Zealand Pharma A/S

Annual Report

2023

Changing lives with next-generation

peptide therapeutics

Zealand Pharma A/S

Sydmarken 11

DK-2860 Søborg

Company reg. no. 20045078

Management review

See our pipeline

Read more on pages 16-18

Other supplementary

reports 2023

Remuneration Report

Contents

Zealand Pharma ∞ Annual Report 2023 2

Contents

Our purpose 4

Zealand Pharma at a glance 5

Letter from the CEO and theChair 6

2023 Achievements 9

Financial highlights and key figures 10

2024 Outlook and objectives 11

The big

picture

Contents The big picture Our business Sustainability Corporate governance Financial statements

The big picture

Zealand Pharma ∞ Annual Report 2023 3

Our purpose

Our ambition

is to be the world's best peptide drug

discovery and development company.

Changing lives

with next-generation

peptide therapeutics

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 4

253

Our strategy

is to pursue global co-development and commercialization

partnerships that complement and extend our capabilities to

bring new medicine to patients with unmet medical needs.

Employees

as of December 31, 2023, with 80% in research and

development and related functions.

R&D focus areas include

becoming a key player in the fast-

developing obesity space

leading in the rare diseases

congenital hyperinsulinism and

short bowel syndrome

advancing potential treatment

options for chronic inflammatory

diseases and type 1 diabetes

expanding our pipeline through

in-house research and external

opportunities

25 years

of expertise in peptide R&D with a validated platform that has delivered two drugs

to market and a rich pipeline of both clinical and pre-clinical programs.

Zealand Pharma at a glance

Zealand Pharma A/S was founded in 1998 and is a biotechnology company focused on the

discovery, design and development of innovative peptide-based medicines.

Find out more about Zealand at

zealandpharma.com/about-us

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 5

Letter from the CEO

and theChair

In 2023, we celebrated 25 years as a

biotechnology company focused on the

discovery, design and development of

peptide therapeutics. It was an extraordinary

year for Zealand Pharma. We delivered on

key strategic objectives, including significant

advancement of our obesity portfolio, two

regulatory submissions to the US FDA for

our rare disease assets, and a strengthened

financial position, all of which pave the way

for a very exciting 2024.

Adam Steensberg

President and

Chief Executive Officer

Martin Nicklasson

Chair of

theBoard of Directors

Positioning our differentiated obesity portfolio

By focusing on R&D, we have been able to prioritize

investments and organizational resources in our differ-

entiated obesity assets, which we believe hold substantial

value potential and could represent some of the thera-

peutic keys needed to unlock solutons for the greatest

healthcare challenge of our time: the obesity pandemic.

In 2023, we reported clinical data that have helped to

position and significantly increase our confidence in our

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 6

differentiated obesity portfolio. We highlighted these data,

along with the scientific rationale behind our programs,

at an R&D Event in December that featured key external

experts in the field of obesity.

Survodutide - differentiated glucagon/

GLP-1 receptor dual agonist

In 2023, our partner Boehringer Ingelheim reported data

from the Phase 2 trial in people living with overweight or

obesity with survodutide, the glucagon/GLP-1 receptor

dual agonist co-invented with Zealand Pharma. After 46

weeks, survodutide dose-dependently reduced body

weight by up to 18.7% on average. Of note, the weight loss

had not plateaued by the end of treatment on the trial,

indicating potential for additional weight loss in trials of

longer duration. Boehringer subsequently initiated a Phase

3 program with survodutide in people living with over-

weight or obesity, SYNCHRONIZE

, which includes three

global registrational trials. If successful, Boehringer and

Zealand could be third to market in this new era of weight-

loss medications. Finally, positive topline results reported

from the Phase 2 trial in metabolic dysfunction-associated

steatohepatitis, or MASH, provide evidence of clear differ-

entiation and potentially position survodutide as a leading

GLP-1-containing weight-loss medication in the future.

Dapiglutide - first-in-class GLP-1/

GLP-2 receptor dual agonist

Our first-in-class GLP-1/GLP-2 receptor dual agonist,

dapiglutide, adds GLP-2 pharmacology to a potent GLP-1

receptor agonist, designed to improve gut integrity and

address low-grade inflammation that is associated with

obesity and can result in several comorbidities, including

cardiovascular disease, liver disease, and neuro-inflam-

mation. Dapiglutide is being evaluated in two clinical trials

initiated in 2023, the Phase 2a investigator-led DREAM trial

and a company-sponsored Phase 1b dose-titration trial.

The data from these trials are expected in 2024 and will

provide insights into the effects of dapiglutide on body

weight as well as biomarkers of inflammation.

Petrelintide - long-acting amylin analog

We believe that long-acting amylin analogs may represent

an alternative to GLP-1 receptor agonists for the treatment

of overweight and obesity. Used as monotherapy, long-

acting amylin analogs have the potential to achieve GLP-1

receptor agonist-like weight loss, but with improved tolera-

bility and the potential to offer a better patient experience.

Pre-clinical data also suggest a high-quality weight loss

with the preferential loss of fat and a preservation of lean

muscle mass. We believe our long-acting amylin analog,

petrelintide, shows potential to be best-in-class. In March,

we reported data from the first-in-human clinical trial with

petrelintide, demonstrating an average weight loss of 4.2%

(4.8% placebo-corrected) at day 7 after a single subcuta-

neous 2.4 mg dose. Subsequently in July, clinical data from

Part 1 of a multiple ascending dose (MAD) trial, six, once-

weekly, low doses of 0.6 mg and 1.2 mg of petrelintide led

to average weight loss above 5%. Petrelintide was well-tol-

erated with no serious or severe treatment-emergent

adverse events and no withdrawals. Importantly, all gastro-

intestinal events reported in the trial were mild. We are now

Important data read-out

"We believe our long-acting

amylin analog, petrelintide,

shows potential to be best-in-

class. We are now investigating

significantly higher doses of

petrelintide over 16 weeks in

Part 2 of the MAD trial and

anticipate these important

results in the first half of 2024."

Watch the recording of our Obesity

R&D Event on December 5, 2023

https://event.webcasts.

com/viewer/landing.

jsp?ei=1647538&tp_key=93047ac522

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 7

investigating significantly higher doses of petrelintide over

16 weeks, in Part 2 of the MAD trial, and anticipate these

important results in the first half of 2024.

Approaching patients with our rare disease assets

During 2023, we submitted New Drug Applications to the

US FDA for dasiglucagon, our glucagon analog, for the

treatment of congenital hyperinsulinism (CHI) and glepa-

glutide, our long-acting GLP-2 analog, for the treatment

of short bowel syndrome (SBS).

In the first half of 2024, we expect to resubmit the appli-

cation for dasiglucagon in CHI for up to three weeks

of dosing, contingent on a successful reinspection of

the third-party manufacturing site where the FDA has

identified deficiencies to be addressed. Importantly, the

deficiencies were not specific to dasiglucagon, and no

concerns regarding the clinical trial conduct and clinical

data package for dasiglucagon were cited. The third-party

manufacturer believes it has resolved these deficiencies

and is ready for a reinspection. Also in the first half of

2024, we look forward to continued dialogue with the FDA

as we work to complete the second part of the New Drug

Application covering use of dasiglucagon beyond three

weeks of dosing.

Separately, we expect the US FDA to notify us of the

PDUFA date for glepaglutide in SBS in the coming weeks.

In parallel with these regulatory activities, and in line with

our strategy to focus on R&D, we will pursue agreements

with commercial partners for both our rare disease assets

so that these treatments may reach as many patients as

possible.

Strong financial position to support

an exciting and eventful 2024

Despite the challenging financing environment for many

biotechnology companies, we have significantly strength-

ened our financial position to invest in our R&D pipeline.

In April, we raised DKK 1.5 billion (USD ~220 million) from

a directed issue and private placement of 6,578,948 new

ordinary shares. We also simplified our balance sheet,

repaying a loan to Oberland Capital in full and securing

a new credit facility provided by Danske Bank, which is

undrawn. In December, we were proud to announce the

Strong financial position

"Despite the challenging

financing environment

for many biotechnology

companies, we have

significantly strengthened

our financial position to

invest in our R&D pipeline."

Adam Steensberg

President and

Chief Executive Officer

Martin Nicklasson

Chair of

theBoard of Directors

backing from the European Investment Bank, supporting

the continued journey of Zealand Pharma with a EUR

90 million finance agreement. During 2023, we received

milestone payments from existing partners, including

Boehringer Ingelheim, Sanofi and Novo Nordisk. Finally, in

January 2024, we announced a directed issue and private

placement to two reputable institutional investors, raising

an additional DKK 1.45 billion (USD 214 million) to further

strengthen the investment in our differentiated obesity

assets. As we embark on a very exciting 2024, we believe

we are very well-positioned to invest significantly in our

differentiated obesity assets and advance our rare disease

assets towards patients.

Dr. Alain Munoz and Dr. Mike Owen will step down from

the Board of Directors at the next AGM. As exemplary

members of the Board, they have made substantial contri-

butions and helped to steer Zealand's robust pipeline to

its present success. We thank them for their dedicated

service and wise counsel over the years.

Finally, we thank our dedicated colleagues who have

contributed to the company's success in the past year, the

patients and their caregivers who have taken part in our

clinical trials, as well as our partners and our shareholders

for their continued support of Zealand Pharma.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 8

2023 Achievements

2023 Achievement

Advanced obesity portfolio

Survodutide (glucagon/GLP-1 receptor dual agonist)

• Boehringer Ingelheim and Zealand Pharma reported positive Phase 2 results with survodutide in people living with overweight or obesity

• Boehringer Ingelheim initiated the Phase 3 program SYNCHRONIZE

with survodutide in people living with overweight or obesity

Petrelintide (long-acting amylin analog)

• Reported positive results with petrelintide from both the single ascending dose trial and Part 1 of the multiple ascending dose trial (6-week trial)

• Initiated Part 2 of the multiple ascending dose trial with petrelintide, investigating significantly higher doses in people living with overweight or obesity over a longer

duration (16 weeks) using a dose-escalation scheme

Dapiglutide (GLP-1/GLP-2 receptor dual agonist)

• Investigator-led Phase 2a trial DREAM, investigating the effects of dapiglutide on body weight, gut permeability, and inflammation, was initiated

• Initiated the 13-week Phase 1b dose-titration trial with dapiglutide, investigating higher doses than the previous multiple ascending dose trial and the DREAM trial

Progressed rare disease assets

towards regulatory submission

Dasiglucagon in congenital hyperinsulinism

• Submitted New Drug Application to the US FDA for dasiglucagon in congenital hyperinsulinism

Glepaglutide in short bowel syndrome

• Submitted New Drug Application to the US FDA for glepaglutide in short bowel syndrome

Ensured Phase 1 readiness

for inflammation assets

• Completed pre-clinical activities with ZP10068 (complement C3 inhibitor in collaboration with Alexion Pharmaceuticals) to ensure Phase 1 readiness

• Completed pre-clinical activities with ZP9830 (Kv1.3 Ion Channel Blocker) to ensure Phase 1 readiness

Strengthened financial position • Met financial guidance on Net Operating Expenses between DKK 800-900 million

• Extended cash runway into 2027, driven by a capital raise of DKK 1.5 billion, a loan facility with the European Investment Bank of DKK 670 million, and a Revolving Credit

facility of DKK 350 million provided by Dansle Bank, as well as a capital raise of DKK 1.45 billion in early January 2024

Other significant activities • Submitted the marketing authorization application to the European Medicines Agency for dasiglucagon injection

for the treatment of severe hypoglycemia in people with diabetes

• Advanced double materiality assessment to identify ESG focus areas, forming the basis of refined ESG strategy

In 2023, we delivered on our strategic objectives and achieved significant pipeline progress.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 9

Financial highlights and key figures

DKK thousand 2023 2022 2021 2020 2019

Income statement

Revenue 342,788 103,986 108,546 192,001 41,333

Royalty expenses -9,138 - -10,970 - -415

Gross profit 323,614 103,986 97,576 192,001 40,918

Research and development

expenses -684,902 -614,044 -581,511 -595,847 -561,423

Sales and marketing expenses -30,627 -32,298 -62,600 -20,795 -

General and administrative

expenses -185,302 -237,210 -235,609 -201,594 -67,881

Other operating items 4,979 -57,587 -2,173 - 444

Net operating expenses -895,852 -941,139 -881,893 -818,838 -628,860

Operating result -572,238 -837,153 -784,317 -626,235 -587,942

Net financial items -136,627 -134,888 25,430 -47,292 11,265

Result before tax -708,865 -972,041 -754,887 -673,527 -576,677

Corporate tax 5,126 6,431 3,949 4,814 5,136

Net result for the year from

continuing operations -703,739 -965,610 -754,938 -668,713 -571,541

Net result for the year from

discontinued operations - -236,525 -263,211 -178,016 -

Net result for the year -703,739 -1,202,135 -1,018,149 -846,729 -571,541

Loss per share from continuing

operations, basic/diluted (DKK) -12.44 -20.90 -17.61 -17.43 -16.91

Loss per share, basic/diluted (DKK) -12.44 -26.02 -23.75 -22.07 -16.91

DKK thousand 2023 2022 2021 2020 2019

Statement of financial position

Cash and cash equivalents 449,311 1,069,234 1,129,103 960,221 1,081,060

Marketable securities 1,183,746 108,611 299,042 297,345 299,448

Cash, cash equivalents

and marketable securities 1,633,057 1,177,845 1,428,145 1,257,566 1,380,508

Total assets 1,979,993 1,539,806 2,067,629 1,761,949 1,599,514

Total shareholders' equity 1,592,839 815,911 927,803 1,229,311 1,242,673

Cash flow

Cash used in operating activities -425,668 -942,311 -1,211,971 -688,716 -409,455

Cash (used in)/provided by investing

activities -1,094,033 281,259 -18,121 -196,807 -51,666

Cash provided by financing

activities 907,014 587,500 1,332,751 760,941 674,480

Purchase of intangible assets -12,508 - - - -

Purchase of property, plant

and equipment -11,241 -11,710 -22,133 -25,044 -21,036

Free cash flow -436,909 -954,021 -1,234,104 -713,760 -430,491

Other

Undrawn borrowing facilities (note 4.2) 722,645 - - - -

Share price (DKK) 373.2 201.4 145.1 220.6 235.4

Number of shares ('000 shares) 58,751 51,702 43,634 39,800 36,055

Market capitalization (MDKK) 21,787 9,305 6,220 8,464 8,487

Equity ratio (%) 80% 53% 45% 70% 78%

Equity per share (DKK) 27.28 17.66 21.26 32.04 34.52

Average number of full time

employees 235 247 346 297 173

Number of full-time employees

at the end of the year 253 196 355 329 179

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 10

2024 Outlook and objectives

2024 Objectives

Advance obesity portfolio

Survodutide

• Boehringer Ingelheim to report data from Phase 2 trial in NASH

• Boehringer Ingelheim to enroll patients in Phase 3 obesity trials SYNCHRONIZE

-1 and SYNCHRONIZE

-2

Dapiglutide

• Report data from Phase 2a investigator-led trial DREAM

• Report data from Phase 1b 13-week dose-titration trial

Petrelintide

• Report data from Part 2 of Phase 1b MAD trial (16-week trial)

• Initiate Phase 2b trial

Progress rare disease assets towards patients

Dasiglucagon for congenital hyperinsulinism

• Resubmit Part 1 of NDA covering up to three weeks of dosing

• Submit analyses from continuous glucose monitoring datasets supporting approval beyond three weeks of dosing

• Engage in commercial partnership discussions

Glepaglutide for short bowel syndrome

• Engage in commercial partnership discussions

Initiate first-in-human trials with inflammation assets • Initiate first-in-human trial with ZP9830 (Kv1.3 Ion Channel Blocker)

• Alexion to initiate first-in-human trial with ZP10068 (Complement C3 Inhibitor)

Maintain a strong financial position • Meet financial guidance and ensure disciplined financial management

• Maintain sufficient cash runway

Deliver on environmental, social

and governance responsibility

• Launch refined ESG strategy based on double materiality assessment

• Establish ESG reporting framework to prepare for CSRD, including CO

baselining

In 2024 we are focused on maximizing the value potential of our pipeline.

Financial guidance

DKK million 2024 Guidance 2023 Actual

Revenue anticipated from existing and new license and partnership agreements No guidance due to uncertain size and timing 343

Net operating expenses

1,100 - 1,200 896

Net operating expenses consist of R&D, S&M, G&A and other operating items

Financial guidance based on foreign exchange rates as of February 27, 2024

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 11

25 years of peptide expertise 13

R&D pipeline 15

Obesity 16

Rare diseases 19

Inflammation 23

Type 1 Diabetes 25

Financial review 26

Our

business

Contents The big picture Our business Sustainability Corporate governance Financial statements

Our business

Zealand Pharma ∞ Annual Report 2023 12

25 years of peptide expertise

We have 25 years of expertise in discovery, design and development of peptide-based medicines.

We engineer peptide analogs to enhance biological activity, extend duration of action and

increase stability to provide innovative and better treatments for a broad range of diseases.

1998

Foundation

Zealand Pharma is founded by SIP

inventor Dr. Bjarne Due Larsen and

Lars Hellerung Christiansen

2010

Initial Public Offering

Zealand Pharma shares are listed

on Nasdaq OMX Copenhagen

2016

First drug product

approval by US FDA

Adlyxin (lixisenatide) and Soliqua

(insulin glargine and lixisenatide),

partnered with Sanofi, are approved

by the US FDA for the treatment of

T2DM in the United States (approved

in Europe by EMA in 2013)

2020

Approval by US FDA

of Zegalogue

for the treatment of severe

hypoglycemia in people

with diabetes

2023

Celebration of 25-year anniversary

Zealand Pharma celebrates 25-year anniver-

sary in eventful year that includes regulatory

submissions to the US FDA for dasiglucagon

in congenital hyperinsulinism and glepa-

glutide in short bowel syndrome, as well

as strong clinical advancement of obesity

portfolio

1999

Invention of Lixisenatide

GLP-1 agonist lixisenatide

is invented

2011

Partnership with

Boehringer Ingelheim

Zealand Pharma enters partnership

agreement with Boehringer Ingelheim to

develop drug candidates for T2DM and

obesity

2019

Partnership with Alexion

Pharmaceuticals

Zealand Pharma enters partnership agreement

with Alexion Pharmaceuticals to discover and

develop therapies for complement-mediated

diseases

2022

New strategy and CEO

- Zealand Pharma launches new strategy, focusing on

R&D and scaling back commercial activities, and Dr.

Adam Steensberg (former Chief Medical Officer) is

appointed as new CEO

- Sale of V-Go to MannKind Corporation and partner-

ship agreement with Novo Nordisk for Zegalogue

Our journey towards becoming experts in peptide R&D

Contents The big picture Our business Sustainability Corporate governance Financial statements

25 years of peptide expertise

Zealand Pharma ∞ Annual Report 2023 13

Validated peptide platform

Since our foundation in 1998, we have built a unique

peptide platform and design process based on a deep

understanding of peptide chemistry, formulation

know-how and intellectual property rights combined with

advanced computer science.

The success of our peptide discovery and development

platform has been validated by bringing two drug prod-

ucts to market in collaboration with partners Sanofi and

Novo Nordisk, as well as advancing our novel peptide

analogs currently in clinical development.

What are peptides?

Peptides are composed of amino acids and are produced

by all living organisms, including humans. Many peptides

are hormones that carry information between cells or

organs to perform a wide range of essential functions,

such as regulating appetite, blood glucose or stimulating

tissue growth.

Native peptides have powerful biological functions but

many are inherently unstable and short-lived in the blood-

stream. To convert native peptides into effective peptide

therapeutics, these characteristics must be modified,

while maintaining or enhancing the biological activity.

This involves modifying the amino acid sequence of the

peptide, usually by substituting with another amino acid.

We use nature’s own inventions

Through our deep understanding of peptide chemistry

and biology, we focus this substitution process on key

amino acids to remove the weak points that result in poor

solubility, stability or activity. We have successfully applied

this approach to glucagon, amylin, GLP-1, GLP-2 and GIP

to create new drug candidates.

Enhancing the natural property of a peptide or combining

activities of two or more peptides into single peptides can

present new therapeutic opportunities. We use endoge-

nous human peptides and peptides from animal venoms

to develop new therapeutic candidates. We also manipu-

late bacteria to produce peptide libraries. In other words,

we make broad use of nature’s own inventions in an effort

to improve human health and quality of life.

We continue to optimize our peptide platform through

new technologies and scientific advancements. We also

access cutting-edge technology through research collab-

orations. Our R&D capabilities and pre-clinical programs

provide opportunities to grow our scientific and medical

presence.

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 14

Product Candidate

Preclinical Phase 1 Phase 2 Phase 3 Registration

Dapiglutide (GLP-1R/GLP-2R Dual Agonist)

Petrelintide (amylin analog)

ZP6590 (GIP receptor agonist)

Survodutide (GCGR/GLP-1R dual agonist)

Dasiglucagon: Continuous Subcutaneous Infusion

Glepaglutide (GLP-2 Analog)

ZP 9830 (Kv1.3 Ion Channel Blocker)

ZP 10068 (Complement C3 Inhibitor)

Dasiglucagon: Bi-Hormonal Artificial Pancreas Systems

Dasiglucagon: Mini-Dose Pen

R&D pipeline

Rare

diseases

Type 1

diabetes

ObesityInflammation

Our R&D pipeline of investigational candidates aims to address unmet medical needs across therapeutic areas.

Investigational compounds whose safety and efficacy have not been evaluated or approved by the FDA or any other regulatory authority.

Co-invented with Zealand Pharma, Boehringer Ingelheim is funding all activities and is exclusively responsible for clinical development. Up to EUR €315 million outstanding potential development, regulatory and commercial milestones to Zealand Pharma, plus high single to low double

digit percentage royalties on global sales;

Licensed to Alexion: USD $610 million potential development, regulatory and commercial milestones and high single to low double digits percentage royalties on net sales.

Congenital Hyperinsulinism

Obesity and MASH

Obesity

Short Bowel Syndrome

Type 1 Diabetes management

Type 1 Diabetes exercise-induced hypoglycemia

Undisclosed

Contents The big picture Our business Sustainability Corporate governance Financial statements

Pipeline

Zealand Pharma ∞ Annual Report 2023 15

Obesity

Overweight and obesity are associated with more than 220 complications and

co-morbidities, including cardiovascular disease, liver disease, type 2 diabetes, kidney

disease, and neuroinflammation.

An obesity pandemic - the greatest

healthcare challenge of our time

The worldwide prevalence of obesity has nearly tripled

since the mid-1970s, with 650 million adults and 389 million

adolescents and children suffering from obesity today. In

the U.S. alone, more than 40% of the population are consid-

ered obese. More than 3 million people die each year due

to complications from overweight or obesity.

This is equiv-

alent to the estimated number of global deaths attributable

to COVID-19 during 2020, just every year.

The obesity pandemic we are witnessing today is the

result of an increasing number of people having been

obese since their 30s and 40s. In the next few decades,

we could start seeing the consequences of adults having

been obese since they were children or teenagers.

Shockingly, in the U.S. today, the prevalence of over-

weight and obesity among 2-4 year old children is 30%.

A complex, multifactorial disease

requiring more treatment options

Obesity is a complex disease that may be treated by

targeting a number of unique metabolic pathways.

For many years, the weight-loss medications available

have had limited efficacy and/or, for many, been asso-

ciated with considerable side effects. Since 2021, two

weight-loss medications with better efficacy and safety

profiles have been approved. Nevertheless, the treatment

rate today is approximately 2%.

Thus, there remains a

substantial unmet medical need for more and better

Obesity

World Health Organization (WHO). Fact sheet. Obesity. 9 June 2021. https://www.who.int/news-room/facts-in-pictures/detail/6-facts-on-obesity

World Health Organization (WHO). Data stories. The true death toll of COVID-19. https://www.who.int/data/stories/the-true-death-toll-of-covid-19-estimating-global-excess-mortality

Trust for America's Health (TFAH). The State of Obesity 2023. 20-Year Report Anniversary Retrospective. September 2023.

IQVIA. Insights Brief. Obesity Treatment Rates Increase as GLP-1 Inhibitors Prosper. 17 March 2023. https://www.iqvia.com/library/white-papers/obesity-treatment-rates-increase-as-glp-1-inhibitors-prosper

treatment options for the very heterogeneous popula-

tion suffering from overweight and obesity, for example

treatments based on emerging modalities with potential

to deliver similar efficacy as the recently approved treat-

ments but with better tolerability, fat-specific weight loss,

or treatments targeting obesity-related comorbidities.

Watch our CEO discuss the obesity pandemic at

https://vimeo.com/916606203

Contents The big picture Our business Sustainability Corporate governance Financial statements

Obesity

Zealand Pharma ∞ Annual Report 2023 16

Obesity

Survodutide

Targeting obesity and NASH with a glucagon/

GLP-1 receptor dual agonist

Survodutide (BI456906) is a long-acting glucagon/GLP-1

receptor dual agonist for once-weekly subcutaneous

administration. Activating the glucagon and GLP-1 recep-

tors simultaneously may reduce body weight by both

increasing energy expenditure and reducing food intake.

The molecule is designed with a strong relative potency

of 8:1 in favor of GLP-1 receptors compared to glucagon

receptors. This design leverages the weight loss and

glycemic control of GLP-1 receptors with some activity on

the glucagon receptors, which are present in the liver.

Development status

A Phase 2 trial with survodutide in people with type

2 diabetes demonstrated average dose-dependent

decreases in blood sugar, HbA1c, of up to -1.88% after 16

weeks compared to -1.47% with open-label weekly sema-

glutide 1.0 mg. In addition, a Phase 2 trial with survodutide

in people living with overweight or obesity demonstrated

Targeting obesity with differentiated product candidates

average body weight reductions of up to -18.7% after 46

weeks. Based on the positive results seen in these Phase 2

trials, Boehringer Ingelheim has in 2023 initiated a Phase

3 program, SYNCHRONIZE

, in people living with over-

weight or obesity. Finally, positive topline phase 2 results

were recently reported with survodutide in metabolic

dysfunction-associated steatohepatitis (MASH), formerly

nonalcoholic steatohepatitis (NASH), one of the most prev-

alent and serious obesity-related comorbidities, providing

evidence for differentiation from current GLP-1 based

therapies. In people living with overweight and obesity, it is

estimated that 75% have metabolic dysfunction-associated

fatty liver disease (MAFLD), formerly non-alcoholic fatty

liver disease (NAFLD) and 34% have MASH.

Survodutide was co-invented by Boehringer Ingelheim

and Zealand Pharma. Boehringer Ingelheim is funding all

activities and is exclusively responsible for clinical devel-

opment related to survodutide. Zealand has EUR 315

million in outstanding potential milestone payments and

is eligible for high-single to low-double digit percentage

royalties on global sales.

Quek et al. Lancet Gastroenterol Hepatol 2023;8(1):20–30; 2.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 17

Obesity

Petrelintide

A next-generation weight-loss medication, representing

an alternative to GLP-1 receptor agonists

Petrelintide (ZP8396) is a long-acting amylin analog suitable for once-weekly subcu-

taneous administration that has been designed with chemical and physical stability at

neutral pH, minimizing fibrillation and allowing for co-formulation with other peptides.

Amylin is produced in the pancreatic beta cells and co-secreted with insulin in response

to ingested nutrients. Amylin analogs have been shown to increase satiety by a direct

effect on the amylin receptor and by restoring sensitivity to the hormone leptin.

2,3

This is in

contrast to GLP-1 receptor agonists that primarily lower body weight by reducing appetite.

Current clinical or preclinical data suggest a potential of long-acting amylin analogs to

deliver weight loss comparable to GLP-1 receptor agonists but with improved tolerability

for a better patient experience and high-quality weight loss by preserving lean muscle.

Development status

In 2023, we reported results from both a single ascending dose (SAD) trial and Part 1 of a

MAD trial with petrelintide. In the SAD trial, one single dose of petrelintide 2.4 mg led to

average weight loss of -4.2% after one week (placebo-corrected -4.8%), whereas six once-

weekly doses of petrelintide in low doses of 0.6 mg and 1.2 mg in Part 1 of the MAD trial

showed average weight loss of -5.3% and -5.1%, respectively. Petrelintide was well-toler-

ated with no serious or severe treatment-emergent adverse events and no withdrawals.

All gastrointestinal adverse events reported were mild. Part 2 of the MAD trial is currently

ongoing, exploring significantly higher doses of petrelintide over a longer duration of 16

weeks, with results expected in the first half of 2024.

Dapiglutide

Targeting obesity and low-grade inflammation with

a GLP-1/GLP-2 receptor dual agonist

Dapiglutide is a long-acting GLP-1/GLP-2 receptor dual agonist for once-weekly

subcutaneous administration. This is a first-in-class peptide designed to leverage

the weight loss effects of a potent GLP-1 agonist and address comorbidities

associated with low-grade inflammation through improved intestinal barrier

function by GLP-2. People living with obesity have increased translocation of

bacteria from the gut lumen into the bloodstream due to a reduced integrity of

the intestinal barrier, or “leaky gut”, driving a state of low-grade inflammation.

This obesity-related low-grade inflammation can result in comorbidities, such as

cardiovascular disease, liver disease, and neuro-inflammation.

Development status

A Phase 1 multiple ascending dose (MAD) trial with dapiglutide in healthy volun-

teers demonstrated average dose-dependent weight loss of up to -4.3% after

four weeks, supporting further clinical development in obesity. Two clinical trials

with dapiglutide are currently ongoing: DREAM, the investigator-led 12-week

trial evaluating the effects of dapiglutide on body weight, gut permeability, and

inflammation; and the Phase 1b 13-week dose-titration trial investigating higher

doses of dapiglutide than the previous trials. Results from DREAM are expected

in the first half of 2024, whereas results from the Phase 1b dose-titration trial are

expected in the second half of 2024.

Vetrani et al. Nutrients 2022;14(10):2103.

Mathiesen et al. Eur J Endocrinol 2022;186(6):R93–R111

Roth et al. Proc Natl Acad Sci U S A 2008;105(20):7257–7262

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 18

Rare diseases

Congenital Hyperinsulinism (CHI)

A significant burden for the

affected children and their families

Frequent, recurrent and severe episodes of hypoglycemia

in patients with CHI may result in brain damage. Complex

care, including continuous enteral feeding or intravenous

glucose, can result in lengthy and frequent hospitaliza-

tions that make daily life difficult. More than half of CHI

patients may be sub-optimally treated with current ther-

apies. The most severely affected children may need to

have their pancreas removed within months of birth to

prevent hypoglycemia, which results in the development

of life-long type 1 diabetes. The burden of managing CHI

is significant for the affected children and their families

and caregivers.

CHI is a rare disease affecting newborns, infants and children caused by a defect in

pancreatic beta-cells, resulting in insulin overproduction and leading to frequent,

recurrent and often severe episodes of low glucose (hypoglycemia). Every year, an

estimated one in 28,000 to 50,000 newborns are diagnosed with genetically determined

CHI in the U.S. and Europe

External expert perspective

"CHI leads to serious

challenges for affected

families. Brain injuries resulting

in permanent disabilities

occur all too frequently.

There are also significant

psychosocial effects as well as

extra financial burdens on the

family. The limited availability

of safe and effective treatment

options represents an urgent

unmet medical need."

Julie Raskin

CEO of

Congenital

Hyperinsulinism

International

Crosby lives with congenital

hyperinsulinism

Amoux JB et al. (2011). Orphanet J Rare Dis, 6:63; Yau et al. (2020). Plos One, 15(2): e0228417.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 19

Rare diseases

Zealand Pharma has a collaborative development and supply agreement with DEKA Research & Development Corporation and affiliates for the infusion pump system

We are seeking to improve the

lives of patients and their caregivers

Dasiglucagon is an investigational glucagon analog

designed to allow for continuous subcutaneous infusion via

a wearable pump system.

The potential of dasiglucagon in

the management of CHI is supported by three Phase 3 clin-

ical trials in newborns and children up to 12 years of age.

In one Phase 3 trial (17103), dasiglucagon reduced the

requirement for intravenous glucose in newly diag-

nosed newborns and infants who were being treated in

a hospital setting. By the end of the 25-day, two-part

clinical study, 7 of 12 patients had weaned off intravenous

glucose without needing a pancreatectomy. The second

Phase 3 trial (17109) was conducted with children aged

between 3 months and 12 years in a homecare setting. In

this trial, dasiglucagon reduced time in hypoglycemia by

approximately 50% and hypoglycemic events by 37-40%

when measured by continuous glucose monitoring. The

most frequently reported adverse events in both trials

were skin reactions and gastrointestinal disturbances. 42

out of the 44 patients who participated in these two Phase

3 trials enrolled into a long-term extension trial that is

ongoing.

Dasiglucagon

Zealand is pursuing a partnership

agreement for the commerciali-

zation of dasiglucagon for CHI

Investigational compound and

device that have not yet been

approved for marketing by any

regulatory authority

We expect to resubmit the New Drug Application

for dasiglucagon in CHI for up to three weeks of

dosing in the first half of 2024, contingent on a

successful reinspection of the third-party manufac-

turing site where the FDA has identified deficiencies

to be addressed. Importantly, these deficiencies

were not specific to dasiglucagon, and there were

no concerns regarding the clinical trial conduct and

clinical data package submitted for dasiglucagon. In

the first half of 2024, we also expect to submit the

second part of the New Drug Application covering

use of dasiglucagon in CHI beyond three weeks of

dosing.

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 20

Rare diseases

Short Bowel Syndrome (SBS)

Life-long dependency on parenteral support

Short bowel syndrome (SBS) is a complex disease that

occurs due to the physical loss of half or more of the

small intestine, most often due to surgical removal. As a

result, individuals with SBS often have a reduced ability to

absorb nutrients and fluids. In more severe cases, referred

to as SBS with intestinal failure (SBS-IF), patients are

dependent on complex parenteral support (PS) to sustain

life. SBS with intestinal failure is associated with significant

medical complications, including liver and renal failure,

metabolic complications, chronic fatigue, and life-threat-

ening infections. Although lifesaving, management of

PS is associated with a significant burden on healthcare

systems and reduction in quality of life for patients and

their families.

Short bowel syndrome (SBS) is a rare, chronic and debilitating condition

resulting in significantly reduced or complete loss of intestinal function. In the

U.S. alone, there are an estimated 7,500 people living with SBS with intestinal

failure who are dependent on parenteral support.

Unmet medical need for more efficacious

and convenient treatment options

SBS can be treated in highly specialized, multi-dis-

ciplinary centers, involving the use of agents that

promote rehabilitation of the intestinal lining, such

as GLP-2 analogs. The only currently available GLP-2

treatment requires weight-adjusted, daily subcu-

taneous dosing via vial and syringe that involves a

multi-step reconstitution process. More efficacious

and convenient treatments to further reduce PS are

needed, with the ultimate goal of achieving enteral

autonomy.

Marianne lives with short

bowel syndrome

SBS-IF patient estimates based on Zealand Pharma claims analysis, 2020 and Mundi et al. (2020), Characteristics of Chronic IF in the US Based on Analysis of Claims Data, JPEN in Press.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 21

Rare diseases

External expert perspective

"Short Bowel Syndrome with Intestinal Failure

(SBS-IF) is a rare, often neglected, debilitating

disease, severely impacting patient quality of

life. Severe nutrient malabsorption may lead

to severe malnutrition and dehydration if not

treated with parenteral support (PS) through

a central venous catheter. Both symptoms of

SBS-IF and potential PS complications impose

significant life restrictions and daily challenges.

Thus, there is an unmet need for new,

convenient long-acting GLP-2 analog treatment

options. If approved by the health authorities,

the long-acting GLP-2 analog glepaglutide,

provided in a ready-to-use autoinjector, offers

a beneficial efficacy and safety profile with a

twice-weekly dosing regimen."

We are developing a next-generation

GLP-2 therapy for patients with SBS

Glepaglutide is a long-acting GLP-2 analog that is stable

in aqueous solution. We are developing glepaglutide as

a ready-to-use, fixed dose product designed for subcu-

taneous delivery via auto-injector. The Phase 3 program

includes four clinical trials evaluating the potential for

glepaglutide to reduce or eliminate the need for PS in SBS

patients with intestinal failure.

In the EASE-1 trial, glepaglutide administered twice a

week reduced weekly PS volume at week 24 compared to

placebo with statistical significance. Nine of 70 patients

treated with glepaglutide in the trial weaned off paren-

teral support within 24 weeks, while no placebo-treated

patients were able to wean off parenteral support.

Glepaglutide appeared to be well tolerated; the most

frequently reported adverse events in the trial were injec-

tion site reactions and gastrointestinal events.

Zealand has submitted the New Drug Application (NDA) to

the US FDA in December 2023. The regulatory submission

is based on results from EASE-1 and two long-term (104

weeks) safety and efficacy extension trials, EASE-2 and

EASE-3, where interim analyses conducted after 6 months

showed that clinical response to glepaglutide across key

endpoints was generally maintained or improved, as well

as EASE-4, a mechanistic trial assessing the effects of

glepaglutide on intestinal fluid and energy uptake.

Palle Bekker Jeppesen

Clinical Professor, Department

of Clinical Medicine (Gastro-

enterology and Hepatology)

at the University of Copenhagen

Glepaglutide

Zealand is pursuing a partnership

agreement for the commercialization

of glepaglutide

Investigational compound and device

that have not yet been approved for

marketing by any regulatory authority

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 22

Inflammation

We believe that peptide medicines

represent an opportunity for innovation

in the treatment of chronic inflammatory

diseases.

We are progressing programs that represent high-profile

targets shown to be difficult to address with small mole-

cules and antibodies.

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 comple-

ment cascade is implicated in many immune-mediated

diseases and in particular rare diseases such as paroxysmal

nocturnal hemoglobinuria, cold agglutinin disease, myas-

thenia gravis and C3 glomerulopathy. There is currently

only one approved drug to treat complement-mediated

diseases: an antibody that blocks the complement C5,

the final step in complement activation. We have selected

a lead candidate molecule that acts on C3 (ZP10068),

Inflammation

Henrik works in Medicinal Chemistry

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 23

Inflammation

been demonstrated in pre-clinical models of autoimmune

diseases. The specific and selective location of the Kv1.3 on

the effector memory T cells makes it an attractive pharma-

ceutical 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.

We have, in 2023, completed the pre-clinical activities with

ZP9830 and expect to initiate the first-in-human clinical

trial in 2024.

upstream of C5, and thus offers potential differentiation

and broader utility than the current therapy. The candidate

investigational peptide is selective and long-acting, with the

potential to be best-in-class.

We are currently progressing this molecule in collaboration

with Alexion Pharmeceuticals (AstraZeneca Rare Disease).

We have, in 2023, completed the pre-clinical activities with

the lead candidate molecule to ensure readiness for the

first-in-human clinical trials. Alexion will lead development

efforts beginning with Investigational New Drug (IND) filing

and Phase 1 trials, which we exoect Alexion to initiate in

2024.

For the lead candidate molecule, Zealand is eligible to

receive up to USD 610 million in development and sales

milestone payments, plus royalties on global sales in the

high single to low double digits.

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 drive tissue damage. The anti-inflam-

matory effects of blocking the Kv1.3 ion channel have

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 24

Type 1 Diabetes

Despite newer insulins and better

administration systems, most people with

type 1 diabetes are unable to reach the

glycemic goals defined by the American

Diabetes Association.

Advances have been made in insulin chemistry and

delivery systems to help patients more effectively manage

their disease. Despite this, achieving tight control over

blood-glucose levels remains a daily challenge for those

living with type 1 diabetes. The risk of diabetes complica-

tions persists particularly in those who cannot optimize

glucose control, or are at significant risk of hypoglycemia.

Type 1 diabetes is not a single-hormone disease. Both

insulin and glucagon secretion are dysfunctional 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 supple-

mentation. The aqueous formulation of dasiglucagon

potentially renders it suitable for chronic administration.

Type 1 diabetes

Type 1 Diabetes

We aspire to change type 1 diabetes management

We are developing a pre-filled dasiglucagon cartridge

intended for use in Bihormonal Artificial Pancreas systems.

We have a collaboration with Beta Bionics, developer

of the Bihormonal iLet

Bionic Pancreas (iLet Duo™), a

pocket-sized, dual chamber (insulin and dasiglucagon),

autonomous, glycemic control system. The iLet Duo™ is

an investigational device that is limited to investigational

use only. The iLet

Bionic Pancreas platform is designed

to use adaptive, self-learning control algorithms together

with continuous glucose monitoring and pump tech-

nology, to autonomously compute and administer doses

of insulin and/or glucagon and mimic the body’s natural

ability to maintain tight glycemic control.

With Beta Bionics, we are planning a Phase 3 program

designed to support the marketing applications for the

iLet Duo

and a New Drug Application for the use of dasi-

glucagon in Bihormonal Artificial Pancreas systems for the

treatment of type 1 diabetes.

Ditte works in Translational

Pharmacology

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 25

Financial review

• Revenue in 2023 of DKK 343 million was mainly driven

by a EUR 30 million milestone payment from Boehringer

Ingelheim associated with survodutide and USD 10

million from a milestone payment from Sanofi associ-

ated with lixisenatide.

• Net operating expenses in 2023 of DKK -896 million

were mainly driven by investments in the clinical

advancement of the obesity pipeline and progression

of the late-stage rare disease assets towards regulatory

submission.

• Runway is extended into 2027 following the directed

issue and private placements in April 2023 and in

January 2024, bringing in gross proceeds of combined

DKK 3 billion, and the new EUR 90 million (DKK

671 million) finance agreement with the European

Investment Bank (EIB) announced in December 2023.

Revenue

Revenue in 2023 of DKK 343 million was mainly driven

by EUR 30 million in milestone payment from Boehringer

Ingelheim related to the Phase 3 initiation with survodu-

tide in obesity in November 2023 and USD 10 million

in milestone payment from Sanofi associated with

lixisenatide. Out of the USD 10 million from Sanofi,

Zealand has paid USD 1.3 million in royalty expenses to

Alkermes, which was entitled to 13% of payments received

by Zealand in respect of lixisenatide under the Sanofi

License Agreement. As of December 31, 2023, there are

no other outstanding milestone payments associated with

the license agreement with Sanofi. All royalties related to

lixisenatide were sold to Royalty Pharma in 2018.

The remaining revenue of 2023 is mainly related to the

license and development agreement for Zegalogue

with

Novo Nordisk as well as proceeds from the agreement

with Alexion.

Net operating expenses

Research and development expenses in 2023 of DKK -685

million were mainly driven by the clinical advancement of

the obesity pipeline and progression of the late-stage rare

disease assets towards regulatory submission. The spend

for research and development expenses in 2023 has

increased compared to 2022 due to the progression of

clinical and regulatory activities with the main cost drivers

being preparing the submission of the two NDAs for our

DKK millions 2023 2022

Revenue 343 104

Gross profit 324 104

Research and development expenses -685 -614

Sales and marketing expenses -31 -32

General and administrative expenses -185 -237

Other operating items 5 -58

Net operating expenses -896 -941

Operating result -572 -837

Net financial items -137 -135

Result before tax -709 -972

Cash and cash equivalents 449 1,069

Marketable securities 1,184 109

Cash, cash equivalents and

marketable securities 1,633 1,178

Equity 1,593 816

Other

Share price (DKK) 373 201

Number of shares ('000 shares) 58,751 51,702

Market capitalization (mDKK) 21,787 9,305

Number of full-time employees

at year-end 253 196

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 26

rare disease assets to the US FDA and the significant clin-

ical advancement of the obesity pipeline.

Selling and marketing expenses were at DKK -31 million

(2022: DKK -32 million) and general and administrative

expenses at DKK -185 million in 2023 (2022: DKK -237

million). The latter is significantly below 2022 due to cost

reduction efforts following the announced restructuring

on March 30, 2022.

Other operating items of DKK 5 million in 2023 comprise

other operating income of DKK 16 million related to

a reversal of inventory write-down associated with

Zegalogue

and other operating expenses of DKK -11

million related to an impairment of the US Boston office

lease.

Financial items

Financial items in 2023 of DKK -137 million (2022: -135

million) are mainly driven by the final repayment and

termination of the loan with Oberland Capital in May

2023, partly offset by interest income on marketable

securities. The significant increase in interest income

compared to 2022 as described in note 4.7 Financial items,

comes mainly from placement of surplus funds from the

capital increase in April 2023 into marketable securities.

In 2023, the investment in Beta Bionics was subject to a

fair value adjustment of DKK -16 million.

Equity

On December 31, 2023, equity was DKK 1,593 million,

reflecting a significant increase compared to December

31, 2022, mainly driven by the proceeds from the directed

issue and private placement of new shares in April 2023

and partly offset by the loss for the period.

In 2023, Zealand has purchased 300,000 new treasury

shares. The treasury shares are allocated to performance

share units (PSUs) and restricted share units (RSUs) as

described further in note 4.8 Share capital.

Cash position

Cash, cash equivalents and marketable securities as of

December 31, 2023, was DKK 1.6 billion and DKK 2.4

billion including the undrawn DKK 350 million Revolving

Credit Facility provided by Danske Bank and the EIB loan

(Tranche A), reflecting a significant increase compared to

the DKK 1.2 billion in cash, cash equivalents and market-

able securities as of December 31, 2022. The develop-

ment in 2023 is mainly driven by the DKK 1.5 billion in

gross proceeds from the directed issue and private place-

ment of new shares in April 2023 partly offset by cash

used in operating activities during the period (DKK -426

million) and settlement and repayment of the Oberland

loan (DKK -526 million).

As of December 31, 2023, Zealand has placed DKK 1.2

billion in low-risk marketable securities with an invested

graded rating of AAA to -BBB, whereas cash and cash

equivalents amount to DKK 0.4 billion. This is in line with

the Company’s treasury policy. As of December 31, 2022,

the split between marketable securities and cash and cash

equivalents was largely opposite, with marketable secu-

rities at DKK 0.1 billion and cash and cash equivalents at

DKK 1.1 billion.

The final repayment and termination of the loan agree-

ment with Oberland Capital in May 2023 was refi-

nanced through the undrawn Revolving Credit Facility

provided by Danske Bank and the milestone payments

from Boehringer Ingelheim and Sanofi associated with

survodutide and lixisenatide, respectively. Both milestone

payments totaling DKK 249 million have been received

late 2023.

In December 2023, Zealand entered into a new EUR 90

million (DKK 671 million) finance agreement with the

European Investment Bank (EIB). The loan is structured

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 27

with part of the interest paid at recurring intervals during

the term and part being deferred (non-compounding) for

payment at maturity of each tranche. In addition, the EIB

has entered into a warrant agreement with Zealand that

will entitle the EIB to receive warrants in Zealand when

each tranche is drawn down. The warrants will, subject to

the warrant terms, entitle the warrant holder to subscribe

for ordinary shares in Zealand at market price.

Events after the reporting date

As announced on January 8, 2024, the Board of Directors

exercised the remaining authorization granted by

Zealand's annual general meeting held on March 29, 2023,

to increase the Group's share capital by issue of 3,761,470

new ordinary shares at a subscription price of DKK 386.45

per new share.

The aggregate gross proceeds from the private placement

amounts to DKK 1.45 billion and Zealand intends to use

the net proceeds to further strengthen Zealand’s invest-

ment in its differentiated assets targeting obesity.

The new shares were issued on January 12, 2024, and

Zealand received the proceeds on January 16, 2024.

As announced on December 22, 2023, Zealand entered

into a new EUR 90 million (DKK 671 million) finance

agreement with the European Investment Bank (EIB). The

Cash position compared to FY22 (DKK million)

Cash position includes cash, cash equivalents and

marketable securities. Undrawn borrowing facilities

comprise DKK 350 million RCF in Danske Bank and

Tranche A from EIB loan of EUR 50 million.

The two tranches are subject to pre-specified

milestones being met.

Undrawn borrowing facilities

Cash and cash equivalents

Marketable securities

conditions for disbursement of the first tranche (Tranche

A) have been met. In February 2024, Zealand Pharma

has accepted disbursement offer for Tranche A and the

related EUR 50 million (DKK 373 million) is expected to be

received in March 2024.

Aside from the above mentioned no events have occurred

subsequent to the balance sheet date that could signifi-

cantly affect the financial statements as of December 31,

2023.

Guidance

Net operating expenses in 2023 of DKK -896 million was

within the guidance of DKK 800-900 million.

1000

2000

3000

4000

5000

2,356

1,178

4,104

EIB loan signed in

December, 2023

(EUR 40 million for

Tranche B and C)

Repayment

Oberland Capital

loan May 2023

Gross proceeds

from capital increase

January 2024

Cash position

including Jan-24

capital raise and

EIB loan

Cash position

Dec-2023

Other cash

adjustments

Gross proceeds

from capital increase

April 2023

Cash ﬂow from

operating activities

Cash position

Dec-2022

1,184

1,450

449

1,069

109

-526

-426

1,500

-93

298

723

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 28

Our responsibility 30

Our business model 32

Double Materiality Assessment 34

Our patients 35

Our people 38

Our operations 42

Sustainability:

Our patients, people

and operations

Contents The big picture Our business Sustainability Corporate governance Financial statements

Sustainability

Zealand Pharma ∞ Annual Report 2023 29

At Zealand, we are committed to changing lives with next-generation peptide

therapeutics. Through our innovative pipeline, we seek to make a difference for

people living with chronic diseases while acknowledging our responsibility to

society, our employees, and the environment.

Our responsibility

The Sustainable Development Goals (SDGs)

We have adopted and incorporated selected UN

Sustainable Development Goals that are aligned with our

business impact and connect Zealand’s efforts with those

of other companies to address global challenges. We

remain committed to these UN Sustainable Development

Goals:

SDG 3: Ensure healthy lives and promote well-being for all

at all ages

SDG 5: Achieve gender equality and empower all women

and girls

SDG 10: Reduce inequality within and among countries

SDG 12: Ensure sustainable consumption and production

patterns

SDG 16: Promote peaceful and inclusive societies for

sustainable development, provide access to justice for all

and build effective, accountable and inclusive institutions

at all levels

SDG 17: Strengthen the means of

implementation and revitalize the

global partnership for sustain-

able development

Our patients

Our people

Our operations

Our focus areas

As we pursue our ambition of becoming the world's

best peptide drug discovery and development company,

our impact on global health and society continues to

increase. We recognize the importance of operating a

responsible and sustainable business as we grow and

expand our pipeline.

In 2023, Zealand further refined the company's

Environmental, Social and Governance (ESG) strategy.

We have identified three pillars within sustainability that

are affected by our activities: our patients, our people,

and our operations. For each pillar, we have or will

set clear goals and ambitions to ensure that Zealand

continues to act responsibly and sustainably. You can

read more about our work within each pillar throughout

this chapter.

We leverage innovation to

advance the health and well-

being of patients

We foster an engaging

and enriching workplace

for our people

We take responsibility

for the impact of our

operations

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 30

We leverage innovation to advance

the health and well-being of patients

We foster an engaging and

enriching workplace for our people

We take responsibility

for the impact of our operations

Health and quality of life

We work to develop patient-centric treatments

that solve severe unmet medical needs

Patient collaboration

We engage with patients to ensure their voices are

heard by the medical system

Engagement

We strive to make Zealand an enriching place to work

Growth

We support our employees

in developing to their full potential

Diversity and inclusion

We foster an inclusive workplace for all

groups and backgrounds

Climate

We recognize the importance of minimizing and

mitigating our climate impact

Ethics

We ensure safeguards and controls to avoid adverse

outcomes from our research and our business

Our patients Our people Our operations

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 31

Research Development Manufacturing Distribution Commercial execution

Zealand core focus Partner-led

Our business model is focused on delivering best-in-class treatment options that

address patient needs and ease the burden on healthcare systems.

Engaging with partners so that

we can focus on our core competencies

Our core strength as a company lies in therapeutic

peptide design and development, which has led to our

R&D pipeline of promising candidates targeting obesity,

rare diseases, and inflammation. You can read more about

our peptide platform on pages 13-14.

Our business model

Our strategy is to pursue global co-development and

commercialization partnerships that complement and

extend our capabilities to deliver new therapies to patients

with unmet medical needs. We aim to engage with part-

ners across the value chain. We also have partnerships

with academic and scientific institutions, leading contract

research organizations (CROs), contract manufacturing

organizations (CMOs), and distribution partners.

Find out more about

our peptide platform

Go to pages 13-14

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 32

Governance

The Board of Directors sets the overall corporate strategy

for Zealand Pharma as well as our ESG strategy. The

Audit Committee oversees ESG policies, governance, and

reporting. Within Corporate Management, ESG is anchored

with our Chief Financial Officer and our Chief People

Officer. This ensures top-level commitment and underpins

the importance of this emerging area.

Accountability

Our ESG steering committee, represented by members

of the Corporate Management team from P&O, Finance,

Operations and Legal, is responsible for executing our

sustainability strategy and works diligently to ensure that

ESG is embedded throughout the organization and inte-

grated in our business model as well as to assure legal

compliance.

ESG is considered an integral part of the Zealand culture

and DNA. We have undertaken extensive work to refine and

formalize our efforts within ESG. Since 2022, ESG goals

have been an integrated part of our Company Goals linked

to our performance-based remuneration. This includes

all employees as well as Corporate Management. In 2023,

all sub-goals related to ESG were achieved. The 2024 ESG

priorities therefore focus on CSRD readiness, ESG strategy,

as well as efforts to enable measurable target setting within

the "Our operations" pillar.

Working with sustainability at Zealand

Sustainability is anchored with Corporate Management to ensure that our organization’s

ethical compass is set from the helm, fostering accountability and guiding responsible

decision-making.

Nicole works in Clinical

Operations

ESG governance structure

Board of Directors

Audit Committee

Corporate Management

ESG Steering Committee

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 33

Preparing for CSRD

In 2023, we advanced our double materiality assessment

to prepare for the upcoming Corporate Sustainability

Reporting Directive (CSRD). The preliminary inside-out

and outside-in assessment has been an important part of

formalizing the appropriate ESG strategy for Zealand and

identifying our ESG strategy pillars, highlighting the most

material and impactful topics for Zealand and across the

value chain.

Zealand must comply with the CSRD by the financial year

2025. Based on the outcome of the double materiality

assessment, Zealand is required to report on data points

related to the 12 material topics and we are currently

working on closing the identified data gaps for these to

ensure compliance with CSRD. This chapter continues

to be based on the requirements of the Danish Financial

Statements Act and complies with relevant laws, standards,

and guidelines for reporting on corporate social responsi-

bility activities.

Double Materiality

Assessment

We have advanced our double materiality

assessment to shape the ESG strategy, pinpointing

focus areas that align both with internal business

impacts and external stakeholder priorities.

Preliminary assessment of material topics

Environmental Social Governance

Climate change (incl. green

house gas) Emissions)

Employee engagement

and development

Animal welfare

Energy management Diversity Equity and Inclusion

Risk mgmt. and ethical

business practices

Patient access to medicines IP and Anti-trust

Patient health and safety Privacy and data protection

Health and Safety

Ethical and responsible

marketing

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 34

Health and

quality of life

Patient

collaboration

We work to develop patient-

centric treatments that solve

severe unmet medical needs

We engage with patients to

ensure their voices are heard

by the medical system

Our patients

Zealand’s most important contribution to a sustainable society is through improvement of the health

and well-being of patients by developing new medical treatments. Our first strategy pillar focuses on

Health and Quality of Life and Patient Collaboration.

product candidates. In 2023, we attended 20 congresses

and delivered 30 scientific communications, including

12 abstracts, four posters and eight oral presentations,

as well as six manuscripts. As we move into 2024, the

number of scientific publications and congress attend-

ances are expected to be at a similar level.

Health and quality of life

We work to develop patient-centric treatments that

address unmet medical needs. Our current pipeline

includes potential treatment options for two rare diseases,

chronic inflammation, as well as the greatest healthcare

challenge of our time - obesity. You can read more about

our pipeline and these disease areas on pages 15-25.

Addressing the greatest healthcare

challenge of our time

For 300,000 years, the rate of obesity among humans has

been low and stable… until now. During the last 50 years,

obesity has become a global pandemic and arguably the

greatest healthcare challenge of our time. Worldwide

prevalence of obesity has nearly tripled between 1975 and

today where 2 billion people are considered overweight

Our investments in research and development are

driven by the goal of addressing unmet medical needs,

ultimately improving outcomes and care for patients

Patients are the heart of our business. We work with

patient communities, thought leaders and external

experts as we aim to improve the lives of people by

addressing unmet medical needs. Our commitment is

within Research and Development (R&D). In 2023, 76% of

our operating expenditure (OPEX) was focused on R&D

and 80% of our employees work within the R&D organi-

zation. This ratio is expected to remain steady in 2024, as

we continue to invest in R&D and seek partnerships for

commercialization of our late-stage assets.

During 2023, Zealand was sponsoring seven active clinical

trials. Over the course of these trials, Zealand expects up

to 337 trial participants to be enrolled.

In 2024, we expect

this figure to increase, as we plan to initiate a compre-

hensive Phase 2b trial with petrelintide in obesity and a

Phase 1 trial with our Kv1.3 Ion Channel Blocker targeting

inflammation. As part of our work to increase awareness

of our medical advances, we attend scientific congresses

to update the community on the development of our

Petrelintide (Ph1b), Dapiglutide (Ph1b), Glepaglutide (EASE-2, EASE-3, EASE-4) Dasiglucagon for CHI (long-term extension trial), Dasiglucagon rescue pen (pediatric trial).

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 35

76%

of operating expenditure

(OPEX) allocated to R&D

in 2023.

80%

of full-time equivalents

(FTEs) working in R&D in

2023.

337

sponsoring seven active

clinical trials in 2023

in which up to 337 trial

participants are expected

to be enrolled.

scientific

communications in 2023.

Our patients KPIs

or obese. Obesity places a substantial burden on indi-

vidual patients’ quality of life, impacting physical health,

emotional well-being, and daily activities, often leading

to challenges in mobility, increased risk of comorbid-

ities, and psychological distress. More than 3 million

people die each year as a consequence of obesity. This

is equivalent to the estimated number of global deaths

attributable to COVID-19 during 2020, just every year.

We believe that our product candidates targeting obesity

and obesity-related comorbidities represent some of

the potential keys that can help unlock the challenges

associated with the obesity pandemic. With more and

better treatment options, our vision is that we can address

obesity and obesity-related comorbidities during the next

50 years, preventing healthcare systems from becoming

overwhelmed.

Addressing unmet medical needs in rare diseases

Dasiglucagon is designed to serve a critical need for

newborns, infants, and children with congenital hyperin-

sulinism (CHI). CHI imposes a drastically different lifestyle

on affected families and is associated with significant

morbidity as well as psychosocial and financial burden.

The absence of safe and efficacious treatment options

represents an urgent unmet medical need. We believe

that dasiglucagon can substantially improve the quality of

life of patients living with CHI and their families.

In the first half of 2024, we expect to resubmit the New

Drug Application (NDA) for dasiglucagon in CHI for up

to three weeks of dosing, contingent on a successful

reinspection of the third-party manufacturing site where

the FDA has identified some deficiencies to be addressed.

We also plan to submit the second part of the NDA

supporting treatment beyond three weeks in the first half

of 2024. In parallel, we will pursue a commercial partner-

ship agreement to reach as many patients as possible.

In 2023, we also submitted an NDA for glepaglutide

for the treatment of short bowel syndrome (SBS). SBS

with intestinal failure (SBS-IF) is a rare, often neglected,

debilitating disease, severely impacting patient quality

of life. Severe nutrient malabsorption may lead to severe

malnutrition and dehydration if not treated with paren-

teral support (PS) through a central venous catheter.

Both symptoms of SBS-IF and potential PS complications

impose significant life restrictions and daily challenges.

Our long-acting GLP-2 analog, glepaglutide, provided in

a ready-to-use autoinjector, may offer beneficial efficacy,

safety/tolerability and convenience, reducing patient

burden and improving quality of life. As with dasiglucagon

for CHI, we will pursue a partnership agreement for the

commercialization of glepaglutide to ensure maximum

patient reach.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 36

Patient collaboration

We engage with patients to ensure that their voices are

heard by the medical system. As we develop our novel

treatments, we have a focus on patients' needs informed

by strong collaborations with patient organizations.

In rare diseases, this collaboration is especially critical

to raise awareness and understanding of the diseases

and improve access to care. At Zealand, we have long-

standing relationships with organizations, including

Congenital Hyperinsulinism International and The Oley

Foundation (working with short bowel syndrome) through

various initiatives such as funding support and clinical trial

collaboration. We work with thought leaders and external

experts in both disease areas of CHI and SBS to inform

communities and maximize the reach of our potential

medical treatment options. In 2023, we held both SBS and

CHI Summits at our headquarters outside Copenhagen to

gather key external experts and medical staff from sites

that had participated in our clinical trials, as well as patient

organizations, to exchange perspectives and insights

directly relevant to our programs.

Once our rare disease products are on the market, we

will continue to monitor impacts on patient outcomes as

well as expand efforts to inform and improve treatment

decisions.

As our obesity pipeline matures, we will engage with

patient organizations where we, amongst other things,

will work on changing the perception of the disease.

Many continue to consider obesity a lifestyle choice, as

opposed to a serious chronic disease, impacting the payer

sentiment, patients’ desire to seek medical advice and

treatment, as well as the attitude of healthcare profes-

sionals towards prescribing anti-obesity medications.

Never compromising on quality

When conducting clinical trials, quality is of essence to

ensure patient safety, product quality and data integ-

rity. To remain compliant and in control, we ensure that

we integrate quality and data integrity in our processes.

Our Development and Operations areas outsource

good practice (GxP) activities to qualified and approved

suppliers, where the sponsor and product ownership

responsibilities remain with us. Our reliance on external

partners to perform GxP activities poses an inherent risk

that partners may not follow requirements of pharma-

ceutical quality standards. Such non-compliance could in

turn jeopardize patient safety, quality, access, and safety

and efficacy of our medicines. Oversight of the activities

is carried out to ensure compliance with the applicable

requirements including Good Laboratory Practice (GLP),

Good Manufacturing Practice (GMP), Good Clinical

Practice (GCP), Good Pharmacovigilance Practice (GVP),

appropriate standards for medical devices and others. We

work in close partnerships with our suppliers to achieve

quality products and processes. Our partners are selected

and maintained through a rigorous process where we

focus on business ethics and business continuity as

well as capability and capacity of the services provided.

This includes, but is not limited to, use of specialized

computer systems, process understanding, regulatory

understanding and suitability of the supplier’s own quality

system. Elements in the assessment include quality audits,

frequent follow-up and oversight, supplier management

assessment, and evaluation of financial stability.

Our Pharmaceutical Quality System is described in our

Quality Manual, which also defines our Quality Policy.

Ongoing evaluation of our quality system is performed

through both internal audits and external inspections from

relevant health authorities, including the Danish Medicines

Agency and the US Food and Drug Administration.

Mike lives with short bowel

syndrome

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 37

Id works

in IT

Kamal works

in Medical Affairs

Engagement

We strive to make Zealand an

enriching place to work

Our people

We foster an engaging and enriching workplace for our people through

our focus on Engagement, Growth, and Diversity & Inclusion.

At Zealand, we believe that engaged and motivated

employees with a passion for making a difference bring

a positive mindset and inspiring level of energy to work.

Our highly skilled employees are at the center of the

medical treatment options that we design and develop

for patients. We pride ourselves on our ability to work

together as one team and to foster a strong and engaging

company culture founded on collaboration, courage,

empowerment, and trust.

The Zealand family continues to grow. We started 2023

with 196 employees and we ended 2023 with 253

employees. A total of 88 employees have been onboarded

during the year. The turnover rate of 10.3% during 2023

is considered low, showcasing Zealand’s ability to attract

and retain highly skilled workers even in a highly compet-

itive market.

Growth

Diversity and

inclusion

We support our employees

in developing to their full

potential

We foster an inclusive

workplace for all groups and

backgrounds

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 38

Engagement

We strive to make Zealand an enriching place to work.

We do so by leveraging our DNA: We are BOLD, we

EMPOWER people, we work as ONE TEAM, and we can be

TRUSTED. Throughout our 25-year history, we have built

a unique company culture where employees are given

autonomy to shape their work with a strong focus on a

deeper purpose.

To support our employees’ well-being, we work

systematically to maintain a safe, inclusive, secure, and

healthy work environment. We have designed our poli-

cies and governance systems to promote physical and

psychosocial health, including a Works Council and

an Occupational Safety and Health Committee (OSHA

Committee), on which both management and employees

are represented and where matters related to our work

environment are regularly discussed. We have a hybrid

working environment that allows our employees to work

from home when it suits the individual employee and the

specific work tasks. We continue to focus on optimizing

the work-life balance of all our employees to ensure their

well-being.

Our commitment to an engaged workforce is evident

from our latest engagement survey where Zealand

employees responded with a high response rate (92%) and

reported a high level of positive engagement (8.8/10). As

part of our ESG strategy development in 2023, we aim for

a continuous high target of a positive engagement score

of +8.

253

employees at the

end of 2023

10.3%

turnover rate

during 2023

8.8

overall engagement

score (target of >8.0

out of 10)

Zealand Pharma

employees in brief

We are

BOLD

Our

DNA

We can be

TRUSTED

We work as

ONE TEAM

We EMPOWER

people

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 39

Christin works in Molecular

Pharmacology

Results from the 2023 engagement survey also high-

lighted future focus areas to ensure high engagement

is maintained. We will continue to focus on work-life

balance, optimization of processes and available technol-

ogies, and clear communication around the strategy and

direction for Zealand.

In 2024, we will launch a new leadership development

program for leaders across the organization. The lead-

ership development program will, among other things,

focus on creating a shared leadership framework,

enhance strategic thinking, and provide better tools for

open conversations and assembling the right team. We

will also strengthen our HR Business Partner function to

equip managers with the right tools to promote employee

engagement and to assist people managers in their

employee development skills.

Health and safety

Laboratory operations contain inherent risks; therefore,

we work systematically to maintain a safe and healthy

work environment for all employees. Several procedures

are in place, including a manual describing our policies on

occupational safety and health (OSHA). All our employees

are trained in the standard safety protocol and they are

given the tools to manage their own occupational safety.

We conduct quarterly safety walk throughs of our facili-

ties and a near-accident reporting system is maintained

to build on our strong safety track record and safeguard

against potential future accidents. In 2023, one near-

accident was reported under our near-accident reporting

initiative (2022: 4) and we had one "obligated to notify"

accident (2022: 0).

Growth

At Zealand, we support our employees in developing to

their full potential. We prioritize employee growth via

hands-on practical learning and delegating new respon-

sibilities in a supportive environment. This strategy is

backed by structured regular review processes to discuss

performance and identify plans for future learning oppor-

tunities. While individuals have ownership of their own

development, they are constantly supported with tools

and mentorship to grow.

To support our growth initiatives, we plan to launch

a consistent and transparent career framework for all

employees, and offer relevant training. We are also devel-

oping and launching an internal mentorship program

during 2024 to leverage our strong internal competencies.

Diversity and Inclusion

We foster an inclusive workplace for all individuals regard-

less of their background. We value diversity not only

because we believe that this is the socially responsible

thing to do, but because we believe that diverse teams

arrive at better solutions, eventually benefitting patients,

our company, and society at large.

We are committed to providing equal employment oppor-

tunities for all employees, and we evaluate recruitment of

new employees, training and development opportunities

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 40

for existing employees, promotions, and other personnel

decisions regardless of race, color, gender identity or

expression, religion, age, sexual orientation, national

origin, disability, military or veteran status, part-time or

full-time employee status, or any other basis.

We acknowledge that diversity goes beyond gender and

that we as a company embrace diverse backgrounds in

terms of experience and competencies. In Zealand, we

do not only have a diverse team in terms of gender, but

also value different educational, cultural, and industry

backgrounds. The age range of our employees is 27 to 68

(average of 47.1), showcasing our ability to attract young

as well as experienced talent. One of the founders of

Zealand, as well as the first employee to be hired, are still

with us today, having celebrated their 25th anniversary

along with the company. Inclusion is a focus area in our

annual engagement survey with dedicated questions and

a commitment to showcase this in future annual reports.

In 2024, we plan to formalize and communicate our diver-

sity and inclusion policy.

Diversity in management

Under Danish law, when reporting diversity in manage-

ment, the Board of Directors and Executive Management

(Zealand's CEO and CFO) are considered. We acknowl-

edge that diversity in management as well as the organ-

ization creates a better position for fruitful dicision

making. As with the remaining organization, Management

is selected and evaluated based on their capabilities,

regardless of race, color, gender identity or expression,

religion, age, sexual orientation, national origin or disa-

bility. In 2023, there were no changes to the Executive

Management nor Board of Directors, but as described

the Board composition will change in 2024. If the Board

observers are elected as members, they will bring exten-

sive pharmaceutical industry experience and contribute to

our diversity in terms of nationality, ethnicity and educa-

tional background.

Statutory gender reporting under Danish law

We strive to achieve balanced representation of genders

at all management levels, from the Board of Directors to

the heads of departments.

2023

Board of Directors

Total number of members 7

Underrepresented gender (%) 29%

Other management positions

Total number of members 22

Underrepresented gender (%) 45%

The Board of Directors consisted of two women and five

men elected at the Annual General Meeting in 2023 and is

therefore regarded as having an equal gender distribution

(underrepresented gender: 29%). Consequently, Zealand

is not obligated to set a gender distribution target for the

Board. At the Annual General Meeting in 2024, two Board

observers stand for election, one woman and one man.

If elected, they will replace two male members of the

Board, resulting in a female representation of 43% going

forward.

As of December 31, 2023, Other Management Positions

consisted of 22 employees of which 45% were women,

thus giving an equal gender distribution. A target is there-

fore not required.

Shareholder elected board members of Zealand Pharma A/S

Corporate Management and their direct reports with managerial responsibilities, all employed by Zealand Pharma A/S

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 41

Our operations

At Zealand, we take proactive responsibility for the impact of our operations.

Our Operations pillar is centered around Climate and Ethics.

Climate

Ethics

We recognize the importance of

minimizing and mitigating our

climate impact

We ensure safeguards and controls

to avoid adverse outcomes from

our research and our business

During 2024, we plan to calculate our CO

baseline,

including scope 1-3 emissions. This will enable us to set a

formal decarbonization roadmap to prioritize our efforts

where they have the biggest impact. Furthermore, this is

an important step towards meeting CSRD requirements.

During 2024, we plan to explore setting an emission

reduction target as part of our work with decarbonization

following establishing the CO

emission baseline.

Ethics

As an R&D company working within pharmaceuticals,

we recognize the importance of having safeguards and

controls to avoid adverse outcomes from our activities.

We strive to operate according to the highest ethical

standards and safeguard our business against corruption,

bribery, and non-compliance.

Our reputation as a trusted business and scientific

partner is crucial to our ability to engage successfully in

existing and potentially new partnerships. Therefore, we

ensure that our employees are continuously trained and

kept updated with policies on good business practice

and compliance, insider trading, and appropriate legal

management of third-party intellectual property. We

proactively engage in positive dialogue with all regula-

tory and advisory authorities and with stakeholders from

relevant industries in order to be inspired to make further

improvements.

Climate

While Zealand’s environmental footprint and risks associ-

ated with climate-related matters are currently considered

relatively low, we recognize the importance of minimizing

and mitigating our climate impact. We are continuously

evaluating and implementing initiatives that can reduce

any negative impact on the environment from our oper-

ations. This is very close to the heart of our employees

who have organized a Green Initiatives Group with the

ambition of minimizing resource consumption, waste, and

energy usage in our laboratory facilities.

In 2023, we continued to have certified electricity at our

Copenhagen facilities to ensure that 100% is sourced

from sustainable energy, such as wind or hydro power.

We also implemented a new policy to ensure that all

new company paid cars are electric and that by 2027 all

company cars will be electric. We significantly expanded

our charging stations to facilitate the increasing demand

from our employees. We have also included environ-

mental criteria for selecting and evaluating contract

manufacturing organizations as part of our Supplier Code

of Conduct.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 42

As part of our program of maintaining a robust ethical

working environment, Zealand maintains a whistle-blower

program that is monitored by an external law firm to

ensure that issues that need to be examined by Corporate

Management and members of the Board of Directors

are brought to their attention when appropriate. All

employees are introduced to the whistle-blower service

when they join the company to ensure that they are

able to use it if the occasion arises. In 2023, we had zero

whistle- blower cases.

We actively promote and maintain a policy of transpar-

ency and honesty with our employees. At Zealand, we do

not accept bribery, corruption or fraud. Zealand’s Code of

Conduct, which all employees are regularly trained in, and

the Employee Handbook stipulate a set of policies speci-

fying the company’s standards regarding our employees’

general and legal conduct. We set the same standards for

key suppliers through our Supplier Code of Conduct. All

our suppliers have confirmed that Zealand's supplier Code

of Conduct correspond to their own internal Code of

Conducts, thereby living up to our anti-bribery, corruption

and fraud standards.

At Zealand, we believe in being transparant about our

global tax positions and tax policies. We are committed to

always paying taxes in due time in the countries in which

we operate in accordance with applicable tax laws and

regulations. We aim to keep the business setup as simple

as possible and therefore have a limited number of entities

present in Denmark and the United States. Transactions

Dino works in Alliance Management

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 43

between the Group companies are conducted on market

terms in accordance with the arms' length principle. In

general, we assess that the risk regarding transfer pricing

is limited due to the simple business structure.

We have taken every precaution to keep all employees,

board members and certain stakeholders up to date and

compliant with our internal rules. We distinguish carefully

between those who are listed on the permanent insiders’

list and those who are exposed to what is deemed insider

information. In the latter case, we take every precaution

to keep an up-to-date list of employees’ knowledge of

insider information. All new employees are introduced to

our internal rules and are required to digitally sign off stip-

ulating that they have read and understood these rules.

We have strict policies regarding the proper use and

transfer of intellectual property. We continuously refine

our confidentiality and material transfer agreements to

reflect critical changes in the industry, building on the

extensive industry experience of many of our employees.

At Zealand, we are committed to apply data ethics that are

consistent with the appropriate privacy regulations and

consistent with accepted industry practice. We currently

have policies on Data Integrity and Good Documentation

that apply to the integrity and quality of data for clinical

trials, as well as a Data Governance Manual that governs

the way that certain categories are handled and used. We

believe these policies provide adequate safeguards for our

data.

During vendor selection, we review the capabilities of

potential partners as part of the process to engage with

them in supply agreements. At present, our major vendors

are located in the United States, Taiwan, and Europe (with

additional facilities for some elements of their work in

China). We believe our vendors operate to an appropriate

standard of human rights protection as far as our prod-

ucts are concerned. All suppliers have confirmed that

our human rights and labor requirements in our Supplier

Code of Conduct are met and correspond to their own

internal Code of Conducts.

Animal welfare

In the discovery of new therapies and to ensure the effi-

cacy and safety of new pharmaceuticals as required by

regulatory authorities, it is necessary to conduct in-vivo

experiments using laboratory animals.

Our policy on animal ethics and welfare is to use animal

studies only where no available and acceptable in vitro

alternative exists. All laboratory animals used under our

responsibility must be treated gently and with respect, and

only purpose-bred animals are used. We adhere to the

principles of the 3Rs (reduce, refine, replace) and work to

integrate these principles in all studies.

All in-house animal studies are carried out in accord-

ance with specific licenses issued by the Ministry of

Environment and Food of Denmark and international

guidelines, as appropriate. Danish law stipulates regular

inspections of the animal facilities as well as compre-

hensive reporting protocols overseeing experiments

conducted during the year, processed through The Animal

Experiments Inspectorate. Continuous dialogue between

lab technicians, veterinarians, academic staff, and heads

of departments ultimately ensures the highest animal

welfare standards in all studies conducted.

All employees working with laboratory animals have

appropriate and documented education and training,

proactively monitoring developments in the field.

Veterinary checks of our animals are performed regularly.

In addition, our internal ethics committee scrutinizes all

proposed in-house in-vivo pharmacology, toxicology,

and pharmacokinetic experiments for compliance with

regulatory permissions and highest ethical standards.

The necessity of animal experiments to our research and

development activities cannot be overstated, which is why

we constantly strive for the greatest vigilance and care in

our treatment of animals.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 44

Introduction 46

Corporate governance structure 47

Board of Directors and Corporate Management 53

Internal controls and Risk management 59

Risk and risk mitigation 63

Shareholder information 66

Annex: Recommendations on

CorporateGovernance 68

Corporate

Governance

Contents The big picture Our business Sustainability Corporate governance Financial statements

Corporate Governance

Zealand Pharma ∞ Annual Report 2023 45

Jakob works in Finance

As a company incorporated under the laws of Denmark,

and with its shares admitted to trading and official listing

on Nasdaq Copenhagen, Zealand is subject to various

applicable legislation, standards, and other regulations for

publicly traded companies. These include Danish securities

law and the recommendations on corporate governance

issued by the Danish Committee on Corporate Governance

(in the below ‘‘the Recommendations’’) updated on

December 2, 2020.

At Zealand, we regularly review our activities to ensure that

we meet our obligations to shareholders, employees, regu-

latory authorities, and other stakeholders while maximizing

long-term value. Zealand also regularly reviews its rules,

policies and practices within risk management and internal

control to improve guidelines and policies for corporate

governance, ensuring that the standards that we set are up

to date with accepted practice for a company like Zealand.

In addition to these, when relevant, we have corporate

governance activities reviewed by a third party who carries

out an evaluation of the Board and how it is governed.

In addition to the reviews set out above, the Board of

Directors and Corporate Management constantly seek to

ensure that Zealand's management structure and control

systems are efficient, function properly, and provide the

right degree of control and management to the organi-

zation. Several internal procedures have been developed

and are continuously updated, with external assistance if

required, to ensure active, secure, and efficient manage-

ment of our company.

Find out more about Zealand at

zealandpharma.com/corporate-governance/

Introduction

This chapter on the corporate governance of Zealand Pharma A/S (“Zealand”)

has been integrated into the management review of the Annual Report 2023

and covers the period January 1 – December 31, 2023.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 46

Corporate governance structure

Zealand has a two-tier management structure composed of the Board of Directors

(‘the Board’) and Corporate Management.

The Board is responsible for the overall vision, strategies

and objectives, the financial and managerial supervision

of Zealand, as well as for regular evaluation of the work of

Corporate Management. In addition, the Board provides

general oversight of Zealand's activities and ensures that

it is managed in a manner and in accordance with appli-

cable law, Zealand's articles of association, and the poli-

cies and procedures that are put in place to ensure sound

governance.

The Board approves the policies and procedures, and

Corporate Management is responsible for the day-to-day

management of Zealand in compliance with the guide-

lines and directions set by the Board. The allocation

of responsibilities between the Board of Directors and

Corporate Management is stipulated in the Rules of

Procedure that are reviewed and signed every year by

the members of the Board of Directors and Corporate

Management after the Annual General Meeting.

Board of Directors

The Board plays an active role in setting Zealand's strat-

egies and goals as well as in monitoring its operations

and results. The Board functions according to its Rules of

Procedure. The duties include establishing Zealand’s poli-

cies to achieve Zealand's objectives in accordance with its

articles of association that form an important set of guard-

rails for how the company should be governed. These

also define the responsibilities of the Board, for example

ensuring that Zealand’s bookkeeping, accounting, asset

management, information technology systems, budgeting

and internal control are properly organized.

As of December 31, 2023, Zealand’s Board is comprised

of seven Board members elected at the Annual General

Meeting, four employee representatives elected by

Zealand's employees, and two Board observers. The

Annual General Meeting appoints each sharehold-

er-elected member of the Board for a one-year term,

whereas employee representatives are elected for a four-

year term. The two Board observers appointed in 2023 will

stand for election as Board members at the 2024 Annual

General Meeting, whereas two current members of the

Board do not stand for re-election. The other five current

members of the Board and all the employee-elected

members of the Board are up for re-election in 2024.

Corporate governance structure

Annual General Meeting

Board of Directors

Corporate Management

Organization

Nomination Committee

Audit Committee

Remuneration Committee

Scientific Committee

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 47

Paola works in Medicinal and

Computational Chemistry

Board members elected by the shareholders:

• Martin Nicklasson, Chair

• Kirsten A. Drejer, Vice Chair

• Jeffrey Berkowitz

• Bernadette Connaughton

• Leonard Kruimer

• Alain Munoz (not for re-election at AGM 2024)

• Michael J. Owen (not for re-election at AGM 2024)

Board members elected by the employees:

• Jens Peter Stenvang

• Frederik Barfoed Beck

• Anneline Nansen

• Iben Louise Gjelstrup

Board observers for election as Board members at AGM

2024:

• Enrique Conterno

• Elaine Sullivan

In line with the Recommendations, the Board reviews and

determines the qualifications and experience needed on

the Board with respect to:

• Scientific knowledge within bioscience and innovation

of pharmaceutical products

• Financial experience and knowledge

• Experience in leading an innovative business and insight

into the biopharmaceutical market

• Experience with market entry and relationship with payers

• Experience in handling and managing partnering

agreements

• Competency in ensuring that the obligations of a listed

company are fulfilled

In 2023, the Board decided to carry out a full inde-

pendent review of its performance. This performance

was carried out independently by the Leadership Advisory

Group (LAG) in compliance with article 3.5 of Danish

Recommendations on Corporate Goverence 2020. They

used a mixture of anonymous on-line questionnaires and

one to one interviews with members of the Board and

members of management. The results were presented to

the Board before the 2023 annual general meeting and

provided areas where the governance of the company

could be the subject of annual review and further

strengthened. These recommendations were instituted

as part of the company’s annual review as a matter of

routine.

At the beginning of 2024, the Board decided to follow this

evaluation to check its progress and to ensure that there

was independence when the Board was evaluated. Once

again, the Board decided to use the services of the LAG

to follow up from its last review of the Board in 2023. The

LAG used an anonymous on-line questionnaire that was

sent to each member of the Board and management.

LAG produced a report that was sent to the Chair and the

Company Secretary. The Chair also met one to one with

the members of the Board to discuss the functioning of

the Board.

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 48

The report that is compiled measures 11 separate catego-

ries and scores them based on an average of the scores

from the member of the Board and Management (11 + 6

people in total). Of these 11 categories. The scores indi-

cate the following performance against benchmarks for

Danish companies.

The results indicate that in six of the 11 categories (indi-

cated in blue font in the chart below) Zealand’s perfor-

mance was regarded as exceptional across various

categories. The LAG’s assessment was that in these six

categories Zealand represented a role model company

board.

The Board should meet at least 6 times a year and when-

ever the Chair decides that it is necessary. The Board of

Directors met for a total of 10 times in 2023 and of these 6

meetings were virtual.

Audit Committee

The Audit Committee consists of Leonard Kruimer,

Martin Nicklasson, Jeffrey Berkowitz, and Bernadette

Connaughton. The committee is chaired by Leonard

Kruimer.

The Audit Committee plays an active role in setting

Zealand's strategies and goals as well as in monitoring its

operations and results, including ESG. The Committee

functions according to its Charter that is reviewed on an

annual basis. The duties include the internal controls and

risk management systems related to financial reporting

and evaluating the need for an internal audit.

• establishing procedures for the receipt, retention and

treatment of complaints received regarding accounting,

internal controls, auditing and financial reporting

matters (whistle-blower function);

• nominating the statutory external auditor to be elected

at the Annual General Meeting and preparing the

recommendation to the Annual General Meeting

regarding the election of our external auditor, as well

as, if relevant, proposing to the Annual General Meeting

that an external auditor is discharged;

• monitoring the strategy, plan, scope and approach of

the external auditor’s annual audit;

• monitoring and approving the terms and compensation

of the external auditor;

• monitoring the external auditor’s reports to the

Executive Management and the Board of Directors,

including management letters and long-form reports,

discussing any reports with the Executive Management

and the external auditor and be mainly responsible

for resolving any disagreements between the external

auditor and the Executive Management;

LAG report results

Category

Score from

a total of 5 Benchmark Difference

Role Model

Benchmark

Strategy Development and implementation 4.10 3.53 +0.57 4.19

Risk awareness, monitoring and reporting 3.96 3.48 +0.48 4.14

Co-operation with CEO and Management 4.47 3.61 +0.86 4.47

Board Composition and dynamics 4.13 3.57 +0.56 4.13

On and Off Boarding 3.39 3.08 +0.21 3.90

Meeting Structure and operation 4.36 3.70 +0.66 4.36

Meeting effectiveness 4.31 3.72 +0.59 4.31

Shareholders and stakeholder relations 4.03 3.41 +0.62 4.29

Committee and Vice Chair value contribution 4.23 3.75 +0.48 4.24

Evaluation of the Chair 4.67 4.09 +0.58 4.67

General 4.41 3.79 +0.62 4.41

Overall Score 4.23 3.61 +0.62 4.23

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 49

• considering (at least on an annual basis) the performance

and independence of the external auditor and obtaining

and reviewing of a report from the external auditor

substantiating that the external auditor is independent;

• reviewing policy in relation to the provision of non-audit

services by the external auditor under which the Audit

Committee approves non-audit services delivered by

the external auditor;

• engaging independent counsel and other advisors as

the Audit Committee determines necessary to carry out

its duties;

• obtaining available appropriate funding as the Audit

Committee determines necessary for the fulfilment of

its tasks and duties; and

• evaluating on an annual basis: (i) the performance of the

Audit Committee, including independence and financial

expertise; and (ii) the adequacy of the Audit Committee’s

charter and recommendation of any proposed changes

to the Board of Directors.

In 2023, specific topics discussed included auditor’s

reports, accounting policies, internal controls, compli-

ance, finance, going concern status, risk management,

cybersecurity, insurance policy, year-end issues, ESG

reporting, transactions not in the usual course of business

and external financing.

The Audit Committee met for a total of 7 times in 2023

and of these 5 meetings were virtual. The committee is

composed of independent members.

Remuneration Committee

The Remuneration Committee consists of Martin

Nicklasson, Alain Munoz, and Michael J. Owen. The

committee is chaired by Martin Nicklasson. Alain Munoz

and Michael J. Owen do not stand for re-election at the

2024 Annual General Meeting.

The Remuneration Committee proposes the remuner-

ation policy as well as targets for company-operated

performance-related incentive programs. These policies

and guidelines set out the various components of the

remuneration, including fixed and variable remuneration

such as pension schemes, benefits, retention bonuses,

severance, and incentive schemes as well as the related

bonus and evaluation criteria. The committee functions

according to its Charter that is reviewed on an annual

basis.

The proposed remuneration policy is subject to the

approval of our shareholders at the Annual General

Meeting. Our Remuneration Committee has the following

principal responsibilities:

• preparing and presenting proposals to the Board of

Directors on the framework for remuneration packages

for Executive Management, including, but not limited

to salary, salary increases, pension rights and any

compensation or termination payments, ensuring that

the contractual terms are fair to the individual and to

Zealand, that failure is not rewarded, and that the duty

to mitigate loss is fully recognized;

• preparing and presenting proposals to the Board

of Directors on remuneration matters of material

importance to Zealand, including incentive programs

and payments for the Executive Management. The

proposals for remuneration of Executive Management,

including any incentive program, shall be in accordance

with and not exceed relevant comparable market

practice levels at any given time;

• preparing and presenting proposals to the Board of

Directors on the targets (bonus levels and performance

targets) for company-operated performance-related

incentive programs for Executive Management, as well as

monitoring and evaluating the fulfilment of such targets;

• overseeing the implementation of any pension,

retirement, death or disability, or life insurance scheme

and any incentive schemes for Executive Management;

and

• reviewing and considering the proposals from our

Nomination Committee on remuneration for members

of the Board of Directors and Executive Management.

In 2023, specific topics discussed included long-term

incentive programs for management and Board of

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 50

Directors, company goals, and the compensation

policy for eligible employees. Please refer to the 2023

Remuneration Report for more details.

The Remuneration Committee met for a total of 6 times in

2023 and of these 5 meetings were virtual. The committee

is composed of a majority of independent members.

Nomination Committee

The Nomination Committee consist of Kirsten A. Drejer,

Leon Kruimer and Bernadette Connaughton. The

committee is chaired by Kirsten A. Drejer.

The Nomination Committee makes recommendations for

decisions to the Board of Directors regarding Board posi-

tions, identifying and recommending candidates for the

Board of Directors. The Committee functions according

to its Charter that is reviewed on an annual basis.

Specific topics discussed in 2023 included the compo-

sition of the independent members of the Board of

Directors as well as the selection and recommendation of

new members of the Board of Directors.

The Nomination Committee met for a total of 4 times in

2023 and of these 3 meetings were virtual. The committee

is composed of independent members.

Scientific Committee

The Scientific Committee consists of Kirsten A. Drejer,

Alain Munoz, and Michael J. Owen. The committee is

chaired by Kirsten A. Drejer. Alain Munoz and Michael J.

Owen do not stand for re-election at the 2024 Annual

General Meeting.

The Scientific Committee is a forum with the purpose

of leveraging the scientific expertise of the appointed

Board members, understanding and challenging the

approach and assumptions of the Zealand’s Research &

Development strategy, providing technical assistance to the

Board on research and development-related issues, and

guiding the Board on the risks of the Company’s Research

& Development strategy. Specific topics discussed in 2023

included the development of the clinical pipeline, prepara-

tion for potential interactions with regulatory authorities, and

a review of the pre-clinical pipeline and innovation strategy.

The Scientific Committee met for a total of 4 times in 2023

and of these 2 meetings were virtual. The committee is

composed of a majority of independent members.

Overview of meetings in 2023

Attended Absent

Board Audit Committee

Remuneration

Committee

Scientific

Committee

Nomination

Committee

Martin Nicklasson

••••••••••••• ••••••• ••••••

N/A N/A

Kirsten A. Drejer

•••••••••••••

N/A N/A

•••• ••••

Jeffrey Berkowitz

••••••••••••• •••••••

N/A N/A N/A

Bernadette Connaughton

••••••••••••• •••••••

N/A N/A

••••

Alain Munoz

•••••••••••••

N/A

•••••• ••••

N/A

Leonard Kruimer

••••••••••••• •••••••

N/A N/A

••••

Michael J Owen

•••••••••••••

N/A

•••••• ••••

N/A

Jens Peter Stenvang

•••••••••••••

N/A N/A N/A N/A

Frederik Barfoed Beck

•••••••••••••

N/A N/A N/A N/A

Anneline Nansen

•••••••••••••

N/A N/A N/A N/A

Iben Louise Gjelstrup

•••••••••••••

N/A N/A N/A N/A

On August 8 and August 23, Leon Kruimer was travelling and unable to attend the nomination committee meetings scheduled for those dates. He was able to discuss the matters discussed

during those meetings with the Chair of the Nomination Committee to ensure that he was up to date with the process that was in place to select potential new board members.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 51

Corporate Management

Corporate Management is composed of Executive

Management and other members of Corporate

Management:

Executive Management

• Adam Steensberg, President and Chief Executive Officer

• Henriette Wennicke, Executive Vice President and Chief

Financial Officer

Other members of the Corporate Management

• Ivan Møller, Executive Vice President

and Chief Operating Officer

• Christina Sonnenborg Bredal,

Executive Vice President, Chief People Officer

• David Kendell, Chief Medical Officer and Head of

Research & Development

• Ravinder Singh Chahil, Executive Vice President

and General Counsel

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 52

Board of Directors and Corporate Management

Zealand Pharma Board of Directors at February 27, 2024

Martin Nicklasson Kirsten A. Drejer Jeffrey Berkowitz

Position Chair Vice Chair Board member

Year of birth 1955 1956 1966

Nationality Swedish Danish American

Gender Male Female Male

First elected 2015 2018 2019

Committee AudCom and RemCom (Chair) NomCom (Chair) and SciCom (Chair) AudCom

Independent Yes Yes Yes

Special

competencies

Extensive general management and research and

development experience from AstraZeneca Plc

and Swedish Orphan Biovitrum AB.

More than 30 years of international experience

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 pharmacy, whole-

sale drug distribution, specialty, payor and

healthcare services leadership experience in P&L

accountable roles.

Current positions Board member of Basilea Pharmaceutica Ltd. and

Chair of Nykode Therapeutics AS.

Chair of the Board of Bioneer and ResoTher

Pharma. Board member of Curasight A/S and

Malin Corporation.

CEO and Director of Real Endpoints. Board

member of H. Lundbeck A/S, Esperion

Therapeutics, Inc. and Uniphar PLC.

Find out more about the

Board of Directors at

zealandpharma.com/

board-of-directors-and-

nomination- committee

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 53

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

2012

Committee AudCom and NomCom AudCom (Chair) and NomCom RemCom and SciCom RemCom and SciCom

Independent Yes Yes No

Yes

Special

competencies

More than 30 years of global strategic, commer-

cial 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

publicly listed biotechnology companies

Physician qualified in 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 publica-

tions. Has held several leading positions at

GlaxoSmithKline, most recently as SVP and Head

of Biopharmaceuticals Research.

Current positions Board member of Halozyme Therapeutics Inc.

and Editas Medicine.

Chair of the Board of BioInvent International AB,

Board member and Chair of Audit Committee of

Pharming Group NV., and Basilea Pharmaceutica

Ltd. Director AI Global Investments (Netherlands).

Chair of the Board of Directors of Acticor Biotech

and a Board member of Auris Medical and Amryt

Pharma Plc.

Chair of the Board of Ossianix Inc. and is a

member of the Board of ReNeuron Group plc,

and Sareum Holdings plc.

Zealand Pharma Board of Directors at February 27, 2024, continued

Resigned in 2006 and re-elected in 2007.

Not considered independent in accordance with the Danish Recommendations on Corporate Governance of 2 December 2020.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 54

Zealand Pharma Board of Directors at February 27, 2024, continued

Frederik Barfoed Beck Anneline Nansen Louise Gjelstrup Jens Peter Stenvang

Position Employee-elected board member Employee-elected board member Employee-elected board member Employee-elected board member

Year of birth 1967 1969 1977 1954

Nationality Danish Danish Danish Danish

Gender Male Female Female Male

First elected 2020 2021 2020 2014

Committee None None None None

Independent No No No No

Current positions Associate Director, Contracts and Sourcing Principal Scientist Principal Laboratory Technologist Senior Application Specialist

Zealand shares at

December 31, 2022

4,422 2,500 1,655

3,500

Zealand warrants at

December 31, 2022

4,978 6,298 1,417

2,123

Zealand RSUs at

December 31, 2022

2,100 2,375 1,750

1,750

Change in ownership

in 2022

-1,316 +929 -575

-4,300

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 55

Zealand Pharma Board Observers at February 27, 2024

Enrique Conterno Elaine Sullivan

Position Board Observer Board Observer

Year of birth 1966 1961

Nationality Peruvian/American British/Irish

Gender Male Female

First elected Stand for election to Board at AGM 2024 Stand for election to Board at AGM 2024

Committee N/A N/A

Independent Yes Yes

Special

competencies

27 years at Eli Lilly and Company, including

SVP and Member of the Executive Committee,

President of Lilly USA, and President of Lilly

Diabetes, as well as roles across sales, marketing,

finance, and business development. Bachelor of

Science in Mechanical Engineering from Case

Western Reserve University and MBA from Duke

University.

Served at both AstraZeneca and Eli Lilly and

Company as member of senior global R&D

management teams, including VP of Global

External R&D at Eli Lilly and Company and VP

and Head of New Opportunities at AstraZeneca.

Co-founded and served as CEO of Carrick

Therapeutics. PhD in Molecular Virology from the

University of Edinburgh.

Current positions Member of the Board of Directors of Glooko, inc.

and Member of the Board of Governors of the

American Red Cross.

Member of the Board of Directors of Nykode

Therapeutics ASA, IP Group plc, and hVIVO Ltd,

as well as Member of the Supervisory Board of

Evotec AG.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 56

Zealand Pharma Corporate Management at February 27, 2024

Adam Steensberg Henriette Wennicke David Kendall Ivan Møller

Position Executive Management

President and Chief Executive Officer

Executive Management

Chief Financial Officer Chief Medical Officer Chief Operating Officer

Year of birth 1974 1983 1961 1972

Nationality Danish Danish American American/Danish

Gender Male Female Male Male

Joined Zealand 2010 2022 2020 2018

Experience Adam has 20+ years of experience in both the

private and public sectors, including:

• Chief Medical Officer at Zealand Pharma

• Medical Director at Novo Nordisk

• Clinician at Rigshospiltalet

Henriette has 15+ years of experience from

global, publicly listed companies, including:

• Vice President, Head of Investor Relations &

Treasury at GN Store Nord

• Vice President, Head of Global Finance at GN

Hearing

• Director, R&D Business Support at Novo

Nordisk

David has 35+ years of experience in clinical

diabetes, research, and Pharma, including:

• Chief Medical Officer at MannKind Corporation

• Vice President, Medical Affairs and

Distinguished Medical Fellow at Eli Lilly and

Company

• Chief Scientific and Medical Officer for the

American Diabetes Association

• Chief of Clinical Services and Medical Director

at the International Diabetes Center

• Faculty at the University of Minnesota

Ivan has 25+ years of experience in Pharma and

project management, including:

• Executive Vice President, Technical

Development & Operations at Zealand Pharma

• Global Head, Operations Management at

Novartis

• Vice President, Global Head, External Supply

Organization at Novartis

• Project Leader at Boston Consulting Group

• Head of Production, PolyPeptide

Laboratories A/S

Other management

positions

• Board Member at Cessatech ApS

• Board Member of DANISH BIO -

DANSK BIOTEK

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 57

Zealand Pharma Corporate Management at February 27, 2024, continued

Christina Sonnenborg Bredal Ravinder Chahil

Position

Chief People Officer General Counsel

Year of birth

1985 1968

Nationality

Danish British

Gender

Female Male

Joined Zealand 2020 2017

Experience

Christina has 10+ years of experience in various

legal and advisory areas, including:

• Senior Vice President, Head of People &

Organization at Zealand Pharma

• Manager at PwC Legal

• Tax Manager and Senior Tax Consultant at EY

People Advisory Services

• Trial Lawyer at Martinelli Advokatfirma

Ravinder has 25+ years of international expe-

rience in law including:

• Senior Vice President, General Counsel &

Company Secretary at Zealand Pharma

• Director of Intellectual Property at

Polpharma

• Director of Commercial Intellectual

Property at Actavis Group hf

• Senior Solicitor at Bird & Bird

• Called to the Bar England & Wales

November 1992

Corporate Management

Overview of shares, warrants, PSUs, RSUs and change in 2023

Zealand shares

at December

31, 2023

Zealand

warrants at

December

31, 2023

Zealand PSUs

at December

31, 2023

Zealand RSUs

at December

31, 2023

Change in

ownership

in 2023

Adam Steensberg 41,143 189,063 170,976 30,246 23,532

Henriette Wennicke 3,432 14,038 29,184 12,026 3,432

David Kendall 9,299 10,490 14,191 35,254 7,763

Ivan Møller 45,428 66,137 79,663 10,647 30,079

Christina

Sonnenborg Bredal 6,734 31,761 33,469 4,260 6,192

Ravinder Chahil 7,327 34,261 32,344 6,470 7,327

Board of Directors

Overview of shares, warrants, RSUs and change in 2023

Zealand shares

at December

31, 2023

Zealand warrants

at December

31, 2023

Zealand RSUs

at December

31, 2023

Change in

ownership

in 2023

Martin Nicklasson 18,570 - 8,000 8,000

Kirsten A, Drejer 8,800 - 4,000 4,000

Jeffrey Berkowitz 8,200 - 4,000 4,000

Bernadette Connaughton 8,500 - 4,000 4,000

Leonard Kruimer 15,300 - 5,500 7,300

Alain Munoz 12,215 - 4,500 2,465

Michael John Owen 7,360 - 4,500 3,540

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 58

Internal controls and Risk management

Zealand is a knowledge-intensive company, with a high

focus on competency and personal development. The

Management philosophy in Zealand is based on a high

degree of trust in the company’s employees. However,

policies and operational processes are well described,

with regular reporting and controls. Operations are

performed mainly within the parent company Zealand

Pharma A/S in Søborg, Denmark. All main research

and development operations are based at the site in

Søborg. The company maintains a small workforce at

Zealand Pharma US Inc, the US subsidiary, located in

Boston, Massachusetts. Some of the company’s work is

outsourced to various contract research, development, or

manufacturing organizations.

Internal controls environment

Zealand has a number of internal control and risk

management systems in place to ensure that its financial

statements provide a true and fair view and comply IFRS

Accounting Standards as adopted by the EU and additional

requirements under the Danish Financial Statements Act.

Zealand has several policies and procedures in key

areas of financial reporting. The internal control and risk

management systems are designed to mitigate, detect,

and correct material misstatements rather than eliminate

the risks identified in the financial reporting process.

Corporate Management is responsible for implementing

policies and procedures on a day-to-day basis. The Board

has established an Audit Committee to advise the Board

on related matters.

A review and prioritization of material accounting items

is performed throughout the year. Items in the financial

statements that are based on estimates or that are gener-

ated through complex processes carry a relatively higher

risk of error. Zealand performs continual risk assessments

to identify such items and assess their scope and related

risks.

There are inherent limitations in the effectiveness of

any internal control over financial reporting, including

Zealand strives to conduct its operations in accordance with the highest ethical standards.

the possibility of human error and the circumvention or

overriding of internal control. Accordingly, even effective

internal control over financial reporting can provide only

reasonable assurance with respect to financial statement

preparation. An effective internal control environment

may become inadequate in the future because of changes

in conditions, or deterioration in the degree of compli-

ance with the policies and procedures.

As of December 31, 2023, key risks and processes iden-

tified have been documented and internal controls have

been designed and implemented in the organization.

Internal controls have been subject to management

testing and assessment to ensure that risks are addressed

and managed in a responsible and efficient manner.

Results have been formally reported to Management.

The Board has assessed that an internal audit function is

not required at Zealand in view of the Company’s legal

structure and size.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 59

Ravinder is General Counsel

Audit

Zealand’s external auditors are appointed for a term

of one year by the shareholders at the Annual General

Meeting, based on the recommendation of the Board.

Before such recommendation and in consultation with the

Audit Committee and Executive Management, the Board

assesses the independence, competencies and other

matters pertaining to the auditors.

The framework for the auditors’ duties, including their

remuneration, audit, and non-audit tasks, is agreed

between the Audit Committee and the auditors, and

endorsed by the Board.

Description of management reporting

systems and internal control systems

Management continually works on the design and effec-

tiveness of its management reporting and internal control

systems in order to enable it to monitor performance,

strategy, operations, business environ ment, organization,

procedures, funding, risk, and internal controls. While

implementation is ongoing, Corporate Management is of

the opinion that the reporting and internal controls are

adequate to avoid material misstatements in the financial

reporting.

In 2023, Zealand has implemented a new budget tool as

well as a new Enterprise Resource Planning (ERP) system

to further strengthen management reporting. A new elec-

tronic document management system has been launched

in December 2023.

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 60

The management reporting and internal control systems

include the following reports:

• Annual budget

• Quarterly reports, including budget revisions in March,

June and September

• Financial performance and cash position

• Comparison of budgeted and actual performance

• Analysis of cash flows

• Project management and cost control, and regular

project reporting and follow-up

• Summaries of project management key performance

indicators

• Controls on purchase and maintenance of assets

• Review of potential claims and litigation

• Review and updating of contracts and collaboration

agreements to ensure that all commitments and liabil-

ities are recognized as well as all income to which

Zealand is entitled

In addition to the above-mentioned reports, the internal

control system includes a number of detailed policies and

procedures, including:

• Treasury policy guiding investment of liquid assets

• Schedule of authorization guiding the sign-off of

expenses and investments

• Employee manual providing guidance on policies, rules

and procedures associated with employment at Zealand

Zealand also undertakes controls to ensure the complete-

ness and accuracy of accounting records. Such controls

are prepared, reviewed, tested and documented in an

online controls tool.

Zealand’s Management considers that the above high-

level and detailed controls contribute to more effective

financial reporting procedures.

Control environment/accounting

Incoming invoices are approved electronically. An

approval hierarchy ensures that invoices are approved

by the appropriate persons in accordance with Zealand's

Schedule of Authorization. Payment proposals are

approved through online banking and require two staff

members to complete the transaction. No changes

to vendors' banking details can be performed without

approval.

Risk assessment

As part of the risk assessment process, a review and prior-

itization of key risks and material accounting items has

been performed. These risks have been analyzed with

relevant controls described.

The areas deemed to have a moderate to high-risk profile

are:

• Revenue recognition and share-based compensation,

which involve a degree of judgment and estimation with

a risk profile assessed to be moderate

• Counterparty risk for liquid assets

• Risk of fraud

It is Management’s view that the current controls are

adequately reducing the risk of significant errors in the

financial statements.

The end-of-period process

In addition to controls of individual accounting items, it

is important to maintain a high level of control over the

different steps involved in transforming raw accounting

data into final quarterly or annual reports.

The quarterly and year-end processes involve detailed

documentation of each balance sheet item as well as

documentation supporting all notes to the accounts.

Management reviews the accounting policies used and

assesses the need for any new accounting policies. Any

items where estimates and/or judgements influence the

accounts are discussed with the Audit Committee and are

described in note 1.3 in the Annual Report.

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 61

In addition to the controls performed by Management,

Zealand’s IT department has policies in place covering

data governance, use of IT, and information security.

IT is leveraging an external Security Operation Center

(SOC) provider for Monitoring Detection Response (MDR)

and Incident Response (IR). An employee cyber security

training program is also implemented. IT will continue

investing in infrastructure and network hardening.

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 62

Dorte works in IT

Risk and risk mitigation

Zealand’s Corporate Management is responsible for

implementing adequate systems and policies in rela-

tion to risk management and internal control, and for

assessing the overall and specific risks associated with

Zealand’s business and operations. Furthermore, Zealand’s

Corporate Management seeks to ensure that such risks

are managed optimally and in a responsible and efficient

manner.

Doing business in the drug development industry involves

major financial risks. The development period for novel

medicines takes several years; costs are high, and the

probability of reaching the market is relatively low due to

developmental and regulatory hurdles.

Risks of particular importance to Zealand are scientific

and development risks, commercial risks, intellectual

property risks, clinical trial risks, regulatory risks, partner

interest risks, financial risks, and risks relating to finan-

cial reporting. Risk and mitigation plans are monitored

by Corporate Management, and the continuous risk

assessment is an integral part of the yearly reporting to

We constantly monitor and assess the overall risk of doing business in the drug

development industry and the particular risks associated with our current activities

and corporate profile.

the Board. In addition to these, each project team has

a risk identification and mitigation assessment using a

standard internal matrix that is used across the company.

This is used by each project team to ensure that there is

a consistent approach to risk and that appropriate risks

are identified. This is updated during the lifetime of any

project.

Below we have summarized Zealand’s key risk areas and

how we attempt to address and mitigate such risks.

Contents The big picture Our business Sustainability Corporate governance Financial statements

Zealand Pharma ∞ Annual Report 2023 63

Zealand risk and mitigation

Product pipeline Partnerships

Workforce and

management

Finance and

macroeconomics

Risk

Research and development activities for new

pharmaceutical product candidates are costly and

require lengthy clinical trials, which by nature are

uncertain and associated with high risk of failure.

Adverse events in clinical trials or failure to satisfac-

torily demonstrate safety and efficacy of product

candidates to regulatory authorities could lead to

delays in completing clinical trials, additional costs

to Zealand, or ultimately failure to progress the

product candidates towards market.

Zealand has a business model that is dependent on

partnerships in development, manufacturing, and

commercialization. Quality or supply issues at key

third-party manufacturers may lead to regulatory

delays or impact clinical or commercial supply.

Failure to secure or manage future commercializa-

tion partnerships may result in loss of product value

and negatively impact access for patients.

Zealand’s ability to attract and retain highly skilled

and talented employees is key to our success and

future growth. Loss of key employees may lead to

delays in the development of Zealand’s product

candidates, loss of important know-how, and

impact on the company’s culture.

Exposure to macroeconomic risks relate to interest

rates as well as volatility and instability in the

financial markets which could potentially lead to

Zealand’s inability to secure financing.

Mitigation

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 experience within

their field of expertise and receive training on a

continuous basis to develop and fulfil requirements.

We also engage in meetings with regulatory author-

ities to ensure that there is alignment on the regula-

tory strategy and trial requirements.

Suppliers are regularly audited to ensure proper

quality. To maximize the value of all partnerships,

we strive to foster a close and open dialogue with

our partners, thereby building strong partnerships

that work effectively.

Zealand strives to be an enriching, inspiring and

great place to work. Throughout our 25-year

history, we have built a unique company culture.

Engagement surveys show high engagement

(8.8/10) and a high sense of purpose for all

employees. Peer and pay reviews are performed

regularly and we invest in training, development,

and active culture management to ensure a

continued good working environment.

Zealand’s current cash runway into 2027 makes us

less vulnerable to financial instability. As stipulated

in our treasury policy, we work diligently to secure

a healthy balance sheet by managing our cash,

investments, and debt while also hedging our expo-

sure to, for example, exchange rate risk.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 64

Zealand risk and mitigation – continued

IT security

Climate and geopolitical

environment

Legal, patent and

compliance risk

Regulatory environment

Risk

Cyberattacks may lead to theft or leakage of patient

data, personal employee data, intellectual property,

and confidential business data, potentially impacting

Zealand’s operations and reputation, resulting in

fines from authorities or financial losses.

Climate or geopolitical events may impact Zealand’s

or a partner’s business operations due to supply

issues. Trial recruitment could be delayed due to

geopolitical issues or global health crises as seen

during the COVID-19 pandemic. Increased regula-

tory requirements and public sentiment will require

Zealand to manage our carbon footprint. Inability to

do so could lead to compliance issues and investor

dissatisfaction.

If we or our partners were to face infringement

claims or challenges by third parties, an adverse

outcome could subject us or our partners to signif-

icant liabilities to such third parties or lead to the

withdrawal of our products or product candidates.

This could lead us or our partners to curtail or

cease the development of some or all of their drug

product candidates or cause our partners to seek

legal or contractual remedies against us, potentially

involving a reduction in the royalties due to us.

The regulatory approval processes of the US Food

and Drug Administration (US FDA), the European

Medicines Agency (EMA), and other regulatory

authorities can be lengthy and inherently unpre-

dictable. If we or our collaboration partners are

ultimately unable to obtain regulatory approval for

internal or out-licensed product candidates, our

business could be substantially harmed.

Mitigation

We employ qualified IT professionals, including

dedicated specialists, who use external assistance

from qualified vendors to provide advice on cyber-

security and systems security where relevant. All

members of staff are trained in IT security and our IT

systems use multi-authentication systems as appro-

priate to reduce the risk of unauthorized entry into

the systems. Our company has appropriate protec-

tion systems from viruses and malware. The most

sensitive data is encrypted and subject to restricted

internal use.

Zealand’s direct environmental footprint is consid-

ered relatively low, mainly due to the outsourcing

of investigational medicinal product to third-party

manufacturers. When selecting and evaluating

contract manufacturing organizations, we have

included environmental criteria as part of our

Supplier Code of Conduct to ensure standards are

met and climate footprint is minimized. We have

launched an ESG strategy with a commitment to

calculate our CO

baseline and set proper decar-

bonization targets going forward.

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 updates on policies regarding the correct and

lawful management of internal and external intel-

lectual property.

Our regulatory department works closely with

external consultants and regulatory agents to

develop regulatory strategies. We also engage in

meetings with regulatory authorities to ensure that

there is alignment on the regulatory strategy and

trial requirements.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 65

Shareholder information

At December 31, 2023, the nominal value of our share

capital was DKK 58,751,152, divided into 58,751,152 shares

with a nominal value of DKK 1 each.

In 2023, the share capital increased by a nominal value of

DKK 7.0 million driven by one directed issue and private

placement (DKK 6.6 million) and exercise of employee

warrants (DKK 0.5 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 shareholders’ meetings.

Change in number of shareholders during 2023

The number of registered shareholders in Zealand Pharma

increased to 36,798 at December 31, 2023, from 24,283 at

December 31, 2022.

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

February 27, 2024:

• Van Herk Investments, Netherlands (9.97% of

votes/9.97% of capital)

• Polar Capital LLP, United Kingdom (9.62% of votes/9.62%

of capital)

• Avoro Capital Advisors LLC, United States (5.5% of

votes/5.5% of capital)

Share price performance

The price of Zealand’s shares increased by 85.3% during

2023 with a market closing share price at year-end of DKK

373.2, compared to DKK 201.4 at year-end 2022.

Institutional shareholders by geography

Share price performance in 2023

Based on Nasdaq Corporate Solutions aggregated data per

December 2023 and October 2022.

Core share data

Denmark

Number of shares at Dec. 31, 2023 58,751,152

Listing Nasdaq

Copenhagen

Ticker symbol ZEAL

Index

memberships

OMXCopenhagen25

STOXX Europe 600

We are listed on Nasdaq Copenhagen under the ticker symbol ZEAL.

Index

25 (18)

12 (25)

1 (0)

22 (20)

40 (37)

Denmark

United Kingdom

Rest of Europe

Rest of World

United States

2023

2022

Find more and contact Investor Relations at

zealandpharma.com/investor-relations

100

150

200

Jan 23 Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 Nov 23Feb 23 Dec 23

180

102

Zealand Pharma

Nasdaq Biotechnology Index (NBI)

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 66

Annual General Meeting

The annual general meeting is scheduled to be held elec-

tronically and in-person on Wednesday, March 20, 2024 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 2024

Date Event

March 20 Annual General Meeting

May 16 Q1 Earnings Release /

Interim Report First Quarter 2024

August 15 H1 Earnings Release /

Interim Report First Half 2024

November 7 Q3 Earnings Release /

Interim Report Third Quarter 2024

All dates are subject to NASDAQ deadlines and reporting

requirements and are subject to change

Analyst coverage

Zealand is followed by the financial institutions and

analysts listed below:

Institution Analyst

Carnegie Jesper Ilsøe

Danske Bank Thomas Bowers

Goldman Sachs Rajan Sharma

Jefferies Lucy Codrington

Kempen Suzanne van Voorthuizen

Morgan Stanley Charlie Mabbutt

Nordea Michael Novod

SEB Neshat Ahmadi

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 67

Annex: Recommendations on CorporateGovernance

For the financial year of 2023, Zealand is subject to the

Recommendations for Good Corporate Governance

from 2 December 2020, which are available on the

Committee on Corporate Governance's website https://

corporategover nance.dk/.

The following table indicates whether Zealand complies

with the recommendations of the Committee on

Corporate Governance. In line with the ‘comply or explain’

principle, Zealand has provided explanations if recom-

mendations are not fully complied with.

Zealand complies with the Recommendations on

Corporate Governance in all material respects, with notes

on those areas where it has chosen to depart from those

recommendations set out below. Zealand has chosen

to depart or had provided explanations in respect of the

following areas of the Recommendations:

1.1.2. The Committee recommends that the company

adopts policies on the company’s relationships with its

shareholders.

2.1.1. The Committee recommends that the board of

directors, in support of the company’s statutory objects

according to its articles of association and the long-term

value creation, considers the company’s purpose and

ensures and promotes a good culture and sound values

in the company. The company should provide an account

thereof in the management commentary and/or on the

company's website.

3.1.2. The Committee recommends that the board of

directors on an annual basis discusses the company’s

activities to ensure relevant diversity at the different

management levels of the company and adopts a diversity

policy, which is included in the management commentary

and/or available on the company's website.

This corporate governance statement has been approved

by the Board of Directors on

February 26, 2023

Find out more about Zealand at

zealandpharma.com/corporate-governance/

Complies

Not compliant

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 68

The company

complies

The company

explains

Recommendation Why How

1. Interaction with the company’s shareholders, investors and other stakeholders

1.1. Communication with the company’s shareholders, investors and other stakeholders

1.1.1. The Committee recommends that the management through ongoing dialogue and interaction ensures that

shareholders, investors and other stakeholders gain the relevant insight into the company's affairs, and that the board of

directors obtains the possibility of hearing and including their views in its work.

1.1.2. The Committee recommends that the company adopts policies on the company’s relationships with its shareholders,

investors and if relevant other stakeholders in order to ensure that the various interests are included in the company’s

considerations and that such policies are made available on the company’s website.

Given the size of Zealand a

formal policy is not felt to be

required.

Zealand has regular contact

with its key investors and

shareholder representatives

to ensure alignment. As

the company grows further

consideration will be given

to a formal policy on

engagement.

1.1.3. The Committee recommends that the company publishes quarterly reports.

1.2. The general meeting

1.2.1. The Committee recommends that the board of directors organises the company’s general meeting in a manner that

allows shareholders, who are unable to attend the meeting in person or are represented by proxy at the general meeting, to

vote and raise questions to the management prior to or at the general meeting. The Committee recommends that the board of

directors ensures that shareholders can observe the general meeting via webcast or other digital transmission.

1.2.2. The Committee recommends that proxies and postal votes to be used at the general meeting enable the shareholders

to consider each individual item on the agenda.

1.3. Takeover bids

1.3.1. The Committee recommends that the company has a procedure in place in the event of takeover bids, containing a

“road map” covering matters for the board of directors to consider in the event of a takeover bid, or if the board of directors

obtains reasonable grounds to suspect that a takeover bid may be submitted. In addition, it is recommended that it appears

from the procedure that the board of directors abstains from countering any takeover bids by taking actions that seek to

prevent the shareholders from deciding on the takeover bid, without the approval of the general meeting.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 69

The company

complies

The company

explains

Recommendation Why How

1.4. Corporate Social Responsibility

1.4.1. The Committee recommends that the board of directors adopts a policy for the company’s corporate social

responsibility, including social responsibility and sustainability, and that the policy is available in the management commentary

and/or on the company’s website. The Committee recommends that the board of directors ensures compliance with the

policy.

1.4.2. The Committee recommends that the board of directors adopts a tax policy to be made available on the company’s

website.

2. The duties and responsibilities of the board of directors

2.1. Overall tasks and responsibilities

2.1.1. The Committee recommends that the board of directors in support of the company’s statutory objects according to its

articles of association and the long-term value creation considers the company’s purpose and ensures and promotes a good

culture and sound values in the company. The company should provide an account thereof in the management commentary

and/or on the company's website.

The company has a formal

staff engagement survey that

is provided to the Board every

year.

The company will work with

advisors to work on additional

areas to develop this new

requirement.

2.1.2. The Committee recommends that the board of directors at least once a year discusses and on a regular basis follows up

on the company’s overall strategic targets in order to ensure the value creation in the company.

2.1.3. The Committee recommends that the board of directors on a continuous basis takes steps to examine whether the

company’s share and capital structure supports the strategy and the long-term value creation in the interest of the company

as well as the shareholders. The Committee recommends that the company gives an account thereof in the management

commentary.

2.1.4. The Committee recommends that the board of directors prepares and on an annual basis reviews guidelines for the

executive management, including requirements in respect of the reporting to the board of directors.

2.2. Members of the board of directors

2.2.1. The Committee recommends that the board of directors, in addition to a chairperson, appoints a vice chairperson, who

can step in if the chairperson is absent and who can generally act as the chairperson’s close sparring partner.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 70

The company

complies

The company

explains

Recommendation Why How

2.2.2. The Committee recommends that the chairperson in cooperation with the individual members of the board of directors

ensures that the members up-date and supplement their knowledge of relevant matters, and that the members’ special

knowledge and qualifications are applied in the best possible manner.

2.2.3. The Committee recommends that if the board of directors, in exceptional cases, requests a member of the board of

directors to take on special duties for the company, for instance, for a short period to take part in the daily management of the

company, the board of directors should approve this in order to ensure that the board of directors maintains its independent

overall management and control function. It is recommended that the company publishes any decision on allowing a member

of the board of directors to take part in the daily management, including the expected duration thereof.

3. The composition, organisation and evaluation of the board of directors

3.1. Composition

3.1.1. The Committee recommends that the board of directors on an annual basis reviews and in the management

commentary and/or on the company’s website states

• which qualifications the board of directors should possess, collectively and individually, in order to perform its duties in the best

possible manner, and

• the composition of and diversity on the board of directors.

3.1.2. The Committee recommends that the board of directors on an annual basis discusses the company’s activities in order

to ensure relevant diversity at the different management levels of the company and adopts a diversity policy, which is included

in the management commentary and/or available on the company's website.

The Board is attentive to the

issue of diversity and regards

this as an area of focus next

year

In 2024, we plan to formalize

and communicate our

diversity and inclusion policy.

3.1.3. The Committee recommends that candidates for the board of directors are recruited based on a thorough process

approved by the board of directors. The Committee recommends that in assessing candidates for the board of directors – in

addition to individual competencies and qualifications – the need for continuity, renewal and diversity is also considered.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 71

The company

complies

The company

explains

Recommendation Why How

3.1.4. The Committee recommends that the notice convening general meetings, where election of members to the board of

directors is on the agenda - in addition to the statutory items - also includes a description of the proposed candidates’

• qualifications,

• other managerial duties in commercial undertakings, including board committees,

• demanding organisational assignments and

• independence.

3.1.5. The Committee recommends that members to the board of directors elected by the general meeting stand for election

every year at the annual general meeting, and that the members are nominated and elected individually.

3.2. The board of director’s independence

3.2.1. The Committee recommends that at least half of the members of the board of directors elected in general meeting are

independent in order for the board of directors to be able to act independently avoiding conflicts of interests.

In order to be independent, the member in question may not:

• be or within the past five years have been a member of the executive management or an executive employee in the company, a

subsidiary or a group company,

• within the past five years have received large emoluments from the company/group, a subsidiary or a group company in

another capacity than as member of the board of directors,

• represent or be associated with a controlling shareholder,

• within the past year have had a business relationship (e.g. personally or indirectly as a partner or an employee, shareholder,

customer, supplier or member of a governing body in companies with similar relations) with the company, a subsidiary or a

group company, which is significant for the company and/or the business relationship,

• be or within the past three years have been employed with or a partner in the same company as the company’s auditor elected

in general meeting,

• be a CEO in a company with cross-memberships in the company’s management,

• have been a member of the board of directors for more than twelve years, or

• be closely related to persons, who are not independent, cf. the above-stated criteria.

Even if a member of the board of directors does not fall within the above-stated criteria, the board of directors may for other

reasons decide that the member in question is not independent.

3.2.2. The Committee recommends that members of the executive management are not members of the board of directors

and that members retiring from the executive management does not join the board of directors immediately thereafter.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 72

The company

complies

The company

explains

Recommendation Why How

3.3. Members of the board of directors and the number of other managerial duties

3.3.1. The Committee recommends that the board of directors and each of the members on the board of directors, in

connection with the annual evaluation, cf. recommendation 3.5.1., assesses how much time is required to perform the board

duties. The aim is for the individual member of the board of directors not to take on more managerial duties than the board

member in question is able to perform in a satisfactory manner.

3.3.2. The Committee recommends that the management commentary, in addition to the statutory requirements, contains

the following information on the individual members of the board of directors:

• position, age and gender,

• competencies and qualifications relevant to the company,

• independence,

• year of joining the board of directors,

• year of expiry of the current election period,

• participation in meetings of the board of directors and committee meetings,

• managerial duties in other commercial undertakings, including board committees, and demanding organisational assignments,

and

• the number of shares, options, warrants, etc. that the member holds in the company and its group companies and any changes

in such holdings during the financial year.

3.4. Board committees

3.4.1. The Committee recommends that that the management describes in the management commentary:

• the board committees’ most significant activities and number of meetings in the past year, and

• the members on the individual board committees, including the chairperson and the independence of the members of the

committee in question.

In addition, it is recommended that the board committees’ terms of reference are published on the company’s website.

3.4.2. The Committee recommends that board committees solely consist of members of the board of directors and that the

majority of the members of the board committees are independent.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 73

The company

complies

The company

explains

Recommendation Why How

3.4.3. The Committee recommends that the board of directors establishes an audit committee and appoints a chairperson

of the audit committee, who is not the chairperson of the board of directors. The Committee recommends that the audit

committee, in addition to its statutory duties, assists the board of directors in:

• supervising the correctness of the published financial information, including accounting practices in significant areas,

significant accounting estimates and related party transactions,

• reviewing internal control and risk areas in order to ensure management of significant risks, including in relation to the

announced financial outlook,

• assessing the need for internal audit,

• performing the evaluation of the auditor elected by the general meeting,

• reviewing the auditor fee for the auditor elected by the general meeting,

• supervising the scope of the non-audit services performed by the auditor elected by the general meeting, and

• ensuring regular interaction between the auditor elected by the general meeting and the board of directors, for instance, that

the board of directors and the audit committee at least once a year meet with the auditor without the executive management

being present.

If the board of directors, based on a recommendation from the audit committee, decides to set up an internal audit function,

the audit committee must:

• prepare terms of reference and recommendations on the nomination, employment and dismissal of the head of the internal

audit function and on the budget for the department,

• ensure that the internal audit function has sufficient resources and competencies to perform its role, and

• supervise the executive management’s follow-up on the conclusions and recommendations of the internal audit function.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 74

The company

complies

The company

explains

Recommendation Why How

3.4.4. The Committee recommends that the board of directors establishes a nomination committee to perform at least the

following preparatory tasks:

• describing the required qualifications for a given member of the board of directors and the executive management, the

estimated time required for performing the duties of this member of the board of directors and the competencies, knowledge

and experience that is or should be represented in the two management bodies,

• on an annual basis evaluating the board of directors and the executive management’s structure, size, composition and results

and preparing recommendations for the board of directors for any changes,

• in cooperation with the chairperson handling the annual evaluation of the board of directors and assessing the individual

management members’ competencies, knowledge, experience and succession as well as reporting on it to the board of

directors,

• handling the recruitment of new members to the board of directors and the executive management and nominating candidates

for the board of directors' approval,

• ensuring that a succession plan for the executive management is in place,

• supervising executive managements’ policy for the engagement of executive employees, and

• supervising the preparation of a diversity policy for the board of directors’ approval.

3.4.5. The Committee recommends that the board of directors establishes a remuneration committee to perform at least the

following preparatory tasks:

• preparing a draft remuneration policy for the board of directors’ approval prior to the presentation at the general meeting,

• providing a proposal to the board of directors on the remuneration of the members of the executive management,

• providing a proposal to the board of directors on the remuneration of the board of directors prior to the presentation at

thegeneral meeting,

• ensuring that the management’s actual remuneration complies with the company’s remuneration policy and the evaluation of

the individual member’s performance, and

• assisting in the preparation of the annual remuneration report for the board of directors’ approval prior to the presentation for

the general meeting's advisory vote.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 75

The company

complies

The company

explains

Recommendation Why How

3.5. Evaluation of the board of directors and the executive management

3.5.1. The Committee recommends that the board of directors once a year evaluates the board of directors and at least every

three years engages external assistance in the evaluation. The Committee recommends that the evaluation focuses on the

recommendations on the board of directors’ work, efficiency, composition and organisation, cf. recommendations 3.1.-3.4.

above, and that the evaluation as a minimum always includes the following topics:

• the composition of the board of directors with focus on competencies and diversity

• the board of directors and the individual member’s contribution and results,

• the cooperation on the board of directors and between the board of directors and the executive management,

• the chairperson’s leadership of the board of directors,

• the committee structure and the work in the committees,

• the organisation of the work of the board of directors and the quality of the material provided to the board of directors, and

• the board members’ preparation for and active participation in the meetings of the board of directors.

3.5.2. The Committee recommends that the entire board of directors discusses the result of the evaluation of the board

of directors and that the procedure for the evaluation and the general conclusions of the evaluation are described in the

management commentary, on the company’s website and at the company’s general meeting.

3.5.3. The Committee recommends that the board of directors at least once a year evaluates the work and results of the

executive management according to pre-established criteria, and that the chairperson reviews the evaluation together with

the executive management. In addition, the board of directors should on a continuous basis assess the need for changes in the

structure and composition of the executive management, including in respect of diversity, succession planning and risks, in

light of the company’s strategy.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 76

The company

complies

The company

explains

Recommendation Why How

4. Remuneration of management

4.1. Remuneration of the board of directors and the executive management

4.1.1. The Committee recommends that the remuneration for the board of directors and the executive management and

the other terms of employment/service is considered competitive and consistent with the company's long-term shareholder

interests.

4.1.2. The Committee recommends that share-based incentive schemes are evolving, i.e., that they are periodically granted,

and that they primarily consist of long-term schemes with a vesting or maturity period of at least three years.

4.1.3. The Committee recommends that the variable part of the remuneration has a cap at the time of grant, and that there is

transparency in respect of the potential value at the time of exercise under pessimistic, expected and optimistic scenarios.

4.1.4. The Committee recommends that the overall value of the remuneration for the notice period, including severance

payment, in connection with a member of the executive management’s departure, does not exceed two years’ remuneration

including all remuneration elements.

4.1.5. The Committee recommends that members of the board of directors are not remunerated with share options and

warrants.

Members of the Board have

chosen to forgo some of their

cash based renumeration and

receive restricted stock units

(RSUs) rather than the cash.

The cash based renumeration

was therefore reduced and

substituted with RSUs to a

fixed amount dependent on

the Board members position

and committee involvement.

This system of renumeration

ensures that the members

of the Board are working in

the shareholders interest and

increasing shareholder value.

4.1.6. The Committee recommends that the company has the option to reclaim, in whole or in part, variable remuneration

from the board of directors and the executive management if the remuneration granted, earned or paid was based on

information, which subsequently proves to be incorrect, or if the recipient acted in bad faith in respect of other matters, which

implied payment of a too large variable remuneration.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 77

The company

complies

The company

explains

Recommendation Why How

5. Risk management

5.1. Identification of risks and openness in respect of additional information

5.1.1. The Committee recommends that the board of directors based on the company's strategy and business model

considers, for instance, the most significant strategic, business, accounting and liquidity risks. The company should in the

management commentary give an account of these risks and the company’s risk management.

5.1.2. The Committee recommends that the board of directors establishes a whistle-blower scheme, giving the employees

and other stakeholders the opportunity to report serious violations or suspicion thereof in an expedient and confidential

manner, and that a procedure is in place for handling such whistleblower cases.

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 78

Financial

statements

Contents The big picture Our business Sustainability Corporate governance Financial statements

Financial Statements

Zealand Pharma ∞ Annual Report 2023 79

Statement of loss 81

Statement of comprehensive loss 81

Statement of financial position 82

Statement of cash flows 83

Statement of changes in equity 83

Notes 84

Consolidated

financial statements

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 80

Statement of loss

Statement of comprehensive loss

Consolidated financial statements

DKK thousand Note 2023 2022

Revenue 2.1 342,788 103,986

Royalty expenses 2.3 -9,138 -

Cost of goods sold 2.4 -10,036 -

Gross profit 323,614 103,986

Research and development expenses 2.5 -684,902 -614,044

Sales and marketing expenses 2.6 -30,627 -32,298

General and administrative expenses 2.7 -185,302 -237,210

Other operating income 2.9 15,979 -

Other operating expenses 2.9 -11,000 -57,587

Net operating expenses -895,852 -941,139

Operating result -572,238 -837,153

Financial income 4.7 54,115 133,270

Financial expenses 4.7 -190,742 -268,158

Result before tax -708,865 -972,041

Corporate tax 5.1 5,126 6,431

Net result for the year from continuing operations -703,739 -965,610

Net result for the year from discontinued operations 2.10 - -236,525

Net result for the year -703,739 -1,202,135

Loss per share from continuing operations, basic/diluted (DKK) 2.11 -12.44 -20.90

Loss per share from discontinued operations, basic/diluted (DKK) 2.11 - -5.12

Loss per share, basic/diluted (DKK) 2.11 -12.44 -26.02

DKK thousand Note 2023 2022

Net result for the year -703,739 -1,202,135

Other comprehensive income

Items that will be reclassified to income

statement when certain conditions are met (net of tax):

Exchange differences on translation of foreign operations 8,087 462

Total comprehensive result for the year -695,652 -1,201,673

Consolidated statement of loss for the years ended

December 31, 2023 and 2022

Consolidated statement of comprehensive loss for the years ended

December 31, 2023 and 2022

Zealand Pharma ∞ Annual Report 2023 81Contents The big picture Our business Sustainability Corporate governance Financial statements

Statement of financial position

Consolidated financial statements

Consolidated statement of financial position

as of December 31, 2023 and 2022

DKK thousand Note 2023 2022

Assets

Intangible assets 3.1 12,255 -

Property, plant and equipment 3.2 47,047 50,528

Right-of-use assets 3.3 102,805 114,960

Other investments 3.4 14,004 30,943

Deferred tax assets 5.1 925 2,017

Other receivables 3.6 15,794 18,105

Other financial assets 3.7 7,375 6,901

Total non-current assets 200,205 223,454

Inventory 3.5 7,935 1,286

Trade and other receivables 3.6 122,359 115,622

Corporate tax receivable 5.1 16,437 21,599

Marketable securities 4.5 1,183,746 108,611

Cash and cash equivalents (subject to certain conditions) 4.4 - 348,608

Cash and cash equivalents 4.4 449,311 720,626

Total current assets 1,779,788 1,316,352

Total assets 1,979,993 1,539,806

DKK thousand Note 2023 2022

Share capital 4.8 58,751 51,702

Share premium 6,406,225 4,921,232

Currency translation reserve 22,704 14,617

Retained losses -4,894,841 -4,171,640

Total shareholders' equity 1,592,839 815,911

Other payables 3.8 - 19,058

Borrowings including embedded derivatives 4.6 - 401,346

Lease liabilities 3.3 102,575 108,000

Total non-current liabilities 102,575 528,404

Lease liabilities 3.3 16,655 14,729

Trade and other payables 3.8 267,924 180,762

Total current liabilities 284,579 195,491

Total liabilities 387,154 723,895

Total shareholders' equity and liabilities 1,979,993 1,539,806

Zealand Pharma ∞ Annual Report 2023 82Contents The big picture Our business Sustainability Corporate governance Financial statements

Statement of cash flows

Statement of changes in equity

Consolidated financial statements

DKK thousand Note 2023 2022

Net result for the year -703,739 -1,202,135

Adjustment for other non-cash items 6.6 202,033 269,332

Changes in working capital 6.6 52,103 10,161

Financial income received 37,887 5,178

Financial expenses paid -25,252 -34,124

Corporate taxes received 11,300 9,277

Cash flow used in operating activities -425,668 -942,311

Proceeds from sale of marketable securites 1,089,547 887,060

Purchase of marketable securities -2,159,831 -700,477

Purchase of intangible assets -12,508 -

Purchase of property, plant and equipment -11,241 -11,710

Divestment of activities 2.10 - 106,386

Cash flow from/(used in) investing activities -1,094,033 281,259

Repayment of borrowings 4.6 -525,764 -436,088

Lease installments 3.3 -17,664 -13,719

Proceeds from issuance of shares 1,500,000 1,052,757

Purchase of treasury shares 4.8 -41,600 -

Proceeds from issuance of shares related to exercise of share-

based compensation 63,950 31,904

Costs related to issuance of shares -71,908 -47,354

Cash flow from financing activities 907,014 587,500

Decrease in cash and cash equivalents -612,686 -73,552

Cash and cash equivalents at beginning of year 1,069,234 1,129,103

Exchange rate adjustments -7,237 13,683

Cash and cash equivalents at end of year 449,311 1,069,234

Consolidated statement of cash flows for the years

ended December 31, 2023 and 2022

DKK thousand

capital

*Share

premium

Currency

translation

reserve

*Retained

losses Total

Equity at January 1, 2023 51,702 4,921,232 14,617 -4,171,640 815,911

Other comprehensive income

for the year - - 8,087 - 8,087

Net result for the year - - - -703,739 -703,739

Purchase of treasury shares - - - -81,045 -81,045

Net settlement of PSUs - - - 66 66

Net settlement of RSUs - - - 91 91

Exercise of warrants 470 63,480 - - 63,950

Share-based compensation expenses - - - 61,426 61,426

Capital increases 6,579 1,493,421 - - 1,500,000

Costs related to capital increases - -71,908 - - -71,908

Equity at December 31, 2023 58,751 6,406,225 22,704 -4,894,841 1,592,839

Equity at January 1, 2022 43,634 3,891,993 14,155 -3,021,979 927,803

Other comprehensive income

for the year - - 462 - 462

Net result for the year - - - -1,202,135 -1,202,135

Net settlement of PSUs - - - 72 72

Net settlement of RSUs - - - 116 116

Exercise of warrants 201 31,703 - - 31,904

Share-based compensation expenses - - - 52,286 52,286

Capital increases 7,867 1,044,890 - - 1,052,757

Costs related to capital increases - -47,354 - - -47,354

Equity at December 31, 2022 51,702 4,921,232 14,617 -4,171,640 815,911

* Other reserves of DKK 749.6 million from the 2022 Annual Report have been split into Share premium and Retained losses to ease read-

ability of movements in shareholders’ equity.

Consolidated statement of changes in shareholders' equity

at December 31, 2023 and 2022

Zealand Pharma ∞ Annual Report 2023 83Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes overview

Notes

Consolidated financial statements

Notes to the consolidated financial statements

1.0 Basis of preparation 85

1.1 Basis of preparation, going concern assumption,

nature of the business and accounting policies 85

1.2 New accounting policies and disclosures 89

1.3 Management's judgements and estimates under IFRS 89

2.0 Results for the year 91

2.1 Revenue 91

2.3 Royalty expenses 95

2.4 Cost of goods sold 95

2.5 Research and development expenses 96

2.6 Selling and marketing expenses 97

2.7 General and administrative expenses 97

2.8 Staff costs 98

2.9 Other operating items 98

2.10 Discontinued operations 99

2.11 Earnings per share 101

3.0 Operating assets and liabilities 102

3.1 Intangible assets 102

3.2 Property, plant and equipment 104

3.3 Right-of-use assets and lease liabilities 106

3.4 Other investments 108

3.5 Inventories 108

3.6 Trade and other receivables 109

3.7 Other financial assets 110

3.8 Trade and other payables 110

4.0 Capital structure, financial risk

and related items 111

4.1 Capital management 111

4.2 Financial risks 112

4.3 Financial assets and liabilities 115

4.4 Cash and cash equivalents 117

4.5 Marketable securities 117

4.6 Borrowings 118

4.7 Financial items 124

4.8 Share capital 125

4.9 Share-based instruments 126

5.0 Tax 130

5.1 Corporate tax 130

6.0 Other disclosures 133

6.1 Remuneration of the Board of Directors and Executive

Management 133

6.2 Fees to auditors appointed at the annual general meeting 135

6.3 Contingent assets and liabilities 135

6.4 Commitments 135

6.5 Related parties 135

6.6 Cash flow adjustments 136

6.7 Collaborations and technology licenses 136

Zealand Pharma ∞ Annual Report 2023 84Contents The big picture Our business Sustainability Corporate governance Financial statements

1 Basis of preparation

1.1 Basis of preparation, going concern assumption, nature of the business

and accounting policies

Basis of preparation

These consolidated financial statements include Zealand Pharma A/S (the parent company) and subsidi-

aries over which the parent company has control. The Zealand consolidated Group is referenced herein

as "Zealand" or the "Group".

This section describes Zealand's material financial accounting policies including Management's

judgements and estimates. New or revised EU endorsed accounting standards and interpretations are

described, in addition to how these changes are expected to impact the financial performance and

reporting of Zealand.

Accounting policies

The consolidated financial statements have been prepared in accordance with IFRS

Accounting

Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act

(class D). The consolidated financial statements were approved by the Board of Directors and author-

ized for issue on February 26, 2024. Except as outlined in note 1.2 New accounting policies and disclo-

sures, the financial statements have been prepared using the same accounting policies as in previous

years.

Zealand describes material accounting policy information in conjunction with each note with the aim to

provide a more understandable description of each accounting area.

IAS 1 Presentation of Financial Statements - Disclosure of Accounting policies

The amendments to IAS 1 replace the requirement to disclose significant accounting policies with a

requirement to disclose material accounting policy information. Zealand has adapted the amended

standard for the annual report for the financial year January 1 - December 31, 2023. As an effect

Zealand only discloses accounting policies if:

• A choice of accounting policy is permitted by the IFRS accounting standard,

• It is needed to provide context for a change of accounting policy that had a material effect on the

information in the financial statements,

• It is needed to provide context to significant judgements and estimates,

• The required accounting (recognition, measurement, presentation, disclosure) is complex and users

would otherwise not understand the material transaction, event, or condition, or

• There are other qualitative factors that make the accounting policy information material.

1.1 Basis of preparation, going concern

assumption, nature of the business and

accounting policies 85

1.2 New accounting policies and disclosures 89

1.3 Management's judgements and estimates

under IFRS 89

1.0

Basis of

preparation

Zealand Pharma ∞ Annual Report 2023 85Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

1.1 Basis of preparation, going concern assumption, nature of the business

and accounting policies (continued)

The adoption of the above mentioned amendments did not have a material impact on the financial

statements as of December 31, 2023.

Going concern assessment

The Company's strategy to prioritize research and development allows the Company to focus on the

research and development of innovative peptide-based medicines and leverage its peptide platform

through strategic collaborations.

Until such time where the Company becomes able to generate positive cash-flows from its operations,

additional funding is expected to be necessary to fund future research and development activities.

Therefore, the Company may raise additional funds through either public financing, debt financing,

collaboration agreements, strategic alliances and licensing arrangements, or a combination of such.

Management’s judgement and assessment of the Company’s ability to continue as a going concern

includes evaluation of the Company's operational cash-flow requirements for the forthcoming 12

months from the balance sheet date and future sources and uses of cash. Management has assessed

factors such as its product pipeline, cash position, planned research and development activities, current

license and collaboration agreements, undrawn borrowing facilities and financing opportunities.

Management expects that the Company's cash and cash equivalents as of December 31, 2023, will

be sufficient to fund the Company's research and development activities as planned and capital

requirements for at least 12 months from the December 31, 2023 balance sheet date. Following the

capital increase in January 2024 the Group received gross proceeds of DKK 1.45 billion.

On this basis, these consolidated financial statements are prepared using the going concern

assumption.

Nature of the Business

Zealand is a biotechnology company focused on the discovery and development of innovative peptide-

based medicines. More than 10 drug candidates invented by Zealand have advanced into clinical devel-

opment, of which two have reached the market. The Company has development partnerships with a

number of pharma companies as well as commercial partnerships for its marketed products.

Zealand Pharma A/S, founded in 1998, is incorporated in Denmark and headquartered in Copenhagen,

Denmark with a presence in the U.S.

Materiality

Zealand's Annual Report is based on the concept of materiality and the Company focuses on informa-

tion that is considered material and relevant to the users of the consolidated financial statements. The

consolidated financial statements consist of a large number of transactions. These transactions are

aggregated into classes according to their nature or function and presented in classes of similar items

in the consolidated financial statements as required by IFRS and the Danish Financial Statements Act. If

Zealand Pharma ∞ Annual Report 2023 86Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

items are individually immaterial, they are aggregated with other items of similar nature in the financial

statements or in the notes.

Consolidated Financial Statements

The consolidated financial statements include Zealand A/S and subsidiaries over which the parent

company has control. The parent controls a subsidiary when the parent is exposed to, or has rights

to, variable returns from its involvement with the subsidiary and has the ability to affect those returns

through its power to direct the activities of the subsidiary.

Zealand's consolidated financial statements have been prepared on the basis of the financial statements

of the parent company and subsidiaries, prepared under Zealand's accounting policies by combining

similar accounting items on a line-by-line basis. On consolidation, intercompany income and expenses,

intercompany receivables and payables, and unrealized gains and losses on transactions between the

consolidated companies are eliminated.

The recorded value of the equity interests in the consolidated subsidiaries is eliminated with the propor-

tionate share of the subsidiaries' equity. Subsidiaries are consolidated from the date when control is

transferred to the Group.

The income statements for subsidiaries with a different functional currency than Zealand's presenta-

tion currency, are translated into Zealand's presentation currency at average exchange rates, and the

balance sheets are translated at the exchange rate in effect at the balance sheet date.

Exchange rate differences arising from the translation of foreign subsidiaries shareholders' equity at the

beginning of the year and exchange rate differences arising as a result of foreign subsidiaries' income

1.1 Basis of preparation, nature of the business and accounting policies (continued)

Zealand Pharma A/S

Ultimate parent

Domicile: Denmark

ZP Holding SPV K/S

Domicile: Denmark

Ownership: 100%

Voting rights: 100%

ZP General Partner 1 ApS

Domicile: Denmark

Ownership: 100%

Voting rights: 100%

ZP SPV 3 K/S

Domicile: Denmark

Ownership: 100%

Voting rights: 100%

Zealand Pharma U.S., Inc.

Domicile: United States

Ownership: 100%

Voting rights: 100%

Zealand Pharma California US, LLC.

Domicile: United States

Ownership: 100%

Voting rights: 100%

ZP General Partner 3

Domicile: Denmark

Ownership: 100%

Voting rights: 100%

ZP General Partner 2 ApS

Domicile: Denmark

Ownership: 100%

Voting rights: 100%

ZP SPV 1 K/S

Domicile: Denmark

Ownership: 100%

Voting rights: 100%

Zealand Pharma ∞ Annual Report 2023 87Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

1.1 Basis of preparation, nature of the business and accounting policies (continued)

statements being translated at average exchange rates are recorded in translation reserves in share-

holders' equity.

Functional and Presentation Currency

The consolidated financial statements have been prepared in Danish Kroner (DKK), which is the func-

tional and presentation currency of the parent company.

Foreign Currency

Transactions in foreign currencies are translated at the exchange rates in effect at the date of the

transaction.

Exchange rate gains and losses arising between the transaction date and the settlement date are recog-

nized in the income statement as financial income or expense.

Unsettled monetary assets and liabilities in foreign currencies are translated at the exchange rates in

effect at the balance sheet date. Exchange rate gains and losses arising between the transaction date

and the balance sheet date are recognized in the income statement as financial income or expense.

Statements of Cash Flows

The cash flow statement is presented using the indirect method.

Cash flows from operating activities are stated as the net result for the year adjusted for net financial

items, non-cash operating items such as depreciation, amortization, impairment losses, share-based

compensation expenses, provisions, and for changes in operating assets and liabilities, interest paid and

received, interest elements of lease payments and corporate taxes paid or received. Operating assets

and liabilities are mainly comprised of changes in receivables and other payables excluding the items

included in cash and cash equivalents. Changes in non-current assets and liabilities are included in

operating assets and liabilities, if related to the main revenue-producing activities of Zealand.

Cash flows from investing activities consist of purchases and sales of marketable securities and other

investments, as well as purchases of intangible assets and property and equipment.

Cash flows from financing activities relate to the issuance of shares, purchase of treasury shares and

payments of loans including installments on lease liabilities.

Cash and cash equivalents are comprised of cash, bank deposits, and marketable securities with a

maturity of less than ninety days on the date of acquisition.

The statements of cash flows cannot be derived solely from the consolidated financial statements.

ESEF and iXBRL reporting

Zealand Pharma is required to file its annual report in ESEF format, and the annual report is therefore

prepared in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European

Single Electronic Format (ESEF Regulation) which includes requirements related to the preparation

of the annual report in XHTML format. 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 exten-

sion to the taxonomy 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 549300ITBB1ULBL4CZ12-2023-12-31-en.zip

Zealand Pharma ∞ Annual Report 2023 88Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

1.2 New accounting policies and disclosures

Implementation of new and revised standards and interpretations

Zealand has, with effect from January 1, 2023, applied and implemented the following new standards

and amendments, which are relevant for Zealand:

• Amendments to IAS 1 Presentation of Financial Statements and to the IFRS Practice Statement 2 (PS2)

Making Materiality Judgements.

• Amendment to IAS 8 Accounting Policies, Changes in Accounting Estimates and Error relating to the

definition of Accounting Estimates

• Amendments to IAS 12 Income taxes relating to (i) deferred tax related to assets and liabilities arising

from a single transaction and (ii) the International Tax Reform – Pillar Two Model Rules

The implementation of the above new and revised standards and amendments did not have any mate-

rial impact on amounts recognized in current and prior periods and is not expected to have a material

impact in the current or future reporting periods.

Standards and interpretations not yet effective

The IASB has issued a number of new standards and updated some existing standards, which are effec-

tive for accounting periods beginning on January 1, 2024, or later. Therefore, they are not incorporated

in these consolidated financial statements. There are no standards presently known that are not yet

effective and that would be expected to have a material impact on Zealand in current or future reporting

periods and on foreseeable future transactions.

New accounting policy for software

In 2023, Zealand has adopted a new accounting policy on capitalization of implementation costs on IT

projects due to a new type of transactions. On initial recognition they are measured at cost and include

configuration and customization of the underlying software, including training and testing. Refer to note

3.1 Intangible assets for additional information.

1.3 Management's judgements and estimates under IFRS

In preparing consolidated financial statements under IFRS, certain provisions in the standards require

Management's judgements, including various accounting estimates and assumptions. These judge-

ments and estimates affect the application of accounting policies, as well as reported amounts within

the consolidated financial statements and disclosures.

Determining the carrying amount of certain assets and liabilities requires judgements, estimates and

assumptions concerning future events that are based on historical experience and other factors, which

by their very nature are associated with uncertainty and unpredictability.

Accounting estimates are based on historical experience and various other factors relative to the

circumstances in which they are applied. Estimates are generally made based on information available

at the time. An example would include Management's estimation of useful lives of intangible assets.

Accounting judgements are made in the process of applying accounting policies. These judgements are

typically made based on the guidance and information available at the time of application. Examples

would include Management's judgements utilized in determining revenue recognition.

These estimates and judgements may prove incomplete or incorrect, and unexpected events or circum-

stances may arise. Zealand is also subject to risks and uncertainties which may lead actual results to

differ from these estimates, both positively and negatively. Specific risks for Zealand are discussed in the

relevant section of this Annual Report and in the notes to the consolidated financial statements.

The areas involving a high degree of judgement and estimation that at the end of the reporting period

have a significant risk of resulting in material adjustment to the carrying amount of assets and liabilities

within the next financial year are summarized below. Refer to the identified notes for further informa-

tion on the key accounting estimates and judgements utilized in the preparation of these consolidated

financial statements.

Climate change

In preparing the consolidated financial statements, Management has considered the impact of climate

change, particularly in the context of the Group’s sustainability targets. Zealand Pharma targets to

minimize and mitigate the climate impact by continuously evaluating and implementing initiatives that

can reduce any negative impact on the environment from the Group’s operations. These considerations

did not have a material impact on Management’s judgements and estimates, consistent with the

assessment that climate change is not expected to have a significant impact on the Group’s future cash

flows, the carrying amount of non-current assets, or going concern assessment.

Zealand Pharma ∞ Annual Report 2023 89Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

1.3 Management's judgements and estimates under IFRS (continued)

Accounting topic Key accounting estimates and judgements Note reference Estimation risk

Revenue recognition Judgement in assessing the nature of combined performance obligations within contracts 2.1 Moderate

Judgement in assessing the probability of attainment of milestones Low

Estimation of stand-alone selling price for each identified performance obligation Moderate

Share-based compensation Judgement in determining assumptions required for valuation of warrant grants 4.9 Moderate

Estimate of instruments expected to vest Moderate

Inventory Estimate of net realizable value of Zegalogue

raw materials 3.5 Low

Deferred taxes Judgement and estimate regarding valuation of deferred income tax assets 5.1 Low

Capitalization of research and development costs Judgement involved in determining when a development project reached technological feasibility 3.1 Low

Going concern assumption Judgement in assessing operational cashflow and capital requirements for the forthcoming 12 months from the

balance sheet date

1.1 Low

Discontinued operations Judgements exercised by Management in applying IFRS 5 as a result of the divestment of the US sales activities,

including the V-GO activity and the transfer of the commercial rights for Zegalogue

2.10 Moderate

Accrual of costs for clinical contracts Estimate on allocation of total contract costs between start-up, patient treatment and wrap-up phases for clinical

trials including estimate of value for expected change orders.

2.5 Low

Right-of-use assets Estimate in assessing the recoverable amount under the finance lease agreement for the US Boston office 3.3 Low

Zealand Pharma ∞ Annual Report 2023 90Contents The big picture Our business Sustainability Corporate governance Financial statements

2 Results for the year

Accounting policies

Zealand recognizes revenue when its customer obtains control of promised goods or services, in an

amount that reflects the consideration that the entity expects to receive in exchange for those goods

or services. To determine revenue recognition for arrangements that Zealand determines are within the

scope of IFRS 15, Zealand performs the following five steps: (i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate

the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or

as) the entity satisfies a performance obligation. Zealand only applies the five-step model to contracts

when it is probable that the Company will collect the consideration it is entitled to in exchange for the

goods or services it transfers to the customer. At contract inception, once the contract is determined to

be within the scope of IFRS 15, Zealand assesses the goods and services promised within each contract

and identifies as a performance obligation each good or service that is distinct. Revenue is recognized

in the amount of the transaction price that is allocated to the respective performance obligation when

(or as) the performance obligation is satisfied.

Milestone revenue

At the inception of each arrangement that includes milestone payments, Zealand evaluates whether

the achievement of milestones is considered highly probable and estimates the amount to be included

in the transaction price using the most likely amount method. If it is highly probable that a significant

revenue reversal would not occur, the associated milestone value is included in the transaction price.

Milestone payments that are not within the control of Zealand or the license and collaboration partner,

such as milestones conditioned of regulatory approvals, are not considered probable of being achieved

until such regulatory approvals are received. The transaction price is then allocated to each perfor-

mance obligation on a relative stand-alone selling price basis, for which Zealand recognizes revenue as

or when the performance obligations under the contract are satisfied. At the end of each subsequent

reporting period, Zealand re-evaluates the probability of achievement of such milestones and any

related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjust-

ments are recorded on a cumulative catch-up basis, which would affect revenue and earnings in the

period of adjustment.

License revenue for intellectual property

If the license to Zealand's functional intellectual property is determined to be distinct from the other

performance obligations identified in the arrangement, Zealand recognizes revenues from non-refund-

able upfront fees allocated to the license at the point in time the license is transferred to the licensee

2.1 Revenue

2.0

Results for

the year

This section includes disclosures related to the

consolidated statement of loss. A detailed

description of the results for the year is

provided in the Financial Review section

in the Management’s Review.

2.1 Revenue 91

2.2 Information about geographic areas 95

2.3 Royalty expenses 95

2.4 Cost of goods sold 95

2.5 Research and development expenses 96

2.6 Selling and marketing expenses 97

2.7 General and administrative expenses 97

2.8 Staff costs 98

2.9 Other operating items 98

2.10 Discontinued operations 99

2.11 Earnings per share 101

Zealand Pharma ∞ Annual Report 2023 91Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

Management’s judgements and estimates

Revenue recognition

Evaluating the criteria for revenue recognition under license and collaboration agreements requires

Management's judgement to assess and determine the following:

• Identification of performance obligations within the contract and determine the nature of perfor-

mance obligations and whether they are distinct or should be combined with other performance

obligations to determine whether the performance obligations are satisfied over time or at a point in

time.

• Determine the transaction price, including an assessment of whether the achievement of milestone

payments is highly probable.

• Allocation of transaction price to performance obligations to determine the stand-alone selling price

of each performance obligation identified in the contract using key assumptions which may include

forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates

and probabilities of technical and regulatory success.

2.1 Revenue (continued)

and the licensee is able to use and benefit from the license. For licenses that are bundled with other

promises, Zealand utilizes judgement to assess the nature of the combined performance obligation to

determine whether the combined performance obligation is satisfied over time or at a point in time and,

if over time, the appropriate method of measuring progress for purposes of recognizing revenue from

non-refundable, upfront fees.

Royalties

Some of Zealand's license and collaboration agreements include sales-based royalties including

commercial milestone payments based on the level of sales. The license has been deemed to be the

predominant item to which the royalties relate under Zealand's license and collaboration agreements.

As a result, Zealand recognizes revenue when the related sales occur.

Reimbursement revenue for R&D services

Zealand’s research and development collaboration agreements include the provisions for reimburse-

ment or cost sharing for research and development services and payment for full-time equivalent

employees (FTEs) at contractual rates. R&D services are performed over time given that the customer

simultaneously receives and consumes the benefits provided by Zealand and revenue for research and

development services is therefore recognized over time. Amount is recognized net of any passthrough

cost incurred on behalf of the customer. The assessment of if a cost is incurred on behalf of the

customer is made by evaluating the nature of its promise to the customer including whether the spec-

ified good or service to be provided to the customer is controlled by the Company before that good or

service is transferred to the customer.

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 rebates and chargebacks, all of which are estimated

at the time of sale.

Zealand Pharma ∞ Annual Report 2023 92Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

Recognized revenue can be specified as follows for all agreements and product sales:

DKK thousand 2023 2022Alexion Pharmaceuticals Inc. 4,094 69,027Boehringer Ingelheim International GmbH 223,725 -Novo Nordisk A/S 34,149 34,959Sanofi-Aventis Deutschland GmbH 70,784 -Total revenue from license and collaboration agreements 332,752 103,986Gross product sales 10,036 164,651Sales rebates - -69,526Returns and sales reductions - -7,513- Hereof related to discontinued operations - -87,612Sale of goods revenue from continuing operations 10,036 -Total revenue from continuing operations 342,788 103,986Total revenue recognized over time 38,244 76,181Total revenue recognized at a point in time from continuing operations 304,544 27,805Total revenue recognized at a point in time from discontinued operations - 87,612Milestone revenue 294,509 27,805Royalty revenue 841 -Reimbursement revenue for R&D services 37,402 76,181Product sales 10,036 -Total revenue by revenue stream from continuing operations 342,788 103,986Product sales - 87,612Total revenue by revenue stream from discontinued operations - 87,612

2.1 Revenue (continued)

Alexion Pharmaceuticals Inc. agreement

In March 2019, Zealand entered into a license, research and development agreement with Alexion

Pharmaceuticals, Inc. (Alexion) to develop novel therapies to treat complement-mediated diseases.

This agreement provided Zealand an immediate cash injection as well as further external validation of

Zealand’s peptide platform. The agreement is described further in note 6.7 Collaborations and tech-

nology licenses.

Under the Alexion license, research and development agreement, Zealand has received an upfront

non-refundable payment of USD 25 million for the Complement C3 program and a concurrent USD

15 million equity investment in Zealand at a premium to the market price. These payments have been

received and recognized in revenue in prior years.

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-related milestones and high single digit to low double digit

royalty payments. Zealand is furthermore eligible to receive non-refundable upfront payments of USD 15

million each for up to three additional targets, with development and sales milestone and royalties. The

non-refundable up-front fee was allocated to the combined license, research and development services,

and is being recognized as revenue along with provision of the research and development services under

the lead program. Expenses to provide the services are 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.

The remaining deferred revenue was recognized in December 2022. In 2023, the revenue of DKK 4.1

million under the Alexion agreement solely relates to compensation on a time and material basis for R&D

services.

Boehringer Ingelheim International GmbH agreement

In June 2011, Zealand entered into a license, research and development collaboration agreement with

Boehringer Ingelheim International GmbH (BI) to advance novel dual acting glucagon/GLP-1 peptide

receptor agonists for the treatment of patients with type 2 diabetes and obesity. As part of the agree-

ment, Boehringer obtained global development and commercialization rights to the lead drug candidate,

survodutide. Boehringer funds all research, development, and commercialization activities under the

agreement.

Zealand Pharma ∞ Annual Report 2023 93Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

2.1 Revenue (continued)

Under the agreement, Zealand is eligible to receive a EUR 30 million milestone payment on initiation

of Phase 3 clinical trials for survodutide. In November 2023, Boehringer initiated the Phase 3 program

with survodutide in patients living with obesity or overweight (SYNCHRONIZE™) that consists of

three global clinical trials, which triggered the milestone payment. 85% of the payment was received

in December 2023 with 15% withholding taxes that will be paid out upon approval of Zealand’s WHT

exemption application. For further information about potential future milestone payments refer to note

6.7 Collaborations and technology licenses.

Novo Nordisk A/S license and development agreement

On September 7, 2022, Zealand announced a global license and development agreement with Novo

Nordisk to commercialize Zegalogue

(dasiglucagon) for injection. Under the agreement Zealand

received DKK 25 million in upfront payments and is eligible for up to DKK 45 million in development

milestones and DKK 220 million in net sales-based milestones as well as compensation on a time and

material basis. The agreement with Novo Nordisk is considered a contract with a customer as defined

in IFRS 15. Thus, Zealand recognizes as revenue from research and development services under the

collaboration agreement the amount of the transaction price that is allocated to the respective perfor-

mance obligation when (or as) the performance obligation is satisfied.

Within this Novo Agreement, Zealand identified five distinct performance obligations:

1. Delivery of license for Zegalogue

(completed in 2022)

2. Delivery of transitional services

3. Delivery of R&D services

4. Submission of EU marketing authorization application (completed in 2023)

5. Delivery of specified development activities

The total transaction price under the agreement was determined to be DKK 55 million which includes the

upfront payment of DKK 25 million and DKK 30 million of the future potential milestone amounts. While

determining the transaction price to be allocated to performance obligations, Management has deemed

milestones of DKK 30 million to be highly probable and unlikely that a significant revenue reversal would

occur. As the remaining milestones are contingent of the occurrence of future events outside the control

of the Company, such milestones will be recognized when their achievement is deemed to be highly

probable and a significant revenue reversal would not occur. Royalties and net sales-based milestones

under this agreement, will be recognized when the related sales occur. As Zealand is compensated on

a time and material basis for delivery of transition services and R&D services as listed above, the total

transaction price of DKK 55 million has been allocated to the three remaining performance obliga-

tions, being the delivery of the license for Zegalogue

, services related to submission of EU marketing

authorization application and delivery of specified development activities. The allocation has been based

on Management’s estimate of relative stand-alone selling prices. For performance obligations in respect to

services related to submission of EU marketing authorization application and delivery of specified develop-

ment activities, the stand-alone selling prices have been based on internal budgets and the same time and

material compensation schedules as agreed between Zealand and Novo Nordisk. The stand-alone selling

price for the delivery of the license for Zegalogue

was estimated using the residual approach. The alloca-

tion of the transaction price to the performance obligations not compensated on a time and material basis

is summarized below:

1. Delivery of license for Zegalogue

: DKK 28 million (completed in 2022)

4. Submission of EU marketing authorization application: DKK 13 million (completed in 2023)

5. Delivery of specified development activities: DKK 14 million (ongoing)

The performance obligations related to the delivery of the license for Zegalogue

were completed at a

point in time (September 2022) and revenue of DKK 28 million was recognized in 2022. The submission

of EU marketing authorization application has been recognized over a period of time (completed in June

2023). The revenue of DKK 13 million has been recognized with DKK 3 million in 2022 and DKK 10 million

in 2023 respectively.

The delivery of specified development activities are recognized over time as the activities progress.

Revenue is measured based on Zealand’s estimate of actual expenses incurred while rendering the

services during the period compared to planned service periods and budgeted expenses. As such,

Zealand applies an input-based method (budget expenses) when determining the timing of satisfaction

of performance obligations as the services related to delivery of specified development activities are

performed by an indeterminate number of acts over the development timeline. Revenue from delivery of

the specified development activities has been recognized with DKK 2 million in 2022 and DKK 6 million in

2023 respectively, resulting in a remaining obligation as of December 31, 2023, of DKK 6 million.

Sanofi-Aventis Deutschland GmbH agreement

In 2023, USD 10 million in milestone payments associated with lixisenatide were received from Sanofi.

Out of the USD 10 million from Sanofi, Zealand will pay USD 1.3 million in royalty expenses to Alkermes

in line with a termination agreement following the dissolution of a former joint venture with Elan

Corporation (now Alkermes), stipulating that Alkermes is entitled to 13% of payments received by Zealand

in respect to lixisenatide under the Sanofi License Agreement. As of December 31, 2023, there are no

other outstanding milestone payments associated with the license agreement with Sanofi. All royalties

related to lixisenatide were sold to Royalty Pharma in 2018.

Zealand Pharma ∞ Annual Report 2023 94Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

2.2 Information about geographic areas 2.3 Royalty expenses

Non-current Non-current Revenueassets Revenueassets(DKK thousand) 2023 2022Denmark 44,185 136,819 34,959 143,740United States 4,094 13,033 69,027 21,748Germany 294,509 - - -Total continuing operations 342,788 149,851 103,986 165,488United States - - 87,612 -Total discontinued operations - - 87,612 -

Zealand is managed and operated as one business unit, which is reflected in the organizational structure

and internal reporting. No separate lines of business or separate business entities have been identified

with respect to any licensed products, marketed products, product candidates or geographical markets

and no segment information is currently prepared for internal reporting.

The development compared to the prior year is a result of the completed restructuring announced in

March 2022 closing all commercial activities in the US to pursue partnerships on Zealand’s late-stage

clinical portfolio, including delisting from the Nasdaq Global Select Market in the U.S.

Accounting policies

Royalty expenses comprise contractual amounts payable to third parties that are derived from milestone

payments. Royalty expenses are recognized in the income statement when the related payments and

milestone events in the corresponding collaboration agreements materialize.

Royalty expense associated with lixisenatide under the Sanofi License Agreement

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 enti-

ties - 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 2023

royalty expenses of DKK 9.1 million relate to the mentioned inventor (2022: DKK 0 million).

2.4 Cost of goods sold

Costs of goods sold in 2023 of DKK 10.0 million (2022: DKK 0 million) relates to inventory utilized in the

production under the supply agreement with Novo Nordisk A/S. The inventory was measured at net

realizable value which equals the agreed selling price with Novo Nordisk A/S. Therefore, an equivalent

revenue from sale of goods of DKK 10.0 million has been recognized, thus resulting in neutral effect

on gross profit. The offsetting DKK 10.0 million in product sales is included in revenue, refer to note 2.1

Revenue.

Zealand Pharma ∞ Annual Report 2023 95Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

2.5 Research and development expenses

Accounting policies

Research and development expenses primarily include salaries, benefits and other employee related

costs of Zealand's research and development staff, license costs, manufacturing costs, preclinical costs,

clinical trials, contractors and outside service fees, amortization and impairment of licenses and rights

related to intangible assets, and depreciation of property and equipment, to the extent that such costs

are related to the Group's research and development activities.

Management’s judgements and estimates

Treatment of research and development expenses

Research and development expenses are recognized in the income statement as incurred and in the

period in which they relate, except for development expenses for which the capitalization criteria are

met.

Please see note 3.1 Intangible assets for a more detailed description on the treatment of Zealand's

development expenses related to internal development projects.

Accrual of costs for clinical contracts

Management estimates expenses to be recognized from Contract Research Organizations (CROs) based

on an estimate on allocation of total contract costs between start-up, patient treatment and wrap-up

phases for clinical trials including an estimate of treatment cost per patient and value of expected

change orders.

Total contract costs are allocated to each phase using the below split for all Zealand’s CRO contracts

based on previous experiences:

• Service fee: Start-up (20%), Patient treatment (75%), Wrap-up (5%)

• Pass through: Start-up (5%), Patient treatment (90%), Wrap-up (5%)

CRO contracts are recognized over the contract period based on an estimate of the contract’s cost

driving element which could be either i) patients or ii) time. If the primary goal of the study is to get a

certain number of patients through the study, then patients is used as the cost driving element. Time is

used if the study runs through a certain timeline regardless of how many patients that are enrolled.

At the end of each reporting period, Management estimates any expected change orders, which are

recognized up front with an amount corresponding to the completion rate of the contract (patients or

time). The remaining change order amount will be recognized over the remaining contract period.

DKK thousand 2023 2022Staff costs (note 2.8) -256,310 -233,474Amortization, depreciation, impairment losses on intangible assets, property plant and equipment, and right of use assets -18,717 -23,851Other external research and development expenses -409,875 -361,632Total research and development expenses -684,902 -618,957- Hereof related to discontinued operations - 4,913Total research and development expenses from continuing operations -684,902 -614,044

Since the capital raise completed in April 2023, Zealand has intensified its research and development

activities which have been continuously increasing throughout 2023. The increase compared to 2022

comes from project expenses across all therapeutic areas along with increased hiring within Zealand’s

R&D area.

Zealand Pharma ∞ Annual Report 2023 96Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

2.6 Selling and marketing expenses

Accounting policies

Selling and marketing expenses relate to Zealand’s commercial activities, including costs related to

preparing the market for Zealand’s products and administration of commercial partnerships. This

includes salaries, benefits and other headcount costs related to commercial minded departments as

well as third-party costs.

In addition, depreciation and impairment of property and equipment, to the extent such expenses are

related to commercial functions are also included. Selling and marketing expenses are recognized in the

income statement in the period to which they relate.

DKK thousand 2023 2022Staff costs (note 2.8) -14,455 -75,346Amortization, depreciation, impairment losses on intangibles assets, property, plant and equipment, and right-of-use assets -120 -23Other external sales and marketing expenses -16,052 -88,567Total sales and marketing expenses -30,627 -163,936- Hereof related to discontinued operations - 131,638Total sales and marketing expenses from continuing operations -30,627 -32,298

In 2023, total sales and marketing expenses have been primarily related to preparing the market for

Zealand’s remaining late-stage rare disease assets and in pursuing strong strategic partners for future

commercialization. In 2022, all commercial activities in the US were discontinued following the

company announcement in March 2022 on restructuring.

2.7 General and administrative expenses

Accounting policies

General and administrative expenses relate to the recurring management and administration of Zealand.

This includes salaries, benefits and other headcount costs related to management and support func-

tions including human resources and the finance departments.

In addition, depreciation and impairment of property and equipment, to the extent such expenses are

related to administrative functions are also included. General and administrative expenses are recog-

nized in the income statement in the period to which they relate.

DKK thousand 2023 2022Staff costs (note 2.8) -105,256 -118,308Amortization, depreciation, impairment losses on intangibles assets, property, plant and equipment, and right-of-use assets -6,249 -5,662Other external general and administrative expenses -73,797 -130,365Total general and administrative expenses -185,302 -254,335- Hereof related to discontinued operations - 17,125Total general and administrative expenses from continuing operations -185,302 -237,210

The decrease in total general and administrative expenses compared to prior year is mainly a result of

the delisting from the US stock exchange in 2022, significantly reducing insurance premiums paid by

Zealand.

Zealand Pharma ∞ Annual Report 2023 97Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

2.8 Staff costs

Accounting policies

Wages and salaries are recognized in the income statement in the period in which services for wages

and salaries is rendered to the Company

DKK thousand 2023 2022Total staff costs can be specified as follows:Wages and salaries -268,078 -369,311Share-based compensation (note 4.9) -61,426 -52,286Pension schemes (defined contribution plans) -21,189 -19,672Government grants 7 5Other payroll and staff-related costs -25,335 -31,676Total staff costs -376,021 -472,940- Hereof related to discontinued operations - 110,426Total staff costs from continuing operations -376,021 -362,514The amount is charged as:Research and development expenses -256,310 -231,022Sales and marketing expenses -14,455 -7,870General and administrative expenses -105,256 -104,524Other operating items - restructuring costs - -19,098Discontinued operations - -110,426Total staff costs -376,021 -472,940

Average number of employees 235 247

For additional information refer to note 4.9 Share-based instruments and note 6.1 Remuneration of the

Board of Directors and Executive Management.

For further information on restructuring costs included in other operating items in 2022, refer to note

2.9 Other operating items.

2.9 Other operating items

Accounting policies

Other operating items comprise non-revenue income and expenses related to Zealand’s operations that

are assessed to be non-recurring and significant for the understanding of the financial performance of

Zealand.

Other operating items also includes expenses as result of restructuring activities, including insurance

costs, impairment charges, reversal of inventory write-downs, loss on revaluation of disposal group and

other significant one-time transaction expenses.

DKK thousand 2023 2022Restructuring costs - continuing operations - -19,098Insurance - -37,033Loss on retirement of fixed assets - -1,456Write-down of US Boston lease -11,000 -Reversal of inventory write-down (note 3.5) 15,979 -Total other operating items from continuing operations 4,979 -57,587Restructuring costs - discontinued operations - -56,738Impairment of production equipment (note 3.2) - -9,725Reversal of inventory write-down (note 3.5) - 22,564Loss on disposal group V-GO (note 2.10) - -40,743Total other operating items from discontinued operations - -84,642Presentation in income statement:Other operating income 15,979 -Other operating expenses -11,000 -57,587

Zealand Pharma ∞ Annual Report 2023 98Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

As of December 31, 2023 Management has estimated the net realizable value of raw materials to be DKK

7.9 million as all remaining materials are expected to be utilized in the production and sale under the

supply agreement with Novo Nordisk A/S, and therefore a reversal of Zegalogue

inventory write-down

of DKK 16.0 million has been made, reference is made to note 3.5 Inventories. The partial reversal of the

inventory write-down of DKK 22.6 million in 2022 primarily related to Zegalogue

finished goods which

were transferred to Novo Nordisk A/S as a result of the global license and development agreement as

announced in September 2022.

Impairment of right-of-use assets relates to an impairment of the US Boston office of DKK 11.0 million.

The DKK 11.0 million comprise DKK 3.5 from impairment of furniture, fixtures & equipment (FF&E), DKK

1.3 million from impairment of right-of-use assets ("ROU"), and DKK 6.2 million from onerous contract

(not recovered operating expenses and real estate taxes). The change in estimate of the recoverable

amount reflects Management’s assessment of future cash flows and market conditions from subleasing

the US Boston lease, where the initial feedback from the real estate agent has indicated a lower rent

level than anticipated previously thereby triggering impairment, refer to note 3.3 Right-of-use assets and

lease liabilities.

Insurance in 2022 comprised a one-off cost to cover any claims against directors and officers that

would arise following the delisting from the US stock exchange. Restructuring costs from discontinued

operations in 2022 comprised severance costs (DKK 13.8 million), reversal of costs related to forfeited

share-based incentive programs (DKK 2.7 million) and an allowance for loss on Zegalogue

inventories

(DKK 45.6 million), while restructuring costs from continuing operations in 2022 comprised severance

costs (DKK 30.3 million) and reversal of costs related to forfeited share-based incentive programs

(DKK 11.2 million). All restructuring costs were incurred as a result of the March 30, 2022, company

announcement.

Impairment of production equipment in 2022 is related to equipment acquired to be able to upscale the

production of Zegalogue

. Loss on disposal group V-GO covers the accounting loss incurred in 2022 as

a result of the divestment of the V-GO activities. Please refer to note 2.10 Discontinued operations for

further information.

2.9 Other operating items (continued) 2.10 Discontinued operations

Accounting policies

A discontinued operation is a component of the entity that has been disposed of or is classified as held

for sale and that represents a separate major line of business or geographical area of operations, is part

of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary

acquired exclusively with a view to resale. The results of discontinued operations are presented sepa-

rately in the statement of profit or loss. Comparatives in the statement of profit and loss for previous

periods are restated to reflect the result of discontinued operations.

Management's judgements and estimates

On March 30, 2022, the group announced its intention to exit the US sales activities including the V-GO

activity. The activities were successfully divested through an asset purchase agreement with MannKind

Corporation dated May 29, 2022. On September 7, 2022, the group announced the transfer of the

commercial rights for Zegalogue

to Novo Nordisk A/S effectually ending all efforts to commercialize

the Group's products via its own sales force in 2022.

Management has exercised judgement in determining that the activities around commercialization of

V-GO products via Zealand's own sales force and the transfer of commercial rights for Zegalogue

met

the criteria for classification as a discontinued operations and in the segregation of results from discon-

tinued operation from results from continued operations for all periods presented. Accordingly, the

activities, including the effect of the divestment of the V-GO disposal group, has been presented sepa-

rately as a discontinued operation in the income statement.

Zealand Pharma ∞ Annual Report 2023 99Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

The results and the cash flow of the discontinued activities are presented below as discontinued opera-

tions for the period ended December 31, 2023, and December 31, 2022:

DKK thousand 2023 2022Revenue - 87,613Cost of goods sold - -70,688Gross profit - 16,925Research and development expenses - -4,913Sales and marketing expenses - -133,695Administrative expenses - -17,125Other operating items - -84,642Net operating expenses - -240,375Result before tax - -223,450Corporate tax - -13,075Net result for the year from discontinued operations - -236,525DKK thousand 2023 2022Cash flows from discontinued operationsNet cash outflow from operating activities - -155,238Net cash inflow from investing activities - 106,380Net cash outflow from financing activities - -1,064Net cash decrease generated from the discontinued operation - -49,922

2.10 Discontinued operations (continued)

All assets and liabilities included in the V-GO disposal group were derecognized as of May 29, 2022, with

the closure of the asset purchase agreement with MannKind Corporation. As a result, no assets or liabil-

ities were classified as held for sale in relation to the discontinued operation as of December 31, 2022.

The derecognized assets and liabilities, recognized consideration and net impact on profit and loss from

the divestment of V-GO are presented below:

DKK thousand May 29, 2022Assets included in disposal groupIntangible assets 52,082Property, plant and equipment 20,586Right-of-use assets 8,128Deposits and prepayments 1,871Inventories 79,872Total assets of disposal group 162,539Liabilities directly associated with assets included in disposal groupLease liabilities 8,837Total liabilities of disposal group 8,837Net assets of disposal group 153,702Consideration:Cash consideration 111,553Purchase price adjustment -5,167Other financial assets 6,573Total consideration 112,959Loss on sale of disposal group - recognized as other operating items from discontinued operations -40,743

As part of the license and development agreement with Novo Nordisk A/S as described in note 2.1 Reve-

nue, finished goods with a value of DKK 21.3 was transferred as part of the contract.

Zealand Pharma ∞ Annual Report 2023 100Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

2.11 Earnings per share

Accounting policies

Basic result per share

Basic result per share is calculated as the net result for the period, divided by the weighted average

number of ordinary shares outstanding, excluding treasury shares held by the Company.

Diluted result per share

Diluted result per share is calculated as the net result for the period, divided by the weighted average

number of ordinary shares outstanding, excluding the treasury shares, and adjusted for the dilutive

effect of share equivalents.

DKK thousand 2023 2022Net result used in the calculation of basic and diluted earnings/ losses per share from continuing operations -703,739 -965,610Net result used in the calculation of basic and diluted earnings/ losses per share from discontinued operations - -236,525Net result used in the calculation of basic and diluted earnings/ losses per share -703,739 -1,202,135Weighted average number of ordinary shares 56,881,075 46,502,969Weighted average number of treasury shares -292,488 -302,817Weighted average number of ordinary shares excluding treasury shares used in the calculation of basic/diluted earnings per share 56,588,587 46,200,152Loss per share from continuing operations -basic/diluted (DKK) -12.44 -20.90Loss per share from discontinued operations -basic/diluted (DKK) - -5.12Total loss per share - basic/diluted (DKK) -12.44 -26.02

In the calculation of the diluted loss per share for 2023, 1,970,432 potential ordinary shares related to

share-based payment instruments have been excluded as they are anti-dilutive (2022: 2,190,503).

On January 8, 2024, Zealand announced an issue of 3,761,470 new ordinary shares, which represent

the remaining authorization, at a subscription price of DKK 386.45 per new share resulting in gross

proceeds of DKK 1.45 billion. The capital increase was completed in January 2024. Please refer to note

6.8 Subsequent events for further information.

Zealand Pharma ∞ Annual Report 2023 101Contents The big picture Our business Sustainability Corporate governance Financial statements

3 Operating assets and liabilities

3.1 Intangible assets

Accounting policies

Internal development programs

Zealand currently has not recognized internally generated intangible assets from development, as the

criteria for recognition of an asset are not met as described below.

Software

Software comprises capitalized implementation costs on IT projects initially measured at cost. Costs

include configuration and customization of the underlying software, including training and testing.

Capitalization ceases when the asset is in the condition necessary for it to be capable of operating in

the manner intended by Management. The intangible assets are subsequently measured at cost less

accumulated amortization and any impairment losses according to IAS 38. Amortization is calculated on

a straight-line basis over the estimated useful life which is 3-5 years and is included in the income state-

ment under general and administrative expenses.

Acquired licenses and rights

Acquired licenses, rights, and patents are initially measured at cost and include the net present value

of any future payments. The net present value of any future payments is recognized as a liability. When

triggered, milestone payments are accounted for as an increase in the cost to acquire licenses, rights,

and patents unless such subsequent expenditures are recognized in the income statement as Research

& Development expenses if they do not satisfy the conditions for recognition as an asset.

Amortization

Licenses, rights, and patents are amortized using the straight-line method over the estimated useful

life which is determined when the asset is available for use. Amortizations, impairment losses and gain

or losses on the disposal of intangible assets are recognized in the income statement as Research &

Development expenses.

Impairment

If circumstances or changes in Zealand's operations indicate that the carrying amount of the intangible

assets may not be recoverable, Management will review the intangibles for impairment. Intangible

assets not ready for use are reviewed for impairment on an annual basis.

3.0

Operating assets

and liabilities

This section covers the operating assets and related

liabilities that form the basis for Zealand’s activities.

Assets related to Zealand’s financing activities are

described in detail in section 4.0 Capital structure,

financial risks and related items.

3.1 Intangible assets 102

3.2 Property, plant and equipment 104

3.3 Right-of-use assets and lease liabilities 106

3.4 Other investments 108

3.5 Inventories 108

3.6 Trade and other receivables 109

3.7 Other financial assets 110

3.8 Trade and other payables 110

Zealand Pharma ∞ Annual Report 2023 102Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

3.1 Intangible assets (continued)

DKK thousand SoftwareCost at January 1, 2023 -Additions 12,508Cost at December 31, 2023 12,508Amortization and impairment at January 1, 2023 -Amortization for the year -253Amortization and impairment at December 31, 2023 -253Carrying amount at December 31, 2023 12,255Amortization and impairment for the financial year has been charged as:General and administrative expenses -253Total -253

In 2023, Zealand has implemented a new budget tool along with a new enterprise resource planning

system (ERP) to further strengthen Management reporting. In 2023, a new quality assurance (QA) system

has also been implemented with going-live date in December 2023. These investments have been made

to provide Zealand with future economic benefits and are capitalized according to the new accounting

policy for software.

Management's judgements and estimates

According to IAS 38, intangible assets arising from development projects should be recognized in the

balance sheet. The criteria that must be met for capitalization are that:

• the development project is clearly defined and identifiable and the attributable costs can be meas-

ured reliably during the development period; and

• the technological feasibility, adequate resources to complete and a market for the product or an

internal use of the product can be documented; and

• Management has the intent to produce and market the product or to use it internally.

Such an intangible asset should be recognized if sufficient certainty can be documented that the future

income from the development project will exceed the aggregate cost of production, development and

sale and administration of the product.

A development project involves a single product candidate undergoing a high number of tests to illus-

trate its safety profile and its effect on humans prior to obtaining the necessary final approval of the

product from the authorities. The future economic benefit associated with the individual development

projects are dependent on obtaining such approval. Considering the significant risk and duration of the

development period related to the development of biological products, Management has concluded

that the future economic benefits associated with the individual projects 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 there-

fore all research and development costs are recognized in the income statement when incurred.

Zealand Pharma ∞ Annual Report 2023 103Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

3.2 Property, plant and equipment

Accounting policies

Property, plant, and equipment is mainly comprised of plant and machinery, other fixtures and fittings,

leasehold improvements, and assets under construction, which are measured at cost less accumulated

depreciation. and any impairment losses.

The cost is comprised of the acquisition price and costs directly related to the acquisition until the asset

is ready for use. Costs include direct costs and costs to subcontractors.

Depreciaion

Depreciation is calculated on a straight-line basis to allocate the cost of the assets, net of any residual

value, over the estimated useful lives, which are as follows:

Leasehold improvements 5-13 years, but never longer than the lease term

Plant and machinery 5-10 years

Other fixtures and fittings 3-5 years

The useful lives and residual values are reviewed and adjusted if appropriate on a yearly basis. Assets

under construction are not depreciated.

Impairment

If circumstances or changes in Zealand's operations indicate that the carrying amount of property,

plant and equipment may not be recoverable, Management reviews that asset for impairment. The basis

for the review is the recoverable amount of the assets, determined as the greater of the fair value less

cost to sell or its value in use. Value in use is calculated as the net present value of future cash inflow or

savings generated from the asset.

If the carrying amount is greater than the recoverable amount, the asset is written down to the

recoverable amount. An impairment loss is recognized in the income statement when the impairment is

identified.

3.1 Intangible assets (continued)

Licenses, rights and Intellectual Physician DKK thousandpatentspropertyrelationshipCost at January 1, 2022 2,530 13,692 65,613Disposals -2,530 - -Transferred to V-GO disposal group (note 2.10) - -13,692 -69,443Currency translation - - 3,830Cost at December 31, 2022 - - -Amortization and impairment at January 1, 2022 - 13,692 14,353Impairment for the year 2,530 - -Amortization for the year - - 2,057Disposals -2,530 - -Transferred to V-GO disposal group (note 2.10) - -13,692 -17,361Currency translation - - 951Amortization and impairment at December 31, 2022 - - -Carrying amount at December 31, 2022 - - -Amortization and impairment for the financial year has been charged as:Research and development expenses -2,530 -Discontinued operations - - -2,057Total -2,530 - -2,057

Assets listed under Intellectual property and Physician relationship were all disposed of as a part of the

V-GO disposal group. Please refer to note 2.10 Discontinued operations for further information.

Licenses, rights, and patents as of January 1, 2022, comprised the license to the lead product candidate

acquired with Encycle Therapeutics in October 2019. During 2022 the development program with the

lead candidate was abandoned and it was decided to move on with another product candidate from the

same patent instead. As a result, the recognized asset was impaired and disposed.

Zealand Pharma ∞ Annual Report 2023 104Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

3.2 Property, plant and equipment (continued)

Other Leasehold Assets Plant and fixtures and improve-under con-DKK thousandmachineryfittingsmentsstructionCost at January 1, 2023 66,828 15,997 38,193 870Transfers - 870 - -870Additions 9,043 1,386 812 -Disposals -15,066 -427 - -Currency translation - -60 -98 -Cost at December 31, 2023 60,805 17,766 38,907 -Accumulated depreciation and impairment at January 1, 2023 52,339 11,233 7,788 -Depreciation for the year 5,330 2,372 3,296 -Impairment for the year - 1,173 2,270 -Disposals -14,919 -427 - -Currency translation - -12 -12 -Accumulated depreciation and impairment at December 31, 2023 42,750 14,339 13,342 -Carrying amount at December 31, 2023 18,055 3,427 25,565 -Depreciation and impairment for the financial year has been charged as:Research and development expenses -5,320 -1,775 -2,523 -Sales and marketing expenses - -68 -51 -General and administrative expenses -10 -1,702 -2,992 -Total -5,330 -3,545 -5,566 -

Impairment in 2023 on other fixtures and fittings of DKK 1.2 million and DKK 2.3 million on leasehold im-

provements relate to the US Boston office and is included in other operating expenses, refer to note 2.9 Other

operating items. For further information on the impairment assessment refer to Management’s judgements

and estimates in note 3.3 Right-of-use assets and lease liabilities.

Disposals on plant and machinery mainly relate to scrap of old lab equipment in May 2023.

Other Leasehold Assets Plant and fixtures and improve-under con-DKK thousandmachineryfittingsmentsstructionCost at January 1, 2022 90,797 15,835 36,600 12,112Transfers 268 1,644 2,915 -4,827Additions 2,985 73 293 6,089Disposals -1,433 -905 - -10,092Transferred to V-GO disposal group (Note 2.10) -25,790 -763 -1,801 -2,563Currency translation 1 113 186 151Cost at December 31, 2022 66,828 15,997 38,193 870Accumulated depreciation and impairment at January 1, 2022 54,216 9,240 5,434 -Depreciation for the year 7,903 3,145 3,187 -Impairment for the year 742 71 - 10,092Disposals -1,433 -905 - -10,092Transferred to V-GO disposal group (Note 2.10) -9,090 -357 -884 -Currency translation 1 39 51 -Accumulated depreciation and impairment at December 31, 2022 52,339 11,233 7,788 -Carrying amount at December 31, 2022 14,489 4,764 30,405 870Depreciation and impairment for the financial year has been charged as:Research and development expenses -6,214 -2,315 -2,417General and administrative expenses - -779 -770 -Other operating items -742 -71 - -362Discontinued operations -1,689 -28 - -9,730Total -8,645 -3,216 -3,187 -10,092

Impairment of assets under construction relates to production equipment for Zegalogue

which is not

expected to be used by the Company. The amount is recognized as other operating items from discontinued

operations.

Zealand Pharma ∞ Annual Report 2023 105Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

3.3 Right-of-use assets and lease liabilities

Accounting policies

Zealand determines if an arrangement is a lease at inception. Zealand leases comprise various proper-

ties and cars. Rental contracts are typically made for fixed periods. Lease terms are negotiated on an

individual basis and contain wide range of different terms and conditions.

All leases are recognized in the balance sheet as a right-of-use ("ROU") asset with a corresponding lease

liability, except for short term assets in which the lease term is 12 months or less, or low value assets.

ROU assets represent Zealand's right to use an underlying asset for the lease term and lease liabilities

represent Zealand's obligation to make lease payments arising from the lease.

Liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the

net present value of fixed payments, less any lease incentives. As Zealand's leases do not provide an

implicit interest rate, Zealand uses an incremental borrowing rate based on the information available at

the commencement date of the lease in determining the present value of lease payments. Lease terms

utilized by Zealand may include options to extend or terminate the lease when it is reasonably certain

that Zealand will exercise that option. In determining the lease term, Management considers all facts

and circumstances that create an economic incentive to exercise an extension option, or not exercise

a termination option. Extension options (or periods after termination options) are only included in the

lease term if the lease is reasonably certain to be extended (or not terminated). Interest expenses related

to the lease liability are classified in financial items.

ROU assets are measured at cost and include 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. ROU assets are depreciated over the shorter of the asset's

useful life and the lease term on a straight-line basis over the lease term.

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-

line basis as an expense in the income statement. Short-term leases are leases with a lease term of 12

months or less and low-value assets comprise IT equipment and small items of office furniture.

Impairment

If circumstances or changes in Zealand's operations indicate that the carrying amount of right-of-use

assets ("ROU") may not be recoverable, Management reviews that ROU for impairment. The basis for

the review is the recoverable amount of the ROU, determined as the greater of the fair value less cost to

sell or its value in use. Value in use is calculated as the net present value of future cash inflow or savings

generated from the ROU. If the carrying amount is greater than the recoverable amount, the ROU is

written down to the recoverable amount. An impairment loss is recognized in the income statement

when the impairment is identified.

Management's judgements and estimates

Management has estimated the recoverable amount of the right-of-use asset related to the US Boston

office as of December 31, 2023. The impairment in 2023 of DKK 11.0 million reflects an assessment of

the ROU's carrying amount against its recoverable amount, considering factors such as future cash

flows and market conditions for office rentals in Boston, Massachusetts. Zealand has entered into an

irrevocable lease agreement until 2029 thereby knowing the expected cash flows many years ahead and

Management is currently investigating possibilities on subleasing the US office to a third party. The initial

feedback from the real estate agent has indicated a lower rent level than previously anticipated thereby

triggering impairment.

The recoverable amount has been calculated by applying a discount rate of 4.5% on future cash flows

being the annual effective discount rate from the lease contract. Future cash flows are projected with

2% annual escalations and current projections include an estimate of the recoverable rent payments

until the end of the lease term on August 31, 2029, partly offset by non-recovered operating expenses

and real estate taxes.

The estimated recoverable amount is subject to sensitivity if the projected level for base rent per square

feet changes; however, Management has chosen a conservative approach in the calculations, and

therefore the risk for a significant change in the recoverable amount is deemed immaterial.

The DKK 1.3 million from impairment of right-of-use assets ("ROU") is included in other operating

expenses, refer to note 2.9 Other operating items.

The total provision for onerous contract of DKK 6.2 million has been recognized as an addition to lease

liabilities as of December 31, 2023, out of which DKK 1.4 million is short-term and DKK 4.8 million is

long-term.

No impairment losses have previously been recognized for the right-of-use asset in Zealand Pharma

U.S., Inc.

Zealand Pharma ∞ Annual Report 2023 106Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

3.3 Right-of-use assets and lease liabilities (continued)

Set out below are the carrying amounts of lease liabilities and the movements during the period:

DKK thousand 2023 2022As at January 1 122,729 139,523Additions 5,680 992Accretion of interest 2,890 3,286Payments -12,711 -13,719Transferred to V-GO disposal group (note 2.10) - -8,836Currency translation 643 1,483As at December 31 119,231 122,729Current 16,655 14,729Non-current 102,575 108,000The following amounts are recognized in the income statement:Depreciation expense of right-of-use assets -13,610 -14,488Interest expense on lease liabilities -2,892 -3,286Total amount recognized in profit and loss -16,502 -17,774Cash flow -17,664 -13,719Total cash outflow from leases -17,664 -13,719Depreciation for the financial year has been charged as:Research and development expenses -8,951 -10,375General and administrative expenses -4,659 -4,113Total amount recognized in profit and loss -13,610 -14,488

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 thousandBuildingsfittingsAs at January 1, 2023 113,379 1,581Additions 1,860 1,344Depreciation expense -12,557 -1,025Impairment -1,266 -Currency translation -532 21As at December 31, 2023 100,884 1,921As at January 1, 2022 133,371 1,623Additions - 736Depreciation expense -13,710 -778Transferred to V-GO disposal group (note 2.10) -8,128 -Currency translation 1,846 -As at December 31, 2022 113,379 1,581

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

a lease expiration date of August 31, 2029 with the opportunity to sublease. Equipment and vehicles are

leased over a period of 3-4 years with no extension option.

Zealand Pharma ∞ Annual Report 2023 107Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

Accounting policies

Other investments are measured at fair value on initial recognition and subsequently. Changes in fair

value are recognized in the income statement under financial items.

Investment in Beta Bionics Inc.

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 0.6%

(2022 :1.5%) ownership of Beta Bionics, Inc., and is measured at a fair value of DKK 14.0 million as of

December 31, 2023 (2022: DKK 30.9 million).

In determining fair value, Zealand considers the value per share from the most recent closed financing

round, adjusted for valuation infliction points through the balance sheet date, including (i) discount

for lack of marketability, (ii) information obtained from third party valuation reports, and (iii) company

announcements.

The following have been recognized as financial items:

DKK thousand 2023 2022Other investments at January 1 30,943 26,907Fair value adjustments -16,939 4,036Other investments at December 31 14,004 30,943

The fair value adjustment of the investment in 2023 of DKK 16.9 million is a combination of a reduc-

tion of the implied value per share provided by a third-party valuation expert. Also in August 2023,

Beta Bionics announced the closing of $100 million series D funding. Zealand did not participate in this

financing round thus having a dilutive effect on Zealand’s ownership compared to 2022. Reference is

made to note 4.3 Financial assets and liabilities for fair value disclosures.

3.4 Other investments

Accounting policies

Raw materials, work in progress and finished goods are measured at the lower of cost and net realiz-

able 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 busi-

ness 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 immedi-

ately 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 devel-

opment 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.

Zealand reviews inventory for excess or obsolescence and writes down inventory that has no alternative

uses to its net realizable value. Economic conditions, customer demand and changes in purchasing and

distribution can affect the carrying amount of inventory. 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 fore-

casts and the estimated fair value of inventory.

Management's judgements and estimates

As of December 31, 2023, Zegalogue

related raw materials at cost amounted to DKK 7.9 million.

Management has estimated the net realizable value to be DKK 7.9 million, and therefore a reversal of

Zegalogue

inventory write-down of DKK 16.0 million has been made as the raw materials are expected

to be utilized under the license and development agreement with Novo Nordisk A/S.

With the March 30, 2022, restructuring announcement an allowance for loss on Zegalogue

raw mate-

rials and finished goods of DKK 45.6 million was recognized in 2022 due to uncertainties around the

future sales channels for the product. The allowance was included as discontinued operations under

other operating expenses as a restructuring cost. As all Zegalogue

finished goods were transferred to

3.5 Inventories

Zealand Pharma ∞ Annual Report 2023 108Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

Novo Nordisk A/S as a result of the global license and development agreement announced in Q3, 2022,

a partial reversal of the inventory allowance of DKK 22.6 million was recognized under other operating

income from discontinued operations in 2022.

In 2023, an additional reversal of prior years’ inventory allowance of DKK 16.0 million was recognized

under other operating income.

As of December 31, 2022, Zegalogue

related raw materials and semi-finished goods at cost amounted

to DKK 33.6 million. Due to uncertainties whether the materials would be utilized in the production

under the supply agreement with Novo Nordisk A/S, Management estimated the net realizable value to

be DKK 1.3 million at the end of 2022.

DKK thousand 2023 2022Raw materials 7,935 1,286Total 7,935 1,286

Write downs on inventory were comprised as follows:

DKK thousand 2023 2022Accumulated write-downs, January 1 -32,257 -25,653Write-downs in the reporting period - -45,547Utilization of write-downs 3,635 16,867Reversal of write-downs 15,979 22,623Exchange differences - -547Accumulated write-downs, December 31 -12,643 -32,257

The write-downs and the reversal of write-downs on inventory recognized in 2023 and 2022 are

included in other operating items. Please refer to note 2.9 Other operating items.

3.5 Inventories (continued) 3.6 Trade and other receivables

Accounting policies

Receivables are designated as financial assets measured at amortized cost and are initially measured

at fair value less transaction costs and subsequently measured in the balance sheet at amortized cost,

which generally corresponds to nominal value less expected credit loss provision.

Zealand utilizes a simplified approach to measuring expected credit losses and uses a lifetime

expected loss allowance for all receivables. To measure the expected credit losses, receivables have

been grouped based on credit risk characteristics and the days past due. Expected credit losses as of

December 31, 2023, and December 31, 2022, are immaterial.

Deposits relate to up-front payments on rental of office buildings measured at nominal value. Other

receivables include accrued interest on marketable securities and VAT receivables measured at nominal

value. Prepaid expenses include expenditures related to a future financial period. Prepaid expenses are

measured at historical cost.

DKK thousand 2023 2022Deposits 8,908 9,409Trade receivables 1,004 1,361Receivables related to license and collaboration agreements 68,793 56,431Other receivables 24,556 3,438Prepaid expenses 34,892 63,088Total trade and other receivables 138,153 133,727Non-current 15,794 18,105Current 122,359 115,622

Non-current other receivables comprise deposits on office buildings and accrued insurance costs.

Current other receivables mainly comprise accrued interest from marketable securities and VAT

receivables.

Receivables related to license and collaboration agreements include withholding tax receivable from

the Boehringer Ingelheim (BI) milestone payment of DKK 35.7 million.

Zealand Pharma ∞ Annual Report 2023 109Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

3.7 Other financial assets

Accounting policies

Please refer to accounting policies in note 4.3 Financial assets and liabilities.

DKK thousand 2023 2022Other financial assets at January 1 6,901 -Additions during the year - 6,573Fair value adjustments 474 319Currency adjustments - 9Other financial assets at December 31 7,375 6,901

Other financial assets comprise the sales-related milestones from the divestment of V-GO. A maximum

of four milestones of USD 2.5 million each can be achieved under the contract based on annual sales.

The fair value has been determined using the risk-adjusted net present value method using a discount

rate of 4% (2022: 10%) and an estimated probability of 50% to reach the first sales-related milestone

(2022: 50% and 25% respectively to reach the first two sales-related milestones).

Reference is made to note 4.3 Financial assets and liabilities for fair value disclosures.

3.8 Trade and other payables

Accounting policies

Please refer to accounting policies in note 4.3 Financial assets and liabilities.

DKK thousand 2023 2022Trade payables 91,607 53,156Payable for treasury shares (note 4.8) 81,045 41,600Employee benefits 51,730 58,348Other payables 10,077 10,452Discount and rebate liabilities - 2,201Accruals development projects 33,465 34,063Total trade and other payables 267,924 199,820Non-current - 19,058Current 267,924 180,762

Non-current trade and other payables as of December 31, 2022, of DKK 19.1 million related to frozen

holiday funds under the Danish Holiday Act (Ferieloven) effective as of September 1, 2020. In August

2023, the amount has been paid in full to Lønmodtagernes Feriemidler through a voluntary payment.

Zealand Pharma ∞ Annual Report 2023 110Contents The big picture Our business Sustainability Corporate governance Financial statements

4 Capital structure, financial risk and related items

4.1 Capital management

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 adequacy of our available funds will depend on various factors, including progress in our research and

development 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

partnerships and acquisitions. Accordingly, we plan to potentially raise additional funds through equity or

debt financings, collaborative agreements with partners, or from other sources.

At the annual general meeting on March 31, 2023, Zealand was authorized to increase the share capital by

nominally DKK 10,340,419 during the period until March 29, 2028. On December 31, 2023, nominally DKK

3,761,471 of the authorization remains.

At the Zealand Annual Meeting held on April 6, 2022, the shareholders authorized the Company to issue

convertible debt instruments with access to conversion to shares in the Company of up to a total of

nominally DKK 10,850,136 without pre-emption rights for existing shareholders in accordance with the

Company’s Articles of Association. This authorization covers the period until 15 April 2026, but has not been

utilized as of December 31, 2023.

On March 12 and 13, 2023 the Company provided statements on the closure of Silicon Valley Bank (SVB). At

that time Zealand had DKK 162.6 million in cash deposits which were fully recovered.

On March 30, 2023, Zealand announced an issue of 6,578,948 new ordinary shares at a subscription price of

DKK 228 per new share resulting in gross proceeds of DKK 1.5 billion. The capital increase was completed in

April 2023.

On June 30, 2023, Zealand entered a new DKK 350 million Revolving Credit Facility provided by Danske

Bank. The facility matures in 2 years from June 2023 where any outstanding amount must be repaid in full

and carries an interest of CIBOR + fixed margin. As of December 31, 2023, Zealand has not made any draw

downs on this credit facility.

In the light of the SVB closure in March 2023, mentioned above and settlement of the Oberland Capital

loans in May 2023, Zealand has adopted a new treasury policy in order to achieve an even higher diver-

sification in the management of funds. In 2023, Zealand has invested a significant amount in marketable

4.0

Capital structure,

financial risk and

related items

This section includes disclosures related to how

Zealand manages its capital structure, cash

position and related risks and items.

4.1 Capital management 111

4.2 Financial risks 112

4.3 Financial assets and liabilities 115

4.4 Cash and cash equivalents 117

4.5 Marketable securities 117

4.6 Borrowings 118

4.7 Financial items 124

4.8 Share capital 125

4.9 Share-based instruments 126

Zealand Pharma ∞ Annual Report 2023 111Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

4.1 Capital management (continued)

securities, primarily as a result of excess liquidity from the capital raise in April 2023, but also to minimize

credit risk. As of December 31, 2023, Zealand has DKK 1,183.7 million invested in marketable securities,

corresponding to 72% of total cash, cash equivalents and marketable securities (2022: DKK 108.6 million,

9%). For additional information refer to note 4.5 Marketable securities.

In December 2023, Zealand signed a new loan agreement with the European Investment Bank (EIB)

providing a credit of up to EUR 90 million, refer to note 4.6 Borrowings for an overview of the loan terms.

Tranche A of EUR 50 million is expected to be disbursed in the beginning of 2024.

The Company and the Board of Directors monitor 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 procedures in 2023. Neither Zealand Pharma A/S nor any of its subsidiaries are subject to

externally imposed capital requirements other than the conditions related to the new revolving credit facility

in Danske Bank and the new loan from the European Investment Bank (EIB), refer to note 4.6 Borrowings.

Under the revolving credit facility (RCF) in Danske Bank, Zealand is required to have a minimum collateral

value of 120% of the loan commitment (DKK 420 million) held in the designated custody accounts under

management by Danske Asset Management and Zealand’s designated cash accounts attached to the

custody accounts. Zealand must also comply with a covenant on fulfilling certain information requirements.

The EIB loan contains a negative pledge clause preventing Zealand Pharma A/S or any of its subsidiaries

from creating or permitting to subsist any new security over any of its assets. The pledges are described

further in note 4.4 Cash and cash equivalents and a description of Zealand’s total commitments can be

found in note 6.4 Commitments.

On January 8, 2024, Zealand announced an issue of 3,761,470 new ordinary shares, which represent the

remaining authorization, at a subscription price of DKK 386.45 per new share resulting in gross proceeds of

DKK 1.45 billion. The capital increase was completed in January 2024. Please refer to note 6.8 Subsequent

events for further information.

4.2 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 treasury 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.

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.

Research and development, and regulatory milestone payments in license and collaboration agree-

ments are denominated in foreign currencies, namely USD and EUR. However, as milestone payments

are unpredictable in terms of timing and materialization, the payments are not included in the basic

exchange rate risk evaluation.

As Zealand conducts clinical trials and toxicology studies around the world and has activities in US,

Zealand is 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 translation risk associated with the USD passively, by having a portion of the Group's

cash and cash equivalents in a USD account to cover future payment of Zealand’s expenses denomi-

nated in USD.

As of December 31, 2023, Zealand holds DKK 313.9 million (2022: DKK 460.4 million) of its cash, cash

equivalents and marketable securities in USD.

Interest rate risk

Zealand has a policy of avoiding financial instruments that expose the Group to any unintended finan-

cial risks. During 2023, all cash has been held in current bank accounts in DKK, USD, and EUR.

Following the closure of Silicon Valley Bank in March 2023, Zealand has made a shift towards more

investments of surplus cash balances into low-risk marketable securities being fixed income instruments

with an investment graded rating of AAA to BBB-.

Zealand Pharma ∞ Annual Report 2023 112Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

The excess liquidity from the capital increase completed in April 2023, has been placed into a new DKK

portfolio and EUR portfolio held at Danske Bank. The Group’s marketable securities portfolio comprises

various types of bonds and securities as described in note 4.5 Marketable securities. All bonds held as of

December 31, 2023 mature within 13 months. The bonds are reinvested on the maturity date to mini-

mize lost interest.

As of December 31, 2023, Zealand has borrowings amounting to DKK 0 million (2022: DKK 336.8

million), embedded derivatives amounting to DKK 0 million (2022: DKK 80.6) and lease liabilities

amounting to DKK 119.2 million (2022: DKK 122.7 million). Lease liabilities as of December 31, 2023,

includes a provision for onerous contract of DKK 6.1 million as part of the impairment of the right-

of-use asset related to the US Boston office as described in detail in note 3.3 Right-of-use assets and

lease liabilities. The change in borrowings and embedded derivatives is a result of the settlement of

the Oberland Capital loan as described in note 4.6 Borrowings. An increase in interest rates would be

reflected in an increase in interest income from the group's cash balances.

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

counterparties to the trade receivables are large global pharmaceutical companies. Cash and bonds are

associated with an inherent credit risk, though not considered to be very high, as the counterparties are

banks with investment-grade ratings (i.e. BBB- or higher from Standard & Poor’s).

On the date of Silicon Valley Bank’s closure on March 10, 2023, Zealand had DKK 162.6 million in cash

deposits which were fully recovered. Following the SVB closure a new treasury policy was adopted as

described in note 4.1 Capital management.

Liquidity risk

The purpose of Zealand’s cash management is to ensure that the Group always has sufficient and flex-

ible financial resources at its disposal.

Zealand’s short-term liquidity is managed and monitored by means of the Company’s annual

budget process and 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.

4.2 Financial risks (continued)

In 2023, Zealand has lifted the covenants on cash and cash equivalents from the Oberland Capital loan

following the settlement in May 2023. Zealand’s total liquidity reserve has increased significantly in 2023,

with the DKK 1.5 billion capital raise in March (surplus funds invested in marketable securities), the new

Danske Bank credit facility, and in December 2023, the loan with the European Investment Bank.

DKK thousand 2023 2022Cash and cash equivalents 449,311 720,626Cash and cash equivalents (subject to certain conditions) - 348,608Marketable securities 1,183,746 108,611Danske Bank revolving credit facility (RCF) 350,000 -EIB loan (Tranche A) 372,645 -Total liquidity reserve as of December 31 2,355,702 1,177,845

Zealand Pharma entered in December 2023 into a loan agreement with the EIB, whereby the Tranche A

of this loan for DKK 373 million is expected to be received in Q1, 2024. The conditions for disbursement

of the first tranche (Tranche A) have been met late 2023, i.e. Boehringer Ingelheim’s initialization of the

Phase 3 program with survodutide in patients living with obesity or overweight (SYNCHRONIZE™).

In January 2024, Zealand completed a capital increase thereby receiving another DKK 1.45 billion in

gross proceeds as described in note 6.8 Subsequent events.

Reference is made to going concern considerations in note 1.1 Basis of preparation, going concern

assumption, nature of the business and accounting policies for further description of the going concern

assessment.

Zealand Pharma ∞ Annual Report 2023 113Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

4.2 Financial risks (continued)

Sensitivity analysis

The table shows the impact on profit/loss and equity of changes in valuation of the Company’s oper-

ations in USD, i.e. cash, cash equivalents, marketable securities and lease liabilities as of December 31,

2023, and December 31, 2022, assuming a 10% fluctuation increase in the USD conversion rate.

2023 2022DKK thousand Fluctuation Effect Fluctuation EffectUSD +/-10% +/-29,187 +/-10% +/-21,209

Contractual maturity (liquidity risk)

Details on the Group’s aggregate liquidity risk on financial assets and liabilities is provided 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.

Except for 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.

Carrying DKK thousand < 12 months 1-5 Years > 5 Years TotalamountLease liabilities 15,377 61,094 47,763 124,234 119,231Trade and other payables 267,924 - - 267,924 267,923Total financial liabilities as of December 31, 2023 283,301 61,094 47,763 392,158 387,154Borrowings including embedded derivatives 260,970 191,515 37,996 490,481 401,346Lease liabilities 14,995 59,553 62,237 136,785 122,729Trade and other payables 180,762 - 19,058 199,820 199,820Total financial liabilities as of December 31, 2022 456,727 251,068 119,291 827,086 723,895

All cash flows are non-discounted, including interest. Contractual obligations related to payments under

agreements for development projects, including CROs, are disclosed in note 6.4 Commitments, as their

maturity dates are uncertain.

Cash flows denominated in USD are translated into DKK at the USD/DKK rates applicable as of

December 31, 2023.

On May 10, 2023, Zealand settled the Oberland Capital loan, including embedded derivatives as

described in note 4.6 Borrowings. Long-term trade and other payables in 2022 of DKK 19.1 million

related to frozen holiday funds paid in full in August, 2023, refer to note 3.8 Trade and other payables.

Zealand Pharma ∞ Annual Report 2023 114Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

The fair value of an asset or a liability is measured using the assumptions that market participants would

use when pricing the asset or liability, assuming that market participants act in their economic best

interest. Zealand uses valuation techniques that are appropriate in the circumstances and for which

sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and

minimizing the use of unobservable inputs. For financial instruments that are measured in the balance

sheet at fair value, IFRS 13 for financial instruments requires disclosure of fair value measurements by

level of the following fair value measurement hierarchy for:

• Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities

• Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or

liability, either directly (that is, as prices) or indirectly (that is, derived from prices)

• Level 3 - Inputs for the asset or liability that are not based on observable market data (that is, unob-

servable inputs).

For assets and liabilities that are recognized in the financial statements on a recurring basis, Zealand

determines whether transfers have occurred between levels in the hierarchy by re-assessing categoriza-

tion (based on the lowest level input that is significant to the fair value measurement as a whole) at the

end of each reporting period. Any transfers between the different levels are carried out at the end of the

reporting period.

4.3 Financial assets and liabilities

Accounting policies

Classification of Categories of Financial Assets and Liabilities:

Zealand classifies its financial assets held into the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income, or

through profit or loss), and

• those to be measured at amortized cost.

The classification depends on the business model for managing the financial assets and the contractual

terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other

comprehensive income.

Zealand reclassifies debt investments only when its business model for managing those assets changes.

Further details about the accounting policy for each of the categories are outlined in the respective

notes.

Fair Value Measurement

Zealand measures financial instruments, such as marketable securities, at fair value at each balance

sheet date. Management assessed that the fair value of financial assets and liabilities measured at amor-

tized cost such as bank deposits, receivables and other payables approximate their carrying amounts

largely due to the short-term maturities of these instruments.

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. The fair value measurement is based

on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability, or

• In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by Zealand.

Zealand Pharma ∞ Annual Report 2023 115Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

DKK thousand Note 2023 2022Categories of financial instrumentsTrade and other receivables excluding prepaid expenses 103,261 70,640Financial assets at amortized costs 103,261 70,640Marketable securities (Level 1) 4.5 1,183,746 -Marketable securities (Level 2) 4.5 - 108,611Other investments (Level 3) 3.4 14,004 30,943Other financial assets (Level 3) 3.7 7,375 6,901Financial assets measured at fair value through profit and loss 1,205,125 146,455Borrowings - 320,743Lease liabilities 167,986 122,729Trade and other payables 267,923 199,820Financial liabilities measured at amortized cost 435,909 643,292Embedded derivatives, lender's call option (Level 3) 4.6 - 80,603Financial liabilities measured at fair value through profit and loss - 80,603

4.3 Financial assets and liabilities (continued)

Financial Financial assets liabilities DKK thousand(Level 3)(Level 3)Carrying amount at January 1, 2023 37,844 80,603Fair value adjustments through profit and loss -16,465 -1,161Exchange rate effect through other comprehensive income - -1,916Derecognition of call option on settlement of Oberland Capital loan - -77,526Carrying amount at December 31, 2023 21,379 -Financial Financial assets liabilities DKK thousand(Level 3)(Level 3)Carrying amount at January 1, 2022 325,949 -Fair value adjustments through profit and loss 4,355 62,613Exchange rate effect through other comprehensive income 9 -27Equity investment in bond portfolio -299,042 -V-GO milestones 6,573 -Bifurcation of embedded derivatives - 18,017Carrying amount at December 31, 2022 37,844 80,603

No transfer between fair value levels have occurred during 2023 and 2022.

Zealand Pharma ∞ Annual Report 2023 116Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

4.4 Cash and cash equivalents

Accounting policies

Cash is measured on intitial recognition at cost.

DKK thousand 2023 2022Cash and cash equivalents 449,311 720,626Cash and cash equivalents (subject to certain conditions) - 348,608Total borrowings including embedded derivatives 449,311 1,069,234

Restricted cash and cash equivalents

Under the second amendment to the Oberland loan agreement signed on September 20, 2022, the

outstanding principal of USD 50 million was on December 31, 2022, held in a designated deposit

account subject to certain conditions. The cash and securities could be released in increments of

minimum USD 10.0 million upon request from the group subject to certain conditions as described

in note 4.6 Borrowings. On May 10, 2023, Zealand settled the Oberland Capital loans in a one-time

payment. With the final repayment of the Oberland loan agreement on May 10, 2023, all previous

restrictions have been released.

Pledges provided in relation to revolving credit facility in Danske Bank

As security for the undrawn revolving credit facility of DKK 350 million, as disclosed in note 4.6

Borrowings, the Group has provided pledge over Zealand’s designated custody accounts under

management by Danske Asset Management and pledge over Zealand’s designated cash accounts

attached to the custody accounts. As of December 31, 2023, marketable securities and cash and

cash equivalents held in these pledged accounts amount to DKK 454.5 million and DKK 0.1 million,

respectively.

Accounting policies

Marketable securities consist of investments in securities with a maturity of ninety days or greater at

the time of acquisition. Measurement of marketable securities depends on the business model for

managing the asset and the cash flow characteristics of the asset. There are three measurement cate-

gories which Zealand considers when classifying its marketable securities:

• Amortized cost: Assets that are held for collection of contractual cash flows, where those cash flows

represent solely payments of principal and interest, are measured at amortized cost. Interest income

from these financial assets is included in finance income using the effective interest rate method. Any

gain or loss arising on derecognition is recognized directly in profit or loss and presented in other

gains/(losses), together with foreign exchange rate gains/(losses). Impairment losses are presented as

a separate line item in the statement of profit or loss.

• Fair value through other comprehensive income (FVOCI): Assets that are held with an objective that

results in collecting contractual cash flows and selling financial assets are measured at FVOCI. A gain

or loss on assets that is subsequently measured at FVOCI is recognized in other comprehensive profit

or loss. Impairment losses and foreign exchange rate gains/(losses) are presented as a separate line

item in the statement of profit or loss.

• Fair value through profit and loss (FVTPL): Assets that do not meet the criteria for amortized cost or

fair value through other comprehensive income (FVOCI) are measured at FVTPL. A gain or loss on a

debt investment that is subsequently measured at FVTPL is recognized in profit or loss and presented

net within financial income or expenses in the period in which it arises.

4.5 Marketable securities

Zealand Pharma ∞ Annual Report 2023 117Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

Zealand's portfolio is managed and evaluated on a fair value basis in accordance with its stated invest-

ment guidelines and the information provided internally to Management. This business model does not

meet the criteria for amortized cost or FVOCI and as a result marketable securities are measured at fair

value through profit and loss. This classification is consistent with prior year's classification.

Transactions are recognized at trade date.

DKK thousand 2023 2022DKK portfolio:DK bonds 509,948 -Total DKK portfolio 509,948 -EUR portfolio:IG Corporate bonds (investment-grade) 454,467 -Total EUR portfolio 454,467 -USD portfolio:Asset-backed securities 2,738 24,392Certificates of deposit 125,178 -Commercial paper 69,823 -Corporate bonds - 84,219U.S. Treasury Debt 2,664 -U.S. Treasury Repurchase Agreement 18,928 -Total USD portfolio 219,331 108,611Total portfolio 1,183,746 108,611

In October 2023, the USD portfolio previously held at Silicon Valley Bank has been transferred to JP

Morgan. The DKK and EUR portfolios are held at Danske Bank.

All marketable securities have a fixed interest rate but different maturities. As of December 31, 2023, all

outstanding securities were expected to mature within 13 months (2022: within 3 months).

4.5 Marketable securities (continued) 4.6 Borrowings

Accounting policies

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 derivative.

Transaction costs attributable to the debt host contract are deducted from the initial fair value and amortized

over the term of the loan as part of the effective interest rate on the loan. Transaction costs attributable to

non-closely related embedded derivatives are expensed on initial recognition. Subsequently, borrowings are

measured at amortized cost. On initial recognition, borrowings are evaluated for the existence of non-closely

related embedded derivatives, 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 such as

prepayment options at amounts which are not substantially equal to the loan’s amortized cost. The cash

flows attributable to such non-closely related embedded derivatives are separated and accounted for as

derivative financial instruments.

Loan commitments are not recognized. Lender fees and transaction costs attributable to unconditional loan

commitments are treated as prepaid transaction costs if the Group expects to draw down on the facility. If

the Group has no specific plans for draw down on the loan commitment, the transaction costs are amortized

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.

Amendment of the terms of a loan is accounted for as an extinguishment of the original loan and recognition

of a new liability reflecting the amended terms if the amended terms are substantially different from the orig-

inal terms. Both quantitative and qualitive factors are considered. If the present value of the amended cash

flows discounted at the original effective interest rate differs by 10% or more, the amendment is treated as

an extinguishment. If the presented value of the amended cash flows differs by less than 10%, Management

evaluates qualitative factors such as:

• Change in collateral and restrictions of the use of proceeds

• Significant change in the term of the loan

• Change in loan currency and interest base

All fees incurred in connection with a modification of the terms accounted for as an extinguishment are

recognized as an expense.

Derecognition of financial liabilities: A financial liability is derecognized when the obligation under the liability

is settled, discharged, cancelled, or expires. The difference between the carrying amount of a financial

liability extinguished and the consideration paid is recognized through profit and loss.

Zealand Pharma ∞ Annual Report 2023 118Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

DKK thousand 2023 2022Borrowings at amortized cost - 320,743Embedded derivatives at fair value - 80,603Total borrowings including embedded derivatives - 401,346

On December 31, 2021, Zealand entered into a USD 100 million loan agreement with Oberland. The

following describes subsequent amendments to the loan agreement and the final settlement in May

2023.

Following a change in the strategy announced on March 30, 2022, the conditions for release of the

included liquidity covenant being trailing 6 months cumulative revenue of at least USD 50 million was

considered unlikely to be met. Therefore, Zealand was as of this point in time effectively restricted

from obtaining access to the funds, and Zealand's prepayment option, whose fair value was assessed

to be immaterial upon issue of the loan, was considered to have a significant positive value as Zealand

effectively would not gain access to the cash. The positive fair value was determined as the present

value of future cash flows under the contract, compared with the cost of prepaying the loan. The basis

for measuring fair value was determined to be an entity (market participant) which was expected not

to meet the liquidity covenant, and which needed the funds. Fair value as of December 31, 2021, was

determined to amount to DKK 142.1 million based on the following assumptions:

Assumption Value assigned to assumptionUS LIBOR rate (annual forward rates) + 6% + “catch up” Cash flow loanpayment to arrive at an IRR of 9.75%Deposit income US LIBOR rate (annual forward rates)Discount rate 11%

Fair value was determined mainly based on unobservable data (level 3). Please refer to the movement

table presented on the following pages.

Following the first amendment 50% of Zealand's prepayment option was utilized (DKK 71.0 million was

recognized under loss on settlement of borrowings). As a part of the amendment, all revenue-related

liquidity covenants were lifted, and Zealand gained access to the cash. The premium on repayment of

4.6 Borrowings (continued)

the loan within the first four years of the agreement was also increased. As a result, it was Management's

assessment that the value of Zealand's prepayment option as of December 31, 2022, is immaterial.

During 2022 the loan agreement with Oberland Capital was amended twice.

Oberland amendment no. I

On May 10, 2022, Zealand entered into an agreement to amend certain terms of the Oberland loan. The

amendments were as follows:

• Prepayment of 50% of the USD 100 million principal which included a prepayment premium of 20%

amounts to USD 60 million

• Removal of the liquidity covenant meaning that Zealand has no limitations in respect of utilizing the

cash held by the Group

• Lender option renegotiated to include additional assets

• Increase in premium which Zealand is required to pay in case of repayment within the first four years

of the agreement (refer to repayment amount section below)

• Potential for a further $75 million incremental capital following specific events

Management considers the amendments to comprise terms which are substantially different from the

term applicable prior to the amendment. Consequently, the modification has been accounted for as

an extinguishment of the loan subject to the original terms and recognition of a new liability. Under

the amended terms, Management estimates that fair value of the Zealand prepayment option for the

remaining outstanding amount is insignificant, as release from the liquidity covenant as a market partic-

ipant would not benefit from prepaying the loan due to the fact that the funds are available for use for

a market participant. For the prepaid notional amount of USD 50 million, DKK 131.4 million was recog-

nized as loss on settlement of borrowings under financial expenses. The amount comprises utilization

of the prepayment option (DKK 71.0 million) and premium on settlement of debts (DKK 60.4 million).

The cash outflow from debts of DKK 436.1 million comprises the premium on settlement of debts (DKK

56.7 million), repayment of USD 51.7 million (DKK 365.4 million) and a prepayment of USD 2.0 million

(DKK 14.0 million), which will be offset against future repayments.

Fair value of the amended loan (USD 50 million) was measured at DKK 367.1 million of which the fair

value of the lender call option accounted for DKK 18.0 million. A loss of DKK 14.6 was recognized as a

consequence of the derecognition. As discussed below under the section “Fair value measurement”, the

lender call option is assessed to have a significant fair value as of the modification date and has been

separated from the debt host contract.

Zealand Pharma ∞ Annual Report 2023 119Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

4.6 Borrowings (continued)

Oberland amendment no. II

On September 20, 2022, the Company entered into the Second Amendment to the Note Purchase

Agreement to address certain non-financial events of default by Zealand, which Oberland Capital

waived pursuant to the amendment. The Second Amendment introduced two conditions for the release

of the USD 50 million held in a Zealand Pharma A/S account that is controlled by Oberland Capital, one

of which was satisfied. Upon satisfaction of the second condition, which relates to the fulfillment of

certain post-closing obligations, Zealand may transfer funds from such account in increments of USD

10 million for purposes of operating Zealand’s business in the ordinary course upon prior notice to

Oberland Capital. There are currently no other outstanding events of default under the Note Purchase

Agreement.

Fair value of the amended loan (USD 50 million) was assessed to be DKK 398.8 million of which the fair

value of the lender call option accounted for DKK 45.0 million. A gain of DKK 23.5 was recognized as

a consequence of the derecognition. Please refer to the section “Fair value measurement” for further

information about the measurement of the option.

Loan terms following amendment 2Loan amount, tranche 1: USD 50 millionMaturity date: December 30, 2028Repayment profile: Repayment at maturity:Base Interest: 3 months US Libor with a floor of 0.25%Credit spread: 6% p.a., fixed over the term of the contractRevenue participation payments: Draw down on tranche 1: 1.33% of consolidated revenue per financial year, not exceeding 75 MUSD.Lender call option to require repayment Change of control event of the debt: Sale of assets or licenses – proceeds from sale to be used to repay the loan, however, no more than up to 75% of the net proceeds.Zealand option to prepay the debt: Throughout the term of the loan

Repayment amount:

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 lender equal

to 12.0% on the aggregate purchase price paid for such Notes,

calculated from the First Purchase Date to the fifth anniversary

of the First Purchase Date.

In any case less any interests and revenue participation amounts

already paid.

From January 1, 2027 until maturity: 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 lender

equal to 11.0% on the aggregate purchase price paid for such

Notes, calculated from the First Purchase Date to the date of

repayment.

In any case less any interests and revenue participation amounts

already paid.

At maturity: At the principal amount or if investor IRR is lower than 9.75% p.a.

including interest payments, revenue participation payments

and lender-required repayments, an additional amount

Zealand Pharma ∞ Annual Report 2023 120Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

4.6 Borrowings (continued)

Settlement of Oberland Capital loan

On April 20, 2023, Oberland Capital exercised an option in the loan agreement to provide an additional

loan of USD 12.5 million on similar terms as the existing loan, bringing the total principal amount to USD

62.5 million. The additional loan of USD 12.5 million was not provided in cash.

On May 10, 2023, Zealand settled the Oberland Capital loans, including embedded derivatives, in a

one-time payment of USD 77.3 million (DKK 525.7 million). With this final repayment, the Group’s loan

agreement with Oberland Capital was fully settled. As a result of the settlement Zealand in 2023 recog-

nized a net loss of USD 19.9 million (DKK 135.6 million) under financial items, including derecognition

of Oberland Capital’s call option with a carrying value as of May 10, 2023, of USD 11.4 million (DKK 77.5

million).

For an overview of the events under the loan agreement from December 31, 2022, and until repayment

on May 10, 2023, please refer to the movement table presented below.

With the final repayment, Oberland has released all rights to collateral provided for under the loan

agreement.

Management's judgements and estimates

Fair value measurement of lender's call option

Fair value of the lender call option is determined as the difference between the present value of the

probability weighted contractual cash flow upon the occurrence of a call option trigger event and the

present value of the contractual cash flows without a call option trigger event occurring, discounted at

the expected internal rate of return of 14.3%. It is assumed that any call option trigger event will result in

full repayment of the loan. As of December 31, 2022, the likelihood of a lender call option trigger event

within the next two years was assessed as realistic and fair value of the option was assessed to DKK 80.6

million. At the time of settlement on May 10, 2023, the fair value of the option amounted to DKK 77.5

million. The fair value change, DKK 1.2 million (2022: DKK -62.6 million), is included in financial items,

while the effect of changes to the exchange rate, DKK 1.9 million (2022: DKK 0.0 million), is included in

other comprehensive income. Valuation is based on unobservable data (level 3).

Zealand Pharma ∞ Annual Report 2023 121Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

4.6 Borrowings (continued)

Changes arising from Oberland loan agreement - including changes for level 3 embedded derivativesNon-cash Non-cash changes over changes other com-recognized in prehensive Cash profit and lossincomechangesCarrying Repayment Carrying value as of Loss on debt Bifurcation Gain on debt of debt, value as at December Loss on recognition - of embedded recognition - Fair value Interests Currency Including Currency December 31, 2022settlementamendment Iderivativesamendment IIadjustments Amortizationaccruedadjustmentspremiumadjustments31, 2023Borrowings as amortized costs 320,743 211,938 - - - - 943 - -7,960 -525,664 - -Embedded derivatives at fair value - Lender call option 80,603 -77,526 - - - -1,161 - - -1,916 - - -Other receivables -8,184 1,176 - - - - - 15,688 263 - -8,943 -Total impact from Oberland loan agreement 393,162 135,588 - - - -1,161 943 15,688 -9,613 -525,664 -8,943 -

Non-cash Non-cash changes over changes other com-recognized in prehensive Cash profit and lossincomechangesCarrying Repayment Carrying value as of Loss on debt Bifurcation Gain on debt of debt, value as at December Loss on recognition - of embedded recognition - Fair value Interests Currency Including Currency December 31, 2021settlementamendment Iderivativesamendment IIadjustments Amortizationaccruedadjustmentspremiumadjustments31, 2022Borrowings as amortized costs 647,906 60,387 22,381 -18,017 -18,581 - 1,337 - 47,829 -422,085 - 320,743Embedded derivatives at fair value - Zealand prepayment option - 71,050 - - - -71,050 - - - - - -Embedded derivatives at fair value - Lender call option - - - 18,017 - 62,613 - - -27 - - 80,603Other receivables - - -7,764 - -4,890 - - 54,052 -2,928 -14,003 -32,651 -8,184Total impact from Oberland loan agreement 647,906 131,437 14,617 - -23,471 -8,437 1,337 54,052 44,460 -436,088 -32,651 393,162

Zealand Pharma ∞ Annual Report 2023 122Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

4.6 Borrowings (continued)

Refinancing with new credit facility

The repayment of the Oberland Capital loan has been refinanced through a new DKK 350 million

Revolving Credit Facility provided by Danske Bank and milestones from existing partners. The facility

matures in 2 years from June 2023 where any outstanding amount must be repaid in full and carries an

interest of CIBOR + fixed margin. The main terms of the facility are listed below.

In 2023, there have been no significant transaction costs related to the facility, thus no transaction costs

have been capitalized from entering the agreement. As of December 31, 2023, total amount of undrawn

borrowing facilities amounts to DKK 350 million.

Credit facility terms:Amount: DKK 350 millionMaturity date: June, 2025Repayment: Each loan under the Revolving Credit Facility must be repaid on the last day of its Interest Period. All outstanding amounts under the Revolving Credit Facility must be repaid in full on the Final Maturity Date.Maximum number of loans and minimum The loan can be called with a minimum of DKK amount of each loan:25,000,000, or if greater, in integral multiples of DKK 5,000,000. A maximum of 5 loans can be outstanding at any given time.Upfront fee: 0.4% of the Amount.Interest on withdrawals: CIBOR + fixed margin.Commitment fee 45% of fixed margin.

For a description of the pledges provided in relation to the credit facility refer to note 4.4 Cash and cash

equivalents.

New loan facility from the European Investment Bank (EIB)

In December 2023, Zealand has entered into a new EUR 90 million finance agreement with the

European Investment Bank (EIB). The loan, which has been offered at competitive terms, is structured

with part of the interest paid at recurring intervals during the term and part being deferred (non-

compounding) for payment at maturity of each tranche. In addition, the EIB will enter into a warrant

agreement with Zealand that will entitle the EIB to receive warrants in Zealand when each tranche is

drawn down. The warrants will, subject to the warrant terms, entitle the warrant holder to subscribe for

ordinary shares in Zealand at market price.

The conditions for disbursement of the first tranche (Tranche A) have been met and the EUR 50 million

is expected to be available to Zealand in the beginning of 2024. In 2023, DKK 0.7 million was capitalized

through transaction costs related to the loan facility from entering the agreement, which will be amor-

tized over the loan term.

Loan terms:Amount: The loan facility may be utilized in up to three tranches of EUR 50 million (Tranche A), EUR 20 million (Tranche B) and EUR 20 million (Tranche C), respectively, with disbursement of each tranche subject to pre-specified milestones being met. A floating rate and a deferred interest rate shall be paid on each tranche.Maturity date: 6 years from the disbursement date of the relevant tranche.Repayment: Each tranche under the EIB loan must be repaid on the maturity date.Prepayment fee: 1-5% of principal amount if prepaid before maturity.Floating rate: EURIBOR + fixed margin (cash pay margin).Deferred interest rate: Low single digit for all tranches.Commitment fee: Low single digit on the daily undrawn and uncancelled balance of the relevant tranche. The commitment fee becomes effective from the date falling 6 months from the date of the agreement (Tranche A) or from the date falling 6 months from conditions being fulfilled (Tranches B and C). Warrants: With the disbursement of each tranche, warrants are granted to EIB in accordance with the warrant agreement. The warrants granted will vest as the loan(s) are repaid. If not utilized, any warrants will expire twenty years from the signing date of the contract. Once the warrants have vested, EIB has a put option enabling them to sell the warrants back to Zealand at fair market value at any time.

Zealand Pharma ∞ Annual Report 2023 123Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

4.7 Financial items

Accounting policies

Financial items include interests, as well as foreign exchange rate adjustments, fair value adjustments of

other investments, embedded derivatives and marketable securities, banking fees from managing finan-

cial transactions, gains and losses from sale of marketable securities and dividends from marketable

securities.

DKK thousand 2023 2022Interest income 45,324 6,542Interest expenses from financial liabilities measured at amortized costs -21,998 -53,169Interest expenses from lease liabilities -2,890 -3,286Fair value adjustments of embedded derivatives – Zealand prepayment option - -62,613Loss on settlement of borrowings, including embedded derivatives under Oberland loan -135,588 -131,437Loss on debt recognition – amendment I - -14,617Gain on debt recognition – amendment II - 23,471Gain from sale of marketable securities 1,519 -Fair value adjustment of lender's call option 1,161 71,050Fair value adjustment of marketable securities 6,111 -1,699Fair value adjustment of other investments -16,465 4,036Amortization of loan costs -943 -1,337Exchange rate adjustments (primarily on USD deposits) -9,708 25,602Other financial expenses -3,150 2,569Financial items in total -136,627 -134,888Presentation in income statement:Financial income 54,115 133,270Financial expenses -190,742 -268,158

Interest income comprises interest on marketable securities, including interest from the new marketable

securities in Danske Bank from June 2023, which is the main reason for the increase in interest income

compared to 2022.

Interest expenses and banking fees have decreased significantly compared to 2022 following the settle-

ment of the Oberland Capital loans in May 2023 as described in note 4.6 Borrowings. Going forward

interest expenses mainly comprise interest on the newly established credit facility in Danske Bank, the

finance agreement with the European Investment Bank (EIB), and banking fees.

Fair value adjustments of Zealand's prepayment option in 2022, are related to the prepayment option

included in the loan agreement with Oberland. Please refer to note 4.6 Borrowings for further information.

In 2023, loss on settlement of borrowings relates to the settlement of the Oberland loan on May 10, 2023.

In 2022, loss on settlement of borrowings relates to the utilization of the prepayment option from the loan

agreement with Oberland comprised of the partial utilization of the prepayment option, the premium paid

and the capitalized loan costs, which were fully expensed. Reference is made to note 4.6 Borrowings for

further information.

Gain on debt modifications in 2022 comprises the accounting impact of the two amendments to the

Oberland agreement as described in note 4.6 Borrowings.

Fair value adjustment of lender call option in 2022 relates to the value adjustments of Oberland's option

to call for repayment of the loan under certain conditions. For further information please refer to note 4.6

Borrowings.

Fair value adjustment on other investments comprises the accounting impact of the investment in Beta

Bionics as described in note 3.4 Other investments.

Zealand Pharma ∞ Annual Report 2023 124Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

4.8 Share capital

Accounting policies

The share capital comprises the nominal amount of Zealand Pharma A/S’s ordinary shares, each at a

nominal value of DKK 1. All shares are fully paid.

The share premium reserve is comprised of the amount received, attributable to shareholders’ equity, in

excess of the nominal amount of the shares issued at the parent company’s capital increases or exercise

of warrants, reduced by any external expenses directly attributable to the offerings. The total nominal

amount from purchase of treasury shares is recognized in retained losses, including any amount excess

of the nominal amount.

Share option schemes

The Group has share option schemes for warrants, performance share units (PSUs) and restricted share

units (RSUs) under which options to subscribe for the Group’s shares have been granted to employees,

Management and Board of Directors. Refer to note 4.9 Share-based instruments for further details.

PSUs and RSUs exercised in each respective year have been settled using the treasury shares of the

Group. Any excess of the cash received from exercise of warrants over the nominal amount of the

shares issued is recorded in share premium.

DKK thousand 2023 2022Share capital at January 1 51,702 43,634Shares issued for cash 6,579 7,867Exercise of warrants 470 201Share capital at December 31 58,751 51,702

The share capital solely consists of one class of ordinary shares all issued at 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 March 31, 2023, Zealand was author-

ized to increase the share capital by nominally DKK 10,340,419 during the period until March 29, 2028.

On December 31, 2023, nominally DKK 3,761,471 of the authorization remains. The Company has an

unused authorization to issue convertible debt instruments with access to conversion to shares in the

Company of up to a total of nominally DKK 10,850,136. This authorization covers the period until April

15, 2026.

On March 30, 2023, Zealand announced an issue of 6,578,948 new ordinary shares at a subscription

price of DKK 228 per new share resulting in gross proceeds of DKK 1.5 billion. The capital increase was

completed in April 2023.

During 2023, a total of 470,106 new shares (2022: 200,588) have been issued due to exercise of warrant

programs with net proceeds of DKK 63.9 million (2022: DKK 23.8 million) corresponding to an average

exercise price of DKK 136.0 (2022: DKK 118.8).

As announced on January 8, 2024, the Board of Directors exercised the remaining authorization granted

by Zealand's annual general meeting held on March 29, 2023, to increase the Group's share capital by

issue of 3,761,470 new ordinary shares at a subscription price of DKK 386.45 per new share. The aggre-

gate gross proceeds from the private placement in public equity will amount to DKK 1.45 billion and

Zealand intends to use the net proceeds to further strengthen Zealand’s investment in its differentiated

assets targeting obesity. The new shares were issued on January 12, 2024, and Zealand received the net

proceeds of DKK 1.43 billion on January 16, 2024. The costs related to the capital increase were DKK

22.9 million.

For additional information on the potential dilutive effects refer to note 2.11 Earnings per share.

Treasury shares

As of December 31, 2023, there were 373,134 treasury shares, equivalent to 0.6% of the share capital

(2022: 230,063, 0.4%). The treasury shares are allocated to performance share units (PSUs) and restricted

share units (RSUs).

As of December 31, 2023, DKK 81.0 million included in trade and other payables, comprise Zealand's

commitment to a bank credit relating to the acquisition of 300,000 new treasury shares in 2023.

The payable amount for treasury shares as of December 31, 2022, of DKK 41.6 million as disclosed in

note 3.8 Trade and other payables has been settled and paid in full during 2023, and is reflected in the

cash flow statement for 2023. The DKK 41.6 million was recognized under equity in 2021 when Zealand

committed to the purchase of 200,000 new treasury shares.

Zealand Pharma ∞ Annual Report 2023 125Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

4.9 Share-based instruments

To motivate and retain key employees, Management and Board of Directors and to encourage the

achievement of common goals for employees, Management and shareholders, the Group has estab-

lished equity-settled incentive plans based on Restricted share units (RSUs), Performance share units

(PSUs) and warrants.

Warrants, PSUs and RSUs are granted by the Board of Directors in accordance with authorizations given

to it by Zealand Pharma A/S’s shareholders. Grants to members of the Board of Directors and members

of the Executive Management are subject to the Remuneration Policy adopted at the Annual General

Meeting.

Share-based compensation expense

The total expense recognized for the year under staff costs arising from share-based instruments was as

follows:

DKK thousand 2023 2022Recognized as staff costs:Share-based compensation expenses 61,426 52,286Total 61,426 52,286Total share-based compensation expenses split on type of awardDKK thousand 2023 2022PSUs 18,209 11,510RSUs 22,481 16,789Warrants 20,736 23,987Total 61,426 52,286

Total share-based compensation expenses split on expense type

DKK thousand 2023 2022The amount is presented as:Research and development expenses 29,758 33,837Selling and marketing expenses 1,732 649General and administrative expenses 29,936 31,696Other operating items - -11,241Discontinued operations - -2,655Total 61,426 52,286

In 2022, restructuring costs from discontinued operations included a reversal of costs related to forfeited

share-based incentive programs of DKK 2.7 million. Restructuring costs from continuing operations also

included a reversal of costs related to forfeited share-based incentive programs as part of restructuring

costs following the March 20, 2022, company announcement. This is included in other operating items

with DKK 11.2 million. For further information see note 2.9 Other operating items.

Accounting policies

Share-based compensation expenses

The value of services received as consideration for share-based compensation is measured at the fair

value of the granted instrument. 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 instruments vest. The offsetting entry is recognized under equity. At each reporting date, an

estimate is made of the number of instruments expected to vest, so the total expense recognized over

the vesting period is equal to fair value of the actual number of instruments which vest. The fair value of

warrants granted is estimated using the Black–Scholes pricing model, whereas for RSUs and PSUs the

closing share price on the day of the grant is used.

In respect of performance obligations, market conditions, such as when the exercisability of an instrument

depends on the achievement of a specified target that is based on the market price or value of the entity’s

equity instruments, relative to an index, are taken into account when estimating the fair value of the award

at the grant date, while non-market vesting conditions, such as forfeiture rates, are taken into account by

adjusting the number of equity instruments included in the measurement of the transaction amount so as

to reflect the number of awards that are expected to vest.

Zealand Pharma ∞ Annual Report 2023 126Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

Management's judgements and estimates

Estimate of fair value of share-based compensation programs

In accordance with IFRS 2, the fair value of the warrants at grant date is recognized as an expense in the

income statement over the vesting period.

The fair value of each warrant granted during the year is calculated using the Black-Scholes pricing

model. This pricing model requires the input of subjective assumptions such as:

• The expected share price volatility, which is based upon the historical volatility of Zealand's share price.

• The risk-free interest rate, which is determined based on the interest rate on Danish government

bonds (bullet issues) with a maturity similar to the expected life of the option.

• The expected life of warrants, which is based on vesting terms, expected rate of exercise, and

contractual life terms in the current warrant program.

These assumptions can vary over time and can change the fair value of future warrants granted.

Estimate of forfeiture rate for share-based compensation programs

The estimated number of shares expected to vest is based on a series of factors such as:

• The historic rate of employee turnover adjusted for significant events.

• Remaining time until vesting.

• Expected achievement of performance goals for PSUs.

Determination of fair value of the instruments granted

For warrants granted after April 19, 2018, the exercise price is determined by the closing price of

Zealand’s shares on Nasdaq Copenhagen on the day prior to the grant date.

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 expire automatically after 5 or 10 years for

warrants granted to Corporate Management and employees, respectively.

Warrants may be exercised four times a year during a four-week period starting from the date of the

publication of Zealand’s Annual Report or interim reports. Dividends are not expected.

4.9 Share-based instruments (continued)

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 of 7 years

i.e., 6.5 years (2022: 6.5 years)

The fair value of the warrants granted in 2023 and 2022 was determined using the Black-Scholes model

using the following inputs:

Grant year2023 2022Inputs in determining fair value of warrants:Life of warrant 10 years 5 and 10 yearsWeighted average exercise price/share price (DKK) 219.4 93.6Volatility (%) 43.0 to 50.3 48.6 to 61.2Risk-free interest rate (%) 2.68 to 2.89 0.86 to 2.14Exercise period to-from Apr '26 to May '23 to Oct '33Sep '32

The weighted average fair value of warrants granted in 2023 is DKK 114.7 (2022: DKK 43.4).

Warrant programs

A Warrant grants the beneficiary the option to purchase a new share at a fixed price upon vesting. The

only vesting condition is time (service condition).

Incentive programs with outstanding warrants at the end of 2023 and 2022, respectively, have been

offered under different warrant programs. The number of warrants granted in 2023 consists of 290,894

granted on April 19, 2023, and 4,943 granted on October 31, 2023, totaling 295,837 warrants (2022:

896,990).

The warrants granted in 2023 are valued at DKK 33.9 million (2022: DKK 38.9 million) using the Black-

Scholes model. The warrants vest linearly or gradually over 3 years.

Zealand Pharma ∞ Annual Report 2023 127Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

Movement table of warrants granted:

Weighted average exercise No. of warrants 2023price (DKK)Warrants outstanding at January 1 1,549,430 124.7Granted during the period 295,837 219.4Forfeited during the period -33,884 124.7Exercised during the period -470,106 136.0Expired during the period -6,619 155.8No. of warrants outstanding at December 31 1,334,658 141.6Exercisable at the end of the period 333,302 176.8Exercisable within 1 year 81,277 97.2Exercisable within 1-2 years 631,110 93.1Exercisable within 2-3 years 288,969 219.4Warrants outstanding at the end of the period:Range of exercise prices (DKK) 90.7-300.4Weighted-average remaining contractual life 7.00Number held by Executive Management 203,101

4.9 Share-based instruments (continued)

Weighted average exercise No. of warrants 2022price (DKK)Warrants outstanding at January 1 1,477,194 159.6Granted during the period 896,990 93.6Forfeited during the period -230,302 175.2Exercised during the period -200,588 118.8Expired during the period -393,864 158.1No. of warrants outstanding at December 31 1,549,430 124.7Exercisable at the end of the period 465,158 122.7Exercisable within 1 year 344,717 194.3Exercisable within 1-2 years 81,277 97.2Exercisable within 2-3 years 658,277 93.0Warrants outstanding at the end of the period:Range of exercise prices (DKK) 90-224.4Weighted-average remaining contractual life 5.8Number held by Executive Management 268,101

The weighted average share price for warrants exercised in 2023 is DKK 252.2 (2022: DKK 189.0).

The Board of Directors has not been granted warrants. Refer to note 6.1 Remuneration of the Board of

Directors and Executive Management for additional information.

Zealand Pharma ∞ Annual Report 2023 128Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

4.9 Share-based instruments (continued)

PSU programs

PSUs grant the beneficiary the right to receive one already existing share upon vesting. Vesting condi-

tions for PSUs consist of both a service condition (time) and a performance condition. The performance

condition can be either market based (cliff vesting) or operational based (graded vesting). The PSUs have

either cliff vesting after 3 years or graded vesting over 3 years.

Operational based PSUs are dependent on pre-determined performance criteria (non-market perfor-

mance conditions) set out to pursue the overall strategic objectives for the Company.

The number of performance share units granted in 2023 consists of 67,576 granted on April 19, 2023

(2022: 286,813). The value per share unit granted is determined based on the Company's closing share

price on Nasdaq Copenhagen A/S on the day of the grant.

The PSUs granted in 2023 are valued at DKK 14.7 million at grant (2022: DKK 28.3 million) based on a

share price of DKK 218.0 (2022: DKK 90.7 to 203.0). The weighted average fair value of PSUs granted

in 2023 is DKK 218.0 (2022: DKK 98.7). Dividends are not expected and thus not incorporated into the

measurement of fair value.

Movement table of PSU granted shares:

No. of PSUsDKK thousand 2023 2022No. of share units:At January 1 357,801 271,761Adjustments due to performance targets - 35,948Granted during the year 67,576 286,813Vested during the year -65,550 -71,780Forfeited during the year - -164,941At December 31 359,827 357,801

The adjustment made in 2022 of 35,948 units was due to reaching a performance target set out in the

2021 operational based PSU grant.

RSU programs

RSUs grants the beneficiary the right to receive one of the Company’s already issued shares upon

vesting. There are no vesting conditions except time (service condition). The RSUs have either cliff

vesting after 3 years or graded vesting over 3 years.

The number of restricted share units granted in 2023 consists of 126,747 granted on April 19, 2023

(2022: 148,431). The value per share unit granted is determined based on the Company's closing share

price on Nasdaq Copenhagen A/S on the day of the grant.

The RSUs granted in 2023 are valued at DKK 27.6 million (2022: DKK 13.6 million) and are granted at a

share price of DKK 218.0 (2022: DKK 90.7 to 100.2). The weighted average fair value of RSUs granted

in 2023 is DKK 218.0 (2022: DKK 91.6). Dividends are not expected and thus not incorporated into the

measurement of fair value.

Movement table of RSU granted shares:

No. of RSUsDKK thousand 2023 2022No. of share units:At January 1 283,272 460,089Granted during the year 126,747 148,431Vested during the year -91,307 -116,563Forfeited during the year -42,765 -208,685At December 31 275,947 283,272

Sale Instruction Scheme

In 2024, Zealand has decided to establish a Sale Instruction Scheme for its Corporate Management.

The Scheme allows the individual member of the management to give a sales instruction for future

sales at a time where the individual is not in possession of inside information. The Scheme is only to be

used by the Zealand management to sell shares to pay their taxes or the cost of exercising the incen-

tive schemes. Zealand has assisted the management in establishing the Scheme, however, it is at the

individual management member's own risk and liability to use the Scheme and Zealand cannot be held

accountable for any liability.

Zealand Pharma ∞ Annual Report 2023 129Contents The big picture Our business Sustainability Corporate governance Financial statements

5 Tax

5.1 Corporate 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, except to the extent that the tax is attributable to items which directly

relate to shareholders' equity or other comprehensive income.

Current tax liabilities and current tax receivables are measure at the amounts expected to be paid to or

recovered from the tax authorities.

Deferred tax is accounted for under the liability method which requires recognition of deferred tax on

all temporary differences between the carrying amount of assets and liabilities and the tax base of such

assets and liabilities. This includes the tax value of tax losses carried forward.

Deferred tax is calculated in accordance with the tax regulations in the local countries and the tax rates

expected to be in force at the time the deferred tax is utilized. Changes in deferred tax from changes in

tax rates is recognized in the income statement.

Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be

available against which the differences can be utilized.

Management's judgements and estimates

Zealand recognizes deferred tax assets, including the tax base of tax losses carried forward, if

Management assesses that these tax assets can be offset against positive taxable income within a

foreseeable future. This judgement is made on an ongoing basis and is based on numerous factors,

including actual results, budgets, and business plans for the coming years.

The creation and development of therapeutic products within the biotechnology and pharmaceutical

industry are subject to considerable risks and uncertainties. Zealand's future taxable income will be

driven by future events that are highly susceptible to factors outside of the groups control including

outcomes of clinical trials, regulatory approvals, and other matters.

Due to the uncertainties described, Management has concluded that no deferred tax assets should

be recognized on December 31, 2023 (none recognized in 2022), except for the US entity, which is

expected to have profitable taxable income due to the Group’s transfer pricing setup.

5.0

Tax

Zealand Pharma's Tax Policy is reviewed

annually and approved by the Board of Directors.

Please refer to our tax policy on our website:

https://www.zealandpharma.com/wp-content/

uploads/2023/08/Zealand-Pharma-Company-

Tax-Policy-2023.pdf.

5.1 Corporate tax 130

Zealand Pharma ∞ Annual Report 2023 130Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

5.1 Corporate tax (continued)

DKK thousand 2023 2022Net result for the year before tax -708,865 -1,195,491Corporate tax rate in Denmark 22.0% 22.0%Expected tax benefit -155,950 -263,008Adjustment for foreign tax rates -2,618 -806Adjustment for non-deductible expenses -6,512 1,052Adjustment for non-taxable income - -468Adjustment for warrants -1,690 5,935Adjustment for R&D extra deduction -21,768 -20,960Adjustment to prior year -28,409 800Change in tax assets (not recognized) 211,821 283,493Total income tax expense/(benefit) -5,126 6,644- hereof related to discontinued operations - -13,075Total income tax expense/(benefit) from continuing operations -5,126 -6,431

Zealand Pharma pays corporate income tax in jurisdictions where the operations are profitable.

Corporate income tax is currently only paid in the United States. We are currently in a loss-making posi-

tion in Denmark with an accumulated tax loss carryforward shown in the table below, which can be

offset in future taxable income.

Zealand Pharma accepts government sponsored tax credits and incentives with strict adherence to the

rules and in line with the economic substance of the Company’s business activities. We only accept

credits and incentives which are commonly available. Under Danish tax law, Zealand Pharma is eligible

to receive a DKK 5.5 million cash refund in 2023 (2022: DKK 5.5 million) on qualifying research and

development expenses, which at the same time equally reduces the tax loss carried forward. Zealand

is also eligible for the super deduction in Denmark on certain research and development expenditures.

Unrecognized deferred tax assets relate to tax jurisdictions in Denmark and US.

DKK thousand 2023 2022Specification of deferred tax assets:Tax losses carried forward (available indefinitely) 3,898,988 3,312,022Research and development expenses 1,031,011 956,816Intangible assets 76,129 107,231Non-current assets 100,444 105,323Liabilities 21,981 77,168Other 412,116 103,278Total temporary differences 5,540,669 4,661,838Calculated potential deferred tax asset at local tax rate 1,219,805 1,026,257Deferred tax asset not expected to be utilized -1,218,880 -1,024,240Recognized deferred tax asset 925 2,017

Adjustment for foreign tax rates

Adjustment relates to difference in the corporate tax rates between Denmark and United States.

Adjustment for non-deductible expenses

Adjustment mainly relates to interest deduction limitation and value adjustment of tax-exempt port-

folio shares in Beta Bionics Inc. In addition, from January 1, 2023, new legislation limiting deduction for

high salaries has come into effect. This is more than offset by non-deductible expenses related to the

Oberland Capital loan in 2023.

Adjustment for warrants

Adjustment relates to timing difference between deduction of warrants in the accounts and the deduc-

tion for tax purposes, along with differences in accounting and tax values.

In accordance with IFRS 2, the fair value of warrants at grant date is recognized as an expense in the

income statement over the vesting period for accounting purposes. For tax purposes, a deduction is

Zealand Pharma ∞ Annual Report 2023 131Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

claimed at the time the warrants, which fulfill certain conditions, are exercised. The deductible amount

is equal to the difference in fair value of the warrants and the exercise price for taxable warrants.

The adjustment relates to Zealand Pharma's warrant incentive schemes and represents the deduct-

ible amount along with an adjustment of the expected future tax deduction on incentive schemes.

Deductions are calculated based on the circumstances for the individual scheme and the recipient.

Zealand Pharma also provides, included in this adjustment, incentive schemes which are non-deduct-

ible for tax purposes.

Adjustment for R&D extra deduction

Adjustment relates to an 8% extra deduction taken on qualifying research and development expenses in

accordance with the government sponsored tax incentive.

Adjustment to prior year

In 2023, the adjustment mainly relates to an interest limitation that was not fully included until the finali-

zation of the tax return for 2022.

Tax assets not recognized

In accordance with the Group’s accounting policies, the value of tax assets originating from Denmark is

not recognized, due to uncertainty regarding when and if they will be realized as a future tax advantage

within a foreseeable future.

Tax assets originating from Zealand Pharma U.S., Inc. have been recognized with an amount of DKK 0.9

million, which is expected to be realized as a future tax advantage within a foreseeable future.

Total tax losses carried forward for the Group amount to DKK 3,899 million.

5.1 Corporate tax (continued)

Zealand Pharma ∞ Annual Report 2023 132Contents The big picture Our business Sustainability Corporate governance Financial statements

6 Other disclosures

6.0

Other

disclosures

6.1 Remuneration of the Board of Directors

and Executive Management 132

6.2 Fees to auditors appointed at the

annual general meeting 134

6.3 Contingent assets and liabilities 134

6.4 Commitments 134

6.5 Related parties 134

6.6 Cash flow adjustments 135

6.7 Collaborations and technology licenses 135

6.1 Remuneration of the Board of Directors and Executive Management

2023 2022Base Share-based Total Base Share-based Total DKK thousandboard feescompensationfeesboard feescompensationfeesRemuneration to the Board of DirectorsMartin Nicklasson 100 966 1,066 100 968 1,068Kirsten Drejer 100 483 583 100 484 584Alain Munoz 100 544 644 100 545 645Michael Owen 100 544 644 100 545 645Bernadette Mary Connaughton 100 483 583 100 484 584Jeffrey Berkowitz 100 483 583 100 484 584Leonard Kruimer 100 664 764 100 666 7661Jens Peter Stenvang100 181 281 100 182 2821Frederik Barfoed Beck100 181 281 100 182 282Louise Gjelstrup¹ 100 181 281 100 182 2821,2Anneline Nansen100 181 281 100 96 196Total 1,100 4,891 5,991 1,100 4,818 5,918

Employee-elected board members; the table only includes remuneration for board work.

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.

Zealand Pharma ∞ Annual Report 2023 133Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

6.1 Remuneration of the Board of Directors and Executive Management (continued)

Other Base Pension short term Share-based Severance DKK thousandsalary Bonuscontributionbenefitscompensationpayments Total2023Remuneration to the Executive Management1Adam Sinding Steensberg5,750 4,744 1,150 243 12,950 - 24,8372Henriette Wennicke2,621 1,441 524 267 4,387 - 9,240Total 8,371 6,185 1,674 510 17,337 - 34,077Total Other Corporate Management⁵ 9,696 5,300 1,016 820 15,467 - 32,299Total 18,067 11,485 2,690 1,330 32,804 - 66,3762022Remuneration to the Executive Management1Adam Sinding Steensberg4,162 2,366 832 725 11,061 - 19,1462Henriette Wennicke420 168 84 41 225 - 9383Emmanuel Dulac2,626 1,575 525 122 -3,265 6,564 8,1474Matthew Donald Dallas2,248 860 46 234 -581 3,194 6,001Total 9,456 4,969 1,487 1,122 7,440 9,758 34,232Total Other Corporate Management⁵ 9,826 4,204 1,009 879 10,986 3,033 29,938Total 19,282 9,173 2,496 2,001 18,426 12,791 64,170

1 Former EVP, R&D and CMO Adam Sinding Steensberg was appointed CEO at March 30, 2022.

2 Henriette Wennicke was appointed as CFO at November 1, 2022.

3 Former CEO Emmanuel Dulac resigned from Zealand at March 30, 2022.

4 Former CFO Matthew Donald Dallas resigned from Zealand at August 31, 2022.

5 Other Corporate Management in 2023 comprised four members (2022: four)

Zealand Pharma ∞ Annual Report 2023 134Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

6.2 Fees to auditors appointed at the annual general meeting

DKK thousand 2023 2022Audit 2,590 7,862Audit-related services and other assurance engagements 940 1,760Other - 389Total fees 3,530 10,011

The fee for audit-related services and other assurance engagements, and other services provided to the

Group by EY Godkendt Revisionspartnerselskab in 2023 and 2022 consisted of an audit of the annual

report, quarterly reviews, other audit-related services on various statements for public authorities, and

other accounting advisory services.

6.3 Contingent assets and liabilities

Contingent assets and liabilities

Zealand is entitled to potential milestone payments and royalties on successful commercialization of

products developed under license and collaboration agreements with partners. Since the size and

timing of such payments are uncertain until the milestones are reached or sales are generated, future

payments under these agreements qualify as contingent assets. However, it is impossible to measure

the value of contingent assets, and as such, no assets have been recognized.

As part of the license and collaboration agreements that Zealand has entered, once a product is devel-

oped and commercialized, Zealand may be required to make milestone and royalty payments. It is not

possible to measure the value of such future payments, but Zealand expects to generate future income

from such products which will exceed any milestone and royalty payments due, and as such, no liabili-

ties have been recognized.

Reference is made to note 6.7 Collaborations and technology licenses for descriptions of Zealand’s

collaboration and license agreements.

6.4 Commitments

Guarantees and collaterals

The Group provided floating charge collateral covering all assets in the Company which could be collat-

eralized, including shares in subsidiaries, as collateral for the debt to Oberland. On May 10, 2023, the

Group settled the Oberland Capital loans in a one-time payment. With the final repayment, Oberland

has released all rights to collateral provided for under the loan agreement.

Under the revolving credit facility (RCF) in Danske Bank, Zealand is required to have a minimum collat-

eral value of 120% of the loan commitment (DKK 420 million) held in the designated custody accounts

under management by Danske Asset Management and Zealand’s designated cash accounts attached

to the custody accounts. Zealand must also comply with a covenant on fulfilling certain information

requirements. The pledges are described further in note 4.4 Cash and cash equivalents.

The EIB loan contains a negative pledge clause preventing Zealand Pharma A/S or any of its subsidiaries

from creating or permitting to subsist any new security over any of its assets.

Other purchase obligations

As of December 31, 2023, total contractual obligations related to agreements for development projects,

including CROs, amounted to DKK 304.4 million of which DKK 219.3 million relates to 2024 and DKK

85.1 million to the years 2025 up to and including 2028 (2022: DKK 220.5 million).

6.5 Related parties

Zealand has no related parties with controlling interest.

Zealand’s other related parties comprise the Company’s Board of Directors and Executive Management.

Aside from the remuneration and other transactions described in note 6.1 Remuneration of the Board

of Directors and Executive Management, there were no other material related party transactions during

2023 and 2022.

Zealand Pharma ∞ Annual Report 2023 135Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

6.6 Cash flow adjustments

DKK thousand 2023 2022Depreciation, amortization and impairment losses 25,086 117,961Deferred revenue - - 67,58 4Reversal of inventory write-down -15,980 -Share-based compensation expenses 61,426 52,286Financial income -54,115 -37,780Financial expenses 190,741 174,927Corporate tax -5,125 9,893Fair value adjustments - -3,590Exchange rate adjustments - 23,219Adjustments for non-cash items in total 202,033 269,332DKK thousand 2023 2022Changes in accounts receivable -6,756 26,636Changes in prepaid expenses 28,534 17,581Changes in other receivables -11,849 6,474Changes in inventory 9,339 18,221Changes in accounts payable 39,837 21,550Changes in other liabilities 14,218 -26,452Changes in rebate and discount liabilities -2,162 -22,515Changes in other liabilities and provisions -19,058 -31,334Changes in working capital in total 52,103 10,161

6.7 Collaborations and technology licenses

Collaboration and license agreements

Zealand enters into collaborations with biotechnology and pharmaceutical companies to advance the

development and commercialization of our product candidates and to supplement our internal pipeline.

Zealand seeks collaborations that will allow Zealand to retain significant future participation in product

sales through either profit-sharing or royalties paid on net sales. Below is an overview of Zealand's

collaboration and license agreements that have had a significant impact or are expected in the near

term to have a significant impact on financial results. With reference to note 6.3 Contingent assets and

liabilities, each agreement is marked with CA (contingent asset) and CL (contingent liability) if applicable.

Complement C3 (collaboration with Alexion, AstraZeneca Rare Disease) (CA)

Zealand and Alexion are collaborating on the discovery and development of novel peptide therapies for

complement-mediated diseases. Under the terms of the agreement entered in March 2019, Alexion and

Zealand entered into an exclusive collaboration for the discovery and development of subcutaneously

delivered peptide therapies directed to up to four complement pathway targets.

The lead program, ZP10068, is an investigational long-acting inhibitor of Complement C3 which has the

potential to treat a broad range of complement mediated diseases. Zealand will lead the joint discovery

and research efforts through the pre-clinical stage, and Alexion will lead development efforts beginning

with Investigational New Drug (IND) filing and Phase 1 trials. Zealand has completed activities to support

advancing ZP10068 into clinical studies. Subsequent regulatory, clinical, and development efforts will

be led and conducted by Alexion.

For the lead target, Zealand is eligible to receive up to USD 115 million in development milestone

payments and up to USD 495 million in sales milestone payments, plus royalties on global sales in the

high single to low double digits. In addition, Alexion has the option to select up to three additional

targets with Zealand being eligible for USD 15 million upfront per target plus potential development/

regulatory milestones for each target selected similar to the lead target with slightly reduced commer-

cial milestones and royalties.

Zealand receives compensation on a time and material basis for certain research and development

services delivered under the contract.

Zealand Pharma ∞ Annual Report 2023 136Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

Beta Bionics (Dasiglucagon for bi-hormonal artificial pancreas systems) (CA)

Dasiglucagon is in clinical development for use in investigational bi-hormonal artificial pancreas (BHAP)

systems containing both insulin and dasiglucagon.

In 2016, Zealand entered into collaboration with Beta Bionics, Inc., a medical technology company

leveraging lifelong, machine-learning, artificial intelligence to develop and commercialize the world’s

first autonomous bionic pancreas. The partnership aims to combine product rights from each party

to advance a new dual-hormonal artificial pancreas system. Such a system has the potential to offer

people with diabetes on insulin therapy more efficacious, safer, and easier blood sugar control for better

long-term disease management and outcomes.

As a part of the collaboration Zealand has made an investment in Beta Bionics. Reference is made to

note 3.4 Other investments for further information.

Boehringer Ingelheim (Obesity/survodutide) (CA)

In June 2011, Zealand entered into a license, research, and development collaboration agreement with

Boehringer Ingelheim International GmbH (BI) to advance novel dual acting glucagon/GLP-1 peptide

receptor agonists for the treatment of patients with type 2 diabetes and obesity. As part of the agree-

ment, Boehringer obtained global development and commercialization rights to the lead drug candidate,

survodutide. Boehringer funds all research, development, and commercialization activities under the

agreement.

As of December 31, 2023, Zealand is eligible to receive license and milestone payments of up to EUR 315.0

million, related to the achievement of pre-specified development, regulatory and commercial milestones

for the lead product. Zealand is also eligible to receive tiered royalties ranging from high single digit to low

double digit percentages on global sales by Boehringer of all products stemming from this collaboration. In

addition, Zealand retains co-promotion rights in Scandinavia.

In November 2023, Boehringer initiated the Phase 3 program with survodutide in patients living with

obesity or overweight (SYNCHRONIZE™) that consists of three global clinical trials, which triggered a EUR

30 million milestone payment (2022: 0).

6.7 Collaborations and technology licenses (continued)

DEKA Research & Development Corp. (CHI/dasiglucacon) (CL)

In November 2021, Zealand announced a collaboration agreement with DEKA to develop a continuous

infusion pump, for which Zealand receives a worldwide, exclusive license, to be used in combination

with dasiglucagon for treatment of CHI.

DEKA is responsible for pump development and pump manufacturing activities. Zealand is responsible

for clinical development around the drug-device combination and commercialization in all territories.

As consideration for a global license to use the infusion pump for treatment of CHI, DEKA is eligible to

receive a low to high single digit royalty rate of the global net sales of the combination product.

Encycle Therapeutics (CL)

In October 2019, Zealand announced the acquisition of Encycle Therapeutics to obtain a pre-clin-

ical asset that complements Zealand’s focus on developing next-generation peptide therapeutics for

gastrointestinal diseases. The asset is being developed as an orally delivered peptide drug to target inte-

grin alpha-4-beta-7, which is involved in the pathogenesis of inflammatory bowel disease (IBD).

As compensation for the acquisition, the former owners of Encycle are eligible for up to USD 80.0

million in development and sales-based milestones as well as a potential mid-single digit royalty on

global net sales.

MannKind Corporation (V-GO) (CA)

In May 2022, Zealand announced an Asset Purchase Agreement with MannKind Corporation to sell the

V-GO Insulin Delivery Device. V-GO is a once-daily, wearable, insulin delivery device that helps provide

blood sugar control for everyday lifestyles. Designed to be patient-friendly, V-GO is worn like a patch

and eliminates the need for taking multiple daily shots.

As of December 31, 2023, Zealand is eligible to receive up to USD 10.0 million in sales-based milestones.

The fair value of milestones is recognized as other financial assets, refer to note 3.7 Other financial

assets.

Zealand Pharma ∞ Annual Report 2023 137Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Consolidated financial statements

6.7 Collaborations and technology licenses (continued)

Novo Nordisk (Zegalogue

/dasiglucagon (CA)

In September 2022, Zealand announced a global license and development agreement with Novo Nordisk

to commercialize Zegalogue

(dasiglucagon) for injection. Zegalogue

is approved by the U.S. Food and

Drug Administration (FDA) for the treatment of severe hypoglycemia in pediatric and adult patients with

diabetes aged 6 and above. Under the agreement Novo Nordisk A/S is responsible for the global commer-

cialization of Zegalogue

while Zealand is responsible for certain planned regulatory, development and

manufacturing activities to support further development and approval outside of the U.S. for which

Zealand is eligible to receive a mix of development milestones, and time and material compensation.

Zealand retained all non-licensed intellectual property rights to the Company’s other dasiglucagon devel-

opment programs.

As of December 31, 2023, Zealand is eligible to receive up to DKK 22.5 million in development milestones

and DKK 220.0 million in sales-based milestones as well as tiered royalties ranging from high single digit to

low double digit percentages on worldwide net sales by Novo Nordisk A/S.

Zealand is also eligible for compensation on a time and material basis for certain product supply, research

and development services delivered under the contract.

Protagonist Therapeutics (Rusfertide) (CA)

In June 2012, Zealand and Protagonist entered into a collaboration to develop disulfide-rich peptides.

Protagonist has since taken over the full responsibility of the development.

As of December 31, 2023, Zealand is eligible to receive up to USD 60.0 million in regulatory and commer-

cial milestones, as well as a low single digit royalty rate on global net sales.

Sanofi/Royalty Pharma (Soliqua/Suliqua/Lyxumia/Adlyxin) (CA)

In September 2018, Zealand announced that all future royalties and all but up to USD 15.0 million of future

milestone payments relating to the Sanofi License Agreement were sold to Royalty Pharma.

In 2023, USD 10 million in milestone payments associated with lixisenatide were received from Sanofi. Out

of the USD 10 million from Sanofi, Zealand will pay USD 1.3 million in royalty expenses to Alkermes in line

with a termination agreement following the dissolution of a former joint venture with Elan Corporation

(now Alkermes), stipulating that Alkermes is entitled to 13% of payments received by Zealand in respect to

lixisenatide under the Sanofi License Agreement. As of December 31, 2023, there are no outstanding mile-

stone payments associated with the license agreement with Sanofi (2022: USD 10 million).

6.8 Subsequent events

Capital increase

As announced on January 8, 2024, the Board of Directors exercised the remaining authorization granted

by Zealand's annual general meeting held on March 29, 2023, to increase the Group's share capital by

issue of 3,761,470 new ordinary shares at a subscription price of DKK 386.45 per new share.

The aggregate gross proceeds from the private placement amount to DKK 1.45 billion and Zealand

intends to use the net proceeds to further strengthen Zealand’s investment in its differentiated assets

targeting obesity.

The new shares were issued on January 12, 2024, and Zealand received the proceeds on January 16,

2024.

Besides the above mentioned, no events have occurred subsequent to the balance sheet date that

could significantly affect the financial statements as of December 31, 2023.

Disbursement of EIB loan (Tranche A)

As announced on December 22, 2023, Zealand entered into a new EUR 90 million (DKK 671 million)

finance agreement with the European Investment Bank (EIB). The conditions for disbursement of the

first tranche (Tranche A) have been met. In February 2024, Zealand Pharma has accepted disbursement

offer for Tranche A and the related EUR 50 million (DKK 373 million) is expected to be received in March

2024.

Zealand Pharma ∞ Annual Report 2023 138Contents The big picture Our business Sustainability Corporate governance Financial statements

Financial statements of the parent company

1 Significant accounting policies, and

significant accounting estimates and assessments 143

2 Revenue 143

3 Royalty expenses 144

4 Research and development expenses 144

5 Sales and marketing expenses 144

6 General and administrative expenses 144

7 Information on staff and remuneration 144

8 Financial items 146

9 Other operating items 146

10 Corporate tax 147

11 Discontinued operations 147

12 Intangible assets 149

13 Property, plant and equipment 150

14 Right-of-use assets and lease liabilities 151

15 Investments in subsidiaries 152

16 Inventories 152

17 Trade and other receivables 153

18 Trade and other payables 153

19 Fees to auditors appointed at

the annual general meeting 153

20 Contingent assets, liabilities and

other contractual obligations 153

21 Transactions with related parties 154

22 Adjustments for non-cash items 154

23 Changes in working capital 154

24 Significant events after the balance sheet date 154

Alternative performance measures for the Group

(non-audited) 155

Statement of loss 140

Statement of financial position 141

Statement of cash flows 142

Statement of changes in equity 142

Notes 143

Contents – parent company

Zealand Pharma ∞ Annual Report 2023 139Contents The big picture Our business Sustainability Corporate governance Financial statements

Financial statements of the parent company

Statement of loss

Financial statements of the parent company

Statement of loss for the years ended

December 31, 2023 and 2022

Statement of comprehensive loss for the years ended

December 31, 2023 and 2022

DKK thousand Note 2023 2022

Revenue 2 278,131 141,741

Royalty expenses 3 -7,447 -37,756

Cost of goods sold -10,036 -

Gross profit 260,648 103,985

Research and development expenses 4 -690,260 -613,993

Sales and marketing expenses 5 -29,886 -32,285

General and administrative expenses 6 -184,058 -236,977

Other operating income 9 15,979 -

Other operating expenses 9 - -88,188

Net operating expenses -888,225 -971,443

Operating result -627,577 -867,458

Dividend from subsidiaries - 38,624

Financial income 8 48,779 36,710

Financial expenses 8 -330,569 -9,268

Result before tax -909,367 -801,392

Corporate tax 10 5,592 5,005

Net result for the year from continuing operations -903,775 -796,387

Net result for the year from discontinued operations 11 - -223,575

Net result for the year -903,775 -1,019,962

DKK thousand Note 2023 2022

Net result for the year -903,775 -1,019,962

Other comprehensive income/(loss) - -

Total comprehensive result for the year -903,775 -1,019,962

Zealand Pharma ∞ Annual Report 2023 140Contents The big picture Our business Sustainability Corporate governance Financial statements

Statement of financial position

Financial statements of the parent company

Statement of financial position as of

December 31, 2023 and 2022

DKK thousand Note Group note 2023 2022

Assets

Intangible assets 12 12,255 -

Property, plant and equipment 13 47,047 46,169

Right-of-use assets 14 89,772 97,571

Other investments 3.4 14,004 30,943

Investments in subsidiaries 15 36,186 62,228

Other receivables 17 15,786 157,039

Other financial assets 3.7 7,375 6,901

Total non-current assets 222,425 400,851

Inventory 16 7,935 1,286

Trade and other receivables 17 178,249 134,760

Corporate tax receivable 10 11,000 5,500

Marketable securities 4.5 1,183,746 -

Cash and cash equivalents (subject to certain

conditions) 4.4 - 348,608

Cash and cash equivalents 4.4 302,157 361,496

Total current assets 1,683,087 851,650

Total assets 1,905,512 1,252,501

DKK thousand Note Group note 2023 2022

Share capital 4.8 58,751 51,702

Share premium 6,406,225 4,921,232

Retained losses -4,928,620 -4,005,383

Total shareholders' equity 1,536,356 967,551

Other payables 18 303 19,058

Lease liabilities 14 83,977 91,096

Total non-current liabilities 84,280 110,154

Lease liabilities 14 12,024 11,522

Trade and other payables 18 272,852 163,274

Total current liabilities 305,820 174,796

Total liabilities 284,876 284,950

Total shareholders' equity and liabilities 1,905,512 1,252,501

Zealand Pharma ∞ Annual Report 2023 141Contents The big picture Our business Sustainability Corporate governance Financial statements

Statement of changes in equityStatement of cash flows

Financial statements of the parent company

Statement of cash flows for the years ended

December 31, 2023 and 2022

Statement of changes in shareholders' equity at

December 31, 2023 and 2022

DKK thousand Note 2023 2022

Net result for the year 22 -903,775 -1,019,962

Adjustment for other non-cash items 23 336,963 13,049

Changes in working capital -103,446 -53,814

Financial income received 33,816 -

Financial expenses paid -8,675 -999

Corporate taxes received 91 7,698

Cash flow used in operating activities -645,026 -1,054,028

Proceeds from sale of marketable securites 665,336 297,559

Purchase of marketable securities -1,843,301 -

Purchase of intangible assets -12,508 -

Purchase of property, plant and equipment -11,241 -8,838

Divestment of activities 11 - 64,475

Cash flow from/(used in) investing activities -1,201,714 353,196

Lease installments 14 -11,649 -11,714

Proceeds from issuance of shares 1,500,000 1,052,757

Purchase of treasury shares -41,600 -

Proceeds from issuance of shares related to exercise of share-

based compensation 63,950 31,904

Costs related to issuance of shares -71,908 -47,354

Cash flow from financing activities 1,438,793 1,025,593

(Decrease)/increase in cash and cash equivalents -407,947 324,761

Cash and cash equivalents at beginning of year 710,104 377,189

Exchange rate adjustments - 8,154

Cash and cash equivalents at end of year 302,157 710,104

DKK thousand

capital

*Share

premium

*Retained

losses Total

Equity at January 1, 2023 51,702 4,921,232 -4,005,383 967,551

Net result for the year - - -903,775 -903,775

Purchase of treasury shares - - -81,045 -81,045

Net settlement of PSUs - - 66 66

Net settlement of RSUs - - 91 91

Exercise of warrants 470 63,480 - 63,950

Share-based compensation expenses - - 61,426 61,426

Capital increases 6,579 1,493,421 - 1,500,000

Costs related to capital increases - -71,908 - -71,908

Equity at December 31, 2023 58,751 6,406,225 -4,928,620 1,536,356

Equity at January 1, 2022 43,634 3,891,993 -3,037,895 897,732

Net result for the year - - -1,019,962 -1,019,962

Net settlement of PSUs - - 72 72

Net settlement of RSUs - - 116 116

Exercise of warrants 201 31,703 - 31,904

Share-based compensation expenses - - 52,286 52,286

Capital increases 7,867 1,044,890 - 1,052,757

Costs related to capital increases - -47,354 - -47,354

Equity at December 31, 2022 51,702 4,921,232 -4,005,383 967,551

* Other reserves of DKK 915.8 million from the 2022 Annual Report have been split into Share premium and Retained losses to ease read-

ability of movements in shareholders’ equity.

Zealand Pharma ∞ Annual Report 2023 142Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Financial statements of the parent company Notes

Notes to the Financial statements of the parent company

Significant accounting policies

Basis of preparation

The separate financial statement of the parent company has been prepared in accordance with IFRS

Accounting Standards as adopted by the EU (IFRS) 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 previous 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 section 1.0 Basis of preparation in the consolidated financial statements.

Notes have only been included in the Parent Financial Statement where amounts differ from the

consolidated financial statement.

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.

Investments in subsidiaries

Please refer to note 15 Investments in subsidiaries.

Please refer to note 2.1 Revenue in the consolidated financial statements for accounting policies for the

revenue streams and additional information regarding revenue.

Recognized revenue can be specified as follows for all agreements:

DKK thousand 2023 2022

Alexion Pharmaceuticals Inc. 4,093 69,028

Boehringer Ingelheim International GmbH 223,725 -

Novo Nordisk A/S 34,150 34,013

ZP SPV 3 K/S 6,127 38,700

Total revenue from license and collaboration agreements 268,095 141,741

Product sales - External 10,036 21,292

Product sales - Intercompany - -10,791

- Hereof related to discontinued operations - -10,501

Sale of goods revenue from continuing operations 10,036 -

Total revenue from continuing operations 278,131 141,741

Total revenue recognized over time 44,371 114,881

Total revenue recognized at a point in time from continuing operations 233,760 26,860

Total revenue recognized at a point in time from discontinued operations - 10,501

Milestone revenue 223,725 26,860

Royalty revenue 840 -

Reimbursement revenue for R&D services 37,403 65,390

Product sales 10,036 10,791

Revenue from research and development services rendered to ZP SPV 3 K/S 6,127 38,700

Total revenue by revenue stream from continuing operations 278,131 141,741

Product sales - 10,501

Total revenue by revenue stream from discontinued operations - 10,501

Revenue of DKK 6.1 million (2022: 38.7 million) from ZP SPV 3 K/S relates to IP rights for the Alexion

Pharmaceutical Inc. agreement transferred from Zealand Pharma A/S to ZP SPV 3 K/S in 2020. ZP SPV 3

K/S reimburses ZP A/S for the R&D services carried out on behalf of ZP SPV 3 K/S.

1 Significant accounting policies, and significantaccountingestimates and assessments 2 Revenue

Zealand Pharma ∞ Annual Report 2023 143Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Financial statements of the parent company

3 Royalty expenses

Royalty expenses of DKK 7.4 million in 2023 (2022: 37.8 million) relate to license fees payable by Zealand

Pharma A/S to ZP SPV 3 K/S for use of the IP rights under the Alexion Pharmaceuticals Inc. agreement

which were internally transferred to ZP SPV 3 K/S in 2020.

4 Research and development expenses

DKK thousand 2023 2022

Staff costs (note 7) -241,639 -233,474

Amortization, depreciation, impairment losses on intangibles assets,

property, plant and equipment, and right-of-use assets -18,087 -23,851

Other external research and development expenses -430,534 -361,632

Total research and development expenses -690,260 -618,957

- Hereof related to discontinued operations - 4,913

Total research and development expenses from continuing operations -690,260 -614,044

5 Sales and marketing expenses

DKK thousand 2023 2022

Staff costs (note 7) -10,427 -75,346

Amortization, depreciation, impairment losses on intangibles assets,

property, plant and equipment, and right-of-use assets - -23

Other external sales and marketing expenses -19,459 -88,567

Total sales and marketing expenses -29,886 -163,936

- Hereof related to discontinued operations - 131,638

Total sales and marketing expenses from continuing operations -29,886 -32,298

6 General and administrative expenses

DKK thousand 2023 2022

Staff costs (note 7) -94,258 -118,308

Amortization, depreciation, impairment losses on intangibles assets, property,

plant and equipment, and right-of-use assets -3,601 -5,662

Other external general and administrative expenses -86,199 -130,365

Total general and administrative expenses -184,058 -254,335

- Hereof related to discontinued operations - 17,125

Total general and administrative expenses from continuing operations -184,058 -237,210

7 Information on staff and remuneration

DKK thousand 2023 2022

Total staff costs can be specified as follows:

Wages and salaries -247,253 -220,310

Share-based compensation -55,130 -51,286

Pension schemes (defined contribution plans) -20,945 -17,615

Government grants - 5

Other payroll and staff-related costs -22,996 -5,682

Total staff costs -346,324 -294,888

- Hereof related to discontinued operations - 7,275

Total staff costs from continuing operations -346,324 -287,613

The amount is charged as:

Research and development expenses -241,639 -210,971

Sales and marketing expenses -10,427 -

General and administrative expenses -94,258 -62,627

Other operating items - -14,015

Discontinued operations - -7,275

Total staff costs -346,324 -294,888

Average number of employees 224 197

For remuneration to the Board of Directors please refer to note 6.1 Remuneration of the Board of

Directors and Executive Management in the consolidated financial statements and for additional infor-

mation regarding staff costs refer to note 2.8 Staff costs.

Zealand Pharma ∞ Annual Report 2023 144Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Financial statements of the parent company

7 Information on staff and remuneration (continued)

DKK thousand Base salary Bonus

Pension

contribution

Other

short term

benefits

Share-based

compensation

Severance

payment Total

2023

Remuneration to the Executive Management

Adam Sinding Steensberg

5,750 4,744 1,150 243 12,950 - 24,837

Henriette Wennicke

2,621 1,441 524 267 4,387 - 9,240

Total 8,371 6,185 1,674 510 17,337 - 34,077

Total Other Corporate Management

7,728 4,910 948 693 11,086 - 25,365

Total 16,099 11,095 2,622 1,203 28,423 - 59,442

2022

Remuneration to the Executive Management

Adam Sinding Steensberg

4,162 2,366 832 725 11,061 - 19,146

Henriette Wennicke

420 168 84 41 225 - 938

Emmanuel Dulac

2,626 1,575 525 122 -3,265 6,564 8,147

Matthew Donald Dallas

308 123 - 103 - - 534

Total 7,516 4,232 1,441 991 8,021 6,564 28,765

Total Other Corporate Management

6,131 2,689 898 599 10,569 - 20,286

Total 13,647 6,921 2,339 1,590 18,590 6,564 49,651

1 Former EVP, R&D and CMO Adam Sinding Steensberg was appointed CEO at March 30, 2022.

2 Henriette Wennicke was appointed as CFO at November 1, 2022.

3 Former CEO Emmanuel Dulac resigned from Zealand at March 30, 2022.

4 Former CFO Matthew Donald Dallas resigned from Zealand at August 31, 2022. He had tax obligations in Denmark, so part of his salary was paid out in Denmark.

5 Other Corporate Management in 2023 comprised four members (2022: four).

Zealand Pharma ∞ Annual Report 2023 145Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Financial statements of the parent company

8 Financial items

DKK thousand 2023 2022

Interest income 31,778 380

Interest expenses from financial liabilities measured at amortized costs -6,050 -3,824

Interest expenses from lease liabilities -2,075 -2,207

Interest income from group companies 9,701 7,682

Impairment of investments in subsidiaries -26,042 -

Impairment of intercompany receivables -271,897 -2,073

Gain from sale of marketable securities 1,519 -

Fair value adjustment of marketable securities 5,781 -1,164

Fair value adjustment of other investments -16,466 4,036

Exchange rate adjustments -5,127 24,612

Other financial expenses -2,912 -

Financial items in total -281,790 27,442

Presentation in income statement:

Financial income 48,779 36,710

Financial expenses -330,569 -9,268

Impairment of investments in subsidiaries of DKK 26.0 million and impairment of intercompany receiv-

ables of DKK 271.9 million (2022: 2.1 million) relates to the Oberland Capital loan which Zealand

Pharma A/S settled in May 2023 on behalf of Zealand Pharma U.S., Inc. Refer to description in note 15

Investments in subsidiaries and 17 Trade and other receivables respectively. Please also refer to note 4.7

Financial items in the consolidated financial statements for additional information regarding financial

items.

9 Other operating items

DKK thousand 2023 2022

Restructuring costs - continuing operations - -14,015

Insurance - -37,033

Impairment Encycle IP rights - -35,691

Loss on sale of fixed assets - -1,449

Reversal of inventory write-down (note 3.5) 15,979 -

Total other operating items from continuing operations 15,979 -88,188

Restructuring costs - discontinued operations - -30,615

Impairment of production equipment (note 3.2) - -9,730

Reversal of inventory write-down (note 3.5) - 1,284

Loss on disposal group V-GO (note 2.10) - -3,072

Total other operating items from discontinued operations - -42,133

Presentation in income statement:

Financial income 15,979 -

Financial expenses - -88,188

Impairment of Encycle IP rights in 2022 is described further in note 12 Intangible assets. Please refer to

note 2.9 Other operating items in the consolidated financial statements for additional information.

Zealand Pharma ∞ Annual Report 2023 146Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Financial statements of the parent company

10 Corporate tax

DKK thousand 2023 2022

Net result for the year before tax -909,367 -1,024,967

Corporate tax rate in Denmark 22.0% 22.0%

Expected tax benefit -200,061 -225,493

Adjustment for non-deductible expenses 48,447 868

Adjustment for warrants 943 6,274

Adjustment for R&D extra deduction -21,768 -20,960

Adjustment to prior years -30,673 1,839

Change in tax assets (not recognized) 197,520 232,467

Total income tax expense/(benefit) -5,592 -5,005

Tax on equity

Warrants shareprice development -32,566 -7,362

Change in tax assets (not recognized) 32,566 7,362

Total income tax expense (income) - -

Specification of unrecognized deferred tax assets:

Tax losses carried forward (available indefinitely) 3,862,273 3,299,214

Research and development expenses 1,031,011 956,816

Licenses, rights and patents 76,129 71,540

Non-current assets 109,930 105,961

Liabilities 9,855 -98,695

Other 393,640 102,156

Total temporary differences 5,482,838 4,436,991

Please refer to note 5.0 Tax in the consolidated financial statements for additional information regarding

income tax.

11 Discontinued operations

Management's judgements and estimates

On March 30, 2022, the group announced its intention to exit the US sales activities including the V-GO

activity. The activities were successfully divested on May 29, 2022, through an asset purchase agreement

with MannKind Corporation. On September 7, 2022, the group announced the transfer of the commer-

cial rights for Zegalogue

to Novo Nordisk effectually ending all efforts to commercialize the group's

products via own sales force. Management had determined that the activities to supply subsidiaries

with products and acquired services from subsidiaries related to commercialization of products via own

sales force met all the criteria for classification as a discontinued operation as of September 7, 2022.

Accordingly, the activities, including the effect of the divestment of the V-GO disposal group, were

presented separately as a discontinued operation in the income statement.

Zealand Pharma ∞ Annual Report 2023 147Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Financial statements of the parent company

The results and the cash flow of the discontinued activities are presented below as discontinued opera-

tions for the period ended December 31, 2023, and December 31, 2022:

DKK thousand 2023 2022

Revenue - 10,546

Cost of goods sold - -41,113

Gross profit - -30,567

Research and development expenses - -4,035

Sales and marketing expenses - -129,827

Administrative expenses - -17,014

Other operating items - -42,132

Net operating expenses - -193,008

Result before tax - -223,575

Net result for the year from discontinued operations - -223,575

DKK thousand 2023 2022

Cash flows from discontinued operations

Net cash outflow from operating activities - -17,717

Net cash inflow from investing activities - 64,383

Net cash increase generated from the discontinued operation - 46,666

11 Discontinued operations (continued)

All assets and liabilities included in the V-GO disposal group were derecognized as of May 29, 2022, with

the closure of the asset purchase agreement with MannKind Corporation. As a result, no assets or liabil-

ities were classified as held for sale in relation to the discontinued operations as of December 31, 2022.

The derecognized assets and liabilities, recognized consideration and net impact on profit and loss from

the divestment of V-GO are presented below:

DKK thousand May 29, 2022

Assets included in disposal group

Property, plant and equipment 19,380

Right-of-use assets 9

Deposits and prepayments 665

Inventories 54,085

Total assets of disposal group 74,139

Liabilities directly associated with assets included in disposal group

Lease liabilities 19

Total liabilities of disposal group 19

Net assets of disposal group 74,120

Consideration:

Cash consideration 67,828

Purchase price adjustment -3,353

Other financial assets 6,573

Total consideration 71,048

Loss on sale of disposal group - recognized as other operating items from

discontinued operations -3,072

Zealand Pharma ∞ Annual Report 2023 148Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Financial statements of the parent company

DKK thousand Software

Cost at January 1, 2023 -

Additions 12,508

Cost at December 31, 2023 12,508

Amortization and impairment at January 1, 2023 -

Amortization for the year -253

Amortization and impairment at December 31, 2023 -253

Carrying amount at December 31, 2023 12,255

Amortization and impairment for the financial year has been charged as:

General and administrative expenses -253

Total 253

DKK thousand Licenses rights and patents

Cost at January 1, 2022 41,167

Disposals -35,691

Transferred to V-GO disposal group (note 2.10) -5,476

Cost at December 31, 2022 -

Amortization and impairment at January 1, 2022 5,476

Impairment for the year 35,691

Disposals -35,691

Transferred to V-GO disposal group (note 2.10) -5,476

Amortization and impairment at December 31, 2022 -

Carrying amount at December 31, 2022 -

Amortization and impairment for the financial year has been charged as:

Other operating items 35,691

Total 35,691

Licenses, rights, and patents on January 1, 2022, comprised the license to the lead product candidate

acquired with Encycle Therapeutics in October 2019. During 2022 the development program with the

lead candidate was abandoned and it was decided to move on with another product candidate from the

same patent instead. As a result, the recognized asset was impaired and disposed.

Please refer to note 3.1 Intangible assets in the consolidated financial statements for additional

information.

12 Intangible assets

Zealand Pharma ∞ Annual Report 2023 149Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Financial statements of the parent company

DKK thousand

Plant and

machinery

Other

fixtures and

fittings

Leasehold

improve-

ments

Assets

under con-

struction

Cost at January 1, 2023 66,828 14,153 35,190 870

Transfers - 870 - -870

Additions 9,043 1,386 812 -

Disposals -15,066 -427 - -

Cost at December 31, 2023 60,805 15,982 36,002 -

Accumulated depreciation and impairment at

January 1, 2023 52,339 10,987 7,546 -

Depreciation for the year 5,330 1,995 2,891 -

Disposals -14,919 -427 - -

Accumulated depreciation and impairment at

December 31, 2023 42,750 12,555 10,437 -

Carrying amount at December 31, 2023 18,055 3,427 25,565 -

Depreciation and impairment for the financial

year has been charged as:

Research and development expenses -5,320 -1,651 -2,380 -

General and administrative expenses -10 -344 -511 -

Total -5,330 -1,995 -2,891 -

13 Property, plant and equipment

DKK thousand

Plant and

machinery

Other

fixtures and

fittings

Building

improve-

ments

Assets

under con-

struction

Cost at January 1, 2022 90,778 14,349 34,897 7,343

Transfers 268 - - -268

Additions 2,985 72 293 6,088

Transferred to V-GO disposal group (note 2.10) -25,770 -268 - -2,563

Retirements -1,433 - - -9,730

Cost at December 31, 2022 66,828 14,153 35,190 870

Accumulated depreciation and impairment at

January 1, 2022 54,201 8,388 4,703 -

Depreciation for the year 7,901 2,749 2,843 -

Impairment for the year 742 - - 9,730

Transferred to V-GO disposal group (note 2.10) -9,072 - - -9,730

Retirements -1,433 -150 - -

Accumulated depreciation and impairment at

December 31, 2022 52,339 10,987 7,546 -

Carrying amount at December 31, 2022 14,489 3,166 27,644 870

Depreciation and impairment for the financial

year has been charged as:

Research and development expenses 6,214 2,315 2,417 -

General and administrative expenses - 406 426 -

Other operating items 742 - - -

Discontinued operations 1,687 28 - 9,730

Total 8,643 2,749 2,843 9,730

Please refer to note 3.2 Property, plant, and equipment in the consolidated financial statements for

additional information.

Zealand Pharma ∞ Annual Report 2023 150Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Financial statements of the parent company

14 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:

DKK thousand

Office

buildings

Other

fixtures and

fittings

As at January 1, 2023 95,990 1,581

Additions 1,860 1,344

Depreciation expense -9,999 -1,004

As at December 31, 2023 87,851 1,921

As at January 1, 2022 106,158 1,623

Additions - 736

Depreciation expense -10,159 -778

Transferred to V-GO disposal group (note 2.10) -9 -

As at December 31, 2022 95,990 1,581

Set out below are the carrying amounts of lease liabilities and the movements during the period:

DKK thousand 2023 2022

As at January 1 102,618 111,455

Additions 3,588 689

Disposals -393 -

Accretion of interest 2,075 2,207

Payments -11,887 -11,714

Transferred to V-GO disposal group (note 2.10) - -19

As at December 31 96,001 102,618

Current 12,024 11,522

Non-current 83,977 91,096

The following amounts are recognized in the income statement:

Depreciation expense of right-of-use assets -11,002 -10,937

Interest expense on lease liabilities -2,075 -2,207

Total amount recognized in profit and loss -13,077 -13,144

Cash flow -11,649 -11,714

Total cash outflow from leases -11,649 -11,714

Zealand Pharma ∞ Annual Report 2023 151Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Financial statements of the parent company

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

recoverable amount. Impairment losses are recognized under financial items.

DKK thousand 2023 2022

Cost at January 1 62,228 62,228

Divestment -1,911 -

Cost at December 31 60,317 62,228

Value adjustments at January 1 - -

Impairment -24,131 -

Value adjustments at December 31 -24,131 -

Investments in subsidiaries at December 31 36,186 62,228

In 2023, an impairment of DKK 24.1 million has been recognized on the investment in Zealand Pharma U.S.

Inc. as a result of lost equity following the settlement of the Oberland Capital loan in May 2023, which

Zealand Pharma A/S settled on behalf of Zealand Pharma U.S., Inc. Refer also to note 8 Financial items.

DKK thousand Domicile Ownership

Voting

rights

Zealand Pharma A/S'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%

ZP SPV 3 K/S Denmark 100% 100%

ZP General Partner 3 ApS Denmark 100% 100%

ZP Holding SPV K/S'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%

16 Inventories

Inventories were comprised as follows:

DKK thousand 2023 2022

Raw materials 7,935 1,286

Total 7,935 1,286

Write-downs recognized on inventories were reflected in the cost of goods sold. They were comprised

as follows:

DKK thousand 2023 2022

Accumulated write-downs, January 1 -32,257 -12,813

Write-downs in the reporting period - -30,615

Utilization of write-downs 3,635 9,887

Reversal of write-downs 15,979 1,284

Accumulated write-downs, December 31 -12,643 -32,257

Please refer to note 3.5 Inventories in the consolidated financial statements for additional information

regarding inventory.

15 Investments in subsidiaries

Zealand Pharma ∞ Annual Report 2023 152Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Financial statements of the parent company

17 Trade and other receivables

DKK thousand 2023 2022

Deposits 8,900 8,900

Trade receivables 987 -

Intercompany receivables 57,509 170,931

Receivables related to license and collaboration agreements 68,793 56,431

Other receivables 24,349 1,454

Prepaid expenses 33,497 54,083

Total trade and other receivables 194,035 291,799

Non-current 15,786 157,039

Current 178,249 134,760

In 2023 an impairment of DKK 271.9 million has been recognized on intercompany receivables from

Zealand Pharma U.S., Inc. In May 2023, as mentioned in note 4.6 Borrowings, Zealand Pharma A/S

settled the Oberland Capital loan with a one-time payment of USD 77.3 million (DKK 525.7 million) on

behalf of Zealand Pharma U.S., Inc. As a result, equity was lost in Zealand Pharma U.S. Inc. which has

triggered the impairment in 2023, refer to note 8 Financial items.

18 Trade and other payables

DKK thousand 2023 2022

Trade payables 90,352 51,803

Intercompany payables 12,521 1,425

Payable treasury shares 81,045 41,600

Employee benefits 48,009 50,275

Other payables 7,764 3,166

Accruals development projects 33,464 34,063

Total trade and other payables 273,155 182,332

Non-current 303 19,058

Current 272,852 163,274

19 Fees to auditors appointed at the annual general meeting

DKK thousand 2023 2022

Audit 2,475 4,880

Audit-related services and other assurance engagements 940 1,310

Other - 389

Total fees 3,415 6,579

20 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.

The parent company had provided floating charge collateral covering all assets in the company which

could be collateralized, including shares in subsidiaries, as collateral for the debt to Oberland. On May

10, 2023, the Group settled the Oberland Capital loans in a one-time payment. With the final repay-

ment, Oberland has released all rights to collateral provided for under the loan agreement.

Under the revolving credit facility (RCF) in Danske Bank, Zealand is required to have a minimum collat-

eral value of 120% of the loan commitment (DKK 420 million) held in the designated custody accounts

under management by Danske Asset Management and Zealand’s designated cash accounts attached

to the custody accounts. Zealand must also comply with a covenant on fulfilling certain information

requirements. The pledges are described further in note 4.4 Cash and cash equivalents.

The EIB loan contains a negative pledge clause preventing Zealand Pharma A/S or any of its subsidiaries

from creating or permitting to subsist any new security over any of its assets.

Please refer to note 6.4 Commitments in the consolidated financial statements for information on

commitments.

Zealand Pharma ∞ Annual Report 2023 153Contents The big picture Our business Sustainability Corporate governance Financial statements

Notes to the Financial statements of the parent company

Zealand Pharma A/S's related parties are the Board of Directors, Executive Management, and close

members of the family of these persons. Refer to note 6.1 Remuneration of the Board of Directors and

Executive Management in the consolidated financial statements. Refer to note 7 Information on staff

and remuneration in these parent company financial statements for remuneration of the Executive

Management.

The parent company had the following transactions with subsidiaries:

DKK thousand 2023 2022

Revenue 6,127 38,700

Research and development expenses -23,323 -26,336

Sales and marketing expenses -5,615 -32,285

General and administrative expenses -20,468 -69,995

Financial items 9,701 5,609

Discontinued operations - -156,638

Receivables -113,422 26,027

Payables 11,096 -57,653

Cash flows -157,958 -

Total -293,862 -272,571

21 Transactions with related parties 22 Adjustments for non-cash items

DKK thousand 2023 2022

Depreciation, amortization and impairment losses 21,688 70,572

Deferred revenue - -67,584

Reversal of inventory write-down -15,980 -

Share-based compensation expenses 55,130 51,286

Financial income -52,417 -106,592

Financial expenses 334,133 79,149

Corporate tax -5,591 -5,005

Exchange rate adjustments - -8,777

Adjustments for non-cash items in total 336,963 13,049

23 Changes in working capital

DKK thousand 2023 2022

Changes in accounts receivable -4,304 -106,679

Changes in prepaid expenses 20,583 -

Changes in other receivables -13,594 -

Changes in inventory 9,330 23,396

Changes in intercompany receivables -157,958 -

Changes in accounts payable 40,832 29,469

Changes in other liabilities 20,723 -

Changes in other liabilities and provisions -19,058 -

Changes in working capital in total -103,446 -53,814

24 Significant events after the balance sheet date

Please refer to note 6.8 Subsequent events in the consolidated financial statements.

Zealand Pharma ∞ Annual Report 2023 154Contents The big picture Our business Sustainability Corporate governance Financial statements

Alternative performance measures for the Group (non-audited)

Free cash flow

Free cash flow is calculated as the sum of cash flows from operating activities less purchase of prop-

erty, 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.

Therefore, Executive Management believes that this non-IFRS liquidity measure provides useful infor-

mation to investors in addition to the most directly comparable IFRS financial measure “Net cash flow

from operating activities.” The table below shows a reconciliation of free cash flow for 2023 and 2022:

DKK thousand 2023 2022

Cash outflow from operating activities -425,668 -942,311

Less purchase of property, plant and equipment -11,241 -11,710

Free cash flow -436,909 -954,021

Liquidity reserve

Zealand’s liquidity reserve, classified as a non-IFRS liquidity measure includes assets held in cash, cash

equivalents, marketable securities, and undrawn borrowing facilities. Management believes that this

APM can provide stakeholders with valuable information regarding Zealand's ability to meet short-term

obligations, navigating uncertain economic conditions and adding information about potential capital

requirements (runway).

Equity ratio

Equity ratio is calculated as equity at the balance sheet date divided by total assets at the balance sheet

date.

Market capitalization

Market capitalization is calculated as weighted outstanding shares at the balance sheet date times the

share price at the balance sheet date.

Equity per share

Equity per share is calculated as shareholders' equity divided by weighted average total number of

shares less weighted average total number of treasury shares.

Alternative performance measures for the Group (non-audited)

Zealand Pharma ∞ Annual Report 2023 155Contents The big picture Our business Sustainability Corporate governance Financial statements

Statement of the Board of Directors and Executive Management

The Board of Directors and Executive Management have today

discussed and approved the Annual Report of Zealand Pharma A/S

for the financial year January 1 – December 31, 2023.

The consolidated financial statements and parent company financial

statements have been prepared in accordance with IFRS Accounting

Standards as adopted by the EU and additional requirements under

the Danish Financial Statements Act.

We consider the accounting policies used to be appropriate. In our

opinion, the consolidated financial statements and parent company

financial statements give a true and fair view of the Group’s and the

parent company’s financial position as of December 31, 2023, and of

the results of the Group’s and the parent company’s operations and

cash flows for the financial year January 1 – December 31, 2023.

In our opinion, the Management’s review includes a fair review of

the development of the Group’s and the parent company’s oper-

ations and economic conditions, the results for the year, and the

Group’s and the parent company’s financial position, as well as a

review of the principal risks and uncertainties to which the Group

and the parent company are exposed.

In our opinion, the Annual Report of Zealand Pharma A/S for

the financial year January 1 - December 31, 2023 identified as

549300ITBB1ULBL4CZ12-2023-12-31-en.zip has in all material

respects been prepared in compliance with the ESEF Regulation.

We recommend that the Annual Report be approved at the Annual

General Meeting.

Søborg, February 27, 2024

Executive Management

Adam Sinding Steensberg

President and

Chief Executive Officer

Henriette Wennicke

Executive Vice President and Chief

Financial Officer

Board of Directors

Alf Gunnar Martin Nicklasson

Chairman

Kirsten Aarup Drejer

Vice Chairman

Bernadette Connaughton

Board member

Leonard Kruimer

Board member

Alain Munoz

Board member

Jens Peter Stenvang

Board member

Employee elected

Iben Louise Gjelstrup

Board member

Employee elected

Jeffrey Berkowitz

Board member

Michael John Owen

Board member

Frederik Barfoed Beck

Board member

Employee elected

Anneline Nansen

Board member

Employee elected

Reports

Zealand Pharma ∞ Annual Report 2023 156Contents The big picture Our business Sustainability Corporate governance Financial statements

To the shareholders of Zealand Pharma A/S

Report on the audit of the Consolidated Financial

Statements and Parent Company Financial Statements

Opinion

We have audited the consolidated financial statements and the

parent company financial statements of Zealand Pharma A/S for

the financial year 1 January – 31 December 2023, which comprise

statement of loss, statement of comprehensive loss, statement of

financial position, statement of cash flows statement of sharehold-

er’s equity and notes, including material accounting policy infor-

mation, for the Group and the Parent Company. The consolidated

financial statements and the parent company financial statements

are prepared in accordance with IFRS Accounting Standards as

adopted by the EU and additional requirements of the Danish

Financial Statements Act.

In our opinion, the consolidated financial statements and the parent

company financial statements give a true and fair view of the finan-

cial position of the Group and the Parent Company at 31 December

2023 and of the results of the Group's and the Parent Company's

operations and cash flows for the financial year 1 January – 31

December 2023 in accordance with IFRS Accounting Standards

as adopted by the EU and additional requirements of the Danish

Financial Statements Act.

Our opinion is consistent with our long-form audit report to the

Audit Committee and the Board of Directors.

Basis for opinion

We conducted our audit in accordance with International Standards

on Auditing (ISAs) and additional requirements applicable in

Denmark. Our responsibilities under those standards and require-

ments are further described in the "Auditor's responsibilities for

the audit of the consolidated financial statements and the parent

company financial statements" (hereinafter collectively referred to

as "the financial statements") section of our report. We believe that

the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our opinion.

Independence

We are independent of the Group in accordance with the

International Ethics Standards Board for Accountants' International

Code of Ethics for Professional Accountants (IESBA Code) and the

additional ethical requirements applicable in Denmark, and we have

fulfilled our other ethical responsibilities in accordance with these

requirements and the IESBA Code.

To the best of our knowledge, we have not provided any prohibited

non-audit services as described in article 5(1) of Regulation (EU) no.

537/2014.

Appointment of auditor

We were initially appointed as auditor of Zealand Pharma A/S on

April 2, 2020 for the financial year 2020. We have been reappointed

annually by resolution of the general meeting for a total consecutive

period of four years up until the financial year 2023.

Key audit matters

Key audit matters are those matters that, in our professional judge-

ment, were of most significance in our audit of the financial state-

ments for the financial year 2023. These matters were addressed

during our audit of the financial statements as a whole and in

forming our opinion thereon. We do not provide a separate opinion

on these matters. For each matter below, our description of how our

audit addressed the matter is provided in that context.

We have fulfilled our responsibilities described in the "Auditor's

responsibilities for the audit of the financial statements" section,

including in relation to the key audit matters below. Accordingly,

our audit included the design and performance of procedures to

respond to our assessment of the risks of material misstatement

of the financial statements. The results of our audit procedures,

including the procedures performed to address the matters below,

provide the basis for our audit opinion on the financial statements.

Accounting for research and development expenses and accruals

related to Clinical Research Organisations

Zealand Pharma A/S engages with third-party clinical research

organisations (CROs) for certain clinical development activities,

including clinical trials. The diverse nature of these activities, along

with varied contract terms, compensation arrangements, and

impact from potential scope changes and the consequential impact

on cost per patient and timelines, requires significant estimates and

judgments by management in recognizing expenses and accruals

for clinical development activities. Management has established

CRO accrual models used to recognize the expenses for clinical

development activities over the periods over which services are

provided to the Group and the Parent Company and estimate clin-

ical trial accruals at the balance sheet date. Refer to note 2.5 and 3.8

in the consolidated financial statements.

Given the significance of clinical trial expenses and the complexity

associated with management's estimates and judgment in recog-

nizing accruals for clinical development activities, including alloca-

tion of contract costs to clinical development phases, determination

of clinical trial service periods, and the effect from changes to

clinical trial scope, we considered the accounting for research and

development expenses and accruals related to Clinical Research

Organisations a key audit matter.

Independent auditor’s report

Zealand Pharma ∞ Annual Report 2023 157Contents The big picture Our business Sustainability Corporate governance Financial statements

How our audit addressed the key audit matter

Our audit procedures related to research and development

expenses and accruals related to Clinical Research Organisations

included the following:

• Obtaining an understanding of Management’s process for

accounting for clinical development activities and controls related

to monitoring services provided.

• Obtaining an understanding of terms and conditions of contrac-

tual arrangements with CROs along with ongoing development

phases and their timelines through inspection of contracts,

evidence supporting their execution and corroborative inquiries of

management.

• Evaluation of the appropriateness of the methodology and

accounting policies applied to comply with applicable accounting

standards.

• Evaluation of CRO accrual models and test of key input data

applied, including contract cost, patient enrolment data and treat-

ment timelines by tracing to supporting evidence.

• Evaluation of key assumptions applied in the CRO models,

including determination of variable costs, allocation of contract

costs to development phases and timelines.

• Checking the arithmetical accuracy of the computations within

the CRO accrual models and reconciling the models’ output to

the Group and Parent Company’s financial records.

• Performing test of details, including analytical procedures, over

research and development expenses to verify occurrence and

appropriateness of recorded expenses.

• Examining transactions after balance sheet date to assess

completeness and accuracy of the recorded transactions.

• Evaluation of appropriateness of the disclosures pertaining to

accounting for research and development expenses and related

accruals for compliance with applicable accounting standards.

Statement on the Management's review

Management is responsible for the Management's review.

Our opinion on the financial statements does not cover the

Management's review, and we do not express any assurance conclu-

sion thereon.

In connection with our audit of the financial statements, our

responsibility is to read the Management's review and, in doing so,

consider whether the Management's review is materially incon-

sistent with the financial statements, or our knowledge obtained

during the audit, or otherwise appears to be materially misstated.

Moreover, it is our responsibility to consider whether the

Management's review provides the information required by relevant

law and regulations.

Based on our procedures, we conclude that the Management's

review is in accordance with the financial statements and has been

prepared in accordance with the requirements of relevant law and

regulations. We did not identify any material misstatement of the

Management's review.

Management's responsibilities for the financial statements

Management is responsible for the preparation of consolidated

financial statements and parent company financial statements

that give a true and fair view in accordance with IFRS Accounting

Standards as adopted by the EU and additional requirements of

the Danish Financial Statements Act and for such internal control

as Management determines is necessary to enable the preparation

of financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the financial statements, Management is responsible for

assessing the Group's and the Parent Company's ability to continue

as a going concern, disclosing, as applicable, matters related to

going concern and using the going concern basis of accounting

in preparing the financial statements unless Management either

intends to liquidate the Group or the Parent Company or to cease

operations, or has no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial

statements

Our objectives are to obtain reasonable assurance as to whether the

financial statements as a whole are free from material misstatement,

whether due to fraud or error, and to issue an auditor's report that

includes our opinion. Reasonable assurance is a high level of assur-

ance, but is not a guarantee that an audit conducted in accordance

with ISAs and additional requirements applicable in Denmark will

always detect a material misstatement when it exists. Misstatements

can arise from fraud or error and are considered material if, indi-

vidually or in the aggregate, they could reasonably be expected to

influence the economic decisions of users taken on the basis of the

financial statements.

As part of an audit conducted in accordance with ISAs and addi-

tional requirements applicable in Denmark, we exercise professional

judgement and maintain professional scepticism throughout the

audit. We also:

• Identify and assess the risks of material misstatement of the

financial statements, whether due to fraud or error, design and

perform audit procedures responsive to those risks and obtain

audit evidence that is sufficient and appropriate to provide a basis

for our opinion. The risk of not detecting a material misstatement

resulting from fraud is higher than for one resulting from error,

as fraud may involve collusion, forgery, intentional omissions,

misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit

in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion

on the effectiveness of the Group's and the Parent Company's

internal control.

• Evaluate the appropriateness of accounting policies used and the

reasonableness of accounting estimates and related disclosures

made by Management.

• Conclude on the appropriateness of Management's use of

the going concern basis of accounting in preparing the finan-

cial statements and, based on the audit evidence obtained,

Zealand Pharma ∞ Annual Report 2023 158Contents The big picture Our business Sustainability Corporate governance Financial statements

whether a material uncertainty exists related to events or condi-

tions that may cast significant doubt on the Group's and the

Parent Company's ability to continue as a going concern. If we

conclude that a material uncertainty exists, we are required to

draw attention in our auditor's report to the related disclosures

in the financial statements or, if such disclosures are inadequate,

to modify our opinion. Our conclusions are based on the audit

evidence obtained up to the date of our auditor's report. However,

future events or conditions may cause the Group and the Parent

Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and contents of the

financial statements, including the note disclosures, and whether

the financial statements represent the underlying transactions and

events in a manner that gives a true and fair view.

• Obtain sufficient appropriate audit evidence regarding the

financial information of the entities or business activities within

the Group to express an opinion on the consolidated financial

statements. We are responsible for the direction, supervision and

performance of the group audit. We remain solely responsible for

our audit opinion.

We communicate with those charged with governance regarding,

among other matters, the planned scope and timing of the audit and

significant audit findings, including any significant deficiencies in

internal control that we identify during our audit.

We also provide those charged with governance with a statement

that we have complied with relevant ethical requirements regarding

independence, and to communicate with them all relationships and

other matters that may reasonably be thought to bear on our inde-

pendence, and where applicable, actions taken to eliminate threats

or safeguards applied.

From the matters communicated with those charged with govern-

ance, we determine those matters that were of most significance

in the audit of the consolidated financial statements and the parent

company financial statements of the current period and are there-

fore the key audit matters. We describe these matters in our auditor's

report unless law or regulation precludes public disclosure about

the matter.

Report on compliance with the ESEF Regulation

As part of our audit of the Consolidated Financial Statements and

Parent Company Financial Statements of Zealand Pharma A/S, we

performed procedures to express an opinion on whether the annual

report of Zealand Pharma A/S for the financial year 1 January – 31

December 2023 with the file name 549300ITBB1ULBL4CZ12-2023-

12-31-en.zip is prepared, in all material respects, in compliance

with the Commission Delegated Regulation (EU) 2019/815 on the

European Single Electronic Format (ESEF Regulation) which includes

requirements related to the preparation of the annual report in

XHTML format and iXBRL tagging of the Consolidated Financial

Statements including notes.

Management is responsible for preparing an annual report that

complies with the ESEF Regulation. This responsibility includes:

• The preparing of the annual report in XHTML format;

• The selection and application of appropriate iXBRL tags, including

extensions to the ESEF taxonomy and the anchoring thereof to

elements in the taxonomy, for all financial information required to

be tagged using judgement where necessary;

• Ensuring consistency between iXBRL tagged data and the

Consolidated Financial Statements presented in human readable

format; and

• For such internal control as Management determines necessary to

enable the preparation of an annual report that is compliant with

the ESEF Regulation.

Our responsibility is to obtain reasonable assurance on whether the

annual report is prepared, in all material respects, in compliance

with the ESEF Regulation based on the evidence we have obtained,

and to issue a report that includes our opinion. The nature, timing

and extent of procedures selected depend on the auditor’s judge-

ment, including the assessment of the risks of material departures

from the requirements set out in the ESEF Regulation, whether due

to fraud or error. The procedures include:

• Testing whether the annual report is prepared in XHTML format;

• Obtaining an understanding of the company’s iXBRL tagging

process and of internal control over the tagging process;

• Evaluating the completeness of the iXBRL tagging of the

Consolidated Financial Statements including notes;

• Evaluating the appropriateness of the company’s use of iXBRL

elements selected from the ESEF taxonomy and the creation

of extension elements where no suitable element in the ESEF

taxonomy has been identified;

• Evaluating the use of anchoring of extension elements to

elements in the ESEF taxonomy; and

• Reconciling the iXBRL tagged data with the audited Consolidated

Financial Statements.

In our opinion, the annual report of Zealand Pharma A/S for the

financial year 1 January – 31 December 2023 with the file name

549300ITBB1ULBL4CZ12-2023-12-31-en.zip is prepared, in all mate-

rial respects, in compliance with the ESEF Regulation.

Copenhagen, February 27, 2024

EY Godkendt Revisionspartnerselskab

Christian Schwenn Johansen Rasmus Bloch Jespersen

State Authorised

Public Accountant

State Authorised

Public Accountant

mne33234 mne35503

Zealand Pharma ∞ Annual Report 2023 159Contents The big picture Our business Sustainability Corporate governance Financial statements

Other

information

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 160

Company

information

Zealand Pharma A/S

Sydmarken 11

2860 Søborg

Denmark

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

info@zealandpharma.com

www.zealandpharma.com

Established

1998

Registered office

Gladsaxe

Auditors

EY Godkendt Revisionspartnerselskab

CVR no.: 30 70 02 28

Contents The big picture Our business Sustainability Corporate governance Financial statements Zealand Pharma ∞ Annual Report 2023 161

Zealand Pharma A/S

Sydmarken 11

DK-2860 Søborg

Denmark

Tel: +45 88 77 36 00

Fax: +45 88 77 38 98

CVR no.: 20 04 50 78

zealandpharma.com

Design og produktion: Noted