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        Applicable authorities, including the FDA/USPTO in the United States, and comparable regulatory authorities and intellectual property offices in other EU countries and worldwide, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request. If this occurs, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case.

Third parties may challenge the inventorship of our patent filings and other intellectual property or may assert ownership or commercial rights to inventions we develop.

        Third parties may in the future make claims challenging the inventorship or ownership of our intellectual property. We have written agreements with collaboration partners that provide for the ownership of intellectual property arising from our collaborations. These agreements provide that we or our licensees must negotiate certain commercial rights with collaboration partners with respect to joint inventions or inventions made by our collaboration partners that arise from the results of the collaboration. In addition, our standard employment contracts ensure that any inventions are ours by right and this contractual position is in addition to our rights to any invention by the operation of law where we conduct research and development ourselves.

        In some instances, there may not be, or parties may dispute that there are, adequate written provisions to address clearly the resolution of intellectual property rights that may arise from collaboration. If we or our licensees cannot successfully negotiate sufficient ownership and commercial rights to the inventions that result from our use of a third party collaboration partner's materials where required, or if disputes otherwise arise with respect to the intellectual property developed with the use of a collaboration partner's samples, we may be limited in our ability to capitalize on the market potential of these inventions. In addition, we may face claims by third parties that our agreements with

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employees, contractors or consultants obligating them to assign intellectual property to us are ineffective, or in conflict with prior or competing contractual obligations of assignment, which could result in ownership disputes regarding intellectual property we have developed or will develop and interfere with our ability to capture the commercial value of such inventions. Litigation may be necessary to resolve an ownership dispute, and if we are not successful, we may be precluded from using certain intellectual property, or may lose our exclusive rights in that intellectual property. Either outcome could have an adverse impact on our business, financial position, results of operations and future growth prospects.

Third parties may assert that our employees or consultants or we have wrongfully used or disclosed confidential information or misappropriated trade secrets, or claim ownership of what we regard as our own intellectual property.

        We employ individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, and no such claims against us are currently pending, we may be subject to claims that we or our employees, consultants or independent contractors have used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

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Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

        Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and applications are required to be paid to the USPTO and various governmental patent agencies outside the United States in several stages over the lifetime of the patents and applications. The USPTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process and after a patent has issued. There are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

Risks Related to Government Regulation

Government restrictions on pricing and reimbursement, as well as other healthcare payor cost-containment initiatives, may negatively impact our ability to generate revenue.

        Sales of certain of our out-licensed products and our product candidates, if and when approved for marketing, has and will depend, in part, on the extent to which our products will be covered by third party payors, such as government health care programs like Medicare and Medicaid, commercial insurance and managed healthcare organizations. These third party payors play an important role in determining the extent to which new drugs, biologics and medical devices will be covered. The Medicare and Medicaid programs increasingly are used as models for how private payors and other governmental payors develop their coverage and reimbursement policies for drugs, biologics and medical devices. It is difficult to predict at this time what third party payors will decide with respect to the coverage and reimbursement for our product candidates. The primary trend in the U.S. healthcare industry and elsewhere has been cost containment, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products and/or biosimilars. Adoption

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of price controls, cost containment measures and adoption of more restrictive policies in jurisdictions with existing controls and measures, could limit our net revenue and results.

        Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for medical products, drugs and services. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for drugs. We cannot be sure that coverage will be available for any product candidate that we commercialize and, if coverage is available, the level of reimbursement. Because coverage and reimbursement determinations are made on a payor-by-payor basis, obtaining coverage and adequate reimbursement from a third party payor does not guarantee that we will obtain similar coverage or reimbursement from another third party payor. Reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval. If reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize any product candidate for which we obtain marketing approval. Decreases in third party reimbursement for our product candidates or a decision by a third party payor not to cover our product candidates or provide only limited reimbursement for our product candidates could reduce physician usage of our products once approved and have a material adverse effect on our sales, results of operations and financial condition. Further, the adoption and implementation of any future governmental cost containment or other health reform initiative may result in additional downward pressure on the price that we may receive for any approved product.

        Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada, and other countries has and will continue to put

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pressure on the pricing and usage of our product candidates. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. Other countries allow companies to fix their own prices for medical products, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.

        Moreover, increasing efforts by governmental and third party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our product candidates. We expect to experience pricing pressures in connection with the sale of any of our product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs, medical devices and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the successful commercialization of new products.

We may face difficulties from changes to current regulations and future legislation.

        Existing regulatory policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability.

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        The current presidential administration and U.S. Congress have also recently attempted to repeal or "repeal and replace" the Affordable Care Act, or the ACA. Although those efforts did not succeed, the presidential administration may continue to seek to modify, repeal, or otherwise invalidate all, or certain provisions of, the ACA. There is still uncertainty with respect to the impact President Trump's administration and the U.S. Congress may have on the ACA, if any, and any changes will likely take time to unfold. Additionally, since its enactment, there have beenremain judicial and Congressional challenges to certain aspects of the ACA. For example, on December 14, 2018, a U.S. District Court Judge in the Northern District of Texas, or Texas District Court Judge, ruled that the entire ACA is invalid based primarily on the fact that the Tax Cuts and Jobs Act of 2017 repealed the tax-based shared responsibility payment imposed by the ACA, on certain individuals who fail to maintain qualifying health coverage for all or part of a year, which is commonly referred to as the "individual mandate". WhileAdditionally, on December 18, 2019, the TexasU.S. Court of Appeals for the 5th Circuit upheld the District Court Judge,ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the PPACA are invalid as well as the current presidential administration and the Centers for Medicare and Medicaid Services, have stated that this ruling will have no immediate effect, itwell. It is unclear how this decision, future decisions, and subsequent appeals will impact the law and the effect such impact could have on coverage and reimbursement for healthcare items and services covered by plans that were authorized by the ACA.

        In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, will stay in effect through 20252029 unless additional Congressional action is taken. In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the U.S. government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for our out-licensed products and product candidates (if and when approved) and accordingly, our financial results.

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        Likewise, the annual Medicare Physician Fee Schedule update, which, until recently, was based on a target-setting formula system called the Sustainable Growth Rate, or SGR, , was adjusted to reflect the comparison of actual expenditures to target expenditures. Because one of the factors for calculating the SGR was linked to the growth in the U.S. gross domestic product, or GDP, the SGR formula often resulted in a negative payment update when growth in Medicare beneficiaries' use of services exceeded GDP growth. Congress repeatedly intervened to delay the implementation of negative SGR payment updates. For example, on April 1, 2014, with the enactment of the Protecting Access to Medicare Act of 2014, Congress prevented the 24% cut that was to occur by continuing the previously implemented 0.5% payment increase through December 31, 2014 and maintaining a 0% payment update from January 1, 2015 through March 31, 2015. However, on April 14, 2015, Congress passed the Medicare Access and CHIP Reauthorization Act of 2015, which was signed into law by President Obama on April 16, 2015. This law repealsor MACRA, ended the SGR methodology fromuse of the physicianstatutory formula and established a quality payment formula, institutes a 0% updateprogram, also referred to as the Medicare Physician Fee Schedule forQuality Payment Program. . The quality payment program has two tracks, one known as the January 1 to July 1, 2015 period, a 0.5% payment update for July 2015 through the end of 2019, and a 0% payment update for 2020 through 2025, along with a merit-basedmerit based incentive payment system beginning January 1,for providers in the fee-for service Medicare program, and the advanced alternative payment model for providers in specific care models, such as accountable care organizations. In November 2019, CMS issued a final rule finalizing the changes to the Quality Payment Program. At this time it is unclear how the introduction of the Quality Payment Program will impact overall physician reimbursement under the Medicare program. .

        There have been several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drugs. At the federal level, the Trump administration's budget proposal for fiscal year 2021 includes a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients, and increase patient access to lower-cost generic and biosimilar drugs Further, the Trump administration previously released a "Blueprint" to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products paid by consumers. The Department of Health and Human Services, or HHS, has solicited feedback on some of these measures and has implemented others under its existing authority. Congress and the Trump administration have each indicated that it will replace current incentive programs. For 2026continue to seek new legislative and/or administrative measures to control drug costs. At the state level, legislatures are increasingly passing legislation and subsequent years, the payment updateimplementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, such measures are designed to encourage importation from other countries and bulk purchasing. We expect that additional state and federal healthcare reform measures will be either 0.75%adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or 0.25%, depending on which Alternate Payment Model the physician participates.additional pricing pressures.

        We expect more rigorous coverage criteria in the future in the U.S. healthcare market and an additional downward pressure on the prices that we receive for approved products. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our out-licensed products and product candidates.

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        In addition, it is not currently possible to predict how, if at all, the FDA's approved process or regulation will change as a result of the Trump Administration or what impact any such changes will have on us.

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Our operations involve hazardous materials and we and third parties with whom we contract must comply with environmental and safety laws and regulations, which can be expensive and restrict how we do business.

        As a pharmaceutical company, we are subject to environmental and safety laws and regulations, including those governing the use of hazardous materials. The cost of compliance with health and safety regulations is substantial. Our business activities involve the controlled use of hazardous materials. Our R&D activities involve the controlled storage, use and disposal of hazardous materials, including the components of our product candidates and other hazardous compounds. We and manufacturers and suppliers with whom we may contract are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. In some cases, these hazardous materials and various wastes resulting from their use are stored at our and our manufacturers' facilities pending their use and disposal. We cannot eliminate the risk of accidental contamination or injury from these materials, which could cause an interruption of our commercialization efforts, R&D efforts and business operations, environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. We cannot guarantee that that the safety procedures utilized by third party manufacturers and suppliers with whom we may contract will comply with the standards prescribed by laws and regulations or will eliminate the risk of accidental contamination or injury from these materials. In such an event, we may be held liable for any resulting damages and such liability could exceed our resources and European, U.S. federal and state or other applicable authorities may curtail our use of certain materials and/or interrupt our business operations. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent. We cannot predict the impact of such changes and cannot be certain of our future compliance. We do not currently carry biological or hazardous waste insurance coverage. In the event of an accident or environmental discharge, we may be held liable for any consequential damage and any resulting claims for damages, which may exceed our financial resources and may materially adversely affect our business, results of operations and prospects, and the value of our shares.

We are subject to healthcare laws and regulations, which may require substantial compliance efforts and could expose us to criminal sanctions, civil penalties, exclusion from government healthcare programs, contractual damages, reputational harm and diminished profits and future earnings, among other penalties.

        If we market products ourselves, healthcare providers, such as physicians,Our current and other health care entitiesfuture operations may directly, or indirectly through our prescribers, customers and organizations, will play a primary role in the recommendation and prescription of our products, if approved. Our arrangements with such persons, entities and third party payors and our general business operations willpurchasers, expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research, market, sell and distribute our products. Restrictions under applicable U.S. federal, state, local and non-U.S. healthcare laws and regulations include, but are not limited to, the following:

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the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, including any kickback, bribe or rebate, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase or lease, order or recommendation of, any item, good, facility or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid;

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the federal Beneficiary Inducement Statute, which prohibits giving anything of value to a government insurance beneficiary that could influence the choice of provider or reimbursable covered product;



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federal civil and criminal false claims laws, and civil monetary penalties laws, including the civil False Claims Act, and civil monetary penalties laws, which impose criminal and civil penalties, including those from civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, claims for payment that are false or fraudulent

or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;



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the anti-inducement law prohibits, among other things, the offering or giving of remuneration, which includes, without limitation, any transfer of items or services for free or for less than fair market value (with limited exceptions), to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary's selection of a particular supplier of items or services reimbursable by a federal or state governmental program;



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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes that impose criminal and civil liability for, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or knowingly and willingly falsifying, concealing or covering up a material fact or making false statements relating to healthcare matters;



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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, which impose certain requirements on covered entities and their business associates, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;



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the federal transparency requirements under the Physician Payments Sunshine Act, enacted as part of the Patient Protection and ACA that require applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children's Health Insurance Program, with specific exceptions, to track and annually report to the Centers for Medicare & Medicaid Services, or CMMS, payments and other transfers of value provided to physicians, as defined by such law, and teaching hospitals, and certain ownership and investment interests held by physicians or their immediate family members;



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analogous state, local and non-U.S. laws and regulations, such as state anti-kickback and false claims laws, which may apply to items or services reimbursed by any third party payor, including commercial insurers; state, local and non-U.S. marketing and/or transparency laws applicable to manufacturers that may be broader in scope than the federal requirements; state laws that require biopharmaceutical companies to comply with the biopharmaceutical industry's voluntary compliance guidelines, relevant compliance guidance promulgated by the federal government, implementation of compliance programs, and compliance with the state's code of conduct; state and local laws that require a pharmaceutical company's sales representatives to be registered or licensed by the state or local governmental entity; and state and non-U.S. laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may be more stringent than HIPAA, thus complicating compliance efforts; and



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rules/rules or legislation covering more or less the same subject matter are found in numerous other countries, including in Denmark, which sometimes result in lower or higher exposures in those countries than in the United States.

   ��    Ensuring that our business arrangements with third parties comply with applicable healthcare laws and regulations will likely be costly. It is possible that governmental authorities will conclude that our

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business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations were found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, possible exclusion from government funded healthcare programs, such as Medicare and Medicaid, integrity obligations, contractual damages, reputational harm, diminished profits and future

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earnings, and curtailment of our operations, any of which could substantially disrupt our operations. If the physicians or other providers or entities with whom we expect to do business are found not to be in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusion from government funded healthcare programs.

        The risk of us being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. For example, the definition of the "remuneration" under the federal Anti-Kickback Statute has been interpreted to include anything of value. Further, courts have found that if "one purpose" of remuneration is to induce referrals, the federal Anti-Kickback Statute is violated.

        Additionally, recent healthcare reform legislation has strengthened federal and state healthcare fraud and abuse laws. For example, the ACA amends the intent requirement of the federal Anti-Kickback Statute and criminal healthcare fraud statutes to clarify that liability under these statutes does not require a person or entity to have actual knowledge of the statutes or a specific intent to violate them. Moreover, the ACA provides that the government may assert that a claim that includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act. Furthermore, on January 31, 2019, the Department of Health and Human Services (HHS) and HHS Office of Inspector General (OIG) proposed an amendment to one of the existing Anti-Kickback safe harbors (42 C.F.R. 1001.952(h)) which would prohibit certain pharmaceutical manufacturers from offering rebates to pharmacy benefit managers ("PBMs") in the Medicare Part D and Medicaid managed care programs. The proposed amendment would remove protection for "discounts" from Anti-Kickback enforcement action, and would include criminal and civil penalties for knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce or reward the referral of business reimbursable under federal health care programs. At the same time, HHS also proposed to create a new safe harbor to protect point-of-sale discounts that drug manufacturers provide directly to patients, and adds another safe harbor to protect certain administrative fees paid by manufacturers to PBMs. If this proposal is adopted, in whole or in part, it could affect the pricing and reimbursement for any products for which we receive approval in the future. Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws.

Our employees and collaboration partners may engage in misconduct or other improper activities, including violating applicable regulatory standards and requirements or engaging in insider trading, which could significantly harm our business.

        We are exposed to the risk of employee fraud or other misconduct and the fraud and misconduct of our collaboration partners. Misconduct by our employees or our collaboration partners could include intentional failures to:

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comply with legal requirements or the requirements of the FDA, the EMA, the CMMS and other comparable regulatory authorities;



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provide accurate information to applicable government authorities;

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comply with fraud and abuse and other healthcare laws and regulations in the United States, or similar laws in Denmark and elsewhere;



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comply with the FCPA and other applicable anti-bribery laws;



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report financial information or data accurately; or



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disclose unauthorized activities to us.

        In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing, bribery and other abusive practices. These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee or collaboration partner misconduct could also involve the improper use of, including trading on, information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. We have adopted a code of conduct, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may be ineffective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we or such collaboration are not successful in defending ourselves or asserting our rights, those actions could have

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a significant impact on our business, including the imposition of significant fines or other sanctions. Further, if any actions are instituted against any of our collaboration partners and such partner fails to defend itself or assert its rights and as a result, is subjected to criminal, civil or administrative sanctions, including exclusion from government funded healthcare programs, such actions and outcomes could have a significant impact on our business.

If we are a passive foreign investment company, there could be adverse U.S. federal income tax consequences to U.S. Holders.

        Under the Internal Revenue Code of 1986, as amended, or the Code, we will be a passive foreign investment company, or PFIC, for any taxable year in which (1) 75% or more of our gross income consists of passive income or (2) 50% or more of the average quarterly value of our assets consists of assets that produce, or are held for the production of, passive income, including cash. For purposes of these tests, passive income includes dividends, interest, gains from the sale or exchange of investment property and certain rents and royalties. In addition, for purposes of the above calculations, a non-U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets and received directly its proportionate share of the income of such other corporation. If we are a PFIC for any taxable year during which a U.S. Holder (as defined in Item 10.E. "Taxation—Material U.S. Federal Income Tax Considerations for U.S. Holders") holds the ADSs, the U.S. Holder may be subject to adverse tax consequences regardless of whether we continue to qualify as a PFIC, including ineligibility for any preferred tax rates on capital gains or on actual or deemed dividends, interest charges on certain taxes treated as deferred, and additional reporting requirements.

        We do not believe we were a PFIC for our taxable year ended December 31, 2019. We have not yet made any determination as to our expected PFIC status for our taxable year ended December 31, 2020 and, accordingly, any such expectation would be subject to change based on, among other factors, our use of cash, the source and nature of our income, and the price of our ordinary shares or ADSs. No assurances regarding our PFIC status can be provided for any past, current or future taxable years. The determination of whether we are a PFIC is a fact-intensive determination made on an annual basis and the applicable law is subject to varying interpretation. In particular, the characterization of our assets as active or passive may depend in part on our current and intended future business plans, which are subject to change. In addition, for our current and future taxable years, the total value of our assets for PFIC testing purposes may be determined in part by reference to the market price of our ordinary shares or ADSs from time to time, which may fluctuate considerably. Under the income test, our status as a PFIC depends on the composition of our income which will depend on the transactions we enter into in the future and our corporate structure. The composition of our income and assets is also affected by how, and how quickly, we spend the cash we raise in any offering. Our U.S. counsel expresses no opinion with respect to our PFIC status for our taxable year ended December 31, 2019, and also expresses no opinion with regard to our expectations regarding our PFIC status in the future.

        If we are a PFIC, U.S. Holders (as defined in Item 10.E. "Taxation—Material U.S. Federal Income Tax Considerations for U.S. Holders) of the ADSs would be subject to adverse U.S. federal income tax consequences, such as ineligibility for any preferred tax rates on capital gains or on actual or deemed dividends, interest charges on certain taxes treated as deferred, and additional reporting requirements under U.S. federal income tax laws and regulations. For further discussion of the PFIC rules and the adverse U.S. federal income tax consequences in the event we are classified as a PFIC, see Item 10.E. "Taxation—Material U.S. Federal Income Tax Considerations for U.S. Holders."

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If a United States person is treated as owning at least 10% of our ordinary shares, including ordinary shares represented by ADSs, such holder may be subject to adverse U.S. federal income tax consequences.

        If a U.S. Holder is treated as owning (directly, indirectly or constructively through the application of attribution rules) at least 10% of the value or voting power of our ordinary shares, including ordinary shares represented by ADSs, such U.S. Holder may be treated as a "United States shareholder" with respect to each "controlled foreign corporation" in our group (if any). Because our group includes at least one U.S. subsidiary (Zealand Pharma US, Inc.), certain of our non-U.S. subsidiaries may be treated as controlled foreign corporations (regardless of whether Zealand Pharma A/S is treated as a controlled foreign corporation). A United States shareholder of a controlled foreign corporation may be required to annually report and include in its U.S. taxable income its pro rata share of "Subpart F income," "global intangible low-taxed income" and investments in U.S. property by controlled foreign corporations, regardless of whether we make any distributions. An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation. We cannot provide any assurances that we will assist investors in determining whether any of our non-U.S. subsidiaries, if any, are treated as a controlled foreign corporation or whether such investor is treated as a United States shareholder with respect to any of such controlled foreign corporations. Further, we cannot provide any assurances that we will furnish to any U.S. shareholder information that may be necessary to comply with the reporting and tax paying obligations discussed above. Failure to comply with these reporting obligations may subject you to significant monetary penalties and may prevent the statute of limitations with respect to your U.S. federal income tax return for the year for which reporting was due from starting. U.S. Holders should consult their tax advisors regarding the potential application of these rules to their investment in the ADSs.

Tax authorities may disagree with our positions and conclusions regarding certain tax positions, resulting in unanticipated costs, taxes or non-realization of expected benefits.

        A tax authority may disagree with tax positions that we have taken, which could result in increased tax liabilities. For example, the U.S. Internal Revenue Service or another tax authority could challenge our allocation of income by tax jurisdiction and the amounts paid between our affiliated companies pursuant to our intercompany arrangements and transfer pricing policies, including amounts paid with respect to our intellectual property development. Similarly, a tax authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a taxable connection, often referred to as a "permanent establishment" under international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions. A tax authority may take the position that material income tax liabilities, interest and penalties are payable by us, in which case, we expect that we might contest such assessment. Contesting such an assessment may be lengthy and costly and if we were unsuccessful in disputing the assessment, the implications could increase our anticipated effective tax rate, where applicable.

Changes in Danish, U.S. or other foreign tax laws or compliance requirements, or the practical interpretation and administration thereof, could have a material adverse effect on our business, financial condition and results of operations.

        We are affected by various Danish, U.S. and foreign taxes, including direct and indirect taxes imposed on our global activities, such as corporate income, withholding, customs, excise/energy, value added, sales, environmental and other taxes. Significant judgment is required in determining our provisions for taxes and there are many transactions and calculations where the ultimate tax determination is uncertain.

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        In recent years, tax authorities around the world have increased their scrutiny of company tax filings, and have become more rigid in exercising any discretion they may have. As part of this, the Organization for Economic Co-operation and Development, or OECD, has proposed a number of tax law changes under its Base Erosion and Profit Shifting, or BEPS, Action Plans to address issues of transparency, coherence and substance.

        At the same time, the European Commission is finalizing its Anti TaxAnti-Tax Avoidance Directive, which seeks to prevent tax avoidance by companies and to ensure that companies pay appropriate taxes in the markets where profits are effectively made and business is effectively performed. The European Commission also continues to extend the application of its policies seeking to limit fiscal aid by Member States to particular companies, and the related investigation of the Member States' practices regarding the issuance of rulings on tax matters relating to individual companies.

        These OECD and EU tax reform initiatives also need local country implementation, including in our home country of Denmark, which may result in significant changes to established tax principles. Although we have taken steps to be in compliance with the evolving OECD and EU tax initiatives, and will continue to do so, significant uncertainties remain as to the outcome of these efforts.

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        In addition, in the United States, on December 22, 2017, President Trump signed into law the tax reform legislation commonly referred to as the Tax Cuts and Jobs Act of 2017, which includes substantial changes to the US taxation of individuals and businesses. Although the new law substantially decreased tax rates applicable to corporations in the United States, we do not yet know what all of the consequences of this new statute will be, including whether the law will have any unintended consequences. In particular, significant uncertainties remain as to how the U.S. government will implement the new law, including with respect to the tax qualification of interest deductions, the concept of a territorial tax regime, royalty payments and cost of goods sold.

        In general, such tax reform efforts, including with respect to tax base or rate, transfer pricing, intercompany dividends, cross border transactions, controlled corporations, and limitations on tax relief allowed on the interest on intercompany debt, will require us to continually assess our organizational structure against tax policy trends, and could lead to an increased risk of international tax disputes and an increase in our effective tax rate, and could adversely affect our financial results.

        Changes in Danish or foreign direct or indirect tax laws or compliance requirements, including the practical interpretation and administration thereof, including in respect to market practices, or otherwise, could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

The UK's pending withdrawal from the EU could result in increased regulatory and legal complexity, which may make it more difficult for us to do business in the EU and the rest of Europe and impose additional challenges in securing regulatory approval of our product candidates in the EU and the rest of Europe.

        The UK is a major market for pharmaceutical products, in general, and for products that treat diabetes, in particular. On June 23, 2016, the UK voted to leave the EU in an advisory referendum, which is generally referred to as Brexit. On March 29, 2017, the UK delivered notice under Article 50 of the Lisbon Treaty of its intent to leave the EU. The UK is currently scheduled to leave the EU on May 29, 2019, unless this date is extended. To date there has been no agreement between the EU and the U.K. on the terms of the exit.

        Brexit, the subsequent high-profile failures of the UK to agree on an exit strategy, and the pending withdrawal of the UK, may lead to legal uncertainty and potentially divergent laws and regulations between the UK and the EU, as the UK determines which EU laws to replicate or replace and this uncertainty may persist for years. We cannot predict whether or not the UK will significantly alter its current laws and regulations in respect of the pharmaceutical industry and, if so, what impact any such alteration would have on us or our business. Moreover, we cannot predict the impact that Brexit will have on (i) the marketing of pharmaceutical products, (ii) the process to obtain regulatory approval in the United Kingdom for product candidates or (iii) the award of exclusivities that are normally part of the EU legal framework (for instance Supplementary Protection Certificates, Pediatric Extensions or Orphan exclusivity).

        Brexit may also result in a reduction of funding to the EMA if the UK no longer makes financial contributions to European institutions, such as the EMA. If UK funding is so reduced, it could create delays in the EMA issuing regulatory approvals for our product candidates and, accordingly, have a material adverse effect on our business, financial position, results of operations and future growth prospects.

        As a result of Brexit, other European countries may seek to conduct referenda with respect to their continuing membership with the EU. Given these possibilities and others we may not anticipate, as well as the absence of comparable precedent, it is unclear what financial, regulatory and legal implications the withdrawal of the United Kingdom from the EU would have and how such withdrawal would affect us, and the full extent to which our business could be adversely affected.

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        In addition, following the Brexit vote, the EU has decided to move the headquarters of the EMA from the UK to the Netherlands by March 2019. It is expected that a significant percentage of the current employees of the EMA will decide not to make the move to the Netherlands. This raises the possibility that new drug approvals in the EU could be delayed as a result.

PCAOB inspection of our independent auditors

        With Zealand Pharma A/S being a public company listed in the United States, our independent public accounting firm, Deloitte Statsautoriseret Revisionspartnerselskab (CVR no 33 96 35 56), is registered with the PCAOB and therefore required to undergo regular PCAOB inspections to assess the registered accounting firm's compliance with United States law and professional standards in connection with its audits of financial statements filed with the SEC.

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ITEM 4    INFORMATION ON THE COMPANY

A.    HISTORY AND DEVELOPMENT OF THE COMPANY

        We were founded in 1998 and are a biotechnology company focused on the discovery, design and development of innovative peptide-based medicines. We intend to be a leader in specialty medicines focusing on metabolic and gastrointestinal diseases and other specialty disease areas with significant unmet medical needs.

        Our current pipeline of internal product candidates focuses on specialty gastrointestinal and metabolic diseases. Our portfolio also includes two clinical license collaborations with Boehringer Ingelheim.

        Since 2003 we have had a license collaboration with Sanofi, or the Sanofi License Agreement, in the diabetes field pertaining to the development and commercialization of lixisenatide, both as a standalone therapy and as a combination therapy. Pursuant to the Sanofi License Agreement, we were entitled to receive certain royalties and commercial milestones in respect of global net-sales of Soliqua® 100/33/ Suliqua® and Lyxumia®/Adlyxin® . On September 6, 2018 we, together with two of our wholly-owned subsidiaries, entered into a purchase and sale agreement with Royalty Pharma, or the Royalty Pharma Agreement, pursuant to which we sold and transferred our and our subsidiaries' respective rights to receive royalties and USD 85 million of potential commercial milestones in respect of global net sales of Soliqua® 100/33/ Suliqua® and Lyxumia®/Adlyxin® from and after July 1, 2018. On September 17, 2018 we received DKK 1,310.2 million, or $205.0 million, upon closing of the transactions contemplated by the Royalty Pharma Agreement and redeemed our ZP SPV Notes issued in 2014 and related debt, making us debt free. The net gain from the transaction amounted to DKK 1,098.9 million, or $170.6 million. In addition, we also remained eligible for a payment from Sanofi of potentially up to USD 15.0 million related to an offset from a settlement of an intellectual property dispute. However, we cannot be certain with regards to the timing and final amount of this payment, as both are dependent on factors that are outside of our control.

        Under the terms of the Royalty Pharma Agreement, we remain required to perform certain of our obligations under the Sanofi License Agreement and to perform cetain administrative obligations under the Royalty Pharma Agreement, which include that retain the underlying intellectual property and pay the relevant renewals thereon in a timely manner. A failure by us to comply with the terms of the Royalty Pharma Agreement or the Sanofi License Agreement may place us in breach of our contractual obligations with either party, expose us to liability for indemnification of either party and/or may result in arbitration and/or litigation against us that may lead, in the event of an adverse finding against us, to an award of significant damages, loss of profits and/or award of attorney fees against us. For a further discussion of the Royalty Pharma Agreement and the Sanofi License Agreement, see note 7 in the consolidated financial statements of our Annual Report 2018.

        Our pipeline focuses on gastrointestinal, metabolic and other specialty diseases where we believe that the present standard of care is inadequate and whereinadequate. In addition, we have the resources to advance our peptide-based product candidates into the later stages of clinical development, including registration and commercialization, while opportunistically considering partnership relationships that may arise.

        We have a track record of successfully inventing and developing novel peptide-based product candidates. This success is based on our deep understanding of peptide chemistry and extensive experience in improving the therapeutic characteristics of naturally-occurring peptides by modifying and optimizing their structures. The modifications we make are designed to improve upon naturally occurring peptides so that their therapeutic benefit, duration of action, stability and/or convenience of use favorably compare to other treatment options.

        Our research and development, organization is structured to enable dynamic collaboration across various functions and project teams at each stage of discovery and development, allowing us to advance

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promising opportunities quickly and take advantage of our extensive knowledge of peptide design and product development. We are looking to focus our efforts on drug candidates that may qualify for orphan/rare disease status.

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        Our shares are listed on Nasdaq Copenhagen (ZEAL). Our American Depositary Shares (ADS) are listed on the Nasdaq Global Select Market ("NASDAQ") in the United States (ZEAL).

Legal name: Zealand Pharma A/S

Commercial name: Zealand Pharma

Domicile: Smedeland 36, 2600 Glostrup, Denmark

Tel: +45 8877 3600

Fax: +45 8877 3898

Website: zealandpharma.com

        The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Our website address iswww.zealandpharma.com.

        (The contents of this website are not incorporated by reference into this Annual Report on Form 20-F.)

Date of incorporation: December 22, 1998

Legal form of the Company: A Danish limited liability company

Legislation under which the Company operates: Danish law

Country of incorporation: Denmark

Emerging Growth Company

        As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an "emerging growth company," as defined in the Jumpstart Our Business Startups Act, ("or the JOBS Act").Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:

•

a requirement to have only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations disclosure; and



•

an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act.

        We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company as of the end of any fiscal year following the fifth anniversary of our initial public offering or if, prior to that date, we have more than $1.07 billion in annual revenue or more than $700 million in market value of the equity securities held by non-affiliates as of the end of our second fiscal quarter, or on the date that we have issued more than $1 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced burdens, and therefore the information that we provide holders of shares and ADSs may be different than the information available from other public companies. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards applicable to public companies. We currently prepare our consolidated financial statements in

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accordance with IFRS as issued by the IASB, which do not have separate provisions for publicly traded and private companies. However, in the event that we convert to accounting principles generally accepted in the United States (which we do not currently intend to do) while we remain an emerging growth company, we have irrevocably elected to opt out of such extended transition period.

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Important events in 2018

Sanofi License Agreement and Royalty Pharma Agreement

        Reference is madeSince 2003 we have had a license collaboration with Sanofi, or the Sanofi License Agreement, in the diabetes field pertaining to '2018 Achievements', page 9the development and commercialization of lixisenatide, both as a standalone therapy and as a combination therapy. Pursuant to the Sanofi License Agreement, we were entitled to receive certain royalties and commercial milestones in respect of global net-sales of Soliqua® 100/33/ Suliqua® and Lyxumia®/Adlyxin®. In September 2018 we, together with two of our wholly-owned subsidiaries, entered into a purchase and sale agreement with Royalty Pharma, or the Royalty Pharma Agreement, pursuant to which we sold and transferred our and our subsidiaries' respective rights to receive royalties and $85 million of potential commercial milestones in respect of global net sales of Soliqua® 100/33/ Suliqua® and Lyxumia®/Adlyxin® from and after July 1, 2018. In September 2018 we received DKK 1,310.2 million, or $205.0 million, upon closing of the transactions contemplated by the Royalty Pharma Agreement. The net gain from the transaction amounted to DKK 1,098.9 million, or $170.6 million, a portion of which was used to redeem outstanding notes we had issued in 2014 and related debt. In addition, we also remained eligible for a payment from Sanofi of potentially up to $15.0 million related to an offset from a settlement of an intellectual property dispute. However, we cannot be certain with regards to the timing and final amount of this payment, as both are dependent on factors that are outside of our control.

        Under the terms of the Royalty Pharma Agreement, we remain required to perform certain of our obligations under the Sanofi License Agreement and to perform certain administrative obligations under the Royalty Pharma Agreement, which include that retain the underlying intellectual property and pay the relevant renewals thereon in a timely manner. A failure by us to comply with the terms of the Royalty Pharma Agreement or the Sanofi License Agreement may place us in breach of our contractual obligations with either party, expose us to liability for indemnification of either party and/or may result in arbitration and/or litigation against us that may lead, in the event of an adverse finding against us, to an award of significant damages, loss of profits and/or award of attorney fees against us. For a further discussion of the Royalty Pharma Agreement and the Sanofi License Agreement, see Note 2 'Revenue' and Note 7 'Other operating income' to the consolidated financial statements on pages 73-74 in our Annual Report 20182019.

Alexion Collaboration

        On March 20, 2019, we announced a collaboration with Alexion to discover and develop novel peptide therapies for complement-mediated diseases. The Collaborative Research and License Agreement, dated as of March 20, 2019, by and between Zealand Pharma A/S and Alexion Pharma Holding Unlimited Company, or the Alexion Agreement, provides Alexion with exclusive worldwide licenses for one preclinical target, with an option for up to three additional targets, in the complement pathway. We received an upfront payment of $25 million and an equity investment of $15 million (pursuant to Alexion's subscription for 802,859 of our ordinary shares), with potential for additional milestone-dependent and royalty payments. The accounting treatment of this upfront payment is outlined in Note 2 'Revenue' to the consolidated financial statements in our Annual Report 2019.

        For the lead target, the Alexion Agreement provides the potential for development-related milestones of up to $115 million, as well as up to $495 million in sales-related milestones and the potential for royalty payments in the high single digits to low teens. Each of the three subsequent targets can be selected for an option fee of $15 million and has the potential for additional development-related milestones and sales-related milestones and royalty payments at a reduced price to the lead target.

        As part of the equity investment from Alexion, our shares in ZP General Partner 3 ApS and ZP SPV 3 K/S were in January 2020 pledged to Alexion Pharma International Operation Unlimited

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Company, or Alexion Pharma. Alexion Pharma is required to consent to any transfer of our shares in ZP General Partner 3 ApS and ZP SPV 3 K/S and Alexion Pharma also has a right to acquire such shares under certain conditions. Further, pursuant to the Alexion Agreement, in January 2020 we placed the relevant intellectual property to be developed under the Alexion Agreement in ZP SPV 3 K/S, our wholly owned subsidiary.

Encycle Acquisition

        On October 22, 2019, we announced the acquisition of Encycle Therapeutics, Inc., or Encycle, pursuant to that certain Purchase Agreement, dated as of October 22, 2019, by and between the Zealand Pharma A/S, Encycle Therapeutics Inc. and certain other parties thereto, or the Encycle Agreement. The acquisition is determined to be an asset acquisition and is accounted for under IAS 38 'Intangible Assets'. The acquisition is centered on a pre-clinical lead asset that complements Zealand's focus on developing next-generation peptide therapeutics for gastrointestinal diseases. There were no upfront payments associated with the transaction. Future milestone payments could reach up to $80 million upon the completion of certain events, including $10 million upon the successful completion of a Phase 2 study. There is also a potential mid-single digit royalty on global net sales from the lead asset. The lead asset, ET3764, is being developed as an orally-delivered peptide drug to target integrin alpha-4-beta-7, which is involved in the pathogenesis of inflammatory bowel disease, or IBD. The target's mode of action has been clinically validated in IBD by vedolizumab, an approved, infusion-only alpha-4-beta-7 integrin inhibitor.

Bid for Valeritas Assets

        On February 10, 2020, we announced a bid to acquire substantially all assets from Valeritas Holdings, Inc. (Nasdaq: VLRX), or Valeritas, for a total cash consideration of $23 million and the assumption of certain liabilities related to the ongoing business (including up to approximately $13.3 million related to open purchase orders, license payments and cure costs relating to prepetition contracts that will be assumed by Valeritas under the U.S. Bankruptcy Code upon exiting Chapter 11 proceedings), pursuant to the terms of the "stalking horse" asset purchase agreement entered into with Valeritas. On February 9, 2020, Valeritas and its subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. At that time, we entered into a definitive agreement to acquire substantially all assets from Valeritas. Under the terms of the agreement, we serve as the stalking horse bidder in a sale process.

        The proposed sale is to be conducted through a Court-supervised sale process under Section 363 of the Bankruptcy Code and will be subject to Court-approved bidding procedures and receipt of competing offers at auction. A hearing was held before the Bankruptcy Court on March 6, 2020, during which the Bankruptcy Court determined the procedures for the bidding and potential auction of Valeritas, which is expected to occur in March 2020. If our bid is selected, the sale will be subject to approval by the Bankruptcy Court and certain other closing conditions, including a condition relating to manufacturing performance to address supply disruptions experienced by Valeritas in December 2019. There can be no certainty that the transaction will be concluded.

        Valeritas is a U.S.-based commercial-stage medical technology company focused on improving health and simplifying life for people with diabetes. Valeritas' product, the V-Go® Wearable Insulin Delivery device, is a simple, affordable, all-in-one basal-bolus insulin delivery device option for adult patients requiring insulin that is worn like a patch and can eliminate the need for taking multiple daily shots. Valeritas reported revenue of $22.4 million and loss before income taxes of $41.9 million for the nine months ended September 30, 2019. Valeritas reported in December 2019 that it experienced certain manufacturing performance issues that resulted in supply disruptions and are expected to have a material negative impact on its revenue and loss before income taxes. Although we expect that, if the Valeritas transaction is consummated, we may be able to reduce costs in the Valeritas business

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associated with some aspects of how the business is run (for instance, rationalizing some of the sites and removing duplicative costs like insurance policies) relative to historical amounts, there can be no such assurance that any such cost reductions will be realized on a timely basis or at all. Even if such cost reductions are realized, the Company expects that the Valeritas acquisition will materially increase its operating loss and cash used in operations in the near term. The foregoing information concerning Valeritas Holdings, Inc. is taken from reports filed by such company with the SEC and has not been independently verified by us.

        Reference is also made to '2019 Achievements' on page 8 in our Annual Report 2019 for a description of important events in 2018. Further, reference is made to Note 7 'Other operating income' and Note 20 'Royalty bond' to the consolidated financial statements on page 75 and 82-83 in our Annual Report 2018 for discussion regarding the sale of future royalties and the repayment of the Royalty bond.2019.

Capital expenditure

        Capital expenditures primarily relate to building improvements and purchase of lab equipment at our locationheadquarters in Glostrup,Søborg, Denmark. All capital expenditures are expected to be financed internally through cash flows from operations.

        We have no capital expenditure for property, plant and equipment for the interim period of 2019 prior to the publication of this Annual Report on Form 20-F.hand.

Public takeover offers in respect of the Company's shares

        No such offers occurred during 20182019 or 20192020 to date.

B.    BUSINESS OVERVIEW

        We were founded in 1998 and isare a biotechnology company focused on the discovery, design and development of innovative peptide-based medicines. More than 10 drug candidates invented by us have advanced into clinical development, of which two have reached the market. Our current pipeline of internal product candidates focus on specialty gastrointestinal and metabolic diseases. Our portfolio also includes two clinical license collaborations with Boehringer Ingelheim referencediseases where we believe that the present standard of care is madeinadequate. In addition, we are looking to 'Partnered Programs:Obesity/type 2 diabetes, page 29 infocus our Annual Report 2018.

efforts on drug candidates that may qualify for orphan/rare disease status. We have four fully ownedthe following programs in late clinical development:

•

1 Glepaglutide, a long-acting GLP-2 analog in development for the treatment of short bowel syndrome, (SBS).or SBS.

  Orphan drug designation has been granted in the U.S. We have published the results of a Phase 2 trial where glepaglutide was dosed for three weeks in 18 patients with SBS. The trial demonstrates significant positive effects on gastrointestinal absorption and other efficacy parameters with the two highest doses, whilst the lowest dose was non-effective. Based on the findings of this trial, the pivotal Phase 3 trial in 129 SBS patients was initiated in Q4the fourth quarter of 2018 with patient enrollment expected results by mid- 2020.

        Dasiglucagon, a Zealand-invented proprietary glucagon analog currentlyto be completed in development for three different indications:

2 Dasiglucagon in Dual-hormone pump therapy for diabetes treatment

        We have already reported positive2020 and results from two Phase 2a trials during the second quartertrial expected in the first half of 2017, and2021. This study will evaluate the initiation ofability to reduce patient dependency on parenteral (intravenous) support when treated with glepaglutide over 26 weeks. We believe glepaglutide may have the potential to offer patients with SBS a small Phase 2b trial in iLet™ dual-hormone artificial pancreas system is planned for 2019.

convenient once-weekly treatment alternative.3



•

Dasiglucagon Hypoplal ®HypoPal® Rescue Pen for severe hypoglycemiahypoglycemia.

  Ready-to-use dasiglucagon may offer diabetes patients and their families a fast treatment solution for severe hypoglycemia that is easier to use than currently marketed glucagon kits. The pivotalkits and offer a different mode of administration than the recently approved nasal administered glucagon powder Baqsimi®. Severe hypoglycemia is an acute, life-threatening condition resulting from a critical drop in blood glucose levels associated primarily with insulin therapy. Two Phase 3




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trial efficacy trials with dasiglucagon for the treatment of severe hypoglycemia washave been completed with good results in 2018.2018 and 2019. A pediatric Phase 3 trial was initiated in the end of 2018, with positive results expectedannounced in H2September 2019.

An NDA submission to the FDA is planned for early 2020.

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•

Dasiglucagon dual-hormone artificial pancreas for automated diabetes management.  In a non-exclusive collaboration with Beta Bionics, we are developing dasiglucagon for use in an artificial pancreas device containing both insulin and dasiglucagon. Breakthrough Device designation was received from the FDA in December 2019. Guided by an algorithm, this device is designed to maintain and control blood glucose levels with minimal patient intervention. We have already reported positive results from two Phase 2a trials during the second quarter of 2017, and top-line results from a small home-use Phase 2 trial in iLet™ gen 3.2 dual-hormone artificial pancreas system were announced in June 2019. We and Beta Bionics are in discussion with the FDA and expect to initiate the pivotal Phase 3 trial in late 2020.



•

Dasiglucagon for Congenital hyperinsulinismcongenital hyperinsulinism.

  Congenital hyperinsulinism, or CHI, is an ultra-rare but devastating disease caused by inappropriately elevated insulin secretion irrespective of glucose levels. This leads to frequent and often severe hypoglycemia and long-term irreversible damage to health. In 2017, the FDA in the U.S. and the CommitteeEuropean Commission both granted orphan drug designation to dasiglucagon for Orphan Medicinal Products in the EU issued a positive opinion on an orphan medicinal product application for our glucagon analog.treatment of CHI. In January 2018, the FDA issued a safe-to-proceed letter, and athe first Phase 3 trial with 32 pediatric patients (ages three months to 12 years) with CHI started in Q1 2019.

the first quarter of 2019 with results expected in 2020. In May 2019, we enrolled the first children in the long-term Phase 3 extension study. In December 2019, we initiated a second Phase 3 trial with 12 pediatric patients (ages seven days to one year) with CHI and we are currently awaiting patient recruitment. If results from these studies are positive, we anticipate submitting an NDA to the FDA for treatment of CHI in 2021.



•

Dasiglucagon for post bariatric surgery hypoglycemia.  In October 2019, we initiated a Phase 2 dose-finding clinical proof of concept trial to explore potential benefit of mini-doses of dasiglucagon in correcting serious hypoglycemic events following meal ingestions in some patients who have undergone bariatric surgery. The results of this trial are expected in the first half of 2020.

        In addition to the late stage clinical programs, weour portfolio includes ZP 7570, a potential once-weekly GLP-1-GLP-2 agonist for treatment of SBS in phase 1 development, two clinical license collaborations with Boehringer Ingelheim targeting treatment of type 2 diabetes and/or obesity, and a pre-clinical license collaboration with Alexion targeting Complement C3. The complement system is part of the immune system that protects the body against, among other things, bacterial infection. In certain diseases, this system can become dysregulated and lead to certain auto- immune diseases. Peptide-based therapeutics may offer an opportunity to treat some of these diseases. We also have a pipeline of other pre-clinical programs with the potential to enter into the clinic in 20192020 and the years to come.

        Furthermore, as we approach commercialization of certain of our product candidates, we are building a fully integrated commercial organization with U.S. operations to market our own therapies for rare diseases in the United States. During 2019, we took the decision to accelerate the development of our commercial organization to prepare to independently launch the Dasiglucagon HypoPal® Rescue Pen.

Our Product Pipeline

        We operate within the global market for peptide basedpeptide-based medicines. All revenues are generated from milestone and royalty payments related to our license agreements. See Note 2 'Revenue' to the consolidated financial statements on pages 64-6661-63 in our Annual Report 20182019 for disclosure of revenue by category. We do not sell products to specific geographic markets.

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        The chart below summarizes the development stage and status of our portfolio of product candidates:

(1)

Partnered with Boehringer Ingelheim. Zealand eligible for EUR 365m365 million in outstanding milestones;milestones. The initial EUR 20 million milestone will become payable upon initiation of Phase 2 clinical testing of BI456906 GLP-1/GLU Dual Agonist. That Phase 2 clinical trial has not yet been initiated, but is expected to be initiated, and as a result, the initial EUR 20 million milestone is expected to be received in 2020 rather than in late 2019 as previously anticipated.

(2)

Partnered with Boehringer Ingelheim. Zealand eligible for EUR 283m283 million in outstanding milestonesmilestones.

(3)

Partnered with Alexion. Zealand eligible for USD 610 million in outstanding milestones.

(4)

Acquired Encycle Therapeutics, Inc. Future potential earn-outs of up to USD 80 million contingent on successful achievement of development, regulatory and commercial milestones; payable in cash and/or ZEAL equity at Zealand's discretion.

Overview of Short Bowel Syndrome (SBS)

        SBS is a complex chronic and severe condition associated with reduced or complete loss of intestinal function. Many patients have to be connected to infusion lines and pumps every day, which pose significant restrictions on their ability to engage in daily activities. In addition, they are at risk of experiencing a number of serious and life-threatening complications such as sepsis, blood clots, liver damage and renal impairment.

GLP-2 treatment of SBS

        In 2012 the FDA approved teduglutide as a novel treatment for the treatment of adult patients with SBS who are dependent on parenteral support. Teduglutide has a mean terminal half-life of approximately 1.3 hours in SBS subjects and has to be administered daily vial a syringe, following reconstitution of the lyophilized power. In 2018, Shire reported global sales of teduglutide of approximately $450 million.

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Glepaglutide

        Glepaglutide is a long-acting GLP-2 analogue with an effective half-life of approximately 50 hours with potential for once-weekly dosing in an auto-injector pen. In our pre-clinical studies, we observed that glepaglutide was effective in increasing intestinal weight and length. A Phase 2 clinical proof-of-concept, dose-finding Phase 2 trial was completed in 2017. Eighteen patients with SBS were enrolled in the trial and the primary result demonstrated that treatment with 1 mg and 10 mg glepaglutide reduced mean fecal output by 592 g/d (p=0.002) and 833 g/d (p=0.0002), respectively, and increased intestinal wet weight absorption. No changes were observed in the 0.1 mg dose group. Common adverse events were stoma complications, injection site reactions, peripheral edema, polyuria, nausea, and abdominal pain.

        Key results from Phase 2 trial with glepaglutide in SBS are as follows:

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        In-house inventionsCommon related adverse events as sorted by number of patients in each treatment period in the glepaglutide Phase 2 trial.

        Following the End-of-Phase 2 meeting with the FDA and scientific advice from the European Medicines Agency, we initiated the glepaglutide Phase 3 trial in patients with SBS in October 2018. The Phase 3 trial seeks to demonstrate efficacy and safety of once- and twice-weekly subcutaneous injections of 10 mg glepaglutide in SBS patients on parenteral support. We expect to enroll 129 patients at sites across the United States, Canada and Europe with enrollment expected to be completed in 2020. The trial will be placebo-controlled, randomized, parallel-group, double-blind, and with fixed dose injection. The primary objective will be to evaluate the efficacy of glepaglutide in reducing parenteral support volume in SBS patients. The secondary objectives will be to evaluate additional efficacy endpoints, as well as safety and tolerability. Results from the trial are expected in the basisfirst half of our portfolio, demonstrating our ability to discover and develop innovative peptide-based product candidates with favorable therapeutic profiles.2021.

Our Focus on Peptide-Based MedicinesDiabetes and severe hypoglycemia

        WeAll people with type 1 diabetes and most people with severely affected type 2 diabetes must constantly monitor and adjust their blood glucose levels to remain in proper glycemic control, as both high and low blood glucose may affect their health, both in the short and long term.

        Severe hypoglycemia is an acute, life-threatening condition resulting from a critical drop in blood glucose levels associated primarily with insulin therapy. Severe hypoglycemic is one of the biggest concerns for insulin-dependent patients their families. It is a condition characterized by confusion, seizures and, often, loss of consciousness which, if left untreated, can result in death.

        People require assistance from another person to treat severe hypoglycemia. Powder formulations of glucagon that require reconstitution immediately before administration, due to their poor drug stability, are available on the market. Studies have suggested that up to 85% of trained caregivers fail to give the full dose of glucagon when using these glucagon kits in a simulated emergency situation, due to complexity of use. Recently, Baqsimi®, a nasally-administered dry powder glucagon product, was approved by the FDA as an alternative treatment of severe hypoglycemia, which does not require mixing before administration. In addition to Baqsimi®, Xeris Pharmaceuticals Inc. has developed a ready use glucagon injection, Gvoke™, which is designed to be delivered in a pre-filled syringe, or PFS, or an auto-injector. Gvoke™ was approved by the FDA in September 2019.

Dasiglucagon HypoPal® PFS and rescue pen for severe hypoglycemia

        Our dasiglucagon HypoPal® is a glucagon analog which is stable in liquid formulation. It is being developed in a PFS and auto-injector rescue pen presentations for treatment of severe hypoglycemia.

        The HypoPal® rescue pen may offer diabetes patients and their families a fast treatment solution for severe hypoglycemia that is easier to use than currently focus on specialty gastrointestinalmarketed glucagon kits. Two Phase 3

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efficacy trials with dasiglucagon for the treatment of severe hypoglycemia have been completed in 2018 and metabolic diseases where we believe2019. A pediatric Phase 3 trial was initiated at the end of 2018, with positive results announced in September 2019. The NDA submission to the FDA is planned for early 2020.

        The pivotal Phase 3 trial demonstrated that a single dose of dasiglucagon administered via the PFS rapidly increased blood glucose levels in patients with type 1 diabetes following insulin-induced hypoglycemia. The trial compared the glycemic response observed after administration of dasiglucagon with that of placebo and that of currently marketed glucagon, in powder form for reconstitution prior to injection. The primary endpoint was time to plasma glucose recovery, which was defined as first increase in plasma glucose of at least 20 mg/dL (1.1 mmol/L) from baseline without administration of rescue intravenous glucose. The trial enrolled 168 total patients, including 82 in the dasiglucagon arm, 43 in the placebo arm and 43 in the GlucaGen® arm. GlucaGen® is a glucagon currently marketed by Novo Nordisk A/S.

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The primary result demonstrates that the present standardmedian time to blood glucose recovery was 10 minutes for dasiglucagon, which was superior to placebo (median: 40 min; p<0.001). The median time to recovery for GlucaGen® was 12 minutes.



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99% of caresubjects were recovered from the insulin-induced hypoglycemia within 15 minutes following dosing with dasiglucagon, versus 2% with placebo and 95% with GlucaGen®.

        Overall, no safety concerns were raised for dasiglucagon within the trial. Nausea and vomiting were reported with similar numbers for dasiglucagon and GlucaGen® (nausea: 55% and 53%, vomiting: 23% and 19%, respectively).

        The confirmatory Phase 3 trial demonstrated that a single dose of dasiglucagon administered via the HypoPal® rescue pen rapidly increased blood glucose levels in patients with type 1 diabetes following insulin-induced hypoglycemia. The trial compared the glycemic response observed after dosing of dasiglucagon with that of placebo. The primary endpoint was time to plasma glucose recovery, which was defined as first increase in plasma glucose of³20 mg/dL (1.1 mmol/L) from baseline without administration of rescue intravenous glucose. 45 subjects were included in the trial. The primary result demonstrated that the median time to blood glucose recovery was 10 minutes for dasiglucagon, which was superior to placebo (median: 35 min; p<0.001). The dasiglucagon pharmacokinetic profiles were consistent between the two phase 3 trials. Overall, no safety concerns were raised for dasiglucagon within the trial. Nausea and vomiting were reported with dasiglucagon (nausea: 62% and vomiting: 29%).

        The pediatric Phase 3 trial compared the glycemic response observed after induction of hypoglycemia and administration of dasiglucagon (0.6 mg) with that of placebo and that of GlucaGen® (1 mg) in powder form for reconstitution prior to injection. The primary endpoint was time to plasma glucose recovery, which was defined as first increase in plasma glucose of at least 20 mg/dL (1.1 mmol/L) from baseline without administration of rescue intravenous glucose. The trial enrolled 42 pediatric patients (divided into age groups of 6 to 11 and 12 to 17 years old), including 21 in the dasiglucagon arm, 11 in the placebo arm and 10 in the GlucaGen® arm. The primary result demonstrated that the median time to blood glucose recovery was 10 minutes for dasiglucagon, which was superior to placebo (median: 30 min; p<0.001). The median time to recovery for GlucaGen® was 12 minutes. Overall, no safety concerns were raised for dasiglucagon within the trial. Nausea and vomiting were reported with dasiglucagon in both age groups (6 to 11 years; nausea: 25% and vomiting:

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25%; 12 to 17 years; nausea: 92% and vomiting: 67%). For GlucaGen® (6 to 11 years; nausea: 50% and vomiting: 25%; 12 to 17 years; nausea: 17% and vomiting: 0%).

Dual-hormone artificial pancreas for automated diabetes management

        Despite availability of modern insulins and improved insulin pump systems and glucose sensors, management of type 1 diabetes remains a significant patient burden and data suggest that only 20 to 30% of patients in the United States are below the glucose targets recommended by the American Diabetes Association. Maintaining tight glycemic control with infusion or injection with insulin is inadequatedifficult due to delays in uptake and where we believeconstant changes in insulin requirements. Therefore, several academic researchers and a few device companies are working on glucose-sensor guided dual-hormone pumps that weinjects insulin when glucose is high and glucagon with glucose is low, and thus holds the potential to remove the burden of marinating tight glucose control from the patients.

Dasiglucagon for dual-hormone artificial pancreas for automated diabetes management

        Dasiglucagon is being developed in a 1ml pre-filled cartridge for use in dual-hormone artificial pancreas device systems, with insulin being the other hormone. We have already reported positive results from two Phase 2a trials during the resourcessecond quarter of 2017. In our Phase 2a microdose trial, 17 patients with type 1 diabetes received four different doses of dasiglucagon, ranging from 0.03 mg to advance0.6 mg, under euglycemia (normal blood glucose level) and hypoglycemia conditions. A dose-response with increases in blood glucose levels was observed across the dose range tested in this trial. In our peptide-based product candidates intoPhase 2a pump trial, 10 adult patients with type 1 diabetes received dosing of dasiglucagon under challenging conditions, including fasting, a high basal insulin rate and exercise to stimulate the later stagesadministration of glucagon by the iLet™ algorithms. No severe hypoglycemic episodes were observed, time below 60 mg/dl glucose was approximately 13% and 18% for dasiglucagon and recombinant glucagon, respectively, and time with 70 to 180 mg/dl glucose was approximately 71% and 65% for dasiglucagon and recombinant glucagon, respectively. Nausea and vomiting were reported in a similar number of patients for both dasiglucagon and the recombinant glucagon (nausea was reported in 55% and 53% of patients, respectively, and vomiting was reported in 23% and 19% of patients, respectively), but dasiglucagon was observed to be well-tolerated in the trial, with no injection site reactions noted. Furthermore, chronic toxicology studies support human testing of long-term usage of dasiglucagon, as dasiglucagon was observed to demonstrate similar physiological effects to native glucagon. Data from our Phase 2a trials and the toxicology studies provided the foundation for further clinical development including registration and, potentially, commercialization, while opportunistically considering partnership relationships that may arise. In addition, we are looking to focus our efforts on drug candidates that may qualify for orphan/rare disease status. Our R&D organization is structured to enable dynamic collaboration across various functions and project teams at each stage of discovery and development, allowing us to advance promising opportunities quickly and take advantage of our extensive knowledge of peptide design and product development.dasiglucagon in the iLet™ pump system.

        We have a track recordnon-exclusive collaboration with Beta Bionics who is the developer of successfully inventingan artificial pancreas device containing both insulin and developing novel peptide-based product candidates. This successdasiglucagon, the iLet™. Breakthrough Device designation

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was received from the FDA in December 2019. Guided by an algorithm, this device is based on our deep understanding of peptide chemistry and extensive experience in improving the therapeutic characteristics of naturally-occurring peptides by modifying and optimizing their structures. The modifications we make are designed to improve upon naturally occurring peptides so that their therapeutic benefit, duration of action, stabilitymaintain and convenience of use favorably compare to other treatment options.

        Peptides generally have a number of advantages as drug candidates that can provide specific therapeutic benefits including: high selectivity with effects only on the intended target thereby providing specific therapeutic benefits; lower risks of toxicity with limited, or no, off-target effects; high potency with strong effects even at low concentrations; favorable safety profiles (including fewer side effects)control blood glucose levels with minimal drug-to-drug interactions, tailored half-livespatient intervention.

        Top-line results from a small home-use Phase 2 trial in iLet™ gen 3.2 dual-hormone artificial pancreas system were announced in June 2019. The trial compared operational performance of the iLet in the insulin-only configuration for one week versus the bihormonal configuration for one week in 10 adult participants with T1D. The iLet operated as expected, meeting the primary aim of the study. Preliminary data analysis demonstrated that the bihormonal iLet using dasiglucagon provided superior glycemic control over the insulin-only iLet (see table below).

        We and binding affinity;Beta Bionics are in discussion with the FDA and high regulatory approval rates,expect to initiate the pivotal Phase 3 trial in late 2020.

Congenital hyperinsulinism

        CHI is an ultra-rare but devastating disease caused by inappropriately elevated insulin secretion irrespective of glucose levels. This leads to frequent and often severe hypoglycemia and long-term irreversible damage to health. Researchers have demonstrated the potential using chronic low-dose glucagon infusions to improve management of nine children with approval ratesCHI. Reduction or discontinuation of 20%,I.V. glucose infusion was seen in all children. Six children were discharged to home during treatment. In five children, pancreatectomy or re-operation was avoided. In three children, glucagon was administered for one to four years leading to stable euglycemia.

Dasiglucagon for congenital hyperinsulinism

        In 2017, the FDA and the European Commission both granted orphan drug designation to dasiglucagon for the treatment of CHI. In January 2018, the FDA issued a safe-to-proceed letter, and the first Phase 3 trial with 32 pediatric patients (ages three months to 12 years) with CHI started in the first quarter of 2019 with results expected in 2020. In December 2019, we initiated a second Phase 3 trial with 12 pediatric patients (ages seven days to one year) with CHI. If results from these studies are positive, we anticipate submitting an NDA to the FDA for treatment of CHI in 2021.

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Post bariatric surgery hypoglycemia

        Post-gastric bypass hypoglycemia, or PGBH, occurs following a meal and starting approximately 6 months or later following surgery for gastric bypass (called Roux-en-Y gastric bypass, or RYGB). Although it is rare, severe PGBH can be life-threatening with reports of associated seizure, syncope and motor vehicle accidents. The mechanisms underlying PGBH are not completely understood but may include inappropriate secretion of insulin and gut hormones, increased beta cell response to oral stimuli, increased glucose effectiveness, dysfunction of counter-regulatory hormones such as comparedglucagon, and rapid post-weight loss improvement in insulin sensitivity.

Dasiglucagon for post bariatric surgery hypoglycemia

        In October 2019, we initiated a Phase 2 dose-finding clinical proof of concept trial to 10% for small molecule medications. Peptidesexplore potential benefit of mini-doses of dasiglucagon in correcting serious hypoglycemic events following meal ingestions in some patients who have undergone bariatric surgery. The results of this trial are also smaller than proteins on a molecular level, which can offer potential advantagesexpected in termsthe first half of therapeutic administration.2020.

        Our peptide chemistry and pharmaceutical development expertise is complemented by strong downstream development competencies, including a clinical development team with experience in quality assurance and in regulatory matters. We believe that we have the requisite in-house capabilities to advance product candidates in our selected disease areas from preclinical Investigational New Drug, orIND enabling studies to late-stage clinical development, including registration.Recent Developments

        Reference is also made to the sections 'Our programssection 'Transforming peptides' on pages 18-3112-25 in our Annual Report 2018.2019.

Segment information

        The Group is managed by a corporate management team reporting to the Chief Executive Officer. The corporate management team, including the Chief Executive Officer, represents the chief operating decision maker (CODM). No separate business areas or separate business units have been identified in connection with product candidates or geographical markets. As a consequence of this, no segment reporting is made concerning business areas or geographical areas.

Seasonality

        The Company's financial performance, financial position and cash flows are not subject to significant seasonality.

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Raw materials

        A number of raw materials are used to produce our proprietary product candidates. The bulk of the raw materials are items that are also used by other pharmaceutical producers, so are generally not difficult for us to obtain. We are dependent only on suppliers of raw materials solely for use in the preclinical and clinical development stages of our product candidates. The raw materials have relatively low price volatility.

Market and competition

        The pharmaceutical and biotechnology industries are characterized by intense competition and significant and rapid technological change as researchers learn more about diseases and develop new technologies and treatments. Significant competitive factors in our industry include: (i) product safety and efficacy; (ii) quality and breach of an organization's technology; (iii) skill of an organization's employees and its ability to recruit and retain key employees; (iv) timing and scope of regulatory approvals; (v) government reimbursement rates for, and the average settling price of, products; (vi) the availability of raw materials and qualified manufacturing capacity; (vii) manufacturing costs; (viii) intellectual property and patent rights and their protection; and (ix) sales and marketing capabilities. While we believe that our product and product candidate platform, development expertise

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and scientific knowledge provide us with competitive advantages, we face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions.

        Any product candidates that we successfully develop and commercialize will compete with existing drugs and new drugs that may become available in the future.

        We compete with companies that are producing drugs for, among other disease indications, SBS, such as Takeda plc which currently markets and distributes Gattex, and hypoglycemia, such as Novo Nordisk, and Eli Lilly and Xeris Pharmaceuticals, Inc., which each market and distribute glucagon rescue kits.

        Our competitors may also succeed in obtaining FDA, EMA or other regulatory approvals more rapidly than us, which could place us at a significant competitive disadvantage or deny us marketing exclusivity rights. Market acceptance of our product candidates will depend on a number of factors, including:

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potential advantages over existing or alternative therapies or tests;



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the actual or perceived safety of similar classes of products;



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the effectiveness of our sales, marketing and distribution capabilities; and



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the scope of any approval provided by the FDA, the EMA or other comparable regulatory authorities.

        Although we believe our drugs and product candidates possess attractive attributes, we cannot ensure that our product candidates will achieve regulatory or market acceptance, or that we will be able to compete effectively in the market.

        If our product candidates fail to gain regulatory approvals and acceptance in their intended markets, we may not generate meaningful revenue or achieve profitability.

        In addition, many of our competitors have significantly greater financial resources and expertise in R&D, manufacturing, preclinical studies, conducting clinical trials, obtaining regulatory approvals and marketing drugs. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of competitors, particularly through partnership arrangements with large established companies. These companies also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

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Patents

Patent Strategy

        Our strategy for filing patent applications is to file early in the drug discovery process, typically before a lead compound has been selected. Before filing an initial patent application, we conduct searches of patents and publications based on keywords, patent classification codes and/or sequences to verify patentability of the compounds identified to date. A more focused, structure-based search is conducted once a lead compound is selected.

        Patent applications are generally prepared by our in-house patent professionals in collaboration with outside patent counsel. Patent applications drafted before a lead compound is chosen typically disclose a large number of structurally related compounds. Our patent applications cover compositions of matter and methods of use, and may additionally cover dosing regimens and methods of making the

compounds. Later-filed patent applications typically cover next-generation compounds having for example, structural differences that might confer improved properties. Initially, we file one or more patent applications that establish priority to be claimed in later-filed applications. For most patent families, we file a patent application under the International Patent System, ("or PCT,") which can be entered for examination into the patent office in any of the countries that are signatories to the PCT. In some cases, we file national applications directly in the major jurisdictions, which include Europe, the United States and Japan. For certain patent families, we file in parallel an application under the PCT and national applications in certain jurisdictions, such as the United States. Our patent strategy includes an evaluation of the of third party patents that may be infringed by our drug candidate products and development programs, and we prepare our development and commercialization plans to avoid claims of infringement. To the extent that we identify any potential issue with third party patents that may affect any of our product candidates, we develop a strategy to deal with such third party patents by ensuring that we are satisfied that such patents are invalid, not infringed, or that we commercialize our products after the expiry of such patents. Such strategies can include seeking a judicial or administrative revocation of such patents, ensuring that we are in a position to defend a claim for infringement, or seeking a license where that is appropriate.

        We or our outside patent counsel handle the prosecution of our patent applications. If we enter into a licensing arrangement with a collaboration partner, we typically retain ultimate control of patent prosecution of patent applications for our inventions. For new inventions arising from collaboration under the license agreement, the collaboration partner may, depending on the identity of the inventors, file patent applications that are owned either by the collaboration partner alone or jointly with us.

Patent and Patent Application Portfolio

        We own one patent family covering lixisenatide, including 45 non-USlixisenatide. This family includes approximately 60 granted patents and one patent application. This includes 59 granted non-U.S. patents in 10 non-USnon-U.S. jurisdictions and one issued U.S patent. This entire family is all licensed exclusively to Sanofi. We own twofive patent families covering two related proprietary GLP-2 analogs, glepaglutide and elsiglutide, or backup candidates. These two patent families include 67 granted patents and 36 patent applications. Of these, 59 non-USpatents are non-U.S. patents in 16 non-US jurisdictions and 7 pending patent applications in 4non-U.S. jurisdictions. Although the disclosures of one of these two patent families encompass both elsiglutide and glepaglutide, it has been possible to claim the subject matter relating to elsiglutide and glepaglutide in separate patents in the United States. For our internal compound dasiglucagon, a glucagon analog that has a favorable stability profile, we own onethree patent familyfamilies including 19approximately 29 pending non-USnon-U.S. patent applications and in 18 non-USnon-U.S. jurisdictions.

        We also possess Intellectual Property ("IP") with respect to certain technologies we employ when designing novel peptide drug candidates. An example of one of our internal peptide enhancing technologies is the SIP technology. The SIP technology adds a number of specific amino acids to a peptide thereby strengthening or tightening the molecular structure to make the peptide less susceptible to biological degradation. This may helpThe SIP technology can assist to maintain the peptide in the blood for a longer period of time

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before the peptide is degraded and may permit less frequent dosing of the peptide. The SIP technology has been employed for the development of lixisenatide, glepaglutide and elsiglutide.

        Other In addition to these we possess other proprietary technologies we usewhich involve the addition of a fatty acid to the amino acid chain of a given peptide as another technique to increase the half-life of the peptide in the blood stream.

        Although specific reference is made to the status of patents granted or pending in the U.S. Patent and Trademark Office, or USPTO, the European Patent Office, or EPO, and Japan, in many cases the patent families also include patents or applications in a number of additional jurisdictions, including Australia, Canada, China, and India. Nominal expiration dates mentioned below are based on the statutory patent terms. Upon marketing approval, patent term extensions or supplementary protection certificates may be obtainable in various jurisdictions, including the United States, certain European

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jurisdictions, and Japan, with respect to certain patents claiming compositions of matter, methods of use or methods of manufacturing the products, with a maximum of five years of extension potentially available. U.S. patents may also be entitled to adjustments to their statutory patent term depending on the length of the delay to the issuance of the patents caused by the USPTO.

        We (or our wholly owned subsidiary, ZP Holding SPV K/S (a limited partnership), or ZP Holding, in the case of lixisenatide) own all patents and applications described below, as relating to lixisenatide, elsiglutide, glepaglutide and dasiglucagon.

Lixisenatide

        Our wholly owned subsidiary, ZP Holding, owns twoone patent familiesfamily covering the lixisenatide compound and compositions, methods of using lixisenatide and dosing regimens for administering lixisenatide. The firstcompositions. This patent family includes granted patents in Europe (one European patent validated in 25 countries and a second European patent validated in 18 countries), the United States, Australia (two), Canada, China, Hong Kong (two), India, Israel (three), Japan (three), New Zealand and South Africa. The patents include composition of matter claims covering both the peptide and composition of lixisenatide, originally known as ZP10. The granted U.S. patent originally claimed lixisenatide and closely related analogs of lixisenatide, but was reissued with claims covering lixisenatide only. The closely related analogs may be pursued in one or more continuing applications. The granted European patents include claims drawn to the composition of matter of a genus of compounds that encompasses lixisenatide and of lixisenatide, compositions comprising lixisenatide, and uses of lixisenatide to treat various diseases, including type 2 diabetes, type 1 diabetes and obesity. The patents in this patent family have a nominal expiration date in July 2020 and some may be eligible for up to 5five years of regulatory patent term extension in several jurisdictions, including certain European jurisdictions, Japan, Israel and the United States. This entire family is all licensed exclusively to Sanofi.

Elsiglutide and glepaglutide

        We own twoone patent families,family that covers both elsiglutide and glepaglutide, which include 59 non-USincludes 66 granted patents and 16 pending non-US applications in a total of 54 non-US jurisdictions. The first8 patent applications. This patent family discloses both the elsiglutide compound and the glepaglutide compound, which are structurally-related GLP-2 receptor agonists developed using our SIP technology.

        The first These two compounds therefore share one patent family includes six granted U.S. patents and one granted Europeanin common.

        This patent (validated in 30 countries). The first patent family also includes granted patents in Australia, Canada, China (two), Eurasia (designated in 9nine countries), Hong Kong, Israel (three), India(two)India (two), Japan (thre)(three), South Korea (three), Mexico, New Zealand (three), Ukraine and South Africa(two)Africa (two). The granted U.S. patents include composition of matter claims covering both the peptide and composition of elsiglutide and glepaglutide, and claims drawn to a method of treating CID by administering elsiglutide and a method of treating inflammatory bowel disease by administering glepaglutide. The granted European patent includes claims drawn to the composition of matter of a genus of compounds that encompasses elsiglutide and glepaglutide and of elsiglutide and glepaglutide, as well as analogs thereof and methods

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of using elsiglutide and glepaglutide for the preparation of a medicament to treat or prevent side effects of chemotherapy, including diarrhea. Twelve applications are pending in this family in the USUnited States and non-USnon-U.S. jurisdictions, including Brazil, Europe, Hong Kong, India, Japan, Norway and South Africa. The patents in this patent family have a nominal expiration date in May 2026, with the exception of one of the granted U.S. patents, which has an adjusted expiration date in June 2026.

        The patents in this patent family were licensed to Helsinn for elsiglutide until June 2017. With the termination of the license agreement with Helsinn, we are now responsible for the maintenance of this patent family.

        The granted European patent in this first patent family was opposed in the EPO by a competitor. The Opposition Division of the EPO maintained all original claims at a hearing in June 2014. The decision to maintain the patent with narrow claims covering glepaglutide and elsiglutide was made final at an oral hearing in November 2018 before the Technical Board of Appeals of the EPO. These proceedings are now closed.

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        A secondIn addition, glepaglutide has a total of five other patent family covers backup compounds for elsiglutide. This family includes granted patents in Australia, China, Hong Kong, Israel, Japan, South Korea, Mexico, New Zealand (two), Ukraine and the United States. The second family also includes sevenfamilies that are at an early stage of prosecution. These consist of pending patent applications in the United States Brazil, Canada, Eurasia, Europe, Norway and South Africa. The patents in this second family have a nominal expiration date in November 2027, withat the exception of the granted U.S. patent, which has an adjusted expiration date in February 2030.

        The patents in each of these patent families were licensed to Helsinn for elsiglutide until June 2017. With the termination of the license agreement with Helsinn, we are now responsible for the maintenance of both patent families.EPO.

Dasiglucagon

        We own onethree patent familyfamilies covering dasiglucagon, includingwhich include 25 granted non-U.S. patents in 13 European countries and 1921 patent applications outstanding in 18 jurisdictions.the United States and non-U.S. jurisdictions, including Brazil, Japan and India. The pending claims in this patentone family cover the dasiglucagon compound and a group of structurally related compounds having glucagon agonist activity and increased solubility and/or stability relative to the native glucagon. The pending claims also coverglucagon, as well as pharmaceutical compositions comprising such compounds and related uses for treating a variety of diseases including hypoglycemia, type 1 and 2 diabetes and other metabolic conditions, and nucleic acid molecules for expression of the compounds in host cells. The patentspatent applications in thisthe family that protect the compound itself, when issued, will have a nominal expiration date in July 2033. A United States patent in this family granted with claims covering the dasiglucagon compound. This patent received a patent term adjustment of 560 days, and is scheduled to expire in February 2035.

ZP 10,000a₄b₇ Integrin Inhibitor

        This is an asset that was acquired with our acquisition of Encycle. This includes the acquisition of six patent families consisting of 20 granted patents and 33 patent applications in various territories, including two patent families that are co-owned with the University of Montreal and two patent families that are licensed from the University of Toronto. The remaining two families are wholly owned by Encycle, including the family that includes the composition of matter patent application.

Ion Channel Blockers

        We own one unpublished patent application in relation to this pre-clinical asset. This is at a very early stage of prosecution.

Government Regulation

        The FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirements upon companies involved in the clinical development, manufacture, marketing and distribution of drugs, such as those we are developing. These agencies and other federal, state and local entities regulate, among other things, the R&D, testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion, distribution, post-approval monitoring and reporting, sampling and export and import of our product candidates.

U.S. Government Regulation

        In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act ("FDCA") and its implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA's refusal to approve pending NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution,

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injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

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        The process required by the FDA before a drug may be marketed in the United States generally involves the following:

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completion of preclinical laboratory studies, animal studies and formulation studies in compliance with the FDA's good laboratory practice regulations;



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submission to the FDA of an IND, which must become effective before human clinical trials may begin;



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approval by the institutional review board, or IRB, at each clinical site before each trial may be initiated;



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performance of adequate and well-controlled human clinical trials in accordance with applicable IND and other clinical trial-related regulations, sometimes referred to as good clinical practices to establish the safety and efficacy of the proposed product candidate for its proposed indication;



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submission to the FDA of an NDA;



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satisfactory completion of an FDA pre-approval inspection of the production facility or facilities where the product is produced to assess compliance with the FDA's cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the product's identity, strength, quality, purity and potency;



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potential FDA audit of the preclinical and/or clinical trial sites that generated the data in support of the NDA; and



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FDA review and approval of the NDA prior to any commercial marketing or sale of the product in the United States.

Preclinical Studies

        Preclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess potential safety and efficacy. An IND sponsor must submit the results of the preclinical studies, together with manufacturing information, analytical data and any available clinical data or literature, among other things, to the FDA as part of an IND. Some preclinical studies may continue even after the IND is submitted. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. As a result, submission of an IND may not result in the FDA allowing clinical trials to commence.

Clinical Trials

        Clinical trials involve the administration of the IND to human patients under the supervision of qualified investigators in accordance with GCP requirements, which include the requirement that all research patients provide their informed consent in writing for their participation in any clinical trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. In addition, an IRB at each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution. Information about

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certain clinical trials must be submitted within specific timeframes to the National Institutes of Health, or NIH, for public dissemination on their www.clinicaltrials.gov website.

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        Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined:

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Phase 1 clinical trial: the product candidate is initially introduced into healthy human patients or patients with the target disease or condition and tested for safety, dosage tolerability, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness;



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Phase 2 clinical trial: the product candidate is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerability and optimal dosage; and



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Phase 3 clinical trial: the product candidate is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.

        Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur. Each of Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, or at all. Furthermore, the FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB's requirements or if the drug has been associated with unexpected serious harm to patients.

Marketing Approval

        Assuming successful completion of the required clinical testing, the results of the preclinical studies and clinical trials, together with detailed information relating to the product's chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications. In most cases, the submission of an NDA is subject to a substantial application user fee. Under the Prescription Drug User Fee Act, or PDUFA, guidelines that are currently in effect, the FDA has a goal of ten months from the date of "filing" of a standard NDA for a new molecular entity to review and act on the submission. This review typically takes twelve months from the date the NDA is submitted to the FDA because the FDA has approximately two months to make a "filing" decision.

        In addition, under the Pediatric Research Equity Act of 2003, or PREA, as amended and reauthorized, certain NDAs or supplements to an NDA must contain data that are adequate to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements.

        The FDA also may require submission of a Risk Evaluation and Mitigation Strategies, or REMS, plan to ensure that the benefits of the drug outweigh its risks. The REMS plan could include medication guides, physician communication plans, assessment plans, or elements to assure safe use, such as restricted distribution methods, patient registries, or other risk minimization tools.

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        The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, before accepting them for filing, to determine whether they are sufficiently complete to permit

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substantive review. The FDA may request additional information rather than accept an NDA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing.

        Once the submission is accepted for filing, the FDA begins an in-depth substantive review. The FDA reviews an NDA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged or held meets standards designed to assure the product's continued safety, quality and purity.

        The FDA may refer an application for a novel drug to an advisory committee. An advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

        Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA may inspect one or more clinical trial sites to assure compliance with GCP requirements.

        After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter. A complete response letter generally contains a statement of specific conditions that must be met in order to secure final approval of the NDA and may require additional clinical or preclinical testing in order for the FDA to reconsider the application. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA's satisfaction, the FDA will typically issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.

        Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug's safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies or surveillance programs. After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes, and additional labeling claims, are subject to further testing requirements and FDA review and approval.

Post-Approval Requirements

        Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims are subject to prior FDA review and approval. There also are continuing, annual user fee requirements for any marketed products and the

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establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data.

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        The FDA may impose a number of post-approval requirements as a condition of approval of an NDA. For example, the FDA may require post-marketing testing, including Phase 4 clinical trials, and surveillance to further assess and monitor the product's safety and effectiveness after commercialization. In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP requirements and impose reporting and documentation requirements upon the sponsor and any third party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.

        Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:

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restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;



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fines, warning letters or holds on post-approval clinical trials;



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refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals;



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product seizure or detention, or refusal to permit the import or export of products; or



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injunctions or the imposition of civil or criminal penalties.

        The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.

Combination Products

        Certain of our product candidates are designed to be delivered to patients by dedicated medical devices. In the United States, products composed of components that would normally be regulated by different centers at the FDA are known as combination products. Typically, the FDA's Office of Combination Products assigns a combination product to a specific center as the lead reviewer based upon the product's primary mode of action. Depending on the type of combination product, its approval, clearance or licensure may usually be obtained through the submission of a single marketing application. However, the FDA sometimes will require separate marketing applications for individual constituent parts of the combination product which may require additional time, effort, and information, For example, delivery devices require Human Factors testing and their manufacture is subject to FDA's Quality System Regulation. Even when a single marketing application is required for a combination product, such as an NDA for a combination drug and delivery device, both the FDA's Center for Drug Evaluation and Research and the FDA's Center for Devices and Radiological Health may participate in the review.

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Other U.S Healthcare Laws

        Our current and future operations may directly, or indirectly through our prescribers, customers and purchasers, expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research, market, sell and distribute our products. Restrictions under applicable U.S. federal, state, local and non-U.S. healthcare laws and regulations include, but are not limited to, the following:

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the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, including any kickback, bribe or rebate, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase or lease, order or recommendation of, any item, good, facility or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid;



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the federal Beneficiary Inducement Statute, which prohibits giving anything of value to a government insurance beneficiary that could influence the choice of provider or reimbursable covered product;



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federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalties laws, which impose criminal and civil penalties, including those from civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;



•

the anti-inducement law prohibits, among other things, the offering or giving of remuneration, which includes, without limitation, any transfer of items or services for free or for less than fair market value (with limited exceptions), to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary's selection of a particular supplier of items or services reimbursable by a federal or state governmental program;



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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes that impose criminal and civil liability for, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or knowingly and willingly falsifying, concealing or covering up a material fact or making false statements relating to healthcare matters;



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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, which impose certain requirements on covered entities and their business associates, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;



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the federal transparency requirements under the Physician Payments Sunshine Act, enacted as part of the Patient Protection and ACA that require applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children's Health Insurance Program, with specific exceptions, to track and annually report to the Centers for Medicare & Medicaid Services, or CMMS, payments and other transfers of value provided to physicians, as defined by such law, and teaching hospitals, and certain ownership and investment interests held by physicians or their immediate family members;



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analogous state, local and non-U.S. laws and regulations, such as state anti-kickback and false claims laws, which may apply to items or services reimbursed by any third party payor, including commercial insurers; state, local and non-U.S. marketing and/or transparency laws applicable to

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manufacturers that may be broader in scope than the federal requirements; state laws that require biopharmaceutical companies to comply with the biopharmaceutical industry's voluntary compliance guidelines, relevant compliance guidance promulgated by the federal government, implementation of compliance programs, and compliance with the state's code of conduct; state and local laws that require a pharmaceutical company's sales representatives to be registered or licensed by the state or local governmental entity; and state and non-U.S. laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may be more stringent than HIPAA, thus complicating compliance efforts; and

•

rules or legislation covering more or less the same subject matter are found in numerous other countries, including in Denmark, which sometimes result in lower or higher exposures in those countries than in the United States.

        Additionally, recent healthcare reform legislation has strengthened federal and state healthcare fraud and abuse laws. For example, the ACA amends the intent requirement of the federal Anti-Kickback Statute and criminal healthcare fraud statutes to clarify that liability under these statutes does not require a person or entity to have actual knowledge of the statutes or a specific intent to violate them. Moreover, the ACA provides that the government may assert that a claim that includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act. Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws.

        Ensuring that our business arrangements with third parties comply with applicable healthcare laws and regulations will likely be costly. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations were found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, possible exclusion from government funded healthcare programs, such as Medicare and Medicaid, integrity obligations, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could substantially disrupt our operations. If the physicians or other providers or entities with whom we expect to do business are found not to be in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusion from government funded healthcare programs.

Healthcare Reform

        Existing regulatory policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. For example, in the United States the current presidential administration and U.S. Congress have attempted to repeal or "repeal and replace" the Affordable Care Act, or the ACA. Although those efforts did not succeed, the presidential administration may continue to seek to modify, repeal, or otherwise invalidate all, or certain provisions of, the ACA. Additionally, there remain judicial and Congressional challenges to certain aspects of the ACA. For example, on December 14, 2018, a U.S. District Court Judge in the Northern District of Texas, or Texas District Court Judge, ruled that the entire ACA is invalid based primarily on the fact that the Tax Cuts and Jobs Act of 2017 repealed the tax-based shared responsibility payment imposed by the ACA, on certain individuals who fail to maintain qualifying health coverage for all or part of a year, which is commonly referred to as the "individual mandate". Additionally, on December 18, 2019, the U.S. Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual

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mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well. It is unclear how this decision, future decisions, and subsequent appeals will impact the law and the effect such impact could have on coverage and reimbursement for healthcare items and services covered by plans that were authorized by the ACA.

        Other legislative changes have been proposed and adopted since the ACA was enacted. These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, will stay in effect through 2029 unless additional Congressional action is taken. In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the U.S. government to recover overpayments to providers from three to five years. The Medicare Access and CHIP Reauthorization Act of 2015, or MACRA, ended the use of the statutory formula and established a quality payment program, also referred to as the Quality Payment Program. The quality payment program has two tracks, one known as the merit based incentive payment system for providers in the fee-for service Medicare program, and the advanced alternative payment model for providers in specific care models, such as accountable care organizations. In November 2019, CMS issued a final rule finalizing the changes to the Quality Payment Program. At this time it is unclear how the introduction of the Quality Payment Program will impact overall physician reimbursement under the Medicare program. These new laws may result in additional reductions in Medicare and other healthcare funding.

        There have been several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drugs. In addition, the Trump administration's budget proposal for fiscal year 2021 includes a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients, and increase patient access to lower-cost generic and biosimilar drugs. Further, the Trump administration previously released a "Blueprint" to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products paid by consumers. The Department of Health and Human Services, or HHS, has solicited feedback on some of these measures and has implemented others under its existing authority. Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, such measures are designed to encourage importation from other countries and bulk purchasing.

Coverage and Reimbursement

        Sales of certain of our out-licensed products and our product candidates, if and when approved for marketing, has and will depend, in part, on the extent to which our products will be covered by third party payors, such as government health care programs like Medicare and Medicaid, commercial insurance and managed healthcare organizations. These third party payors play an important role in determining the extent to which new drugs, biologics and medical devices will be covered. The Medicare and Medicaid programs increasingly are used as models for how private payors and other governmental payors develop their coverage and reimbursement policies for drugs, biologics and medical devices. It is difficult to predict at this time what third party payors will decide with respect to

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the coverage and reimbursement for our product candidates. The primary trend in the U.S. healthcare industry and elsewhere has been cost containment, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products and/or biosimilars. Adoption of price controls, cost containment measures and adoption of more restrictive policies in jurisdictions with existing controls and measures, could limit our net revenue and results.

        Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for medical products, drugs and services. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for drugs. We cannot be sure that coverage will be available for any product candidate that we commercialize and, if coverage is available, the level of reimbursement. Because coverage and reimbursement determinations are made on a payor-by-payor basis, obtaining coverage and adequate reimbursement from a third party payor does not guarantee that we will obtain similar coverage or reimbursement from another third party payor. Reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval. If reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize any product candidate for which we obtain marketing approval. Decreases in third party reimbursement for our product candidates or a decision by a third party payor not to cover our product candidates or provide only limited reimbursement for our product candidates could reduce physician usage of our products once approved and have a material adverse effect on our sales, results of operations and financial condition. Further, the adoption and implementation of any future governmental cost containment or other health reform initiative may result in additional downward pressure on the price that we may receive for any approved product.

        Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada, and other countries has and will continue to put pressure on the pricing and usage of our product candidates. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. Other countries allow companies to fix their own prices for medical products, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.

C.    ORGANIZATIONAL STRUCTURE

        For information regarding our organizational structure, please refersee Exhibit 8.1 to the section 'Business overview' on page 54 in ourthis Annual Report 2018.on Form 20-F.

D.    PROPERTY, PLANT AND EQUIPMENT

        We lease approximately 5,344 square meters of office space at Smedeland 36 and Smedeland 26B, 2600 Glostrup (Copenhagen), Denmark for our corporate headquarters and other administrative functions. The lease for this facility may, subject to certain Danish law restrictions, be terminated by us or the lessor upon six months' prior written notice. We have recently signed a new lease of approximately 7,181 square meters of office and laboratory space at Sydmarken 5,11, 2860 Søborg, Denmark.Denmark, where all our activities, including R&D, are currently conducted. The lease is interminable for 13 years for Zealand and 15 years for the landlord, Ejendomsselskabet

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Sydmarken 5 A/S, ("the landlord") from the date when Zealand moves in tomoved into the facilities, which is expected to be aroundwas September 1, 2019. After said periods Zealand can, without restrictions, and the landlord, subject to certain restrictions under Danish law, terminate the lease upon 12 months written notice.

ITEM 4A    UNRESOLVED STAFF COMMENTS

        Not applicable.

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ITEM 5    OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Critical accounting estimates

        Reference is made to Note 1 'Significant accounting policies, and significant accounting estimates and assessments' to the consolidated financial statements on pages 55-6354-60 in our Annual Report 2018.2019.

New accounting pronouncements

        Reference is made to Note 1 'Significant accounting policies, and significant accounting estimates and assessments' to the consolidated financial statements on pages 55-6354-60 in our Annual Report 2018.2019.

A.    OPERATING RESULTS

        Reference is made to the section 'Financial review' contained on pages 41-4340-42 in our Annual Report 20182019 and "Item 3—Key Information—D. Risk Factors". Reference is further made to 'Risk management and internal control' on pages 38-39 in our Annual Report 2018.2019.

        The financial condition of the Group and its development is described in our Annual Report 2018.2019. The information in this section is based on, these reports and should be read in conjunction with, our Annual Report 2018.2019. The analysis and discussion included in our Annual Report 20182019 is primarily based on the consolidated financial statements, which are prepared in accordance with IFRS as issued by the IASB.

20182019 compared with 20172018

        The section 'Financial review' contained on pages 41-4340-42 in our Annual Report 20182019 constitutes the Board of Directors' and Executive Management's discussion and analysis of results of operations.

20172018 compared with 20162017

        RevenueThe following financial review is based on the Company's consolidated financial information for the year ended December 31, 2017 was DKK 136.3 million,2018, as compared to DKK 230.9 millionthe financial information for the year ended December 31, 2016 reflecting a decrease of 41% (or2017. The below financial information has been restated. Please see Note 1 'Significant accounting policies, and significant accounting estimates and assessments' on pages 54-60 in our Annual Report 2019 for information regarding the restatement.

Revenue

        Revenue in 2018 amounted to DKK 94.5 million) in 2017,38.0 million, as compared to 2016.DKK 136.3 million in 2017.

        Revenue from milestone payments wasamounted to DKK 101.013.1 million for the year ended December 31, 2017,in 2018, as compared to DKK 210.4 million for the year ended December 31, 2016, reflecting a decrease of 52% (or DKK 109.4 million)101.0 in 2017, as comparedcorresponding to 2016. Milestones comprisean 87% decrease. The milestone payments in 2018 comprised a payment of DKK 69.69.8 million from Sanofian undisclosed counterpart in connection with the EU approval of Suliqua®a material transfer agreement and a payment of DKK 29.83.3 million from Boehringer Ingelheim related to the initiation of Phase 1 trials for the long-acting amylin analog. A milestone payment of DKK 1.7 million was also received from a license agreement with Protagonist Therapeutics Inc. Milestones

        Total royalty revenue in 2016 relate to the FDA approval of Adlyxin and Soliqua® 100/33 in the United States in July 2016 and November 2016, triggering milestone payments from Sanofi of DKK 33.5 million and DKK 175.2 million, respectively. Royalty income was DKK 35.3 million for the year ended December 31, 2017, as compared2018 amounted to DKK 20.4 million for the year ended December 31, 2016, reflecting an increase of 73% (or DKK 14.9 million) in 2017, as compared to 2016. The increase in royalty income was due to decreased sales of Lyxumia offset by royalty income from first year sales of Soliqua® 100/33.

        Royalty expenses for the year ended December 31, 2017 were DKK 14.224.9 million, as compared to DKK 30.935.3 million forin 2017, a decrease of 29%. The decrease in 2018 is a consequence of the year ended December 31, 2016.sale of future Sanofi royalties and milestones, the effect of which was that only royalties earned before June 30, 2018 were included in the 2018 income statement. Royalty expenses for the years ended December 31, 2017 and 2016 were comprised of payments that we made with respect to royalty payments received by usrevenue in 2018 from the sales of LyxumiaLyxumia®/ Adlyxin® amounted to DKK 7.1 million (as compared to DKK 16.7 in 2017) and from sales of Soliqua® 100/33 plus milestone payments received from Sanofi. We pay royalties of 13% on all revenue relatedamounted to lixisenatide under the SanofiDKK 17.8 million (as compared to DKK 18.7 million in 2017).

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License Agreement to Alkermes and 0.5% of the total amounts we receive in connection with our SIP modified peptides to one of the inventors of our SIP technology.Royalty expenses

        R&DRoyalty expenses for the year ended December 31, 2017 were2018 amounted to DKK 324.73.4 million, as compared to DKK 268.214.2 million for 2017, and related to royalties paid to third parties on milestone payments received and royalty income relating to the year ended December 31, 2016 reflecting an increase of 21% (orlicense agreement with Sanofi.

Research and development expenses

        R&D expenses amounted to DKK 56.5 million)438.2 million in 2017,2018, as compared to 2016.DKK 323.9 million in 2017. The increase in R&D expenses for the year ended December 31, 20172018 was primarily related to external costs of DKK 30.679.6 million from accelerated development activities. This 2018 figure comprises costs for the three dasiglucagon programs, including the two Phase 3 trials relating to the rescue pen for severe hypoglycemia, and the two Phase 2b trialsclinical costs for dasiglucagon to be used in a dual-hormone artificial pancreas.pancreas and to treat CHI. It also includes costs for finalizinginitiating the Phase 23 trial with glepaglutide, as well as costs relating to preclinicalpre-clinical activities.

        The R&D share of the personnel expenses for the year ended December 31, 2017 amounted to2018 was DKK 119.5153.6 million, as compared to DKK 109.5118.6 million for the year ended December 31, 2016, reflecting an increase of 9.1% (or DKK 10.0 million) in 2017, as compared to 2016.2017. The increase in R&D share of the personnel expenses in the year ended December 31, 2017, as compared to the year ended December 31, 2016, was primarily duemainly related to an increase in the number of employees in the clinical development function.organization.

        As of December 31, 2017 and 2016, we have not capitalized any developmentAdministrative expenses and, accordingly, all such costs have been recognized within the income statement.

        Administrative expenses for the year ended December 31, 2017 wereamounted to DKK 47.543.5 million in 2018, as compared to DKK 52.547.3 million for the year ended December 31, 2016, reflecting a decrease of 9.5% (or DKK 5.0 million) in 2017, as compared to 2016.

2017. The decrease in administrative expenses in the year ended December 31, 2017 was primarily relateddue to a change in the composition of employees working in R&D and Administrationadministration in comparison to previous year.2017.

        Expenses related to staff and remuneration for the year ended December 31, 2017 were DKK 152.0 million, as compared to DKK 145.7 million for the year ended December 31, 2016. The increase in our staff and remuneration costs was primarily due to an increase in salaries as a consequence of an increases in the number of employees. A total of DKK 119.5 million of expenses related to staff and remuneration for the year ended December 31, 2017 was charged to R&D expenses and a total of DKK 32.6 million of expenses related to staff and remuneration for the year ended December 31, 2017 was charged to administrative expenses.Other operating income

        Other operating income for the year ended December 31, 2017 was DKK 0.6 million, as comparedamounted to DKK 1.71,099.5 million for the year ended December 31, 2016. Other operating income for was primarily comprised of Government grants.

        As a result of the foregoing, operating losses for the year ended December 31, 2017 were DKK 249.4 million, as compared to DKK 119.0 million for the year ended December 31, 2016.

        Financial income for the year ended December 31, 2017 was DKK 2.1 million,in 2018, as compared to DKK 0.6 million in 2017, and mainly consisted of the net effect from the Royalty Pharma Agreement to sell future royalty streams and $85 million of potential commercial milestones for Soliqua® 100/33/ Suliqua® and Lyxumia®/Adlyxin® to Royalty Pharma. Zealand received DKK 1,310.2 million, or $205 million, in September 2018 at closing of the year ended December 31, 2016. The increase in financial income for the year ended December 31, 2017 as comparedtransaction. Costs directly related to the year ended December 31, 2016 was primarily duetransaction amounted to interestDKK 211.3 million and consisted of DKK 176.9 million paid to third parties plus other transaction costs of DKK 34.5 million.

        Other operating income which was DKK 2.0 million for the year ended December 31,in 2018 in 2017 as compared toalso consisted of government grants of DKK 0.6 million for the year ended December 31, 2016. Inin each of the years ended December 31, 2016 and 2015, interest income related to our cash and cash equivalents as well as our restricted cash.year.

Operating result

        Financial expensesThe operating result for the year ended December 31, 2017 were2018 was DKK 33.5652.4 million, as compared to DKK 44.4–248.5 million for the year ended December 31, 2016.in 2017.

Net financial items (financial income less financial expenses)

        Net financial items amounted to DKK –27.3 million in 2018, as compared to DKK –31.4 million in 2017. The decrease was mainly due to positive exchange rate adjustments in 2018 compared to negative exchange rate adjustments in 2017 and decreased interest expenses, as Zealand redeemed a royalty bond in September 2018 in connection with the closing of the Royalty Pharma Agreement. Net financial items consist of interest income and expenses, amortized costs relating to the royalty bond financing, banking fees and exchange rate adjustments. DKK 15.1 million of the net financial items in the year ended December 31, 2017 was primarily attributable2018 (as compared to DKK 18.9 million in 2017) related to interest expenses and amortizationexpense on the Royaltyroyalty bond, since halfand DKK 18.3 million in 2018 (as compared to DKK 5.7 million in 2017) related to amortized costs of the outstanding amount was repaid in March 2017.

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        Pursuant to Danish tax legislation, we have received DKK 5.5million in respectroyalty bond financing. The increased amortized costs were a result of the repayment of the outstanding royalty bond in September 2018 as all remaining capitalized financing costs had been expensed.

Result before tax

        Result before tax losses for 2016 and are eligiblein 2018 was DKK 625.1 million, as compared to receiveDKK –279.9 million in 2017.

Income tax

        Income tax amounted to DKK –43.8 million in 2018, as compared to DKK 5.5 million in respect2017. The income tax in 2018 was a consequence of the positive result before tax losses for 2017, which losses originatedthe year stemming mainly from qualifying research and development expenditures. These tax benefits comprised the entire current tax benefit in 2017 and 2016.

net effect from our entry into the Royalty Pharma Agreement described above. No deferred tax asset has beenwas recognized in the statement of financial position in 2018 due to an uncertainty as to when and ifwhether tax losses cancould be utilized against future taxable income.utilized.

Net result and comprehensive result

        As aThe net result of the foregoing, our net lossand comprehensive result for the year ended December 31, 2017 was2018 both amounted to DKK 275.3581.3 million, as compared to DKK 157.3–274.4 million for the year ended December 31, 2016.2017. The increased result in 2018 was mainly a consequence of an increase in other operating income as a result of the sale of future milestones and royalties relating to the Sanofi license having a net impact of DKK 1,098.9 million. This increase was partly offset by a decrease in revenue and an increase in research and development expenses.

Allocation of result

        No dividend was proposed for 2018 or 2017. The net result for 2018 of DKK 581.3 million and the net result for 2017 of DKK –274.4 million was transferred to retained loss.

Segment information

        The Group is managed by a Corporate Management Team reporting to the Chief Executive Officer. The Corporate Management Team, including the Chief Executive Officer, represents the chief operating decision maker (CODM). No separate business areas or separate business units have been identified in connection with product candidates or geographical markets. As a consequence of this, no segment reporting is made concerning business areas or geographical areas.

Inflation

        Inflation for the three most recent fiscal years ended December 31, 2019, 2018 and 2017 has not had a material impact on the Group's revenue or net loss.

Foreign currencies

        Reference is made to Note 2326 'Financial risks'risks—Exchange rate risk' to the consolidated financial statements on pages 84-86page 84 in our Annual Report 2018.2019.

Governmental policies

        Please refer to "Item 4—Information on the Company—Government Regulation".

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B.    LIQUIDITY AND CAPITAL RESOURCES

        It is our aim to have an adequate capital structure in relation to the underlying operating results and research and development projects, so that it is always possible to providewe have sufficient capital to support operations and itsour long-term growth targets.

        The Board of Directors finds that the current capital and share structure is appropriate for the shareholders and the Group and for the Company's present requirements.

        As of December 31, 2018,2019, our cash and cash equivalents were DKK 1,081.1 million, and we had cash, cash equivalents andmarketable securities of DKK 1,159.2299.5 million. We require cash to meet our operating expenses and capital expenditures. We have funded our cash requirements since our incorporation primarily with equity financing, and milestone and royalty payments from our collaboration partners, along with the proceeds of ZP SPV Notes issued in 2014. In September 2018, we entered into the Royalty Pharma Agreement, pursuant to which we and two of our wholly-owned subsidiaries agreed to sell and transfer our and our subsidiaries' respective rights to receive royalties and USD 85 million of potential commercial milestones in respect of global net sales of Soliqua® 100/33/ Suliqua® and Lyxumia®/Adlyxin® from and after July 1, 2018. We received DKK 1,310.2 million, or $205.0 million upon closing of the transaction. The net gain from the transaction amounted to DKK 1,098.9 million / USD 170.6 million.future royalty streams.

        The overall objectives and policies for our financial risk management are outlined in the Finance Policy, which is approved by the Board of Directors. For further information, reference is made to "Item 11—Qualitative and Quantitative Disclosures about Market Risks".

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Financial resources

        Reference is made to page 52 'Consolidated statements of financial position' andon page 5351 and 'Consolidated statements of cash flows' on page 52 in our Annual Report 2018.2019.

        We believe our financial resources are sufficient to meet itsour requirements for at least the next 12 months.

Cash flow in 2019, 2018 2017 and 20162017

        Reference is made to 'Consolidated statements of cash flows' on page 53 and 'Financial review' contained on page 41-4352 in our Annual Report 2018 for a discussion of cash flows for the year ended December 31, 2018 to the comparable period in 2017.

        Cash outflow from operating activities for the year ended December 31, 2017 was DKK 278.7 million, as compared to an inflow of DKK 40.9 million for the year ended December 31, 2016. The decrease in cash outflow from operating activities for the year ended December 31, 2017 was mainly as a result of the net loss for the year adjusted for non-cash items.

        Cash inflow from investing activities for the year ended December 31, 2017 was DKK 221.4 million, as compared to an outflow of DKK 300.0 million for the year ended December 31, 2016. The change in cash inflow in 2017, as compared to 2016, was primarily due to the transfer of milestone payments received from Sanofi during 2017 from restricted cash to cash and cash equivalents in conjunction with the repayment of 50.4% of the royalty bond.

        Cash inflow from financing activities for the year ended December 31, 2017 was DKK 337.9 million, as compared to an outflow of DKK 157.1 million for the year ended December 31, 2016. The increase in cash inflow from financing activities for the year ended December 31, 2017 was related to the net proceeds of DKK 507.5 from the initial public offering and a capital increase of DKK 6.8 million due to the exercise of warrants.

2019. The total cash inflowflow for the year ended December 31,2019, 2018 and 2017 wasamounted to DKK 213.4 million, DKK 266.1 million and DKK 280.5 million, as compared to an outflow of DKK 101.9 million for the year ended December 31, 2016.respectively.

        There are no material restrictions on the ability of subsidiaries with material cash amounts to transfer funds to the Parent Company.parent company Zealand Pharma A/S.

Cash outflow/inflow from operating activities

        Cash flow from operating activities amounted to DKK –409.5 million, DKK –461.4 million and DKK –278.7 million in 2019, 2018 and 2017, respectively. Cash outflow from operating activities for 2019 was mainly due to the loss for the year adjusted for the upfront cash and equity investment from the Alexion agreement. Cash outflow from operating activities for 2018 was mainly a result of the net profit for the year adjusted for the net effect from the Royalty Pharma Agreement to sell future royalty streams and $85 million of potential commercial milestones for Soliqua® 100/33/ Suliqua® and Lyxumia®/Adlyxin® and for other non-cash items. Cash outflow from operating activities for 2017 was mainly a result of the net loss for the year adjusted for non-cash items.

Cash outflow/inflow from investing activities

        Cash flow from investing activities amounted to DKK –51.7 million, DKK 882.9 million and DKK 221.4 million in 2019, 2018 and 2017, respectively. Cash outflow from investing activities in 2019 mainly comprised purchase of other investment and property, plant and equipment. Cash inflow from investing activities in 2018 mainly comprised the net effect from the Royalty Pharma Agreement described above. Cash inflow from investing activities in 2017 reflected milestone payments received from Sanofi during the year being transferred from restricted cash to cash and cash equivalents in conjunction with the repayment of a portion of the royalty bond.

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        Net investments in securities for 2018 amounted to DKK 225.6 million, as compared to DKK��75.0 for 2017. No additional investments in marketable securities were made in 2019. Zealand's marketable securities portfolio comprises listed short-term bonds in Danish kroner.

        Cash flows related to other investments for 2019, 2018 and 2017 amounted to DKK 22.8 million, DKK 0.0 million and DKK 9.3 million, respectively. Zealand invested in Beta Bionics, Inc. in 2018, but payment related to such investment did not occur until 2019.

        Investments in plant and equipment in 2019 and 2018 amounted to DKK 21.0 million and DKK 4.0 million, respectively mainly related to improvement of the new leased headquarters in Denmark paid in cash. Investments in plant and equipment for 2017 amounted to DKK 7.2 million, mainly related to new laboratory equipment.

Cash outflow/inflow from financing activities

        Cash flow from financing activities amounted to DKK 674.5 million (–155.4), mainly related to capital contribution from Van Herk Investments, Alexion Pharmaceuticals and proceeds from employees exercising warrants. 2018 mainly related to the repayment of the royalty bond.

        Cash flow from financing activities amounted to DKK 674.5 million in 2019, mainly related to capital contribution from Van Herk Investments, Alexion Pharmaceuticals and proceeds from employees exercising warrants. Cash flow from financing activities in 2018 amounted to DKK –155.4 million, related to the repayment of the royalty bond of DKK –158.3 million and proceeds from issuance of shares related to exercise of warrants of DKK 2.9 million. Cash flow from financing activities in 2017 amounted to DKK 337.9 million and included the net proceeds from the U.S. IPO of DKK 507.5 million, DKK –176.4 million related to repayment of the royalty bond and proceeds from issuance of shares related to exercise of warrants of DKK 6.8 million.

Debt financing

        In connection with the closing of the Royalty Pharma Agreement in September 2018, we redeemed outstanding notes we had issued in 2014 and related debt. No long-term loans were outstanding as of December 31, 2019 or 2018. Reference is made to 'Consolidated statements of financial position' on page 5251 and Note 2022 'Royalty bond' to the consolidated financial statements on pages 82-83page 82 in our Annual Report 20182019 for information on current debt financing. In connection with the closing of the Royalty Pharma Agreement, we redeemed our ZP SPV Notes issued in 2014 and related debt, making us debt free.

Financial instruments

        Reference is made to Note 2326 'Financial risks'risks—Contractual maturity (liquidity risk)' to the consolidated financial statements on pages 84-86page 85 in our Annual Report 2018.2019.

Commitments for capital expenditure etc.

        Contractual obligations for capital expenditure and other contingent liabilities as of December 31, 2018, respectively,2019 are shown in Note 2225 'Contingent assets, liabilities and other contractual obligations' on pages 83-84page 83 to the consolidated financial statements in our Annual Report 2018.2019.

        The Executive Management of the Group believes that the obligations are covered by the Group's financial resources as well as expected future cash flows from operating activities.

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C.    RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

        We currently focus on gastrointestinal, metabolic and other specialty diseases where we believe that the present standard of care is inadequate and where we believe that we have the resources to advance our peptide-based product candidates into the later stages of clinical development, including

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registration and, potentially, commercialization, while opportunistically considering partnership relationships that may arise. In addition, we are looking to focus our efforts on drug candidates that may qualify for orphan/rare disease status. Our R&D organization is structured to enable dynamic collaboration across various functions and project teams at each stage of discovery and development, allowing us to advance promising opportunities quickly and take advantage of our extensive knowledge of peptide design and product development.

        Reference is made to 'Research Our research and development expenses'expenses were DKK 561.4 million, DKK 438.2 million and DKK 323.9 million in 'Financial review'2019, 2018 and 2017, respectively. See Note 4 'Research, development and administration expenses' on pages 41-4364-65 to the consolidated financial statements in our Annual Report 2018 for Research and development expenses in 2018, 2017 and 2016, respectively.2019.

        Information related to selected research and development projects can be found under 'Our programs''Transforming peptides' on pages 18-3112-25 in our Annual Report 2018.2019.

        Reference is made to "Item 3—Key Information—D. Risk Factors".

D.    TREND INFORMATION

        We do not currently produce, hold inventory or sell any products by ourselves or through partnerships.

        Information about expectations for the financial year 20192020 can be found on page 1011 in the subsection 'Financial highlights'2020 Outlook and 2019 guidance"objectives' in our Annual Report 2018.2019.

E.    OFF-BALANCE SHEET ARRANGEMENTS

        Reference is made to Note 2225 'Contingent assets, liabilities and other contractual obligations' to the consolidated financial statements pages 83-84page 83 in our Annual Report 2018.2019.

F.     TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

20182019

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2017

January 1, 2019 leases have been recognized in the statement of financial position. Reference is made to Note 221 'Significant accounting policies, and significant accounting estimates and assessments' to the consolidated financial statements on pages 54-60 in our Annual Report 2019.

        Reference is also made to Note 25 'Contingent assets, liabilities and other contractual obligations' to the consolidated financial statements on pages 83-84page 83 in our Annual Report 2018.2019.

G.    SAFE HARBOR

        Forward-looking information discussed in this Item 5 includes assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as "forward-looking statements". We caution that assumptions, expectations, projections, intentions and beliefs about future events may and often do vary from actual results and the differences can be material.

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Please see the section entitled "Forward-Looking Statements" at the beginning of this Annual Report.Report on Form 20-F.

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ITEM 6    DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES

A.    DIRECTORS AND EXECUTIVE MANAGEMENT

        Reference is made to 'Board of Directors and Corporate Management' on pages 46-4745-47 in our Annual Report 20182019 for name, position and period of service as director forinformation about the members of our Board of Directors.

        Reference is made to 'Corporate Management' on page 48 in our Annual Report 2018 for name, position, age, yearDirectors and Corporate Management, as well as their activities outside of appointment and year of joining Zealand for the members of Corporate Management.Company.

        The Board of Directors has the overall responsibility for the affairs of the Company.

        The activities of the members of Board of Directors and members of Corporate Management outside the Company are included in Board of Directors and Corporate Management' on pages 46-48 in our Annual Report 2018.

        There are no family relationships between the Board of Directors and Corporate Management. No Director or member of Corporate Management have been elected according to an arrangement or understanding with shareholders, customers, suppliers or others.

        As required by the Danish Companies Act, directors are elected at General Meetings by simple majority vote. In addition, three employee representatives are elected for four-year terms by the employees of Zealand Pharma A/S.

B.    COMPENSATION

        Reference is made to Note 6 'Information on staff and remuneration' to the consolidated financial statements on pages 67-7465-73 in our Annual Report 2018.2019.

C.    BOARD PRACTICES

        Reference is made to 'Corporate governance' on pages 33-3532-34 in our Annual Report 20182019 regarding board practices. The year of election for each member of the Board of Directors and the year of appointment for each member of Corporate Management is included in 'Board of Directors and Corporate Management' on pages 46-4845-47 in our Annual Report 2018.2019.

        The terms of office of all the members of our boardBoard of directorsDirectors elected by the general meeting expire at the next annual general meeting to be held in April 2019.2020. All members of the boardBoard of directorsDirectors elected by the general meeting are eligible for re-election. Employee elected board members are elected for a period of four years.

        None of our directors has a service contract with us or any of our subsidiaries providing for benefits upon termination of employment.

D.    EMPLOYEES

        Reference is made to the section entitled 'Our people' on page 37At December 31, 2019, 2018 and 'Consolidated key figures' on page 11 in our Annual Report 2018 regarding the total number of our2017 we had 179, 149 and 133 full-time employees, at year-end for the years 2014-2018.and during 2019, 2018 and 2017 we had an average of 173, 146 and 128 full-time employees. Labor unions currently representing our employees include HK it, medie & Industri Hovedstaden. We negotiate a collective agreement in good faith every three years, with the next negotiation scheduled to take place in 2020.

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E.    SHARE OWNERSHIP

        For information on the Board of Directors' and Corporate Management's individual holdings of shares and grantingwarrants as of shares,December 31, 2019 and change in these holdings during 2019, reference is made to the sections 'Board of Directors'Directors and Corporate Management' on pages 46-47 and 'Corporate Management' on page 48,45-47, and Note 6 'Information on staff and remuneration' to the consolidated financial statements on pages 67-7465-73 in our

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Annual Report 2018 .2019. The members of our Board of Directors and Corporate Management in the aggregate hold 41,045 shares, representing less than 1% of the beneficial ownership of the Company.

        For information on the Board of Directors' and Corporate Management's individual holdings of and trading in our shares during 2018, reference is made to the sections 'Board of Directors' on pages46-47 and 'Corporate Management' on page 48, and Note 6 'Information on staff and remuneration' to the consolidated financial statements on pages 67-74 in our Annual Report 2018. As of March 7, 2019 the Board of Directors and Executive Management owned 177,734 shares.

In the period from January 1, 20182020 until March 7, 2019,9, 2020, no shares were sold or purchased by the members of the Board of Directors or Executive Management. The internal rules on trading in our shares by members of the Board of Directors and Executive Management only permit trading in the 30 calendar-dayfour-week period commencing at the beginning of the third trading day following each quarterly earnings announcement.the date of public disclosure of interim financial reports or the annual report. Under special circumstances, the trading window may be derogated from.

        We granted warrants to our executive management and selected employees of the company in 2005, 2007 and in each of the years between 2009 and 2018.2019. Since our Annual General Meeting in 2012, it has been part of our remuneration policy that members of the Board of Directors are not permitted to participate in the warrant incentive program in their capacity as board members.

        Warrants are, and have been, granted pursuant to shareholder authorizations provided to our boardBoard of directorsDirectors under our articlesArticles of association.Association. The detailed terms of the warrants, including the exact exercise price and the size of the grants, andhave been set our guidelines for incentive pay in force at the timeBoard of grant are fixed in accordance with this authorization.Directors. Warrants are granted for employee services and will typically become exercisable between approximately one to five years after the date of grant and may be exercised in a pre-defined exercise period to subscribe for shares in a number of pre-defined exercise windows against payment of the exercise price. Unexercised warrants will lapse. Granted warrants to employees are generally subject to provisions reflecting the principles of the Danish Stock Option Act (Aktieoptionsloven), which allowsallow for the forfeiture of unexercised warrants if the grantee separates from the company or one of our subsidiaries under circumstances in which the warrant holder is considered a "bad-leaver","bad-leaver," understood as, for example, being dismissed for cause or resigning without us having materially breached the employment contract. Warrant holders may generally maintain all granted warrants if they separate from the company or one of our subsidiaries under circumstances where they are considered as "good-leavers","good-leavers," such as dismissal without cause, leaving us pursuant to an agreed severance agreement or retirement, warrant holder's resignation due to our material breach of contract or the warrant holder's death. Warrants granted to Britt Meelby Jensen are, however, subject to leaver provisions, which deviate from the principles of the Danish Stock Option Act (Aktieoptionsloven).

        Reference is made to Note 6 'Information on staff and remuneration' to the consolidated financial statements on pages 67 –7465-73 in our Annual Report 2018.2019.

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ITEM 7    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.    MAJOR SHAREHOLDERS

        As of November 2, 2010, we had one class of shares (prior to this date we had multiple classes of shares). As of December 31, 2018March 9, 2020, our registered, issued and outstanding share capital was DKK 30,786,82736,054,661 distributed into 30,786,82736,054,661 shares of nominal value DKK 1 each.

        Below is information as of March 7, 20199, 2020 with respect to (a) any shareholder who is known to the Company to be the owner of more than 5% of the Company's shares and (b) the total amount of any class owned by Zealand Pharma A/S and its affiliates (treasury shares) and by the Board of Directors and Executive Management as a group:

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        As of December 31, 2018,March 9, 2020, approximately 45%33.7% of our share capital was held in Denmark and approximately 22%19.7% of itsour share capital was held in North America. The total number of shareholders is more than 16,00015,100 of whom more than 85%96.8% are estimated to be Danish residents and 0.5%0.6% are estimated to be resident in the United States.

        Since August 9, 2017, which is the date that ADSs representing our ordinary shares were first listed on The Nasdaq Global Select Market, there has been no significant change in the percentage ownership held by any major shareholder except as described below:

•

As of September 5, 2019, the holdings of Van Herk Investments B.V. (Dutch registration no. 59055057) increased nominally from DKK 1,962,535 shares, corresponding to approximately 6.4% of the total share capital and total voting rights of Zealand Pharma A/S at such time, to DKK 6,714,730 shares, corresponding to approximately 18.8% of the total share capital and total voting rights of Zealand Pharma A/S at such time.

        No shareholders of the Company have different voting rights from any other shareholder.

        For further information reference is made to 'Shareholder information' on pages 44-4543-44 in our Annual Report 2018.2019.

B.    RELATED PARTY TRANSACTIONS

        We have no related parties with controlling interest.

        Our other related parties comprise of the Company's Board of Directors and Corporate Management.

        For further information reference is made to Note 2427 'Related parties' to the consolidated financial statements on page 86 in our Annual Report 2018.2019.

        There have not been and there are no loans to members of the Board of Directors or Corporate Management in 2019, 2018 2017 or 2016.2017.

C.    INTERESTS OF EXPERTS AND COUNSEL

        Not applicable.

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ITEM 8    FINANCIAL INFORMATION

A.    CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

        The consolidated financial statements required by this item accompany this annual reportAnnual Report on Form 20-F in the form of our Annual Report 20182019 (see Exhibit no. 15.1).

Legal proceedings

        There are no material legal proceedings at December 31, 20182019 or December 31, 2017.2018.

Dividends

        We have never declared or paid any cash dividends on our shares and we do not anticipate paying any cash dividends on our shares in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion of our business. Any future determination related to our dividend policy and the declaration of any dividends will be made at the discretion of our boardBoard of directorsDirectors and will depend on a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors our boardBoard of directorsDirectors deems relevant.

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        In accordance with the Danish Companies Act ("DCA") ordinary dividends, if any, are declared with respect to a financial year at the annual general meeting of shareholders in the following year, where the statutory annual report (which includes the audited financial statements) for that financial year is approved. Further, our shareholders may resolve at a general meeting to distribute interimextraordinary dividends and our shareholders may also at a general meeting grant our Board of Directors may, pursuant to an authorization that will be granted to it by our shareholders prior to completion of this offering, resolve to distribute interimextraordinary dividends. Any resolution to distribute interimextraordinary dividends within six months of the date of the statement of financial position as set out in our latest adopted annual report must be accompanied by the statement of financial position from our latest annual report or an interim statement of financial position which must be reviewed by our auditor. If the decision to distribute interimextraordinary dividends is passed more than six months after the date of the statement of financial position as set out in our latest adopted annual report, an interim statement of financial position must be prepared and reviewed by our auditor. The statement of financial position or the interim statement of financial position, as applicable, must show that sufficient funds are available for distribution. Dividends may not exceedOur general meeting of shareholders cannot resolve to distribute dividends at an amount exceeding the amount recommended or approved by the boardour Board of directors for approval by the general meeting of shareholders.Directors. Moreover, ordinary dividends and interimextraordinary dividends may only be made out of distributable reserves and may not exceed what is considered sound and adequate with regard to our financial condition or be to the detriment of our creditors and such other factors as the board of directors may deem relevant.creditors.

        In accordance with the DCA, share buybacks, if any, may only be carried out by the board of directors using funds that could have been distributed as dividends at the latest annual general meeting of shareholders. Any share buyback must generally only be conducted in accordance with an authorization obtained at a general meeting of our shareholders. The authorization must be granted for a defined period of time not exceeding five years. In addition, the authorization must specify the maximum permitted value of treasury shares as well as the minimum and maximum amount that we may pay as consideration for such shares. A decision by our boardBoard of directorsDirectors to engage in share buybacks, if any, will be made in accordance with the factors applicable to dividend payments set forth above.

        For further information reference is made to 'Shareholder information', on pages 44-4543-44 in our Annual Report 2018.2019.

B.    SIGNIFICANT CHANGES

        On February 10, 2020, we announced a bid to acquire substantially all assets from Valeritas for a total cash consideration of $23 million and the assumption of certain liabilities related to the ongoing business (including up to approximately $13.3 million related to open purchase orders, license payments and cure costs relating to prepetition contracts that will be assumed by Valeritas under the U.S. Bankruptcy Code upon exiting Chapter 11 proceedings), pursuant to the terms of the "stalking horse" asset purchase agreement entered into with Valeritas.

No other significant events have occurred since December 31, 2018.2019. Reference is made to Note 2730 'Significant events after the balance sheet date' to the consolidated financial statements on page 8786 in our Annual Report 2018.2019.

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ITEM 9    THE OFFER AND LISTING

A.    OFFER AND LISTING DETAILS

        The table below sets forth for the calendar periods indicated,Company's shares are listed in the first two columns, high and low prices for the shares as reported by theDenmark on Nasdaq Copenhagen, and intraded under the third and fourth columns, high and low ADS prices as reported bysymbol "ZEAL." The Company's ADRs are traded on the NASDAQNasdaq Global Select Market sinceunder the symbol "ZEAL."

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        See Exhibit 2.1 to this Annual Report on Form 20-F for a description of the Company's listing in August 2017.

ordinary shares. Reference is also made to 'Shareholder information' on pages 44-4543-44 in our Annual Report 2018.2019.

B.    PLAN OF DISTRIBUTION

        Not applicable.

C.    MARKETS

        The shares have been publicly traded since 2010 and have been listed on Nasdaq Copenhagen since that time.

        ADSs representing the shares, as evidenced by American Depository Shares issued by The Bank of New York Mellon, as the Depository, have been listed on the NASDAQNasdaq Global Select Market since August 2017.

D.    SELLING SHAREHOLDERS

        Not applicable.

E.    DILUTION

        Not applicable.

F.     EXPENSES OF THE ISSUE

        Not applicable.

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ITEM 10    ADDITIONAL INFORMATION

A.    SHARE CAPITAL

        Not applicable.

B.    MEMORANDUM AND ARTICLES OF ASSOCIATION

        This section summarizes certain material provisions of our Articles of Association, certain other constitutive documents and relevant Danish corporate law.

General

        We are a public limited liability company organized under the laws of Denmark and registered with the Danish Business Authority under CVR number 20045078. We have been established with the objective of engaging in research, manufacture trade and related activities primarily within the pharmaceutical industry. Our objectives are set out in Article 2 of our Articles of Association.

Powers of the Board of Directors

        Unless otherwise directed by the Board of Directors all members of the Board of Directors have equal voting rights, and all resolutions are passed by a simple majority of votes. In the event of a tie, the Chairman, and in his/her absence the Deputy Chairman, shall have the casting vote. The Board of Directors forms a quorum when at least a majority of its members is present.

        According to the Danish Companies Act, no member of the Board of Directors or the Executive Management may take part in the consideration of any business involving agreements between any member of the groupGroup and himself, legal actions brought against himself, or any business involving

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agreements between any member of the Group and any third party or legal actions brought against any third party, if he has a major interest therein that might conflict with our interests.

        The Danish Companies Act prohibits us fromsets specific requirements for granting loans or providing securitiessecurity to any member of the Board of Directors and anyone particularly close to such a member of the Board of Directors.

        Under our Articles of Association, no person can be elected to the board having reached the age of 70. Further a Board Member shall retire at the end of the first annual general meeting held after the relevant Board Member reaches the age of 70.Directors

        The remuneration of the Board of Directors must be approved by our shareholders at the Annual General Meeting.

Rights, restrictions and preferences attaching to the shares

        No share carries any special rights. Each share confers the right to cast one vote at the general meeting of shareholders, unless the articlesArticles of associationAssociation provide otherwise. Each holder of shares may cast as many votes as it holds shares. Voting instructions may be given only in respect of a number of ADSs representing an integral number of shares or other deposited securities. Shares that are held by the company or direct or indirect subsidiaries do not confer the right to vote.

        ADS holders may only exercise voting rights with respect to the shares underlying their respective ADSs. In accordance with the provisions of the deposit agreement, which provides that a holder may vote the shares underlying any ADSs for any particular matter to be voted on by our shareholders either by withdrawing the shares underlying the ADSs or, to the extent permitted by applicable law and as permitted by the depositary, by requesting temporary registration as shareholder and authorizing the depositary to act as proxy. The depositary will try, as far as practical, to vote the shares underlying the ADSs as instructed by the ADS holders.

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Changes to Shareholders' rights

        Any change to the rights of the shareholders would require an amendment to the Articles of Association.

        Where we elect to pay a Dividenddividend these are accrued to the company where they have not been claimed after 3 years.

General Meetings

        General Meetings of the company are held in the greater Copenhagen area and must be held not later than four months from the closing of the financial year. Notice of the date of Annual General Meeting shall be sent to shareholders not later than eight weeks before the date of that meeting together with a date by which any shareholders wishing to have any specific item included on the agenda of the meeting should submit that item. Our general meetings of our shareholders are convened with a maximum notice of five weeks and a minimum notice of three weeks.

Ownership restrictions

        There are no limitations on the rights of non-resident or foreign owners to hold or vote the shares imposed by the laws of Denmark, our Articles of Association, or any other of its constituentour constitutive documents.

Change of control

        There is no provision in the Articles of Association, nor any other constituent document, that would have an effect of delaying, deferring or preventing a change in control of Zealand Pharma A/S and that would operate only with respect to a merger, acquisition or corporate restructuring involving the company (or any of its subsidiaries).

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Ownership disclosure