Q4 2021 Zealand Pharma A/S Earnings Call

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Ladies and gentlemen, thank you for standing by your conference will begin shortly.

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Ladies and gentlemen, thank you for standing by and welcome to Xenon pharma fourth quarter, a 40 F 'twenty earnings conference call.

At this time, all participant I didn't listen only mode.

After the speaker presentation, there will be a question and answer session. That's good question you will need to press star one on your telephone I would now like turn the conference over your speaker today <unk>. Please go ahead Sir.

Yes.

Thanks.

Yes he is.

Yes.

Thank you Robert.

Alright. Thank you. Thanks Manuel welcome and thank you for joining us today to discuss Zealand fourth quarter in four years old for 2020 , One I'm, Matt Dallas Senior Vice President and Chief Financial Officer At Zealand with me Today are Zealand's President and Chief Executive Officer, Manuel <unk> President of Zealand Pharma U S. Frank standards, and Chief Medical Officer and head of development.

Adam Steinberg.

You can find the related company announcement and additional supporting information on our website at Zealand pharma dotcom.

I would like to point out that we'll be making forward looking statements that are subject to risks and uncertainties.

These statements are valid only asps.

The company assumes no obligation to update them, except as required by law. Please refer to recent filings for more complete picture of risks and other factors with that I will turn the call over to President and CEO Manuel Do Act.

Yes, Thank you, Matt and thanks to everyone for joining today.

Before we begin I would like to take a moment to acknowledge the headwinds that we are all facing from these current.

Geopolitical.

And the current biotech market landscape.

In spite of these obstacles we have.

The principal athene in format to deliver on our mission and we believe we can actually rise to this challenge.

2021, please turn to slide three.

2021 was.

It's transformational for Zealand pharma.

As we received our first FDA approval and launched our first commercial product, while continuing to advance our deep pipeline.

With the launch of <unk> in the U S are established reserves capability in Denmark, and now complemented by our commercial franchise in the United States.

In 2022, we are eagerly anticipating our pivotal phase III results with both impacted by it for Sps and does he could you guys foresee a chi and.

And continuing our strategy to discover and develop innovative spectacular boutique options for patients with type one diabetes.

<unk> disease.

Obesity and inflammation.

With these establish momentum across our robust preclinical and clinical pipeline, we feel well positioned.

Four continued progress in the year ahead.

Next slide.

We continue to discover and develop innovative peptide therapeutics for patients with type one diabetes rare disease, and obesity and have established momentum across our robust preclinical and clinical pipeline with a number of significant milestone this past year.

Later in the call, our CMO and head of research and development items Keansburg will discuss our most recent pipeline updates in greater detail, including completing enrollment in the pivotal phase III trial of <unk> for the treatment.

<unk> of congenital hyperinsulinism or.

Chime in.

In children up to 12 months to.

12 months old.

Completing enrollment in the <unk> pivotal phase III trials assessing <unk> in patients with short bowel syndrome or SBS and.

Successfully completing the phase one b trial of our <unk> <unk> dual agonist deputised.

These achievements position us well for continued progress in 2022. This year, we look forward to a number of clinical milestones.

Getting data from each of these recently enrolled phase III studies for Delek us one slip appetite along with dosing the first patient.

Phase III program of the <unk> Bionic pancreas device for the treatment of type one diabetes in collaboration with our partner Beta bionics.

But first I will turn it over to Frank centers business the Zeta.

<unk> pharma us who will discuss the continued work of our commercial team on the launch of the take a look.

Yes.

Thank you Emmanuel please turn to slide five.

In the fourth quarter approximately 2000 total prescription claims for example, a lot were submitted to commercial and government payers.

Approximately 500 distinct health care providers wrote prescriptions for <unk> work.

Most of these prescribers, where endocrinologists, both adult and pediatric and approximately 60% of prescribers, where repeat prescribers, writing sidewalk prescriptions multiple times in the quarter.

On average two point out units of <unk> per.

Per prescription were being dispatched.

Note, we have been encouraged to see an uptick in the number of unique prescribers with most recent symphony health data showing 30, new prescribers per week, representing a 30% 36% increase per week versus what we saw over the fourth quarter of 2021.

While the second log demand has grown since launching last June it has not translated into a proportional level of revenue growth two.

2021 full year net revenue per megawatt was $5 5 million Danish kroner or $8 million.

Please turn to slide six.

Megawatt now has favorable coverage and approximately 70% of commercial lives, which accounts for more than 130 million lives and approximately 95% of Medicaid lives, which accounts for $69 1 million Medicaid lives.

Now I will turn to Adam who will provide an overview of the progress of our clinical development programs.

Yeah.

Thank you and please turn to slide seven.

You can see our robust pipeline targeting full therapeutic areas with high unmet medical need.

In 'twenty, one we successfully continued in patient enrollment Institute.

Our key made in mid stage development programs setting us up.

And very exciting 'twenty two.

A number of pivotal clinical data readouts.

We also saw significant progress in our peptide platform, an early pipeline, which will become increasingly visible throughout the year.

In type one diabetes, our partner beta bionics initiated the phase III program capacity.

The biomarker that sufficient pancreas in late 'twenty one.

We expect to present data from the phase Iia trial.

But basically work on mini dose pen in type one diabetes later this year and we look forward to providing providing more visibility into these programs throughout 'twenty two.

During this.

Second and third quarters, we expect pivotal phase.

<unk> data readouts on our rare disease program targeting <unk> and SBS.

And then the positive outcomes, we will shift the tissue NDA submissions for both indications with the U S. FDA.

Connecticut side, we completed the phase one program late last year, and we look forward to sharing further results at a scientific conference later in 'twenty two at which time. We will also provide an update to the next development step for this molecule.

As a reminder, <unk> is a long acting <unk> agonist with potential across a spectrum of metabolic and gastrointestinal diseases.

With its dual mode of action, we believe this compound.

Could lead to better than clinical differentiation for patients.

Second you also looks to be an exciting year for our BDC portfolio first we expect to present data from the phase III trial with <unk> hundred $45 60, 906 in people with type two diabetes at a medical meeting and to see the results of the phase II trial in obesity.

Our partner Hanmi is making good progress on all fronts.

We also began dosing patients in the phase one obesity trial of our long acting amylin analogue CPE ADT 96, and I'm very happy to announce that the trial is making good progress.

We expect to initiate the phase <unk> multiple ascending dose trial data in 'twenty, two and scrutinize further preclinical and clinical updates as we advance into the year.

Please turn to the next slide.

I'll discuss our Pascagoula van <unk> I program and the upcoming results for our pivotal trial for this indication.

Among the most advanced clinical programs in our pipeline is the evaluation of continuous infusion of <unk> in children with congenital hyperinsulinism CACI, an ultra rare disease caused by a defect in the pancreatic beta cells.

<unk> is the most frequent cause of severe and persistent hyperglycemia.

As early as the neonatal period and profoundly affects those children and their families from infancy.

Two the teenage years.

It is characterized by an excessive and uncontrolled insulin secretion triggering the current episode of profound hypoglycemia with requests civilians rebate and incentive intervention to provide it to prevent neurological sequelae.

We have randomized the last patients into that pivotal phase III sign.

The primary objective of this trial is to demonstrate a reduction in need for intravenous glucose infusion in hospitalized children.

Secondary endpoint includes reduction unit to incentive hospital treatment reduction in frequency of dangerous low blood sugar and need for constant feeding and to potentially delay or eliminate the need for pancreatic.

We also have a number of children.

In the long term safety and efficacy side 17, one O six with some children, having been treated with the ethical and for several years.

From this trial is planned to be included in that potential NDA submission with the U S FDA and I'm happy to announce that we have managed to close.

Database of integrating data for this study last week.

Pending positive results from.

From the pivotal phase III trial in the second quarter.

We're quickly and diligently towards an NDA submission with the U S. FDA based on data from all three phase III studies.

Please go to slide nine.

And our efforts to develop a novel treatment options for people living with short bowel syndrome.

We recently announced the completion of patient enrollment into the <unk> and.

<unk> has the potential to be the first long acting CFO to equities and the first to be delivered by year end.

Ultra injector.

Patients with FCS They had limited treatment opportunities and many remain in need for long term daily intravenous infusions of liquids and entity to maintain that and we believe that <unk> has the potential to make a significant difference in the lives of these people and.

And phase III data have shown the potential to improve gastrointestinal absorption and people with SBS and thereby reducing the need for parental support.

Please go to slide 10.

But <unk> had around 95% policy to take a treatment effect of <unk> versus placebo is a six months trial.

And full results.

So off the study is expected in the third quarter this year.

Long term safety and efficacy data from <unk> II and III will be included in a potential NDA submission to the U S. FDA and we are currently planning for entering database locks, but these trials later this year.

Please go to the next slide.

Data presented last year from the phase <unk> trial of <unk> 45, $69 six and long acting tool can look on tier one receptor agonist showed that the compounds are solid and clinical relevant body weight reductions of up to 13, 7% with no unexpected safety findings after 16 weeks of dosing.

In 'twenty, two we expect to present data from the phase two time.

In people with type two diabetes and to see the results of the phase III trial in our PCT.

Please go to the next slide.

And our PCT week last year, we also presented preclinical data as related to our long acting amylin analogue CPE 80, 390, <unk>, either as a monotherapy or in combination with <unk>.

The combination therapy resulted in up to 20% weight loss.

In vivo models.

The phase one trial was initiated late last year and we continue to make good progress data in stage two we expect 2% further preclinical and clinical updates from the program and to initiate the multiple ascending dose phase <unk> trial.

I'll now turn it over to our CFO , Matt Dallas to walk us through our.

Financials, Matt.

Thanks, Adam.

On slide 13, Youll see Zealand's income statement for full year 2021, and how it compares to the 2020.

Total revenue for the year was $292 6 million Danish kroner were $44 6 million USD. This was driven primarily by net product revenue of the V go wearable insulin delivery device and <unk> as well as partnership revenue from our collaborations with Alexia on behind.

The net operating result for the year was a loss of $1 5 billion, Danish kroner or $160 4 million USD sales and marketing costs, mainly relate to the commercial infrastructure in the U S to support the Ziegler logging Vigo commercial programs, while R&D cost primarily related to our late stage clinical programs.

Slide 14 illustrates our financial position and ability to support our growing business through continued investments net operating expenses for the year were one 2 billion Danish kroner or $186 7 million USD in.

In December we announced a seven year $200 million financing arena.

With Oberland capital that included an upfront payment of $100 million in exchange for seven year interest only secured note.

And at the end of the year, we had cash cash equivalents in marketable securities of $1 4 billion, Danish kroner or $217 7 million USD.

Turning to our financial guidance on Slide 15 for 2022 net product revenue from the sales of commercial products is expected to be $235 million DKK, plus or minus 10% net operating expenses are expected to be $1 2 billion, DKK plus or minus 10%.

We do expect revenue from existing licensing agreements. However, since such revenue is uncertain because of the size and timing, we do not intend to provide guidance with such revenue.

And with that I will now turn it back to them anymore.

Thanks, Matt.

So in summary, 2021 was the Europe significant progress for organization.

2022 is the year, where we expect significant inflection.

Pipeline.

We have a deep rooted knowhow in developing peptide therapeutics and have the potential to change the lives of patients with late stage programs in metabolic and gets gastrointestinal disease.

Some are rising again, what Adam just described in 2022, we expect.

To see phase III data from a second and pivotal trial of Desert you Giggling Thia.

Phase III data from our pivotal study of <unk> in SBS.

Phase III trial results.

For the program, we have in collaboration with di in type two diabetes.

Phase III trial completion.

So the same program in obesity.

And phase one single ascending those results.

MRI imaging analog trial in obesity.

So at this time.

It Couldnt Meek and Julie Kehoe geopolitical challenges.

Our company.

Believes that we can continue execution.

For us all.

All our clinical milestones and it will bring us closer to our goal of offering a commercialized products by 2025.

Thank you all.

Ill now turn it over to the operator for questions.

Ladies and gentlemen, we'll now begin the question and answer session.

If you wish to ask a question. Please press star one on your telephone.

For your name to be announced.

The first question from Thomas <unk>. Please go ahead your line is open.

Yes, great. Thank you very much a couple of questions from my side. So so.

US dive into your product revenue guidance. So so if we are assuming.

Adult split up veeco and seek it out but.

Just assuming flat or low single digits vehicle growth we are looking at.

Some of those <unk> in 22 sales for CECO.

This is this is very close to your initial switch you want guidance.

So is there any anything materially has changed in how you looked at the at the market potential for Sika lock.

I mean now you will have modest zero issues with payer coverage going forward at least from from from Q2 or something so so prior to second half 'twenty. Two that was my first question. So second question is just related to wood Sanofi.

So I see you.

Your revenue that you had 30 million milestone from sort of what we do in the yen.

Well, maybe it's mostly for modeling reasons, but but but that full amount that you expect from from let's say the tide lift all boats here.

Believe I remember that the full amount was around 10 to 15 million U S. So is this the $30 million that youre going to get or is there potentially additional revenue all milestones in <unk>.

The near future.

And then my last question, maybe just if we just dig a little bit to see good luck and then also vehicles, so maybe a little bit of a high level. So.

Is there extra still have an argument against just putting the blocks here and fill out lies in this part of the pipeline.

Of course, they have the.

The expected upcoming product launches you have with <unk> and also in <unk> and hopefully also dual hormone.

Those all target either ultra.

<unk> orphan segment that you've been.

Cope with a small sales force and then of course with the dual hormone stuff is probably going to be done with the emetic. Papa. So so is that that much below aside from of course is the back office functions.

There was.

Also your initial arguments were exited so to keep the full control of basic Coca Cola.

The out license to any particular indication so maybe a little color on that that would be very helpful. Thank you.

Yes, three questions. So I think the first one I will ask Frank to answer.

I think the.

The middle maybe you can maybe you can touch as well on the last one Frank if you want right away and then I think.

Probably.

Matt will address the second question the needle regarding the.

Payments from Sanofi, and then I will probably add on the third question.

Frank.

Okay. Thank you Manuel.

Let me start by saying.

We experienced two main obstacles in the first two quarters of launch in 2021.

The first was driving new patient starts while we were in the process of securing market access coverage with payers and Pbms and the second is that our sales teams faced challenges physically accessing hcp's health care professionals, and the third and fourth quarter. A total of it and then this is because many hospitals and health care provider practices, where shutdowns of sales.

Faxes access during the time of Covid.

So for 2022 at the beginning of the year. These conditions have improved on both of these fronts. The first is that you saw this from the slide that we had shared a moment ago, but does.

Is that good work now has favorable coverage and approximately 70% of commercial lives in the first quarter.

And 95% of Medicaid lives again in the first quarter, which is a major difference versus the first two quarters of launch in 2021.

The second thing that I would say, it's been physical access to Hcp's isn't paradigm and Hcp's are reopening they're forced to Zealand representatives, which again has to change.

And then finally, we are seeing an increase in the number of unique prescribers for <unk> in 2022, we're gaining now approximately 30 more prescribers per week in 2022, which is about 35% greater.

That won't be solved.

In the end.

The fourth quarter of 2021.

That's to address your first question on the commentary that we'll make as it relates to the second is this is the first launch in a long string of potential launches for Zealand that are planned over the next couple of years and we see this as an opportunity obviously to establish our presence in the U S. But the infrastructure that we're building as you had said Thomas in the backend.

It's something that we see as being scalable supportable of other product launches in rare disease, and we will continue to evaluate that as we get closer to launch. So thank you for the question.

Matt do you want to take the yes, the one I got it yes.

Thomas Theres, one outstanding milestone for Santa Fe is for 10 million USD $65 6 million DKK.

Okay. That's fair thank you very much.

Yeah.

Thank you Thomas.

Thank you for your question.

Next question from Michael <unk> from Nordea. Please go ahead.

These openings.

Yes. Thank you very much also to two two.

Two questions, rather simpler probably but.

On the milestone front as well.

If you look at your election collaborations should we expect any milestones.

I know you're not guiding on it full for 2022 and of course this uncertainty but.

Is there any sort of clinical progress expected that could potentially trigger milestones from the election collaboration and then secondly on the on the Pi.

Are there any milestones related to.

Readout of the phase II data in there.

In touch with diabetes or will the next milestone being connection with initiating phase III. Thanks.

Maybe you can take it to Adam.

Thanks for the questions.

Unfortunately, I can't give you the answers to those because our partners will not allow us to do so yet so for competitive reasons, but you.

You can just confirm that we are making very good progress in BPI.

And we can say that the milestone and royalty structures.

Is it cost structure that actually goes for both.

Program, so, but we cannot provide more specific guidance on when you will have the next one for the.

Same goes for the election.

Making very good progress for this.

As you probably remember we had responsible for driving all activities up to the human dose study so they will take over.

Sure.

And but I can unfortunately, not give you the more specifics on.

Based upon all.

When you have an iPhone seven.

Okay.

Hum.

Actual obligations.

Alright, Thats fine thank you very much.

Thank you for your question.

My question is from Joseph Stringer from Needham.

Please go ahead.

Hi, everyone. Thanks for taking our questions two.

From us on the SBS program.

The phase III <unk> trial can you speak more.

On the.

The change in parental support.

Obviously, the primary endpoint is an absolute change.

And then a key secondary as a relative measure sort of the responder analysis greater than 20%.

Change if I recall correctly I guess my question is what would you consider.

Sort of a clinically meaningful absolute change on a primary endpoint and then what.

What's most important I suppose from.

Physician perspective in terms of.

The absolute versus the.

Relative change a responder analysis and then just.

<unk> on the safety exposure requirements for.

From FDA or for a potential NDA submission do you.

Given some of the recent.

Changes in open enrollment in <unk> do you still remain on track to satisfy the safety exposure requirements where clapper.

SBS prior to a potential NDA submission thanks for taking our questions.

<unk>.

Thanks for the questions.

Maybe I guess.

Sure.

First question you can say.

People living with short bowel syndrome, and independent parental support extremely EQT news and that also means that some will have.

And infusion of IV solutions every day and Thats it varied between accumulator at up to 10 meters.

Some of the only need.

Two or three times a week.

And you can see our study you need at least three times a week.

So you can say the absolute reduction for the individual patient of course dependent.

How much volume then only dependent on but on average if we would be.

You can say.

If you dig into what was observed in prior studies, an absolute reduction of $2 three data.

Across the broader publication, but that would be a mix of some people are having a very significant much higher absolute reductions in some having a much lower one so it's really depending on the individual need up those patients when they enter the study.

But I would say any any reduction.

Lead to clinical benefit for patients because you can say, it's both time you need to be hooked up to these systems.

Reputation to be off treatment for one day and if you can say.

Science, you'll have to go through that side throughout the night.

Nicholas infused.

No.

So it's difficult to answer but on average we would expect.

To see more than two country data is across the population. If we have a similar distribution of patients in the former phase II studies conducted in this population the relative.

Response.

20% reduction.

It's a little bit of an official one but it's still seen I would say it from as many as a clinical relevant measure because you can say lets say if you could give you at least one <unk>. If you are if you have a solutions more than five basically.

Actually provide quite significant daily reductions in volume for each individual patient.

A 20% reduction.

Reduction.

I hope this is the piano, but it's really dependent on each patient actually those lines on the safety database.

We are actually confident and comfortable with the safety database as it is right now with regard to exposure, both six and 12 months and long term exposure, which is exceeding what we discussed with FDA at the.

At the peak.

In the phase II meeting.

So you can say any additional patients we get in <unk>.

<unk> only upside to where we are where we are to date.

And having said that we do expect to see that upside scenario, because it's it's a quite attractive study too.

<unk>.

Patient two spaces.

And.

As you know keeping the trial enrollment for new randomization since <unk>.

Great. Thanks for taking our questions.

Yes. Thank you.

Thank you Julien.

Thank you for your question.

Amanda if you wish to ask a question. Please press star and one on just kind of fun.

The next question Phil <unk> from Jefferies. Please go ahead.

Hi, Thanks for taking my questions.

Just on the artificial pancreas.

What's a realistic timeline for the first patient screening.

Screening is underway a realistic.

The timeline now for when we might expect data at.

Let me start looking early next year.

Shifting into condos.

Just the first half of next year.

And then just thinking about the full.

So demonstrating efficacy in the study.

The engine only allows us to get to get the insulin data at some point next year.

Are you aiming to superiority.

No.

It still be in that filing.

Siding.

Sure.

So that and then.

Last question just relate to.

Whether you have any.

Significant exposure to Russia, Ukraine, Brazil.

Our ongoing clinical trial.

King.

Yes, so I can start by addressing the SaaS question first and that's the short answer no.

That's good for us in this situation unfortunate situations.

With regard to the <unk> study, we have actually not guided on when we expect results and we will not do that until we have dosed the first patient so.

But so so is that I cannot comment further on and so but when will be dosed. The first patient in its exited a little bit.

We are discussing that with our partner right now as well in the sense that they have completed the incident.

The size of adjustments that we just need to get those into the device and then they're ready to go.

And we will provide updates when that happens but that should be.

S guidance too so.

When the new mentioned you asked about the superiority versus non inferiority in the Permian.

Can it be going for superiority of the biomarker pancreas, which was interesting only when it comes to the lowering of HVA. Once you that is the primary endpoint and I would consider this you can see sales study if we don't demonstrate superiority on HVA.

Clinical relevant.

Changes in regulatory Regulator's mind as a country.

But we would go for more I would say.

We would actually saw.

Key secondary endpoints, which is timing hypo.

<unk> is enough we believe to show non inferiority.

Hey, you can get better glycemic control without increasing the risk of hypoglycemia, but personally I would also hope to see superiority on there.

Yes, hi, guys seem yet which would be.

Strong product profile, but primary endpoint is superiority.

On the <unk>.

And then at the same time show non inferiority on hydro.

Thank you very much.

And to do that.

Thank you for your question within that any other question at the moment I will hand back the conference over to.

Mr Emmanuel Dulac.

Well. Thank you very much and then with that we would like to think.

You all for attending.

And for your questions look forward to connecting on future announcements and the Bates.

Thank you again.

That concludes our conference for today. Thank you for participating you may hold disconnect.

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Yes.

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