Ladies and gentlemen, thank you for standing by, and welcome to Zealand Pharma fourth quarter and full year 2020 earnings conference call. At this time all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question, you will need to press star and one on your telephone. I would now like to hand the conference over to speaker today, Emmanuel Dulac. Please go ahead, sir.
Yes, good afternoon, everyone. Yes. Please, Matt, take it over.
All right. Thank you. Thanks, Emmanuel. Welcome and thank you for joining us today to discuss Zealand's fourth quarter and full year results for 2021. I'm Matt Dallas, Senior Vice President and Chief Financial Officer at Zealand. With me today are Zealand's President and Chief Executive Officer, Emmanuel Dulac, President of Zealand Pharma U.S., Frank Sanders, and Chief Medical Officer and Head of Development, Adam Steensberg. You can find the related company announcement and additional supporting information on our website at zealandpharma.com. I'd like to point out that we'll be making forward-looking statements that are subject to risk and uncertainties. These statements are valid only as of today, and the company assumes no obligation to update them except as required by law. Please refer to recent filings for a more complete picture of risk and other factors.
With that, I will turn the call over to President and CEO, Emmanuel Dulac.
Yeah. Thank you, Matt, again, 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 this current geopolitical, you know, and the current biotech market landscape. In spite of these obstacles, we have the principle at Zealand Pharma to deliver on our mission, and we believe we can actually rise to this challenge. 2021, please turn to slide three. 2021 was 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 Zegalogue in the U.S., our established research capability in Denmark, and now complemented by a commercial franchise in the United States.
In 2022, we are eagerly anticipating our pivotal phase III results with both glepaglutide for SBS and dasiglucagon for CHI, and continuing our strategy to discover and develop innovative peptide therapeutic options for patients with type 1 diabetes, rare disease, obesity and inflammation. With this established momentum across our robust preclinical and clinical pipeline, we feel well-positioned for continued progress in the year ahead. Next slide. We continue to discover and develop innovative peptide therapeutics for patients with type 1 diabetes, rare disease and obesity, and have established momentum across our robust preclinical and clinical pipeline with a number of significant milestones this past year.
Later in the call, our CMO and Head of Research and Development, Adam Steensberg, will discuss our most recent pipeline updates in greater detail, including completing enrollment in the pivotal phase III trial of dasiglucagon for the treatment of congenital hyperinsulinism, or CHI, in children up to 12 months old, completing enrollment in the EASE-SBS 1 pivotal phase III trial, assessing glepaglutide in patients with short bowel syndrome or SBS, and successfully completing the phase Ib trial of our GLP-1/GLP-2 dual agonist dapiglutide. These achievements position us well for continued progress in 2022.
This year, we look forward to a number of clinical milestones, including data from each of those recently enrolled phase III studies for dasiglucagon and glepaglutide, along with dosing the first patient in our phase III program of the iLet bionic pancreas device for the treatment of type 1 diabetes in collaboration with our partner, Beta Bionics. First, I will turn it over to Frank Sanders, President of Zealand Pharma U.S., who will discuss the continued work of our commercial team on the launch of Zegalogue. Frank?
Thank you, Emmanuel. Please turn to slide five. In the fourth quarter, approximately 2,000 total prescription claims for Zegalogue were submitted to commercial and government payers. Also, approximately 500 distinct healthcare providers wrote prescriptions for Zegalogue. Most of these prescribers were endocrinologists, both adult and pediatric, and approximately 60% of prescribers were repeat prescribers, writing Zegalogue prescriptions multiple times in the quarter. On average, 2.0 units of Zegalogue per prescription were being dispensed. Of 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 36% increase per week versus what we saw over the fourth quarter of 2021. While Zegalogue demand has grown since launching last June, it has not translated into a proportional level of revenue growth.
2021 full year net revenue for Zegalogue was DKK 5.5 million or $0.8 million. Please turn to slide six. Zegalogue now has favorable coverage in 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.
Thank you, Frank, and please turn to slide seven. Here you can see our robust pipeline targeting four therapeutic areas of high unmet medical need. In 2021, we successfully completed inpatient enrollment into two of our key late- and mid-stage development programs, setting us up for a very exciting 2022, with a number of pivotal clinical data readouts. We also saw significant progress in our peptide platform and early pipeline, which will become increasingly visible throughout the year. In type 1 diabetes, our partner Beta Bionics initiated the phase III program for dasiglucagon in the biohormonal artificial pancreas in late 2021. We expect to present data from the phase II A trials with dasiglucagon minidose pen in type 1 diabetes later this year, and we look forward to providing more visibility into these programs throughout 2022.
During the second and third quarters, we expect pivotal phase III data readouts on our rare disease programs targeting CHI and SBS. In the event of positive outcomes, we will swiftly pursue NDA submissions for both indications with the U.S. FDA. For dapiglutide, we completed the phase I program late last year, and we look forward to sharing further results at a scientific conference later in 2022, at which time we will also provide an update to the next development step for this molecule. As a reminder, dapiglutide is a long-acting GLP-1, GLP-2 dual agonist with potential across a spectrum of metabolic and gastrointestinal diseases. With its dual mode of action, we believe this compound could lead to relevant clinical differentiation for patients. 2022 also looks to be an exciting year for our obesity portfolio.
First, we expect to present data from the phase II trial with BI 456906 in people with type 2 diabetes at a medical meeting, and to see the results of the phase II trial in obesity. Our partner, Boehringer Ingelheim, is making good progress on all fronts. We also began dosing patients in the phase I obesity trial of our long-acting amylin analog ZP8396, and I'm very happy to announce that the trial is making good progress. We expect to initiate the phase I-B multiple ascending-dose trial later in 2022, and to provide further pre-clinical and clinical updates as we advance into the year. Please turn to the next slide. We'll discuss our dasiglucagon CHI 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 dasiglucagon in children with congenital hyperinsulinism, or CHI, an ultra-rare disease caused by a defect in the pancreatic beta cells. CHI is the most frequent cause of severe and persistent hypoglycemia. It starts as early as the neonatal period and profoundly affects those children and their families from infancy through the teenage years. It is characterized by an excessive and uncontrolled insulin secretion, triggering recurrent episode of profound hypoglycemia, which requires surveillance, rapid and intensive interventions to provide, to prevent neurological sequelae. We have randomized the last patients into the pivotal phase III trial. The primary objective of this trial is to demonstrate a reduction in need for intravenous glucose infusion in the hospitalized children.
Secondary endpoints includes reduction in need for intensive hospital treatment, reduction in frequency of dangerous low blood sugar, and need for constant feeding, and to potentially delay or eliminate the need for pancreatectomy. We also have a number of children in the long-term safety and efficacy trial 17106, with some children having been treated with dasiglucagon for several years. Data from this trial is planned to be included in a potential NDA submission with the U.S. FDA, and I'm happy to announce that we have managed to close the database for the interim data for this study last week. Pending positive results from the pivotal phase III trial in the second quarter, we will work 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.
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 pivotal EASE-SBS 1 trial. Glepaglutide has the potential to be the first long-acting GLP-2 agonist, and the first to be delivered via an auto-injector. Patients with SBS, they have limited treatment opportunities, and many remain in need for long-term daily intravenous infusions of liquids and energy to maintain life. We believe that glepaglutide has the potential to make a significant difference in the lives of these people. Phase II data have shown the potential to improve gastrointestinal absorption in people with SBS, and thereby reducing the need for parenteral support. Please go to slide 10. The pivotal EASE-SBS 1 trial has around 95% power to detect a treatment effect of glepaglutide versus placebo.
It's a six-month trial, and full results of the study is expected in the third quarter this year.
Long-term safety and efficacy data from EASE SBS 2 and 3 will be included in a potential NDA submission to the U.S. FDA, and we are currently planning for interim database locks for these trials later this year. Please go to the next slide. Data presented last year from the phase I-B trial of BI 456906, a long-acting dual glucagon/GLP-1 receptor agonist, showed that the compound resulted in clinically relevant body weight reductions of up to 13.7% with no unexpected safety findings after 16 weeks of dosing. In 2022, we expect to present data from the phase II trial in people with type 2 diabetes and to see the results of the phase II trial in obesity. Please go to the next slide.
At ObesityWeek last year, we also presented preclinical data as related to our long-acting amylin analog ZP8396, either as a monotherapy or in combination with semaglutide. The combination therapy resulted in up to 20% weight loss in vivo models. The phase I A trial was initiated late last year, and we continue to make good progress. Later in 2022, we expect to present further preclinical and clinical updates from the program and to initiate the multiple ascending-dose phase I B trial. I'll now turn over to our CFO, Matt Dallas, to walk us through our year-end financials. Matt?
Thanks, Adam. On slide 13, you will see Zealand's income statement for full year 2021 and how it compares to 2020. Total revenue for the year was DKK 292.6 million , or $44.6 million. This is driven primarily by net product revenue of the V-Go wearable insulin delivery device and Zegalogue, as well as partnership revenue from our collaborations with Alexion, BI, and Sanofi. The net operating result for the year was a loss of DKK 1.05 billion , or $160.4 million. Sales and marketing costs mainly relate to the commercial infrastructure in the U.S. to support the Zegalogue and V-Go commercial programs, while R&D costs primarily relate 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 DKK 1.22 billion , or $186.7 million. In December, we announced a seven-year, $200 million financing agreement with Oberland Capital that included an upfront payment of $100 million in exchange for a seven-year interest-only secured note. At the end of the year, we had cash equivalents, and marketable securities of DKK 1.4 billion , or $217.7 million. Turning to our financial guidance on slide 15. For 2022, net product revenue from the sales of commercial products is expected to be DKK 235 million , ±10%. Net operating expenses are expected to be DKK 1.2 billion , ±10%. We do expect revenue from existing licensing agreements.
However, since such revenue is uncertain because of size and timing, we do not intend to provide guidance on such revenue. With that, I will now turn it back to Emmanuel.
Thanks, Matt. In summary, 2021 was a year of significant progress for our organization. 2022 is the year where we expect significant inflection in our pipeline. We have a deeply rooted know-how in developing peptide therapeutics and have the potential to change the lives of patients with our late-stage programs in metabolic and gastrointestinal disease. Summarizing again what Adam just described, in 2022, we expect to see phase III data from our second and pivotal trial of dasiglucagon in CHI. Phase III data from our pivotal study of glepaglutide in SBS. Phase II trial results for the program we have in collaboration with BI in type 2 diabetes. Phase II trial completion for the same program in obesity. Phase I single ascending dose results from our amylin analog trial in obesity.
Despite economic and geopolitical challenges, our company believe that we can continue execution across all our clinical milestones, and it will bring us closer to our goal of offering five commercialized products by 2025. Thank you all. I will now turn it over to the operator for questions.
Ladies and gentlemen, we now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. The first question is from Thomas Bowers. Please go ahead. Your line is open.
Yes, great. Thank you very much. A couple of questions here from my side. If we just dive into your product revenue guidance. If we are assuming, and I know you don't split up V-Go and Zegalogue, but you know, just assuming flat or low single digits V-Go growth, we are looking at some, I don't know, DKK 50 million in 2022 sales for Zegalogue. I mean, this is very close to your initial 2021 guidance. Is there anything that materially has changed in how you look at the market potential for Zegalogue? I mean, now you have more or less zero issues with payer coverage going forward or at least from Q2 or something.
Prior to second half, 2022. That was my first question. Second question is just related to Sanofi. I've seen your revenue that you have DKK 30 million milestone from Sanofi during the year. And maybe it's mostly for modeling reasons, but that full amount that you expect from, you could say the lixisenatide leftovers here, I believe I remember that the full amount was around $10 million-$15 million. Is this the thirty million that you're gonna get, or is there potentially additional revenue or milestones in the near future?
My last question maybe just if we just dig a little bit to Zegalogue and then also V-Go. Maybe a little bit more high level. Is there actually still an argument against just, you know, pulling the plug here and out license in this part of the pipeline? I mean, of course, the expected upcoming product launches you have with glepaglutide and also in CHI and hopefully also dual hormone. I mean, though those all target either ultra rare orphan segment that you can cope with a small sales force. Of course, the dual hormone stuff is probably going to be done with a med tech partner.
Is there that much spillover aside from, of course, the back office functions? I remember also that your initial arguments were actually to keep full control of dasiglucagon, so not out-license any particular indications. Maybe a little color on that would be very helpful. Thank you.
Yeah. Three questions. I think the first one I will ask Frank to answer.
Okay.
I think on the middle, maybe you can touch as well on the last one, Frank, if you want, right away. I think probably Matt will address the second question, the middle regarding the payments from Sanofi. I will probably add on the third question. Frank?
Okay. Thank you, Emmanuel. Look, 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. The second is that our sales teams face challenges physically accessing HCPs, healthcare professionals in the third and fourth quarter of COVID. This is because many hospitals and healthcare provider practices were shut down to sales rep access during the time of COVID. For 2022 at the beginning of the year, these conditions have improved on both of these fronts. The first is that, and, you know, you saw this from the slide that we had shared a moment ago.
The Zegalogue now has favorable coverage in 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 will say is that physical access to HCPs is improving, and HCPs are reopening their doors to Zealand representatives, which again, is a change. Finally, we are seeing an increase in the number of unique prescribers for Zegalogue in 2022. We're gaining now approximately 30 more prescribers per week in 2022, which is about 35% greater than what we saw in the fourth quarter of 2021. That's to address your first question.
The commentary that I'll make or, 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. We see this as an opportunity, obviously, to establish our presence in the U.S. The infrastructure that we're building, as you had said in the, Thomas, in the back end, is something that we see as being scalable and supportable of other product launches in rare disease. We'll continue to evaluate that as we get closer to launch. Thank you for the question.
Matt, do you wanna take the-
Yeah.
The one-
I got it.
Yeah.
Thomas, there's one outstanding milestone for Sanofi. It's for $10 million or DKK 65.6 million.
Okay. That's right. Yeah. Thank you very much.
You're welcome.
Thank you, Thomas.
Thank you for your question. The next question from Michael Novod from Nordea. Please go ahead. Your line is open.
Yeah. Thank you very much. Also, two questions, rather simple, probably. On the milestone front as well, if you look at your Alexion collaboration, should we expect any milestones? I know you're not guiding on it for 2022, and of course there's uncertainty, but is there any sort of clinical progress expected that could potentially trigger milestones from the Alexion collaboration? And secondly, on the BI milestones, are there any milestones related to readout of the phase II data in type 2 diabetes, or will the next milestone be in connection with initiating phase III? Thanks.
Maybe you can take it, Adam.
Thanks for the questions, Michael. Unfortunately, I cannot give you answers to those because our partners will not allow us to do so yet, for competitive reasons. We can just confirm that we are making very good progress in the BI collaboration. We can say the milestone and royalty structures are classical structures that actually goes for both programs. We cannot provide more specific guidance on when we will have the next one for the BI. Same goes for the Alexion. We are making very good progress for this. As you probably remember, we are responsible for driving all activities up to the first human dose study, whereafter they will take over.
I can unfortunately not give you the more specifics on when we will start phase I or when we will have the milestones due to-
Okay.
Yeah. Contractual obligations.
All right. That's fine. Thank you very much. That's it.
Thank you for your question. The next question is from Joseph Stringer from Needham. Please go ahead.
Hi, everyone. Thanks for taking our questions. Two from us on the SBS program. For the phase III EASE SBS 1 trial, can you speak more on the change in parenteral support? Obviously, the primary endpoint is an absolute change, and then a key secondary is a relative measure, sort of the responder analysis greater than 20% of change, if I recall correctly. I guess my question is: what would you consider sort of a clinically meaningful absolute change on the primary endpoint? And then what's most important, I suppose, from a physician perspective in terms of you know, the absolute versus the relative change or responder analysis? And then just a question on the safety exposure requirements from FDA or for a potential NDA submission. Do you...
You know, given some of the recent changes in open enrollment in EASE SBS 2, do you still remain on track to satisfy the safety exposure requirements for glepaglutide in SBS prior to a potential NDA submission? Thanks for taking our questions.
Thanks for the questions. Maybe just on the first question, you can say people living with short bowel syndrome and being dependent on parenteral support are extremely heterogeneous, and that also means that some will have an infusion of IV solutions every day, and that could vary between a few liters up to 10 liters. Some will only need two or three times a week, and you can say for our study, you need at least three times a week. You can say the absolute reduction for the individual patient of course depends on how much volume they are normally dependent on. But on average, you can say if you look into what was observed in prior studies, then an absolute reduction of 2.3 liters was what across the broader population.
That would be a mix of some people having a very significant, much higher absolute reductions and some having a much lower one. It's really depending on the individual need of those patients when they enter the study. I would say any reduction could lead to clinical benefits for patients because it's You can say it's both time you need to be hooked up to these systems. It's the potential to be off treatment for one day, and it's the, you can say, the amount of times you have to go to the toilet throughout the night if you have a lot of liquids infused.
It's a difficult answer, but on average, we would expect to see more than 2.3 liters across the population if we have a similar distribution of patients as in the former phase III studies conducted with this population. The relative response of a 20% reduction is a little bit of an artificial one, but it's still seen, I would say, from as many as a clinically relevant measure. Because you can say, let's say if you... That could give you at least one day off if you are, if you have infusions more than five days a week, or actually provide quite significant daily reductions in the volume for each individual patient if you have a 20% daily reduction.
I hope this is clear enough, but it's really dependent on each patient, the absolute ones. On the safety database, we are actually confident and comfortable with the safety database as it is right now with regards to exposure, both for six and 12 months and long-term exposure, which is exceeding what we discussed with FDA at the pre-end-of-phase II meeting. You can say any additional patients we get into EASE SBS 2 is actually only upside to where we are today. Having said that, we do expect to see that upside scenario because it's a quite attractive study to participate in from a patient perspective.
We are, as you know, keeping the trial open for new randomizations into EASE SBS 2. Does this answer your question?
Great. Thanks for taking our questions. Oh, yeah. Thank you.
Thank you, Joseph.
Thank you for your question. As a reminder, if you wish to ask a question, please press star and one on your telephone. The next question from Lucy Codrington from Jefferies. Please go ahead.
Hi, thank you for taking my questions. Just on the artificial pancreas, what's a realistic timeline for the first patient in? I know screening is underway and a realistic timeline now for when we might expect data. Are we still looking at early next year or is that slipping into kind of just the first half of next year? Just thinking about the bar for demonstrating efficacy in this study versus the insulin only. We'll obviously, hopefully get the insulin-only data at some point this year, but you're aiming for superiority. Would non-inferiority still be enough for filing for that? Last question just relates to whether you have any significant exposure to Russia or Ukraine in terms of your ongoing or planned clinical trials. Thank you.
Yeah. I can start by addressing the last question first, and that's a short answer of no. That's good for us here in this unfortunate situation. With regards to the BHAP study, we have actually not guided on when we expect results, and we will not do that until we have those first patients, that I cannot comment further on. When will we dose the first patient? It's actually a little bit, we're discussing that with our partner right now as well, in the sense that, you know, they have completed the insulin only and made slight adjustments. We just need to get those into the device, and then we're ready to go. We will provide further updates when that happens.
That should be as guided still. When you ask about the superiority versus non-inferiority on the primary endpoint, we are definitely going for superiority of the bihormonal artificial pancreas versus insulin only when it comes to lowering of HbA1c. That is the primary endpoint. I would consider this, you can say, a failed study if we don't demonstrate superiority on HbA1c. Clinically relevant changes in a regulator's mind is open, truly, but we would go for more, I would say. We would actually for the key secondary endpoints, which is time in hypo. It's enough, we believe, to show non-inferiority, so, say you can get better glycemic control without increasing the risk of hypoglycemia.
Personally, I would also hope to see superiority on the mean, less hypoglycemia, which would be a very strong product profile. Primary endpoint is superiority on HbA1c, and we're going for that, and then at the same time show non-inferiority on hypoglycemia.
Thanks very much.
Thank you, Lisa.
Thank you for your question. We don't have any other question at the moment. I will hand back the conference over to Mr. Emmanuel Dulac.
Well, thank you. Thank you very much. With that, we would like to thank you all for attending and for your questions. We look forward to connecting on future announcements and updates. Thank you again.
That concludes the conference for today. Thank you for participating. You may all disconnect.