Q3 2021 Zealand Pharma A/S Earnings Call
Welcome to the conference call. Please continue to stand by your conference will begin shortly.
[music].
Good afternoon, everyone and welcome to the Zealand pharma third quarter 2021 financial results Conference call. Today's call is being recorded at this time I would like to turn the call over to Matt Dallas, Senior Vice President and Chief financial.
<unk> Mathur. Please go ahead.
Thank you operator, welcome and thank you for joining us today to discuss <unk> third quarter results for 2021, and that Dallas Senior Vice President and Chief Financial Officer with me today are huge president and Chief Executive Officer menu, All do our President of Zealand Pharma U S. Frac Sanders, Chief Medical Officer, and head of development pattern.
Sure.
You can find your latest company announcements and additional supporting information on our website that Zealand pharma is dot com.
As I pointed out that we will be making forward looking statements that are subject to risks and uncertainties.
These statements are valid only as of today and the company assumes no obligation to out them update them, except as required by law. Please refer to recent filings for more complete picture of risks and other factors and with that I will turn the call over to president and CEO Manuel Doer.
Thank you Matt.
Thanks to everyone for joining today.
The third quarter date, we will discuss on today's call underscore Zealand's evolution as a fully integrated biopharmaceutical company.
In Q3, we continued to execute on our commercial goals. Following the launch if you take a look in the U S. While also sustaining momentum across the rest of our pipeline by advancing multiple clinical and preclinical programs that leverage our innovative peptide platform to address unmet needs in type one.
Diabetes and rare disease.
These continuous progress positions us well to achieve our goal of offering five marketed products by 2025 to patients around the globe with high unmet medical needs.
Slide four illustrates the development of our company in relation to the successful execution of our strategy.
Later in the call, our CMO and head of research and development, Adam Kingbird will discuss these pipelines updates in greater detail, including.
Dates on deep expertise in the treatment of short bowel syndrome or S. P. S.
Formation on critical data from an in analog and clinical data from our glucagon guilty one dual agonist partnered with B I that were presented at the recent obesity Society annual meeting.
And more details on our collaboration agreement with <expletive> a research and development Corporation to advanced development of an infusion pump to be used with Desert Creek.
Currently under investigation as a potential treatment option for congenital hyperinsulinism.
But first Frank Sanders President of Zealand Pharma U S, who will discuss the work.
Commercial team has been doing on the singular launch.
Thank you Emmanuel.
Second one was launched in late June the U S. Commercial organization has been focused on securing favorable coverage on the drug formulary plans pbms and commercial and Medicaid plans to ensure that appropriate patients can receive beside golan with ease when that's prescribed this involves driving demand with prescribers to cigna.
To payers that the desire to prescribe sidewalk is hot in them.
A moment I will speak to our progress in generating demand and our progress in securing favorable payer coverage for <unk>.
These refer to slide five.
I want to share that the dialogue has been viewed as an attractive treatment option for severe hypoglycemia by payers patients and their caregivers and endocrinologists, both adult and pediatric endocrinologists, what's compelling about side, the largest a repetitive and consistency of recovery from severe hypoglycemia.
That was seen across all pivotal phase III studies this position positioning as the sink and it's compelling, especially in the context of the severe hypoglycemic events, which can be terrifying for people with diabetes and their families.
Rapid and reliable recovery from a severe hypoglycemic event and 10 minutes is important because during a severe hypoglycemic of that every minute matters.
On slide six I'd like to take a moment to refer to the to the approved full indication and the important safety information for us that a lot.
On slide seven I will speak to the demand, which has continued to increase over the fourth the first four months since launch as I spoke to in my opening remarks generating early demand from health care prescribers is essential because it helps inspire payers to act more expeditiously and their formulary review activities.
In the third quarter of approximately 3800 total prescription claims for save a lot were submitted to commercial and government payers also approximately 115 distinct health care providers wrote prescriptions for sidewalk. Most of these prescribers, where endocrinologists, both adult and pediatric and 62% of the prescribers.
Our repeat prescribers, writing cycle multiple times in the quarter on average $1 nine units of <unk> per prescription or being dispatched.
There are encouraging signs of underlying growth, which is observed to be increasing month over month.
While demand continues to grow it has not yet translated into a proportional level of revenue growth. What's different is that the rate of rejection of sidewalk prescription claims by payers at the pharmacy is higher than we anticipated. We expect that this will begin to resolve as recent drug coverage decisions take effect.
Please refer to slide eight.
Now I will speak to the results that our market access team has achieved since launch.
Coverage was limited in the third quarter, its first quarter of March with only approximately 16% with commercial and 10% of Medicaid lives being covered.
As previously mentioned this level of coverage resulted in a higher than anticipated rate of rejection of prescription claims at the pharmacy.
P B M and payer coverage has improved since March.
Recently, we have signed agreements with some of the largest pbms and state Medicaid plans. The full impact of these coverage decisions will begin to be realized at the start of 2022 based on the timing of some of these arrangements.
We will start the year off with approximately 70% coverage of commercial and 70% coverage of Medicaid lives, having access to <unk>.
This equates to approximately $130 million commercial and 50 million Medicaid Medicare.
Medicaid recipients and will set the stage for growth in 2022.
I want to thank our employees that Zealand for their work on building the U S commercial organization and executing the launch of exactly what does that get a lot is an important launch on its own but we expect that it's only the first of multiple potential new product launches and our near term horizon now.
Now I will turn to Adam who will provide an overview of the progress of our clinical development programs.
Yeah.
Thank you Frank Please go to slide nine.
Here, you can see how our robust pipeline targeting areas in full medical.
He is a high unmet medical need.
On the next slide I'll take you two updates on several of these programs and begin with our efforts to transform management of type one diabetes. Please go to slide 10.
A recent study.
Found that despite the many innovations in insulin pump and continuous glucose monitors only approximately 20% of people living with type one diabetes in the U S.
I think recommended that should make targets.
As such the majority of those people have innovated plasma glucose levels and therefore have increased risks of long term complications.
More all at risk of experiencing dangerously low blood glucose.
It takes too much insulin.
We are currently developing basically grew up on for potential use in our bedroom artificial pancreas system in a smaller phase III trial, we showed that the Dynamo <unk> plus.
I was able to achieve glycemic targets for 90% of the participants importantly.
This was achieved while only on average they spend opened 2% of the time and hyperglycemia.
To the right.
We are therefore excited to confirm that we are moving towards startup phase III later this quarter.
Please go to slide 11.
The phase three program for vascular in the ILEC five more artificial pancreas system has been discussing details with the FDA and we're pursuing a broad indication with studies in both adults and children with type one diabetes.
The program includes three trials and we'll begin with a single arm five among only safety and test one trial.
Following 12 weeks of dosing of approximately 40 subjects, who will begin the two randomized controlled trials.
With the primary endpoint for the randomized trials being <unk> at six months.
And we seek to demonstrate superiority over insulin only island and over standard of care.
Further six months.
Closure to designate oven will support the safety data needed for the NDA with the U S FDA.
Please go to slide 12.
Among the most advanced clinical programs in our pipeline is the evaluation of continuous infusion, especially Logan and killing the congenital hyperinsulinism CH I'm, an ultra rare disease caused by a defect in the pancreatic beta cells.
We reported initial phase III results in December last year, and the first phase III trial and by year end, we expect to complete enrollment into the second phase III trial.
Yes.
<unk> children age seven days to one year with results expected in the first half of 'twenty two.
Pending positive results from this second phase III trial, we will work quickly and diligently towards an NDA submission to the U S. FDA.
In addition, we are excited about the agreement with data research and development Corporation that was announced last week.
Please go to the next slide slide 13, which illustrates the deca continuous infusion pump that we anticipate to utilize to deliver that's either.
Tangela treatment option for children with Chr.
We believe that this pump has the optimal design and quality features to provide ease and confidence in the management.
CA Italia.
Please go to the next slide.
Uncontacted side, although I can give you two analog for treatment of <unk> syndrome.
During the quarter, we presented preclinical data that showed dose dependent effects of packaged side once more a nice consistent growth and concluded the puts and track that supports the use of the ultra and kicked off the dosing of the Gulf truck. Please go to slide 15.
We also indicated.
SDN stool, which is the phase III trial assessing effects of once weekly administration of <unk>.
Energy and fluid uptake.
Earlier in the year, we initiated each sba's, three which will contribute to the overall clinical programs with long term safety and efficacy data.
Importantly, two out since the one we have made good progress on the recruitment into each Sps one our pivotal phase III trial.
Which you can see the trial via ground diagram on the next slide slide 16.
Based on Palo dialog with FDA and EMA throughout the year, we have decided to introduce an interim analysis that can allow for stopping the trial. So I figure C. A facility before the full 179 patients have been enrolled.
If the interim readout is positive.
We plan to pursue an NDA submission at the mixed developments that based on these clinical data.
And we expect all subjects needed for the interim analysis and road.
By the end of 'twenty, one with results being available in the third quarter next year.
On Slide 17, you can see details on particular side, our long acting <unk> agonist, which is in development as a potential treatment option for Sps and other ti associated diseases, we have already reported the plasma half life of 100 and Cynthia.
In a phase <unk> trial, and we look forward reporting the results of the multiple ascending dose trial.
Later this year.
Please go to slide 18, and our <unk>.
What's the target of PCT and associated with robotic conditions.
At the recent obesity Society annual meeting, we presented preclinical data on our M&A and Iraq.
And clinical data on the tier one glucagon dual agonist.
Please go to slide 19, which shows data from the phase one clinical trial of <unk> hundred $45 60 906.
And the time, you have certain clinical relevant body weight reductions of up to 13, 7% with no unexpected safety findings after 16 weeks of dosing.
Earlier this year our development partner.
On <unk> two additional phase III trials, and we look forward seeing the results from the trials in type two diabetes and obesity next year.
Please go to the next slide slide 20.
At obesity week, we also presented preclinical data.
It's well amylin analogue either as a monotherapy or in combination with enrolment I think <unk> one molecules macro side. The combination therapy resulted in up to 20% weight loss.
During that same week.
We were excited to announce the dosing the first subjects in the phase one safety and Tolerability trial of <unk> 80, 396, and expect to share results from this study next year.
I'll now turn over to our CFO, Matt Dallas to what was true too.
<unk> thousand 71 year to year to date financials, Matt Thanks, Adam.
21, you will see Zealand's income statement for the third quarter of 2021 and how it compares to the same period in 2020 total revenue for the first nine months was $238 6 million Danish kroner were $37 1 million in the U S. This was driven primarily by net product revenue for the <unk> wearable and delivery device and legal as well as partnership.
From our collaborations with <unk> and Santa Cruz.
Operating results for the first nine months was a loss of $762 6 million Danish kroner or $118 8 million USD.
Sales and marketing costs, mainly relate to the commercial infrastructure in the U S to support the Ziegler log in vivo commercial programs R&D costs, primarily related to our late stage clinical programs.
Slide 22 illustrates our strong financial position and ability to support our growing business through continued investments net operating expenses for the first nine months were $906 2 million Danish kroner or $141 1 million USD and ended the quarter with cash cash equivalents marketable securities $1 5 billion Danish kroner.
$163 3 million USD.
Turning to our financial guidance on Slide 23 for 2000 for 2021 net product revenue from the sale of the commercial products is expected to be 190 million DKK plus or minus 10%.
This is a decrease of 30 million DKK from the guidance issued on March 11, the reduction in net revenue from the previous guidance was driven by lower than expected sales of <unk> for 2021.
Net operating expenses.
They tend to be 125 billion, Danish kroner, plus or minus 10% and this remains unchanged from the financial guidance issued on March 11.
We expect revenue from existing license agreements.
<unk> revenue is uncertain because of the size and timing.
I intend to provide guidance on petroleum and with that I will now turn it back to 90, well. Thank you Matt.
He didn't commercials and research team have established significant momentum across Amit somebody can guest room casino programs. During the first nine months of this year as exemplified by the exciting third quarter Abates discuss on this call.
We look forward to closing 2021 out strong carrying the momentum of these transformational year into 2022 as we continue on our journey to change the lives of patients by offering five marketed products by 2025.
Thank you all I will now turn it over to the operator for questions.
Thank you, Sir and if you would like to ask a question just press star one and if you want to cancel it just spread the husky once again, please press star one for a question.
And Sir your first question comes from the line up Lucy Codrington from Jefferies. Please go ahead. Your line is open.
Hi, there thanks for taking my questions just a couple of follow.
On the desert they Sunset XI agreement to the pump at Deca My understanding you had a prior agreement with Welsh that has and.
The trials they thought so just wondering.
What kind of drive the change and will any additional studies see necessary and could this potentially delay filing.
And then on.
Mclaughlin side, and where are you and press release.
When the required number of patients.
The interim analysis have been accretive.
And then for me I Hope I think 96.
I might get safety.
Diabetes data.
This quarter.
And the I two displays they data or do you think like in the past they will save them for a conference.
Thank you.
Thank you Lucy for your three questions in a row and I will actually ask Adams, we pig poultry okay. Thanks for the questions.
Adding the pump that'd be.
Anticipating using for CACI Youre correct that were used in those countries right now that is all the time just been an agreement where we would use it for.
The clinical study and so we have to.
You can see for a long time working on establishing a commercial agreement as we have done now with daycare MSA I will say that the agreement with Roche. So there's no changes there.
Also we do not expect to do any additional clinical studies with the.
As it relates to.
Studies in humans, we will of course have to demonstrate the quality.
With which we have already started so we feel very comfortable with that and we do not expect that he will have any negative impact on NDA filing timelines.
The good thing about the Deca pump is that it's you can say only.
Earlier this year. It was approved by the FDA for administration of a different truck as a subcutaneous infusion. So it's more or less the same news that yet we're going through.
Yeah. So it's a proven concept versus using an insulin pump, which is intended to be put into them. So we actually see this derisking the project very much.
But labor, yes, we will press release once we have reached the number of patients needed for the interim analysis and.
Regarding the <unk> want to work on that.
We have put behind us.
As you know they did.
You can say completed enrolment into this study in the third quarter and this year and we would expect them to soon have the data when they're going to reduce that those data we cannot comment on that.
As it is their decision.
As always we will encourage them to do it as soon as possible.
Thank you and thank you receive for your questions. Thank you.
Yes.
Yeah.
Once again, if you would like to ask a question just breakfast bar, one and if you wanted to cancel it just breath dash.
And Sir your next question comes from the line of Jesper <unk> from Carnegie. Please go ahead. Your line is open.
Thank you so much Chris Hecla tied and then afterwards.
Sick a lot. So first of all the protected sites, perhaps you can just elaborate a bit about your decision to do this interim analysis. So firstly, how we should think about this impact will go to power. This.
The stopping criteria for the interim analysis is always the most difficult to know too positive.
The data show positive data and interim compared to say the full datasets that you had before.
And also one just so I understand it so.
This.
Expect enrollments to fight.
In 2021.
Got that.
That you do not expect complete enrollment before Q3 next year.
So just to forget my understanding because it's going to Covid cases rising.
And also how many patients to accidently before you have final completes.
Yes.
And then afterwards you know.
So I'd say to that so there's a lot of key products to meet but loans are still pretty slow so what could or would you do to improve that traction where we do get into between the 22. Thank you.
Thank you, Sir and again, Adam for glass like your thoughts and maybe Frank will jump in for Zynga long ago.
<unk>.
Yeah. So thanks for your question if I should start by addressing our you can say the decision and the rationale behind it into it so.
Yeah.
I'll say that the COVID-19.
FDA and European authorities issued different guidance for how to act in this situation, including the including in those guidance guidance is whereas statistical considerations societies, which actually opened up the first answer is to introduce posts and Ses.
In the study so that's an important view apparently that the guidance is in place.
When do you decide when you design study this phase III trials that should.
So is it fair to sort of an NDA submission you need to generate sufficient data to address both efficacy and safety and with the delays we have seen and maybe that can be created quite an extensive safety database because we have patients who have been on drug for many years. That's also exemplified by ECS Gate Street, which is an extension study to the weekend.
<unk> extension study, so we have patients who have been exposed to.
Close to three years now in the study. So you can see from a safety perspective, we actually have generated more data than we had originally planned for the NDA submission. When you have these discussions on the size of the study with the FDA and with regard to efficacy.
We of course have to design. Your study is also to address the efficacy needs and you do that by having some assumptions around the <unk>.
Science.
You can say the standard deviation and we of course were inspired by the data that we have seen from its leukocyte.
And and internal data in paper and then what I can say from a fixed size point of view the size of the <unk>.
Analyses, we would not have introduced that one if we did not feel comfortable still that we can actually reach a conclusion.
The decision on the efficacy and as well.
Due to the fixed size. So you can also say we had very very good effect.
Yes.
<unk> for the original trial design very much driven by the need for safety database, which we had.
And by the delays so we actually feel very comfortable with this one if assumptions we had when we designed the studies hold true and we have no reason to believe they don't.
And.
You would not announce the number of patient that goes into the engine room and I simply cannot do that because we need to keep the trial.
Typically of the time it will be as a blinded data safety monitoring committee that evaluates the data and make a recommendation to us.
Is that okay.
Continue the study.
And as I said, we would not have introduced this interim if we did not believe the likelihood of starting with Wassa.
Very good.
I would.
Also at that you will continue to enroll patients.
Even when we have reached these.
Number needed for the interim and they would have caused these statements will of course contribute to the data that we anticipate to submit to FDA in a potential NDA.
I don't know if this address.
If you have questions on that later.
Maybe Frank you can answer on EBITDA and then you have to I can follow up if you have more.
Okay.
Okay, Yeah. Thank you Adam and Jesper. Thank you for the question let.
Let me address our confidence in the backlog in 2022. So that's why I said earlier, our focus and in the first quarters of launches on securing favorable coverage on the drug formularies with Pbms commercial and Medicaid plans and driving demand and there's an inherent tension. If you will at launch between access and demand as you need demand to help payers reviewed.
<unk> earlier to be able to get to gain access and coverage and you need access to drive demand and so what what we've learned about this drug is that demand is growing month over month, but it's not yet translating into a proportional level of revenue growth, which makes sense. When you look at the the level of coverage in the third quarter, which is the first quarter.
Launched with having approximately 16% of commercial and 10% of Medicaid lives covered but that demand has helped the market access team secure favorable access and <unk>.
In a stepwise manner.
Where it moved from 16% commercial, but 10% Medicaid towards 70% coverage for commercial and 70% coverage for Medicaid.
We enter 2022, so it really presents a very different condition for us that will enable us to be able to take these positive patterns in underlying demand.
And really begin to translate this into recognized revenue and revenue growth by pulling through these favorable wins on major plants.
Okay. So just to follow up on that so you see any increased risk intuit this interim versus <unk>.
Just doing the entire study so just touching on your confidence into the interim.
Thank you.
Yeah, I mean of course, when you get into when you do so much with Alpha Netcentric, what's all about increased risk on the other hand as I.
I said in the beginning of the assumptions, we had when we decided to start through which we have no reason to believe they don't then we feel we have very good power to conclude the study based on the interim readout.
And of course, we have a number of patients in this study, which we expect.
We'll provide that noise. So you can also say we're also to some degree.
Manish at potential risk of a third spike.
And Colby coming this window, so we would not like to enter the next three months.
That uncertainty so net net we see this as a very positive decision for the program.
Okay. Thank you.
Thank you for answering thank you Bruce.
Yeah.
Once again, if he would like to ask a question just press star one and as Sir. Your next question comes from the line of Michael <unk> from Nordea. Please go ahead. Your line is open.
Yeah. Thanks, a lot it's microphone over here.
So just two clarifying questions first to where the.
Two the biomarker problem.
Do you already have the data from the instead only with beta bionics or.
Was it just other data that you were referencing in the in the presentation and then secondly on <unk> what is it expected that that drives a delay we'd expect the data here in Q4.
And now it's moving into the first half of next year and then also when executive during first half of next year as of Q1 and Q2.
It gives more clarity around when we finally get some data thanks.
Michael your.
Question as it related to the insulin only yeah, yeah. Okay.
The only data that the beta bionics has been running.
Yes.
Hum.
I mean, it's not debatable on it too.
Two relief and talk about the I O data.
If you look at the timeline from clinical trials Gov. I mean, we would expect them to have faith that they have a very soon.
So and so.
As we've said all the time and completion of that study has been to trade up a mutation of the tylenol and lessens the pancreas.
We used two hormones so.
I cannot comment further on the day, but.
No reason to believe that things are not progressing when invasive is on the insulin only study as planned.
So you.
You can say personally I'm also disappointed that we have not reached the last subject study yet we had expected that's what happened this quarter to be honest.
And as you know the the neonate.
We know that patients are MDI in constant dialogue with them.
Dialogue with the sites and also potential patients that could go.
I mean, I'm hearing about potential patients that could go into the study yet. It is this is as a family when you.
Get to the situation, where you have a child is diagnosed with CACI is a very dramatic situation to be in.
To participate in the clinical study, where there are significant requirements to actually enhance the study protocols and so on can sometimes be difficult so personally.
I would have expected us to at least that.
The randomization based on where we were a few months ago.
Not yet, but we feel that we have there, but it feels so yes.
Yes.
A condition that is difficult.
Difficult to manage.
You can see that the.
Justification here on the newborns.
Okay.
Okay. Thanks, a lot.
Yeah.
Thank you Mike next.
Our next question comes from the line of Joseph <unk> from Needham and company. Please go ahead. Your line is open.
Hi, everyone. Thanks for taking our questions and apologies were temporarily disconnected. So I apologize if I repeat a question here.
First one is on the interim analysis just curious.
Around the world.
The stats plan for this in terms of.
You previously guided for the full results.
Excuse me the topline results from the full number of patients in 2022, So just curious.
Why or why not why not wait if you have to spend the alpha on the interim analysis for for the full results and then on the interim analysis is it is it analysis of each of the once weekly and the twice weekly arms or is it some type of pools.
Interim analysis on on both.
And then I guess just lastly.
If you.
If you were to see.
A positive outcome on the interim.
And let's say in <unk>.
What else is required for potential NDA submission from the other.
<unk> East trials, two three and four would you have to wait for additional.
Data from that prior to NDA submission.
Thank you.
Yeah. Thanks for your question so.
Why not wait a so this is what the dialogue we had with FDA throughout the year.
To make sure that.
We would meet our goals you can say and as I said before we feel comfortable around the power that goes into this one the reason that we take the decision of ours and we feel that he.
It is of course that we aim to now.
The winter season.
We do as you know everybody to see start to see spikes of getting Covid. So we don't want to be in a situation where Q1 is.
<unk> is going to again close to.
So this program so I think it's a very reasonable.
I think for us to make that decision now that's at least how we have discussed this internally and we feel very comfortable.
We can intervene so.
That is the trigger wherever you are right now.
We are not changing the way we assess the data we are still allowed to assess each individually. So that is the power and we are also looking into both primary and secondary endpoints. So.
So again, there's no change to those.
S base, if we have a decision to stop and is positive then we expect and plan to submit the NDA based on those data meaning that for <unk>.
Two and three the two extension studies, we will basically make a data cut there at that time and then.
Those data will be part of the submission we eat Sps for which the phase <unk> study, we will likely also considers into an instrument quite yet to provide those data as well, but they're not in our current spending needed for the submission. So.
If we reach a decision for a positive go.
We expect to pursue the NDA based on the data that we have available at that time.
Thank you Joe great. Thanks for taking our question.
Yeah.
Once again, if you would like to ask a question just press star one and if you wanted to cancel it just pass the house.
Okay.
Sir no more question and over the phone lines I will hand back.
And then well for closing remarks, thank you.
Thank you with that we would like to thank you all for attending and for your questions.
End of June we launched our first commercial product in the U S. Zig a log injection for the treatment of <unk> in patients at six and above.
And.
Meanwhile, we saw we are four months into the launch we continue to progress our late stage clinical program all type one diabetes management and rare disease programs as well as advanced our early stage pipeline that is actually the message I want you to take away Tonight and.
And as well, we look forward to connecting on future announcements and updates.
Thank you very much for your time.
This concludes our conference for today. Thank you for participating you may now all disconnect.
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Welcome and thank you for joining us today to discuss <unk> third quarter results for 2021.
<unk> Senior Vice President and Chief Financial Officer Zealand with me today are <unk>, President and Chief Executive Officer, Manuel <unk> President of Zealand Pharma U S. Frank Sanders, Chief Medical Officer, and head of development patterns before.
You can find the related company notes with additional supporting information on our website that Zealand pharma is dot com.
<unk> pointed out that we will be making forward looking statements that are subject to risks and uncertainties.
These statements are valid only as of today and the company assumes no obligation to of them update them, except as required by law. Please refer to recent filings for more complete picture of risks and other factors and with that I will turn the call over to president and CEO Manuel Doer.
Thank you Matt.
Thanks to everyone for joining today.
The third quarter date, we will discuss on today's call underscore Zealand's evolution is this fully integrated biopharmaceutical company.
In Q3, we continued to execute on our commercial goals. Following the launch of the take a look in the U S. While also sustaining momentum across the rest of our pipeline by advancing multiple clinical and preclinical programs that leverage our innovative peptide platform to address unmet needs in type one.
Diabetes and rare disease.
This continuous progress positions us well to achieve our goal of offering five marketed products by 2025 to patients around the globe with high unmet medical needs.
Slide four illustrates the development of our company in relation to the successful execution of our strategy.
Later in the call, our CMO and head of research and development, Adam Kingbird will discuss these pipelines updates in greater detail, including.
Dates on refractory tied in the treatment of short bowel syndrome or Sps.
Formation on critical data from our lead in analog and clinical data from our glucagon <unk> dual agonist partnered with B I that were presented at the recent obesity Society annual meeting.
And more details on our collaboration agreement with <unk> Research and development Corporation to advanced development of an infusion pump to be used with.
Currently under litigation as a potential treatment option for congenital hyperinsulinism.
But first Frank Sanders President of Zealand pharma use who will discuss the work.
Our commercial team has been doing on the Ziegler launch.
Yeah.
Thank you Emmanuel.
<unk> was launched in late June the U S. Commercial organization has been focused on securing favorable coverage on the drug formulary plans pbms and commercial and Medicaid plans to ensure that appropriate patients can receive recycled log with ease when it's prescribed <unk>.
This involves driving demand with prescribers to signal to payers that the desire to prescribe sidewalk is hot.
In a moment I will speak to our progress in generating demand and our progress in securing favorable payer coverage for <unk>.
Please refer to slide five.
I want to share that dialog is being viewed as an attractive treatment option for severe hypoglycemia by payers.
And their caregivers and endocrinologists, both adult and pediatric endocrinologists, what's compelling about the second largest of repetitive and consistency of recovery from severe hypoglycemia that was seen across all pivotal phase III studies.
Physician positioning as the sink and it's compelling, especially in the context of the severe hypoglycemic events, which can be terrifying for people with diabetes and their families rapid and reliable recovery from a severe hypoglycemic event and 10 minutes is important because during a severe hypoglycemic have that evergreen.
Minute matters.
On slide six I'd like to take a moment to refer to the to the approved.
The approved indication and the important safety information for <unk>.
On slide seven I will speak to the demand, which has continued to increase over the fourth the first four months since launch.
Polk to in my opening remarks generating early demand from health care prescribers is essential because it helps inspire payers to act more expeditiously and their formulary review activities.
In the third quarter of approximately 3800 total prescription claims for <unk> were submitted to commercial and government payers.
Also approximately 115 distinct health care providers wrote prescriptions for sidewalk most of these prescribers, where endocrinologists, both adult and pediatric and 62% of the prescribers, where repeat prescribers writing cycle multiple times in the quarter on average one nine units of dialogue per prescription were being <unk>.
Matched.
These are encouraging signs of underlying growth, which is observed to be increasing month over month.
While demand continues to grow it has not yet translated into a proportional level of revenue growth.
What's different is that the rate of rejection of megawatt prescription claims by payers at the pharmacy is higher than we anticipated. We expect that this will begin to resolve as recent drug coverage decisions take effect.
Please refer to slide eight.
Now I will speak to the results that our market access team has achieved since launch.
<unk> coverage was limited in the third quarter. Its first quarter of March with only approximately 16% with commercial and 10% of Medicaid lives being covered.
Previously mentioned this level of coverage resulted in a higher than anticipated rate of rejection of prescription claims at the pharmacy.
P. P M and payer coverage has improved such swatch recently, we've signed agreements with some of the largest pbms and state Medicaid plans.
Full impact of these coverage decisions will begin to be realized at the start of 2022 based on the timing of some of these arrangements.
We will start the year off with approximately 70% coverage of commercial and 70% coverage of Medicaid lives, having access to <unk>. This equates to approximately $130 million commercial and $50 million Medicaid Medicare Medicaid recipients and will set the stage for growth in 2022.
I want to thank our employees for Zealand for their work on building the U S commercial organization and executing the launch of exactly what <unk> is an important launch on its own but we expect that it's only the first of multiple potential new product launches and our near term horizon.
Now I will turn to Adam who will provide an overview of the progress of our clinical development programs.
Yeah.
Thank you Frank Please go to slide nine.
So you can see a robust pipeline targeting areas in full medical.
Areas of high unmet medical need.
On the next slide I'll take you two updates on several of these programs and begin with our efforts to transform management of type one diabetes. Please go to slide 10.
A recent study.
Found that despite the many innovations in incident current pumps and continuous glucose monitors only approximately 20% of people living with type one diabetes in the U S.
I think recommended that can make targets.
As such the majority of those people have elevated plasma glucose levels and therefore have increased risks of long term complications.
More all at risk of experiencing dangerously low blood glucose.
It takes too much insulin.
We are currently developing basically everyone for potential use in a bimodal artificial pancreas system in a smaller phase III trial, we showed that the biomarker island was able to achieve glycemic targets for 90% of the participants importantly, this was achieved while only.
On average they spend over 2% of the timing hyperglycemia.
To the right.
We are therefore excited to confirm that we are moving towards startup phase III later this quarter. Please.
Please go to slide 11.
The phase III program for vascular run in the ILEC five more artificial pancreas system has been discussing details with the FDA and we are pursuing a broad indication with studies in both adults and children with type one diabetes.
The program includes three trials and we will begin with a single I've among only safety and test one trial.
Following three weeks of dosing of approximately 40 subjects, who will begin the two randomized controlled trials.
With the primary endpoint for the randomized trials being <unk> at six months.
And the key to demonstrate superiority over Internet only island and over standard of care.
Further six months.
<unk> will support the safety data needed for the NDA with the U S FDA.
Please go to slide 12.
Among the most advanced clinical programs in our pipeline is the evaluation of continuous infusion of 30, Logan and killing the congenital hyperinsulinism or CACI and ultra rare disease caused by a defect in the pancreatic beta cells.
We reported initial phase III results in December last year from the first phase III trial and.
And by year end, we expect to complete enrollment into the second phase III trial.
<unk> children age seven days to one year with results expected in the first half of 'twenty two.
Pending positive results from this second phase III trial, we will work quickly and diligently towards an NDA submission to the U S. FDA.
In addition.
We are excited about the agreement with data research and development Corporation that was announced last week.
Please go to the next slide slide 13, which illustrates the take a continuous infusion pump that we anticipate to euthanize delivered as you look on as a potential treatment option for children with Chr.
We believe that this pump has the optimal design and quality features to provide ease and confidence in the management of CHS.
Please go to the next slide.
<unk>, our dog that can get to analog for treatment of short bowel syndrome. During the quarter. We presented preclinical data that showed dose dependent effects of the packer side once more a nice consistent growth and concluded the bridging trial that supports the use of the auto injector for dosing optical truck. Please go to slide 15.
<unk>.
We also initiated ESPN.
<unk>, which is a phase <unk> trial assessing effects of once weekly administration of <unk>.
Energy and fluid uptake.
Earlier in the year, we initiated ESPN, three which will contribute to the overall clinical program with long term safety and efficacy data.
Importantly, two out since the one we have made good progress under the prudent into each Sps one our pivotal phase III trial for which you can see the trough year ground diagram on the next slide slide 16.
Based on Palo dialog with FDA and the EMA throughout the year, we have decided to introduce an interim analysis that can allow for starting that trial. So I figure C. A facility before the full 102009 patients have been enrolled.
If the interim readout is positive.
Plan to pursue an NDA submission at the mixed developments that based on these clinical data.
And we expect to have all subjects needed for the interim analysis and road.
By the end of 'twenty, one with results being available in the third quarter next year.
On Slide 17, you can see the details on particular side, our long acting <unk> agonist, which is in development as a potential treatment option for Sps and other Gi associated diseases, we have already reported the plasma half life of 120.
In our phase <unk> trial, and we look forward reporting the results of the multiple ascending dose trial.
Later this year.
Please go to slide 18, and our effort.
What's the target of PCT and associated with robotic conditions.
At the recent obesity Society annual meeting, we presented preclinical data on our amylin analogue.
And clinical data on the tier one glucagon dual agonist.
Please go to slide 19, which shows data from the phase one clinical trial of <unk> hundred $45 60 906.
In the trial, we observed clinically relevant body weight reductions of up to 13, 7% with no unexpected safety findings after 16 weeks of dosing.
Earlier this year our development partner.
<unk> added two additional phase II trials, and we look forward seeing the results from the trials in type two diabetes and obesity next year.
Please go to the next slide slide 20.
Our PVC, we also presented preclinical data at <unk>.
Two hour amylin analogue either as monotherapy or in combination with <unk>, one molecules macro side. The combination therapy resulted in up to 20% weight loss.
During that same week.
We were excited to announce the dosing of the first subjects in the phase one safety and Tolerability trial of <unk> 80, 396, and expect to share results from this study next year.
I'll now turn over to our CFO, Matt Dallas to over through.
2071 year to year to date financials, Matt Thanks, Adam.
21, you will see Zealand's income statement for the third quarter of 2021 and how it compares to the same period in 2020 total revenue for the first nine months was $238 6 million Danish kroner were $37 1 million and USD. This was driven primarily by net product revenue for the V go wearable insulin delivery device and legal as well as partnership.
<unk> from our collaborations with <unk> and Santa Cruz.
Operating ROE for the first nine months was a loss of $762 6 million Danish kroner or $118 8 million USD.
Sales and marketing costs, mainly relate to the commercial infrastructure in the U S to support the Ziegler log in vivo commercial programs, while R&D costs, primarily related to our late stage clinical programs.
Slide 22 illustrates our strong financial position and ability to support our growing business through continued investments net operating expenses for the first nine months were $906 2 million Danish kroner or $141 1 million USD, but the end of the quarter, we had cash cash equivalents marketable securities $1 5 billion Danish kroner.
$163 3 million USD.
Turning to our financial guidance on Slide 23 for 2000 for 2021 net product revenue from the sale of the commercial products, we expect it to be $190 million, DKK plus or minus 10%.
This is a decrease of 30 million DKK from the guidance issued on March 11, the reduction in net revenue from the previous guidance was driven by lower than expected sales of <unk> for 2021.
Net operating expenses.
They tend to be 125 billion, Danish kroner, plus or minus 10% and this remains unchanged from the financial guidance issued on March 11.
We expect revenue from existing license agreements. However, some push revenue is uncertain because of the size and timing.
I intend to provide guidance on revenue and with that I will now turn it back to Randy well. Thank you Matt.
<unk> commercial and research team have established significant momentum across Amit somebody can gastrointestinal programs. During the first nine months of this year as exemplified by the exciting third quarter discussed on this call.
We look forward to closing 2021 out stronger carrying the momentum of these transformational year into 2022 as we continue on our journey to change the lives of patients by offering five marketed products by 2025.
Thank you all I will now turn it over to the operator for questions.
Thank you, Sir and if you would like to ask a question just press star one and if you want to cancel it does suppress the husky once again, please press star one for a question.
Okay.
And Sir your first question comes from the line up Lucy Codrington from Jefferies. Please go ahead. Your line is open.
Hi, guys. Thanks for taking my questions just a couple for me.
On the desert Sunset by agreement to the pump with Deca My understanding you had a prior agreement with <unk> that has.
And that thing is their trial they thought so just one thing.
What kind of drove the change and will any additional studies see necessary and could be potentially delay filing.
And then.
On the classically side, and where are you and press release.
When the required number of patients.
For the interim analysis have been accretive.
And then for B I Hope I think 96.
I might get safety.
Diabetes data potentially this quarter.
And the I two displays data or do you think like in the past they will save them for a conference.
Thank you.
Thank you receive for your three questions in a row and I will actually ask Adam to take all three okay. Thanks for the questions.
Got it and the pump that'd be.
Anticipating using for CACI Youre correct that were used in those pumps right now that is all the time just been an agreement where we would use it for.
With a clinical study and so we have to.
You can see for a long time work on establishing a commercial agreement as we have done now with Deca MSA I will say that the agreement with Roche. So there's no changes there.
Also we do not expect to do any additional clinical studies with the.
Echo pump as it relates to.
Studies in humans, we will of course have to demonstrate the quality.
Work, which we have already started so we feel very comfortable with that and we do not expect that it will have any negative impact on NDA filing timelines.
The good thing about the Deca pump is that it's you can say only.
Earlier this year. It was approved by the FDA for administration of a different truck as a subcutaneous infusion. So it's more or less the same use that going forward here. So it's a proven concept versus using an insulin pump, which is intended to increase with them. So we actually see this as Steve is getting the project very much.
So cleve, yes, we will.
Chris release once we have reached the number of patients needed for the interim analysis and then.
Regarding the gears wanted to work on.
But as we have with Eni.
As you know they did.
They compete enrolment into this study in the third quarter and this year and we would expect them to soon have the data.
When they're going to reduce that those data we cannot comment on that.
As it is their decision.
We will encourage them to do it as soon as possible.
Yes.
Thank you and thank you receive for your questions. Thank you.
Once again, if you would like to ask a question just press the star one and if you wanted to cancel it just breath dash.
And Sir your next question comes from the line of Jesper <unk> from Carnegie. Please go ahead. Your line is open.
Thank you so much a question on the pellet side and then afterwards on sick a lot. So first of all the protected sites. Perhaps you can just elaborate a bit about your decision to do this interim analysis. So firstly, how we should think about this impactful both the power and the stopping criteria for the instrument.
Alex its always the most difficult to know too positive.
You know theater show positive data and interim compared to say the full datasets that you had before.
And also one just so I understand it so.
Through this.
And expect enrollment to fight.
Yeah in 2021.
Meaning that you do not expect complete enrollment before Q3 next year.
It's just to forget my understanding because it's going to Covid cases rising.
And also how many patients to accidently before you have final completely enrolled.
Enrollment.
And then afterwards.
Second the so there's a lot of key products to meet but laws are still pretty slow so what could or would you do to improve that traction where we do get into between the 22. Thank you.
Thank you Sir and again.
And then for glass like retired then maybe Frank will jump in for Zika Lager launch.
Hi, yes. Thanks for your questions, if I should add that by addressing or you can say the decision and the rationale behind the into them. So.
At the outset of the Covid.
FDA and actually also European authorities issued different guidance for how to.
In this situation, including the including in those guidance guidance is we're statistical considerations for studies, which actually opened up first sponsors to introduce post hoc analysis.
In the study.
That's an important period, apparently that that the guidance is in place.
When do you decide when you design studies phase III trials that should.
So is it fair to sort of an NDA submission, we need to generate sufficient data to address both efficacy and safety and with the delays we have seen and maybe that can be created quite an extensive safety database because we have patients who have been on drug for many years. That's also exemplified by <unk>, which is an extension study to the originally expected extension studies that we have.
Patients who have been exposed to.
Close to three years now in the study. So you can see from a safety perspective, we actually have generated more data than we had originally planned.
And for the NDA submission when you have these discussions on the size of the study with the FDA.
And with regard to efficacy.
Of course as to design. Your study is also to address the efficacy needs and you do that by having some assumptions around the fixed side.
You can say the standard deviation and we of course, we are inspired by the data that we have seen from Mr. Luca <unk>.
And and internal data in paper and then what I can say from a fixed size point of view the size of the interim analysis, we would not have been introduced at one if we did not feel comfortable that we can actually reach a conclusion.
A positive.
A decision on the efficacy and as well so due to the effects size. So you can also say we had very very good effect.
Therefore, the original trial design very much driven by the need for safety database, which we have expanded by the delays. So we actually feel very comfortable with this one if assumptions we had when we designed the studies are true and we have no reason to believe they don't.
You will not announce the number of patient that goes into the engine room and I simply cannot do that because we need to keep the trial.
Typically at the time it will be at blinded data safety monitoring committee that evaluates the data and make a recommendation to us.
That's a start.
The study.
And as I said, we would not have introduced this interim if we did not believe the likelihood of stuffing.
Very good.
I would.
Also at that you will continue to enroll patients.
Even when we have reached these.
Number needed for the interim and they will of course. These statements will of course contribute to the data that we anticipate to submit to FDA in a potential NDA.
I don't know if this address.
Your questions on that later.
Maybe Frank you can answer on EBIT and then you can follow up if you have more.
Okay.
Okay, Yeah. Thank you Adam and yesterday. Thank you for the question let.
Let me address our confidence in Drydock in 2022, so as I said earlier, our focus and in the first quarters of launches on securing favorable coverage on the drug formularies with Pbms commercial and Medicaid plans and driving demand and there's an inherent tension. If you will at launch between access and demand as you need demand to help payers reviewed.
<unk> earlier to be able to get to gain access and coverage and you need access to drive demand and so what what we've learned about this drug is that demand is growing month over month, but it's not yet translating into a proportional level of revenue growth, which makes sense. When you look at the the level of coverage in the third quarter, which is the first quarter.
Launched with having approximately 16% of commercial and 10% of Medicaid lives covered but that demand has helped the market access team secure favorable access and <unk>.
In a stepwise manner.
Where it moved from 16% commercial, but 10% Medicaid towards 70% coverage for commercial and 70% coverage for Medicaid.
We enter 2022, so it really presents a very different condition for us that will enable us to be able to take these positive patterns in underlying demand.
And really begin to translate this into recognized revenue and revenue growth by pulling through these favorable wins on major clamps.
Okay. So just to follow up on that labor. So you see any increased risk intuit. This interim versus is it just to rank the entire study so just touching on your confidence into the interim.
Thank you.
Yeah, I mean of course, when you get into when you do lose some of your Alpha and Netcentric would talk about increased risk on the other hand as I said in the beginning of the assumptions we had when we decided to start your whole suite, which we have no reason to believe they don't then we feel we have very good power to conclude the study based on the interim readout.
And of course, we have a number of patients in this study, which we expect.
We'll provide that noise. So you can also say, we'll also to some degree.
Manage a potential risk of a third spike.
And Colby coming this window, so we would not like to enter the next three months.
With that uncertainty so net net we see this as a very positive decision for the program.
Okay. Thank you.
Thank you for answering.
Yeah.
Once again, if he would like to ask question Jess Breakfast Star one and as Sir. Your next question comes from the line of Michael <unk> from Nordea. Please go ahead. Your line is open.
Yeah. Thanks, a lot it's microphone over here.
So just two clarifying questions first to where the.
Two the <unk> problem.
Do you already have the data from the interim relief with beta bionics or.
Or is it just other data that you were referencing in the in the presentation and then secondly on <unk> what is it expected that that drives a delay we would expect the data here in Q4.
And now it's moving into the first half of next year and then also when executive during first half of next year as of Q1 and Q2 just to get more clarity around when we finally going to get some data. Thanks.
Michael Your question as it related to the insulin only yeah yeah. Okay.
He has been the only data that the beta bionics has been running.
Yes.
Uh huh.
I mean, it's also visible on it too.
Two relief and talk about the Io data.
If you look at the timeline continues to track above I mean, you would expect them to have to say that they have a very soon.
And so and so.
As we had said all the time to completion of that study has been to trade up a mutation of the <unk> license in pancreatic study revenues two hormones. So.
I cannot comment further on the data but.
I have no reason to believe that things are not progressing <unk> insulin only study as planned.
For CSI.
You can say personally I'm also disappointed that we have not reached the last.
Subjects. This study yet we had expected that's what happened this quarter to be honest.
As you know <unk>.
We know that patients that are in constant dialogue with the dialogue with the sites and also potential patients that could go.
I mean, I'm hearing about potential patients that could go into the study. We ended two years. This is as a family when you.
Get to the situations, where you have a child is diagnosed with CACI is a day from agency to agency <unk> and <unk>.
Then participate in the clinical study, where there are significant requirements to actually enhance the study protocols and so on and some times to vehicles. So personally.
I would have expected us to at least that.
Randomization based on where we were a few months ago.
That yet, but we feel that we have their vehicles. So yes.
Yes.
A condition that is difficult to manage.
You can see that.
Justification here on the newborns.
Okay.
Okay. Thanks, a lot.
Yeah.
Thank you Mike next.
Our next question comes from the line of Joseph <unk> from Needham and company. Please go ahead. Your line is open.
Hi, everyone. Thanks for taking my questions and apologies were temporarily disconnected. So I apologize if I repeat a question here.
First one is on the interim analysis just curious.
Around the stats plan for this in terms of.
<unk>.
You previously guided for the full results.
Excuse me the topline results from the full number of patients in 2022, So just curious.
Why or why not why not wait if you have to spend the alpha on the interim analysis for the full results and then on the interim analysis is it is it analysis of each the once weekly and the twice weekly arms or is it some type of pooled.
Interim analysis on on both.
And then I guess just lastly.
If if you.
If you were to see.
A positive outcome on the interim.
And let's say in <unk>.
What else is required for potential NDA submission from the other.
He's trials two three and four would you have to wait for additional.
Data from that prior to NDA submission.
Thank you.
Yeah. Thanks for your question so.
Why not wait a so this is a dialogue we had with FDA throughout the year.
To make sure that.
We would meet our goals you can say and.
As I said before we feel comfortable around the power that goes into this one.
Isn't that we take the decision of ours and we feel that we.
This is of course that we enter now.
The winter season, and we do as you know everybody see start to see spikes of getting Covid. So we don't want to be in a situation where Q1 is.
<unk> is going to again close to these programs. So I think it's a very reasonable thing for.
To make that decision now that's at least how we have discussed this internally.
We feel very comfortable.
With each of them so that.
That is the trigger wherever you are right now.
We are not changing the way we assess the data we are still allowed to assess each individually. So so that is the power and we are also looking into both the primary and secondary endpoints. So.
So again, there's no change to those.
U S base, if we have a decision to stop and is positive then we expect and plan to submit the NDA based on those data meaning that for <unk>.
Two and three the two extension studies will basically make a data cut there at that time and then.
Those data will be part of the submission who used Sps for which the phase III study.
We also consider to do an instrument quite yet to provide those data as well, but they're not in our current thing needed for the submission so.
If we reach a decision for a positive go.
We expect to pursue the NDA based on the data that we have available at that time.
Thank you Joe Great. Thanks for taking my question.
Yeah.
Once again, if you would like to ask a question just press star one and if you want to cancel it does pass the house.
Okay.
Sir no more question and over the phone lines I will hand back.
And then well for closing remarks, thank you.
Thank you with that we would like to thank you all for attending and for your questions.
End of June we launched our first commercial product in the U S. Zig a log injection for the treatment of <unk> in patients at six and above.
And.
Meanwhile, we saw we are four months into the launch we continue to progress our late stage clinical program all type one diabetes management and rare disease programs as well as advanced our early stage pipeline that is actually the message I want you to take away Tonight, and and as well, we look forward to connecting Unsecure announcements and updates.
Thank you very much for your time.