Zealand Pharma A/S

Welcome and thank you for joining us today to discuss Zeeland's first quarter results for 2022. I'm Matt Dallas, Senior Vice President and Chief Financial Officer at Zeeland. With me today is Zeeland's President and Chief Executive Officer, Adam Sainsberg. 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'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 obligation to update them except as required by law. Please refer to recent findings for a more complete picture of risk and other factors. With that, I'll turn the call over to President and CEO, Adam Stainsberg.

Thank you, Matt, and thanks to everyone for joining today. Please turn to slide three. As you all know, at the end of the first quarter, following a thorough review of our business operations, we announced an organizational restructuring and a strategic refocusing to transition CELA into a more cost-effective company focused on our core competencies, the research and development of innovative peptide therapeutics, addressing areas of high unmet medical need. We believe this decision better supports our mission to change the lives of patients with next-generation peptide therapeutics. With a new commercial partnership strategy and a more streamlined organization, we are financially well-positioned to achieve our goals in the next few years, which includes the potential for three more commercialized products and a highly valued product pipeline, including programs targeting diabetes, obesity, chronic inflammation, leveraging our strong and innovative peptide platform. Please turn to slide four. One of my top priorities since taking over as the CEO has been to execute on the announced restructuring, including securing a strong financial runway that will take us beyond near-term clinical milestones. The cost savings associated with the restructuring and the amendment to our finance agreement with Oberland Capital have delivered financial stability, which enable us to deliver on our R&D focus, as Matt will discuss later in greater details. We expect to have completed the announced downscaling in the US by the end of the third quarter. As announced today, Matt will be leading Sealand to pursue new opportunities by the end of August and we have initiated the search for a new CFO for the company. Matt joined Sealand in 2019 and played an important part in building Sealand's commercial operations in the US and has created a very strong finance organization for the company. Personally, I've really enjoyed working with Matt and I look forward to work with him until the end of his tenure here at Sealand. Securing strong commercial partnerships is a fundamental element to our new strategy. Our business development team has been very busy engaging potential partners for VEGO and Seagalock, and I look forward to delivering on these negotiations in the coming months. Lastly, we look forward to top-line results for two of our phase three programs, which of course, depending on the data, could lead to NDA filings. Please turn to slide five. We continue to make progress on our clinical pipeline. All programs are based on innovation coming from our peptide platform, which is the foundation of our refocus strategy. Our excellence in understanding peptides and our broad know-how in how to create innovative peptide therapeutics will be at the center when considering future strategic partnerships. Our clinical programs, they target type 1 diabetes, rare diseases, obesity, and we have a late preclinical assets targeting chronic inflammation. We have strong momentum across the pipeline and a number of upcoming significant milestones this year. Importantly, we have three major clinical data readouts approaching with people to phase III results both for glipaglutide in SVS and basic lorgon in CHI, both of which I will expand upon in a moment, and phase II data for BI456906 in type II diabetes. This candidate is partnered with Berger Ingelheim and is the lead program in our obesity portfolio, which also includes an amylin analog in phase I development and GIB analog in late preclinical development. Applying our peptide know-how and cutting-edge platform to create therapeutics to tackle obesity is an important part of our refocus strategy, and I look forward to sharing updates from these programs with you later in the year. Turning to slide six. As I mentioned earlier, in the coming weeks, we expect top-line results from our Phase III study evaluating Dacid Glucon for the treatment of congenital hyperinsulinism, or CHI, in neonates and infants. CHI is an ultra-rare pediatric disease characterized by recurrent and persistent hyperglycemia. Our randomized placebo-controlled study of 12 children with CHI, ranging in age from seven days to 12 months, will measure a primary endpoint of reduced need for intravenous glucose. We believe basigluoban has the potential to be an important new treatment option for children with CHI, where there is a significant unmet medical need, and we look forward to sharing the results from this phase three study soon. With positive data, we plan to pursue an NDA submission, which will also include data from the phase three trial in older children with CHI with the FDA. Please turn to slide seven. Let me now turn to another product in our pipeline, where we look forward to share phase three data later this year. Glipaglutide, our long-acting GLP-2 analog, being investigated for the potential treatment of short-viral syndrome or SPS. We believe there's significant opportunity to improve the care for these patients and also believe that glipaglutide holds significant potential as a next-generation long-acting GLP-2 analog. The once- or twice-weekly profile delivered via an auto-injector provides a clear differentiation and the upcoming phase three data will provide more insight into the clinical profile of the drug, and the positive data will pursue an NDA finding with the FDA. Please turn to slide eight. Our data readout for EaseSDS-1 Our clopaclotype remains on track for data in the third quarter. Also, later this year, we expect to see the data from each SDS two and three, as you can see on this picture. And we look very much forward to sharing the data with you later in the year. Please turn to slide nine. For our additional late-stage DASIC-Logon programs, our partner BetaBionics initiated the Phase III program for DASIC-Logon in the bi-hormonal artificial pancreas pump for the management of type 1 diabetes in late 2021, and we expect that the first patients will be dosed later in this year. Beta Bionics recently presented results from their insulin-only bionic pancreas pivotal study at the International Conference of Advanced Technologies and Treatments for Diabetes, achieving key primary and secondary endpoints and demonstrating improved outcomes over standard of care in people living with type 1 diabetes While this trial did not involve deadly lubricants, it demonstrated the encouraging potential of the bionic pancreas pump for the management of type 1 diabetes, and we look forward to advancing our phase 3 program. In summary, we have a strong momentum across our robust preclinical pipeline and clinical pipeline, and with the refocused strategy prioritizing R&D announced at the end of the first quarter, we feel well-positioned to continue this progress. I will now turn over to our CFO, Matt Dallas, to walk us through our quarterly financials and the ways in which our organizational restructuring have improved our operational efficiency.

Thanks, Adam. This last quarter, we not only outlined our refocus strategy, but initiated our organizational restructuring and took steps to strengthen our financial future, ensuring that we can continue to discover and develop innovative new peptide therapeutics in 2022 and beyond. Slide 10 illustrates the immediate and long-term impact of the organizational restructuring. We are estimating an operating expense reduction from our 2021 level of 1.25 billion Danish kroner of 200 million in 2022. This is primarily related to a 90% reduction in the workforce of our U.S. subsidiary, and we anticipate that the long-term impact of the restructuring will result in a 400 million Danish kroner annual reduction in operating expenses beginning in 2023. In addition, on May 10th, we completed an amendment to our no-purchase agreement with Oberlin Capital. This amendment was completed as a result of our change in strategy and helps position the company financially to execute on this strategy. With the amendment, Zealand has paid down 50 million USD of the original 100 million principal balance, and there are up to 75 million in additional capital available to Zealand following the completion of specific events. The amendment removes any restrictions on use of cash and extends the company's cash runway into 2023. On slide 11, you will see Zealand's income statement for the first quarter of 2022 and how it compares to 2021. The total revenues for the first quarter was 15.1 million Danish kroner, or 2.3 million U.S. dollars. This was driven by net ZigaLog product revenue and partnership revenue from our collection with Alexion, collaboration with Alexion. The net operating result for the quarter was a loss of 302.1, 302 million Danish kroner, or 45.1 million USD. Sales and marketing costs mainly relate to the commercial infrastructure in the U.S. for ZigaLog, while R&D costs mainly relate to our late stage clinical programs. And as a result of our announced restructuring, all gross margin and operating expenses related to the Vigo wearable insulin delivery device are accounted for as discontinued operations. Total discontinued operations for the first quarter of 2022 were a loss of 41.8 million Danish kroner, or 6.2 million USD. Slide 12 illustrates our financial position and ability to support our growing business through continued investment. Net operating expenses for the quarter were 314.2 million Danish kroner, or 46.9 million USD. Included in net operating expenses for the first quarter of 2022 are 75.8 million Danish kroner related to our announced restructuring. Cash on hand at the end of Q1 2022 was 1.1 billion Danish kroner, or 167.6 million USD. Turning to our financial guidance on slide 13. On March 30th, Zeeland updated the guidance for net product revenue from the sales of commercial products to be 115 million Danish Kroner plus or minus 10%. This was a decrease of 120 million Danish Kroner from the guidance issued on March 10th. Combined sales of Vigo and Zegalog in Q1 were 39.2 million Danish Kroner and were in line with the updated guidance. Following the company's announced intent to sell Vigo, net product for the device is to be accounted for as discontinued operations. As such, Net product revenue reported in the Q1 earnings release only reflects sales of Zegalog, which were 4.1 million Danish kroner, with full-year net product revenue projected to be 19 million Danish kroner, excluding any potential partnerships or license agreements. In 2022, Xenopharm expects revenue from existing license agreements. However, since such revenue is uncertain in terms of size and timing, Xenopharm does not intend to provide guidance on such revenue. Net operating expenses for 2022 are expected to be 1 billion Danish kroner plus or minus 10%. This is unchanged from our guidance issued on March 30th and is a decrease of 200 million Danish kroner from the guidance issued on March 10th. With that, I will now turn it back to Adam.