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Zealand: It’s out of our hands

The first six months of the year have yielded a disappointing turnover and a triple-digit deficit for Zealand Pharma. The CEO points to underlying elements in the company, but, for the time being, he cannot gauge whether the company will make it into the black at year’s end.

Foto: Zealand Pharma/PR

David Solomon is a happy CEO, although his company, Zealand Pharma, has just published an H1 report revealing a huge bottom line deficit and a significantly lower turnover than the year before.

“But the basic elements in Zealand are extremely solid. We have started seeing returning revenue from Sanofi, as Lyxumia is now selling in Europe – in Germany it has already captured a market share of about 11.5 % as of July, 26. That's the foundation of our building,” he tells Medwatch.

He points out that additional clinical programs meant to ensure continued revenue in the company are also advancing as planned.

A product on the market

“We are advancing danegaptide to phase IIa later this year, and ZP2929 is in phase I in our collaboration with Boehringer Ingelheim. Elsiglutide begins in phase IIb soon in our collaboration with Helsinn, and we have a strong financial position with over DKK 400m (USD 71m). Although it hasn’t been a profitable six months, we are very enthusiastic in regards to the basic foundation of Zealand, and we are continually adding value by discovering and developing peptide drugs,” David Solomon says, adding:

“Very few biotech companies in Europe, or even the US, have a product on the market. And, in addition to Lyxumia, we continue to generate value through our partnerships as well as our own projects.”

Last year you managed a turnover of DKK 224m (USD 40m) and a profit of DKK 36m (USD 6.4m). The first six months of 2013 have yielded a turnover of DKK 1m (USD 177,000) and a deficit of DKK 104.3m (USD 18.5m). Will it be a profitable year for Zealand Pharma?

“I cannot say anything about that. There will be turnover from Lyxumia sales, but we cannot predict how Sanofi will fair in this regard, so it’s out of our hands. We might also see milestone payments from other projects, but I cannot say anything about that at the moment either. But I can reveal our expected turnover for the full year (DKK 210-240m, ed.), and I can say what our current cash on hand is (DKK 403.6m, ed.). So in any case we will have a healthy financial situation at the end of the year.”

Financial discipline

Can you reveal whether you are expecting any kind of milestone payments in Q2?

“No. We don’t guide for milestone payments until they are triggered. They are usually tied to events that are out of our hands. So anything else would be reckless in regards to the stock market.”

H1 yielded a significant deficit. You have previously said that Zealand Pharma should be a lean, mean machine, creating value for shareholders and focus on profitability…

“The company is that. Our employee numbers and our burn rate are kept at a constant level. We haven’t increased our cost basis for the full year, so we’re very cautious, and we are holding on to the financial discipline.”

Luxury

How would you assess the development in sales of Lyxumia?

“I cannot comment on that. It’s too soon, it’s out of our hands, and we don’t have access to the latest information from Sanofi,” David Solomon says and adds:

“But I’m a happy CEO. I’m happy because the basics look solid, research programs are on the right track, and we have entered a stable period with returning revenue, which is a luxury for any biotech company.”

- translated by Martin Havtorn Petersen

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