Zealand Pharma A/S (ZEAL) Earnings Call Transcript & Summary

Hello. Welcome you all again to the -- to another session of the Morgan Stanley 18th Annual Global Healthcare Conference. I'm one of the biotech analysts here. My name is David Lebowitz. Before we get started, I just need to go through the requisite disclosures. Please note that this webcast is for Morgan Stanley clients and appropriate Morgan Stanley employees only. This webcast is not for members of the press. If you are a member of the press, disconnect and reach out separately. For important disclosures, please see Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. And with that, in this session, I have from Zealand Pharmaceuticals, CEO, Emmanuel Dulac; and CFO, Matt Dallas. Zealand is a development stage biotechnology company focusing on developing peptide-based medicines. I guess if you could start out perhaps to give us a top line discussion of the team, of the company, the evolution, where you've come from and the overall mission?

Yes. Thank you, David, again, and good morning, everyone. I'm Emmanuel Dulac. I joined the company 1.5 years ago, and the Zealand Pharma has been in existence for over the last 20 years, establishing itself on the peptide-based platform. Zealand has harnessed peptide technology by prolonging the half-life of peptides and as well developing formulations that can stabilize peptide in solutions so that we have ready to inject products. The company has basically followed the biology, and we have actually developed endogenous peptides to tackle -- to develop GI as well as metabolic therapeutic areas. We have today 2 franchises built around these 2 therapeutic areas, and we have set a foot about 5 years ago into immunology. And I think it came to friction when we signed a deal with Alexion 1.5 years ago on the complement -- peptide complemented agonist. So that's actually has been the setup for the company and the platform that brought us to where we are today.

Excellent. I guess, let's start off with dasiglucagon. Certainly, for hypoglycemia, you have an NDA that's currently outstanding. Could you run us through the data that we've seen to this point for dasiglucagon?

Yes. Well, dasiglucagon by itself is a franchise. We have 4 ongoing applications right now. We have 1, as you say, that -- which is in review with the FDA. It's for an acute response of severe hypoglycemia in patients. It comes in the form of a device drug combination of a pen -- rescue pen, and it is actually -- the PDUFA date is for March 27, 2021. We had 3 -- we have produced 3 Phase III studies with this compound, which has shown -- each one of them have shown a rapid response, rapid response as well as ready-to-inject solutions. Then we have actually another indications with -- which is another drug-device combination on the basis of dasiglucagon, which is for a rare disease called congenital hyperinsulinism, which are babies born with this overproduction of insulin, and we try to balance this overproduction with the right supply of glucagon -- dasiglucagon. We have a third application, which is a micro dosing of this dasiglucagon, which is -- comes in a multi-dose pen. We are developing today the pen itself as well as the second applications. We have produced Phase II data on this one. And then we have produced Phase II data for dual-hormone pump, which is a combination between a device, which is developed by Beta Bionics, a company based in Boston, of a pump that would actually give both the insulin and the dasiglucagon on demand to patients who are type 1 diabetic patients and needs hormone replacement therapy.

Given the current NDA in the U.S. right now, what do you expect the first label would actually comprise?

So the application is for rescue pen for severe hypoglycemic patients and that would be actually for diabetic patients in general. There are several formulations and forms available in the market. But these new novel, actually, advice and solution would come at a time when HCPs and patients are actually making their choice of options right now. So it comes at the right time for them. The market hasn't seen innovations for a very long time. There was 2 novel solutions introduced last year. We believe that the patients are still looking for a rapid response of the ready-to-inject, simple-to-use pen, and that's what the HypoPal rescue pen would bring to the market.

I guess when you look at some of these other technologies coming in, and then you see what was there before in the standard of care, how ultimately do you think dasiglucagon fits in the marketplace?

Yes. As I said, there has been literally no promotion in this market and no innovation for the last 20 years. The glucagon powder has been in existence for many, many years. But the fit for a recombination therapy in an acute setting like severe hypoglycemia is not a good fit. So patients, as a result, were not necessarily embracing this because the recombination during this stressful period of few minutes, when someone is in the coma next to you and you have to do the recombination, doesn't fit the picture. And so as a result, there was no promotion by the pharma companies. These products were just left for use, but no real promotion. So now the introduction of the dasiglucagon HypoPal rescue pen, we offer a solution that will offer a simple-to-use, ready-to-inject rapid onset a product. We have 3 Phase III studies in different age groups, different weights, different conditions associated to this hypoglycemia, severe hypoglycemia and these 3 studies independently all showed that the HypoPal rescue pen could actually rescue -- bring the recovery in 10 minutes -- 10 minutes or less, which is a tremendous result, very potent, very fast and at the same time, simple to use. So we will see -- we wait for the final FDA review and the PDUFA date, as I said, is March 27, 2021. So very -- coming soon, but we are very excited by the prospects of what this product can bring to patients.

I guess, historically, how large is this market? And given that there might be some actual marketing dollars heading into this area after really not for a long time, how do you expect it to evolve going forward?

Yes. It's an interesting market, again, because we looked at the market potential, not the market itself. The number of the -- all the kits sold were around 1 million a year. So -- and around 500,000 patients were buying these kits. And on average, they would buy 2 kits to have 1 at home and 1 at school or 1 in the office. So that's how they would -- and usually, these kits would be stored with the insulin -- along with insulin, so in the fridge. So that when the patients would actually passed out, the people surrounding him would know where the kit is. You don't want to necessarily go around and look for it, you have to know where it is stored. So very, I would say, interesting market, but no promotion, no real fit for the situation. So the market potential is interesting because if you have to assess, the entire Type 1 diabetic patients would actually probably require a rescue solution. The entire insulin-dependent Type 2 diabetic patients would actually require rescue solution around. So that's around 6 million patients total in the U.S. And again, I bring you back, only 500,000 patients today are buying these -- were buying these order kits. So we are very interested to see how these markets would evolve, and how this new product that offers really like a simple solution and efficacious solution will actually transform this market.

Excellent. Where are your efforts in launch preparations at this point?

We have -- maybe, Matt, do you want to actually take this one and talk about the integration?

In April, we completed an asset purchase agreement with Valeritas. With that, we brought over the V-Go wearable insulin delivery device as well as the majority of their commercial team. With that, we were able to kind of form the backbone of what will be the commercial team that we used to launch, not only the rescue pen but our subsequent indications down the road for dasiglucagon. So with that, we have a strong commercial team in place. We brought in Frank Sanders recently from Sage to head the U.S. commercial operations. So the team is being augmented -- so the launch plans being developed right now.

Excellent. I guess the V-Go is pretty much the exact same population that would be for this as well. So they were already kind of at the proper geographies?

Yes, that's correct. V-Go is actually detailed to high insulin prescribers. And so these are the prescribers that would actually as well right for HypoPal rescue pen. So definitely -- so they have actually a relationship not, of course, with the entire, but we have a good number and the highest, would say, prescribers of this group. They have established as well a network of people influencers. They know the payers in this field as well. So it's -- for us, it was very fortunate that we were able to onboard this team with, again, the network and relationships. And then on top of that, we're adding up our pipeline. The entire pipeline we have in metabolic and endocrinology will actually, I would say, reignite their efforts into changing this market, enabling this market to the next level. So we are -- it's a match made in heaven. We are very happy that we were able to coordinate this acquisition at the right time for us.

Excellent. So what is congenital hyperinsulinism?

Yes. It's an ultra-rare disease that goes by, again, abbreviation of CHI. There is around 300 patients born to what we know. There's, again, as usual, rare disease, ultra-rare disease, very little information in it until you start really working on it. But for what we know in terms of publications today, we can assess there's around 300 patients born. And usually the numbers that we know are of -- are probably most of the time in rare disease are the tip of the iceberg. But we know of 300 patients being born in the U.S. annually. Around 2,000 patients alive with the disease today. We have run 2 studies, 1 in what we call the older patient population, patients who are aged from 3 months old to 12 years old, and we completed this study a month ago. We will actually release the data later this year about this older patient study, 32 patients, so fairly large for a rare disease. And then we have a younger patient study for babies who are born -- just born, so from 7 days old to 1 year old. And this one is still running. We hope to complete it this year, before the end of the year, but the data release will be next year.

Would this indication lead to a PRV, if successful?

No, because it's not the first indication. It will come after the rescue pen. So no, certainly not.

Okay. I guess, what is the market opportunity, given that this is going to be an approved therapy for a much broader market, but at the same time being approved for this ultra-rare indication?

Yes. Again, I spoke about the U.S. numbers of patients that we know of. But as any rare disease, it's a global issue. So we will make sure that we tackle these patients and we serve these patients globally. And if you take it as a global market, it's actually substantial. It's a very interesting opportunity for us. What's really interesting as well is how transformative this disease -- therapy is for them. So these babies are born by over producing insulin, their pancreas is hyperactive. And so very early in life, they actually get seizures, several days sometimes. So they cannot be discharged from the hospital right away. They have to be stabilized. The way to stabilize them is to put that on IV glucose under highly surveillance, medical surveillance. And then when you discharge them from home, ultimately, if you can, then you will have to survey again them through the night. Some patients are being awaken every 2 hours to be fed, so that they don't fall into this deep hypoglycemic situation. So the pump -- we developed actually this continuous infusion pump with dasiglucagon inside, which actually will balance out the over production of insulin. And so once the pump is plugged, the idea is that these patients can be dischargeable and live a near-normal life. I think it's very critical for them as well because they are born with these defects. So their organs are not developing normally, if you don't supply that enough blood glucose, I mean, sugar, if you don't normalize it, so especially the brain. So that's actually a critical disease, and we will make sure that we serve them around the world, which makes it, for us, a great opportunity as well for the company to establish a footprint, not only in the U.S. but as well starting to expand outside of the U.S. market through the rare disease opportunity.

Excellent. So let's move on to short bowel syndrome. Could you tell us about glepaglutide and its mechanism of action?