Company announcement - No. 33 / 2016

Zealand's interim report for the first half of 2016 (unaudited)

- Financial results as expected and in July, the first Zealand invented product was approved in the U.S.

Revenue of DKK 14.7 million / €2.0 million
Net loss of DKK 175.7 million / €23.6 million
Cash position of DKK 423.2 million / €56.9 million as of end June 2016
iGlarLixi received a positive 12-2 vote by an FDA Advisory Committee recommending its approval to treat type 2 diabetes
Agreement with Beta Bionics on clinical development of dasiglucagon^[1] (ZP4207) for use in a dual-hormone artificial pancreas system

Events after the reporting period:

Lixisenatide approved by the FDA as Adlyxin^TM to treat type 2 diabetes
Positive Phase II results with single-dose dasiglucagon (ZP4207) support its potential as a ready-to-use rescue pen to treat severe hypoglycemia
FDA extended the review time of iGlarLixi by three months. Regulatory decision expected end November 2016

Copenhagen, 25 August 2016 - Zealand Pharma A/S ("Zealand") (CVR no. 20 04 50 78) today reported financial results for the half-year period 1 January - 30 June 2016. Results were as expected and the financial guidance for 2016 remains unchanged.

Britt Meelby Jensen, President and CEO of Zealand, commented on the report:

"This has been an exciting period for Zealand. We report financial results as expected, we confirm our full-year guidance, and we have had important advancements in our product portfolio. Lixisenatide, with the U.S. brand name Adlyxin^TM, received FDA approval to treat adults with type 2 diabetes. Despite the recently announced three months' extension to the FDA review time for iGlarLixi, I expect 2016 to become the most successful year for Zealand, with an anticipated approval of this product in the U.S. as well. I am pleased with the continuously strong momentum in the development of our own product candidates. We have had positive Phase II results with our single-dose dasiglucagon, or ZP4207, for acute, severe hypoglycemia and we are in preparations to start the next clinical trial of multiple-dose dasiglucagon in a dual-hormone artificial pancreas system. Finally, our Phase II trial with glepaglutide^[2], or ZP1848, for short bowel syndrome is progressing well."

Financial highlights for H1 2016

Revenue of DKK 14.7million / €2.0 million (H1 2015: DKK 13.3 million / €1.8 million).
Net operating expenses of DKK 165.4 million / €22.2 million (H1 2015: DKK 125.9 million / €16.9 million).
Net loss of DKK 175.7 million / €23.6 million (H1 2015: DKK 131.8 million / €17.7 million).
The cash position amounted to DKK 423.2 million / €56.8 million at 30 June 2016 (30 June 2015: DKK 468.6 million / €62.8 million).

Restatements

In connection with the preparation of the interim report for the first half of 2016, Zealand reviewed its accounting policy related to functional currency, income tax benefit and its royalty bond, along with reviewing a number of other items including the presentation of certain items within the statement of financial position. This review led to a number of restatements impacting the prior period income statements, statements of comprehensive loss, statement of cash flow, statement of financial position and statement of changes in equity.

The restatements have had a total impact on net loss and total comprehensive loss for the three and six months ended 30 June 2015 of respectively DKK -1.7 million and DKK 0.8 million. The restatements have had no impact on net loss or total comprehensive loss for the year ended 31 December 2015.

The nature and impact of the restatements are described in further details in Note 1 of the condensed consolidated interim financial statements.

Portfolio of out-licensed products - First product approved in the U.S.

Adlyxin^TM/Lyxumia^® (lixisenatide) for type 2 diabetes (license collaboration with Sanofi)

Royalty revenue to Zealand on Sanofi's sales of Lyxumia^® amounted to DKK 13.1 million / € 1.7 million in H1 2016, a decrease of 3% compared to the same period of 2015. Sanofi reported flat sales of Lyxumia^® for the period measured at constant exchange rates. Lyxumia^® is approved in more than 60 countries and has been launched by Sanofi in 42 of these. The biggest markets for Lyxumia^® are the UK, Spain, Italy and Japan. Additional launches are planned for 2016-2018.
Late July, lixisenatide was approved by the U.S. FDA under the brand name Adlyxin^TM for the treatment of adults with type 2 diabetes. This triggered a $5 million milestone payment from Sanofi.

iGlarLixi (fixed-ratio combination of lixisenatide and Lantus^®) for type 2 diabetes (license collaboration with Sanofi)

On 19 August 2016, the U.S. FDA decided to extend the regulatory review time for Sanofi's New Drug Application (NDA) for iGlarLixi by three months. The decision followed the submission by Sanofi of additional information, requested by the FDA, on the pen device for delivery of iGlarLixi as part of the NDA. A U.S. regulatory decision on iGlarLixi is now expected before the end of November 2016.
In May 2016, the Endocrinologic and Metabolic Drugs Advisory Committee (EMDAC) of the FDA recommended, by a vote of 12 to 2, the approval of the NDA for iGlarLixi.
iGlarLixi is also undergoing review by the European Medicines Agency (EMA) with a regulatory decision for Europe expected in Q1 2017.

Elsiglutide (GLP-2 analog) for chemotherapy-induced diarrhea (license collaboration with Helsinn)

In May 2016, a Phase IIb trial of elsiglutide for the treatment of chemotherapy induced diarrhea failed to meet its primary endpoint.
Helsinn is evaluating the full Phase II data set as well as results from a large, observational study of chemotherapy-induced diarrhea in consideration of next possible steps in the development of elsiglutide. A decision is expected later in H2 2016.

Boehringer Ingelheim license agreements - Novel treatments for diabetes and obesity

Zealand has two therapeutic peptide projects under license collaborations with Boehringer Ingelheim. One covers glucagon/GLP-1 dual agonists for the treatment of diabetes and/or obesity, and the other covers novel compounds against an undisclosed biological target for the treatment of obesity and/or diabetes.
Under both collaborations a lead candidate is being progressed towards start of clinical Phase I development in 2017.

Progress in the pipeline of proprietary drug candidates

Glepaglutide^[3] (ZP1848, long-acting GLP-2 analog) for short bowel syndrome

In June 2016, glepaglutide was proposed as an International Non-proprietary Name for Zealand's proprietary GLP-2 analog, previously known as ZP1848.
The ongoing Phase II Proof-of-Concept trial is progressing according to plan, with results expected mid-2017.

Dasiglucagon^[4] (ZP4207, glucagon analog) for single-dose rescue treatment of severe hypoglycemia in diabetes

In August 2016, Zealand announced results from a clinical Phase II trial with dasiglucagon, supporting its potential as a ready-to-use rescue pen to treat acute, severe hypoglycemia ("insulin shock") associated with insulin therapy in diabetes.
Zealand initiated the trial in February 2016 and completed the enrolment of 58 patients with type 1 diabetes in June 2016.
The full results from the Phase II trial are planned for discussion with the FDA later in 2016 to define the next development steps for dasiglucagon as a rescue treatment.

Dasiglucagon^[5] (ZP4207, glucagon analog) for multiple-dose use in dual-hormone artificial pancreas for better diabetes management

In June 2016, a non-exclusive collaboration was announced with U.S. based Beta Bionics. The objective is to advance the development of a first-in-class dual-hormone artificial pancreas system to offer diabetes patients on insulin therapy, an easier and better way to control and manage their disease.
A next clinical trial is expected to be initiated later in 2016.

Other business

As of 1 July 2016, Zealand's senior management team has been expanded and strengthened with the arrival of Andrew Parker as the company's new Chief Science Officer.

Financial guidance for 2016 unchanged

Zealand maintains its revenue guidance for the full-year. This includes expectations of growing royalty revenue from Sanofi's sales of lixisenatide; as Lyxumia^® outside the U.S. and potentially as Adlyxin^TM in the U.S. pending launch in 2016.

Expectations of revenue of up to DKK 200 million / €27 million in the form of milestone payments from partners are also unchanged.

Net operating expenses in 2016 are expected at a range of DKK 340-360 million / €45-48 million, and operating loss before royalty income/expenses is therefore expected at a range of DKK 140-160 million / €19-21 million.

Conference call with senior management today at 2:00 pm CET / 8:00 am EDT

Zealand's senior management will host a conference call today at 2:00 pm CET/ 8:00 am EDT to present the interim report for H1 2016. Participating in the call will be Britt Meelby Jensen, Chief Executive Officer, Mats Blom, Chief Financial Officer, Adam Steensberg, Chief Medical and Development Officer and Hanne Leth Hillman, SVP and Head of IR and Communications. The presentation will be followed by a Q&A session.

The conference call will be conducted in English and the dial-in numbers are:

DK standard access +45 32 71 16 60

UK and international +44 (0) 207 136 6283

US (free dial-in from NYC) +1 646 254 3388

Passcode for access 79 59 175

A live audio webcast of the call including an accompanying slide presentation will be available via the following link, http://edge.media-server.com/m/p/m4rcono7, accessible also from Zealand's website (www.zealandpharma.com). Participants are advised to register for the webcast approximately 10 minutes before the start.

A replay of the event will be made available from the investor section of Zealand's website following the call.

*****

Britt Meelby Jensen, President and Chief Executive Officer
Tel: +45 51 67 61 28, email: bmj@zealandpharma.com

Hanne Leth Hillman, Senior Vice President, Investor Relations and Communications
Tel: +45 50 60 36 89, email: hlh@zealandpharma.com

About Zealand Pharma A/S

Zealand Pharma A/S (Nasdaq Copenhagen: ZEAL) ("Zealand") is a biotechnology company focused on the discovery, design and development of innovative peptide-based medicines. Zealand has a portfolio of medicines and product candidates under license collaborations with Sanofi, Boehringer Ingelheim and Helsinn and a pipeline of proprietary product candidates, which primarily target specialty diseases with significant unmet needs.

The company's first invented medicine, lixisenatide, a once-daily prandial GLP-1 analog for the treatment of type 2 diabetes, is licensed to Sanofi. Lixisenatide is marketed as Lyxumia^® outside the United States and approved as Adlyxin^TM in the United States. Lixisenatide has been developed in a fixed-ratio combination with Lantus^®(insulin glargine) which product is under regulatory review in the United States and in Europe.

Zealand's proprietary pipeline includes: Dasiglucagon^* (ZP4207) as single-dose rescue treatment for acute, severe hypoglycemia (Phase II); Glepaglutide** (ZP1848) for treatment of short bowel syndrome (Phase II); Dasiglucagon* (ZP4207) multiple-dose version intended for use in a dual-hormone artificial pancreas system for better hypoglycemia control and diabetes management (in preparation for Phase II); and other earlier stage clinical and preclinical peptide therapeutics.

Zealand is based in Copenhagen (Glostrup), Denmark. For further information about the company's business and activities, please visit www.zealandpharma.com or follow Zealand on Twitter @ZealandPharma.

* Dasiglucagon is a proposed International Nonproprietary Name (pINN)

** Glepaglutide is a proposed International Nonproprietary Name (pINN)

^[1] Dasiglucagon is a proposed International Nonproprietary Name (pINN).

^[2] Glepaglutide is a proposed International Nonproprietary Name (pINN).

^[3] Glepaglutide is a proposed International Nonproprietary Name (pINN).

^[4] Dasiglucagon is a proposed International Nonproprietary Name (pINN).

^[5] Dasiglucagon is a proposed International Nonproprietary Name (pINN).