Zealand Pharma A/S

CSE:ZEAL

Earnings Call Transcript 2021-Q3

[Operator]

Good afternoon, everyone, and welcome to Zealand Pharma's Third Quarter 2021 Financial Results Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Matt Dallas, Senior Vice President and Chief Financial Officer. Matt, please go ahead.

[Matthew Donald Dallas, Senior VP & CFO]

Thank you, operator. Welcome, and thank you for joining today to discuss Zealand's third quarter results for 2021. I'm Matt Dallas, Senior Vice President and Chief Financial Officer at Zealand. With me today are Zealand's President and Chief Executive Officer, Emmanuel Dulac; President of Zealand Pharma U.S., Frank Sanders; and Chief Medical Officer and Head of Development, Adam Steensberg. You can find the related company announcement and additional supporting information on our website at zealandpharma.com. I would like to point out that we will be making forward-looking statements that are subject to risks and uncertainties. These statements are valid only as of today, and the company assumes no obligation to update them, except as required by law. Please refer to recent filings for a more complete picture of risks and other factors.And with that, I will turn the call over to President and CEO, Emmanuel Dulac.

[Emmanuel Dulac, CEO & President]

Thank you, Matt, and thanks to everyone for joining today. The third quarter updates, we will discuss on today's call underscore Zealand evolution as a fully integrated biopharmaceutical company. In Q3, we continue to execute on our commercial goals following the launch of Zegalogue in the U.S., while also sustaining momentum across the rest of our pipeline by advancing multiple clinical and preclinical programs that leverage our innovative peptide platform to address unmet needs in type 1 diabetes and rare disease. This continuous progress positions us well to achieve our goal of offering 5 marketed products by 2025 to patients around the globe with high unmet medical needs.Slide 4 illustrates the development of our company in relation to the successful execution of our strategy. Later in the call, our CMO and Head of Research and Development, Adam Steensberg, will discuss these pipeline updates in greater detail, including updates on glepaglutide in the treatment of short bowel syndrome or SBS, information on clinical data from our amylin analogue and clinical data from our Glucagon GLP-1 Dual-Agonist partnered with BI that were presented at the recent Obesity Society Annual Meeting, and more detail on our collaboration agreement with DEKA Research and Development Corporation to advance development of an infusion pump to be used with dasiglucagon, currently under investigation as a potential treatment option for congenital hyperinsulinism. But first, Frank Sanders, President of Zealand Pharma U.S. will discuss the work our commercial team has been doing on the Zegalogue launch.

[Frank Sanders, President of Zealand Pharma U.S]

Thank you, Emmanuel. Since Zegalogue was launched in late June, the U.S. commercial organization has been focused on securing favorable coverage on the drug formulary plans of PBMs and commercial and Medicaid plans to ensure that appropriate patients can receive Zegalogue with ease when it's prescribed. This involves driving demand with prescribers to signal to payers that the desire to prescribe Zegalogue is high. In a moment, I will speak to our progress in generating demand and our progress in securing favorable payer coverage for Zegalogue.Please refer to Slide 5. I want to share that Zegalogue is being viewed as an attractive treatment option for severe hypoglycemia by payers, patients and their caregivers and endocrinologists, both adult and pediatric endocrinologists. What's compelling about Zegalogue is the rapidity and consistency of recovery from severe hypoglycemia that was seen across all pivotal Phase III studies. This positioning is succinct and it's compelling, especially in the context of the severe hypoglycemic events, which can be terrifying for people with diabetes and their families. Rapid and reliable recovery from a severe hypoglycemic event in 10 minutes is important because during a severe hypoglycemic event every minute matters.On Slide 6, I'd like to take a moment to refer to the approved full indication and the important safety information for Zegalogue.On Slide 7, I will speak to the demand, which has continued to increase over the first 4 months since launch. As I spoke to in my opening remarks, generating early demand from health care prescribers is essential because it helps inspire payers to act more expeditiously in their formulary review activities. In the third quarter, approximately 3,800 total prescription claims for Zegalogue were submitted to commercial and government payers. Also, approximately 115 (sic) [ 515 ] distinct health care providers wrote prescriptions for Zegalogue. Most of these prescribers were endocrinologists, both adult and pediatric, and 62% of the prescribers were repeat prescribers writing Zegalogue multiple times in the quarter. On average, 1.9 units of Zegalogue per prescription were being dispensed. These are encouraging signs of underlying growth, which is observed to be increasing month-over-month.While demand continues to grow, it has not yet translated into a proportional level of revenue growth. What's different is that the rate of rejection of Zegalogue prescription claims by payers at the pharmacy is higher than we anticipated. We expect that this will begin to resolve as recent drug coverage decisions take effect.Please refer to Slide 8. Now I will speak to the results that our market access team has achieved since launch. Zegalogue coverage was limited in the third quarter, its first quarter of launch with only approximately 16% of commercial and 10% of Medicaid lives being covered. As previously mentioned, this level of coverage resulted in a higher-than-anticipated rate of rejection of prescription claims at the pharmacy. PBM and payer coverage has improved since launch. Recently, we've signed agreements with some of the largest PBMs and state Medicaid plans. The full impact of these coverage decisions will begin to be realized at the start of 2022 based on the timing of some of these arrangements. We will start the year off with approximately 70% coverage of commercial and 70% coverage of Medicaid lives having access to Zegalogue. This equates to approximately 130 million commercial and 50 million Medicaid recipients and will set the stage for growth in 2022. I want to thank our employees at Zealand for their work on building the U.S. commercial organization and executing the launch of Zegalogue. Zegalogue is an important launch on its own, but we expect that it's only the first of multiple potential new product launches in our near-term horizon.Now I will turn to Adam, who will provide an overview of the progress of our clinical development programs.

[Adam Sinding Steensberg]

Thank you, Frank. Please go to Slide 9. Here, you can see our robust pipeline targeting areas in 4 medical areas of high unmet medical needs. On the next slide, I'll take you through updates on several of these programs and begin with our efforts to transform management of type 1 diabetes.Please go to Slide 10. A recent study found that despite the many innovations in insulin, current pumps and continuous glucose monitors, only approximately 20% of people living with type 1 diabetes in the U.S. are at the recommended glycemic targets. As such, the majority of those people have elevated plasma glucose levels and therefore, are at increased risk of long-term complications. Moreover, all are at risk of experiencing dangerously low blood glucose if they take too much insulin. We are currently developing dasiglucagon for potential use in a bihormonal artificial pancreas system. In a smaller Phase II trial, we showed that the bihormonal iLet was able to achieve glycemic target for 90% of the participants. Importantly, this was achieved while only on average, they spent 0.2% of the time in hypoglycemia as seen to the right. We are, therefore, excited to confirm that we are moving towards start of Phase III later this quarter.Please go to Slide 11. The Phase III program for dasiglucagon in the iLet bihormonal artificial pancreas system has been discussed in details with the FDA and we are pursuing a broad indication with studies in both adults and children with type 1 diabetes. The program includes 3 sub trials and we'll begin with a single-arm, bihormonal-only safety and test-run trial. Following 3 weeks of dosing of approximately 40 subjects, we'll begin the 2 randomized controlled trials. With the primary endpoint for the randomized trials being HbA1c at 6 months, and we seek to demonstrate superiority over insulin-only iLet over standard of care. Further 6 months exposure to dasiglucagon will support the safety data needed for the NDA with the U.S. FDA.Please go to Slide 12. Among the most advanced clinical programs in our pipeline is the duration of continuous infusion of dasiglucagon in children with congenital hyperinsulinism or CHI, and also rare disease caused by a defect in the pancreatic beta cells. We reported initial Phase III results in December last year from the first Phase III trial. And by year-end, we expect to complete enrollment into the second Phase III trial in CHI children age 7 days to 1 year, with results expected in the first half of '22. Pending positive results from this second Phase III trial, we will work quickly and diligently towards an NDA submission to the U.S. FDA. In addition, we are excited about the agreement with DEKA Research and Development Corporation that was announced last week.Please go to the next slide, Slide 13, which illustrates that DEKA continuous infusion pump that we anticipate to utilize to deliver dasiglucagon as a potential treatment option for children with CHI. We believe that this pump has the optimal design and quality features to provide ease and confidence in the management of CHI.Please go to the next slide. Glepaglutide, our long-acting GLP-2 analog for treatment of short bowel syndrome. During the quarter, we presented preclinical data that showed dose different effects of glepaglutide on small and large intestinal growth and concluded the bridging trial that supports the use of the auto-injector for dosing of the drug.Please go to Slide 15. We also initiated EASE-SBS 4, which is a Phase IIIb trial assessing effects of once weekly administration of glepaglutide on [ intestinal ] energy and fluid uptake. Earlier in the year, we initiated EASE-SBS 3, which will contribute to the overall clinical program with long-term safety efficacy data. Importantly, throughout '21, we have made good progress on the recruitment into EASE-SBS 1, our pivotal Phase III trial, for which you can see the trial diagram on the next slide, Slide 16. Based on parallel dialogue with FDA and the EMA throughout the year, we have decided to introduce an interim analysis that can allow for stopping the trial for efficacy or futility before full 129 patients have been enrolled. If the interim readout is positive, we plan to pursue an NDA submission as a next development step based on these clinical data. And we expect to have all subjects needed for the interim analysis enrolled by the end of '21 with results being available in the third quarter next year.On Slide 17, you can see details on dapiglutide, our long-acting GLP-1, GLP-2 dual agonist, which is in development as a potential treatment option for SBS and other GI-associated disease. We have already reported a plasma half-life of 120 hours in a Phase Ia trial, and we look forward reporting the results of the multiple ascending dose trial later this year. Please go to Slide 18 and our efforts to target obesity and associated metabolic conditions. At the recent Obesity Society Annual Meeting, we presented preclinical data on our amylin analog and clinical data on the GLP-1 glucagon dual-agonist. Please go to Slide 19, which shows data from the Phase I clinical trial of BI 456906. In the trial, we observed clinical relevant body weight reductions of up to 13.7% with no unexpected safety findings after 16 weeks of dosing. Earlier this year, our development partner Boehringer Ingelheim initiated 2 additional Phase II trials, and we look forward to seeing the results for the trials in type 2 diabetes and obesity next year.Please go to the next slide, Slide 20. At ObesityWeek, we also presented preclinical data as related to our amylin analog, either as a monotherapy or in combination with the long-acting GLP-1 molecule semaglutide. The combination therapy resulted in up to 20% weight loss. During that same week, we were thus excited to announce the dosing of the first subjects in the Phase I safety and tolerability trial of ZP 8396 and expect to share results from this study next year.I'll now turn over to our CFO, Matt Dallas, to walk us through 2021 year-to-year date financials. Matt?

[Matthew Donald Dallas, Senior VP & CFO]

Thanks, Adam. On Slide 21, you will see a Zealand income statement for the third quarter of 2021 and how it compares to the same period in 2020. Total revenue for the first 9 months was DKK 238.6 million or USD 37.1 million. This was driven primarily by net product revenue for the V-Go wearable insulin delivery device and Zegalogue, as well as partnership revenue from our collaboration with Alexion, BI and Sanofi. The net operating result for the first 9 months was a loss of DKK 762.6 million or USD 18.8 million. Sales and marketing costs mainly related to the commercial infrastructure in the U.S. to support the Zegalogue and V-Go commercial programs while R&D costs primarily relate to our late-stage clinical programs.Slide 22 illustrates our strong financial position and ability to support our growing business through continued investments. Net operating expenses for the first 9 months were DKK 906.2 million or USD 14.1 million. At the end of the quarter, we had cash, cash equivalents and marketable securities, DKK 1.05 billion or USD 163.3 million.Turning to our financial guidance on Slide 23. For 2021, net product revenue from the sales of commercial products we expected to be DKK 190 million, plus or minus 10%. This is a decrease of DKK 30 million from the guidance issued on March 11. The reduction in net revenue from the previous guidance was driven by lower-than-expected sales of Zegalogue for 2021. Net operating expenses are expected to be DKK 1.25 billion, plus or minus 10%, and this remains unchanged from the financial guidance issued on March 11. We expect revenue from existing license agreements. However, since such revenue is uncertain as the size and timing, we do not intend to provide guidance on such revenue.And with that, I will now turn it back to Emmanuel.

[Emmanuel Dulac, CEO & President]

Thank you, Matt. Zealand's commercial and research team have established significant momentum across our metabolic and gastrointestinal programs during the first 9 months of this year, as exemplified by the exciting third quarter updates discussed on this call. We look forward to closing 2021 out strong, carrying the momentum of this transformational year into 2022 as we continue on our journey to change the lives of patients by offering 5 marketed products by 2025. Thank you all.I will now turn it over to the operator for questions.

[Operator]

Good afternoon, everyone, and welcome to Zealand Pharma's Third Quarter 2021 Financial Results Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Matt Dallas, Senior Vice President and Chief Financial Officer. Matt, please go ahead.

[Matthew Donald Dallas, Senior VP & CFO]

Thank you, operator. Welcome, and thank you for joining today to discuss Zealand's third quarter results for 2021. I'm Matt Dallas, Senior Vice President and Chief Financial Officer at Zealand. With me today are Zealand's President and Chief Executive Officer, Emmanuel Dulac; President of Zealand Pharma U.S., Frank Sanders; and Chief Medical Officer and Head of Development, Adam Steensberg. You can find the related company announcement and additional supporting information on our website at zealandpharma.com. I would like to point out that we will be making forward-looking statements that are subject to risks and uncertainties. These statements are valid only as of today, and the company assumes no obligation to update them, except as required by law. Please refer to recent filings for a more complete picture of risks and other factors.And with that, I will turn the call over to President and CEO, Emmanuel Dulac.

[Emmanuel Dulac, CEO & President]

Thank you, Matt, and thanks to everyone for joining today. The third quarter updates, we will discuss on today's call underscore Zealand evolution as a fully integrated biopharmaceutical company. In Q3, we continue to execute on our commercial goals following the launch of Zegalogue in the U.S., while also sustaining momentum across the rest of our pipeline by advancing multiple clinical and preclinical programs that leverage our innovative peptide platform to address unmet needs in type 1 diabetes and rare disease. This continuous progress positions us well to achieve our goal of offering 5 marketed products by 2025 to patients around the globe with high unmet medical needs.Slide 4 illustrates the development of our company in relation to the successful execution of our strategy. Later in the call, our CMO and Head of Research and Development, Adam Steensberg, will discuss these pipeline updates in greater detail, including updates on glepaglutide in the treatment of short bowel syndrome or SBS, information on clinical data from our amylin analogue and clinical data from our Glucagon GLP-1 Dual-Agonist partnered with BI that were presented at the recent Obesity Society Annual Meeting, and more details on our collaboration agreement with DEKA Research and Development Corporation to advance development of an infusion pump to be used with dasiglucagon, currently under investigation as a potential treatment option for congenital hyperinsulinism. But first, Frank Sanders, President of Zealand Pharma U.S. will discuss the work our commercial team has been doing on the Zegalogue launch.

[Frank Sanders, President of Zealand Pharma U.S]

Thank you, Emmanuel. Since Zegalogue was launched in late June, the U.S. commercial organization has been focused on securing favorable coverage on the drug formulary plans of PBMs and commercial and Medicaid plans to ensure that appropriate patients can receive Zegalogue with ease when it's prescribed. This involves driving demand with prescribers to signal to payers that the desire to prescribe Zegalogue is high. In a moment, I will speak to our progress in generating demand and our progress in securing favorable payer coverage for Zegalogue.Please refer to Slide 5. I want to share that Zegalogue is being viewed as an attractive treatment option for severe hypoglycemia by payers, patients and their caregivers and endocrinologists, both adult and pediatric endocrinologists. What's compelling about Zegalogue is the rapidity and consistency of recovery from severe hypoglycemia that was seen across all pivotal Phase III studies. This positioning is succinct and it's compelling, especially in the context of the severe hypoglycemic events, which can be terrifying for people with diabetes and their families. Rapid and reliable recovery from's a severe hypoglycemic event in 10 minutes is important because during a severe hypoglycemic event every minute matters.On Slide 6, I'd like to take a moment to refer to the approved full indication and the important safety information for Zegalogue.On Slide 7, I will speak to the demand, which has continued to increase over the first 4 months since launch. As I spoke to in my opening remarks, generating early demand from health care prescribers is essential because it helps inspire payers to act more expeditiously in their formulary review activities. In the third quarter, approximately 3,800 total prescription claims for Zegalogue were submitted to commercial and government payers. Also, approximately 115 (sic) [ 515 ] distinct health care providers wrote prescriptions for Zegalogue. Most of these prescribers were endocrinologists, both adult and pediatric, and 62% of the prescribers were repeat prescribers writing Zegalogue multiple times in the quarter. On average, 1.9 units of Zegalogue per prescription were being dispensed. These are encouraging signs of underlying growth, which is observed to be increasing month-over-month.While demand continues to grow, it has not yet translated into a proportional level of revenue growth. What's different is that the rate of rejection of Zegalogue prescription claims by payers at the pharmacy is higher than we anticipated. We expect that this will begin to resolve as recent drug coverage decisions take effect.Please refer to Slide 8. Now I will speak to the results that our market access team has achieved since launch. Zegalogue coverage was limited in the third quarter, its first quarter of launch with only approximately 16% of commercial and 10% of Medicaid lives being covered. As previously mentioned, this level of coverage resulted in a higher-than-anticipated rate of rejection of prescription claims at the pharmacy. PBM and payer coverage has improved since launch. Recently, we've signed agreements with some of the largest PBMs and state Medicaid plans. The full impact of these coverage decisions will begin to be realized at the start of 2022 based on the timing of some of these arrangements. We will start the year off with approximately 70% coverage of commercial and 70% coverage of Medicaid lives having access to Zegalogue. This equates to approximately 130 million commercial and 50 million Medicaid recipients and will set the stage for growth in 2022. I want to thank our employees at Zealand for their work on building the U.S. commercial organization and executing the launch of Zegalogue. Zegalogue is an important launch on its own, but we expect that it's only the first of multiple potential new product launches in our near-term horizon.Now I will turn to Adam, who will provide an overview of the progress of our clinical development programs.

[Adam Sinding Steensberg]

Thank you, Frank. Please go to Slide 9. Here, you can see our robust pipeline targeting areas in 4 medical areas of high unmet medical needs. On the next slide, I'll take you through updates on several of these programs and begin with our efforts to transform management of type 1 diabetes.Please go to Slide 10. A recent study found that despite the many innovations in insulin, current pumps and continuous glucose monitors, only approximately 20% of people living with type 1 diabetes in the U.S. are at the recommended glycemic targets. As such, the majority of those people have elevated plasma glucose levels and therefore, are at increased risk of long-term complications. Moreover, all are at risk of experiencing dangerously low blood glucose if they take too much insulin. We are currently developing dasiglucagon for potential use in a bihormonal artificial pancreas system. In a smaller Phase II trial, we showed that the bihormonal iLet was able to achieve glycemic target for 90% of the participants. Importantly, this was achieved while only on average, they spent 0.2% of the time in hypoglycemia as seen to the right. We are, therefore, excited to confirm that we are moving towards start of Phase III later this quarter.Please go to Slide 11. The Phase III program for dasiglucagon in the iLet bihormonal artificial pancreas system has been discussed in details with the FDA and we are pursuing a broad indication with studies in both adults and children with type 1 diabetes. The program includes 3 sub trials and we'll begin with a single-arm, bihormonal-only safety and test-run trial. Following 3 weeks of dosing of approximately 40 subjects, we'll begin the 2 randomized controlled trials. With the primary endpoint for the randomized trials being HbA1c at 6 months, and we seek to demonstrate superiority over insulin-only iLet over standard of care. Further 6 months exposure to dasiglucagon will support the safety data needed for the NDA with the U.S. FDA.Please go to Slide 12. Among the most advanced clinical programs in our pipeline is the duration of continuous infusion of dasiglucagon in children with congenital hyperinsulinism or CHI, and also rare disease caused by a defect in the pancreatic beta cells. We reported initial Phase III results in December last year from the first Phase III trial. And by year-end, we expect to complete enrollment into the second Phase III trial in CHI children age 7 days to 1 year, with results expected in the first half of '22. Pending positive results from this second Phase III trial, we will work quickly and diligently towards an NDA submission to the U.S. FDA. In addition, we are excited about the agreement with DEKA Research and Development Corporation that was announced last week.Please go to the next slide, Slide 13, which illustrates that DEKA continuous infusion pump that we anticipate to utilize to deliver dasiglucagon as a potential treatment option for children with CHI. We believe that this pump has the optimal design and quality features to provide ease and confidence in the management of CHI.Please go to the next slide. Glepaglutide, our long-acting GLP-2 analog for treatment of Short bowel syndrome. During the quarter, we presented preclinical data that showed dose different effects of glepaglutide on small and large intestinal growth and concluded the bridging trial that supports the use of the auto-injector for dosing of the drug.Please go to Slide 15. We also initiated EASE-SBS 4, which is a Phase IIIb trial assessing effects of once weekly administration of glepaglutide on [ intestinal ] energy and fluid uptake. Earlier in the year, we initiated EASE-SBS 3, which will contribute to the overall clinical program with long-term safety efficacy data. Importantly, throughout '21, we have made good progress on the recruitment into EASE-SBS 1, our pivotal Phase III trial, for which you can see the trial diagram on the next slide, Slide 16. Based on parallel dialogue with FDA and the EMA throughout the year, we have decided to introduce an interim analysis that can allow for stopping the trial for efficacy or futility before full 129 patients have been enrolled. If the interim readout is positive, we plan to pursue an NDA submission as a next development step based on these clinical data. And we expect to have all subjects needed for the interim analysis enrolled by the end of '21 with results being available in the third quarter next year.On Slide 17, you can see details on dapiglutide, our long-acting GLP-1, GLP-2 dual agonist, which is in development as a potential treatment option for SBS and other GI-associated disease. We have already reported a plasma half-life of 120 hours in a Phase Ia trial, and we look forward reporting the results of the multiple ascending dose trial later this year. Please go to Slide 18 and our efforts to target obesity and associated metabolic conditions. At the recent Obesity Society Annual Meeting, we presented preclinical data on our amylin analog and clinical data on the GLP-1 glucagon dual-agonist. Please go to Slide 19, which shows data from the Phase I clinical trial of BI 456906. In the trial, we observed clinical relevant body weight reductions of up to 13.7% with no unexpected safety findings after 16 weeks of dosing. Earlier this year, our development partner Boehringer Ingelheim initiated 2 additional Phase II trials, and we look forward to seeing the results for the trials in type 2 diabetes and obesity next year.Please go to the next slide, Slide 20. At ObesityWeek, we also presented preclinical data as related to our amylin analog, either as a monotherapy or in combination with the long-acting GLP-1 molecule semaglutide. The combination therapy resulted in up to 20% weight loss. During that same week, we were thus excited to announce the dosing of the first subjects in the Phase I safety and tolerability trial of ZP 8396 and expect to share results from this study next year.I'll now turn over to our CFO, Matt Dallas, to walk us through 2021 year-to-year date financials. Matt?

[Matthew Donald Dallas, Senior VP & CFO]

Thanks, Adam. On Slide 21, you will see a Zealand income statement for the third quarter of 2021 and how it compares to the same period in 2020. Total revenue for the first 9 months was DKK 238.6 million or USD 37.1 million. This was driven primarily by net product revenue for the V-Go wearable insulin delivery device and Zegalogue, as well as partnership revenue from our collaboration with Alexion, BI and Sanofi. The net operating result for the first 9 months was a loss of DKK 762.6 million or USD 18.8 million. Sales and marketing costs mainly related to the commercial infrastructure in the U.S. to support the Zegalogue and V-Go commercial programs while R&D costs primarily relate to our late-stage clinical programs.Slide 22 illustrates our strong financial position and ability to support our growing business through continued investments. Net operating expenses for the first 9 months were DKK 906.2 million or USD 14.1 million. At the end of the quarter, we had cash, cash equivalents and marketable securities, DKK 1.05 billion or USD 163.3 million.Turning to our financial guidance on Slide 23. For 2021, net product revenue from the sales of commercial products we expected to be DKK 190 million, plus or minus 10%. This is a decrease of DKK 30 million from the guidance issued on March 11. The reduction in net revenue from the previous guidance was driven by lower-than-expected sales of Zegalogue for 2021. Net operating expenses are expected to be DKK 1.25 billion, plus or minus 10%, and this remains unchanged from the financial guidance issued on March 11. We expect revenue from existing license agreements. However, since such revenue is uncertain as the size and timing, we do not intend to provide guidance on such revenue.And with that, I will now turn it back to Emmanuel.

[Emmanuel Dulac, CEO & President]

Thank you, Matt. Zealand's commercial and research team have established significant momentum across our metabolic and gastrointestinal programs during the first 9 months of this year, as exemplified by the exciting third quarter updates discussed on this call. We look forward to closing 2021 out strong, carrying the momentum of this transformational year into 2022 as we continue on our journey to change the lives of patients by offering 5 marketed products by 2025. Thank you all.I will now turn it over to the operator for questions.

[Operator]

Good afternoon, everyone, and welcome to Zealand Pharma's Third Quarter 2021 Financial Results Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Matt Dallas, Senior Vice President and Chief Financial Officer. Matt, please go ahead.

[Matthew Donald Dallas, Senior VP & CFO]

Thank you, operator. Welcome, and thank you for joining today to discuss Zealand's third quarter results for 2021. I'm Matt Dallas, Senior Vice President and Chief Financial Officer at Zealand. With me today are Zealand's President and Chief Executive Officer, Emmanuel Dulac; President of Zealand Pharma U.S., Frank Sanders; and Chief Medical Officer and Head of Development, Adam Steensberg. You can find the related company announcement and additional supporting information on our website at zealandpharma.com. I would like to point out that we will be making forward-looking statements that are subject to risks and uncertainties. These statements are valid only as of today, and the company assumes no obligation to update them, except as required by law. Please refer to recent filings for a more complete picture of risks and other factors.And with that, I will turn the call over to President and CEO, Emmanuel Dulac.

[Emmanuel Dulac, CEO & President]

Thank you, Matt, and thanks to everyone for joining today. The third quarter updates, we will discuss on today's call underscore Zealand evolution as a fully integrated biopharmaceutical company. In Q3, we continue to execute on our commercial goals following the launch of Zegalogue in the U.S., while also sustaining momentum across the rest of our pipeline by advancing multiple clinical and preclinical programs that leverage our innovative peptide platform to address unmet needs in type 1 diabetes and rare disease. This continuous progress positions us well to achieve our goal of offering 5 marketed products by 2025 to patients around the globe with high unmet medical needs.Slide 4 illustrates the development of our company in relation to the successful execution of our strategy. Later in the call, our CMO and Head of Research and Development, Adam Steensberg, will discuss these pipeline updates in greater detail, including updates on glepaglutide in the treatment of short bowel syndrome or SBS, information on clinical data from our amylin analogue and clinical data from our Glucagon GLP-1 Dual-Agonist partnered with BI that were presented at the recent Obesity Society Annual Meeting, and more details on our collaboration agreement with DEKA Research and Development Corporation to advance development of an infusion pump to be used with dasiglucagon, currently under investigation as a potential treatment option for congenital hyperinsulinism. But first, Frank Sanders, President of Zealand Pharma U.S. will discuss the work our commercial team has been doing on the Zegalogue launch.

[Frank Sanders, President of Zealand Pharma U.S]

Thank you, Emmanuel. Since Zegalogue was launched in late June, the U.S. commercial organization has been focused on securing favorable coverage on the drug formulary plans of PBMs and commercial and Medicaid plans to ensure that appropriate patients can receive Zegalogue with ease when it's prescribed. This involves driving demand with prescribers to signal to payers that the desire to prescribe Zegalogue is high. In a moment, I will speak to our progress in generating demand and our progress in securing favorable payer coverage for Zegalogue.Please refer to Slide 5. I want to share that Zegalogue is being viewed as an attractive treatment option for severe hypoglycemia by payers, patients and their caregivers and endocrinologists, both adult and pediatric endocrinologists. What's compelling about Zegalogue is the rapidity and consistency of recovery from severe hypoglycemia that was seen across all pivotal Phase III studies. This positioning is succinct and it's compelling, especially in the context of the severe hypoglycemic events, which can be terrifying for people with diabetes and their families. Rapid and reliable recovery from's a severe hypoglycemic event in 10 minutes is important because during a severe hypoglycemic event every minute matters.On Slide 6, I'd like to take a moment to refer to the approved full indication and the important safety information for Zegalogue.On Slide 7, I will speak to the demand, which has continued to increase over the first 4 months since launch. As I spoke to in my opening remarks, generating early demand from health care prescribers is essential because it helps inspire payers to act more expeditiously in their formulary review activities. In the third quarter, approximately 3,800 total prescription claims for Zegalogue were submitted to commercial and government payers. Also, approximately 115 (sic) [ 515 ] distinct health care providers wrote prescriptions for Zegalogue. Most of these prescribers were endocrinologists, both adult and pediatric, and 62% of the prescribers were repeat prescribers writing Zegalogue multiple times in the quarter. On average, 1.9 units of Zegalogue per prescription were being dispensed. These are encouraging signs of underlying growth, which is observed to be increasing month-over-month.While demand continues to grow, it has not yet translated into a proportional level of revenue growth. What's different is that the rate of rejection of Zegalogue prescription claims by payers at the pharmacy is higher than we anticipated. We expect that this will begin to resolve as recent drug coverage decisions take effect.Please refer to Slide 8. Now I will speak to the results that our market access team has achieved since launch. Zegalogue coverage was limited in the third quarter, its first quarter of launch with only approximately 16% of commercial and 10% of Medicaid lives being covered. As previously mentioned, this level of coverage resulted in a higher-than-anticipated rate of rejection of prescription claims at the pharmacy. PBM and payer coverage has improved since launch. Recently, we've signed agreements with some of the largest PBMs and state Medicaid plans. The full impact of these coverage decisions will begin to be realized at the start of 2022 based on the timing of some of these arrangements. We will start the year off with approximately 70% coverage of commercial and 70% coverage of Medicaid lives having access to Zegalogue. This equates to approximately 130 million commercial and 50 million Medicaid recipients and will set the stage for growth in 2022. I want to thank our employees at Zealand for their work on building the U.S. commercial organization and executing the launch of Zegalogue. Zegalogue is an important launch on its own, but we expect that it's only the first of multiple potential new product launches in our near-term horizon.Now I will turn to Adam, who will provide an overview of the progress of our clinical development programs.

[Adam Sinding Steensberg]

Thank you, Frank. Please go to Slide 9. Here, you can see our robust pipeline targeting areas in 4 medical areas of high unmet medical needs. On the next slide, I'll take you through updates on several of these programs and begin with our efforts to transform management of type 1 diabetes.Please go to Slide 10. A recent study found that despite the many innovations in insulin, current pumps and continuous glucose monitors, only approximately 20% of people living with type 1 diabetes in the U.S. are at the recommended glycemic targets. As such, the majority of those people have elevated plasma glucose levels and therefore, are at increased risk of long-term complications. Moreover, all are at risk of experiencing dangerously low blood glucose if they take too much insulin. We are currently developing dasiglucagon for potential use in a bihormonal artificial pancreas system. In a smaller Phase II trial, we showed that the bihormonal iLet was able to achieve glycemic target for 90% of the participants. Importantly, this was achieved while only on average, they spent 0.2% of the time in hypoglycemia as seen to the right. We are, therefore, excited to confirm that we are moving towards start of Phase III later this quarter.Please go to Slide 11. The Phase III program for dasiglucagon in the iLet bihormonal artificial pancreas system has been discussed in details with the FDA and we are pursuing a broad indication with studies in both adults and children with type 1 diabetes. The program includes 3 sub trials and we'll begin with a single-arm, bihormonal-only safety and test-run trial. Following 3 weeks of dosing of approximately 40 subjects, we'll begin the 2 randomized controlled trials. With the primary endpoint for the randomized trials being HbA1c at 6 months, and we seek to demonstrate superiority over insulin-only iLet over standard of care. Further 6 months exposure to dasiglucagon will support the safety data needed for the NDA with the U.S. FDA.Please go to Slide 12. Among the most advanced clinical programs in our pipeline is the duration of continuous infusion of dasiglucagon in children with congenital hyperinsulinism or CHI, and also rare disease caused by a defect in the pancreatic beta cells. We reported initial Phase III results in December last year from the first Phase III trial. And by year-end, we expect to complete enrollment into the second Phase III trial in CHI children age 7 days to 1 year, with results expected in the first half of '22. Pending positive results from this second Phase III trial, we will work quickly and diligently towards an NDA submission to the U.S. FDA. In addition, we are excited about the agreement with DEKA Research and Development Corporation that was announced last week.Please go to the next slide, Slide 13, which illustrates that DEKA continuous infusion pump that we anticipate to utilize to deliver dasiglucagon as a potential treatment option for children with CHI. We believe that this pump has the optimal design and quality features to provide ease and confidence in the management of CHI.Please go to the next slide. Glepaglutide, our long-acting GLP-2 analog for treatment of Short bowel syndrome. During the quarter, we presented preclinical data that showed dose different effects of glepaglutide on small and large intestinal growth and concluded the bridging trial that supports the use of the auto-injector for dosing of the drug.Please go to Slide 15. We also initiated EASE-SBS 4, which is a Phase IIIb trial assessing effects of once weekly administration of glepaglutide on [ intestinal ] energy and fluid uptake. Earlier in the year, we initiated EASE-SBS 3, which will contribute to the overall clinical program with long-term safety efficacy data. Importantly, throughout '21, we have made good progress on the recruitment into EASE-SBS 1, our pivotal Phase III trial, for which you can see the trial diagram on the next slide, Slide 16. Based on parallel dialogue with FDA and the EMA throughout the year, we have decided to introduce an interim analysis that can allow for stopping the trial for efficacy or futility before full 129 patients have been enrolled. If the interim readout is positive, we plan to pursue an NDA submission as a next development step based on these clinical data. And we expect to have all subjects needed for the interim analysis enrolled by the end of '21 with results being available in the third quarter next year.On Slide 17, you can see details on dapiglutide, our long-acting GLP-1, GLP-2 dual agonist, which is in development as a potential treatment option for SBS and other GI-associated disease. We have already reported a plasma half-life of 120 hours in a Phase Ia trial, and we look forward reporting the results of the multiple ascending dose trial later this year. Please go to Slide 18 and our efforts to target obesity and associated metabolic conditions. At the recent Obesity Society Annual Meeting, we presented preclinical data on our amylin analog and clinical data on the GLP-1 glucagon dual-agonist. Please go to Slide 19, which shows data from the Phase I clinical trial of BI 456906. In the trial, we observed clinical relevant body weight reductions of up to 13.7% with no unexpected safety findings after 16 weeks of dosing. Earlier this year, our development partner Boehringer Ingelheim initiated 2 additional Phase II trials, and we look forward to seeing the results for the trials in type 2 diabetes and obesity next year.Please go to the next slide, Slide 20. At ObesityWeek, we also presented preclinical data as related to our amylin analog, either as a monotherapy or in combination with the long-acting GLP-1 molecule semaglutide. The combination therapy resulted in up to 20% weight loss. During that same week, we were thus excited to announce the dosing of the first subjects in the Phase I safety and tolerability trial of ZP 8396 and expect to share results from this study next year.I'll now turn over to our CFO, Matt Dallas, to walk us through 2021 year-to-year date financials. Matt?

[Matthew Donald Dallas, Senior VP & CFO]

Thanks, Adam. On Slide 21, you will see a Zealand income statement for the third quarter of 2021 and how it compares to the same period in 2020. Total revenue for the first 9 months was DKK 238.6 million or USD 37.1 million. This was driven primarily by net product revenue for the V-Go wearable insulin delivery device and Zegalogue, as well as partnership revenue from our collaboration with Alexion, BI and Sanofi. The net operating result for the first 9 months was a loss of DKK 762.6 million or USD 18.8 million. Sales and marketing costs mainly related to the commercial infrastructure in the U.S. to support the Zegalogue and V-Go commercial programs while R&D costs primarily relate to our late-stage clinical programs.Slide 22 illustrates our strong financial position and ability to support our growing business through continued investments. Net operating expenses for the first 9 months were DKK 906.2 million or USD 14.1 million. At the end of the quarter, we had cash, cash equivalents and marketable securities, DKK 1.05 billion or USD 163.3 million.Turning to our financial guidance on Slide 23. For 2021, net product revenue from the sales of commercial products we expected to be DKK 190 million, plus or minus 10%. This is a decrease of DKK 30 million from the guidance issued on March 11. The reduction in net revenue from the previous guidance was driven by lower-than-expected sales of Zegalogue for 2021. Net operating expenses are expected to be DKK 1.25 billion, plus or minus 10%, and this remains unchanged from the financial guidance issued on March 11. We expect revenue from existing license agreements. However, since such revenue is uncertain as the size and timing, we do not intend to provide guidance on such revenue.And with that, I will now turn it back to Emmanuel.

[Emmanuel Dulac, CEO & President]

Thank you, Matt. Zealand's commercial and research team have established significant momentum across our metabolic and gastrointestinal programs during the first 9 months of this year, as exemplified by the exciting third quarter updates discussed on this call. We look forward to closing 2021 out strong, carrying the momentum of this transformational year into 2022 as we continue on our journey to change the lives of patients by offering 5 marketed products by 2025. Thank you all.I will now turn it over to the operator for questions.

[Operator]

[Operator Instructions]And sir, your first question comes from the line of Lucy Codrington from Jefferies.

[Lucy-Emma Mary Sarah Codrington-Bartlett]

Just a couple for me. On the dasiglucagon CHI agreement for the pump with DEKA, is my understanding you had a prior agreement with Roche that has -- and that's been used for the trial so far. So just wondering what kind of drove the change? And will any additional studies be necessary? And could these potentially delay filing? And then on the glepaglutide, will you -- press release when the required number to patients for the interim analysis have been recruited? And then for BI 456906, might get Phase II diabetes data potentially this quarter. Do you expect and -- BI to disclose those data? Or do you think like in the past, they will save them for a conference?

[Emmanuel Dulac, CEO & President]

Thank you, Lucy, for your 3 questions in a row. And I will actually ask Adam to take all 3.

[Adam Sinding Steensberg]

Okay. Thanks for the questions. For the -- regarding the pump that we anticipating using for CHI, you're correct, that we use the Roche pump right now. That is all the time, just been an agreement where we would use it for the clinical study. And so we have, you can say, for a long time, worked on establishing a commercial agreement as we have done now with DEKA. That was the outset of the agreement with Roche. So there's no changes there. Also, we do not expect to do any additional clinical studies with the DEKA pump, as it relates to studies in humans. We will, of course, have to demonstrate the quality which we have already started. So we feel very comfortable there. And we do not expect that it will have any negative impact on NDA finding time lines. The good thing about the DEKA pump is that it's, you can say, only earlier this year, it was approved by the FDA for administration of a different drug as a subcutaneous infusion. So it's more or less the same use that we are going forward here. So it's a proven concept versus using an insulin pump, which is in second hoping for insulin. So we actually see this as derisking the project very much.For glepa, yes, we will press release once we have a recent number of patients needed for the interim analysis. And regarding the GLP-1 glucagon that we have with BI, as you know, they did, you can say, complete enrollment into the study in the third quarter and this year, and we expect them to soon have the data. When they're going to release those data, we cannot comment on that, as it is their decision. As always, we will encourage them to do it as soon as possible.

[Operator]

[Operator Instructions]And sir your next question comes from the line of Jesper Ilsoe from Carnegie.

[Jesper Ilsoe, Research Analyst]

A question on glepaglutide and then afterwards one on Zegalogue. So first on glepaplutide. First, you can just elaborate a bit about your decision to do this interim analysis. So firstly, how we should think about this impacting both the power and the stopping criteria for the interim analysis. So is it more difficult to now do a positive data -- show positive data in the interim compared to, say, the full data set that we had before? And also one -- just so I understand it, so you do this and expect enrollment by year-end 2021. So does that mean that you do not expect complete enrollment before Q3 next year? Just to get my understanding because of the current COVID cases rising. And also how many patients do you actually need before you have final complete enrollment? -- and then afterwards on Zegalogue. So it's not a key product to me, but the launch is still pretty slow. So what could or would you do to improve that traction when we look into 2022?

[Emmanuel Dulac, CEO & President]

Thank you, Jesper. And again, Adam for glepaglutide and maybe Frank will jump in for Zegalogue launch.

[Adam Sinding Steensberg]

Thanks for your questions. if I should start by addressing you can say the decision and the rationale behind the interim. So at the outset of the COVID, FDA and also Europe authorities issued different guidance for how to act in this situation. And including in those guidances were statistical considerations for studies, which actually opened up for our sponsors to introduce postop analysis in the study. So that's an important parameter that the guidance is in place. When we design studies, Phase III trials, that should serve the purpose of an NDA submission, you need to generate sufficient data to address both efficacy and safety. And with the delays we have seen in glepa, we have actually created quite an extensive safety database because we have patients who have been on drug for many years. That's also exemplified by EASE-SBS 3 which is an extension study to the originally expected extension study. So we have patients who have been exposed for close to 3 years now in the study. So you say from a safety perspective, we actually have generated more data than we had originally planned for, for the NDA submission, when we had these discussions on the size of the study with the FDA. Then with regard to efficacy, you, of course, have to design your studies also to address efficacy needs. And you do that by having some assumptions around your fixed times and, you can say, the standard deviations. And we, of course, were inspired by the data that we have seen from [ elsiglutide ], and internal data on glepa. And what I can say from an efficacy size point of view, the size of the interim analysis, we would not have introduced that one if we did not feel comfortable still that we can actually reach a conclusion, a positive decision on the efficacy as well. So due to the . So you can also say we had very, very good effect at alpha-4 for the original trial design, very much driven by the need for a safety database, which we have expanded by the delays. So we actually feel very comfortable with this one if the assumptions we had when we designed the studies hold true, and we have no reasons to believe they don't. We will not announce the number of patients that goes into the interim. And I simply cannot do that because we need to keep the trial -- the integrity of the trial. It will be a blinded data safety monitoring committee that evaluates the data and make a recommendation to us with regard to stop or continuing the study. And as I said, we would not have introduced this interim if we did not believe the likelihood of stopping was very good. I would also add that we will continue to enroll patients even when we have reached these number needed for the interim, and they will, of course, these patients will, of course, contribute to the data that we anticipate to submit to FDA in a potential NDA. I don't know if this address all your questions on the glepa. But maybe, Frank, you can answer and see that and then yes, we can follow up if you have more.

[Frank Sanders, President of Zealand Pharma U.S]

Okay. Good. Yes. Thank you, Adam, and Jesper. Thank you for the question. Let me address our confidence in Zegalogue in 2022. So as I had said earlier, our focus in the first quarters of launch is on securing favorable coverage on the drug formularies, the PBMs, commercial and Medicaid plans, and driving demand. And there's inherent tension, if you will, at launch between access and demand, is you need demand to help payers review products earlier to be able to gain access and coverage and you need access to drive demand. And so what we have learned about this drug is that demand is growing month-over-month, but it's not yet translating into a proportional level of revenue growth, which makes sense when you look at the level of coverage in the third quarter, which is the first quarter of launch, with having approximately 16% of commercial and 10% of Medicaid lives covered. But that demand has helped the market access team secure favorable access and really in a stepwise manner, where it moved from 16% commercial to 10% Medicaid towards 70% coverage for commercial and 70% coverage for Medicaid as we enter 2022. So it really presents a very different condition for us that will enable us to be able to take these positive patterns and underlying demand and really begin to translate this into recognized revenue and revenue growth by pulling through these favorable wins on major plans.

[Jesper Ilsoe, Research Analyst]

Okay. Just to follow up on the glepa. So do you see any increased risk in doing this interim versus just doing the entire study? So just touching on your confidence into the interim.

[Emmanuel Dulac, CEO & President]

Yes. I mean, of course, when you do an interim, you do use some of your alpha, in that sense, you could talk about increased risk on the other hand. As I said in the beginning, if the assumptions we had when we designed the study holds true, which we have no reasons to believe they don't, then we feel we have very good power to conclude the study based on the interim read-out. And of course, we have a number of patients in the study, which we expect will provide that noise. So you can also say -- will also, to some degree, manage a potential risk of a third spike in COVID coming this winter. So we would not like to enter the next 3 months with that uncertainty. So net-net, we see this as a very positive decision for the program.

[Operator]

[Operator Instructions]And sir, your next question comes from the line of Michael Novod from Nordea.

[Michael Novod]

It's Michael from Nordea.So just 2 clarifying questions. First to the bihormonal pump. Do you already have the data from the Insulin-Only with Beta Bionics? Or was it just other data that you are referencing in the presentation? And then secondly, on CHI, what is it exactly that drives a delay? Were you expected the data here in Q4? And now it's moving into this first half of next year. And also, when exactly during first half of next year, is it Q1 and Q2? Just to get more clarity around when we're finally going to get some data.

[Emmanuel Dulac, CEO & President]

Michael, your dual-hormone pump question, is it related to the insulin only?

[Michael Novod]

As the only data that the Beta

[Operator]

[Operator Instructions]And sir, your first question comes from the line of Lucy Codrington from Jefferies.

[Lucy-Emma Mary Sarah Codrington-Bartlett]

Just a couple for me. On the dasiglucagon CHI agreement for the pump with DEKA, is my understanding you had a prior agreement with Roche that has -- and that's been used for the trial so far. So just wondering what kind of drove the change? And will any additional studies be necessary? And could these potentially delay filing? And then on the glepaglutide, will you -- press release when the required number to patients for the interim analysis have been recruited? And then for BI 456906, might get Phase II diabetes data potentially this quarter. Do you expect and -- BI to disclose those data? Or do you think like in the past, they will save them for a conference?

[Emmanuel Dulac, CEO & President]

Thank you, Lucy, for your 3 questions in a row. And I will actually ask Adam to take all 3.

[Adam Sinding Steensberg]

Okay. Thanks for the questions. For the -- regarding the pump that we anticipating using for CHI, you're correct, that we use the Roche pump right now. That is all the time, just been an agreement where we would use it for the clinical study. And so we have, you can say, for a long time, worked on establishing a commercial agreement as we have done now with DEKA. That was the outset of the agreement with Roche. So there's no changes there. Also, we do not expect to do any additional clinical studies with the DEKA pump, as it relates to studies in humans. We will, of course, have to demonstrate the quality which we have already started. So we feel very comfortable there. And we do not expect that it will have any negative impact on NDA finding time lines. The good thing about the DEKA pump is that it's, you can say, only earlier this year, it was approved by the FDA for administration of a different drug as a subcutaneous infusion. So it's more or less the same use that we are going forward here. So it's a proven concept versus using an insulin pump, which is in second hoping for insulin. So we actually see this as derisking the project very much.For glepa, yes, we will press release once we have a recent number of patients needed for the interim analysis. And regarding the GLP-1 glucagon that we have with BI, as you know, they did, you can say, complete enrollment into the study in the third quarter and this year, and we expect them to soon have the data. When they're going to release those data, we cannot comment on that, as it is their decision. As always, we will encourage them to do it as soon as possible.

[Operator]

[Operator Instructions]And sir your next question comes from the line of Jesper Ilsoe from Carnegie.

[Jesper Ilsoe, Research Analyst]

A question on glepaglutide and then afterwards one on Zegalogue. So first on glepaplutide. First, you can just elaborate a bit about your decision to do this interim analysis. So firstly, how we should think about this impacting both the power and the stopping criteria for the interim analysis. So is it more difficult to now do a positive data -- show positive data in the interim compared to, say, the full data set that we had before? And also one -- just so I understand it, so you do this and expect enrollment by year-end 2021. So does that mean that you do not expect complete enrollment before Q3 next year? Just to get my understanding because of the current COVID cases rising. And also how many patients do you actually need before you have final complete enrollment? -- and then afterwards on Zegalogue. So it's not a key product to me, but the launch is still pretty slow. So what could or would you do to improve that traction when we look into 2022?

[Emmanuel Dulac, CEO & President]

Thank you, Jesper. And again, Adam for glepaglutide and maybe Frank will jump in for Zegalogue launch.

[Adam Sinding Steensberg]

Thanks for your questions. if I should start by addressing you can say the decision and the rationale behind the interim. So at the outset of the COVID, FDA and also Europe authorities issued different guidance for how to act in this situation. And including in those guidances were statistical considerations for studies, which actually opened up for our sponsors to introduce postop analysis in the study. So that's an important parameter that the guidance is in place. When we design studies, Phase III trials, that should serve the purpose of an NDA submission, you need to generate sufficient data to address both efficacy and safety. And with the delays we have seen in glepa, we have actually created quite an extensive safety database because we have patients who have been on drug for many years. That's also exemplified by EASE-SBS 3 which is an extension study to the originally expected extension study. So we have patients who have been exposed for close to 3 years now in the study. So you say from a safety perspective, we actually have generated more data than we had originally planned for, for the NDA submission, when we had these discussions on the size of the study with the FDA. Then with regard to efficacy, you, of course, have to design your studies also to address efficacy needs. And you do that by having some assumptions around your fixed times and, you can say, the standard deviations. And we, of course, were inspired by the data that we have seen from [ elsiglutide ], and internal data on glepa. And what I can say from an efficacy size point of view, the size of the interim analysis, we would not have introduced that one if we did not feel comfortable still that we can actually reach a conclusion, a positive decision on the efficacy as well. So due to the . So you can also say we had very, very good effect at alpha-4 for the original trial design, very much driven by the need for a safety database, which we have expanded by the delays. So we actually feel very comfortable with this one if the assumptions we had when we designed the studies hold true, and we have no reasons to believe they don't. We will not announce the number of patients that goes into the interim. And I simply cannot do that because we need to keep the trial -- the integrity of the trial. It will be a blinded data safety monitoring committee that evaluates the data and make a recommendation to us with regard to stop or continuing the study. And as I said, we would not have introduced this interim if we did not believe the likelihood of stopping was very good. I would also add that we will continue to enroll patients even when we have reached these number needed for the interim, and they will, of course, these patients will, of course, contribute to the data that we anticipate to submit to FDA in a potential NDA. I don't know if this address all your questions on the glepa. But maybe, Frank, you can answer and see that and then yes, we can follow up if you have more.

[Frank Sanders, President of Zealand Pharma U.S]

Okay. Good. Yes. Thank you, Adam, and Jesper. Thank you for the question. Let me address our confidence in Zegalogue in 2022. So as I had said earlier, our focus in the first quarters of launch is on securing favorable coverage on the drug formularies, the PBMs, commercial and Medicaid plans, and driving demand. And there's inherent tension, if you will, at launch between access and demand, is you need demand to help payers review products earlier to be able to gain access and coverage and you need access to drive demand. And so what we have learned about this drug is that demand is growing month-over-month, but it's not yet translating into a proportional level of revenue growth, which makes sense when you look at the level of coverage in the third quarter, which is the first quarter of launch, with having approximately 16% of commercial and 10% of Medicaid lives covered. But that demand has helped the market access team secure favorable access and really in a stepwise manner, where it moved from 16% commercial to 10% Medicaid towards 70% coverage for commercial and 70% coverage for Medicaid as we enter 2022. So it really presents a very different condition for us that will enable us to be able to take these positive patterns and underlying demand and really begin to translate this into recognized revenue and revenue growth by pulling through these favorable wins on major plans.

[Jesper Ilsoe, Research Analyst]

Okay. Just to follow up on the glepa. So do you see any increased risk in doing this interim versus just doing the entire study? So just touching on your confidence into the interim.

[Emmanuel Dulac, CEO & President]

Yes. I mean, of course, when you do an interim, you do use some of your alpha, in that sense, you could talk about increased risk on the other hand. As I said in the beginning, if the assumptions we had when we designed the study holds true, which we have no reasons to believe they don't, then we feel we have very good power to conclude the study based on the interim read-out. And of course, we have a number of patients in the study, which we expect will provide that noise. So you can also say -- will also, to some degree, manage a potential risk of a third spike in COVID coming this winter. So we would not like to enter the next 3 months with that uncertainty. So net-net, we see this as a very positive decision for the program.

[Operator]

[Operator Instructions]And sir, your next question comes from the line of Michael Novod from Nordea.

[Michael Novod]

It's Michael from Nordea.So just 2 clarifying questions. First to the bihormonal pump. Do you already have the data from the Insulin-Only with Beta Bionics? Or was it just other data that you are referencing in the presentation? And then secondly, on CHI, what is it exactly that drives a delay? Were you expected the data here in Q4? And now it's moving into this first half of next year. And also, when exactly during first half of next year, is it Q1 and Q2? Just to get more clarity around when we're finally going to get some data.

[Emmanuel Dulac, CEO & President]

Michael, your dual-hormone pump question, is it related to the insulin only?

[Michael Novod]

As the only data that the Beta

[Operator]

[Operator Instructions]And sir, your first question comes from the line of Lucy Codrington from Jefferies.

[Lucy-Emma Mary Sarah Codrington-Bartlett]

Just a couple for me. On the dasiglucagon CHI agreement for the pump with DEKA, is my understanding you had a prior agreement with Roche that has -- and that's been used for the trial so far. So just wondering what kind of drove the change? And will any additional studies be necessary? And could these potentially delay filing? And then on the glepaglutide, will you -- press release when the required number to patients for the interim analysis have been recruited? And then for BI 456906, might get Phase II diabetes data potentially this quarter. Do you expect and -- BI to disclose those data? Or do you think like in the past, they will save them for a conference?

[Emmanuel Dulac, CEO & President]

Thank you, Lucy, for your 3 questions in a row. And I will actually ask Adam to take all 3.

[Adam Sinding Steensberg]

Okay. Thanks for the questions. For the -- regarding the pump that we anticipating using for CHI, you're correct, that we use the Roche pump right now. That is all the time, just been an agreement where we would use it for the clinical study. And so we have, you can say, for a long time, worked on establishing a commercial agreement as we have done now with DEKA. That was the outset of the agreement with Roche. So there's no changes there. Also, we do not expect to do any additional clinical studies with the DEKA pump, as it relates to studies in humans. We will, of course, have to demonstrate the quality which we have already started. So we feel very comfortable there. And we do not expect that it will have any negative impact on NDA finding time lines. The good thing about the DEKA pump is that it's, you can say, only earlier this year, it was approved by the FDA for administration of a different drug as a subcutaneous infusion. So it's more or less the same use that we are going forward here. So it's a proven concept versus using an insulin pump, which is in second hoping for insulin. So we actually see this as derisking the project very much.For glepa, yes, we will press release once we have a recent number of patients needed for the interim analysis. And regarding the GLP-1 glucagon that we have with BI, as you know, they did, you can say, complete enrollment into the study in the third quarter and this year, and we expect them to soon have the data. When they're going to release those data, we cannot comment on that, as it is their decision. As always, we will encourage them to do it as soon as possible.

[Operator]

[Operator Instructions]And sir your next question comes from the line of Jesper Ilsoe from Carnegie.

[Jesper Ilsoe, Research Analyst]

A question on glepaglutide and then afterwards one on Zegalogue. So first on glepaplutide. First, you can just elaborate a bit about your decision to do this interim analysis. So firstly, how we should think about this impacting both the power and the stopping criteria for the interim analysis. So is it more difficult to now do a positive data -- show positive data in the interim compared to, say, the full data set that we had before? And also one -- just so I understand it, so you do this and expect enrollment by year-end 2021. So does that mean that you do not expect complete enrollment before Q3 next year? Just to get my understanding because of the current COVID cases rising. And also how many patients do you actually need before you have final complete enrollment? -- and then afterwards on Zegalogue. So it's not a key product to me, but the launch is still pretty slow. So what could or would you do to improve that traction when we look into 2022?

[Emmanuel Dulac, CEO & President]

Thank you, Jesper. And again, Adam for glepaglutide and maybe Frank will jump in for Zegalogue launch.

[Adam Sinding Steensberg]

Thanks for your questions. if I should start by addressing you can say the decision and the rationale behind the interim. So at the outset of the COVID, FDA and also Europe authorities issued different guidance for how to act in this situation. And including in those guidances were statistical considerations for studies, which actually opened up for our sponsors to introduce postop analysis in the study. So that's an important parameter that the guidance is in place. When we design studies, Phase III trials, that should serve the purpose of an NDA submission, you need to generate sufficient data to address both efficacy and safety. And with the delays we have seen in glepa, we have actually created quite an extensive safety database because we have patients who have been on drug for many years. That's also exemplified by EASE-SBS 3 which is an extension study to the originally expected extension study. So we have patients who have been exposed for close to 3 years now in the study. So you say from a safety perspective, we actually have generated more data than we had originally planned for, for the NDA submission, when we had these discussions on the size of the study with the FDA. Then with regard to efficacy, you, of course, have to design your studies also to address efficacy needs. And you do that by having some assumptions around your fixed times and, you can say, the standard deviations. And we, of course, were inspired by the data that we have seen from [ elsiglutide ], and internal data on glepa. And what I can say from an efficacy size point of view, the size of the interim analysis, we would not have introduced that one if we did not feel comfortable still that we can actually reach a conclusion, a positive decision on the efficacy as well. So due to the . So you can also say we had very, very good effect at alpha-4 for the original trial design, very much driven by the need for a safety database, which we have expanded by the delays. So we actually feel very comfortable with this one if the assumptions we had when we designed the studies hold true, and we have no reasons to believe they don't. We will not announce the number of patients that goes into the interim. And I simply cannot do that because we need to keep the trial -- the integrity of the trial. It will be a blinded data safety monitoring committee that evaluates the data and make a recommendation to us with regard to stop or continuing the study. And as I said, we would not have introduced this interim if we did not believe the likelihood of stopping was very good. I would also add that we will continue to enroll patients even when we have reached these number needed for the interim, and they will, of course, these patients will, of course, contribute to the data that we anticipate to submit to FDA in a potential NDA. I don't know if this address all your questions on the glepa. But maybe, Frank, you can answer and see that and then yes, we can follow up if you have more.

[Frank Sanders, President of Zealand Pharma U.S]

Okay. Good. Yes. Thank you, Adam, and Jesper. Thank you for the question. Let me address our confidence in Zegalogue in 2022. So as I had said earlier, our focus in the first quarters of launch is on securing favorable coverage on the drug formularies, the PBMs, commercial and Medicaid plans, and driving demand. And there's inherent tension, if you will, at launch between access and demand, is you need demand to help payers review products earlier to be able to gain access and coverage and you need access to drive demand. And so what we have learned about this drug is that demand is growing month-over-month, but it's not yet translating into a proportional level of revenue growth, which makes sense when you look at the level of coverage in the third quarter, which is the first quarter of launch, with having approximately 16% of commercial and 10% of Medicaid lives covered. But that demand has helped the market access team secure favorable access and really in a stepwise manner, where it moved from 16% commercial to 10% Medicaid towards 70% coverage for commercial and 70% coverage for Medicaid as we enter 2022. So it really presents a very different condition for us that will enable us to be able to take these positive patterns and underlying demand and really begin to translate this into recognized revenue and revenue growth by pulling through these favorable wins on major plans.

[Jesper Ilsoe, Research Analyst]

Okay. Just to follow up on the glepa. So do you see any increased risk in doing this interim versus just doing the entire study? So just touching on your confidence into the interim.

[Emmanuel Dulac, CEO & President]

Yes. I mean, of course, when you do an interim, you do use some of your alpha, in that sense, you could talk about increased risk on the other hand. As I said in the beginning, if the assumptions we had when we designed the study holds true, which we have no reasons to believe they don't, then we feel we have very good power to conclude the study based on the interim read-out. And of course, we have a number of patients in the study, which we expect will provide that noise. So you can also say -- will also, to some degree, manage a potential risk of a third spike in COVID coming this winter. So we would not like to enter the next 3 months with that uncertainty. So net-net, we see this as a very positive decision for the program.

[Operator]

[Operator Instructions]And sir, your next question comes from the line of Michael Novod from Nordea.

[Michael Novod]

It's Michael from Nordea.So just 2 clarifying questions. First to the bihormonal pump. Do you already have the data from the Insulin-Only with Beta Bionics? Or was it just other data that you are referencing in the presentation? And then secondly, on CHI, what is it exactly that drives a delay? Were you expected the data here in Q4? And now it's moving into this first half of next year. And also, when exactly during first half of next year, is it Q1 and Q2? Just to get more clarity around when we're finally going to get some data.

[Emmanuel Dulac, CEO & President]

Michael, your dual-hormone pump question, is it related to the insulin only?

[Michael Novod]

As the only data that the Beta Bionics has been running?

[Emmanuel Dulac, CEO & President]

I mean it's up to Beta Bionics to release and talk about the I/O data. We -- if you look at the time lines and clinical trial ], I mean, we would expect them to have data available very soon. So as we have said all the time, completion of that study has been the trigger for initiation of the bihormonal artificial pancreas study, where we use 2 hormones. So I cannot comment further on the data, but I have no reasons to believe that things are not progressing within Beta Bionics on the insulin-only studies as planned.For CHI, you can say, personally, I'm also disappointed that we have not reached the last subject for this study yet. We -- I had expected that to happen this quarter, to be honest. And as you know, these are neonates. We know the patients we are in constant dialogue, weekly dialogue with the and also potential patients that could go -- I mean, gearing up our potential patients that could go into the study. Reality is, this is, as a family when you get to the situation where you have a child that is diagnosed with CHI, it's a very, very dramatic situation to be in, and to then participate in clinical study where there are significant requirements to actually adhere to study protocols and so on, can sometimes be difficult. So personally, I would have expected us to have reached that last randomization base than where we were a few months ago. We are not there yet, but we feel that we are very, very close. So yes, it's a condition that is difficult to manage, you can say, and that's just On the newborns.

[Operator]

Your next question comes from the line of Joseph Stringer from Needham & Company.

[Joseph Robert Stringer, Associate]

And apologies, we're temporarily disconnected. So apologies if I repeat a question here. First 1 is on the interim analysis. Just curious, around the stat plan for this in terms of -- you've previously guided full results -- or excuse me, the top line results from the full number of patients in 2022. So just curious why not wait? Do you have to spin the alpha on the interim analysis for the full results? And then on the interim analysis, is it analysis of each the once-weekly and the twice-weekly arms? Or is it some type of pooled interim analysis on both treatment arms? And then I guess just lastly, if you were to see a positive outcome on the interim in, let's say, in 3Q, what else is required for potential NDA submission from the other SBS-EASE trials 2, 3 and 4, would you have to wait for additional data from that prior to NDA submission?

[Emmanuel Dulac, CEO & President]

So why not wait? So this was a dialogue we had with the FDA throughout the year to make sure that we would meet our goals, you can say. And as I said before, we feel comfortable around the power that goes into this one. The reason that we take the decision now is -- and we feel that we is, of course, that we enter now the winter season and when we do, as you know, everybody start to see spikes again in COVID. So we don't want to be in a situation where Q1 is going to again cause delays to this program. So I think it's a very reasonable thing for us to make that decision now. That's at least how we discuss this internally, and we feel very comfortable with interim. So that is the trigger where we are right now. We are not changing the way. We assessed the date. And we are still allowed to assess each arm individually. So that is the power, and we are also looking into both primary and secondary end points.So again, there's no change to those aspects. If we have a decision to stop, and is positive, then we expect and plan to submit the NDA based on those data, meaning that for EASE-SBS 2 and 3, the 2 extension studies will basically make a data cut there at that time. And then those data will be part of the submission. EASE-SBS 4, which is the Phase IIIb study, we will likely also consider to do an interim just to provide those data as well, but they are not in our current planning needed for the submission. So if we reach a decision for a positive goal, then we expect to pursue the NDA based on the data that we have available at that time.

[Operator]

[Operator Instructions]No more question over the phone lines. I will hand back to Emmanuel for closing remarks. Thank you.

[Emmanuel Dulac, CEO & President]

Thank you. With that, we would like to thank you all for attending and for your questions. End of June, we launched our first commercial product in the U.S., Zegalogue injection for the treatment of severe hypoglycemia in patients age 6 and above. And meanwhile, we saw we are 4 months into the launch. We continue to progress our late-stage clinical program, our type 1 diabetes management and rare disease programs as well as advance our early-stage pipeline. That's actually the message I want you to take away tonight. And as well, we look forward to connecting on future announcements and updates. Thank you very much for your time.

[Operator]

This concludes our conference for today. Thank you for participating. You may now all disconnect.As the only data that the Beta Bionics has been running?

[Emmanuel Dulac, CEO & President]

I mean it's up to Beta Bionics to release and talk about the I/O data. We -- if you look at the time lines and clinical trial ], I mean, we would expect them to have data available very soon. So as we have said all the time, completion of that study has been the trigger for initiation of the bihormonal artificial pancreas study, where we use 2 hormones. So I cannot comment further on the data, but I have no reasons to believe that things are not progressing within Beta Bionics on the insulin-only studies as planned.For CHI, you can say, personally, I'm also disappointed that we have not reached the last subject for this study yet. We -- I had expected that to happen this quarter, to be honest. And as you know, these are neonates. We know the patients we are in constant dialogue, weekly dialogue with the and also potential patients that could go -- I mean, gearing up our potential patients that could go into the study. Reality is, this is, as a family when you get to the situation where you have a child that is diagnosed with CHI, it's a very, very dramatic situation to be in, and to then participate in clinical study where there are significant requirements to actually adhere to study protocols and so on, can sometimes be difficult. So personally, I would have expected us to have reached that last randomization base than where we were a few months ago. We are not there yet, but we feel that we are very, very close. So yes, it's a condition that is difficult to manage, you can say, and that's just On the newborns.

[Operator]

Your next question comes from the line of Joseph Stringer from Needham & Company.

[Joseph Robert Stringer, Associate]

And apologies, we're temporarily disconnected. So apologies if I repeat a question here. First 1 is on the interim analysis. Just curious, around the stat plan for this in terms of -- you've previously guided full results -- or excuse me, the top line results from the full number of patients in 2022. So just curious why not wait? Do you have to spin the alpha on the interim analysis for the full results? And then on the interim analysis, is it analysis of each the once-weekly and the twice-weekly arms? Or is it some type of pooled interim analysis on both treatment arms? And then I guess just lastly, if you were to see a positive outcome on the interim in, let's say, in 3Q, what else is required for potential NDA submission from the other SBS-EASE trials 2, 3 and 4, would you have to wait for additional data from that prior to NDA submission?

[Emmanuel Dulac, CEO & President]

So why not wait? So this was a dialogue we had with the FDA throughout the year to make sure that we would meet our goals, you can say. And as I said before, we feel comfortable around the power that goes into this one. The reason that we take the decision now is -- and we feel that we is, of course, that we enter now the winter season and when we do, as you know, everybody start to see spikes again in COVID. So we don't want to be in a situation where Q1 is going to again cause delays to this program. So I think it's a very reasonable thing for us to make that decision now. That's at least how we discuss this internally, and we feel very comfortable with interim. So that is the trigger where we are right now. We are not changing the way. We assessed the date. And we are still allowed to assess each arm individually. So that is the power, and we are also looking into both primary and secondary end points.So again, there's no change to those aspects. If we have a decision to stop, and is positive, then we expect and plan to submit the NDA based on those data, meaning that for EASE-SBS 2 and 3, the 2 extension studies will basically make a data cut there at that time. And then those data will be part of the submission. EASE-SBS 4, which is the Phase IIIb study, we will likely also consider to do an interim just to provide those data as well, but they are not in our current planning needed for the submission. So if we reach a decision for a positive goal, then we expect to pursue the NDA based on the data that we have available at that time.

[Operator]

[Operator Instructions]No more question over the phone lines. I will hand back to Emmanuel for closing remarks. Thank you.

[Emmanuel Dulac, CEO & President]

Thank you. With that, we would like to thank you all for attending and for your questions. End of June, we launched our first commercial product in the U.S., Zegalogue injection for the treatment of severe hypoglycemia in patients age 6 and above. And meanwhile, we saw we are 4 months into the launch. We continue to progress our late-stage clinical program, our type 1 diabetes management and rare disease programs as well as advance our early-stage pipeline. That's actually the message I want you to take away tonight. And as well, we look forward to connecting on future announcements and updates. Thank you very much for your time.

[Operator]

This concludes our conference for today. Thank you for participating. You may now all disconnect.has been running?

[Emmanuel Dulac, CEO & President]

I mean it's up to Beta Bionics to release and talk about the I/O data. We -- if you look at the time lines and clinical trial ], I mean, we would expect them to have data available very soon. So as we have said all the time, completion of that study has been the trigger for initiation of the bihormonal artificial pancreas study, where we use 2 hormones. So I cannot comment further on the data, but I have no reasons to believe that things are not progressing within Beta Bionics on the insulin-only studies as planned.For CHI, you can say, personally, I'm also disappointed that we have not reached the last subject for this study yet. We -- I had expected that to happen this quarter, to be honest. And as you know, these are neonates. We know the patients we are in constant dialogue, weekly dialogue with the and also potential patients that could go -- I mean, gearing up our potential patients that could go into the study. Reality is, this is, as a family when you get to the situation where you have a child that is diagnosed with CHI, it's a very, very dramatic situation to be in, and to then participate in clinical study where there are significant requirements to actually adhere to study protocols and so on, can sometimes be difficult. So personally, I would have expected us to have reached that last randomization base than where we were a few months ago. We are not there yet, but we feel that we are very, very close. So yes, it's a condition that is difficult to manage, you can say, and that's just On the newborns.

[Operator]

Your next question comes from the line of Joseph Stringer from Needham & Company.

[Joseph Robert Stringer, Associate]

And apologies, we're temporarily disconnected. So apologies if I repeat a question here. First 1 is on the interim analysis. Just curious, around the stat plan for this in terms of -- you've previously guided full results -- or excuse me, the top line results from the full number of patients in 2022. So just curious why not wait? Do you have to spin the alpha on the interim analysis for the full results? And then on the interim analysis, is it analysis of each the once-weekly and the twice-weekly arms? Or is it some type of pooled interim analysis on both treatment arms? And then I guess just lastly, if you were to see a positive outcome on the interim in, let's say, in 3Q, what else is required for potential NDA submission from the other SBS-EASE trials 2, 3 and 4, would you have to wait for additional data from that prior to NDA submission?

[Emmanuel Dulac, CEO & President]

So why not wait? So this was a dialogue we had with the FDA throughout the year to make sure that we would meet our goals, you can say. And as I said before, we feel comfortable around the power that goes into this one. The reason that we take the decision now is -- and we feel that we is, of course, that we enter now the winter season and when we do, as you know, everybody start to see spikes again in COVID. So we don't want to be in a situation where Q1 is going to again cause delays to this program. So I think it's a very reasonable thing for us to make that decision now. That's at least how we discuss this internally, and we feel very comfortable with interim. So that is the trigger where we are right now. We are not changing the way. We assessed the date. And we are still allowed to assess each arm individually. So that is the power, and we are also looking into both primary and secondary end points.So again, there's no change to those aspects. If we have a decision to stop, and is positive, then we expect and plan to submit the NDA based on those data, meaning that for EASE-SBS 2 and 3, the 2 extension studies will basically make a data cut there at that time. And then those data will be part of the submission. EASE-SBS 4, which is the Phase IIIb study, we will likely also consider to do an interim just to provide those data as well, but they are not in our current planning needed for the submission. So if we reach a decision for a positive goal, then we expect to pursue the NDA based on the data that we have available at that time.

[Operator]

[Operator Instructions]No more question over the phone lines. I will hand back to Emmanuel for closing remarks. Thank you.

[Emmanuel Dulac, CEO & President]

Thank you. With that, we would like to thank you all for attending and for your questions. End of June, we launched our first commercial product in the U.S., Zegalogue injection for the treatment of severe hypoglycemia in patients age 6 and above. And meanwhile, we saw we are 4 months into the launch. We continue to progress our late-stage clinical program, our type 1 diabetes management and rare disease programs as well as advance our early-stage pipeline. That's actually the message I want you to take away tonight. And as well, we look forward to connecting on future announcements and updates. Thank you very much for your time.

[Operator]

This concludes our conference for today. Thank you for participating. You may now all disconnect.