Focused on
Growing our Most
Valuable Asset
Zealand Pharma
Annual Report
2021
Company reg. no. 20045078
Today
Annual General
Meeting 2021
#WithZeal
Contents
CEO Letter
Read more on page 5
Other supplementary
reports 2021
Corporate Social Responsibility Report
Remuneration Report
Corporate Governance Report
See our pipeline
Read more on page 19
Overview
Zealand Pharma in short 4
Letter from the CEO and the Chairman 5
2021 Achievements 8
Consolidated key figures 9
2022 Outlook and Objectives 10
Zealand Pharma’s USlaunch
Zealand Pharma’s first independent launch 12
Five in 25 13
Zealand Pharma’s R&D platform and pipeline
Peptide platform 15
Zealand Pharma pipeline 19
Severe Hypoglycemia in diabetes/Zegalouge 20
Congenital Hyperinsulinism (CHI) 21
Type 1 diabetes 22
Obesity / Type 2 diabetes 23
Short Bowel Syndrome (SBS) 24
Corporate matters
Corporate Matters 26
Corporate Social Responsibility 29
Our People and Culture 31
Risk management and internal control 33
Financial review 36
Shareholder information 39
Board of Directors 41
Corporate Management 44
Financial statementsManagement review
Follow us
Consolidated financial statements
Income statement 48
Statement of comprehensive income 48
Statement of financial position 49
Statement of cash flows 50
Statement of changes in equity 50
Business overview 51
Notes 52
Financial statements of the parent company
Income statement 96
Statement of comprehensive income 96
Statement of financial position 97
Statement of cash flows 98
Statement of changes in equity 98
Notes 99
Alternative performance measures
for the group (non-audited) 113
Reports
Statement of the Board of Directors and
Executive Management 114
Independent auditor’s report 115
Other information
Sources 121
Company information 121
2Zealand Pharma ∞ Annual Report 2021
Contents
Zealand Pharma
in short
We work to pursue our mission
of transforming patients’ lives
through peptide innovation and
novel treatment solutions.
Find out more about Zealand at
zealandpharma.com/about-us
Our ambition
is to be a leading provider of
innovative peptide therapeutics
and novel treatment solutions to
address the unmet medical needs
of patients. We have a unique
peptide research platform that
we leverage to discover, develop
and commercialize innovative
treatments focusing on metabolic
and gastrointestinal diseases,
including rare disease areas.
Our goal
is to make all our pipeline
candidates available. In addition
to the products that we will market
for ourselves in the US, we have
and will continue to enter into
strategic partnerships, where
appropriate, with larger biotech
and pharmaceutical companies to
licence non-clinical and clinical
assets for further development and
eventual sale by them.
Our strategy
is to launch five products by 2025 as part of
our “5 by 25” plan. Two of these, the V-Go
®
insulin delivery device and the Zegalogue
®
(dasiglucagon) injection for the treatment of
severe hypoglycemia in people with diabetes
aged 6 years an above and these products are on
the market in the US through our US subsidiary.
Founded
in 1998 and headquartered in
Copenhagen, we are a global
company with locations in Boston
and Marlborough, MA.
Our deep knowledge
and expertise with peptides has
enabled us to develop a broad
pipeline of both clinical and pre-
clinical programs.
5 by 25
1998
4Zealand Pharma ∞ Annual Report 2021
ZP in short
Letter from
the CEO and
theChairman
Once again, we are pleased to report remarkable
business achievements from yet another
challenging year. This is a tribute to all our
employees who have had to adapt to new ways
of thinking to overcome the continuing effects
of the COVID-19 pandemic and continue our
mission to help our patients.
Our peptide design strength was further validated when
we received our first authorization for Zegalouge (dasi-
glucagon) injection for the treatment of severe hypo-
glycemia in people with diabetes.¹ This was a significant
milestone in the company’s history. We have decided to
enter the market with Zeaglouge in the US with our own
sales force and aimed to ensure the widest possible access
to patients at the end of 2021. We are making progress on
Emmanuel Dulac
President and
Chief Executive
Officer
¹ ZEGALOGUE (dasiglucagon) injection is a prescription medicine authorized by the FDA for sale in the US market
only and is used to treat very low blood sugar (severe hypoglycemia) in people with diabetes aged 6 years and
older.
Martin Nicklasson
Chairman of
theBoard of Directors
5Zealand Pharma ∞ Annual Report 2021
Letter from the chairman Letter from the CEO
this ambitious goal. This achievement cements our tran-
sition into a fully integrated biotech company which we
demonstrated by launching Zegalogue. We remain confi-
dent that this product will establish itself in the US market
and, alongside V-Go, contribute to fulfilling our aim to put
5 products on the market by 2025. This has been only one
of our many accomplishments this year.
Clinical Progress
Progress of our late-stage pipeline is a key part of the fu-
ture of Zealand. These programs are rooted in our exper-
tise with peptide design and will contribute to our future
growth. Zealand has met the ambition it set for itself for
2021 to advance the clinical assets and ensure that we are
in the best possible position to provide them to patients.
We were pleased to be able to close the recruitment into
our Phase 3 trial for glepaglutide, which is being inves-
tigated for the treatment of Short Bowel Disease (SBS).
We now have enough patients for a pivotal readout in the
third quarter of 2022. Our aim is to apply for authorization
in the US as quickly as possible in the event of a successful
read out. The acceleration in patient recruitment allows
us to mitigate future delays caused by the pandemic. We
have great hopes for this product candidate to provide a
real medical and quality of life advantage to patients with
this serious rare disease. Our other clinical development
programs have also made progress with dasiglucagon in
the treatment of congenital hyperinsulinism (CHI) nearing
its conclusion and our dapiglutide program is now ready
to advance to Phase 2 enabling us to place Zealand on
a firm footing for its next generation of investigational
products.
This means that in the coming year, we have two major
pivotal program read-outs: dasiglucagon in CHI and glep-
aglutide in SBS. Due to the relatively small patient popu-
lation size, both conditions are classified as rare diseases
and we are very excited to demonstrate their potential in
the clinical trials. We are extremely grateful to the patients,
their caregivers, the clinicians and our employees who
continued to advance these trials despite all the restric-
tions and complexities imposed by COVID-19 in 2020 and
2021. We look forward to the results for CHI in late quarter
2 and SBS in late third quarter 2022.
Enrichment of our early pipeline
We have successfully progressed amylin into a single
ascending dose study in Phase 1. Amylin, together with
our GLP-1/Glu dual agonists and GIP, form part of our
developing strength in the potential treatment of obe-
sity. We are pleased with the progress of these assets
as they demonstrate Zealand’s ability to explore novel
peptide-based therapies in additional disease areas. We
have also utilized Zealand’s strengths in peptide design
and modification to provide additional treatment options
in inflammatory diseases. We are working on ion channel
blockers and an Alpha-4-Beta-7 program both having
made progress in their development. These are achieve-
ments on top of our collaboration with Alexion (now part
of AstraZeneca) with the complement system (C3) asset.
Glepaglutide in SBS
Our aim is to apply for
authorization in the US as
quickly as possible in the
event of a successful read out.
We have great hopes for this
product candidate in providing
a real medical and quality of life
advantages to sufferers of this
serious rare disease.
6Zealand Pharma ∞ Annual Report 2021
Focus on finances
The recent pressure and volatility in the financial markets
have placed biotech companies in a highly challenging
position when attempting to raise capital. The closing of
the deal with Oberland Capital LLC, in late 2021, provided
financial strength that allows us to execute on how to ad-
vance the company later in its future transition to a mid-
cap biotech. The deal with Oberland provided access to
a total of $200m at staged intervals, tied to performance
and is regarded as key at this stage of our growth journey.
In addition to this we will focus on additional areas of
finance and financial management to ensure that the
company can meet its financial requirements over the
next year.
There will be a continued focus by the Zealand manage-
ment on the company’s financial position to ensure the
future growth of the company.
We have come far
Once again Zealand continues to show its flexibility, resil-
ience, and strength in pursuing its future. It has journeyed
from its origins as a research organization to one that now
has a global footprint, multiple clinical trials running with
unique breakthrough molecules and fantastic employees.
We are at a point where we may have a clinical Phase 3
data read out from our key product candidate, glepaglu-
tide, and a positive read out is expected to have the po-
tential of transforming the company once again and drive
shareholder value.
On behalf of the Board, the Management team and all our
colleagues, we extend our thanks to our shareholders,
patients and employees for taking part in our development
activities and to our other stakeholders for their continued
trust in Zealand Pharma.
Emmanuel Dulac
President and Chief Executive Officer
Martin Nicklasson
Chairman of the Board of Directors
Thank you
On behalf of the Board, the
Management team and all
our colleagues, we extend our
thanks to our shareholders,
all patients taking part in
our development activities
and other stakeholders for
their continued trust in
ZealandPharma.
7Zealand Pharma ∞ Annual Report 2021
2021
Achievements
In 2021, we took a
transformational step by
launching our own product
Zegalogue in the US.
2021 Achievement
Advanced our presence in US by expanding
Zealand Pharma U.S.
• Approval of Zegalogue by the FDA on 22 March 2021
• Launch of Zeaglogue in the US market and ensuring patient access in approximately 65% of
commercial lives and approximately 55% of Medicaid lives
Executed on the clinical pipeline • Zegalogue: Approved by Food Drug Administration (“FDA”) in March 2021 and launched in
US
• Glepaglutide for short bowel syndrome: Patient enrolment for Phase 3 completed.
• Progress on dasiglucagon for congenital hyperinsulinism
• Dasiglucagon for bi-hormonal artificial pancreas pump: Patient screening for Phase 3 pro-
gram initiated
• Dapiglutide for short bowel syndrome: Phase 1b trial completed
• Amylin for Obesity: Phase 1 initiated
Advanced our early pipeline • Advanced four programs in pre-clinical development towards Phase 1 initiation (Com-
plement C3 inhibitor¹, ZP 10000 α4β7 integrin inhibitor; ZP6590 GIP (glucose dependent
insulin peptide); ZP 9830 Kv1.3 ion channel blocker).
Expanded our strong financial and
organizational position
• Secured approximately DKK 749 million in private placement completed in January 2021
• Completed $200M financing agreement in late 2021 with Oberland Capital
We have advanced our pipeline programs, most promi-
nently enrolling our last patient in our EASE-SBS 1 Phase
3 Trial assessing glepaglutide in Patients with Short Bowel
Syndrome. That should provide a readout in 2022. During
the year we successfully continued to keep our operations
running with a highly engaged work force through the
COVID-19 health crisis.
Find out more about Zealand at
zealandpharma.com/about-us
8Zealand Pharma ∞ Annual Report 2021
2020 Achievements
Consolidated key figures
DKK ’000 2021 2020 2019 2018 2017
Income statement and
comprehensive income
Revenue 292,567 353,314 41,333 37,977 136,322
Gross margin 173,753 262,749 40,918 34,621 122,159
Research and development expenses -588,453 -604,081 -561,423 -438,219 -323,949
Sales and Marketing expenses -375,269 -285,256 0 0 0
Administrative expenses -260,987 -202,771 -67,881 -43,543 -47,343
Net operating expenses -1,224,709 -1,092,108 -629,304 -481,762 -371,292
Operating result -1,052,370 -792,361 -587,942 652,385 -248,526
Net financial items 25,430 -47,292 11,265 -27,334 -31,387
Result before tax -1,026,940 -839,653 -576,677 625,051 -279,913
Income tax¹ 8,791 -7,076 5,136 -43,773 5,500
Net result for the period -1,018,149 -846,729 -571,541 581,278 -274,413
Comprehensive result for the period -1,012,972 -837,752 -571,541 581,278 -274,413
Earnings/loss per share
– basic/diluted (DKK) -23,75 -22.07 -16.91 18.94 -9.85
Statement of financial position
Cash and cash equivalents 1,129,103 960,221 1,081,060 860,635 588,7180
Marketable securities 299,042 297,345 299,448 298,611 75,111
Cash, cash equivalents
and Marketable securities 1,428,145 1,257,566 1,380,508 1,159,246 663,829
Total assets 2,067,629 1,761,949 1,599,514 1,229,797 721,285
Share capital ('000 shares) 43,634 39,800 36,055 30,787 30,751
Equity 927,803 1,229,311 1,242,673 1,116,281 514,669
Equity ratio² 0.45 0.70 0.78 0.91 0.71
DKK ’000 2021 2020 2019 2018 2017
Cash flow
Cash (used in)/provided by
operating activities -1,211,971 -688,716 -409,455 -461,420 -278,746
Cash (used in)/provided by
investing activities -18,121 -196,807 -51,666 882,925 221,351
Cash (used in)/provided by
financing activities 1,332,751 760,941 674,480 -155,449 337,930
Purchase of property, plant
and equipment -22,133 -25,044 -21,036 -4,038 -7,226
Free cash flow³ -1,234,104 -713,760 -430,491 -463,418 -285,972
Other
Share price (DKK) 145.10 220.60 235.40 82.40 85.00
Market capitalization (DKKm)⁴ 6,220 8,464 8,487 2,537 2,614
Equity per share (DKK)⁵ 21.26 32.04 34.52 36.33 16.77
Average number of employees 346 297 173 146 128
Number of full time employees
at the end of the year 355 329 179 149 133
¹ Zealand expects to be eligible to receive up to DKK 5.5 million in Danish corporate tax benefit related to R&D expenses incurred for 2021,
of which DKK 5.5 million has been recognized for the period ended December 31, 2021.
² Equity ratio is calculated as equity at the balance sheet date divided by total assets at the balance sheet date.
³ Free cash flow is calculated as the sum of cash flows from operating activities and purchase of property, plant and equipment.
⁴ Market capitalization is calculated as weighted outstanding shares at the balance sheet date times the share price at the balance sheet
date.
⁵ Equity per share is calculated as shareholders' equity divided by weighted total number of shares less weighted treasury shares.
9Zealand Pharma ∞ Annual Report 2021
Consolidated key figures
2022 Outlook
and Objectives
We expect 2022 to be a year
where we build on our success
and continue to develop as a
biopharmaceutical company. Our
first products in the US provide
us a stepping stone to the next
chapter in our development.
Financial guidance
In 2022, Zealand Pharma expects net product revenue
from the sales of its commercial products of DKK 235.0
million +/-10% compared to 2021 of DKK 184.0 million.
In 2022, Zealand Pharma expects revenue from existing
license agreements. However, since such revenue is un-
certain in terms of size and timing, Zealand Pharma does
not intend to provide guidance on such revenue.
Net operating expenses in 2022 are expected to be DKK
1,200.0 million +/-10% compared to 2021 of DKK 1,224.7
million.
2022 Objectives
Execute on our commercial targets • Deliver on net revenue targets for V-Go and Zegalogue
Deliver on the late-stage clinical pipeline • Dasiglucagon for congenital hyperinsulinism: Complete second Phase 3 study and prepare
NDA for execution in 2022
• Dasiglucagon for bi-hormonal artificial pancreas pump: Advance Phase 3 study
• Glepaglutide for short bowel syndrome: Complete Phase 3 study and prepare the NDA
Enrich early pipeline and develop
our next generation platform
• Amylin for Obesity: Advance Phase 1 study
• Develop our early pipeline and next generation peptide platform
Maintain a strong financial position • Ensure disciplined financial management and productive investments
• Address company's finacial position by ensuring access to additional sources of finance
Deliver on our environmental, social, and
governance responsibility
• Initiate carbon footprint reduction initiatives
10Zealand Pharma ∞ Annual Report 2021
2021 Outlook
Zealand
Pharma’s first
independent
launch
With our established US
commercial presence and
introduction of Zegalogue to
supplement our sales of V-Go to
patients, Zegalogue became the
second of our five products to be
launched by 2025 in the US.
US organization
In line with our strategy of independently commercializ-
ing our medicines, Zealand Pharma has established and
then further optimized our own fully-fledged commercial
operation in the US, preparing us for our future launches
expected by 2025.
Our purchase of the assets of Valeritas Inc. in 2020 pro-
vided us with the infrastructure to sell our products in the
US market. In 2021, we have utilized the benefit of that
acquisition and further developed our commercial pres-
ence as a fully integrated biotech company with an es-
tablished footprint in the US diabetes market by launching
Zegalogue. This focus on developing our US commercial
platform was a pivotal element in our strategy and ena-
bled us to make progress with the launch of Zegalogue in
the US. This development will allow us to independently
launch and market the future medicines we develop in the
US market.
12Zealand Pharma ∞ Annual Report 2021
Zealand Pharma’s first independent launch
Five in 25
Our broad pipeline provides the
potential to build a diversified
product portfolio with five
marketed products by 2025.
The launch of Zegalogue in the US is just the first of a
number of launches of new medicines expected from
Zealand Pharma in the coming years. Our goal is to have
five commercialized products in the US by 2025.
Zegalogue is the first product in our franchise built on
the dasiglucagon molecule. The next potential launch
is a continuous infusion for the treatment of Congenital
Hyperinsulinism (CHI), a rare disease with often devas-
tating consequences for patients and their families. We
expect our second Phase 3 trial to readout in the first half
of 2022.
We are also planning to advance our Phase 3 trial with
dasiglucagon used in a fully automated bi-hormonal
pump, in collaboration with Beta Bionics. This "bionic"
pancreas has been shown in Phase 2 studies to achieve
low and stable levels of blood glucose levels, while reduc-
ing hypoglycaemia. If successful, in its Phase 3 trial this
opportunity constitutes another possibility to extend the
use of dasiglucagon in the coming years.
In the gastrointestinal field we have the potential to launch
a new treatment for patients with Short Bowel Syndrome
(SBS). Glepaglutide, a long-acting GLP-2 analog, is being
developed in an auto-injector with potential for weekly
administration. We have completed recruitment of pa-
tients into Phase 3, and we remain on track for trial results
to be obtained in the third quarter of 2022.
We are excited about our
first independent launch
of Zegalogue and the
potential of having multiple
new product launches
in the metabolic and
gastrointestinal disease areas
over the next 5 years.
13Zealand Pharma ∞ Annual Report 2021
Five in 25
Zealand Pharma’s
R&D platform
and pipeline
Peptide platform 15
Zealand Pharma pipeline 19
Severe Hypoglycemia in diabetes/Zegalouge 20
Congenital Hyperinsulinism (CHI) 21
Type 1 diabetes 22
Obesity / Type 2 diabetes 23
Short Bowel Syndrome (SBS) 24
14Zealand Pharma ∞ Annual Report 2021
Zealand Pharma’s R&D platform and pipeline
Find out more in our movie on
zealandpharma.com/peptide-platform-video
Peptide
platform
Our peptide platform allows us
to engineer peptide analogs
with enhanced biological
activity, extended duration of
action and increased stability
to provide innovative and
better treatments for a range of
different diseases.
Our platform
Since our founding in 1998, our sole focus has been on
the discovery and development of peptide-based med-
icines to harness the power of native peptides and en-
hancing their effects. We have a unique peptide platform
and design process built around a deep understanding of
peptide chemistry, formulation know-how and intellec-
tual property rights combined with advanced computer
science. This allows us to engineer peptide analogs with
enhanced biological activity, extended duration of action
or increased stability to provide innovative and better
treatments for a range of diseases.
Our peptide platform is validated by the fact that we have
now advanced more than ten novel peptide-analogs into
clinical development, two of which are currently market-
ed¹.
Vital to human health
Peptides are produced by all living organisms and humans
have peptides in every cell and tissue. They can function
as biological messengers (hormones) carrying information
between cells or organs and thereby perform a wide range
of essential functions, e.g., regulating appetite and blood
glucose and stimulating tissue growth. This makes pep-
tides vital to keeping us functioning and healthy.
Native peptides are composed of amino acids in a linear
or cyclic form, have powerful biological functions but are
inherently unstable and short-lived in the bloodstream.
To convert these native peptides into effective peptide
therapeutics requires the instability and thus duration of
action to be changed while maintaining or enhancing the
biological activity. This requires modifications to the amino
acid sequence of the peptide, generally using substitution
with another amino acid.
Nature’s own inventions
We use our unique in-depth understanding of peptide
chemistry and biology to focus the substitution process
on key amino acids to remove the weak points that result
in poor solubility, stability or activity, and thus create
new drug candidates. We have successfully applied this
approach to glucagon, amylin, GLP-1, GLP-2 and GIP.
Enhancing their natural properties or combining their
activities in single peptides present multiple therapeutic
opportunities.
We base our research and development on endogenous
peptides found in humans and peptides from venoms
from various animals. We also manipulate bacteria to pro-
duce peptide libraries. In other words, we make broad use
of nature’s own inventions to improve human health and
quality of life.
15Zealand Pharma ∞ Annual Report 2021
Peptide platform
In line with our strategy to access cutting-edge technol-
ogy, we have a range of research collaborations providing
us with access to novel peptide libraries or new technolo-
gies for peptide stabilization and delivery.
Because of their unique features, specificity, physical
size and attractive risk profile, peptide-based medicines
may allow us to in the future treat diseases that we can’t
treat today. Furthermore, they may enable us to treat
more patients, initiate treatment earlier and ensure better
treatment compliance, all of which could improve health
outcomes.
16Zealand Pharma ∞ Annual Report 2021
Peptide Platform
New technologies and scientific
advancements within peptides enable us to
continuously optimize our peptide platform.
Our Research and Development capabilities
and current pre-clinical programs provide
opportunities to grow our scientific and
medical presence by expanding into
indications like obesity and inflammatory
diseases.
Our pre-clinical pipeline contains programs
focused on analogs of endogenous peptide
hormones, as well as programs with
innovative peptide candidates acting on
components of the complement cascade,
ion channels and other target classes.
We are also exploring ways to deliver
these innovative products to patients
using oral delivery mechanisms that may
afford patients a more convenient way to
administer the product.
Long-acting amylinanalog
Amylin is derived from β-cells in the pancreas and is
co-secreted with insulin. It both regulates blood glucose
by delaying gastric emptying after meal ingestion and
directly modulates satiety signals in the brain. Preclini-
cal studies also suggest that amylin, like glucagon, can
increase energy expenditure, contributing to its weight
loss effect. Our lead molecule, ZP8396, is a long-acting
analog of amylin designed to allow for co-formulation
with other anti-obesity treatments.
It has shown significant weight loss in pre-clinical models
of obesity.
A Phase 1 clinical trial was initiated in November 2021.
Long-acting GIP analogs
Glucose-dependent insulinotropic peptide (GIP) is synthe-
sized by K cells, which are found in the proximal intestine.
GIP receptors are expressed in many organs and tissues
including the central nervous system, enabling GIP to
influence regulation of appetite and satiety, while show-
ing antiemetic effects. Thus, GIP can contribute to the
efficacy of other anti-obesity peptides by both a comple-
mentary effect and by providing an improved therapeutic
window of the other peptide.
Our lead molecule, ZP6590, has shown additive effects
when co-administered with a GLP-1 receptor agonist in
pre-clinical obesity models.
Programs focusing on obesity
The global prevalence of obesity has tripled since the mid-1970s
with 650 million adults and 124 million children and adolescents
suffering from obesity. In the US alone, more than 40% of the
population are considered obese². We aspire to address the obesity
pandemic with peptide molecules with built-in dual-acting
pharmacology or molecules with mono pharmacology that can be
combined or co-formulated with other anti-obesity treatments.
17Zealand Pharma ∞ Annual Report 2021
Peptide Platform
Integrin α4β7 inhibitor
ZP10000, is being developed as an orally deliv-
ered peptide drug to target integrin α4β7, which
is involved in the pathogenesis of inflammatory
bowel disease (IBD). Specific binding to surface
α4β7 on the T cells prevents the interaction with
MAdCAM-1 on the endothelial cells, which plays a
critical role in immune cell recruitment to the in-
testinal tissue. This mode of action has been clini-
cally validated in IBD by vedolizumab, an approved
injection-only α4β7 integrin inhibitor antibody.
ZP10000, is a peptide ligand that selectively binds
to α4β7, and its efficacy has been demonstrated in
vivo in IBD models. ZP10000, has binding prop-
erties on par with marketed antibodies as well as
oral bioavailability as demonstrated in vivo. We are
currently exploring the optimal oral formulation
for this compound while we progress the program
towards clinical testing.
Kv1.3 ion channel blockers
Kv1.3 is a potassium conducting ion channel,
which is selectively upregulated on T effector
memory cells. T effector memory cells play a key
role in autoimmunity and chronic inflammation by
releasing pro-inflammatory cytokines, which drives
tissue damage. The anti-inflammatory effects of
blocking the Kv1.3 ion channel have been demon-
strated in multiple pre-clinical models of autoim-
mune diseases. The specific and selective location
of the Kv1.3 on the effector memory T cells makes
it an attractive pharmaceutical target, as blocking
preserves the protective effects of the rest of the
immune system. ZP9830, is a potent and selective
Kv1.3 blocker with potential to treat a broad range
of T cell driven autoimmune diseases. Currently
we are progressing the molecule into IND enabling
toxicity studies.
Complement C3 inhibitor
The complement system is a part of the innate
immune system, and a central component of the
complement cascade is the C3 protein.
Altered activation of the complement cascade is
implicated in many immune-mediated diseases
and in particular rare diseases such as paroxysmal
nocturnal hemoglobinuria, cold agglutinin disease,
myasthenia gravis and C3 glomerulopathy. There is
currently only one approved drug to treat comple-
ment mediated diseases: an antibody that blocks
the complement C5, the final step in complement
activation. We have selected a candidate molecule
that acts on C3, upstream of C5 and thus offering
potential differentiation and broader utility than the
current therapy. The candidate peptide is potent,
selective, and long-acting and has the potential to
be best-in-class, which we are currently progress-
ing into the next stage of development in collabo-
ration with Alexion (AstraZeneca).
Programs focusing
on chronic inflammatory diseases
Peptide medicines have proven their effectiveness in other therapeutic areas such as type
2 diabetes and obesity and we believe that they represent a great opportunity for new
innovation in the chronic inflammatory diseases area. The programs we are progressing
represent high-profile peptide targets that have shown to be difficult to address with
small molecules and antibodies as well as orally available peptides against disease targets
that have already been clinically proven with injectable antibodies.
18Zealand Pharma ∞ Annual Report 2021
Product Candidate Preclinical Phase 1 Phase 2 Phase 3 Registration
Dasiglucagon Mini-Dose Pen
Dasiglucagon Bihormonal Artificial Pancreas
Dasiglucagon SC Continuous Infusion
Glepaglutide (GLP-2 Analog)
BI 456906
(GLP-1/GLU Dual Agonist)¹
ZP8396 (Amylin Analog)
ZP6590 (GIP Agonist)
Dapiglutide (GLP-1/GLP-2 Dual Agonist)
ZP9830 (Kv1.3 Ion Channel Blocker)
ZP10000 (ɑ4β7 Integrin Inhibitor)
Complement C3 Inhibitor²
Zealand Pharma
Pipeline
Type 1 diabetesRare diseaseObesity
GIP, glucose-dependent insulinotropic polypeptide; GLP, glucagon-like peptide; GLU, glucagon; hypo, hypoglycemia; IBD, inflammatory bowel disease; NASH, non-alcoholic steatohepatitis;
SBS, short bowel syndrome; SC, subcutaneous; T1D, type 1 diabetes; T2D, type 2 diabetes; Undiscl., undisclosed
Inflammation
Type 1 Diabetes
Exercise-Induced Hypoglycemia
Obesity, NASH and T2D
Obesity and T2D
SBS
Obesity
IBD
IBD
Undiscl.
Type 1 Diabetes management
Congenital Hyperinsulinism
Short Bowel Syndrome
19Zealand Pharma ∞ Annual Report 2021
Zealand Pharma Pipeline
Severe
Hypoglycemia
in diabetes/
Zegalogue
Severe hypoglycemia is an
acute, life-threatening condition
resulting from a critical
drop in blood glucose levels.
Unpredictable and among the
most feared complications
of diabetes treatment, severe
hypoglycemia requires another
person for rescue.
The International Hypoglycemia Study Group defines
hypoglycemia as blood sugar levels below the normal
range, generally arising as a consequence of pharma-
cologic treatment. While mild hypoglycaemia usually
resolves with prompt ingestion of carbohydrates, more
significantly reduced glucose levels can lead to severe hy-
poglycemia, in which the affected individual needs other
people to help treat the event. Severe hypoglycemia leads
to impaired cognitive function, loss of consciousness,
and even threatens life. The link between hypoglycaemia
and increased mortality has been documented in several
studies.¹
Zegalogue (dasiglucagon) was approved in March 2021
by the FDA and launched in the USA in June 2021 to treat
severe hypoglycemia in people with diabetes aged 6 years
and older. Zegalogue reverses hypoglycemia, typically
within 10 min, without the need for additional intervention,
and is well tolerated.² The drug is available in a convenient
auto-injector and in a prefilled syringe, both of which can
be refrigerated for up to three years or carried at room
temperature for up to a year.³
20Zealand Pharma ∞ Annual Report 2021
Severe Hypoglycemia in diabetes/Zegalouge
Find out more on
zealandpharma.com
CHI
Congenital hyperinsulinism
(CHI) is a rare disease affecting
mainly newborns and toddlers. It
is caused by a defect in pancreatic
beta-cells, resulting in insulin
overproduction and leading to
persistent and dangerously low
blood sugar levels. CHI develops
in one out of 50,000 (or fewer)
children, which corresponds
to approximately 300 children
diagnosed in the U.S. and Europe
every year.¹
,
²
The most severely affected children need to have their
pancreas surgically removed within a few months of birth
in order to prevent hypoglycemia. This invariably results
in the development of type 1 diabetes, which will follow
them for the rest of their lives.³
Current treatment options are insufficient: less than one-
third of newborns and less than two-thirds of older chil-
dren respond to approved medical therapy. The burden of
disease is significant not just for the affected children but
for their families and caregivers and represents a signifi-
cant unmet medical need.⁴
21Zealand Pharma ∞ Annual Report 2021
CHI
Find out more on
zealandpharma.com
Type 1 diabetes
In spite of newer insulins and
better administration systems, the
vast majority of people with Type
1 diabetes are unable to reach
glycemic goals as defined by the
American Diabetes Association.
While advances have been made in insulin chemistry and
delivery systems to help patients manage their disease,
achieving tight control over blood-glucose levels remains
a daily challenge for those living with Type 1 diabetes. Mi-
crovascular complications are still high due to an inability
to optimize insulin treatment and hypoglycemia remains
an important contributing factor in increased mortality.
It is a well-known fact that Type 1 diabetes is not a single-
hormone disease, and that glucagon secretion is dys-
functional in these patients. We believe that insulin-only
treatment approaches do not mimic physiology and that
therapies should be aimed at restoring physiology through
bi-hormonal supplementation. The aqueous formulation
of dasiglucagon potentially renders it suitable for chron-
ic administration. As such, it is being investigated for the
treatment of patients with Type 1 diabetes, both as part of
a Bi-Hormonal Artificial Pancreas therapy (in collaboration
with BetaBionics) and as a single agent to prevent and
treat exercise-induced hypoglycemia.
22Zealand Pharma ∞ Annual Report 2021
Type 1 diabetes
Find out more on
zealandpharma.com
Obesity /
Type 2 diabetes
Excessive weight and obesity are
among the leading risk factors
for heart disease, ischemic stroke,
liver diseases and Type 2 diabetes
as well as for a number of cancers.
The global prevalence of obesity has tripled since the mid-
1970s with 650 million adults and 124 million children and
adolescents suffering from obesity. In the US alone, more
than 40% of the population are considered obese.¹ This is
a complex metabolic disease modulated by several mo-
lecular pathways; whereas single-peptide therapies have
shown profound weight loss, it is expected that dual or tri-
ple-peptide treatments are needed to achieve weight loss
levels comparable to those seen with bariatric surgery.
Zealand is investigating both an amylin analog and a GIP
analog, with the potential for monotherapy or co-formu-
lation with other anti-obesity peptide agents. Additionally,
and in collaboration with Boehringer-Ingelheim, a GLP-1/
Glucagon dual agonist is being evaluated in obese pa-
tients, as well as in patients with Type 2 diabetes and in
patients with NASH.
23Zealand Pharma ∞ Annual Report 2021
Obesity / Type 2 diabetes
Find out more on
zealandpharma.com
Short Bowel
Syndrome (SBS)
Patients with Short bowel
syndrome (SBS) have undergone
massive intestinal surgery
resulting in significantly reduced
or complete loss of intestinal
function.
Short bowel syndrome (SBS) is a complex disease that
occurs due to the physical loss, most often due to surgical
removal, of half or more of the small intestine. As a result,
individuals with SBS often have a reduced ability to absorb
nutrients such as fats, carbohydrates, vitamins, minerals,
trace elements and fluids, which can lead to malabsorp-
tion and in more severe cases, to the need for parenteral
support (PS) to maintain life. Diarrhoea, malnutrition,
unintended weight loss, and a greatly reduced quality of
life are all present to different degrees in affected individ-
uals. Although life-saving, the provision of PS is associated
with potentially life-threatening complications and poses a
burden to the patients.¹
Despite the lack of a cure, the disorder usually can be
treated effectively in highly specialized, multi-discipli-
nary centers, involving the use of agents that promote
rehabilitation of the of the intestinal lining, such as GLP-2
analogs. Zealand is currently investigating glepaglutide, a
soluble, long-acting GLP-2 analog, in Phase 3 studies for
the treatment of SBS.
24Zealand Pharma ∞ Annual Report 2021
Short Bowel Syndrome (SBS)
Corporate
Matters
¹ The Nomination Committee is a sub-set of the board.
² Formalized of April 2021.
Corporate governance structure
Annual General Meeting
Board of Directors
Corporate Management
Organization
Nomination
Committee¹
Remuneration
Committee
Scientific
Committee²
Audit
Committee
26Zealand Pharma ∞ Annual Report 2021
Corporate matters
Overview of meetings in 2021
Attended Absent
Audit Remuneration Scientific Nomination
Board Committee Committee Committee Committee
Martin Nicklasson
••••••••••
••••••••
•••••
N/A
••••••••••
Kirsten A. Drejer
••••••••••
N/A N/A
•••
••••••••••
Jeffrey Berkowitz
••••••••••
••••••••
N/A N/A
••••••••••
Bernadette Connaughton
••••••••••
••••••••
N/A N/A
••••••••••
Alain Munoz
••••••••••
N/A
•••••
•••
••••••••••
Leonard Kruimer
••••••••••
••••••••
N/A N/A
••••••••••
Michael J Owen
••••••••••
N/A
•••••
•••
••••••••••
Jens Peter Stenvang
••••••••••
N/A N/A N/A N/A
Frederik Barfoed Beck
••••••••••
N/A N/A N/A N/A
Getrud Koefoed Rasmussen
1
••••••••••
N/A N/A N/A N/A
Anneline Nansen
2
••••••••••
N/A N/A N/A N/A
Iben Louise Gjelstrup
••••••••••
N/A N/A N/A N/A
1
Resigned from company and as employee elected board member in September 2021
2
Joined the board as of Gertrud Koefoed Rasmussen’s resignation in September 2021
27Zealand Pharma ∞ Annual Report 2021
The charter of the Audit Committee is available at:
zealandpharma.com/audit-committee/
The charter of the Remuneration Committee, the
remuneration report, the remuneration policy and
the guidelines for incentive pay are available at:
zealandpharma.com/remuneration-committee
The rules of procedure of the Nomination-
Committee are available at:
zealandpharma.com/nomination-committee/
28Zealand Pharma ∞ Annual Report 2021
Corporate Social
Responsibility
As we work toward realizing
our ambition to improve care
for patients and deliver value
for our shareholders, we further
recognize the importance of
protecting the world around
us. We believe in operating as a
responsible company that serves
broader economic, societal, and
environmental interests.
We have incorporated selected UN Sustainable Devel-
opment Goals that are aligned to our business to further
connect our efforts with those of other companies to
address global challenges.
Our CSR policy focuses on areas most relevant to our core
business:
• Environmental sustainable development,
• Diverse work environment,
• Quality in relation to research, development and prod-
uct supply activities,
• Exceptional treatment for patients, and
• Business ethics.
Commitment to Sustainable Development Goals
We are committed to addressing global challenges
through support of the Sustainable Development Goals
established by the United Nations. Six goals that are
relevant to our business were placed into focus last year,
and we continue to identify and implement initiatives and
metrics to evaluate our progress in these areas. Additional
goals may be considered as our company continues to
grow and evolve.
Gender Diversity
For the statutory reporting on corporate
social responsibility, gender distribution
and diversity in management cf. the Danish
Financial Statement Act §99a, §99b and
§107d, please see the Corporate Social
Responsibility Report 2021 at
29Zealand Pharma ∞ Annual Report 2021
Corporate Responsibility
2021
2020
Men
Women
%
64 (64)
36 (36)
Quality in everything we do
Our quality policy describes compliance with rigorous
internationally recognized standards and guidelines at all
stages of research, development and commercial produc-
tion to ensure that we do not place patients or animals at
risk due to inadequate safety, quality or efficacy. We main-
tain oversight of the outsourced GxP activities to ensure
vendor compliance with the requirements of pharmaceu-
tical quality standards as articulated in Good Laboratory
Practice (GLP), Good Manufacturing Practice (GMP), Good
Clinical Practice (GCP), Good Pharmacovigilance Practice
(GVP), Good Distribution Practice (GDP), to the relevant
ISO standards with respect to medical devices and others.
Zealand Pharma
Board of Directors as of
December 31, 2021:
4 women and
7men
giving a female
representation of 36%
(2020: 36%).
Zealand Board of DirectorsFocus on patients
At Zealand, we work to create better lives for patients
through collaborations with advocacy groups and patient
organizations. We aim to demonstrate our commitment
to patients and caregivers by serving their interests with
the aim of consolidating relations and obtaining better
treatment options.
Data Ethics
30Zealand Pharma ∞ Annual Report 2021
42 (42)
58 (58)
2021
2020
Men
Women
%
Our People and
Culture
Our team's well-being, competency
development, and engagement
are key to realizing our ambitious
business goals. We strive to cultivate
a diverse, unique, energizing,
and respectful environment for
all employees, regardless of their
background.
Engagement
We are proud that close to 100% of employees across
all geographies and functional areas believe in the future
of Zealand, according to our 2021 engagement survey
results. Our people are as dedicated and ambitious as ever,
helping to achieve major organizational goals despite the
global COVID-19 pandemic. We aspire to maintain this
level of engagement as we continue our journey.
One Team
We aim to change lives through next generation therapeu-
tics, and our employees are at the center of the solutions.
We pride ourselves on our ability to work together as one
team, and foster a strong company culture founded on
collaboration, innovation, empowerment, and trust.
To support our employees’ well-being, we work sys-
tematically to maintain a safe and healthy work environ-
ment. We have a number of policies and committees in
place to promote physical and psychosocial health. Our
committees include a Works Council, a COVID response
committee and an Occupational Safety and Health Com-
mittee (OSHA Committee), on which both management
and employees are represented and regularly discuss
matters related to our work environment. Employees are
also represented on the company’s Board of Directors
per Danish law.
Zealand total
31Zealand Pharma ∞ Annual Report 2021
Our People and culture
Talent
Zealand strives to be among the very best employers in
our industry as we continue our strategic focus on build-
ing a world-class, fully integrated biopharmaceutical
organization. While building on Zealand’s unique strengths
and culture, Zealand is increasingly diversifying our work-
force to meet tomorrow's demands and keep our innova-
tion power to attract and retain global talent, we refreshed
our company DNA in 2020 and our values are that our
employees are bold, work as one team, can be trusted and
empower our teams. The process of rolling these values
out values across the organization has continued across
2021. Through our employees, we can continue to grow a
company with highly specialized employees committed to
changing lives by evolving our business and our pipeline.
Safe work environment
Zealand works systematically to maintain a safe and
healthy work environment. We maintain numerous pro-
cedures to support our work environment and train all
Zealand employees in standard safety protocols to enable
self-management of their own occupational safety.
32Zealand Pharma ∞ Annual Report 2021
Risk
management
and internal
control
We constantly monitor and
assess the overall risk of doing
business in the pharmaceutical/
biotech industry and the
particular risks associated
with our current activities and
corporate profile.
This section contains a summary of our key risk areas and
how we attempt to address and mitigate such risks. Envi-
ronmental and ethical risks are covered in our corporate
social responsibility reporting, and risks related to finan-
cial reporting are covered in our corporate governance
reporting.
Doing business in the pharmaceutical/biotech industry
involves major financial risks. The development of nov-
el medicines takes several years, costs are high, and the
probability of reaching the market is relatively low due to
developmental and regulatory hurdles.
Our Management is responsible for implementing ade-
quate systems and policies in relation to risk management
and internal control, and for assessing the overall and
specific risks associated with our business and operations.
Furthermore, our Management seeks to ensure that such
risks are managed optimally and in a responsible and effi-
cient manner.
The main risks related to our activities include employees’
and business partners’ violation of our anti-corruption
commitment and potential legal and financial conse-
quences thereof. Zealand’s whistleblower program and
insider information list are two methods for mitigating
such risk. We are developing programs to support ongoing
maintenance of code of business conduct understanding
among employees, as well as a more robust program to
ensure data privacy and protection.
Risks of particular importance to us are scientific and
development risks, commercial risks, intellectual property
risks, clinical trial risks, regulatory risks, partner interest
risks, and financial risks. Risk and mitigation plans are
monitored by Management, and the continuous risk as-
sessment is an integral part of the yearly reporting to the
Board of Directors.
33Zealand Pharma ∞ Annual Report 2021
Risk management and internal control
Zealand risk and mitigation
Commercial activities – products
in research and development
Research and
development
Clinical trials Intellectual property
Risk
Risks relating to the sales of our products,
market size, competition, development
time and costs, partner interest and pricing
of products in development.
Research and development of new phar-
maceutical medicines is inherently a high-
risk activity. The probability of discovering
and developing an effective and safe new
medicine with strong IP protection is very
low.
Our product candidates will need to
undergo time-consuming and expensive
trials to document efficacy and safety, the
outcome of which is unpredictable, and for
which there is a high risk of failure.
If clinical trials of our product candidates
fail to satisfactorily demonstrate safety and
efficacy to the FDA, the EMA and other
comparable regulatory authorities, we may
incur additional costs or experience delays
in completing, or ultimately not be able
to complete, the development of these
product candidates
If we or our partners were to face infringe-
ment claims or challenges by third parties,
an adverse outcome could subject us or
our partners to significant liabilities to such
third parties. This could lead us or our part-
ners to curtail or cease the development
of some or all of their candidate drugs,
or cause our partners to seek legal or
contractual remedies against us, potentially
involving a reduction in the royalties due
to us.
Mitigation
We maintain a reporting system for our
products to monitor sales and inventory
and will establish similar systems for future
launches. From early in the research phase
and throughout development, commercial
potential and risks are assessed to ensure
that final products have the potential to be
commercially viable. In order to cope with
the restrictions imposed by COVID-19 we
have adapted our marketing activities to
protect our staff, providers and patients.
Throughout the research and development
process, we regularly assess these risks by
means of a quarterly risk assessment of all
of our research and development projects,
conducted by Management together with
the department heads and project man-
agers. This assessment, which is presented
to the Board of Directors, describes each
project and measures its progress based on
milestones. It analyzes the individual risks
of each project and prioritizes the project
portfolio
Our clinical project teams work closely
with external expert clinicians and product
development experts within the industry
to design, set up and conduct the clinical
programs. Our employees have been
selected due to their extensive experi-
ence within their field of expertise, receive
training and are continuously developed
to fulfill requirements. We also engage in
meetings with regulatory authorities to
ensure that there is alignment on the regu-
latory strategy and trial requirements.
Our patent department works closely with
external patent counsels and partners’
patent counsels to minimize the risk of
patent infringement claims as well as to
prepare any patent defense should this be
necessary.
Our employees receive training and up-
dates on policies regarding the correct and
lawful management of external intellectual
property.
34Zealand Pharma ∞ Annual Report 2021
Zealand risk and mitigation – continued
Regulatory Future partnerships Financial IT
Risk
The regulatory approval processes of the
FDA, the EMA and other comparable regu-
latory authorities are lengthy, time consum-
ing and inherently unpredictable, and if we
or our collaboration partners are ultimately
unable to obtain regulatory approval for
internal or outlicensed product candidates,
our business could be substantially harmed.
Entering into collaborations with partners
can bring significant benefits as well as
involve risks. In addition, full control of the
product is often given to the partner.
Financial risks relate to cash and treas-
ury management, liquidity forecasts and
financing opportunities.
Risks realted to the company's financial
position and its cash requirments for the
next 12 months.
Our information technology systems are
key to its operations and need protection
from intrusion from unauthorized entry.
Mitigation
Our qualified staff in the regulatory depart-
ment works closely with external consult-
ants and regulatory agents to develop regu-
latory strategies and frequently interacts
with regulatory agencies.
We have taken a decision to increase our
focus on proprietary programs in order
to decrease our dependence on partners
in the development process and capture
more of the value of its projects.
Partnerships may still be relevant in the
future and, to maximize the value of such
partnerships, we strive to foster a close and
open dialogue with our partners, thereby
building strong partnerships that work
effectively.
Financial risks are managed in accordance
with the Finance Policy, regularly assessed
by our Management and reported to the
Audit Committee and the Board of Direc-
tors. During 2021 we have continued to
optimize our Internal Control Framework
in response to the requirements of the Sar-
banes-Oxley Act as a result of being listed
in the US. See also p. 88-90 note 30.
The company employs qualified IT profes-
sionals who use external assistance from
qualified vendors to provide advice on
cybersecurity and systems security were
relevant. All members of staff are trained in
IT security and its IT systems use authen-
tication systems to reduce the risk of
unauthorized entry into its systems. It has
appropriate protection from viruses and
malware. Its most sensitive data is encrypt-
ed and subject to restricted internal use.
35Zealand Pharma ∞ Annual Report 2021
Financial review
Financial review for the period
January 1 – December 31, 2021.
Comparative figures for the corresponding period in 2020
are shown in brackets except for the financial position,
which expresses the comparative figures as of December
31, 2020.
Financial results
Zealand Pharma received approval by the Food and Drug
Administration for Zegalogue in March 2021 and began
commercial promotion and sales for the product in June
2021. Revenue, Cost of Goods Sold, Gross Margin, and
Sales and Marketing Expenses in 2021 all reflect new ac-
tivities for Zegalogue not incurred by the company in prior
periods.
Revenue
∆ in
DKK million 2021 2020 ∆ percent
Product sales 184.0 161.3 22.7 14%
License and
milestone revenue 108.6 192.0 -83.4 -43%
Total revenue 292.6 353.3 -60.7 -17%
Increase in revenue from the sale of goods is primarily
attributable to the sales of V-Go and Zegalogue in 2021.
Zegalogue became commercially available in June of 2021
and did not have any product revenue prior to that date.
The decrease in license and milestone revenue is mainly
due to a milestone payment of DKK 149.1 million triggered
and recognized as revenue in June 2020 from our part-
nership agreement with Boehringer Ingelheim offset by
smaller milestones received in 2021 through partnerships
with Sanofi, Boehringer Ingelheim, and Protagonist.
Gross margin
∆ in
DKK million 2021 2020 ∆ percent
Gross margin 173.8 262.8 -89.0 -34%
The decrease in gross margin is primarily due to the
milestone payment of DKK 149.1 million triggered and
recognized as revenue in June 2020 from our partnership
agreement with Boehringer Ingelheim.
Research and development expenses
∆ in
DKK million 2021 2020 ∆ percent
Research and
development expenses 588.5 604.1 -15.6 25.8%
Research and development expenses are primarily related
to activities with our late-stage clinical programs for dasi-
glucagon and glepaglutide. The decrease in research and
development expenses is related to the regulatory activi-
ties required for Zegalogue in 2020, which was approved
by the Food and Drug Administration in March 2021.
Sales and marketing expenses
∆ in
DKK million 2021 2020 ∆ percent
Sales and marketing
expenses 375.3 285.3 90.0 32%
36Zealand Pharma ∞ Annual Report 2021
Financial review
The increase in sales and marketing expenses is related
to efforts for the Zegalogue launch as well as continued
commercial support for the V-Go wearable insulin delivery
device.
Administrative expenses
∆ in
DKK million 2021 2020 ∆ percent
Administrative
expenses 261.0 202.7 58.3 29%
The increase in administrative expenses is costs related
to the buildup and operations of the US subsidiary, which
supports the commercial infrastructure as well as general
and administrative purposes. Substantial US operations
were acquired in April 2020 following the close of the
Valeritas asset purchase agreement.
Operating result
∆ in
DKK million 2021 2020 ∆ percent
Operating result -1,052.4 -792.4 -260.0 -33%
The operating result reflects gross margin, research and
development expenses, sales and marketing and adminis-
trative expenses, as discussed above.
Financial income and financial expenses
∆ in
DKK million 2021 2020 ∆ percent
Net financial items 25.4 -47.3 72.7 154%
Financial income and financial expenses, which we refer
to collectively as net financial items, consist of interest
income and expense, fair market value adjustments, bank-
ing fees and impact from adjustments related to foreign
exchange rates.
The positive development from 2020 to 2021 is mainly re-
lated to the development in the DKK/USD exchange rate.
Result before tax
∆ in
DKK million 2021 2020 ∆ percent
Result before tax -1,026.9 -839.7 -187.2 22%
Result before tax reflects the operating result and net
financial items, as discussed above.
Income tax
∆ in
DKK million 2021 2020 ∆ percent
Income tax 8.8 -7.1 15.9 224%
The net income tax (income) is mainly impacted by the tax
deduction in Denmark, a prior period correction offset by
tax expenses in US.
No deferred tax asset regarding the Danish parent compa-
ny has been recognized in the statement of financial po-
sition due to uncertainty as to whether tax losses carried
forward can be utilized within the near term.
Net result
∆ in
DKK million 2021 2020 ∆ percent
Net result -1,018.1 -846.7 -171.4 20%
The decrease in the net result is primarily a result of in-
creased sales and marketing and administrative expenses.
The expense increase is due to 2020 only having com-
mercial infrastructure effective April 2020 following the
Valeritas asset purchase agreement and the company’s
commercially launch of Zegalogue in June of 2021. In
addition, there was a one-time milestone of DKK 149.1
million triggered in June 2020 from our partnership
agreement with Boehringer Ingelheim.
Liquidity and capital resources
Equity
Dec. Dec. ∆ in
DKK million 31, 2021 31, 2020 ∆ percent
Equity 927.8 1,229.3 -301.5 -25%
Equity ratio 45% 70% N/A N/A
Equity ratio is calculated as equity at the balance sheet
date divided by total assets at the balance sheet date.
The decrease in equity was mainly driven by the loss for
the period offset by a capital increase in January 2021
amounting to DKK 748.9 million.
37Zealand Pharma ∞ Annual Report 2021
Cash, cash equivalents and
Marketable securities
Dec. Dec. ∆ in
DKK million 31, 2021 31, 2020 ∆ percent
Cash, cash
equivalents and
Marketable securities 1,428.1 1,257.6 170.5 14%
The increase was mainly driven by the capital increase in
January 2021 amounting to DKK 748.9 million and the
DKK 650.0 million received from the Oberland Note Pur-
chase Agreement offset by cash spent in the period.
Cash flow
∆ in
DKK million 2021 2020 ∆ percent
Cash used in
operating activities -1,212.0 -688.7 -523.3 76%
Cash used in
investing activities -18.1 -196.8 178.7 -91%
Cash flow from
financing activities 1,332.8 760.9 571.9 75%
Net cash flow -1,234.1 -713.8 -520.3 73%
The increase in cash used in operating activities from the
same period in 2020 is mainly related to our sales and
marketing and administrative expenses increasing as a
result of the commercial activities and support for Zega-
logue and the V-Go wearable insulin delivery device. In
2020 Zealand only had the sales and marketing expense
and infrastructure effective April 2020 following the Valeri-
tas asset purchase agreement.
Cash used in investing activities in 2021 related mainly to
acquisition of tangible assets. The investing activities in
2020 are mainly related to the acquisition of Valeritas.
Cash from financing activities increased primarily because
of the January 2021 financing with an aggregate gross
amount of DKK 748.9 million and the Oberland Note
Purchase Agreement for DKK 650.0 million. Cash from
financing activities for 2020 was mainly related to June
financing of gross DKK 657.7 million but also a private
placement of gross DKK 137.2 million.
The Company monitors its funding position on a month-
ly basis to ensure that it has access to sufficient liquidity
to meet its forecasted cash requirements. Analyses are
run to reflect different scenarios including, but not lim-
ited to, cash runway, human capital resources and pipe-
line priorities in order to identify liquidity risk and enable
Management and the Board of Directors to prepare for
new financing transaction and/or take relevant expense
management activities to allow the Company to continue
as a going concern.
As of the date of these financial statements the Company,
with it's current strategic plans, anticipates that the current
cash position and the cash requirements per the 2022
Annual Budget will provide a positive cash runway until
April 2023 but will exceed the terms of liquidity cove-
nant as part of the Oberland Note Purchase Agreement
and hence, a working capital deficit in September 2022
without additional financing and/or cost reductions. While
reviewing the Company’s strategic plans and priorities,
Management and the Board of Directors are working on
extending the cash runway by means of new addition-
al funding for the Company, either through issuance of
shares, issuance of debt instruments, establishment of
royalty arrangements, divestments, expense manage-
ment activities or a combination of such, and on this basis
believes it is probable that sufficient resources will be ob-
tained in due time prior to the end of September 2022 to
enable the Company to continue its activities as planned
well into 2023. On this basis Management has prepared
the financial statements based on a going concern as-
sumption.
Since such new source of funding is not obtained of
the date of these financial statements, substantial doubt
regarding going concern exist, and therefore the Com-
pany may be unable to realize its assets and discharge its
liabilities in the normal course of business.
38Zealand Pharma ∞ Annual Report 2021
28 (22)
41 (35)
0 (0)
1 (5)
1 (0)
27 (36)
1 (1)
%
Denmark
United Kingdom
Sweden
France
Rest of Europe
Rest of World
United States
2021
2020
Find out more about our investor relations at
zealandpharma.com/investor-relations
Shareholder
information
We are dual listed on Nasdaq
Copenhagen and Nasdaq Global
Select Market, New York, under the
ticker symbol ZEAL.
At December 31, 2021, the nominal value of our share
capital was DKK 43,634,142, divided into 43,634,142 shares
with a nominal value of DKK 1 each.
In 2021 the share capital increased by a nominal value of
DKK 3.8 million through one directed issues and private
placements (DKK 3.6 million in total) and exercise of em-
ployee warrants (DKK 0.2 million). All Zealand shares are
ordinary shares and belong to one class. Each share listed
by name in Zealand’s shareholder register represents one
vote at the annual general meeting and other sharehold-
ers’ meetings.
Change in number of shareholders during 2021
The number of registered shareholders in Zealand Pharma
increased to 24,143 at December 31, 2021, from 17,678 at
December 31, 2020. In addition, 1,742,842 shares were
represented by ADSs traded on Nasdaq Global Select Mar-
ket, New York.
Institutional shares by geography
Ownership
The following shareholders are registered in Zealand
Pharma’s register of shareholders as being the owners of a
minimum of 5% of the voting rights or a minimum of 5% of
the share capital (one share equals one vote) at December
31, 2021:
• Van Herk Investments, Netherlands (16.8% of
votes/16.8% of capital)
• Credit Suisse Group AG. Switzerland (6.20% of
votes/6.20% of capital)
• Capital Group Companies Inc., USA (5.61% of votes/0%
of capital)
• SMALLCAP World Fund, Inc., USA (0% of votes/5.61% of
capital)
39Zealand Pharma ∞ Annual Report 2021
Shareholder information
Share price performance
The price of Zealand’s shares decreased by 34.2% during
2021 with a market closing share price at year-end of DKK
145.1, compared to DKK 220.6 at year-end 2020.
Annual General Meeting
The annual general meeting is scheduled to be held elec-
tronically on Wednesday, April 6, 2022 at 3:00 PM CET.
Additional information will become available at https://
www.zealandpharma.com/annual-general-meeting no
later than 3 weeks before the annual general meeting.
Financial Calendar 2022
Date Event
April 6 Annual General Meeting
May 12 Q1 Earnings Release / Interim Report First
Quarter 2022
August 11 H1 Earnings Release / Interim Report First
Half 2022
November 10 Q3 Earnings Release / Interim Report Third
Quarter 2022
All dates are subject to NASDAQ deadlines and reporting require-
ments and are subject to change
Analyst coverage
Zealand is followed by the financial institutions and analysts listed
below:
Institution Analyst's name
US
Needham Joseph Stringer
United Kingdom
Goldman, Sachs & Co.
Jefferies
Keyur Parekh
Peter Welford
Netherlands
Kempen Suzanne van Voorthuizen
Denmark
Carnegie
Danske Bank
Nordea
Jesper Ilsøe
Thomas Bowers
Michael Novod
Core share data
Number of shares and
ADSs at Dec. 31, 2021
43,634,142 1,742,842
Listing Nasdaq
Copenhagen
Nasdaq Global Select
Market, New York
Ticker symbol ZEAL ZEAL
Index
memberships
Nasdaq
Copenhagen
STOXX Europe
TMI Pharm
Large Cap
40Zealand Pharma ∞ Annual Report 2021
Board of
Directors and
Corporate
Management
Martin Nicklasson Kirsten A. Drejer Jeffrey Berkowitz
Position Chairman Vice Chairman Board member
Year of birth 1955 1956 1966
Nationality Swedish Danish American
Gender Male Female Male
First elected 2015 2018 2019
Committee AdCom, RemCom chair and
NomCom chair
NomCom and SciCom NomCom and AdCom
Independent Yes Yes Yes
Special competen-
cies
Extensive general management and
research and development experience
from AstraZeneca Plc and Swedish Orphan
Biovitrum AB.
More than 30 years of international expe-
rience in the pharmaceutical and biotech
industry. Before co-founding Symphogen
A/S in 2000, held several scientific and
managerial positions at Novo Nordisk A/S.
Global executive with extensive branded
and generic pharmaceutical, retail pharma-
cy, wholesale drug distribution, specialty,
payor and healthcare services leadership
experience in P&L accountable roles.
Current positions Board member of Basilea Pharmaceutica
Ltd. and chairman of Nykode Therapeutics
AS.
Chairman of the board of Antag Thera-
peutics, Bioneer and ResoTher Pharma.
Board member of Curasight A/S and Malin
Corporation.
Board member of H. Lundbeck A/S, Espe-
rion Theraptics, Inc. and Uniphar PLC.
Zealand shares at
December 31, 2021
2,570 800 200
Zealand warrants at
December 31, 2021
0 0 0
Zealand RSUs at
December 31, 2021
8,000 4,000 4,000
Change in ownership
in 2021
0 0 0
Zealand Board of Directors at March 10, 2022
Find out more about the Board of Directors at
zealandpharma.com/board-of-directors-and-
nomination-committee
41Zealand Pharma ∞ Annual Report 2021
Board of Directors and Corporate Management
Bernadette Connaughton Leonard Kruimer Alain Munoz Michael John Owen
Position Board member Board member Board member Board member
Year of birth 1958 1958 1949 1951
Nationality American Dutch French British
Gender Female Male Male Male
First elected 2019 2019 2005
¹
2012
Committee NomCom and AdCom NomCom and AdCom NomCom, RemCom and ScCom NomCom, RemCom and ScCom
Independent Yes Yes No
2
Yes
Special competen-
cies
More than 30 years of global strategic, com-
mercial and leadership expertise, and a broad
perspective on the strategy, capabilities and
governance required for successful execution in
U.S. and international markets.
More than 30 years of experience in corporate
finance, planning and strategy, including 15 years
in senior executive positions in private and pub-
licly listed biotechnology companies.
Physician qualified cardiology and intensive
care. Experience in the pharmaceutical industry
at senior management level. Served as SVP for
international development in the Sanofi Group
and in the pharmaceutical division of Fournier
Laboratories.
Research experience focusing on the immune
system and more than 150 publications. Has held
several leading positions at GlaxoSmithKline,
most recently as SVP and head of biopharma-
ceuticals research.
Current positions Board member of the board of Halozyme Thera-
peutics Inc. and Syneos Health.
Chairman of the board of BioInvent Int. AB.,
board member of Oncoytics Biotech Inc. and
board member and Chairman of Audit Commit-
tee of Pharming Group NV. Director AI Global
(Netherlands) PCC Ltd.
Scientific Advisory Board of Valneva SE, chairman
of the board of directors of Acticor Biotech, and
a board member of Auris Medical and Amryt
Pharma Plc.
Chairman of the board of Ossianix Inc., and is a
member of the board of ReNeuron Group plc,
Sareum Holdings plc, and GammaDelta Thera-
peutics.
Zealand shares at
December 31, 2021
500 4,000 5,250 300
Zealand warrants at
December 31, 2021
0 0 0 0
Zealand RSUs at
December 31, 2021
4,000 5,500 4,500 4,500
Change in ownership
in 2021
0 0 0 0
Zealand Board of Directors at March 10, 2022, continued
1
Resigned in 2006 and re-elected in 2007.
2
Not considered independent in accordance with the Danish Recommendations on Corporate Governance of 2 December 2020.
42Zealand Pharma ∞ Annual Report 2021
Frederik Barfoed Beck
Anneline Nansen Louise Gjelstrup Jens Peter Stenvang
Position Employee-elected board member
1
Employee-elected board member
1
Employee-elected board member
1
Employee-elected board member¹
Year of birth 1967 1969 1977 1954
Nationality Danish Danish Danish Danish
Gender Male Female Female Male
First elected 2020 2021
2
2020 2014
Committee None None None None
Independent No No No No
Current positions Senior Outsourcing Manager Principal Scientist. Principal Laboratory Technologist. Senior Application Specialist.
Zealand shares at
December 31, 2021
4,798 1,571 1,255
6,300
Zealand warrants at
December 31, 2021
7,200 5,500 1,500
750
Zealand RSUs at
December 31, 2021
2,100 875 1,750
1,750
Change in ownership
in 2021
0 0 +415
+1,250
Zealand Board of Directors at March 10, 2022, continued
1
Employee-elected board members are elected for a period of four years.
2
Joined the board on 1 September 2021 as an employee elected member following the resignation of Gertrud Koefoed Rasmussen.
43Zealand Pharma ∞ Annual Report 2021
Emmanuel Dulac Matthew Dallas Adam Steensberg
Position Executive Management
President and
Chief Executive Officer
Executive Management
Senior Vice President and
Chief Financial Officer
Executive Management
Executive Vice President, Research & Development,
and Chief Medical Officer
Year of birth 1969 1975 1974
Nationality French American Danish
Gender Male Male Male
Joined Zealand 2019 2019 2010
Experience Emmanuel Dulac has been Chief Executive Officer (CEO) of
Zealand Pharma (Nasdaq: ZEAL), since April 2019. Since becoming
CEO, Emmanuel led a transformation to build Zealand Pharma
into a leading global Biotech company: He clarified the path to
growth for the company, accelerated Zealand readiness to market
their own drug while expanding their unique and highly productive
peptide therapeutics platform. Under his leadership, the company
filed their first NDA, completed their first in-licensing, led their first
acquisition, received their first NDA approval and has set an ambi-
tious goal to have five commercialized products by 2025.
Most recently, Mr. Dallas served as chief financial officer at Aveo
Pharmaceuticals, leading finance for the publicly traded biotechnol-
ogy company and was additionally responsible for investor relations,
facilities and information technology. He was previously CFO at
CoLucid Pharmaceuticals, which was acquired by Eli Lilly. His earlier
career included positions at Genzyme, NEN Life Science Products,
and Kimberly Clark.
Prior to joining Zealand, Adam led clinical research teams as medi-
cal director at Novo Nordisk and worked as a clinician at Rigshospi-
talet, University of Copenhagen. Adam was a medical and scientific
advisor in the areas of endocrinology, cardiology, gastroenterology
and rheumatology, and has significant experience of leading regu-
latory strategies.
Adam is a chairman of the board of directors of Cessatech ApS,
board member of Dansk Biotek and a board observer of Beta Bion-
ics, Inc.
Zealand shares at
December 31, 2021
7,692 841 0
Zealand warrants at
December 31, 2021
113,848 51,275 188,286
Zealand PSUs at
December 31, 2021
123,609 34,552 39,809
Zealand RSUs at
December 31, 2021
44,915 15,536 15,571
Change in ownership
in 2021
+7,692 +841 0
Zealand Corporate Management at March 10, 2022
44Zealand Pharma ∞ Annual Report 2021
Corporate management
Ivan Møller Frank Sanders Christina Sonnenborg Bredal
Position Executive Vice President,
Technical Development & Operations
President of Zealand Pharma U.S. Vice President, People & Organization
Year of birth 1972 1969 1985
Nationality American/Danish American Danish
Gender Male Male Female
Joined Zealand 2018 2020 2020
Experience Prior to joining Zealand, Ivan worked for Novartis in both generics
and pharmaceutical manufacturing, as well as in strategy, quality
assurance, contract manufacturing and supply chain leadership in
Germany, the U.S. and Switzerland.
Ivan was project leader at The Boston Consulting Group in the
pharmaceutical R&D and manufacturing areas.
Frank has an accomplished career with over 25 years of experience
in the pharmaceutical industry. Prior to Zealand, Frank was Senior
Vice President, US Commercial for Sage Therapeutics, a biopharma-
ceutical company based in Cambridge, Massachusetts. At Sage, he
had direct General Manager responsibility for Sales, Account Man-
agement, Marketing, Patient Services and Commercial Operations
and was responsible for the design, build, and overall performance
of the US commercial function. Prior to joining Sage, Frank served
as Vice President, Market Access Strategic Account Management
at Janssen Pharmaceutical Companies of Johnson & Johnson and
held a wide range of leadership roles for GlaxoSmithKline including
Vice President, Customer Strategy and Vice President, Field Sales.
Most recently, Christina was a consultant in PwC Legal, specializ-
ing in employment law and employee share programs. Previously,
Christina worked at EY, People Advisory Services, specializing in
global mobility tax and rewards.
Christina has also worked as a trial lawyer litigating civil court cases
and as an attorney specializing in M&A and legal due diligence.
Zealand shares at
December 31, 2021
0 0 0
Zealand warrants at
December 31, 2021
81,420 43,217 2,500
Zealand PSUs at
December 31, 2021
37,547 34,744 1,500
Zealand RSUs at
December 31, 2021
14,599 17,445 500
Change in ownership
in 2021
0 0 0
Zealand Corporate Management at March 10, 2022, continued
45Zealand Pharma ∞ Annual Report 2021
Financial
statements
46Zealand Pharma ∞ Annual Report 2021
Financial statements
Notes
1 Significant accounting policies, and significant
accounting estimates and assessments 52
2 Going Concern uncertainties 56
3 Revenue 57
4 Royalty expenses 61
5 Research, development and administrative expenses 61
6 Fees to auditors appointed at the Annual
General Meeting 62
7 Information on staff and remuneration 63
8 Other operating income and expenses 69
9 Financial income 69
10 Financial expenses 70
11 Income tax 71
12 Basic and diluted earnings per share 73
13 Intangible assets 74
14 Property, plant and equipment 76
15 Right-of-use assets and lease liabilities 78
16 Other investments 80
17 Impairment 80
18 Inventory 81
19 Trade receivables 82
20 Prepaid expenses 82
21 Other receivables 82
22 Marketable securities 82
23 Cash and cash equivalents 83
24 Share capital 83
25 Borrowings 84
26 Deferred revenue 86
27 Provision 86
28 Other liabilities 87
29 Contingent assets and liabilities, other contractual
obligations and collateral provided 87
30 Financial risks 88
31 Business combinations 91
32 Related parties 93
33 Adjustments for non-cash items 93
34 Change in working capital 93
35 Reconciliation of borrowings 94
36 Significant events after the balance sheet date 94
37 Approval of the annual report 94
Contents –
consolidated
financial
statements
Consolidated financial statements
Income statement 48
Statement of comprehensive income 48
Statement of financial position 49
Statement of cash flows 49
Statement of changes in equity 50
Business overview 51
47Zealand Pharma ∞ Annual Report 2021
Con Fin – Content
Consolidated statements of comprehensive income for the years ended
December 31, 2021, 2020 and 2019
DKK thousand Note 2021 2020 2019
Net result for the year -1,018,149 -846,729 -571,541
Other comprehensive income
Items that will be reclassified to income statement
when certain conditions are met:
Exchange differences on translation of foreign operations 5,178 8,977 0
Comprehensive result for the year -1,012,972 -837,752 -571,541
Total comprehensive income attributable to
shareholders of Zealand Pharma A/S -1,012,972 -837,752 -571,541
Consolidated income statement for the years ended
December 31, 2021, 2020 and 2019
DKK thousand Note 2021 2020 2019
Revenue 3 292,567 353,314 41,333
Cost of goods sold 18 -107,844 -90,565 0
Royalty expenses 4 -10,970 0 -415
Gross margin 173,753 262,749 40,918
Research and development expenses 5,7 -588,453 -604,081 -561,423
Sales and marketing expenses 5,7,13 -375,269 -285,256 0
Administrative expenses 5,7 -260,987 -202,770 -67,881
Operating expenses -1,224,709 -1,092,107 -629,304
Other operating income 8 759 36,997 444
Other operating expense 8 -2,173 0 0
Operating result -1,052,370 -792,361 -587,942
Financial income 9 41,211 2,022 14,655
Financial expenses 10 -15,781 -49,314 -3,390
Result before tax -1,026,940 -839,653 -576,677
Income tax (expense)/benefit 11 8,791 -7,076 5,136
Net result for the year -1,018,149 -846,729 -571,541
Earnings/(loss) per share – basic (DKK) 12 -23.75 -22.07 -16.91
Earnings/(loss) per share - diluted (DKK) 12 -23.75 -22.07 -16.91
Net result attributable to shareholders
of Zealand Pharma A/S -1,018,149 -846,729 -571,541
Consolidated financial statements
48Zealand Pharma ∞ Annual Report 2021
Con Fin – Income Statement
Consolidated statements of financial position
as of December 31, 2021 and 2020
DKK thousand Note 2021 2020
Assets
Non-current assets
Intangible assets 13 53,790 57,485
Property, plant and equipment 14 86,454 85,040
Right-of-use assets 15 134,994 127,998
Other Investments 16 26,907 32,333
Deposits 12,638 16,650
Corporate tax receivable 11 1,268 1,268
Deferred tax assets 11 13,525 8,370
Prepaid expenses 20 16,457 13,117
Total non-current assets 346,033 342,261
Current assets
Inventories 18 118,436 65,040
Trade receivables 19 73,025 46,484
Prepaid expenses 20 64,626 35,156
Corporate tax receivable 11 21,562 5,500
Other receivables 21 15,802 9,942
Marketable securities 22 299,042 297,345
Cash and cash equivalents (incl cash subject to liquidity cove rnant) 23 1,129,103 960,221
Total current assets 1,721,596 1,419,688
Total assets 2,067,629 1,761,949
DKK thousand Note 2021 2020
Liabilities and equity
Share capital 24 43,634 39,800
Treasury shares -71,890 -1,700
Share premium 4,250,306 3,472,487
Currency translation reserve 14,155 8,977
Retained losses -3,308,402 -2,290,253
Shareholders' equity 927,803 1,229,311
Borrowings 25 647,906 0
Deferred revenue 26 14,551 44,587
Other liabilities 28 18,426 16,744
Lease liabilities 15 124,626 116,047
Non-current liabilities 805,509 177,378
Trade payables 64,558 70,384
Corporate tax payables 0 30,394
Lease liabilities 15 14,897 14,072
Deferred revenue 26 53,033 53,182
Rebate and product return liabilities 27 28,695 36,673
Other liabilities 28 173,134 150,555
Current liabilities 334,317 355,260
Total liabilities 1,139,826 532,638
Total shareholders' equity and liabilities 2,067,629 1,761,949
Consolidated financial statements
49Zealand Pharma ∞ Annual Report 2021
Con Fin – Financial position
Consolidated statements of cash flows for the years
ended December 31, 2021, 2020 and 2019
DKK thousand Note 2021 2020 2019
Net result for the year -1,018,149 -846,729 -571,541
Bargain purchase 31 0 -36,395 0
Adjustments for other non-cash items 33 47,615 143,138 9,207
Change in working capital 34 -166,325 97,818 10,873
Interest received 0 895 5,413
Interest paid -3,296 -4,562 -3,390
Deferred revenue 26 -30,185 -42,881 139,890
Income tax paid/received -41,631 0 93
Cash flow from operating activities -1,211,971 -688,716 -409,455
Acquisition of Valeritas business, net of cash acquired 31 0 -167,791 0
Change in deposits 4,012 -3,972 -6,250
Purchase of other investments and marked securities 16 0 0 -22,803
Purchase of property, plant and equipment 14 -22,133 -25,044 -21,036
Purchase of intangible assets 13 0 0 -2,480
Sale of property, plant and equipment 0 0 25
Dividends on securities 0 0 878
Cash flow from investing activities -18,121 -196,807 -51,666
Proceeds from issuance of shares related to
exercise of share based compensation 24 26,070 41,363 52,468
Proceeds from issuance of shares 24 748,975 791,503 645,145
Purchase of treasury shares 24 -28,590 0 0
Proceeds from borrowings 35 647,906 0 0
Costs related to issuance of shares 24 -46,895 -42,706 -14,444
Lease installments 15 -14,715 -29,219 -8,689
Cash flow from financing activities 1,332,751 760,941 674,480
Decrease/increase in cash and cash equivalents 102,659 -124,582 213,359
Cash and cash equivalents at beginning of period 23 960,221 1,081,060 860,635
Exchange rate adjustments 66,223 3,743 7,066
Cash and cash equivalents at end of period 23 1,129,103 960,221 1,081,060
Consolidated financial statements
Consolidated statements of changes in shareholders' equity
at December 31, 2021, 2020 and 2019
Trans-
Share Treasury Share lation Retained
DKK thousand capital shares premium reserve losses Total
Equity at January 1, 2021 39,800 -1,700 3,472,487 8,977 -2,290,253 1,229,311
Other comprehensive income 0 0 0 5,178 0 5,178
Net result for the year 0 0 0 0 -1,018,149 -1,018,149
Treasury shares 0 -70,190 0 0 0 -70,190
Share-based compensation 0 0 53,504 0 0 53,504
Capital increases 3,834 0 771,211 0 0 775,045
Cost related to capital increases 0 0 -46,896 0 0 -46,896
Equity at December 31, 2021 43,634 -71,890 4,250,306 14,155 -3,308,402 927,803
Equity at January 1, 2020 36,055 -1,700 2,651,842 0 -1,443,524 1,242,673
Other comprehensive income 0 0 0 8,977 0 8,977
Net result for the year 0 0 0 0 -846,729 -846,729
Share-based compensation 0 0 30,485 0 0 30,485
Capital increases 3,745 0 832,866 0 0 836,611
Cost related to capital increases 0 0 -42,706 0 0 -42,706
Equity at December 31, 2020 39,800 -1,700 3,472,487 8,977 -2,290,253 1,229,311
Equity at January 1, 2019 30,787 -1,700 1,959,177 0 -871,983 1,116,281
Other comprehensive income 0 0 0 0 0 0
Net result for the year 0 0 0 0 -571,541 -571,541
Share-based compensation 0 0 14,764 0 0 14,764
Capital increases 5,268 0 692,345 0 0 697,613
Cost related to capital increases 0 -14,444 0 0 -14,444
Equity at December 31, 2019 36,055 -1,700 2,651,842 0 -1,443,524 1,242,673
50Zealand Pharma ∞ Annual Report 2021
Con Fin – Cash Flow Con Fin – Equity
Consolidated financial statements
Business overview
Zealand Pharma A/S (Nasdaq: ZEAL) ("Zealand", the “Company”, the “Group”, “Zealand” and “we”) is a
development, of which two have reached the market and three candidates are in late-stage development.
In addition, license collaborations with Boehringer Ingelheim and AstraZeneca create opportunities for
more patients to potentially benefit from Zealand-invented peptide investigational agents currently in
development. Zealand was founded in 1998 in Copenhagen, Denmark , and has presence throughout the
U.S. that includes key locations in Boston, and Marlborough (MA).
In April 2020, we acquired substantially all of the medical technology business from Valeritas Holdings,
Inc. Refer to note 31.
Owner- Voting
Company summary Domicile ship rights
Zealand Pharma A/S subsidiaries
ZP Holding SPV K/S Denmark 100% 100%
ZP General Partner 1 ApS Denmark 100% 100%
Zealand Pharma US Inc. United States 100% 100%
Encycle Therapeutics Inc. Canada 100% 100%
ZP SPV 3 K/S Denmark 100% 100%
ZP General Partner 3 ApS Denmark 100% 100%
ZP Holding SPV K/S subsidiaries
ZP SPV 1 K/S Denmark 100% 100%
ZP General Partner 2 ApS Denmark 100% 100%
Zealand Pharma US Inc. subsidiary
Zealand Pharma California US, LLC. United States 100% 100%
51Zealand Pharma ∞ Annual Report 2021
Con Fin – Business overview
Notes
Note 1 – Significant accounting policies, and significant accounting estimates and assessments
Significant accounting policies
Basis of preparation
The consolidated financial statements of Zealand have been prepared in accordance with International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and
as adopted by the EU and additional requirements under the Danish Financial Statements Act (class D).
The Board of Directors considered and approved the 2021 Annual Report of Zealand on March 10, 2022.
The Annual Report will be submitted to the shareholders of Zealand for approval at the Annual General
Meeting on April 6, 2022.
The consolidated financial statements are presented on a historical cost basis, except for certain financial
assets and liabilities measured at fair value.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and
services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is
directly observable or estimated using another valuation technique.
For financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on
the degree to which the inputs to the fair value measurements are observable and on the significance of
the inputs to the fair value measurement as a whole. The inputs are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date
• Level 2 inputs are inputs, other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly
• Level 3 inputs are fair value measures derived from valuation techniques that include inputs for the
asset or liability that are not based on observable market data (unobservable inputs).
The consolidated financial statements are presented in Danish kroner (DKK), which is the functional cur-
rency of the Parent Company.
In the narrative sections of the financial statements, comparative figures for 2020 and 2019 are shown in
brackets if not indicated otherwise.
Implementation of new and revised standards and interpretations
Management has assessed the impact of new or amended and revised accounting standards and inter-
pretations (IFRSs) issued by the IASB and IFRSs endorsed by the EU effective on or after 1 January 2021. It
is assessed that application of amendments effective from 1 January 2021 has not had a material impact
on the consolidated financial statements for 2021. Furthermore, Management does not anticipate any
significant impact on future periods from the adoption of these amendments.
Standards and interpretations issued, but not yet applied
IASB has issued a number of new and amended standards which are not yet effective. None of these new
standards or amendments are expected to impact the Group.
Accounting policies
The accounting policies are unchanged from last year. The accounting policies for specific line items and
transactions are included in the respective notes to the financial statements except for basis and princi-
ples of consolidation, foreign currency translation, classification of income statement, segment reporting,
classification of financial assets and the cash flow statement, which are included below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
(including structured entities) controlled by the Company and its subsidiaries. Control is achieved when
the Company:
• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.
The Company reassesses whether it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above.
52Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 1
Notes
Note 1 – Significant accounting policies, and significant accounting estimates and assessments (continued)
Principles of consolidation
The consolidated financial statements are prepared on the basis of the financial statements of the parent
company and the individual subsidiaries, which are based on uniform accounting policies and account-
ing periods in all Group entities. Consolidation of Group entities is performed after elimination of all intra
Group transactions, balances, income and expenses.
Functional currency
A functional currency is determined for each Group entity. The functional currency is the currency used
in the primary financial environment in which the individual Group entity operates.
Foreign currency translation
Transactions denominated in currencies other than the transacting entity's functional currency are trans-
lated at the exchange rates on the transaction dates.
Exchange differences arising between the rate on the transaction date and the rate on the payment day
are recognized in the income statement as financial income or financial expenses.
Receivables, payables and other monetary items denominated in foreign currencies that have not been
settled at the statement of financial position date are translated by applying the exchange rates at the
statement of financial position date. Differences arising between the rate at the statement of financial
position date and the rate at the date on which the receivable or payable arose are recognized in the
income statement as financial income and financial expenses.
Recognition in the consolidated financial statements
On preparation of the consolidated financial statements, the income statements of entities with a func-
tional currency different from DKK are translated at the average exchange rate for the period, and balance
sheet items are translated at the exchange rate ruling at the reporting date.
Foreign exchange differences arising on translation of the equity of foreign entities and on translation of
receivables considered part of net investment are recognized directly in other comprehensive income.
Foreign exchange differences arising on the translation of income statements from the average exchange
rate for the period to the exchange rate ruling at the reporting date are also recognized in other compre-
hensive income. Adjustments are presented under a separate translation reserve in equity.
Materiality in financial reporting
In preparing the Annual Report, Management seeks to improve the information value of the consolidated
financial statements, the notes to the statements and other measures disclosed by presenting the infor-
mation in a way that supports the understanding of the Group’s performance in the reporting period.
This objective is achieved by presenting fair transactional aggregation levels at line items and other
financial information, emphasizing information that is considered of material importance to the user and
making relevant rather than generic descriptions throughout the Annual Report.
All disclosures are made in compliance with the International Financial Reporting Standards, the Danish
Financial Statements Act and other relevant regulations, ensuring a true and fair view throughout the
Annual Report.
Consolidated financial statements
Income statement
The expenses recognized in the income statement is presented as an analysis using a classification based
on their function.
Segment reporting
The Group is managed by a Corporate Management team reporting to the Chief Executive Officer. The
Corporate Management team, including the Chief Executive Officer, represents the chief operating
decision maker (CODM). No separate business areas or separate business units have been identified in
connection with line of business, product candidates or geographical markets. Consequently, there is no
segment reporting concerning business areas.
Statement of financial position
Financial assets
Financial assets include receivables, marketable securities and cash. Financial assets are divided into cate-
gories of which the following are relevant for the Group:
1. Financial assets at amortized cost comprising of receivables with contractual cash flows solely
comprising of payment of principal and interest and which are held for the purpose of collecting the
contractual cash flow.
53Zealand Pharma ∞ Annual Report 2021
Notes
Note 1 – Significant accounting policies, and significant accounting estimates and assessments (continued)
2. Financial assets at fair value through the income statement, which are marketable securities catego-
rized as equity instruments are held for trading and classified at fair value through profit and loss.
3. Equity investments. These investments are measured at fair value through the profit and loss.
Financial assets are assigned to the different categories by Management on initial recognition, depending
on the cash flow characteristics and purpose for which the assets were acquired. All financial assets are
recognized on their settlement date. All financial assets other than those classified at fair value through
the profit and loss are initially recognized at fair value, plus transaction costs.
Financial liabilities
Financial liabilities include borrowings, trade payables and certain other payables. Financial liabilities are
divided into categories of which the following are relevant for the Group:
1. Financial liabilities at amortised cost.
Borrowings:
On initial recognition, borrowings are evaluated for the existence of non-closely related embedded de-
rivatives, i.e. cash flows or potential cash flows whose economic characteristics and risks are not closely
related to the economic characteristics and risks in the debt host contract. The cash flows attributable to
such non-closely related embedded derivatives are separated and accounted for as derivative financial
instruments.
On initial recognition borrowings are measured at fair value which is generally equal to the proceeds
received. Fair value is allocated between the debt host contract and, if applicable, an embedded deriva-
tive. Transaction costs attributable to the debt host contract are deducted from the initial fair value and
amortised over the term of the loan as part of the effective interest rate on the loan. Transaction costs
attributable to a non-closely related embedded derivatives are expensed on initial recognition.
Loan commitments are not accounted for. Lender fees and transaction costs attributable to uncondi-
tional loan commitments are treated as prepaid transaction costs if the Group expect to draw down on
the facility. If the Group has no specific plans for draw down on the loan commitment, the transaction
costs are amortised over the commitment period.
If a loan commitment is subject to meeting certain conditions, it is considered an unconditional loan
commitment if the Group considers it probable that the conditions will be met.
Statement of cash flows
The cash flow statement is prepared in accordance with the indirect method on the basis of the net result
for the year. The statement shows the cash flows broken down into operating, investing and financing ac-
tivities, cash and cash equivalents at the beginning and end of the year, and the impact of the calculated
cash flows on cash and cash equivalents. The cash flow statement cannot be derived directly from the
balance sheet and income statement.
Cash flows in foreign currencies are translated into Danish kroner at the exchange rate on the transaction
date.
Cash flow from operating activities
Cash flow from operating activities is presented indirectly and is calculated as the net operating result
adjusted for depreciation and amortization, sale of royalties, non-cash operating items, changes in net
working capital, financial items paid, bargain purchase gain, and income tax benefits received and paid.
Cash flow from investing activities
Cash flow from investing activities includes cash flows from the sale of future royalties and milestone
relating to the Sanofi license, purchase and sale of property, plant and equipment, investments and de-
posits, net cashflow from acquisition of Valeritas activities, as well as transfers to and from restricted cash
related to the royalty bond.
Cash flow from financing activities
Cash flow from financing activities includes proceeds from issuance of new ordinary shares, proceeds
from issuance of shares related to exercise of sharebased compensation. and related costs, finance lease
installments, loan financing and purchase of treasury shares.
Cash and cash equivalents
Cash and cash equivalents comprise cash and bank balances. Cash and cash equivalents are instruments
with original maturities of 90 days or less. The Company does not have any cash equivalents for the years
ended December 31, 2021, 2020 or 2019.
54Zealand Pharma ∞ Annual Report 2021
Notes
Note 1 – Significant accounting policies, and significant accounting estimates and assessments (continued)
Information on COVID-19
Our business, operations and clinical studies were, of course, impacted by the effects of
COVID-19. Although our clinical studies continued without interruption during 2021, there were delays
and increased total costs arising from the implications of COVID-19.
However, we have not recognized any write-offs, impairments of assets, or losses to onerous contracts
due to COVID-19.
The COVID-19 pandemic is also having an effect on other aspects of our business, including: our
third-party manufacturers, and other third parties; albeit with no material effect or impact. The COV-
ID-19 pandemic may, in the long-term, affect the productivity of our staff; our ability to attract, integrate,
manage and retain qualified personnel or key employees; our global supply chains and relationships with
vendors and other parties; significant disruption of global financial markets; and reduced ability to secure
additional funding. We continuously monitor the COVID-19 pandemic and its potential impact on our
business and financials.
Significant accounting estimates and judgements
The preparation of the consolidated financial statements requires Management to make judgments and
estimates that affect the reported amounts of revenues, expenses, assets and liabilities, and the accom-
panying disclosures. In applying our accounting policies, Management is required to make judgements
and estimates about the carrying amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recog-
nized in the period in which the estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and future periods.
The estimates used are based on assumptions assessed to be reasonable by Management. However,
estimates are inherently uncertain and unpredictable. The assumptions may be incomplete or inaccurate,
and unexpected events or circumstances may occur. Furthermore, we are subject to risks and uncertain-
ties that may result in deviations in actual results compared with estimates.
Please refer to the table below to see in which note the accounting estimates and judgements are pre-
sented.
Notes including management’s estimates and judgements
Estimates Judgements
2 - Going concern uncertainties X
3 – Revenue X X
7 – Employee incentive programs X
27 – Rebate and product return liabilities X X
Additional description of Management's estimates and judgements made are described below and in note 2.
Revenue recognition (management estimate and judgement)
Revenue comprises license payments, upfront- and milestone payments, product revenue and royalty
income. License payments which provide the buyer with the right to use the license as it exists at the
date of transfer are recognized upon transfer of the associated licensing rights at the point at which the
buyer obtains the right to use the license. Upon entering into agreements with multiple components,
Management determines whether individual components are distinct, which is the case if the buyer can
obtain benefits from the goods or service and the promise is distinct within the context of the contract.
If no individual components are distinct, the contract is treated as a single performance obligation. When
entering into licensing and development agreements, a critical judgment relates to whether the custom-
er could continue development of the Intellectual Property (IP) to the stage promised by Zealand under
the promise to provide R&D services. If this is not the case, the IP and the R&D services are considered a
single performance obligation.
Milestone payments are related to the collaborative research agreements with commercial partners and
are recognized when it is highly probable that Zealand Pharma will become entitled to the milestone
which is generally when the milestone is achieved. Royalty income from licenses is based on third-party
sales of licensed products and is recognized in accordance with contract terms in the period in which the
sales occur.
55Zealand Pharma ∞ Annual Report 2021
Notes
Note 1 – Significant accounting policies, and significant accounting estimates and assessments (continued)
Revenue from transactions involving the rendering of services which are consumed by the customer
simultaneously with delivery is recognized along with delivery of the services.
Employee incentive programs (management estimates)
In accordance with IFRS 2, Share-based Payment, the fair value of the warrants classified as equity settled
is measured at the grant date and recognized as an expense in the income statement over the vesting pe-
riod. The fair value of each warrant granted during the year is estimated using the Black– Scholes option
pricing model. This requires the input of subjective assumptions such as:
• The expected stock price volatility, which is based on the historical volatility of Zealand’s share price
• The selection of the risk-free interest rate, which is determined as the interest rate on Danish
government bonds with a maturity equal to the expected term
• The duration of the warrants, which is assumed to be until the middle of the exercise period
The total fair value of the warrants is recognized in the income statement over the vesting period. An
adjustment is made to reflect an expected attrition rate during the vesting period. The attrition rate is
re-estimated at year-end based on the historical attrition rate resulting in recognition of an expense equal
to grant date fair value of the number of warrants which actually vest.
Rebate and product return liabilities (management estimate and judgement)
Liabilities regarding sales rebates and discounts granted to government agencies, wholesalers, retail phar-
macies, managed care and other customers are recorded at the time the related revenues are recorded
or when the incentives are offered.
For both managed care rebates and the Medicare part D rebates, the key assumptions relate to the rebate
percentages by each pharmacy as determined in each pharmacy's contract with the Company and
forecasted number of prescriptions that will be filled by each pharmacy (referred to as payor mix). For
co-pay card redemptions, the key assumptions relate to expected settlement rate for sales units remain-
ing in the channel that have yet to be presented under co-pay terms. These assumptions are made based
on historical actuals, which are used to estimate forecasted trends, including payor mix and settlement
rates, which are used to estimate the expected settlement of managed care rebates and Medicare part
D rebates, and co-pay card redemption, and the specific terms in the individual agreements. Unsettled
rebates are recognized as liabilities when the timing or amount is uncertain. Where absolute amounts are
known, the rebates are recognized as accruals. Please refer to note 27 for further information on sales
rebates and liabilities.
iXBRL reporting
Zealand Pharma is required to file its annual report in the European Single Electronic Format (‘ESEF’) and
The Annual Report is therefore prepared in the XHTML format that can be displayed in a standard brows-
er. The primary statements in the consolidated financial statements are tagged using inline eXtensible
Business Reporting Language (iXBRL). The iXBRL tags comply with the ESEF taxonomy, which is included
in the ESEF Regulation and developed based on the IFRS taxonomy published by the IFRS Foundation.
Where a financial statement line item is not defined in the ESEF taxonomy, an extension to the taxono-
my has been created. Extensions are anchored to elements in the ESEF taxonomy, except for extensions
which are subtotals. The Annual Report submitted to the Danish Financial Supervisory Authority consists
of the XHTML document together with certain technical files, all included in a file named 549300ITB-
B1ULBL4CZ12-2021-12-31-en.zip.
Note 2 – Going Concern uncertainties
The Company monitors its funding position on a monthly basis to ensure that it has access to sufficient li-
quidity to meet its forecasted cash requirements. Analyses are run to reflect different scenarios including,
but not limited to, cash runway, human capital resources and pipeline priorities in order to identify liquid-
ity risk and enable Management and the Board of Directors to prepare for new financing transaction and/
or take relevant expense management activities to allow the Company to continue as a going concern.
As of the date of these financial statements the Company, with it's current strategic plans, anticipates that
the current cash position and the cash requirements per the 2022 Annual Budget will provide a positive
cash runway until April 2023 but will exceed the terms of liquidity covenant as part of the Oberland Note
Purchase Agreement and hence, a working capital deficit in September 2022 without additional financing
and/or cost reductions. While reviewing the Company’s strategic plans and priorities, Management and
the Board of Directors are working on extending the cash runway by means of new additional funding for
the Company, either through issuance of shares, issuance of debt instruments, establishment of royalty
arrangements, divestments, expense management activities or a combination of such, and on this basis
believes it is probable that sufficient resources will be obtained in due time prior to the end of September
2022 to enable the Company to continue its activities as planned well into 2023. On this basis Manage-
ment has prepared the financial statements based on a going concern assumption.
Since such new source of funding is not obtained of the date of these financial statements, substantial
doubt regarding going concern exist, and therefore the Company may be unable to realize its assets and
discharge its liabilities in the normal course of business.
56Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 2
Notes
Note 3 – Revenue
Accounting policies
Revenue comprises milestone payments, license payments and sale of goods.
Milestone and license payments
Milestone payments related to the collaborative research agreements with commercial partners are
recognized when it is highly probable that Zealand Pharma will become entitled to the milestone which
is generally when the milestone is achieved. Royalty income from licenses is based on third-party sales of
licensed products and is recognized in accordance with contract terms in the period in which the sales
occur.
License payments which provide the buyer with the right to use the license as it exists at the date of trans-
fer are recognized upon transfer of the associated licensing rights at the point at which the buyer obtains
the right to use the license.
Upon entering into agreements with multiple components, Management determines whether individual
components are distinct, which is the case if the buyer can obtain benefits from the goods or service and
the promise is distinct within the context of the contract. If no individual components are distinct, the
contract is treated as having a single performance obligation.
Revenue from Alexion (license and collaboration agreement)
Revenue is recognized based on the percentage of completion of the R&D services, which is estimated
based on the expenses incurred during that period compared to planned service periods and budgetted
costs. Zealand applies the output based method (budget cost) when determining the timing of satisfac-
tion of performance obligations as the development services are performed by an indeterminate number
of acts over the development timeline.
Product sales
Product sales represent net invoice value less estimated sales rebates and product returns, which are
considered to be variable consideration and include significant estimates. Sales are recognised when
the control of the goods has been transferred to a third party. This is usually when title passes to the
customer, either on shipment or on receipt of goods by the customer, depending on local trading terms.
In markets where returns are significant, estimates of returns are accounted for at the point revenue is
recognised. Revenue is not recognised in full until it is highly probable that a significant reversal in the
amount of cumulative revenue recognised will not occur.
Recognized revenue can be specified as follows for all agreements and product sales:
DKK thousand 2021 2020 2019
Boehringer Ingelheim International GmbH 22,311 149,120 0
Alexion Pharmaceuticals Inc. 30,185 42,881 38,021
Protagonist Therapeutics, Inc. 25,381 0 0
Sanofi-Aventis Deutschland GmbH 30,669 0 0
Undisclosed counterpart 0 0 3,312
Total license and milestone revenue 108,546 192,001 41,333
Gross product sales 354,599 303,658 0
Sales rebates -157,016 -133,924 0
Returns and sales reductions -13,562 -8,421 0
Total net product sales 184,021 161,313 0
Total revenue 292,567 353,314 41,333
Total revenue recognized over time 30,185 42,881 38,021
Total revenue recognized at a point in time 262,382 310,433 3,312
57Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 3
Notes
Note 3 – Revenue (continued)
Revenue from Boehringer Ingelheim (BI)
In 2021, we recognized DKK 22.3 million (2020: DKK 149.1 million) as income from milestone payments.
Revenue from Alexion
In 2021, we recognized DKK 30.2 million (2020: DKK 42.9 million and 2019: DKK 38.0 million) as income
from the license, research and development agreement signed in March 2019 reflecting the progress on
the lead project. Under the agreement DKK 67.6 million is accounted for as deferred revenue at Decem-
ber 31, 2021.
In 2019, DKK 0.6 million of other revenue is recognized related to other projects with Alexion.
Revenue from Protagonist Therapeutics Inc.
In 2021, we recognized DKK 25.4 million as a milestone payment (2020 and 2019: DKK 0.0 million).
Revenue from other agreements
In 2021 and 2020, we recognized zero revenue from other agreements.
In 2019, we recognized DKK 3.3 million in revenue from a license option payment from an undisclosed
counterpart relating to a Material Transfer Agreement.
Revenue from Sanofi
In 2021, we recognized DKK 30.7 million as a milestone payment.
No revenue was recognized in 2020 or 2019.
Revenue from product sales
Revenue in 2021 of DKK 184.0 million from sale of goods comprise our current two products, V-Go
and Zegalogue. In 2020, we recognized DKK 161.3 million as net sales from goods sold generated from
our V-Go product. The rights to the V-Go product was acquired on April 2, 2020 as part of the business
combination described in note 31. Thus revenue from sale of the V-Go product recognized in 2020 solely
relates to the period April 2 - December 31.
Information about Geographical Areas
Net revenue in Germany comprises DKK 53.0 million (2020: DKK 149.1 million) in milestone revenue and
net revenue in United States comprise DKK 239.6 million (2020: DKK 204.2 million) including license
revenues and sale of goods. No other country accounts for more than 10% of the net total sales. In 2021
we had 3 significant customers with revenue from sale of goods. Customer A, amounted to DKK 67.2
million (2020: DKK 60.6 million), Customer B amounted to DKK 52.8 million (2020: DKK 48.4 million) and
Customer C DKK 45.0 million (2020: DKK 37.7 million).
Of the Company’s non-current assets, which comprise intangible assets, property, plant and equipment,
right-of-use assets and prepayments, DKK 184.8 million is located in Denmark and DKK 106.9 million in
United States.
58Zealand Pharma ∞ Annual Report 2021
Notes
Note 3 – Revenue (continued)
Accounting treatment for the Alexion Pharmaceuticals, Inc. Agreement
In March 2019, Zealand entered into a license, research and development agreement with Alexion Phar-
maceuticals, Inc. (Alexion) to develop novel therapies to treat complement mediated diseases. This agree-
ment provided Zealand an immediate cash injection as well as further external validation of Zealand’s
peptide platform.
The collaboration with Alexion is not limited to the project C3 but offers the potential to work on identi-
fication of peptide inhibitors to up to three additional components of the complement cascade. Zealand
will have responsibility for the C3 project and other targets up to IND and Alexion will then progress the
peptides into clinical development.
Under the Alexion license, research and development agreement, Zealand has received an upfront
non-refundable payment of USD 25 million for the C3 program and a concurrent USD 15 million equity
investment in Zealand at a premium to the market price. The agreement also provides the potential for
development-related milestones of up to USD 115 million, as well as up to USD 495 million in sales-re-
lated milestones and high single- to low double-digit royalty payments. The 3 additional programs will
provide further non-refundable upfront payments (USD 15 million each), development and sales mile-
stone and royalties.
The non-refundable up-front fee was allocated to the combined license, research and development ser-
vices, and is being recognized as revenue along with provision of the research and development services
under the lead program. Expenses to provide the services is being recognized when incurred. Further, the
premium over the market share price on the Zealand shares subscribed by Alexion, DKK 12.7 million, is
attributed to the Agreement as further consideration and consequently also recognized over the period
over which the R&D services are provided. Alexion has paid USD 40 million, corresponding to DKK 262.9
million that as of December 31, 2019 has affected equity by DKK 85.6 million, deferred revenue by DKK
139.9 million, and revenue by DKK 37.4 million in 2019. Hence the cash flow from operating activities was
DKK 177.3 million and the cash flow from financing activities was DKK 85.6 million.
In 2021 revenue of DKK 30.2 million (2020: DKK 42.9 million and 2019: DKK 38.0 million) was recognized.
Milestone payments, if any, will be recognized as revenue when the relevant milestones are achieved
as they relate to performance obligations already satisfied at this stage. Royalty payments, if any, will be
recognized along with the underlying sales.
Significant judgement applied (performance obligations and revenue recognition)
Determination of whether the license transferred and the research and development services constitute
separate performance obligations, or form part a single performance obligation comprising a combined
output has a significant impact on the accounting treatment. Zealand has applied significant judgment
to determine whether the promised services are distinct and concluded that Alexion cannot benefit from
the license alone. It is Zealand assessment that the R&D services under this agreement requires specif-
ic Zealand know-how and expertise which cannot be easily identified or sourced externally. Therefore,
Alexion would not in the absence of the contractual provisions have had the practical ability to engage a
third-party R&D service provider to provide the agreed R&D services.
Judgments and estimates in respect of output is made when entering the agreement and is based on
research and development budgets and plans. The planned service periods (output) and budget costs
for the respective research and development projects are assessed on an ongoing basis. If the expected
service period is changed significantly, this will require a reassessment.
All Zealand’s revenue-generating transactions have been subject to such evaluation by management.
As the nature of the collaboration with Alexion may affect the accounting treatment of the agreement,
Zealand has considered whether the agreement takes the form of a collaborative partnership with Alexion
rather than a customer-vendor agreement. After consideration of all facts and circumstances, Zealand
has assessed that the agreement takes the form of a customer-vendor relationship. Accordingly, the
agreement is treated under the guidelines of IFRS 15 Revenue from Contracts with Customers.
As any additional programs are optional and paid for separately, they are not considered part of the initial
agreement. It has been considered whether the options for additional components represent a material
right and, thus, a separate performance obligation under the initial agreement to which a portion of the
initial upfront payment should be allocated. Zealand has determined that the probability of exercising the
option is low and in combination with the fact that the development is significantly less advanced than
the lead target, we have determined that the options do not represent a material right.
Accounting treatment for revenue from product sales
Revenue from sale of goods is recognized at a point in time when control of the goods is transferred to
the customer and recorded net of adjustments for managed care rebates, wholesale distributions fees,
cash discounts, prompt pay discounts, and co-pay card redemptions, all of which are established at the
time of sale.
59Zealand Pharma ∞ Annual Report 2021
Notes
Note 3 – Revenue (continued)
In order to prepare the consolidated financial statements, the company is required to make estimates
regarding the amounts earned or to be claimed on the related product sales, including the following:
• Managed care and Medicare rebates, which are based on the estimated end user pay or mix and related
contractual rebates;
• Distribution fees, prompt pay discounts and other discounts, which are recorded based on specified
payment terms, and which vary by customer and other incentive programs; and
• Co-pay card redemption charges which are based on the net transaction costs of prescriptions filled
via a company-subsidized card program and other incentive programs.
Zealand believes rebates and co-pay card redemptions related to sales in the U.S. are complex in nature
and establishing appropriate provisions requires assessment of multiple factors as well as significant
judgement and estimation by management as not all conditions are known at the time of sale.
The Group has concluded that it is the principal in which revenue arrangements since it controls the
goods before transferring them to the customer.
We record allowances for product returns as a reduction of revenue at the time product sales are record-
ed. Several factors are considered in determining whether an allowance for product returns is required,
including the customers’ return rights and our historical experience with returns and the amount of prod-
uct sales in the distribution channel not consumed by patients and subject to return. Management replies
on historical return rates to estimate returns. In the future, as any of these factors and/or the history of
product returns change, adjustments to the allowance for product returns will be reflected.
Accounting for the Sanofi License Agreement
All future royalties and all but up to DKK 98.4 million (USD 15 million) of future milestone payments relat-
ing to the Sanofi License Agreement were sold to Royalty Pharma in September 2018.
In 2021, Zealand Pharma received a milestone of DKK 30.7 million (USD 5.0 million. None in 2020 or
2019), and as of December 31, 2021, there is one milestone that remains outstanding for DKK 65.6 million
(USD 10 million). Outstainding as of December 31, 2020 and 2019 were DKK 98.4 million (USD 15 million)
Accounting for the Boehringer Ingelheim License Agreements
In 2011, Zealand entered into a license, research and development collaboration agreement with
Boehringer Ingelheim International GmbH (BI) to advance novel GLP-1/glucagon dualacting peptide
receptor agonists (GGDAs) for the treatment of patients with type 2 diabetes and obesity. Under the terms
of the 2011 BI License Agreement, BI paid a fixed amount per full-time employee and other costs related
to all research, development and commercialization in respect of the compounds covered by the agree-
ment.
Zealand is eligible to receive license and milestone payments of up to EUR 386 million, of which EUR 345
million was outstanding at December 31, 2021, related to the achievement of pre-specified development,
regulatory and commercial milestones for the lead product. We are also eligible to receive tiered royalties
ranging from high single-digit to low double-digit percentages on BI’s sales of all products stemming
from this collaboration. In addition, we retain copromotion rights in Scandinavia.
In 2014, Zealand entered into a second global license, research and development collaboration agree-
ment with BI (the 2014 BI License Agreement). This agreement pertained to a collaboration on a specific
therapeutic peptide project from our portfolio of preclinical programs for a period of up to four and a half
years, with the aim of developing novel drugs to improve the treatment of patients with cardiometabolic
diseases. In 2015, BI selected a novel peptide therapeutic to be advanced into preclinical development
under this agreement.
No product candidates out licensed to BI are currently marketed, and accordingly we have not received
any royalty payments to date under our licensing agreements with BI.
Milestone payments are recognized as revenue when the relevant milestones are achieved.
60Zealand Pharma ∞ Annual Report 2021
Notes
Note 4 – Royalty expenses
Accounting policies
Royalty expenses comprise contractual amounts payable to third parties that are derived from milestone
payments. Royalty expense is recognized in the income statement when the related payments and mile-
stone events in the corresponding collaboration agreements materialize.
We have agreed to pay some of our revenue in deferred payments or royalties to third parties. At the time
of the dissolution of a former joint venture with Elan Corporation, plc (Elan) and certain of its subsidiaries
that were party to the joint venture agreement with us, we agreed to pay royalties to Elan – now Alkermes
plc, as successor in interest to a termination agreement between us and the Elan entities – including 13%
of future payments we receive in respect of lixisenatide under the Sanofi License Agreement.
In addition, we have agreed to pay a royalty of 0.5% of the total amounts we receive in connection with
our SIP-modified peptides, including lixisenatide, to one of the inventors of our SIP technology, who is
one of our employees. The royalty to be paid to this inventor is calculated on the basis of all the amounts
we receive, including license payments, milestone payments and sales. In 2021, 2020 and 2019, the royal-
ty expenses relate to mentioned inventor.
Note 5 – Research, development, sales, marketing and administrative expenses
Accounting policies
Research expenses comprise salaries, share-based compensation, contributions to pension schemes and
other expenses, including patent expenses, as well as depreciation and amortization directly attributable
to the Group’s research activities. Research expenses are recognized in the income statement as incurred.
Development expenses comprise salaries, share-based compensation, contributions to pension schemes
and other expenses, including depreciation and amortization, directly attributable to the Group’s devel-
opment activities. Development expenses are recognized in the income statement as incurred, except
where the capitalization criteria are met.
No indirect costs that are not directly attributable to research and development activities are included in
the disclosure of research and development expenses recognized in the income statement. Overhead
expenses have been allocated to research and development or administrative expenses based on the
number of employees in each department, determined according to the respective employees’ associat-
ed undertakings.
Research and development expenses
A development project involves a single product candidate undergoing a large number of tests to
demonstrate its safety profile and its effect on human beings, prior to obtaining the necessary final
approval for the product from the appropriate authorities. The future economic benefits associated with
the individual development projects are dependent on obtaining such approval. Considering the signif-
icant risk and duration of the development period for biological products, Management has concluded
that whether the intangible asset will generate probable future economic benefits cannot be estimated
with sufficient certainty until the project has been finalized and the necessary final regulatory approval of
the product has been obtained. Accordingly, Zealand has not recognized such assets at this time, and all
research and development expenses are therefore recognized in the income statement when incurred.
Capitalization of development costs assumes that, in the Group’s opinion, the development of the
technology or the product has been completed, all necessary regulatory and public registrations and
marketing approvals have been received, and expenses can be reliably measured. Furthermore, it must be
established that the technology or the product can be commercialized and that the future income from
the product can cover not only the production, selling and administrative expenses but also development
expenses. Zealand has not capitalized any development expenses in 2021, 2020 or 2019.
61Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 4-5
Notes
DKK thousand 2021 2020 2019
Staff costs, cf. note 7 -239,512 -204,210 -178,089
Depreciation and impairment losses, property,
plant and equipment and right-of-use assets, cf. note 13-15 -20,636 -17,417 -4,422
Other external research and development costs -328,305 -382,454 -378,912
Total research and development costs -588,453 -604,081 -561,423
Sale and Marketing expenses
Sales and marketing expenses include expenses for sales personnel and expenses related to company
premises in the US used for sales activities. Other significant expenses include product demonstration
samples, trade show expenses, professional fees for our contracted customer support center and other
consultants, insurance, facilities and information technology expenses. Overhead expenses have been
allocated to sales and marketing expenses according to the number of employees in each department,
based on the respective employees’ associated undertakings.
DKK thousand 2021 2020 2019
Staff costs, cf. note 7 -145,245 -130,568 0
Depreciation and impairment losses, property,
plant and equipment and right-of-use assets, cf. note 13-15 -92 -640 0
Other external sale and marketing costs -229,932 -154,048 0
Total Sale and Marketing expenses -375,269 -285,256 0
Note 5 – Research, development, sales, marketing and administrative expenses (continued)
Administrative expenses
Administrative expenses include expenses for administrative personnel, expenses related to compa-
ny premises, depreciation on tangible assets and right-of-use assets, investor relations, etc. Overhead
expenses have been allocated to research and development or administrative expenses according to the
number of employees in each department, based on the respective employees’ associated undertakings.
DKK thousand 2021 2020 2019
Staff costs, cf. note 7 -127,630 -78,639 -40,141
Depreciation and impairment losses, property,
plant and equipment and right-of-use assets, cf. note 13-15 -4,390 -5,042 0
Other external administrative costs -128,967 -119,089 -27,740
Total Administrative expenses -260,987 -202,770 -67,881
Note 6 – Fees to auditors appointed at the Annual General Meeting
DKK thousand 2021 2020 2019
Audit 7,879 5,941 1,847
Audit-related services and other assurance engagements 721 1,002 1,731
Other 0 0 12
Total fees 8,600 6,943 3,590
The fee for audit-related services and other assurance engagements and other services provided to the
Group by EY Godkendt Revisionspartnerselskab in 2021 and 2020 consisted of Audit of Annual Report,
Audit of 20-F SEC filing, including SOX 404b attestation procedures, quarterly reviews, other auditor’s
reports on various statements for public authorities, and other accounting advisory services. (Deloitte
Statsautoriseret Revisionspartnerselskab in 2019).
62Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 6
Notes
Note 7 – Information on staff and remuneration
Accounting policies
The value of services received as consideration for granted warrants is measured at the fair value of the
warrant. The fair value of equity settled share-based compensation is determined at the grant date and is
recognized in the income statement as employee benefit expense over the period in which the warrants
vest. The offsetting entry to this is recognized under equity. An estimate is made of the number of war-
rants expected to vest. Subsequently, an adjustment is made for changes in the estimate of the number
of warrants, which will vest, so the total expense is equal to fair value of the actual number of warrants
which vest. The fair value of warrants granted is estimated using the Black–Scholes pricing model and
Monte Carlo model in programs with value caps whereas the average share price prior to grant is used for
RSU and PSUs.
DKK thousand 2021 2020 2019
Total staff costs can be specified as follows:
Wages and salaries 410,007 337,295 175,104
Share-based compensation 53,737 30,485 14,764
Pension schemes (defined contribution plans) 23,993 16,716 13,430
Other payroll and staff-related costs 54,541 37,241 14,932
Total staff costs 542,278 421,737 218,230
The amount is charged as:
Research and development expenses 239,512 204,210 178,089
Sale and marketing expenses 145,245 130,568 0
Administrative expenses 127,630 78,639 40,141
Cost of goods sold 20,954 3,713 0
Inventory 8,937 4,607 0
Total staff costs 542,278 421,737 218,230
Average number of employees 346 297 173
63Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 7
Notes
Note 7 – Information on staff and remuneration (continued)
2021 2020 2019
Base Committee Total Base Committee Total Base Committee Total
DKK thousand board fees fees fees board fees fees fees board fees fees fees
Remuneration to the Board of Directors
Martin Nicklasson 999 208 1,207 750 100 850 750 100 850
Kirsten Drejer 446 208 653 500 0 500 467 0 467
Alain Munoz 308 415 723 400 50 450 400 50 450
Michael Owen 308 415 723 400 50 450 400 50 450
Bernadette Mary Connaughton 308 346 653 400 33 433 267 0 267
Jeffrey Berkowitz 308 346 653 400 50 450 267 33 300
Leonard Kruimer 308 553 861 400 150 550 267 100 367
Jens Peter Stenvang
1
308 0 308 400 0 400 400 0 400
Gertrud Koefoed Rasmussen
1,2
67 0 67 267 0 267 0 0 0
Frederik Barfoed Beck
1
308 0 308 267 0 267 0 0 0
Iben Louise Gjelstrup¹ 308 0 308 267 0 267 0 0 0
Hanne Heidenheim Bak² 0 0 0 133 0 133 400 0 400
Rosemary Crane 0 0 0 0 0 0 133 17 150
Catherine Moukheibir 0 0 0 0 0 0 133 50 183
Anneline Nansen
3
33 0 33 0 0 0 0 0 0
Total 4,009 2,491 6,497 4,584 433 5,017 3,884 400 4,284
1
Employee-elected board members; the table only includes remuneration for board work.
2
Hanne Heidenheim Bak resigned from the board in 2020 and Gertrud Koefod Rasmussen resigned from the Board in 2021.
3
Anneline Nansen joined the Board in 2021.
The disclosed remuneration for board members excludes minor mandatory social security costs paid by the company.
It also excludes reimbursed expenses incurred in connection with board meetings, such as travel and accommodation.
64Zealand Pharma ∞ Annual Report 2021
Notes
Note 7 – Information on staff and remuneration (continued)
Other Share-based
Pension short term compensation Severance
DKK thousand Base salary Bonus contribution benefits expenses payments Total
2021
Remuneration to the Executive Management
Emmanuel Dulac¹ 5,099 3,059 1,020 243 12,182 0 21,603
Adam Sinding Steensberg² 3,056 1,193 611 286 4,829 0 9,975
Matthew Donald Dallas³ 2,878 1,182 37 48 4,086 0 8,232
Total 11,033 5,434 1,668 577 21,097 0 39,810
Total Other Corporate Management⁵ 9,022 3,429 497 564 8,319 2,772 24,602
Total 20,055 8,863 2,165 1,141 29,416 2,772 64,412
2020
Remuneration to the Executive Management
Emmanuel Dulac¹ 4,950 3,267 990 699 2,534 0 12,440
Adam Sinding Steensberg² 2,967 1,266 593 282 2,281 0 7,389
Matthew Donald Dallas³ 2,721 1,191 36 15 1,707 0 5,670
Total 10,638 5,724 1,619 996 6,522 0 25,499
Total Other Corporate Management⁵ 6,386 2,739 313 286 3,423 0 13,147
Total 17,024 8,463 1,932 1,282 9,945 0 38,646
2019
Remuneration to the Executive Management
Emmanuel Dulac¹ 3,100 9,072 620 855 832 0 14,479
Adam Sinding Steensberg² 2,807 1,032 505 269 2,304 0 6,917
Matthew Donald Dallas³ 588 534 0 5 82 0 1,209
Britt Meelby Jensen⁴ 1,745 419 175 60 0 0 2,399
Mats Blom⁴ 655 248 66 61 1,677 0 2,707
Total 8,895 11,305 1,366 1,250 4,895 0 27,711
Total other Corporate Management⁵ 6,559 2,580 389 46 1,972 0 11,546
Total 15,454 13,885 1,755 1,296 6,867 0 39,257
¹ Emmanuel Dulac was appointed as CEO at April 25, 2019.
² Former Interim CEO Adam Sinding Steensberg was appointed EVP,
R&D and CMO at April 25, 2019.
³ Matthew Donald Dallas was appointed CFO at October 10, 2019.
⁴ Former CEO Britt Meelby Jensen and former CFO Mats Blom
resigned from Zealand at February 28, 2019 and March 28, 2019,
respectively.
⁵ Other Corporate Management in 2021 comprised three members
(2020: three and 2019: three.)
65Zealand Pharma ∞ Annual Report 2021
Notes
Note 7 – Information on staff and remuneration (continued)
In order to motivate and retain key employees, management and board of directors and encourage the
achievement of common goals for employees, management and shareholders, the Group has established
this incentive plan based on RSUs, PSUs and warrants programs.
Total share-based costs split on share-based type 2021 2020 2019
PSUs 14,765 900 500
RSUs 23,701 1,100 0
Warrants 15,271 28,485 14,264
Total 53,737 30,485 14,764
Total share-based costs split on cost type 2021 2020 2019
Cost of goods sold 521 0 0
Research and development expenses 22,158 14,005 12,191
Sale and Marketing expenses 2,259 6,045 0
Administrative expenses 27,972 10,435 2,573
Inventory 827 0 0
Total 53,737 30,485 14,764
PSU programs
The number of performance share units granted in 2021 are 282,852 of which 185,162 were granted on
May 12 and 97,090 on May 27. The value is determined based on the Company's share price on Nasdaq
Copenhagen A/S on the day of the grant.
The programs granted in 2021 are initially valued at DKK 51.7 million (2020: DKK 3.2 million).
The PSU's vest linear or gradually over 3 years.
Movement table of PSU granted shares below:
No of PSUs 2021 2020 2019
Number of shares
At January 1 19,765 19,765 0
Granted during the year 282,852 0 22,915
Vested during the year 0 0 0
Forfeited during the year -30,856 0 -3,150
At December 31 271,761 19,765 19,765
RSU programs
The number of restricted share units granted in the period April 29 to December 7, 2021, totals 507,461.
The value is determined based on the Company's share price on Nasdaq Copenhagen A/S on the day of
the grant.
The programs granted in 2021 are initially valued at DKK 92.2 million (2020: DKK 6.1 million). The RSU's
vest linear or gradually over 3 years.
Movement table of RSU granted shares below:
No of RSUs 2021 2020 2019
Number of shares
At January 1 27,466 0 0
Granted during the year 507,461 27,466 0
Vested during the year -163 0 0
Forfeited during the year -74,675 0 0
At December 31 460,089 27,466 0
66Zealand Pharma ∞ Annual Report 2021
Notes
Note 7 – Information on staff and remuneration (continued)
Employee warrant programs
Incentive programs have been offered in 2005, 2007 and in the 2009-2020 period. No new warrant pro-
grams were issued in 2021.
The employee incentive programs of
Warrant programs existing during the period 2020 2015
Maximum years of options granted 10 years 5 years
Method of settlement equity-settled equity-settled
2021
Outstanding at the beginning of the period 63,217 1,908,920
Granted during the period 0 0
Forfeited during the period 0 -214,348
Exercised during the period 0 -233,595
Expired during the period 0 -47,000
Outstanding at the end of the period 63,217 1,413,977
Exercisable at the end of the period 21,073 529,596
Warrants outstanding at the end of the period
Range of exercise prices 216.8 90-224.4
Weighted-average remaining contractual life 8.7 3.8
Number held by Executive Management 0 353,409
The Board of directors have not been granted warrants.
The employee incentive programs of
Warrant programs existing during the period 2020 2015 2010
Maximum years of options granted 10 years 5 years 5 years
Method of settlement equity-settled equity-settled
2020
Outstanding at the beginning of the period 0 1,647,788 42,359
Granted during the period 63,217 631,288 0
Forfeited during the period 0 -53,747 0
Exercised during the period 0 -276,409 -42,359
Expired during the period 0 -40,000 0
Outstanding at the end of the period 63,217 1,908,920 0
Exercisable at the end of the period 0 301,529 0
Warrants outstanding at the end of the period
Range of exercise prices 216.8 90.0-224.4 101.2-127.1
Weighted-average remaining contractual life 9.7 4.9 0
Number held by Executive Management 0 373,409 0
67Zealand Pharma ∞ Annual Report 2021
Notes
Note 7 – Information on staff and remuneration (continued)
Warrants exercised during the period 2021 2020
Weighted-average share price at the date of exercise 186.1 234.7
Weighted-average exercise price for warrants expired during the period 142.5 101.2
Weighted-average exercise price for warrants forfeited during the period 206.2 169.2
Weighted-average exercise price for warrants outstanding at period end 159.6 158.5
Determination of fair value of the warrants granted during the period
The exercise price is determined by the closing price of Zealand’s shares on Nasdaq Copenhagen on the
day prior to the grant date. For warrants granted before April 19, 2018, the exercise price was determined
by the closing price of Zealand’s shares on Nasdaq Copenhagen on the day prior to the grant date plus
10%.
Warrants granted prior to April 15, 2020 expire automatically after five years. Warrants vest either after 3
years of service, with 1/36 each month from the grant date, or with 1/3 after one year, 1/3 after two years
and 1/3 after three years. The service cost is recognized over the respective vesting periods. Warrants
granted from April 15, 2020 and going forward expires automatically after 10 years.
Warrants may be exercised four times a year during a four-week period starting from the date of the pub-
lication of Zealand’s Annual Report or interim reports. Dividend is not expected.
For warrants granted before January 1, 2019, the volatility rate used is based on the 5-year historical vola-
tility of the Zealand share price. For warrants granted after January 1, 2019, the volatility rate used is based
on a historical volatility of the Zealand share price calculated as the vesting period of 3 years plus 50% of
the exercise period (2020: 7 years, 2019: 2 years).
The fair value of the warrants compensation granted in 2020 was determined using the Black-Scholes
and Monte Carlo model using the following inputs as at day of grant and using average fair market value
for RSUs and PSUs:
Grant year 2021 2021 2020 2020 2019 2019
Type PSUs RSUs RSUs Warrants PSU Warrants
Term 36 months 36 months 36 months Up to 78 36 months Up to 48
months months
Weighted average 216.8 127.0
share price (DKK) - - - to 224.4 - to 220.0
Share price at 185.9- 131.2- 216.8- - 138.6 -
grant date (DKK) 191.6 207.6 224.4
Exercise price (DKK) 0 0 0 224.1 0 127.0
to 220.0
Volatility (%) N/A N/A N/A 44.68 N/A 41.9
to 46.45 to 43.5
Risk-free N/A -0.31 N/A -0.45
interest rate (%) N/A N/A to -0.41 to -0.63
Exercise period N/A Apr'21 N/A Jun'20
to-from N/A N/A to Apr'30 to Dec'24
No granted 282,852 507,461 21,602 631,288 22,915 641,029
Cost price (DKK) 185.9- 131.2- 216.8 48.4 138.6 41.9
191.6 207.6 to 224.4 to 95.4 to 69.5
68Zealand Pharma ∞ Annual Report 2021
Notes
Note 8 – Other operating income and expenses
Accounting policies
Other operating income and expenses comprises gains from sale of intangible assets, research funding
from business partners and government grants and bargain purchase gain.
Research funding is recognized in the period when the research activities have been performed and gov-
ernment grants are recognized periodically when the work supported by the grant has been reported.
Bargain purchase are recognized when the purchase price allocation is finalized.Government grants are
recognized when a final and firm right to the grant has been obtained. Government grants are included in
Other operating income, as the grants are considered to be cost refunds.
DKK thousand 2021 2020 2019
Government grants 759 602 444
Gain from Bargain Purchase, cf. note 31 0 36,395 0
Total other operating income 759 36,997 444
Loss on retirement of fixed assets -2,173 0 0
Total other operating expenses -2,173 0 0
Zealand Pharma received government grants in the periods 2021, 2020 and 2019.
A bargain purchase gain of DKK 36 million was recognized in 2020 as part of the acquistion explained in
note 31.
Note 9– Financial income
Accounting policies
Financial income includes interest from trade receivables, as well as realized and unrealized exchange
rate adjustments, fair value adjustments of other investments and marketable securities and dividends
from marketable securities.
Interest income is recognized in the income statement in accordance with the effective interest rate
method.
DKK thousand 2021 2020 2019
Interest income from financial assets measured
at amortized costs 44 895 5,413
Fair value adjustments of marketable securities, cf. note 22 1,852 0 837
Fair value adjustments of other investments, cf. note 16 0 936 2,009
Exchange rate adjustments (primarily on USD deposits) 39,315 0 5,518
Dividend, marketable securities 0 191 878
Total financial income 41,211 2,022 14,655
69Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 8-9
Notes
Note 10 – Financial expenses
Accounting policies
Financial expenses include interest expenses, as well as realized and unrealized exchange rate adjust-
ments, interest on lease obligations and fair value adjustments of securities.
Interest expense is recognized in the income statement in accordance with the effective interest rate
method.
DKK thousand 2021 2020 2019
Interest expenses -4,091 -2,895 -3,205
Fair value adjustments of marketable securities, cf. note 22 0 -2,103 0
Fair value adjustments of other investments, cf. note 16 -8,217 0 0
Other financial expenses -3,473 -4,829 -185
Exchange rate adjustments (primarily on USD deposits) 0 -39,487 0
Total financial expenses -15,781 -49,314 -3,390
70Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 10 NY
Notes
Note 11 – Income tax
Accounting policies
Income tax on results for the year, which comprises current tax and changes in deferred tax, is recog-
nized in the income statement, whereas the portion attributable to entries in equity is recognized directly
in equity.
Current tax liabilities and current tax receivables are recognized in the statement of financial position as
tax calculated on the taxable income for the year adjusted for tax on previous years’ taxable income and
taxes paid on account/prepaid.
Deferred tax is measured according to the statement of financial position liability method in respect of
temporary differences between the carrying amount and the tax base of assets and liabilities.
Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax
assets are recognized to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recog-
nized if the temporary difference arises from the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting
profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the
initial recognition of goodwill.
Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidi-
aries except where the Group is able to control the reversal of the temporary difference and it is probable
that the temporary difference will not be reversed in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with such investments and interest are only recognized
to the extent that it is probable that there will be sufficient taxable profits against which to utilize the ben-
efits of the temporary differences and they are expected to be reversed in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each statement of financial position date and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
This judgment is made on an ongoing basis and is based on recent historical losses carrying more weight
than factors such as budgets and business plans for the coming years, including planned commercial
initiatives. The creation and development of therapeutic products within the biotechnology and phar-
maceutical industry is subject to considerable risks and uncertainties. Zealand Pharma Group has so far
reported significant losses and, consequently, has unused tax losses.
Management has concluded that deferred tax assets should not be recognized at December 31, 2021
(none recognized in 2020 or 2019), except for the US entities, which are profitable and therefore recog-
nize deferred tax on the balance sheet.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities, they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current tax assets and liabilities on a net basis.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is set-
tled or the asset is realized, based on tax laws and rates that have been enacted or substantively enacted
at the statement of financial position date. Deferred tax from business combinations is initially recognized
at fair value.
Income tax receivables are recognized in accordance with the Danish tax credit scheme 'Skattekreditord-
ningen'. Companies covered by the tax credit scheme may obtain payment of the tax base of losses origi-
nating from research and development expenses of up to DKK 25 million (tax value of DKK 5.5 million).
71Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 11
Notes
Note 11 – Income tax (continued)
DKK thousand 2021 2020 2019
Net result for the year before tax -1,026,940 -839,653 -576,677
Corporate tax rate in Denmark 22.0% 22.0% 22.0%
Expected tax benefit/(expenses) -225,927 184,724 126,869
Adjustment for foreign tax rates 461 -769 0
Adjustment for non-deductible expenses 888 1,927 -947
Adjustment for non-taxable income 0 -6,844 964
Adjustment for warrants 11,573 2,387 8,664
Adjustment for R&D extra deduction -14,379 -8,811 1,676
Adjustment to prior year -12,602 931 0
Change in tax assets (not recognized) 231,196 -180,621 -132,090
Total income tax expense/benefit -8,790 -7,076 5,136
The above specifications related to warrants have been gathered in one line in 2021 and therefore the
comparative numbers have been adjusted accordingly.
DKK thousand 2021 2020 2019
Specification of deferred tax assets:
Tax losses carried forward (available indefinitely) 2,231,049 1,281,505 681,531
Research and development expenses 842,775 732,389 460,007
Intangible assets 51,154 40,373 35,849
Non-current assets 89,414 66,419 51,677
Liabilities 126,174 188,787 139,890
Other 55,075 58,483 70,306
Total temporary differences 3,395,641 2,365,956 1,439,260
Calculated potential deferred tax asset at local tax rate 749,198 514,239 316,637
Deferred tax asset not expected to be utilized -735,673 -505,869 -316,637
Recognized deferred tax asset 13,525 8,370 0
Under Danish tax legislation, Zealand is eligible to receive DKK 5.5 million in 2021 (DKK 5.5 million in 2020
and 2019) in tax return based on qualifying research and development expenses.
72Zealand Pharma ∞ Annual Report 2021
Notes
Note 12 – Basic and diluted earnings per share
Accounting policies
Basic result per share
Basic result per share is calculated as the net result for the period that is allocated to the parent compa-
ny’s ordinary shares, divided by the weighted average number of ordinary shares outstanding deducted
the treasury shares held by the company, cf. note 24.
Diluted result per share
Diluted result per share is calculated as the net result for the period that is allocated to the parent com-
pany’s ordinary shares, divided by the weighted average number of ordinary shares outstanding deducted
the treasury shares, and adjusted by the dilutive effect of potential ordinary shares held by the company,
cf. note 24.
The result and weighted average number of ordinary shares used in the calculation of basic and diluted
result per share, deducted treasury shares, are as follows:
DKK thousand 2021 2020 2019
Net result for the year -1,018,149 -846,729 -571,541
Net result used in the calculation of basic and
diluted earnings/losses per share -1,018,149 -846,729 -571,541
Weighted average number of ordinary shares 43,192,383 38,433,923 33,866,709
Weighted average number of treasury shares -322,988 -64,223 -64,223
Weighted average number of ordinary shares used
in the calculation of basic earnings per share 42,869,395 38,369,700 33,802,486
Weighted average number of ordinary shares used
in the calculation of diluted earnings per share 42,869,395 38,369,700 33,802,486
Basic earnings/loss per share (DKK) -23,75 -22.07 -16.91
Diluted earnings/loss per share (DKK) -23,75 -22.07 -16.91
The following potential ordinary shares are anti-dilutive at December 31, 2021 (anti-dilutive at December
31, 2020 and dilutive December 31, 2019) and are therefore not included in the weighted average number
of ordinary shares for the purpose of diluted earnings per share:
DKK thousand 2021 2020 2019
Outstanding warrants under the 2010 employee
incentive program 0 0 42,359
Outstanding warrants under the 2015 employee
incentive programs 1,413,977 1,908,920 1,647,788
Outstanding Restricted Share Units (RSUs) under
the LTIP programs 460,089 27,466 0
Outstanding Performance Share Units (PSUs) under
the LTIP program 271,761 19,765 19,765
Outstanding warrants under the 2020 employee
incentive program 63,217 63,217 0
Total outstanding warrants 2,209,044 2,019,368 1,709,912
- out of which these are dilutive 0 0 0
- out of which these are anti-dilutive 2,209,044 2,019,368 1,709,912
73Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 12
Notes
Note 13 – Intangible assets
Accounting policies
Separately acquired licenses, rights and patents are initially measured at cost. Licenses, rights and patents
acquired in connection with the purchase of a legal entity where substantially all of the fair value of the
gross assets acquired is concentrated in a single asset are considered an asset acquisition and initially
recognized at cost at the acquisition date. The cost accumulation model has been applied for accounting
for contingent considerations, whereby all further consideration is added when incurred, to the cost of
the asset initially recorded.
The acquired intangibles have a finite useful life and are subsequently carried at cost less accumulated
amortizations using the straight-line method over the estimated useful life and impairment losses. The
amortization periods are as follows:
License, rights and patents: Amortization period will be determined once these IP rights are available for
use
Intellectual property: 10 years
Physician relationship: 8 years
Amortizations will recognized in the income statement as Research & Development expenses when the
intangibles are available for use based on the determined useful life. Useful lifetime is assessed continu-
ously for all new acquired assets.
If circumstances or changes in Zealand's operations indicate that the carrying amount of the intangibles
may not be recoverable, Management will review the intangibles for impairment. Refer to note 17.
At December 31, 2021, licenses, rights and patents comprise a right that will be included in a future devel-
opment project originating from the acquisition of Encycle Therapeutics in October 2019. The useful life
will be determined when the intangible asset is in the location and condition necessary for it to be capa-
ble of operating in the manner intended by management, which is when the amortizations will begin.
The right has been measured based on the overall cost of the transaction less the fair value of the cash
balance and trade payables also acquired. The fair value of the contingent considerations related to En-
cycle Therapeutics was assessed to be zero as per the acquisition date due to Zealand applying the cost
accumulation model for accounting for contingent considerations, whereby all further consideration is
added when incurred, to the cost of the asset initially recorded.
Physician relationships and IP rights acquired through business combinations are measured at fair value at
the acquisition date and amortized on a systematic basis over their useful life 8 and 10 years respectively
(unless the asset has an indefinite useful life, in which case it is not amortized).
74Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 13
Notes
Note 13 – Intangible assets (continued)
Licenses
rights Intellectual Physician
DKK thousand and patents property relationship
Cost at January 1, 2021 2,530 13,692 60,576
Additions 0 0 0
Currency translation 0 0 5,037
Cost at December 31, 2021 2,530 13,692 65,613
Amortization and impairment at January 1, 2021 0 13,692 5,621
Amortization for the year 0 0 7,859
Currency translation 0 0 873
Amortization and impairment at December 31, 2021 0 13,692 14,353
Carrying amount at December 31, 2021 2,530 0 51,260
Amortization and impairment for the financial year
has been charged as:
Research and development expenses 0 0 0
Sale and marketing expenses 0 0 7,859
Administrative expenses 0 0 0
Total 0 0 7,859
Remaining amortization period - - 6.25 years
Licenses
rights Intellectual Physician
DKK thousand and patents property relationship
Cost at January 1, 2020 2,480 0 0
Additions due to business combinations, cf. note 31 0 13,692 68,459
Additions 0 0 0
Currency translations 50 0 -7,883
Cost at December 31, 2020 2,530 13,692 60,576
Amortization and impairment at January 1, 2020 0 0 0
Amortization for the year 0 957 5,901
Impairment, cf. note 17 0 12,735 0
Currency translation 0 0 -280
Amortization and impairment at December 31, 2020 0 13,692 5,621
Carrying amount at December 31, 2020 2,530 0 54,955
Amortization for the financial year has been charged as:
Sale and marketing expenses 0 13,692 5,901
Total 0 13,692 5,901
Remaining amortization period - - 7.25 years
75Zealand Pharma ∞ Annual Report 2021
Notes
Note 14 – Property, plant and equipment
Accounting policies
Plant and machinery, other fixtures and fittings, tools and equipment and leasehold improvements are
measured at cost less accumulated depreciation.
Cost comprises acquisition price and costs directly related to acquisition until the time when the Group
starts using the asset.
Tangible assets under construction are recorded as work in progress until construction has been com-
pleted and use of asset commenced.
The basis for depreciation is cost less estimated residual value at the end of the useful life. Assets are
depreciated using the straight-line method over the expected useful lives of the assets. The depreciation
periods are as follows:
Buildings 5-13 years
Plant and machinery 5-10 years
Other fixtures and fittings, tools and equipment 3-5 years
Gains and losses arising from disposal of plant and equipment are stated as the difference between the
selling price less the costs of disposal and the carrying amount of the asset at the time of the disposal.
Gains and losses are recognized in the income statement under Research and development expenses,
Sale and marketing expenses and Administrative expenses.
The fair value of property, plant and equipment is assessed equivalent to the carrying amounts.
At the end of each reporting period, the Group reviews the carrying amount of property, plant and equip-
ment as well as non-current asset investments to determine whether there is an indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset
is estimated to determine the extent of the impairment loss (if any). If it is not possible to estimate the re-
coverable amount of an individual asset, the Group estimates the recoverable amount of the cash-gener-
ating unit to which the asset belongs. If a reasonable and consistent basis of allocation can be identified,
assets are also allocated to cash-generating units, or allocated to the smallest group of cash-generating
units for which a reasonable and consistent allocation basis can be identified.
The recoverable amount is the higher of fair value less costs of disposal and value in use. The estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects the
current market assessments of the time value of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
No impairments to property. plant and equipment have been recognized for 2021, 2020 or 2019
76Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 14
Notes
Plant and Other fixtures Building Assets under
DKK thousand machinery and fittings improvements construction
Cost at January 1, 2020 57,153 12,501 13,773 14,001
Transfer 0 0 13,796 -13,796
Addition from
business combinations 33,875 2,572 1,707 2,984
Additions 8,479 1,566 14,889 109
Retirements -5,935 -985 -9,856 0
Currency translation -7,674 -375 -205 -275
Cost at December 31, 2020 85,898 15,279 34,104 3,023
Accumulated depreciation
at January 1, 2020 43,696 4,164 9,860 0
Transfer 0 0 0 0
Depreciation for the year 4,974 2,301 2,301 0
Retirements -4,304 -985 -9,804 0
Currency translation -379 1,462 -22 0
Accumulated depreciation
at December 31, 2020 43,987 6,942 2,335 0
Carrying amount
at December 31, 2020 41,911 8,337 31,769 3,023
Depreciation for the
financial year has been
charged as:
Research and
development expenses -4,128 -1,378 -1,910 0
Sale and marketing expenses -846 -282 -391 0
Administrative expenses 0 -640 0 0
Total -4,974 -2,301 -2,301 0
Note 14 – Property, plant and equipment (continued)
Plant and Other fixtures Building Assets under
DKK thousand machinery and fittings improvements construction
Cost at January 1, 2021 85,898 15,279 34,104 3,023
Transfer 949 664 0 -1,613
Additions 7,118 1,444 2,449 11,122
Retirements -3,169 -1,630 -84 -419
Currency translation 1 78 131 -1
Cost at December 31, 2021 90,797 15,835 36,600 12,112
Accumulated depreciation
at January 1, 2021 43,987 6,942 2,335 0
Transfer 0 0 0 0
Depreciation for the year 11,558 3,461 3,128 0
Retirements -1,330 -1,203 -73 0
Currency translation 1 40 44 0
Accumulated depreciation
at December 31, 2021 54,216 9,240 5,434 0
Carrying amount
at December 31, 2021 36,581 6,595 31,166 12,112
Depreciation for the
financial year has been
charged as:
Cost of goods sold -7,151 -121 0 0
Research and
development expenses -3,621 -2,568 -2,715 0
Sale and marketing expenses 0 -92 0 0
Administrative expenses -786 -680 -413 0
Total -11,558 -3,461 -3,128 0
77Zealand Pharma ∞ Annual Report 2021
Notes
Note 15 – Right-of-use assets and lease liabilities
Accounting policies
Contracts may contain both lease and non-lease components. The group allocates the consideration in
the contract to the lease and non-lease components according to the specific pricing of the services in
the agreements.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and condi-
tions. The lease agreements do not impose any covenants other than the security interests in the leased
assets that are held by the lessor.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
• fixed payments less any lease incentives receivable
• variable lease payment that are based on an index or a rate, initially measured using the index or rate as
at the commencement date
Lease payments to be made under reasonably certain extension options are also included in the meas-
urement of the liability.
Short-term and low value leases are also recognized as right-of-use assets.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be
readily determined, which is generally the case for leases in the Group, the Group’s incremental borrow-
ing rate is used, being the rate that the group would have to pay to borrow the funds necessary to obtain
an asset of similar value to the right-of-use asset in a similar economic environment with similar terms,
security and conditions.
The Group is exposed to potential future increases in variable lease payments based on an index or rate,
which are not included in the lease liability until they take effect. When adjustments to lease payments
based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use
asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to the
income statement over the lease period to ensure a constant periodic rate of interest on the remaining
balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives received
• any initial direct costs and restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term
on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use
asset is depreciated over the underlying asset’s useful life.
78Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 15
Notes
Note 15 – Right-of-use assets and lease liabilities (continued)
Amounts recognized in the statement of financial position
The statement of financial position shows the following amounts relating to right-of-use assets:
Other
Office fixtures and
DKK thousand Buildings fittings
As at January 1, 2021 126,821 1,177
Additions 18,677 1,512
Depreciation expense -13,177 -1,066
Currency translation 1,050 0
As at December 31, 2021 133,371 1,623
As at January 1, 2020 84,148 1,484
Additions due to business combination, cf. note 31 14,299 0
Additions 42,725 581
Retirements -6,035 -144
Reversal of depreciations 6,035 0
Depreciation expense -12,779 -744
Currency translation -1,572 0
As at December 31, 2020 126,821 1,177
The Group leases office buildings, equipment and vehicles. The rental contract for the HQ office building
has been made for a minimum period of 13 years (terminable by the landlord after 15 years). Management
has assessed the lease period to be 13 years. The rental contract for the US office site has been made
for a minimum period of 16 years. Equipment and vehicles are leased over a period of 3-4 years with no
extension option.
Variable lease payments are considered immaterial in 2021 and 2020.
Set out below are the carrying amounts of lease liabilities and the movements during the period:
2021 2020
As at January 1 130,119 85,760
Additions due to business combinations, cf. note 31 0 14,046
Additions 20,189 43,151
Accretion of interest 2,953 2,763
Payments -14,715 -14,098
Currency translation 977 -1,503
As at December 31 139,523 130,119
Current 14,897 14,072
Non-current 124,626 116,047
The following are the amounts recognized in income statement:
Depreciation expense of right-of-use assets -14,243 -13,524
Interest expense on lease liabilities -2,953 -2,763
Total amount recognized in profit and loss -17,196 -16,287
Cashflow -14,715 -14,098
Total cash outflow for leases -14,715 -14,098
Depreciation for the financial year has been charged as:
Research and development expenses -11,732 -10,001
Sale and marketing expenses 0 0
Administrative expenses -2,511 -3,523
Total -14,243 -13,524
79Zealand Pharma ∞ Annual Report 2021
Notes
Note 16 – Other investments
Accounting policies
Other investments are measured on initial recognition at cost, and subsequently at fair value. Changes in
fair value are recognized in the income statement under financial items.
The Group’s other investments consist of an investment in Beta Bionics, Inc., the developer of iLet™, a
fully integrated dual-hormone pump (bionic pancreas) for autonomous diabetes care. The investment
in Beta Bionics, Inc. is measured at fair value through profit and loss. This investment represents 1.6%
(2020:1.6%) ownership of Beta Bionics, Inc., and is measured at a fair value of DKK 26.9 million as of De-
cember 31, 2021 (DKK 32.3 million as of December 31, 2020).
In determining fair value, Zealand considered the impact of any recent share capital issuances by Beta Bi-
onics as an indicator of the fair value of the shares. In particular, Beta Bionics undertook a capital offering
in June 2019 and subsequent infliction points was used as the basis for determining fair value. Measure-
ment is considered a level 3 measurement.
The following have been recognized as financial items:
DKK thousand 2021 2020 2019
Other investments at January 1 32,333 35,557 32,582
Fair value adjustments -8,217 69 2,193
Currency adjustments 2,791 -3,293 782
Other investments at December 31 26,907 32,333 35,557
Note 17 – Impairment
Accounting policies
Assets with indefinite useful lives are annually tested for impairment and whenever there is an impairment
indication, whereas assets with finite useful lifetime are assessed for impairment indicators at the end of
each reporting period. If such impairment indicators exists, the recoverable amount, determined as the
higher amount of the fair value of the asset adjusted for expected costs to sell and the value in use of the
asset, is calculated. The value in use is calculated based on the estimated future cash flows, discounted by
using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset.
If the recoverable amount of an asset or its cash-generating unit is lower than the carrying amount, an
impairment charge is recognized in respect of the asset. The impairment loss is recognized in the income
statement. In addition, for goodwill and other intangible assets with indefinite useful lives, impairment
tests are performed at each balance sheet date, regardless of whether there are any indications of impair-
ment. For acquisitions, the first impairment test is performed before the end of the year of acquisition.
Key assumptions in the impairment test
The impairment assessment for 2020 identified a need for impairment on the V-Go related Intellectual
property of DKK 12.7 million. The impairment loss was primarily related to Management’s decision to allo-
cate resources to support future product launches while limiting the investment in the V-Go product.
Management has reassessed for 2021 whether indicators that the impairment loss recognized in 2020
may no longer exist or may have decreased. No such indicators were identified in 2021. Through the
assessment of impairment indicators regarding the V-Go intellectual property, Management identified
impairment indicators and an impairment test was performed by calculating recoverable amount of the
V-Go intellectual property.
The recoverable amount was determined based on a value in use calculation using cash flow and
projections for subsequent years up to and including 2030, equivalent to the expected useful life of the
intangible asset. The expected future net cash flows are determined based on budgets and business plans
approved by Management Board. From 2031 onwards, a perpetual cash flow decreasing by the terminal
growth rate of -50% is used. The pre-tax discount rate applied to the cash flow projections was 13 %. The
analysis showed a need of an impairment of DKK 12.7 million regarding the V-Go Intellectual property.
The amount is recognized as sales and marketing expenses in the income statement. Due to the full im-
pairment of the V-Go related intellectual property in 2020, no additional sensitivity analysis is performed.
80Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 16-17
Notes
Note 18 – Inventories
Accounting policies
Raw materials, work in progress and finished goods are measured at the lower of cost and net realizable
value. Cost is determined on a first in, first out basis and comprises direct materials, direct labor and an
appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis
of normal operating capacity. Costs of purchased inventory are determined after deducting rebates and
discounts. Net realizable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to complete the sale.
Inventory manufactured prior to regulatory approval (prelaunch inventory) is capitalized but immediately
provided for, until there is a high probability of regulatory approval for the product. A write-down is made
against inventory, and the cost is recognized in the income statement as research and development
costs. Once there is a high probability of regulatory approval being obtained, the write-down is reversed,
up to no more than the original cost.
We review our inventory for excess or obsolescence and write down inventory that has no alterna-
tive uses to its net realizable. Economic conditions, customer demand and changes in purchasing and
distribution can affect the carrying value of inventory. As circumstances warrant, we record provisions
for potentially obsolete or slow-moving inventory and lower of cost or net realizable value inventory
adjustments. In some instances, these adjustments can have a material effect on the financial results of
an annual or interim period. In order to determine such adjustments, we evaluate the age, inventory turns,
future sales forecasts and the estimated fair value of inventory.
DKK thousand 2021 2020
Raw materials 35,816 14,398
Work in process 29,588 13,723
Finished goods 53,032 36,919
Total 118,436 65,040
Direct costs 85,270 48,224
Indirect production costs 33,166 16,816
Write downs recognized on inventories were reflected in the cost of goods sold. They were comprised as
follows:
DKK thousand 2021 2020
Accumulated write downs, January 1 -6,948 0
Addition from business combination, cf. note 31 0 -11,294
Write downs in the reporting period -10,766 486
Utilization of write downs 12,641 3,860
Reversal of write downs 0 0
Exchange differences -119 0
Accumulated write downs, December 31 -5,192 -6,948
Cost of goods sold
Cost of goods sold includes raw materials, labor costs, manufacturing overhead expenses and reserves
for anticipated scrap and inventory obsolescence.
81Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 18
Notes
Note 21 – Other receivables
Accounting policies
Other receivables are measured on initial recognition at cost and subsequently at amortized cost.
DKK thousand 2021 2020
VAT 10,682 3,887
Other 5,120 6,055
Total other receivables 15,802 9,942
Note 22 – Marketable securities
Accounting policies
The Group’s Marketable securities portfolio comprises an equity investment in a bond portfolio. The
investment is categorized as equity instruments classified at fair value through profit or loss. Refer to note
30, Financial risks.
A net fair value adjustment of DKK 1.9 million from marketable securities have been recognized in finan-
cial income in 2021 (2020: DKK -2.1 million in financial expenses, and 2019: DKK 0.8 million in financial
income).
Note 19 – Trade receivables
Accounting policies
On initial recognition, receivables are measured at fair value. The Group holds the trade receivables with
the objective to collect the contractual cash flows and therefore measures them subsequently at amor-
tized cost.
Trade receivables are written down for expected credit losses. The Group applies the simplified approach
in IFRS 9 to measuring expected credit losses which uses a lifetime expected loss allowance for trade
receivables and contract assets. A write-down is recognized in sales and marketing expenses.
There are no material overdue receivables and the write-down for expected credit losses is not material.
At December 31, 2021 and 2020, Zealand had no trade receivables related to milestone payments.
Note 20 – Prepaid expenses
Accounting policies
Prepaid expenses comprise amounts paid in respect of goods or services to be received in subsequent
financial periods. Clinical trials, which are outsourced to Clinical Research Organizations (“CROs”), take
several years to complete. As such, Management is required to make estimates based on the progress
and costs incurred to-date for the ongoing trials. Judgements are made in determining the amount of
costs to be expensed during the period, or recognized as prepayments or accruals on the statement of
financial position.
Other receivables are measured at amortized cost less impairment. Prepayments include expenditures
related to future financial periods and are measured at nominal value.
The increase in Prepaid expenses of DKK 32.8 million from 2020 to 2021 is primarily related to higher
insurance costs for coverage of Management and Board members and timing of invoices received from
the Contract Research Organizations (CRO's).
82Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 19-22
Notes
Note 23 – Cash and cash equivalents
Accounting policies
Cash is measured on initial recognition at cost.
DKK thousand 2021 2020
DKK 11,336 286,222
USD 1,098,160 568,444
EUR 19,607 105,555
Total cash and cash equivalents 1,129,103 960,221
Cash includes proceeds from draw down on “Oberland”, USD 100 million. As discussed in note 25, the
loan is subject to a liquidity covenant under which the Group must hold at least USD 100 million until cer-
tain conditions are met.
Note 24 – Share capital
Accounting policies
Consideration paid for the acquisition of treasury shares transactions is recognized directly in equity with-
in treasury shares reserve. Capital reductions through cancellation of treasury shares reduce the share
capital by an amount equal to the original cost price of the shares. Dividend payments are recognized as
a deduction of equity and a corresponding liability when declared.
No, of shares (thousand) 2021 2020
January 1 39,800 36,055
Increase due to issue of new shares 3,834 3,745
December 31 43,634 39,800
The share capital solely consists of one class of ordinary shares all issued of DKK 1 each and all shares
rank equally. The shares are negotiable instruments with no restrictions on their transferability. All shares
have been fully paid. At the annual general meeting on April 2, 2020 Zealand was authorized to increase
Note 24 – Share capital (continued)
the nominal share capital by nominally DKK 9,013,665 during the period until April 2, 2025. At December
31, 2021 nominally DKK 1,986,547 of the authorization remains.
On February 1, 2021 a total of 3.600.841 new shares have been subscribed through a private and direct
shares issue with a net proceeds of DKK 745.4 million. In the period 19 March, 2021 to 10 December,
2021, a total of 233.595 new shares have been issued due to exercise of warrant programs with a net
proceeds of DKK 26.1 million. The expenses related to share issues amounts to DKK 46.9 million.
On June 22, 2020 a total of 2,684,461 new shares have been subscribed through a private and direct
shares issue with a net proceeds pf DKK 655.0 million. On March 26, a total of 741,816 new shares have
been subscribed through a private share issue to US based investors with a net proceeds of DKK 136.5
million. The cost of share issues amounts to DKK 42.7 million.
Expenses directly related to capital increases are recognized in equity.
At December 31, 2021, there were 418,247 treasury shares (2020: 64,223), equivalent to 1.0% (2020: 0.2%)
of the share capital and corresponding to a market value of DKK 60.7 million (2020: DKK 14.1 million). The
treasury shares are allocated to performance shares units (PSUs) and restricted stock units (RSUs).
Rules on changing the Articles of Association
All resolutions put to the vote of shareholders at general meetings are subject to adoption by a simple
majority of votes, unless the Danish Companies Act 'Selskabsloven' or our Articles of Association pre-
scribe other requirements.
83Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 23-24
Notes
Note 25 – Borrowings
Accounting policies
For accounting policy we refer to note 1.
On December 30, 2021, the Group entered into a loan agreement with Oberland. The agreement com-
prises of three tranches of which the first tranche of USD 100 million was drawn down on December 31,
2021. Tranche 2 can be drawn down subject to obtaining FDA marketing approval for Glepaglutid where-
as tranche 3 can be draw down only upon Oberland’s explicit acceptance.
Loan terms
Loan amount, tranche 1: 100 MUSD
Loan amount, tranche 2: 50 MUSD to be drawn no later than December 31, 2023
Loan amount tranche 3: 50 MUSD to be drawn down no later than June 30, 2023
Maturity date: December 31, 2028
Repayment profile: Repayment at maturity:
Base Interest: Higher of 12 months US Libor and 3 months Libor / [leverage
formula] with a floor of 0.25%
Credit spread: 6% p.a., fixed over the term of the contract
Revenue participation payments: Draw down on tranche 1: 2.67% of consolidated revenue, not
exceeding 75 MUSD and
Draw down on tranche 1 & 2: 4% of consolidated revenue, not
exceeding 75 MUSD
Repayment amount at maturity: An amount resulting in an investor IRR of 9.75% p.a. including
interest payments and royalty payments
Lender option to require repayment of
the debt:
Change of control event
Sale of certain assets – proceeds from sale to be used to
repay the loan, however, no more than up to 75% of the out-
standing amount
Zealand option to prepay the debt: Throughout the term of the loan
Early repayment amount:
Before January 1, 2023: An amount equal to 120.0% of the principal amount of the
Notes issued
From January 1, 2023 until January 1,
2024:
An amount equal to 135.0% of the principal amount of the
Notes issued
From January 1, 2024 until January 1,
2026:
An amount equal to 150.0% of the principal amount of the
Notes issued
From January 1, 2026 until January 1,
2027:
An amount equal to the greater of 150.0% of the principal
amount of the Notes issued and the amount (greater than
zero) that would generate an internal rate of return to the
Purchasers equal to 12.0% on the aggregate purchase price
paid for the Notes
From January 1, 2027 until December 31,
2028:
An amount equal to the greater of (i) 150.0% of the principal
amount of the Notes issued and (ii) the amount (greater than
zero) that would generate an internal rate of return to the
Purchasers equal to 11.0% on the aggregate purchase price
paid for the Notes
Liquidity covenant
The loan is subject to certain covenants including a requirement to retain cash balances in the amount of
at least USD 100 million (DKK 656 million) until trailing 6 months total net revenue excluding sales from
V-Go, Alexion Licensed Products and Sanofi Licensed Products exceeds USD 50 million.
After deduction of transaction costs, DKK 8.2 million, the carrying amount is DKK 647.9 million.
84Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 25
Notes
Accounting Accessment
Due to the fact that the lenders are entitled to a fixed return of 9.75% p.a., the debt host contract is con-
sidered to be a fixed rate loan with variable cash flows.
Management has assessed the contract for non closely related embedded derivatives and has concluded
that the prepayment option is not closely related to the debt host contract due to the fact that the repay-
ment amount could differ with more than an insignificant amount from the debts amortised cost.
The revenue based payments are not separated from the debt host contract and assessed separately due
to the fact that they will mainly affect the timing of the cash flows and not the total IRR. They could to a
limited extent impact the prepayment premium.
The interest rate clause comprises an element which could potentially result in leverage. The interest
rate clauses are non-closely related and not separated as embedded derivatives due to the fact that they
will mainly affect the timing of the cash flows and not the total IRR. Interest rate movements could to a
limited extent impact the prepayment premium.
Fair value measurement
Due to the significant premium, the prepayment options will have value for Zealand only if Zealand’s
credit quality increases significantly (refer to Note 2). The likelihood of instances which would entitle the
lender to require repayment and which would have economic value to the lender is currently consid-
ered very low. Based on the above, the fair value of the prepayment options on inception is considered
insignificant.
Fair value is determined primarily based on unobservable data (level 3). The most significant input is:
1. Development in future credit rating
2. US Libor forward interest rates
As of the balance sheet date December 31, 2021, no reasonably possible alternative assumption regarding
the development in these two inputs will lead to any significant fair value of the prepayment options. The
credit spread in the loan corresponds to a rating of CCC. An increase of the Group’s credit quality to a
rating between B and BB by the end of 2025 would establish an economic break-even point for exer-
cise of the prepayment options. After 2025, the prepayment options would, in virtually all instances not
become economically attractive to exercise. The assessment is based on the 31 December 2021 US Libor
yield curve and observable credit spreads for traded debt instrument.
The Group has up until now not held complex financial instruments measured at fair value and has
currently no processes for determining fair value of such instruments. Therefore, third party valuation
specialists have been engaged to determine fair value of the prepayment option as of 31 December 2021.
Due to the fact that the loan agreement has been entered into in December 2021, fair value of the loan
as of 31 December 2021 is considered to equal its nominal amount of USD 100 million equal to DKK 656
million. It is considered a level 2 measurement (recent transation).
Collateral provided
The Group has provided floating charge collateral with all assets which can be collaterised including
shares in subsidiaries.
Note 25 – Borrowings (continued)
85Zealand Pharma ∞ Annual Report 2021
Notes
Note 26 – Deferred revenue
Accounting policies
We refer to accounting policy description in Note 3 Revenue.
The Group has recognized the following liabilities related to contracts with customers.
DKK thousand 2021 2020
Deferred revenue at January 1 97,769 139,890
Customer payment received, cf. note 3. 0 0
Revenue recognized during the year -30,185 -42,881
Total deferred revenue 67,584 97,769
Non-current deferred revenue 14,551 44,587
Current deferred revenue 53,033 53,182
Total deferred revenue 67,584 97,769
Deferred revenue occurred in connection with the agreement with Alexion Pharmaceuticals, Inc. as dis-
closed in Note 3. An up-front payment of DKK 177.3 million was received of which DKK 30.2 million has
been recognized during DKK 2021 (2020: DKK 42.9 million and 2019: DKK 37.4 million)
Management expects that approx. DKK 53 million of the up-front payment received will be recognized as
revenue during 2022. The remaining payment is expected to be recognized during 2023 according to the
progress of the development project.
Note 27 – Rebate and product return liabilities
Accounting policies
Product sale rebate liabilities and product return liabilities are amounts payable or credited to a customer,
usually based on the quantity or value of product sales to the customer for specific products in a certain
period. Product sales rebates, which relate to product sales that occur over a period of time, are normally
issued retrospectively. At the time product sales are invoiced, rebates and deductions that the Group ex-
pects to pay, are estimated. These rebates typically arise from sales contracts with government agencies,
wholesalers, retail pharmacies, Managed Care and other customers, which are recorded at the time the
related revenues are recorded or when the incentives are offered, cf. note 3.
Sale Product
rebate return 2021 2020
DKK thousand liabilities liabilities total total
Beginning of the year 36,434 239 36,673 0
Addition due to acquisition, cf. note 31 0 0 0 6,969
Additions for the year 155,910 2,124 158,033 137,321
Utilization during the period -167,045 -1,555 -168,600 -103,766
Reversal of accruals from previous years 0 0 0 -1,184
Currency translation adjustments 2,544 45 2,589 -2,668
End of the year 27,843 852 28,695 36,673
Sale rebate liabilities are calculated based on historical experience and the specific terms in the individual
agreements. Unsettled rebates are recognized as accruals when the timing or amount is uncertain. Where
absolute amounts are known, the rebates are recognized as other liabilities.
Please refer to note 1 and note 3 for further information on sale rebates related liabilities and manage-
ments estimates and judgements.
Zealand Pharma issues credit notes for expired goods as a part of normal business. Where there is histor-
ical experience or a reasonably accurate estimate of expected future returns can otherwise be made, an
accrual for estimated product returns is recorded. The accrual is measured at gross sales value.
86Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 26-27
Notes
Note 29 – Contingent assets and liabilities, other contractual obligations and collateral
provided
Accounting policies
Contingent assets and liabilities are disclosed, unless the possibility of an inflow or outflow of resources
embodying economic benefits is virtually certain.
Contingent assets include potential future milestone payments. Contingent liabilities and other contrac-
tual obligations include contractual obligations related to agreements in development projects such as
contract research organizations (CROs), milestone payments and lease commitments.
Contingent Assets
At December 31, 2021, Zealand is still eligible for a payment from Sanofi of up to USD 10.0 million, of
which USD 10.0 million is expected in 2022. However, it is Management’s opinion that the amount of
any payment cannot be determined on a sufficiently reliable basis, and therefore have not recognized an
asset in the statement of financial position of the Group.
Contingent liabilities and Contractual obligations
At December 31, 2021, total contractual obligations related to agreements for development projects,
including CROs, amounted to DKK 317.4 million (DKK 184.4 million for 2022 and DKK 133.0 million for the
years 2023 up to and including 2025).
Zealand may be required to pay future development, regulatory and commercial milestones related to the
acquisition of Encycle Therapeutics. Refer to note 13.
Collateral provided
The Group has provided floating charge collateral with all assets which can be collaterised including
shares in subsidiaries.
Note 28 – Other liabilities
Accounting policies
Financial liabilities are recognized initially at fair value less transaction costs. In subsequent periods, finan-
cial liabilities are measured at amortized cost corresponding to the capitalized value using the effective
interest method.
DKK thousand 2021 2020
Employee benefits 84,800 101,028
Royalty payable to third party 5,860 5,732
Development project costs 18,736 28,267
Other payables 82,164 32,272
Total other liabilities 191,560 167,299
Current 173,134 150,555
Non-current 18,426 16,744
87Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 28-29
Notes
Note 30 – Financial risks
Zealand is exposed to various financial risks, including foreign exchange rate risk, interest rate risk, credit
risk and liquidity risk.
The objective of Zealand’s financial management policy is to reduce the Group’s sensitivity to fluctuations
in exchange rates, interest rates, credit rating and liquidity. Zealand’s financial management policy has
been endorsed by Zealand’s Audit Committee and ultimately approved by Zealand’s Board of Directors.
Capital structure
Zealand aims to have an adequate capital structure in relation to the underlying operating results and
research and development projects, so that it is always possible to provide sufficient capital to support
operations and long-term growth targets. We refer to Note 2.
Exchange rate risk
Most of Zealand’s financial transactions are in DKK, USD and EUR.
Due to Denmark’s long-standing fixed exchange rate policy vis-à-vis the EUR, Zealand has evaluated that
there is no material transaction exposure or exchange rate risk regarding transactions in EUR.
Zealand’s milestone payments have been agreed in foreign currencies, namely USD and EUR. However,
as milestone payments are unpredictable in terms of timing, the payments are not included in the basic
exchange rate risk evaluation.
Currency exposures regarding our US activities are managed by having revenue and expenses in the same
currency.
As Zealand conducts clinical trials and toxicology studies around the world, Zealand will be exposed to
exchange rate risks associated with the denominated currency, which is primarily USD based on volume
and fluctuations against DKK. To date, Zealand’s policy has been to manage the transaction and transla-
tion risk associated with the USD passively, placing the revenue received from milestone payments in USD
in a USD account for future payment of Zealand’s expenses denominated in USD, covering payments for
the next 12-24 months and thus matching Zealand’s assets with its liabilities.
As of December 31, 2021, Zealand holds DKK 862.9 million (2020: DKK 568.4 million) of its cash in USD.
Additionally, Zealand has a financial debt of DKK 656.1 million denominated in USD.
Interest rate risk
Zealand has a policy of avoiding financial instruments that expose the Group to any unintended financial
risks.
During 2021, all cash has been held in current bank accounts in USD, EUR and DKK. Interest rates on bank
deposits in DKK and EUR have been negative since 2018, while USD accounts have generated a low level
of interest income.
During 2021 and 2020, Zealand has invested in low-risk marketable securities. The Group’s marketable
securities portfolio comprises bonds in Danish kroner. The average weighted duration of the bond portfo-
lio on the statement of financial position date was 3 years in both years.
As of December 31, 2021, Zealand has borrowings amounting to DKK 656.1 million (2020: DKK 0 million)
and Lease liabilities amounting to DKK 139.5 million (2020: DKK 130.1 million). As discussed in note 25
borrowings bears a fixed interest rate.
Credit risk
Zealand is exposed to credit risk in respect of receivables, bank balances and bonds. The maximum credit
risk corresponds to the carrying amount. Management believes that credit risk is limited, as the counter-
parties to the trade receivables are large global pharmaceutical companies and wholesalers.
Cash and bonds are not deemed to be subject to credit risk, as the counterparties are banks with invest-
ment-grade ratings (i.e. BBB- or higher from Standard & Poor’s).
Liquidity risk
The purpose of Zealand’s cash management is to ensure that the Group has sufficient and flexible finan-
cial resources at its disposal at all times. Refer to Note 2.
Zealand’s short-term liquidity is managed and monitored by means of the Company’s quarterly budget
revisions to balance the demand for liquidity and maximize the Company’s interest income by matching
its free cash in fixed-rate, fixed-term bank deposits and bonds with its expected future cash burn.
88Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 30
Notes
Note 30 – Financial risks (continued)
Sensitivity analysis
The table shows the effect on profit/loss and equity of reasonably likely changes in the financial variables
in the statement of financial position.
2021 2020
DKK thousand Fluctuation Effect Fluctuation Effect
USD +/-10% 20,675 +/-10% 58,124
The decline in currency exposure is primarily related to reduced net cash balance from borrowings de-
nominated in USD.
Contractual maturity (liquidity risk)
A breakdown of the Group’s aggregate liquidity risk on financial assets and liabilities is given below.
The following table details the Group’s remaining contractual maturity for its financial liabilities with
agreed repayment periods. The table has been prepared using the undiscounted cash flows for financial
liabilities, based on the earliest date on which the Group can be required to pay. The table includes both
interest and principal cash flows. To the extent that the specific timing of interest or principal flows is
dependent on future events, the table has been prepared based on Management’s best estimate of such
timing at the end of the reporting period. The contractual maturity is based on the earliest date on which
the Group may be required to pay.
With the exception of leasing and borrowings, there are no interest cash flows to be included in the table
below for the existing financial liabilities as they are not interest-bearing financial liabilities.
< 12
DKK thousand months 1-5 Years > 5 Years Total
Borrowings 50,954 252,042 736,410 1,039,406
Trade payables 64,558 0 0 64,558
Leasing 14,608 62,558 75,415 152,581
Other liabilities 173,134 0 18,426 191,560
Total financial liabilities at December 31, 2021 303,254 314,600 830,251 1,448,105
Trade payables 71,442 0 0 71,442
Leasing 14,072 53,039 76,354 146,465
Other liabilities 150,555 16,744 0 167,299
Total financial liabilities at December 31, 2020 236,069 69,783 76,354 382,209
All cash flows are non-discounted and include all liabilities under contracts but not contractual obliga-
tions related to payments under agreements for development projects, including CROs, as disclosed in
note 29, as their maturity dates are uncertain.
The expected future cash flows from borrowing repayments in USD are estimated based on USD Forward
Libor rates as of 31 December 2021 and the Group’s revenue forecast and translated into DKK at the USD/
DKK forward rates applicable as of 31 December 2021.
89Zealand Pharma ∞ Annual Report 2021
Notes
DKK thousand 2021 2020
Categories of financial instruments
Deposits 12,638 16,650
Trade receivables 73,025 46,484
Other receivables 15,802 9,942
Cash and cash equivalents 1,129,103 960,221
Financial assets at amortized costs 1,230,568 1,033,297
Marketable securities 299,042 297,345
Other investments 26,907 32,333
Financial assets measured at fair value through profit or loss 325,949 329,678
Borrowings 647,906 0
Lease liabilities 139,523 130,119
Trade payables 64,558 70,384
Other liabilities 191,560 167,299
Financial liabilities measured at amortized cost 1,043,547 367,802
The fair value of marketable securities is based on Level 1 in the fair value hierarchy.
The fair value of other investments is based on level 3 in the fair value hierarchy. Refer to note 16.
There were no transfers between levels 1, 2 and 3 for recurring fair value measurement during the period
ended December 31, 2021 or 2020.
The carrying amount of financial assets and financial liabilities approximated the fair value.
Note 30 – Financial risks (continued)
Capital Management
Zealand’s goal is to maintain a strong capital base to maintain investor, creditor and market confidence,
and a continuous advancement of Zealand’s product pipeline and business in general. Zealand is primarily
financed through capital increases, long-term borrowings and partnership collaboration income. The
Group had, as of December 31, 2021, a cash position of DKK 1,129 million i.e. DKK 473 million in excess of
the minimum cash position discussed below. As of 31 December 2020, the cash position was DKK 960.2
million. Refer to Note 2 Going concern uncertainties.
The cash position supports the advancement of our product pipeline and operations and the objective is
to maintain a cash position which secures financing of development costs over the next 12 to 15 months,
refer to Note 2. The adequacy of our available funds will depend on many factors, including progress
in our research and development programs, the magnitude of those programs, our commitments to
existing and new clinical collaborators, our ability to establish commercial and licensing arrangements,
our capital expenditures, market developments, and any future acquisitions. Accordingly, we may require
additional funds and may attempt to raise additional funds through equity or debt financings, collabora-
tive agreements with partners, or from other sources. To strengthen the cash position, the Group entered
into a USD 100 million Loan agreement with Oberland in December 2021. Under the loan agreement, the
Group has to maintain a cash position of at least USD 100 million (DKK 656 million) until trailing 6 months
net sales excluding sales from V-Go, Alexion Licensed Products and Sanofi Licensed Products exceeds
USD 50 million. Refer to note 25 for discussion of the terms of the loan.
The Board of Directors monitors the share and capital structure to ensure that Zealand’s capital resources
support the strategic goals. There was no change in the group’s approach to capital management pro-
cedures in 2021 besides the issuance of borrowings as described in Note 25. Neither Zealand Pharma A/S
nor any of its subsidiaries are subject to externally imposed capital requirements other than the liquidity
covenant related to the borrowing agreement.
90Zealand Pharma ∞ Annual Report 2021
Notes
Note 31 – Business combinations
Accounting policy
Business combinations are accounted for using the acquisition method of accounting. At the date of the
acquisition, the Company initially recognizes the fair value of the identifiable assets acquired, the liabilities
assumed and any non-controlling interest in the acquired business.
The consideration transferred is measured at fair value at the date of acquisition and the excess of the
consideration transferred over the fair value of net identifiable assets of the business acquired is recorded
as goodwill. In circumstances where the consideration transferred is less than the fair value of net iden-
tifiable assets of the business acquired, the difference is recognized directly in the consolidated income
statement as a bargain purchase.
Where the settlement of any part of cash consideration is deferred, the amounts payable in the future
are discounted to their present value. Contingent consideration is classified either as equity or a financial
liability and is recognized at fair value on the acquisition date. Amounts classified as a financial liability are
subsequently remeasured to fair value in accordance with IFRS 9 (Financial Instruments), with changes in
fair value recognized in the consolidated statement of comprehensive loss as an administrative expense.
Business combinations require management making an assessment of the fair value of the net assets ac-
quired as well as an assessment regarding whether control exists. Management judgement is particularly
involved in the recognition and measurement of the following items at fair value:
• intellectual property: this may include patents, licenses, trademarks and similar rights for currently mar-
keted products, and also the rights and scientific knowledge associated with projects that are currently
in research or development phases, and requires the projection of estimated future cash inflows and
outflows and relevant risks, the terminal value of these assets, discount rates and weighted average
costs of capital,
• working capital items such as trade receivables, inventory (raw materials, work in process, parts and
finished goods), prepaid expenses, trade payables, and fixed assets
• Guarantees, warranties, indemnities, rights, claims, counterclaims etc. set off against third parties
relating to the acquired assets or assumed liabilities, including rights under vendors’ and manufacturers’
warranties, indemnities, guaranties and avoidance claims and causes of action under any applicable
Law, employee liabilities and other contingencies
In all cases, management makes an assessment based on the underlying economic substance of the
items concerned, and not only on the contractual terms, in order to fairly present these items. In making
these assessments, management relies to a significant extent on the work of valuation experts. However,
the assessments are highly subjective and sensitive to the assumptions used.
In accordance with IFRS 3, if a business combination indicates a bargain gain all applied assumptions will
be reassessed by Management before recognition.
Directly attributable acquisition-related costs are expensed as incurred within the consolidated statement
of comprehensive loss.
Customer relationships and IP rights acquired through business combinations are measured at fair value
at the acquisition date and amortized on a systematic basis over their useful life 8 and 10 years respec-
tively (unless the asset has an indefinite useful life, in which case it is not amortized).
Acquisition of medical technology business from Valeritas, Inc.
On April 2, 2020 (or “the acquisition date”) Zealand acquired substantially all of the medical technology
business from Valeritas Holdings, Inc. (or “Valeritas”) pursuant to the terms of the stalking horse asset
purchase agreement previously entered into with Valeritas and following approval by the U.S. Bankruptcy
Court for the District of Delaware on March 20, 2020.
Valeritas was a U.S. based commercial-stage company whose activities comprised development, pro-
duction and sale of wearable disposable insulin pumps and has therefore been acquired to accelerate
Zealand’s plans for establishing U.S. operations to support the anticipated launch of the auto-injector and
pre-filled syringe for severe hypoglycemia.
The acquisition comprises all medical technology business related tangible and intangible assets that
pursuant to the Bankruptcy Code was transferred to Zealand free and clear of all claims, liabilities and en-
cumbrances including the Valeritas workforce. Additionally, the acquisition includes most of the working
capital assets and selected liabilities.
Under IFRS 3, Business Combinations, the acquisition has been accounted for as a business combination
using the acquisition method. The consolidated financial statements include the results of Valeritas for
the from the acquisition date.
91Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 31
Notes
The consideration transferred was DKK 167.7 million (USD 24.5 million), and the fair values of the identifia-
ble assets and liabilities of Valeritas as at the date of acquisition were:
DKK thousand Fair value recognized on acquisition
Assets
Physician Relationship 68,459
V-Go IP 13,692
Property, plant and equipment 41,138
Right-of-use assets 14,299
Inventories 55,796
Trade receivables 50,603
Other assets 10,132
Cash and cash equivalents 66
Liabilities
Deferred tax liability -11,880
Trade payables -4,050
Lease liabilities -14,046
Other liabilities -19,792
Total identifiable net assets at fair value 204,417
Bargain purchase recognized -36,692
Purchase consideration transferred 167,725
Analysis of cash flows on acquisition:
Net cash acquired
(included in cash flows from investing activities) 66
Cash paid -167,725
Net cash flow on acquisition -167,659
Note 31 – Business combinations (continued)
The fair value attributable to intangible assets (DKK 82.2 million as of the acquisition date) consists of the
value arising from the existing Valeritas physician network and relationships, valued at DKK 68.5 million
which is based on the estimated cost it would require to establish similar network and relationships, or
a so-called with/without valuation method, and intellectual property related to the V-Go technology,
valued at DKK 13.7 million using an excess earnings model. (Subsequently impaired. Refer to note 17)
The valuations are determined using cash flow projections from financial budget approved by Corporate
Management covering a 10-year period. The discount rate applied to the cash flow projections is 13%.
The growth rate used to extrapolate the cash flows of the unit beyond the 10-year period is -50% which
reflects our estimate of the expected lifetime of the product of 10 years with a significant decrease in
revenues afterwards.
The calculation of the fair value of intangible assets is most sensitive to the revenue and gross margin
growths. Revenue and gross margin: Revenue and gross margin are based on historical trends. The reve-
nue growth applied in the calculation is between 1-20% in the 10-year budget period with the first years
having the highest revenue growth in percentage. Operating costs: Operating costs are based on histori-
cal trends and industry knowledge. Operating costs over the 10-year budget period has been adjusted to
incorporate the allocation related to shared efforts of future product launches.
Trade receivables have been measured at the contractual amount expected to be received which ap-
proximates the fair value of DKK 50.6 million. The amounts have not been discounted, as maturity on
receivables is generally very short and the discounted effect therefore immaterial.
The acquisition resulted in a bargain purchase gain of DKK 36.7 million which was recognized within
other operating income in the consolidated income statement. The gain arose as the fair value of the
net assets acquired (DKK 204.4 million) exceeded the fair value of the purchase consideration (DKK 167.7
million). The gain is primarily attributable to the Company purchasing the medical technology business
of Valeritas out of bankruptcy. Valeritas encountered operational and financial difficulties in late 2019
and filed for Bankruptcy in February 2020. Specifically, the fair value of the tangible and financial assets
acquired (DKK 147.5 million), such as inventories, trade receivables, and property, plant and equipment,
represents a significant component of the purchase price prior to consideration of the fair value of the
identified intangible assets.
92Zealand Pharma ∞ Annual Report 2021
Notes
Acquisition-related costs of DKK 7.1 million have been expensed and are included in administrative expenses
in profit or loss and are part of operating cash flows in the statement of cash flows have all been incurred
in the three months period ended March 31, 2020. Adjustments may be applied to the various net asset
categories when full alignment to Zealand accounting policies is finalized. Consequently, adjustments may
be applied for a period of up to twelve months from the acquisition date in accordance with IFRS 3.
The Valeritas business acquisition has contributed with net revenues of approximately DKK 161.3 million
in net revenue and profit and loss of approximately DKK -278.8 million to the Group for the period ending
December 31, 2020 since the acquisition on April 2, 2020.
If the acquisition had occurred on 1 January 2020, the consolidated pro forma revenue and operating
result of Zealand Pharma Group for the period ended 31 December 2020 would have been approximately
DKK 395.8 million and DKK -868.9 million, respectively.
Note 32 – Related parties
Zealand has no related parties with controlling interest.
Zealand’s other related parties comprise the Company’s Board of Directors and Corporate Management.
Remuneration to the Board of Directors and Corporate Management is disclosed in note 7.
No further transactions with related parties were conducted during the year.
Ownership
The following shareholders are registered in Zealand Pharma’s register of shareholders as owning mini-
mum 5% of the voting rights or minimum 5% of the share capital (1 share equals 1 vote) at December 31,
2021:
• Van Herk Investments, Rotterdam, Netherlands
• Credit Suisse Bank, Zürich, Switzerland
• SMALLCAP World Fund, Los Angeles, USA (shares)
• The Capital Group Companies, Los Angeles, USA (votes)
Note 31 – Business combinations (continued) Note 33 – Adjustments for non-cash items
DKK thousand 2021 2020 2019
Depreciation, amortization and impairment 40,249 42,692 13,682
Share-based compensation expenses 53,504 30,485 14,763
Income tax -1,190 9,865 -5,385
Financial income -1,896 -1,127 -9,306
Financial expenses 16,674 3,511 3,390
Net loss on sale of fixed assets 2,697 0 0
Fair value adjustments 6,520 0 0
Exchange rate adjustments -68,943 57,712 -7,937
Total adjustments 47,615 143,138 9,207
Note 34 – Change in working capital
DKK thousand 2021 2020 2019
(Increase)/decrease in receivables -64,494 -7,716 -21,059
(Increase)/decrease in Inventory -52,772 -14,404 0
Increase/(decrease) in payables and other liabilities -49,059 119,938 17,061
Adjustment for non-cash investing activities 0 0 -7,932
Cash outflow for investment in Beta Bionics 0 0 22,803
Change in working capital -166,325 97,818 10,873
93Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 32-34
Notes
Note 35 – Reconciliation of borrowings
DKK thousand 2021 2020 2019
As at January 1 0 0 0
Additions -656,120 0 0
Transaction costs 8,214 0 0
As at December 31 -647,906 0 0
Note 36 – Significant events after the balance sheet date
No significant events have occurred after the end of the reporting period.
Note 37 – Approval of the annual report
The Annual Report has been approved by the Board of Directors and Executive Management and author-
ized for issue on March 10, 2022.
94Zealand Pharma ∞ Annual Report 2021
Con Fin – Note 35-36
Notes
1 Significant accounting policies, and significant
accounting estimates and assessments 99
2 Revenue 99
3 Information on staff and remuneration 100
4 Financial income 103
5 Financial expenses 103
6 Other operating income and expenses 104
7 Income tax 104
8 Intangible assets 105
9 Property, plant and equipment 106
10 Right-of-use assets and lease liabilities 107
11 Investments in subsidiaries 108
12 Other investments 108
13 Inventories 109
14 Prepaid expenses 109
15 Other receivables 109
16 Cash and cash equivalents 109
17 Share capital 110
18 Other liabilities 110
19 Contingent assets, liabilities and other contractual
obligations 110
20 Financial risks 110
21 Transactions with related parties 112
22 Adjustments for non-cash items 112
23 Change in working capital 112
24 Allocation of result 112
25 Significant events after the balance sheet date 112
26 Approval of the annual report 112
Contents –
Parent company
Financial statements of the parent company
Income statement 96
Statement of comprehensive income 96
Statement of financial position 97
Statement of cash flows 98
Statement of changes in equity 98
95Zealand Pharma ∞ Annual Report 2021
Par Fin – Contents
Income statement
DKK thousand Note 2021 2020
Revenue 2 255,776 337,808
Cost of goods sold 13 -121,240 -85,878
Royalty expenses -10,133 0
Gross margin 124,403 251,930
Research and development expenses 3 -585,458 -604,081
Sale and marketing expenses -366,509 -334,118
Administrative expenses 3 -253,125 -138,671
Operating expenses -1,205,092 -1,076,870
Other operating income 6 759 36,996
Other operating expense 6 -2,161 0
Operating result -1,082,091 -787,944
Income from subsidiaries 11 36,745 0
Financial income 4 48,898 7,139
Financial expenses 5 -15,080 -51,537
Result before tax -1,011,528 -832,342
Income tax (expense)/benefit 7 6,925 5,543
Net result for the year -1,004,603 -826,799
Statement of comprehensive income
DKK thousand Note 2021 2020
Net result for the year -1,004,603 -826,799
Other comprehensive income (loss) 0 0
Comprehensive result for the year -1,004,603 -826,799
Financial statements of the parent company
96Zealand Pharma ∞ Annual Report 2021
Par Fin – Income Statement Par Fin – comprehensive income
DKK thousand Note 2021 2020
Liabilities and equity
Share capital 17 43,634 39,800
Treasury shares -71,890 -1,700
Share premium 4,247,442 3,454,550
Retained loss -3,320,164 -2,315,561
Shareholders' equity 899,022 1,177,089
Deferred revenue 14,551 44,587
Other liabilities 18 18,426 16,744
Lease liabilities 10 99,769 108,456
Non-current liabilities 132,746 169,787
Trade payables 48,430 59,307
Payables to subsidiaries 59,078 359,869
Lease liabilities 10 11,686 11,392
Deferred revenue 53,033 53,182
Other liabilities 18 115,315 93,983
Current liabilities 287,542 577,733
Total liabilities 420,288 747,520
Total shareholders' equity and liabilities 1,319,310 1,924,610
Financial statements of the parent company
Statement of financial position at December 31
DKK thousand Note 2021 2020
Assets
Non-current assets
Intangibles (Intellectual property) 8 35,691 35,691
Property, plant and equipment 9 80,075 82,377
Right of use assets 10 107,781 118,002
Investment in subsidiaries 11 62,228 62,228
Other investments 12 26,906 32,333
Intercompany 135,817 325,645
Deposits 8,920 8,920
Corporate tax receivable 7 1,268 1,268
Prepaid expenses 14 16,456 13,117
Total non-current assets 475,142 679,581
Current assets
Trade receivables 13,546 0
Inventory 13 78,767 45,700
Receivables from subsidiaries 9,087 0
Prepaid expenses 14 59,172 28,517
Corporate tax receivable 5,500 5,500
Other receivables 15 1,865 7,195
Marketable securities 299,042 297,345
Cash and cash equivalents 16 377,189 860,772
Total current assets 844,168 1,245,029
Total assets 1,319,310 1,924,610
97Zealand Pharma ∞ Annual Report 2021
Par Fin – Financial position
Statement of cash flows
DKK thousand Note 2021 2020
Net result for the year -1,004,603 -826,799
Adjustments for non-cash items 22 127,223 54,758
Change in working capital 23 -257,057 30,682
Financial income received 0 897
Financial expenses paid -3,296 -4,562
Deferred revenue -30,185 -42,881
Income tax receipt 5,500 0
Cash inflow/outflow from operating activities -1,162,418 -787,905
Change in deposit 0 48
Investment in subsidiaries 11 0 -59,627
Purchase of intangible assets 0 -41,167
Purchase of property, plant and equipment -16,903 -51,846
Cash outflow from investing activities -16,903 -152,592
Proceeds from issuance of shares related to exercise of warrants 26,070 38,832
Proceeds from issuance of shares 748,975 794,929
Costs related to issuance of shares -46,894 -42,706
Purchase of treasury shares -28,590 0
Leasing installments -12,260 -12,449
Cash inflow from financing activities 687,301 778,606
Decrease/increase in cash and cash equivalents -492,020 -161,891
Cash and cash equivalents at January 1 860,772 1,019,811
Exchange rate adjustments 8,437 2,852
Cash and cash equivalents at December 31 377,189 860,772
Statement of changes in equity
Share Treasury Share Retained
DKK thousand capital shares premium loss Total
Equity at January 1, 2021 39,800 -1,700 3,454,550 -2,315,561 1,177,089
Comprehensive income for the year
Net result for the year 0 0 0 -1,004,603 -1,004,603
Treasury shares 0 -70,190 0 0 -70,190
Share-based compensation 0 0 68,577 0 68,577
Capital increases 3,834 0 771,211 0 775,045
Costs related to capital increases 0 0 -46,896 0 -46,896
Equity at December 31, 2021 43,634 -71,890 4,247,442 -3,320,164 899,022
Equity at January 1, 2020 36,055 -1,700 2,648,117 -1,488,762 1,193,710
Comprehensive income for the year
Net result for the year 0 0 0 -826,799 -826,799
Share-based compensation 0 0 16,273 0 16,273
Capital increases 3,745 0 832,866 0 836,611
Costs related to capital increases 0 0 -42,706 0 -42,706
Equity at December 31, 2020 39,800 -1,700 3,454,550 -2,315,561 1,177,089
Financial statements of the parent company
98Zealand Pharma ∞ Annual Report 2021
Par Fin – Cash flow Par Fin – Equity
Notes
Note 1 – Significant accounting policies, and significant accounting estimates and
assessments
Significant accounting policies
Basis of preparation
The separate financial statement of the parent company have been prepared in accordance with Interna-
tional Financial Reporting Standards (IFRS) as adopted by the EU and additional requirements under the
Danish Financial Statements Act (Class D).
The accounting policies for the financial statements of the parent company are unchanged from the pre-
vious financial year. A number of new or amended standards became applicable for the current reporting
period. The parent company did not change its accounting policies as a result of the adoption of these
standards. The accounting policies are the same as for the consolidated financial statements with the
supplementary accounting policies for the parent described below. For a description of the accounting
policies of the group, please refer to the consolidated financial statements.
Note disclosures have only been included in the Parent Financial Statement where amounts differ from
the Consolidation financial statement.
In the narrative sections of the financial statements, comparative figures for 2020 are shown in brackets.
Supplementary accounting policies for the Parent Company
Revenue from research and development services rendered to ZP SPV 3 K/S
Revenue from research and development services are performed and satisfied over time given that ZP
SPV 3 K/S simultaneously receives and consumes the benefits provided by Zealand Pharma A/S.
Other operating income
Non-cash contributions to subsidiaries are measured at fair value. Any gain is recognized as other operat-
ing income provided the increase does not result in an impairment of the investment.
Investments in subsidiaries
Please refer to note 11 Investments in subsidiaries.
Note 2 – Revenue
Please refer to note 3 in the consolidated financial statements for accounting policies for the revenue
streams.
Recognized revenue can be specified as follows for all agreements:
DKK thousand 2021 2020
Boehringer Ingelheim International GmbH 22,311 149,120
Alexion Pharmaceuticals Inc. 30,185 42,881
Protagonist Therapeutics Inc. 25,380 0
ZP SPV 3 K/S 9,187 7,410
Total license and milestone revenue 87,063 199,411
Intercompany sales 168,713 138,397
Total revenue from product sales 168,713 138,397
Total revenue 255,776 337,808
Total revenue recognized over time 30,185 42,881
Total revenue recognized at a point in time 225,591 294,927
Please refer to note 3 in the consolidated financial statements for additional information regarding revenue.
99Zealand Pharma ∞ Annual Report 2021
Par Fin – Note 1-2
Notes
Note 3 – Information on staff and remuneration
DKK thousand 2021 2020
Total staff salaries can be specified as follows:
Wages and salaries 217,995 200,732
Share based payment costs 39,890 16,273
Pension schemes (defined contribution plans) 18,700 14,605
Other payroll and staff-related costs 132 9,615
Total 276,717 241,225
The amount is charged as:
Research and development expenses 209,549 204,210
Administrative expenses 63,881 37,015
Inventory 3,287 0
Total 276,717 241,225
Average number of employees 219 195
For remuneration to the Board of Directors please refer to note 7 in the consolidated financial statements
and for additional information regarding staff costs.
100Zealand Pharma ∞ Annual Report 2021
Par Fin – Note 3-4
Notes
Note 3 – Information on staff and remuneration (continued)
Other Warrant
Pension short term compensation
DKK thousand Base salary Bonus contribution benefits expenses Total
2021
Remuneration to the Executive Management
Emmanuel Dulac 5,099 3,059 1,020 243 12,182 21,603
Adam Sinding Steensberg 3,056 1,193 611 286 4,829 9,975
Matthew Donald Dallas
1
449 184 0 38 0 672
Total 8,604 4,436 1,631 567 17,011 32,250
Total Other Corporate Management
2
3,873 1,469 387 186 4,791 10,705
Total 12,477 5,905 2,018 753 21,802 42,955
2020
Remuneration to the Executive Management
Emmanuel Dulac 4,950 3,267 990 699 2,534 12,440
Adam Sinding Steensberg 2,967 1,266 593 282 2,281 7,389
Matthew Donald Dallas
1
408 192 0 2 0 602
Total 8,325 4,725 1,583 983 4,815 20,431
Total Other Corporate Management
2
2,604 1,135 260 51 1,544 5,594
Total 10,929 5,860 1,843 1,034 6,359 26,025
1 Matthew Dallas has tax obligations in Denmark, so a part of his salary is paid out in Denmark.
2 Other Corporate Management in 2021 comprised two members (2020: One).
101Zealand Pharma ∞ Annual Report 2021
Notes
Note 3 – Information on staff and remuneration (continued)
The employee
incentive programs of
Warrant programs existing during the period 2020 2015
Maximum term of options granted 10 years 10 years
Method of settlement equity- equity-
settled settled
2021
Outstanding at the beginning of the period 63,217 1,908,920
Granted during the period 0 0
Forfeited during the period 0 -214,348
Exercised during the period 0 -233,595
Expired during the period 0 -47,000
Outstanding at the end of the period; and 63,217 1,413,977
Exercisable at the end of the period 21,073 529,596
Warrants outstanding at the end of the period
Range of exercise prices 216.8 90-224.4
Weighted-average remaining contractual life 8.7 3.8
Number held by Executive Management 0 353,409
The employee
incentive programs of
Warrant programs existing during the period 2020 2020 2015 2010
Maximum term of options granted 10 years 10 years 5 years
Method of settlement equity-settled
equity-settled
2020
Outstanding at the beginning of the period 0 1,647,788 42,359
Granted during the period 63,217 631,288 0
Forfeited during the period 0 -53,747 0
Exercised during the period 0 -276,409 -42,359
Expired during the period 0 -40,000 0
Outstanding at the end of the period; and 63,217 1,908,920 0
Exercisable at the end of the period 0 301,529 0
Warrants outstanding at the end of the period
Range of exercise prices 216.8 90.0-224.4 101.2-127.1
Weighted-average remaining contractual life 9.7 4.9 0
Number held by Executive Management 0 373,409 0
Warrants exercised during the period 2021 2020
Weighted-average share price at the date of exercise 186.1 234.7
Weighted-average exercise price for warrants expired during the period 142.5 101.2
Weighted-average exercise price for warrants forfeited during the period 206.2 169.2
Weighted-average exercise price for warrants outstanding at period end 159.6 158.5
102Zealand Pharma ∞ Annual Report 2021
Expense arising from share-based payment transactions
2021 2020
Research and development expenses 20,981 14,254
Sale and marketing expenses 0 0
Administrative expenses 18,580 2,513
Total 39,561 16,767
Effect of fair value of PSUs recognized in the income statement is DKK 11.2 million (2020: DKK 0.8 million).
Effect of fair value of RSUs recognized in the income statement is DKK 14.1 million (2020: DKK 0.6 million).
Long-term incentive programs (LTIP) for Corporate Management and employees
No of PSUs 2021 2020
Number of units
At January 1 16,703 16,703
Granted during the year 185,762 0
Vested during the year 0 0
Forfeited during the year 0 0
At December 31 202,465 16,703
No of RSUs 2021 2020
Number of units
At January 1 13,665 0
Granted during the year 258,883 13,665
Vested during the year -163 0
Forfeited during the year -17,318 0
At December 31 255,067 13,665
Note 3 – Information on staff and remuneration (continued) Note 4 – Financial income
DKK thousand 2021 2020
Interest income from financial assets measured at amortized costs 44 897
Interest income 6,744 5,306
Fair value adjustments of marketable securities 1,852 0
Fair value adjustments of other investments 0 936
Dividend, marketable securities 0 0
Exchange rate adjustments 40,258 0
Total financial income 48,898 7,139
Please refer to note 9 in the consolidated financial statements for additional information regarding
financial income.
Note 5 – Financial expenses
DKK thousand 2021 2020
Other financial expenses -3,224 -4,931
Fair value adjustments of Marketable securities 0 -2,103
Fair value adjustments of other investments -8,217 0
Interest expenses -3,639 -2,391
Exchange rate adjustments 0 -42,112
Total financial expenses -15,080 -51,537
Please refer to note 10 in the consolidated financial statements for additional information
regarding financial expenses.
103Zealand Pharma ∞ Annual Report 2021
Par Fin – Note 5-6
Notes
Note 7 – Income tax (continued)
DKK thousand 2021 2020
Tax on equity
Warrants - shareprice development 5,588 2,325
Change in tax assets (not recognized) -5,588 -2,325
Total income tax expense (income) 0 0
DKK thousand 2021 2020
Specification of unrecognized deferred tax assets:
Tax losses carried forward (available indefinitely) 2,231,010 1,269,107
Research and development expenses 842,775 732,389
Licenses, rights and patents 41,512 36,260
Non-current assets 88,676 66,179
Liabilities 73,444 131,147
Other 30,822 51,413
Total temporary differences 3,308,239 2,286,495
Please refer to note 11 in the consolidated financial statements for additional information regarding
income tax.
Note 6 - Other operating income and expenses
DKK thousand 2021 2020
Government grants 759 645
Contributed IP rights to Zealand Pharma SPV 3 K/S 0 35,496
Other 0 855
Total other operating income 759 36,996
Other -2,161 0
Total other operating expenses -2,161 0
Please refer to note 8 in the consolidated financial statements for additional information regarding other
operating income and expenses
Note 7 – Income tax
DKK thousand 2021 2020
Net result for the year before tax -1,011,529 -832,342
Corporate tax rate in Denmark 22.0% 22.0%
Expected tax benefit/(expenses) -222,536 -183,115
Adjustment for non-deductible expenses 5,469 1,873
Adjustment for non-taxable income -8,084 -7,181
Adjustment for warrants 6,501 -72
Adjustment for R&D extra deduction -14,379 -8,811
Adjustment to prior years -5,143 313
Change in tax assets (not recognized) 231,247 191,450
Total income tax expense/benefit -6,925 -5,543
104Zealand Pharma ∞ Annual Report 2021
Par Fin – Note 7-8
Note 8 – Intangible assets
Licenses,
rights
DKK thousand and patents
Cost at January 1, 2021 41,167
Additions 0
Retirements 0
Cost at December 31, 2021 41,167
Depreciations and impairment at January 1, 2021 5,476
Depreciation for the year 0
Impairment 0
Depreciation and impairment at December 31, 2021 5,476
Carrying amount at December 31, 2021 35,691
Depreciation and impairment for the financial year has been charged as:
Research and development expenses 0
Sale and marketing expenses 0
Administrative expenses 0
Total 0
Licenses,
rights
DKK thousand and patents
Cost at January 1, 2020 0
Additions 41,167
Cost at December 31, 2020 41,167
Depreciation at January 1, 2020 0
Depreciation for the year 411
Impairment 5,065
Depreciation and impairment at December 31, 2020 5,476
Carrying amount at December 31, 2020 35,691
Depreciation and impairment for the financial year has been charged as:
Research and development expenses 411
Sale and marketing expenses 5,065
Total 5,476
105Zealand Pharma ∞ Annual Report 2021
Par Fin – Note 9
Notes
Note 9 – Property, plant and equipment
Plant and Other fixtures Building Assets under
DKK thousand machinery and fittings improvements construction
Cost at January 1, 2021 85,877 12,706 32,448 3,022
Transfer 949 204 0 -1,153
Additions 7,118 1,444 2,449 5,893
Retirements -3,166 -5 0 -419
Cost at December 31, 2021 90,778 14,349 34,897 7,343
Accumulated depreciation
at January 1, 2021 43,977 5,711 1,988 0
Depreciation for the year 11,551 2,681 2,715 0
Retirements -1,327 -4 0 0
Accumulated depreciation
at December 31, 2021 54,201 8,388 4,703 0
Carrying amount
at December 31, 2021 36,577 5,961 30,194 7,343
Depreciation for the
financial year has been
charged as:
Cost of goods sold 7,143 117 0 0
Research and
development expenses 3,621 2,564 2,716 0
Administrative expenses 786 0 0 0
Total 11,550 2,681 2,716 0
Plant and Other fixtures Building Assets under
DKK thousand machinery and fittings improvements construction
Cost at January 1, 2020 57,153 12,501 13,773 14,001
Transfer 0 0 13,796 -13,796
Additions 33,103 1,190 14,735 2,817
Retirements -4,379 -985 -9,856 0
Cost at December 31, 2020 85,877 12,706 32,448 3,022
Accumulated depreciation
at January 1, 2020 43,696 4,164 9,860 0
Depreciation for the year 4,585 2,533 1,933 0
Retirements -4,304 -986 -9,805 0
Accumulated depreciation
at December 31, 2020 43,977 5,711 1,988 0
Carrying amount
at December 31, 2020 41,900 6,995 30,460 3,022
Depreciation for the
financial year has been
charged as:
Research and
development expenses 4,000 2,133 1,634 0
Sale and marketing expenses 0 0 0 0
Administrative expenses 585 400 299 0
Total 4,585 2,533 1,933 0
Please refer to note 14 in the consolidated financial statements for additional information regarding property,
plant and equipment.
106Zealand Pharma ∞ Annual Report 2021
Par Fin – Note 10
Notes
Note 10 – Right-of-use assets and lease liabilities
Amounts recognized in the statement of financial position
The statement of financial position shows the following amounts relating to lease assets:
Other
fixtures and
DKK thousand Buildings fittings
As at January 1, 2021 116,824 1,178
Additions 0 1,511
Retirements 0 0
Reversal of depreciations 0 0
Depreciation expense -10,666 -1,066
As at December 31, 2021 106,158 1,623
As at January 1, 2020 84,148 1,484
Additions 43,698 581
Retirements -6,036 -143
Reversal of depreciations 6,036 0
Depreciation expense -11,022 -744
As at December 31, 2020 116,824 1,178
Set out below are the carrying amounts of lease liabilities and the movements
during the period.
2021 2020
As at January 1 119,848 85,760
Additions 1,418 44,209
Accretion of interest 2,449 2,386
Payments -12,260 -12,507
As at December 31 111,454 119,848
Current 11,686 11,392
Non-current 99,769 108,456
The following are the amounts recognized in profit and loss:
Depreciation expense of right-of-use assets -11,732 -11,766
Interest expense on lease liabilities 2,449 2,391
Total amount recognized in profit and loss -9,283 -9,375
Cashflow -12,260 -12,507
Total cash outflow for leases -12,260 -12,507
Please refer to note 15 in the consolidated financial statements for additional information regarding right-
of-use assets and lease liabilities.
107Zealand Pharma ∞ Annual Report 2021
Par Fin – Note 11
Notes
Note 11 – Investments in subsidiaries
Accounting policies
Investments in subsidiaries are measured at cost in the parent company’s financial statements. Where the
recoverable amount of the investment is lower than cost, the investments are written down to this lower
value.
DKK thousand 2021 2020
Cost at January 1 62,228 2,601
Additions 0 59,627
Cost at December 31 62,228 62,228
Value adjustments at January 1 0 0
Value adjustments for the year 0 0
Value adjustments at December 31 0 0
Carrying amount at December 31 62,228 62,228
Voting
Company summary Domicile Ownership rights
Zealand Pharma A/S subsidiaries:
ZP Holding SPV K/S Denmark 100% 100%
ZP General Partner 1 ApS Denmark 100% 100%
Zealand Pharma US, Inc. United States 100% 100%
Encycle Therapeutics, Inc. Canada 100% 100%
ZP SPV 3 K/S Denmark 100% 100%
ZP General Partner 3 ApS Denmark 100% 100%
ZP Holding SPV K/S subsidiaries:
ZP SPV 1 K/S Denmark 100% 100%
ZP General Partner 2 ApS Denmark 100% 100%
Zealand Pharma US Inc. subsidiary
Zealand Pharma California US, LLC. United States 100% 100%
ZP Holding SPV K/S has in 2021 distributed dividend of DKK 36.7 million to Zealand Pharma A/S. No divi-
dend has been distributed from subsidiaries during 2020.
Note 12 – Other investments
Please refer to note 16 in the consolidated financial statements.
108Zealand Pharma ∞ Annual Report 2021
Par Fin – Note 12
Notes
Note 15 – Other receivables
DKK thousand 2021 2020
VAT 420 3,887
Other 1,445 3,308
Total other receivables 1,865 7,195
Please refer to note 21 in the consolidated financial statements for additional information regarding other
receivables.
Note 16 – Cash and cash equivalents
DKK thousand 2021 2020
DKK 9,056 253,262
USD 354,951 521,977
EUR 13,182 85,533
Total cash and cash equivalents 377,189 860,772
Please refer to note 23 in the consolidated financial statements for additional information regarding cash
and cash equivalents.
Note 13 – Inventories
Inventories were comprised as follows:
DKK thousand 2021 2020
Raw materials 35,816 14,398
Work in process 29,498 13,665
Finished goods 13,453 17,637
Total 78,767 45,700
Direct costs 59,128 35,653
Indirect production costs 19,639 10,047
Write downs recognized on inventories were reflected in the cost of goods sold. They were comprised as
follows:
DKK thousand 2021 2020
Accumulated write downs, January 1 -6,425 0
Additions 0 -5,707
Write downs in the reporting period -8,089 -718
Utilization of write downs 11,702 0
Reversal of write downs 0 0
Accumulated write downs, December 31 -2,812 -6,425
Please refer to note 18 in the consolidated financial statements for additional information regarding
inventory.
Note 14 – Prepaid expenses
The increase in Prepaid expenses of DKK 34.0 million from 2020 to 2021 is primarily related to higher
insurance costs for coverage of Management and Board members and timing of invoices received from
the Contract Research Organizations (CRO's).
109Zealand Pharma ∞ Annual Report 2021
Par Fin – Note 14-16
Notes
Note 17 – Share capital
Please refer to note 24 to the consolidated financial statements.
Note 18 – Other liabilities
DKK thousand 2021 2020
Employee benefits 59,506 67,173
Development project costs 18,736 28,266
Other payables 55,499 15,287
Total other liabilities 133,741 110,727
Current: 115,315 93,983
Non-current 18,426 16,744
Please refer to note 28 in the consolidated financial statements for additional information regarding other
liabilities.
Note 19 – Contingent assets, liabilities and other contractual obligations
Zealand Pharma A/S is part of a Danish joint taxation. Consequently, referring to the Danish Corporation
Tax Act regulations, Zealand Pharma A/S is liable for any income taxes, etc. for the jointly taxed compa-
nies and Zealand Pharma A/S is likewise liable for any obligations to withhold tax at source on interest,
royalties and returns for the jointly taxed companies.
Please refer to note 29 in the consolidated financial statements for information on contractual obliga-
tions.
Note 20 – Financial risks
For Capital structure, Exchange rate risk, Credit risk and Liquidity risk we refer to note 30 in the consoli-
dated financial statements.
Exchange rate risk
As of December 31, 2021, Zealand Pharma A/S holds DKK 355.0 million (2020: DKK 522.0 million) of its
cash in USD.
Interest rate risk
As of December 31, 2021, Zealand Pharma A/S has lease liabilities amounting to DKK 111.5 million (2020:
DKK 119.8 million).
Contractual maturity (liquidity risk)
A breakdown of the Company’s aggregate liquidity risk on financial assets and liabilities is given below.
The following table details the Company’s remaining contractual maturity for its financial liabilities with
agreed repayment periods. The table has been prepared using the undiscounted cash flows for financial
liabilities, based on the earliest date on which the Company can be required to pay. The table includes
both interest and principal cash flows. To the extent that the specific timing of interest or principal flows is
dependent on future events, the table has been prepared based on Management’s best estimate of such
timing at the end of the reporting period. The contractual maturity is based on the earliest date on which
the Company may be required to pay.
With the exception of leasing, there are no interest cash-flows to be included in the table below for the
existing financial liabilities as they are not interest-bearing financial liabilities.
110Zealand Pharma ∞ Annual Report 2021
Par Fin – Note 18-21
Notes
DKK thousand 2021 2020
Categories of financial instruments
Deposits 8,920 8,920
Trade receivables 13,546 0
Receivables from subsidiaries 144,904 325,645
Other receivables 1,865 7,195
Cash and cash equivalents 377,189 860,772
Financial assets measured at amortized cost 546,424 1,502,532
Marketable securities 299,042 297,345
Other investments 26,906 32,333
Financial assets measured at fair value through profit or loss 325,948 329,678
Trade payables 48,430 59,307
Payables to subsidiaries 59,078 8,562
Lease liabilities 111,455 119,848
Other liabilities 133,741 109,292
Financial liabilities measured at amortized cost 352,704 297,009
The fair value of marketable securities is based on Level 1 in the fair value hierarchy.
The fair value of other investments is based on level 3 in the fair value hierarchy.
At December 31, 2021 and 2020, the carrying amount of other financial assets and financial liabilities
approximated the fair value.
Note 20 – Financial risks (continued)
< 12
DKK thousand months 1-5 Years >5 years Total
Trade payables 48,430 0 0 48,430
Payables to subsidiaries 59,078 0 0 59,078
Leasing 11,772 44,946 67,547 124,265
Other liabilities 115,315 0 18,426 133,741
Total financial liabilities
at December 31, 2021 234,595 44,946 85,973 365,514
Trade payables 59,307 0 0 59,307
Leasing 11,392 43,949 78,648 133,989
Other liabilities 92,983 0 0 92,983
Total financial liabilities
at December 31, 2020 163,682 43,949 78,648 286,279
All cash flows are undiscounted and include all liabilities under contracts.
111Zealand Pharma ∞ Annual Report 2021
Notes
Note 23 – Change in working capital
DKK thousand 2021 2020
Increase/decrease in receivables -184,413 -9,666
Increase/decrease in inventory -33,067 -45,700
Increase/decrease in payables -10,876 39,720
Increase/decrease in other liabilities -28,701 46,328
Change in working capital -257,057 30,682
Note 24 – Allocation of result
The Board of Directors proposes that the parent company’s 2021 net result of DKK -1,004.6 million (2020:
DKK -826.8 million) be carried forward to next year by transfer to retained loss.
Note 25 – Significant events after the balance sheet date
Please refer to note 36 in the consolidated financial statements.
Note 26 – Approval of the annual report
Please refer to note 37 in the consolidated financial statements.
Note 21 – Transactions with related parties
‘Zealand Pharma A/S' related parties are the board of directors, executive management, and close mem-
bers of the family of these persons. Refer to note 7 in the consolidated financial statements for remunera-
tion of Board of Directors. Refer to note 3 in these parent company financial statements for remuneration
of the executive management team.
The parent company had the following transactions with subsidiaries:
DKK thousands 2021 2020
Revenue 168,713 138,396
Other income 9,186 35,500
Research and development expenses 54,055 0
Sale and marketing expenses 365,851 327,829
Admin Expenses 92,149 0
Receivables 144,904 325,645
Payables 59,078 359,869
Note 22 – Adjustments for non-cash items
DKK thousand 2021 2020
Depreciation 28,678 26,293
Warrant compensation expenses 68,577 16,273
Income tax receipt 1,426 0
Financial income -8,596 0
Financial expenses 17,436 5,327
Net loss on sale of fixed assets 2,258 0
Fair value adjustments -2,007 0
Exchange rate adjustments 19,451 9,623
Total adjustments 127,223 57,516
112Zealand Pharma ∞ Annual Report 2021
Par Fin – Note 22-27
Free cash flow
Free cash flow is calculated as the sum of cash flows from operating activities less purchase of property,
plant and equipment. A positive free cash flow shows that the Group is able to finance its activities and
that external financing or capital raises is thus not necessary for the Group’s operating activities. There-
fore, Executive Management believes that this non-IFRS liquidity measure provides useful information to
investors in addition to the most directly comparable IFRS financial measure “Net cash flow from operat-
ing activities.” The table below shows a reconciliation of free cash flow for 2021, 2020 and 2019:
DKK thousand 2021 2020 2019
Cash (outflow)/inflow from operating activities -1,211,971 -688,716 -409,455
Less purchase of property, plant and equipment -22,133 -25,044 -21,036
Free cash flow -1,234,104 -713,760 -430,491
Alternative performance measures for the Group (non-audited)
113Zealand Pharma ∞ Annual Report 2021
Par Fin – Alternative performance measures
Statement
of the Board
of Directors
and Executive
Management
Executive Management
Board of Directors
114Zealand Pharma ∞ Annual Report 2021
Statement – Management
Independent
auditor’s report
Report on the audit of the Consolidated Financial
Statements and Parent Company Financial Statements
Opinion
Basis for opinion
Material uncertainty related to going concern
115Zealand Pharma ∞ Annual Report 2021
Statement – Independent auditor
Key audit matters
116Zealand Pharma ∞ Annual Report 2021
Statement on the Management's review
Management's responsibilities for the financial
statements
Auditor's responsibilities for the audit of the financial
statements
117Zealand Pharma ∞ Annual Report 2021
Report on compliance with the ESEF Regulation
118Zealand Pharma ∞ Annual Report 2021
119Zealand Pharma ∞ Annual Report 2021
Other
information
120Zealand Pharma ∞ Annual Report 2021
Other – COVER
Sources Company
information
CVR no.: 20 04 50 78
Tel: +45 88 77 36 00
Fax: +45 88 77 38 98
Zealand Pharma U.S., Inc.
44 Farnsworth Street
4th Floor
Boston, MA 02210
Established
1998
Registered office
Auditors
CVR no.: 30 70 02 28
2021 Achievements
¹ (Partnered with Alexion (AstraZeneca))
Peptide platform
¹ (This includes Lixisenatide licensed to Sanofi and sold under the mark Lyxumia
®
in the EU
and Adlyxin
®
in the US as well as Dasiglucagon)
² Kumanyika S et al., N Engl J Med (2020) 383:2197-2200
Zealand Pharma Pipeline
¹ Licensed to Boehringer Ingelheim.
² Licensed to AstraZeneca.
Severe Hypoglycemia in diabetes/Zegalouge
¹ International Hypoglycemia Study Group. Glucose concentrations of less than 3.0
mmol/L (54 mg/dL) should be reported in clinical trials: a joint position statement of the
American Diabetes Association and the European Association for the Study of Diabetes.
Published in both Diabetes Care 2017 Jan; 40(1): 155-157 and Diabetologia 2017;6-:3-6.
² Siyed Y. Dasiglucagon in severe hypoglycemia: a profile of its use. Drugs & Therapy Per-
spectives 2022. https://doi.org/10.1007/s40267-022-00894-x
³ Zegalogue (dasiglucagon). Prescribing information. Zealand Pharma A/S; April 2021
CHI
¹ Congenital Hyperinsulinism International. Available at: http://congenitalhi.org
² De Leon et al. Nat Clin Pract Endocrinol Metab 2007;3:57-68
³ Yorifuji et al. Pediatrics International 2014;56:467
⁴ Eljamel et al. Orphanet Journal of Rare Diseases 2018;13:123
Type 1 diabetes
¹ Hypoglycemia in the Diabetes Control and Complications Trial. The Diabetes Control and
Complications Trial Research Group. Diabetes. 1997;46:271-286;
² Abraham et al. Pediatr Diabetes. 2018;19(Suppl. 27):178-192;
³ International Hypoglycaemia Study Group; Diabetes Care. 2015;38:1583-1591;
⁴ Edridge et al. PloS ONE. 2015:10:e0126427.
⁵ Chronic usage of other 2nd generation products is likely hindered by DMSO additive and
inhalation format, respectively
Obesity / Type 2 diabetes
¹ Kumanyika S et al., N Engl J Med (2020) 383:2197-2200
Short Bowel Syndrome (SBS)
¹ Jeppesen P. Expert Opinion on Orphan Drugs (2013) 1(7):515-525
Corporate Matters
¹ The Nomination Committee is a sub-set of the board.
² Formalized of April 2021.
³ Resigned from company and as employee elected board member in September 2021
⁴ Joined the board as of Gertrud Koefoed Rasmussen’s resignation in September 2021
Board of Directors and Corporate Management
¹ Resigned in 2006 and re-elected in 2007.
² Employee-elected board members are elected for a period of four years.
121Zealand Pharma ∞ Annual Report 2021
Other – Sources - Company info
Design and production: Noted
Tel: +45 88 77 36 00
Fax: +45 88 77 38 98
CVR no.: 20 04 50 78
zealandpharma.com