Copenhagen, 2014-08-21 14:02 CEST (GLOBE NEWSWIRE) -- Company Announcement
No. 13/2014
Copenhagen, 21 August 2014 – Zealand Pharma A/S (Zealand) (CVR no. 20 04 50 78) (NASDAQ OMX Copenhagen: ZEAL) announces its un-audited interim report for the six-month period 1 January to 30 June 2014. The period is marked by a significant increase in revenue compared to the same period last year, a net result in accordance with the full year guidance and advances across Zealand’s portfolio of peptide therapeutics both internally and externally.
Commenting on the report, David H. Solomon, President and CEO of Zealand, said:
“Zealand is advancing well on all fronts. I am satisfied with the status of our activities and very confident about the outlook for the company.
“Lyxumia® roll-out by Sanofi outside the US is generating increasing revenue and LixiLan is advancing in Phase III. For both products, we look forward to the planned US regulatory filing by Sanofi in 2015. In parallel, we are growing the value of Zealand’s proprietary pipeline with danegaptide in Phase II development, and our novel glucagon analogue and other exciting preclinical programs advancing well. As part of our strategy, we continue to look for external high-value clinical assets to expand our pipeline and, across our preclinical activities, we recently engaged in a new partnership with Boehringer Ingelheim and have streamlined our resources to leverage our leading peptide competences and exploit attractive new therapeutic opportunities.”
Financial highlights for H1 2014
(Comparative figures for the same period 2013 are shown in brackets)
Pipeline highlights and update for Q2 2014 and the period thereafter
Lyxumia® (lixisenatide): Marketed ex-US for Type 2 diabetes ─ Global license agreement with Sanofi
LixiLan, fixed-ratio combination of Lyxumia® (lixisenatide) and Lantus® (insulin glargine): In Phase III-development for Type 2 diabetes ─ Global license agreement with Sanofi
Danegaptide: In Phase IIb development for the protection against reperfusion injuries ─ Fully Zealand owned
Elsiglutide: In Phase II development for the prevention of chemotherapy-induced diarrhea ─ Partnered with Helsinn
ZP1848: Completed Phase Ia/Ib development in Inflammatory Bowel Disease ─ Fully Zealand owned
Glucagon analogue: In preparation for Phase I development for severe hypoglycaemia in diabetes ─ Fully Zealand owned
Additional and ongoing collaborations with Boehringer Ingelheim
Internal preclinical pipeline prioritisation and new initiatives
Financial outlook for 2014
Zealand maintains its full year financial outlook as announced following the new collaboration agreement with Boehringer Ingelheim (Company Announcement No.11/2014 from 28 July 2014).
For 2014, Zealand expects revenue from milestone payments of DKK 133 (EUR 18) million. This includes DKK 81 (EUR 11) million received from Sanofi in January, DKK 37 (EUR 5) million from Boehringer Ingelheim in the third quarter and a time-based milestone from Helsinn of DKK 15 (EUR 2) million payable in the fourth quarter.
In addition, the company receives revenue in the form of Lyxumia® sales royalties, which amounted to DKK 8.1 (EUR 1.1) million for the first half of the year. No guidance can be provided for the level of royalty revenues for the full year as Sanofi has given no guidance on sales.
Net operating expenses in 2014 are expected at a range of DKK 195-205 (EUR 25-28) million.
***
Conference Call
Today at 1400 CET/ 0800 EDT, Zealand will host a conference call to present the interim results and give an update on the status and outlook for the company’s main products, followed by a Q&A session. Participating in the call will be David Solomon, President and CEO, Mats Blom, CFO, and Hanne Leth Hillman, Vice President and Head of IR and Corporate Communications.
The conference call will be conducted in English and can be accessed via the following numbers:
DK: + 45 3272 8018
US: + 1 866 6828 490
UK and international: +44 (0) 1452 555 131
A live audio cast of the call including an accompanying slide presentation will be available via the following link: http://www.media-server.com/m/p/y9zpu4uq
The audio cast can also be accessed from the investor section of Zealand’s website (www.zealandpharma.com) and participants are advised to register approximately 10 minutes before the call starts. An on-demand version of the audio cast will also be available on the website following the call.
For further information, please contact:
David Solomon, President and Chief Executive Officer
Tel: +45 22 20 63 00
Hanne Leth Hillman, Vice President,
Head of Investor Relations & Corporate Communications
Tel: +45 50 60 36 89, email: hlh@zealandpharma.com
About Zealand
Zealand Pharma A/S (“Zealand”) (NASDAQ OMX Copenhagen: ZEAL) is a biotechnology company based in Copenhagen, Denmark. Zealand has leading expertise in the discovery, design and development of novel peptide medicines and a mature portfolio of therapeutic products, which are all based on internal inventions. The company’s focus lies in the field of cardio-metabolic diseases, diabetes and obesity in particular, and its lead product is lixisenatide, a once-daily prandial GLP-1 agonist for the treatment of Type 2 diabetes, marketed as Lyxumia® under a license agreement with Sanofi. Lyxumia® is approved in several countries globally, including Europe and Japan. In the US, submission of an NDA is expected in 2015, after completion of a cardiovascular outcome study, ELIXA. A once-daily single injection combination of Lyxumia® and Lantus® (LixiLan) is in Phase III development by Sanofi with planned first regulatory filing as early as at the end of 2015.
Zealand has a partnering strategy for the development and commercialization of its products and in addition to the license agreement with Sanofi in Type 2 diabetes, the company has two collaborations with Boehringer Ingelheim in diabetes/obesity and cardio-metabolic diseases, one with Lilly in diabetes and obesity, one with Helsinn Healthcare in chemotherapy induced diarrhea and a license agreement with AbbVie in acute kidney injury.
For further information: www.zealandpharma.com
Follow us on Twitter @ZealandPharma
Key figures
The Board of Directors and Executive Management have approved this interim report containing condensed financial information for the first six months of 2014 ending 30 June 2014. The report is prepared in accordance with IAS 34 as endorsed by the EU and the additional Danish disclosure requirements for listed companies. The accounting principles are unchanged in the six months of 2014 and reference is made to the Annual Report 2013 for a more detailed description of the accounting policies.
DKK thousand | 2014 | 2013 | 2014 | 2013 | 2013 | |
INCOME STATEMENT AND | 1.4 - 30.6 | 1.4 - 30.6 | 1.1 - 30.6 | 1.1 - 30.6 | 1.1 - 31.12 | |
COMPREHENSIVE INCOME | Note | Q2 | Q2 | H1 | H1 | Full year |
Revenue | 4,294 | 1,080 | 89,291 | 1,080 | 6,574 | |
Royalty expenses | -581 | -146 | -12,055 | -146 | -872 | |
Gross profit | 3,713 | 934 | 77,236 | 934 | 5,702 | |
Research and development expenses | -45,115 | -41,509 | -82,041 | -95,767 | -164,467 | |
Administrative expenses | -6,841 | -8,965 | -14,830 | -16,018 | -34,155 | |
Other operating income | 131 | 2,227 | 131 | 5,622 | 7,302 | |
Operating result | -48,112 | -47,313 | -19,504 | -105,229 | -185,618 | |
Net financial items | 371 | 327 | 613 | 916 | 1,942 | |
Net result for the period (after tax) | -47,741 | -46,986 | -18,891 | -104,313 | -183,676 | |
Comprehensive income for the period | -47,741 | -46,986 | -18,891 | -104,313 | -183,676 | |
Earnings per share - basic (DKK) | -2.11 | -2.08 | -0.83 | -4.61 | -8.10 | |
Earnings per share - diluted (DKK) | -2.10 | -2.08 | -0.83 | -4.61 | -8.10 | |
2014 | 2013 | 2013 | ||||
STATEMENT OF FINANCIAL POSITION | 30 June | 30 June | 31 Dec | |||
Cash and cash equivalents | 297,624 | 325,558 | 286,178 | |||
Securities | 0 | 78,022 | 24,383 | |||
Total assets | 333,097 | 432,716 | 346,913 | |||
Share capital ('000 shares) | 23,193 | 23,193 | 23,193 | |||
Shareholder's equity | 299,355 | 396,028 | 316,141 | |||
Equity / assets ratio | 0.90 | 0.92 | 0.91 | |||
2014 | 2013 | 2014 | 2013 | 2013 | ||
1.4 - 30.6 | 1.4 - 30.6 | 1.1 - 30.6 | 1.1 - 30.6 | 1.1 - 31.12 | ||
CASH FLOW | Q2 | Q2 | H1 | H1 | Full year | |
Depreciation | 1,432 | 1,585 | 2,952 | 3,071 | 5,911 | |
Change in working capital | -7,303 | 7,828 | 2,259 | 8,851 | -3,643 | |
Purchase of property, plant and equipment | -353 | -970 | -2,036 | -1,568 | -4,569 | |
Free cash flow | 1 | -51,986 | -37,542 | -12,862 | -81,848 | -174,187 |
2014 | 2013 | 2013 | ||||
OTHER | 30 June | 30 June | 31 Dec | |||
Share price (DKK) | 70.00 | 69.00 | 59.00 | |||
Market capitalization (MDKK) | 1,623,510 | 1,600,317 | 1,368,387 | |||
Equity per share (DKK) | 2 | 13.23 | 17.46 | 13.97 | ||
Avg. number of employees (full-time equivalents) | 105 | 108 | 111 | |||
Compounds in clinical development (end period) | 6 | 6 | 6 | |||
Products on the marked | 1 | 1 | 1 | |||
Notes: | ||||||
(1) Free cash flow is calculated as cash flow from operating activities less purchase of property, plant and equipment | ||||||
(2) Equity per share is calculated as shareholders equity divided by total number of shares less treasury shares |
Financial Review for the first six months of 2014
(Comparative figures for the same period 2013 are shown in brackets)
Income statement
The net result for the first six months (“H1”) of 2014 was a loss of DKK 18.9 million compared to a loss of DKK 104.3 million for the same period of 2013. The increase in net result is a consequence mainly of a milestone payment received by Zealand in Q1 2014 under the license agreements with Sanofi, while no milestone payments were received in H1 2013, and higher royalty income from the sales of Lyxumia® during H1 2014 period.
Net operating expenses were also lower in H1 2014 compared to the same period of 2013.
Revenue
In January, Sanofi commenced the LixiLan Phase III clinical development program for the fixed-ratio single injection combination of Lyxumia® with Lantus®, which triggered a milestone payment to Zealand of DKK 81.2 million (USD 15 million). In addition Zealand royalty revenue on Sanofi’s sales of Lyxumia® amounted to DKK 8.1 (1.1) million H1 2014.
Royalty expenses
Royalty expenses for H1 2014 were DKK 12.1 million (0.1). Royalty expenses are payments by Zealand to third parties based on license payments received for Lyxumia®.
Research and development expenses
Research and development expenses for H1 2014 amounted to DKK 82.0 million (95.8) which is in accordance with the company’s full year guidance. The decrease of DKK 13.8 million compared to the same period in 2013 is due to non-recurring costs related to warrant programs and other non-recurring costs in 2013. Excluding non-recurrent items, research and development expenses are at the same level as in the same period last year.
Administrative expenses
Administrative expenses for H1 2014 amounted to DKK 14.8 million (16.0). The decrease compared to last year related to non-recurring costs relating to warrant programs in 2013.
Other operating income
Other operating income for H1 2014 amounted to DKK 0.1 million (5.6). Other operating income has mainly consisted of funding of development costs for ZP2929 and research costs under the glucagon/GLP-1 collaboration with Boehringer Ingelheim. Following a change in the development program under the collaboration, announced in February 2014, ZP2929 is now in development by Zealand outside the collaboration, and therefore limited operating income was registered for the period.
Operating result
The operating result for H1 2014 was DKK -19.5 million (-105.2).
Net financial items
Net financial items consist of interest income, banking fees and exchange rate adjustments. Net financial items for H1 2014 amounted to DKK 0.6 million (0.9).
Result from ordinary activities before tax
Result from ordinary activities before tax in H1 2014 was DKK -18.9 million (-104.3).
Tax on ordinary activities
Since the result from ordinary activities before tax was negative, no tax has been recorded for the period.
No deferred tax asset has been recognized in the statement of financial position due to uncertainty as to whether tax losses can be utilized.
Net result
Net result for H1 2014 amounted to DKK -18.9 million (-104.3).
Equity
Equity stood at DKK 299.4 million (396.0) at the end of the period, corresponding to an equity ratio of 90 % (92).
Capital expenditure
Investments in new laboratory equipment for the period amounted to DKK 2.0 million (1.6).
Cash flow
Cash flow from operating activities amounted to DKK -10.8 million (-80.3), and cash flow from investing activities was DKK 22.6 million (46.7) of which DKK 24.4 million (48.3) relates to net sales of securities. The total cash flow for H1 2014 amounted to DKK 11.4 million (-33.6).
Cash and cash equivalents
As of 30 June 2014, Zealand had cash and cash equivalents including securities of DKK 297.6 million (403.6).
Key financial developments in Q2 2014
Revenue in the second quarter amounted to DKK 4.3 million (1.1) and relates to royalty income to Zealand from Sanofi’s commercial sales of Lyxumia®.
Total operating expenses amounted to DKK 52.0 million (50.5).
Net result for the second quarter amounted to DKK -47.7 million (-47.0).
Financial outlook for 2014
For 2014, Zealand expects revenue from milestone payments of DKK 133 / EUR 18 million. This include DKK 81 /EUR 11 million received from Sanofi in January, DKK 37 /EUR 5 million from Boehringer Ingelheim in the third quarter and a time-based milestone from Helsinn of DKK 15 /EUR 2 million payable in the fourth quarter.
Further, the company receives revenue in the form of Lyxumia® sales royalties, which amounted to DKK 8.1 / EUR 1.1 million for the first half of the year. No guidance can be provided for the level of royalty revenues for the full year as Sanofi has given no guidance on sales.
Net operating expenses in 2014 are expected at a range of DKK 195-205 / EUR 25-28 million.
Risk factors
This interim report contains forward-looking statements, including forecasts of future expenses as well as expected business related events. Such statements are subject to risks and uncertainties as various factors, some of which are beyond the control of Zealand, may cause actual results and performance to differ materially from the forecasts made in this interim report. Without being exhaustive, such factors include e.g. general economic and business conditions, including legal issues, scientific and clinical results, fluctuations in currencies etc. A more extensive description of risk factors can be found in the 2013 Annual Report under the section Risk management and internal control.
Management’s Statements on the Interim Report
The Board of Directors and the Executive Management have today considered and adopted the interim report of Zealand Pharma A/S for the period 1 January – 30 June 2014. The interim report has not been audited or reviewed by the company’s auditor.
The report is prepared in accordance with IAS 34 as endorsed by the EU and the additional Danish disclosure requirements for listed companies. The accounting principles are unchanged in the first six months of 2014 and reference is made to the Annual Report 2013 for a more detailed description of the accounting policies.
In our opinion, the interim report gives a true and fair view of the company’s assets, equity and liabilities and financial position at 30 June 2014 and of the results of the company’s operations and cash flows for the period 1 January – 30 June 2014.
Moreover, in our opinion, the Management’s Review gives a true and fair view of the development in the company’s operations and financial conditions, of the net result for the period and the financial position while also describing the most significant risks and uncertainty factors that may affect the company.
Copenhagen, 21 August 2014
Executive Management
David H. Solomon Mats Blom
President and CEO Senior Vice President and CFO
Board of Directors
Daniël J. Ellens Jørgen Lindegaard Peter Benson
Chairman Vice chairman
Alain Munoz Florian Reinaud Michael Owen
Christian Thorkildsen Helle Størum Jens Peter Stenvang
2014 | 2013 | 2014 | 2013 | 2013 | |
INCOME STATEMENT (DKK '000) | Q2 | Q2 | H1 | H1 | Full year |
Revenue | 4,294 | 1,080 | 89,291 | 1,080 | 6,574 |
Royalty expenses | -581 | -146 | -12,055 | -146 | -872 |
Gross profit | 3,713 | 934 | 77,236 | 934 | 5,702 |
Research and development expenses | -45,115 | -41,509 | -82,041 | -95,767 | -164,467 |
Administrative expenses | -6,841 | -8,965 | -14,830 | -16,018 | -34,155 |
Other operating income | 131 | 2,227 | 131 | 5,622 | 7,302 |
Operating result | -48,112 | -47,313 | -19,504 | -105,229 | -185,618 |
Financial income | 383 | 557 | 638 | 1,611 | 3,185 |
Financial expenses | -12 | -230 | -25 | -695 | -1,243 |
Result from ordinary activities before tax | -47,741 | -46,986 | -18,891 | -104,313 | -183,676 |
Tax on ordinary activities | 0 | 0 | 0 | 0 | 0 |
Net result for the period | -47,741 | -46,986 | -18,891 | -104,313 | -183,676 |
Comprehensive income for the period | -47,741 | -46,986 | -18,891 | -104,313 | -183,676 |
Earnings per share - basic (DKK) | -2.11 | -2.08 | -0.83 | -4.61 | -8.10 |
Earnings per share - diluted (DKK) | -2.10 | -2.08 | -0.83 | -4.61 | -8.10 |
2014 | 2013 | 2013 | |||
STATEMENT OF FINANCIAL POSITION (DKK '000) | 30 June | 30 June | 31 Dec | ||
ASSETS | |||||
Plant and machinery | 17,424 | 17,563 | 16,014 | ||
Other fixtures and fittings, tools and equipment | 341 | 542 | 409 | ||
Leasehold improvements | 1,381 | 1,796 | 1,459 | ||
Fixed assets under construction | 0 | 0 | 2,180 | ||
Deposits | 2,645 | 2,553 | 2,570 | ||
Non current assets total | 21,791 | 22,454 | 22,632 | ||
Trade receivables | 11 | 13 | 11 | ||
Prepaid expenses | 12,623 | 5,450 | 3,642 | ||
Other receivables | 1,048 | 1,219 | 10,067 | ||
Securities | 0 | 78,022 | 24,383 | ||
Cash and cash equivalents | 297,624 | 325,558 | 286,178 | ||
Current assets total | 311,306 | 410,262 | 324,281 | ||
Total assets | 333,097 | 432,716 | 346,913 | ||
LIABILITIES AND EQUITY | |||||
Share capital | 23,193 | 23,193 | 23,193 | ||
Retained earnings | 276,162 | 372,835 | 292,948 | ||
Equity total | 299,355 | 396,028 | 316,141 | ||
Trade payables | 9,733 | 16,317 | 13,376 | ||
Prepayment from customers | 2,672 | 2,704 | 2,329 | ||
Other liabilities | 21,337 | 17,667 | 15,067 | ||
Current liabilities | 33,742 | 36,688 | 30,772 | ||
Total liabilities | 33,742 | 36,688 | 30,772 | ||
Total equity and liability | 333,097 | 432,716 | 346,913 |
2014 | 2013 | 2013 | |
STATEMENT OF CASH FLOWS (DKK '000) | H1 | H1 | Full Year |
Net result for the period | -18,891 | -104,313 | -183,676 |
Adjustments | 4,696 | 11,406 | 12,912 |
Change in working capital | 2,259 | 8,851 | -3,643 |
Cash flow from operating activities before financing items | -11,936 | -84,056 | -174,407 |
Financial income received | 1,135 | 3,747 | 4,870 |
Financial expenses paid | -25 | 29 | -81 |
Cash flow from operating activities | -10,826 | -80,280 | -169,618 |
Change in deposit | -75 | 0 | -17 |
Purchase of property, plant and equipment | -2,036 | -1,568 | -4,569 |
Purchase of securities | 0 | -43,247 | -47,356 |
Disposal of securities | 24,383 | 91,515 | 148,750 |
Cash flow from investing activities | 22,272 | 46,700 | 96,808 |
Capital increase | 0 | 0 | 0 |
Repurchase of own shares | 0 | 0 | 0 |
Cash flow from financing activities | 0 | 0 | 0 |
Decrease / increase in cash and cash equivalents | 11,446 | -33,580 | -72,810 |
Cash and cash equivalents at beginning of period | 286,178 | 358,922 | 358,847 |
Exchange rate adjustments | 0 | 216 | 141 |
Cash and cash equivalents at end of period | 297,624 | 325,558 | 286,178 |
Share | Retained | ||
STATEMENT OF CHANGES IN EQUITY (DKK '000) | capital | earnings | Total |
Equity at 1 January 2014 | 23,193 | 292,948 | 316,141 |
Warrants compensation expenses | 0 | 2,105 | 2,105 |
Comprehensive income for the period | 0 | -18,891 | -18,891 |
Equity at 30 June 2014 | 23,193 | 276,162 | 299,355 |
Equity at 1 January 2013 | 23,193 | 467,822 | 491,015 |
Warrants compensation expenses | 0 | 9,326 | 9,326 |
Comprehensive income for the period | 0 | -104,313 | -104,313 |
Equity at 30 June 2013 | 23,193 | 372,835 | 396,028 |
Changes in share capital | |||
Share capital at 31 December 2006 | 17,682 | ||
Capital increase at 23 November 2010 | 4,337 | ||
Capital increase at 9 December 2010 | 852 | ||
Capital increase at 12 December 2011 | 322 | ||
Share capital at 31 December 2013 | 23,193 | ||
Share capital at 30 June 2014 | 23,193 |