Zealand Pharma A/S

Good afternoon, everyone, and welcome to Zealand Pharma's third quarter 2021 financial results conference call. Today's call is being recorded. At this time, I would like to turn the call over to Matt Dallas, Senior Vice President and Chief Financial Officer. Matt, please go ahead.

Thank you, operator. Welcome and thank you for joining us today to discuss Zealand's third quarter results for 2021. I'm Matt Dallas, Senior Vice President and Chief Financial Officer at Zeeland. With me today are Zeeland's President and Chief Executive Officer, Emmanuel Duac, President of Zeeland Pharma U.S., Frank Sanders, and Chief Medical Officer and Head of Development, Adam Steensburg. You can find the related company announcement and additional supporting information on our website at zeelandpharma.com. I would like to point out that we will be making four looking statements that are subject to risks 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. And with that, I will turn the call over to President and CEO, Emmanuel Doula.

Thank you, Matt. And thanks to everyone for joining today. The third quarter of dates we will discuss on today's call underscore Zealand's evolution as a fully integrated biopharmaceutical company. In Q3, We continue to execute on our commercial goals following the launch of Zegalog in the US, while also sustaining momentum across the rest of our pipeline by advancing multiple clinical and preclinical programs that leverage our innovative peptide platform to address unmet needs in type 1 diabetes and rare disease. This continuous progress positions us well to achieve our goal of offering five marketed products by 2025 to patients around the globe with high-end medical needs. Slide four illustrates the development of our company in relation to the successful execution of our strategy. Later in the call, our CMO and head of research and development, Adam Stinsberg, will discuss these pipelines updates in greater detail, including updates on glipagritide in the treatment of Scholl-Powell syndrome, or SBS, information on pre-heal data from our analog and clinical data from our glucagon GLP-1 dual agonist partnered with BI that were presented at the recent Obesity Society annual meeting. And more details on our collaboration agreement with Deca Research and Development Corporation to advance development of an infusion pump to be used with Tazic-Glucagon, currently under investigation as a potential treatment option for congenital hyperinsulinism. But first, Frank Sanders, President of Xenopharma US, will discuss the work our commercial team has been doing on the Zegalog launch.

Thank you, Emmanuel. Since Zegalog was launched in late June, the US commercial organization has been focused on securing favorable coverage on the drug formulary plans of PBMs and commercial and Medicaid plans to ensure that appropriate patients can receive Zegalog with ease when it's prescribed. This involves driving demand with prescribers to signal to payers that the desire to prescribe Zegalog is high. In a moment, I will speak to our progress in generating demand and our progress in securing favorable payer coverage for Zegalog. Please refer to slide five. I want to share that Zegalog is being viewed as an attractive treatment option for severe hypoglycemia by payers, patients and their caregivers, and endocrinologists. both adult and pediatric endocrinologists. What's compelling about Zegalog is the rapidity and consistency of recovery from severe hypoglycemia that was seen across all Pivotal Phase III studies. This positioning is succinct and it's compelling, especially in the context of a severe hypoglycemic event, which can be terrifying for people with diabetes and their families. Rapid and reliable recovery from a severe hypoglycemic event in 10 minutes is important because during a severe hypoglycemic event, every minute matters. On slide six, I'd like to take a moment to refer to the approved full indication and the important safety information for Zegalog. On slide seven, I will speak to the demand, which has continued to increase over the first four months since launch. As I spoke to in my opening remarks, generating early demand from healthcare prescribers is essential because it helps inspire payers to act more expeditiously in their formulary review activities. In the third quarter, approximately 3,800 total prescription claims for Zegalog were submitted to commercial and government payers. Also, approximately 115 distinct healthcare providers wrote prescriptions for Zegalog. Most of these prescribers were endocrinologists, both adult and pediatric, and 62% of the prescribers were repeat prescribers, writing Zegalog multiple times in the quarter. On average, 1.9 units of Zegalog per prescription were being dispensed. These are encouraging signs of underlying growth, which is observed to be increasing month over month. While demand continues to grow, it has not yet translated into a proportional level of revenue growth. What's different is that the rate of rejection of Zegalog prescription claims by payers at the pharmacy is higher than we anticipated. We expect that this will begin to resolve as recent drug coverage decisions take effect. Please refer to slide eight. Now I will speak to the results that our market access team has achieved since launch. Zegalog coverage was limited in the third quarter, its first quarter of launch, with only approximately 16% of commercial and 10% of Medicaid lives being covered. As previously mentioned, This level of coverage resulted in a higher than anticipated rate of rejection of prescription claims at the pharmacy. PBM and payer coverage has improved since launch. Recently, we've signed agreements with some of the largest PBMs and state Medicaid plans. The full impact of these coverage decisions will begin to be realized at the start of 2022 based on the timing of some of these arrangements. We will start the year off with approximately 70% coverage of commercial and 70% coverage of Medicaid lives having access to Zegalog. This equates to approximately 130 million commercial and 50 million Medicaid recipients and will set the stage for growth in 2022. I want to thank our employees at Zeland for their work on building the U.S. commercial organization and executing the launch of Zegalog. Zegalog is an important launch on its own, but we expect that it's only the first of multiple potential new product launches in our near-term horizon. Now I will turn to Adam, who will provide an overview of the progress of our clinical development programs.

Thank you, Frank. Please go to slide nine. Here you can see our robust pipeline targeting areas in four medical areas of high on-demand medical need. On the next slide, I'll take you through updates on several of these programs and begin with our efforts to transform management of type 1 diabetes. Please go to slide 10. A recent study found that despite the many innovations in insulin, current pumps, and continuous glucose monitors, only approximately 20% of people living with type 1 diabetes in the U.S. are at the recommended glycemic targets. The majority of those people have elevated plasma glucose levels and therefore are at increased risk of long-term complications. Moreover, all are at risk of experiencing dangerously low blood glucose if they take too much insulin. We are currently developing dasigluobon for potential use in a bi-hormonal artificial pancreas system. In a smaller phase two trial, we showed that the bi-hormonal islet was able to achieve glycemic target for 90% of the participants. Importantly, this was achieved while only on average they spent 0.2% of the time in hypoglycemia, as seen to the right. We are therefore excited to confirm that we are moving towards start of phase three later this quarter. Please go to slide 11. The phase three program Fibroblastic logon in the ILAC bi-hormonal artificial pancreas system has been discussed in details with the FDA, and we are pursuing a broad indication with studies in both adults and children with type 1 diabetes. The program includes three sub-trials and will begin with a single-arm bi-hormonal-only safety and test-run trial. Following three weeks of dosing of approximately 40 subjects, we will begin the two randomized control trials. with the primary endpoint for the randomized trials being HbA1c at six months, and we seek to demonstrate superiority over insulin-only islet and over standard of care. Further six months' exposure to basic lorban will support the safety data needed for the NDA with the US FDA. Please go to slide 12. Among the most advanced Clinical programs in our pipeline is the evaluation of continuous infusion of static organ in children with congenital hyperinsulinism, or CHI, an ultra-rare disease caused by a defect in the pancreatic beta cells. We reported initial Phase III results in December last year from the first Phase III trial, and by year end, we expect to complete enrollment into the second Phase III trial in CHI children aged seven days to one year. with results expected in the first half of 22. Pending positive results from this second phase three trial, we will work quickly and diligently towards an NDA submission to the US FDA. In addition, we are excited about the agreement with DECA Research and Development Corporation that was announced last week. Please go to the next slide, slide 13, which illustrates the DECA continuous infusion pump that we anticipate to utilize to deliver DASI-Logon as a potential treatment option for children with CHI. We believe that this pump has the optimal design and quality features to provide ease and confidence in the management of CHI. Please go to the next slide. On cataclytide, our long-acting given true analog for treatment of short bowel syndrome. During the quarter, We presented preclinical data that showed dose-dependent effects of glipacritide on small and large intestinal growth and concluded the bridging trial that supports the use of the autoinjector for dosing of the drug. Please go to slide 15. We also initiated EASE-SPS4, which is a phase 3B trial assessing effects of once-weekly administration of glipacritide on energy and fluid uptake. Earlier in the year, we initiated EAST-SPS-3, which will contribute to the overall clinical program with long-term safety efficacy data. Importantly, throughout 2021, we have made good progress on the recruitment into EAST-SPS-1, our PIVOTOR phase 3 trial, for which you can see the trial diagram in the next slide, slide 16. Based on parallel dialogue with FDA and the EMA throughout the year, We have decided to introduce an interim analysis that can allow for stopping the trial for efficacy of fertility before the full 129 patients have been enrolled. If the interim readout is positive, we plan to pursue an MDA submission as a next development step based on these clinical data. And we expect to have all subjects needed for the interim analysis enrolled by the end of 21. with results being available in the third quarter next year. On slide 17, you can see the details on dapiglutide, our long-acting GLP-1, GLP-2 dual agonist, which is in development as a potential treatment option for SPS and other GI-associated diseases. We have already reported a plasma half-life of 120 hours in a Phase Ia, trial and we look forward to reporting the results of the multiple ascending dose trial later this year. Please go to slide 18 and our efforts to target obesity and associated metabolic conditions. At the recent Obesity Society Annual Meeting, we presented preclinical data on our amylin analog and clinical data on the DO-1 glucagon dual agonist. Please go to slide 19. which shows data from the phase one clinical trial of BI456906. In the trial, we observed clinical relevant body weight reductions of up to 13.7% with no unexpected safety findings after 16 weeks of dosing. Earlier this year, our development partner, Berner Ingenheim, initiated two additional phase two trials, and we look forward to seeing the results for the trials in type two diabetes and obesity next year. Please go to the next slide, slide 20. At Obesity Week, we also presented preclinical data as related to our amylin analog, either as a monotherapy or in combination with the long-acting CRT1 molecule, Simacrotide. The combination therapy resulted in up to 20% weight loss. During that same week, We were thus excited to announce the dosing of the first subjects in the Phase I safety and tolerability trial of ZPE 8396 and expect to share results from this study next year. I'll now turn over to our CFO, Matt Ballard, to walk us through 2021 year-to-year date financials. Matt?

Thanks, Adam. On slide 21, you will see Zeeland-Zicken's statement for the third quarter of 2021 and how it compares to the same period in 2020. Total revenue for the first nine months was 238.6 million Danish kroner, with 37.1 million in USD. This was driven primarily by net product revenue for the Beagle wearable and twin delivery device and BeagleLock, as well as partnership revenue from our collaborations with Alexion, BI, and Sanity. The net operating result for the first nine months was a loss of 762.6 million Danish kroner, or 118.8 million USD. Sales and marketing costs mainly relate to the commercial infrastructure in the U.S. to support the ZGLOG and VGO commercial programs, while R&D costs primarily relate to our late-stage clinical programs. Slide 22 illustrates our strong financial position and ability to support our growing business through continued investments. Net operating expenses for the first nine months were 906.2 million Danish kroner, or 141.1 million USD. At the end of the quarter, we had cash, cash equivalent to marketable securities, 1.05 billion Danish kroner, or 163.3 million USD. Turning to our financial guidance on slide 23, for 2021, net product revenue from the sales of commercial products is expected to be 190 million DKK, plus or minus 10%. This is a decrease of 30 million DKK from the guidance issued on March 11. The reduction in net revenue from the previous guidance is driven by lower-than-expected sales of Zika lock for 2021. Net operating expenses are expected to be 1.25 billion Danish kroner, plus or minus 10%, And this remains unchanged from the financial guidance issued on March 11. We 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. And with that, I will now turn it back to Emmanuel.

Thank you, Matt. Zeland's commercial and research team have established significant momentum across our metabolic and gastrointestinal programs during the first nine months of this year, as exemplified by the exciting third quarter updates discussed on this call. We look forward to closing 2021 out strong, carrying the momentum of this transformational year into 2022 as we continue on our journey to change the lives of patients by offering five marketed products by 2025. Thank you all. I will now turn it over to the operator for questions.

Thank you, sir. And if you would like to ask questions, just press star 1. And if you want to cancel it, just press the hash key. Once again, please press star 1 for questions. And so your first question comes from the line of Lucy Corrington from Jefferies. Please go ahead. Your line is open.

Hi there. Thanks for taking my questions. Just a couple for me. On the designated on CHI agreement for the pump with DECA, it's my understanding you had a prior agreement with Roche that has been used for the trial so far. So just wondering what kind of drove the change and will any additional studies be necessary and could these potentially delay filing? Then on the GLEPA-GLU side, will you press release when the required number of patients for the interim analysis have been recruited? And then for BI-456-906, we might get phase two diabetes data potentially this quarter, do you expect BI to disclose those data, or do you think, like in the past, they will save them for a conference? Thank you.

Thank you, Lucy, for your three questions in a row, and I will actually ask Adam to take all three. Okay.

Thanks for the questions. Regarding the pump that we... anticipating using for CHI, you're correct that we use the ROSE pump right now. That has all the time just been an agreement where we would use it for the clinical study. And so we have, you can say, for a long time worked on establishing a commercial agreement as we have done now with DECA. That was the outset of the agreement with ROSE. So there's no changes there. Also, we do not expect to do any additional clinical studies with the DECA pump as it relates to studies in humans, we will of course have to demonstrate the quality work which we have already started. So we feel very comfortable there. And we do not expect that it will have any negative impact on NDA finding timelines. The good thing about the DECA pump is that it's, you can say, only Earlier this year, it was approved by the FDA for administration of a different drug as a subcutaneous infusion. So it's more or less the same use that we are going for here. So it's a proven concept versus using an insulin pump, which is in second only for insulin. So we actually see this as de-risking the project very much. For Glibber, yes, we will press release once we have reached the number of patients needed for the insulin analysis. Regarding the one gluagon that we have with DI, as you know, they did, you can say, complete enrollment into the study in the third quarter this year, and we would expect them to soon have the data. When they're going to release those data, we cannot comment on that, as it is their decision. As always, we will encourage them to do it as soon as possible.

Thank you, Adam. Thank you, Lucy, for your questions.

Thank you.

Once again, if you would like to ask questions, just press star 1. And if you want to cancel it, just press the hash key. And so your next question comes from the line of Jasper Ilse from Carnegie. Please go ahead. Your line is open.

Thank you so much. A question on clipeglutide and then afterwards one on cigalot. So first on clipeglutide. First, you can just elaborate a bit about your decision to do this interim analysis. So firstly, how we should think about this impacting both the power and the stopping criteria for the interim analysis. So is it more difficult to now do a positive, you know, data, show positive data in the interim compared to say the full data set that you had before? And also one, just so I understand it, so You do this and expect enrollment by year end 2021. So does that mean that you do not expect complete enrollment before Q3 next year? Just to get my understanding, is it because of the current COVID cases rising? And also how many patients do you actually need before you have final complete enrollment? And then afterwards, you know, second up, So it's not a key product to me, but launch is still pretty slow. So what could or would you do to improve that traction when we look into 2022? Thank you.

Thank you, Jesper. And again, Adam for Gleipagritide, and maybe Frank will jump in for Zygalog launch.

Hi, Jesper. Thanks for your questions. If I should start by addressing, you can say, the decision and the rationale behind the interim. At the outset of the COVID, FDA and actually also European authorities issued different guidance for how to act in this situation, and including in those guidance were statistical considerations for studies, which actually opened up for sponsors to introduce post-hoc analysis in the studies. So that's an important parameter that the guidance is in place. When we design studies, phase three trials that should serve the purpose of an NDA submission, you need to generate sufficient data to address both efficacy and safety. And with the delays we have seen in Glipper, we have actually created quite an extensive safety database because we have patients who have been on drugs for many years. That's also exemplified by yeast SPS3, which is an extension study to the originally expected extension study. So we have patients who have been exposed for close to three years now in this study. You can say from a safety perspective, we actually have generated more data than we had originally planned for for the NDA submission when we had these discussions on the science of the study with the FDA. Then with regard to efficacy, you of course have to design your studies also to address efficacy needs. And you do that by having some assumptions around your effect size and your, you can say, the standard deviations. And we, of course, were inspired by the data that we have seen from and what I can say from an effect science point of view, the size of the interim analysis, we would not have introduced that one if we did not feel comfortable still that we can actually reach a conclusion, a positive decision on the efficacy as well. due to the effect size. So you can also say we had very, very good effect at alpha for the original trial design, very much driven by the need for a safety database, which we have expanded by the delays. So we actually feel very comfortable with this one if the assumptions we had when we designed the studies hold true, and we have no reason to believe they don't. We will not announce the number of patients that goes into the interim. And I simply cannot do that because we need to keep the trial, the antiquity of the trial. It will be a blinded data safety monitoring committee that evaluates the data and make a recommendation to us with regard to start or continue the study. And as I said, we would not have introduced this interim if we did not believe the likelihood of stopping was very good. Also add that we will continue to enroll patients even when we have reached the number needed for the interim, and they will, of course, these patients will, of course, contribute to the data that we anticipate to submit to FDA in a potential NDA. I don't know if this addresses all your questions on the GLEPA, but maybe, Frank, you can answer and then Jesper can follow up if you have more.

Okay, good. Yeah, thank you, Adam. And Jesper, thank you for the question. Let me address our confidence in Zegalog in 2022. So as I had said earlier, our focus in the first quarters of launch is on securing favorable coverage on the drug formularies of PBMs, commercial and Medicaid plans, and driving demand. And there's an inherent tension, if you will, at launch between access and demand. You need demand to help payers review products earlier to be able to gain access and coverage, and you need access to drive demand. And so what we have learned about this drug is that demand is growing month over month, but it's not yet translating into a proportional level of revenue growth, which makes sense when you look at the level of coverage in the third quarter, which is the first quarter of launch with having approximately 16% of commercial and 10% of Medicaid lives covered. But that demand has helped the market access team secure favorable access in a stepwise manner where it moved from 16% commercial to 10% Medicaid towards 70% coverage for commercial and 70% coverage for Medicaid as we enter 2022. So it really presents a very different condition for us that will enable us to be able to take these positive patterns and underlying demand and really begin to translate this into recognized revenue and revenue growth by pulling through these favorable winds on major plans.

Okay, thank you. Just to follow up on the clip, so do you see any increased risk in doing this interim versus just doing the entire study? So just touching on your confidence into the interim. Thank you.

Yeah, I mean, of course, when you do an interim, you do use some of your alpha. In that sense, you could talk about increased risk. On the other hand, As I said in the beginning, if the assumptions we had when we designed the study holds true, which we have no reason to believe they don't, then we feel we have very good power to conclude the study based on the interim readout. And of course, we have a number of patients in the study which we expect will provide that knowledge. So you can also say it will also, to some degree, manage a potential risk of a third spike in COVID coming this winter. So we would not like to enter the next three months with that uncertainty. So net-net, we see this as a very positive decision for the program.

Okay. Thank you. Thank you very much.

Once again, if you would like to ask questions, just press the star 1. And, sir, your next question comes from the line of Michael Navod from Nordea. Please go ahead. Your line is open.

Yeah, thanks a lot. It's Michael from Nordea. So just two clarifying questions. First, to the biohormonal pump, do you already have the data from the interleukin with beta-bionics or not? Was it just other data that you were referencing in the presentation? And then secondly, on CHI, what is it exactly that drives a delay? We had expected the data here in Q4, and now it's moving into this first half of next year. And also, when exactly during first half of next year is it Q1 or Q2? Just to get more clarity around when we're finally going to get some data. Thanks.

Michael, your dual hormone pump question, is it related to the insulin only? Yeah, yeah. Okay.

Yeah, it was just the insulin-only data that the beta biotics has been running.

Yeah. I mean, it's up to beta biotics to release and talk about their IO data. If you look at the timelines in clinicaltribe.gov, I mean, we would expect them to have data available very soon. So, yeah. As we have said all the time, completion of that study has been the trigger for mutation of the bi-hormonal artificial pancreas study where we used two hormones. So I cannot comment further on the data, but I have no reasons to believe that things are not progressing within beta-bonics on the insulin-only studies as planned. For CHI, you can say, personally, I'm also disappointed that we have not reached the last subject for this study yet. I had expected that to happen this quarter, to be honest. And as you know, these are neonates. We know the patients are there. We are in constant dialogue, weekly dialogue with the sites and also potential patients that could go, I mean, hearing about potential patients that could go into the study. Reality is, this is, as a family, when you get to this situation where you have a child that is diagnosed with CHI, it's a very, very dramatic situation to be in. And to then participate in a clinical study where there are significant requirements to actually adhere to study protocols and so on can sometimes be difficult. So personally, I would have expected us to have reached that last randomization basin where we were a few months ago. We are not there yet. but we feel that we are very, very close. So, yeah, it's a condition that is very, very difficult to manage, you can say, and that's just the reflection here on the new bones. Okay.

Okay, thanks a lot.

Thank you, Michael. Your next question comes from the line of Joseph Schringer from Needham & Company. Please go ahead. Your line is open.

Hi, everyone. Thanks for taking our questions. And apologies, we're temporarily disconnected. So apologies if I repeat a question here. First one is on the interim analysis. Just curious around the stacked plan for this in terms of, you know, you previously got it for full results, or excuse me, the top line results from the full number of patients in 2022. So just curious, you know, why not wait if you have to spend the alpha on the interim analysis for the full results? And then on the interim analysis, is it analysis of each, the once weekly and the twice weekly arms, or is it some type of pooled interim analysis on both treatment arms? And then I guess just lastly, if you were to see... you know, positive outcome on the interim in, let's say, in 3Q. What else is required for potential NDA submission from the other SBS EASE trials, 2, 3, and 4? Would you have to wait for additional data from that prior to NDA submission? Thank you.

Yeah. Thanks for your question. So why not wait? So this was a dialogue we had with FDA throughout the year. to make sure that we would meet our goals, you can say. And as I said before, we feel comfortable around the power that goes into this one. The reason that we take the decision now is that, and we feel that we, is of course that we enter now the winter season, and when we do, as you know, everybody starts to see spikes again in COVID. So we don't want to be in a situation where Q1 is going to again cause delays to this program. So I think it's a very reasonable thing for us to make that decision now. That's at least how we adjust this internally, and we feel very comfortable with the interview. So that is the trigger where we are right now. We are not changing the way we assess the data. We are still allowed to assess each arm individually, so that is the power, and we are also looking into both primary and secondary endpoints. So, again, there's no change to those aspects. If we have a decision to stop and it's positive, then we expect and plan to submit the NDA based on those data, meaning that for each SPS, Two and three, the two extension studies will basically make a data cut there at that time, and then those data will be part of the submission. For each SPS-4, which is the Phase IIIb study, we will likely also consider to do an interim cut just to provide those data as well, but they are not in our current planning needed for the submission. So if we reach a decision for a positive goal, then we expect to pursue the NDA based on the data that we have available at that time.

Thank you, Julie. Great. Thanks for taking our question.

Once again, if you would like to ask questions, just press star 1. And if you want to cancel it, just press the hash key. Sorry, no more questions over the phone lines. I will hand back to Emmanuel for closing remarks. Thank you.

Thank you. With that, we would like to thank you all for attending and for your questions. End of June, we launched our first commercial product in the U.S., Zegalog, injection for the treatment of severe polysemia in patients age 6 and above. And meanwhile, so we are four months into the launch. We continue to progress our late-stage clinical program. our type 1 diabetes management and rare disease programs, as well as advance our early stage pipeline. That's actually the message I want you to take away tonight. And as well, we look forward to connecting on future announcements and updates. Thank you very much for your time.

This concludes our conference for today. Thank you for participating. You may now all disconnect. Thank you. Thank you. Thank you. you Thank you. Thank you. Thank you.

Welcome and thank you for joining us today to discuss Zeeland's third quarter results for 2021. I'm Matt Dallas, Senior Vice President and Chief Financial Officer at Zeeland. With me today are Zeeland's President and Chief Executive Officer, Emmanuel Duac, President of Zeeland Pharma U.S., Frank Sanders, and Chief Medical Officer and Head of Development, Adam Steensburg. You can find the related company announcement and additional supporting information on our website at zeelandpharma.com. I would like to point out that we will be making four 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 violence for a more complete picture of risk and other factors. And with that, I will turn the call over to President and CEO, Emmanuel Doula.

Thank you, Matt. And thanks to everyone for joining today. The third quarter dates. We will discuss on today's call underscore Zealand's evolution as a fully integrated biopharmaceutical company. In Q3, we continue to execute on our commercial goals following the launch of Zegalog in the U.S., while also sustaining momentum across the rest of our pipeline by advancing multiple clinical and preclinical programs that leverage our innovative peptide platform to address unmet needs in type 1 diabetes and rare disease. This continuous progress positions us well to achieve our goal of offering five marketed products by 2025 to patients around the globe with high-end medical needs. Slide four illustrates the development of our company in relation to the successful execution of our strategy. Later in the call, our CMO and head of research and development, Adam Stinsberg, will discuss these pipelines updates in greater detail, including updates on glipagrutide in the treatment of short bowel syndrome, or SBS, information on perinatal data from our amine analog and clinical data from our Glucagon GLP-1 dual agonist partnered with BI that were presented at the recent Obesity Society annual meeting, and more details on our collaboration agreement with Deca Research and Development Corporation to advance development of an infusion pump to be used with Tazic-Glucagon. currently under investigation as a potential treatment option for congenital hyperinsulinism. But first, Frank Sanders, President of Xenopharma U.S., will discuss the work our commercial team has been doing on the Zegalog launch. Thank you, Emmanuel.

Since Zegalog was launched in late June, the U.S. commercial organization has been focused on securing favorable coverage on the drug formulary plans of PBMs and commercial and Medicaid plans to ensure that appropriate patients can receive Zegalog with ease when it's prescribed. This involves driving demand with prescribers to signal to payers that the desire to prescribe Zegalog is high. In a moment, I will speak to our progress in generating demand and our progress in securing favorable payer coverage for Zegalog. Please refer to slide five. I want to share that Zegalog is being viewed as an attractive treatment option for severe hypoglycemia by payers, patients and their caregivers, and endocrinologists, both adult and pediatric endocrinologists. What's compelling about Zegalog is the rapidity and consistency of recovery from severe hypoglycemia that was seen across all Pivotal Phase III studies. This positioning is succinct. And it's compelling, especially in the context of a severe hypoglycemic event, which can be terrifying for people with diabetes and their families. Rapid and reliable recovery from a severe hypoglycemic event in 10 minutes is important because during a severe hypoglycemic event, every minute matters. On slide six, I'd like to take a moment to refer to the approved full indication and the important safety information for Zegeloff. On slide seven, I will speak to the demand, which has continued to increase over the first four months since launch. As I spoke to in my opening remarks, generating early demand from healthcare prescribers is essential because it helps inspire payers to act more expeditiously in their formulary review activities. In the third quarter, approximately 3,800 total prescription claims for Zegelag were submitted to commercial and government payers. Also, approximately 115 distinct healthcare providers wrote prescriptions for Zegalog. Most of these prescribers were endocrinologists, both adult and pediatric, and 62% of the prescribers were repeat prescribers, writing Zegalog multiple times in the quarter. On average, 1.9 units of Zegalog per prescription were being dispensed. These are encouraging signs of underlying growth, which is observed to be increasing month over month. While demand continues to grow, it has not yet translated into a proportional level of revenue growth. What's different is that the rate of rejection of Zegalog prescription claims by payers at the pharmacy is higher than we anticipated. We expect that this will begin to resolve as recent drug coverage decisions take effect. Please refer to slide eight. Now I will speak to the results that our market access team has achieved since launch. Zegalog coverage was limited in the third quarter, its first quarter of launch, with only approximately 16% of commercial and 10% of Medicaid lives being covered. As previously mentioned, this level of coverage resulted in a higher than anticipated rate of rejection of prescription claims at the pharmacy. PBM and payer coverage has improved since launch. Recently, we've signed agreements with some of the largest PBMs and state Medicaid plans. The full impact of these coverage decisions will begin to be realized at the start of 2022 based on the timing of some of these arrangements. We will start the year off with approximately 70% coverage of commercial and 70% coverage of Medicaid lives having access to Zegalog. This equates to approximately 130 million commercial and 50 million Medicaid recipients and will set the stage for growth in 2022. I want to thank our employees at Zeeland for their work on building the U.S. commercial organization and executing the launch of Zegalog. Zegalog is an important launch on its own, but we expect that it's only the first of multiple potential new product launches in our near-term horizon. Now I will turn to Adam, who will provide an overview of the progress of our clinical development programs.

Thank you, Frank. Please go to slide nine. Here you can see our robust pipeline targeting areas in four medical areas of higher medical need. On the next slide, I'll take you through updates on several of these programs and begin with our efforts to transform management of type 1 diabetes. Please go to slide 10. A recent study found that despite the many innovations in insulin, current pumps, and continuous glucose monitors, only approximately 20% of people living with type 1 diabetes in the U.S. are at the recommended glycemic targets. As such, the majority of those people have elevated plasma glucose levels and therefore are at increased risk of long-term complications. Moreover, all are at risk of experiencing dangerously low blood glucose levels. if they take too much insulin. We are currently developing dasyclurabone for potential use in a bi-hormonal artificial pancreas system. In a smaller phase two trial, we showed that the bi-hormonal islet was able to achieve glycemic target for 90% of the participants. Importantly, this was achieved while only on average they spent 0.2% of the time in hypoglycemia, as seen to the right. We are therefore excited to confirm that we are moving towards start of phase three later this quarter. Please go to slide 11. The phase three program for DASIG-Lorgon in the islet bi-hormonal artificial pancreas system has been discussed in details with the FDA, and we are pursuing a broad indication with studies in both adults and children with type 1 diabetes. The program includes three sub-trials and we'll begin with a single-arm, bi-hormonal-only safety and test run trial. Following three weeks of dosing of approximately 40 subjects, we'll begin the two randomized control trials, with the primary endpoint for the randomized trials being HbA1c at six months, and we seek to demonstrate superiority over insulin-only islet and over standard of care. Further six months, Exposure to dasic lorban will support the safety data needed for the NDA with the U.S. FDA. Please go to slide 12. Among the most advanced clinical programs in our pipeline is the evaluation of continuous infusion of dasic lorban in children with congenital hyperinsulinism, or CHI, an ultra-rare disease caused by a defect in the pancreatic beta cells. We reported initial phase three results in December last year from the first phase three trial, and by year end, we expect to complete enrollment into the second phase three trial in CHI children aged seven days to one year, with results expected in the first half of 22. Pending positive results from this second phase three trial, we will work quickly and diligently towards an NDA submission to the US FDA. In addition, we are excited about the agreement with DECA Research and Development Corporation that was announced last week. Please go to the next slide, slide 13, which illustrates the DECA continuous infusion pump that we anticipate to utilize to deliver DASI Logon as a potential treatment option for children with CHI. We believe that this pump has the optimal design and quality features to provide ease and confidence in the management of CHI. Please go to the next slide. On glipaglutide, our long-acting given two analogs for treatment of short bowel syndrome. During the quarter, we presented preclinical data that showed dose-dependent effects of glipaglutide on small and large intestinal growth and concluded the bridging trial that supports the use of the autoinjector for dosing of the drug. Please go to slide 15. We also initiated EAST-SPS-4, which is a Phase IIIb trial assessing effects of once-weekly administration of glipaglutide on energy and fluid uptake. Earlier in the year, we initiated EAST-SPS-3, which will contribute to the overall clinical program with long-term safety efficacy data. Importantly, throughout 2021, we have made good progress on the recruitment into EAST-SPS-1. our PIVOTOR phase 3 trial, for which you can see the trial diagram in the next slide, slide 16. Based on parallel dialogue with FDA and the EMA throughout the year, we have decided to introduce an interim analysis that can allow for stopping the trial for efficacy of fertility before the full 129 patients have been enrolled. If the interim readout is positive, we plan to pursue an MDA submission as a next development step based on these clinical data. And we expect to have all subjects needed for the interim analysis enrolled by the end of 21, with results being available in the third quarter next year. On slide 17, you can see details on dapetlutide, our long-acting GLP-1 GLP-2 dual agonist, which is in development as a potential treatment option for SPS and other GI-associated diseases. We have already reported a plasma half-life of 120 hours in a Phase Ia trial, and we look forward to reporting the results of the multiple ascending dose trial later this year. Please go to slide 18 and our efforts to target obesity and associated metabolic conditions. At the recent Obesity Society Annual Meeting, we presented preclinical data on our amylin and clinical data on the G01 glucagon dual agonist. Please go to slide 19, which shows data from the phase one clinical trial of BI456906. In the trial, we observed clinical relevant body weight reductions of up to 13.7% with no unexpected safety findings after 16 weeks of dosing. Earlier this year, our development partner, Berner Ingenheim, initiated two additional phase two trials and we look forward to seeing the results for the trials in type 2 diabetes and obesity next year. Please go to the next slide, slide 20. At Obesity Week, we also presented preclinical data as related to our amylin analog, either as a monotherapy or in combination with the long-acting therapy one molecule semacretide. The combination therapy resulted in up to 20% weight loss. During that same week, We were thus excited to announce the dosing of the first subjects in the Phase I safety and tolerability trial of ZPE 8396 and expect to share results from this study next year. I'll now turn over to our CFO, Matt Ballard, to walk us through 2021 year-to-year date financials. Matt?

Thanks, Adam. On slide 21, you will see Zeeland's income statement for the third quarter of 2021 and how it compares to the same period in 2020. Total revenue for the first nine months was 238.6 million Danish kroner, with 37.1 million in USD. This was driven primarily by net product revenue for the Beagle wearable influence delivery device and BeagleLock, as well as partnership revenue from our collaborations with Alexion, BI, and Sanity. The net operating result for the first nine months was a loss of 762.6 million Danish kroner, or 118.8 million USD. Sales and marketing costs mainly relate to the commercial infrastructure in the U.S. to support the ZGLOG and VGO commercial programs, while R&D costs primarily relate to our late-stage clinical programs. Slide 22 illustrates our strong financial position and ability to support our growing business through continued investments. Net operating expenses for the first nine months were 906.2 million Danish kroner, or 141.1 million USD. At the end of the quarter, we had cash, cash equivalent to marketable securities, 1.05 billion Danish kroner, or 163.3 million USD. Turning to our financial guidance on slide 23, for 2021, net product revenue from the sales of commercial products is expected to be $190 million DKK, plus or minus 10%. This is a decrease of $30 million DKK from the guidance issued on March 11. The reduction in net revenue from the previous guidance was driven by lower-than-expected sales of Zegalot for 2021. Net operating expenses are expected to be $1.25 billion damage coroner, plus or minus 10%. And this remains unchanged from the financial guidance issued on March 11. We 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. And with that, I will now turn it back to Emmanuel.

Thank you, Matt. Zeland's commercial and research team have established significant momentum across our metabolic and gastrointestinal programs during the first nine months of this year, as exemplified by the exciting third quarter updates discussed on this call. We look forward to closing 2021 out strong, carrying the momentum of this transformational year into 2022 as we continue on our journey to change the lives of patients by offering five marketed products by 2025. Thank you all. I will now turn it over to the operator for questions.

Thank you, sir. And if you would like to ask questions, just press star 1. And if you want to cancel it, just press the hash key. Once again, please press star 1 for questions. And so your first question comes from the line of Lucy Corrington from Jefferies. Please go ahead. Your line is open.

Hi there. Thanks for taking my questions. Just a couple for me. On the designated on CHI agreement for the pump with DECA, it's my understanding you had a prior agreement with Roche that has been used for the trial so far. So just wondering what kind of droves have changed and will any additional studies be necessary and could these potentially delay filing? Then on the glupaglutide, will you press release when the required number of patients for the interim analysis have been recruited? And then for BI-456906, we might get phase two diabetes data potentially this quarter, do you expect BI to disclose those data, or do you think, like in the past, they will save them for a conference? Thank you.

Thank you, Lucy, for your three questions in a row, and I will actually ask Adam to take all three. Okay.

Thanks for the questions. Regarding the pump that we... for CHI, you're correct that we use the ROSE pump right now. That has all the time just been an agreement where we would use it for the clinical study. And so we have, you can say, for a long time worked on establishing a commercial agreement as we have done now with DECA. That was the outset of the agreement with ROSE. So there's no changes there. Also, we do not expect to do any additional clinical studies with the DECA pump as it relates to studies in humans, we will of course have to demonstrate the quality work which we have already started. So we feel very comfortable there, and we do not expect that it will have any negative impact on NDA finding timelines. The good thing about the DECA pump is that it's, you can say, only, Earlier this year, it was approved by the FDA for administration of a different drug as a subcutaneous infusion. So it's more or less the same use that we are going for here. So it's a proven concept versus using an insulin pump, which is intended only for insulin. So we actually see this as de-risking the project very much. For Glibber, yes, we will press release once we have reached the number of patients needed for the insulin analysis. Regarding the one gluagon that we have with DI, as you know, they did, you can say, complete enrollment into the study in the third quarter this year, and we would expect them to soon have the data. When they're going to release those data, we cannot comment on that, as it is their decision. As always, we will encourage them to do it as soon as possible.

Thank you, Adam. Thank you, Lucy, for your questions.

Thank you.

Once again, if you would like to ask questions, just press star 1. And if you want to cancel it, just press the hash key. And so your next question comes from the line of Jasper Ilse from Carnegie. Please go ahead. Your line is open.

Thank you so much. A question on clipeglutide and then afterwards one on cigalot. So first on clipeglutide. First, you can just elaborate a bit about your decision to do this interim analysis. So firstly, how we should think about this impacting both the power and the stopping criteria for the interim analysis. So is it more difficult to now do a positive, you know, data, show positive data in the interim compared to, say, the full data set that you had before? And also, one, just so I understand it, so You do this and expect enrollment by year end 2021. So does that mean that you do not expect complete enrollment before Q3 next year? Just to get my understanding, is it because of the current COVID cases rising and also how many patients do you actually need before you have final complete enrollment? And then afterwards on, you know, second lot, So it's not a key product to me, but launch is still pretty slow. So what could or would you do to improve that traction when we look into 2022? Thank you.

Thank you, Jesper. And again, Adam for Gleipagritide, and maybe Frank will jump in for ZigaLog launch.

Hi, Jesper. Thanks for your questions. If I should start by addressing, you can say, the decision and the rationale behind the interim. At the outset of the COVID, FDA and actually also European authorities issued different guidance for how to act in this situation, and including in those guidance were statistical considerations for studies, which actually opened up for our sponsors to introduce post-hoc analysis in the study. So that's an important parameter that the guidance is in place. When we design studies, there's three trials that should serve the purpose of an NDA submission, you need to generate sufficient data to address both efficacy and safety. And with the delays we have seen in Glipper, we have actually created quite an extensive safety database, because we have patients who have been on drugs for many years. That's also exemplified by yeast SPH3, which is an extension study to the originally expected extension study. So we have patients who have been exposed for close to three years now in this study. You can say from a safety perspective, we actually have generated more data than we had originally planned for for the NDA submission when we had these discussions on the science of the study with the FDA. Then with regard to efficacy, you of course have to design your studies also to address efficacy needs. And you do that by having some assumptions around your effect size and your, you can say, the standard deviations. And we, of course, were inspired by the data that we have seen from and what I can say from an effect science point of view, the size of the interim analysis, we would not have introduced that one if we did not feel comfortable still that we can actually reach a conclusion, a positive decision on the efficacy as well. due to the effect size. So you can also say we had very, very good effect alpha for the original trial design, very much driven by the need for a safety database, which we have expanded by the delays. So we actually feel very comfortable with this one if the assumptions we had when we designed the studies hold true, and we have no reason to believe they don't. We will not announce the number of patients that goes into the interim. And I simply cannot do that because we need to keep the trial, the antiquity of the trial. It will be a blinded data safety monitoring committee that evaluates the data and make a recommendation to us with regard to start or continue the study. And as I said, we would not have introduced this interim if we did not believe the likelihood of stopping was very good. Also add that we will continue to enroll patients even when we have reached the number needed for the interim, and they will, of course, these patients will, of course, contribute to the data that we anticipate to submit to FDA in a potential NDA. I don't know if this addresses all your questions on the GLEPA, but maybe, Frank, you can answer and then Jesper can follow up if you have more.

Okay, good. Yeah, thank you, Adam. And Jesper, thank you for the question. Let me address our confidence in Zegalog in 2022. So as I had said earlier, our focus in the first quarters of launch is on securing favorable coverage on the drug formularies, the PBMs, commercial and Medicaid plans, and driving demand. And there's an inherent tension, if you will, at launch between access and demand. You need demand to help payers review products earlier to be able to gain access and coverage, and you need access to drive demand. And so what we have learned about this drug is that demand is growing month over month, but it's not yet translating into a proportional level of revenue growth, which makes sense when you look at the level of coverage in the third quarter, which is the first quarter of launch with having approximately 16% of commercial and 10% of Medicaid lives covered. But that demand has helped the market access team secure favorable access in a stepwise manner where it moved from 16% commercial to 10% Medicaid towards 70% coverage for commercial and 70% coverage for Medicaid as we enter 2022. So it really presents a very different condition for us that will enable us to be able to take these positive patterns and underlying demand and really begin to translate this into recognized revenue and revenue growth by pulling through these favorable winds on major plans.

Okay, thank you. Just to follow up on the clip, so do you see any increased risk in doing this interim versus just doing the entire study? So just touching on your confidence into the interim. Thank you.

Yeah, I mean, of course, when you do an interim, you do use some of your alpha. In that sense, you could talk about increased risk. On the other hand, As I said in the beginning, if the assumptions we had when we designed the study holds true, which we have no reason to believe they don't, then we feel we have very good power to conclude the study based on the interim readout. And of course, we have a number of patients in the study which we expect will provide that knowledge. So you can also say it will also to some degree manage a potential risk of a third spike in COVID coming this winter. So we would not like to enter the next three months with that uncertainty. So net-net, we see this as a very positive decision for the program.

Okay. Thank you. Thank you very much.

Once again, if you would like to ask questions, just press the star 1. And, sir, your next question comes from the line of Michael Navod from Nordea. Please go ahead. Your line is open.

Yeah, thanks a lot. It's Michael from Nordea. So just two clarifying questions. First, to the biohormonal pump, do you already have the data from the interleukin with beta-bionics or not? Was it just other data that you were referencing in the presentation? And then secondly, on CHI, what is it exactly that drives a delay? We had expected the data here in Q4, and now it's moving into this first half of next year. And also, when exactly during first half of next year is it Q1 or Q2? Just to get more clarity around when we're finally going to get some data. Thanks.

Michael, your dual hormone pump question, is it related to the insulin only? Yeah. Yeah. Okay. I don't know.

It was just the insulin-only data that the beta biotics has been running.

Yeah. Yeah. I mean, it's up to beta biotics to release and talk about their IO data. If you look at the timelines in clinicaltribe.gov, I mean, we would expect them to have data available very soon. So, yeah. As we have said all the time, completion of that study has been the trigger for mutation of the bi-hormonal artificial pancreas study where we used two hormones. So I cannot comment further on the data, but I have no reason to believe that things are not progressing within beta bionics on the insulin-only studies as planned. For CHI, you can say personally, I'm also disappointed that we have not reached the last subject for this study yet. I had expected that to happen this quarter, to be honest. And as you know, these are neonates. We know the patients are there. We are in constant dialogue, weekly dialogue with the sites and also potential patients that could go, I mean, hearing about potential patients that could go into the study. Reality is, this is, as a family, when you, get to this situation where you have a child that is diagnosed with CHI, it's a very, very dramatic situation to be in. And to then participate in a clinical study where there are significant requirements to actually adhere to study protocols and so on can sometimes be difficult. So personally, I would have expected us to have reached that last randomization basin where we were a few months ago. We are not there yet. but we feel that we are very, very close. So, yeah, it's a condition that is very, very difficult to manage, you can say, and that's just the reflection here on the newborns.

Okay. Okay, thanks a lot.

Thank you, Michael.

Your next question comes from the line of Joseph Tringer from Needham and Company. Please go ahead. Your line is open.

Hi, everyone. Thanks for taking our questions. And apologies, we're temporarily disconnected. So apologies if I repeat a question here. First one is on the interim analysis. Just curious around the stacked plan for this in terms of, you know, you previously got it for full results, or excuse me, the top line results from the full number of patients in 2022. So just curious, you know, why not wait if you have to spend the alpha on the interim analysis for the full results? And then on the interim analysis, is it analysis of each, the once weekly and the twice weekly arms, or is it some type of pooled interim analysis on both treatment arms? And then I guess just lastly, if you were to see you know, positive outcome on the interim in, let's say, in 3Q. What else is required for potential NDA submission from the other SBS EASE trials, 2, 3, and 4? Would you have to wait for additional data from that prior to NDA submission? Thank you.

Yeah. Thanks for your question. So why not wait? So this was a dialogue we had with FDA throughout the year. to make sure that we would meet our goals, you can say. And as I said before, we feel comfortable around the power that goes into this one. The reason that we take the decision now is that, and we feel that we, is of course that we enter now The winter season, when we do, as you know, everybody starts to see spikes again in COVID. So we don't want to be in a situation where Q1 is going to again cause delays to this program. So I think it's a very reasonable thing for us to make that decision now. That's at least how we have adjusted internally, and we feel very comfortable with the interim. So that is the trigger where we are right now. We are not changing the way we assess the data. We are still allowed to assess each arm individually, so that is the power, and we are also looking into both the primary and secondary endpoints. So, again, there's no change to those aspects. If we have a decision to stop and it's positive, then we expect and plan to submit the NDA based on those data, meaning that for each SPS, Two and three, the two extension studies will basically make a data cut there at that time, and then those data will be part of the submission. For each SPS-4, which is the Phase IIIb study, we will likely also consider to do an interim cut just to provide those data as well, but they are not in our current planning needed for the submission. So if we reach a decision for a positive goal, then we expect to pursue the NDA based on the data that we have available at that time.

Thank you, Julie. Great. Thanks for taking our question.

Once again, if you would like to ask questions, just press star 1. And if you want to cancel it, just press the hash key. Sorry, no more questions over the phone lines. I will hand back to Emmanuel for closing remarks. Thank you.

Thank you. With that, we would like to thank you all for attending and for your questions. End of June, we launched our first commercial product in the U.S., Zegalog, injection for the treatment of severe polysemia in patients age 6 and above. And meanwhile, we are four months into the launch. We continue to progress our late-stage clinical program, our type 1 diabetes management and rare disease programs, as well as advance our early stage pipeline. That's actually the message I want you to take away tonight. And as well, we look forward to connecting on future announcements and updates. Thank you very much for your time.