ZEAL is a biotech developing peptide-based medicines, with an initial focus on treating type 2 diabetes. Its portfolio includes two approved products, which are out-licenses to Sanofi (SNY) including: 1). lixisenatide, which has been approved by the U.S FDA and the European Medicines Agency (EMA). In the U.S., it is marketed as Adlyxin and in markets outside the U.S. it is marketed as Lyxumia; and 2). a combination of lixisenatide with Lantus, the brand name of insulin glargine, developed by Sanofi. Lantus has been approved by the FDA and by the EMA and is sold under the brand names Soliqua in the U.S. and Suliqua in the Netherlands. Suliqua is expected to launch in other European countries in 2H17.
To give an idea of their impact financially so far, Lyxumia had global sales of €32.7 million ($37.3 million) in 2016. For the six months ended June 30, 2017, Adlyxin / Lyxumia had combined global sales of €13.9 million ($15.8 million) and Soliqua/Suliqua had combined global sales of €9.1 million ($10.4 million).
ZEAL is obligated to pay Alkermes (ALKS) 13% of all future milestone payments relating to Adlyxin/Lyxumia and Soliqua/Suliqua. Alkermes is the successor in interest to a termination agreement among each of ZEAL, Elan, and Elan subsidiaries that were all party to a now-terminated joint venture agreement relating to lixisenatide. In addition, ZEAL agreed to pay one of its employees who was involved in inventing lixisenatide a royalty of 0.5% on all such milestone and royalty payments.
With respect to the remaining 86.5% of royalty revenue on Adlyxin/Lyxumia, ZEAL has instructed the licensee to pay this revenue directly into a collection account for the purpose of paying interest and principal on a $50 million royalty bond that it issued through a wholly owned subsidiary in December 2014. As of December 31, 2016, ZEAL had paid $6.5 million, or 86.5% from royalties received in 2015 and 2016 in respect of Lyxumia, into a collection account to service the payments of principal and interest on the bonds.
ZEAL also has a couple product candidates in the pipleline that have yet to gain approval. Here is a quick look at those:
- Glepaglutide: In September 2015, ZEAL advanced glepaglutide, a novel long-acting GLP-2 analog, into Phase 2 clinical development. In pre-clinical trials, glepaglutide has shown a long half-life and differentiated stability in a liquid formulation, as compared to native GLP-2, which it believse can be used in the development of a product candidate that better meets patient needs, including by providing an easy-to-use option for the treatment of short bowel syndrome. In February 2016, ZEAL began dosing glepaglutide to patients with SBS in a Phase 2 proof-of-concept clinical trial. In June 2017, top-line results of this Phase 2 trial were released. In the Phase 2 trial, glepaglutide met the primary endpoint of reducing fecal wet weight output in patients with SBS. ZEAL then submitted an IND to the FDA in July of 2017.
- Dasiglucagon: This is a novel analog of human glucagon, a hormone that increases the level of blood glucose in the body. In pre-clinical trials, dasiglucagon has shown a favorable stability and solubility profile in a liquid formulation, as compared to native glucagon, and is being investigated for use as a rescue treatment for severe hypoglycemia, in a dual-hormone artificial pancreas system for insulin-dependent diabetes patients, and in a single-hormone pump for subcutaneous infusion as a treatment for CHI. In June 2017, ZEAL obtained orphan medicinal product designation from the European Commission for the use of our multiple-dose formulation of dasiglucagon for the treatment of CHI. In July 2017, it also submitted rare pediatric disease and orphan drug designation applications to the FDA for the treatment of CHI. ZEAL expects a decision to be made on these applications in the second half of 2017.
For the three months ended March 31, 2017, revenue was DKK 77.6 million ($11.1 mln), up 1,058% year/year. Milestone revenue amounted to DKK 69.6 million (as compared to zero for the three months ended March 31, 2016), due to a $10 million milestone payment received from Sanofi related to the approval of Suliqua in the EU in January 2017.
Royalty expenses for the period were DKK 10.5 million ($1.5 million), as compared to DKK 0.9 million for the three months ended March 31, 2016, reflecting an increase of DKK 9.6 million. R&D expenses were DKK 60.7 million ($8.7 million), as compared to DKK 63.7 million for the three months ended March 31, 2016. R&D expenses consisted mainly of costs related to the clinical development of dasiglucagon (both single and multiple dose formulations) and to glepaglutide for short bowel syndrome.
ZEAL had an operating loss of DKK (3.3) million, a significant improvement from the DKK (64.5) million operating loss in the year ago period.