substantiating that the external auditor is independent;
The Audit Committee met for a total of 7 times in 2023
and of these 5 meetings were virtual. The committee is
composed of independent members.
compensation or termination payments, ensuring that
the contractual terms are fair to the individual and to
Zealand, that failure is not rewarded, and that the duty
to mitigate loss is fully recognized;
• reviewing policy in relation to the provision of non-audit
services by the external auditor under which the Audit
Committee approves non-audit services delivered by
the external auditor;
• engaging independent counsel and other advisors as
the Audit Committee determines necessary to carry out
its duties;
• obtaining available appropriate funding as the Audit
Committee determines necessary for the fulfilment of
its tasks and duties; and
• evaluating on an annual basis: (i) the performance of the
Audit Committee, including independence and financial
expertise; and (ii) the adequacy of the Audit Committee’s
charter and recommendation of any proposed changes
to the Board of Directors.
In 2023, specific topics discussed included auditor’s
reports, accounting policies, internal controls, compli-
ance, finance, going concern status, risk management,
cybersecurity, insurance policy, year-end issues, ESG
reporting, transactions not in the usual course of business
and external financing.
Remuneration Committee
The Remuneration Committee consists of Martin
Nicklasson, Alain Munoz, and Michael J. Owen. The
committee is chaired by Martin Nicklasson. Alain Munoz
and Michael J. Owen do not stand for re-election at the
2024 Annual General Meeting.
The Remuneration Committee proposes the remuner-
ation policy as well as targets for company-operated
performance-related incentive programs. These policies
and guidelines set out the various components of the
remuneration, 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. The committee functions
according to its Charter that is reviewed on an annual
basis.
The proposed remuneration policy is subject to the
approval of our shareholders at the Annual General
Meeting. Our Remuneration Committee has the following
principal responsibilities:
• preparing and presenting proposals to the Board of
Directors on the framework for remuneration packages
for Executive Management, including, but not limited
to salary, salary increases, pension rights and any
• preparing and presenting proposals to the Board
of Directors on remuneration matters of material
importance to Zealand, including incentive programs
and payments for the Executive Management. The
proposals for remuneration of Executive Management,
including any incentive program, shall be in accordance
with and not exceed relevant comparable market
practice levels at any given time;
• preparing and presenting proposals to the Board of
Directors on the targets (bonus levels and performance
targets) for company-operated performance-related
incentive programs for Executive Management, as well as
monitoring and evaluating the fulfilment of such targets;
• overseeing the implementation of any pension,
retirement, death or disability, or life insurance scheme
and any incentive schemes for Executive Management;
and
• reviewing and considering the proposals from our
Nomination Committee on remuneration for members
of the Board of Directors and Executive Management.
In 2023, specific topics discussed included long-term
incentive programs for management and Board of
Zealand Pharma ∞ Annual Report 2023 Contents
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51
Directors, company goals, and the compensation
policy for eligible employees. Please refer to the 2023
Remuneration Report for more details.
The Remuneration Committee met for a total of 6 times in
2023 and of these 5 meetings were virtual. The committee
is composed of a majority of independent members.
Nomination Committee
The Nomination Committee consist of Kirsten A. Drejer,
Leon Kruimer and Bernadette Connaughton. The
committee is chaired by Kirsten A. Drejer.
The Nomination Committee makes recommendations for
decisions to the Board of Directors regarding Board posi-
tions, identifying and recommending candidates for the
Board of Directors. The Committee functions according
to its Charter that is reviewed on an annual basis.
Specific topics discussed in 2023 included the compo-
sition of the independent members of the Board of
Directors as well as the selection and recommendation of
new members of the Board of Directors.
The Nomination Committee met for a total of 4 times in
2023 and of these 3 meetings were virtual. The committee
is composed of independent members.
Scientific Committee
The Scientific Committee consists of Kirsten A. Drejer,
Alain Munoz, and Michael J. Owen. The committee is
chaired by Kirsten A. Drejer. Alain Munoz and Michael J.
Owen do not stand for re-election at the 2024 Annual
General Meeting.
The Scientific Committee is a forum with the purpose
of leveraging the scientific expertise of the appointed
Board members, understanding and challenging the
approach and assumptions of the Zealand’s Research &
Development strategy, providing technical assistance to the
Board on research and development-related issues, and
guiding the Board on the risks of the Company’s Research
& Development strategy. Specific topics discussed in 2023
included the development of the clinical pipeline, prepara-
tion for potential interactions with regulatory authorities, and
a review of the pre-clinical pipeline and innovation strategy.
The Scientific Committee met for a total of 4 times in 2023
and of these 2 meetings were virtual. The committee is
composed of a majority of independent members.
Overview of meetings in 2023
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
•••••••••••••
•••••••••••••
•••••••••••••
•••••••••••••
•••••••••••••
•••••••••••••
•••••••••••••
•••••••••••••
•••••••••••••
•••••••••••••
•••••••••••••
•••••••
N/A
•••••••
•••••••
N/A
•••••••
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
N/A
N/A
N/A
N/A
On August 8 and August 23, Leon Kruimer was travelling and unable to attend the nomination committee meetings scheduled for those dates. He was able to discuss the matters discussed
during those meetings with the Chair of the Nomination Committee to ensure that he was up to date with the process that was in place to select potential new board members.
Zealand Pharma ∞ Annual Report 2023
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52
Corporate Management
Corporate Management is composed of Executive
Management and other members of Corporate
Management:
Executive Management
• Adam Steensberg, President and Chief Executive Officer
• Henriette Wennicke, Executive Vice President and Chief
Financial Officer
Other members of the Corporate Management
• Ivan Møller, Executive Vice President
and Chief Operating Officer
• Christina Sonnenborg Bredal,
Executive Vice President, Chief People Officer
• David Kendell, Chief Medical Officer and Head of
Research & Development
• Ravinder Singh Chahil, Executive Vice President
and General Counsel
Zealand Pharma ∞ Annual Report 2023 Contents
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Board of Directors and Corporate Management
Zealand Pharma Board of Directors at February 27, 2024
Find out more about the
Board of Directors at
zealandpharma.com/
board-of-directors-and-
nomination- committee
Martin Nicklasson
Kirsten A. Drejer
Position
Year of birth
Chair
1955
Nationality
Swedish
Gender
First elected
Male
2015
Vice Chair
1956
Danish
Female
2018
Jeffrey Berkowitz
Board member
1966
American
Male
2019
Committee
AudCom and RemCom (Chair)
NomCom (Chair) and SciCom (Chair)
AudCom
Independent
Yes
Yes
Yes
Special
competencies
Extensive general management and research and
development experience from AstraZeneca Plc
and Swedish Orphan Biovitrum AB.
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, whole-
sale drug distribution, specialty, payor and
healthcare services leadership experience in P&L
accountable roles.
Current positions
Board member of Basilea Pharmaceutica Ltd. and
Chair of Nykode Therapeutics AS.
Chair of the Board of 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 Pharma ∞ Annual Report 2023
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54
Zealand Pharma Board of Directors at February 27, 2024, continued
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
AudCom and NomCom
AudCom (Chair) and NomCom
RemCom and SciCom
RemCom and SciCom
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
Current positions
Board member of Halozyme Therapeutics Inc.
and Editas Medicine.
Chair of the Board of BioInvent International AB,
Board member and Chair of Audit Committee of
Pharming Group NV., and Basilea Pharmaceutica
Ltd. Director AI Global Investments (Netherlands).
Physician qualified in 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 pharmaceutical division of Fournier
Laboratories.
Research experience focusing on the
immune system and more than 150 publica-
tions. Has held several leading positions at
GlaxoSmithKline, most recently as SVP and Head
of Biopharmaceuticals Research.
Chair of the Board of Directors of Acticor Biotech
and a Board member of Auris Medical and Amryt
Pharma Plc.
Chair of the Board of Ossianix Inc. and is a
member of the Board of ReNeuron Group plc,
and Sareum Holdings plc.
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 2023
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Corporate governance
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Zealand Pharma Board of Directors at February 27, 2024, continued
Frederik Barfoed Beck
Anneline Nansen
Louise Gjelstrup
Jens Peter Stenvang
Position
Employee-elected board member
Employee-elected board member
Employee-elected board member
Employee-elected board member
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
Associate Director, Contracts and Sourcing
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
4,422
4,978
2,100
Change in ownership
in 2022
-1,316
2,500
6,298
2,375
+929
1,655
1,417
1,750
-575
3,500
2,123
1,750
-4,300
Zealand Pharma ∞ Annual Report 2023
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Zealand Pharma Board Observers at February 27, 2024
Enrique Conterno
Position
Board Observer
Year of birth
1966
Nationality
Peruvian/American
Gender
Male
Elaine Sullivan
Board Observer
1961
British/Irish
Female
First elected
Stand for election to Board at AGM 2024
Stand for election to Board at AGM 2024
Committee
Independent
Special
competencies
N/A
Yes
N/A
Yes
27 years at Eli Lilly and Company, including
SVP and Member of the Executive Committee,
President of Lilly USA, and President of Lilly
Diabetes, as well as roles across sales, marketing,
finance, and business development. Bachelor of
Science in Mechanical Engineering from Case
Western Reserve University and MBA from Duke
University.
Served at both AstraZeneca and Eli Lilly and
Company as member of senior global R&D
management teams, including VP of Global
External R&D at Eli Lilly and Company and VP
and Head of New Opportunities at AstraZeneca.
Co-founded and served as CEO of Carrick
Therapeutics. PhD in Molecular Virology from the
University of Edinburgh.
Current positions
Member of the Board of Directors of Glooko, inc.
and Member of the Board of Governors of the
American Red Cross.
Member of the Board of Directors of Nykode
Therapeutics ASA, IP Group plc, and hVIVO Ltd,
as well as Member of the Supervisory Board of
Evotec AG.
Zealand Pharma ∞ Annual Report 2023
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Zealand Pharma Corporate Management at February 27, 2024
Position
Year of birth
Nationality
Gender
Joined Zealand
Experience
Adam Steensberg
Henriette Wennicke
David Kendall
Ivan Møller
Executive Management
President and Chief Executive Officer
Executive Management
Chief Financial Officer
Chief Medical Officer
Chief Operating Officer
1974
Danish
Male
2010
1983
Danish
Female
2022
1961
American
Male
2020
1972
American/Danish
Male
2018
Adam has 20+ years of experience in both the
private and public sectors, including:
Henriette has 15+ years of experience from
global, publicly listed companies, including:
David has 35+ years of experience in clinical
diabetes, research, and Pharma, including:
Ivan has 25+ years of experience in Pharma and
project management, including:
• Chief Medical Officer at Zealand Pharma
• Medical Director at Novo Nordisk
• Clinician at Rigshospiltalet
• Vice President, Head of Investor Relations &
Treasury at GN Store Nord
• Vice President, Head of Global Finance at GN
Hearing
• Chief Medical Officer at MannKind Corporation
• Vice President, Medical Affairs and
Distinguished Medical Fellow at Eli Lilly and
Company
• Executive Vice President, Technical
Development & Operations at Zealand Pharma
• Global Head, Operations Management at
Novartis
• Director, R&D Business Support at Novo
• Chief Scientific and Medical Officer for the
• Vice President, Global Head, External Supply
Nordisk
American Diabetes Association
Organization at Novartis
• Chief of Clinical Services and Medical Director
at the International Diabetes Center
• Faculty at the University of Minnesota
• Project Leader at Boston Consulting Group
• Head of Production, PolyPeptide
Laboratories A/S
Other management
positions
• Board Member at Cessatech ApS
• Board Member of DANISH BIO -
DANSK BIOTEK
Zealand Pharma ∞ Annual Report 2023 Contents
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58
Zealand Pharma Corporate Management at February 27, 2024, continued
Christina Sonnenborg Bredal
Ravinder Chahil
Position
Chief People Officer
General Counsel
Year of birth
Nationality
Gender
1985
Danish
Female
Joined Zealand
2020
1968
British
Male
2017
Experience
Christina has 10+ years of experience in various
legal and advisory areas, including:
Ravinder has 25+ years of international expe-
rience in law including:
• Senior Vice President, Head of People &
Organization at Zealand Pharma
• Manager at PwC Legal
• Tax Manager and Senior Tax Consultant at EY
People Advisory Services
• Trial Lawyer at Martinelli Advokatfirma
• Senior Vice President, General Counsel &
Company Secretary at Zealand Pharma
• Director of Intellectual Property at
Polpharma
• Director of Commercial Intellectual
Property at Actavis Group hf
• Senior Solicitor at Bird & Bird
• Called to the Bar England & Wales
November 1992
Corporate Management
Overview of shares, warrants, PSUs, RSUs and change in 2023
Zealand shares
at December
31, 2023
Zealand
warrants at
December
31, 2023
Zealand PSUs
at December
31, 2023
Zealand RSUs
at December
31, 2023
Change in
ownership
in 2023
Adam Steensberg
41,143
189,063
170,976
Henriette Wennicke
David Kendall
Ivan Møller
Christina
Sonnenborg Bredal
Ravinder Chahil
3,432
9,299
45,428
6,734
7,327
14,038
10,490
66,137
31,761
34,261
29,184
14,191
79,663
33,469
32,344
30,246
12,026
35,254
10,647
4,260
6,470
23,532
3,432
7,763
30,079
6,192
7,327
Board of Directors
Overview of shares, warrants, RSUs and change in 2023
Zealand shares
at December
31, 2023
Zealand warrants
at December
31, 2023
Zealand RSUs
at December
31, 2023
Change in
ownership
in 2023
Martin Nicklasson
Kirsten A, Drejer
Jeffrey Berkowitz
Bernadette Connaughton
Leonard Kruimer
Alain Munoz
Michael John Owen
18,570
8,800
8,200
8,500
15,300
12,215
7,360
-
-
-
-
-
-
-
8,000
4,000
4,000
4,000
5,500
4,500
4,500
8,000
4,000
4,000
4,000
7,300
2,465
3,540
Zealand Pharma ∞ Annual Report 2023 Contents
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59
Internal controls and Risk management
Zealand strives to conduct its operations in accordance with the highest ethical standards.
Zealand is a knowledge-intensive company, with a high
focus on competency and personal development. The
Management philosophy in Zealand is based on a high
degree of trust in the company’s employees. However,
policies and operational processes are well described,
with regular reporting and controls. Operations are
performed mainly within the parent company Zealand
Pharma A/S in Søborg, Denmark. All main research
and development operations are based at the site in
Søborg. The company maintains a small workforce at
Zealand Pharma US Inc, the US subsidiary, located in
Boston, Massachusetts. Some of the company’s work is
outsourced to various contract research, development, or
manufacturing organizations.
Internal controls environment
Zealand has a number of internal control and risk
management systems in place to ensure that its financial
statements provide a true and fair view and comply IFRS
Accounting Standards as adopted by the EU and additional
requirements under the Danish Financial Statements Act.
Zealand has several policies and procedures in key
areas of financial reporting. The internal control and risk
management systems are designed to mitigate, detect,
and correct material misstatements rather than eliminate
the risks identified in the financial reporting process.
Corporate Management is responsible for implementing
policies and procedures on a day-to-day basis. The Board
has established an Audit Committee to advise the Board
on related matters.
A review and prioritization of material accounting items
is performed throughout the year. Items in the financial
statements that are based on estimates or that are gener-
ated through complex processes carry a relatively higher
risk of error. Zealand performs continual risk assessments
to identify such items and assess their scope and related
risks.
There are inherent limitations in the effectiveness of
any internal control over financial reporting, including
the possibility of human error and the circumvention or
overriding of internal control. Accordingly, even effective
internal control over financial reporting can provide only
reasonable assurance with respect to financial statement
preparation. An effective internal control environment
may become inadequate in the future because of changes
in conditions, or deterioration in the degree of compli-
ance with the policies and procedures.
As of December 31, 2023, key risks and processes iden-
tified have been documented and internal controls have
been designed and implemented in the organization.
Internal controls have been subject to management
testing and assessment to ensure that risks are addressed
and managed in a responsible and efficient manner.
Results have been formally reported to Management.
The Board has assessed that an internal audit function is
not required at Zealand in view of the Company’s legal
structure and size.
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Audit
Zealand’s external auditors are appointed for a term
of one year by the shareholders at the Annual General
Meeting, based on the recommendation of the Board.
Before such recommendation and in consultation with the
Audit Committee and Executive Management, the Board
assesses the independence, competencies and other
matters pertaining to the auditors.
The framework for the auditors’ duties, including their
remuneration, audit, and non-audit tasks, is agreed
between the Audit Committee and the auditors, and
endorsed by the Board.
Description of management reporting
systems and internal control systems
Management continually works on the design and effec-
tiveness of its management reporting and internal control
systems in order to enable it to monitor performance,
strategy, operations, business environ ment, organization,
procedures, funding, risk, and internal controls. While
implementation is ongoing, Corporate Management is of
the opinion that the reporting and internal controls are
adequate to avoid material misstatements in the financial
reporting.
In 2023, Zealand has implemented a new budget tool as
well as a new Enterprise Resource Planning (ERP) system
to further strengthen management reporting. A new elec-
tronic document management system has been launched
in December 2023.
Ravinder is General Counsel
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The management reporting and internal control systems
include the following reports:
• Annual budget
• Quarterly reports, including budget revisions in March,
June and September
• Financial performance and cash position
• Comparison of budgeted and actual performance
• Analysis of cash flows
• Project management and cost control, and regular
project reporting and follow-up
• Summaries of project management key performance
indicators
• Controls on purchase and maintenance of assets
• Review of potential claims and litigation
• Review and updating of contracts and collaboration
agreements to ensure that all commitments and liabil-
ities are recognized as well as all income to which
Zealand is entitled
In addition to the above-mentioned reports, the internal
control system includes a number of detailed policies and
procedures, including:
• Treasury policy guiding investment of liquid assets
• Schedule of authorization guiding the sign-off of
expenses and investments
• Employee manual providing guidance on policies, rules
and procedures associated with employment at Zealand
Zealand also undertakes controls to ensure the complete-
ness and accuracy of accounting records. Such controls
are prepared, reviewed, tested and documented in an
online controls tool.
Zealand’s Management considers that the above high-
level and detailed controls contribute to more effective
financial reporting procedures.
The areas deemed to have a moderate to high-risk profile
are:
• Revenue recognition and share-based compensation,
which involve a degree of judgment and estimation with
a risk profile assessed to be moderate
• Counterparty risk for liquid assets
• Risk of fraud
Control environment/accounting
Incoming invoices are approved electronically. An
approval hierarchy ensures that invoices are approved
by the appropriate persons in accordance with Zealand's
Schedule of Authorization. Payment proposals are
approved through online banking and require two staff
members to complete the transaction. No changes
to vendors' banking details can be performed without
approval.
It is Management’s view that the current controls are
adequately reducing the risk of significant errors in the
financial statements.
The end-of-period process
In addition to controls of individual accounting items, it
is important to maintain a high level of control over the
different steps involved in transforming raw accounting
data into final quarterly or annual reports.
Risk assessment
As part of the risk assessment process, a review and prior-
itization of key risks and material accounting items has
been performed. These risks have been analyzed with
relevant controls described.
The quarterly and year-end processes involve detailed
documentation of each balance sheet item as well as
documentation supporting all notes to the accounts.
Management reviews the accounting policies used and
assesses the need for any new accounting policies. Any
items where estimates and/or judgements influence the
accounts are discussed with the Audit Committee and are
described in note 1.3 in the Annual Report.
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IT
In addition to the controls performed by Management,
Zealand’s IT department has policies in place covering
data governance, use of IT, and information security.
IT is leveraging an external Security Operation Center
(SOC) provider for Monitoring Detection Response (MDR)
and Incident Response (IR). An employee cyber security
training program is also implemented. IT will continue
investing in infrastructure and network hardening.
Zealand Pharma ∞ Annual Report 2023 Contents
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Risk and risk mitigation
We constantly monitor and assess the overall risk of doing business in the drug
development industry and the particular risks associated with our current activities
and corporate profile.
the Board. In addition to these, each project team has
a risk identification and mitigation assessment using a
standard internal matrix that is used across the company.
This is used by each project team to ensure that there is
a consistent approach to risk and that appropriate risks
are identified. This is updated during the lifetime of any
project.
Below we have summarized Zealand’s key risk areas and
how we attempt to address and mitigate such risks.
Zealand’s Corporate Management is responsible for
implementing adequate systems and policies in rela-
tion to risk management and internal control, and for
assessing the overall and specific risks associated with
Zealand’s business and operations. Furthermore, Zealand’s
Corporate Management seeks to ensure that such risks
are managed optimally and in a responsible and efficient
manner.
Doing business in the drug development industry involves
major financial risks. The development period for novel
medicines takes several years; costs are high, and the
probability of reaching the market is relatively low due to
developmental and regulatory hurdles.
Risks of particular importance to Zealand are scientific
and development risks, commercial risks, intellectual
property risks, clinical trial risks, regulatory risks, partner
interest risks, financial risks, and risks relating to finan-
cial reporting. Risk and mitigation plans are monitored
by Corporate Management, and the continuous risk
assessment is an integral part of the yearly reporting to
Dorte works in IT
Zealand Pharma ∞ Annual Report 2023 Contents
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Zealand risk and mitigation
Product pipeline
Partnerships
Workforce and
management
Finance and
macroeconomics
Research and development activities for new
pharmaceutical product candidates are costly and
require lengthy clinical trials, which by nature are
uncertain and associated with high risk of failure.
Adverse events in clinical trials or failure to satisfac-
torily demonstrate safety and efficacy of product
candidates to regulatory authorities could lead to
delays in completing clinical trials, additional costs
to Zealand, or ultimately failure to progress the
product candidates towards market.
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 and receive training on a
continuous basis to develop and 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.
k
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Zealand has a business model that is dependent on
partnerships in development, manufacturing, and
commercialization. Quality or supply issues at key
third-party manufacturers may lead to regulatory
delays or impact clinical or commercial supply.
Failure to secure or manage future commercializa-
tion partnerships may result in loss of product value
and negatively impact access for patients.
Zealand’s ability to attract and retain highly skilled
and talented employees is key to our success and
future growth. Loss of key employees may lead to
delays in the development of Zealand’s product
candidates, loss of important know-how, and
impact on the company’s culture.
Exposure to macroeconomic risks relate to interest
rates as well as volatility and instability in the
financial markets which could potentially lead to
Zealand’s inability to secure financing.
Suppliers are regularly audited to ensure proper
quality. To maximize the value of all partnerships,
we strive to foster a close and open dialogue with
our partners, thereby building strong partnerships
that work effectively.
Zealand strives to be an enriching, inspiring and
great place to work. Throughout our 25-year
history, we have built a unique company culture.
Engagement surveys show high engagement
(8.8/10) and a high sense of purpose for all
employees. Peer and pay reviews are performed
regularly and we invest in training, development,
and active culture management to ensure a
continued good working environment.
Zealand’s current cash runway into 2027 makes us
less vulnerable to financial instability. As stipulated
in our treasury policy, we work diligently to secure
a healthy balance sheet by managing our cash,
investments, and debt while also hedging our expo-
sure to, for example, exchange rate risk.
Zealand Pharma ∞ Annual Report 2023
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Zealand risk and mitigation – continued
IT security
Climate and geopolitical
environment
Legal, patent and
compliance risk
Regulatory environment
Cyberattacks may lead to theft or leakage of patient
data, personal employee data, intellectual property,
and confidential business data, potentially impacting
Zealand’s operations and reputation, resulting in
fines from authorities or financial losses.
Climate or geopolitical events may impact Zealand’s
or a partner’s business operations due to supply
issues. Trial recruitment could be delayed due to
geopolitical issues or global health crises as seen
during the COVID-19 pandemic. Increased regula-
tory requirements and public sentiment will require
Zealand to manage our carbon footprint. Inability to
do so could lead to compliance issues and investor
dissatisfaction.
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 our products or product candidates.
This could lead us or our partners to curtail or
cease the development of some or all of their drug
product candidates or cause our partners to seek
legal or contractual remedies against us, potentially
involving a reduction in the royalties due to us.
The regulatory approval processes of the US Food
and Drug Administration (US FDA), the European
Medicines Agency (EMA), and other regulatory
authorities can be lengthy and inherently unpre-
dictable. 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.
We employ qualified IT professionals, including
dedicated specialists, who use external assistance
from qualified vendors to provide advice on cyber-
security and systems security where relevant. All
members of staff are trained in IT security and our IT
systems use multi-authentication systems as appro-
priate to reduce the risk of unauthorized entry into
the systems. Our company has appropriate protec-
tion systems from viruses and malware. The most
sensitive data is encrypted and subject to restricted
internal use.
Zealand’s direct environmental footprint is consid-
ered relatively low, mainly due to the outsourcing
of investigational medicinal product to third-party
manufacturers. When selecting and evaluating
contract manufacturing organizations, we have
included environmental criteria as part of our
Supplier Code of Conduct to ensure standards are
met and climate footprint is minimized. We have
launched an ESG strategy with a commitment to
calculate our CO2 baseline and set proper decar-
bonization targets going forward.
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 defense should
this be necessary. Our employees receive training
and updates on policies regarding the correct and
lawful management of internal and external intel-
lectual property.
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.
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66
Shareholder information
We are listed on Nasdaq Copenhagen under the ticker symbol ZEAL.
Core share data
Denmark
Number of shares at Dec. 31, 2023
58,751,152
Listing
Ticker symbol
Index
memberships
Nasdaq
Copenhagen
ZEAL
OMXCopenhagen25
STOXX Europe 600
Change in number of shareholders during 2023
The number of registered shareholders in Zealand Pharma
increased to 36,798 at December 31, 2023, from 24,283 at
December 31, 2022.
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
February 27, 2024:
At December 31, 2023, the nominal value of our share
capital was DKK 58,751,152, divided into 58,751,152 shares
with a nominal value of DKK 1 each.
• Van Herk Investments, Netherlands (9.97% of
votes/9.97% of capital)
Institutional shareholders by geography
%
40 (37)
2023
1 (0)
2022
25 (18)
22 (20)
12 (25)
United States
Denmark
United Kingdom
Rest of Europe
Rest of World
Based on Nasdaq Corporate Solutions aggregated data per
December 2023 and October 2022.
In 2023, the share capital increased by a nominal value of
DKK 7.0 million driven by one directed issue and private
placement (DKK 6.6 million) and exercise of employee
warrants (DKK 0.5 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 shareholders’ meetings.
Find more and contact Investor Relations at
zealandpharma.com/investor-relations
• Polar Capital LLP, United Kingdom (9.62% of votes/9.62%
Share price performance in 2023
Index
of capital)
• Avoro Capital Advisors LLC, United States (5.5% of
votes/5.5% of capital)
Share price performance
The price of Zealand’s shares increased by 85.3% during
2023 with a market closing share price at year-end of DKK
373.2, compared to DKK 201.4 at year-end 2022.
200
150
100
50
180
102
Jan 23
Feb 23
Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 Nov 23
Dec 23
Zealand Pharma
Nasdaq Biotechnology Index (NBI)
Zealand Pharma ∞ Annual Report 2023 Contents
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67
Annual General Meeting
The annual general meeting is scheduled to be held elec-
tronically and in-person on Wednesday, March 20, 2024 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.
Analyst coverage
Zealand is followed by the financial institutions and
analysts listed below:
Institution
Carnegie
Analyst
Jesper Ilsøe
Danske Bank
Thomas Bowers
Financial Calendar 2024
Goldman Sachs
Rajan Sharma
Date
March 20
May 16
August 15
November 7
Event
Annual General Meeting
Q1 Earnings Release /
Interim Report First Quarter 2024
H1 Earnings Release /
Interim Report First Half 2024
Q3 Earnings Release /
Interim Report Third Quarter 2024
All dates are subject to NASDAQ deadlines and reporting
requirements and are subject to change
Jefferies
Kempen
Lucy Codrington
Suzanne van Voorthuizen
Morgan Stanley
Charlie Mabbutt
Nordea
SEB
Michael Novod
Neshat Ahmadi
Zealand Pharma ∞ Annual Report 2023 Contents
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Annex: Recommendations on Corporate Governance
For the financial year of 2023, Zealand is subject to the
Recommendations for Good Corporate Governance
from 2 December 2020, which are available on the
Committee on Corporate Governance's website https://
corporategover nance.dk/.
The following table indicates whether Zealand complies
with the recommendations of the Committee on
Corporate Governance. In line with the ‘comply or explain’
principle, Zealand has provided explanations if recom-
mendations are not fully complied with.
Zealand complies with the Recommendations on
Corporate Governance in all material respects, with notes
on those areas where it 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 relationships with its
shareholders.
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 diversity 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.
This corporate governance statement has been approved
by the Board of Directors on
February 26, 2023
Find out more about Zealand at
Complies
zealandpharma.com/corporate-governance/
Not compliant
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Recommendation
1. Interaction with the company’s shareholders, investors and other stakeholders
1.1. Communication with the company’s shareholders, investors and other stakeholders
1.1.1. The Committee recommends that the management through ongoing dialogue and interaction ensures that
shareholders, investors and other stakeholders gain the relevant insight into the company's affairs, and that the board of
directors obtains the possibility of hearing and including their views in its work.
The company
complies
The company
explains1
Why
How
1.1.2. The Committee recommends that the company adopts policies on the company’s relationships with its shareholders,
investors and if relevant other stakeholders in order to ensure that the various interests are included in the company’s
considerations and that such policies are made available on the company’s website.
Given the size of Zealand a
formal policy is not felt to be
required.
Zealand has regular contact
with its key investors and
shareholder representatives
to ensure alignment. As
the company grows further
consideration will be given
to a formal policy on
engagement.
1.1.3. The Committee recommends that the company publishes quarterly reports.
1.2. The general meeting
1.2.1. The Committee recommends that the board of directors organises the company’s general meeting in a manner that
allows shareholders, who are unable to attend the meeting in person or are represented by proxy at the general meeting, to
vote and raise questions to the management prior to or at the general meeting. The Committee recommends that the board of
directors ensures that shareholders can observe the general meeting via webcast or other digital transmission.
1.2.2. The Committee recommends that proxies and postal votes to be used at the general meeting enable the shareholders
to consider each individual item on the agenda.
1.3. Takeover bids
1.3.1. The Committee recommends that the company has a procedure in place in the event of takeover bids, containing a
“road map” covering matters for the board of directors to consider in the event of a takeover bid, or if the board of directors
obtains reasonable grounds to suspect that a takeover bid may be submitted. In addition, it is recommended that it appears
from the procedure that the board of directors abstains from countering any takeover bids by taking actions that seek to
prevent the shareholders from deciding on the takeover bid, without the approval of the general meeting.
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The company
complies
The company
explains1
Why
How
Recommendation
1.4. Corporate Social Responsibility
1.4.1. The Committee recommends that the board of directors adopts a policy for the company’s corporate social
responsibility, including social responsibility and sustainability, and that the policy is available in the management commentary
and/or on the company’s website. The Committee recommends that the board of directors ensures compliance with the
policy.
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. The duties and responsibilities of the board of directors
2.1. Overall tasks and responsibilities
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.
The company has a formal
staff engagement survey that
is provided to the Board every
year.
The company will work with
advisors to work on additional
areas to develop this new
requirement.
2.1.2. The Committee recommends that the board of directors at least once a year discusses and on a regular basis follows up
on the company’s overall strategic targets in order to ensure the value creation in the company.
2.1.3. The Committee recommends that the board of directors on a continuous basis takes steps to examine whether the
company’s share and capital structure supports the strategy and the long-term value creation in the interest of the company
as well as the shareholders. The Committee recommends that the company gives an account thereof in the management
commentary.
2.1.4. The Committee recommends that the board of directors prepares and on an annual basis reviews guidelines for the
executive management, including requirements in respect of the reporting to the board of directors.
2.2. Members of the board of directors
2.2.1. The Committee recommends that the board of directors, in addition to a chairperson, appoints a vice chairperson, who
can step in if the chairperson is absent and who can generally act as the chairperson’s close sparring partner.
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Recommendation
2.2.2. The Committee recommends that the chairperson in cooperation with the individual members of the board of directors
ensures that the members up-date and supplement their knowledge of relevant matters, and that the members’ special
knowledge and qualifications are applied in the best possible manner.
2.2.3. The Committee recommends that if the board of directors, in exceptional cases, requests a member of the board of
directors to take on special duties for the company, for instance, for a short period to take part in the daily management of the
company, the board of directors should approve this in order to ensure that the board of directors maintains its independent
overall management and control function. It is recommended that the company publishes any decision on allowing a member
of the board of directors to take part in the daily management, including the expected duration thereof.
3. The composition, organisation and evaluation of the board of directors
3.1. Composition
3.1.1. The Committee recommends that the board of directors on an annual basis reviews and in the management
commentary and/or on the company’s website states
• which qualifications the board of directors should possess, collectively and individually, in order to perform its duties in the best
possible manner, and
• the composition of and diversity on the board of directors.
3.1.2. The Committee recommends that the board of directors on an annual basis discusses the company’s activities in order
to ensure relevant diversity 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.
3.1.3. The Committee recommends that candidates for the board of directors are recruited based on a thorough process
approved by the board of directors. The Committee recommends that in assessing candidates for the board of directors – in
addition to individual competencies and qualifications – the need for continuity, renewal and diversity is also considered.
The company
complies
The company
explains1
Why
How
The Board is attentive to the
issue of diversity and regards
this as an area of focus next
year
In 2024, we plan to formalize
and communicate our
diversity and inclusion policy.
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The company
complies
The company
explains1
Why
How
Recommendation
3.1.4. The Committee recommends that the notice convening general meetings, where election of members to the board of
directors is on the agenda - in addition to the statutory items - also includes a description of the proposed candidates’
• qualifications,
• other managerial duties in commercial undertakings, including board committees,
• demanding organisational assignments and
• independence.
3.1.5. The Committee recommends that members to the board of directors elected by the general meeting stand for election
every year at the annual general meeting, and that the members are nominated and elected individually.
3.2. The board of director’s independence
3.2.1. The Committee recommends that at least half of the members of the board of directors elected in general meeting are
independent in order for the board of directors to be able to act independently avoiding conflicts of interests.
In order to be independent, the member in question may not:
• be or within the past five years have been a member of the executive management or an executive employee in the company, a
subsidiary or a group company,
• within the past five years have received large emoluments from the company/group, a subsidiary or a group company in
another capacity than as member of the board of directors,
• represent or be associated with a controlling shareholder,
• within the past year have had a business relationship (e.g. personally or indirectly as a partner or an employee, shareholder,
customer, supplier or member of a governing body in companies with similar relations) with the company, a subsidiary or a
group company, which is significant for the company and/or the business relationship,
• be or within the past three years have been employed with or a partner in the same company as the company’s auditor elected
in general meeting,
• be a CEO in a company with cross-memberships in the company’s management,
• have been a member of the board of directors for more than twelve years, or
• be closely related to persons, who are not independent, cf. the above-stated criteria.
Even if a member of the board of directors does not fall within the above-stated criteria, the board of directors may for other
reasons decide that the member in question is not independent.
3.2.2. The Committee recommends that members of the executive management are not members of the board of directors
and that members retiring from the executive management does not join the board of directors immediately thereafter.
Zealand Pharma ∞ Annual Report 2023
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The company
complies
The company
explains1
Why
How
Recommendation
3.3. Members of the board of directors and the number of other managerial duties
3.3.1. The Committee recommends that the board of directors and each of the members on the board of directors, in
connection with the annual evaluation, cf. recommendation 3.5.1., assesses how much time is required to perform the board
duties. The aim is for the individual member of the board of directors not to take on more managerial duties than the board
member in question is able to perform in a satisfactory manner.
3.3.2. The Committee recommends that the management commentary, in addition to the statutory requirements, contains
the following information on the individual members of the board of directors:
• position, age and gender,
• competencies and qualifications relevant to the company,
• independence,
• year of joining the board of directors,
• year of expiry of the current election period,
• participation in meetings of the board of directors and committee meetings,
• managerial duties in other commercial undertakings, including board committees, and demanding organisational assignments,
and
• the number of shares, options, warrants, etc. that the member holds in the company and its group companies and any changes
in such holdings during the financial year.
3.4. Board committees
3.4.1. The Committee recommends that that the management describes in the management commentary:
• the board committees’ most significant activities and number of meetings in the past year, and
• the members on the individual board committees, including the chairperson and the independence of the members of the
committee in question.
In addition, it is recommended that the board committees’ terms of reference are published on the company’s website.
3.4.2. The Committee recommends that board committees solely consist of members of the board of directors and that the
majority of the members of the board committees are independent.
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The company
complies
The company
explains1
Why
How
Recommendation
3.4.3. The Committee recommends that the board of directors establishes an audit committee and appoints a chairperson
of the audit committee, who is not the chairperson of the board of directors. The Committee recommends that the audit
committee, in addition to its statutory duties, assists the board of directors in:
• supervising the correctness of the published financial information, including accounting practices in significant areas,
significant accounting estimates and related party transactions,
• reviewing internal control and risk areas in order to ensure management of significant risks, including in relation to the
announced financial outlook,
• assessing the need for internal audit,
• performing the evaluation of the auditor elected by the general meeting,
• reviewing the auditor fee for the auditor elected by the general meeting,
• supervising the scope of the non-audit services performed by the auditor elected by the general meeting, and
• ensuring regular interaction between the auditor elected by the general meeting and the board of directors, for instance, that
the board of directors and the audit committee at least once a year meet with the auditor without the executive management
being present.
If the board of directors, based on a recommendation from the audit committee, decides to set up an internal audit function,
the audit committee must:
• prepare terms of reference and recommendations on the nomination, employment and dismissal of the head of the internal
audit function and on the budget for the department,
• ensure that the internal audit function has sufficient resources and competencies to perform its role, and
• supervise the executive management’s follow-up on the conclusions and recommendations of the internal audit function.
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The company
complies
The company
explains1
Why
How
Recommendation
3.4.4. The Committee recommends that the board of directors establishes a nomination committee to perform at least the
following preparatory tasks:
• describing the required qualifications for a given member of the board of directors and the executive management, the
estimated time required for performing the duties of this member of the board of directors and the competencies, knowledge
and experience that is or should be represented in the two management bodies,
• on an annual basis evaluating the board of directors and the executive management’s structure, size, composition and results
and preparing recommendations for the board of directors for any changes,
• in cooperation with the chairperson handling the annual evaluation of the board of directors and assessing the individual
management members’ competencies, knowledge, experience and succession as well as reporting on it to the board of
directors,
• handling the recruitment of new members to the board of directors and the executive management and nominating candidates
for the board of directors' approval,
• ensuring that a succession plan for the executive management is in place,
• supervising executive managements’ policy for the engagement of executive employees, and
• supervising the preparation of a diversity policy for the board of directors’ approval.
3.4.5. The Committee recommends that the board of directors establishes a remuneration committee to perform at least the
following preparatory tasks:
• preparing a draft remuneration policy for the board of directors’ approval prior to the presentation at the general meeting,
• providing a proposal to the board of directors on the remuneration of the members of the executive management,
• providing a proposal to the board of directors on the remuneration of the board of directors prior to the presentation at
the general meeting,
• ensuring that the management’s actual remuneration complies with the company’s remuneration policy and the evaluation of
the individual member’s performance, and
• assisting in the preparation of the annual remuneration report for the board of directors’ approval prior to the presentation for
the general meeting's advisory vote.
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The company
complies
The company
explains1
Why
How
Recommendation
3.5. Evaluation of the board of directors and the executive management
3.5.1. The Committee recommends that the board of directors once a year evaluates the board of directors and at least every
three years engages external assistance in the evaluation. The Committee recommends that the evaluation focuses on the
recommendations on the board of directors’ work, efficiency, composition and organisation, cf. recommendations 3.1.-3.4.
above, and that the evaluation as a minimum always includes the following topics:
• the composition of the board of directors with focus on competencies and diversity
• the board of directors and the individual member’s contribution and results,
• the cooperation on the board of directors and between the board of directors and the executive management,
• the chairperson’s leadership of the board of directors,
• the committee structure and the work in the committees,
• the organisation of the work of the board of directors and the quality of the material provided to the board of directors, and
• the board members’ preparation for and active participation in the meetings of the board of directors.
3.5.2. The Committee recommends that the entire board of directors discusses the result of the evaluation of the board
of directors and that the procedure for the evaluation and the general conclusions of the evaluation are described in the
management commentary, on the company’s website and at the company’s general meeting.
3.5.3. The Committee recommends that the board of directors at least once a year evaluates the work and results of the
executive management according to pre-established criteria, and that the chairperson reviews the evaluation together with
the executive management. In addition, the board of directors should on a continuous basis assess the need for changes in the
structure and composition of the executive management, including in respect of diversity, succession planning and risks, in
light of the company’s strategy.
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Recommendation
4. Remuneration of management
4.1. Remuneration of the board of directors and the executive management
4.1.1. The Committee recommends that the remuneration for the board of directors and the executive management and
the other terms of employment/service is considered competitive and consistent with the company's long-term shareholder
interests.
4.1.2. The Committee recommends that share-based incentive schemes are evolving, i.e., that they are periodically granted,
and that they primarily consist of long-term schemes with a vesting or maturity period of at least three years.
4.1.3. The Committee recommends that the variable part of the remuneration has a cap at the time of grant, and that there is
transparency in respect of the potential value at the time of exercise under pessimistic, expected and optimistic scenarios.
4.1.4. The Committee recommends that the overall value of the remuneration for the notice period, including severance
payment, in connection with a member of the executive management’s departure, does not exceed two years’ remuneration
including all remuneration elements.
4.1.5. The Committee recommends that members of the board of directors are not remunerated with share options and
warrants.
4.1.6. The Committee recommends that the company has the option to reclaim, in whole or in part, variable remuneration
from the board of directors and the executive management if the remuneration granted, earned or paid was based on
information, which subsequently proves to be incorrect, or if the recipient acted in bad faith in respect of other matters, which
implied payment of a too large variable remuneration.
The company
complies
The company
explains1
Why
How
This system of renumeration
ensures that the members
of the Board are working in
the shareholders interest and
increasing shareholder value.
Members of the Board have
chosen to forgo some of their
cash based renumeration and
receive restricted stock units
(RSUs) rather than the cash.
The cash based renumeration
was therefore reduced and
substituted with RSUs to a
fixed amount dependent on
the Board members position
and committee involvement.
Zealand Pharma ∞ Annual Report 2023
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78
Recommendation
5. Risk management
5.1. Identification of risks and openness in respect of additional information
5.1.1. The Committee recommends that the board of directors based on the company's strategy and business model
considers, for instance, the most significant strategic, business, accounting and liquidity risks. The company should in the
management commentary give an account of these risks and the company’s risk management.
5.1.2. The Committee recommends that the board of directors establishes a whistle-blower scheme, giving the employees
and other stakeholders the opportunity to report serious violations or suspicion thereof in an expedient and confidential
manner, and that a procedure is in place for handling such whistleblower cases.
The company
complies
The company
explains1
Why
How
Zealand Pharma ∞ Annual Report 2023
Financial Statements
Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
79
Financial
statements
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
80
Consolidated
financial statements
Statement of loss
Statement of comprehensive loss
Statement of financial position
Statement of cash flows
Statement of changes in equity
Notes
81
81
82
83
83
84
Zealand Pharma ∞ Annual Report 2023 Statement of loss
Statement of loss
Statement of comprehensive loss
Statement of comprehensive loss
Contents
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Corporate governance
Financial statements
81
Consolidated financial statements
Consolidated statement of loss for the years ended
December 31, 2023 and 2022
Consolidated statement of comprehensive loss for the years ended
December 31, 2023 and 2022
DKK thousand
Revenue
Royalty expenses
Cost of goods sold
Gross profit
Research and development expenses
Sales and marketing expenses
General and administrative expenses
Other operating income
Other operating expenses
Net operating expenses
Operating result
Financial income
Financial expenses
Result before tax
Corporate tax
Net result for the year from continuing operations
Net result for the year from discontinued operations
Net result for the year
Loss per share from continuing operations, basic/diluted (DKK)
Loss per share from discontinued operations, basic/diluted (DKK)
Loss per share, basic/diluted (DKK)
Note
2023
2022
DKK thousand
103,986
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
Total comprehensive result for the year
Note
2023
2022
-703,739
-1,202,135
8,087
462
-695,652
-1,201,673
2.1
2.3
2.4
2.5
2.6
2.7
2.9
2.9
4.7
4.7
342,788
-9,138
-10,036
323,614
-
-
103,986
-684,902
-614,044
-30,627
-32,298
-185,302
-237,210
15,979
-11,000
-
-57,587
-895,852
-941,139
-572,238
-837,153
54,115
133,270
-190,742
-268,158
-708,865
-972,041
5.1
5,126
6,431
-703,739
-965,610
2.10
2.11
2.11
2.11
-
-236,525
-703,739
-1,202,135
-12.44
-
-12.44
-20.90
-5.12
-26.02
Zealand Pharma ∞ Annual Report 2023 Statement of financial position
Statement of financial position
Contents
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Corporate governance
Financial statements
82
Consolidated financial statements
Consolidated statement of financial position
as of December 31, 2023 and 2022
DKK thousand
Assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Other investments
Deferred tax assets
Other receivables
Other financial assets
Total non-current assets
Inventory
Trade and other receivables
Corporate tax receivable
Marketable securities
Cash and cash equivalents (subject to certain conditions)
Cash and cash equivalents
Total current assets
Total assets
Note
2023
2022
DKK thousand
Share capital
-
Share premium
3.1
3.2
3.3
3.4
5.1
3.6
3.7
3.5
3.6
5.1
4.5
4.4
4.4
12,255
47,047
102,805
14,004
925
15,794
7,375
50,528
114,960
30,943
2,017
18,105
6,901
200,205
223,454
7,935
122,359
16,437
1,183,746
-
449,311
1,286
115,622
21,599
108,611
348,608
720,626
1,779,788
1,316,352
1,979,993
1,539,806
Currency translation reserve
Retained losses
Total shareholders' equity
Other payables
Borrowings including embedded derivatives
Lease liabilities
Total non-current liabilities
Lease liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total shareholders' equity and liabilities
Note
2023
2022
4.8
58,751
51,702
6,406,225
4,921,232
22,704
14,617
-4,894,841
-4,171,640
1,592,839
815,911
-
-
102,575
102,575
16,655
267,924
284,579
19,058
401,346
108,000
528,404
14,729
180,762
195,491
387,154
723,895
1,979,993
1,539,806
3.8
4.6
3.3
3.3
3.8
Zealand Pharma ∞ Annual Report 2023
Statement of cash flows
Statement of cash flows
Statement of changes in equity
Statement of changes in equity
Contents
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Financial statements
83
Consolidated financial statements
Consolidated statement of cash flows for the years
ended December 31, 2023 and 2022
Consolidated statement of changes in shareholders' equity
at December 31, 2023 and 2022
DKK thousand
Note
2023
2022
DKK thousand
Share
capital
*Share
premium
Currency
translation
reserve
*Retained
losses
Total
Net result for the year
Adjustment for other non-cash items
Changes in working capital
Financial income received
Financial expenses paid
Corporate taxes received
Cash flow used in operating activities
Proceeds from sale of marketable securites
Purchase of marketable securities
Purchase of intangible assets
Purchase of property, plant and equipment
Divestment of activities
Cash flow from/(used in) investing activities
Repayment of borrowings
Lease installments
Proceeds from issuance of shares
Purchase of treasury shares
Proceeds from issuance of shares related to exercise of share-
based compensation
Costs related to issuance of shares
Cash flow from financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange rate adjustments
Cash and cash equivalents at end of year
6.6
6.6
2.10
4.6
3.3
4.8
-703,739
202,033
52,103
37,887
-25,252
11,300
-425,668
-1,202,135
269,332
10,161
5,178
-34,124
9,277
-942,311
1,089,547
-2,159,831
-12,508
-11,241
-
-1,094,033
-525,764
-17,664
1,500,000
-41,600
63,950
-71,908
907,014
-612,686
1,069,234
-7,237
449,311
887,060
-700,477
-
-11,710
106,386
281,259
-436,088
-13,719
1,052,757
-
31,904
-47,354
587,500
-73,552
1,129,103
13,683
1,069,234
Equity at January 1, 2023
51,702
4,921,232
14,617
-4,171,640
815,911
Other comprehensive income
for the year
Net result for the year
Purchase of treasury shares
Net settlement of PSUs
Net settlement of RSUs
Exercise of warrants
Share-based compensation expenses
Capital increases
Costs related to capital increases
-
-
-
-
-
-
-
-
-
-
470
-
63,480
-
6,579
1,493,421
-
-71,908
8,087
-
-
-
-
-
-
-
-
-
-703,739
-81,045
66
91
-
61,426
-
-
8,087
-703,739
-81,045
66
91
63,950
61,426
1,500,000
-71,908
Equity at December 31, 2023
58,751
6,406,225
22,704
-4,894,841
1,592,839
Equity at January 1, 2022
43,634
3,891,993
14,155
-3,021,979
927,803
Other comprehensive income
for the year
Net result for the year
Net settlement of PSUs
Net settlement of RSUs
Exercise of warrants
Share-based compensation expenses
-
-
-
-
201
-
-
-
-
-
31,703
-
Capital increases
Costs related to capital increases
7,867
1,044,890
-
-47,354
462
-
462
-1,202,135
-1,202,135
-
-
-
-
-
-
-
72
116
-
52,286
-
-
72
116
31,904
52,286
1,052,757
-47,354
815,911
Equity at December 31, 2022
51,702
4,921,232
14,617
-4,171,640
* Other reserves of DKK 749.6 million from the 2022 Annual Report have been split into Share premium and Retained losses to ease read-
ability of movements in shareholders’ equity.
Zealand Pharma ∞ Annual Report 2023 Notes overview
Notes
Contents
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Sustainability
Corporate governance
Financial statements
84
Consolidated financial statements
Notes to the consolidated financial statements
1.0 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 Management's judgements and estimates under IFRS
85
85
89
89
2.0 Results for the year
2.1 Revenue
2.3 Royalty expenses
2.4 Cost of goods sold
2.5 Research and development expenses
2.6 Selling and marketing expenses
2.7 General and administrative expenses
2.8 Staff costs
2.9 Other operating items
2.10 Discontinued operations
2.11 Earnings per share
4.0 Capital structure, financial risk
and related items
111
5.0 Tax
5.1 Corporate tax
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
111
112
115
117
117
118
124
125
126
91
91
95
95
96
97
97
98
98
99
101
130
130
3.0 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 Trade and other payables
6.0 Other disclosures
102
102
104
106
108
108
109
110
110
133
6.1 Remuneration of the Board of Directors and Executive
Management
133
6.2 Fees to auditors appointed at the annual general meeting 135
6.3 Contingent assets and liabilities
6.4 Commitments
6.5 Related parties
6.6 Cash flow adjustments
6.7 Collaborations and technology licenses
135
135
135
136
136
Zealand Pharma ∞ Annual Report 2023 1 Basis of preparation
Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
85
1.0
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 Management's judgements and estimates
under IFRS
85
89
89
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 material financial accounting policies including Management's
judgements and estimates. 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.
Accounting policies
The consolidated financial statements have been prepared in accordance with IFRS® Accounting
Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act
(class D). The consolidated financial statements were approved by the Board of Directors and author-
ized for issue on February 26, 2024. Except as outlined in note 1.2 New accounting policies and disclo-
sures, the financial statements have been prepared using the same accounting policies as in previous
years.
Zealand describes material accounting policy information in conjunction with each note with the aim to
provide a more understandable description of each accounting area.
IAS 1 Presentation of Financial Statements - Disclosure of Accounting policies
The amendments to IAS 1 replace the requirement to disclose significant accounting policies with a
requirement to disclose material accounting policy information. Zealand has adapted the amended
standard for the annual report for the financial year January 1 - December 31, 2023. As an effect
Zealand only discloses accounting policies if:
• A choice of accounting policy is permitted by the IFRS accounting standard,
• It is needed to provide context for a change of accounting policy that had a material effect on the
information in the financial statements,
• It is needed to provide context to significant judgements and estimates,
• The required accounting (recognition, measurement, presentation, disclosure) is complex and users
would otherwise not understand the material transaction, event, or condition, or
• There are other qualitative factors that make the accounting policy information material.
Zealand Pharma ∞ Annual Report 2023 Contents
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Sustainability
Corporate governance
Financial statements
86
Notes to the Consolidated financial statements
1.1
Basis of preparation, going concern assumption, nature of the business
and accounting policies (continued)
The adoption of the above mentioned amendments did not have a material impact on the financial
statements as of December 31, 2023.
requirements for at least 12 months from the December 31, 2023 balance sheet date. Following the
capital increase in January 2024 the Group received gross proceeds of DKK 1.45 billion.
Going concern assessment
The Company's 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 platform
through 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 may raise additional funds through either public financing, debt financing,
collaboration agreements, strategic alliances and licensing arrangements, or a combination of such.
Management’s judgement and assessment of the Company’s 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, undrawn borrowing facilities and financing opportunities.
Management expects that the Company's cash and cash equivalents as of December 31, 2023, will
be sufficient to fund the Company's research and development activities as planned and capital
On this basis, these consolidated financial statements are prepared using the going concern
assumption.
Nature of the Business
Zealand is a biotechnology company focused on the discovery and development of innovative peptide-
based medicines. More than 10 drug candidates invented by Zealand have advanced into clinical devel-
opment, of which two have reached the market. The Company has development partnerships with a
number of pharma companies as well as commercial partnerships for its marketed products.
Zealand Pharma A/S, founded in 1998, is incorporated in Denmark and headquartered in Copenhagen,
Denmark with a presence in the U.S.
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
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Notes to the Consolidated financial statements
1.1 Basis of preparation, nature of the business and accounting policies (continued)
items are individually immaterial, they are aggregated with other items of similar nature in the financial
statements or in the notes.
intercompany receivables and payables, and unrealized gains and losses on transactions between the
consolidated companies are eliminated.
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.
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,
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 presenta-
tion 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
Zealand Pharma A/S
Ultimate parent
Domicile: Denmark
ZP SPV 3 K/S
Domicile: Denmark
Ownership: 100%
Voting rights: 100%
ZP General Partner 3
Domicile: Denmark
Ownership: 100%
Voting rights: 100%
ZP Holding SPV K/S
Domicile: Denmark
Ownership: 100%
Voting rights: 100%
ZP General Partner 1 ApS
Domicile: Denmark
Ownership: 100%
Voting rights: 100%
Zealand Pharma U.S., Inc.
Domicile: United States
Ownership: 100%
Voting rights: 100%
ZP General Partner 2 ApS
Domicile: Denmark
Ownership: 100%
Voting rights: 100%
ZP SPV 1 K/S
Domicile: Denmark
Ownership: 100%
Voting rights: 100%
Zealand Pharma California US, LLC.
Domicile: United States
Ownership: 100%
Voting rights: 100%
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Notes to the Consolidated financial statements
1.1 Basis of preparation, nature of the business and accounting policies (continued)
statements being translated at average exchange rates are recorded in translation reserves in share-
holders' equity.
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.
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
transaction.
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.
The statements of cash flows cannot be derived solely from the consolidated financial statements.
ESEF and iXBRL reporting
Zealand Pharma is required to file its annual report in ESEF format, and the annual report is therefore
prepared in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European
Single Electronic Format (ESEF Regulation) which includes requirements related to the preparation
of the annual report in XHTML format. The consolidated financial statements are tagged using inline
eXtensible 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 exten-
sion 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 549300ITBB1ULBL4CZ12-2023-12-31-en.zip
Statements of Cash Flows
The cash flow statement is presented using the indirect method.
Cash flows from operating activities are stated as the net result for the year 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.
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Notes to the Consolidated financial statements
1.2 New accounting policies and disclosures
1.3 Management's judgements and estimates under IFRS
Implementation of new and revised standards and interpretations
Zealand has, with effect from January 1, 2023, applied and implemented the following new standards
and amendments, which are relevant for Zealand:
• Amendments to IAS 1 Presentation of Financial Statements and to the IFRS Practice Statement 2 (PS2)
Making Materiality Judgements.
• Amendment to IAS 8 Accounting Policies, Changes in Accounting Estimates and Error relating to the
definition of Accounting Estimates
• Amendments to IAS 12 Income taxes relating to (i) deferred tax related to assets and liabilities arising
from a single transaction and (ii) the International Tax Reform – Pillar Two Model Rules
The implementation of the above new and revised standards and amendments did not have any mate-
rial impact on amounts recognized in current and prior periods and is not expected to have a material
impact in the current or future reporting periods.
Standards and interpretations not yet effective
The IASB has issued a number of new standards and updated some existing standards, which are effec-
tive for accounting periods beginning on January 1, 2024, 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.
In preparing consolidated financial statements under IFRS, certain provisions in the standards require
Management's judgements, including various accounting estimates and assumptions. These judge-
ments and estimates affect the application of accounting policies, as well as reported amounts within
the consolidated financial statements and disclosures.
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.
New accounting policy for software
In 2023, Zealand has adopted a new accounting policy on capitalization of implementation costs on IT
projects due to a new type of transactions. On initial recognition they are measured at cost and include
configuration and customization of the underlying software, including training and testing. Refer to note
3.1 Intangible assets for additional information.
The areas involving a high degree of judgement and estimation that at the end of the reporting period
have a significant risk of resulting in material adjustment to the carrying amount of assets and liabilities
within the next financial year are summarized below. Refer to the identified notes for further informa-
tion on the key accounting estimates and judgements utilized in the preparation of these consolidated
financial statements.
Climate change
In preparing the consolidated financial statements, Management has considered the impact of climate
change, particularly in the context of the Group’s sustainability targets. Zealand Pharma targets to
minimize and mitigate the climate impact by continuously evaluating and implementing initiatives that
can reduce any negative impact on the environment from the Group’s operations. These considerations
did not have a material impact on Management’s judgements and estimates, consistent with the
assessment that climate change is not expected to have a significant impact on the Group’s future cash
flows, the carrying amount of non-current assets, or going concern assessment.
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Notes to the Consolidated financial statements
1.3 Management's judgements and estimates under IFRS (continued)
Key accounting estimates and judgements
Note reference
Estimation risk
Accounting topic
Revenue recognition
Judgement in assessing the nature of combined performance obligations within contracts
Judgement in assessing the probability of attainment of milestones
Estimation of stand-alone selling price for each identified performance obligation
Share-based compensation
Judgement in determining assumptions required for valuation of warrant grants
Inventory
Deferred taxes
Estimate of instruments expected to vest
Estimate of net realizable value of Zegalogue® raw materials
Judgement and estimate regarding valuation of deferred income tax assets
Capitalization of research and development costs
Judgement involved in determining when a development project reached technological feasibility
Going concern assumption
Discontinued operations
Judgement in assessing operational cashflow and capital requirements for the forthcoming 12 months from the
balance sheet date
Judgements 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®
Accrual of costs for clinical contracts
Estimate on allocation of total contract costs between start-up, patient treatment and wrap-up phases for clinical
trials including estimate of value for expected change orders.
Right-of-use assets
Estimate in assessing the recoverable amount under the finance lease agreement for the US Boston office
2.1
4.9
3.5
5.1
3.1
1.1
2.10
2.5
3.3
Moderate
Low
Moderate
Moderate
Moderate
Low
Low
Low
Low
Moderate
Low
Low
Zealand Pharma ∞ Annual Report 2023 2 Results for the year
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2.0
Results for
the year
This section includes disclosures related to the
consolidated statement of loss. A detailed
description of the results for the year is
provided in the Financial Review section
in the Management’s Review.
2.1 Revenue
2.2 Information about geographic areas
2.3 Royalty expenses
2.4 Cost of goods sold
2.5 Research and development expenses
2.6 Selling and marketing expenses
2.7 General and administrative expenses
2.8 Staff costs
2.9 Other operating items
2.10 Discontinued operations
2.11 Earnings per share
91
95
95
95
96
97
97
98
98
99
101
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.
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
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Notes to the Consolidated financial statements
2.1 Revenue (continued)
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.
Royalties
Some 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 passthrough
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 spec-
ified good or service to be provided to the customer is controlled by the Company before that good or
service is transferred to the customer.
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.
Management’s 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.
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Notes to the Consolidated financial statements
2.1 Revenue (continued)
Recognized revenue can be specified as follows for all agreements and product sales:
DKK thousand
Alexion Pharmaceuticals Inc.
Boehringer Ingelheim International GmbH
Novo Nordisk A/S
Sanofi-Aventis Deutschland GmbH
2023
2022
4,094
223,725
34,149
70,784
69,027
-
34,959
-
Total revenue from license and collaboration agreements
332,752
103,986
Gross product sales
Sales rebates
Returns and sales reductions
- Hereof related to discontinued operations
Sale of goods revenue from continuing operations
Total revenue from continuing operations
Total revenue recognized over time
Total revenue recognized at a point in time from continuing operations
Total revenue recognized at a point in time from discontinued operations
Milestone revenue
Royalty revenue
Reimbursement revenue for R&D services
Product sales
10,036
-
-
-
10,036
164,651
-69,526
-7,513
-87,612
-
342,788
103,986
38,244
304,544
-
76,181
27,805
87,612
294,509
27,805
841
37,402
10,036
-
76,181
-
Total revenue by revenue stream from continuing operations
342,788
103,986
Product sales
Total revenue by revenue stream from discontinued operations
-
-
87,612
87,612
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 agreement is described further in note 6.7 Collaborations and tech-
nology licenses.
Under the Alexion license, research and development agreement, Zealand has received an upfront
non-refundable payment of USD 25 million for the Complement C3 program and a concurrent USD
15 million equity investment in Zealand at a premium to the market price. These payments have been
received and recognized in revenue in prior years.
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 digit to low double digit
royalty payments. Zealand is furthermore eligible to receive non-refundable upfront payments of USD 15
million each for up to three additional targets, with 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 are 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.
The remaining deferred revenue was recognized in December 2022. In 2023, the revenue of DKK 4.1
million under the Alexion agreement solely relates to compensation on a time and material basis for R&D
services.
Boehringer Ingelheim International GmbH agreement
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 agree-
ment, Boehringer obtained global development and commercialization rights to the lead drug candidate,
survodutide. Boehringer funds all research, development, and commercialization activities under the
agreement.
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94
Notes to the Consolidated financial statements
2.1 Revenue (continued)
Under the agreement, Zealand is eligible to receive a EUR 30 million milestone payment on initiation
of Phase 3 clinical trials for survodutide. In November 2023, Boehringer initiated the Phase 3 program
with survodutide in patients living with obesity or overweight (SYNCHRONIZE™) that consists of
three global clinical trials, which triggered the milestone payment. 85% of the payment was received
in December 2023 with 15% withholding taxes that will be paid out upon approval of Zealand’s WHT
exemption application. For further information about potential future milestone payments refer to note
6.7 Collaborations and technology licenses.
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.
Within this Novo Agreement, Zealand identified five distinct performance obligations:
1. Delivery of license for Zegalogue® (completed in 2022)
2. Delivery of transitional services
3. Delivery of R&D services
4. Submission of EU marketing authorization application (completed in 2023)
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 obliga-
tions, being the delivery of the license for Zegalogue®, services related to submission of EU marketing
authorization application and delivery of specified development activities. The allocation has been based
on Management’s estimate of relative stand-alone selling prices. For performance obligations in respect to
services related to submission of EU marketing authorization application and delivery of specified develop-
ment 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 the delivery of the license for Zegalogue® was estimated using the residual approach. The alloca-
tion of the transaction price to the performance obligations not compensated on a time and material basis
is summarized below:
1. Delivery of license for Zegalogue®: DKK 28 million (completed in 2022)
4. Submission of EU marketing authorization application: DKK 13 million (completed in 2023)
5. Delivery of specified development activities: DKK 14 million (ongoing)
The performance obligations related to the delivery of the license for Zegalogue® were completed at a
point in time (September 2022) and revenue of DKK 28 million was recognized in 2022. The submission
of EU marketing authorization application has been recognized over a period of time (completed in June
2023). The revenue of DKK 13 million has been recognized with DKK 3 million in 2022 and DKK 10 million
in 2023 respectively.
The delivery of specified development activities are recognized 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 delivery of specified development activities are
performed by an indeterminate number of acts over the development timeline. Revenue from delivery of
the specified development activities has been recognized with DKK 2 million in 2022 and DKK 6 million in
2023 respectively, resulting in a remaining obligation as of December 31, 2023, of DKK 6 million.
Sanofi-Aventis Deutschland GmbH agreement
In 2023, USD 10 million in milestone payments associated with lixisenatide were received from Sanofi.
Out of the USD 10 million from Sanofi, Zealand will pay USD 1.3 million in royalty expenses to Alkermes
in line with a termination agreement following the dissolution of a former joint venture with Elan
Corporation (now Alkermes), stipulating that Alkermes is entitled to 13% of payments received by Zealand
in respect to lixisenatide under the Sanofi License Agreement. As of December 31, 2023, there are no
other outstanding milestone payments associated with the license agreement with Sanofi. All royalties
related to lixisenatide were sold to Royalty Pharma in 2018.
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Notes to the Consolidated financial statements
2.2 Information about geographic areas
(DKK thousand)
Denmark
United States
Germany
Total continuing operations
United States
Total discontinued operations
Non-current
assets
Revenue
2023
Non-current
assets
Revenue
2022
44,185
4,094
294,509
342,788
-
-
136,819
13,033
-
34,959
69,027
-
143,740
21,748
-
149,851
103,986
165,488
-
-
87,612
87,612
-
-
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.
2.3 Royalty expenses
Accounting policies
Royalty expenses comprise contractual amounts payable to third parties that are derived from milestone
payments. Royalty expenses are recognized in the income statement when the related payments and
milestone events in the corresponding collaboration agreements materialize.
Royalty expense associated with lixisenatide under the Sanofi License Agreement
We have agreed to pay some of our revenue in deferred payments or royalties to third parties. At the
time of the dissolution of a former joint venture with Elan Corporation, plc (Elan) and certain of its
subsidiaries that were party to the joint venture agreement with us, we agreed to pay royalties to Elan
– now Alkermes plc, as successor in interest to a termination agreement between us and the Elan enti-
ties - including 13% of future payments we receive in respect of lixisenatide under the Sanofi License
Agreement. In addition, we have agreed to pay a royalty of 0.5% of the total amounts we receive in
connection with our SIP-modified peptides, including lixisenatide, to one of the inventors of our SIP
technology, who is one of our employees. The royalty to be paid to this inventor is calculated on the
basis of all the amounts we receive, including license payments, milestone payments and sales. In 2023
royalty expenses of DKK 9.1 million relate to the mentioned inventor (2022: DKK 0 million).
The development compared to the prior year is a result of the completed restructuring announced in
March 2022 closing all commercial activities in the US to pursue partnerships on Zealand’s late-stage
clinical portfolio, including delisting from the Nasdaq Global Select Market in the U.S.
2.4 Cost of goods sold
Costs of goods sold in 2023 of DKK 10.0 million (2022: DKK 0 million) relates to inventory utilized in the
production under the supply agreement with Novo Nordisk A/S. The inventory was measured at net
realizable value which equals the agreed selling price with Novo Nordisk A/S. Therefore, an equivalent
revenue from sale of goods of DKK 10.0 million has been recognized, thus resulting in neutral effect
on gross profit. The offsetting DKK 10.0 million in product sales is included in revenue, refer to note 2.1
Revenue.
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Notes to the Consolidated financial statements
2.5 Research and development expenses
Accounting policies
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.
Management’s judgements and estimates
Treatment of research and development expenses
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 Intangible assets for a more detailed description on the treatment of Zealand's
development expenses related to internal development projects.
Accrual of costs for clinical contracts
Management estimates expenses to be recognized from Contract Research Organizations (CROs) based
on an estimate on allocation of total contract costs between start-up, patient treatment and wrap-up
phases for clinical trials including an estimate of treatment cost per patient and value of expected
change orders.
Total contract costs are allocated to each phase using the below split for all Zealand’s CRO contracts
based on previous experiences:
• Service fee: Start-up (20%), Patient treatment (75%), Wrap-up (5%)
• Pass through: Start-up (5%), Patient treatment (90%), Wrap-up (5%)
CRO contracts are recognized over the contract period based on an estimate of the contract’s cost
driving element which could be either i) patients or ii) time. If the primary goal of the study is to get a
certain number of patients through the study, then patients is used as the cost driving element. Time is
used if the study runs through a certain timeline regardless of how many patients that are enrolled.
At the end of each reporting period, Management estimates any expected change orders, which are
recognized up front with an amount corresponding to the completion rate of the contract (patients or
time). The remaining change order amount will be recognized over the remaining contract period.
DKK thousand
Staff costs (note 2.8)
Amortization, depreciation, impairment losses on intangible assets, property
plant and equipment, and right of use assets
Other external research and development expenses
Total research and development expenses
- Hereof related to discontinued operations
2023
2022
-256,310
-233,474
-18,717
-23,851
-409,875
-361,632
-684,902
-618,957
-
4,913
Total research and development expenses from continuing operations
-684,902
-614,044
Since the capital raise completed in April 2023, Zealand has intensified its research and development
activities which have been continuously increasing throughout 2023. The increase compared to 2022
comes from project expenses across all therapeutic areas along with increased hiring within Zealand’s
R&D area.
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Notes to the Consolidated financial statements
2.6 Selling and marketing expenses
2.7 General and administrative expenses
Accounting policies
Accounting policies
Selling and marketing expenses relate to Zealand’s commercial activities, including costs related to
preparing the market for Zealand’s 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.
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.
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 (note 2.8)
2023
2022
DKK thousand
-14,455
-75,346
Staff costs (note 2.8)
Amortization, depreciation, impairment losses on intangibles assets,
property, plant and equipment, and right-of-use assets
Other external sales and marketing expenses
Total sales and marketing expenses
- Hereof related to discontinued operations
Total sales and marketing expenses from continuing operations
-120
-16,052
-30,627
-
-30,627
-23
-88,567
-163,936
131,638
-32,298
In 2023, total sales and marketing expenses have been primarily related to preparing the market for
Zealand’s remaining late-stage rare disease assets and in pursuing strong strategic partners for future
commercialization. In 2022, all commercial activities in the US were discontinued following the
company announcement in March 2022 on restructuring.
Amortization, depreciation, impairment losses on intangibles assets,
property, plant and equipment, and right-of-use assets
Other external general and administrative expenses
Total general and administrative expenses
- Hereof related to discontinued operations
Total general and administrative expenses from continuing operations
-185,302
-237,210
The decrease in total general and administrative expenses compared to prior year is mainly a result of
the delisting from the US stock exchange in 2022, significantly reducing insurance premiums paid by
Zealand.
2023
2022
-105,256
-118,308
-6,249
-5,662
-73,797
-130,365
-185,302
-254,335
-
17,125
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Notes to the Consolidated financial statements
2.8 Staff costs
Accounting policies
2.9 Other operating items
Accounting policies
Wages and salaries are recognized in the income statement in the period in which services for wages
and salaries is rendered to the Company
DKK thousand
2023
2022
Other operating items comprise non-revenue income and expenses related to Zealand’s operations that
are 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.
DKK thousand
2023
2022
Total staff costs can be specified as follows:
Wages and salaries
Share-based compensation (note 4.9)
Pension schemes (defined contribution plans)
Government grants
Other payroll and staff-related costs
Total staff costs
- Hereof related to discontinued operations
Total staff costs from continuing operations
The amount is charged as:
Research and development expenses
Sales and marketing expenses
General and administrative expenses
Other operating items - restructuring costs
Discontinued operations
Total staff costs
Average number of employees
-268,078
-369,311
-61,426
-21,189
7
-52,286
-19,672
5
Restructuring costs - continuing operations
-25,335
-31,676
Insurance
-376,021
-472,940
Loss on retirement of fixed assets
-
110,426
Write-down of US Boston lease
-376,021
-362,514
Reversal of inventory write-down (note 3.5)
-256,310
-231,022
-14,455
-7,870
-105,256
-104,524
-
-
-19,098
-110,426
-376,021
-472,940
Total other operating items from continuing operations
Restructuring costs - discontinued operations
Impairment of production equipment (note 3.2)
Reversal of inventory write-down (note 3.5)
Loss on disposal group V-GO (note 2.10)
Total other operating items from discontinued operations
Presentation in income statement:
235
247
Other operating income
-
-
-
-11,000
15,979
4,979
-
-
-
-
-
-19,098
-37,033
-1,456
-
-
-57,587
-56,738
-9,725
22,564
-40,743
-84,642
15,979
-11,000
-
-57,587
For additional information refer to note 4.9 Share-based instruments and note 6.1 Remuneration of the
Board of Directors and Executive Management.
For further information on restructuring costs included in other operating items in 2022, refer to note
2.9 Other operating items.
Other operating expenses
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Notes to the Consolidated financial statements
2.9 Other operating items (continued)
As of December 31, 2023 Management has estimated the net realizable value of raw materials to be DKK
7.9 million as all remaining materials are expected to be utilized in the production and sale under the
supply agreement with Novo Nordisk A/S, and therefore a reversal of Zegalogue® inventory write-down
of DKK 16.0 million has been made, reference is made to note 3.5 Inventories. The partial reversal of the
inventory write-down of DKK 22.6 million in 2022 primarily related to Zegalogue© finished goods which
were transferred to Novo Nordisk A/S as a result of the global license and development agreement as
announced in September 2022.
Impairment of right-of-use assets relates to an impairment of the US Boston office of DKK 11.0 million.
The DKK 11.0 million comprise DKK 3.5 from impairment of furniture, fixtures & equipment (FF&E), DKK
1.3 million from impairment of right-of-use assets ("ROU"), and DKK 6.2 million from onerous contract
(not recovered operating expenses and real estate taxes). The change in estimate of the recoverable
amount reflects Management’s assessment of future cash flows and market conditions from subleasing
the US Boston lease, where the initial feedback from the real estate agent has indicated a lower rent
level than anticipated previously thereby triggering impairment, refer to note 3.3 Right-of-use assets and
lease liabilities.
Insurance in 2022 comprised a one-off cost to cover any claims against directors and officers that
would arise following the delisting from the US stock exchange. Restructuring costs from discontinued
operations in 2022 comprised 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 operations in 2022 comprised 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.
Impairment of production equipment in 2022 is related to equipment acquired to be able to upscale the
production of Zegalogue©. Loss on disposal group V-GO covers the accounting loss incurred in 2022 as
a result of the divestment of the V-GO activities. Please refer to note 2.10 Discontinued operations for
further information.
2.10 Discontinued operations
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.
Management's judgements and estimates
On March 30, 2022, the group announced its intention to exit the US sales activities including the V-GO
activity. The activities were successfully divested through an asset purchase agreement with MannKind
Corporation dated May 29, 2022. On September 7, 2022, the group announced the transfer of the
commercial rights for Zegalogue© to Novo Nordisk A/S effectually ending all efforts to commercialize
the Group's products via its own sales force in 2022.
Management has exercised judgement in determining that the activities around commercialization of
V-GO products via Zealand's own sales force and the transfer of commercial rights for Zegalogue© met
the criteria for classification as a discontinued operations and in the segregation of results from discon-
tinued 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 sepa-
rately as a discontinued operation in the income statement.
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Notes to the Consolidated financial statements
2.10 Discontinued operations (continued)
The results and the cash flow of the discontinued activities are presented below as discontinued opera-
tions for the period ended December 31, 2023, and December 31, 2022:
DKK thousand
Revenue
Cost of goods sold
Gross profit
Research and development expenses
Sales and marketing expenses
Administrative expenses
Other operating items
Net operating expenses
Result before tax
Corporate tax
Net result for the year from discontinued operations
2023
2022
-
-
-
-
-
-
-
-
-
-
-
87,613
-70,688
16,925
-4,913
-133,695
-17,125
-84,642
-240,375
-223,450
-13,075
-236,525
All assets and liabilities included in the V-GO disposal group were derecognized as of May 29, 2022, with
the closure of the asset purchase agreement with MannKind Corporation. As a result, no assets or liabil-
ities were classified 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
Intangible assets
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
Lease liabilities
Total liabilities of disposal group
Net assets of disposal group
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
DKK thousand
2023
2022
Consideration:
Cash flows from discontinued operations
Net cash outflow from operating activities
Net cash inflow from investing activities
Net cash outflow from financing activities
Net cash decrease generated from the discontinued operation
-
-
-
-
-155,238
106,380
-1,064
-49,922
Cash consideration
Purchase price adjustment
Other financial assets
Total consideration
Loss on sale of disposal group - recognized as other operating items from
discontinued operations
As part of the license and development agreement with Novo Nordisk A/S as described in note 2.1 Reve-
nue, finished goods with a value of DKK 21.3 was transferred as part of the contract.
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In the calculation of the diluted loss per share for 2023, 1,970,432 potential ordinary shares related to
share-based payment instruments have been excluded as they are anti-dilutive (2022: 2,190,503).
On January 8, 2024, Zealand announced an issue of 3,761,470 new ordinary shares, which represent
the remaining authorization, at a subscription price of DKK 386.45 per new share resulting in gross
proceeds of DKK 1.45 billion. The capital increase was completed in January 2024. Please refer to note
6.8 Subsequent events for further information.
Notes to the Consolidated financial statements
2.11 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
2023
2022
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
Weighted average number of ordinary shares
Weighted average number of treasury shares
-703,739
-965,610
-
-236,525
-703,739
-1,202,135
56,881,075
46,502,969
-292,488
-302,817
Weighted average number of ordinary shares excluding treasury shares
used in the calculation of basic/diluted earnings per share
56,588,587
46,200,152
Loss per share from continuing operations -basic/diluted (DKK)
Loss per share from discontinued operations -basic/diluted (DKK)
Total loss per share - basic/diluted (DKK)
-12.44
-
-12.44
-20.90
-5.12
-26.02
Zealand Pharma ∞ Annual Report 2023 3 Operating assets and liabilities
Contents
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102
3.0
Operating assets
and liabilities
This section covers the operating assets and related
liabilities that form the basis for Zealand’s activities.
Assets related to Zealand’s financing activities are
described in detail in section 4.0 Capital structure,
financial risks and related items.
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 Trade and other payables
102
104
106
108
108
109
110
110
3.1 Intangible assets
Accounting policies
Internal development programs
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.
Software
Software comprises capitalized implementation costs on IT projects initially measured at cost. Costs
include configuration and customization of the underlying software, including training and testing.
Capitalization ceases when the asset is in the condition necessary for it to be capable of operating in
the manner intended by Management. The intangible assets are subsequently measured at cost less
accumulated amortization and any impairment losses according to IAS 38. Amortization is calculated on
a straight-line basis over the estimated useful life which is 3-5 years and is included in the income state-
ment under general and administrative expenses.
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 &
Development 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.
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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:
• the development project is clearly defined and identifiable and the attributable costs can be meas-
ured reliably during the development period; and
• the technological feasibility, adequate resources to complete and a market for the product or an
internal use of the product can be documented; and
• Management has the intent to produce and market the product or to use it internally.
DKK thousand
Cost at January 1, 2023
Additions
Cost at December 31, 2023
Amortization and impairment at January 1, 2023
Amortization for the year
Amortization and impairment at December 31, 2023
Carrying amount at December 31, 2023
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.
Amortization and impairment for the financial year has been charged as:
General and administrative expenses
Total
Software
-
12,508
12,508
-
-253
-253
12,255
-253
-253
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.
In 2023, Zealand has implemented a new budget tool along with a new enterprise resource planning
system (ERP) to further strengthen Management reporting. In 2023, a new quality assurance (QA) system
has also been implemented with going-live date in December 2023. These investments have been made
to provide Zealand with future economic benefits and are capitalized according to the new accounting
policy for software.
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Notes to the Consolidated financial statements
3.1 Intangible assets (continued)
3.2 Property, plant and equipment
DKK thousand
Cost at January 1, 2022
Disposals
Transferred to V-GO disposal group (note 2.10)
Currency translation
Cost at December 31, 2022
Amortization and impairment at January 1, 2022
Impairment for the year
Amortization for the year
Disposals
Transferred to V-GO disposal group (note 2.10)
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
Licenses,
rights and
patents
2,530
-2,530
-
-
-
-
2,530
-
-2,530
-
-
-
-
-2,530
-
-2,530
Intellectual
property
Physician
relationship
13,692
65,613
-
-
-13,692
-69,443
-
-
3,830
-
13,692
14,353
-
-
-
-
2,057
-
-13,692
-17,361
-
-
-
-
-
-
951
-
-
-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 2.10 Discontinued operations for further information.
Licenses, rights, and patents as of 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.
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.
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Notes to the Consolidated financial statements
3.2 Property, plant and equipment (continued)
DKK thousand
Plant and
machinery
Other
fixtures and
fittings
Leasehold
improve-
ments
Assets
under con-
struction
DKK thousand
Plant and
machinery
Other
fixtures and
fittings
Leasehold
improve-
ments
Assets
under con-
struction
Cost at January 1, 2023
66,828
15,997
38,193
Transfers
Additions
Disposals
Currency translation
Cost at December 31, 2023
Accumulated depreciation and impairment at
January 1, 2023
Depreciation for the year
Impairment for the year
Disposals
Currency translation
Accumulated depreciation and impairment
at December 31, 2023
Carrying amount at December 31, 2023
Depreciation and impairment for the financial
year has been charged as:
Research and development expenses
Sales and marketing expenses
General and administrative expenses
Total
-
9,043
-15,066
-
870
1,386
-427
-60
-
812
-
-98
60,805
17,766
38,907
52,339
5,330
-
-14,919
-
42,750
18,055
-5,320
-
-10
-5,330
11,233
2,372
1,173
-427
-12
14,339
3,427
-1,775
-68
-1,702
-3,545
7,788
3,296
2,270
-
-12
13,342
25,565
-2,523
-51
-2,992
-5,566
870
-870
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Impairment in 2023 on other fixtures and fittings of DKK 1.2 million and DKK 2.3 million on leasehold im-
provements relate to the US Boston office and is included in other operating expenses, refer to note 2.9 Other
operating items. For further information on the impairment assessment refer to Management’s judgements
and estimates in note 3.3 Right-of-use assets and lease liabilities.
Disposals on plant and machinery mainly relate to scrap of old lab equipment in May 2023.
Cost at January 1, 2022
Transfers
Additions
Disposals
Transferred to V-GO disposal group (Note 2.10)
Currency translation
Cost at December 31, 2022
Accumulated depreciation and impairment at
January 1, 2022
Depreciation for the year
Impairment for the year
Disposals
Transferred to V-GO disposal group (Note 2.10)
Currency translation
Accumulated depreciation and impairment
at December 31, 2022
Carrying amount at December 31, 2022
Depreciation and impairment for the financial
year has been charged as:
Research and development expenses
General and administrative expenses
Other operating items
Discontinued operations
Total
90,797
268
2,985
-1,433
-25,790
1
66,828
54,216
7,903
742
-1,433
-9,090
1
52,339
14,489
-6,214
-
-742
-1,689
-8,645
15,835
1,644
73
-905
-763
113
15,997
9,240
3,145
71
-905
-357
39
36,600
2,915
293
-
-1,801
186
38,193
5,434
3,187
-
-
-884
51
11,233
4,764
7,788
30,405
-2,315
-779
-71
-28
-3,216
-2,417
-770
-
-
-3,187
12,112
-4,827
6,089
-10,092
-2,563
151
870
-
-
10,092
-10,092
-
-
-
870
-
-362
-9,730
-10,092
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.
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Notes to the Consolidated financial statements
3.3 Right-of-use assets and lease liabilities
Accounting policies
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 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.
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.
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.
Impairment
If circumstances or changes in Zealand's operations indicate that the carrying amount of right-of-use
assets ("ROU") may not be recoverable, Management reviews that ROU for impairment. The basis for
the review is the recoverable amount of the ROU, 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 ROU. If the carrying amount is greater than the recoverable amount, the ROU is
written down to the recoverable amount. An impairment loss is recognized in the income statement
when the impairment is identified.
Management's judgements and estimates
Management has estimated the recoverable amount of the right-of-use asset related to the US Boston
office as of December 31, 2023. The impairment in 2023 of DKK 11.0 million reflects an assessment of
the ROU's carrying amount against its recoverable amount, considering factors such as future cash
flows and market conditions for office rentals in Boston, Massachusetts. Zealand has entered into an
irrevocable lease agreement until 2029 thereby knowing the expected cash flows many years ahead and
Management is currently investigating possibilities on subleasing the US office to a third party. The initial
feedback from the real estate agent has indicated a lower rent level than previously anticipated thereby
triggering impairment.
The recoverable amount has been calculated by applying a discount rate of 4.5% on future cash flows
being the annual effective discount rate from the lease contract. Future cash flows are projected with
2% annual escalations and current projections include an estimate of the recoverable rent payments
until the end of the lease term on August 31, 2029, partly offset by non-recovered operating expenses
and real estate taxes.
The estimated recoverable amount is subject to sensitivity if the projected level for base rent per square
feet changes; however, Management has chosen a conservative approach in the calculations, and
therefore the risk for a significant change in the recoverable amount is deemed immaterial.
The DKK 1.3 million from impairment of right-of-use assets ("ROU") is included in other operating
expenses, refer to note 2.9 Other operating items.
The total provision for onerous contract of DKK 6.2 million has been recognized as an addition to lease
liabilities as of December 31, 2023, out of which DKK 1.4 million is short-term and DKK 4.8 million is
long-term.
No impairment losses have previously been recognized for the right-of-use asset in Zealand Pharma
U.S., Inc.
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107
Notes to the Consolidated financial statements
3.3 Right-of-use assets and lease liabilities (continued)
Amounts recognized in the statement of financial position
The statement of financial position shows the following amounts relating to right-of-use assets:
Set out below are the carrying amounts of lease liabilities and the movements during the period:
DKK thousand
As at January 1, 2023
Additions
Depreciation expense
Impairment
Currency translation
As at December 31, 2023
As at January 1, 2022
Additions
Depreciation expense
Transferred to V-GO disposal group (note 2.10)
Currency translation
As at December 31, 2022
Office
Buildings
Other
fixtures and
fittings
113,379
1,860
-12,557
-1,266
-532
100,884
133,371
-
-13,710
-8,128
1,846
113,379
1,581
1,344
-1,025
-
21
1,921
1,623
736
-778
-
-
1,581
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
a lease expiration date of August 31, 2029 with the opportunity to sublease. Equipment and vehicles are
leased over a period of 3-4 years with no extension option.
DKK thousand
As at January 1
Additions
Accretion of interest
Payments
Transferred to V-GO disposal group (note 2.10)
Currency translation
As at December 31
Current
Non-current
The following amounts are recognized in the 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 from leases
Depreciation for the financial year has been charged as:
Research and development expenses
General and administrative expenses
Total amount recognized in profit and loss
2023
2022
122,729
139,523
5,680
2,890
992
3,286
-12,711
-13,719
-
643
-8,836
1,483
119,231
122,729
16,655
102,575
14,729
108,000
-13,610
-2,892
-16,502
-17,664
-17,664
-8,951
-4,659
-13,610
-14,488
-3,286
-17,774
-13,719
-13,719
-10,375
-4,113
-14,488
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108
Notes to the Consolidated financial statements
3.4 Other investments
Accounting policies
3.5 Inventories
Accounting policies
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.
Investment in Beta Bionics Inc.
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 0.6%
(2022 :1.5%) ownership of Beta Bionics, Inc., and is measured at a fair value of DKK 14.0 million as of
December 31, 2023 (2022: DKK 30.9 million).
In determining fair value, Zealand considers the value per share from the most recent closed financing
round, adjusted for valuation infliction points through the balance sheet date, including (i) discount
for lack of marketability, (ii) information obtained from third party valuation reports, and (iii) company
announcements.
The following have been recognized as financial items:
DKK thousand
Other investments at January 1
Fair value adjustments
Other investments at December 31
2023
2022
30,943
-16,939
14,004
26,907
4,036
30,943
The fair value adjustment of the investment in 2023 of DKK 16.9 million is a combination of a reduc-
tion of the implied value per share provided by a third-party valuation expert. Also in August 2023,
Beta Bionics announced the closing of $100 million series D funding. Zealand did not participate in this
financing round thus having a dilutive effect on Zealand’s ownership compared to 2022. Reference is
made to note 4.3 Financial assets and liabilities for fair value disclosures.
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.
Zealand reviews inventory for excess or obsolescence and writes down inventory that has no alternative
uses to its net realizable value. Economic conditions, customer demand and changes in purchasing and
distribution can affect the carrying amount of inventory. 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 fore-
casts and the estimated fair value of inventory.
Management's judgements and estimates
As of December 31, 2023, Zegalogue® related raw materials at cost amounted to DKK 7.9 million.
Management has estimated the net realizable value to be DKK 7.9 million, and therefore a reversal of
Zegalogue® inventory write-down of DKK 16.0 million has been made as the raw materials are expected
to be utilized under the license and development agreement with Novo Nordisk A/S.
With the March 30, 2022, restructuring announcement an allowance for loss on Zegalogue® raw mate-
rials and finished goods of DKK 45.6 million was recognized in 2022 due to uncertainties around the
future sales channels for the product. The allowance was included as discontinued operations under
other operating expenses as a restructuring cost. As all Zegalogue® finished goods were transferred to
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109
Notes to the Consolidated financial statements
3.5 Inventories (continued)
Novo Nordisk A/S 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.
In 2023, an additional reversal of prior years’ inventory allowance of DKK 16.0 million was recognized
under other operating income.
As of December 31, 2022, Zegalogue® related raw materials and semi-finished goods at cost amounted
to DKK 33.6 million. Due to uncertainties whether the materials would be utilized in the production
under the supply agreement with Novo Nordisk A/S, Management estimated the net realizable value to
be DKK 1.3 million at the end of 2022.
DKK thousand
Raw materials
Total
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
2023
2022
7,935
7,935
1,286
1,286
2023
2022
-32,257
-
3,635
15,979
-
-25,653
-45,547
16,867
22,623
-547
Accumulated write-downs, December 31
-12,643
-32,257
The write-downs and the reversal of write-downs on inventory recognized in 2023 and 2022 are
included in other operating items. Please refer to note 2.9 Other operating items.
3.6 Trade and other receivables
Accounting policies
Receivables are designated as financial assets measured at amortized cost and are initially measured
at fair value less transaction costs and subsequently measured in the balance sheet at amortized cost,
which generally corresponds to nominal value less expected credit loss provision.
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, 2023, and December 31, 2022, are immaterial.
Deposits relate to up-front payments on rental of office buildings measured at nominal value. Other
receivables include accrued interest on marketable securities and VAT receivables measured at nominal
value. Prepaid expenses include expenditures related to a future financial period. Prepaid expenses are
measured at historical cost.
DKK thousand
Deposits
Trade receivables
Receivables related to license and collaboration agreements
Other receivables
Prepaid expenses
Total trade and other receivables
Non-current
Current
2023
2022
8,908
1,004
68,793
24,556
34,892
9,409
1,361
56,431
3,438
63,088
138,153
133,727
15,794
122,359
18,105
115,622
Non-current other receivables comprise deposits on office buildings and accrued insurance costs.
Current other receivables mainly comprise accrued interest from marketable securities and VAT
receivables.
Receivables related to license and collaboration agreements include withholding tax receivable from
the Boehringer Ingelheim (BI) milestone payment of DKK 35.7 million.
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Financial statements
110
Notes to the Consolidated financial statements
3.7 Other financial assets
Accounting policies
3.8 Trade and other payables
Accounting policies
Please refer to accounting policies in note 4.3 Financial assets and liabilities.
Please refer to accounting policies in note 4.3 Financial assets and liabilities.
DKK thousand
Other financial assets at January 1
Additions during the year
Fair value adjustments
Currency adjustments
Other financial assets at December 31
2023
6,901
-
474
-
7,375
-
6,573
319
9
6,901
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 4% (2022: 10%) and an estimated probability of 50% to reach the first sales-related milestone
(2022: 50% and 25% respectively to reach the first two sales-related milestones).
Reference is made to note 4.3 Financial assets and liabilities for fair value disclosures.
2022
DKK thousand
Trade payables
Payable for treasury shares (note 4.8)
Employee benefits
Other payables
Discount and rebate liabilities
Accruals development projects
Total trade and other payables
Non-current
Current
2023
2022
91,607
81,045
51,730
10,077
-
33,465
53,156
41,600
58,348
10,452
2,201
34,063
267,924
199,820
-
267,924
19,058
180,762
Non-current trade and other payables as of December 31, 2022, of DKK 19.1 million related to frozen
holiday funds under the Danish Holiday Act (Ferieloven) effective as of September 1, 2020. In August
2023, the amount has been paid in full to Lønmodtagernes Feriemidler through a voluntary payment.
Zealand Pharma ∞ Annual Report 2023 4 Capital structure, financial risk and related items
Contents
The big picture
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Financial statements
111
4.0
Capital structure,
financial risk and
related items
This section includes disclosures related to how
Zealand manages its capital structure, cash
position and related risks and 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
111
112
115
117
117
118
124
125
126
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 adequacy of our available funds will depend on various 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 potentially raise additional funds through equity or
debt financings, collaborative agreements with partners, or from other sources.
At the annual general meeting on March 31, 2023, Zealand was authorized to increase the share capital by
nominally DKK 10,340,419 during the period until March 29, 2028. On December 31, 2023, nominally DKK
3,761,471 of the authorization remains.
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, 2023.
On March 12 and 13, 2023 the Company provided statements on the closure of Silicon Valley Bank (SVB). At
that time Zealand had DKK 162.6 million in cash deposits which were fully recovered.
On March 30, 2023, Zealand announced an issue of 6,578,948 new ordinary shares at a subscription price of
DKK 228 per new share resulting in gross proceeds of DKK 1.5 billion. The capital increase was completed in
April 2023.
On June 30, 2023, Zealand entered a new DKK 350 million Revolving Credit Facility provided by Danske
Bank. The facility matures in 2 years from June 2023 where any outstanding amount must be repaid in full
and carries an interest of CIBOR + fixed margin. As of December 31, 2023, Zealand has not made any draw
downs on this credit facility.
In the light of the SVB closure in March 2023, mentioned above and settlement of the Oberland Capital
loans in May 2023, Zealand has adopted a new treasury policy in order to achieve an even higher diver-
sification in the management of funds. In 2023, Zealand has invested a significant amount in marketable
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112
Notes to the Consolidated financial statements
4.1 Capital management (continued)
4.2 Financial risks
securities, primarily as a result of excess liquidity from the capital raise in April 2023, but also to minimize
credit risk. As of December 31, 2023, Zealand has DKK 1,183.7 million invested in marketable securities,
corresponding to 72% of total cash, cash equivalents and marketable securities (2022: DKK 108.6 million,
9%). For additional information refer to note 4.5 Marketable securities.
In December 2023, Zealand signed a new loan agreement with the European Investment Bank (EIB)
providing a credit of up to EUR 90 million, refer to note 4.6 Borrowings for an overview of the loan terms.
Tranche A of EUR 50 million is expected to be disbursed in the beginning of 2024.
The Company and the Board of Directors monitor 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 2023. Neither Zealand Pharma A/S nor any of its subsidiaries are subject to
externally imposed capital requirements other than the conditions related to the new revolving credit facility
in Danske Bank and the new loan from the European Investment Bank (EIB), refer to note 4.6 Borrowings.
Under the revolving credit facility (RCF) in Danske Bank, Zealand is required to have a minimum collateral
value of 120% of the loan commitment (DKK 420 million) held in the designated custody accounts under
management by Danske Asset Management and Zealand’s designated cash accounts attached to the
custody accounts. Zealand must also comply with a covenant on fulfilling certain information requirements.
The EIB loan contains a negative pledge clause preventing Zealand Pharma A/S or any of its subsidiaries
from creating or permitting to subsist any new security over any of its assets. The pledges are described
further in note 4.4 Cash and cash equivalents and a description of Zealand’s total commitments can be
found in note 6.4 Commitments.
On January 8, 2024, Zealand announced an issue of 3,761,470 new ordinary shares, which represent the
remaining authorization, at a subscription price of DKK 386.45 per new share resulting in gross proceeds of
DKK 1.45 billion. The capital increase was completed in January 2024. Please refer to note 6.8 Subsequent
events for further information.
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 treasury policy is to reduce the Group’s sensitivity to fluctuations in exchange
rates, interest rates, credit rating and liquidity. Zealand’s financial management policy has been
endorsed by Zealand’s Audit Committee and ultimately approved by Zealand’s Board of Directors.
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.
Research and development, and regulatory milestone payments in license and collaboration agree-
ments are denominated in foreign currencies, namely USD and EUR. However, as milestone payments
are unpredictable in terms of timing and materialization, the payments are not included in the basic
exchange rate risk evaluation.
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, 2023, Zealand holds DKK 313.9 million (2022: DKK 460.4 million) of its cash, cash
equivalents and marketable securities in USD.
Interest rate risk
Zealand has a policy of avoiding financial instruments that expose the Group to any unintended finan-
cial risks. During 2023, all cash has been held in current bank accounts in DKK, USD, and EUR.
Following the closure of Silicon Valley Bank in March 2023, Zealand has made a shift towards more
investments of surplus cash balances into low-risk marketable securities being fixed income instruments
with an investment graded rating of AAA to BBB-.
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113
Notes to the Consolidated financial statements
4.2 Financial risks (continued)
The excess liquidity from the capital increase completed in April 2023, has been placed into a new DKK
portfolio and EUR portfolio held at Danske Bank. The Group’s marketable securities portfolio comprises
various types of bonds and securities as described in note 4.5 Marketable securities. All bonds held as of
December 31, 2023 mature within 13 months. The bonds are reinvested on the maturity date to mini-
mize lost interest.
As of December 31, 2023, Zealand has borrowings amounting to DKK 0 million (2022: DKK 336.8
million), embedded derivatives amounting to DKK 0 million (2022: DKK 80.6) and lease liabilities
amounting to DKK 119.2 million (2022: DKK 122.7 million). Lease liabilities as of December 31, 2023,
includes a provision for onerous contract of DKK 6.1 million as part of the impairment of the right-
of-use asset related to the US Boston office as described in detail in note 3.3 Right-of-use assets and
lease liabilities. The change in borrowings and embedded derivatives is a result of the settlement of
the Oberland Capital loan as described in note 4.6 Borrowings. An increase in interest rates would be
reflected in an 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. Cash and bonds are
associated with an inherent credit risk, though not considered to be very high, as the counterparties are
banks with investment-grade ratings (i.e. BBB- or higher from Standard & Poor’s).
On the date of Silicon Valley Bank’s closure on March 10, 2023, Zealand had DKK 162.6 million in cash
deposits which were fully recovered. Following the SVB closure a new treasury policy was adopted as
described in note 4.1 Capital management.
Liquidity risk
The purpose of Zealand’s cash management is to ensure that the Group always has sufficient and flex-
ible financial resources at its disposal.
Zealand’s short-term liquidity is managed and monitored by means of the Company’s annual
budget process and 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.
In 2023, Zealand has lifted the covenants on cash and cash equivalents from the Oberland Capital loan
following the settlement in May 2023. Zealand’s total liquidity reserve has increased significantly in 2023,
with the DKK 1.5 billion capital raise in March (surplus funds invested in marketable securities), the new
Danske Bank credit facility, and in December 2023, the loan with the European Investment Bank.
DKK thousand
Cash and cash equivalents
Cash and cash equivalents (subject to certain conditions)
Marketable securities
Danske Bank revolving credit facility (RCF)
EIB loan (Tranche A)
2023
2022
449,311
-
1,183,746
350,000
372,645
720,626
348,608
108,611
-
-
Total liquidity reserve as of December 31
2,355,702
1,177,845
Zealand Pharma entered in December 2023 into a loan agreement with the EIB, whereby the Tranche A
of this loan for DKK 373 million is expected to be received in Q1, 2024. The conditions for disbursement
of the first tranche (Tranche A) have been met late 2023, i.e. Boehringer Ingelheim’s initialization of the
Phase 3 program with survodutide in patients living with obesity or overweight (SYNCHRONIZE™).
In January 2024, Zealand completed a capital increase thereby receiving another DKK 1.45 billion in
gross proceeds as described in note 6.8 Subsequent events.
Reference is made to going concern considerations in note 1.1 Basis of preparation, going concern
assumption, nature of the business and accounting policies for further description of the going concern
assessment.
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114
Notes to the Consolidated financial statements
4.2 Financial risks (continued)
Sensitivity analysis
The table shows the impact on profit/loss and equity of changes in valuation of the Company’s oper-
ations in USD, i.e. cash, cash equivalents, marketable securities and lease liabilities as of December 31,
2023, and December 31, 2022, assuming a 10% fluctuation increase in the USD conversion rate.
DKK thousand
USD
2023
2022
Fluctuation
Effect
Fluctuation
Effect
+/-10%
+/-29,187
+/-10%
+/-21,209
Contractual maturity (liquidity risk)
Details on the Group’s aggregate liquidity risk on financial assets and liabilities is provided below.
The following table details the Group’s remaining contractual maturity for its financial liabilities with
agreed repayment periods. The table has been prepared using the undiscounted cash flows for financial
liabilities, based on the earliest date on which the Group can be required to pay. The table includes both
interest and principal cash flows. To the extent that the specific timing of interest or principal flows is
dependent on future events, the table has been prepared based on Management’s best estimate of such
timing at the end of the reporting period.
DKK thousand
< 12 months
1-5 Years
> 5 Years
Total
Carrying
amount
Lease liabilities
Trade and other payables
Total financial liabilities as of
December 31, 2023
Borrowings including embedded
derivatives
Lease liabilities
Trade and other payables
Total financial liabilities as of
December 31, 2022
15,377
267,924
61,094
47,763
-
-
124,234
267,924
119,231
267,923
283,301
61,094
47,763
392,158
387,154
260,970
14,995
180,762
191,515
59,553
-
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
All cash flows are non-discounted, including interest. Contractual obligations related to payments under
agreements for development projects, including CROs, are disclosed in note 6.4 Commitments, as their
maturity dates are uncertain.
Except for 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.
Cash flows denominated in USD are translated into DKK at the USD/DKK rates applicable as of
December 31, 2023.
On May 10, 2023, Zealand settled the Oberland Capital loan, including embedded derivatives as
described in note 4.6 Borrowings. Long-term trade and other payables in 2022 of DKK 19.1 million
related to frozen holiday funds paid in full in August, 2023, refer to note 3.8 Trade and other payables.
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Financial statements
115
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.
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
minimizing the use of unobservable inputs. For financial instruments that are measured in the balance
sheet at fair value, IFRS 13 for financial instruments 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)
• Level 3 - Inputs for the asset or liability that are not based on observable market data (that is, unob-
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income.
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 reclassifies debt investments only when its business model for managing those assets changes.
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.
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Notes to the Consolidated financial statements
4.3 Financial assets and liabilities (continued)
DKK thousand
Note
2023
2022
DKK thousand
Categories of financial instruments
Trade and other receivables excluding prepaid expenses
Financial assets at amortized costs
Marketable securities (Level 1)
Marketable securities (Level 2)
Other investments (Level 3)
Other financial assets (Level 3)
103,261
103,261
70,640
70,640
4.5
4.5
3.4
3.7
1,183,746
-
-
108,611
14,004
7,375
30,943
6,901
Carrying amount at January 1, 2023
Fair value adjustments through profit and loss
Exchange rate effect through other comprehensive income
Derecognition of call option on settlement of Oberland Capital loan
Carrying amount at December 31, 2023
Financial assets measured at fair value through
profit and loss
1,205,125
146,455
DKK thousand
Borrowings
Lease liabilities
Trade and other payables
Financial liabilities measured at amortized cost
Embedded derivatives, lender's call option (Level 3)
4.6
Financial liabilities measured at fair value through
profit and loss
-
167,986
267,923
435,909
-
-
320,743
122,729
199,820
643,292
80,603
80,603
Carrying amount at January 1, 2022
Fair value adjustments through profit and loss
Exchange rate effect through other comprehensive income
Equity investment in bond portfolio
V-GO milestones
Bifurcation of embedded derivatives
Carrying amount at December 31, 2022
No transfer between fair value levels have occurred during 2023 and 2022.
Financial
assets
(Level 3)
Financial
liabilities
(Level 3)
37,844
-16,465
-
-
21,379
80,603
-1,161
-1,916
-77,526
-
Financial
assets
(Level 3)
Financial
liabilities
(Level 3)
325,949
4,355
9
-299,042
6,573
-
37,844
-
62,613
-27
-
-
18,017
80,603
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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 borrowings including embedded derivatives
2023
2022
449,311
-
720,626
348,608
449,311
1,069,234
Restricted cash and cash equivalents
Under the second amendment to the Oberland loan agreement signed on September 20, 2022, the
outstanding principal of USD 50 million was on December 31, 2022, held in a designated deposit
account subject to certain conditions. The cash and securities could 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 Borrowings. On May 10, 2023, Zealand settled the Oberland Capital loans in a one-time
payment. With the final repayment of the Oberland loan agreement on May 10, 2023, all previous
restrictions have been released.
Pledges provided in relation to revolving credit facility in Danske Bank
As security for the undrawn revolving credit facility of DKK 350 million, as disclosed in note 4.6
Borrowings, the Group has provided pledge over Zealand’s designated custody accounts under
management by Danske Asset Management and pledge over Zealand’s designated cash accounts
attached to the custody accounts. As of December 31, 2023, marketable securities and cash and
cash equivalents held in these pledged accounts amount to DKK 454.5 million and DKK 0.1 million,
respectively.
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 three measurement cate-
gories which Zealand considers when classifying 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 rate gains/(losses). Impairment losses are presented as
a separate line item in the statement of profit or loss.
• Fair value through other comprehensive income (FVOCI): Assets that are held with an objective that
results in collecting contractual cash flows and selling financial assets are measured at FVOCI. A gain
or loss on assets that is subsequently measured at FVOCI is recognized in other comprehensive profit
or loss. Impairment losses and foreign exchange rate gains/(losses) are presented as a separate line
item in the statement of profit or loss.
• Fair value through profit and loss (FVTPL): Assets that do not meet the criteria for amortized cost or
fair value through other comprehensive income (FVOCI) are measured at FVTPL. A gain or loss on a
debt investment that is subsequently measured at FVTPL is recognized in profit or loss and presented
net within financial income or expenses in the period in which it arises.
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Notes to the Consolidated financial statements
4.5 Marketable securities (continued)
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 prior year's classification.
Transactions are recognized at trade date.
DKK thousand
DKK portfolio:
DK bonds
Total DKK portfolio
EUR portfolio:
IG Corporate bonds (investment-grade)
Total EUR portfolio
USD portfolio:
Asset-backed securities
Certificates of deposit
Commercial paper
Corporate bonds
U.S. Treasury Debt
U.S. Treasury Repurchase Agreement
Total USD portfolio
Total portfolio
2023
2022
509,948
509,948
454,467
454,467
2,738
125,178
69,823
-
-
-
-
24,392
-
-
-
84,219
2,664
18,928
219,331
1,183,746
-
-
108,611
108,611
4.6 Borrowings
Accounting policies
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 derivative.
Transaction costs attributable to the debt host contract are deducted from the initial fair value and amortized
over the term of the loan as part of the effective interest rate on the loan. Transaction costs attributable to
non-closely related embedded derivatives are expensed on initial recognition. Subsequently, borrowings are
measured at amortized 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 amortized cost. The cash
flows attributable to such non-closely related embedded derivatives are separated and accounted for as
derivative financial instruments.
Loan commitments are not recognized. Lender fees and transaction costs attributable to unconditional loan
commitments are treated as prepaid transaction costs if the Group expects to draw down on the facility. If
the Group has no specific plans for draw down on the loan commitment, the transaction costs are amortized
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 orig-
inal 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
In October 2023, the USD portfolio previously held at Silicon Valley Bank has been transferred to JP
Morgan. The DKK and EUR portfolios are held at Danske Bank.
All fees incurred in connection with a modification of the terms accounted for as an extinguishment are
recognized as an expense.
All marketable securities have a fixed interest rate but different maturities. As of December 31, 2023, all
outstanding securities were expected to mature within 13 months (2022: within 3 months).
Derecognition of financial liabilities: A financial liability is derecognized when the obligation under the liability
is settled, discharged, cancelled, or expires. The difference between the carrying amount of a financial
liability extinguished and the consideration paid is recognized through profit and loss.
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Notes to the Consolidated financial statements
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the loan within the first four years of the agreement was also increased. As a result, it was Management's
assessment that the value of Zealand's prepayment option as of December 31, 2022, is immaterial.
4.6 Borrowings (continued)
DKK thousand
Borrowings at amortized cost
Embedded derivatives at fair value
Total borrowings including embedded derivatives
-
-
-
320,743
80,603
401,346
On December 31, 2021, Zealand entered into a USD 100 million loan agreement with Oberland. The
following describes subsequent amendments to the loan agreement and the final settlement in May
2023.
Following a change in the strategy announced on March 30, 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 positive value as Zealand
effectively 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 prepaying the loan. The basis
for measuring 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 as of December 31, 2021, 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 covenants were lifted, and Zealand gained access to the cash. The premium on repayment of
During 2022 the loan agreement with Oberland Capital was 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 included 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 additional 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, as release from the liquidity covenant as a market partic-
ipant 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 recog-
nized 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.
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Notes to the Consolidated financial statements
4.6 Borrowings (continued)
Oberland amendment no. II
On September 20, 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 measurement 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
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
repayment.
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
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Notes to the Consolidated financial statements
4.6 Borrowings (continued)
Settlement of Oberland Capital loan
On April 20, 2023, Oberland Capital exercised an option in the loan agreement to provide an additional
loan of USD 12.5 million on similar terms as the existing loan, bringing the total principal amount to USD
62.5 million. The additional loan of USD 12.5 million was not provided in cash.
On May 10, 2023, Zealand settled the Oberland Capital loans, including embedded derivatives, in a
one-time payment of USD 77.3 million (DKK 525.7 million). With this final repayment, the Group’s loan
agreement with Oberland Capital was fully settled. As a result of the settlement Zealand in 2023 recog-
nized a net loss of USD 19.9 million (DKK 135.6 million) under financial items, including derecognition
of Oberland Capital’s call option with a carrying value as of May 10, 2023, of USD 11.4 million (DKK 77.5
million).
For an overview of the events under the loan agreement from December 31, 2022, and until repayment
on May 10, 2023, please refer to the movement table presented below.
With the final repayment, Oberland has released all rights to collateral provided for under the loan
agreement.
Management's judgements and estimates
Fair value measurement of lender's call option
Fair value of the lender call option is determined 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. As of December 31, 2022, the likelihood of a lender call option trigger event
within the next two years was assessed as realistic and fair value of the option was assessed to DKK 80.6
million. At the time of settlement on May 10, 2023, the fair value of the option amounted to DKK 77.5
million. The fair value change, DKK 1.2 million (2022: DKK -62.6 million), is included in financial items,
while the effect of changes to the exchange rate, DKK 1.9 million (2022: DKK 0.0 million), is included in
other comprehensive income. Valuation is based on unobservable data (level 3).
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Notes to the Consolidated financial statements
4.6 Borrowings (continued)
Changes arising from Oberland loan agreement - including changes for level 3 embedded derivatives
Non-cash
changes
recognized in
profit and loss
Non-cash
changes over
other com-
prehensive
income
Carrying
value as of
December
31, 2022
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
Cash
changes
Repayment
of debt,
Including
premium
Currency
adjustments
Carrying
value as at
December
31, 2023
Borrowings as amortized costs
320,743
211,938
Embedded derivatives at fair value
- Lender call option
Other receivables
Total impact from Oberland
loan agreement
80,603
-8,184
-77,526
1,176
393,162
135,588
-
-
-
-
-
-
-
-
-
-
-
-
-1,161
-
-1,161
-
943
-
-
15,688
-7,960
-525,664
-1,916
263
-
-
-
-
-8,943
-
-
943
15,688
-9,613
-525,664
-8,943
Non-cash
changes
recognized in
profit and loss
Non-cash
changes over
other com-
prehensive
income
Carrying
value as of
December
31, 2021
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
Cash
changes
Repayment
of debt,
Including
premium
Currency
adjustments
Borrowings as amortized costs
647,906
60,387
22,381
-18,017
-18,581
-
1,337
47,829
-422,085
Embedded derivatives at fair value
- Zealand prepayment option
Embedded derivatives at fair value
- Lender call option
Other receivables
Total impact from Oberland
loan agreement
-
-
-
71,050
-
-
-
-
-7,764
647,906
131,437
14,617
-
18,017
-
-
-
-
-4,890
-71,050
62,613
-
-
-
-
-
-
-
54,052
-
-27
-2,928
-
-
-14,003
-32,651
-
-
-
-23,471
-8,437
1,337
54,052
44,460
-436,088
-32,651
393,162
-
-
-
-
Carrying
value as at
December
31, 2022
320,743
-
80,603
-8,184
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Notes to the Consolidated financial statements
4.6 Borrowings (continued)
Refinancing with new credit facility
The repayment of the Oberland Capital loan has been refinanced through a new DKK 350 million
Revolving Credit Facility provided by Danske Bank and milestones from existing partners. The facility
matures in 2 years from June 2023 where any outstanding amount must be repaid in full and carries an
interest of CIBOR + fixed margin. The main terms of the facility are listed below.
In 2023, there have been no significant transaction costs related to the facility, thus no transaction costs
have been capitalized from entering the agreement. As of December 31, 2023, total amount of undrawn
borrowing facilities amounts to DKK 350 million.
agreement with Zealand that will entitle the EIB to receive warrants in Zealand when each tranche is
drawn down. The warrants will, subject to the warrant terms, entitle the warrant holder to subscribe for
ordinary shares in Zealand at market price.
The conditions for disbursement of the first tranche (Tranche A) have been met and the EUR 50 million
is expected to be available to Zealand in the beginning of 2024. In 2023, DKK 0.7 million was capitalized
through transaction costs related to the loan facility from entering the agreement, which will be amor-
tized over the loan term.
Credit facility terms:
Amount:
Maturity date:
Repayment:
Maximum number of loans and minimum
amount of each loan:
DKK 350 million
June, 2025
Each loan under the Revolving Credit Facility must
be repaid on the last day of its Interest Period. All
outstanding amounts under the Revolving Credit
Facility must be repaid in full on the Final Maturity Date.
The loan can be called with a minimum of DKK
25,000,000, or if greater, in integral multiples of DKK
5,000,000. A maximum of 5 loans can be outstanding at
any given time.
Upfront fee:
Interest on withdrawals:
Commitment fee
0.4% of the Amount.
CIBOR + fixed margin.
45% of fixed margin.
For a description of the pledges provided in relation to the credit facility refer to note 4.4 Cash and cash
equivalents.
Warrants:
New loan facility from the European Investment Bank (EIB)
In December 2023, Zealand has entered into a new EUR 90 million finance agreement with the
European Investment Bank (EIB). The loan, which has been offered at competitive terms, is structured
with part of the interest paid at recurring intervals during the term and part being deferred (non-
compounding) for payment at maturity of each tranche. In addition, the EIB will enter into a warrant
Loan terms:
Amount:
Maturity date:
Repayment:
Prepayment fee:
Floating rate:
The loan facility may be utilized in up to three tranches of EUR 50
million (Tranche A), EUR 20 million (Tranche B) and EUR 20 million
(Tranche C), respectively, with disbursement of each tranche subject
to pre-specified milestones being met. A floating rate and a deferred
interest rate shall be paid on each tranche.
6 years from the disbursement date of the relevant tranche.
Each tranche under the EIB loan must be repaid on the maturity date.
1-5% of principal amount if prepaid before maturity.
EURIBOR + fixed margin (cash pay margin).
Deferred interest rate:
Low single digit for all tranches.
Commitment fee:
Low single digit on the daily undrawn and uncancelled balance of
the relevant tranche. The commitment fee becomes effective from
the date falling 6 months from the date of the agreement (Tranche
A) or from the date falling 6 months from conditions being fulfilled
(Tranches B and C).
With the disbursement of each tranche, warrants are granted to EIB
in accordance with the warrant agreement. The warrants granted will
vest as the loan(s) are repaid. If not utilized, any warrants will expire
twenty years from the signing date of the contract.
Once the warrants have vested, EIB has a put option enabling them to
sell the warrants back to Zealand at fair market value at any time.
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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, banking fees from managing finan-
cial transactions, gains and losses from sale of marketable securities and dividends from marketable
securities.
DKK thousand
Interest income
Interest expenses from financial liabilities measured at amortized costs
Interest expenses from lease liabilities
Fair value adjustments of embedded derivatives
– Zealand prepayment option
Loss on settlement of borrowings, including embedded derivatives
under Oberland loan
Loss on debt recognition – amendment I
Gain on debt recognition – amendment II
Gain from sale of marketable securities
Fair value adjustment of lender's call option
Fair value adjustment of marketable securities
Fair value adjustment of other investments
Amortization of loan costs
Exchange rate adjustments (primarily on USD deposits)
Other financial expenses
Financial items in total
Presentation in income statement:
Financial income
Financial expenses
2023
2022
45,324
-21,998
-2,890
6,542
-53,169
-3,286
-
-62,613
-135,588
-
-
1,519
1,161
6,111
-16,465
-943
-9,708
-3,150
-136,627
-131,437
-14,617
23,471
-
71,050
-1,699
4,036
-1,337
25,602
2,569
-134,888
54,115
-190,742
133,270
-268,158
Interest income comprises interest on marketable securities, including interest from the new marketable
securities in Danske Bank from June 2023, which is the main reason for the increase in interest income
compared to 2022.
Interest expenses and banking fees have decreased significantly compared to 2022 following the settle-
ment of the Oberland Capital loans in May 2023 as described in note 4.6 Borrowings. Going forward
interest expenses mainly comprise interest on the newly established credit facility in Danske Bank, the
finance agreement with the European Investment Bank (EIB), and banking fees.
Fair value adjustments of Zealand's prepayment option in 2022, are related to the prepayment option
included in the loan agreement with Oberland. Please refer to note 4.6 Borrowings for further information.
In 2023, loss on settlement of borrowings relates to the settlement of the Oberland loan on May 10, 2023.
In 2022, loss on settlement of borrowings relates to the utilization of the prepayment option from the loan
agreement with Oberland comprised of the partial utilization of the prepayment option, the premium paid
and the capitalized loan costs, which were fully expensed. Reference is made to note 4.6 Borrowings for
further information.
Gain on debt modifications in 2022 comprises the accounting impact of the two amendments to the
Oberland agreement as described in note 4.6 Borrowings.
Fair value adjustment of lender call option in 2022 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
Borrowings.
Fair value adjustment on other investments comprises the accounting impact of the investment in Beta
Bionics as described in note 3.4 Other investments.
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125
Notes to the Consolidated financial statements
4.8 Share capital
Accounting policies
The share capital comprises the nominal amount of Zealand Pharma A/S’s ordinary shares, each at a
nominal value of DKK 1. All shares are fully paid.
The share premium reserve is comprised of the amount received, attributable to shareholders’ equity, in
excess of the nominal amount of the shares issued at the parent company’s capital increases or exercise
of warrants, reduced by any external expenses directly attributable to the offerings. The total nominal
amount from purchase of treasury shares is recognized in retained losses, including any amount excess
of the nominal amount.
Share option schemes
The Group has share option schemes for warrants, performance share units (PSUs) and restricted share
units (RSUs) under which options to subscribe for the Group’s shares have been granted to employees,
Management and Board of Directors. Refer to note 4.9 Share-based instruments for further details.
PSUs and RSUs exercised in each respective year have been settled using the treasury shares of the
Group. Any excess of the cash received from exercise of warrants over the nominal amount of the
shares issued is recorded in share premium.
DKK thousand
Share capital at January 1
Shares issued for cash
Exercise of warrants
Share capital at December 31
2023
2022
51,702
6,579
470
58,751
43,634
7,867
201
51,702
The share capital solely consists of one class of ordinary shares all issued at 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 March 31, 2023, Zealand was author-
ized to increase the share capital by nominally DKK 10,340,419 during the period until March 29, 2028.
On December 31, 2023, nominally DKK 3,761,471 of the authorization remains. The Company has an
unused authorization 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 April
15, 2026.
On March 30, 2023, Zealand announced an issue of 6,578,948 new ordinary shares at a subscription
price of DKK 228 per new share resulting in gross proceeds of DKK 1.5 billion. The capital increase was
completed in April 2023.
During 2023, a total of 470,106 new shares (2022: 200,588) have been issued due to exercise of warrant
programs with net proceeds of DKK 63.9 million (2022: DKK 23.8 million) corresponding to an average
exercise price of DKK 136.0 (2022: DKK 118.8).
As announced on January 8, 2024, the Board of Directors exercised the remaining authorization granted
by Zealand's annual general meeting held on March 29, 2023, to increase the Group's share capital by
issue of 3,761,470 new ordinary shares at a subscription price of DKK 386.45 per new share. The aggre-
gate gross proceeds from the private placement in public equity will amount to DKK 1.45 billion and
Zealand intends to use the net proceeds to further strengthen Zealand’s investment in its differentiated
assets targeting obesity. The new shares were issued on January 12, 2024, and Zealand received the net
proceeds of DKK 1.43 billion on January 16, 2024. The costs related to the capital increase were DKK
22.9 million.
For additional information on the potential dilutive effects refer to note 2.11 Earnings per share.
Treasury shares
As of December 31, 2023, there were 373,134 treasury shares, equivalent to 0.6% of the share capital
(2022: 230,063, 0.4%). The treasury shares are allocated to performance share units (PSUs) and restricted
share units (RSUs).
As of December 31, 2023, DKK 81.0 million included in trade and other payables, comprise Zealand's
commitment to a bank credit relating to the acquisition of 300,000 new treasury shares in 2023.
The payable amount for treasury shares as of December 31, 2022, of DKK 41.6 million as disclosed in
note 3.8 Trade and other payables has been settled and paid in full during 2023, and is reflected in the
cash flow statement for 2023. The DKK 41.6 million was recognized under equity in 2021 when Zealand
committed to the purchase of 200,000 new treasury shares.
Zealand Pharma ∞ Annual Report 2023 Contents
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126
Notes to the Consolidated financial statements
4.9 Share-based instruments
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 estab-
lished equity-settled incentive plans based on Restricted share units (RSUs), Performance share units
(PSUs) and warrants.
Warrants, PSUs and RSUs are granted by the Board of Directors in accordance with authorizations given
to it by Zealand Pharma A/S’s shareholders. Grants to members of the Board of Directors and members
of the Executive Management are subject to the Remuneration Policy adopted at the Annual General
Meeting.
Share-based compensation expense
The total expense recognized for the year under staff costs arising from share-based instruments was as
follows:
DKK thousand
Recognized as staff costs:
Share-based compensation expenses
Total
Total share-based compensation expenses split on type of award
DKK thousand
PSUs
RSUs
Warrants
Total
2023
2022
61,426
61,426
52,286
52,286
2023
2022
18,209
22,481
20,736
61,426
11,510
16,789
23,987
52,286
Total share-based compensation expenses split on expense type
DKK thousand
The amount is presented as:
Research and development expenses
Selling and marketing expenses
General and administrative expenses
Other operating items
Discontinued operations
Total
2023
2022
29,758
1,732
29,936
-
-
61,426
33,837
649
31,696
-11,241
-2,655
52,286
In 2022, restructuring costs from discontinued operations included a reversal of costs related to forfeited
share-based incentive programs of DKK 2.7 million. Restructuring costs from continuing operations also
included a reversal of costs related to forfeited share-based incentive programs as part of restructuring
costs following the March 20, 2022, company announcement. This is included in other operating items
with DKK 11.2 million. For further information see note 2.9 Other operating items.
Accounting policies
Share-based compensation expenses
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 instruments vest. The offsetting entry is recognized under equity. At each reporting date, an
estimate is made of the number of instruments expected to vest, so the total expense recognized over
the vesting period is equal to fair value of the actual number of instruments which vest. The fair value of
warrants granted is estimated using the Black–Scholes pricing model, whereas for RSUs and PSUs the
closing share price on the day of the grant is used.
In respect of performance obligations, market conditions, such as when the exercisability of an instrument
depends on the achievement of a specified target that is based on the market price or value of the entity’s
equity instruments, relative to an index, are taken into account when estimating the fair value of the award
at the grant date, while non-market vesting conditions, such as forfeiture rates, are taken into account by
adjusting the number of equity instruments included in the measurement of the transaction amount so as
to reflect the number of awards that are expected to vest.
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127
Notes to the Consolidated financial statements
4.9 Share-based instruments (continued)
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.
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 (2022: 6.5 years)
The fair value of the warrants granted in 2023 and 2022 was determined using the Black-Scholes model
using the following inputs:
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:
Grant year
• The expected share price volatility, which is based upon the historical volatility of Zealand's share price.
• The risk-free interest rate, which is determined based on 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
contractual life terms in the current warrant program.
Inputs in determining fair value of warrants:
Life of warrant
Weighted average exercise price/share price (DKK)
These assumptions can vary over time and can change the fair value of future warrants granted.
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:
Volatility (%)
Risk-free interest rate (%)
Exercise period to-from
2023
2022
10 years
5 and 10
years
219.4
93.6
43.0 to 50.3 48.6 to 61.2
2.68 to 2.89 0.86 to 2.14
Apr '26 to
Oct '33
May '23 to
Sep '32
• The historic rate of employee turnover adjusted for significant events.
• Remaining time until vesting.
• Expected achievement of performance goals for PSUs.
Determination of fair value of the instruments granted
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.
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 expire automatically after 5 or 10 years for
warrants granted to Corporate Management and employees, respectively.
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.
The weighted average fair value of warrants granted in 2023 is DKK 114.7 (2022: DKK 43.4).
Warrant programs
A Warrant grants the beneficiary the option to purchase a new share at a fixed price upon vesting. The
only vesting condition is time (service condition).
Incentive programs with outstanding warrants at the end of 2023 and 2022, respectively, have been
offered under different warrant programs. The number of warrants granted in 2023 consists of 290,894
granted on April 19, 2023, and 4,943 granted on October 31, 2023, totaling 295,837 warrants (2022:
896,990).
The warrants granted in 2023 are valued at DKK 33.9 million (2022: DKK 38.9 million) using the Black-
Scholes model. The warrants vest linearly or gradually over 3 years.
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128
Notes to the Consolidated financial statements
4.9 Share-based instruments (continued)
Movement table of warrants granted:
No. of warrants
Warrants outstanding at January 1
Granted during the period
Forfeited during the period
Exercised during the period
Expired during the period
No. of warrants outstanding at December 31
Exercisable at the end of the period
Exercisable within 1 year
Exercisable within 1-2 years
Exercisable within 2-3 years
Warrants outstanding at the end of the period:
Range of exercise prices (DKK)
Weighted-average remaining contractual life
Number held by Executive Management
Weighted
average
exercise
price (DKK)
124.7
219.4
124.7
136.0
155.8
141.6
176.8
97.2
93.1
219.4
2023
1,549,430
295,837
-33,884
-470,106
-6,619
1,334,658
333,302
81,277
631,110
288,969
90.7-300.4
7.00
203,101
No. of warrants
Warrants outstanding at January 1
Granted during the period
Forfeited during the period
Exercised during the period
Expired during the period
No. of warrants outstanding at December 31
Exercisable at the end of the period
Exercisable within 1 year
Exercisable within 1-2 years
Exercisable within 2-3 years
Warrants outstanding at the end of the period:
Range of exercise prices (DKK)
Weighted-average remaining contractual life
Number held by Executive Management
Weighted
average
exercise
price (DKK)
159.6
93.6
175.2
118.8
158.1
124.7
122.7
194.3
97.2
93.0
2022
1,477,194
896,990
-230,302
-200,588
-393,864
1,549,430
465,158
344,717
81,277
658,277
90-224.4
5.8
268,101
The weighted average share price for warrants exercised in 2023 is DKK 252.2 (2022: DKK 189.0).
The Board of Directors has not been granted warrants. Refer to note 6.1 Remuneration of the Board of
Directors and Executive Management for additional information.
Zealand Pharma ∞ Annual Report 2023 Contents
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129
Notes to the Consolidated financial statements
4.9 Share-based instruments (continued)
PSU programs
PSUs grant the beneficiary the right to receive one already existing share upon vesting. Vesting condi-
tions for PSUs consist of both a service condition (time) and a performance condition. The performance
condition can be either market based (cliff vesting) or operational based (graded vesting). The PSUs have
either cliff vesting after 3 years or graded vesting over 3 years.
Operational based PSUs are dependent on pre-determined performance criteria (non-market perfor-
mance conditions) set out to pursue the overall strategic objectives for the Company.
The number of performance share units granted in 2023 consists of 67,576 granted on April 19, 2023
(2022: 286,813). The value per share unit granted is determined based on the Company's closing share
price on Nasdaq Copenhagen A/S on the day of the grant.
The PSUs granted in 2023 are valued at DKK 14.7 million at grant (2022: DKK 28.3 million) based on a
share price of DKK 218.0 (2022: DKK 90.7 to 203.0). The weighted average fair value of PSUs granted
in 2023 is DKK 218.0 (2022: DKK 98.7). Dividends are not expected and thus not incorporated into the
measurement of fair value.
Movement table of PSU granted shares:
No. of PSUs
DKK thousand
No. 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
2023
2022
357,801
-
67,576
-65,550
271,761
35,948
286,813
-71,780
-
-164,941
359,827
357,801
The adjustment made in 2022 of 35,948 units was due to reaching a performance target set out in the
2021 operational based PSU grant.
RSU programs
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 (service condition). The RSUs have either cliff
vesting after 3 years or graded vesting over 3 years.
The number of restricted share units granted in 2023 consists of 126,747 granted on April 19, 2023
(2022: 148,431). The value per share unit granted is determined based on the Company's closing share
price on Nasdaq Copenhagen A/S on the day of the grant.
The RSUs granted in 2023 are valued at DKK 27.6 million (2022: DKK 13.6 million) and are granted at a
share price of DKK 218.0 (2022: DKK 90.7 to 100.2). The weighted average fair value of RSUs granted
in 2023 is DKK 218.0 (2022: DKK 91.6). Dividends are not expected and thus not incorporated into the
measurement of fair value.
Movement table of RSU granted shares:
No. of RSUs
DKK thousand
No. of share units:
At January 1
Granted during the year
Vested during the year
Forfeited during the year
At December 31
2023
2022
283,272
126,747
-91,307
-42,765
460,089
148,431
-116,563
-208,685
275,947
283,272
Sale Instruction Scheme
In 2024, Zealand has decided to establish a Sale Instruction Scheme for its Corporate Management.
The Scheme allows the individual member of the management to give a sales instruction for future
sales at a time where the individual is not in possession of inside information. The Scheme is only to be
used by the Zealand management to sell shares to pay their taxes or the cost of exercising the incen-
tive schemes. Zealand has assisted the management in establishing the Scheme, however, it is at the
individual management member's own risk and liability to use the Scheme and Zealand cannot be held
accountable for any liability.
Zealand Pharma ∞ Annual Report 2023 5 Tax
Contents
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Financial statements
130
5.0
Tax
Zealand Pharma's Tax Policy is reviewed
annually and approved by the Board of Directors.
Please refer to our tax policy on our website:
https://www.zealandpharma.com/wp-content/
uploads/2023/08/Zealand-Pharma-Company-
Tax-Policy-2023.pdf.
5.1 Corporate tax
130
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 losses 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 from changes in
tax rates is 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 losses carried forward, if
Management assesses that these tax assets can be offset against positive taxable income within a
foreseeable future. This judgement 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 are 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 that no deferred tax assets should
be recognized on December 31, 2023 (none recognized in 2022), except for the US entity, which is
expected to have profitable taxable income due to the Group’s transfer pricing setup.
Zealand Pharma ∞ Annual Report 2023 Contents
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131
Notes to the Consolidated financial statements
5.1 Corporate tax (continued)
DKK thousand
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)
- hereof related to discontinued operations
Total income tax expense/(benefit) from continuing operations
2023
2022
DKK thousand
2023
2022
-708,865
-1,195,491
Specification of deferred tax assets:
22.0%
22.0%
Tax losses carried forward (available indefinitely)
3,898,988
3,312,022
Research and development expenses
Intangible assets
Non-current assets
Liabilities
Other
Total temporary differences
800
Calculated potential deferred tax asset at local tax rate
Deferred tax asset not expected to be utilized
Recognized deferred tax asset
-155,950
-263,008
-2,618
-6,512
-
-1,690
-21,768
-28,409
211,821
-5,126
-
-5,126
-806
1,052
-468
5,935
-20,960
283,493
6,644
-13,075
-6,431
1,031,011
76,129
100,444
21,981
412,116
956,816
107,231
105,323
77,168
103,278
5,540,669
4,661,838
1,219,805
1,026,257
-1,218,880
-1,024,240
925
2,017
Zealand Pharma pays corporate income tax in jurisdictions where the operations are profitable.
Corporate income tax is currently only paid in the United States. We are currently in a loss-making posi-
tion in Denmark with an accumulated tax loss carryforward shown in the table below, which can be
offset in future taxable income.
Zealand Pharma accepts government sponsored tax credits and incentives with strict adherence to the
rules and in line with the economic substance of the Company’s business activities. We only accept
credits and incentives which are commonly available. Under Danish tax law, Zealand Pharma is eligible
to receive a DKK 5.5 million cash refund in 2023 (2022: DKK 5.5 million) on qualifying research and
development expenses, which at the same time equally reduces the tax loss carried forward. Zealand
is also eligible for the super deduction in Denmark on certain research and development expenditures.
Unrecognized deferred tax assets relate to tax jurisdictions in Denmark and US.
Adjustment for foreign tax rates
Adjustment relates to difference in the corporate tax rates between Denmark and United States.
Adjustment for non-deductible expenses
Adjustment mainly relates to interest deduction limitation and value adjustment of tax-exempt port-
folio shares in Beta Bionics Inc. In addition, from January 1, 2023, new legislation limiting deduction for
high salaries has come into effect. This is more than offset by non-deductible expenses related to the
Oberland Capital loan in 2023.
Adjustment for warrants
Adjustment relates to timing difference between deduction of warrants in the accounts and the deduc-
tion for tax purposes, along with differences in accounting and tax values.
In accordance with IFRS 2, the fair value of warrants at grant date is recognized as an expense in the
income statement over the vesting period for accounting purposes. For tax purposes, a deduction is
Zealand Pharma ∞ Annual Report 2023 Contents
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Financial statements
132
Notes to the Consolidated financial statements
5.1 Corporate tax (continued)
claimed at the time the warrants, which fulfill certain conditions, are exercised. The deductible amount
is equal to the difference in fair value of the warrants and the exercise price for taxable warrants.
The adjustment relates to Zealand Pharma's warrant incentive schemes and represents the deduct-
ible amount along with an adjustment of the expected future tax deduction on incentive schemes.
Deductions are calculated based on the circumstances for the individual scheme and the recipient.
Zealand Pharma also provides, included in this adjustment, incentive schemes which are non-deduct-
ible for tax purposes.
Adjustment for R&D extra deduction
Adjustment relates to an 8% extra deduction taken on qualifying research and development expenses in
accordance with the government sponsored tax incentive.
Adjustment to prior year
In 2023, the adjustment mainly relates to an interest limitation that was not fully included until the finali-
zation of the tax return for 2022.
Tax assets not recognized
In accordance with the Group’s accounting policies, the value of tax assets originating from Denmark is
not recognized, due to uncertainty regarding when and if they will be realized as a future tax advantage
within a foreseeable future.
Tax assets originating from Zealand Pharma U.S., Inc. have been recognized with an amount of DKK 0.9
million, which is expected to be realized as a future tax advantage within a foreseeable future.
Total tax losses carried forward for the Group amount to DKK 3,899 million.
Zealand Pharma ∞ Annual Report 2023 6 Other disclosures
Contents
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Financial statements
133
6.0
Other
disclosures
6.1 Remuneration of the Board of Directors
and Executive Management
6.2 Fees to auditors appointed at the
annual general meeting
6.3 Contingent assets and liabilities
6.4 Commitments
6.5 Related parties
6.6 Cash flow adjustments
6.7 Collaborations and technology licenses
132
134
134
134
134
135
135
6.1 Remuneration of the Board of Directors and Executive Management
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
Frederik Barfoed Beck1
Louise Gjelstrup¹
Anneline Nansen1,2
Total
Base
board fees
2023
Share-based
compensation
Total
fees
Base
board fees
2022
Share-based
compensation
100
100
100
100
100
100
100
100
100
100
100
966
483
544
544
483
483
664
181
181
181
181
1,066
583
644
644
583
583
764
281
281
281
281
100
100
100
100
100
100
100
100
100
100
100
968
484
545
545
484
484
666
182
182
182
96
Total
fees
1,068
584
645
645
584
584
766
282
282
282
196
1,100
4,891
5,991
1,100
4,818
5,918
1 Employee-elected board members; the table only includes remuneration for board work.
2 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.
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134
Notes to the Consolidated financial statements
6.1 Remuneration of the Board of Directors and Executive Management (continued)
DKK thousand
2023
Remuneration to the Executive Management
Adam Sinding Steensberg1
Henriette Wennicke2
Total
Total Other Corporate Management⁵
Total
2022
Remuneration to the Executive Management
Adam Sinding Steensberg1
Henriette Wennicke2
Emmanuel Dulac3
Matthew Donald Dallas4
Total
Total Other Corporate Management⁵
Total
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 Management in 2023 comprised four members (2022: four)
Base
salary
Bonus
Pension
contribution
Other
short term
benefits
Share-based
compensation
Severance
payments
Total
5,750
2,621
8,371
9,696
4,744
1,441
6,185
5,300
18,067
11,485
4,162
420
2,626
2,248
9,456
9,826
19,282
2,366
168
1,575
860
4,969
4,204
9,173
1,150
524
1,674
1,016
2,690
832
84
525
46
1,487
1,009
2,496
243
267
510
820
1,330
725
41
122
234
1,122
879
2,001
12,950
4,387
17,337
15,467
32,804
11,061
225
-3,265
-581
7,440
10,986
-
-
-
-
-
-
-
6,564
3,194
9,758
3,033
24,837
9,240
34,077
32,299
66,376
19,146
938
8,147
6,001
34,232
29,938
18,426
12,791
64,170
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
135
Notes to the Consolidated financial statements
6.2 Fees to auditors appointed at the annual general meeting
6.4 Commitments
DKK thousand
Audit
Audit-related services and other assurance engagements
Other
Total fees
2023
2,590
940
-
2022
7,862
1,760
389
3,530
10,011
The fee for audit-related services and other assurance engagements, and other services provided to the
Group by EY Godkendt Revisionspartnerselskab in 2023 and 2022 consisted of an audit of the annual
report, quarterly reviews, other audit-related services on various statements for public authorities, and
other accounting advisory services.
6.3 Contingent assets and liabilities
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, future
payments under these agreements qualify as contingent assets. However, it is impossible to measure
the value of contingent assets, and as such, no assets have been recognized.
Guarantees and collaterals
The Group provided floating charge collateral covering all assets in the Company which could be collat-
eralized, including shares in subsidiaries, as collateral for the debt to Oberland. On May 10, 2023, the
Group settled the Oberland Capital loans in a one-time payment. With the final repayment, Oberland
has released all rights to collateral provided for under the loan agreement.
Under the revolving credit facility (RCF) in Danske Bank, Zealand is required to have a minimum collat-
eral value of 120% of the loan commitment (DKK 420 million) held in the designated custody accounts
under management by Danske Asset Management and Zealand’s designated cash accounts attached
to the custody accounts. Zealand must also comply with a covenant on fulfilling certain information
requirements. The pledges are described further in note 4.4 Cash and cash equivalents.
The EIB loan contains a negative pledge clause preventing Zealand Pharma A/S or any of its subsidiaries
from creating or permitting to subsist any new security over any of its assets.
Other purchase obligations
As of December 31, 2023, total contractual obligations related to agreements for development projects,
including CROs, amounted to DKK 304.4 million of which DKK 219.3 million relates to 2024 and DKK
85.1 million to the years 2025 up to and including 2028 (2022: DKK 220.5 million).
6.5 Related parties
Zealand has no related parties with controlling interest.
As part of the license and collaboration agreements that Zealand has entered, once a product is devel-
oped 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 liabili-
ties have been recognized.
Zealand’s other related parties comprise the Company’s Board of Directors and Executive Management.
Aside from the remuneration and other transactions described in note 6.1 Remuneration of the Board
of Directors and Executive Management, there were no other material related party transactions during
2023 and 2022.
Reference is made to note 6.7 Collaborations and technology licenses for descriptions of Zealand’s
collaboration and license agreements.
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
136
Notes to the Consolidated financial statements
6.6 Cash flow adjustments
6.7 Collaborations and technology licenses
DKK thousand
2023
2022
Depreciation, amortization and impairment losses
Deferred revenue
Reversal of inventory write-down
Share-based compensation expenses
Financial income
Financial expenses
Corporate tax
Fair value adjustments
Exchange rate adjustments
25,086
-
-15,980
61,426
-54,115
190,741
-5,125
-
-
117,961
-67,584
-
52,286
-37,780
174,927
9,893
-3,590
23,219
Adjustments for non-cash items in total
202,033
269,332
DKK thousand
Changes in accounts receivable
Changes in prepaid expenses
Changes in other receivables
Changes in inventory
Changes in accounts payable
Changes in other liabilities
Changes in rebate and discount liabilities
Changes in other liabilities and provisions
Changes in working capital in total
2023
2022
-6,756
28,534
-11,849
9,339
39,837
14,218
-2,162
-19,058
52,103
26,636
17,581
6,474
18,221
21,550
-26,452
-22,515
-31,334
10,161
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 6.3 Contingent assets and
liabilities, each agreement is marked with CA (contingent asset) and CL (contingent liability) if applicable.
Complement C3 (collaboration with Alexion, AstraZeneca Rare Disease) (CA)
Zealand and Alexion are collaborating on the discovery and development of novel peptide therapies for
complement-mediated diseases. Under the terms of the agreement entered in March 2019, Alexion and
Zealand entered into an exclusive collaboration for the discovery and development of subcutaneously
delivered peptide therapies directed to up to four complement pathway targets.
The lead program, ZP10068, is an investigational long-acting inhibitor of Complement C3 which has the
potential to treat a broad range of complement mediated diseases. Zealand will lead the joint discovery
and research efforts through the pre-clinical stage, and Alexion will lead development efforts beginning
with Investigational New Drug (IND) filing and Phase 1 trials. Zealand has completed activities to support
advancing ZP10068 into clinical studies. Subsequent regulatory, clinical, and development efforts will
be led and conducted by Alexion.
For the lead target, Zealand is eligible to receive up to USD 115 million in development milestone
payments and up to USD 495 million in sales milestone payments, plus royalties on global sales in the
high single to low double digits. In addition, Alexion has the option to select up to three additional
targets with Zealand being eligible for USD 15 million upfront per target plus potential development/
regulatory milestones for each target selected similar to the lead target with slightly reduced commer-
cial milestones and royalties.
Zealand receives compensation on a time and material basis for certain research and development
services delivered under the contract.
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
137
Notes to the Consolidated financial statements
6.7 Collaborations and technology licenses (continued)
Beta Bionics (Dasiglucagon for bi-hormonal artificial pancreas systems) (CA)
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.
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.
As a part of the collaboration Zealand has made an investment in Beta Bionics. Reference is made to
note 3.4 Other investments for further information.
Boehringer Ingelheim (Obesity/survodutide) (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 agree-
ment, Boehringer obtained global development and commercialization rights to the lead drug candidate,
survodutide. Boehringer funds all research, development, and commercialization activities under the
agreement.
As of December 31, 2023, Zealand is eligible to receive license and milestone payments of up to EUR 315.0
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 Boehringer of all products stemming from this collaboration. In
addition, Zealand retains co-promotion rights in Scandinavia.
In November 2023, Boehringer initiated the Phase 3 program with survodutide in patients living with
obesity or overweight (SYNCHRONIZE™) that consists of three global clinical trials, which triggered a EUR
30 million milestone payment (2022: 0).
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 an 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.
As of December 31, 2023, Zealand is eligible to receive up to USD 10.0 million in sales-based milestones.
The fair value of milestones is recognized as other financial assets, refer to note 3.7 Other financial
assets.
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
138
Notes to the Consolidated financial statements
6.7 Collaborations and technology licenses (continued)
6.8 Subsequent events
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 Nordisk A/S is responsible for the global commer-
cialization 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, and time and material compensation.
Capital increase
As announced on January 8, 2024, the Board of Directors exercised the remaining authorization granted
by Zealand's annual general meeting held on March 29, 2023, to increase the Group's share capital by
issue of 3,761,470 new ordinary shares at a subscription price of DKK 386.45 per new share.
The aggregate gross proceeds from the private placement amount to DKK 1.45 billion and Zealand
intends to use the net proceeds to further strengthen Zealand’s investment in its differentiated assets
targeting obesity.
Zealand retained all non-licensed intellectual property rights to the Company’s other dasiglucagon devel-
opment programs.
The new shares were issued on January 12, 2024, and Zealand received the proceeds on January 16,
2024.
Besides the above mentioned, no events have occurred subsequent to the balance sheet date that
could significantly affect the financial statements as of December 31, 2023.
Disbursement of EIB loan (Tranche A)
As announced on December 22, 2023, Zealand entered into a new EUR 90 million (DKK 671 million)
finance agreement with the European Investment Bank (EIB). The conditions for disbursement of the
first tranche (Tranche A) have been met. In February 2024, Zealand Pharma has accepted disbursement
offer for Tranche A and the related EUR 50 million (DKK 373 million) is expected to be received in March
2024.
As of December 31, 2023, Zealand is eligible to receive up to DKK 22.5 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 A/S.
Zealand is also eligible for compensation on a time and material basis for certain product supply, research
and development services delivered under the contract.
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.
As of December 31, 2023, Zealand is eligible to receive up to USD 60.0 million in regulatory and commer-
cial 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.
In 2023, USD 10 million in milestone payments associated with lixisenatide were received from Sanofi. Out
of the USD 10 million from Sanofi, Zealand will pay USD 1.3 million in royalty expenses to Alkermes in line
with a termination agreement following the dissolution of a former joint venture with Elan Corporation
(now Alkermes), stipulating that Alkermes is entitled to 13% of payments received by Zealand in respect to
lixisenatide under the Sanofi License Agreement. As of December 31, 2023, there are no outstanding mile-
stone payments associated with the license agreement with Sanofi (2022: USD 10 million).
Zealand Pharma ∞ Annual Report 2023 Financial statements of the parent company
Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
139
Contents – parent company
Statement of loss
Statement of financial position
Statement of cash flows
Statement of changes in equity
Notes
140
141
142
142
143
1
2
3
4
5
Significant accounting policies, and
significant accounting estimates and assessments
Revenue
Royalty expenses
Research and development expenses
Sales and marketing expenses
6 General and administrative expenses
7
8
Information on staff and remuneration
Financial items
9 Other operating items
10 Corporate tax
11 Discontinued operations
12
Intangible assets
13 Property, plant and equipment
14 Right-of-use assets and lease liabilities
143
143
144
144
144
144
144
146
146
147
147
149
150
151
15
Investments in subsidiaries
16
Inventories
17 Trade and other receivables
18 Trade and other payables
19 Fees to auditors appointed at
the annual general meeting
20 Contingent assets, liabilities and
other contractual obligations
21 Transactions with related parties
22 Adjustments for non-cash items
23 Changes in working capital
24 Significant events after the balance sheet date
Alternative performance measures for the Group
(non-audited)
152
152
153
153
153
153
154
154
154
154
155
Zealand Pharma ∞ Annual Report 2023
Financial statements of the parent company
Statement of loss
Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
140
Financial statements of the parent company
Statement of loss for the years ended
December 31, 2023 and 2022
Statement of comprehensive loss for the years ended
December 31, 2023 and 2022
DKK thousand
Revenue
Royalty expenses
Cost of goods sold
Gross profit
Research and development expenses
Sales and marketing expenses
General and administrative expenses
Other operating income
Other operating expenses
Net operating expenses
Operating result
Dividend from subsidiaries
Financial income
Financial expenses
Result before tax
Corporate tax
Net result for the year from continuing operations
Net result for the year from discontinued operations
Net result for the year
Note
2023
2022
DKK thousand
Note
2023
2022
Net result for the year
Other comprehensive income/(loss)
Total comprehensive result for the year
-903,775
-1,019,962
-
-
-903,775
-1,019,962
2
3
4
5
6
9
9
8
8
278,131
-7,447
-10,036
260,648
141,741
-37,756
-
103,985
-690,260
-613,993
-29,886
-32,285
-184,058
-236,977
15,979
-
-
-88,188
-888,225
-971,443
-627,577
-867,458
-
48,779
-330,569
38,624
36,710
-9,268
-909,367
-801,392
10
11
5,592
5,005
-903,775
-796,387
-
-223,575
-903,775
-1,019,962
Zealand Pharma ∞ Annual Report 2023 Statement of financial position
Statement of financial position
Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
141
Financial statements of the parent company
Statement of financial position as of
December 31, 2023 and 2022
DKK thousand
Assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Other investments
Investments in subsidiaries
Other receivables
Other financial assets
Total non-current assets
Inventory
Trade and other receivables
Corporate tax receivable
Marketable securities
Cash and cash equivalents (subject to certain
conditions)
Cash and cash equivalents
Total current assets
Total assets
Note Group note
2023
2022
DKK thousand
Note Group note
2023
2022
12
13
14
15
17
16
17
10
12,255
47,047
89,772
14,004
36,186
15,786
7,375
3.4
3.7
Share capital
-
Share premium
46,169
97,571
30,943
62,228
157,039
6,901
Retained losses
Total shareholders' equity
Other payables
Lease liabilities
Total non-current liabilities
222,425
400,851
Lease liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total shareholders' equity and liabilities
7,935
178,249
11,000
4.5
1,183,746
4.4
4.4
-
302,157
1,683,087
1,286
134,760
5,500
-
348,608
361,496
851,650
1,905,512
1,252,501
18
14
14
18
4.8
58,751
51,702
6,406,225
4,921,232
-4,928,620
-4,005,383
1,536,356
967,551
303
83,977
84,280
12,024
272,852
305,820
19,058
91,096
110,154
11,522
163,274
174,796
284,876
284,950
1,905,512
1,252,501
Zealand Pharma ∞ Annual Report 2023 Statement of cash flows
Statement of changes in equity
Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
142
Financial statements of the parent company
Statement of cash flows for the years ended
December 31, 2023 and 2022
DKK thousand
Note
2023
2022
DKK thousand
Statement of changes in shareholders' equity at
December 31, 2023 and 2022
Share
capital
*Share
premium
*Retained
losses
Net result for the year
Adjustment for other non-cash items
Changes in working capital
Financial income received
Financial expenses paid
Corporate taxes received
22
23
336,963
-103,446
33,816
-8,675
91
13,049
-53,814
-
-999
7,698
Net result for the year
Purchase of treasury shares
Net settlement of PSUs
Net settlement of RSUs
Exercise of warrants
Cash flow used in operating activities
-645,026
-1,054,028
Share-based compensation expenses
-
-
-
-
470
-
-
-
-
-
63,480
-
-903,775
-1,019,962
Equity at January 1, 2023
51,702
4,921,232
-4,005,383
Proceeds from sale of marketable securites
665,336
297,559
Purchase of marketable securities
Purchase of intangible assets
Purchase of property, plant and equipment
Divestment of activities
-1,843,301
-12,508
-11,241
-
11
-
-
-8,838
64,475
Capital increases
Costs related to capital increases
6,579
1,493,421
-
-71,908
Equity at December 31, 2023
58,751
6,406,225
-4,928,620
1,536,356
Equity at January 1, 2022
Net result for the year
43,634
3,891,993
-3,037,895
897,732
-1,019,962
-1,019,962
Cash flow from/(used in) investing activities
-1,201,714
353,196
Net settlement of PSUs
Net settlement of RSUs
Exercise of warrants
Share-based compensation expenses
Capital increases
Costs related to capital increases
-
-
-
201
-
-
-
-
31,703
-
7,867
1,044,890
-
-47,354
Equity at December 31, 2022
51,702
4,921,232
-4,005,383
* Other reserves of DKK 915.8 million from the 2022 Annual Report have been split into Share premium and Retained losses to ease read-
ability of movements in shareholders’ equity.
-903,775
-81,045
66
91
-
61,426
-
-
72
116
-
52,286
-
-
Total
967,551
-903,775
-81,045
66
91
63,950
61,426
1,500,000
-71,908
72
116
31,904
52,286
1,052,757
-47,354
967,551
Lease installments
Proceeds from issuance of shares
Purchase of treasury shares
Proceeds from issuance of shares related to exercise of share-
based compensation
Costs related to issuance of shares
Cash flow from financing activities
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange rate adjustments
Cash and cash equivalents at end of year
14
-11,649
-11,714
1,500,000
1,052,757
-41,600
-
63,950
-71,908
31,904
-47,354
1,438,793
1,025,593
-407,947
710,104
-
324,761
377,189
8,154
302,157
710,104
Zealand Pharma ∞ Annual Report 2023 Notes to the Financial statements of the parent company
Notes
Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
143
Notes to the Financial statements of the parent company
1 Significant accounting policies, and significant accounting estimates and assessments
2 Revenue
Significant accounting policies
Basis of preparation
The separate financial statement of the parent company has been prepared in accordance with IFRS
Accounting 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 section 1.0 Basis of preparation in the consolidated financial statements.
Notes have only been included in the Parent Financial Statement where amounts differ from the
consolidated financial statement.
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 15 Investments in subsidiaries.
Please refer to note 2.1 Revenue in the consolidated financial statements for accounting policies for the
revenue streams and additional information regarding revenue.
Recognized revenue can be specified as follows for all agreements:
DKK thousand
2023
2022
Alexion Pharmaceuticals Inc.
Boehringer Ingelheim International GmbH
Novo Nordisk A/S
ZP SPV 3 K/S
Total revenue from license and collaboration agreements
Product sales - External
Product sales - Intercompany
- Hereof related to discontinued operations
Sale of goods revenue from continuing operations
4,093
223,725
34,150
6,127
268,095
10,036
-
-
10,036
69,028
-
34,013
38,700
141,741
21,292
-10,791
-10,501
-
Total revenue from continuing operations
278,131
141,741
Total revenue recognized over time
Total revenue recognized at a point in time from continuing operations
Total revenue recognized at a point in time from discontinued operations
Milestone revenue
Royalty revenue
Reimbursement revenue for R&D services
Product sales
Revenue from research and development services rendered to ZP SPV 3 K/S
Total revenue by revenue stream from continuing operations
Product sales
Total revenue by revenue stream from discontinued operations
44,371
233,760
-
223,725
840
37,403
10,036
6,127
278,131
-
-
114,881
26,860
10,501
26,860
-
65,390
10,791
38,700
141,741
10,501
10,501
Revenue of DKK 6.1 million (2022: 38.7 million) from ZP SPV 3 K/S relates to IP rights for the Alexion
Pharmaceutical Inc. agreement transferred from Zealand Pharma A/S to ZP SPV 3 K/S in 2020. ZP SPV 3
K/S reimburses ZP A/S for the R&D services carried out on behalf of ZP SPV 3 K/S.
Zealand Pharma ∞ Annual Report 2023 Contents
The big picture
Our business
Sustainability
Corporate governance
Financial statements
144
Notes to the Financial statements of the parent company
3 Royalty expenses
Royalty expenses of DKK 7.4 million in 2023 (2022: 37.8 million) relate to license fees payable by Zealand
Pharma A/S to ZP SPV 3 K/S for use of the IP rights under the Alexion Pharmaceuticals Inc. agreement
which were internally transferred to ZP SPV 3 K/S in 2020.
4 Research and development expenses
DKK thousand
Staff costs (note 7)
Amortization, depreciation, impairment losses on intangibles assets,
property, plant and equipment, and right-of-use assets
Other external research and development expenses
Total research and development expenses
- Hereof related to discontinued operations
Total research and development expenses from continuing operations
5 Sales and marketing expenses
DKK thousand
Staff costs (note 7)
Amortization, depreciation, impairment losses on intangibles assets,
property, plant and equipment, and right-of-use assets
Other external sales and marketing expenses
Total sales and marketing expenses
- Hereof related to discontinued operations
Total sales and marketing expenses from continuing operations
2023
2022
-241,639
-233,474
-18,087
-430,534
-690,260
-
-690,260
-23,851
-361,632
-618,957
4,913
-614,044
2023
2022
-10,427
-75,346
-
-19,459
-29,886
-
-29,886
-23
-88,567
-163,936
131,638
-32,298
6 General and administrative expenses
DKK thousand
Staff costs (note 7)
Amortization, depreciation, impairment losses on intangibles assets, property,
plant and equipment, and right-of-use assets
Other external general and administrative expenses
Total general and administrative expenses
- Hereof related to discontinued operations
Total general and administrative expenses from continuing operations
7
Information on staff and remuneration
2023
2022
-94,258
-118,308
-3,601
-86,199
-184,058
-
-184,058
-5,662
-130,365
-254,335
17,125
-237,210
DKK thousand
2023
2022
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
- Hereof related to discontinued operations
Total staff costs from continuing operations
The amount is charged as:
Research and development expenses
Sales and marketing expenses
General and administrative expenses
Other operating items
Discontinued operations
Total staff costs
Average number of employees
-247,253
-55,130
-20,945
-
-22,996
-346,324
-
-346,324
-241,639
-10,427
-94,258
-
-
-346,324
-220,310
-51,286
-17,615
5
-5,682
-294,888
7,275
-287,613
-210,971
-
-62,627
-14,015
-7,275
-294,888
224
197
For remuneration to the Board of Directors please refer to note 6.1 Remuneration of the Board of
Directors and Executive Management in the consolidated financial statements and for additional infor-
mation regarding staff costs refer to note 2.8 Staff costs.
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145
Notes to the Financial statements of the parent company
7
Information on staff and remuneration (continued)
DKK thousand
2023
Remuneration to the Executive Management
Adam Sinding Steensberg1
Henriette Wennicke2
Total
Total Other Corporate Management5
Total
2022
Remuneration to the Executive Management
Adam Sinding Steensberg1
Henriette Wennicke2
Emmanuel Dulac3
Matthew Donald Dallas4
Total
Total Other Corporate Management5
Total
Base salary
Bonus
Pension
contribution
Other
short term
benefits
Share-based
compensation
Severance
payment
5,750
2,621
8,371
7,728
16,099
4,162
420
2,626
308
7,516
6,131
13,647
4,744
1,441
6,185
4,910
11,095
2,366
168
1,575
123
4,232
2,689
6,921
1,150
524
1,674
948
2,622
832
84
525
-
1,441
898
2,339
243
267
510
693
1,203
725
41
122
103
991
599
1,590
12,950
4,387
17,337
11,086
28,423
11,061
225
-3,265
-
8,021
10,569
18,590
-
-
-
-
-
-
-
6,564
-
6,564
-
6,564
Total
24,837
9,240
34,077
25,365
59,442
19,146
938
8,147
534
28,765
20,286
49,651
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. He had tax obligations in Denmark, so part of his salary was paid out in Denmark.
5 Other Corporate Management in 2023 comprised four members (2022: four).
Zealand Pharma ∞ Annual Report 2023 Contents
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146
Notes to the Financial statements of the parent company
8 Financial items
DKK thousand
Interest income
Interest expenses from financial liabilities measured at amortized costs
Interest expenses from lease liabilities
Interest income from group companies
Impairment of investments in subsidiaries
Impairment of intercompany receivables
Gain from sale of marketable securities
Fair value adjustment of marketable securities
Fair value adjustment of other investments
Exchange rate adjustments
Other financial expenses
Financial items in total
Presentation in income statement:
Financial income
Financial expenses
9 Other operating items
2023
2022
DKK thousand
2023
2022
31,778
-6,050
-2,075
9,701
-26,042
-271,897
1,519
5,781
-16,466
-5,127
-2,912
-
-1,164
4,036
24,612
-
-281,790
27,442
48,779
-330,569
36,710
-9,268
380
-3,824
-2,207
7,682
Restructuring costs - continuing operations
Insurance
Impairment Encycle IP rights
Loss on sale of fixed assets
-
Reversal of inventory write-down (note 3.5)
-2,073
Total other operating items from continuing operations
Restructuring costs - discontinued operations
Impairment of production equipment (note 3.2)
Reversal of inventory write-down (note 3.5)
Loss on disposal group V-GO (note 2.10)
Total other operating items from discontinued operations
Presentation in income statement:
Financial income
Financial expenses
-
-
-
-
15,979
15,979
-
-
-
-
-
-14,015
-37,033
-35,691
-1,449
-
-88,188
-30,615
-9,730
1,284
-3,072
-42,133
15,979
-
-
-88,188
Impairment of investments in subsidiaries of DKK 26.0 million and impairment of intercompany receiv-
ables of DKK 271.9 million (2022: 2.1 million) relates to the Oberland Capital loan which Zealand
Pharma A/S settled in May 2023 on behalf of Zealand Pharma U.S., Inc. Refer to description in note 15
Investments in subsidiaries and 17 Trade and other receivables respectively. Please also refer to note 4.7
Financial items in the consolidated financial statements for additional information regarding financial
items.
Impairment of Encycle IP rights in 2022 is described further in note 12 Intangible assets. Please refer to
note 2.9 Other operating items in the consolidated financial statements for additional information.
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Notes to the Financial statements of the parent company
10 Corporate 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 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
11 Discontinued operations
2023
2022
Management's judgements and estimates
On March 30, 2022, the group announced its intention 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 had determined that the activities to supply subsidiaries
with products and acquired 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, were
presented separately as a discontinued operation in the income statement.
-909,367
-1,024,967
22.0%
22.0%
-200,061
-225,493
48,447
943
-21,768
-30,673
197,520
-5,592
-32,566
32,566
-
868
6,274
-20,960
1,839
232,467
-5,005
-7,362
7,362
-
3,862,273
3,299,214
1,031,011
76,129
109,930
9,855
393,640
956,816
71,540
105,961
-98,695
102,156
5,482,838
4,436,991
Please refer to note 5.0 Tax in the consolidated financial statements for additional information regarding
income tax.
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148
Notes to the Financial statements of the parent company
11 Discontinued operations (continued)
The results and the cash flow of the discontinued activities are presented below as discontinued opera-
tions for the period ended December 31, 2023, and December 31, 2022:
DKK thousand
Revenue
Cost of goods sold
Gross profit
Research and development expenses
Sales and marketing expenses
Administrative expenses
Other operating items
Net operating expenses
Result before tax
Net result for the year from discontinued operations
2023
2022
-
-
-
-
-
-
-
-
-
-
10,546
-41,113
-30,567
-4,035
-129,827
-17,014
-42,132
-193,008
-223,575
-223,575
All assets and liabilities included in the V-GO disposal group were derecognized as of May 29, 2022, with
the closure of the asset purchase agreement with MannKind Corporation. As a result, no assets or liabil-
ities were classified as held for sale in relation to the discontinued operations 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
Lease liabilities
Total liabilities of disposal group
Net assets of disposal group
DKK thousand
2023
2022
Consideration:
Cash flows from discontinued operations
Net cash outflow from operating activities
Net cash inflow from investing activities
Net cash increase generated from the discontinued operation
Cash consideration
Purchase price adjustment
Other financial assets
Total consideration
-
-
-
-17,717
64,383
46,666
Loss on sale of disposal group - recognized as other operating items from
discontinued operations
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
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149
Notes to the Financial statements of the parent company
12 Intangible assets
DKK thousand
Cost at January 1, 2023
Additions
Cost at December 31, 2023
Amortization and impairment at January 1, 2023
Amortization for the year
Amortization and impairment at December 31, 2023
Carrying amount at December 31, 2023
Amortization and impairment for the financial year has been charged as:
General and administrative expenses
Total
Software
DKK thousand
Licenses rights and patents
-
Cost at January 1, 2022
12,508
12,508
-
-253
-253
Disposals
Transferred to V-GO disposal group (note 2.10)
Cost at December 31, 2022
Amortization and impairment at January 1, 2022
Impairment for the year
12,255
Disposals
Transferred to V-GO disposal group (note 2.10)
Amortization and impairment at December 31, 2022
Carrying amount at December 31, 2022
-253
253
Amortization and impairment for the financial year has been charged as:
Other operating items
Total
41,167
-35,691
-5,476
-
5,476
35,691
-35,691
-5,476
-
-
35,691
35,691
Licenses, rights, and patents on 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.
Please refer to note 3.1 Intangible assets in the consolidated financial statements for additional
information.
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Notes to the Financial statements of the parent company
13 Property, plant and equipment
DKK thousand
Plant and
machinery
Other
fixtures and
fittings
Leasehold
improve-
ments
Assets
under con-
struction
Cost at January 1, 2023
66,828
14,153
35,190
Transfers
Additions
Disposals
Cost at December 31, 2023
Accumulated depreciation and impairment at
January 1, 2023
Depreciation for the year
Disposals
Accumulated depreciation and impairment at
December 31, 2023
Carrying amount at December 31, 2023
Depreciation and impairment for the financial
year has been charged as:
Research and development expenses
General and administrative expenses
Total
-
9,043
-15,066
60,805
52,339
5,330
-14,919
42,750
18,055
870
1,386
-427
-
812
-
15,982
36,002
10,987
1,995
-427
12,555
3,427
7,546
2,891
-
10,437
25,565
-5,320
-10
-5,330
-1,651
-344
-1,995
-2,380
-511
-2,891
870
-870
-
-
-
-
-
-
-
-
-
-
-
DKK thousand
Cost at January 1, 2022
Transfers
Additions
Transferred to V-GO disposal group (note 2.10)
Retirements
Cost at December 31, 2022
Accumulated depreciation and impairment at
January 1, 2022
Depreciation for the year
Impairment for the year
Transferred to V-GO disposal group (note 2.10)
Retirements
Accumulated depreciation and impairment at
December 31, 2022
Carrying amount at December 31, 2022
Depreciation and impairment 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
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
-
742
1,687
8,643
14,349
34,897
-
72
-268
-
-
293
-
-
14,153
35,190
8,388
2,749
-
-
-150
4,703
2,843
-
-
-
10,987
3,166
7,546
27,644
2,315
406
-
28
2,417
426
-
-
2,749
2,843
7,343
-268
6,088
-2,563
-9,730
870
-
-
9,730
-9,730
-
-
870
-
-
-
9,730
9,730
Please refer to note 3.2 Property, plant, and equipment in the consolidated financial statements for
additional information.
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151
Notes to the Financial statements of the parent company
14 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, 2023
Additions
Depreciation expense
As at December 31, 2023
As at January 1, 2022
Additions
Depreciation expense
Transferred to V-GO disposal group (note 2.10)
As at December 31, 2022
Office
buildings
Other
fixtures and
fittings
95,990
1,860
-9,999
87,851
106,158
-
-10,159
-9
95,990
1,581
1,344
-1,004
1,921
1,623
736
-778
-
1,581
DKK thousand
As at January 1
Additions
Disposals
Accretion of interest
Payments
Transferred to V-GO disposal group (note 2.10)
As at December 31
Current
Non-current
The following amounts are recognized in the 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 from leases
2023
2022
102,618
111,455
3,588
-393
2,075
689
-
2,207
-11,887
-11,714
-
-19
96,001
102,618
12,024
83,977
11,522
91,096
-11,002
-2,075
-13,077
-10,937
-2,207
-13,144
-11,649
-11,649
-11,714
-11,714
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152
Notes to the Financial statements of the parent company
15 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. Impairment losses are recognized under financial items.
DKK thousand
Cost at January 1
Divestment
Cost at December 31
Value adjustments at January 1
Impairment
Value adjustments at December 31
2023
2022
62,228
-1,911
60,317
-
-24,131
-24,131
62,228
-
62,228
-
-
-
Investments in subsidiaries at December 31
36,186
62,228
In 2023, an impairment of DKK 24.1 million has been recognized on the investment in Zealand Pharma U.S.
Inc. as a result of lost equity following the settlement of the Oberland Capital loan in May 2023, which
Zealand Pharma A/S settled on behalf of Zealand Pharma U.S., Inc. Refer also to note 8 Financial items.
DKK thousand
Domicile Ownership
16 Inventories
Inventories were comprised as follows:
DKK thousand
Raw materials
Total
2023
2022
7,935
7,935
1,286
1,286
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
2023
2022
-32,257
-
3,635
15,979
-12,813
-30,615
9,887
1,284
-12,643
-32,257
Please refer to note 3.5 Inventories in the consolidated financial statements for additional information
regarding inventory.
Zealand Pharma A/S'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'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%
Voting
rights
100%
100%
100%
100%
100%
100%
100%
United States
100%
100%
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153
Notes to the Financial statements of the parent company
17 Trade and other receivables
19 Fees to auditors appointed at the annual general meeting
DKK thousand
Deposits
Trade receivables
Intercompany receivables
Receivables related to license and collaboration agreements
Other receivables
Prepaid expenses
Total trade and other receivables
Non-current
Current
2023
2022
DKK thousand
8,900
987
57,509
68,793
24,349
33,497
194,035
291,799
15,786
178,249
157,039
134,760
Total fees
56,431
1,454
54,083
8,900
-
Audit
Audit-related services and other assurance engagements
170,931
Other
2023
2022
2,475
940
-
3,415
4,880
1,310
389
6,579
In 2023 an impairment of DKK 271.9 million has been recognized on intercompany receivables from
Zealand Pharma U.S., Inc. In May 2023, as mentioned in note 4.6 Borrowings, Zealand Pharma A/S
settled the Oberland Capital loan with a one-time payment of USD 77.3 million (DKK 525.7 million) on
behalf of Zealand Pharma U.S., Inc. As a result, equity was lost in Zealand Pharma U.S. Inc. which has
triggered the impairment in 2023, refer to note 8 Financial items.
18 Trade and other payables
DKK thousand
Trade payables
Intercompany payables
Payable treasury shares
Employee benefits
Other payables
Accruals development projects
Total trade and other payables
Non-current
Current
2023
2022
90,352
12,521
81,045
48,009
7,764
33,464
51,803
1,425
41,600
50,275
3,166
34,063
273,155
182,332
303
272,852
19,058
163,274
20 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 had provided floating charge collateral covering all assets in the company which
could be collateralized, including shares in subsidiaries, as collateral for the debt to Oberland. On May
10, 2023, the Group settled the Oberland Capital loans in a one-time payment. With the final repay-
ment, Oberland has released all rights to collateral provided for under the loan agreement.
Under the revolving credit facility (RCF) in Danske Bank, Zealand is required to have a minimum collat-
eral value of 120% of the loan commitment (DKK 420 million) held in the designated custody accounts
under management by Danske Asset Management and Zealand’s designated cash accounts attached
to the custody accounts. Zealand must also comply with a covenant on fulfilling certain information
requirements. The pledges are described further in note 4.4 Cash and cash equivalents.
The EIB loan contains a negative pledge clause preventing Zealand Pharma A/S or any of its subsidiaries
from creating or permitting to subsist any new security over any of its assets.
Please refer to note 6.4 Commitments in the consolidated financial statements for information on
commitments.
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Notes to the Financial statements of the parent company
21 Transactions with related parties
22 Adjustments for non-cash items
Zealand Pharma A/S's related parties are the Board of Directors, Executive Management, and close
members of the family of these persons. Refer to note 6.1 Remuneration of the Board of Directors and
Executive Management in the consolidated financial statements. Refer to note 7 Information on staff
and remuneration in these parent company financial statements for remuneration of the Executive
Management.
The parent company had the following transactions with subsidiaries:
DKK thousand
Depreciation, amortization and impairment losses
Deferred revenue
Reversal of inventory write-down
Share-based compensation expenses
Financial income
Financial expenses
Corporate tax
Exchange rate adjustments
Adjustments for non-cash items in total
23 Changes in working capital
2023
2022
6,127
-23,323
-5,615
-20,468
9,701
38,700
-26,336
-32,285
-69,995
5,609
-
-156,638
DKK thousand
-113,422
11,096
-157,958
26,027
-57,653
-
-293,862
-272,571
Changes in accounts receivable
Changes in prepaid expenses
Changes in other receivables
Changes in inventory
Changes in intercompany receivables
Changes in accounts payable
Changes in other liabilities
Changes in other liabilities and provisions
Changes in working capital in total
2023
2022
21,688
-
-15,980
55,130
-52,417
334,133
-5,591
-
336,963
70,572
-67,584
-
51,286
-106,592
79,149
-5,005
-8,777
13,049
2023
2022
-4,304
20,583
-13,594
9,330
-157,958
40,832
20,723
-19,058
-106,679
-
-
23,396
-
29,469
-
-
-103,446
-53,814
24 Significant events after the balance sheet date
Please refer to note 6.8 Subsequent events in the consolidated financial statements.
DKK thousand
Revenue
Research and development expenses
Sales and marketing expenses
General and administrative expenses
Financial items
Discontinued operations
Receivables
Payables
Cash flows
Total
Zealand Pharma ∞ Annual Report 2023 Alternative performance measures for the Group (non-audited)
Alternative performance measures for the Group (non-audited)
Contents
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Financial statements
155
Alternative performance measures for the Group (non-audited)
Free cash flow
Free cash flow is calculated as the sum of cash flows from operating activities less purchase of prop-
erty, plant, and equipment. A positive free cash flow shows that the Group is able to finance its activities
and that external financing or capital raises is thus not necessary for the Group’s operating activities.
Therefore, Executive Management believes that this non-IFRS liquidity measure provides useful infor-
mation to investors in addition to the most directly comparable IFRS financial measure “Net cash flow
from operating activities.” The table below shows a reconciliation of free cash flow for 2023 and 2022:
DKK thousand
Cash outflow from operating activities
Less purchase of property, plant and equipment
Free cash flow
2023
2022
-425,668
-942,311
-11,241
-11,710
-436,909
-954,021
Liquidity reserve
Zealand’s liquidity reserve, classified as a non-IFRS liquidity measure includes assets held in cash, cash
equivalents, marketable securities, and undrawn borrowing facilities. Management believes that this
APM can provide stakeholders with valuable information regarding Zealand's ability to meet short-term
obligations, navigating uncertain economic conditions and adding information about potential capital
requirements (runway).
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 average total number of
shares less weighted average total number of treasury shares.
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Statement of the Board of Directors and Executive Management
The Board of Directors and Executive Management have today
discussed and approved the Annual Report of Zealand Pharma A/S
for the financial year January 1 – December 31, 2023.
The consolidated financial statements and parent company financial
statements have been prepared in accordance with IFRS Accounting
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, 2023, 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, 2023.
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, 2023 identified as
549300ITBB1ULBL4CZ12-2023-12-31-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, February 27, 2024
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
Michael John Owen
Board member
Iben Louise Gjelstrup
Board member
Employee elected
Jens Peter Stenvang
Board member
Employee elected
Frederik Barfoed Beck
Board member
Employee elected
Anneline Nansen
Board member
Employee elected
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Independent auditor’s report
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 1 January – 31 December 2023, which comprise
statement of loss, statement of comprehensive loss, statement of
financial position, statement of cash flows statement of sharehold-
er’s equity and notes, including material accounting policy infor-
mation, for the Group and the Parent Company. The consolidated
financial statements and the parent company financial statements
are prepared in accordance with IFRS Accounting Standards as
adopted by the EU and additional requirements of the Danish
Financial Statements Act.
In our opinion, the consolidated financial statements and the parent
company financial statements give a true and fair view of the finan-
cial position of the Group and the Parent Company at 31 December
2023 and of the results of the Group's and the Parent Company's
operations and cash flows for the financial year 1 January – 31
December 2023 in accordance with IFRS Accounting Standards
as adopted by the EU and additional requirements of the Danish
Financial Statements Act.
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 Standards
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.
Independence
We are independent of the Group in accordance with the
International Ethics Standards Board for Accountants' International
Code of Ethics for Professional Accountants (IESBA Code) and the
additional 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 consecutive
period of four years up until the financial year 2023.
Key audit matters
Key audit matters are those matters that, in our professional judge-
ment, were of most significance in our audit of the financial state-
ments for the financial year 2023. These matters were addressed
during our audit of the financial statements as a whole and in
forming our opinion thereon. We do not provide a separate opinion
on these matters. For each matter below, our description of how our
audit addressed the matter is provided in that context.
We have fulfilled our responsibilities described in the "Auditor's
responsibilities for the audit of the financial statements" section,
including in relation to the key audit matters below. Accordingly,
our audit 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 research and development expenses and accruals
related to Clinical Research Organisations
Zealand Pharma A/S engages with third-party clinical research
organisations (CROs) for certain clinical development activities,
including clinical trials. The diverse nature of these activities, along
with varied contract terms, compensation arrangements, and
impact from potential scope changes and the consequential impact
on cost per patient and timelines, requires significant estimates and
judgments by management in recognizing expenses and accruals
for clinical development activities. Management has established
CRO accrual models used to recognize the expenses for clinical
development activities over the periods over which services are
provided to the Group and the Parent Company and estimate clin-
ical trial accruals at the balance sheet date. Refer to note 2.5 and 3.8
in the consolidated financial statements.
Given the significance of clinical trial expenses and the complexity
associated with management's estimates and judgment in recog-
nizing accruals for clinical development activities, including alloca-
tion of contract costs to clinical development phases, determination
of clinical trial service periods, and the effect from changes to
clinical trial scope, we considered the accounting for research and
development expenses and accruals related to Clinical Research
Organisations a key audit matter.
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How our audit addressed the key audit matter
Our audit procedures related to research and development
expenses and accruals related to Clinical Research Organisations
included the following:
• Obtaining an understanding of Management’s process for
accounting for clinical development activities and controls related
to monitoring services provided.
• Obtaining an understanding of terms and conditions of contrac-
tual arrangements with CROs along with ongoing development
phases and their timelines through inspection of contracts,
evidence supporting their execution and corroborative inquiries of
management.
• Evaluation of the appropriateness of the methodology and
accounting policies applied to comply with applicable accounting
standards.
• Evaluation of CRO accrual models and test of key input data
applied, including contract cost, patient enrolment data and treat-
ment timelines by tracing to supporting evidence.
• Evaluation of key assumptions applied in the CRO models,
including determination of variable costs, allocation of contract
costs to development phases and timelines.
• Checking the arithmetical accuracy of the computations within
the CRO accrual models and reconciling the models’ output to
the Group and Parent Company’s financial records.
• Performing test of details, including analytical procedures, over
research and development expenses to verify occurrence and
appropriateness of recorded expenses.
• Examining transactions after balance sheet date to assess
completeness and accuracy of the recorded transactions.
• Evaluation of appropriateness of the disclosures pertaining to
accounting for research and development expenses and related
accruals for compliance with applicable accounting standards.
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 assurance conclu-
sion 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
Management's review provides the information required by relevant
law and regulations.
Based on our procedures, we conclude that the Management's
review is in accordance with the financial statements and has been
prepared in accordance with the requirements of relevant law and
regulations. We did not identify any material misstatement of the
Management's review.
Management's responsibilities for the financial statements
Management is responsible for the preparation of consolidated
financial statements and parent company financial statements
that give a true and fair view in accordance with IFRS Accounting
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 Management 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
statements
Our objectives are to obtain reasonable assurance as to whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is a high level of assur-
ance, 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, indi-
vidually 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 professional
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 finan-
cial statements and, based on the audit evidence obtained,
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whether a material uncertainty exists related to events or condi-
tions that may cast significant doubt on the Group's and the
Parent Company's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to
draw attention in our auditor's report to the related disclosures
in the financial statements or, if such disclosures are 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
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 statement
that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our inde-
pendence, 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 auditor's
report unless law or regulation precludes public disclosure about
the matter.
from the requirements set out in the ESEF Regulation, whether due
to fraud or error. The procedures include:
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 1 January – 31
December 2023 with the file name 549300ITBB1ULBL4CZ12-2023-
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 Regulation) which includes
requirements related to the preparation of the annual report in
XHTML format and iXBRL tagging of the Consolidated 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;
• 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
Consolidated 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 compliance
with the ESEF Regulation based on the evidence we have obtained,
and to issue a report that includes our opinion. The nature, timing
and extent of procedures selected depend on the auditor’s judge-
ment, including the assessment of the risks of material departures
• 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
Consolidated 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
• 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 1 January – 31 December 2023 with the file name
549300ITBB1ULBL4CZ12-2023-12-31-en.zip is prepared, in all mate-
rial respects, in compliance with the ESEF Regulation.
Copenhagen, February 27, 2024
EY Godkendt Revisionspartnerselskab
Christian Schwenn Johansen
State Authorised
Public Accountant
mne33234
Rasmus Bloch Jespersen
State Authorised
Public Accountant
mne35503
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Sustainability
Corporate governance
Financial statements
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Other
information
Zealand Pharma ∞ Annual Report 2023 Contents
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Financial statements
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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 2023 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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