Zealand announces full year results in line with guidance and release of its Annual Report for 2015

Company announcement No. 5 / 2016 Zealand announces full year results in line with guidance and release of its Annual Report for 2015 2015 was a transitional year for Zealand with considerable business and pipeline advancements and a clear strategic direction set for accelerated value creation Strong Q4 with revenue of DKK 167 million / EUR 22 million and a net result of DKK 70 million / EUR 9 million Full year net result of DKK -114 million / EUR -15 million (2014: DKK -65 million / EUR -9 million) with revenues of DKK 188 million / EUR 25 million (2014: DKK 154 million / EUR 21 million) in line with guidance End 2015 cash position of DKK 440 million / EUR 59 million (2014: DKK 538 million / EUR 72 million), excluding the milestone of DKK 137 million / EUR 18 million from Sanofi in December, which was paid only in January 2016 Key business events in Q4 2015 and the period thereafter: - The fixed-ratio combination of lixisenatide and Lantus (LixiLan) was submitted for US registration with use of a priority review voucher by Sanofi, triggering a USD 20 million payment to Zealand. FDA accepted the file in February 2016 - An FDA Advisory Committee Meeting on lixisenatide and the fixed-ratio combination of lixisenatide and Lantus has been scheduled for May 2016 - Patient enrolment completed in Phase IIb trial with elsiglutide by Helsinn - Two new lead drug candidates advanced into preclinical development under collaborations with Boehringer Ingelheim: One in October 2015 with an associated EUR 3 million payment to Zealand, and one in February 2016 - Two proprietary medicines have advanced into Phase II: ZP4207 for severe hypoglycemia and ZP1848 for short bowel syndrome - Results from well-conducted Phase II Proof-of-Concept trial showed no effect of danegaptide on reducing cardiac reperfusion injuries - Appointment of Andrew Parker as new Senior Vice President and Chief Science Officer with effect from 1 July 2016 Copenhagen, 16 March 2016 Zealand Pharma A/S ( Zealand ) (CVR no. 20 04 50 78) announces financial results in line with guidance and considerable progress for its product portfolio and business for the twelve month period from 1 January to 31 December 2015. Zealand Pharma A/S 1/8

Commenting on Zealand s full year results and the Annual Report for 2015, Britt Meelby Jensen, President and CEO of Zealand, said: 2015 was one of the best years in the history of Zealand. Financial results were as expected with considerable financing from milestone payments, and our business and portfolio have substantially progressed. Under our agreement with Sanofi, both lixisenatide and LixiLan have been filed for approvals in the US with regulatory decisions expected in July and August, respectively. These milestones are decisive for the prospects of Zealand becoming a profitable company near term. We have also advanced and expanded our own proprietary pipeline, including the initiation of Phase II trials with two new lead drug candidates, a glucagon analogue for hypoglycemia and a GLP-2 analogue for short bowel syndrome. These advancements support our new strategy for accelerated value creation, in that we will take select specialty peptide medicines all the way through registration ourselves and thereby retain more value and control for the benefit of both patients and our shareholders. And she continued: As we expand and invest more in advancing our own investigational medicines, we will obviously increase our operating expenses. We remain mindful that this increase will largely be offset by growing royalty revenue and that Zealand retains a solid cash position. We have had a great start to 2016 and it is with confidence that I look further into another exciting year with a strong news flow and further growth of our business. Financial highlights for 2015 Revenue of DKK 187.7 / EUR 25.2 million (2014: DKK 153.8 / EUR 20.7 million). Royalty expenses of DKK 22.3 / EUR 3.0 million (2014: DKK 13.8 / EUR 1.9 million). Net operating expenses of DKK 246.7 / EUR 33.1 million (2014: DKK 213.5 / EUR 28.7 million). Net result of DKK -114.0 / EUR -15.3 million (2014: DKK -65.0 / EUR -8.7 million). Cash and securities amounted to DKK 440.2 / EUR 59.0 million at 31 December 2015 (2014: DKK 538.3 / EUR 72.3 million). Financial highlights for Q4 2015 Revenue of DKK 167.1 / EUR 22.4 million (Q4 2014: DKK 6.3 / EUR 0.8 million). Net operating expenses of DKK 70.6 / EUR 9.5 million (Q4 2014: DKK 73.4 / EUR 9.9 million). Net result of DKK 69.7 / EUR 9.4 million (Q4 2014: DKK -63.0 / EUR 8.5 million). Business highlights and updates for Q4 2015 and the period thereafter Maturing portfolio of out-licensed products and projects Lixisenatide for Type 2 diabetes (license collaboration with Sanofi) Marketed as Lyxumia outside the US / under regulatory review in the US Royalty revenue to Zealand on Sanofi s sales of Lyxumia outside the US amounted to DKK 28.6 million / EUR 3.8 million in 2015, an increase of 41% over 2014. Royalty revenue for Q4 was DKK 8.1 million / EUR 1.1 million, an increase of 31% compared to the same period in 2014. The main contributing countries were the UK, Spain, Italy and Japan. Zealand Pharma A/S 2/8

In the US, lixisenatide is under FDA review and a regulatory decision is expected in July 2016. On 15 March 2016, FDA announced that an Advisory Committee meeting on lixisenatide and on the fixed-ratio combination of lixisenatide and Lantus has been scheduled for May 2016. Fixed-ratio combination of lixisenatide and Lantus (LixiLan) for Type 2 diabetes (license collaboration with Sanofi) Under regulatory priority review in the US with EU submission expected before end March 2016 End December 2015, based on positive top-line results reported in Q3 2015 from two pivotal Phase III trials (LixiLan-L and LixiLan-O), Sanofi submitted the combination of lixisenatide and Lantus for US registration, redeeming a Priority Review Voucher as part of the filing. Triggered by this milestone was a USD 20 million payment to Zealand. End February 2016, FDA accepted the file for priority review of the combination product with a regulatory decision in the US expected in August 2016. On 15 March 2016, FDA announced that an Advisory Committee meeting on the fixed-ratio combination of lixisenatide and insulin glargine (Lantus ) has been scheduled for May 2016. Sanofi plans to submit the combination product for regulatory approval in the EU before end March 2016. Elsiglutide for chemotherapy-induced diarrhea (license collaboration with Helsinn) Completing Phase IIb development In February 2016, Helsinn completed the enrolment of approximately 500 patients with colorectal cancer into its Phase IIb dose-finding trial. The trial was initiated in February 2015 and evaluates the effect and safety of three doses of elsiglutide as a novel and potential first-ever treatment of chemotherapy induced diarrhea. The Phase II trial will complete later in H1 2016 with top-line results expected in H2 2016. Progress under both Boehringer Ingelheim license collaborations in diabetes and obesity In October 2015, Boehringer Ingelheim selected and advanced a novel, undisclosed peptide therapeutic into preclinical development as a potential new treatment of obesity or diabetes under one of two ongoing collaborations. This development milestone led to a EUR 3 million payment to Zealand. Under the other collaboration between Zealand and Boehringer Ingelheim, covering novel glucagon/glp-1 dual acting agonists for the treatment of Type 2 diabetes and/or obesity, Boehringer in February 2016 selected and advanced a new lead drug candidate into preclinical development. Growing proprietary pipeline (Zealand retains all rights) ZP4207 (single-dose) rescue treatment for acute, severe hypoglycemia in diabetes In clinical Phase II development In February 2016, Zealand initiated dosing of patients in a Phase II trial with ZP4207 for the treatment and management of hypoglycemia in diabetes. Contrary to existing products, which are Zealand Pharma A/S 3/8

based on native glucagon, ZP4207 has high stability in liquid formulation and potential as a ready-touse rescue treatment. The Phase II trial is planned to enroll 56 patients with Type 1 diabetes and results will be an important step in the dual product development plans for ZP4207: as a more convenient rescue treatment for severe hypoglycaemia associated with insulin therapy in diabetes and for multiple-dose use as an essential component in a dual-hormone artificial pancreas system. Completion of the Phase II trial and results are expected in H2 2016. ZP1848 (long-acting GLP-2 analogue) for short bowel syndrome In clinical Phase II development In February 2016, Zealand successfully dosed the first patients with short bowel syndrome in a clinical Phase II Proof-of-Concept trial with ZP1848. Short bowel syndrome is a serious and most often chronic specialty disease caused by reduced or loss of intestinal function and a huge burden on patients. The ongoing Phase II trial is planned to enroll 18 patients with short bowel syndrome, who will all be randomized to two of three different doses of ZP1848 in a cross-over design. Updates on patient enrolment and timelines for trial completion will be communicated in H2 2016. Currently, Phase II results are expected to be available in H1 2017. ZP4207 (multiple-dose) for better hypoglycemia control and glucose management In preparation for next clinical step after Phase Ib Zealand has evaluated ZP4207 also in a Phase Ib trial with results showing good safety and tolerability after multiple ascending dosing of this soluble and stable glucagon analogue. A multiple-dose version of ZP4207 has particular potential as an essential component in a dualhormone artificial pancreas device for better hypoglycaemia control and derived beneficial effect on long-term glucose management. Zealand is evaluating several options and is preparing for the advancement of ZP4207 for multipledose use into the next clinical phase. Danegaptide for cardiac reperfusion injuries Clinical Phase II Proof-of-Concept trial completed with negative results In March 2016, Zealand completed a clinical Phase II Prof-of-Concept trial for the evaluation of danegaptide as a potential first-ever pharmaceutical treatment of cardiac reperfusion injuries. The trial was well-conducted, delivering a high-quality data set with results however, showing no effect of danegaptide on the primary endpoint of saving cardiac tissue from ischemic reperfusion injuries as measured on the Myocardial Salvage Index (MSI). Other business events New competencies added to senior management Two internationally experienced profiles have been appointed to complement the competence span of Zealand s senior management team: Zealand Pharma A/S 4/8

On 1 December 2015, Carlos de Sousa joined Zealand as Senior Vice President and Chief Business Officer. Carlos has 25 years of experience from numerous senior leadership positions in the international pharmaceutical and biotech industries. Recently, Andrew Parker has been appointed as Senior Vice President and Chief Science Officer with effect as of 1 July 2017 the latest. Andrew has more than 20 years of experience from senior leadership and managerial positions in international pharmaceutical, biotech and start-up companies, including several years with Shire Pharmaceuticals, Opsona Therapeutics, and AstraZeneca. He holds a Ph.D. from the National Institute for Medical Research at Mill Hill, London, conducted post-doctoral research at Johns Hopkins Medical School, Baltimore, USA, and also has an MBA from the University of Warwick Business School, UK. Collaboration with BioSolveIT to create unique, new peptide drug discovery software Zealand has joined forces with BioSolveIT, a renowned medicinal chemistry informatics company, in the creation of a novel, unique software tool tailored to advance the design and development of therapeutic peptides. A first version of the software, called PepSee, has been implemented at Zealand and already demonstrated its ability to accelerate and add new dimensions to peptide design. Completion of a second version is expected within 18 months, adding additional features, and with the potential to support innovation and push the boundaries of peptide research. Financial guidance for 2016 In 2016, Zealand expects continuously growing royalty payments from Sanofi on sales of Lyxumia outside the US. Pending positive US regulatory decisions on both lixisenatide and LixiLan in Q3 2016 and potential subsequent commercial launches by Sanofi also in 2016, royalty payments on US sales may be received as well. However, no specific guidance on the level of royalties can be provided, as Sanofi has given no guidance on 2016 sales of Lyxumia or LixiLan. Additional revenue of up to DKK 200 million / EUR 27 million may be received from event driven partner related milestones. Net operating expenses in 2016 are expected to increase to a range of DKK 340-360 million / EUR 45-48 million. The increase compared to 2015 relates to a higher level of clinical development costs associated with the advancement of Zealand s proprietary clinical pipeline. Operating loss before royalty income/expenses is therefore expected at a range of DKK 140-160 / EUR 19-21 million. Zealand s Annual Report 2015 This full year announcement should be read in conjunction with Zealand s Annual Report for 2015, published today and attached to the announcement in a PDF-version. Following publication, a PDF version of the Annual Report can also be accessed and downloaded from the front page of Zealand s website or directly from the following link: (http://www.annualreport2015.zealandpharma.com/). Under the same link, there will also be access to video recordings with members of senior management presenting on different part of Zealand s business and outlook. Zealand Pharma A/S 5/8

Printed versions of the Annual Report 2015 will be available from the beginning of April and a copy can be requested by contacting Zealand at info@zealandpharma.com or investors@zealandpharma.com. The full report is only available in English, however a Danish version of the Management Review will be available both as PDF and in print before the company s Annual General Meeting on 19 April 2016. Conference call with Zealand s management today at 14:00 CET / 9:00 EDT Zealand s management will host a conference call today at 14:00 CET/ 9:00 EDT to present the Full Year results and the Annual Report for 2015. Participating in the call will be Britt Meelby Jensen, President and Chief Executive Officer, Mats Blom, Senior Vice President and Chief Financial Officer, Adam Steensberg, Chief Medical and Development Officer and Hanne Leth Hillman, Senior Vice President 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 3271 1658 UK and international +44 (0) 2033 645 381 US (free dial-in) +1 646 254 3367 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/m3o2s85z, accessible also from the Investor section of 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. For further information, please contact: 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 Zealand Pharma A/S (Nasdaq Copenhagen: ZEAL) ( Zealand ) is a biotech company with leading-edge scientific expertise in turning peptides into medicines. Zealand has a growing proprietary pipeline of novel investigational medicines and a mature portfolio of products and projects under license collaborations with Sanofi, Helsinn Healthcare and Boehringer Ingelheim. The company s first invented medicine, lixisenatide, a once-daily prandial GLP-1 analogue for the treatment of Type 2 diabetes, is licensed to Sanofi who markets the product globally (ex-us) as Lyxumia and has it under regulatory review in the US. The license agreement with Sanofi covers also LixiLan, which is the reference name for the fixed-ratio, singleproduct combination of lixisenatide and insulin glargine 100 Units/mL (Lantus ). LixiLan is under regulatory priority review by the US FDA and regulatory submission in the EU is planned by Sanofi for Q1 2016. Zealand s proprietary pipeline includes: ZP4207 (a stable glucagon rescue treatment) for severe hypoglycemia in Phase II; ZP1848 for Short Bowel Syndrome in Phase II; ZP4207 (multiple-dose version) for better hypoglycemia management Zealand Pharma A/S 6/8

in diabetes in preparation for Phase II; ZP2929 for diabetes/obesity in Phase I; and several preclinical peptide therapeutics. The company is based in Copenhagen (Glostrup), Denmark. For further information about Zealand s business and activities, please visit: www.zealandpharma.com or follow us on Twitter @ZealandPharma Zealand Pharma A/S 7/8

GROUP KEY FIGURES DKK thousand 2015 2014 2015 2014 INCOME STATEMENT 1.10-31.12 1.10-31.12 1.1-31.12 1.1-31.12 AND COMPREHENSIVE INCOME Note Q4 Q4 Full year Full year Revenue 167,107 6,303 187,677 153,773 Royalty expenses -19,541-912 -22,267-13,776 Gross profit 147,566 5,391 165,410 139,997 Research and development expenses -55,992-58,082-214,959-180,036 Administrative expenses -16,606-19,244-44,606-39,826 Other operating income 2,041 3,972 12,828 6,328 Operating result 77,009-67,963-81,327-73,537 Net financial items -9,609-1,251-38,505 1,047 Result from ordinary activities before tax 67,400-69,214-119,832-72,490 Tax on ordinary activities 1 2,320 6,250 5,875 7,500 Net result for the period (after tax) 69,720-62,964-113,957-64,990 Comprehensive income for the period 69,720-62,964-113,957-64,990 Earnings per share - basic (DKK) 2,93-2.78-4.82-2.87 Earnings per share - diluted (DKK) 2,86-2.78-4.82-2.87 2015 2014 STATEMENT OF FINANCIAL POSITION 31 Dec 31 Dec Cash, cash restricted and cash equivalents 440,199 538,273 Total assets 634,688 596,756 Share capital ('000 shares) 24,353 23,193 Shareholder's equity 252,231 252,828 Equity/assets ratio 0.40 0.42 Royalty bond 312,951 272,170 2015 2014 2015 2014 1.10-31.12 1.10-31.12 1.1-31.12 1.1-31.12 CASH FLOW Q4 Q4 Full year Full year Depreciation 1,601 1,602 6,215 5,932 Change in working capital -122,211 25,784-138,871 15,521 Investments in fixed assets -737-1,606-4,040-4,497 Free cash flow 2-46,366-38,256-221,373-46,680 2015 2014 OTHER 31 Dec 31 Dec Share price (DKK) 151.50 83.00 Market capitalization (MDKK) 3,689 1,925 Equity per share (DKK) 3 10.60 11.17 Average number of employees 110 103 Products in clinical development (end period) 4 6 5 Products in registration phase (end period) 5 2 0 Medicines on the market 1 1 Notes: (1) According to Danish tax legislation Zealand is eligible to receive DKK 5.9 million in cash relating to the tax loss of 2015 (2) Free cash flow is calculated as cash flow from operating activities less purchase of property, plant and equipment (3) Equity per share is calculated as shareholders equity divided by total number of shares less treasury shares (4) In May 2015, Zealand initiated clinical Phase Ib development of ZP4207 for multiple dose use, and in September 2015, ZP1848 was advanced into clinical Phase II development (5) End of July 2015, Sanofi filed lixisenatide for regulatory approval in the US, and in September, the file was accepted for review by the FDA. In December 2015, Sanofi filed LixiLan for registration in the US. The file was accepted for review by the FDA in February 2016 Zealand Pharma A/S 8/8