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spk00: Thank you for joining us today to discuss Zeeland's first quarter results for 2021. I'm Matt Dallas, Senior Vice President, Chief Financial Officer at Zeeland. With me today are Zeeland's President and Chief Executive Officer, Emmanuel Dubac, 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 announcement and additional supporting information on our website at zeelandpharma.com. I'd like to point out that we will 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 Douac.
spk03: Thank you, Matt. And thanks to everyone for joining today. The first quarter brought one of the most significant milestones in Zealand pharma's history, the US FDA approval of Zegalog. indicated for the treatment of people with diabetes who are at risk of severe hyperglycemia. Our first FDA approval as a company and our first approval in the Dazuclagon franchise. This marks a key turning point in our evolution from a research and development focused organization to a fully integrated biopharmaceutical company with a goal of five commercial products by 2025. Turning to slide four and five, Under the leadership of Frank Sanders, president of Zeed and Pharma US, 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, 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 four strategic objectives. The first is to establish a clear and distinct product position with HCPs, patients, and caregivers. Second, we will focus on the back to school season to execute a focused launch that targets and prioritizes high volume customer segments. Third, we are working closely with top national and regional payers, pharmacy benefit managers, and health systems to establish market access and make it simple for patients and providers to acquire product. And fourth, we are committed to providing a patient support program to ensure education and access for patients and caregivers. Turning to slide six and seven. There is a significant unmet medical need in the treatment of severe hypoglycemia. And with the arrival of newcomers, we have seen an increasing utilization of rescue therapies. For your reference, we have indication in important safety information for Zegalog. A copy of the full PI is available on Zegalog.com slash prescribing information. We believe Zegalog will be an important new option for people with diabetes to consider in the management of potential consequences of their disease. Turning to slide eight, In parallel with Zegalog's approval and upcoming launch, we continue to make exciting progress across our pipeline and thoughtfully build our organization. I am excited to announce that we have strengthened our internal team with the appointment of Christina Sonnenborg-Bredau to a newly created role of head of people and organization. A new role will bring Denmark and US HR functions and internal communications together in a single elevated global function, and be instrumental as we continue to attract and retain the most talented employees. I will now turn it over to our Head of Research and Development, Adam Stinberg, to discuss our pipeline in greater detail. Adam?
spk06: Thank you, Emmanuel. Please turn to slide nine. And as just mentioned, Emanuel, our preparations for the Zika-locked late June loans are being executed while we in parallel continue to advance our pipeline programs, 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 dashy-gluargon. Among the most advanced clinical programs is the study evaluating continuous infusion of dasyluogon in children with congenital hyperinsulinism, or CHI, which is an ultra-rare disease caused by a defect in the pancreatic beta cells. And later this year, we expect the results from the second phase 3 trial in the CHI children aged 7 days to 1 year. Please turn to slide 11. In collaboration with Beta Bionics, we plan to initiate the pivotal phase three trial program for the bi-hormonal islet bionic pancreas device, which utilizes dasigluagin in the second half of this year. We plan to enroll approximately 350 adults and 350 children with type one diabetes and randomize them into the trial. And these trials are expected to form the basis for an NDA submission to the US FDA for use of basic luergon in bi-hormonal artificial pancreas systems. Please turn to slide 12. As Emmanuel mentioned earlier, we have also broadened our pipeline of metabolic therapies to target obesity and non-alcoholic steatohepatitis. Our clinical development partner, Berger Ingelheim, recently initiated two additional phase two trials for the GLP-1 gluagon dual agonist, BI456906, in adults who are either overweight or obese, or for adults with NASH. And we believe that our dual agonist has the potential to achieve increased weight loss via improvements of the patient's metabolism, and also has the potential to alleviate NASH by reducing upstream hepatic steatosis. And we expect BI to complete the phase 2 trial in people with type 2 diabetes and to communicate the results from the 16-week phase 1B trial later this year. Turning to slide 13, we also have two assets in preclinical development for obesity, both of which have shown additive weight loss effects when co-injected with GLP-1 analogs in preclinical models. And we anticipate starting phase 1 trials with our long-acting amine analog ZP8396 later in the year and expect to bring our long-acting GIP analog ZP6590 into phase 1 trials in 2022. In addition to the continued advancement of our metabolic candidates, we have also made significant progress in the clinical development of our gastrointestinal programs and recently announced new preclinical candidates in this space. Please turn to slide 14. Lipaglutide is our long-acting tier 2 analog with a half-life of approximately 50 hours, which is being developed in a disposable ultrainjector. We are progressing with patient enrollment in the pubertal phase 3 trial, which will evaluate once- and twice-weekly dosing of lipaglutide 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 GLP-1-2 dual agonist that people tried, where we expect results from the Phase 1b trial later this year. While GLP-2 mainly stimulates intestinal absorption capacity, GLP-1 slows down intestinal motility thereby potentially contributing positively to enhanced absorption. And I will now turn over to our CFO, Matt Dallas, to walk us through our first quarter financials. Matt.
spk00: Thanks, Adam. On slide 16, you will see Zealand's income statement for the first quarter of 2021 and how it compares to the same period in 2020. Total revenue for the quarter was 47.8 million Danish kroner, or 7.5 million USD. This was driven by net product revenue of the Vigo 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 260.9 million Danish kroner, or 41.1 million USD. Sales and marketing costs mainly relate to the commercial infrastructure in the U.S. to support Vigo and the upcoming Zika log launch, while R&D costs relate to our late-stage clinical program. Slide 17 illustrates our strong financial position and ability to support our growing business through continued investments. Net operating expenses for the first quarter were $284.8 million Danish kroner or $44.9 million USD. At the end of the quarter, we had a cash position of $1.6 billion Danish kroner or $252.9 million USD, funding the company through several key upcoming milestones. And during the quarter, we also successfully completed the largest financing in company history by raising $750 million Danish kroner. 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 is expected to be 220 million Danish kroner, plus or minus 10%. Net operating expenses in 2021 are expected to be 1.25 million Danish kroner, 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 revenues. And with that, I'll turn it back to Emmanuel.
spk03: Thanks, Matt. Turning to slide 19. As Matt has laid out, we are in a strong financial position to execute on the upcoming launch of Zegalog 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 aimed at meeting and met health needs. Our continued progress would not be possible without our research and development engine. The clinical and regulatory teams who work tirelessly to advance our program and the members of our growing commercial organization who are working to bring treatment options like Zegalog to the patients who need it most. I am grateful and proud of all the hard work the Xenon team has done to get us to this point and look forward to continuing to work together to deliver on our vision of offering five commercialized products by 2025. Thank you all. I will now turn it over to the operator for questions. Operator?
spk01: As a reminder, to ask a question, you will need to press the star and 1 on your telephone. And to withdraw your question, please press the pound key. Once again, if you wish to ask a question, please press the star and 1. And your first question comes from the line of David Leibowitz from Morgan Stanley. Your line is open. Please ask your question.
spk07: Thank you very much for taking my question. Could you just, I guess, speak to the glipaglutide trial and how, I guess, enrollment has continued in that study? Have things stabilized in recent months after, I guess, you know, certainly the pandemic has had has increased challenges over the last year or so.
spk03: Adam, will you take this question?
spk06: Yes, thanks. And thanks for the question. Yes, they have. And we continue 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, so far, it is... coming out as we had hoped for here with vaccinations being rolled out across the US and Europe.
spk07: That's good to hear. And with respect to the upcoming launch, how have market dynamics been changing? And I guess, how has your launch been evolving as you prep for June?
spk03: Yeah, I'll take this one. The market has clearly signaled shift away from the legacy products to innovative new products for the patients and the caregivers. And the shift is still underway. So I think based on current trends, 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 that we have seen with the launch of the recently approved products an expansion of the market by 6% in 2019 and 10% in 2020, even though it was heavily market-impacted by COVID and by no return back to school, which again accounts for around 60% of the total year. So we believe that Zegalog will be a very attractive new option with HCPs and patients alike. And the launch sequence right now is ongoing so that, you know, 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 season.
spk07: Excellent. Thank you for taking my questions.
spk01: And your next question comes from the line of Greg Sabanovich from Goldman Sachs. Your line is open. Please ask your question.
spk04: Hi there, it's Nick on for Greg here. First question, if I may, regarding Zegalog, 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., is there going to be a high watermark in 2Q, 3Q when we consider the first several quarters of sales, or are we more likely to see a more steady rise on a quarter-and-quarter basis? And then a follow-up on 906, with the expected Phase 2 completion in Type 2 diabetes in the third quarter of this year, is it reasonable to expect that we might see some data from BI, or should we be more safe to assume 2022? Thank you.
spk03: I'll take the first part on Zegalog, and Adam will talk to you about the BI collaboration and product. So our 2021 guidance is on a total combined revenue. So we are not providing individual guidance on the product level and definitely not phasing it by quarter. That said, our field operating model is really well positioned to continue to support both the Vigo and the Zegalog. And regarding the, I would say, the launch and the plan for the launch, our plans are anchored around ensuring that we can execute a full product launch in late June, coinciding with the annual market opportunity on the back-to-school season. And so we are on track to achieving this objective. In fact, our market access teams are active, engaging with national and regional payers and PDMs around the clinical value of Zegalog. Discussions with formularies and drug formulary decision makers have 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 we'll continue to build this momentum over the next two quarters and the two quarters of launch. And our sales team is in place and present with customers today. So we'll pivot in late June to begin to execute the launch ahead of the back-to-school season market lift. Adam, do you want to talk about the DI?
spk06: Yes, thanks for that question as well. So we are, as you know, truly excited about this collaboration that we have with DI and the progress that they are making, also starting two new studies. What we do expect is, as I mentioned, to see that they report the phase 1b 16-week data, which was conducted in overweight patients. later this year. We're also hopeful that they will share the data in type 2 diabetes that is expected to read out later this year, 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 is really up to BI, and we don't have a firm commitment or communication from them on this part, so I cannot be more precise here on the study in type 2 diabetes.
spk04: Okay, that's appreciated. Thank you.
spk01: Next question comes from the line of Lucy Codrington from Jefferies. The line is open. Please ask your question.
spk02: Hi there. Thanks for taking my question. Just a couple. Just on the D-Day performance this quarter, should we view that as a sensible run rate for the rest of the year, or were there any – any kind of one-offs within the quarter that we should be factoring in. Secondly, on the artificial pancreas phase three, and this might be a misguided question, but 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 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 be reflected then in your dual hormone trial? Thank you.
spk03: So I guess the first question on the financial quarter will go to our CFO, Matt Dennis, and then Adam will take the next one on the dual hormone pump, the bi-hormonal pump.
spk00: Yeah, so for the run rate, I mean, right now what we do have is we have a large amount of, you know, launch costs and activities ahead of Zika log as we prepare for that late June launch. Those costs will normalize as we head into as the drug is being sold, but it'll be offset with, you know, additional clinical spendings we'll have as we approach the BHAP and, you know, obviously the GLEPA studies are ongoing as well as CHI. So I think our run rate should be relatively consistent within the year. With that, I'll turn it over to Adam.
spk06: Yeah. So you are correct that the insulin-only, the patients who participate in the insulin-only trial can be offered to also enroll into the bi-hormonal study that we plan to start. There will not be a direct rollover. So, but and you ask about the stratification, and I think that's a very reasonable thought, that you want to make sure that there is an equal number of patients who comes from the insulin-only studies in each of the three groups that we are going to have in the biohormonal study as well. But it's not a direct roll-over. There will be a little bit of time between they exit that study and then they enter the biohormonal study.
spk02: Okay, thanks. And then just back on the first one, just in terms of the Vigo sales, though, is that a good run rate for the rest of the year rather than the run rate of OpEx? Thanks.
spk00: I would rather, I mean, for both revenue and OpEx, we don't provide guidance on a quarterly basis. It's more within the annual number. I'd kind of refer to you to those targets versus providing quarterly.
spk01: Bye. Thank you. And next question comes from the line of Ezra Daru from Guggenheim Securities. Your line is open. Please ask your question.
spk05: Great. Thanks for taking questions here. Just a couple here. So I guess maybe first, 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 bi-home model phase three launch later this year? So first question.
spk03: Adam, do you want to?
spk06: Yeah, I can take that. Thanks for the question. I think it's a very important thing you raised here. we have to remember that for beta bionics and the islet in particular, it's the first time that 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, especially in the start of that study. And this is something that we consider is a significant upside for when we are to do the biohormonal study because it's really been, 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 bi-hormonal study, which includes both adults and children and around 700 patients with a device that has already been tested for six months across 440 patients, with the only difference being that the patients glucagon, you can say CHAMPA has been activated. So that, of course, you can say risk reduce our studies significantly from a device perspective. So we are extremely happy with the progress that beta variants are making in the insulin-only. We look very much forward to have them complete the insulin-only study and then see the results of that study. That should hopefully provide some guidance also for what we can expect for the bi-hormonal study when we then correlate back to what has been seen in phase two trials and so on. So it's, for us, also a very important milestone to have beta bionics to complete the engineering-only studies.
spk05: Well, great. Thanks for that. And maybe, Adam, just on sort of the two phase, the phase two trials for the basic glucobon 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.
spk06: Yeah, I mean, we have actually, you can say, both in type 1 diabetes, the mini-dose concept for exercise-induced hypoglycemia, but really giving smaller doses than what we use for rescue therapy. That concept we have tested. We know that smaller doses of basic gluagon works for correcting mild to moderate hypoglycemia. Similarly, in patients with post-biotic hypoglycemia who can not tolerate eating without getting hypoglycemia, that we've also done an in-clinic study to show that basic urine can actually correct the situation so they don't get as hypoglycemic as when they just take placebo. But these are studies conducted in the clinics, and the studies that we plan to start in this quarter They are actually outpatient studies, and we have the actual pen that can be the ultimate device in the hands of patients to see how they will utilize this in this type 1 setting to correct mild and moderate hypoglycemia in exercise settings in type 1 diabetes, and then for patients with post-biotic hypoglycemia, how they will utilize such a pen in real life. 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 three. So we are extremely happy to see the progress that we're making here. We look forward to see the results in both these for both these opportunities and once they are finalized.
spk05: Great. No, thank you. And congrats on all the progress.
spk01: Once again, if you wish to ask a question, please press star and 1. 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.
spk08: Thanks for taking our question. Just a general question on the 5 by 25 strategy here that you recently announced that, you know, you could potentially have these five products coming online, but Just curious if there was a goal of sort of a first year of profitability or at least maybe an idea of perhaps a peak operating loss year. What are the levers in terms of not only R&D but just OpEx in general that need to be pulled over the next several years to get there? Thanks for taking our questions.
spk03: Matt, will you take this one?
spk00: Yeah, so, Joey, great question. You know, one area that we focus on, we've got the 5 by 25 strategy, but behind that that's not kind of in that five grouping is all of the research and the early stage candidates that we have behind those kind of five late stage or commercial candidates that we have now. Our goal is to continue to fund those programs so that you know, beyond 25, there's a lot more than five that are coming to market. And so with that, we don't provide any guidance on profitability because it's all going to be determined based on the success of the early stage pipeline. Does that make sense?
spk01: There are no further questions at this time. Please continue.
spk03: Okay. Well, I guess if there's no more questions, then we will actually complete this call. And thank you, everyone, for joining this call. And thank you for actually participating and listening to us. We remain available for any additional questions if you have. But thank you again. Talk to you soon.
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