Thank you, operator. Welcome and thank you for joining us today to discuss Zealand's first half 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 Duaque and Chief Medical Officer and Head of Development, Adam Steensburg. After the prepared remarks, we will open the call to take your questions.
Our President of Zealand Pharma U. S, Frank Sanders, will also be available to take your questions during the Q and A session. 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 risks and uncertainties. These statements are valid only as of today and the company assumes no obligations 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 Duach.
Thank you, Matt, and thanks to everyone for joining today. Please now turn to Slide 3. This first half of twenty twenty one was transformational for Zealand. The FDA approval Followed by the ZEGALOG commercial launch in the treatment of severe hypoglycemia for people with diabetes aged 6 and above were two historical milestones And 2 firsts for the company. In parallel, during the same period, we continue to drive sustained progress across our pipeline And toward our vision of becoming a fully integrated independent biotech company.
Turning to Slide 4. Adam Stinsberg, our CMO, will detail the progress made on the pipeline in a minute. While I will discuss Just now in more detail the improvements made to our organization and strategy. This progress Allows us to focus our attention on key strategic priorities for the second half of the year and reinforces our confidence In the call of having 5 commercialized products by 2025. Regarding the launch of Zegalog, Let me start with Slide 5, which illustrates some of Zegalog's key attributes.
Research indicates that diabetes patients face the challenge of avoiding hypoglycemic events and that they and their loved ones Often live in the fear of one of these events materializing. Rescue solutions such as Zegalog provide an Attractive treatment option for patients and providers alike, who can feel confident that they are prepared to address a potential severe hypoglycemic event. Throughout the summer, our commercial team in the U. S. Has worked tirelessly with national and regional payers, Pharmacy Benefit Managers and Health Systems to ensure that patients across the country have access options for ZIGALOG.
We have established a strong presence and presented new data at several medical meetings. We are launching more than a drug with Zegalog. We are also launching a company and all our employees are excited and highly engaged behind the challenge. Slide 6 is for your reference on the indication and important safety information for Zegalog. A copy of the full PI He's available on www.segalog.com/prescribinginformation.
And I am delighted to show you on Slide 7 some background related to the patient support capabilities deployed by Zealand to ensure patient access with Zegalog at the point of launch. In support of our commitment to patient access, We initiated Zealand Pharma Connected Care, a comprehensive patient support program designed to offer Affordability, reimbursement and educational resource to help address the diverse needs of patients and caregivers. The program includes components such as an available co pay saving cards for eligible commercially insured patients And the opportunity to receive home prescription delivery. We believe Zegalog is an important treatment option for people with diabetes to manage potential severe hypoglycemic events. And we look forward to continuing this work to ensure that Zegalog is available to the people who need it.
Finally, Slide 8 is showing how profound and rapidly the company is continuing its growth. In the first half of the year, we have seen strong momentum within our pipeline and progress across multiple clinical development programs. For those familiar with our pipeline, they will appreciate the continued progress of pipeline candidates shown on this slide. We now have 4 pipeline focused areas, which makes our potential reach wider and allows us to improve the depth of our expertise in each therapeutic area and help us better manage our portfolio. The 4 areas of focus are Type 1 diabetes We have 2 marketed drugs and 2 mid late stage programs rare disease with 2 late stage and 1 mid stage programs Our newly defined obesity franchise, which includes the collaboration with BI and our Amylin and GIP programs.
We're expecting to see data readouts and initiation of new clinical activities in ABILITY in the second half of this year. And finally, our inflammation franchise, which with early but potentially promising assets. The acceleration in the build of our pipeline within these 4 focused areas is a reflection of how productive our research is and clearly shows How we plan to prioritize our investments going forward. I'll now turn it over to our CMO and Head of Research and Development, Adam Ginsberg, to discuss our pipeline in greater details. Adam?
Thank you, Emmanuel. And I'm really pleased
with the progress we are making across the pipeline programs that you see here, and I look forward to share more updates on the next slides. So please go to Slide 9. Our medical affairs organization has been busy engaging with the medical community ahead of the launch of CIGALOG. And I'm pleased with the early feedback, building further confidence that Siegeloft is well positioned to allow more people in need to be equipped with Rescu Solutions for severe hypoglycemia. The introduction of SigaDOG, however, only marks the beginning of our mission to create a paradigm shift in type 1 diabetes management.
While we have seen many improvements over the last decade With the introduction of insulin CTMs and insulin pumps, studies suggest that on average, only 20% of patients Achieved their glycemic targets in the U. S. And the burden of disease management remains very high. And we believe that the unique features of dasiglucagon allowing its use in either a low dose pen or in the biohormonal artificial pancreas system Gold has great potential to help patients achieve these glycemic goals and also improve their quality of life. In our view, it is now time to start looking at the other end of the glycemic equation, the Loews, which drives a lot of anxiety among patients and can be addressed by dasiglucagon.
In the last quarter, we initiated an outpatient Phase II trial with dasiglucagon low dose pen aimed at investigating exercise induced hypoglycemia, which we believe represent an area of significant unmet medical needs. On the bimhormonal artificial pancreas front, We completed the in use compatibility test of Dasiglucagon in the islet pump last quarter, and we are happy to see that beta Bionics remains on track for initiating the Phase III trial program later this year. Following our end of Phase II meeting For this program, we have continued the positive dialogue with FDA and believe we have a good alignment on expectations. All together, we look forward to providing further updates on our efforts in diabetes as we progress into the next quarters. Please turn to Slide 11 and our rare next rare disease programs in In congenital hydroinsulinism and short bowel syndrome.
Both indications represent areas of large unmet medical need and reflect Zealand's commitment to make a difference in the lives of people suffering from these conditions. For both programs, We are concluding the Phase III development. If you go to Slide 12, you can see the Phase III program investigating dasiglucagon in CHI is on track to generate results from the trial in neonates later this year. If this study meets its primary endpoint, we expect to utilize the results from the full Phase 3 program to support a potential NDA submission to the FDA. Slide 13 provides an overview of our ongoing Phase 3 program for tepaglutide with results from the pivotal Phase III trial on track to read out in 2022.
In the Q2 of this year, we initiated EAS SDS3, where we have utilized the auto injector pen for once weekly dosing. This study in those patients who have already completed EASTS-one and two and as a result up to 4.5 years glepaglutide Safety and efficacy data will be generated from the 3 trials. Later in this quarter, we expect to dose the first patients And EAS SPS 4, which will evaluate long term effects of glepaglutide on intestinal absorption and Of Fluid and Energy. On Slide 14, you can see our long acting GLP-one and 2 dual agonist dapiplutide, which is being investigated as a potential treatment for SDS as well as a wider range of Gastrointestinal Diseases. In the last quarter, we completed dosing of the 4th and last cohort in the Phase Ib trial and results And the study remains on track for data this year.
At that time, we also expect to announce the next development steps for the molecule. Please go to Slide 16 and our efforts to address obesity, which is a growing and global condition. While medical treatments for obesity have lagged far behind people's aspirations for weight loss and what surgical interventions can provide, We are now seeing a change with recently approved medical treatments that achieve weight loss into the mid teens percentages. However, since obesity is a complex metabolic disorder, we believe that combination of multiple targets I needed to take weight loss treatment to the next level. At Zealand, our approach centers around building 2 functions into a single molecule like BI-four thousand five hundred and sixty nine-six or by designing single acting peptide agonist that may be co formulated with other peptide agonists.
On Slide 17, we are excited to announce that our partner, Berning Ingelheim, has completed enrollment into the first of 3 Phase II trials, supporting our shared and strong commitment towards metabolic diseases. And we look forward to the obesity conference in November, where BI will present the outcome of the Phase Ib trial. We believe this molecule, which acts on both The GLP-one and the gluagun receptor is a strong candidate to potentially address future medical needs in obesity, NASH and type 2 diabetes. Please go to Slide 18, where we change our focus to Amylin as a promising new target in obesity. We expect to bring our amylin analog, CP8396, into Phase I clinical development later this year.
This molecule has been designed with a pH band that allows for co formulation with a number of known DRZ1 and DRZ1 containing molecules. It has a long plasma half life and has shown weight loss potential in preclinical models. In this regard, we have been excited to To see the weight loss potential of another amylin analog caglimatide in Phase II and I trials both as a monotherapy and As combination therapy with semaglutide as presented to the left of this slide. I will now turn over To our CFO, Matt Dallas, to walk us through our first half financials. Matt?
Thanks, Adam. On Slide 20, you will see Zealand's income statement for first half of twenty twenty one and how it compares to the same period in 2020. Total revenue for the half was DKK 132.1 million for $21,100,000 This is driven primarily by net product revenue of the VEKA wearable insulin delivery device as well as partnership revenue from our collaborations with Alexion and Sanofi. The net operating result of the half was a loss of DKK 550,800,000 or $88,000,000 The sales and marketing costs mainly relate to the commercial infrastructure in the U. S.
To support the Ziegelog and V Go commercial programs, while R and D costs primarily relate to our late stage clinical programs. Slide 21 illustrates our strong position and ability to support our growing businesses through continued investments. Net operating expenses for the first half were DKK616,600,000 or $98,500,000 At the end of the quarter, we had a cash, cash equivalents and marketable securities of DKK1.3 billion or $205,000,000 funding the company through several key upcoming milestones. Turning to our financial guidance on Slide 22. 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 is expected to be DKK 220,000,000 plus or minus 10%. Net operating expenses in 2021 are expected to be DKK 1,250,000,000 plus or minus 10%. We expect revenue from existing license 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 Linewell.
Thanks, Matt. Thanks, Adam. Before taking your questions and looking ahead, I want to reiterate that we are confident That we are well positioned to build on the momentum we established in this first half of the year as we continue to bring ZEGALOG to the patients we need it most, Advance our pipeline of next generation peptide therapeutics across metabolic and gastrontercinol indications and work to achieve our goal of offering 5 commercialized products by 2025. Thank you all. I will now turn it over to the operator for questions.
Thank Your first question today comes from the line Of Joseph Springer from Needham and Co.
Hi, everyone. Thanks for taking our questions. A couple for me. First one on Zagalog. I know it's early on in the launch, but just curious if you could Give us some initial insight in terms of patients that are switching from marketed products, are they switching from the Syringe kits or from other auto injector products.
And then the second question is on sorry, second question Is on CHI. Just wondering if you could
kind of
outline what your current thinking is Based on your discussions with regulators on Emmanuel, you mentioned if the trial is Positive in this neonatal trial that it could be considered a core registrational A trial in conjunction with the prior trial, is that still your thinking or is it A situation where you're doing some additional analysis from the previous Phase 3 trial, Would you need to run any additional studies or what's your current thinking on this? Thank you.
Thank you, Joseph. Maybe for the first question related to Zegalog launch. We have the opportunity to have Frank Sanders online with the President of the U. S. Operation.
And so Frank will take these questions and then Adam will Actually take the CHI related questions related to discussion with the regulators. Frank?
Good. Thank you, Emmanuel. Joseph, thank you for the question and giving us the opportunity to talk about the launch. As you had said, I mean, it's early days. We're just a month and a half in, But we're very pleased with where we stand.
I mean, I wanted to start by saying that we're very proud of the teams here at Zealand for doing what They said that we said we would do, which is executing a full launch in late June. And your question in particular was around a bit around the sources of business. And I wanted to start saying that the feedback from HCPs and patients across the board around the clinical profile of CEGALOG has been consistently favorable as it relates So the rapid, reliable recovery and meaningful across all segments of patients. And while it's very early, we are seeing the source of business Coming from several areas and some of these are bringing new patients into the rescue therapy category. And some of these patients are also coming from conversions of legacy rescue therapy kits over into newer products like Zagaloc.
And there's a lot of room to continue to grow and maneuver there. Just a data point that's important is that the total prescription share of legacy kits is still 55% in the market as of the Q2 of 2021. So there's plenty of room to continue to not Established Segolog within the broader market, but continue to convert share from legacy kits. So we're off to a strong start, pleased with where we are and look forward to be able to report more data as to move forward with the
launch. Okay. And then maybe I will this is Adam. I will follow-up on your question on CHI. And you can say my comment to this is that our confidence in this approach has actually Pleased our confidence that we can utilize the data from the first study to support a full NDA if we meet the primary endpoint in the second Phase The 3 trial is very strong as we speak right now.
We, of course, need to see the data, how they come out in the 2nd Phase 3 study. But at this moment, we do not anticipate that we would need additional trials if it comes out positive. And I would also say we would expect the data from the first Phase 3 tries to contribute to a 5 as a meaningful dataset.
Great. Thanks so much for taking our questions.
Thank you. Your next question comes from the line of Greg Cerynovich from Goldman Sachs.
Hi there, guys. It's Nick Hatter on for Greg. And thank you for taking our questions. Just a quick one for me on glepaglutide. Are you able to offer us Any update on trial progress there?
And how are you seeing current enrollment rates versus what you're seeing in 1Q, Bearing in mind the ongoing COVID environment and perhaps then when maybe expect an update on that program over the Balance of the year.
Thank you. Adam, you can take your question. Yes.
Thanks, Greg. This is Adam again. So we with regards to the recruitment, then we are where we also discussed at the last call, we have actually pre COVID Recruitment, so we're really pleased with this. And you can expect to have updates on the program later in the year. And then we basically just maintain Our guidance for results next year, which we are confident in.
But that is but you can expect again updates later in the year, which will be more precise.
Okay. Thank you, Adam.
Thank you. Your next question comes from the line of Exeter Dhruv from Guggenheim.
Great. Thanks for taking my question. Just Adam, if you could help a little bit on sort of the GLP One glucagon, we saw some recent data from a different program that looked pretty encouraging for weight loss. And I know this is going to be presented in November with partner BI, but just if you could comment at all on the data that you've seen, Any read throughs that you see to sort of the partnered program that we'll get data on in November? Thanks.
Thanks for the question. And I wish I could give you a very straight answer, but I can't. As you know, it's a partnered program. BI will release the data at the Obesity week. What we can reiterate here is that we see a lot of Excitement with BI, we see a very strong commitment with 3 ongoing Phase II studies, one which they basically completed enrollment Earlier in the quarter, and you can say we also noticed the data from From this earlier competing program, which, of course, is encouraging to see, but we remain very encouraged in our own approach.
So that's I cannot share more unfortunately, but you have to hang in and then look forward for November.
Great. Thanks. Sounds good. All right.
Thank you,
Your next question comes from the line of David Levitz from Morgan Stanley.
Thank you very much for taking my question. When you look towards the glopaglutide data for next year, you gave 2022 as timing. Is there lack of visibility at this point on what time of year in 2022 it would be Or could you possibly steer us to when and during the year it might come?
You can say we've just maintained the year of 2022 because we want to have absolute clarity before we specify that even more. So later this year. Later this year, you will have most clarity win in 'twenty two.
Okay. That's helpful. And when we look at the launch of dasiglucagon, are there any comps That we should look at, to help guide us and what the cadence might be going forward?
Yes. This is Frank Sanders. Emmanuel, if I could take that one.
Yes, please take it.
Yes. So I'm assuming specifically the question is around Zegalux. So and I think that there's a couple of things that obviously to look at. First of all, We believe that we are launching a unique and well positioned product in the market that stands along with a strong profile. That said, There are a couple of things that provide leading signals of the performance of Zeguloc and one of those is the recent launch of other products in the category and the rescue therapy category.
So I think it's important to be able to look at the performance of other recent launches in the category, But it's also important to watch here the progression of the market share growth as we emerge the overall market volume growth as we emerge from COVID. For example, recent, SYMPHONY METAS data suggests that the TRx market continues to grow by approximately 10% year over year as we emerge from COVID. So I think there's a combination of factors that will be important to look at and one is the progressive performance of recent second generation launches as well as how the market growth continues to progress quarter over quarter as we emerge from COVID. But the big picture here is that there are approximately 4,000,000 patients in the U. S.
That are on multiple daily doses of insulin. And despite that, only 540,000 or 15 That are on rescue therapies. So there is plenty of room, in this category for us to be able to enter a market that's growing, but with a lot of opportunity. So much is in play and to watch and we'll be able to report more as we progress throughout our Q1 Slouch.
Got it. Thank you very much for taking my question.
Thank you. As we have no further questions at this time, I would like to hand the call back to Emmanuel Dulac for any closing comments. Thank you, sir.
Thank you. Thank you. And with that, we would like to thank you all for attending and for your insightful questions. If you have any follow-up questions, please don't hesitate to contact us. We will make sure to reply to you quickly.
And I want to finish by saying that I am really proud of the team and to their commitment of the execution of the launch. We are actually on track with our Hi Fi strategy, which shows confidence and progress in our launch, In our partnerships with BI and AstraZeneca, with the ongoing Phase III for CHI and repaglutide And with the partnerships we have as well with beta bionics on the biomedal artificial pump pancreas. So again, thank you for coming in today, and we look forward to connecting on future announcements and updates. And thank you again. Talk to you soon.
Thank you. Ladies and gentlemen, that does conclude your call for today. Thank you all for participating. And you may now disconnect.