Zealand Pharma A/S

Britt Meelby Jensen - President and Chief Executive Officer Mats Blom - Executive Vice President and Chief Financial Officer Adam Steensberg - Executive Vice President, Chief Medical and Development Officer

Alan Carr - Needham and Co. Peter Welford - Jefferies Thomas Bowers - Danske Bank

Thank you Keith and welcome everyone. Apologies for the slight delay due to technical reasons.

Joining me on the call today, I have our CFO, Mats Blom and Adam Steensberg, Chief Medical Officer and Executive Vice President of Clinical Development. So on page two, before starting, I would like to remind everyone that today's discussion will include forward-looking statements and that these are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.

Moving on to page three. We have the agenda.

I will begin today's call with an update on our programs and then I will turn it over to Mats for a quick summary on our financials and operations for the first quarter of 2018 and I will conclude with our 2018 outlook before opening up for questions. So please move to page four where we have a quick overview of the Zealand's pipeline that shows a company with a late-stage clinical pipeline as well as two products marketed by our partner, Sanofi.

During 2018, we expect continued progress in our clinical programs, both with results from our pivotal Phase 3 on dasiglucagon HypoPal rescue pen for severe hypoglycemia and we also expect two an additional product candidates, glepaglutide for short bowel syndrome and dasiglucagon for congenital hyperinsulinism to move into Phase 3 development. I will come back on the status and plans on these later in my presentation.

So please turn to page six. The momentum in our business continues to build from the beginning of 2018 and during the quarter and the period after we recorded progress across most of our portfolio, both marketed and clinical novelties, novelties are base candidates.

So we are accelerating our late-stage programs with glepaglutide and dasiglucagon as the most important short and long term value drivers. And we have three fully owned product candidates in Phase 3 studies by the end of the year.

Also the penetration of Soliqua, the combination of Lyxumia and Lantus, continues to increase. So I want to take minute to run through a few of our clinical programs that are recently reporting meaningful and important news, including the glepaglutide for short bowel syndrome, dasiglucagon HypoPal rescue pen and dasiglucagon for congenital hyperinsulinism.

But before doing so, I will touch on a few additions to the team that that have strengthened the company. First, Ivan Møller has joined the management team as our Senior Vice President of Technical Development and Operations.

Ivan previously worked for Novartis in its generics and pharmaceutical manufacturing, as well as in strategy, quality insurance, contract manufacturing and supply chain leadership in Germany, U.S. and Switzerland.

Next, we were fortunate to welcome Dr. Francois Nadar as our Strategic Advisor for the company.

He holds a number of core positions in the biopharma industry and was previously President and CEO of the NPS Pharmaceuticals, prior to NPS being acquired by Shire for $5.2 billion. We are also pleased to have a new Board member, Kirsten Drejer.

Dr. Drejer, she is a co-founder and previous CEO of Symphogen, which is a privately held Danish biotech company dedicated to development of monoclonal antibodies focusing on serious diseases including oncology.

And she brings more than 30 years of international experience in the industry to our Board. So overall, these new members provide us with tremendous experience and this speaks highly of the pipeline and the potential that our company offers.

So turning back to our clinical development programs and moving on to page seven. As you see on this page, we conducted a Phase 2 trial with our long-acting glepaglutide for short bowel syndrome, which concluded last year and in January we presented the Phase 2 data at the ASPEN conference which is a nutrition science and practice conference in Las Vegas.

We tested three different daily doses and had 18 patients in the trial who each got different doses of glepaglutide with a three days collection of all intake and output, both before and after each dosing period. So what we saw in the trial was that glepaglutide was shown to be safe and well tolerated and we also saw indications of a longer half-life which I will come back to.

So moving on to page eight for some efficacy measures. Glepaglutide is an agent that increases the intestinal absorption and this was demonstrated in the Phase 2 trial which met its primary endpoint for two of the therapeutic active doses, the one milligram and 10 milligram of reducing fecal wet weight output.

So after last three weeks of dosing we saw reductions of 592 grams per day and 833 grams per day corresponding to a relative reduction of respectively 23% and 30%. So on page nine, we see the result of an important secondary endpoint which is increase in urine production with an increase of 40% and 32% respectively.

Within the two therapeutic active doses, all in grams, this was 530 and 338 grams. This is an important and significant result and the importance is due to that the increase in urine production is directly linked to the reduction in parenteral support, which will be a primary endpoint in the upcoming Phase 3 trial.

So please move to page 10. As mentioned earlier, the Phase 2 results gave an indication that our half-life of glepaglutide is significantly longer than the 13 to 17 hours previously assumed.

So based on this, we initiated during the fall of 2017 a PK trial evaluating the potential for less frequent dosing than the daily dosing in Phase 2 and also the daily dosing of the glepaglutide treatment. So we tested in the trial glepaglutide once and twice weekly at two different doses and in January this year, we reported that the results support moving into Phase 3 with both a once-weekly and a twice-weekly dosing regimen.

So with a ready to use liquid formulation, this can make this a very easy to use product for patients. So finally on page 11, you see that we recently completed the end of Phase 2 meeting with the U.S.

Food and Drug Administration, FDA and the outcome of this meeting confirmed the path forward for glepaglutide moving into Phase 3. The Phase 3 trial that we are planning to initiate will, as you can see, be a top-of-the-line placebo-controlled study in 130 short bowel syndrome patients.

We will be evaluating both the safety and efficacy of once and twice weekly dose of glepaglutide as well as a placebo over 24 weeks at multiple sites, both in Europe, U.S. and Canada.

So the primary endpoint for the Phase 3 trial is number of patients having at least 20% reduction in parenteral support at six months. And the key secondary endpoints are relative reduction in parenteral support and also the fraction of patients achieving one day of parenteral support.

So our plan is to initiate this pivotal Phase 3 trial in the second half of 2018 and we are on good track for the now. So on page 12, we move to one of our other late-stage product candidates, our ready to use dasiglucagon HypoPal rescue pen for severe hypoglycemia.

So we are very excited to have reported topline results from the first Phase 3 trial where dasiglucagon successfully met both its primary and key secondary objectives, basically confirming its safety profile with no treatment-induced or treatment-boosted antidrug antibodies. So additional results from this trial are expected in the second quarter of 2018 and the full results will be published at an appropriate scientific conference.

So as a quick recap, the trial evaluated the immunogenicity of repeated single doses of dasiglucagon at 0.6 milligram following subcutaneous administration and it was compared to native GlucaGen powder that require immediate reconstitution in an aqueous buffer before injection with a syringe and it was done in 90 patients, all with Type 1 diabetes. So the primary and secondary objectives in the trial were to evaluate the risk of treatment-induced and treatment-boosted antidrug antibodies following the three repeat doses of dasiglucagon or GlucaGen.

So the blind data review of the trial demonstrated that it did not induce or boost antidrug antibodies. So that was a very promising result.

These results from the Phase 3 trial is a major step forward in the development of HypoPal rescue pen for treatment of severe hypoglycemia. And as you might be aware, a hypoglycemic event remains one of the biggest fears among insulin dependent diabetics and it leads to approximately 300,000 hospitalizations every year in U.S.

alone. So looking ahead, we look forward to completing the ongoing pivotal Phase 3 trial later this year and we remain fully committed to offer this easy to use solution to treat a life threatening condition.

So on to slide 13. We are also developing dasiglucagon for congenital hyperinsulinism, which is a rare disease affecting mainly newborns and toddlers.

CHI is caused by a defect in pancreatic cells, which results in an insulin overproduction which causes both persistently and also severely low blood sugar levels, which is also referred to as hypoglycemia. So in Q1, FDA approved our IND application for initiation of two Phase 3 trials of dasiglucagon in CHI.

And just last month, we entered a collaboration with Roche Diabetes Care, who is a global leader in integrated diabetes management solutions for the Phase 3 trial. So while Zealand is responsible for conducting the Phase 3 trials, Roche Diabetes Care will provide its Accu-Chek Combo pump system for the trials under the terms of the agreement that we have.

So we are currently looking into initiating these trials in the second half of 2018. And the aim of the Phase 3 trials is to evaluate the potential for new nonsurgical treatment for children with congenital hyperinsulinism.

And during the trials, neonates and children with CHI will be given low doses of dasiglucagon infused with the Accu-Chek Combo pump system and we are excited about the opportunity to pursue the development of this severe and rare disease that affects both neonates and children. So moving on to page 14.

When it comes to our products marketed by Sanofi, we continue to see growing weekly prescriptions of Soliqua in the U.S. within average of approximately 3,300 weekly in Q1 2018 and these numbers continue to grow and in the last week, the prescription number exceeded 4,200 which is a 27% increase over the Q1 prescription numbers.

And in addition to this, the formulary coverage also continues to increase and is expected to be broader as we move further in the year. So with that as an update on our clinical programs and our marketed programs, I will turn the call over to Mats to discuss our financials.

Okay. Thank you Britt and good afternoon everybody.

If you look at page 16, we can see a summary of our Q1 financial results. The net loss for the first quarter of 2018 was DKK91.4 million compared to DKK26.3 million for the same period last year.

And the increase in that loss is mainly a consequence of decreased milestone revenue of DKK69.6 million and increased research and development expenses of around DKK25 million. So starting with revenue.

The revenue for the first quarter amounted to DKK10.8 million, as I said compared to DKK77.6 million in the same period last year. In 2017 Q1, revenue included a milestone revenue of DKK69.6 million from Sanofi in connection with EU approval of Soliqua.

If we look at royalty revenue, there was a 35% increase in Q1 2018 versus the same period last year. Our research and development expenses for the first quarter increased by 41% to DKK85.7 million compared to DKK60.7 million in the same period last year.

And this increase consists mainly of costs related to our late stage clinical programs, glepaglutide and dasiglucagon but as well as some preclinical research activities. As of the end of March, we had cash and cash equivalents of DKK566.8 million including DKK5.7 million that are held as collateral for our royalty bond.

I will turn back the call to Britt and I will take any questions you might have on the financials later in the Q&A session.

Thank you Mats. So we are excited by the progress that we have made across our pipeline during the past several months and as you can see on page 18 there are several upcoming important milestones and updates which we expect to build even greater excitement around our business.

So, specifically we look forward to announcing the initiation of our Phase 3 trials for glepaglutide and dasiglucagon for congenital hyperinsulinism in the coming months as well as to receive the results from the pivotal Phase 3 on the Dasiglucagon HypoPal program. So we will continue to keep you up-to-date on our progress with these and other programs and events that we have.

So with that, I would like to turn to page 19 and to hand over to the operator to open up the call for questions.

Hi. Thanks for taking my questions.

A couple of them. Can you tell us how you are thinking about you are going to handle commercialization of HypoPal?

I know the primary goal is to partner it. But I am wondering if there is -- what your expectations are for timing around finding a partnership?

And if you might commercialize it yourself if the right partnership isn't found? And then also can you give us a bit of an update on your regulatory discussions with glepaglutide and SPS?

I know you finished your meeting with the FDA. Maybe can tell us a little bit about that and where things stand with your EMA discussion?

Thanks.

Thank you Alan for good questions. I will answer the first one and hand over to Adam Steensberg for the glepaglutide regulatory question.

So on the HypoPal, it's correct that we have previously also communicated that we are looking for partner to commercialize the program with main focus on the U.S. initially.

And you can say that we are currently in discussions with multiple partners. And how we see this is basically that we could engage in a commercial partnership right now if the right partner is ready now.

We also not obliged to do a partnership now as we might as well do a partnership upon approval. So we are working on multiple fronts on that one now.

We do think it makes sense to partner with others in line with our strategy to commercialize this because it is a product that is prescribed by a broad prescriber base and is also a market that is severely underpenetrated today. So we do have some exciting progress and interesting partner discussions that we will update you on when we get a little further into the year.

On the glepaglutide question, I will hand over to you, Adam, to comment on both U.S. and Europe.

Okay. Thanks for the question.

And as we reported approximately a month ago then, we had a very successful meeting with the FDA on the glepaglutide Phase 3 program. So you can say, most aspects of the program was discussed with FDA.

We had already clarified some key issues before the meeting. But overall, I mean the ambition with this and the Phase 2 meeting was to reach an agreement on the Phase 3 trial design and program.

And I think we were very satisfied with the outcome and as we also reported in the press release then, you can say that we continue as planned. So of course there were trial designs, more or less trial design issues that were discussed and modified, but the overall plan with regard to primary endpoint, number of patients, extent of the study, et cetera, were as we had a hoped for.

As we also reported then, we do expect to have the outcome of the discussions with FDA and the minutes from those meeting within a month or so -- sorry, with EMA. And so there also our expectations is that we will continue as planned and along the study outlined that Britt presented here in the presentation.

So we are very encouraged and we are having full speed now on getting our COO up to speed, getting the trial centers signed in and then hope that we will have the first patient to enter the study later this year.

To clarify, did you say that you had a meeting with the EMA and you are waiting for the minutes? Or are you still waiting to have the meeting with the EMA?

We have had the meeting very recently and we will have the meeting minutes in a month or so. The way it works with EMA is a little bit different.

It's a scientific advisory, where you have an informal discussion where you have a chance to kind of discuss key aspects and then they will provide you with minutes within a month after that meeting. And we have just had that meeting and it looks also very positive.

Okay. Great.

Thanks for taking my questions.

Hi. Thanks for taking my question.

Just a brief one actually which is, have you yet initiated for the HypoPal a study bridging to the new rescue pen designs? And can you give us any sort of update on that?

And also the pediatrics study that I think is required for filing any update on the conduct of that study? Is it still part of your plan?

Thank you.

Okay. Thanks.

I would love to answer this. So on the pediatric study, we actually have made good progress there in the sense that we have managed to reach an agreement between both U.S.

and U.S. on the study so that we can -- so there is agreement on how that study is going to be designed.

So we are also fully ready now to get that study up and running and that will also happen within the second half of this year. So we are full speed now on the operational aspects of getting to the pediatric study up and running.

On your first question with regard to the study with the autoinjector, you are correct. Currently we have done the immunogenicity study and also the ongoing Phase 3 trial with the prefilled syringe and the autoinjector study is anticipated to also be initiated later this year.

And that will be a much smaller study just, again, to confirm efficacy of dasiglucagon versus placebo. So I think things are very much on track here for the HypoPal rescue program.

And maybe to from our side. It's not required that we do a pediatric trial.

It is a decision that we have made to do that to get approval and hopefully also from the beginning get an indication in children.

That's great. Thank you.

Yes. Thank you.

Just a sort of a follow-up on the whole submission plan for HypoPal for U.S. When do you actually plan to be able to submit for approval?

And also with that in mind, the CHI studies, I sort of had in mind those studies would start in mid-2018 and now you are saying H2. So is there anything here that may conflict also with the fact that you could be beginning a voucher for the CHI, of course if the rescue pen is not approved prior to that?

Yes. So first of all, on the HypoPal and submission.

So we basically report the pivotal Phase 3 trial later this year. Then we initiate also this year the pediatric trial focusing on U.S.

and Europe. And then we have the bridging study, which leads us to a filing in the second half of next year for that one.

Then I think it's important to note that the formulation for the HypoPal and the congenital hyperinsulinism, it's essentially two different formulations that we have. And it's correct that we said that the start of the Phase 3 trial for CHI was mid this year and you can say we have essentially changed our reporting to first half and second half, which is why we are saying second half.

But we are in full preparations to start the trial right now after we have the go-ahead and clear guidance from the FDA on the trial.

Yes. Maybe I can add in, Thomas.

You also know this is actually two trials that we anticipate to run in congenital hyperinsulinism. And as we also reported just earlier this month, we are actually collaborating with Roche using their insulin pump.

And it's a little bit back to what we discussed before. We are fully ready now to get the studies up and running and we do anticipate that these plans will hold true also in the sense of getting the two studies started this year.

With regard to recruitment and the voucher that you elucidated to, these are of course things that we will have to monitor when we have the studies up and running, how fast we can recruit in the studies and then potentially take decisions at that time point. But so far, I think the strategies and the plans are as we communicated also in the last half year months.

Okay. So I can still put a PRV in my expectations?

That is at your own cost. We have no confirmation that we have priority review voucher.

Yes. But I mean for you may if the CHI study gets delayed also with some uncertainties on recruitments, so are you still considering any ways that you would maybe hold back on the HypoPal submission?

And I think what you are alluding to, of course, that in order to be eligible for one of these vouchers, it has to be the first submission with a new chemical. And of course, everything depends and it is highly attractive to get this voucher.

So if we get slight delays in recruitment, meaning that we have to postpone things for a few months, then of course these are strategic decisions that we will take as a company when we approach. I think currently, our ambition is to have full speed on the programs and we will update when we get further.

But again, I can just say that we have actually managed to get a lot of excitement in the CHI community and getting a few more centers that we anticipated into this study. So once we get this study up and running, we also expect to be able to recruit with a good speed.

While we are talking about it, a total of 50 patients in the two trials maximum.

Yes. That was actually my follow-up question.

You say 50 patients and then if that's split into two times, 25? Or how should I see this?

There are more patients in older children. So the three-months up to 12 years, there we will have more children.

And then in the neonates, there will be fewer. And it is also the older children is the one area where it's easiest to recruit since they are existing patients, you can say.

Okay. Great.

Thank you very much.

Okay. Then if there are no further questions in the call this afternoon, I would like to thank everyone for participating and wish you a good rest of day.