annual report science-to-life

Transcription

1 annual report science-to-life

2 Company Information Zealand Pharma A/S Smedeland 36 DK-2600 Glostrup Denmark Tel: Fax: CVR no.: Established 1. April 1997 Registered office: Albertslund Financial year: 1 January 31 December Board of Directors Daan J. Ellens, Chairman of the Board Peter Benson Alain Munoz Jean-Christophe Renondin Christian Herskind Thomas Tscherning Christian Thorkildsen Helle Størum Executive Management Board David H. Solomon Mogens Vang Rasmussen Auditors Grant Thornton Incorporated State Authorised Public Accountants Stockholmsgade 45 DK-2100 Copenhagen Ø

3 3 table of contents Company Profile Financial Review Product Pipeline Mission and Vision Zealand s success of the last 10 years Management Letter Press Releases 2008 Key Figures Lead Development AVE0010/ZP10 (Type 2 Diabetes) Financial Review 2008 Corporate Governance Share Ownership Financial Policy Statement by the Management Independent Auditor s Report Accounting Policies Income Statement 2008 Balance Sheet at 31 December 2008 Cash Flow Statement Statement of Changes in Equity Notes 13 ZP1609/ GAP-134 (Cardiac Arrhythmias) 14 GLP-2 story 16 ZP1848 (Inflammatory Bowel Disease) 17 ZP1846 (Chemotherapy-Induced Diarrhea) Executive Management Board Board of Directors

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5 5 product pipeline Early Drug Late Drug Pre-Clinical Phase I Phase II Phase III Discovery Discovery Development AVE0010/ZP10 Type 2 Diabetes (Partnered with Sanofi-Aventis) AP214/ZP1480 Post-surgical Organ Failure (Partnered with Action Pharma) ZP1846 Chemotherapy-Induced Diarrhea (Partnered with Helsinn Healthcare) ZP1609 /GAP134 Atrial Fibrillation (Partnered with Wyeth Pharmaceuticals) ZP1848 Inflammatory Bowel Disease ZP2307 Osteoporosis ZP2435 Obesity, Diabetes Gap Junction Modulation, Arrhythmias, Diabetes, Obesity Zealand s overall focus is to create maximum value by bringing innovative peptide drugs with significant therapeutic and commercial potential rapidly and efficiently to the market to meet patients unmet clinical needs. Zealand s vision To be the European technology leader in research and development of peptide drugs. To have a strong and risk diverse product pipeline with products close to the market. To provide a sustainable platform for efficient development of peptide drugs, using our proprietary technologies. To form alliances whenever they serve our business purpose. To keep certain marketing rights to our products that allow us to establish our own marketing organizations in certain territories. To be a preferred employer through our standards, our values and a nurturing workplace environment.

6 6 Zealand s success of the last 10 years building a strong pipeline validated by major global commercial partnerships, has positioned Zealand for future success as a leading peptide development company. Zealand s strength is based on a strong financial position and a focused strategy. Zealand Pharma was founded in 1998 and has achieved a significant position for a company of our size and age. In 10 years Zealand s scientists have built a unique peptide pipeline of proprietary programs, seven of which have entered into clinical development. Our current development portfolio consists of: In addition, Zealand has a number of early stage lead development programs targeting a variety of disease areas and indications which represent unmet clinical need and significant market potentials, for example, obesity, type 2 diabetes, dyslipidemia, cardiac arrhythmias, acute kidney injury and osteoporosis. One Phase III compound AVE0010/ZP10 for Type 2 Diabetes One Phase II compound AP214/ZP1480 for Post-surgical Organ Failure Three compounds in Phase I ZP1609/GAP-134 for Atrial Fibrillation ZP1846 for Chemotherapy-Induced Diarrhea ZP1848 for Inflammatory Bowel Disease All of Zealand s drugs have emerged from our own drug development process. Our technology is commercially validated through global partnerships with major pharmaceutical companies, including Sanofi-Aventis (ZP10), Wyeth (ZP1609), Helsinn Healthcare (ZP1846) and Action Pharma (ZP1480). In 2003 Zealand was honoured as Entrepreneur of the Year within the biotech category by Ernest & Young and in 2008 Zealand was awarded The European R&D Company of the Year by Frost & Sullivan. During the 10 years in operation, Zealand has: Synthesized more than 2000 peptide compounds Filed 226 patent applications in 24 patent families Published more than 100 articles, posters and abstracts Received revenue from upfront payment, development milestones and research contractual work Signed four partnering deals with some of the biggest global pharmaceutical companies

7 7 No. of Synthesized Peptide Compounds Employees year end No. of synthesized peptide compounds Employees year end Accumulated no. of synthesized peptide compounds Revenue DKK No. of Patent Families No. of Patent Families Revenues 10 5 Accumulated no. of Patent Families per year Accumulated Revenues

8 8 Management letter New Milestones reached in 2008 We are pleased to report that 10 years after establishment of Zealand Pharma A/S in 1998, Zealand has reached new significant milestones in The recent global financial crisis has impacted all biotechnology and pharmaceutical companies. Through this crisis, despite a strong financial position, Zealand Pharma has developed a care and a discipline regarding our cash management, and the clinical and drug development programs we support. We believe that this discipline together with our strong pipeline and ongoing Global Partnerships will allow us to achieve significant success in the coming year. In May, worldwide Phase III clinical development was initiated for Zealand s GLP-1 Agonist AVE0010/ ZP10 licensed to Sanofi-Aventis. In November, Zealand and Helsinn Healthcare announced the signing of a partnering agreement, for the development and worldwide commercialization of Zealand s ZP1846, a Glucagon-like Peptide-2 (GLP-2) receptor agonist, which provides a novel way to treat Chemotherapy-Induced Diarrhea (CID), a debilitating condition affecting patients undergoing cancer treatment with a range of chemotherapies. Partnering ZP1846 with Helsinn Healthcare once again demonstrates Zealand s ability to bring innovative peptide projects from idea to clinical development and partnering. This agreement is the third major agreement concluded within the 10 year period of Zealand s existence and these important deals highlight the exciting compounds that our unique approach to drug discovery and development delivers. This approach which combines a creative drug development culture with a strong focus on commercialization, has enabled us to successfully progress ZP1846 from discovery through to clinical trials in just four years, creating significant value for our shareholders. AVE0010/ZP10 In May 2008, Sanofi-Aventis initiated Phase III clinical programs for the GLP-1 agonist AVE0010/ ZP10 licensed from Zealand. The program includes over 3,000 diabetic patients and will evaluate a once-a-day injection of AVE0010/ZP10 in combination with the principal existing treatments (metformin, sulfonylurea, insulin), as well as a comparison with exenatide and a monotherapy study. Submission for registration in the EU/US is expected in ZP120 In the absence of clinically available vasodilatory drugs that preferentially reduce systolic blood pressure, Zealand has during 2008, after consultation with cardio vascular experts, evaluated the opportunity to use ZP120 effectively in the treatment of Isolated Systolic Hypertension (ISH). Unfortunately, as the efficacy from Zealand s animal experiments related to the NOP receptor properties cannot be reproduced in man and as the hypotensive effects are inconsistent, Zealand has decided to terminate the project. ZP1609/GAP-134 Zealand Pharma entered into a development and license agreement with Wyeth Pharmaceuticals in 2003 to co-develop gap junction modifiers for the treatment of cardiovascular diseases. Successive agreements granted Wyeth rights to the unique Zealand compound library for novel molecules with potential gap junctional modifying properties. From this library the two companies have identified ZP1609/GAP-134, a small modified dipeptide, as a potent and selective gap junction modifier with oral bioavailability. In 2008, Wyeth s arrhythmia Learn Team has reassessed the clinical strategy for ZP1609/GAP-134 and a POC strategy for GAP-134 has been endorsed. This will involve studying GAP-134 in prevention of Postoperative Atrial Fibrillation using i.v. dosing in hospital and oral dosing after discharge. In 2008, Wyeth conducted the Phase I clinical trial for the i.v. formulation and has decided to advance this first orally available gap junction modifier ZP1609/ GAP-134 into Phase I clinical trials in the US in the beginning of ZP1609/GAP-134 has shown pharmacological effects in animal models of both ventricular and atrial arrhythmias, and with its oral formulation, the molecule represents a novel paradigm for the potential prevention of chronic cardiac arrhythmias. ZP1846 ZP1846 is a peptide, which incorporates Zealand s proprietary SIP technology, developed as a therapy for the prevention and treatment of Chemotherapy- Induced Diarrhea, a debilitating adverse reaction affecting patients undergoing treatment with many cancer chemotherapies. In the first half of 2008, Zealand completed a Phase I double-blind, placebo controlled, randomized, escalating intravenous single dose safety and tolerability study of ZP1846 in healthy volunteers in the US. Zealand obtained its primary objectives of the Phase I study, which were to investigate the safety, tolerability and maximum tolerable single dose (MTD) of ZP1846 administered as i.v. bolus or subcutaneous injections to healthy volunteers. In November, Zealand and Helsinn Healthcare announced that they have signed a partnering

9 9 agreement for the development and worldwide commercialization of ZP1846. Under the terms of the agreement, Helsinn Healthcare will receive a worldwide exclusive license to ZP1846 and will be responsible for all further development, regulatory approvals, manufacturing, marketing and sales of the compound either on its own or through its sublicensees. In return Helsinn Healthcare will pay Zealand development milestones and sales milestones for an undisclosed amount. In addition, Zealand will receive royalties on future sales and has retained marketing rights to the Nordic countries. The total value of the non-royalty portion of the partnership is valued up to 140 million. ZP1848 ZP1848 is a novel peptide targeted as a subcutaneous injection for the treatment of acute inflammation in patients with Inflammatory Bowel Disease (IBD). Inflammation induces significant damage to the small intestinal mucosa and serosa, which in turn, aggravates the severity and perpetuates the inflammation. ZP1848 is a novel Glucagon-like Peptide-2 (GLP-2) agonist that has a regenerative effect on the intestine by stimulating mucosal growth and thereby enhancing recovery from inflammation. In pre-clinical studies ZP1848 has been shown to attenuate small intestinal inflammation and enhance recovery from inflammation in an experimental model of IBD. ZP1848 is advancing through an extensive pre-clinical toxicology and safety pharmacology program as recommended by the FDA, and an IND was submitted in the US in Zealand intends to bring ZP1848 through a Phase Ia escalating single dose study followed by a Phase Ib study including Crohn s disease patients in remission in addition to healthy volunteers, all dosed for up to 14 days with one dose of ZP1848. Dr. David Solomon brings more than 20 years of experience in medical research, healthcare investing, and key biopharmaceutical and medical device operating roles. He has extensive experience in pharmacology research, having served as a faculty member at Columbia University s College of Physicians and Surgeons in New York, NY, as well as leadership positions at several biotechnology, pharmaceutical and medical device companies, including Remedy Pharmaceuticals and Critical Diagnostics, both in New York. From , Dr. Solomon led healthcare investing at Carrot Capital Healthcare Ventures. Most recently, Dr. Solomon served as Chief Operating Officer of Vital Sensors, Inc. Dr. Solomon studied medicine and received his doctorate at Cornell University Medical College and the Sloan-Kettering division of its Graduate School of Medical Sciences, in New York City. Dr. Solomon succeeds Interim CEO Mogens Vang Rasmussen who will continue at Zealand as Executive Vice President, Chief Operating Officer and Chief Financial Officer. As a result of the partnership with Helsinn Healthcare, Zealand received an upfront payment during For the second year in the row Zealand has significant revenue. Combined with a reduction in cost the strengthened financial position enables Zealand to continue the clinical development of our most advanced programs and to bring new drugs into clinical development. These can come either from Zealand s own highly original research pipeline or later stage external inputs as a supplement to the traditional in-house development path. Zealand s strong cash position also provides us with a unique opportunity to pursue various strategic opportunities, including alliances or joining forces with a larger partner with interest in taking over Zealand s portfolio of compounds, projects and competencies. In April, shareholders of Zealand Pharma A/S elected Dr. Daan J. Ellens as Chairman of the Board of Directors. At an Extraordinary General Meeting in October, Mr. Jens W. Kindtler resigned from the Board of Directors and shareholders elected Dr. Thomas Tscherning as new member of Zealand s Board of Directors. With the progress of Zealand s clinical programs and the build-up of a solid discovery portfolio, we believe that Zealand possesses a rich product portfolio that holds great promise for the years to come. During 2008, we continued to strengthen our technical capabilities with competences in all aspects of peptide sciences and we have further advanced our flexible project organization to examine a range of pipeline and strategic options. Zealand s team spirit and our quest for transforming new opportunities from peptide science into novel drugs that provide better outcomes for patients is the catalyst for inspiring a progressive work environment at Zealand was a challenging year and we would like to thank Zealand s employees for their highly professional and committed efforts throughout the year. Owing their tremendous motivation and hard work it has been possible to reach our common goals and to stay focused in our lead and product development efforts to build further value. We believe that the continuation of the commitment will lead to significant results in Finally, we would like to thank our Board of Directors for their dedication and support throughout the year. Their important contribution continues to be an important inspiration in our pursuit of the company s strategic goals and objectives. Organization 2008 has been a year of substantial progress for Zealand and in August Zealand announced that Dr. David H. Solomon had been appointed President and Chief Executive Officer. Dr. David H. Solomon Mogens Vang Rasmussen President and Chief Executive Officer Executive Vice President, Chief Operating Officer and Chief Financial Officer

10 10 Press Releases February 2008 Phase III program for AVE0010/ZP10 licensed from Zealand Pharma A/S will begin in the first quarter of August 2008 Zealand Pharma today announced that Dr. David H Solomon has been appointed Chief Executive Officer 27 November 2008 Zealand Pharma and Helsinn Healthcare Sign a Partnering Agreement for ZP1846, a novel GLP-2 agonist

11 11 Key Figures DKK Income Statement Operating income 56,382 60,161 3,346 39,919 24,973 81,732 2,186 Research and Development Expenses -85, ,144-96,534-71,584-55,078-56,373-59,324 General and Administrative Expenses -15,308-17,544-13,232-26,138-13,462-11,157-10,234 Net Result (after tax) -33,732-55,000-98,991-43,307-47,161 15,289-68,401 Earnings per Share basic and diluted (DKK) Balance Sheet (31 December) Cash in Hand and Cash Equivalents 209, , , ,296 21,187 72,647 16,696 Total Assets 225, , , ,641 34,511 85,257 34,692 Share Capital ( 000 shares) 17,682 17,682 17,682 12,002 2,633 2,633 1,497 Shareholders Equity 208, , , ,042-35,724 10,813-42,696 Number of Full Time Employees (year end) Compounds in Clinical Development (year end)

12 12 lead development From project identification to clinical lead candidate: A focused and integrated approach In-house initiated projects Validated Concept Clinical Lead Candidate Out-Licensing Lead Development Product Development Introduction Zealand Pharma s primary focus is to develop validated peptide-based target molecules into pipeline drugs with a strong clinical and commercial potential. The development process at Zealand begins with Lead Development, which includes: Identification and selection of peptide programs based on validated concepts that address a significant unmet medical need Focused development of target peptides into drug-like clinical lead candidates supported by a strong IPR platform and business case The clinical lead candidate is transferred to Product Development, which includes: IND enabling pre-clinical development Early-stage clinical development Generation of a strong project partnering package aiming at out-licensing in Phase Ib or at most, IIa Zealand Pharma s demonstrated competency platform and strong external network within metabolic, cardiovascular and gastrointestinal diseases form the basis for pipeline development Over the last 10 years, Zealand has built and demonstrated a strong in-house platform for development of peptide-based drug candidates for treatment of metabolic, cardiovascular and gastrointestinal diseases. The internal competency platform is supported and strengthened by an extensive external academic network. Zealand s projects within metabolic, cardiovascular and gastrointestinal diseases have generated several current pipeline drugs including: Glucagon-like Peptide-1 analogue ZP10 out-licensed to Sanofi-Aventis (Phase III) GAP junction modifier ZP1609 out-licensed to Wyeth (Phase I) Glucagon-like Peptide-2 analogue ZP1846 partnered with Helsinn Healthcare (Phase I) Glucagon-like Peptide-2 analogue ZP1848 (Phase I) These pipeline drugs hold the potential to significantly improve the treatment options for metabolic, cardiovascular and gastrointestinal diseases. For indications outside the designated therapeutic focus areas, Zealand continues to be interested in new peptide-based opportunities, which address a significant unmet medical need and have a strong fit with Zealand s Lead Development competencies and integrated approach. Lead Development projects are selected by combining multi-disciplinary creativity Within each therapeutic focus area, a multi-disciplinary team of scientists, patent professionals and business analysts is assigned to facilitate effective assessment and early identification of unique approaches of promising peptide drug targets. Project ideas are evaluated and prioritized according to a set of pre-defined criteria designed to assure focus on projects, which: Address validated drug targets Hold the potential for a clinically and commercially attractive and competitive profile (i.e. a strong business case) Have a strong technological fit for Zealand Pharma Provide an opportunity for a solid IPR position To address the large unmet medical need within these major disease areas, Zealand is able to leverage its strengths, core competencies and track record to develop new and innovative drugs within the Type 2 Diabetes/metabolic diseases, cardiovascular/renal diseases and gastrointestinal diseases.

13 13 In-house initiated projects Validated Concept Clinical Lead Candidate Out-Licensing Lead Development Product Development Ex-house initiated projects Validated Concept Clinical Lead Candidate Out-Licensing Zealand s documented processes for development of target peptides into clinical lead candidates open opportunities for co-development scenarios Lead and Product Development at Zealand have established processes for developing target peptides into clinical lead candidates and early pipeline drugs. The processes are supported by in-house departments focusing on design and technological implementation within: Peptide chemistry and pre-formulation In vitro assay development and compound characterization Pharmacokinetics and bioanalysis for compound determination Determining compound efficacy in a range of rodent and rabbit disease models Zealand s demonstrated Lead Development platform opens an opportunity for in-licensing and co-development scenarios for university- and biotech-generated peptide projects and delivery technologies. Progress to clinical lead candidate is facilitated by careful planning and project support and execution Upon selection of a project for Lead Development, a multi-disciplinary project team is formed with the aim of driving the project along the critical path through Lead Development. Initially, the project team in collaboration with management outlines the target product profile of the future drug. The target product profile then forms the basis for defining the profile of the future clinical lead candidate in terms of: Physical-chemical properties Potency and selectivity Pharmacokinetics Efficacy and preliminary safety in animal models IPR i.e. properties that support the potential of the clinical lead candidate for further development into a clinically and commercially attractive product. Based on the target profile, decision points, go/nogo criteria and risk profile are delineated followed by development and implementation of a detailed project plan. In summary, Zealand s primary focus is to add value through developing and validating peptide-based target molecules into pipeline drugs with strong clinical and commercial potential. The development process at Zealand begins with Lead Development, which includes identification and selection of peptide-based projects followed by development of the target peptide into a clinical lead candidate. The clinical lead candidate is further advanced through early clinical development by Product Development aiming at building a strong package for out-licensing after Phase I to IIa. Zealand s proven and documented competencies and focused, integrated processes for development of target peptides into clinical lead candidates open opportunities for internally initiated projects as well as in-licensing and co-development scenarios for university- or biotech-generated peptide projects and delivery technologies. The Lead Development project teams work closely together with the departments in order to optimize resource planning and identify project synergies thereby facilitating progress of both the individual projects and the pipeline.

14 14 AVE0010/ZP10 New GLP-1 agonist with superior profile Science AVE0010/ZP10 is a Glucagon-like Peptide-1, or GLP-1, receptor agonist from Zealand s own lead development laboratories that incorporates Zealand s SIP technology and is being developed for the treatment of Type 2 Diabetes in adults who have not achieved adequate glycemic control. The compound mimics the endogenous hormone GLP-1 which is released from specialized cells in the small intestinal wall in response to food intake. The aim of this hormone is to stimulate insulin secretion when blood glucose increases during food intake, suppress the production of glucagon which otherwise would liberate glucose from the glucose depot in the liver, and delay the absorption of food from the gut. These are the three different mechanisms of action by which the blood sugar concentration synergistically is kept under control. GLP-1 only stimulates the liberation of insulin in cases of elevated blood sugar levels but not during periods of normal or low blood sugar. This reduces the risk of hypoglycaemia (low blood sugar levels). The aim of our research was to design a GLP-1 like compound with long lasting anti-diabetic effect and with limited or no nausea. The compound was out-licensed to Sanofi-Aventis in June 2003, and Sanofi-Aventis is responsible for all further development, manufacturing and marketing of the product candidate. In March 2005, Sanofi- Aventis completed a 28-days double blind, randomized, placebo-controlled Phase II clinical study of AVE0010/ZP10 in well-controlled Type 2 diabetic patients. The compound was found to be safe and well tolerated in this trial. Furthermore, a statistically significant reduction in aftermeal blood sugar levels was observed at the highest well tolerated dose. Importantly, although nausea is a common side effect of GLP-1 compounds, four weeks treatment with AVE0010/ZP10 was not associated with increased nausea relative to placebo. In the second half of 2007, Sanofi-Aventis successfully completed their double blind, placebo controlled Phase II dose ranging study for AVE0010/ ZP10 in 500 Metformin-treated patients with Type 2 Diabetes, meeting their primary endpoint of a reduction of the HbA1c levels at the end of treatment. In line with observations from treatment with AVE0010/ZP10 for up to 28 days, once daily dosing with doses that produced marked lowering of HbA1c during 13 weeks of treatment were associated with low incidence of nausea. In addition, treatment with AVE0010/ZP10 was associated with significant weight loss in obese diabetic patients. In May 2008, the first patients were enrolled into a global Phase III program for a short acting formulation. The submission for an NDA/MAA is expected to be filed in 2010 with an expected approval in Life Insulin is a naturally occurring, or endogenous, protein that is synthesized in the beta cells in the pancreas and is necessary for the body to be able to use blood sugar effectively. Insulin is responsible for transporting sugar from the blood into the cells in all tissues. Diabetics have an insufficient production of insulin. In patients with Type 2 Diabetes, often referred to as Adult Onset Diabetes, cells become less sensitive to insulin. Moreover, in late stages of the disease, the pancreas loses the ability to produce sufficient insulin. Type 2 Diabetes is the most common form of diabetes and is caused by both genetic and environmental factors, such as obesity. As a result, the blood sugar is not sufficiently controlled. Type 2 Diabetes is a disease with an alarming growth not only in the industrialized world but now also entering into less industrially developed part of the world. If Type 2 Diabetes is not successfully treated, the patient risks developing severe complications such as stroke, heart attacks, heart failure, kidney failure, blindness and disorders in peripheral nerves. Existing therapy is capable of controlling blood sugar in the first years of the disease but looses its effect over time due to progression of the disease and the compounds have a number of side effects among which weight gain and hypoglycaemia are among the most common. Consequently there is a strong need for an alternative treatment of Type 2 Diabetes and AVE0010/ ZP10 belongs to a new class of compounds which has the potential to delay progression of the disease and facilitate weight loss.

15 15 ZP1609/GAP-134 Pioneering gap junction programs for the treatment of Cardiac Arrhythmia Science Gap junctions are specialized pores that ensure the coordinated transmission of electrical impulses from cell to cell across the heart. This spreading is essential for synchronized contraction of the heart. During a heart attack (acute myocardial infarction) or during chronic heart disease, gap junction pores close, which inhibit spreading of electrical impulses. As a result, electrical impulses take atypical routes which may lead to irregular heart beats, or arrhythmias, and death. Using pre-clinical animal models, we demonstrated that our first generation gap junction modifier Rotigaptide specifically inhibits the re-entry arrhythmia mechanism by normalizing the electrical conduction in the heart and preventing life-threatening arrhythmias during conditions. Zealand Pharma entered into a development and license agreement with Wyeth Pharmaceuticals in 2003 to co-develop gap junction modifiers for the treatment of cardiovascular diseases. Successive agreements granted Wyeth rights to the unique Zealand compound library for novel compounds with potential gap junction modifying properties. From this library, the two companies have identified ZP1609/GAP-134, a small modified dipeptide, as a potent and selective second generation gap junction modifier with oral bioavailability. Following identification of an orally available gap junction modifier, further development of Rotigaptide has been stopped. ZP1609/GAP-134 shows promise for the prevention of Postoperative Atrial Fibrillation (AF) and the maintenance of sinus rhythm in patients with chronic AF. At the annual American Heart Association Meeting in November 2007, compelling data were presented, which showed that ZP1609/GAP-134 prevents postoperative AF and chronic AF in large animal models. In a canine model of acute sterile pericarditis, ZP1609/GAP-134 significantly reduced AF duration and overall AF burden. In a canine model of heart failure, induced by dual chamber simultaneous pacing of the right atria and right ventricle, ZP1609/ GAP-134 significantly reduced mean AF duration, number of AF episodes and inducibility. This canine heart failure model is designed to mimic patients in the early stages of heart failure presenting with AF requiring cardioversion and chronic maintenance of sinus rhythm therapy. These results demonstrate that ZP1609/GAP-134 is a novel antiarrhythmic agent that may be effective for the maintenance of sinus rhythm in patients with postoperative or chronic AF. In October 2008, Wyeth advanced this first orally available gap junction modifier ZP1609/GAP-134 into Phase I clinical trials in the US. With its oral formulation, this molecule represents a novel paradigm for the potential chronic prevention of both atrial and ventricular cardiac arrhythmias. Following completion of a Phase I study for the oral GAP-134, Wyeth will initiate a Phase II for the i.v. form, ZP 1609, for the treatment of AF following coronary artery bypass graft (CABG) surgery. Life Atrial Fibrillation (AF) is the most common sustained arrhythmia in Western patient populations, affecting almost 10% of persons aged 75 or more. With the increased life expectancy and the improved treatment of patients with ischemic heart disease leading to longer survival of this patient population, the prevalence of AF is expected to reach epidemic proportions as the population age. AF is a disease that is most frequently found in patients with chronic cardiovascular disease (e.g. hypertensive, congestive, ischemic, and valvular heart disease). It is a serious disorder associated with an increased risk of stroke (3-5 fold increased risk), morbidity and mortality ( fold increase). AF is the leading cause of hospitalization for arrhythmia and it has serious impact on quality of life. Postoperative AF is common in patients undergoing cardiac surgery (G Incidence: 625,000 operations). Risk of AF following valve surgeries is 1 in 2 and for coronary artery by-pass grafting, it is 1 in 3. The consequences of postoperative AF are increased hospital length of stay and increased risk of postoperative stroke. ZP1609/GAP-134 may provide a safe and well-tolerated treatment option for Atrial Fibrillation patients with or without structural heart disease or heart failure, for whom the long-term maintenance of normal sinus rhythm is the strategy of choice thereby providing patients an improved quality of life.

16 16 glp-2 story

17 17 Glucagon-like Peptide-2 (GLP-2) is a naturally occurring peptide hormone that enhances the regeneration of the compromised small intestinal epithelium in animals and humans. At Zealand Pharma we have developed a number of potent and biologically stable GLP-2 agonists targeted for the treatment of gastrointestinal indications. The small intestinal epithelium has a dynamic cell population which ensures that the structure and function of the small intestine are maintained The small intestinal epithelium is a dynamic tissue in which cells are constantly being removed and replaced with newly differentiated cells. The epithelium is a single layer of cells consisting primarily of three cell types: enterocytes (site of nutrient digestion and absorption), enteroendocrine cells (site of peptide and hormone synthesis) and goblet cells (site of mucous production). This heterogeneous cell composition of the small intestinal epithelium together with the intrinsic ability of the small intestine to frequently replenish its cell population ensures that both the structure and function of the small intestine are maintained. Glucagon-like Peptide-2 stimulates the natural renewal of the small intestinal epithelium Glucagon-like Peptide-2 (GLP-2) is a peptide hormone produced primarily by the enteroendocrine L cells of the small intestine. It is secreted in response to food ingestion and acts via binding to the GLP-2 receptor, which is primarily expressed in the gastrointestinal tract. chemotherapy-induced mucositis, ischemia-reperfusion injury and Inflammatory Bowel Disease (IBD), investigators worldwide have demonstrated that treatment with GLP-2 decreases disease severity and enhances animal survival. This beneficial effect of GLP-2 in these pre-clinical models, in which the structure and/or function of the small intestine is altered, clearly indicates that the compromised gastrointestinal tract maintains responsiveness to GLP-2. In addition to the effect in animals, GLP-2 has also been shown to be therapeutically beneficial in humans. In studies published in Gastroenterology, Jeppesen and his group convincingly showed that chronic treatment with GLP-2 enhanced nutritional status in patients with Short Bowel Syndrome. In conclusion, the observations that GLP-2 enhances the self renewal potential and function of the small intestine together with the demonstration that GLP-2 is therapeutically effective in man strongly suggests that GLP-2 is an attractive therapeutic candidate for the treatment of intestinal injury and/or disease. GLP-2 has multiple, beneficial effects in the healthy or compromised small intestine. use of GLP-2 in the treatment of gastrointestinal disorders. Nevertheless, a significant challenge for the use of GLP-2 clinically is the observation that GLP-2 is rapidly deactivated and excreted from the body. At Zealand we have applied our knowledge of peptide stabilization and our proprietary SIP technology to produce a series of novel, stable GLP-2 peptide analogues that specifically enhance the growth and function of the small intestinal epithelium. We believe that these novel developed GLP-2 agonists will give Zealand the unique possibility to exploit the multiple beneficial effects of GLP-2 for the treatment of gastrointestinal disease. Two Zealand Pharma-developed GLP-2 agonists are currently in clinical development for the treatment of Inflammatory Bowel Disease and Chemotherapy- Induced Diarrhea. The statuses of these projects are presented on page 16 and 17. In animals, GLP-2 administration has been shown to stimulate small intestinal epithelial growth, to enhance nutrient digestion and absorption, to increase intestinal blood flow and to increase intestinal barrier function. Using a broad range of pre-clinical models of gut injury, including irradiation- and A series of stable and potent GLP-2 agonists have been developed at Zealand Pharma for the treatment of gastrointestinal disorders The specific and beneficial effects of GLP-2 in the small intestine have raised much interest as to the

18 18 zp1848 A Mucosal Regeneration Enhancer for the treatment of Inflammatory Bowel Disease Epithelial regeneration TNF-α Ulceration Barrier function Science ZP1848 is a novel Zealand Pharma-developed GLP-2 agonist in development for the treatment of Inflammatory Bowel Disease. ZP1848 was tested in an extensive pre-clinical toxicology and safety pharmacology program that was recommended by the Food and Drug Administration (FDA). In December 2008 an IND was submitted to the FDA and approved. Zealand is currently running a Phase I trial to assess the safety and tolerability of ZP1848 in healthy volunteers and Crohn s Disease patients. The Phase I study is a double-blind, placebocontrolled, randomized, escalating subcutaneous single dose in healthy volunteers followed by a multiple dosing in Crohn s Disease patients. The study is being conducted in the US. Zealand expects to conclude this study during Zealand has demonstrated that ZP1848 binds potently and selectively to the GLP-2 receptor. Thereafter we investigated the therapeutic effect of ZP1848 in two animal models of IBD: the indomethacin-induced small intestinal inflammation model and the dextran sodium sulphate (DSS)-induced colitis model. Indomethacin-induced small intestinal inflammation is characterized primarily by ulcerations in the small intestinal epithelium, increased concentrations of the pro-inflammatory cytokine, tumor necrosis factor (TNF-ɑ), and decreased barrier function of the small intestine. We have shown that ZP1848 decreases ulceration, TNF-ɑ concentrations and enhances barrier function. Similarly we have shown that ZP1848 decreases the concentrations of inflammation markers and decreased bodyweight loss in mice with DSS induced-colitis. The indomethacin-induced model of small intestinal inflammation and the DSS-induced model of colitis are well accepted by the scientific and clinical community as reliable models of human IBD and recognized as useful tools to assess the therapeutic potential of new drugs for the treatment of Crohn s Disease. The demonstrated reparative and antiinflammatory effects of ZP1848 taken together with the selectivity of ZP1848 for the exclusively located GLP-2 receptor clearly suggest that ZP1848 may be a promising, selective therapeutic that specifically targets and repairs the gastrointestinal tract of the IBD patient. ZP1848 targets and treats multiple pathologies in the indomethacin-induced model of Crohn s Disease. Life IBD is an umbrella term that encompasses primarily Crohn s Disease and Ulcerative Colitis. Crohn s Disease and Ulcerative Colitis are chronic conditions characterized by episodic inflammation within the gastrointestinal tract followed by spontaneous remission. The main difference between Crohn s Disease and Ulcerative Colitis is the location and nature of the inflammatory changes. Crohn s Disease may affect any part of the gastrointestinal tract, but most commonly affects the terminal ileum and proximal colon. Inflammation in Crohn s Disease is characterized by focal, asymmetrical, transmural and occasionally granulomatous ulcerations on the small intestinal epithelium. In contrast to Crohn s Disease, inflammation is only found on the epithelial surface of colon and the anus in Ulcerative Colitis. The most common symptoms of IBD include abdominal pain, cramping, fatigue and diarrhea. Other complications associated with IBD include skin rashes, arthritis, and inflammation of the eye. The etiology and pathogenesis of IBD is yet unknown but environmental, genetic and immune factors are known to play a role. The primary goal of treatment in IBD is to relieve and/or to prevent inflammation. Five main classes of drugs are used to achieve this goal: aminosalicylates, corticosteroids, immunosuppressants, antibiotics and biologic therapies. Surgery is also frequently necessary to relieve symptoms or to correct complications such as blockage, perforation, abscess, fistulas, or bleeding in the intestine. The currently available therapeutics are, however, associated with significant drawbacks such as serious side effects, frequent dosing and lack of therapeutic efficacy. Approximately 700,000 and 1.3 million people globally live with Crohn s Disease and Ulcerative Colitis. Interestingly the incidence of Crohn s Disease is on the rise whereas that of Ulcerative Colitis is stable in industrialized countries. In conclusion the inadequacies of the current treatment options in Crohn s Disease coupled with the rise in the incidence of Inflammatory Bowel Disease in the industrialized world highlights the need for more efficacious therapeutic approaches for the treatment of IBD.

19 19 zp1846 For the treatment of Chemotherapy-Induced Diarrhea Science ZP1846 was tested in a pre-clinical toxicology and safety pharmacology program and a Phase I study to document safety and tolerability. The study was conducted in the US in In pharmacological studies we have shown that ZP1846 attenuates or inhibits Chemotherapy-Induced Diarrhea (CID) in animal models, most likely by enhancing the regeneration and function of the small intestinal epithelium. On 26 November 2008 a partnering agreement was entered into with Helsinn Healthcare SA, for the development and worldwide commercialization of ZP1846 for the treatment of CID. Under the terms of the agreement, Helsinn Healthcare will receive a worldwide exclusive license to ZP1846 and will be responsible for all further development, regulatory approvals, manufacturing, marketing and sales of the compound either on its own or through its sublicensees. In return Helsinn Healthcare will pay Zealand development and sales milestones for an undisclosed amount. In addition, Zealand will receive royalties on future sales and has retained the marketing rights to the Nordic countries. The total value of the nonroyalty portion of the partnership is valued up to 140 million. Life Chemotherapeutic agents target and damage the rapidly proliferating tumor cell. Nevertheless at the same time, chemotherapeutic agents also destroy other rapidly proliferating cell proliferations, such as cells of the small intestinal epithelium. Due to this damage to the intestinal epithelium, up to 50% of patients undergoing chemotherapy treatment experience gastrointestinal-related side effects. Chemotherapy-induced damage to the intestinal epithelium is clinically referred to as mucositis and can lead to intestinal dysfunction and diarrhea. Chemotherapy-Induced Diarrhea (CID) is reported to occur in 50-80% of patients receiving certain chemotherapeutic regimens and as such CID has recently emerged as a debilitating and potentially life-threatening condition requiring clinical attention. The therapies that are currently available to treat CID are only palliative, and as such there is a high unmet medical need for novel efficacious therapeutics. ZP1846 is a novel GLP-2 agonist developed at Zealand Pharma and targeted for the treatment of CID.

20 20 management David H. Solomon President and Chief Executive Officer Dr. Solomon has extensive experience in pharmacology research, having served as a faculty member at Columbia University s College of Physicians and Surgeons in New York, NY as well as leadership positions at several biotechnology, pharmaceutical and medical device companies, including Remedy Pharmaceuticals and Critical Diagnostics, both in New York. From , Dr. Solomon led healthcare investing at Carrot Capital Healthcare Ventures. Most recently, Dr. Solomon served as Chief Operating Officer of Vital Sensors, Inc. Dr. Solomon studied medicine and received his doctorate at Cornell University Medical College and the Sloan-Kettering division of its Graduate School of Medical Sciences, in New York City. Mogens Vang Rasmussen Executive Vice President, Chief Operating Officer and Chief Financial Officer Responsible for IT, Investor Relations and Communications Mr. Vang Rasmussen obtained an MSc in Economics from the University of Copenhagen and supplemented his degree with executive seminars from INSEAD and Stanford Business School. Mr. Vang Rasmussen holds experience from Novo Nordisk A/S where he served as corporate controller and manager of investor relations at their headquarters in Denmark and later with Novo Nordisk in New York holding responsibility for their North American financial reporting and investor relations activities. Before joining Zealand Pharma, Mr. Vang Rasmussen served as Chief Financial Officer and later as Chief Executive Officer at MediCult a/s. Mr. Vang Rasmussen has been with Zealand Pharma since 2003.

21 21 board of directors Daan J. Ellens Chairman of the Board PhD (Molecular Biology) MBA Venture Partner Life Scienses Partners, Amsterdam, The Netherlands President, Elkerim GmbH, Milken, Switzerland Chairman of the Supervisory Board of: Prosensa B.V., Leiden, The Netherlands Hybrigenics SA, Paris, France Alain Munoz MD (Cardiology and Aneasthesiology) President, Amistad Pharma SA, France Chairman of the Supervisary Board: Novagali Pharma SA, France Member of the Board: Vivalis SA, France Auris medical AG, Switzerland Genesystem SA, France Jean-Christophe Renondin MD (Medical Biology) and MBA General Partner, CDC Innovation, Paris, France Member of the Board: Aptanomics, France Cytheris, France Kuros Biosurgery, Switzerland Novagali Pharma, France Picometrics, France TXCELL, France Xytis, US Christian Thorkildsen M.Sc. (Pharm) Project Leader, Development Elected by the employees Zealand Pharma A/S Member of the Board: Kreatech Holding B.V., Amsterdam, The Netherlands Helle Størum M.Sc. (Economics) Business Development Manager Business Development Elected by the employees, Zealand Pharma A/S Christian Herskind BA (law), LLM (int. business transactions) Peter Benson M.A. Econ Thomas Tscherning MD, MBA Bank Invest Biomedical Venture, Denmark Chairman of the Board: Zymenex A/S, Denmark F2G, Ltd., UK CEO Refshaleoen Holding A/S Chairman of the Board: Sumisura A/S Herskind Venture Capital Aps Member of the Board: Mannaz A/S, Denmark COOR Service Management A/S, Denmark Helsingør-Århus Real Estate K/S, Denmark Kongevejen K/S, Denmark Managing Partner, Sunstone Capital Member of the Board: Natimmune A/S, Denmark Virogates A/S, Denmark M2Medical Inc., Sunnyvale, California Alsensa ApS, Denmark Observer Tyge Korsgaard M.Sc. (Economics) Member of the Board: FEH A/S, Denmark KM Holding A/S, Denmark KM Rustfri A/S, Denmark M-K-S Holding A/S, Denmark Sophion Bioscience A/S, Denmark Vivolution A/S, Denmark

22 22 Financial Review 2008 Income statement Zealand s net result for the year 2008 was a loss of DKK 33.7 million as compared to a loss of DKK 55.0 million in The improvement in Zealand s net result is a result of lower research and development expenses in 2008 as compared to Revenue from upfront payment and milestone payments and administrative costs were approximately at the same level in 2008 as in the previous year. Personnel expenses increased to 48.1 million in 2008 from DKK 47.6 million in The total number of employees increased to 65 by the end of 2008 compared with 63 by the end of Administrative expenses in 2008 amounted to DKK 15.3 million. During 2008 Zealand was able to reduce administrative expenses by DKK 2.2 million as compared to Revenue Zealand s revenue decreased by DKK 3.6 million, from DKK 59.9 million in 2007 to DKK 56.3 million in In 2008 Zealand successfully partnered ZP1846 for the prevention of Chemotherapy-Induced Diarrhea with Helsinn Healthcare and received an upfront payment. In addition, Zealand received a milestone payment for AP214, out-licensed to Action Pharma for Postoperative Organ Failure to enter into Phase II clinical development. In 2007, Zealand received two milestone payments from Sanofi-Aventis for the completion of a 24 months stability test for the final formulation of AVE0010/ ZP10 and the successful completion of the Phase IIb trial for AVE0010/ZP10 in addition to a milestone payment from Wyeth Pharmaceuticals for the advancement of the first orally available gap junction modifier ZP1609/GAP-134 into Phase I clinical trials in the US. Other operating income Zealand s other operating income consisting of public grants for Ph.D. students amounted to DKK 0.1 million in Of the total expenses in 2008, 85% was directly related to R&D activities, including salaries to R&D staff, laboratory expenses and clinical expenses, whereas administrative expenses accounted for 15%. The percentage of total spending related to R&D activities is at the same level as in 2007 and emphasizes Zealand s continued commitment and focus on R&D. Operating result Zealand s loss from operations decreased from DKK 62.5 in 2007 to DKK 44.7 million in This decrease in the loss from operations resulted primarily from lower research and development expenses in 2008 as compared to Financial items Financial items amounted to a net gain of DKK 11.0 million in 2008 as compared to a net gain of DKK 7.5 million in Financial income amounted to DKK 11.2 million in 2008 equal to the level in 2007, whereas financial expenses decreased from DKK 3.7 million in 2007 to DKK 0.3 million in 2008 mainly due to currency adjustments related to the development in the USD currency rate. Expenses Total operating expenses amounted to DKK million in 2008 as compared to DKK million in The main reason for the decrease in total operating expenses is a decrease in research and development expenses of DKK 19.3 million from DKK million in 2007 to DKK 85.8 million in The development in research and development expenses in 2008 reflects the completion of the Phase I clinical studies in humans in the US, to further advancement in the pre-clinical development of ZP1848 for the treatment of Inflammatory Bowel Disease and the continued spending on Zealand s promising early stage peptide lead development products. Results from ordinary activities before tax Zealand s result before tax in 2008 was a loss of DKK 33.7 million as compared to a loss of DKK 55.0 million in 2007 due to the factors described under revenue, expenses and financial items. Tax on ordinary activities Deferred tax assets have not been recognized in the balance sheet due to uncertainty as to whether tax losses can be utilized. As a consequence, no tax on ordinary activities has been recognized in either 2008 or Capital expenditure Investment in new equipment amounted to DKK 3.4 million in 2008 as compared to DKK 2.4 million in 2007.