Good day and thank you for standing by. Welcome to the Zealand Pharma Results for Q1 21 Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to turn the conference over to the first speaker today, Matt Dallas.
Thank you. Please go ahead.
Thank you, operator. Welcome and thank you for joining us today to discuss Zealand's Q1 results for 2020 18. I'm Matt Gallas, Senior Vice President, Chief Financial Officer at Zealand. With me today are Zealand's President and Chief Executive Officer, Emmanuel Dulac 18 and Chief Medical Officer, Adam Steensburg. After the prepared remarks, we will open the call to take your questions.
You can find the related company 18.7. I would like to point out that we will be making forward looking statements that are subject to risks and uncertainties. 18. 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 nineteen.
With that, I will turn the call over to President and CEO, Emmanuel Duak.
Thank you, Matt, and 18. Thanks to everyone for joining today. The Q1 brought one of the most significant milestones in Zealand Pharma's history, 20. The U. S.
FDA approval of Zegalog indicated for the treatment of people with diabetes who are at risk of severe hypoglycemia. With a goal of 5 commercial products by 2025. Turning to Slide 45. 2018. Under the leadership of Frank Sanders, President of Zealand Pharma U.
S, we have been steadily optimizing our commercial organization over the last year in preparation for the launch of Zegalog in late June. Through established relationships with KOLs and HCPs as well as high prescriber coverage, 18. We are on track with our launch readiness preparation and believe this initial launch will put us in a strong position to further build out our commercial organization. To ensure a successful launch, we have 4 strategic objectives. 18.
The first is to establish a clear and distinct product position with HCP's patients and caregivers. 2nd, 18. We will focus on the back to school season to execute a focused launch that targets and prioritize high volume customer segments. 3rd, we are working closely with top national and regional payers, pharmacy benefit managers and health systems We are committed to providing a patient support program to ensure education and access for patients and caregivers. Turning to Slide 67.
There is a significant unmet medical need in the treatment And with the arrival of newcomers, we have seen an increasing utilization of rescue therapies. For your reference, we have the indication and important safety information for Zigalog. A copy of the full PI is available on zigalog.com We believe Zegelog will be an important new option for people with diabetes to consider in the management of potential consequences of their disease. Turning to Slide 8. 20.
In parallel with Zegalog's approval and upcoming launch, we continue to make exciting progress across our pipeline 18. I am excited to announce that we have strengthened our internal team
18.
I will now turn it over to
2019. To our Head of Research and Development, Adam
Stimpers, to discuss our pipeline in greater detail. Adam?
Thank you, Emmanuel. Please turn to Slide 9. And as just mentioned by 18. Our preparations for the SigaLoft late June loans are being executed while we in parallel continue to advance our pipeline programs, 18, which range from a late stage to preclinical candidates in a variety of metabolic and GI indications. Turning to Slide 10.
We continue to pursue other indications for dasiglucagon. 18. Among the most advanced clinical programs is the study evaluating continuous infusion of dasiglucagon in children with congenital hyperinsulinism Please turn to Slide 11. In collaboration with Beta Bionics, we plan to initiate the pivotal Phase 3 trial program for the bihormonal islet bionic pancreas device which utilizes dasiglucagon in the second half of this year. 18.
We plan to enroll approximately 3 50 adults and 3 50 children with Type 1 diabetes 18. To form the basis for an NDA submission to the U. S. FDA for use of dasiglucagon in biphormonal artificial pancreas systems. Please turn to Slide 12.
As Emmanuel mentioned earlier, 20. We have also broadened our pipeline of metabolic therapies to target obesity and nonalcoholic steroidal hepatitis. 2019. Our clinical development partner, Werner Englheim, recently initiated 2 additional Phase II trials for the GLP-one, glucagon dual agonist 20.5-six thousand nine hundred and six in adults who are either overweight or obese or for adults eighteen. And we believe that our dual agonist has the potential to achieve increased weight loss via improvements The patient's metabolism and also has the potential to alleviate NASH by reducing upstream hepatic steatosis.
And we expect Turning to Slide 13. We also have 2 assets in preclinical development for BECT, 18. Both of which have shown additive weight loss effects when co injected with GLP-one analogs in preclinical models. 18. And we anticipate starting Phase 1 trials with our long acting amylin analog, ZTE8396 later in the year 18 months and expect to bring our long acting GIP analog ZTE-six thousand five hundred and ninety into Phase 20.5.
We have also made significant progress in the clinical development of our gastrointestinal programs and recently announced new preclinical candidates 18. Please turn to Slide 14. Lepeglutide is our long acting Tier 2 analog with a half life of approximately 50 hours, which is being developed in a disposable auto injector. Eighteen. We are progressing with patient enrollment in the pivotal Phase 3 trial, which will evaluate once and twice weekly dosing of glepaglutide versus placebo over 26 weeks, and we expect the results from the trial in 2022.
Please turn to slide 15. We are making good progress also with our long acting Tier III II dual agonist atypical site, And I will now turn over to our CFO, Ned Dallas, 18 to walk us through our Q1 financials. Matt?
Thanks, Adam. 20. On Slide 16, you will see Zealand's income statement for the Q1 of 2021 and how it compares to the same period in 2020. Total revenue for the 20.8 million or USD 7,500,000. This was driven by net product revenue of the V Go wearable insulin delivery device as well as partnership revenue from our collaboration with Alexion.
The net operating result for the quarter was a loss of DKK260.9 million $41,100,000 Sales and marketing costs mainly relate to the commercial infrastructure in the U. S. To support V Go and the upcoming ZIGALOG launch, eighteen. Slide 17 illustrates our strong financial position and ability to twenty nineteen. Net operating expenses for the Q1 were DKK284,800,000 or $44,900,000
18. At the end of
the quarter, we had a cash position of DKK1.6 billion or USD 252.9 million funding the company through several key upcoming milestones. 20. During the quarter, we also successfully completed the largest financing in company history by raising DKK 750,000,000. 20. Turning to our financial guidance on Slide 18.
For 2021, there are no changes to our financial guidance from what was announced in March. Net product revenue from the sales of our commercial products 20.9 percent. Net operating expenses in 2021 are expected to be DKK 1,250,000,000 18%. We expect revenue from existing license agreements. However, since such revenue is uncertain because of size and timing, 20.
And with that, I will turn it back to Emmanuel.
Thanks, Matt. 18. Turning to Slide 19. As Matt has laid out, we are in a strong financial position to execute on the upcoming launch of Zegalog, 18.5% while continuing to advance our pipeline programs and invest in building an organization with the best and brightest talent to bring forward new peptide therapeutics eighteen. Our continued progress would not be possible without our research and development engine.
18. The clinical and regulatory teams who worked tirelessly to advance our program and the members of our growing commercial organization who are eighteen. I am grateful and proud 20. Thank you all. I will 18.
Now turn it over to the operator for questions. Operator?
And your first question comes from the line of David Lebowitz from Morgan Stanley. Your line is open. Please ask your question.
18. Could you just, I guess, speak to the 20. In recent months after, I guess, certainly the pandemic has had increased challenges over the last 18 year or
so. Adam, will you take this question?
Yes. Thanks. And thanks for the question. Yes, they have. And we are continuing to see good progress as we also communicated at our full year.
So we are, you can say, positive with regards to how we see recruitment right now. And So far, it is coming out as we had hoped for here with vaccinations being rolled out across U. S. And Europe.
That's good to hear. And with respect to the upcoming launch, how have market dynamics
18. Yes, I'll take this one. The market has clearly signaled a shift away from the legacy products to innovative new products eighteen. And the shift is still underway. So I think based on current trend, there is Plenty of room to convert legacy shares of the innovative products.
That's actually one side of the story. The other side of the story is that we have seen with the launch of the recently approved products 20. An expansion of the market by 6% in 2019 10% in 2020, even though it was twenty. Accounts for around 60% of the total year. So we believe that Zegelog will be attractive, Very attractive new option with HCPs and patient alike.
And the launch sequence right now is ongoing twenty. So that we are confident that we will be actually ready to launch our product mid to late June, ready on time for the back to school 19
season.
And your next question comes from the line of Greg Sivanovich from Goldman Sachs. Your line is open. Please ask your question.
Hi, there. It's Nick on for Greg here. First question, if I may, on regarding Zegaloc. Eighteen. Given that the launch has been timed for the back to school season, how should we be thinking about the progression of Quarterly sales, I.
E, are they going to be is there going to be a high watermark in 2Q, 3Q twenty. When we consider the 1st several quarters of sales or are we more likely to see a more steady rise on a quarter on quarter basis? And then a follow-up on 906.
20.
I'll take the first part and Zegalog and Adam will talk to you about the BI collaboration and product. So our 2021 guidance That said, our field operating model is really well positioned to continue to support both the V Go and the Zigalog. 20. And regarding the, I would say, the launch and the plan for the launch, 20. Our plans are anchored around ensuring that we can execute a full product launch in late June, twenty.
Consigning with the annual market opportunity on the back to school season. And so we are on track to achieving this objective. 22. In fact, our market access teams have already are active, engaging with national and regional payers 19 and PDMs around the clinical value of Zegalog. Discussions with formularies and drug formulary decision makers Has been favorable, and we expect broad market access.
Actually, we haven't seen any management or any barriers For these products by payers put in place until now. So to build over the first so we'll continue to build this momentum over the next 2 quarters and the 2 quarters of the launch. And our sales team is in place and present with customers today. So we'll pivot in late June 18. Adam, do you want
to talk about the DI? Yes. Thanks for that question as well. So We are, as you know, truly excited about this collaboration that we have with BI and the progress that they are making also starting 2 new studies. What 20.
We do expect this, as I mentioned, to see that they report the Phase 1b 16 week data, which was conducted in overweight patients That they will do that this year, but we cannot comment on it if they will release these data this year or only next year. This twenty. This is really up to BI and we don't have a firm commitment to communication from them on this parcel. So I cannot be more precise here on the Type 1
Next question comes from the line of Lucy Cogington from Jefferies. Your line is open. Please ask your question.
Just a couple. Just on the DJ performance this quarter, Should we view that as a sensible run rate for the rest of the year? Or were there Any kind of one offs within the quarter that we should be factoring in? Secondly, on the artificial pancreas Phase 3, and this might be And this guided question. Given the plan is that hopefully the majority of the patients in the insulin only trial will roll over into the dual hormone trial.
Will those patients then be stratified 18. Given that it's likely that those patients that have already been on an insulin only pump will have better control and therefore will that 20, reflected in your dual role, Medra.
So I guess the first question on the financial 20. We'll go to our CFO, Matt Danath, and then Adam will take the next one on the dual omenon Biomonal Partners.
Yes. So for the run rate, I mean, right now what we do have is we have a large amount of launch costs and activities ahead of Ziegelog. 18. As we prepare for that late June launch, those costs will normalize as we head into as the drug is being 18. Sold, but it will be offset with additional clinical spendings we'll have as we approach the BHAP and obviously the GLPHA studies
So you are correct that the insulin only the 20. Patients who participate in the insulin only trial can be offered to also enroll into the Biomonas study 18. And you asked about the stratification, and I think that's a very reasonable thought that you want to make sure that there is 20. An equal number of patients who comes from the insulin only studies in each of the 3 groups that we are going to have in the biomonal
Okay. And then just back on the first one. Just in terms of the V Go sales, though, Is that a good run rate for the rest of the year rather than the run rate of OpEx? Thanks.
I would rather I mean, For both revenue and OpEx, we don't provide guidance on a quarterly basis. It's more of within the annual number. I'd kind of refer to you To those targets versus providing quarterly.
Okay. Thank you.
And next question comes from the line of Ed Saru from Guggenheim Securities. Your line is open. Please ask your question.
18. Great. Thanks for taking the questions here. Just a couple here. So I guess maybe first, 20.
Wondering what you're learning from the pivotal trial for the insulin only Bionic Pancreas, Particularly anything you could kind of provide in terms of performance of the pump as you prepare for the BioMoMov Phase 3 launch later this year?
Twenty. I think it's a very important thing you raised here. We have to remember that for beta valanex and the islet in particular, it's the first time twenty. The commercial islet is actually being tested in a large clinical setting here in the insulin only study. So of course, there are issues that are being solved, 20.
Especially in the start of the study. So and this is something that we consider is a significant upside for when we are to do the biohormonal study because it's really You can say the technical risks are being reduced significantly. So what I You can say so in our mind, it's really helpful that we can then enter the large bimodal study, which includes both adults and children and around 700 patients with a device that has already been tested For 6 months across 440 patients, with the only difference being that the 20. So we are extremely happy with the progress that beta variants are making in the insulin only. That should hopefully provide some guidance also for what we can expect for the biohormonal study when we then
20. Great. Thanks for that.
And maybe, Adam, just on sort of
The Phase II trials for the dasiglucagon mini dose. If you could just maybe provide a little bit more Color on sort of the trials that are planned, I guess, from the press release on this quarter. Any further details you could provide would be great.
Yes. I mean, we have actually you can say both in type 1 diabetes, the mini dose cancer diet for exercise induced hypoglycemia, but really giving 20. Smaller doses than what we use for rescue therapy. That concept we have tested. We know that smaller doses of dasiglucagon works For correcting mild to moderate hypoglycemia.
Similarly, in patients with post twenty. Clinics started to show that Dasiglucagon can actually correct the situation. So they don't get as hypoglycemic as when they 18. But these are studies conducted in the clinics and the studies that we plan to are starting this quarter, They are actually outpatient studies. So and we have the actual pen that can be the ultimate device twenty.
In the hands of patients to see how they will utilize this in this Type 1 setting to correct mild and moderate hypoglycemia and exercise settings twenty nineteen. So it's really going from in clinic studies into the real life setting and thereby also You can say with positive results setting the scene, so moving into Phase III. So we are extremely happy to see the progress that we're making here. We 18. And look forward to see the results for both these opportunities once they are finalized.
And your next question comes from the line of Joseph Stringer from Needham and Company. Your line is open. Please ask your question.
Hi, everyone. Thanks for taking our question. Just General question on the 5x25 strategy here. I know you recently announced that. You could potentially have these 5 products coming online, but just curious if there was a goal of Sort of a first year profitability or at least maybe an 20.
Not only R and D, but just OpEx in general that need to be pulled over the next several years to get there. 20. Thanks for taking our question.
Matt, will you take this one?
Yes. So Joey, great question. 20. One area that we focus on, we've got the 5 by 25 strategy, but behind that, that's not kind of in that 5 grouping is all of the research And the early stage candidates that we have behind those kind of 5 late stage or commercial candidates that we have now. Our goal is to continue to fund those programs so that beyond 25, there's a lot more than 5 eighteen.
And so with that, we don't provide any guidance on profitability because it's all going to be determined based on the success
Okay. Well, I guess if there's no more question, then we will actually 20. Yes, operator, 18. Thank you, everyone, for joining this call, and thank you for actually 20. We remain available for any additional questions if you have.
But thank you again. Talk to you soon.
18. This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.