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 Dulac, and Chief Medical Officer and Head of Development, Adam Steensberg. 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&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 risk 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 Dulac.
Thank you, Matt. Thanks to everyone for joining today. Please now turn to slide three. This first half of 2021 was transformational for Zealand. The FDA approval, followed by the ZEGALOGUE commercial launch in the treatment of severe hypoglycemia for people with diabetes aged six and above, were two historical milestones, and two firsts for the company. In parallel, during the same period, we continued to drive sustained progress across our pipeline and toward our vision of becoming a fully integrated, independent biotech company. Turning to slide four, Adam Steensberg, our CMO, will detail the progress made on the pipeline in a minute. I will discuss 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 goal of having five commercialized products by 2025. Regarding the launch of ZEGALOGUE, let me start with slide five, which illustrates some of ZEGALOGUE'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 ZEGALOGUE provide an attractive treatment option for treat 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 ZEGALOGUE.
We have established a strong presence and presented new data at several medical meetings. We are launching more than a drug with ZEGALOGUE. We are also launching a company, and all our employees are excited and highly engaged behind the challenge. Slide six is for your reference on the indication and important safety information for ZEGALOGUE. A copy of the full PI is available on www.zegalogue.com/prescribinginformation. I am delighted to show you, on slide seven, some background related to the patient support capabilities deployed by Zealand to ensure patient access with ZEGALOGUE at the point of launch. In support of our commitment to patient access, we initiated Zealand Pharma ConnectedCare, 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 innovative co-pay savings cards for eligible commercially insured patients and the opportunity to receive home prescription delivery. We believe ZEGALOGUE 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 ZEGALOGUE is available to the people who need it. Slide eight 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 four 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 four areas of focus are type 1 diabetes, with two marketed drugs and two mid-late stage programs, rare disease, with two late stage and one 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 obesity in the second half of this year. Finally, our inflammation franchise, with early but potentially promising assets. The acceleration in the build of our pipeline within these four 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 Steensberg, to discuss our pipeline in greater details. Adam?
Thank you, Emmanuel. 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. Please go to slide nine. Our medical affairs organization has been busy engaging with the medical community ahead of the launch of ZEGALOGUE, and I'm pleased with the early feedback, building further confidence that ZEGALOGUE is well-positioned to allow more people in need to be equipped with rescue solutions for severe hypoglycemia. The introduction of ZEGALOGUE, 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 CGMs and insulin pumps, studies suggest that on average, only 20% of patients achieve their glycemic target in the U.S. The burden of disease management remains very high. We believe that the unique features of dasiglucagon allowing its use in either a low-dose pen or in the bi-hormonal artificial pancreas system, holds a 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 lows, 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 bi-hormonal artificial pancreas front, we completed the in-use compatibility test of dasiglucagon in the iLet pump last quarter. 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 disease programs in congenital hyperinsulinism 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 III program to support a potential NDA submission to the FDA. Slide 13 provides an overview of our ongoing phase III program for glepaglutide, with results from the pivotal phase III trial on track to read out in 2022. In the second quarter of this year, we initiated EASE-SBS 3, where we have utilized the auto-injector pen for once-weekly dosing.
This study enrolls patients who have already completed EASE-SBS 1 and 2. As a result, up to 4.5 years glepaglutide safety and efficacy data will be generated from the three trials. Later in this quarter, we expect to dose the first patients in EASE-SBS 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-1 and 2 dual agonist, dapiglutide, which is being investigated as a potential treatment for SBS, as well as a wider range of gastrointestinal diseases. In the last quarter, we completed dosing of the fourth and last cohort in the phase I-B trial. Results from the study remains on track for later 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 are needed to take weight loss treatment to the next level. At Zealand, our approach centers around building two functions into a single molecule like BI 456906, or by designing single-acting peptide agonists that may be co-formulated with other peptide agonists. On slide 17, we are excited to announce that our partner, Boehringer Ingelheim, has completed enrollment into the first of three phase II trials, supporting our shared and strong commitment towards metabolic diseases.
We look forward to the ObesityWeek Conference in November, where BI will present the outcome of the phase I-B trial. We believe this molecule, which acts on both the GLP-1 and the glucagon 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, ZP8396, into phase I clinical development later this year. This molecule has been designed with a pH span that allows for co-formulation with a number of known GLP-1 and GLP-1 containing molecules. It has a long plasma half-life and has shown weight loss potential in pre-clinical models.
In this regard, we have been excited to see the weight loss potential of another amylin analogue, cagrilintide, 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 the first half of 2021 and how it compares to the same period in 2020. Total revenue for the half was DKK 132.1 million, or $21.1 million. This is driven primarily by net product revenue, the V-Go 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 550.8 million, or $88 million. The 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 21 illustrates our strong financial position and ability to support our growing businesses through continued investments.
Net operating expenses for the first half were DKK 616.6 million, or $98.5 million. At the end of the quarter, we had a cash equivalents and marketable securities of DKK 1.3 billion, or $205 million, 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 million ±10%. Net operating expenses in 2021 are expected to be DKK 1.25 billion ±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 Emmanuel.
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 ZEGALOGUE to the patients who need it most, advance our pipeline of next generation peptide therapeutics across metabolic and gastrointestinal indications, and work to achieve our goal of offering five commercialized products by 2025. Thank you, all. I will now turn it over to the operator for questions.
Thank you, sir. Your first question today comes from the line of Joseph Stringer from Needham & Co.
Hi, everyone. Thanks for taking our questions. A couple for me. First one on ZEGALOGUE. 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 marketing products. Are they switching from the syringe kits or from other auto-injector products? The second question is on CHI. Just wondering if you could 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 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 III trial? Would you need to run any additional studies? What's your current thinking on this? Thank you.
Thank you, Joseph. Maybe for the first question, related to ZEGALOGUE launch. We have the opportunity to have Frank Sanders online, who is the President of the U.S. operation. Frank will take these questions, then Adam will actually take the CHI related questions related to discussion with the regulators. Frank?
Yeah. Good. Thank you, Emmanuel. Joseph, thank you for the question and giving us the opportunity to talk about the launch. As you had said, it's early days. We're just a month and a half in. We're very pleased with where we stand. I wanted to start by saying that we're very proud of the teams here at Zealand for doing what they said they would, we said we would do, which is executing a f ull launch in late June. Your question in particular was a bit around the sources of business, and I wanted to start by saying that the feedback from HCPs and patients across the board around the clinical profile of ZEGALOGUE has been consistently favorable as it relates to the rapid, reliable recovery, and meaningful across to all segments of patients.
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. Some of these patients are also coming from conversions of legacy rescue therapy kits over into newer products like ZEGALOGUE. 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 second quarter of 2021. There's plenty of room to continue to not just establish ZEGALOGUE within the broader market, but to continue to convert share from legacy kits. We're off to a strong start, pleased with where we are, and look forward to be able to report more data as we move forward with the launch.
This is Adam, I will follow up on your question on CHI. My comment to this is that our confidence in this approach has actually increased 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 III trial. It is very strong as we speak right now. We, of course, need to see the data, how they come out in the second phase III study. At this moment, we do not anticipate that we would need additional trials if it comes out positive. I would also say we would expect the data from the first phase III trial to contribute to a file as a meaningful data set.
Great. Thanks so much for taking our questions.
Thank you. Your next question comes from the line of Graig Suvannavejh from Goldman Sachs.
Hi there, guys. It's Nick on for Graig. Thank you for taking our questions. Just a quick one from me on glepaglutide. Are you able to offer us any update on trial progress there? How are you seeing current enrollment rates versus what you were seeing in 1Q, bearing in mind the ongoing COVID environment? Perhaps then, when may we expect to hear an update on that program over the balance of the year? Thank you.
Adam, you can take it.
Yeah. Thanks, Graig. This is Adam again. With regard to the recruitment in the EASE trial where we also discussed at the last call, we are back to pre-COVID recruitment, so we are really pleased with this. You can expect to have updates on the program later in the year. We basically just maintain our guidance for results next year, which we are confident in. You can expect, again, updates later in the year, which will be more precise.
Okay. Thank you.
Thank you. Your next question comes from the line of Etzer Darout from Guggenheim.
Great, thanks for taking my question. Just Adam, if you could help a little bit on sort of the GLP-1 glucagon. We saw some recent data from a different program that looked pretty encouraging for weight loss. 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. 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 their ObesityWeek. What we can reiterate here is that we see a lot of excitement with BI. We see a very strong commitment with the three ongoing phase II studies, one which they basically completed enrollment earlier in the quarter. You can say we also noticed the data from this earlier competing program, which of course is encouraging to see. We remain very encouraged on our own approach. I cannot share more, unfortunately. You will have to hang in and look forward for November.
Great. Thanks. Sounds good. All right.
Thank you, Etzer.
Once again, ladies and gentlemen, if you wish to ask a question, please press the star and one on your telephone keypad. Your next question comes from the line of David Lebowitz from Morgan Stanley.
Thank you very much for taking my question. When you look towards the glepaglutide 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 during the year it might come?
You could say we just maintain the year of 2022 because we want to have absolute clarity before we specify that even more.
Later this year.
Later this year, you will have more clarity when in 2022.
Okay, that's helpful. When we look at the launch of dasiglucagon. Are there any comps that we should look at to help guide us on what the cadence might be going forward?
Yeah. This is Frank Sanders. Emmanuel, if I could take that one?
Yeah. Please take it.
Thank you. Yeah. I'm assuming specifically the question is around ZEGALOGUE . I think that there's a couple 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 things that provide leading signals of the performance of ZEGALOGUE , and one of those is the recent launch of other products in the category, in the rescue therapy category. I think it's important to be able to look at the performance of other recent launches in the category. 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 Health data suggests that the TRx market continues to grow by approximately 10% year-over-year as we emerge from COVID. 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. The big picture here is that there are approximately 4 million patients in the U.S. that are on multiple daily doses of insulin, and despite that, only 540,000 or 15% are on rescue therapies. 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 opportunities. Much is in play and to watch, and we'll be able to report more as we progress throughout our first quarter of launch.
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. 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. 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 High-Five strategy, which shows confidence and progress in our launch, in our partnerships with BI and AstraZeneca, with the ongoing phase III for CHI and glepaglutide, and with the partnerships we have as well with Beta Bionics on the bi-hormonal artificial pancreas. Again, thank you for coming in today and we look forward to connecting on future announcements and updates. 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.