20-F/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F/A

☐

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

OR

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from         to          

OR

☐

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report
Commission File Number 001-38178

ZEALAND PHARMA A/S

(Exact name of registrant as specified in its charter and translation of registrant’s name into English)

The Kingdom of Denmark

(Jurisdiction of incorporation or organization)

Sydmarken 11,
2860 Søborg
(Copenhagen)
Denmark
(Address of principal executive offices)

Emmanuel Dulac
President and Chief Executive Officer
Zealand Pharma A/S
Sydmarken 11 2860
Søborg (Copenhagen)
Denmark
Tel: +45 88 77 36 00
Fax: +45 88 77 38 98

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
American Depositary Shares, each representing one ordinary share, DKK 1 nominal value per share Ordinary shares, DKK 1 nominal value per share*	ZEAL	The Nasdaq Global Select Market The Nasdaq Global Select Market*

*

Not for trading, but only in connection with the registration of the American Depositary Shares. Securities registered or to be registered pursuant to Section 12(g) of the Act. None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

39,799,706 Ordinary Shares​

1,742,842 American Depositary Shares​

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒ No ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.  Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b of the Exchange Act. (Check one):

Large accelerated filer   ☒ Accelerated filer   ☐ Non-accelerated filer   ☐ Emerging growth company   ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards†† provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

☐   US GAAP ☒
International Financial Reporting Standards as issued by the International Accounting Standards Board ​ ☐   Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow ☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐ No ☒

†

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

EXPLANATORY NOTE

This Amendment No. 1 to Form 20-F (the “Form 20-F/A”) amends our annual report on Form 20-F for the fiscal year ended December 31, 2020, which was originally filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 18, 2021 (the “Form 20-F”). The purpose of this Form 20-F/A is to amend the Form 20-F to update Exhibit 12.1 dated 17 March 2021 with one correctly dated 18 March 2021; update Exhibit 12.2 dated 17 March 2021 with one correctly dated 18 March 2021, update Exhibit 13.1 dated 17 March 2021 with one correctly dated 18 March 2021, update Exhibit 13.2 dated 17 March 2021 with one correctly dated 18 March 2021, update Exhibit 23.1 dated 17 March 2021 with one correctly dated 18 March 2021, update Exhibit 23.2 dated 17 March 2021 with one correctly dated 18 March 2021 and update Exhibit 16.1 dated 17 March 2021 with one correctly dated 18 March 2021.

TABLE OF CONTENTS

​	Page
INTRODUCTION	​	1
PART I	​	4
ITEM 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS	​	4
ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE	​	4
ITEM 3 KEY INFORMATION	​	4
ITEM 4 INFORMATION ON THE COMPANY	​	36
ITEM 4A UNRESOLVED STAFF COMMENTS	​	54
ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS	​	55
ITEM 6 DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES	​	57
ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	​	59
ITEM 8 FINANCIAL INFORMATION	​	59
ITEM 9 THE OFFER AND LISTING	​	61
ITEM 10 ADDITIONAL INFORMATION	​	62
ITEM 11 QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS	​	69
ITEM 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	​	69
ITEM 12A DEBT SECURITIES	​	69
ITEM 12B WARRANTS AND RIGHTS	​	69
ITEM 12C OTHER SECURITIES	​	69
ITEM 12D AMERICAN DEPOSITARY SHARES	​	69
PART II	​	71
ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	​	71
ITEM 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	​	71
ITEM 15 CONTROLS AND PROCEDURES	​	71
ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERTS	​	73
ITEM 16B CODE OF ETHICS	​	73
ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES	​	73
ITEM 16D EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	​	73
ITEM 16E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED	​	73
ITEM 16F CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	​	73
ITEM 16G CORPORATE GOVERNANCE	​	74
ITEM 16H MINE SAFETY DISCLOSURE	​	75
PART III	​	76
ITEM 17 FINANCIAL STATEMENTS	​	76
ITEM 18 FINANCIAL STATEMENTS	​	76
ITEM 19 EXHIBITS	​	76
SIGNATURES	​	79
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	​	80

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INTRODUCTION

In this Annual Report on Form 20-F the terms the “Company”, “Zealand Pharma”, “Zealand” and the “Group” refer to the parent company Zealand Pharma A/S together with its consolidated subsidiaries. The term “Zealand Pharma A/S” is used when addressing issues specifically related to this legal entity.

Pursuant to Rule 12b-23 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we incorporate information for certain items of this Annual Report on Form 20-F by reference to certain pages of the Zealand Pharma A/S statutory Annual Report 2020 (the “Annual Report 2020”) included as Exhibit 99.1(a) to Form 6-K furnished to the SEC on March 12, 2021 and statutory Annual Report 2019 (the “Annual Report 2019”) included as Exhibit 99.1(a) to Form 6-K furnished to the SEC on March 12, 2020. Therefore, the information in this Annual Report on Form 20-F should be read in conjunction with the Annual Report 2020 and the Annual Report 2019.

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 20-F contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology.

These forward-looking statements include, but are not limited to, statements about:

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our projections regarding the potential market size and the size of the patient populations for our product candidates, if approved, for commercial use;

•

our expectations regarding the potential advantages or benefits of our product candidates over existing therapies;

•

our development plans with respect to our product candidates;

•

our ability to develop, acquire and advance product candidates into, and successfully complete, clinical trials;

•

the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs;

•

Our ability to recruit and obtain consent from subjects for our clinical trials and for those subjects to stay in the trial for the duration of the study

•

the timing or likelihood of regulatory filings and approvals for our product candidates;

•

the implementation of our business model and strategic plans for our business, product candidates and technology;

•

the success of our license collaborations and the success of our partners in advancing those candidates to market, if approved;

•

the uncertainties associated with our integration of substantially all assets and employees of Valeritas Inc. and our ability to obtain the anticipated benefits and costs savings therefrom;

•

Uncertainties associated with the change in the US administration as a result of the 2020 US Presidential Election and any consequential change in administration healthcare policy;

•

the continued uncertainties associated with the United Kingdom’s exit from the European Union, or the EU, on January 31, 2020; and

•

estimates of our expenses, future revenue, capital requirements, our needs for additional financing and our ability to obtain additional capital.

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With reference to our Annual Report 2020 and Annual Report 2019, examples of forward-looking statements can be found under the headings ‘2021 Outlook and Objectives’ in our Annual Report 2020 and ‘2020 Outlook and Objectives’ in our Annual Report 2019, and elsewhere.

The forward-looking statements contained or incorporated by reference herein involve a number of known and unknown risks and uncertainties that could cause our future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements.

You should understand that many important factors, in addition to those discussed or incorporated by reference herein, could cause our results to differ materially from those expressed in the forward-looking statements. Potential factors that could affect our results include, in addition to others not described in this report, those described under “Item 3-Key Information — D. Risk Factors.” These are factors that we think could cause our actual results to differ materially from expected results.

Forward looking statements speak only as of the date on which they are made, and we undertake no obligation to update any forward-looking statements or other information contained in this report, whether as a result of new information, future events or otherwise. You are advised, however, to consult any additional disclosures we make in our reports on Form 6-K filed with the U.S. Securities and Exchange Commission (the “SEC”). Please also see the cautionary discussion of risks and uncertainties under “Item 3 — Key Information — D. Risk Factors”. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

The consolidated financial statements contained in this Annual Report on Form 20-F have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB.

We maintain our books and records in Danish kroner (DKK) and report under IFRS as issued by the IASB. Our consolidated financial statements are not prepared in accordance with accounting principles generally accepted in the United States. We use the symbol “$” to refer to U.S. Dollars and the symbol “€” to refer to Euros herein.

This Annual Report on Form 20-F includes trademarks, tradenames and service marks, certain of which belong to us and others that are the property of other organizations. Solely for convenience, trademarks and tradenames referred to in this Annual Report on Form 20-F appear without the ® and ™ symbols where that is appropriate, but the absence of those references is not intended to indicate, in any way, that we will not assert our rights or that the applicable owner will not assert its rights to these trademarks and tradenames to the fullest extent under applicable law.

Unless otherwise indicated, information contained in this Annual Report on Form 20-F concerning our industry and the markets in which we operate, including our general expectations, market position, market opportunity and market share, is based on information from our own management estimates and research, as well as from industry and general publications, research, surveys and studies conducted by third parties. Management estimates are derived from publicly available information, our knowledge of our industry and assumptions based on such information and knowledge, which we believe to be reasonable. In addition, assumptions and estimates of our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Item 3 — Key Information — D. Risk Factors”. These, and other factors, could cause our future performance to differ materially from our assumptions and estimates. See “Forward-Looking Statements” above.

Enforceability of civil liabilities

The Company is a Danish corporation and many of its directors and officers, are non-residents of the United States. A considerable portion of the assets of Zealand Pharma A/S, its subsidiaries and such persons are located outside the United States. As a result, it may be difficult for shareholders of the Company to effect service within the United States upon directors, officers and experts who are not residents of the United States or to enforce judgments in the United States. In addition, there can be no assurance as to the

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enforceability in Denmark against the Company or its respective directors, officers and experts who are not residents of the United States, or in actions for enforcement of judgments of United States courts, of liabilities predicated solely upon the federal securities laws of the United States.

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PART I

ITEM 1

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not applicable.

ITEM 2

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3

KEY INFORMATION

A.

SELECTED FINANCIAL DATA

The following tables present selected consolidated financial data for our business for the periods indicated. We derived the selected consolidated income statement and balance sheet data as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019, and 2018 from our audited consolidated financial statements, incorporated by reference from our Annual Report 2020 on pages 62-64. We derived the selected consolidated income statement and balance sheet data as of December 31, 2018, 2017 and 2016 and for the years ended December 31, 2017 and 2016 from our audited consolidated financial statements not included or incorporated by reference herein with the exception for amounts that have been restated in accordance with footnote 1 below. You should read this data in conjunction with our consolidated financial statements and related notes appearing on pages 62-99 in our Annual Report 2020. Our historical results are not necessarily indicative of our future results.

The selected financial statements represent the consolidated financial statements of Zealand Pharma A/S and its subsidiaries.

Selected financial data

IFRS figures in DKK thousand, except per share numbers and number of shares	2020		2019		Restated(1) 2018		Restated(1) 2017		Restated(1) 2016
Income statement data	​	​	​	​	​	​	​	​	​	​
Revenue	​	353,314	​	41,333	​	37,977	​	136,322	​	230,864
Operating result	​	–792,361	​	–587,942	​	652,385	​	–248,526	​	–110,271
Result before tax	​	–839,653	​	–576,677	​	625,051	​	–279,913	​	–154,035
Net result for the year	​	–846,729	​	–571,541	​	581,278	​	–274,413	​	–148,535
Earnings/loss per share data	​	​	​	​	​	​	​	​	​	​
Earnings/loss per share – basic (DKK)	​	–22.07	​	–16.91	​	18.94	​	–9.85	​	–6.11
Earnings/loss per share – diluted (DKK)	​	–22.07	​	–16.91	​	18.94	​	–9.85	​	–6.11
Statement of financial position data	​	​	​	​	​	​	​	​	​	​
Total assets	​	1,761,949	​	1,599,514	​	1,229,797	​	721,285	​	683,116
Equity (net assets)	​	1,229,311	​	1,242,673	​	1,116,281	​	514,669	​	267,381
Share capital (000 shares)	​	39,800	​	36,055	​	30,787	​	30,751	​	26,142
Treasury shares (000 shares)	​	64	​	64	​	64	​	564	​	564
Dividends per share	​	0.00	​	0.00	​	0.00	​	0.00	​	0.00
Number of shares	​	39,799,706	​	36,054,661	​	30,786,827	​	30,751,327	​	26,142,365

(1)

Reference is made to Note 1 ‘Significant accounting policies, and significant accounting estimates and assessments’ on pages 54-60 and the ‘Consolidated financial statements’ on pages 50-52 in our Annual Report 2019 for further data.

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B.

CAPITALIZATION AND INDEBTEDNESS

Not applicable.

C.

REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

D.

RISK FACTORS

Risks Related to Our Business

We have incurred net losses in recent periods and may continue to do so.

We recognized net losses of DKK 846.7 million in 2020 and DKK 571.5 million in 2019 and DKK 274.4 million in 2017. Although we made a net profit of DKK 581.3 million in 2018, this profit was primarily a result of the sale of future royalties and milestones from our Sanofi license agreement and may not necessarily be indicative of future periods. Our ongoing source of revenue is limited to the product revenue generated from sales of V-Go wearable insulin delivery device and certain development milestone payments under our other existing collaborations. Our losses have primarily been the result of our internal and external expenditures for conducting preclinical studies and clinical trials in respect of our internal product portfolio, pre-commercialization efforts for our late-stage clinical pipeline, as well as commercial support for V-Go. Our ability to generate revenue from our internal product portfolio depends on our ability to successfully develop and commercialize our product candidates and to obtain the regulatory and marketing approvals necessary to commercialize one or more of our product candidates. Similarly, our ability to generate profits in the future depend on our ability in the US organization to penetrate and commercialize our products in the US market at proper price points and tight cost control in the organization.

Our ability and our collaboration partners’ ability to generate future revenue from product sales or pursuant to milestone payments depend heavily on many factors, including, but not limited to:

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completing research activities and preclinical and clinical development of our out-licensed and internal product candidates;

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on our own, or together with our strategic collaboration partners, obtaining regulatory approvals for our product candidates;

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negotiating favorable terms of and entering further collaboration, licensing or other arrangements;

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the ability of our collaboration partners to, obtain the proper regulatory approval and then successfully commercialize or our ability to commercialize or co-promote our product candidates.

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obtaining market access and market acceptance of our product candidates, if approved;

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obtain sales of our products in markets where there are established competing products or therapies

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Maintain or grow sales of our collaboration products in the face of competition from established rival products or new products that enter the market after us that may offer advantages over ours;

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addressing any competing technological or market developments.

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identifying, assessing, acquiring, in-licensing or developing new product candidates;

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maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how, and our ability to develop, manufacture and commercialize our product candidates and products without infringing the intellectual property rights of others; and

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the ability of our US sales force to market the Vgo product and to use its skills to market future product launches

•

attracting, hiring, and retaining qualified personnel.

In cases where we, or our collaboration partners, are successful in obtaining regulatory approvals to market one or more of our product candidates, our revenue will be dependent, in part, upon the size of the

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markets in the territories for which regulatory approval is granted, the price or prices at which we or our collaboration partners are able to sell such products and our ability to again acceptance for or get paid or reimbursed for such products. If the number of individuals suitable for our product candidates is not as significant as we estimate, the indications approved by regulatory authorities are narrower than we expect, or the reasonably accepted population for treatment is narrowed by competition, physician choice or applicable guidelines, we may not generate significant revenue from the sale of such products, even if approved. Our failure to generate revenue from sales of one or more of our product candidates or pursuant to license or milestone payments or if the level of revenue generated therefrom is lower than our or the market’s expectations, could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

We expect our expenses to continue to increase and that we will continue to incur losses as we further develop our internal product portfolio. We anticipate that our expenses and losses will increase substantially if and as we:

•

continue the preclinical and clinical development of our internal product candidates;

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Expand or review the scope of or otherwise decide to repeat or materially modify our current clinical trials for our internal product candidates;

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begin new clinical trials for our internal product candidates;

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develop our commercial manufacturing capabilities and infrastructure for our internal product candidates;

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seek regulatory and marketing approvals for any internal product candidates that successfully complete clinical trials;

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Utilize and expand our sales, marketing and distribution infrastructure for our commercial programs as well as to support pre-commercialization for any of our products on the market (for instance Vgo) and products for which we may obtain marketing approval and for which we have not entered into a commercialization collaboration with a third party.

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seek to identify and validate additional product candidates;

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acquire or in-license product candidates and technologies;

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maintain, protect and expand our intellectual property portfolio;

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attract new and retain existing skilled personnel; and

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create additional infrastructure to support our operations.

Any net losses we incur may fluctuate significantly from year to year, such that a year-to-year comparison of our results of operations may not be a good indication of our future performance. In any period or periods, our operating results could be below the expectations of securities analysts or investors, which could cause the price of our American Depository Shares, or ADSs, and the price of our ordinary shares to decline.

The regulatory approval processes of the FDA, the EMA and other comparable regulatory authorities are lengthy, time consuming and inherently unpredictable, and if we or our collaboration partners are ultimately unable to obtain regulatory approval for our internal or out-licensed product candidates, our business could be substantially harmed.

The time required to obtain approval by the U.S. Food and Drug Administration, or the FDA, the European Medicines Agency, or the EMA and other comparable regulatory authorities is unpredictable, but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and varies among jurisdictions. We have not obtained regulatory approval in the United States for any product candidate for which we retain full development, commercialization and marketing control, and it is possible that none of our existing product candidates or any product candidates that we may seek to develop in the future will ever obtain regulatory approval.

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Although our NDA for dasiglucagon auto-injector and prefilled syringe for hypoclycemia under review by the FDA and has a PDUFA goal date of March 27, 2021, there is no assurance that FDA will approve the NDA or be able to meet its PDUFA goal date due to the ongoing impact of the global COVID-19 pandemic.

Our product candidates could fail to receive regulatory approval for many reasons, including, but not limited to, the following:

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the FDA, the EMA or other comparable regulatory authorities may disagree with the design or implementation of our clinical trials;

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we or our collaboration partners may be unable to demonstrate to the satisfaction of the FDA, the EMA or other comparable regulatory authorities that a product candidate is safe and effective for its proposed indications;

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we or our collaboration partners may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;

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the FDA, the EMA or other comparable regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials.

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the data collected from clinical trials of our product candidates may not be sufficient to support the submission of a new drug application, or NDA, the submission of a supplemental NDA or other submission or to obtain regulatory approval in the United States, Europe or elsewhere;

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the FDA or the EMA may be unable to inspect our manufacturing facilities due to restrictions on international travel and may not have sufficient staff to timely review our applications due to the ongoing COVID-19 pandemic;

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the FDA, the EMA or any other comparable regulatory authority may fail to approve the labeled conditions for use that we or our collaboration partners propose for a product candidate;

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The FDA the EMA or other comparable regulatory authorities may require restrictions on the label for the product, may restrict the patient population that the product can be offered to or may restrict the shelf life or other storage or transportation conditions in a way that means it is less attractive to patients.

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the FDA, the EMA or other comparable regulatory authorities may fail to approve the manufacturing processes or facilities of any third party manufacturers with which we may contract for clinical and commercial supplies or such processes or facilities may not pass a preapproval inspection; and

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the approval policies or regulations of the FDA, the EMA or other comparable regulatory authorities may change or differ significantly from one another in a manner rendering our clinical data insufficient for approval.

This lengthy approval process, as well as the unpredictability of ongoing clinical trial results, may result in our or our collaboration partners’ failure to obtain regulatory approval to market our product candidates, which would harm our business, financial position, results of operations and future growth prospects significantly. In addition, even if we or our collaboration partners were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than requested, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. They may also restrict the product in other ways that include the population that can be offered the product, its shelf life, the conditions its must be stored in that may make the product less attractive or more difficult to use. In certain jurisdictions, regulatory authorities may not approve the price we or our collaboration partners intend to charge for our products or may take the view that an analysis of the cost of the product versus its benefit is not favorable enough to warrant recommending its use. Any of the foregoing scenarios could materially harm the commercial prospects of our product candidates.

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For certain marketed products, product candidates and clinical development programs, we depend on collaboration partners to develop and conduct clinical trials with, obtain regulatory approvals for, and market and sell our product candidates. If such collaboration partners fail to perform as expected the potential for us to generate future revenue from such product candidates would be significantly reduced and our business would be significantly harmed.

For certain marketed products, product candidates and clinical development programs, we do, and may in the future continue to, rely on our collaboration partners to develop, conduct clinical trials of, and commercialize our product candidates and approved products. We have existing collaborations with Alexion Pharmaceuticals, Inc., or Alexion, Beta Bionics Inc., or Beta Bionics, and Boehringer Ingelheim GmbH, or Boehringer Ingelheim. We may also enter into collaboration agreements with other parties in the future relating to product candidates. Ultimately, if such out-licensed product candidates are advanced through clinical trials and receive marketing approval from the EMA, the FDA, or similar regulatory authorities, certain of our collaboration partners will be responsible for commercialization of these out-licensed products. The potential for us to obtain future development milestone payments and, ultimately, generate revenue from royalties on sales of such out-licensed products depends on the successful development, regulatory approval, marketing and commercialization by our collaboration partners. If our collaboration partners do not perform in the manner we expect, fail to fulfill their responsibilities in a timely manner or at all, if the FDA, EMA or other similar regulatory authorities decline to grant a marketing authorization to them, or provide them with a restricted authorization, if our agreements with them terminate or if the quality or accuracy of the clinical data they obtain is compromised, the clinical development, regulatory approval and commercialization efforts related to our out-licensed product candidates could be delayed or terminated, and it could become necessary for us to assume the responsibility at our own expense for the clinical development of such product candidates. In that event, we would likely be required to limit the size and scope of efforts for the development and commercialization of such product candidate; we would likely be required to seek additional financing to fund further development or identify alternative strategic collaboration partners; our potential to generate future revenue from royalties and milestone payments from such product candidates would be significantly reduced or delayed; and it could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

Collaborations involving our out-licensed product candidates pose several risks, including the following:

•

collaboration partners have significant discretion in determining the efforts and resources that they will apply to these partnerships;

•

collaboration partners may not perform their obligations as expected or may perform them at a pace that we did not anticipate;

•

collaboration partners may not pursue development and commercialization of our out-licensed product candidates or may elect not to continue or renew development or commercialization programs, based on clinical trial results, changes in the collaboration partners’ strategic focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities;

•

collaboration partners may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

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collaboration partners may have or could independently develop, or develop with third parties, products that compete directly or indirectly with our out-licensed product candidates;

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Collaboration partners may be acquired or merged with other companies and as a result the priorities of the combined entity may change and led them to change or abandon our collaboration program;

•

disagreements with collaboration partners, including disagreements over proprietary rights, contract interpretation or the conduct of product research, development or commercialization programs, may cause delays or lead to termination of such programs, or require us to assume unplanned expenditures, responsibilities or liabilities with respect to product candidates we have out licensed, or may result in costly and time consuming litigation or arbitration (for instance our arbitration proceedings with Protagonist Therapeutics Inc with respect to our agreement with them)

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•

collaboration partners may infringe the intellectual property rights of third parties, which may result in costly and time consuming litigation or arbitration in which we may be involved, as a party or in support of our collaboration partners;

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collaboration partners with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products;

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collaboration partners with marketing and distribution rights may incur costs that have the effect of reducing the base on which royalties are calculated;

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collaboration partners may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and

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collaboration agreements may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.

In addition, certain collaboration agreements provide our collaboration partners with rights to terminate such agreements and licenses granted under such agreements under various conditions, which, if exercised, would adversely affect our product development efforts, could make it difficult for us to attract new collaboration partners and may adversely affect our reputation. Our collaboration partners may have the right to terminate their respective collaboration agreements with us. Any such termination of any agreement or any future agreement that we may enter with our collaboration partners could have a material adverse effect on our business, financial position and results of operations.

The timing and amount of any milestone and royalty payments we may receive under our agreements with our collaboration partners will depend on, among other things, the efforts, allocation of resources, and successful development and commercialization of our product candidates. We cannot be certain that any of the development and regulatory milestones will be achieved or that we will receive any future milestone payments of any kind under these agreements. In addition, in certain circumstances we may believe that we have achieved a particular milestone and the applicable collaboration partner may disagree with our belief. In that case, receipt of that milestone payment may be delayed or may never be received, which may require us to adjust our operating plans, seek resolution with the collaboration partner or resolve the matter in arbitration.

Pursuant to our Sale and Purchase Agreement with Royalty Pharma to sell and transfer the royalty streams from the Sanofi License Agreement, we have assigned our right to receive royalty revenue from the sales of Adlyxin/Lyxumia and/or Soliqua 100/33/ Suliqua, and except for certain development milestone payments under our other existing collaborations, we have no ongoing source of revenue.

In 2003, we entered into our global license agreement, or the Sanofi License Agreement, with Sanofi-Aventis Deutschland GmbH, or Sanofi GmbH, a wholly-owned subsidiary of Sanofi S.A., or Sanofi. The Sanofi License Agreement granted Sanofi the exclusive worldwide rights to develop, manufacture, commercialize and market lixisenatide, both as a stand-alone product and combination therapy. Historically, the majority of our revenue has been derived from milestone payments made by Sanofi, as well royalty payments received from Sanofi on sales of these products.

Lixisenatide is out-licensed to and marketed by Sanofi both as a stand-alone therapy under the brand names Adlyxin in the United States and Lyxumia in the EU and in various other jurisdictions, and as a combination therapy with Lantus, the brand name of insulin glargine developed by Sanofi, under the brand name Soliqua 100/33 in the United States, and in some European countries under the brand name Suliqua.

In September 2018 we, together with two of our wholly-owned subsidiaries, entered into a purchase and sale agreement, or the Royalty Pharma Agreement, with Royalty Pharma Investments ICAV, or Royalty Pharma, to sell and transfer 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, payable under the Sanofi License Agreement in consideration for an upfront one-time payment of $205 million. We and our subsidiaries also remain eligible to receive payments from Sanofi of up to $15 million that will be paid in two separate amounts $5m and $10m. We believe that the first of these will become due in 2021 and the second of these may become due in June 2022. These

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estimates based on projections of when the sales of lixisenatide will reach certain milestones. 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.

With the transfer to Royalty Pharma of all the royalties that we were due to earn under the Sanofi License Agreement, with the exception of the aforementioned payments of up to $15 million together with certain development milestone payments we may become entitled to under agreements with our other collaboration partners and potential future royalties should any products concerning those collaborations be approved. We currently have revenue from the sale of V-Go but are also reliant on our cash on hand and potential capital raising efforts to fund the development of our internal pipeline of product candidates. Additionally, we have agreed to pay some of our revenue in deferred payments or royalties to third parties, including but not limited to a portion of any future payments we receive in respect of lixisenatide under the Sanofi License Agreement.

Further, while we are no longer directly exposed to the level of any royalty or milestone payments from Sanofi during the term of the Royalty Pharma Agreement, we have certain administrative obligations toward Royalty Pharma which require that we must maintain the intellectual property on lixisenatide and pay the relevant renewals thereon in a timely manner. In addition to this, certain of our obligations to Sanofi under the Sanofi License Agreement will also continue.

A failure by us to comply with the terms of the agreements with Sanofi and/or Royalty Pharma may place us in breach of our contractual obligations with either party and expose us to liability for indemnification of either party and/or may result in arbitration and/or litigation against us. An adverse ruling in such litigation may lead, to an award of significant damages, loss of profits and/or award of attorney fees against us.

We may need to raise additional funding, which may not be available on acceptable terms, or at all, and failure to obtain this capital when needed may force us to delay, limit or terminate our product development efforts or other operations.

We are currently advancing most of our internal product candidates through clinical development and are conducting preclinical studies with respect to other programs. Developing product candidates is expensive, lengthy and risky, and we expect our Research and Development, or R&D, expenses to increase in connection with our ongoing activities, particularly as we seek to advance our internal product candidates toward commercialization or expand pipeline with additional early-stage development candidates.

As of December 31, 2020, our cash, cash equivalents and marketable securities were DKK 1,257.6 million. We expect that our existing cash and cash equivalents will be sufficient to fund our current operations for at least the next 12 months. However, our operating plans may change as a result of a variety of factors, and we may need to seek additional funds sooner than planned through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches. Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our shareholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of the ADSs to decline. The sale of additional equity or convertible securities could be dilutive to our shareholders. The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we are unable to obtain adequate financing, we may be required to delay, reduce or eliminate the number or scope of our projects and internal product candidates (including our preclinical studies and clinical trial programs). We could also be required to seek funds through arrangements with collaboration partners or at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or internal product candidates or otherwise agree to terms unfavorable to us. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or

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more of our research or development programs or the commercialization of any internal product candidate or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could impair our prospects.

We may not be successful in our efforts to use cash flows from our approved out-licensed products to expand our novel, internal target discovery platform to build a pipeline of product candidates.

A key element of our strategy is to use some of our cash flows from our portfolio of approved, out-licensed drug products to build a pipeline of novel internal product candidates and progress these product candidates through clinical development for the treatment of a variety of diseases. Although our R&D efforts to date have resulted in the development of out-licensed product candidates directed at various diseases, we may not be able to develop additional product candidates in a sufficient timeframe, if at all, to provide for the further development of our pipeline of internal product candidates. Additionally, with our entering into the Royalty Pharma Agreement in September 2018, we and two of our wholly-owned subsidiaries transferred all the royalties and $85 million of potential commercial milestones that we were due to earn from the Sanofi License Agreement in exchange for a one-time upfront payment of $205 million. Although we will be entitled to payments of $5 million and $10 million upon the achievement of certain milestones, we no longer have the right to receive ongoing royalties in respect of global net sales of Soliqua® 100/33/ Suliqua® and Lyxumia®/Adlyxin® from and after July 1, 2018. Our other ongoing collaborations with Alexion, Beta Bionics and Boehringer Ingelheim do not have any approved products, and other than milestone payments that may become due under our ongoing collaborations with Alexion and Boehringer Ingelheim upon the achievement of certain clinical milestones, we are not currently entitled to any royalty or other payments thereunder which could be used to help progress our internal pipeline of product candidates through clinical development. Our current internal product candidates are in late stages of clinical development and will require further clinical development and testing, and eventually regulatory approval, prior to commercialization. Even if we are successful in continuing to develop our out-licensed pipeline, the potential product candidates that we identify may not be suitable for clinical development, including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance. If we do not continue to successfully develop our out-licensed product candidates and if these out-licensed product candidates are not successfully commercialized by our collaboration partners, we will face difficulty in funding our internal pipeline of product candidates and in generally obtaining product revenue in future periods, which could result in significant harm to our financial position and adversely affect the price of the ADSs and our ordinary shares.

We expect our operating loss to increase in the near-term due to the acquisition of Valeritas.

The Valeritas business acquisition has contributed with net revenues of approximately DKK 161.3 million in net revenue and profit and loss of approximately DKK -278.8 million to the Group for the period ending December 31, 2020 since the acquisition on April 2, 2020.

If the acquisition had occurred on 1 January 2020, the consolidated pro forma revenue and operating result of Zealand Pharma Group for the period ended 31 December 2020 would have been approximately DKK 395.8 million and DKK -868.9 million, respectively.

Risks Related to Our Products and Product Candidates

The Food & Drug Administration may not approve our application for a New Drug Application.

Our pending application for the authorization of dasiglucagon single use syringe or an autoinjector for the treatment of severe hypoglycemia may not be approved or may be approved with a restricted indication. The NDA may not be granted on the date specified by the FDA. If the FDA is not satisfied with the data that supports our application for dasiglucagon single use syringe or an autoinjector for the treatment of severe hypoglycemia it may decline to grant us an NDA for this product. The FDA may require additional data on the safety or efficacy of the product before it will grant the authorization and therefore the launch of this product may be delayed. The FDA may decide to give a different indication from that we have applied for,

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may reduce the scope of the patients to whom it can be prescribed or imposed additional restrictions on its storage, transport or use that may reduce the scope of the patient population to whom the product can be prescribed.

We are dependent on the clinical success of our internal product candidates, including glepaglutide and dasiglucagon.

We are dependent on our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize our internal product candidates, including glepaglutide and dasiglucagon. Our internal product candidates will require additional R&D clinical development, management of clinical and manufacturing activities, regulatory approval in multiple jurisdictions (if regulatory approval can be obtained at all), securing sources of commercial manufacturing supply, building of, or partnering with, a commercial organization, substantial investment and significant marketing efforts before any revenue can be generated from product sales. We are not permitted to market or promote any of our product candidates in any jurisdiction before we receive regulatory approval from the FDA, the EMA or any other comparable regulatory authority in that jurisdiction, and we may never receive such regulatory approval for any of our product candidates in any particular jurisdiction or at all. We cannot assure you that our clinical trials for glepaglutide or dasiglucagon will be completed in a timely manner, or at all, or that we will be able to obtain approval from the FDA, EMA or any other comparable regulatory authority for any of our product candidates. We cannot be certain that we will advance any other product candidates that are part of our early non-clinical pipeline into clinical trials. If any of our advanced product candidates such as glepaglutide and dasiglucagon or any future product candidate is not approved and commercialized in any particular jurisdiction, we may not be able to generate any royalties or product revenue, as the case may be, for that product candidate at all or in such jurisdiction. Moreover, any delay or setback in the development of any product candidate could materially adversely affect our business and cause the price of the ADSs or our ordinary shares to fall.

Our product candidates will need to undergo clinical trials that are time consuming and expensive, the outcomes of which are unpredictable, and for which there is a high risk of failure. If clinical trials of our product candidates fail to satisfactorily demonstrate safety and efficacy to the FDA, the EMA and any other comparable regulatory authority, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development of these product candidates.

The FDA in the United States, the EMA in Europe, and any other comparable regulatory authorities in other jurisdictions must approve new product candidates before they can be marketed, promoted or sold in those territories. We must provide these regulatory authorities with data from preclinical studies and clinical trials that demonstrate that our product candidates are safe and effective for a specific indication before they can be approved for commercial distribution. We cannot be certain that our clinical trials for our product candidates will be successful or that any of our other internal or out-licensed product candidates will receive approval from the FDA, the EMA or any other comparable regulatory authority.

Preclinical studies and clinical trials are long, expensive and unpredictable processes that can be subject to extensive delays. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. It may take several years and require significant expenditures to complete the preclinical studies and clinical trials necessary to commercialize a product candidate, and delays or failure are inherently unpredictable and can occur at any stage. Interim results of clinical trials do not necessarily predict final results, and success in preclinical studies and early clinical trials does not ensure that later clinical trials will be successful. A number of companies in the pharmaceutical, biopharmaceutical and biotechnology industries have suffered significant setbacks in advanced clinical trials even after promising results in earlier trials, and we cannot be certain that we will not face similar setbacks. The design of a clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced or completed. Changing the design of a clinical trial can be expensive and time consuming. An unfavorable outcome in one or more trials would be a major setback for our product candidates and for us. An unfavorable outcome in one or more trials may require us to delay, reduce the scope of or eliminate one or more product development programs, which could have a material adverse effect on our business, financial position, results of operations and future growth

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prospects. An unfavorable or unclear outcome in any one of the clinical trials may require us to re-run the trial or redesign the trial at additional expense and delay.

In connection with clinical trials of our product candidates, we face a number of risks, including risks that:

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a product candidate is ineffective, inferior to existing approved products for the same indications, unacceptably toxic or has unacceptable side effects;

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patients may die or suffer other adverse effects for reasons that may or may not be related to the product candidate being tested;

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extension studies on long-term tolerance could invalidate the use of our product;

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the results may not be positive or may be unclear and may not confirm the positive results of earlier trials;

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the results may not meet the level of statistical significance required by the FDA, the EMA or other relevant regulatory agencies to establish the safety and efficacy of our product candidates for continued trial or marketing approval; and

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our collaboration partners or contract research organizations, or CROs, are unable or unwilling to perform under their contracts.

The results of preclinical studies do not necessarily predict clinical success, and larger and later-stage clinical trials may not produce the same results as earlier-stage clinical trials. Our and our collaboration partners’ clinical trials of our product candidates conducted to date have generated favorable safety and efficacy data. However, we may have different enrollment criteria in our future clinical trials. As a result, we may not observe a similarly favorable safety or efficacy profile as in our prior clinical trials. In addition, we cannot assure you that during the course of potential widespread use of any of our product candidates in future, we will not suffer setbacks in maintaining production quality or stability. In addition, clinical trials of potential products often reveal that it is not possible or practical to continue development efforts for these product candidates. If we do not successfully complete preclinical and clinical development, we will be unable to market and sell our product candidates and generate additional revenue. Even if we successfully complete clinical trials, those results are not necessarily predictive of results of additional trials that may be needed before marketing applications may be submitted to the FDA, the EMA or other regulatory authority, as applicable.

Two of our late stage clinical programs have been designated as orphan products. In the case of glepaglutide, its principal indication is intended for the treatment of short bowel syndrome and for dasiglucagon for the treatment of chronic hyperinsulinism, or CHI. Products that developed are for the treatment of orphan diseases receive additional assistance, faster processing and reduced application fees from regulatory authorities like the FDA, EMA or comparable authorities in other countries. In addition to these benefits, orphan indications may also receive additional exclusivity protections that are not awarded to non-orphan drugs and enable orphan drugs to be awarded additional market exclusivity. If we are unable to obtain orphan exclusivity protection for glepaglutide or for dasiglucagon or our other products we may be unable to prevent other companies from producing very similar products in the same therapeutic area or even competition from generic producers.

Furthermore, we sometimes estimate for planning purposes the timing of the accomplishment of various scientific, clinical, regulatory and other product development objectives. These milestones may include our expectations regarding the commencement or completion of scientific studies, clinical trials, the submission of regulatory filings or commercialization objectives. From time to time, we may publicly announce the expected timing of some of these milestones, such as the completion of an ongoing clinical trial, the initiation of other clinical programs, receipt of marketing approval or a commercial launch of a product. The achievement of many of these milestones may be outside of our control. All of these milestones are based on a variety of assumptions, which may cause the timing of achievement of the milestones to vary considerably from our estimates. If we, or our collaboration partners, fail to achieve any announced development milestones in the timeframes we expect, the commercialization of our product candidates may

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be delayed, we may not be entitled to receive certain contractual payments from our collaboration partners, and as a result this could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

We selectively rely on third parties to conduct our clinical trials and perform data collection and analysis, which may result in costs and delays that prevent us from successfully commercializing our product candidates.

We currently, and expect to continue to, selectively rely on public and private research institutions, medical institutions, clinical investigators, CROs, contract laboratories and collaboration partners to conduct some of our early-stage product development activities, perform data collection and analysis and carry out our clinical trials. Our development activities or clinical trials conducted in reliance on third parties may be delayed, suspended or terminated if:

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the third parties do not devote a sufficient amount of time or effort to our activities or otherwise fail to successfully carry out their contractual duties or to meet regulatory obligations or expected deadlines;

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we replace a third party; or

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the quality or accuracy of the data obtained by third parties is compromised due to their failure to adhere to clinical protocols, regulatory requirements, the contractual requirements or for other reasons.

We do not have the ability to control the performance of third parties in their conduct of development activities. Third party performance failures may increase our development costs, delay our ability to obtain regulatory approval and delay or prevent the commercialization of our product candidates. While we believe that there are alternative sources to provide these services, in the event that we seek such alternative sources, we may not be able to enter into replacement arrangements without incurring delays or additional costs.

We rely on third parties to manufacture our preclinical and clinical drug supplies and we intend to rely on third parties to produce commercial supplies of any approved product candidate.

If, for any reason, we were to experience an unexpected loss of supply of our product candidates or placebo or comparator drug used in certain of our clinical trials, whether as a result of manufacturing, supply or storage issues or otherwise, we could experience delays, disruptions, suspensions or terminations of, or be required to restart or repeat, any pending or ongoing clinical trials. We do not currently have, nor do we plan to acquire, the infrastructure or capability internally to manufacture our preclinical or clinical or commercial drug supplies and we lack the resources and the capability to manufacture any of our product candidates on a clinical or commercial scale. The facilities used by our contract manufacturers or other third party manufacturers to manufacture our product candidates are subject to the FDA’s, the EMA’s and other comparable regulatory authorities’ preapproval inspections that will be conducted after we submit our NDA to the FDA or the required approval documents to any other relevant regulatory authority. Due to the ongoing impact of the COVID-19 global pandemic, regulatory authority inspectors may not be able to travel to conduct necessary inspections, which may prevent or delay the approval of our applications. We do not control the implementation of the manufacturing process of, and are completely dependent on, our contract manufacturers or other third party manufacturers for compliance with the regulatory requirements, known as current good manufacturing practices, or cGMPs, for manufacture of both active drug substances and finished drug products. If our contract manufacturers or other third party manufacturers cannot successfully manufacture material that conforms to applicable specifications and the strict regulatory requirements of the FDA, the EMA or other comparable regulatory authority, we will not be able to secure and/or maintain regulatory approvals for our products manufactured at these facilities. In addition, we have little or no control over the ability of our contract manufacturers or other third party manufacturers to maintain adequate quality control and quality assurance procedures and qualified personnel. If the FDA, the EMA or another comparable regulatory authority finds deficiencies at these facilities for the manufacture of our product candidates or if it withdraws any approval because of deficiencies at these facilities in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved.

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We rely on our manufacturers to purchase from third party suppliers the materials necessary to produce our product candidates for our clinical trials. There are a limited number of suppliers for raw materials that we use to manufacture our drugs and there may be a need to assess alternate suppliers to prevent a possible disruption of the manufacture of the materials necessary to produce our product candidates for our clinical trials, and if approved, for commercial sale. We do not have any control over the process or timing of the acquisition of these raw materials by our manufacturers. Moreover, we currently do not have any agreements in place for the commercial production of these raw materials. Although we generally do not begin a clinical trial unless we believe we have access to a sufficient supply of a product candidate to complete the clinical trial, any significant delay in the supply of a product candidate, or the raw material components thereof, for an ongoing clinical trial due to the need to replace a contract manufacturer or other third party manufacturer could considerably delay completion of our clinical trials, product testing and potential regulatory approval of our product candidates. If our manufacturers or we are unable to purchase these raw materials after regulatory approval has been obtained for our product candidates, the commercial launch of our product candidates would be delayed or there would be a shortage in supply, which would impair our ability to generate revenue from the sale of our product candidates. Additionally, if we receive regulatory approval for our product candidates, we may experience unforeseen difficulties or challenges in the manufacture of our product candidates on a commercial scale compared to the manufacture for clinical purposes.

We face substantial competition from companies with considerably more resources and experience than we have, which may result in others discovering, developing, receiving approval for or commercializing products before or more successfully than us.

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. 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 have competitors in each of the disease fields in which we compete, many of which have substantially greater name recognition, commercial infrastructure and financial, technical and personnel resources than we have. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with larger and established companies. Significant competitive factors in our industry include product efficacy and safety, quality and breadth of an organization’s technology, skill of an organization’s employees and its ability to recruit and retain key employees, timing and scope of regulatory approvals, government reimbursement rates for, and the average selling price of, products, the availability of raw materials and qualified manufacturing capacity, manufacturing costs, intellectual property and patent rights and their protection and sales and marketing capabilities. While we believe that our product and product candidate platform, development expertise 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. There can be no assurance that our competitors will not deploy their superior resources to damage our and our drug candidates’ prospects. Given the intense competition in our industry, we cannot assure you that any of the products that we successfully develop will be clinically superior or scientifically preferable to products developed or introduced by our competitors.

In addition, significant delays in the development of our product candidates could allow our competitors to succeed in obtaining the FDA, the EMA or other regulatory approvals for their product candidates more rapidly than us, which could place us at a significant competitive disadvantage or deny us marketing exclusivity rights.

Competitors may develop novel products or other technologies that could make our product candidates obsolete or uneconomical. Any of our product candidates that competes with an approved product may need to demonstrate compelling advantages, such as increased efficacy, convenience, pricing, tolerability and/or safety in order to be commercially successful. As a result, the pricing of certain of our products and product candidates, if and when approved for marketing, will depend, in part, on the pricing strategies adopted by our competitors. Any of our product candidates that are approved could also face other competitive factors in the future, including biosimilar competition, which could force us to lower prices or could result in

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reduced sales. Any failure to compete effectively against our current and future competitors could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

In addition, many of our competitors have significantly greater financial resources and expertise in R&D, manufacturing, conducting preclinical studies and 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.

Certain of our peptide product candidates are expected to be delivered parenterally by medical devices that may be regulated as combination products that are required to obtain separate FDA clearance or pre-market approval and/or approval by other regulatory authorities.

Certain of our peptide product candidates are intended to be used in combination with a delivery device, such as an injector or other delivery system. Medical products containing a combination of new drugs, biological products or medical devices may be regulated as “combination products” in the United States and Europe. A combination product generally is defined as a product comprised of components from two or more regulatory categories (such as drug/device, device/biologic, drug/biologic). Each component of a combination product is subject to the requirements established by the FDA for that type of component, whether a new drug, biologic or device. In order to facilitate pre-market review of combination products, the FDA designates one of its centers to have primary jurisdiction for the pre-market review and regulation of the overall product based upon a determination by the FDA of the primary mode of action of the combination product. The determination whether a product is a combination product or two separate products is made by the FDA on a case-by-case basis. Our product candidates intended for use with such devices, or expanded indications that we may seek for our products used with such devices, may not be approved or may be substantially delayed in receiving approval if the devices do not gain and/or maintain their own regulatory approvals or clearances.

Where approval of the drug or biologic product and device is sought under a single application, the increased complexity of the review process may delay approval. The FDA review process and criteria are not a well-established area, which could also lead to delays in the approval process. The EMA has a parallel review process in place for combination products, the potential effects of which in terms of approval and timing could independently affect our ability to market our combination products in Europe. In addition, because these delivery devices are provided by unaffiliated third-party companies, we are dependent on the sustained cooperation and effort of those third-party companies both to obtain regulatory approval and to maintain their own regulatory compliance. Failure of third-party companies to assist in the approval process or to maintain their own regulatory compliance could delay or prevent approval of our product candidates, or limit our ability to sell a product once approved.

We have a sales function that was established as a result of our acquisition of the assets of Valeritas Inc. This sales function will need to adapt to the sale of products from the Zealand Pharma A/S pipeline as well as the sales of the V-Go® medical device.

The sales force that we have was acquired during the acquisition of the assets of Valeritas Inc. This sales force is trained and versed in the sale and promotion of the V-Go® medical device which is for the management of diabetes. This sales force will be tasked with the sales of our first fully owned product, Dasiglucagon for the emergency treatment of hypoglycemia from insulin overdose. This sales force will require restructure, retraining and education on the sales of a registered medical product rather than a medical device. This transition may be time-consuming or difficult and may require the readjustment of the sales force with fresh employees that are trained to promote a medicine rather than a medical device.

Risks Related to Our Operations

There is a risk that our products may have major side effects that may give rise to substantial liability claims.

As a biopharmaceutical company, we operate in a market that is subject to risk of liability. To our knowledge, we are not currently subject to any product liability suits. However, we may be subject to future

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liability claims alleging adverse effects from the use of our products in clinical trials or medical practice. Any liability claims could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

There is a risk that we may not be able to maintain insurance coverage, and that existing or any future insurance policies or our own resources will not sufficiently cover claims for damages that we may receive in the future.

Our business exposes us to potential product liability and other liability risks that are inherent in clinical development, manufacturing, marketing and use of human therapeutic products. It is generally necessary for us to secure certain levels of insurance as a condition for the conduct of clinical trials and any sale or use of our products. We have taken out product liability insurance with respect to all clinical trials and ongoing trials performed to date for which we were responsible (i.e., in respect of our internal product pipeline).

We may seek to expand our insurance coverage if we obtain marketing approval for any of our internal product candidates or if other risks related to our business increase. We may not be able to obtain or maintain adequate protection against potential liabilities at a cost that is acceptable to us. If we are unable to obtain insurance or other protection against potential product liability claims, we could be exposed to significant liabilities, which may materially and adversely affect our business and financial position. These liabilities could prevent or interfere with our product development and commercialization efforts. If we are sued for any injury caused by our products or processes, our liability could exceed our product liability insurance coverage and our own financial resources and, consequently, could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

Our future success depends on our ability to retain our management team and key employees.

We are highly dependent on the management, development, clinical, financial and business development expertise of our management team and key employees. Recruiting and retaining qualified scientific and clinical personnel will also be critical to our future success. The loss of the services of any of the members of our management team or key employees could impede the achievement of our development and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing any of the members of our management team or key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval for and commercialize drugs. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate the members of our management team or key employees on acceptable terms given the competition among numerous pharmaceutical, biopharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. If we are unable to continue to attract and retain high quality management and employees, our ability to pursue our growth strategy will be limited.

Our internal computer systems, or those of our collaboration partners or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs.

Our internal computer systems and those of our current and any future collaboration partners and other contractors or consultants are vulnerable to damage from cyber security breaches, malware attacks, ransomware attacks or other such computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we do not believe that we have experienced any such material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions. For example, the loss of clinical trial data for our product candidates from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications or other data or applications relating to our technology

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or product candidates, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities, our competitive position could be harmed and the further development and commercialization of our product candidates could be delayed.

Our operations as a global company subject us to various risks, and our failure to manage these risks could adversely affect our results of operations.

We face significant operational risks as a result of doing business internationally, such as:

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fluctuations in foreign currency exchange rates (in particular, U.S. dollars, Euros and Danish kroner);

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potentially adverse and/or unexpected tax consequences, including penalties due to the failure of tax planning or due to the challenge by tax authorities on the basis of transfer pricing and liabilities imposed from inconsistent enforcement;

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potential changes to the accounting standards, which may influence our financial situation and results;

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becoming subject to the different, complex and changing laws, regulations and court systems of multiple jurisdictions and compliance with a wide variety of foreign laws, treaties and regulations;

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reduced protection of, or significant difficulties in enforcing, intellectual property rights in certain countries;

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restrictions imposed by local labor practices and laws on our business and operations, including unilateral cancellation or modification of contracts;

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rapid changes in global government, economic and political policies and conditions, political or civil unrest or instability, terrorism, epidemics or pandemics (such as coronavirus), and other similar outbreaks or events, and potential failures in supply or demand for our products due to such changes or events or the fear that they may occur;

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global production, transportation and warehousing issues that may include delayed transit or damaged goods or parts and ingredients from our various supplier to the end users that may be beyond our control

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tariffs, trade protection measures, import or export licensing requirements, trade embargoes and other trade barriers.

Additionally, as a global company, we are subject to the Foreign Corrupt Practices Act, or the FCPA, which generally prohibits companies and their intermediaries from making or offering improper payments to non-U.S. officials for the purpose of obtaining or retaining business. The FCPA generally also requires companies listed on a U.S. stock exchange to maintain a system of adequate internal accounting controls and to make and keep books, records and accounts that accurately and fairly reflect transactions and dispositions of assets. Because of the predominance of government-sponsored health care systems around the world, many of our commercial relationships outside of the United States are with governmental entities, and personnel of such entities may be considered non-U.S. officials for purposes of the FCPA. Violations of the FCPA and other applicable anti-bribery laws are punishable by criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts as well as other remedial measures. We have adopted a written code of business conduct and other policies and procedures to assist us and our personnel in complying with the FCPA and other applicable anti-bribery laws prior to completion of the offering. However, our personnel and others acting on our behalf could take actions that violate these requirements.

If we were to experience any of the foregoing events, it could adversely affect our reputation, business, financial condition and results of operations.

Production and supply of product

We will need to arrange for supply for products (whether these be active ingredient, finished product, packaging material or associated devices) for products that are still in their development stage as well as

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products that are already on the market like V-Go. As we have no production capacity of our own, we are dependent on third party manufacturers and suppliers that are located in countries in the European Union and China. In addition, if our products become authorized for sale in any territory, we will need to establish a commercial supply chain for the supply of finished products to our customers. We rely on a limited number of third party manufactures of these products and on a small number of facilities to produce our products and manufacturing issues at the facilities of our third party service providers could cause product shortages, stop or delay commercialization of our products, disrupt or delay our clinical trials or regulatory approvals, and adversely affect our business.

The majority of our products and product candidates are peptides and the production of such peptide therapeutics that meet all product specification and regulatory requirements is complex. Even slight deviations at any point in the production process may lead to production failures, product recalls and regulatory actions. In addition, because the production process involves the use of materials of a biologic and chemical nature, the process can be affected by contaminants that could impact the end product. These manufacturing challenges are coupled with the fact that we have limited experience manufacturing commercial quantities of certain of our products (so we or our third party manufacturers may have limited previous experience resolving any issues in connection with the manufacture of certain of our products and any issues may take significant time to remediate or we may be unable to solve any manufacturing problems).

If our third party manufacturers (including those involved in drug substance, drug product, and finished product) and other suppliers fail to meet the highly technical requirements/specifications of manufacturing our peptide products and our strict quality and control specifications, we (or they) may be unable to manufacture or supply our products. We depend on our third-party manufacturers to perform effectively on a timely basis and to comply with regulatory requirements and meet our product specifications. For example, we rely on the Poly Peptide Group in Sweden for the production of many of our drug substances or SHL Medical in Switzerland for the production of syringes and on manufactures in China for the V-go medical device. Our failure or the failure of our third-party manufacturers to produce sufficient quantities of our products and product candidates or to meet our specifications and quality standards or those standards imposed by regulatory authorities could result in lost revenue, diminish our profitability, delay the development of our product candidates, delay regulatory approval, result in the rejection of our product candidates or result in supply shortages for our patients, which may lead to lawsuits, harm to our reputation or could accelerate introduction of competing products to the market.

We rely on a limited number of providers for our raw materials and supply chain services, which could result in our being unable to continue to successfully commercialize our products and our product candidates (if approved) and to advance our clinical pipeline. Certain of the raw materials required in the manufacture and the formulation of our products are derived from biological sources. Such raw materials are difficult to procure and may be subject to contamination or recall. Access to and supply of sufficient quantities of raw materials which meet the technical specifications for the production process can be challenging, and often limited to single-source suppliers. If a raw material manufacturer were unable to supply such materials, our business may be impacted because we rely on one or a limited number of such manufacturers for certain materials for our products. Finding an alternative supplier could take a significant amount of time and involve significant expense due to the nature of the products and the need to obtain regulatory approvals. The failure of these single-source suppliers to supply adequate quantities of raw materials for the production process in a timely manner, or at all, may impact our ability to produce sufficient quantities of our products for clinical or commercial requirements. A material shortage, delay, contamination, recall, or restriction on the use of certain biologically derived substances or any raw material used in the manufacture of our products could adversely impact or disrupt manufacturing and materially limit our ability to generate revenues.

We also depend on a very limited number of third-party providers for supply chain services with respect to our clinical and commercial product requirements, including product filling, finishing, packaging, labeling and logistics. Our third-party raw material providers and supply chain service providers operate as independent entities and we do not exercise control over any such third-party provider’s operations or their compliance with our internal or external specifications or the rules and regulations of regulatory agencies. Any contractual remedies we may have under agreements with these parties may not protect us from the harm suffered by our business or our patients if they fail to provide material or perform services that meet our specifications. Due to the highly specialized nature of the services performed by these third parties, particularly

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the supply of raw materials and other drug supply and drug product, as well as the delivery and supply chain operations regarding our products, we do not believe that we could quickly find replacement suppliers or service providers and, even if we were able to identify additional third parties, the terms of any such arrangement may not be favorable to us. In either of these cases, our revenue, results of operations, business and reputation may be harmed.

The success of our business may also depend on the security of our products while in the supply chain for delivery to patients, which, as noted above, is dependent on third-party providers. For example, if our products are not fully and adequately secured from unauthorized access by third parties, any of our products may be tampered with or contaminated. If our products were exposed to any tampering or contamination, or if they are not transported in accordance with the required specifications, our patients may be harmed through use of our products, and such harm may be severe. In addition, if the supply chain is not secure (or our distributors do not exercise control over our products while in their possession), we are also at risk for our products being diverted to patients other than those who are the intended recipient or to patients who do not have a prescription to receive our therapies (or it may be used for treatment by physicians who have not completed the necessary restrictions in order to treat patients) or it may be sold by distributors, channels or other entities that are not authorized by us to sell our products. In addition, an unauthorized distributor may not properly store or ship our products, thereby exposing patients to potential harm from use of the product that was not handled in accordance with our standards. If any of the foregoing were to happen, we could be subject to costly litigation, significant monetary penalties, harm to our reputation and investigation by regulatory authorities (and potentially subject to regulatory action, including recall, product withdrawals, suspensions and monetary penalties).

For our products that are authorized for and on sale in the US or other territories the sale and use of counterfeit versions of our products could result in significant harm to patients, reduced sales of our products and harm to our reputation.

We have identified material weaknesses in our internal control over financial reporting in previous years. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner or prevent fraud, which may adversely affect our business, investor confidence in our company and the market price of our shares and ADSs.

We reported in our Annual Report on Form 20-F as of March 13, 2020 material weaknesses in internal control related to lack of sufficient competencies related to IFRS and SEC reporting knowledge for the purposes of timely and reliable financial reporting. As of December 31, 2020, our testing of both the design and operating effectiveness of these controls was completed, and we have concluded that the material weaknesses existing at December 31, 2019 and prior have been remediated. Except for the remediation of IFRS and SEC reporting knowledge and related COSO material weaknesses and changes described, there were no changes during the year-ended December 31, 2020 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Completion of remediation does not provide assurance that our remediation or other controls will continue to operate properly. If we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.

The United Kingdom’s 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 United Kingdom is a major market for pharmaceutical products. Following the result of a referendum in 2016, the United Kingdom left the EU on January 31, 2020, commonly referred to as Brexit. Pursuant to the formal withdrawal arrangements agreed between the United Kingdom and the EU, the United Kingdom will be subject to a transition period until December 31, 2020, or the Transition Period, during which EU rules will continue to apply. Negotiations between the United Kingdom and the EU resulted

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in a bi-lateral treaty referred to as the Agreement on the withdrawal of the United Kingdom of Great Briton and Northern Island from the European Union and the European Atomic Energy Community was signed on 24 January 2020 referred to as the “Brexit Withdrawal Agreement”. The effect of this agreement on trade between the EU and the UK are may not be known for some time and may continue to create uncertainty. Further, there may continue to be considerable uncertainty resulting from a lack of precedent and the complexity of the United Kingdom and EU’s intertwined legal regimes as to how Brexit will impact the life sciences industry in Europe, including our company, including with respect to ongoing or future clinical trials. Given these unprecedented changes 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.

In addition, as a result of Brexit, the EMA, formerly situated in London, relocated to Amsterdam. As a result of this change and the withdrawal of United Kingdom representation from the EMA, there may be delays and uncertainty in the regulatory approval process could create delays in the EMA issuing regulatory approvals for our product candidates and, accordingly, have a material adverse effect on our business, financial condition, results of operations or prospects

Risks Related to Our Intellectual Property

Our ability to compete may decline if we or our collaboration partners are unable to or do not adequately protect intellectual property rights or if our intellectual property rights are inadequate for our product candidates or future product candidates

Our commercial success and viability depend on our and our collaboration partners’ ability to obtain and maintain patent protection in the United States, Europe and other countries with respect to our existing product candidates owned by us and to successfully defend these rights against third party challenges, as well as our ability to maintain adequate intellectual property protection for any future products. If we or our collaboration partners do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could materially harm our business, negatively affect our position in the marketplace, limit our ability to commercialize our product candidates and delay or render impossible our achievement of profitability.

Our strategy and future prospects are based, in particular, on our patent portfolio. We and our collaboration partners or licensees will best be able to protect our product candidates and their uses from unauthorized use by third parties to the extent that valid and enforceable patents, effectively protected trade secrets, or other regulatory exclusivities, cover them. Also, intellectual property rights have limitations and do not necessarily address all potential threats to our competitive advantage. Our ability to obtain patent protection for our product candidates is uncertain and the degree of future protection afforded by our intellectual property rights is uncertain due to a number of factors, including, but not limited to:

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we or our collaboration partners may not have been the first to make the inventions covered by pending patent applications or issued patents;

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we or our collaboration partners may not have been the first to file patent applications for our product candidates or the compositions we developed or for their uses;

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others may independently develop identical, similar or alternative products or compositions and uses thereof;

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our, or our collaboration partners, applications for patents my be declined by the patent offices or may be granted with limited scope or in fewer countries than we or our collaboration partners would prefer;

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our or our collaboration partners’ disclosures in patent applications may not be sufficient to meet the statutory requirements for patentability;

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any or all of our or our collaboration partners’ pending patent applications may not result in issued patents;

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we or our collaboration partners may not seek or obtain patent protection in countries that may eventually provide us with a significant business opportunity;

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any patents issued to us or our collaboration partners may not provide a basis for commercially viable products, may not provide any competitive advantages, or may be successfully challenged by third parties;

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our or our collaboration partners’ compositions and methods may not be patentable;

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others may design around our or our collaboration partners’ patent claims to produce competitive products or uses which fall outside of the scope of our patents;

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others may identify prior art or other bases which could result in the prohibition or limitation of our or our collaboration partners’ patents;

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our competitors might conduct R&D activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain R&D activities, as well as in countries where we or our collaboration partners do not have patent rights, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; or

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we may not develop additional proprietary technologies that are patentable.

Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court.

Even if our patents do successfully issue and even if such patents cover our product candidates and methods of use, third parties may initiate interference, re-examination, post-grant review, inter partes review, or derivation actions in the U.S. Patent and Trademark Office, or the USPTO, may initiate third party oppositions in the European Patent Office, or the EPO, or similar actions challenging the validity, enforceability or scope of such patents in other patent administrative proceedings worldwide, which may result in our patent claims being narrowed or invalidated. Such proceedings could result in revocation or amendment of our patents in such a way that they no longer cover our product candidates or competitive products. Further, if we initiate legal proceedings against a third party to enforce a patent covering our product candidate or technology, the defendant could counterclaim that the patent covering our product candidate or technology is invalid or unenforceable. In patent litigation in the United States, certain European and other countries worldwide, it is commonplace for defendants to make counterclaims alleging invalidity and unenforceability in the same proceeding, or to commence parallel defensive proceedings such as patent nullity actions to challenge validity and enforceability of asserted patent claims.

In administrative and court actions, grounds for a patent validity challenge may include alleged failures to meet any of several statutory requirements, including lack of novelty, obviousness (lack of inventive step) and in some cases, lack of sufficiently teaching, or non-enablement of, the claimed invention. Grounds for unenforceability assertions include allegations that someone connected with prosecution of the patent withheld relevant information from the Examiner during prosecution in the USPTO, or made a misleading statement during prosecution in the USPTO, the EPO or elsewhere. Third parties may also raise similar claims before administrative bodies in the USPTO or the EPO, even outside the context of litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to validity, for example, we cannot be certain that there is no invalidating prior art, of which we or the patent examiner were unaware during prosecution. Further, we cannot be certain that all of the potentially relevant art relating to our patents and patent applications has been cited in every patent office. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates.

We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful and have a material adverse effect on the success of our business.

Competitors may infringe our patents, trademarks, copyrights or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims on a country-by-country basis, which can be expensive, unpredictable, time consuming and divert the time and attention of our management and scientific personnel. Any claims we assert against perceived infringers could provoke

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these parties to assert counterclaims against us alleging that we infringe their patents, in addition to counterclaims asserting that our patents are invalid or unenforceable, or both. In any patent infringement proceeding, there is a risk that a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue. There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our patent claims do not cover the invention. An adverse outcome in a litigation or proceeding involving one or more of our patents could limit our ability to assert those patents against those parties or other competitors, and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive products. Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, we could ultimately be forced to cease use of such trademarks.

Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could adversely affect the market price of the ADSs. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded. Even if we ultimately prevail in such claims, the monetary cost of such litigation, any award of damages or loss of profit and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.

Claims that our product candidates or their uses infringe the intellectual property rights of third parties could result in costly litigation, and unfavorable outcomes could require us to pay damages or royalties and could limit our R&D activities or our ability to commercialize certain products.

Even if we have or obtain patents covering our product candidates, compositions or uses, we may still be barred from making, using, importing or selling our product candidates or technologies because of the intellectual property rights of others. Others have filed, and in the future may file, patent applications covering compositions or products and uses that are similar or identical to ours. There are many-issued U.S., European and other worldwide patents relating to therapeutic drugs, and some of these relate to compounds we intend to commercialize. Numerous worldwide patents and pending patent applications owned by others exist in the metabolic disease, gastrointestinal disease and cardiovascular disease field and cover, among others, GLP-2 product candidates that we are developing. To the extent that we identify any potential issue with third party patents that may affect our product candidates, we ensure that we have a strategy to deal with such third party patents, either by ensuring that we believe that such patents are invalid, not infringed or that we commercialize our products upon 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 cannot guarantee that our products, compositions and their uses do not or will not infringe third party patent or other intellectual property rights. Because patent applications can take 18 months to publish and many years to issue, there may be currently pending applications with patent claims unknown to us or which will change over time and may later result in issued patents that purportedly cover our product candidates or compositions and uses. These patent applications may have been filed earlier than or have priority over patent applications filed by us. We may be required to develop or obtain alternative technologies, review product design or, in the case of claims concerning registered trademarks, rename our product candidates.

Claims that our or our collaboration partners’ products, compositions or their uses infringe or interfere with the intellectual property rights of third parties, or that we or our collaboration partners have misappropriated third party trade secrets, could result in costly litigation and could require substantial time and money to resolve, even if litigation were avoided. The basis of such litigation could be, amongst other allegations the infringement of existing patents or patents that are granted in the future or the misappropriation of confidential information or trade secrets. If we or our collaboration partners were to

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face infringement claims or challenges by third parties, an adverse outcome could subject us or our collaboration partners to significant liabilities to such third parties. Litigation or threatened litigation could result in significant demands on the time and attention of our management team. A negative outcome could expose us or our collaboration partners to payment of costs, damages and other financial remedies, including in some jurisdictions, increased damages, such as treble damages and attorneys’ fees, if found to have willfully infringed a patent. Litigation with third parties concerning alleged infringement of their intellectual property rights could require us and our collaboration partners to bear substantial costs and impose burdens on our and their management and personnel, even if we or our collaboration partners were to ultimately succeed in such proceedings. Costs of patent litigation and awards of damages in patent infringement cases can be significant, and equitable remedies such as temporary restraining orders and injunctions can negatively impact or prevent product development and commercialization.

In light of these risks, settlements are often a preferred alternative, to avoid litigation uncertainties and costs, even when there are strong defenses to claims that are made. A negative outcome, potential or actual, could cause us or our collaboration partners to pursue contractual and other remedies against each other; in particular, our license agreements generally allow our collaboration partners to reduce amounts we are owed as royalties and/or milestones by amounts paid to third parties as a result of or in settlement of certain infringement claims, subject to contractual conditions and limitations. We or our collaboration partners could also face equitable remedies, such as being forced, including by court order, to cease developing, manufacturing, importing or commercializing an infringing product candidate or product in one or more jurisdictions. A negative outcome could also lead us or our collaboration partners to delay, curtail or cease the development and commercialization of some or all of our candidate drugs, or could cause us or our collaboration partners to seek legal or administrative actions against third parties. We or our collaboration partners may need to obtain licenses from third parties and such licenses may not be available on commercially reasonable terms, or at all. Even if we or our collaboration partners are able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same rights licensed to us. In addition, even if we or our collaboration partners were ultimately to succeed in asserting one or more patent defenses in an infringement suit, or to settle at an early stage to avoid litigation uncertainties and costs despite having strong patent defenses, such litigation could burden us and our collaboration partners with substantial unanticipated costs and damages. A negative outcome could cause us or our collaboration partners to pursue contractual remedies against each other or against us, including, for example, over settlement or license related payments or royalty reductions.

Biopharmaceutical patents and patent applications involve highly complex legal and factual questions, which, if determined adversely to us, could negatively impact our patent position.

The patent positions of biopharmaceutical companies can be highly uncertain and involve complex legal and factual questions. The interpretation and breadth of claims allowed in some patents covering biopharmaceutical compositions may be uncertain and difficult to determine, and are often affected materially by the facts and circumstances that pertain to the patented compounds, compositions and related patent claims. The standards of the USPTO, the EPO and other international patent offices are evolving and could change in the future. Consequently, we cannot predict the issuance and scope of patents with certainty. Patents, if issued, may be challenged, invalidated or circumvented. European patents and patents in certain other jurisdictions are subject to third party opposition proceedings. U.S. patents and patent applications may also be subject to interference proceedings, and U.S. patents may be subject to reexamination proceedings, post-grant review and/or inter partes review in the USPTO. The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability and our patents or pending patent applications may be challenged in the courts or patent offices in the United States, Europe and elsewhere worldwide. There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found. For example, publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our owned and licensed patents or pending patent applications, or that we were the first to file for patent protection of such inventions. If such prior art exists, it may be used to invalidate a patent, or may prevent a patent from issuing from a pending patent application. For example, such patent filings may be subject to a third party pre-issuance submission of prior art to the USPTO, EPO or to other

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patent offices around the world. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights may be uncertain.

Our pending and future patent applications may not result in patents being issued that protect our technology or products, in whole or in part, or may not effectively prevent others from commercializing competitive technologies and products. For example, such patent filings may be subject to a third party pre-issuance submission of prior art to the USPTO, the EPO or to other patent offices around the world. Alternately or additionally, we may become involved in post-grant review procedures, oppositions, derivations, proceedings, reexaminations, inter partes review post grant proceedings or interference proceedings, in the United States or elsewhere, challenging patents or patent applications in which we have rights, including patents on which we rely to protect our business. An adverse determination in any such challenges may result in loss of exclusivity or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. European patents or patents in other jurisdictions may be subject also to administrative opposition or comparable proceedings in corresponding worldwide patent offices, which could result in either loss of the patent or denial of the patent application or loss or reduction in the scope of one or more of the claims of the patent or patent application. In addition, such interference, reexamination, post-grant review, inter partes review and opposition proceedings may be time consuming and costly. Also, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates may expire before or shortly after such candidates are commercialized. Accordingly, rights under any issued patents may not provide us with sufficient protection against competitive products or processes.

In addition, changes in or different interpretations of patent laws in the United States, Europe and other countries worldwide may diminish the value of our patents or narrow the scope of our patent protection, while patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. For example, changes in or different interpretations of patent laws in the United States, Europe and other countries worldwide may permit others to use our or our collaboration partners’ discoveries or to develop and commercialize our technology and products without providing any compensation to us or may limit the number of patents or claims we can obtain. The laws of some countries may not protect intellectual property rights to the same extent as the laws of the United States or Europe, and those countries may lack adequate rules and procedures for defending our intellectual property rights, or vice versa.

If we fail to obtain and maintain patent protection and trade secret protection for our product candidates, we could lose our competitive advantage and competition we face would increase, reducing any potential revenue and adversely affecting our ability to attain or maintain profitability.

If we are unable to protect the confidentiality of our trade secrets and know-how, our business and competitive position would be harmed.

In addition to seeking patent protection for our product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, collaboration partners, consultants, advisors, university and/or institutional researchers and other third parties. We also have entered or seek to enter into confidentiality and invention or patent assignment agreements with our employees, advisors and consultants. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Our trade secrets may also be obtained by third parties by other means, such as breaches of our physical or computer security systems. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. Moreover, if any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to, or independently developed by, a competitor, our competitive position would be harmed.

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We will not seek to protect our intellectual property rights in all jurisdictions throughout the world, and we may not be able to adequately enforce our intellectual property rights even in the jurisdictions where we seek protection.

Obtaining and maintaining a patent portfolio entails significant expense and resources. Part of the expense includes periodic maintenance fees, renewal fees, annuity fees, various other governmental fees on patents or applications due in several stages over the lifetime of patents or applications, as well as the cost associated with complying with numerous procedural provisions during the patent application process. Filing, prosecuting and defending patents on our product candidates in all countries and jurisdictions throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States and Europe could be less extensive than those in the United States and in Europe, assuming that rights are obtained in the United States or in Europe. We may choose not to pursue or maintain protection for particular inventions where we deem it not to be economic or where the territory is deemed of little commercial interest. In addition, there are situations in which failure to make certain payments or noncompliance with certain requirements in the patent process can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If we choose to forego patent protection or allow a patent application or patent to lapse purposefully or inadvertently, our competitive position could suffer. Competitors may use our technologies in jurisdictions where we do not pursue and obtain patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States or in Europe. These products may compete with our product candidates and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Even if we pursue and obtain issued patents in particular jurisdictions, our patent claims or other intellectual property rights may not be effective or sufficient to prevent third parties from so competing.

In addition, the laws of some countries do not protect intellectual property rights to the same extent as the federal and state laws in the United States and Europe. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to biopharmaceuticals or biotechnologies. This could make it difficult for us to stop the infringement of our patents, if obtained, or the misappropriation of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries. Proceedings and legal actions to enforce our patent rights in the United States or in Europe and in foreign jurisdictions can be expensive, could result in substantial costs, and could divert management time and our efforts and attention from other aspects of our business. In addition, such proceedings or legal actions could put our patents at risk of being invalidated, found unenforceable or interpreted narrowly, could put our patent applications at risk of not being issued and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. We may or may not choose to pursue litigation or other actions against those that have infringed our patents, or used them without authorization, due to the associated expense and time commitment of monitoring these activities. If we fail to protect or to enforce our intellectual property rights successfully, our competitive position could suffer, which could harm our results of operations.

In addition, changes in the law and legal decisions by courts in the United States, Europe and foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of intellectual property. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

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Patent terms and regulatory exclusivities may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.

Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. We expect to seek extensions of patent terms in the United States and, if available, in other countries where we have patents.

Depending upon the timing and duration of the U.S. regulatory review process and patent life considerations, certain of our U.S. patents may be eligible for patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Amendments. The Hatch-Waxman Amendments provide up to five years of patent term extension, or PTE, on a patent that covers an approved product or method of use as compensation for patent term lost during the FDA regulatory review process. Patent term restoration cannot extend the term of a patent beyond a total of 14 years from the product’s approval date. Only one patent with a claim covering an approved drug or method is eligible for the extension, and the extension must be applied for prior to the patent expiration date (which due date may be extended by submission of one or more applications for interim extensions for periods of up to one year each and cannot be extended longer than the maximum period of patent term extension). The USPTO, in consultation with the FDA, reviews and approves a request for patent term extension or restoration and calculates the PTE period that will be awarded. PTE only extends patent coverage on the approved product or method of use.

In certain Member States of the EU, patent term extensions may be obtained through a Supplementary Protection Certificate to recover some of the time lost between the patent application filing date and the date of first regulatory approval, up to a maximum term of five years. Up to five years of patent term extension are also available in Japan for patent term recovery related to the pharmaceutical regulatory review and approval process.

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 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

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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.

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 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

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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.

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.

The current presidential administration and U.S. Congress have also 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, 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 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. 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.

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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 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. These 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.

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. However, 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.

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 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. We expect that additional state and federal healthcare reform measures will be 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 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.

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

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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.

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;

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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 CMS, 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 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 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.

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. 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.

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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 CMS 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 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 the current year 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

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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.”

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

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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.

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-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.

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.

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, EY Godkendt Revisionspartnerselskab (CVR no 30 70 02 28), 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 where we believe that the present standard of care is inadequate. In addition, we are looking to focus our efforts on drug candidates that may qualify for orphan/rare disease status.

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

Legal name:	Zealand Pharma A/S
Commercial name:	Zealand Pharma
Domicile:	Sydmarken 11 2860 Søborg (Copenhagen), 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 is www.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

Important events

Sanofi License Agreement and Royalty Pharma Agreement

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®. 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. 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. This payment is split in two parts. The first of these is $5 million and may fall due to be paid in 2021 and the second payment for $10m is likely to be due in 2022. 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.

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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 7 ‘Other operating income’ and to the consolidated financial statements on pages 74-75 in our Annual Report 2019.

Boehringer Ingelheim Agreements

On 15 June 2011 we signed a collaboration agreement Boehringer Ingelheim GmbH with respect to a research and collaboration for the development of Glucagon & GLP-1 Dual Agonists (referred to as the “GDDA Agreement”). This program is ongoing. This agreement could result in milestone payments of Euro 365m and royalties on global sales of any product that is authorized from this collaboration that are structured according to the commercial success of the product. The agreed royalty rates range, depending on sales are between 1% and 10% and between 10% and 15% of net sales.

On 28 July 2012 we signed a collaboration agreement with Boehringer Ingelheim GmbH with respect to a research and collaboration for the development of islet amyloid polypeptide analogues (referred to as the IAPP agreement). This agreement was terminated by mutual agreement between the parties on 1 February 2021 and all the assets under this agreement have been returned to us. One of the assets that forms our Amylin program is currently under development with us.

Alexion Collaboration

On March 20, 2019, we announced a collaboration with Alexion to discover and develop novel peptide therapies for complement-mediated diseases. The collaboration 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.

For the lead target, the 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 royalties of between 5% and 20% that are dependent on certain annual sales levels being reached 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 are pledged to Alexion Pharma International Operation Unlimited 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 collaboration agreement, we have placed the relevant intellectual property to be developed under the collaboration 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. 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 of between 1.0% and 11.0% 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

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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.

Valeritas Acquisition

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 was conducted through a Court-supervised sale process under Section 363 of the Bankruptcy Code and was subject to Court-approved bidding procedures and receipt of competing offers at auction. A hearing is scheduled before the Bankruptcy Court on March 3, 2020, during which the U.S. Bankruptcy Court determined the procedures for the bidding and potential auction of Valeritas. During this process our bid was selected and was approved by the Bankruptcy Court with certain other closing conditions, including a condition relating to manufacturing performance to address supply disruptions experienced by Valeritas in December 2019. This process was concluded and the transaction was consummated on April 2, 2020.

Reference is also made to ‘2019 Achievements’ on page 8 in our Annual Report 2020 for a description of important events in 2020.

Capital expenditure

Capital expenditures primarily relate to building improvements and purchase of lab equipment at our headquarters in Søborg, Denmark. All capital expenditures are expected to be financed internally through cash on hand.

Public takeover offers in respect of the Company’s shares

No such offers occurred during 2019 or 2020 to date.

B.

BUSINESS OVERVIEW

We are a biotechnology company focused on the discovery, design and development of innovative peptide-based medicines. Our current pipeline of internal product candidates focus on specialty gastrointestinal and metabolic diseases where we believe that the present standard of care is inadequate. In addition, we are looking to focus our efforts on drug candidates that may qualify for orphan/rare disease status. We have the following programs in late clinical development:

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Dasiglucagon single use syringe or autoinjector for severe hypoglycemia.   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 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 efficacy trials with dasiglucagon for the treatment of severe hypoglycemia have been completed with good results in 2018 and 2019. A pediatric Phase 3 trial was initiated in the end of 2018, with positive results announced in September 2019. The PDUFA (Prescription Fee User Fee Amendments Act of 1992) date for this product is 27 March 2021.

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Glepaglutide, a long-acting GLP-2 analog in development for the treatment of short bowel syndrome, 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

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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 the fourth quarter of 2018 with patient enrollment expected to be completed in 2020 and results from the trial expected in the first half of 2021. This study will evaluate the ability 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 convenient once-weekly treatment alternative.

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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. update

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Dasiglucagon for congenital 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 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 and the results were reported on 15 December 2020. It was reported that dasiglucagon on top of standard of care did not meet its primary endpoint of reducing the incidence of hypoglycemia compared with standard of care. However, it was able to meet its secondary endpoints. . 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 completion of patient recruitment. We intend to discuss the results with the FDA and agree a path forwards with this product. If results of these discussions and the results from the remaining studies are positive, we anticipate submitting an NDA to the FDA for treatment of CHI towards the end of this year or early next year.

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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, our portfolio includes ZP 7570, a potential once-weekly GLP-1-GLP-2 agonist for treatment of SBS in phase 2 development, a GIP program and Amylin program that may have potential in obesity, a clinical license collaboration with Boehringer Ingelheim targeting treatment of type 2 diabetes, obesity, and/or NASH 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, 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 that include an Ion Channel blocker and an α4β7 integrin inhibitor that have potential in indications such as irritable bowel disease with the potential to enter into the clinic in 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 Dasiglucagonsingle use or autoinjector for the treatment of severe hypoglycemia. .

Our Product Pipeline

We operate within the global market for peptide-based medicines. All revenues are generated from milestone and royalty payments related to our license agreements. See Note 2 ‘Revenue’ to the consolidated

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financial statements on pages 62-64 in our Annual Report 2019 for disclosure of revenue by category. We do not sell products to specific geographic markets.

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.

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. Common 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 first half of 2021.

Diabetes and severe hypoglycemia

All 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

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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 and rescue pen for severe hypoglycemia

Our dasiglucagon single use syringe or autoinjector 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 rescue pen may offer diabetes patients and their families a fast treatment solution for severe hypoglycemia that is easier to use than currently marketed glucagon kits. Two Phase 3 efficacy trials with dasiglucagon for the treatment of severe hypoglycemia have been completed in 2018 and 2019. 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 median 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 subjects 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 single use syringe 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 of ≥20 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,

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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: 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%).

Bi-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 difficult due to delays in uptake and constant changes in insulin requirements. Therefore, several academic researchers and a few device companies are working on glucose-sensor guided dual- hormone pumps that injects 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 bi-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 second 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 0.6 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 Phase 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 administration 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 of dasiglucagon in the iLet™ pump system.

We have a non-exclusive collaboration with Beta Bionics who is the developer of an artificial pancreas device containing both insulin and dasiglucagon, the iLet™. 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.

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 bi-hormonal 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 bi-hormonal iLet using dasiglucagon provided superior glycemic control over the insulin-only iLet.

We and Beta Bionics are in discussion with the FDA and expect to initiate the pivotal Phase 3 trial the second half of 2021.

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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 CHI. Reduction or discontinuation of 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. 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. On 15 December 2020 we reported the results of the first trial that dasiglucagon on top of standard of care did not meet its primary endpoint of reducing the incidence of hypoglycemia compared with standard of care. However, it was able to meet its secondary endpoints.

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 glucagon, 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 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.

Recent Developments

Reference is also made to the section ‘Transforming peptides’ on pages 12-25 in our Annual Report 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.

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

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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 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, Xeris and Eli Lilly 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.

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

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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. This entire family is all licensed exclusively to Sanofi. We own five patent families covering our proprietary GLP-2 analog glepaglutide or backup candidates. Although the disclosures of one of these patent families encompass both elsiglutide and glepaglutide, it has been possible to claim the subject matter relating to glepaglutide in separate patents in the United States. For our internal compound dasiglucagon, a glucagon analog that has a favorable stability profile .

We also possess 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. The SIP technology can assist to maintain the peptide in the blood for a longer period of time 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, and glepaglutide. In addition to these we possess other proprietary technologies which 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. Upon marketing approval, patent term extensions or supplementary protection certificates may be obtainable in various jurisdictions, including the United States, certain European 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.

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Glepaglutide

We own five patent families that covers glepaglutide. These patent family includes granted patents in Australia, Canada, China, Eurasia, Hong Kong, Israel, India Japan South Korea, Mexico, New Zealand, Ukraine and South Africa. The granted U.S. patents include composition of matter claims covering both the peptide and composition of glepaglutide and related compounds. The granted European patent includes claims drawn to the composition of matter of a genus of compounds that encompasses glepaglutide, as well as analogs thereof and methods of using glepaglutide.

Dasiglucagon

We own five patent families covering dasiglucagon including patents and applications in the United States and non-U.S. jurisdictions, including Brazil, and Japan. The pending claims in one 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, 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 patent applications in the 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 10,000 α4β7 Integrin Inhibitor

This is an asset that was acquired with our acquisition of Encycle. This includes the acquisition of seven patent families consisting of granted patents and 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 Zealand Pharma including the family that includes the composition of matter patent application.

Other Assets

We also have patents and patents applications that encompass or relate to other pre-clinical and clinical assets that include our GLP-1/GLP-2 agonist (10 families), Amylin (3 families), GIP agonist (4 families), Kv1.3 (2 families), GGDA (3 families) and C3 (3 families).

We (or our wholly owned subsidiaries that include ZP Holding SPV K/S and ZP SPV 3 K/S) own all the patents and applications set out above.

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 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

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or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

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 investigational drug 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 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.

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.

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 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.

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

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.

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;

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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

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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 CMS, 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 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

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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 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

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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 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 refer to the section ‘Business overview’ on page 65 in our Annual Report 2020.

D.

PROPERTY, PLANT AND EQUIPMENT

We lease of approximately 7,181 square meters of office and laboratory space at Sydmarken 11, 2860 Søborg, 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 Sydmarken 5 A/S, from the date when Zealand moved into the facilities, which was September 1, 2019. After said periods

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Zealand can, without restrictions, and the landlord, subject to certain restrictions under Danish law, terminate the lease upon 12 months written notice.

We also leases approximately 19,247 square feet of office space at 293 Boston Post Road West, Marlborough, Massachusetts. The term of the lease ends February, 2026 and includes renewal options. In addition to rent expense, the Company is obligated to pay costs of insurance, taxes, repairs and maintenance pursuant to the terms of the building leases. The rental payments include the minimum rentals plus common area maintenance charges.

The company leases one office at 434 W. 33rd Street, New York, NY. The lease is a one year term ending on December 31, 2021. There is an automatic renewal unless terminated by the company with no less than 3 months notice prior to the end of the term.

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 66-70 in our Annual Report 2020.

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 66-70 in our Annual Report 2020.

A.

OPERATING RESULTS

Reference is made to the section ‘Financial review’ contained on pages 50-52 in our Annual Report 2020, the section ‘Financial review’ contained on pages 40-42 in our Annual Report 2019 and “Item 3 — Key Information — D. Risk Factors”. Reference is further made to ‘Risk management and internal control’ on pages 48-49 in our Annual Report 2020.

The financial condition of the Group and its development is described in our Annual Report 2020 and our Annual Report 2019. The information in this section is based on, and should be read in conjunction with, our Annual Report 2020 and our Annual Report 2019. The analysis and discussion included in each of our Annual Report 2020 and our Annual Report 2019 is primarily based on the consolidated financial statements, which are prepared in accordance with IFRS as issued by the IASB.

2020 compared with 2019

The section ‘Financial review’ contained on pages 50-52 in our Annual Report 2020 constitutes the Board of Directors’ and Executive Management’s discussion and analysis of results of operations.

2019 compared with 2018

The section ‘Financial review’ contained on pages 40-42 in our Annual Report 2019 constitutes the Board of Directors’ and Executive Management’s discussion and analysis of results of operations.

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 fiscal years ended December 31, 2020, 2019 and 2018 has not had a material impact on the Group’s revenue or net loss.

Foreign currencies

Reference is made to Note 28 ‘Financial risks — Exchange rate risk’ to the consolidated financial statements on page 94 in our Annual Report 2020.

Governmental policies

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

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 we have sufficient capital to support operations and our long-term growth targets.

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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, 2020, we had cash and cash equivalents, which comprise cash and bank balances, of DKK 960.2 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, milestone and royalty payments from our collaboration partners, and sales of 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”.

Financial resources

Reference is made to ‘Consolidated statements of financial position’ on page 63 and ‘Consolidated statements of cash flows’ on page 64 in our Annual Report 2020.

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

Cash flow in 2020, 2019 and 2018

Reference is made to ‘Consolidated statements of cash flows’ on page 64 in our Annual Report 2020, ‘Financial review — Cash flow’ on page 52 in our Annual Report 2020 and ‘Financial review — Cash flow’ on page 42 in our Annual Report 2019 for a discussion of cash flows for the years ended December 31, 2020, 2019 and 2018.

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

Debt financing

Reference is made to ‘Consolidated statements of financial position’ on page 63 in our Annual Report 2020 for information on 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, 2020 or 2019.

Financial instruments

Reference is made to Note 28 ‘Financial risks — Contractual maturity (liquidity risk)’ to the consolidated financial statements on pages 95-96 in our Annual Report 2020.

Commitments for capital expenditure etc.

Contractual obligations for capital expenditure and other contingent liabilities as of December 31, 2020 are shown in Note 27 ‘Contingent assets, liabilities and other contractual obligations’ on page 94 to the consolidated financial statements in our Annual Report 2020.

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.

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 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

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development. Our research and development expenses were DKK 604.1 million, DKK 561.4 million and DKK 438.2 million in 2020, 2019 and 2018, respectively.

Information related to selected research and development projects can be found under ‘Transforming peptides’ on pages 23-39 in our Annual Report 2020.

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 2021 can be found on page 14 in the subsection ‘2021 Outlook and objectives’ in our Annual Report 2020.

E.

OFF-BALANCE SHEET ARRANGEMENTS

Reference is made to Note 27 ‘Contingent assets, liabilities and other contractual obligations’ to the consolidated financial statements page 94 in our Annual Report 2020.

F.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

2020

DKK million	Within 1 year		1 – 3 years		3 – 5 years		More than 5 years		Total
Leasing	​	14.1	​	26.4	​	26.7	​	79.3	​	146.5
Contractual obligations related to agreements with contract research organizations	​	28.3	​	252.6	​	0	​	0	​	280.9
Total obligations not recognized in the statement of financial position	​	0	​	252.6	​	0	​	0	​	252.6
Total contractual obligations	​	42.4	​	279.0	​	26.7	​	79.3	​	427.4

Reference is made to Note 27 ‘Contingent assets, liabilities and other contractual obligations’ and Note 28 ‘Financial Risks’ to the consolidated financial statements on page 94-96 in our Annual Report 2020.

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

ITEM 6

DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES

A.

DIRECTORS AND EXECUTIVE MANAGEMENT

Reference is made to ‘Board of Directors and Corporate Management’ on pages 55-59 in our Annual Report 2020 for information about the members of our Board of Directors and Corporate Management, as well as their activities outside of the Company.

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

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.

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As required by the Danish Companies Act, directors are elected at General Meetings by simple majority vote. In addition, four 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 76-81 in our Annual Report 2020.

C.

BOARD PRACTICES

Reference is made to ‘Corporate governance’ on pages 41-43 in our Annual Report 2020 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 55-59 in our Annual Report 2020.

The terms of office of all the members of our Board of Directors elected by the general meeting expire at the next annual general meeting to be held in April 2021. All members of the Board of Directors elected by the general meeting are eligible for re-election. Employee elected board members are elected for a period of four years.

D.

EMPLOYEES

At December 31, 2020, 2019 and 2018 we had 329, 179 and 149 full-time employees, and during 2020, 2019 and 2018 we had an average of 297, 173 and 146 full-time employees. Labor unions currently representing our employees in Denmark 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 2023.

E.

SHARE OWNERSHIP

For information on the Board of Directors’ and Corporate Management’s individual holdings of shares and warrants as of December 31, 2020 and change in these holdings during 2020, reference is made to the sections ‘Board of Directors and Corporate Management’ on pages 55-59, and Note 6 ‘Information on staff and remuneration’ to the consolidated financial statements on pages 76-81 in our Annual Report 2020. The members of our Board of Directors and Corporate Management in the aggregate hold 24,308 shares, representing less than 1% of the beneficial ownership of the Company.

In the period from January 1, 2020 until March 18, 2021, the Chief Executive Officer acquired 7,692 ordinary shares and the Chief Financial Officer acquired 841 ordinary shares. The internal rules on trading in our shares by members of the Board of Directors and Executive Management only permit trading in the four-week period commencing at the beginning of the third trading day following 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 2020. 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 Board of Directors under our Articles of Association. The detailed terms of the warrants, including the exact exercise price and the size of the grants, have been set our Board of 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 are generally subject to provisions which allow 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,” 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

58

considered as “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.

Reference is made to Note 6 ‘Information on staff and remuneration’ to the consolidated financial statements on pages 76-81 in our Annual Report 2020.

ITEM 7

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.

MAJOR SHAREHOLDERS

We have one class of shares. As of March 2, 2021, our registered, issued and outstanding share capital was DKK 43,400,547 distributed into 43,400,547 shares of nominal value DKK 1 each.

Below is information as of March 2, 2021 with respect to any shareholder who is known to the Company to be the owner of more than 5% of the Company’s shares:

Identify of person or group	Shares owned		Percent of class		Percent of total votes
Van Herk Investments, Rotterdam, Netherlands	​	7,299,832	​	16.8%	​	16.8%

As of March 12, 2021, approximately 31% of our share capital was held in Denmark and approximately 20% of our share capital was held in 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 for the following:

•

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 6.4% of the total share capital and total voting rights of Zealand Pharma A/S, to DKK 6,714,730 shares, corresponding to 18.75% of the total share capital and total voting rights of Zealand Pharma A/S.

For further information reference is made to ‘Shareholder information’ on pages 53-54 in our Annual Report 2020.

B.

RELATED PARTY TRANSACTIONS

We have no related parties with controlling interest other than the major shareholders listed under items 7A.

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

For further information reference is made to Note 30 ‘Related parties’ to the consolidated financial statements on page 99 in our Annual Report 2020 and Note 27 ‘Related parties’ to the consolidated financial statements on page 87 in our Annual Report 2019.

There have not been and there are no outstanding loans to members of the Board of Directors or Corporate Management in 2020, 2019 or 2018.

C.

INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

ITEM 8

FINANCIAL INFORMATION

A.

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

The consolidated financial statements required by this item accompany this Annual Report on Form 20-F in the form of our Annual Report 2020 (see Exhibit 15.1).

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Legal proceedings

In 2012, we entered into a research collaboration agreement with Protagonist Therapeutics, Inc., or Protagonist Therapeutics, and one of its affiliates, which agreement was terminated in 2014. At that time, Protagonist Therapeutics elected to assume the responsibility for the development and commercialization of compounds previously developed, and we assigned to Protagonist Therapeutics certain intellectual property arising from the collaboration. We also granted Protagonist Therapeutics an exclusive license to certain background intellectual property rights of Zealand that relate to the products they assumed.

Under the terms of the terminated agreement and related agreements, we are entitled to receive payments in respect of certain development, regulatory and commercial milestone events, as well as a low single-digit royalty on worldwide net sales of products developed under the agreement, if further developed and commercialized by Protagonist Therapeutics. Through December 31, 2020, we had received USD 1 million of such milestone payments and we may be entitled to receive up to USD 128 million of additional milestone payments under the agreement if certain development, regulatory and commercial milestone events occur.

On 23 January 2020 Protagonist Therapeutics filed a demand for arbitration with the International Court of Arbitration of the International Chamber of Commerce (ICC) seeking a declaration that it has no past, present or future milestone or royalty payment obligations with respect to the compound it is advancing, PTG-300, alleging that the compound is not within the set of compounds to which such payment obligations apply. Protagonist Therapeutics is also seeking costs, fees, and expenses of the proceeding, including attorneys’ fees, repayment of the USD 1 million of payments previously paid and pre-judgment interest. We are defending against this demand on the basis that payments are required for PTG-300 under our agreements and, as to the demand for repayment that the payments made were voluntary and are non-reimbursable. We have also filed counterclaims demanding payment of an additional milestone now due in the amount of USD 1 million, USD 2 million or USD 3 million, depending on the number of patients to be enrolled in the Phase III clinical trials for PTG-300, and seeking a declaration confirming our right to the payments due under our agreements, as well as the costs, fees and expenses of the proceeding, including attorneys’ fees, and pre-judgment interest. The arbitration remains pending as of the date of this report.

On 18 December 2020 Amyndas Pharmaceuticals S.A. and Amyndas Pharmaceuticals LLC filed a complaint in the U.S. District Court for the District of Massachusetts, which named Alexion Pharmaceuticals, Inc., Zealand Pharma A/S and Zealand Pharma U.S., Inc. as defendants. The complaint alleges claims against the Zealand Pharma A/S (and its U.S. subsidiary) and its collaboration partner Alexion Pharmaceuticals, Inc. (“Alexion”) related to Zealand Pharma A/S’s collaboration with Alexion on C3 peptide-based assets. The complaint alleges federal and state law claims, including claims for breach of confidentiality agreements, trade secret misappropriation and unfair competition. The complaint seeks an unspecified amount of damages plus interest and injunctive relief.

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 Board of Directors 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 Board of Directors deems relevant.

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 extraordinary dividends and our shareholders may also at a general meeting grant our Board of Directors an authorization to distribute extraordinary dividends. Any resolution to distribute extraordinary 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

60

position which must be reviewed by our auditor. If the decision to distribute extraordinary 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. Our general meeting of shareholders cannot resolve to distribute dividends at an amount exceeding the amount recommended or approved by our Board of Directors. Moreover, ordinary dividends and extraordinary 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.

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 Board of Directors 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 53-54 in our Annual Report 2020.

B. SIGNIFICANT CHANGES

On January 27, 2021 a total of 3,600,841 new shares have been subscribed through a private share issue with gross proceeds of DKK 749 million.

No other significant events have occurred after the end of the reporting period.

ITEM 9

THE OFFER AND LISTING

A.

OFFER AND LISTING DETAILS

The Company’s shares are listed in Denmark on Nasdaq Copenhagen, and traded under the symbol “ZEAL.” The Company’s ADSs are traded on the Nasdaq Global Select Market under the symbol “ZEAL.”

See Exhibit 2.1 to this Annual Report on Form 20-F for a description of the Company’s ordinary shares. Reference is also made to ‘Shareholder information’ on pages 53-55 in our Annual Report 2020.

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 Nasdaq Global Select Market since August 2017.

D.

SELLING SHAREHOLDERS

Not applicable.

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E.

DILUTION

Not applicable.

F. EXPENSES OF THE ISSUE

Not applicable.

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 Group and himself, legal actions brought against himself, or any business involving 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 sets specific requirements for granting loans or providing security to any member of the Board of Directors and anyone particularly close to such a member of the Board of 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 Articles of Association 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 dividend 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 our 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).

Ownership disclosure

Pursuant to chapter 7 of the Danish Capital Markets Act (Kapitalmarkedsloven), shareholders in a company incorporated in Denmark with its shares admitted to trading and official listing on a regulated market are required to immediately (normally within the same trading day as the triggering transaction), and simultaneously notify the company and the Danish Financial Supervisory Authority, when the shareholder’s direct or indirect stake (i) represents 5% or more of the voting rights in the company or the nominal value of its share capital, and (ii) when a change in a holding already notified implies that the limits of 5%, 10%, 15%, 20%, 25%, 50% or 90% and the limits of one-third and two-thirds of the voting rights or the nominal value of its share capital are reached.

This duty to notify also applies to anyone, who directly or indirectly holds (a) financial instruments that afford the holder an unconditional right to purchase existing shares, such as share options and/or (b) financial instruments based on existing shares and with an economic effect equal to that of the financial instruments mentioned under (a), regardless of them not affording the right to purchase existing shares, such as ADSs or, depending on the circumstances, cash-settled derivatives linked to the value of our shares or ADSs. Holding these kinds of financial instruments counts towards the thresholds mentioned above and may thus trigger a duty to notify by themselves or when accumulated with a holding of shares or ADSs.

The notifications must comply with, among others, the requirements for the contents thereof set out in sections 15, 16 and 19 of the Danish executive order on major shareholders (Storaktionærbekendtgørelsen), including the identity of the shareholder and the date when a limit is reached or no longer reached. Failure to comply with the duties of disclosure is punishable by fine or suspension of voting rights in instances of gross or repeated non-compliance. The Danish Financial Supervisory Authority will in certain cases publish information concerning reprimands or sanctions imposed, including, as a general rule, the name of the shareholder in question, as a consequence of non-compliance with the above rules. When we receive a notification pursuant to chapter 7 of the Danish Capital Markets Act, we must publish its contents. Publication must occur after the receipt of the notification and no later than three weekdays thereafter.

Furthermore, the general duty of notification pursuant to the DCA applies, which implies that shareholders must notify the company when the limit of 100% of the voting rights or nominal value of the shares is reached or no longer reached. This also applies to holders of the ADSs.

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Changes in capital

Our Articles of Association do not contain conditions governing changes in the capital more stringent than those contained in the Danish Companies Act.

C.

MATERIAL CONTRACTS

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. This transaction was completed on April 2, 2020 and we acquired substantially all the assists of Valeritas Inc. A copy of purchase agreement is attached as Exhibit 4.1.

D.

EXCHANGE CONTROLS

There are no governmental laws, decrees, or regulations in Denmark (including, but not limited to, foreign exchange controls) that restrict the export or import of capital, or that affect the remittance of dividends, interest or other payments to non-resident holders of the shares or the ADSs. There are no limitations on the right of non-resident or foreign owners to hold or vote the shares or the ADSs imposed by the laws of Denmark or our Articles of Association.

E.

TAXATION

The following is a description of the material U.S. federal income tax consequences to the U.S. Holders described below of owning and disposing of the ADSs. It is not a comprehensive description of all tax considerations that may be relevant to a particular person’s decision to acquire securities. This discussion applies only to a U.S. Holder that holds the ADSs as capital assets for tax purposes (generally, property held for investment). In addition, it does not describe all of the tax consequences that may be relevant in light of a U.S. Holder’s particular circumstances, including foreign, state and local tax consequences, U.S. federal gift, estate and alternative minimum tax consequences, the potential application of the Medicare contribution tax, and tax consequences applicable to U.S. Holders subject to special rules, such as:

•

banks, insurance companies, and certain other financial institutions;

•

brokers, dealers or traders in securities who use a mark-to-market method of tax accounting;

•

persons holding the ADSs as part of a hedging transaction, “straddle,” wash sale, conversion transaction or integrated transaction or persons entering into a constructive sale with respect to the ADSs;

•

regulated investment companies;

•

real estate investment trusts, grantor trusts or other trusts;

•

persons whose “functional currency” for U.S. federal income tax purposes is not the U.S. dollar;

•

expatriates of the United States;

•

tax exempt entities, including “individual retirement accounts” and “Roth IRAs”;

•

entities classified as partnerships or other pass-through entities for U.S. federal income tax purposes (and investors therein);

•

persons that own or are deemed to own shares (including shares represented by the ADSs) representing ten percent or more of our vote or value;

•

persons who acquired the ADSs in exchange for services or otherwise as compensation; and

•

persons holding the ADSs in connection with a trade or business conducted outside the United States.

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If an entity that is classified as a partnership for U.S. federal income tax purposes holds the ADSs, the U.S. federal income tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. Partnerships holding the ADSs and partners in such partnerships are encouraged to consult their own tax advisers as to the particular U.S. federal income tax consequences of holding and disposing of the ADSs.

For U.S. federal income tax purposes, U.S. Holders of ADSs will be treated as the beneficial owners of the underlying shares represented by the ADSs and an exchange of ADSs for our shares generally will not be subject to U.S. federal income tax.

The discussion is based on the Code, administrative pronouncements, judicial decisions, and final, temporary and proposed U.S. Treasury Regulations, and the income tax treaty between Denmark and the United States, or the Treaty, all as of the date hereof, changes to any of which may affect the tax consequences described herein — possibly with retroactive effect.

A “U.S. Holder” is a holder who, for U.S. federal income tax purposes, is a beneficial owner of the ADSs who is eligible for the benefits of the Treaty and is:

(1)

an individual who is a citizen or resident of the United States;

(2)

a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia;

(3)

an estate the income of which is subject to U.S. federal income tax regardless of its source; or

(4)

a trust, if (A) a U.S. court is able to exercise primary supervision over the trust’s administration and one or more United States persons (as such term is defined under the Code) have authority to control all substantial decisions of the trust, or (B) the trust has a valid election in place under all applicable U.S. Treasury regulations to treat the trust as a United States person (as such term is defined under the Code).

U.S. Holders are encouraged to consult their own tax advisers concerning the U.S. federal, state, local and foreign tax consequences of owning and disposing of the ADSs in their particular circumstances.

Taxation of distributions

Subject to the Passive Foreign Investment Company, or PFIC, rules described below, distributions paid on the ADSs, other than certain pro rata distributions of the ADSs, generally will be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because we do not maintain calculations of our earnings and profits under U.S. federal income tax principles, we expect that distributions generally will be reported to U.S.

Holders as dividends. Subject to applicable limitations, dividends paid to certain non-corporate U.S. Holders may be taxable at preferential rates applicable to long-term capital gain. However, if we are a PFIC for the taxable year in which the dividend is paid or the preceding taxable year (see discussion below under “— Passive Foreign Investment Company rules”), the preferential rate will not apply. Each U.S. Holder is advised to consult its tax advisors regarding the availability of the reduced tax rate on dividends with regard to its particular circumstances.

The amount of a dividend will include any amounts withheld by us in respect of Danish taxes. The amount of the dividend will be treated as foreign-source dividend income to U.S. Holders and will not be eligible for the dividends-received deduction generally available to U.S. corporations under the Code. Dividends will be included in a U.S. Holder’s income on the date of the U.S. Holder’s receipt of the dividend. The amount of any dividend income paid in DKK will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date of actual or constructive receipt, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt.

65

Subject to applicable limitations, some of which vary depending upon the U.S. Holder’s particular circumstances, Danish taxes withheld from dividends on the ADSs (or shares underlying the ADSs) will be creditable against the U.S. Holder’s U.S. federal income tax liability. The rules governing foreign tax credits are complex and U.S. Holders should consult their tax advisers regarding the creditability of foreign taxes in their particular circumstances. In lieu of claiming a foreign tax credit, U.S. Holders may, at their election, deduct foreign taxes, including any Danish tax, in computing their taxable income, subject to generally applicable limitations under U.S. law. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in the taxable year.

Sale or other taxable disposition of the ADSs

Subject to the PFIC rules described below, gain or loss realized on the sale or other taxable disposition of the ADSs will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder held the ADSs for more than one year. The amount of the gain or loss will equal the difference between the U.S. Holder’s tax basis in the ADSs disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars. This gain or loss generally will be U.S.-source gain or loss for foreign tax credit purposes. Capital gain from the sale, exchange or other disposition of ADSs by a non-corporate U.S. Holder generally is eligible for preferential rates of taxation if the non-corporate U.S. Holder’s holding period for such ADSs determined at the time of such sale, exchange, or other taxable disposition exceeds one year (i.e., such gain is long-term capital gain). The deductibility of capital losses is subject to limitations.

If the consideration received by a U.S. Holder is not paid in U.S. dollars, the amount realized will be the U.S. dollar value of the payment received determined by reference to the spot rate of exchange on the date of the sale or other disposition. However, if the ADSs are treated as traded on an “established securities market” and a U.S. Holder is either a cash basis taxpayer or an accrual basis taxpayer that has made a special election (which must be applied consistently from year to year and cannot be changed without the consent of the IRS), such U.S. Holder will determine the U.S. dollar value of the amount realized in a non-U.S. dollar currency by translating the amount received at the spot rate of exchange on the settlement date of the sale. If a U.S. Holder is an accrual basis taxpayer that is not eligible to or does not elect to determine the amount realized using the spot rate on the settlement date, such U.S. Holder will recognize foreign currency gain or loss to the extent of any difference between the U.S. dollar amount realized on the date of sale or disposition and the U.S. dollar value of the currency received at the spot rate on the settlement date.

Passive Foreign Investment Company rules

Under the Code, we will be a PFIC for any taxable year in which, after the application of certain “look-through” rules with respect to subsidiaries, either (i) 75% or more of our gross income consists of “passive income,” or (ii) 50% or more of the average quarterly value of our assets, including cash, consist of assets that produce, or are held for the production of, “passive income.” Passive income generally includes interest, dividends, rents, certain non-active royalties and capital gains. Whether we will be a PFIC in any year depends on the composition of our income and assets, and the relative fair market value of our assets from time to time, which we expect may vary substantially over time.

Based on certain estimates of our gross income and gross assets, the latter determined by reference to the value of the ADSs and shares, we do not believe that we were a PFIC for the taxable year ending December 31, 2019. We have not yet made any determination as to our expected PFIC status for the current year 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 can be provided with respect to our PFIC status for our taxable year ended December 31, 2019 or with regard to our PFIC status for the current year or any future taxable year. The determination of whether we are a PFIC is made annually for each of our taxable years. As a result, our PFIC status may change. In particular, for purposes of the asset test described above, the total value of our assets will be treated as equal to the sum of the aggregate value of the ADSs and shares plus the Company’s liabilities. Therefore, for purposes of the asset test, the total value of our assets will depend on the market price of the ADSs. However, the value of our passive assets generally will be equal to the actual fair market value of such assets. A decrease in the market price of the ADSs would cause a decrease in the deemed total value of our assets

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for purposes of the asset test but generally would not cause a corresponding decrease in the actual value of our passive assets. Accordingly, fluctuations in the market price of the ADSs may result in us being a PFIC.

For purposes of the income test, we believe that we are engaged in an active trade or business of discovering and developing peptide drugs and that the royalties and milestone payments we receive from unrelated parties should be treated as derived in the active conduct of a trade or business and not characterized as passive income. However, we have no assurance that these anticipated milestone payments and royalties will be paid when expected. If any such payments are delayed or not received then, depending on the amount of passive income we receive from other sources, the relative percentage of our income that is passive could increase and potentially cause us to be classified as a PFIC. There can be no assurances that we will not be classified as a PFIC for the current taxable year or for any future taxable year.

If we are a PFIC for any year during which a U.S. Holder holds the ADSs, we generally would continue to be treated as a PFIC with respect to that U.S. Holder for all succeeding years during which the U.S. Holder holds the ADSs, even if we ceased to meet the threshold requirements for PFIC status in any particular year unless (i) we cease to be a PFIC and the U.S. Holder has made a “deemed sale” election under the PFIC rules, (ii) we cease to be a PFIC and the U.S. Holder has a valid mark-to-market election in effect (as described below) or (iii) the U.S. Holder makes a Qualified Electing Fund Election, or QEF Election, with respect to all taxable years during which such U.S. Holders holding period in which we are a PFIC. However, a U.S. Holder may make a QEF Election with respect to our ADSs only if we annually provide such U.S. Holder with certain tax information, and we currently do not intend to prepare or provide such information. As a result, the QEF Election is not expected to be available to a U.S. Holder and the remainder of this discussion assumes that such election will not be available. If the “deemed sale” election is made, a U.S. Holder will be deemed to have sold the ADSs the U.S. Holder holds at their fair market value and any gain from such deemed sale would be subject to the rules described below. After the deemed sale election, so long as we do not become a PFIC in a subsequent taxable year, the U.S. Holder’s ADSs with respect to which such election was made will not be treated as shares in a PFIC and the U.S. Holder will not be subject to the rules described below with respect to any “excess distribution” the U.S. Holder receives from us or any gain from an actual sale or other disposition of the ADSs. U.S. Holders should consult their tax advisors as to the possibility and consequences of making a deemed sale election if we cease to be a PFIC and such election becomes available.

If we are a PFIC for any taxable year during which a U.S. Holder holds the ADSs, the U.S. Holder may be subject to adverse tax consequences. Generally, gain recognized upon a disposition (including, under certain circumstances, a pledge) of the ADSs by the U.S. Holder would be allocated ratably over the U.S. Holder’s holding period for such shares. The amounts allocated to the taxable year of disposition and to years before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for that taxable year for individuals or corporations, as appropriate, and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. Further, to the extent that any distribution received by a U.S. Holder on its ADSs exceeds 125% of the average of the annual distributions on such ADSs received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, that distribution would be subject to taxation in the same manner described immediately above with respect to gain on disposition.

Alternatively, if we are a PFIC and if the ADSs are “regularly traded” on a “qualified exchange,” a U.S. Holder could make a mark-to-market election that would result in tax treatment different from the general tax treatment described in the preceding paragraph. The ADSs would be treated as “regularly traded” in any calendar year in which more than a de minimis quantity of the ADSs are traded on a qualified exchange on at least 15 days during each calendar quarter. Nasdaq is a qualified exchange for this purpose. If a U.S. Holder makes the mark-to-market election, the U.S. Holder generally will recognize as ordinary income any excess of the fair market value of the ADSs at the end of each taxable year over their adjusted tax basis, and will recognize an ordinary loss in respect of any excess of the adjusted tax basis of the ADSs over their fair market value at the end of the taxable year (but only to the extent of the net amount of income previously included as a result of the mark-to-market election). If a U.S. Holder makes the election, the U.S. Holder’s tax basis in the ADSs will be adjusted to reflect these income or loss amounts. Any gain recognized on the sale or other disposition of ADSs in a year when we are a PFIC will be treated as ordinary

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income and any loss will be treated as an ordinary loss (but only to the extent of the net amount of income previously included as a result of the mark-to-market election).

However, a mark-to-market election generally cannot be made for equity interests in any lower-tier PFICs that we own, unless shares of such lower-tier PFICs are themselves “regularly traded” on a “qualified exchange,” as described above. As a result, even if a U.S. Holder validly makes a mark-to-market election with respect to our ADSs, the U.S. Holder may continue to be subject to the PFIC rules (described above) with respect to its indirect interest in any of our investments that are treated as an equity interest in a PFIC for U.S. federal income tax purposes. U.S. Holders should consult their tax advisors as to the availability and desirability of a mark-to-market election, as well as the impact of such election on interests in any lower-tier PFICs.

In addition, if we are a PFIC or, with respect to particular U.S. Holders, are treated as a PFIC for the taxable year in which we paid a dividend or for the prior taxable year, the preferential rates discussed above with respect to dividends paid to certain non-corporate U.S. Holders would not apply.

U.S. Holders should consult their tax advisers regarding whether we are or may become a PFIC and the potential application of the PFIC rules.

Information reporting and backup withholding

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is a corporation or other exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding.

Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the IRS.

If a U.S. Holder owns ADS during any year in which we are a PFIC, such U.S. Holder (including, potentially, indirect holders) will generally be required to file an IRS Form 8621 with such holder’s federal income tax return for that year.

Certain U.S. Holders who are individuals may be required to report information relating to their ownership of an interest in certain foreign financial assets, including shares of a non-U.S. person, generally on Form 8938, subject to exceptions (including an exception for shares held through a U.S. financial institution). In addition, certain U.S. Holders may be required to file a FinCEN Form 114 (Report of Foreign Bank and Financial Accounts) with the U.S. Treasury Department each year to report their interests in the ADSs. U.S. Holders should consult their tax advisers regarding their reporting obligations with respect to the ADSs.

F.

DIVIDENDS AND PAYING AGENTS

Not applicable.

G.

STATEMENT BY EXPERTS

Not applicable.

H.

DOCUMENTS ON DISPLAY

Copies of this Annual Report on Form 20-F as well as our Annual Report 2020 can be downloaded from the Investors page at zealandpharma.com. The contents of our website are not incorporated by reference into this Annual Report on Form 20-F. This Annual Report on Form 20-F is also filed electronically and can be viewed via EDGAR on www.sec.gov.

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I.

SUBSIDIARY INFORMATION

Zealand Pharma A/S (the parent company) has a number of subsidiaries that are listed on page 65 of the 2020 Annual Report.

ITEM 11

QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS

Financial exposure and financial risk management

For a description and discussion of the Company’s foreign exchange rate risk management, interest rate risk management, credit risk management and liquidity risk management, reference is made to Note 28 ‘Financial risks’ to the consolidated financial statements on pages 94-96 in our Annual Report 2020 and ‘Risk management and internal control’ on pages 48-49 in our Annual Report 2020.

Sensitivity analysis

When conducting a sensitivity analysis, the Group assesses the change in fair value on the market-sensitive instruments following hypothetical changes in interest and exchange rates. The rates used to mark-to-market the instruments are market data as of December 31, 2020.

For information on interest rate and exchange rate sensitivity analysis in 2020, reference is made to Note 28 ‘Financial risks — Sensitivity analysis’ to the consolidated financial statements on page 95 in our Annual Report 2020.

ITEM 12

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

ITEM 12A

DEBT SECURITIES

Not applicable.

ITEM 12B

WARRANTS AND RIGHTS

Not applicable.

ITEM 12C

OTHER SECURITIES

Not applicable.

ITEM 12D

AMERICAN DEPOSITARY SHARES

Our ADS program is administrated by The Bank of New York Mellon. Each ADS represents one ordinary share (or a right to receive one ordinary share) deposited with the Copenhagen office of Danske Bank A/S, as custodian for the depositary in the United States. Each ADS also represents any other securities, cash or other property which may be held by the depositary. The depositary’s office at which the ADSs is administered is located at 101 Barclay Street, New York, New York 10286. The Bank of New York Mellon’s principal executive office is located at 225 Liberty Street, New York, New York 10286.

You may hold ADSs either (a) directly (i) by having an American Depositary Receipt, also referred to as an ADR, which is a certificate evidencing a specific number of ADSs, registered in your name, or (ii) by having uncertificated ADSs registered in your name, or (b) indirectly by holding a security entitlement in ADSs through your broker or other financial institution that is a direct or indirect participant in The Depository Trust Company. If you hold ADSs directly, you are a registered ADS holder, also referred to as an ADS holder. This description assumes you are an ADS holder. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.

Registered holders of uncertificated ADSs will receive statements from the depositary confirming their holdings.

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As an ADS holder, we will not treat you as one of our shareholders and you will not have shareholder rights. Danish law governs shareholder rights. The depositary will be the holder of the shares underlying your ADSs. As a registered holder of ADSs, you will have ADS holder rights. A deposit agreement among us, the depositary, ADS holders and all other persons indirectly or beneficially holding ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADSs.

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PART II

ITEM 13

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15

CONTROLS AND PROCEDURES

A.

Disclosure Controls and Procedures

Zealand Pharma maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports that Zealand Pharma files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission, and that such information is accumulated and communicated to management of the Company, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Zealand Pharma Management, including the Chief Executive Officer and Chief Financial Officer evaluated the Company’s disclosure controls and procedures as of December 31, 2020. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2020, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

In designing and evaluating the disclosure controls and procedures, Management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

B.

Management’s Annual Report on Internal Control over Financial Reporting

Zealand Pharma’s Management is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), and effected by the Company’s Board of Directors, Management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS as issued by the IASB.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Zealand Pharma Management, including the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020, using the criteria established in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (‘COSO’).

Based on this assessment, Zealand Pharma Management, including the Chief Executive Officer and Chief Financial Officer, concluded that, as of December 31, 2020, the Zealand Pharma Group’s internal control over financial reporting was effective based on criteria stated in Internal Control — Integrated Framework (2013) issued by the COSO. Based on the evaluation performed, Management has concluded that Zealand Pharma maintained effective internal control over financial reporting as of December 31, 2020.

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Exemption of activities acquired during the period

On April 2, 2020, the Company completed the acquisition of specific assets of Valeritas Holdings, Inc. The Company is in the process of evaluating the existing internal controls and procedures over the acquired assets and is integrating them into the Company’s internal control environment over financial reporting. In accordance with SEC guidance permitting a company to exclude the internal control over financial reporting of an acquired business from management’s assessment of effectiveness of internal controls over financial reporting in respect of the year in which the acquisition was completed, the Company has excluded the acquired assets from its assessment of the effectiveness of internal control over financial reporting as of December 31, 2020. The activities acquired-represented 11.5% of the Company’s total assets as of December 31, 2020 and 45.6% of the Company’s revenue for the year ended December 31, 2020.

Remediation of previously reported Material Weaknesses

In previous years, we have reported material weaknesses relating to the design and operating effectiveness of our internal control over financial reporting. The material weaknesses resulted from lack of sufficient competencies related to IFRS and SEC reporting knowledge for the purposes of timely and reliable financial reporting. Specifically:

•

lack of a formalized risk assessment, oversight and compliance processes or formalized control descriptions for all of our key controls;

•

where control descriptions existed, they did not necessarily include all relevant information to enable the operating effectiveness of such controls and it was not clear whether adequate controls were performed in all areas;

•

where control activities were dependent on certain information, we did not perform or document controls to assess the completeness and accuracy of such information; and

•

lack of monitoring control activities and identified control deficiencies; thus, we were unable to evaluate whether other deficiencies, individually or in combination, resulted in a reasonable possibility that a material misstatement of our annual financial statements would not be prevented or detected on a timely basis.

During 2020, Management implemented our previously disclosed remediation plans, including 1) hiring additional finance and accounting personnel with appropriate expertise to perform specific functions and to further assist in the implementation of improved processes and internal controls, and 2) building our financial management and reporting infrastructure and further developing and documenting our accounting policies and financial reporting procedures, including ongoing Senior Management review and Audit Committee oversight.

During the fourth quarter of 2020, we completed our testing of the operating effectiveness of our controls, including the effects of the remediation actions described above, and found them to be effective. As a result, we have concluded the material weaknesses have been remediated as of December 31, 2020.

C.

Attestation Report of the Registered Public Accounting Firm

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2020 has been audited by EY Godkendt Revisionspartnerselskab, an independent registered public accounting firm, as stated in their report which appears from page 83 of this Form 20-F.

D.

Changes in Internal Control over Financial Reporting

Except as noted above in section Remediation of previously reported Material Weaknesses and exemption of activities acquired during the period, there were no changes in the Company’s internal control over financial reporting that occurred during the year ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

We have not experienced any material impact to our internal control over financial reporting despite the fact that our employees are currently working remotely due to the COVID-19 pandemic. We are

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continually monitoring and assessing the COVID-19 situation to minimize the impact of the pandemic on the design and operating effectiveness of our internal control over financial reporting.

ITEM 16A

AUDIT COMMITTEE FINANCIAL EXPERTS

Our Audit Committee consists of Leonard Kruimer, Bernadette Connaughton, Jeffrey Berkowitz and Martin Nicklasson, and is chaired by Leonard Kruimer. The Audit Committee reviews and considers matters relating to accounting, audit and regulatory control with our auditors and executive management in accordance with the working terms of reference of the Audit Committee. Our Audit Committee oversees our accounting and financial reporting processes and the audits of our consolidated financial statements.

Each member satisfies the independence requirements of the corporate governance standards of Nasdaq, and each of Leonard Kruimer qualifies as an “Audit Committee financial expert,” as defined in Nasdaq Rule 5605(c)(2)(A) and as determined by our Board of Directors.

ITEM 16B

CODE OF ETHICS

We have adopted a written Code of Business Conduct and Ethics (the Code), which outlines the principles of legal and ethical business conduct under which we do business. The Code applies to all of our board members and employees. This document is available under the “Corporate governance” tab in the “About Zealand” section of our website (www.zealandpharma.com). We undertake to provide to any person, without charge, upon request, a copy of the code of business conduct. Requests shall be made on mail info@zealandpharma.com.

ITEM 16C

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Reference is made to Note 5 ‘Fees to auditors appointed at the Annual General Meeting’ to the consolidated financial statements on page 76 in our Annual Report 2020 regarding fees paid to our statutory auditors.

Pre-approval policies

The Audit Committee assesses and pre-approves all audit and non-audit services provided by the statutory auditors. The pre-approval includes the type of service and a fee budget.

ITEM 16D

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED

Not applicable.

ITEM 16F

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Zealand, through the Audit Committee, conducted an external audit tender in 2019 with a view to replace Deloitte from our 2020 financial year onwards. The audit tender process was completed in December 2019 when, following the recommendation of the Audit Committee, the Board announced that it would appoint EY Godkendt Revisionspartnerselskab as Zealand’s new external auditor to undertake Zealand’s audit for the financial year ending December 31, 2020.

The reports of Deloitte on Zealand’s consolidated financial statements for the fiscal years ended December 31, 2019 and 2018 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

During the fiscal years ended December 31, 2019 and 2018, and the subsequent interim period from January 1, 2020 through April 2, 2020, (i) Zealand had no disagreements with Deloitte on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Deloitte, would have caused Deloitte to make reference

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to the subject matter of the disagreements in connection with its reports on the consolidated financial statements for such years, and (ii) there were no “reportable events” as defined in Item 16F(a)(1)(v) of Form 20-F other than the material weakness reported in our 2019 and 2018 annual reports on Form 20-F filed with the U.S. Securities and Exchange of Commission on March 13, 2020 and March 15, 2019.

Zealand provided Deloitte with a copy of this Form 20-F prior to its filing with the Securities and Exchange Commission and requested that Deloitte furnish it with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the above statements. A copy of Deloitte’s letter is attached as Exhibit 16.1 to this Form 20-F.

In connection with the audits of the Company’s financial statements for each of the fiscal years ended December 31, 2019 and 2018 and from January 1, 2020 through April 2, 2020 neither Zealand nor anyone on its behalf has consulted with EY on the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on Zealand’s financial statements, and either a written report was provided to the registrant or oral advice was provided that the new accountant concluded was an important factor considered by the registrant in reaching a decision as to the accounting, auditing or financial reporting issue, or any matter that was the subject of a disagreement, as that term is defined in Item 16F(a)(1)(iv) of Form 20-F and the related instructions to Item 16F of Form 20-F, or a reportable event, as that term is defined in Item 16F(a)(1)(v) of Form 20-F.

Deloitte resigned after the firm had concluded the 2019 external audit process and the Audit Committee recommended to the Board that EY be appointed to fill the vacancy. Zealand Shareholders were invited to appoint EY as Zealand’s new external auditors at the 2020 AGM, held on April 2, 2020. EY commenced transition activities, subsequent to the appointment on the mentioned date.

ITEM 16G

CORPORATE GOVERNANCE

As a foreign private issuer and as permitted by the listing requirements of Nasdaq, we rely on certain home country corporate governance practices rather than the corporate governance requirements of Nasdaq.

We qualify as a foreign private issuer and our ADSs are listed on Nasdaq. As a result, in accordance with the listing requirements of Nasdaq, we rely on home country governance requirements and certain exemptions thereunder rather than relying on the corporate governance requirements of Nasdaq. For example, we are exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act, including the U.S. proxy rules under Section 14 of the Exchange Act. In addition, our officers and directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, while we currently publish annual and quarterly reports on our website pursuant to the rules of Nasdaq Copenhagen and have filed such financial reports on an annual and quarterly basis with the SEC, we are not required to file such reports with the SEC as frequently or as promptly as U.S. public companies and are not required to file quarterly reports on Form 10-Q or current reports on Form 8-K that a domestic company would be required to file under the Exchange Act. Accordingly, there may be less publicly available information concerning our company than there would be if we were not a foreign private issuer.

In addition, the Listing Rules for the Nasdaq Stock Market (the “Nasdaq Listing Rules”), for domestic U.S. issuers require listed companies to have, among other things, a majority of their board members be independent, and to have independent director oversight of executive compensation, nomination of board members and corporate governance matters. While we currently comply, and intend to continue to comply, with these requirements, we are permitted to follow home country practice in lieu of the above requirements. Danish law does not require that a majority of our board consist of independent directors or the implementation of a nominating and corporate governance committee, and our board may thus in the future not include, or include fewer, independent directors than would be required if we were subject to the Nasdaq Listing Rules, or our board may decide that it is in our interest not to have a compensation committee or nominating and corporate governance committee, or have such committees governed by practices that would not comply with the Nasdaq Listing Rules. We follow home country practice with regard to, among other things, quorum requirements generally applicable to general meetings of shareholders. Danish law only

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has a limited regulatory regime for the solicitation of proxies, thus our practice will vary from the requirement of Nasdaq Listing Rule 5620(b). In addition, our shareholders have authorized our board of directors to issue securities, including in connection with certain events such as the acquisition of shares or assets of another company, the establishment of or amendments to equity-based compensation plans for employees, rights issues at or below market price, certain private placements and directed issues at or above market price. To this extent, our practice varies from the requirements of Nasdaq Listing Rule 5635, which generally requires an issuer to obtain shareholder approval for the issuance of securities in connection with such events.

ITEM 16H

MINE SAFETY DISCLOSURE

Not applicable.

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PART III

ITEM 17

FINANCIAL STATEMENTS

See response to Item 18.

ITEM 18

FINANCIAL STATEMENTS

The financial statements required by this item accompany this Annual Report on Form 20-F in the form of our Annual Report 2020 on pages 62-99 (see Item 19 of this Annual Report on Form 20-F).

Reconciliation of non-IFRS financial measures

In the Annual Report, Zealand discloses non-IFRS financial measures of the Group that reflect adjustments to the most directly comparable measure calculated and presented in accordance with IFRS. The inclusion of non-IFRS measures has been expressly permitted by the Danish Business Authorities and thereby exempted from the prohibition in Item 10(e)(1)(ii)(C) of Regulation S-K. However, the non-IFRS financial measures may not be defined and calculated by other companies in the same manner and may not be comparable with such measure.

Reference is made to the section ‘Alternative performance measures for the Group (non-audited)’ on page 117 in our Annual Report 2020.

ITEM 19

EXHIBITS

a.

Annual Report

The following pages from our Annual Report 2020, furnished to the SEC on Form 6-K, dated March 12, 2021, are incorporated by reference into this Annual Report on Form 20-F. The content of websites and other sources referenced on these pages are not incorporated by reference into this Annual Report on Form 20-F.

Page(s) incorporated by reference from our Annual Report 2020

Management review	​
2020 Achievements	12
2021 Outlook and objectives	14
Zealand Pharma’s first independent launch	15-21
Zealand Pharma’s R&D platform and pipeline	22-39
Corporate governance	41-43
Risk management and internal control	48-49
Financial review	50-52
Shareholder information	53-54
Board of directors and Corporate Management	55-59

Consolidated Financial Statements	​
Consolidated Income statements	62
Consolidated statements of comprehensive income	62
Consolidated statements of financial position	63
Consolidated statements of cash flows	64
Consolidated statements of changes in equity	64
Notes to the Consolidated financial statements	65-99
Statement of the Board of Directors and Executive Management	118

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b.

Exhibits

List of exhibits:

Exhibit No.	Description	Method of filing
1.1	Articles of Association	Incorporated by reference to the Registrant’s Report furnished to the SEC on Form 6-K on February 1, 2020..
2.1	Description of Securities registered under Section 12 of the Securities Act of 1933, as amended.	Filed together with this Form 20-F 2020.
2.2	Deposit Agreement	Incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form F-1/A filed with the SEC August 3, 2017.
4.1	Significant Agreements	Significant Agreements include those agreements referred to this agreement and are with Sanofi Aventis Deutschland SA, Boehringer Ingelheim GmBH, Alexion Pharmaceuticals Inc, Royalty Pharma ICAV, Encycle Theraputics Inc and Valeritas Inc. These agreements are incorporated by reference accept Valeritas Inc. that is attached at Exhibit 4.1.
8.1	List of subsidiaries	Incorporated by reference to our Annual Report 2020, furnished to the SEC on Form 6-K dated March 12, 2021 as exhibit 99.1(a).
12.1	Certification of the principal Executive Officer	Filed together with this Form 20-F 2020.
12.2	Certification of the Financial Officer	Filed together with this Form 20-F 2020.
13.1	Principal Executive Officer certification pursuant to 18 U.S.C. section 1350	Furnished together with this Form 20-F 2020.
13.2	Principal Financial Officer certification pursuant to 18 U.S.C. section 1350	Furnished together with this Form 20-F 2020.
15.1	Extracts from the Registrant’s Annual Report 2020#	Incorporated by reference from our Annual Report 2020, furnished to the SEC on Form 6-K dated March 12, 2021, as exhibit 99.1(a) identified in Item 19.a of this Form 20-F.
15.2	Extracts from the Registrant’s Annual Report 2019#	Incorporated by reference from our Annual Report 2019, furnished to the SEC on Form 6-K dated March 12, 2020, as exhibit 99.1(a) identified in Item 19.a of the Form 20-F.
16.1	Letter of Deloitte Statsautoriseret Revisionspartnerselskab	Filed together with this Form 20-F 2020.
23.1	Consent of independent registered public accounting firm	Filed together with this Form 20-F 2020.
23.2	Consent of independent registered public accounting firm	Filed together with this Form 20-F 2020.

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Exhibit No.	Description	Method of filing
EX-101.INS	XBRL Instance Document	Incorporated by reference to the Registrant’s report furnished to the SEC on Form 6-K on March 12, 2021 as exhibit 99.1(a).
EX-101.SCH	XBRL Taxonomy Extension Schema Document	Incorporated by reference to the Registrant’s report furnished to the SEC on Form 6-K on March 12, 2021 as exhibit 99.1(a).
EX-101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Incorporated by reference to the Registrant’s report furnished to the SEC on Form 6-K on March 12, 2021 as exhibit 99.1(a).
EX-101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Incorporated by reference to the Registrant’s report furnished to the SEC on Form 6-K on March 12, 2021 as exhibit 99.1(a).
EX-101.IAB	XBRL Taxonomy Extension Labels Linkbase Document	Incorporated by reference to the Registrant’s report furnished to the SEC on Form 6-K on March 12, 2021 as exhibit 99.1(a).
EX-101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Incorporated by reference to the Registrant’s report furnished to the SEC on Form 6-K on March 12, 2021 as exhibit 99.1(a).

†

Portions of this exhibit have been omitted pursuant to a request for confidential treatment by the Securities and Exchange Commission and the non-public information has been filed separately with the Securities and Exchange Commission.

#

References to the annual report

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SIGNATURES

The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

Zealand Pharma A/S
Name:	Emmanuel Dulac	Name:	Matt Dallas
Title:	President and Chief Executive Officer	Title:	Senior Vice President and Chief Financial Officer

Denmark
Dated: March 18, 2021

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Zealand Pharma A/S

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of financial position of Zealand Pharma A/S and subsidiaries (the Company) as of December 31, 2020, the related consolidated income statement, statements of comprehensive income, changes in equity and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020, and the results of its operations and its cash flows for the year then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 18, 2021 expressed an unqualified opinion thereon.

Adoption of IFRS 16

As discussed in Note 15 to the consolidated financial statements, the Company changed its method of accounting for leases as at January 1, 2019 due to the adoption of IFRS 16 Leases.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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​	Valeritas business combination and bargain purchase gain
Description of the Matter	As disclosed in Note 29 to the consolidated financial statements, on April 2, 2020, Zealand Pharma A/S acquired substantially all the medical technology business from Valeritas Holding, Inc. a U.S. based commercial-stage company. The consideration transferred was DKK 167.7 million. The acquisition, which was accounted for as a business combination, resulted in a bargain purchase gain of DKK 36.7 million. The Company has accounted for the Valeritas business combination by applying the acquisition method of accounting, including the recognition and measurement of the identified assets acquired and liabilities assumed at the acquisition-date fair values and the recognition of the gain from the bargain purchase. Purchase price allocation is complex and bargain purchases are uncommon in nature. Auditing this matter required the involvement of valuation specialists due to the highly judgmental nature of the initial and reassessed fair value assumptions. These fair value assumptions included prospective financial information relating to revenue and gross margin growth and operating expense assumptions used in the fair value measurement process of intangible assets in the form of the V-Go technology and physician network and relationships. These assumptions have a significant effect on the bargain purchase.
How We Addressed the Matter in Our Audit	We obtained an understanding of the processes for accounting for business combinations and evaluated the design and tested the operating effectiveness of controls relating to the measurement and valuation of the identified assets acquired and liabilities assumed. For example, we tested controls over management’s use of external valuation specialists, management’s review of the purchase price allocation, management’s reassessment of the purchase price allocation, the revenue and gross margin growth and operating expense assumptions and related prospective financial information. To test the purchase price allocation, our audit procedures included, among others, evaluating the methodology used, the significant prospective financial information used in the initial fair value assumptions and reassessed fair value assumptions of the V-Go technology and physician network and relationships, and the underlying data used by the Company. We compared the assumptions used by management to historical trends and market participant expectations. For example, we evaluated management’s methodology for determining revenue and gross margin growth and operating expense assumptions compared to relevant publicly available market data, including market participant expectations, and methodology for reassessment of the purchase price allocation. We involved valuation specialists to assist with our procedures. To evaluate the fair value of acquired intangible assets, we compared the initial fair value assumptions and reassessed fair value assumptions applied with publicly available market data and assessed any entity-specific adjustments that were applied. We also tested the completeness and accuracy of the underlying data, including the market data provided by management’s external valuation specialists.
​	Accounting for rebates and discounts related to the Company’s sales in the United States
Description of the Matter	As disclosed in Note 2 to the consolidated financial statements revenue from products sold by the Company in the United States (U.S.) is impacted by estimates related to managed care rebates, medicare part D rebates, and co-pay card redemption. The estimates for managed care rebates, medicare part D rebates, and co-pay card redemption and related provisions are recognised as a reduction to gross sales in the period in which the underlying sales are recognised. As of December 31, 2020, the provisions for sales discounts and rebates amounts to DKK 36.4 million, as disclosed in Note 25 in the consolidated financial statements. Auditing managed care rebates and medicare part D rebates, and co-pay card redemption and related provisions is complex due to the judgmental nature of management’s estimates,

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​

which involves multiple assumptions, as not all conditions are known at the time of sale. For both managed care rebates and the medicare part D rebates, the key assumptions relate to the rebate percentages by each pharmacy as determined in each pharmacy’s contract with the Company and forecasted number of prescriptions that will be filled by each pharmacy (referred to as payor mix). For co-pay card redemptions, the key assumptions relate to expected settlement rates for sales units remaining in the channel that have yet to be presented under co-pay terms. These assumptions are made based on historical actuals, which are used to estimate forecasted trends, including payor mix and settlement rates, which are used to estimate the expected settlement of managed care rebates and medicare part D rebates, and co-pay card redemption, and the specific terms in the individual agreements.

How We Addressed the Matter in Our Audit

We obtained management’s calculation of provisions for managed care rebates, medicare part D rebates, and co-pay card redemptions and assessed the assumptions applied by management and compared them to applicable commercial policies, historical experience and the specific terms in the individual agreements. We further examined subsequent settlement obligations to assess completeness and accuracy of the recorded provisions. We performed an independent assessment on the key assumptions of the provisions as of December 31, 2020, including the payor mix and expected settlement rates, and compared these to the actual provisions recognised. In addition, we have assessed the adequacy of the Company’s disclosures on rebates and discounts related to the matter described above.

/s/ EY Godkendt Revisionspartnerselskab

We have served as the Company’s auditor since 2020

Copenhagen, Denmark

March 18, 2021

82

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Zealand Pharma A/S

Opinion on Internal Control Over Financial Reporting

We have audited Zealand Pharma A/S’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Zealand Pharma A/S (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

As indicated in the accompanying Management’s Annual Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the activities acquired from Valeritas Holdings, Inc., which is included in the 2020 consolidated financial statements of the Company. The activities acquired represented 11.5% of the Company’s total assets as of December 31, 2020 and 45.6% of the Company’s revenue for the year ended December 31, 2020. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the activities acquired from Valeritas Holdings, Inc.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of financial position of Zealand Pharma A/S and subsidiaries (the Company) as of December 31, 2020, the related consolidated income statement, statements of comprehensive income, changes in equity and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”) and our report dated March 18, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or

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timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ EY Godkendt Revisionspartnerselskab

Copenhagen, Denmark

March 18, 2021

84

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Zealand Pharma A/S

Opinion on the Financial Statements

We have audited the consolidated statements of financial position of Zealand Pharma A/S and subsidiaries (the “Company”) as of December 31, 2019, the related consolidated income statement and consolidated statements of comprehensive income (loss), changes in equity and cash flow for each of the two years in the period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”) included by reference. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Restatement of 2018 financial statements

As discussed in Note 1 to the financial statements, the 2018 financial statements have been restated to correct a misstatement in relation to warrant expenses.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, effective January 1, 2019, the Company adopted IFRS 16 Leases, using the modified retrospective approach.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Deloitte

Statsautoriseret Revisionspartnerselskab
CVR no: 33963556

Sumit Sudan

Kåre Valtersdorf

State Authorized

State Authorized

Public Accountant

Public Accountant

Copenhagen, Denmark

March 18, 2020

We began serving as the Company’s auditor in 2014. In 2020, we became the predecessor auditor.

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EX-2.1

EXHIBIT 2.1​

DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934

Set forth below is a summary of certain information concerning our share capital, as well as a description of certain provisions of our articles of association and relevant provisions of the Danish Companies Act. The summary includes certain references to, and descriptions of, material provisions of our articles of association and Danish law. The summary below contains only material information concerning our share capital and corporate status and does not purport to be complete and is qualified in its entirety by reference to our articles of association and applicable Danish law. Further, please note that if you are a holder of ordinary shares represented by American Depositary Shares, or ADSs, then you are not treated as one of our shareholders and do not have any shareholder rights.

GENERAL

Zealand Pharma A/S is incorporated as a public limited liability company under Danish law and is registered with the Danish Business Authority in Copenhagen, Denmark under registration number (CVR) no. 20045078. Our ordinary shares have been listed on Nasdaq Copenhagen since November 2010 under the symbol “ZEAL” and the ADSs have been listed on the Nasdaq Global Select Market in the United States since August 2017 under the symbol “ZEAL.”

DESCRIPTION OF OUR SHARES

We have one class of shares. As of March 2, 2021, our registered, issued and outstanding share capital was DKK 43,400,547 distributed into 43,400,547 shares of nominal value DKK 1 each.

Authorizations to Our Board of Directors

Our board of directors is authorized to increase our share capital as follows are set out in Article 7 of the Articles of Association that form Exhibit 1.1 to this report and were updated on 1 February 2021.

New shares issued according to the authorizations listed above will rank pari passu with our existing shares in accordance with our articles of association. Further, our board of directors is, in the period until the next annual general meeting, authorized on behalf of the company to acquire its own shares and/or ADSs for a total nominal value of up to 10% of our share capital. The price paid for such shares or ADSs may not deviate by more than 10% from the price quoted by Nasdaq Copenhagen or Nasdaq Global Select Market, respectively, at the time of acquisition.

Pre-emptive Rights

If our shareholders at a general meeting resolve to increase our share capital by a cash contribution, section 162 of the Danish Companies Act will apply. Under that section, shareholders have a pre-emptive right to subscribe for new shares in proportion to their existing shareholdings. However, the pre-emptive right may be derogated from by a majority comprising at least two-thirds of the votes cast, as well as at least two-thirds of the share capital represented at the general meeting, provided the share capital increase takes place at market price or nine-tenths of the votes cast, as well as at least nine-tenths of the share capital represented at the general meeting if the share capital increase takes place below market price, unless (i) such capital increase is directed at certain but not all shareholders (in which case all shareholders must consent); or (ii) such capital increase is directed at our employees whereby a majority comprising at least two-thirds of the votes cast, as well as at least two-thirds of the share capital represented at the general meeting is required. Further, the pre-emptive rights may be derogated from by an exercise of the board of directors of a valid authorization in our articles of association, provided that the share capital increase takes place at or above market price, unless adopted in accordance with the procedures as set out above.

Shareholders’ Register

We are obliged pursuant to Danish law to maintain a shareholders’ register (Ejerbog) for our ordinary shares. The shareholders’ register is maintained by Computershare A/S, Lottenborgvej 26, DK-2800 Kgs.

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Lyngby, Denmark, our Danish share registrar and transfer agent. It is mandatory that the shareholders’ register is maintained within the European Union and that it is available to public authorities.

Pursuant to the Danish Companies Act, public and private limited liability companies are required to register with the Danish Business Authority information regarding shareholders who own at least 5% of the share capital or the voting rights. Pursuant to this provision, we file registrations with the Danish Public Shareholders’ Register of the Danish Business Authority. Shareholders that exceed or fall below the ownership threshold must notify us, and we will subsequently file the information with the Danish Business Authority. Reporting is further required upon passing or falling below thresholds of 10%, 15%, 20%, 25%, 50%, 90%, and 100% as well as one-third and two-thirds of the votes or the share capital. This also applies to beneficial holders of our shares, such as holders of the ADSs.

Articles of Association and Danish Corporate Law

With respect to our articles of association, the following should be emphasized:

Objectives

Our company has been established with the objectives of engaging in research, trade, manufacture and related activities, primarily within the pharmaceutical industry.

Rights and Restrictions in Relation to Existing Shares

•

No share carries any special rights.

•

Each share with a nominal value of DKK 1 carries one vote at general meetings.

•

The shares are negotiable instruments, and no restrictions apply to the transferability of the shares.

•

No shareholder shall be obliged to let his shares be redeemed in full or in part by us or by any other party, except as provided in the Danish Companies Act.

•

All shares shall be registered in the names of the holders and shall be entered in our shareholders’ register.

Adoptions of decisions on our general meetings

All resolutions put to the vote of shareholders at general meetings are subject to adoption by a simple majority of votes, unless the Danish Companies Act or our articles of association prescribes other requirements.

Notice Convening Annual and Extraordinary General Meetings

General meetings shall be held in Greater Copenhagen (Storkøbenhavn). General meetings shall be convened by the board of directors giving not less than three weeks’ and not more than five weeks’ notice. General meetings shall be announced by publication in the IT information system of the Danish Business Authority and on our website. Furthermore, all shareholders registered in our shareholders’ register who have so requested shall be notified by letter or email. The notice shall set out the time and place for the general meeting and the issues to be considered at the general meeting. If the general meeting is to consider a proposal to amend our articles of association, then the notice shall specify the material content of the proposal.

A shareholder’s right to attend general meetings and to vote is determined on the basis of the shares that the shareholder owns on the registration date which date is one week before the general meeting is held.

Any shareholder shall be entitled to attend general meetings, provided he or she has requested an admission card from our offices not later than three days prior to the relevant meeting. The admission card will be issued to the shareholders registered in our shareholders’ register. The shareholder may attend in person or be represented by proxy, and a shareholder shall be entitled to attend together with an advisor. A shareholder may vote by proxy or by postal, and a form for this use shall be made available on our website no later than three weeks prior to the general meeting. A vote by mail must be received by us not later than three days prior to the general meeting in order to be counted at the general meeting.

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Extraordinary general meetings shall be held as directed by the shareholders at the general meeting, the board of directors or an auditor, or upon a written request to the board of directors by shareholders holding not less than 5% of the share capital for consideration of a specific issue. The general meeting shall be convened with three to five weeks notice within 14 days after the proper request has been received by our board of directors.

Provisions as to the Level of Equity Investments to be Notified to Us and the Danish Authorities

Shareholders in Danish companies with shares admitted to trading and official listing on Nasdaq Copenhagen are, pursuant to Section 38 of the Danish Capital Markets Act, required to give simultaneous notice to the company and the Danish Financial Supervisory Authority, or the FSA, of the shareholding in the company, when the shareholding reaches, exceeds or falls below thresholds of 5%, 10%, 15%, 20%, 25%, 50% or 90% and limits of one-third or two-thirds of the voting rights or nominal value of the total share capital.

A shareholder in a company means a natural or legal person who, directly or indirectly, holds: (i) shares in the company on behalf of himself and for his own account; (ii) shares in the company on behalf of himself, but for the account of another natural or legal person; or (iii) depository receipts, where such holder is considered a shareholder in relation to the underlying shares represented by the depository receipts.

The duty to notify set forth above further applies to natural and legal persons who are entitled to acquire, sell or exercise voting rights which are:

(i)

held by a third party with whom that natural or legal person has concluded an agreement, which obliges them to adopt, by concerted exercise of the voting rights they hold, a lasting common policy towards the management of the issuer in question (common duty to inform for all parties to the agreement);

(ii)

held by a third party under an agreement concluded with that natural or legal person providing for the temporary transfer of the voting rights in question in return for consideration;

(iii)

attached to shares which are lodged as collateral for that natural or legal person, provided the person controls the voting rights and declares an intention of exercising them;

(iv)

attached to shares in which that natural or legal person has a lifelong right of disposal;

(v)

held, or may be exercised within the meaning of (i) to (iv), by an undertaking controlled by that person or entity;

(vi)

attached to shares deposited with that natural or legal person and which the person can exercise at his own discretion in the absence of specific instructions from the shareholders;

(vii)

held by a third party in its own name on behalf of that person; or

(viii)

exercisable by that person through a proxy where that person may exercise the voting rights at his discretion in the absence of specific instructions of the shareholder.

The duty to notify set forth above also applies to anyone, who directly or indirectly holds (a) financial instruments that afford the holder either an unconditional right to acquire or the discretion as to his right to acquire existing shares (e.g., share options); and/or (b) financial instruments based on existing shares and with an economic effect equal to that of the financial instruments mentioned in (a), regardless of them not affording the right to purchase existing shares (e.g., the ADSs or, under the circumstances, cash-settled derivatives linked to the value of our shares or ADSs). Holding these kinds of financial instruments counts towards the thresholds mentioned above and may thus trigger a duty to notify by themselves or when accumulated with a holding of shares or ADSs. The FSA will in certain cases publish information concerning sanctions imposed, including, as a general rule, the name of the shareholder in question, as a consequence of non-compliance with the above rules.

The notification shall be made promptly but not later than four weekdays after the shareholder was aware or should have become aware of the completion of the transaction, and in accordance with the

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provisions of Danish Executive Order on Major Shareholders. The shareholder is deemed to have become aware of the completion of the transaction no later than two weekdays after the completion of the transaction. The shareholder shall disclose the change in voting rights and shares, including the number of voting rights (and the division of voting rights between share classes, if applicable) and shares held directly or indirectly by the shareholder following the transaction. The notification shall further state the transaction date on which the threshold was reached or no longer reached and the identity of the shareholder as well as the identity of any natural or legal person with the right to vote on behalf of the shareholder and in the case of a group structure, the chain of controlled undertakings through which voting rights are effectively held. The information shall be notified to the company and simultaneously submitted electronically to the FSA. Failure to comply with the notification requirements is punishable by fine or suspension of voting rights in instances of gross or repeated non-compliance.

When an obligation to notify rests on more than one natural or legal person, the notification may be made through a joint notification. However, use of a joint notification does not exempt the individual shareholders or natural or legal persons from their responsibilities in connection with the obligation to notify or the contents of the notification.

After receipt of the notification, but not later than three weekdays thereafter, the company shall publish the contents of the notification.

Furthermore, the general duty of notification under Section 55 of the Danish Companies Act in respect of notification of significant holdings (similar to the thresholds set out in the Danish Capital Markets Act Section 38) applies, including when the limit of 100% of the share capital’s voting rights or nominal value of the company is reached or are no longer reached.

The EU Short Selling Regulation (EU Regulation 236/2012) Includes Certain Notification Requirements in connection with Short Selling of Shares Admitted to Trading on a Trading Venue (including Nasdaq Copenhagen) and Securities or Derivatives that Relate to Such Shares (including the ADSs).

When a natural or legal person reaches or falls below a net, short position of 0.2% of the issued share capital of a company that has shares admitted to trading on a trading venue, such person shall make a private notification (i.e. such notification will not be made public) to the relevant competent authority, which in Denmark is the FSA. The obligation to notify the FSA, moreover, applies in each case where the short position reaches or no longer reaches 0.1% above the 0.2% threshold. In addition, when a natural or legal person reaches or falls below a net short position of 0.5% of the issued share capital of a company that has shares admitted to trading on a trading venue and each 0.1% above that, such person shall make a public notification of its net short position via the FSA. The notification requirements apply to both physical and synthetic short positions. In addition, uncovered short selling (naked short selling) of shares admitted to trading on a trading venue is prohibited.

Mandatory Tender Offers

The Danish Capital Markets Act (Part 8) and the Danish Executive Order on Takeover include rules concerning public offers for the acquisition of shares admitted to trading on a regulated market (including Nasdaq Copenhagen).

If a shareholding is transferred, directly or indirectly, in a company with one or more share classes admitted to trading on a regulated market, to an acquirer or to persons acting in concert with such acquirer, the acquirer and the persons acting in concert with such acquirer, if applicable, shall give all shareholders of the company the option to dispose of their shares on identical terms, if the acquirer or the persons acting in concert with such acquirer gains control over the company as a result of the transfer.

Control as mentioned above exists if the acquirer or persons acting in concert with such acquirer, directly or indirectly, holds at least one-third of the voting rights in the company, unless it can be clearly proven in special cases that such ownership does not constitute control. An acquirer or persons acting in concert with such acquirer who does not hold at least one-third of the voting rights in a company, nevertheless has control when the acquirer has or persons acting in concert with such acquirer have:

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•

the right to control at least one-third of the voting rights in the company according to an agreement with other investors; or

•

the right to appoint or dismiss a majority of the members of the central governing body.

Voting rights attached to treasury shares shall be included in the calculation of voting rights.

The Danish Capital Markets Act contains specific exemptions from the obligation to submit a mandatory takeover offer, including transfers of shares by inheritance or transfer within the same group and as a result of a creditor’s debt enforcement proceedings. Exemptions from the mandatory tender offer rules may be granted under special circumstances by the FSA.

Comparison of Danish Corporate Law and Our Articles of Association and Delaware Corporate Law

The following comparison between Danish corporate law, which applies to us, and Delaware corporate law, the law under which many publicly listed companies in the United States are incorporated, discusses shareholder rights and obligations and certain additional matters. This summary is subject to Danish law, including the Danish Companies Act, and Delaware corporate law, including the Delaware General Corporation Law. Further, please note that if you are a holder of the ADSs, then you are not treated as one of our shareholders and do not have any shareholder rights in Zealand Pharma A/S.

Shareholder Rights

Notice of Meeting

Denmark.   According to the Danish Companies Act and as implemented in our articles of association, general meetings in listed limited liability companies shall be convened by the board of directors with a minimum of three weeks’ notice and a maximum of five weeks’ notice. A convening notice shall also be forwarded to shareholders recorded in our shareholders’ register who have requested such notification. There are specific requirements as to the information and documentation required to be disclosed in connection with the convening notice.

Delaware.   Under Delaware law, unless otherwise provided in the certificate of incorporation or bylaws, written notice of any meeting of the stockholders must be given to each stockholder entitled to vote at the meeting not less than 10 nor more than 60 days before the date of the meeting and shall specify the place, date, hour and purpose or purposes of the meeting.

Voting Rights

Denmark.   Each share confers the right to cast one vote at the general meeting of shareholders, unless the articles of association 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 us or our 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.

Delaware.   Under the Delaware General Corporation Law, each stockholder is entitled to one vote per share of stock, unless the certificate of incorporation provides otherwise. In addition, the certificate of incorporation may provide for cumulative voting at all elections of directors of the corporation, or at elections held under specified circumstances. Either the certificate of incorporation or the bylaws may specify the number of shares and/or the amount of other securities that must be represented at a meeting in order to constitute a quorum, but in no event can a quorum consist of less than one-third of the shares entitled to vote at a meeting.

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Stockholders as of the record date for the meeting are entitled to vote at the meeting, and the board of directors may fix a record date that is no more than 60 nor less than 10 days before the date of the meeting, and if no record date is set then the record date is the close of business on the day next preceding the day on which notice is given, or if notice is waived then the record date is the close of business on the day next preceding the day on which the meeting is held. The determination of the stockholders of record entitled to notice or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, but the board of directors may fix a new record date for the adjourned meeting.

Shareholder Proposals

Denmark.   According to the Danish Companies Act, extraordinary general meetings of shareholders will be held whenever our board of directors or our appointed auditor requires. In addition, one or more shareholders each representing at least 5% of the registered share capital of the company may, in writing, require that a general meeting be convened. If such a demand is made, the board of directors shall convene the general meeting with three to five weeks notice within 14 days thereafter.

All shareholders have the right to present proposals for adoption at the annual general meeting, provided that the proposals are submitted at least six weeks prior to the meeting. In the event that the request is made at a later date, the board of directors will determine whether the proposals were made in due time to be included on the agenda.

Delaware.   Delaware law does not specifically grant stockholders the right to bring business before an annual or special meeting of stockholders. However, if a Delaware corporation is subject to the SEC’s proxy rules, a stockholder who owns at least $2,000 in market value, or 1% of the corporation’s securities entitled to vote, may propose a matter for a vote at an annual or special meeting in accordance with those rules.

Action by Written Consent

Denmark.   Under Danish law, shareholders may take action and pass resolutions by written consent if such consent is unanimous. However, for a listed company, this method of adopting resolutions is generally not feasible.

Delaware.   Although permitted by Delaware law, publicly listed companies do not typically permit stockholders of a corporation to take action by written consent.

Appraisal Rights

Denmark.   The concept of appraisal rights does not exist under Danish law, except in connection with statutory redemption rights according to the Danish Companies Act.

According to Section 73 of the Danish Companies Act, a minority shareholder may require a majority shareholder that holds more than 90% of the company’s registered share capital to redeem his or her shares. Similarly, a majority shareholder holding more than 90% of the company’s share capital may, according to Section 70 of the Danish Companies Act, squeeze out the minority shareholders. In the event that the parties cannot agree to the redemption squeeze out price, this shall be determined by an independent evaluator appointed by the court. Additionally, there are specific regulations in Sections 249, 267, 285 and 305 of the Danish Companies Act that require compensation in the event of national or cross-border mergers and demergers. Moreover, shareholders who vote against a cross-border merger or demerger are, according to Sections 286 and 306 of the Danish Companies Act, entitled to have their shares redeemed.

Delaware.   The Delaware General Corporation Law provides for stockholder appraisal rights, or the right to demand payment in cash of the judicially determined fair value of the stockholder’s shares, in connection with certain mergers and consolidations.

Shareholder Suits

Denmark.   Under Danish law, only a company itself can bring a civil action against a third party; an individual shareholder does not have the right to bring an action on behalf of a company. However, if shareholders representing at least 10% of the share capital have opposed at a general meeting a decision to

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grant discharge to a member of our board of directors or our executive management or refrain from bringing law suits against, among other persons, a member of our board of directors or executive management, a shareholder may bring a derivative action on behalf of our company against, among other persons, a member of our board of directors or executive management. An individual shareholder may, in its own name, have an individual right to take action against such third party in the event that the cause for the liability of that third party also constitutes a negligent act directly against such individual shareholder.

Delaware.   Under the Delaware General Corporation Law, a stockholder may bring a derivative action on behalf of the corporation to enforce the rights of the corporation. An individual also may commence a class action suit on behalf of himself and other similarly situated stockholders where the requirements for maintaining a class action under Delaware law have been met. A person may institute and maintain such a suit only if that person was a stockholder at the time of the transaction which is the subject of the suit. In addition, under Delaware case law, the plaintiff normally must be a stockholder at the time of the transaction that is the subject of the suit and throughout the duration of the derivative suit. Delaware law also requires that the derivative plaintiff make a demand on the directors of the corporation to assert the corporate claim before the suit may be prosecuted by the derivative plaintiff in court, unless such a demand would be futile.

Repurchase of Shares

Denmark.   Danish limited liability companies may not subscribe for newly issued shares in their own capital. Such companies may, however, according to the Danish Companies Act Sections 196-201, acquire fully paid shares of themselves, provided that the board of directors has been authorized to do so by the shareholders at a general meeting. Such authorization can only be given for a maximum period of five years and the authorization shall fix (i) the maximum value of the shares and (ii) the minimum and the highest amount that the company may pay for the shares. Such purchase of shares may generally only be acquired using distributable reserves. In addition, the board of directors may, on behalf of the company, acquire the company’s own shares, without authorization, in case it is necessary to avoid a considerable and imminent detrimental effect on the company and provided certain conditions are met. In case the company has acquired its own shares under such circumstances the board of directors is obligated to inform the shareholders of such acquisition at the next general meeting.

Delaware.   Under the Delaware General Corporation Law, a corporation may purchase or redeem its own shares unless the capital of the corporation is impaired or the purchase or redemption would cause an impairment of the capital of the corporation. A Delaware corporation may, however, purchase or redeem out of capital any of its preferred shares or, if no preferred shares are outstanding, any of its own shares if such shares will be retired upon acquisition and the capital of the corporation will be reduced in accordance with specified limitations.

Anti-Takeover Provisions

Denmark.   Under Danish law, it is possible to implement limited protective anti-takeover measures. Such provisions may include, among other things, (i) different share classes with different voting rights and (ii) notification requirements concerning participation in general meetings. We have currently not adopted any such provisions, except for the obligation to request an admission card. See description above under the caption “Articles of Association and Danish Corporate Law — Notice Convening Annual and Extraordinary General Meetings.”

Delaware.   In addition to other aspects of Delaware law governing fiduciary duties of directors during a potential takeover, the Delaware General Corporation Law also contains a business combination statute that protects Delaware companies from hostile takeovers and from actions following the takeover by prohibiting some transactions once an acquirer has gained a significant holding in the corporation.

Section 203 of the Delaware General Corporation Law prohibits “business combinations,” including mergers, sales and leases of assets, issuances of securities and similar transactions by a corporation or a subsidiary with an interested stockholder that beneficially owns 15% or more of a corporation’s voting stock, within three years after the person becomes an interested stockholder, unless:

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•

the transaction that will cause the person to become an interested stockholder is approved by the board of directors of the target prior to the transaction;

•

after the completion of the transaction in which the person becomes an interested stockholder, the interested stockholder holds at least 85% of the voting stock of the corporation not including shares owned by persons who are directors and officers of interested stockholders and shares owned by specified employee benefit plans; or

•

after the person becomes an interested stockholder, the business combination is approved by the board of directors of the corporation and holders of at least 66.67% of the outstanding voting stock, excluding shares held by the interested stockholder.

A Delaware corporation may elect not to be governed by Section 203 by a provision contained in the original certificate of incorporation of the corporation or an amendment to the original certificate of incorporation or to the bylaws of the company, which amendment must be approved by a majority of the shares entitled to vote and may not be further amended by the board of directors of the corporation. Such an amendment is not effective until 12 months following its adoption.

Inspection of Books and Records

Denmark.   According to Section 150 of the Danish Companies Act, a shareholder may, at the annual general meeting or at a general meeting whose agenda includes such item, request an inspection of the company’s books regarding specific issues concerning the management of the company or specific annual reports. If approved by shareholders with a simple majority, one or more investigators are elected. If the proposal is not approved by a simple majority but 25% of the share capital votes in favor of the proposal, then the shareholder can request the court to appoint an investigator.

Delaware.   Under the Delaware General Corporation Law, any stockholder may inspect certain of the corporation’s books and records, for any proper purpose, during the corporation’s usual hours of business.

Pre-Emptive Rights

Denmark.   As a general rule, shareholders of the company are entitled to subscribe for new shares in proportion to their existing shareholdings in the event of a cash increase of the share capital. Such a cash increase of the share capital can be resolved by the general meeting by at least two-thirds of the votes cast as well as at least two-thirds of the share capital represented at the general meeting.

However, in the below-mentioned scenarios, the general meeting may resolve to depart from the shareholders’ right to proportionate subscription if the following voting requirements are met:

•

two-thirds majority requirement: if the new shares issued in connection with the capital increase are subscribed for at market price for the benefit of some of the existing shareholders, the above-mentioned two-thirds majority requirement applies;

•

consent requirement: if the new shares issued in connection with the capital increase are subscribed for at a discount for the benefit of some of the existing shareholders, consent from the shareholders who do not get an opportunity to participate in the capital increase must be obtained;

•

two-thirds majority requirement: if the new shares issued in connection with the capital increase are subscribed for at market price for the benefit of parties other than the existing shareholders (i.e., a third party or employees of the company), the above-mentioned two-thirds majority requirement applies; and

•

nine-tenths majority requirement: if the new shares issued in connection with the capital increase are subscribed for at discount for the benefit of parties other than the existing shareholders or the employees of the company, the voting requirement is at least nine-tenths of the votes cast as well as at least nine-tenths of the share capital represented at the general meeting.

The board of directors may resolve to increase our share capital without pre-emptive subscription rights for existing shareholders pursuant to the authorizations described above under the caption “Authorizations to our Board of Directors.”

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Unless future issuances of new shares are registered under the Securities Act or with any authority outside Denmark, U.S. shareholders and shareholders in jurisdictions outside Denmark may be unable to exercise their pre-emptive subscription rights under U.S. securities law.

Delaware.   Under the Delaware General Corporation Law, stockholders have no pre-emptive rights to subscribe for additional issues of stock or to any security convertible into such stock unless, and to the extent that, such rights are expressly provided for in the certificate of incorporation.

Dividends

Denmark.   Under Danish law, the distribution of ordinary and extraordinary dividends requires the approval of a company’s shareholders at a company’s general meeting. In addition the shareholders may authorize the board of directors to distribute extraordinary dividends. We may only pay out dividends from our distributable reserves, which are defined as results from operations carried forward and reserves that are not bound by law after deduction of loss carried forward. It is possible under Danish law to pay out extraordinary dividends. The decision to pay out extraordinary dividends shall be accompanied by a balance sheet, and the board of directors determines whether it will be sufficient to use the statement of financial position from the annual report or if an interim statement of financial position for the period from the annual report period until the extraordinary dividend payment shall be prepared. If the decision to distribute extraordinary 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. Our general meeting of shareholders cannot resolve to distribute dividends at an amount exceeding the amount recommended or approved by our Board of Directors. Moreover, ordinary dividends and extraordinary 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.

Delaware.   Under the Delaware General Corporation Law, a Delaware corporation may pay dividends out of its surplus (the excess of net assets over capital), or in case there is no surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year (provided that the amount of the capital of the corporation is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets). In determining the amount of surplus of a Delaware corporation, the assets of the corporation, including stock of subsidiaries owned by the corporation, must be valued at their fair market value as determined by the board of directors, without regard to their historical book value. Dividends may be paid in the form of shares, property or cash.

Shareholder Vote on Certain Reorganizations

Denmark.   Under Danish law, all amendments to the articles of association shall be approved by the general meeting of shareholders with a minimum of two-thirds of the votes cast and two-thirds of the share capital represented at the general meeting. The same applies to solvent liquidations, mergers with the company as the discontinuing entity, mergers with the company as the continuing entity if shares are issued in connection therewith and demergers. Under Danish law, it is debatable whether the shareholders must approve a decision to sell all or virtually all of the company’s business/assets.

Delaware.   Under the Delaware General Corporation Law, the vote of a majority of the outstanding shares of capital stock entitled to vote thereon generally is necessary to approve a merger or consolidation or the sale of all or substantially all of the assets of a corporation. The Delaware General Corporation Law permits a corporation to include in its certificate of incorporation a provision requiring for any corporate action the vote of a larger portion of the stock or of any class or series of stock than would otherwise be required. However, under the Delaware General Corporation Law, no vote of the stockholders of a surviving corporation to a merger is needed, unless required by the certificate of incorporation, if (1) the agreement of merger does not amend in any respect the certificate of incorporation of the surviving corporation, (2) the shares of stock of the surviving corporation are not changed in the merger and (3) the number of shares of common stock of the surviving corporation into which any other shares, securities or obligations to be issued in the merger may be converted does not exceed 20% of the surviving corporation’s common stock

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outstanding immediately prior to the effective date of the merger. In addition, stockholders may not be entitled to vote in certain mergers with other corporations that own 90% or more of the outstanding shares of each class of stock of such corporation, but the stockholders will be entitled to appraisal rights.

Amendments to Governing Documents

Denmark.   All resolutions made by the general meeting may be adopted by a simple majority of the votes, subject only to the mandatory provisions of the Danish Companies Act and the articles of association. Resolutions concerning all amendments to the articles of association must be passed by two-thirds of the votes cast as well as two-thirds of the share capital represented at the general meeting. Certain resolutions, which limit a shareholder’s ownership or voting rights, are subject to approval by a nine-tenth majority of the votes cast and the share capital represented at the general meeting. Decisions to impose any or increase any obligations of the shareholders towards the company require unanimity.

American Depositary Shares

The Bank of New York Mellon, as depositary, registers and delivers ADSs. Each ADS represents one ordinary share (or a right to receive one ordinary share) deposited with the Copenhagen office of Danske Bank A/S, as custodian for the depositary in Denmark. Each ADS also represents any other securities, cash or other property which may be held by the depositary in respect of the depositary facility. A copy of our Deposit Agreement among us, the depositary, owners and holders of ADSs was filed with the SEC as an exhibit to our registration statement on Form F-1/A filed on August 3, 2017 (File No. 333-219184).

Any ordinary shares that may be issued pursuant to this prospectus and the applicable prospectus supplement, whether directly or upon exercise of warrants, can be deposited for delivery of ADSs. The ADSs may be uncertificated securities or certificated securities evidenced by American Depositary Receipts, or ADRs. The depositary’s office at which the ADSs will be administered and its principal executive office are located at 240 Greenwich Street, New York, New York 10286.

You may hold ADSs either (a) directly (i) by having an American Depositary Receipt, also referred to as an ADR, which is a certificate evidencing a specific number of ADSs, registered in your name, or (ii) by having uncertificated ADSs registered in your name, or (b) indirectly by holding a security entitlement in ADSs through your broker or other financial institution that is a direct or indirect participant in The Depository Trust Company, also called DTC. If you hold ADSs directly, you are a registered ADS holder, also referred to as an ADS holder. This description assumes you are an ADS holder. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.

Registered holders of uncertificated ADSs will receive statements from the depositary confirming their holdings.

As an ADS holder, we will not treat you as one of our shareholders and you will not have shareholder rights. Danish law governs shareholder rights. The depositary will be the holder of the shares underlying your ADSs. As a registered holder of ADSs, you will have ADS holder rights. A deposit agreement among us, the depositary, ADS holders and all other persons indirectly or beneficially holding ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADSs.

The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit agreement and the form of ADR.

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EX-4.1

Exhibit 4.1

ASSET PURCHASE AGREEMENT

Dated as of February 9, 2020

By and Among

Zealand Pharma A/S

as Purchaser,

and

VALERITAS, INC.

as Seller

and

VALERITAS HOLDINGS, INC.

as Company Affiliates

Table of Contents

Page

Article I. PURCHASE AND SALE OF THE PURCHASED ASSETS; ASSUMPTION OF ASSUMED LIABILITIES	2
1.1   Purchase and Sale of the Purchased Assets	2
1.2   Excluded Assets	4
1.3   Assumption of Liabilities	5
1.4   Excluded Liabilities	6
1.5   Post-Closing Liabilities	6
1.6   Assumption/Rejection of Certain Contracts	8
1.7   Disclaimer	10
Article II. CONSIDERATION	10
2.1   Consideration	10
2.2   Withholding	10
2.3   Deposit	11
Article III. CLOSING AND TERMINATION	11
3.1   Closing	11
3.2   Closing Deliveries by Sellers	12
3.3   Closing Deliveries by Purchaser	13
3.4   Termination of Agreement	13
3.5   Procedures Upon Termination	14
3.6   Effect of Termination	14
Article IV. REPRESENTATIONS AND WARRANTIES OF THE SELLERS	15
4.1   Organization and Qualification	15
4.2   Authorization of Agreement	15
4.3   Conflicts; Consents; Compliance with Law	15
4.4   Brokers and Finders	16
4.5   Title to Purchased Assets	16
4.6   Tangible Personal Property	16
4.7   Intellectual Property	16
4.8   Litigation	17
4.9   Inventory	17
4.10   Contracts	17
4.11   Tax Returns; Taxes	18
4.12   Employees; Seller Benefit Plans	18

-i-

Table of Contents

(continued)

Page

4.13   Bank Accounts	19
4.14   Financial Statements	19
4.15   WARN Act	20
4.16   Absence of Certain Changes	20
4.17   Real Property	20
4.18   Environmental Matters	21
4.19   Insurance	21
4.20   Healthcare Regulatory Matters	21
4.21   No Other Representations or Warranties	21
Article V. REPRESENTATIONS AND WARRANTIES OF PURCHASER	22
5.1   Organization and Qualification	22
5.2   Authority	22
5.3   No Inconsistent Obligations	22
5.4   Conflicts; Consents	22
5.5   Brokers	22
5.6   Adequate Assurances Regarding Assigned Contracts	22
5.7   No Litigation	22
5.8   Due Diligence	22
Article VI. EMPLOYEES	23
6.1   Employee Matters	23
Article VII. BANKRUPTCY COURT MATTERS	25
7.1   Approval of Bid Protections	25
7.2   Competing Bid and Other Matters	25
7.3   Sale Order	25
7.4   Contracts	26
7.5   Bankruptcy Filings	26
7.6   Sale Free and Clear	26
Article VIII. COVENANTS AND AGREEMENTS	26
8.1   Conduct of Business of Sellers	26
8.2   Access to Information	27
8.3   Assignability of Certain Contracts	27
8.4   Rejected Contracts	27

-ii-

Table of Contents

(continued)

Page

8.5   Reasonable Efforts; Cooperation	28
8.6   Further Assurances	29
8.7   Notification of Certain Matters	29
8.8   Confidentiality	29
8.9   Preservation of Records	30
8.10   Publicity	30
8.11   Material Adverse Effect	30
8.12   Casualty Loss	30
8.13   No Successor Liability	30
8.14   Seller Assistance	30
Article IX. CONDITIONS TO CLOSING	31
9.1   Conditions Precedent to the Obligations of Purchaser and Sellers	31
9.2   Conditions Precedent to the Obligations of Sellers	31
9.3   Conditions Precedent to the Obligations of Purchaser	32
Article X. ADDITIONAL DEFINITIONS	33
10.1   Definitions	33
Article XI. TAXES	42
11.1   Certain Taxes	42
11.2   Allocation of Purchase Price	42
11.3   Cooperation on Tax Matters	42
11.4   Tax Reporting of Contingent Liabilities	42
Article XII. MISCELLANEOUS	43
12.1   Payment of Expenses	43
12.2   Survival of Representations and Warranties; Survival of Confidentiality	43
12.3   Entire Agreement; Amendments, and Waivers	43
12.4   Execution of Agreement; Counterparts; Electronic Signatures	43
12.5   Governing Law	43
12.6   Jurisdiction, Waiver of Jury Trial	44
12.7   Notices	44
12.8   Binding Effect; Assignment	45
12.9   Severability	45
12.10   Bulk Sales Laws	45

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Table of Contents

(continued)

Page

12.11   Certain Interpretive Matters 45

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INDEX OF EXHIBITS
EXHIBIT A	FORM OF BILL OF SALE
EXHIBIT B	FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT C	FORM OF ASSUMPTION AND ASSIGNMENT OF LEASES
EXHIBIT D	IP ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT E	BIDDING PROCEDURES ORDER
EXHIBIT F	SALE ORDER
EXHIBIT G	ESCROW AGREEMENT

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ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”), dated as of February 9, 2020 (the “Agreement Date”), by and among Zealand Pharma A/S, a Danish limited liability company organized and existing under the laws of Kingdom of Denmark (“Purchaser”) and one or more other persons designated by the Purchaser, and Valeritas, Inc., a Delaware corporation (the “Company”) and Valeritas Holdings, Inc., a Delaware Corporation (together with the Company, each a “Seller” and collectively, the “Sellers”). Purchaser and the Sellers are collectively referred to herein as the “Parties” and individually as a “Party”. For the purposes of this Agreement, capitalized terms used herein shall have the meanings set forth herein or in Article X.

RECITALS

WHEREAS, on February 9, 2020, the Sellers intend to file voluntary petitions (the “Chapter 11 Petitions”) for relief under chapter 11 of title 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) commencing chapter 11 cases (collectively, the “Bankruptcy Cases”).

WHEREAS, the Sellers will continue to manage their properties and operate their businesses as “debtors in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code;

WHEREAS, the Sellers wish to sell the Business;

WHEREAS, Purchaser desires to purchase the Purchased Assets and assume the Assumed Liabilities from the Sellers and the Sellers desire to sell, convey, assign and transfer to Purchaser the Purchased Assets together with the Assumed Liabilities, all in the manner and subject to the terms and conditions set forth in this Agreement and in accordance with sections 105, 363, and 365 and other applicable provisions of the Bankruptcy Code;

WHEREAS, the Purchased Assets and Assumed Liabilities shall be purchased and assumed by Purchaser pursuant to the Sale Order approving such sale, free and clear of all Claims, Liabilities and Encumbrances (other than Permitted Encumbrances), pursuant to sections 105, 363, and 365 of the Bankruptcy Code, and Rules 6004 and 6006 of the Federal Rules of Bankruptcy Procedure, which Sale Order will include the authorization for the assumption by Seller and assignment to Purchaser of the Assigned Contracts and the liabilities thereunder in accordance with section 365 of the Bankruptcy Code, all in the manner and subject to the terms and conditions set forth in this Agreement and the Sale Order and in accordance with other applicable provisions of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure and the Local Rules of Bankruptcy Practice and Procedure for the United States Bankruptcy Court for the District of Delaware (together, the “Bankruptcy Rules”); and

WHEREAS, the board of directors (or similar governing body) of each Seller has determined that it is advisable and in the best interests of such Seller and its constituencies to enter into this Agreement and to consummate the transactions provided for herein, subject to entry of the Sale Order, and each has approved the same.

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, Purchaser and Sellers hereby agree as follows:

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Article I.

PURCHASE AND SALE OF THE PURCHASED ASSETS; ASSUMPTION OF ASSUMED LIABILITIES

1.1Purchase and Sale of the Purchased Assets. Pursuant to sections 105, 363, and 365 of the Bankruptcy Code and on the terms and subject to the conditions set forth herein, at the Closing, Sellers shall sell, transfer, assign, convey, and deliver to Purchaser, and Purchaser (or a designee of Purchaser in the Purchaser’s sole discretion) shall purchase, acquire, and accept from Sellers, free and clear of all Claims, Liabilities and Encumbrances, all of Sellers’ right, title and interest in and to its medical technology business, including but not limited to h-Patch and the V-Go® Wearable Insulin Delivery device (and including all versions thereof, including but not limited to V-Go Sim, V-Go Prefill) (the “Business”), including but not limited to the following, but excluding the Excluded Assets, (the “Purchased Assets”) as of the Closing:

(a)all of Sellers’ properties, rights, claims, and assets (other than the Excluded Assets) of every kind and description, wherever situated or located, real, personal, or mixed, tangible or intangible, contingent, owned, leased, or licensed, used or held for use in, or otherwise relating to, useful in or necessary for the conduct of the Business, whether or not reflected on the books and records of Sellers, as the same shall exist on the Closing Date;

(b)subject to Section 1.6, all Contracts, agreements and purchase and sale orders that (i) are not Rejected Contracts (as defined in Section 1.6(a)(i)), (ii) have not expired prior to the Closing Date and (iii) are listed on Schedule 1.1(b), as it may be amended from time to time in accordance with Section 1.6, including all rights under any lease for Assumed Leased Real Property and any customer contracts and any contract renewal rights, (the “Assigned Contracts”), and all rights thereunder, but excluding obligations under the DIP Financing Agreements and any contracts related to providing financing to the Sellers on or prior to the Closing Date (the “Excluded Contracts”);

(c)except as set forth on Schedule 1.1(c), all trade and non-trade accounts receivable, notes receivable, and negotiable instruments payable to Sellers, but excluding intercompany Indebtedness among the Sellers, if any (the “Accounts Receivable”);

(d)all Cash and Cash Equivalents other than as provided herein;

(e)all Documents relating to the Business, Purchased Assets or Assumed Liabilities, including, without limitation, customer lists;

(f)the Leased Real Property listed on Schedule 1.1(f) (the “Assumed Leased Real Property”), including any security deposits or other deposits delivered in connection therewith;

(g)all tangible assets of Sellers relating to the Business, other than the assets set forth on Schedule 1.1(g), including, without limitation, the tangible assets of Seller located at any Assumed Leased Real Property or at the Locations listed on Schedule 1.1(f);

(h)all Documents relating to and personnel files for Transferred Employees except as prohibited by Law; provided, however, that Sellers have the right to retain duplicate copies to the extent required by Law;

(i)any chattel paper owned or held by Sellers relating to the Business or the Purchased Assets other than the Excluded Assets;

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(j) any lock boxes to which account debtors of the Sellers remit payment relating to the Business or the Purchased Assets other than the Excluded Assets;

(k)all Permits and all pending applications therefor;

(l)all express or implied guarantees, warranties, representations, covenants, indemnities, rights, claims, counterclaims, defenses, credits, causes of action or rights of set off against third parties relating to the Purchased Assets (including, for the avoidance of doubt, those arising under, or otherwise relating to the Assigned Contracts) or Assumed Liabilities, including rights under vendors’ and manufacturers’ warranties, indemnities, guaranties and avoidance claims and causes of action under the Bankruptcy Code or applicable Law that are possessed by the Sellers;

(m)all Seller Intellectual Property, including all Seller Registered Intellectual Property (including all of the items set forth in Schedule 4.7(a)), and all of the Sellers’ rights therein;

(n)all goodwill, payment intangibles and general intangible assets and rights of Seller to the extent associated with, held for use in, or otherwise relating to, useful in or necessary for the conduct of, the Business or the Purchased Assets other than the Excluded Assets;

(o)all Inventory, including raw materials, work in process, parts, subassemblies and finished goods, wherever located and whether or not obsolete or carried on the Sellers’ books of account, in each case with any transferable warranty and service rights of the applicable Seller with respect to such Purchased Assets;

(p)all financial accounting and other financial books and records, a copy of Tax Returns, and canceled checks, correspondence, and all customer sales, marketing, advertising, packaging and promotional materials, files, data, software (whether written, recorded or stored on disk, film, tape or other media, and including all computerized data, all to the extent transferrable), drawings, engineering and manufacturing data and other technical information and data, and all other business and other records, in each case arising under or relating to the Purchased Assets, the Assumed Liabilities or the Business generally, provided, however, that Sellers have the right to retain duplicate copies of all of the foregoing;

(q)all rights and claims under or arising out of all insurance policies relating to the Business or any of the Purchased Assets (including proceeds, condemnation awards or other compensation in respect of loss or damage to the Purchased Assets, returns and refunds of any premiums paid, or other amounts due back to Sellers, with respect to cancelled policies) but excluding any insurance policies relating to any Benefit Plan (other than an Assumed Plan);

(r)except to the extent set forth on Schedule 1.1(r), all rights and obligations under non-disclosure or confidentiality, invention or other Intellectual Property assignment agreements, restrictive covenant agreements, and similar arrangements with employees and agents of Sellers (including the foregoing or similar arrangements entered into in connection with or in contemplation of the filing of the Bankruptcy Cases and the Auction contemplated by the Bidding Procedures Order);

(s)all Benefit Plans (including but not limited to all assets, trusts, insurance policies, and administration service contracts related thereto) listed on Schedule 1.1(s) (collectively, the “Assumed Plans”), which schedule shall be delivered pursuant to 6.1(f);

(t)all fixed assets and other personal property and interests related to the Business or Purchased Assets, wherever located, including all vehicles, tools, parts and supplies, fuel, machinery, equipment, furniture, furnishing, appliances, fixtures, office equipment and supplies, owned and licensed computer hardware and related documentation, stored data, communication equipment, trade fixtures, and leasehold improvements, in each case with any freely transferable warranty and service rights of the applicable Seller with respect to such Purchased Assets;

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(u)telephone, fax numbers, and email addresses;

(v)all prepaid expenses or other prepaid items related to the Business or Purchased Assets;

(w)except to the extent set forth on Schedule 1.2(j), any and all credits, claims, deposits, prepayments, refunds, rebates, causes of action, rights of recovery, rights of set-off, and rights of recoupment relating to or in respect of the Business or the Purchased Assets, including with respect to Taxes;

(x)except to the extent set forth on Schedule 1.1(x), all Bank Accounts; and

(y)all avoidance claims or causes of action arising under Chapter 5 of the Bankruptcy Code or applicable Law, and all other claims or causes of action under any other provision of the Bankruptcy Code or applicable laws relating to the Purchased Assets and/or Assumed Liabilities, including all actions against current or former officers of the Debtors and actions relating to vendors and service providers used in the Business that are counterparties to Assigned Contracts or relating to Assumed Liabilities (collectively, the “Avoidance Actions”).

1.2Excluded Assets. Notwithstanding anything to the contrary in this Agreement, in no event shall Sellers be deemed to sell, transfer, assign or convey, and Sellers shall retain all right, title and interest to, in, and under only the following assets, properties, interests, and rights of such Seller (collectively, the “Excluded Assets”):

(a)any asset of Sellers that otherwise would constitute a Purchased Asset but for the fact that it is sold or otherwise disposed of in compliance with the terms and conditions of this Agreement, including Section 8.1 hereof, during the time from the Agreement Date until the Closing Date;

(b)all agreements and Contracts of Sellers other than the Assigned Contracts, including the Rejected Contracts, the Excluded Contracts and any Contracts listed on Schedule 1.2(b);

(c)all Documents and all personnel records of Sellers’ employees that any Seller is required by Law to retain; provided, however, that Sellers shall promptly provide Purchaser with copies of any of the foregoing upon request by the Purchaser unless prohibited by Law from providing copies thereof to Purchaser;

(d)all shares of capital stock or other equity interests issued by any Seller or securities convertible into, exchangeable, or exercisable for any such shares of capital stock or other equity interests;

(e)all Claims that any of the Sellers may have against any Person with respect to any Excluded Assets or any Excluded Liabilities;

(f)Sellers’ rights under this Agreement, the Purchase Price hereunder, any agreement, certificate, instrument, or other document executed and delivered by Purchaser to any Seller in connection with the transactions contemplated hereby, or any side agreement between any Seller and Purchaser entered into on or after the Agreement Date;

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(g) all current and prior director and officer insurance policies of the Sellers and all rights of any nature with respect thereto, including all insurance recoveries thereunder and rights to assert claims with respect to any such insurance recoveries;

(h)the Sellers’ financial accounting books and records, corporate charter, minute and stock record books, Tax Returns, corporate seal, and, to the extent no constituting or relating to the Purchased Assets, checkbooks and canceled checks, however, that Sellers shall promptly provide Purchaser with copies of any of the foregoing upon request by the Purchaser unless prohibited by Law from providing copies thereof to Purchaser;

(i)all Benefit Plans, together with all funding arrangements or obligations of any type relating thereto (including all assets, trusts, insurance policies and administration service contracts related thereto) except for the Assumed Plans;

(j)except to the extent set forth on Schedule 1.2(j), any and all claims, deposits, prepayments, refunds, rebates, causes of action, rights of recovery, rights of set-off, and rights of recoupment relating to or in respect of an Excluded Asset;

(k)all Tax assets (including duty and Tax refunds and prepayments) relating to the Business, the Purchased Assets or Assumed Liabilities; and

(l)the Intellectual Property listed on Schedule 1.2(l) (the “Excluded Intellectual Property”).

1.3Assumption of Liabilities. On the terms and subject to the conditions set forth in this Agreement and the Sale Order, effective as of the Closing, Purchaser (or a designee of Purchaser in Purchaser’s sole discretion) shall assume from the Sellers (and pay, perform, discharge or otherwise satisfy in accordance with their respective terms), and the Sellers shall irrevocably convey, transfer and assign to Purchaser, the “Assumed Liabilities” and only the Assumed Liabilities and no other obligations or liabilities. “Assumed Liabilities” shall mean only the following Liabilities:

(a)all Liabilities of Sellers arising from the ownership of the Purchased Assets by the Purchaser, solely to the extent arising after the Closing Date;

(b)[intentionally omitted]

(c)Liabilities and obligations of Sellers under the Purchased Assets and under the Assigned Contracts, including, without limitation, all prepetition cure costs required to be paid pursuant to section 365 of the Bankruptcy Code in connection with the assumption and assignment of the Assigned Contracts in an amount not to exceed US$1,500,000 (the “Cure Cap”);

(d)US$400,000 in payment to Roche required in June 2020 under the Roche License Agreement;

(e)all Liabilities and obligations of Sellers under any contract that is an Assigned Contract, solely to the extent arising after the Closing Date;

(f)all Liabilities with respect to open purchase orders set forth on Schedule 1.3(c) arising out of the conduct of the Business and incurred in the Ordinary Course of Business; and

(g)all Liabilities, if any, set forth on Schedule 1.3(g).

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The assumption by Purchaser of the Assumed Liabilities shall not, in any way, enlarge the rights of any third parties relating thereto.

1.4         Excluded Liabilities. Notwithstanding any provision in this Agreement to the contrary, Purchaser is assuming only the Assumed Liabilities and is not assuming, and shall not be deemed to have assumed, any other Liabilities of any Seller of whatever nature (whether arising prior to, at the time of, or subsequent to Closing), whether absolute, accrued, contingent or otherwise, whether due or to become due and whether or not assets, and whether or not known or unknown or currently existing or hereafter arising or matured or unmatured, direct or indirect, and the Sellers shall be solely and exclusively liable for any and all such Liabilities, including those relating to, arising out of or in connection with the operation of the Business or the Purchased Assets (including the use and ownership thereof) at any time prior to the Closing Date, and including, without limitation, those Liabilities set forth below (collectively, the “Excluded Liabilities”):

(a)all Liabilities of the Sellers relating to or otherwise arising, whether before, on or after the Closing, out of, or in connection with, any of the Excluded Assets;

(b)any and all Liabilities for Indebtedness, including all intercompany Indebtedness among the Sellers, except as set forth on Schedule 1.4(b);

(c)all guarantees of third-party obligations and reimbursement obligations to guarantors of Sellers’ obligations or under letters of credit;

(d)any and all (i) Taxes of the Sellers (or any member, stockholder or Affiliate of the Sellers), or for which the Sellers (or any member, stockholder or Affiliate of the Sellers) are liable, for any taxable period (other than Transfer Taxes), (ii) any Taxes imposed on any Person that are the responsibility of the Sellers pursuant to Section 11.1, (iii) any Taxes attributable to the ownership of the Purchased Assets, the operation of the Business, or related to the Assumed Liabilities for any Pre-Closing Tax Period, (iv) any Taxes arising from or in connection with an Excluded Asset or Excluded Liability; and (v) Taxes imposed on Purchaser as a result of the parties’ failure to comply with any bulk sales Law and other similar Laws in any applicable jurisdiction in respect of the transactions contemplated by this Agreement;

(e)any and all Liabilities of the Sellers in respect of Contracts that are not Assigned Contracts;

(f)except as specifically provided with respect to any Assumed Plans, all Liabilities relating to or in any way arising out of any present and past employees of Sellers or their Affiliates and/or the employment or service of any such Person including with respect to any Benefit Plans, other plans, programs, policies, commitments, terms and conditions of employment, employment decisions, compensation or other benefits or entitlements established or existing on or prior to Closing (whether or not such liabilities are accrued or payable at Closing, and whether or not such liabilities are contingent in nature), including, without limitation, any liability (i) for any accrued wages or salaries for periods prior to the Closing, (ii) for severance, dismissal pay damages or otherwise in connection with any termination of employment by Sellers or their Affiliates on or prior to the Closing, (iii) for accrued vacation or sick time accrued prior to the Closing, (iv) relating to any Benefit Plan and any Contract or insurance policy or other funding medium with respect thereto, (v) for misclassification of any employee or independent contractor prior to the Closing, or (vi) any commission, transaction incentive bonus, change in control bonus or payment, “stay” bonus or similar arrangement or agreement that is owed to employees or other service providers of Sellers or their Affiliates that arose on, prior to or in connection with the Closing, whether due, payable or accrued prior to or after the Closing;

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(g) drafts or checks outstanding at the Closing (except to the extent an Assumed Liability or relating to an Assigned Contract);

(h)all Liabilities under any futures contracts, options on futures, swap agreements or forward sale agreements;

(i)all Liabilities for fees, costs and expenses that have been incurred or that are incurred or owed by Sellers in connection with this Agreement or the administration of the Bankruptcy Cases (including all fees and expenses of professionals engaged by Sellers) and administrative expenses and priority claims accrued through the Closing Date and all post-closing administrative wind-down expenses of the bankrupt estates pursuant to the Bankruptcy Code (which such amounts shall be paid by the Sellers) and all costs and expenses incurred in connection with (i) the negotiation, execution and consummation of the transactions contemplated under this Agreement and each of the other documents delivered in connection herewith, (ii) the preparation and submission of any filing or notice required to be made or given in connection with any of the transactions contemplated by this Agreement, and the obtaining of any consent required to be obtained in connection with any of such transactions, (iii) the negotiation, execution and consummation of the DIP Financing Agreements, and (iv) the consummation of the transactions contemplated by this Agreement, including any retention bonuses, “success” fees, change of control payments and any other payment obligations of Sellers payable as a result of the consummation of the transactions contemplated by this Agreement and the documents delivered in connection herewith;

(j)all Liabilities related to the WARN Act, to the extent applicable, for any action resulting from Employees’ separation of employment prior to or on the Closing Date;

(k)all Liabilities of any Seller to its equity holders, including but not limited to those respecting dividends, distributions in liquidation, redemptions of interests, option payments or otherwise, and any Liability of any Seller pursuant to any Affiliate Agreement;

(l)all Liabilities arising out of or relating to any business or property formerly owned or operated by any Seller, any Affiliate or predecessor thereof, but not presently owned and operated by the Sellers;

(m)all Liabilities relating to claims, actions, suits, arbitrations, litigation matters, proceedings or investigations (in each case whether involving private parties, Governmental Bodies, or otherwise), including any potential claims, rights, or causes of action under Chapter 5 of the Bankruptcy Code (11 U.S.C. §§ 501-562), involving, against, or affecting any Purchased Asset, the Business, the Products, any Seller, or any assets or properties of any Seller, whether commenced, filed, initiated, or threatened before or after the Closing and whether relating to facts, events, or circumstances arising or occurring before or after the Closing;

(n)all obligations of the Sellers arising and to be performed prior to the Closing Date arising from or related to the Business or the Purchased Assets;

(o)all Environmental Liabilities and Obligations;

(p)all Liabilities of any Seller or their predecessors arising out of any contract, agreement, Permit, franchise or claim that is not transferred to Purchaser as part of the Purchased Assets or, is not transferred to Purchaser because of any failure to obtain any third-party or governmental consent required for such transfer;

(q)all Liabilities of any kind relating to Avoidance Actions;

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(r) all Liabilities for intercompany Indebtedness, accounts payable, or other Liabilities or obligations that are owed or payable to any Seller or for which any Seller is an obligor or is otherwise responsible or liable;

(s)all Liabilities of any Seller relating to the sale of any product included in the Purchased Assets prior to Closing (including claims related to or arising from returns, rebates, coupon programs, chargebacks, credits, warranties or expirations);

(t)all payroll Liabilities and withholding obligations related thereto during any payroll period prior to or that included the Closing Date;

(u)all Cure Costs in excess of the Cure Cap;

(v)all Liabilities with respect to any and all 503(b)(9) Claims; and

(w)all other Liabilities set forth on Schedule 1.4(w).

1.5Post-Closing Liabilities. Except as provided in Section 1.4, Purchaser acknowledges that Purchaser shall be responsible for all Liabilities and obligations relating to Purchaser’s ownership or use of, or right to use, the Purchased Assets and the Assumed Liabilities after the Closing Date, including all Taxes arising out of or related to the Purchased Assets or the operation of conduct of the Business acquired pursuant to this Agreement for all tax periods beginning after the Closing Date.

1.6Assumption/Rejection of Certain Contracts.

(a)Assignment and Assumption at Closing.

(i)Schedule 1.6(a) sets forth a list of all executory Contracts (including all leases with respect to Leased Real Property (the “Real Property Leases”)) to which one or more of the Sellers are party as of the date hereof and as of the Closing Date and the Sellers’ good faith estimate of the Cure Costs. From and after the date hereof until the Closing, Schedule 1.6(a) shall be updated in accordance with the procedures set forth in Section 1.6(b)(i). Notwithstanding anything to the contrary in Section 1.1, all Contracts of Sellers that are not listed on Schedule 1.6(a), or any Contract listed on Schedule 1.6(a) but not also listed on Schedule 1.1(b), in each case at or after the Closing, shall not be considered an Assigned Contract or Purchased Asset and shall be deemed “Rejected Contracts” for which the Purchaser shall have no obligations.

(ii)At Seller’s sole cost and expense (except as otherwise set forth herein with respect to Cure Costs), Sellers shall take all actions required to assume and assign the Assigned Contracts to Purchaser. Such actions shall include payment of Cure Costs in excess of the Cure Cap, facilitating any negotiations with the counterparties to such Assigned Contracts, and obtaining an Order containing a finding that the proposed assumption and assignment of the Assigned Contracts to Purchaser satisfies all applicable requirements of section 365 of the Bankruptcy Code.

(iii)At Closing, (x) Sellers shall, pursuant to the Sale Order and the Assumption and Assignment Agreement or the Assumption and Assignment of Leases, as applicable, assume and assign to Purchaser (the consideration for which is included in the Purchase Price) each of the Assigned Contracts that is capable of being assumed and assigned and pay all unpaid Cure Costs (if any) in excess of the Cure Cap in connection with such assumption and assignment, and (y) Purchaser shall pay promptly all Cure Costs (up to the Cure Cap), and shall assume, perform, and discharge the Assumed Liabilities (if any) under the Assigned Contracts, pursuant to the Assumption and Assignment Agreement or the Assumption and Assignment of Leases, as applicable.

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(b)Previously Omitted Contracts.

(i)If prior to or following Closing, it is discovered that a Contract should have been listed on Schedule 1.6(a) but was not listed on Schedule 1.6(a), or if Purchaser desires, in its sole discretion, to acquire any Contract listed on Schedule 1.6(a) that is not also listed on Schedule 1.1(b) (including any Rejected Contract prior to the entry by the Bankruptcy Court of an order with respect thereto) (any such Contract, a “Previously Omitted Contract”), then (x) in the case of the discovery of such a Previously Omitted Contract or receipt of notice from Purchaser of its desire to acquire any such Previously Omitted Contract prior to the Closing, Sellers shall, promptly, following the discovery thereof or receipt of such notice (but in no event later than two (2) Business Days following the discovery thereof or receipt of such notice), notify Purchaser in writing of such Previously Omitted Contract and all Cure Costs (if any) in excess of the Cure Cap for such Previously Omitted Contract or (y) in the case of the discovery of such a Previously Omitted Contract or receipt of notice from Purchaser of its desire to acquire any such Previously Omitted Contract following the Closing, Seller shall, promptly following the discovery thereof or receipt of such notice from Purchaser (but in no event later than two (2) Business Days following the discovery thereof or receipt of such notice), notify Purchasers in writing of such Previously Omitted Contract and all Cure Costs (if any) in excess of the Cure Cap for such Previously Omitted Contract. Purchaser shall thereafter deliver written notice to Sellers, no later than five (5) Business Days following notification of such Previously Omitted Contract’s Cure Costs , designating such Previously Omitted Contract as “Assumed” or “Rejected” (a “Previously Omitted Contract Designation”). A Previously Omitted Contract designated in accordance with this Section 1.6(b)(i) as “Rejected,” or with respect to which Purchaser fails to timely deliver a Previously Omitted Contract Designation, shall be a Rejected Contract.

(ii)If Purchaser designates a Previously Omitted Contract as “Assumed” in accordance with Section 1.6(b)(i), Sellers shall, within five (5) business days following receipt of Purchaser’s designation of the Previously Omitted Contract as “Assumed” (A) amend Schedule 1.6(a) to include such Previously Omitted Contract and (B) serve a notice (the “Previously Omitted Contract Notice”) on the counterparties to such Previously Omitted Contract notifying such counterparties of the Cure Costs with respect to such Previously Omitted Contract and Sellers’ intention to assume and assign such Previously Omitted Contract in accordance with this Section 1.6. The Previously Omitted Contract Notice shall provide the counterparties to such Previously Omitted Contract with fifteen (15) Business Days to object, in writing to the Sellers and Purchaser, to the Cure Costs associated with the assumption of its Contract. If the counterparties, Sellers and Purchaser are able to reach a consensual resolution with respect to the objection, such Previously Omitted Contract shall be added to Schedule 1.1(b) and shall be an “Assigned Contract” for purposes of this Agreement. If the counterparties, Sellers, and Purchaser are unable to reach a consensual resolution with respect to the objection, the Sellers shall seek an expedited hearing before Bankruptcy Court to determine the Cure Costs and approve the assumption/assignment of the Previously Omitted Contract to the Purchaser; provided, that the Purchaser shall be under no obligation to accept the assignment of such Contract to Purchaser. If no objection is timely served on and received by the Sellers and Purchaser, Sellers shall obtain an order of the Bankruptcy Court approving the Cure Costs and assumption/assignment of the Previously Omitted Contract. The payment of the Cure Costs and all other costs associated with the process of assuming and assigning the Previously Omitted Contract shall be the responsibility of Purchaser (to the extent the Cure Cap is not exceeded) or the Seller (for all amounts in excess of the Cure Cap). If the Bankruptcy Court approves the assumption/assignment of the Previously Omitted Contract to the Purchaser and the Purchaser accepts such assignment, such Previously Omitted Contract shall be deemed added to Schedule 1.1(b) and shall be an “Assigned Contract” for purposes of this Agreement.

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(c)Removal of Assigned Contracts. If, prior to Closing, Purchaser desires, in its sole discretion, to remove any Contract from Schedule 1.1(b), then Purchaser shall provide Seller with notice of its desire to remove such Contract prior to the Closing and Schedule 1.1(b) hereof shall be deemed automatically amended to remove such Contract (such Contract, after removal, a “Removed Contract”). A Removed Contract shall not be considered an Assigned Contract or Purchased Asset and shall be deemed a Rejected Contract for which the Purchaser shall have no obligations (including, for the avoidance of doubt, any obligations with respect to Cure Costs).

(d)Production of Contracts. Sellers shall promptly provide Purchasers with true and correct copies of the Contracts on Schedule 1.6(a), as well as any Previously Omitted Contract, upon request of Purchaser.

1.7Disclaimer. PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT AS PROVIDED IN THIS AGREEMENT OR ANY CERTIFICATE OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, SELLERS MAKE NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY MATTER RELATING TO THE PURCHASED ASSETS. WITHOUT LIMITING THE FOREGOING, SELLERS HEREBY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE AS TO ANY PORTION OF THE PURCHASED ASSETS. PURCHASER FURTHER ACKNOWLEDGES THAT PURCHASER HAS CONDUCTED AN INDEPENDENT INSPECTION AND INVESTIGATION OF THE PHYSICAL CONDITION OF THE PURCHASED ASSETS AND ALL SUCH OTHER MATTERS RELATING TO OR AFFECTING THE PURCHASED ASSETS AS PURCHASER DEEMED NECESSARY OR APPROPRIATE AND THAT IN PROCEEDING WITH ITS ACQUISITION OF THE PURCHASED ASSETS, EXCEPT FOR ANY REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, PURCHASER IS DOING SO BASED SOLELY UPON SUCH INDEPENDENT INSPECTIONS AND INVESTIGATIONS. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE FOREGOING LIMITATIONS SHALL NOT APPLY TO, AND NOTHING HEREIN SHALL LIMIT, THE PURCHASER’S REMEDIES IN THE EVENT OF FRAUD.

Article II.

CONSIDERATION

2.1Consideration.

(a)The aggregate consideration (collectively, the “Purchase Price”) to be paid for the purchase of the Purchased Assets shall be: (i) the assumption of Assumed Liabilities and (ii) US$23,000,000, in cash in immediately available funds (the “Cash Consideration”); provided, however, that Purchaser reserves the right to increase the Purchase Price, subject to the Bidding Procedures Order and applicable Law.

(b)Limitation on Purchaser Liability. For the avoidance of doubt, Purchaser shall have no liability with respect to any costs, fees, or expenses of any nature incurred by the Sellers or, if different, the Debtors, following the Closing Date.

2.2Withholding. Purchaser shall be entitled to deduct and withhold from all amounts payable pursuant to this Agreement all amounts that Purchaser may be required to deduct and withhold under any provision of applicable Law. To the extent such amounts are withheld and paid over to the applicable Governmental Body, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid. Purchaser will use reasonable efforts to reduce or eliminate any such withholding including by requesting any appropriate Tax forms, including IRS Form W-9 or the appropriate series of IRS Form W-8, as applicable, or any similar information, from the applicable payee prior to withholding on any such payment.

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2.3Deposit. No later than two (2) Business Days following the entry of the Bidding Procedures Order, Purchaser will make an earnest money deposit in the amount of US$2,300,000 (the “Deposit”) to the Escrow Agent pursuant to the terms of the Escrow Agreement. If the Closing occurs, the Deposit shall be applied against payment of the Purchase Price on the Closing Date. If this Agreement is terminated pursuant to Sections 3.4(a)-(e) or Section 3.4(g) hereof, or in the event that any Person other than Purchaser purchases all or any material portion of the Purchased Assets, then the Deposit shall be returned to Purchaser promptly, and in no event later than two (2) Business Days after such termination, and the parties agree that they will promptly execute joint written instructions to the Escrow Agent pursuant to the Escrow Agreement to effect such return of the Deposit. If this Agreement shall be terminated by the Sellers pursuant to Section 3.4(f) hereof, then Seller shall retain the Deposit, and the parties agree that they will promptly execute joint written instructions to the Escrow Agent pursuant to the Escrow Agreement to effect such retention of the Deposit. The Parties agree that the Sellers’ right to retain the Deposit, as set forth herein, is not a penalty, but rather is liquidated damages in a reasonable amount that will compensate the Sellers for their respective efforts and resources expended and the opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the transactions contemplated hereby, which amount would otherwise be impossible to calculate with precision. Notwithstanding anything to the contrary in this Agreement, the Parties agree that if this Agreement is terminated under circumstances in which Sellers are entitled to the Deposit, the delivery of the Deposit is the sole and exclusive remedy available to Sellers with respect to this Agreement and the transactions contemplated hereby, and, upon delivery of the Deposit, none of the Purchaser or any of its former, current or future equity holders, directors, officers, Affiliates, agents or Representatives (collectively, the “Purchaser Releasees”) shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby.

Article III.

CLOSING AND TERMINATION

3.1Closing. Subject to the satisfaction or waiver by the appropriate Party of the conditions set forth in Article IX, the closing of the purchase and sale of the Purchased Assets, the payment of the Purchase Price, the assumption of the Assumed Liabilities, and the consummation of the other transactions contemplated by this Agreement (the “Closing”) shall occur as soon as practicable following the satisfaction or waiver of all conditions set forth in this Agreement (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions). The Closing shall take place by telephone conference and electronic exchange of documents (or, if the Parties agree to hold a physical closing, at the offices of DLA Piper LLP (US), 1201 North Market Street, Suite 2100, Wilmington, Delaware 19801, or at such other place as the Parties may agree). Unless otherwise agreed by the Parties in writing, the Closing shall be deemed effective and all right, title and interest of each of the Sellers in the Purchased Assets to be acquired by Purchaser hereunder shall be deemed to have passed to Purchaser and the assumption of all of the Assumed Liabilities shall be deemed to have occurred as of 12:01 a.m. prevailing Eastern Time on the Closing Date.

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3.2Closing Deliveries by Sellers. At or prior to the Closing, the Sellers shall deliver to Purchaser:

(a) a bill of sale in the form of Exhibit A or such other form as is agreed to by the Purchaser (the “Bill of Sale”) duly executed by the Sellers;

(b)an assignment and assumption agreement in the form of Exhibit B or such other form as is agreed to by the Purchaser (the “Assignment and Assumption Agreement”) duly executed by the Sellers;

(c)a certified copy of the Sale Order;

(d)copies of all instruments, certificates, documents, and other filings (if applicable) necessary to release the Purchased Assets from all Encumbrances, all in a form reasonably satisfactory to Purchaser;

(e)documentation satisfactory to the Purchaser evidencing any waivers, consents, and approvals necessary or required to (i) effect the transfer and assignment of the Purchased Assets and Assigned Contracts and (ii) operate the Business in the Ordinary Course of Business from and after the Closing;

(f)an officer’s certificate, dated as of the Closing Date, executed by a duly authorized officer of each of the Sellers certifying that the conditions set forth in Section 9.3 have been satisfied;

(g)a copy of the resolutions adopted by the board of directors (or similar governing body) of each of the Sellers evidencing the authorization of the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, certified by an authorized officer of such Seller;

(h)an instrument of assumption and assignment of the Assumed Leased Real Property substantially in the form of Exhibit C (the “Assumption and Assignment of Leases”), duly executed by the Sellers, in form for recordation with the appropriate public land records, if necessary;

(i)an Intellectual Property Assignment and Assumption Agreement substantially in the form of Exhibit D (the “IP Assignment and Assumption Agreement”), executed accordingly by the Sellers;

(j)possession of the Purchased Assets and the Business;

(k)such other bills of sale, deeds, endorsements, assignments and other good and sufficient instruments of conveyance and transfer, in form reasonably satisfactory to Purchaser, as Purchaser may reasonably request to vest in Purchaser all of Sellers’ right, title and interest of Sellers in, to or under any or all the Purchased Assets;

(l)evidence satisfactory to the Purchaser that Sellers paid all Cure Costs in excess of the Cure Cap to the Assigned Contract counterparties;

(m)from each Seller, (A) a non-foreign Person affidavit from such Seller dated as of the date hereof, sworn under penalties of perjury and in form and substance required under the Treasury Regulations issued pursuant to Section 1445 of the Code, stating that such Seller is not a “foreign person” as defined in Code Section 1445 and (B) a duly completed and executed IRS Form W-9;

(n)evidence satisfactory to the Purchaser that all 503(b)(9) Claims have been satisfied by the Sellers or will be satisfied by the Sellers; and

(o)such other documents as Purchaser may reasonably request that are not inconsistent with the terms of this Agreement and customary for a transaction of this nature and necessary to evidence or consummate the transactions contemplated by this Agreement.

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3.3Closing Deliveries by Purchaser. At the Closing, Purchaser shall deliver to (or at the direction of) the Company:

(a)the Assignment and Assumption Agreement duly executed by Purchaser;

(b)the Intellectual Property Assignment and Assumption Agreement, executed by Purchaser;

(c)satisfactory evidence of payment of the Cure Costs up to the Cure Cap;

(d)the Cash Consideration;

(e)the Assumption and Assignment of Leases, duly executed by the Purchaser;

(f)an officer’s certificate, dated as of the Closing Date, executed by a duly authorized officer of Purchaser certifying that the conditions set forth in Sections 9.2(a) and 9.2(b) have been satisfied;

(g)all other certificates, agreements and other documents required by this Agreement (or as the Sellers may reasonably request that are customary for a transaction of this nature and necessary to evidence or consummate the transactions contemplated by this Agreement) to be delivered by Purchaser at or prior to the Closing in connection with the transactions contemplated by this Agreement; and

(h)any other agreements expressly required by the terms of this Agreement.

3.4Termination of Agreement. This Agreement may be terminated only in accordance with this Section 3.4. This Agreement may be terminated at any time prior to the Closing, as follows:

(a)by the mutual written consent of the Company and Purchaser;

(b)by written notice of either the Company or the Purchaser to such other Party, if the Closing shall not have been consummated prior to May 9, 2020 (the “Outside Date”)^; provided, however, that the Outside Date may be extended by the mutual written consent of Sellers and Purchaser, for a period up to thirty (30) days to the extent that all conditions to Closing set forth in this Agreement are capable of being satisfied as of such time; provided further, however, that a Party shall not be permitted to terminate this Agreement pursuant to this Section 3.4(b) if the failure of the Closing to occur prior to the Outside Date is as a result of the failure of the Party seeking to terminate this Agreement to materially perform any of its obligations or covenants under this Agreement required to be performed by it at or prior to the Closing;

(c)by written notice from Purchaser to the Company, if (i) any Seller seeks to have the Bankruptcy Court enter an Order dismissing, or converting into cases under chapter 7 of the Bankruptcy Code, any of the cases commenced by Sellers under chapter 11 of the Bankruptcy Code and comprising part of the Bankruptcy Cases, appointing a chapter 11 trustee in the Bankruptcy Cases, or appointing a responsible officer or an examiner with enlarged power relating to the operation of the Business (beyond those set forth in section 1106(a)(3) or (4) of the Bankruptcy Code) under section 1106(b) of the Bankruptcy Code, or (ii) an order of dismissal, conversion, or appointment is entered for any reason and is not reversed or vacated within fourteen (14) days after entry thereof;

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(d) by written notice of either the Company or Purchaser, if any Seller has entered into any agreement or understanding with respect to or initiated proceedings regarding an Alternative Transaction or if proceedings related to an Alternative Transaction has otherwise been initiated;

(e)automatically upon closing of an Alternative Transaction;

(f)by written notice from the Company to Purchaser, if Purchaser shall have materially breached or failed to perform in any respect any representations, warranties or covenants of Purchaser contained in this Agreement and such breach or failure to perform: (i) would give rise to the failure of a condition set forth in Section 9.1 or 9.2, (ii) cannot be or has not been cured within ten (10) days following delivery of notice to Purchaser of such breach or failure to perform and (iii) has not been waived by the Company; or

(g)by written notice from Purchaser to the Company, if any Seller shall have materially breached or failed to perform in any respect any of its representations, warranties, or covenants contained in this Agreement, any certificate delivered by a Seller pursuant to this Agreement or the Bidding Procedures Order or Sale Order and such breach or failure to perform: (i) would give rise to the failure of a condition set forth in Section 9.1 or Section 9.3, (ii) cannot be or has not been cured within ten (10) days following delivery of notice to the Company of such breach or failure to perform, and (iii) has not been waived by Purchaser.

Each condition set forth in this Section 3.4, pursuant to which this Agreement may be terminated shall be considered separate and distinct from each other such condition. If more than one of the termination conditions set forth in this Section 3.4 is applicable, the applicable Party shall have the right to choose the termination condition pursuant to which this Agreement is to be terminated. The Parties acknowledge and agree that no notice of termination or extension of the Outside Date provided pursuant to this Section 3.4 shall become effective upon receipt.

3.5Procedures Upon Termination. In the event of termination and abandonment by Purchaser or Sellers, or both such Parties, pursuant to Section 3.4 hereof, written notice thereof shall forthwith be given to the other Party or Parties, and this Agreement shall terminate, and the purchase of the Purchased Assets and the assumption of the Assumed Liabilities hereunder shall be abandoned, without further action by Purchaser or Sellers. If this Agreement is terminated pursuant to any of Sections 3.4(a)-(e) or Section 3.4(g) (regardless of simultaneous occurrence of any other condition set forth in Section 3.4), in addition to the return of the Deposit pursuant to procedures in Section 2.3, Sellers shall pay in cash to Purchaser the Expense Reimbursement and, only if this agreement is terminated pursuant to Section 3.4(d) (only to the extent no transaction of the type described herein with Purchaser is ultimately consummated) or Section 3.4(e), the Break-Up Fee in an aggregate amount equal to US$690,000 (the “Break-Up Fee” and, together with the Expense Reimbursement, the “Bid Protections”), and the Parties shall have no further obligations to one another except for any obligations that, by their terms, survive the termination of this Agreement, as described in Section 3.6.

3.6Effect of Termination. In the event of termination of this Agreement pursuant to Section 3.4, this Agreement shall forthwith become null and void and there shall be no liability on the part of any Party or any of its partners, officers, directors or shareholders; provided, however, that (a) this Section 3.6, Section 2.3, the Sellers’ obligation to pay the Bid Protections pursuant to Section 3.5 and Section 7.1, Article XII (Miscellaneous), and the Bidding Procedures Order (if entered) shall survive any such termination. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by Law. Each Party acknowledges that the agreements contained in this Section 3.6 and in Section 3.5 are an integral part of the transactions contemplated by this Agreement, that without these agreements such Party would not have entered into this Agreement, and that any amounts payable pursuant to this Section 3.6 and Section 3.5 do not constitute a penalty.

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Article IV.

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

Subject to the exceptions noted in the Disclosure Schedules delivered by the Sellers concurrently herewith, and except as publicly disclosed by the Company in its financial statements, or the notes thereto, filed with the U.S. Securities and Exchange Commission from December 31, 2017 through January 1, 2019 (provided, however, that such disclosure shall be deemed not to include any predictive, cautionary or forward looking disclosures or any similar general precautionary statements and any other disclosures in such financial statements or notes that are predictive, cautionary or forward looking in nature) the Sellers represent and warrant to Purchaser as follows as of the Agreement Date and as of the Closing Date:

4.1Organization and Qualification. Each Seller is a legal entity duly incorporated or organized, validly existing, and in good standing under the Laws of the jurisdiction of its incorporation or formation. Such Seller has all requisite power and authority to own, lease, and operate its properties and to carry on its business (including the Business) as it is now being conducted, subject to the provisions of the Bankruptcy Code. Each Seller has previously delivered to Purchaser complete and correct copies of its Organizational Documents, as amended and in effect on the Agreement Date. None of the Sellers is in violation of any of the provisions of its Organizational Documents. Each Seller is duly qualified or licensed to do business and is in good standing in each jurisdiction where the character of the Business or the nature of its properties makes such qualification or licensing necessary.

4.2Authorization of Agreement. Subject to the entry of the Sale Order, each Seller has all requisite power and authority to execute and deliver this Agreement and each of the Ancillary Documents to which it is a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each of the Ancillary Documents to which it is a party, the performance by each Seller of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary action on the part of each Seller. This Agreement has been, and at or prior to the Closing, each of the Ancillary Documents to which it is a party will be, duly and validly executed and delivered by each Seller and (assuming the due authorization, execution, and delivery by the other Parties, and the entry of the Sale Order) this Agreement constitutes, and each Ancillary Document to which it is a party when so executed and delivered (assuming the due authorization, execution and delivery by the other parties thereto) will constitute, legal, valid, and binding obligations of each Seller, enforceable against each Seller in accordance with its terms. Subject to entry of the Sale Order, except (a)) for entry of the Sale Order, (b) for notices, filings and consents required in connection with the Bankruptcy Cases, and (c) for the notices, filings and consents set forth on Schedule 4.2(c) (if any), Sellers are not required to give any notice to, make any registration, declaration or filing with or obtain any consent, waiver or approval from, any Person (including any Governmental Body) in connection with the execution and delivery of this Agreement and each of the Ancillary Documents or the consummation or performance of any of the transactions contemplated hereby and thereby.

4.3               Conflicts; Consents; Compliance with Law.

(a)Except as set forth on Schedule 4.3(a), the execution, delivery, and performance by each Seller of this Agreement or any Ancillary Document to which it is a party, the compliance by Sellers with any of the provisions hereof or thereof, the consummation of the transactions contemplated hereby or thereby and the taking by Sellers of any other action contemplated hereby or thereby, do not and will not (with or without notice, or lapse of time or both): (i) contravene, violate or conflict with any term or provision of its respective Organizational Documents; (ii) conflict with or result in any breach or violation of or constitute a default or change of control under, or give rise to a right of, or result in, termination, modification, cancellation, first offer, first refusal or acceleration of any obligation or to the loss of a benefit under any Assigned Contract; (iii) result in the creation or imposition of any Encumbrance on any Purchased Asset; (iv) conflict with or violate any Order or Law applicable to any Seller or their respective properties, rights or assets, except in the case of the foregoing clauses (ii), (iii) and (iv), for breaches, violations, defaults, rights, creations or impositions that are excused by or unenforceable as a result of the entry or effectiveness of the Sale Order.

(b)Except (i) for the entry of the Sale Order, and (ii) as set forth on Schedule 4.3(b), no filing with, notice to, or consent from any Person is required in connection with the execution, delivery and performance by each Seller of this Agreement or the Ancillary Documents to which it is a party, the compliance by Seller with any of the provisions hereof or thereof, the consummation of the transactions contemplated hereby or thereby, or the taking by any Seller of any other action contemplated hereby or thereby.

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(c)Each Seller is in compliance, in all material respects with all applicable Orders and Laws. Except as set forth on Schedule 4.3(c), no Seller has received any outstanding written notice from any Governmental Body regarding any actual or possible violation of, or failure to comply in any respect with, any Order or Law. No Seller is in default in any material respect of any order, writ, injunction, judgment, or decree applicable to the Business or the Purchased Assets.

(d)Notwithstanding the foregoing, each Seller is in compliance, in all material respects, with all reporting requirements for medical device products under regulations promulgated by the FDA (the “Reporting Requirements”), as necessary to, in the Ordinary Course of Business, obtain and maintain Regulatory Approvals. Schedule 4.3(d) identifies each Regulatory Approval that is held by Seller and/or any Affiliate of any Seller that relates to or is used in the Business. Each such Regulatory Approval is valid and in full force and effect. No event has occurred, and no condition or circumstance exists, that might (with or without notice or lapse of time) (i) constitute or result directly or indirectly in a violation of or a failure to comply with any term or requirement of any Regulatory Approval, or (ii) result directly or indirectly in the revocation, withdrawal, suspension, cancellation, termination or negative modification of any Regulatory Approval.

(e)Each Seller has filed, or a Representative on behalf of such Seller has filed, with the FDA or other appropriate Governmental Body all required notices, including any Medical Device Reports.

(f)Neither Sellers nor, to the Knowledge of Seller, any of Sellers’ Representatives has committed any act, made any statement or failed to make any statement that would reasonably be expected to provide a basis for the FDA to invoke its policy with respect to “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities” set forth in 56 Fed. Reg. 46191 (September 10, 1991) (the “Fraud Policy”) and any amendments thereto. Neither Sellers, nor to the Knowledge of Sellers, any Representative of any Seller has been convicted of any crime or engaged in any conduct that would reasonably be expected to result, or has resulted, in (i) debarment under 21 U.S.C. Section 335a or any similar state Law, or (ii) exclusion under 42 U.S.C. Section 1320a-7 or any similar state Law. To the Knowledge of Sellers, no Seller is the subject of any pending or threatened investigation by the FDA pursuant to the Fraud Policy or by any Governmental Body pursuant to a comparable policy.

(g)There are no investigations, suits, arbitrations, charges, complaints, claims, actions or proceedings against or affecting any Seller relating to or arising under the Federal Food, Drug, and Cosmetic Act, the FDA regulations adopted thereunder, or any other legislation or regulation promulgated by any other Governmental Body.

4.4Brokers and Finders. Except as set forth on Schedule 4.4, no Person has acted, directly or indirectly, as a broker, finder, or financial advisor for Sellers in connection with the transactions contemplated by this Agreement. Purchaser is not or will not become obligated to pay any fee or commission or like payment to any broker, finder, or financial advisor as a result of the consummation of the transactions contemplated by this Agreement based upon any arrangement made by or on behalf of Sellers.

4.5Title to Purchased Assets. Except for Permitted Encumbrances, Sellers have good title to or, in the case of property leased by Sellers, a valid leasehold interest in or all rights to use all of the Purchased Assets and, at the Closing, Purchaser, pursuant to the Sale Order, shall acquire good and marketable title or, in the case of property leased by the Sellers, a valid leasehold interest, in, and under all of such Purchased Assets, in each case free and clear of all Claims, Liabilities and Encumbrances to the fullest extent permissible under sections 363(f) and 365 of the Bankruptcy Code and Bankruptcy Rules 6004 and 6006. The Purchased Assets (i) include all of the properties, rights and assets necessary or required to operate the Business in the Ordinary Course of Business and (ii) are sufficient for the continued conduct of the Business after the Closing in the Ordinary Course of Business and in substantially the same manner as conducted prior to the Closing. For the sake of clarity, the right to use any assets included in the Purchased Assets in which Sellers have leasehold or non-ownership rights to use shall be assigned to Purchaser only through the assumption and assignment of the Assigned Contracts in accordance with and subject to this Agreement.

4.6Tangible Personal Property. Schedule 4.6 sets forth all leases of personal property (“Personal Property Leases”) relating to personal property used by Sellers or to which any Seller is a party or by which the properties or assets of any Seller are bound, in each case relating to the Business. Each Seller has a valid and enforceable leasehold interest under each Personal Property Lease under which it is a lessee.

4.7Intellectual Property. Schedule 4.7(a) sets forth an accurate and complete list of all Seller Registered Intellectual Property. Except as set forth on Schedule 4.7(b)(i), Sellers own all right, title, and interest to, or possess valid and binding licenses to use, the Seller Intellectual Property. Except as set forth on Schedule 4.7(b)(ii), Seller can convey the Seller Intellectual Property free and clear of Encumbrances pursuant to the Sale Order. No third party has brought any claim in any suit or action that has been served on any Seller related to the Seller Intellectual Property. To the Knowledge of Sellers, no Person is engaging in any activity that infringes any Seller Intellectual Property. No claim has been asserted to any Seller that the use of any Seller Intellectual Property or the operation of the Business infringes or violates the Intellectual Property of any third party. The Seller Intellectual Property and the rights under the Assigned Contracts include the rights to use all Intellectual Property required to operate the Business in the Ordinary Course of Business, as currently conducted and as currently proposed to be conducted.

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4.8Litigation. Except as set forth on Schedule 4.8 and other than the Bankruptcy Cases, there is no suit, action, litigation, arbitration proceeding, or governmental proceeding or audit, including appeals and applications for review, in progress, pending or, to the best of Sellers’ Knowledge, threatened, nor is there any judgment, decree, injunction, deficiency, rule or order of any court, governmental department, commission, agency, instrumentality or arbitrator which, in any case, (i) relates to any Seller, or any of the assets owned or used by the Sellers, including the Business, the Products, the Purchased Assets or the Assumed Liabilities, or any Person whose Liability the Sellers have or may have assumed, either contractually or by operation of law, or (ii) challenges, or would be reasonably be expected to have the effect of preventing, delaying, making illegal or otherwise interfering with the transactions contemplated by this Agreement. Sellers have no Knowledge of any existing ground on which any such action, suit, litigation, audit or proceeding may be commenced with any reasonable likelihood of success.

4.9Inventory.

(a)No Inventory is materially damaged in any significant way, including, but not limited to, damage caused by water, except for any such damage which would not have a material and adverse effect on the Inventory taken as a whole.

(b)The Inventory is not part of or subject to a current or past recall (including, to the Sellers’ Knowledge, any threatened recall), nor have any such recalls been pending at any time.

(c)All Inventory was manufactured, and has been shipped, stored, and otherwise maintained in accordance with, to the extent applicable, Good Manufacturing Practice requirements of the FDA and any other applicable Law.

(d)The Inventory is free of any defect or deficiency and is in working condition except for such failure to be in working condition which would not have a material and adverse effect on the Inventory taken as a whole.

(e)Sellers do not hold any Inventory on consignment.

4.10               Contracts.

(a)Schedule 4.10(a)(X) contains a complete and correct list, as of the date hereof, of each Contract that is material to the Seller Intellectual Property or the operation of the Business under which any Seller has any current or future rights, responsibilities, obligations or Liabilities (in each case, whether contingent or otherwise) or to which any Seller is a party or to which any of their respective properties or assets is subject (all Contracts of the type described in this Section 4.10(a), whether or not set forth on Schedule 4.10(a)(X), being referred to herein as the “Material Contracts”). Schedule 4.10(a)(Y) contains a complete and correct list, as of the date hereof, of each Contract that would otherwise be disclosed on Schedule 4.10(a)(X) but for the fact that the Contract has terminated or has not been renewed and the parties to such Contract are still performing, whether in whole or in part, in accordance with the terms of such Contract. Schedule 4.10(a)(Z) contains a complete and correct list (divided by subtypes) of each Contract listed on Schedule 4.10(a)(X) or 4.10(a)(Y):

(i)relating to sales and distribution activities conducted by a third party wholesaler or distributor or any contract with a pharmacy benefit manager;

(ii)relating to marketing and advertising of the Business, including the Products; or

(iii)relating to the ongoing supply or manufacturing of clinical and commercial quantities of any of the Products.

(b)True and complete copies of each Material Contract in effect as of the date hereof have been made available to the Purchaser. No Seller is in breach of or default under the terms of any Material Contract, except as would not have a material and adverse effect on the Business. To the Knowledge of the Sellers, as of the date hereof, no other party to any Material Contract is in breach of or default under the terms of any Material Contract. To the Knowledge of the Sellers, no event has occurred that would, with or without notice or lapse of time or both, result in any breach or violation of or constitute a default or give rise to any right of termination, acceleration, vesting, payment, exercise or revocation under any Material Contract. Each Material Contract is a valid, binding and enforceable obligation of the Seller party thereto and, to the Knowledge of the Sellers, of each other party thereto, and is in full force and effect.

(c)Except as set forth on Schedule 4.10(c), Sellers have not, and, to Sellers’ Knowledge, no other party to any Assigned Contract has, commenced any action against any of the parties to any Assigned Contract or given or received any written notice of any default or violation under any Assigned Contract that has not been withdrawn or dismissed except to the extent such default or violation will be cured as a result of the payment of the applicable Cure Costs. Assuming payment of the Cure Costs, each Assigned Contract is, or will be upon the Closing, valid, binding and in full force and effect in accordance with its terms.

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4.11Tax Returns; Taxes.

(a)All Tax Returns required to have been filed by the Sellers with respect to the Purchased Assets or the Business have been duly and timely filed and are true, correct, and complete in all material respects and have been prepared in accordance with all applicable Law. Except as set forth on Schedule 4.11(a), no Seller is currently the beneficiary of any extension of time within which to file any Tax Return. True and correct copies of Sellers’ Tax Returns filed since December 31, 2015 with respect to the Purchased Assets or the Business have been delivered to Purchaser (or its representatives) prior to the Agreement Date.

(b)The Sellers have timely paid all Taxes required to have been paid by them with respect to the Purchased Assets or the Business (whether or not shown on any Tax Returns), other than Taxes that are not yet due and payable. No deficiency for any Tax with respect to the Purchased Assets or the Business has been asserted or assessed by a Governmental Body against the Sellers which deficiency has not been paid in full.

(c)The Sellers have timely collected, withheld and paid to the appropriate Governmental Body all Taxes with respect to the Purchased Assets or the Business required to have been collected, withheld and paid under applicable Law, including collections and withholdings with respect to amounts paid or owing to any employee, independent contractor, customer, creditor, stockholder or other third party.

(d)No written claim has ever been made by a Governmental Body in a jurisdiction where the Sellers do not file Tax Returns that a Seller is or may be subject to taxation or required to file Tax Returns in that jurisdiction with respect to the Purchased Assets or the Business. The Sellers are not subject to any Tax payment obligation or Tax Return filing obligation in any jurisdiction outside the United States with respect to the Purchased Assets or the Business.

(e)Except as set forth on Schedule 4.11(e), no Tax Proceeding is being asserted in writing against any of the Sellers with respect to the Purchased Assets or the Business, nor to the Knowledge of the Sellers, has any claim with respect to Taxes relating to the Purchased Assets or the Business been threatened or asserted in writing.

(f)There are no Encumbrances for Taxes on the Purchased Assets, other than Permitted Encumbrances.

(g)None of the Sellers is a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2.

(h)None of the Purchased Assets or the Business constitutes a direct or indirect interest in any trust, partnership, corporation, limited liability company, or other “business entity” for U.S. federal income Tax purposes.

(i)None of the Purchased Assets are (i)  “tax-exempt use property” within the meaning of Section 168(h)(1) of the Code, (ii) “tax-exempt bond financed property” within the meaning of Section 168(g) of the Code, (iii) subject to Section 168(g)(1)(A) of the Code, or (iv) subject to a “section 467 rental agreement” as defined in Section 467 of the Code.

4.12Employees; Seller Benefit Plans.

(a)Sellers have provided Purchaser with a true, complete, and correct list of the Employees as of the Agreement Date, specifying their position, FLSA classification, annual salary, target bonus opportunity, value of accrued but unused vacation time, date of hire and current leave status. The Sellers are in compliance in all material respects with all Laws relating to the employment, classification, and termination of employment of the Employees.

(b)Except as set forth on Schedule 4.12(b), there are no Actions pending or, to the Knowledge of any Seller, threatened, against any Seller by any Employee, former employee, or current or former service provider of any Seller.

(c)Set forth on Schedule 4.12(c) is a true and complete list of each Benefit Plan. As applicable with respect to each Benefit Plan, the Sellers have delivered to Purchaser true and complete copies of (i) each plan document, including all amendments thereto, and in the case of an unwritten plan, a written description thereof, (ii) all current trust documents, investment management contracts, custodial agreements and insurance contracts relating thereto, (iii) the current summary plan description and each summary of material modifications thereto, (iv) the most recent Internal Revenue Service (“IRS”) determination or opinion letter, as applicable, (v) the most recent summary annual report, actuarial report, financial statement and trustee report and non-discrimination test results, and (vi) any material correspondence with a Governmental Body.

(d)Each Benefit Plan has been maintained, operated, and administered in compliance in all material respects with its terms and any related documents or agreements and the applicable provisions of ERISA, the Code and all other Laws. Each Benefit Plan intended to be qualified under Section 401(a) of the Code is so qualified and heretofore been determined by the IRS to be so qualified and, nothing has occurred since the issuance of each such letter that could reasonably be expected to cause the loss of the tax-qualified status of any such Benefit Plan. All contributions and payments required to be made by the Sellers or any ERISA Affiliate to or with respect to any Benefit Plan have been timely paid.

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(e)There are no pending audits or investigations by any Governmental Body involving any Benefit Plan, and no pending or, to the Knowledge of the Sellers, threatened claims (except for individual claims for benefits payable in the normal operation of the Benefit Plans), suits or proceedings involving any Benefit Plan, any fiduciary thereof or service provider thereto, nor to the Knowledge of the Sellers is there any reasonable basis for any such audit, investigation, claim, suit, or proceeding.

(f)No Benefit Plan provides benefits, including, without limitation, death or medical benefits, beyond termination of service or retirement other than coverage mandated by law and neither the Sellers nor any ERISA Affiliate has made a written or oral representation promising the same.

(g)No Seller or any ERISA Affiliate has ever maintained, sponsored, participated in, contributed to, or been obligated to contribute to, or otherwise incurred any obligation or liability (including any contingent liability) under any “multiemployer plan” (as defined in Section 3(37) of ERISA) or to any “pension plan” (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA or Section 412 of the Code. No Seller nor any ERISA Affiliate has any actual or potential withdrawal liability for any complete or partial withdrawal (as defined in Sections 4203 and 4205 of ERISA) from any multiemployer plan.

(h)The Sellers’ execution of, and performance of the transactions contemplated by this Agreement could not reasonably be expected to, either alone or in connection with any other event(s), (I) result in any payment or benefit, result in the funding of any payment or benefit, or increase in payments or benefits or acceleration in the timing of payments or benefits becoming due to any current or former employee, director, officer, or independent contractor of any Seller, (II) limit the right to merge, amend, or terminate any Benefit Plan, (III) result in the payment or provision of an “excess parachute payment” under Section 280G of the Code, whether under a Benefit Plan or otherwise, (IV) directly or indirectly cause Sellers or any of their ERISA Affiliates to transfer or set aside any assets to fund or otherwise provide for the benefits under any Benefit Plan for any current or former employee, officer or director, or (V) result in any requirement to pay any Tax “gross-up” or similar “make whole” payment to any employee or officer of Sellers or any ERISA Affiliate.

(i)Each Benefit Plan that constitutes a “non-qualified deferred compensation plan” within the meaning of Section 409A of the Code, complies in both form and operation with the requirements of Section 409A of the Code so that no amounts paid pursuant to any such Benefit Plan is subject to Tax under Section 409A of the Code.

(j)The employment of each Employee of Sellers is at-will without required payment of severance or other consideration, except as set forth on Schedule 4.12(j).

(k)No Benefit Plan is sponsored, maintained or contributed to under the law or applicable custom or rule of the any jurisdiction outside of the United States.

4.13Bank Accounts. Schedule 4.13 sets forth a complete list of all bank accounts (including any deposit accounts, securities accounts and any sub-accounts) of Sellers (the “Bank Accounts”).

4.14Financial Statements.

(a)The Sellers have timely filed all reports, schedules, forms, statements or other documents required to be filed by them under the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”), or the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”), as the case may be, since January 1, 2017 (collectively, the “Seller SEC Reports”). Each Seller SEC Report (i) as of its date, complied as to form in all material respects with the applicable requirements of the Securities Act or the Exchange Act, as the case may be, as in effect on the date so filed and (ii) did not, at the time it was filed (or, if subsequently amended or supplemented, at the time of such amendment or supplement), contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

(b)The Sellers have made available to the Purchaser complete and accurate copies of the following financial statements (collectively the “Financial Statements”): (i) the audited consolidated balance sheet of the Sellers as of December 31, 2018 and December 31, 2017, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit) and cash flows for each fiscal year then ended; and (ii) the unaudited consolidated balance sheet of the Sellers as of September 30, 2019 and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit) and cash flows for the nine (9) months then ended. Subject to the notes thereto, the Financial Statements were prepared in accordance with GAAP consistently applied during the periods involved and present fairly, in all material respects, the consolidated financial position, results of operations, changes in stockholders’ equity (deficit) and cash flows of the Sellers as of the respective dates and for the respective periods referred to in the Financial Statements (in the case of quarterly Financial Statements, subject to normal year-end adjustments). There are no Liabilities of the Business (whether accrued, absolute, contingent or otherwise) required under GAAP to be reflected on the Financial Statements that are not reflected therein other than (i) Liabilities incurred in the Ordinary Course of Business since September 30, 2019 and (ii) Liabilities that are not, or would not reasonably be expected to be, individually or in the aggregate, material to the Business.

(c)The Sellers established and maintain disclosure controls and procedures and internal controls over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, and which include policies and procedures that: (a) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Sellers, (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the Sellers and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Sellers that could have a material effect on the Financial Statements.

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4.15WARN Act. No Seller has, within the ninety (90) days immediately prior to the Closing Date, in whole or in part taken any action or actions which would, independent of the transaction contemplated hereby, result in a plant closing or mass layoff, temporary or otherwise, within the meaning of the WARN Act, or any similar Law.

4.16Absence of Certain Changes.

(a)Except as set forth on Schedule 4.16(a), since September 30, 2019, there has not been a Material Adverse Effect.

(b)Except as set forth on Schedule 4.16(b) or as expressly required pursuant to this Agreement, from September 30, 2019 to the Agreement Date, Sellers have not:

(i)except for executory contracts and unexpired leases rejected by Sellers pursuant to a Bankruptcy Court order with the prior written consent of Purchaser, terminated, modified, or amended any material Assigned Contract or taken any action which materially violates, materially conflicts with, or resulted in a material breach of any provision of, or constitutes a default under, or give rise to the right of any counterparty to accelerate the obligations under or modify the terms of, any Assigned Contract;

(ii)purchased or otherwise acquired any material properties or assets (tangible or intangible) or sold, leased, transferred, or otherwise disposed of any Purchased Assets, except for purchases of materials and sales of Inventory in the Ordinary Course of Business, (i) permitted, allowed, or suffered any of the Purchased Assets to be subjected to any Encumbrance (other than Permitted Encumbrances), or (ii) removed any equipment or other material assets (other than Inventory) from the Leased Real Property other than in the Ordinary Course of Business;

(iii) waived or released any claim or rights included in or related to the Purchased Assets or the Business, except for adjustments to the value of Inventory in the Ordinary Course of Business;

(iv)entered into any material contractual relationship with any third party related to the Purchased Assets or the Business;

(v)adopted, amended or terminated any Benefit Plan;

(vi)except for consequences relating to the filing of the Bankruptcy Cases, conducted the Business outside the Ordinary Course of Business;

(vii)changed in any way Sellers’ accounting methods, principles, or practices other than required by changes in GAAP;

(viii)incurred any Indebtedness or paid, discharged, or satisfied any claims, Liabilities or obligations, other than the incurrence of Indebtedness under the DIP Financing Agreements and the payment, discharge, or satisfaction in the Ordinary Course of Business of Liabilities incurred in the Ordinary Course of Business;

(ix)allowed any Permit held by any Seller to terminate, expire, or lapse relating to the Purchased Assets or the Business, except for any such damage as would not have a material and adverse effect on the Business;

(x)made or changed any Tax election, filed any amended Tax Return, entered into any closing agreement, settled any Tax claim or assessment, surrendered any right to claim a refund of Taxes, consented to any extension or waiver of the limitation period applicable to any Tax claim or assessment, incurred any liability for Taxes outside the ordinary course of business, failed to pay any Tax that became due and payable (including any estimated tax payments), prepared or filed any Tax Return in a manner inconsistent with past practice, or adopted or changed any accounting method in respect of Taxes; or

(xi)agreed or committed to do any of the foregoing.

4.17Real Property. No Seller owns any real property. Schedule 4.17 sets forth a complete and correct list of all Real Property Leases. Complete and correct copies of the Real Property Leases have been made available to the Purchaser prior to the date hereof. No Seller has subleased, licensed or otherwise granted any Person the right to use or occupy any real property or any portion thereof. Each Real Property Lease is valid, binding and in full force and effect, and no uncured default of a material nature on the part of any Seller or, to the Knowledge of the Sellers, the landlord thereunder exists with respect to any Real Property Lease. The Sellers have good and valid leasehold interest in or contractual right to use or occupy, subject to the terms of the applicable Real Property Lease, the Leased Real Property. As of the date hereof, no party, other than the Sellers, has any right to use or occupy the Leased Real Property or any portion thereof, whether as tenants, subtenants, trespassers or otherwise. The Leased Real Property is in good condition and repair (ordinary wear and tear excepted) and is sufficient for the operation of the Business in the Ordinary Course of Business and the uses in which such property is presently employed.

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4.18Environmental Matters. Each Seller is in material compliance with all applicable Environmental Laws. The Sellers possess all permits and approvals issued pursuant to any applicable Law relating to the protection of the environment or, as such relates to exposure to Hazardous Materials, to health and safety that are required to conduct the Business, and are in material compliance with all such permits and approvals. No Releases of Hazardous Materials have occurred at, on, from or under any real property currently or, to the Knowledge of the Sellers, formerly owned or operated by any Seller in a manner that would reasonably be expected to result in a Liability under any Environmental Laws. There is no Action currently pending or, to the Knowledge of the Sellers, threatened alleging that a Seller is or may be in violation of or liable under, any Environmental Law. No Seller has entered into or agreed to any consent decree or order or is subject to any judgment, decree or judicial order relating to compliance with Environmental Laws or the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous Materials.

4.19Insurance. Schedule 4.19 sets forth a complete and correct list, as of the date hereof, of all insurance policies maintained by any Seller with respect to the Business, the Products, the Purchased Assets or the Assumed Liabilities, including in respect of properties, buildings, equipment, fixtures, employees and operations. All such insurance policies (i) are, to the Knowledge of the Sellers, in full force and effect and all premiums thereon have been paid, and, to the Knowledge of the Sellers, the Sellers are otherwise in compliance in all material respects with the terms and provisions of such policies, (ii) such policies provide insurance in such amounts and against such risks as is sufficient to comply with applicable Law, and (iii) the Sellers are not in breach or default of such policies and have not taken any action or failed to take any action which, with notice, the lapse of time or the happening of any other event or condition, would constitute such a breach or default, or permit termination or modification of, any of such insurance policies. To the Sellers’ Knowledge there are no pending notices of cancellation or non-renewal of any such insurance policy nor has the termination of any such insurance policy been threatened, and, to the Knowledge of the Seller, there exists no event, occurrence, condition or act (including the purchase of the Purchased Assets hereunder) that, with the giving of notice, the lapse of time or the happening of any other event or condition, would entitle any insurer to terminate or cancel any such insurance policies.

4.20Healthcare Regulatory Matters. Each Seller is, and at all times has been, in material compliance with all applicable Healthcare Laws. Each Seller possesses all Permits required to conduct its operations, which are set forth on Schedule 4.20, is in material compliance with all such Permits, and has not received any notice of any revocation of, or modification to, any such Permit. Except as set forth on Schedule 4.20, Seller represents that each Permit is transferrable to Purchaser subject to making all appropriate filings with the applicable Governmental Bodies. In addition, each Seller maintains compliance plans that were created to reasonably assure that (1) any Person providing healthcare services to or on behalf of a Seller or (2) any employee or individual contractor of a Seller, in either case (1) or (2), is in compliance in all material respects with all applicable Healthcare Laws and are structured to account for the guidance issued by the U.S. Department of Health and Human Services regarding characteristics of effective corporate compliance programs. No Seller is a “covered entity” or “business associate” as such terms are defined under HIPAA and has not entered into a business associate agreement as described under HIPAA. No Seller has received any notice of any Action or third party notice alleging that any Seller product, operation or activity is in violation of any Healthcare Laws nor, to any Seller’s Knowledge, is any such Action been threatened. Each Seller has filed, maintained or submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any healthcare Permit or Healthcare Laws in all material respects, and all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete and accurate on the date filed in all material respects (or were corrected or supplemented by a subsequent submission). No Seller or any of their respective employees, officers, directors, or agents is a party to any corporate integrity agreements, monitoring agreements, consent decrees, settlement orders, or similar agreements with, or imposed by, any Governmental Body. Neither the Sellers nor any of their respective employees, officers, directors, or agents have been excluded, suspended or debarred from participation in any U.S. federal health care program or human clinical research or is subject to a governmental inquiry, investigation, proceeding, or other similar action that would reasonably be expected to result in debarment, suspension, or exclusion therefrom.

4.21No Other Representations or Warranties. PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT AS PROVIDED IN THIS AGREEMENT OR ANY CERTIFICATE OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, SELLERS MAKE NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY MATTER RELATING TO THE PURCHASED ASSETS. WITHOUT LIMITING THE FOREGOING, SELLERS HEREBY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE AS TO ANY PORTION OF THE PURCHASED ASSETS. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE FOREGOING LIMITATIONS SHALL NOT APPLY TO, AND NOTHING HEREIN SHALL LIMIT, THE PURCHASER’S REMEDIES IN THE EVENT OF FRAUD.

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Article V.

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Subject to the exceptions noted in the schedules delivered by Purchaser concurrently herewith, Purchaser represents and warrants to the Sellers as follows as of the Agreement Date and as of the Closing Date:

5.1               Organization and Qualification. Purchaser is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization. Purchaser has all requisite power and authority to own, lease and operate its properties and to carry on its business (including the Business) as it is now being conducted, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Purchaser’s ability to consummate the transactions contemplated hereby.

5.2               Authority. Purchaser has the requisite power and authority to execute and deliver this Agreement and each of the Ancillary Documents to which it is a party, to perform its obligations hereunder and thereunder, to consummate the transactions contemplated hereby and thereby and to assume and perform the Assumed Liabilities. The execution and delivery of this Agreement by Purchaser and each of the Ancillary Documents to which it is a party, the performance by Purchaser of its obligations hereunder and thereunder, the consummation of the transactions contemplated hereby and thereby, and the assumption and performance of the Assumed Liabilities have been duly and validly authorized by all necessary actions on the part of Purchaser. This Agreement has been, and at or prior to the Closing, each of the Ancillary Documents to which it is a party will be, duly and validly executed and delivered by Purchaser. Assuming the due authorization, execution and delivery of this Agreement and the Ancillary Documents by the Sellers and subject to the effectiveness of the Sale Order, this Agreement constitutes, and each Ancillary Document to which Purchaser is a party when so executed and delivered will constitute, legal, valid, and binding obligations of Purchaser, enforceable against Purchaser in accordance with its terms.

5.3               No Inconsistent Obligations. Neither the execution and delivery of this Agreement or any other documents contemplated hereby, nor the consummation of the transactions contemplated herein or therein in accordance with the Sale Order, will, to Purchaser’s Knowledge, result in a violation or breach of, or constitute a default under, (a) the Organizational Documents of Purchaser, (b) any applicable ruling or order of any Governmental Body, (c) any term or provision of any contract or agreement to which Purchaser is a party (d) any writ, order, judgment, decree, law, rule, regulation, or ordinance, applicable to Purchaser or (e) any other commitment or restriction to which Purchaser is a party, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Purchaser’s ability to consummate the transactions contemplated hereby.

5.4               Conflicts; Consents.

(a) The execution, delivery and performance by Purchaser of this Agreement or any Ancillary Document to which it is a party, the compliance by Purchaser with any of the provisions hereof or thereof, the consummation of the transactions contemplated hereby or thereby and the taking by Purchaser of any other action contemplated hereby or thereby, do not and will not contravene, violate or conflict with any term or provision of its Organizational Documents, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Purchaser’s ability to consummate the transactions contemplated hereby.

(b)Except as set forth on Schedule 5.4(b), no consent, waiver, approval, order or authorization of, or registration, qualification, designation or filing with any Person or Governmental Body is required in connection with the execution, delivery and performance by Purchaser of this Agreement or the Ancillary Documents to which it is a party, the compliance by Purchaser with any of the provisions hereof or thereof, the consummation of the transactions contemplated hereby or thereby, the assumption and performance of the Assumed Liabilities, or the taking by Purchaser of any other action contemplated hereby or thereby, other than such filings, notices or consents, the failure of which to make or obtain would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Purchaser’s ability to perform its obligations under this Agreement and the Ancillary Documents to which it is a party, to assume and perform the Assumed Liabilities or to consummate on a timely basis the transactions contemplated hereby or thereby.

5.5Brokers. Except as set forth on Schedule 5.5, no Person has acted, directly or indirectly, as a broker, finder or financial advisor for Purchaser in connection with the transactions contemplated by this Agreement and Sellers are not and will not become obligated to pay any fee or commission or like payment to any broker, finder, or financial advisor as a result of the consummation of the transactions contemplated by this Agreement based upon any arrangement made by or on behalf of Purchaser.

5.6               Adequate Assurances Regarding Assigned Contracts. As of the Closing, Purchaser will be capable of satisfying the adequate assurance of future performance conditions contained in sections 365(b)(1)(C) and 365(f) of the Bankruptcy Code with respect to the Assigned Contracts, subject to the fulfillment by the Sellers of the conditions set forth in Section 3.2(l) of this Agreement.

5.7No Litigation. To Purchaser’s knowledge, there are no actions, suits, claims, investigations, hearings, or proceedings of any type pending (or, to the knowledge of Purchaser, threatened) instituted against Purchaser challenging the legality of the transactions contemplated in this Agreement (other than with respect to any objection which may be filed in connection with the Bankruptcy Cases), except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Purchaser’s ability to consummate the transactions contemplated hereby.

5.8               Due Diligence. PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT AS PROVIDED IN THIS AGREEMENT OR ANY CERTIFICATE OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, SELLERS MAKE NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY MATTER RELATING TO THE PURCHASED ASSETS. WITHOUT LIMITING THE FOREGOING, SELLERS HEREBY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE AS TO ANY PORTION OF THE PURCHASED ASSETS. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE FOREGOING LIMITATIONS SHALL NOT APPLY TO, AND NOTHING HEREIN SHALL LIMIT, THE PURCHASER’S REMEDIES IN THE EVENT OF FRAUD.

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Article VI.

EMPLOYEES

6.1Employee Matters.

(a)The Purchaser intends to extend offers of employment (which may be for employment with Purchaser or any of its Affiliates) to a majority of the Sellers’ Employees related to the Purchased Assets as of the Agreement Date who have not been terminated or otherwise left the employ of the Sellers prior to the Closing Date, which offers will be effective as of and contingent upon the Closing. Sellers will make available to Purchaser a correct and complete list of all their then current employees within five (5) days after the date of this Agreement, and again thirty (30) days prior to the Closing Date, ten (10) days prior to the Closing Date and also on the Closing Date. Consistent with applicable law, the Sellers shall provide Purchaser access to their personnel records and personnel files and shall provide such other information regarding their employees as Purchaser may reasonably request. All such Employees who accept such offers of employment, and commence such employment immediately after the Closing, with Purchaser or its Affiliates are hereinafter referred to as the “Transferred Employees”. Effective as of immediately before the Closing, each Seller shall terminate the employment of its respective employees who have accepted offers of employment with Purchaser or an Affiliate.

(b)Subject to Purchaser’s right to terminate any Transferred Employees, Purchaser shall provide for a period of one (1) year from and after the Closing Date, each Transferred Employee with (i) base salary, medical, dental, hospital, pharmaceutical, and vision benefits, as well as target bonus opportunities that are, in the aggregate, substantially comparable to those provided to such Transferred Employees as of the date of this Agreement. For purposes of eligibility, vesting and participation (but not for purposes of benefits accrual, or for any purposes under any defined benefit plan, severance, equity or equity-like incentive compensation plan, program or arrangement) under any Purchaser plans and programs providing employee benefits to Transferred Employees after the Closing Date (the “Post-Closing Plans”), each Transferred Employee shall be credited with his or her years of service with Sellers before the Closing Date to the same extent as such Transferred Employee was entitled, before the Closing Date, to credit for such service under substantially similar employee benefit plans in which such Transferred Employees participated before the Closing Date, except to the extent such credit would result in a duplication of benefits and only to the extent that such service was relevant for such determination under the corresponding Benefit Plan. Notwithstanding the foregoing, Purchaser, or its applicable Affiliate, may permit or require the Transferred Employees to continue to participate in the Assumed Plans.

(c)For purposes of each Post-Closing Plan providing medical, dental, hospital, pharmaceutical, or vision benefits to any Transferred Employee, to the extent permitted under the applicable Post-Closing Plan(s), Purchaser shall use commercially reasonable efforts to cause to be waived all pre-existing condition exclusions and actively-at-work requirements of such Post-Closing Plan for such Transferred Employee and his or her covered dependents (unless such exclusions or requirements were applicable under comparable Benefit Plans). In addition, to the extent permitted under the applicable Post-Closing Plan(s), Purchaser shall use commercially reasonable efforts to cause any co-payments, deductible, and other eligible expenses actually incurred by such Transferred Employee and/or his or her covered dependents under any Benefit Plan providing, medical, dental, hospital, pharmaceutical, or vision benefits during the plan year ending on the Closing Date to be credited for purposes of satisfying all deductible, coinsurance, and maximum out-of-pocket requirements applicable to such Transferred Employee and his or her covered dependents for the applicable plan year of each comparable Post-Closing Plan in which he or she participates, and solely to the extent such amounts were credited for such purpose under the comparable Benefit Plan.

(d)To the extent permitted by state and local Law, Purchaser shall assume and honor all vacation days and other paid-time-off accrued or earned, but not yet taken, by each Transferred Employee as of the Closing Date, a record of which shall be delivered by Sellers to Purchaser promptly following the Closing Date.

(e)The Sellers shall be responsible for the payment of any severance payment or benefits that become due to any current or former employee, officer, director, member, partner, or independent contractor as a result of the termination of such individual by any Seller, including any such Employees that incur a termination of employment in connection with the Closing. The Sellers shall be responsible for all legally mandated health care continuation coverage for their current and former employees (and their qualified beneficiaries) who had or have a loss of coverage due to a “qualifying event” (within the meaning of Section 603 of ERISA) which occurred or occurs on or prior to the Closing Date including, without limitation, any loss of coverage that results directly or indirectly from the transactions contemplated by this Agreement. The Purchaser shall be responsible for any severance benefits for any Transferred Employee who terminates employment with the Purchaser after the Closing Date.

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(f)Purchaser shall assume the Assumed Plans. Purchaser shall deliver a list of the Assumed Plans to Company at least two (2) days prior to the Closing. Purchaser, on the one hand, and the Sellers, on the other, shall take such actions as are necessary and reasonably requested by the other Party to cause Purchaser to assume sponsorship of the Assumed Plans as of the Closing and to effect the transfer of all assets and benefit liabilities of the Assumed Plans together with all related trust, insurance policies, and administrative services agreements, effective as soon as practicable following the Closing; provided, however, that Purchaser is not assuming, nor shall it be responsible for, any Liabilities or obligations arising under an Assumed Plan that relate to any employee or former employee of the Sellers who does not become a Transferred Employee (except to cause payment for any claim appropriately covered by a transferred insurance policy), or with respect to any claims incurred under any such Assumed Plans prior to the Closing. For purposes of this Agreement, a claim is deemed incurred when the services that are the subject of the claim are performed; in the case of life insurance, when the death occurs, in the case of long-term disability benefits, when the disability occurs and, in the case of a hospital stay, when the employee first enters the hospital.

(g)On or before the Closing Date, the Purchaser or one of its Affiliates shall have offered an employment agreement to each of the Key Employees (collectively, the “Employment Contracts”) with effectiveness as of and contingent upon the Closing.

(h)On and following the Agreement Date, Sellers and Purchaser shall reasonably cooperate in all matters reasonably necessary to effect the transactions contemplated by this Section 6.1, including exchanging information and data relating to workers’ compensation, employee benefits, and employee benefit plan coverage, and in obtaining any governmental approvals required hereunder, except as would result in the violation of any applicable Law, including without limitation, any Law relating to the safeguarding of data privacy.

(i)The provisions of this Section 6.1 are for the sole benefit of the parties to this Agreement only and shall not be construed to grant any rights, as a third party beneficiary or otherwise, to any person who is not a party to this Agreement, nor shall any provision of this Agreement be deemed to be the adoption of, or an amendment to, any employee benefit plan, as that term is defined in Section 3(3) of ERISA, or otherwise to limit the right of Purchaser or the Sellers or any of their Affiliates to amend, modify, or terminate any such employee benefit plan. In addition, nothing contained herein shall be construed to (i) prohibit any amendments to or termination of any employee benefit plans or (ii) prohibit the termination or change in terms of employment of any employee (including any Transferred Employee) as permitted under applicable Law. Nothing herein, expressed or implied, shall confer upon any employee (including any Transferred Employee) any rights or remedies (including, without limitation, any right to employment or continued employment for any specified period) of any nature or kind whatsoever, under or by reason of any provision of this Agreement.

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Article VII.

BANKRUPTCY COURT MATTERS

7.1Approval of Bid Protections. Subject to the entry of the Bidding Procedures Order, in consideration for Purchaser having expended considerable time and expense in connection with this Agreement and the negotiation hereof and the identification and quantification of assets of Sellers, Sellers shall pay the Bid Protections to Purchaser promptly upon the effective date of termination of this Agreement (and in no event later than three (3) Business Days after such termination) in accordance with, and only to the extent provided in, the provisions of Section 3.5, and the Bidding Procedures Order. The obligations of Seller to pay the Bid Protections (i) shall be entitled to super-priority administrative expense claim status under sections 503(b)(1)(A) and 507(a)(2) of the Bankruptcy Code, (ii) shall not be subordinated to any other administrative expense claim against the Sellers, other than any adequate protection order in existence at the time the Bid Protections are approved, and (iii) shall survive the termination of this Agreement in accordance with Section 3.6.

7.2Competing Bid and Other Matters.

(a)Within two (2) business days following the Petition Date, Seller shall file with the Bankruptcy Court an application or motion seeking approval of (i) the Bidding Procedures Order and (ii) the form of this Agreement (a true and complete copy of which shall be attached to such application or motion without schedules) and the Sellers’ authority to enter into this Agreement (the “Sale and Bidding Procedures Motion”); provided, that such application or motion and all exhibits thereto shall be in form and substance reasonably acceptable to Purchaser.

(b)This Agreement and the transactions contemplated hereby are subject to Sellers’ right and ability to consider higher or otherwise better competing bids with respect to the Business and a material portion of the Purchased Assets pursuant to the Bidding Procedures Order (each a “Competing Bid”).

(c)If an Auction is conducted, and Purchaser is not the prevailing party at the conclusion of such Auction (such prevailing party, the “Prevailing Bidder”), Purchaser shall, if its bid is determined to be the next highest bid, serve as a back-up bidder (the “Back-up Bidder”) and keep Purchaser’s bid to consummate the transactions contemplated by this Agreement on the terms and conditions set forth in this Agreement (as the same may be improved upon in the Auction) open and irrevocable until 5:00 p.m. (prevailing Eastern time) on the date which is thirty (30) days after the date of the Sale Hearing (the “Outside Back-up Date”).

(d)The Sellers shall promptly serve true and correct copies of the Sale and Bidding Procedures Motion and all related pleadings in accordance with the Bidding Procedures Order, the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the Local Rules for the United States Bankruptcy Court for the District of Delaware and any other applicable order of the Bankruptcy Court.

7.3Sale Order. The Sale Order shall be entered by the Bankruptcy Court. The Sale Order shall, among other things, (i) approve, pursuant to sections 105, 363 and 365 of the Bankruptcy Code, (A) the execution, delivery, and performance by Sellers of this Agreement, (B) the sale of the Purchased Assets to Purchaser on the terms set forth herein, free and clear of all Claims, Liabilities and Encumbrances (other than Encumbrances included in the Assumed Liabilities and Permitted Encumbrances), and (C) the performance by Sellers of their respective obligations under this Agreement; (ii) authorize and empower Sellers to assume and assign to Purchaser the Assigned Contracts; and (iii) find that Purchaser is a “good faith” buyer within the meaning of section 363(m) of the Bankruptcy Code, not a successor to any Sellers and grant Purchaser the protections of section 363(m) of the Bankruptcy Code. Purchaser agrees that it will promptly take such actions as are reasonably requested by Sellers to assist in obtaining Bankruptcy Court approval of the Sale Order, including furnishing affidavits or other documents or information for filing with the Bankruptcy Court for purposes, among others, of (a) demonstrating that Purchaser is a “good faith” purchaser under section 363(m) of the Bankruptcy Code, and (b) establishing adequate assurance of future performance within the meaning of section 365 of the Bankruptcy Code.

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7.4Contracts. Sellers shall serve on all non-Seller counterparties to all of their Contracts a notice specifically stating that Sellers are or may be seeking the assumption and assignment of such Contracts and shall notify such non-Seller counterparties of the deadline for objecting to the Cure Costs, if any.

7.5Bankruptcy Filings. From and after the Agreement Date and until the Closing Date, Sellers shall deliver to Purchaser drafts of any and all pleadings, motions, notices, and all material statements, schedules, applications, reports, and other papers to be filed or submitted in connection with this Agreement for Purchaser’s prior review and comment. Sellers shall use commercially best efforts to ensure that such filings are delivered to Purchaser no later than two (2) Business Days prior to filing. Such filings shall be reasonably acceptable to Purchaser to the extent they relate to the DIP financing, Purchased Assets, any Assumed Liabilities or any of Purchaser’s obligations hereunder. Sellers agree to diligently prosecute the entry of the Bidding Procedures Order and the Sale Order. In the event the entry of the Bidding Procedures Order or the Sale Order shall be appealed, Sellers shall use their best efforts to defend such appeal. Sellers shall comply with all notice requirements (i) of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure, or (ii) imposed by the Sale Order, in each case, in connection with any pleading, notice, or motion to be filed in connection herewith.

7.6Sale Free and Clear. Sellers acknowledge and agree, and the Sale Order shall provide that, on the Closing Date and concurrently with the Closing, all then existing or thereafter arising obligations, Liabilities, Claims and Encumbrances of, against or created by Sellers or their bankruptcy estate, to the fullest extent permitted by section 363 of the Bankruptcy Code, shall be fully released from and with respect to the Purchased Assets. On the Closing Date, the Purchased Assets shall be transferred to Purchaser free and clear of all obligations, Claims, Liabilities, and Encumbrances, other than Permitted Encumbrances and the Assumed Liabilities to the fullest extent permitted by section 363 of the Bankruptcy Code.

Article VIII.

COVENANTS AND AGREEMENTS

8.1Conduct of Business of Sellers. During the Pre-Closing Period, Sellers shall use commercially reasonable efforts, except as otherwise required, authorized, or restricted pursuant to the Bankruptcy Code or an Order of the Bankruptcy Court, to operate the Business in the Ordinary Course of Business. Sellers shall use commercially reasonable efforts to (A) preserve intact their respective business organizations, (B) maintain the Business and the Purchased Assets (normal wear and tear excepted), (C) keep available the services of their respective officers and Employees, (D) maintain satisfactory relationships with licensors, licensees, suppliers, contractors, distributors, consultants, customers, vendors, and others having business relationships with Sellers in connection with the operation of the Business (other than payment of pre-petition claims), (E) pay all of their respective post-petition obligations in the Ordinary Course of Business, and (F) continue to operate the Business and Purchased Assets in all material respects in compliance with all Orders and Laws applicable to the Business and Sellers. Without limiting the generality of the foregoing, and except (i) as otherwise expressly provided in or contemplated by this Agreement, or (ii) required, authorized, or restricted pursuant to the Bankruptcy Code or an Order of the Bankruptcy Court, on or prior to the Closing Date, Sellers may not, without the prior written consent of Purchaser, take any of the following actions with respect to the Business or the Purchased Assets:

(a)except as set forth in Schedule 8.1(a), remove or permit to be removed from any building, facility, or real property any asset, equipment, machinery, or any Inventory (other than in connection with the sale of Inventory in the Ordinary Course of Business and the sale of fixtures, equipment and related assets in connection with the closing of facilities in an amount not to exceed $1,000);

(b)sell, lease, or otherwise dispose of, mortgage, hypothecate, or otherwise encumber any asset (other than sales of Inventory in the Ordinary Course of Business and other than any liens provided for in the DIP Order);

(c)enter into, amend, terminate or renew any Contract if such entry, amendment, termination or renewal would result in an obligation of any Seller in excess of $100,000;

(d)fail to use commercially reasonable efforts to maintain the validity of Sellers’ rights in, to, or under any Seller Intellectual Property;

(e)fail to use best efforts to maintain all material Permits of Sellers, used in the operation of the Business or the Purchased Assets;

(f)make any unusual or extraordinary efforts to collect any outstanding Accounts Receivable or intercompany obligation, liability, or Indebtedness, give any discounts or concessions for early payment of such Accounts Receivable or intercompany obligation, Liability, or Indebtedness, other than discounts consistent with past practice and given by the Business in the Ordinary Course of Business and make any sales of, or other than liens provided for in the DIP Order, convey any interest in, any Accounts Receivable or intercompany obligation, Liability, or Indebtedness to any third party;

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(g)other than transactions pursuant to agreements or arrangements in effect on the Petition Date as set forth on Schedule 8.1(g), engage in any transaction with any Affiliate, subsidiary, shareholder, officer or director of any Seller, incur or assume any long term or short term debt with or on behalf of any such Person or guarantee, endorse or otherwise be liable or responsible (whether directly, indirectly, contingently or otherwise) for the obligations of any such Person;

(h)make any change in their method of accounting, except as required by GAAP;

(i)fail to maintain any insurance policy in effect on the Agreement Date or amend any such policy (other than extensions, replacements or amendments thereof in the Ordinary Course of Business);

(j)accelerate the payment of any obligation, Liability or Indebtedness of any Seller;

(k)make or change any Tax election, file any Tax Return (other than consistent with past practice and applicable Law), file any amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment, incur any liability for Taxes outside the Ordinary Course of Business, fail to pay any Tax that becomes due and payable (including any estimated tax payments), prepare or file any Tax Return in a manner inconsistent with past practice, or adopt or change any accounting method in respect of Taxes;

(l)establish, enter into, terminate, adopt or amend any Benefit Plan (other than (i) amendments required by Law or to maintain the tax qualified status of any Benefit Plan under Section 401(a) of the Code and (ii) any Court-approved employee incentive or retention plan that constituted an Excluded Liability hereunder), or any other plan, trust, policy, agreement, program or arrangement for the benefit of any current or former employees or other service providers, including but not limited to, any change in control or severance agreement;

(m)loan to, or enter into any other transaction (other than in the Ordinary Course of Business) with, any employee, officer, director, or independent contractor;

(n)settle or agree to settle any pending or threatened Action or litigation;

(o)agree, whether in writing or otherwise, to do any of the foregoing; or

(p)amend, terminate or renew any Contract listed on Schedule 1.6(a);

(q)take, or commit or otherwise obligate any Seller to take, any other action which would be required to be disclosed under Section 4.16 if such action had occurred prior to the date hereof.

8.2Access to Information. Sellers agree that, between the Agreement Date and the earlier of the Closing Date and the date on which this Agreement is terminated in accordance with Section 3.4, Purchaser shall be entitled, through its officers, employees, legal counsel, accountants, and other authorized representatives, agents, and contractors (“Representatives”), to have such reasonable access to and make such reasonable investigation and examination of the books and records, properties, businesses, assets, Employees, accountants, auditors, counsel, and operations of Sellers as Purchaser’s Representatives may reasonably request. Any such investigations and examinations shall be conducted during regular business hours upon reasonable advance notice and under reasonable circumstances. Each Seller shall use commercially reasonable efforts to cause its Representatives to cooperate reasonably with Purchaser and Purchaser’s Representatives in connection with such investigations and examinations, and Purchaser shall, and shall use its commercially reasonable efforts to cause its Representatives to, cooperate reasonably with the Sellers and their respective Representatives, and shall use its commercially reasonable efforts to minimize any disruption to the Business.

8.3Assignability of Certain Contracts. To the extent that the assignment to Purchaser of any Assigned Contract pursuant to this Agreement is not permitted without the consent of a non-Seller counterparty and such restriction cannot be overridden effectively or canceled by the Sale Order or other related order of the Bankruptcy Court, then this Agreement will not be deemed to constitute an assignment of or an undertaking or attempt to assign such Contract or any right or interest therein unless and until such consent is obtained; provided, however, that the Parties will use their commercially reasonable efforts, before the Closing, to obtain all such consents; provided, further, that, subject to Section 9.3, if any such consents are not obtained prior to the Closing Date, Sellers and Purchaser will, at the election of Purchaser, cooperate reasonably with each other in any lawful and feasible arrangement designed to provide Purchaser with the benefits and obligations of any such Contract.

8.4Rejected Contracts. Sellers shall not reject any Assigned Contract in any bankruptcy proceeding following the Agreement Date without the prior written consent of Purchaser.

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8.5Reasonable Efforts; Cooperation.

(a) Subject to the other provisions hereof, and unless this Agreement is terminated in accordance with its terms, each Party shall use its commercially reasonable efforts to perform its obligations hereunder and to take, or cause to be taken, and do, or cause to be done, all things necessary, proper, or advisable under applicable Law to cause the transactions contemplated herein to be effected as soon as practicable, but, in any event, on or prior to the Outside Date, in accordance with the terms hereof and shall cooperate in a commercially reasonable manner with each other Party and its Representatives in connection with any step required to be taken as a part of its obligations hereunder.

(b)In the event that any of the Parties to this Agreement discovers a Contract related to the Business, the Purchased Assets, or the Assumed Liabilities during the period from and after the Agreement Date, and such Contract (i) was unknown as of the Agreement Date, (ii) is a Contract that Purchaser wishes to assume the rights and obligations of, and (iii) such Contract is not a Rejected Contract, Purchaser and Seller shall execute, acknowledge, and deliver such other instruments and take such further actions as are reasonably practicable for Purchaser to assume the rights and obligations under such Contract at the Closing.

(c)The obligations of Seller pursuant to this Section 8.5 shall be subject to any orders entered, or approvals or authorizations granted or required, by the Bankruptcy Court or under the Bankruptcy Code (including in connection with the Bankruptcy Cases), and each of Sellers’ obligations as a debtor in possession to comply with any order of the Bankruptcy Court (including the Bidding Procedures Order or the Sale Order) and Sellers’ duty to seek and obtain the highest or otherwise best offer for the Business as required by the Bankruptcy Code.

(d)Purchaser shall make available to Sellers, without charge to Sellers, such information reasonably necessary to assist Sellers to wind up Sellers’ operations following the Closing, as needed, resolve the Bankruptcy Cases, and dissolve any or all of the Sellers. Any information obtained under this Section 8.5(d) shall be kept confidential except as may be otherwise necessary in connection with the filing of Tax Returns or claims for refund or in conducting any audit or other proceeding.

(e)Sellers, on the one hand, and Purchaser, on the other hand, (i) shall promptly inform each other of any communication from any Governmental Body concerning this Agreement, the transactions contemplated hereby, and any filing, notification, or request for approval and (ii) shall permit the other to review in advance, with a reasonable opportunity for comment thereon, any proposed written or material oral communication or information submitted to any such Governmental Body in response thereto. In addition, none of Parties shall agree to participate in any meeting with any Governmental Body with respect to any filings, investigation, or other inquiry with respect to this Agreement or the transactions contemplated hereby, unless such Party consults with the other Parties in advance and, unless prohibited by any such Governmental Body, gives the other Parties the opportunity to attend and participate, in each case to the maximum extent practicable. Subject to restrictions under any Order or Law, Purchaser, on the one hand, and Sellers, on the other hand, shall furnish the other with copies of all correspondences, filings, and communications (and memoranda setting forth the substance thereof) between it and its Affiliates and their respective Representatives on the one hand, and the Governmental Body or members of its staff on the other hand, with respect to this Agreement, the transactions contemplated hereby (excluding documents and communications which are subject to preexisting confidentiality agreements or to the attorney-client privilege or work product doctrine or which refer to valuation of the Business), or any such filing, notification, or request for approval. Each Party shall also furnish the other Party with such necessary information and assistance as such other Party and its Affiliates may reasonably request in connection with their preparation of necessary filings, registration, or submissions of information to the Governmental Body in connection with this Agreement, the transactions contemplated hereby and any such filing, notification, or request for approval. Each Party shall be responsible for payment of its own respective costs and expenses (including attorneys’ fees and other legal fees and expenses) in respect of such actions.

(f) Sellers shall assist the Purchaser, upon Purchaser’s request, in the Purchaser’s submission of all required filings, notifications, or applications to all applicable Governmental Bodies in connection with or arising from the transactions contemplated by this Agreement, including without limitation, the transfer of the Permits to the Purchaser or its designee.

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8.6Further Assurances. Each Party shall execute and cause to be delivered to each other Party such instruments and other documents, and shall take such other actions, as such other Party may reasonably request (prior to, at, or after the Closing) for the purpose of carrying out or evidencing any of the transactions contemplated by this Agreement. If, following the Closing, any Seller receives or becomes aware that it holds any asset, property or right which constitutes a Purchased Asset, then Sellers shall transfer such asset, property or right to the Purchaser and/or, as applicable, one or more designees of the Purchaser as promptly as practicable for no additional consideration. If, following the Closing, the Purchaser receives or becomes aware that it holds any asset, property or right which constitutes an Excluded Asset, then the Purchaser shall transfer such asset, property or right to the Sellers as promptly as practicable for no additional consideration.

8.7Notification of Certain Matters. Sellers shall give prompt notice to Purchaser, and Purchaser shall give prompt notice to Sellers, of (i) any notice or other communication from any Person alleging that the consent of such Person which is or may be required in connection with the transactions contemplated by this Agreement or the Ancillary Documents is not likely to be obtained prior to Closing, (ii) any written objection or proceeding that challenges the transactions contemplated hereby or the entry of the Bidding Procedures Order or the Sale Order, and (iii) the status of matters relating to the completion of the transactions contemplated hereby, including furnishing promptly the other with copies of notices or other communications received by Sellers or Purchaser or by any of their respective Affiliates (as the case may be), from any third party and/or any Governmental Body with respect to the transactions contemplated by this Agreement.

8.8Confidentiality.

(a)Purchaser acknowledges that the confidential information provided in connection with this Agreement, including under Section 8.2, and the consummation of the transactions contemplated hereby, is subject to the terms and conditions of that certain Confidential Disclosure Agreement, dated as of December 22, 2019 (the “Confidentiality Agreement”). As of the Closing, the Purchaser’s obligations under the Confidentiality Agreement related to (i) non-use, non-disclosure and return or destruction of Evaluation Material (as defined in the Confidentiality Agreement) to the extent related to the Business, the Purchased Assets and the Assumed Liabilities shall terminate and (ii) non-solicitation of employees shall terminate with respect to the Transferred Employees; provided, that any action of Purchaser pursuant to Section 6.1 shall not constitute a violation of the Confidentiality Agreement. All other provisions of the Confidentiality Agreement shall remain in full force and effect in accordance with their terms.

(b)Following the completion of the Auction, Sellers agree (A) not to disclose to any Person, or use or otherwise exploit for their benefit any confidential information regarding the Business, the Purchased Assets or the Assumed Liabilities or any of the discussions or negotiations conducted with Purchaser in connection with this Agreement and (B) to take all appropriate steps, to safeguard such confidential information and to protect it against disclosure, misuse, loss, or theft, provided, that obligations under (A) above shall not apply to information that becomes generally available to the public other than as a result of the breach of this Section 8.8(b) or information not otherwise known by the Sellers that becomes available to any Seller from a Person other than Purchaser without any breach of such Person’s confidentiality obligations to any other Person. Notwithstanding the foregoing, Sellers shall be entitled to disclose (i) any information required to be disclosed by Sellers to the Bankruptcy Court, the United States Trustee, parties in interest in the Bankruptcy Cases, other Persons bidding on assets of Sellers, (ii) any information required to be disclosed by Sellers pursuant to any applicable Law (including, without limitation, the Bankruptcy Code), legal proceeding, or Governmental Body, or (iii) any information to Sellers’ counsel and advisors; provided, that, in each case, (x) such disclosure shall be limited to the information that is so required to be disclosed and to the Person(s) to whom such disclosure is required, (y) such counsel and advisors have agreed not to disclose or use such confidential information except under the conditions that Sellers are permitted to disclose or use such information pursuant to this Section 8.8 and (z) if information is required to be disclosed pursuant to clauses (i) or (ii) above, Seller shall provide Purchaser with prompt notice of such requirement prior to making any disclosure so that Purchaser may seek at its own cost and expense an appropriate protective order. Notwithstanding anything in this Section 8.8 to the contrary, unless disclosure is required by applicable Law, the confidentiality of any trade secrets of the Business shall be maintained by Sellers and their Affiliates or Representatives for so long as such trade secrets continue to be entitled to protection as trade secrets of the Business.

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8.9Preservation of Records. Sellers (or any subsequently appointed bankruptcy estate representative, including, but not limited to, a trustee, a creditor trustee, or a plan administrator) and Purchaser agree that each of them shall preserve and keep the books and records held by it relating to the pre-Closing Business for the period commencing on the Agreement Date and ending on the earlier of (i) such date on which an orderly wind-down of the Sellers’ operations has occurred in the reasonable judgment of Purchaser and Sellers and (ii) the 36 month anniversary of the Agreement Date, and during such period each of Seller and Purchaser shall make such books and records available to the other Parties (and permit such other Party to make extracts and copies of such books and records at its own expense) as may be reasonably required by such Party in connection with, among other things, any insurance claims by, legal proceedings, or Tax audits against or governmental investigations of Sellers or Purchaser or in order to enable Sellers or Purchaser to comply with their respective obligations under this Agreement and each other agreement, document, or instrument contemplated hereby or thereby. In the event any Party wishes to destroy such records during such 36-month period, such Party shall first provide ten (10) business days’ prior written notice to the other, and such other Party shall have the right, at its option and expense, to take possession of such records within five (5) business days after notice thereof.

8.10Publicity. Neither Sellers nor Purchaser shall issue any press release or public announcement concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of the other party hereto, which approval will not be unreasonably withheld, conditioned or delayed, unless, in the sole discretion of Purchaser or Seller, disclosure is otherwise required by applicable Law or by the Bankruptcy Court with respect to filings to be made with the Bankruptcy Court in connection with this Agreement or by the applicable rules of any stock exchange on which Purchaser lists securities or in order to enforce a Party’s rights or remedies under this Agreement.

8.11Material Adverse Effect. Sellers shall promptly inform Purchaser in writing of the occurrence of any event that has had, or is reasonably expected to have, a Material Adverse Effect.

8.12Casualty Loss. Notwithstanding any provision of this Agreement to the contrary, if, before the Closing, all or any portion of the Purchased Assets is (a) condemned or taken by eminent domain, (b) is damaged, destroyed stolen or lost, Seller shall notify Purchaser promptly in writing of such fact, (i) in the case of condemnation or taking, Seller shall assign or pay, as the case may be, any proceeds thereof to Purchaser at the Closing, and (ii) in the case of damage, destruction, loss or theft, Seller shall assign the insurance proceeds therefrom to Purchaser at the Closing. Notwithstanding the foregoing, the provisions of this Section 8.12 shall not in any way modify Purchaser’s other rights under this Agreement, including any applicable right to terminate the Agreement if any condemnation, taking, loss, theft, damage, or other destruction resulted in a Material Adverse Effect or otherwise pursuant to Section 3 hereof.

8.13 No Successor Liability. The Parties intend that, except where prohibited expressly under applicable Law, upon the Closing, Purchaser shall not be deemed to: (i) be the successor of Sellers, (ii) have, de facto or otherwise, merged with or into Sellers, (iii) be a mere continuation or substantial continuation of Sellers or the enterprise(s) of Sellers, or (iv) be liable for any acts or omissions of Sellers in the conduct of the Business or arising under or related to the Purchased Assets other than as set forth in this Agreement. Without limiting the generality of the foregoing, and except as otherwise provided in this Agreement, the Parties intend that Purchaser shall not be liable for any Encumbrance (other than Assumed Liabilities and Permitted Encumbrances thereon) against Sellers or any of Sellers’ predecessors or Affiliates, and Purchaser shall have no successor or vicarious liability of any kind or character whether known or unknown as of the Closing Date, whether now existing or hereafter arising, or whether fixed or contingent, with respect to the Business, the Purchased Assets, or any Liabilities of Sellers arising prior to the Closing Date.

8.14Seller Assistance. Sellers agree to use commercially reasonable efforts to perform, at Purchaser’s expense, but without charge by Sellers, all acts reasonably necessary to assist Purchaser in perfecting and enforcing the full benefits, enjoyment, rights and title throughout the world in the Patents included in the Purchased Assets (the “Transferred Patents”). Such acts may include (a) execution of documents, (b) assistance in the filing, registration, and/or enforcement of Transferred Patents or other legal proceedings relating thereto (including providing documents and materials in the possession or control of Sellers and testifying as a witness), and (c) assistance in contacting and securing the cooperation of relevant third parties (e.g., the inventor of the Transferred Patents), including obtaining such individuals' execution of documents and encouraging each such individual to appear as a witness if requested by the Purchaser. A portion of the Purchase Price is paid by Purchaser as consideration to ensure Sellers’ assistance as described in this Section 8.14.

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Article IX.

CONDITIONS TO CLOSING

9.1Conditions Precedent to the Obligations of Purchaser and Sellers. The respective obligations of each Party to this Agreement to consummate the transactions contemplated by this Agreement are subject to the satisfaction (or to the extent permitted by Law, written waiver by each of the Sellers and Purchaser) on or prior to the Closing Date, of each of the following conditions:

(a)there shall not be in effect, enacted, enforced or entered by a Governmental Body any Law, Order, writ, injunction, judgment, decision or decree preventing, enjoining, restraining, making illegal, or otherwise prohibiting the consummation of the transactions contemplated by this Agreement or the Ancillary Documents; provided, however, that (i) the right to terminate this Agreement pursuant to this Section 9.1(a) shall not be available to any Party whose breach of any of its representations, warranties, covenants or agreements contained herein results in such Order, writ, injunction, judgment, decision or decree, and (ii) the Party seeking to terminate this Agreement (and its Affiliates) shall have used reasonable best efforts to have such Law declared invalid or inapplicable or such Order, writ, injunction, judgment, decision or decree vacated.

(b)the Bankruptcy Court shall have entered the Bidding Procedures Order and the Sale Order (as provided in Article VII) and each of such orders shall be a Final Order and in form and substance reasonably satisfactory to Sellers and Purchaser, which orders shall not have been reversed, modified, amended, or stayed; and

(c) to the extent applicable, any waiting period (including any extension thereof) applicable to the purchase and sale of the Purchased Assets under any other applicable antitrust or competition Law shall have expired or been terminated.

9.2Conditions Precedent to the Obligations of Sellers. The obligations of Sellers to consummate the transactions contemplated by this Agreement are subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions, any of which may be waived in writing by Sellers in their sole discretion:

(a)the representations and warranties made by Purchaser in this Agreement or in any Ancillary Document shall be true and correct in all material respects (without giving effect to any materiality or similar qualification contained therein), in each case as of the Agreement Date and as of the Closing Date, with the same force and effect as though all such representations and warranties had been made as of the Closing Date (other than representations and warranties that by their terms address matters only as of another specified date, which shall be so true and correct only as of such other specified date), except where the failure of such representations or warranties to be so true and correct has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Purchaser’s ability to consummate the transactions contemplated hereby;

(b)Purchaser shall have performed and complied in all material respects with all obligations and agreements required by this Agreement to be performed or complied with by Purchaser on or prior to the Closing Date; and

(c)Purchaser shall have delivered, or caused to be delivered, to Sellers all of the items set forth in Section 3.3.

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9.3Conditions Precedent to the Obligations of Purchaser. The obligations of Purchaser to consummate the transactions contemplated by this Agreement are subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions, any of which may be waived in writing by Purchaser in its sole discretion:

(a)the representations and warranties made by the Sellers in this Agreement and in any Ancillary Document (A) that are not qualified by “Material Adverse Effect” or other materiality qualifiers shall be true and correct in all material respects (without giving effect to any materiality or similar qualification contained therein), and (B) that are qualified by “Material Adverse Effect” or other materiality qualifiers shall be true and correct in all respects, in each case as of the Agreement Date and as of the Closing Date, with the same force and effect as though all such representations and warranties had been made as of the Closing Date (other than representations and warranties that by their terms address matters only as of another specified date, which shall be so true and correct only as of such other specified date);

(b)Sellers shall have delivered to Purchaser a certified copy of the Sale Order;

(c)Sellers shall have performed and complied in all material respects with all obligations and agreements required in this Agreement to be performed or complied with by them on or prior to the Closing Date;

(d)[Intentionally omitted]

(e)Sellers shall have delivered, or caused to be delivered, to Purchaser, all of the items set forth in Section 3.2;

(f) Sellers shall have complied with the sale process deadlines set forth in the Bidding Procedures Order in all material respects;

(g)Sellers shall have delivered duly executed consents, in form and substance and on terms satisfactory to the Purchaser, to the extent necessary to effect the valid and effective assignment to the Purchaser of the Contracts set forth on Schedule 9.3(g);

(h)Sellers shall have complied with all of Seller’s obligations under the patent license agreement with Roche Diabetes Care, Inc. dated 16 July 2019 (the “Roche License Agreement”), and no material breach of the terms of, or material default under, the Roche License Agreement (including, for the avoidance of doubt, the breach of any payment obligations thereunder, which shall be deemed material), shall have occurred and not been cured in accordance with the terms of the Roche License Agreement;

(i)[Intentionally omitted]

(j)the Permits listed on Schedule 9.3(j) shall be in full force and effect, and any application, maintenance or renewal costs with respect thereto shall have been fully paid as of the Closing;

(k)the Permits listed on Schedule 9.3(k) shall have been validly transferred to the Purchaser or its designee and all applicable Governmental Bodies shall have provided all required approvals in connection with or arising from the transfer of such Permits;

(l) (a) Sellers shall have provided to Purchaser, no later than 5:00 pm, Eastern Time, March 13, 2020 (the “Manufacturing Deadline”), lot release testing data for the first ten (10) lots utilizing the KIS Springs consisting of the four (4) V-Go 20 Lots and the six (6) V-Go 30 Lots (provided, that the Manufacturing Deadline may be extended by the mutual written consent of the Parties), and (b) at least three (3) of the V-Go 20 Lots and at least four (4) of the V-Go 30 Lots shall have passed the lot release specifications in the applicable 510(k) currently approved by the FDA;

(m)Sellers shall have delivered duly executed amendments to such contracts listed on Schedule 4.10, reasonably requested by the Purchaser, to the extent necessary to prevent the occurrence of a Material Adverse Effect; and

(n)Substantially all of the Employees to whom the Purchaser (or its designee) has offered employment to prior to the Closing (such Employees to whom offers are made, the “Offered Employees”), including each Key Employee and at least seventy-five percent (75%) of the Offered Employees, shall have accepted and not rescinded offers of employment with the Purchaser (or its designee) as of the Closing on terms reasonably satisfactory to the Purchaser.

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Article X.

ADDITIONAL DEFINITIONS

10.1Definitions. As used herein:

“503(b)(9) Claim” means any Claim asserted pursuant to section 503(b)(9) of the Bankruptcy Code.

“Accounts Receivable” shall have the meaning set forth in Section 1.1(c).

“Action” means any action, claim, complaint, grievance, summons, suit, litigation, arbitration, mediation, proceeding (including any civil, criminal, administrative, investigative, or appellate proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination, or investigation by or before any Governmental Body.

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means (i) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by Contract or otherwise or (ii) an officer, director, or any Person that has the power, directly or indirectly, to vote 5% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of such Person.

“Affiliate Agreement” means any agreement or contract between any director, officer, employee or greater than five percent (5%) stockholder of any Seller or Affiliate of any such Person, on one hand, and any Seller, on the other hand, related to the Business, including any contract providing for the employment of, furnishing of services by, rental of real or personal property from or otherwise requiring payments to any such Person or firm, other than employment-at-will arrangements in the Ordinary Course of Business.

“Agreement” shall have the meaning set forth in the preamble.

“Agreement Date” shall have the meaning set forth in the preamble.

“Allocation” shall have the meaning set forth in Section 11.2.

“Alternative Transaction” means (i) the approval by the Bankruptcy Court of a sale or sales of a material portion of the Purchased Assets to a Person other than Purchaser, or (ii) the filing of a plan of reorganization that does not contemplate the sale of the Purchased Assets to Purchaser in accordance with the terms hereof.

“Ancillary Documents” means any certificate, agreement, document or other instrument (other than this Agreement) to be executed and delivered by a Party in connection with the consummation of the transactions contemplated this Agreement.

“Assigned Contracts” shall have the meaning set forth in Section 1.1(b).

“Assignment and Assumption Agreement” shall have the meaning set forth in Section 3.2(b).

“Assumed Leased Real Property” shall have the meaning set forth in Section 1.1(f).

“Assumed Liabilities” shall have the meaning set forth in Section 1.3.

“Assumed Plans” shall have the meaning set forth in Section 1.1(s).

“Assumption and Assignment of Leases” shall have the meaning set forth in Section 3.2(h).

“Auction” has that meaning ascribed to such term by the Bidding Procedures Order.

“Avoidance Actions” shall have the meaning set forth in Section 1.1(y).

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“Back-up Bidder” shall have the meaning set forth in Section 7.2(c).

“Bankruptcy Cases” shall have the meaning set forth in the Recitals.

“Bankruptcy Code” shall have the meaning set forth in the Recitals.

“Bankruptcy Court” shall have the meaning set forth in the Recitals.

“Bankruptcy Rules” shall have the meaning set forth in the Recitals.

“Benefit Plan” means (i) all “employee benefit plans” (including, without limitation, as defined in Section 3(3) of ERISA) and any other employee benefit arrangements or payroll practices (including severance pay, vacation pay, company awards, salary continuation for disability, sick leave, death benefit, hospitalization, welfare benefit, group or individual health, dental, medical, life, insurance, fringe benefit, deferred compensation, profit sharing, retirement, retiree medical, supplemental retirement, bonus or other incentive compensation, stock purchase, equity-based, stock option, stock appreciation rights, restricted stock and phantom stock arrangements or policies) and (ii) all other employment, termination, bonus, severance, change in control, collective bargaining, or other similar plans, programs, policies, contracts, or arrangements (whether written or unwritten), in each case, adopted, sponsored by, entered into, maintained, contributed to, or required to be contributed to by any Seller or any ERISA Affiliate for the benefit of any current or former employee, director, officer or independent contractor of any Seller, under or with respect to which any Seller or ERISA Affiliate has or reasonably could have any Liability.

“Bid Protections” shall have the meaning set forth in Section 3.5.

“Bidding Procedures Order” means an order substantially in the form attached hereto as Exhibit E and otherwise in form and substance reasonably satisfactory to Seller and Purchaser.

“Bill of Sale” shall have the meaning set forth in Section 3.2(a).

“Break-Up Fee” shall have the meaning set forth in Section 3.5.

“Business” shall have the meaning set forth in the Section 1.1.

“Business Day” means any day other than a Saturday, Sunday, or other day on which banks in New York City, New York are authorized or required by Law to be closed.

“Cash and Cash Equivalents” means all of Sellers’ cash (including petty cash and checks received or in transit prior to the close of business on the Closing Date), checking account balances, marketable securities, certificates of deposits, time deposits, bankers’ acceptances, commercial paper, security entitlements, securities accounts, commodity Contracts, commodity accounts, government securities, and any other cash equivalents, whether on hand, in transit, in banks or other financial institutions, or otherwise held (but specifically excluding any cash payable by Purchaser to Seller pursuant to this Agreement).

“Chapter 11 Petition” shall have the meaning set forth in the Recitals.

“Claim” has the meaning given that term in section 101(5) of the Bankruptcy Code and includes, inter alia, all rights, claims, causes of action, defenses, debts, demands, damages, offset rights, setoff rights, recoupment right, obligations, and liabilities of any kind or nature under contract, at law or in equity, known or unknown, contingent or matured, liquidated or unliquidated, and all rights and remedies with respect thereto.

“Closing” shall have the meaning set forth in Section 3.1.

“Closing Date” means the date on which the Closing occurs.

“Code” means the United States Internal Revenue Code of 1986, as the same may be amended from time to time.

“Company” shall have the meaning set forth in the preamble.

“Competing Bid” shall have the meaning set forth in Section 7.2(b).

“Contract” means any written or oral contract, purchase order, service order, sales order, indenture, note, bond, lease, sublease, license, understanding, instrument or other agreement, arrangement or commitment that is binding upon a Person or its property, whether express or implied.

“Copyrights” means all copyrights and copyrightable subject matter.

“Cure Cap” shall have the meaning set forth in Section 1.3(c).

“Cure Costs” means costs that must be paid and obligations that must be satisfied under section 365 of the Bankruptcy Code in connection with the assumption and/or assignment of any Assigned Contracts as agreed to among the various counterparties or as determined by the Bankruptcy Court.

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“Debtors” means Valeritas Holdings, Inc. and its direct and indirect subsidiaries, which all filed for relief under the Bankruptcy Code on February 9, 2020, in the United States Bankruptcy Court for the District of Delaware.

“Deposit” shall have the meaning set forth in Section 2.3.

“DIP Financing Agreements” means that certain Senior Secured Superpriority Priming Debtor-in-Possession Credit Facility Term Sheet, dated as of February 9, 2020, by and among HB Fund LLC, as lender, Debtors and the Prepetition Secured Parties (as defined therein).

“DIP Order” means the interim order (i) authorizing the Debtors to obtain postpetition financing, (ii) authorizing the Debtors to use cash collateral, (iii) granting liens and providing superpriority administrative expense status, (iv)  granting adequate protection, (v) modifying the automatic stay, (vi) scheduling a final hearing, and (vii) granting related relief  and any related final order (each as amended, modified or supplemented in accordance with the terms thereof).

“Disclosure Schedules” means the Schedules included with this Agreement pursuant to Article IV hereof.

“Documents” means all of Sellers’ written files, documents, instruments, papers, books, reports, records, tapes, microfilms, photographs, letters, budgets, forecasts, plans, operating records, safety and environmental plans and reports, data, Permits and Permit applications, studies and documents, Tax Returns, ledgers, journals, title policies, customer lists, regulatory filings, operating data and plans, research material, technical documentation (design specifications, engineering information, test results, maintenance schedules, functional requirements, operating instructions, logic manuals, processes, flow charts, etc.), user documentation (installation guides, user manuals, training materials, release notes, working papers, etc.), marketing documentation (sales brochures, flyers, pamphlets, web pages, etc.), and other similar materials, in each case whether or not in electronic form relating to the Business.

“Employee” means an individual who, as of the applicable date, is employed by any Seller in connection with the Business.

“Employment Contracts” shall have the meaning set forth in Section 6.1(g).

“Encumbrance” means any lien (as defined in section 101(37) of the Bankruptcy Code), encumbrance, claim (as defined in Section 101(5) of the Bankruptcy Code), right, demand, charge, mortgage, deed of trust, option, pledge, security interest or similar interests, title defects, hypothecations, easements, rights of way, restrictive covenants, encroachments, rights of first refusal, preemptive rights, judgments, conditional sale or other title retention agreements and other impositions, imperfections, or defects of title or restrictions on transfer or use of any nature whatsoever.

“Environmental Law” means any federal, state or local law, statute, regulation, or ordinance relating to the protection of human health, safety, the environment, natural resources, or consumer products. “Environmental Liabilities and Obligations” means all Liabilities arising from any impairment, impact or damage to the environment, health or safety, or any failure to comply with Environmental Law in connection with the operation of the Business, the Purchased Assets, or the Assumed Leased Real Property or any other location where the Business is currently located or conducted, including Liabilities related to: (i) the transportation, storage, use, arrangement for disposal or disposal of, or exposure to, Hazardous Materials; (ii) the Release of Hazardous Materials, including migration onto or from the Assumed Leased Real Property; (iii) any other pollution or contamination of the surface, substrata, soil, air, ground water, surface water or marine environments; (iv) any other obligations imposed under Environmental Law including pursuant to any applicable Permits issued pursuant to under any Environmental Law; (v) Orders, notices to comply, notices of violation, alleged non-compliance and inspection reports with respect to any Liabilities pursuant to Environmental Law; and (vi) all obligations with respect to personal injury, property damage, wrongful death and other damages and losses arising under applicable Environmental Law but only as a result of any of the matters identified in clauses (i)-(v) of this definition.

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“ERISA Affiliate” means any entity which is a member of (A) a controlled group of corporations (as defined in Section 414(b) of the Code), (B) a group of trades or businesses under common control (as defined in Section 414(c) of the Code), (C) an affiliated service group (as defined under Section 414(m) of the Code) or (D) any group specified in Treasury Regulations promulgated under Section 414(o) of the Code, any of which includes or included any Seller.

“Escrow Agent” means a third-party entity approved by the Parties that has fiduciary obligations with respect to the transfer of funds in accordance with this Agreement and whose actions will be governed by the Escrow Agreement.

“Escrow Agreement” means the agreement substantially in the form attached hereto as Exhibit G.

“Excluded Assets” shall have the meaning set forth in Section 1.2.

“Excluded Contracts” shall have the meaning set forth in Section 1.1.

“Excluded Intellectual Property” shall have the meaning set forth in Section 1.2.

“Excluded Liabilities” shall have the meaning set forth in Section 1.4.

“Expense Reimbursement” shall mean the reasonable and documented out-of-pocket fees, costs, and expenses of the Purchaser (including attorneys’ costs and fees and the costs and fees of any other advisor to Purchaser), subject to a cap of US$1,000,000.

“Final Order” means an order or judgment of the Bankruptcy Court or any other court of competent jurisdiction entered by the Clerk of the Bankruptcy Court or such other court on the docket in Sellers’ Bankruptcy Cases or the docket of such other court, which has not been modified, amended, reversed, vacated, or stayed and as to which (a) the time to appeal, petition for certiorari, or move for a new trial, reargument or rehearing has expired and as to which no appeal, petition for certiorari or motion for new trial, reargument, or rehearing shall then be pending or (b) if an appeal, writ of certiorari new trial, reargument or rehearing thereof has been sought, such order or judgment of the Bankruptcy Court or other court of competent jurisdiction shall have been affirmed by the highest court to which such order was appealed, or certiorari shall have been denied, or a new trial, reargument, or rehearing shall have been denied or resulted in no modification of such order, and the time to take any further appeal, petition for certiorari, or move for a new trial, reargument or rehearing shall have expired, as a result of which such order shall have become final in accordance with Rule 8002 of the Federal Rules of Bankruptcy Procedure; provided, that the possibility that a motion under Rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules, may be filed relating to such order, shall not cause such order not to be a Final Order.

“Financial Statements” shall have the meaning set forth in Section 4.14.

“GAAP” means United States generally accepted accounting principles as in effect from time to time.

“Governmental Body” means any government, quasi-governmental entity, or other governmental or regulatory body, agency or political subdivision thereof of any nature, whether national, international, multi-national, supra-national, federal, state, or local, or any agency, branch, department, official, entity, instrumentality, or authority thereof, or any court or arbitrator (public or private) of applicable jurisdiction.

“Hazardous Material” means any substance, material or waste which is regulated by any Governmental Body, including petroleum and its by-products, asbestos, polychlorinated biphenyls and any material, waste or substance which is defined or identified as a “hazardous waste,” “hazardous substance,” “hazardous material,” “restricted hazardous waste,” “industrial waste,” “solid waste,” “contaminant,” “pollutant,” “toxic waste” or “toxic substance” or otherwise regulated under or subject to any provision of Environmental Law.

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“Healthcare Laws” means (i) the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act, and the regulations promulgated thereunder; (ii) all applicable federal, state, local and foreign health care fraud and abuse laws, including, without limitation, the U.S. Anti-Kickback Statute (42 U.S.C. Section 1320a-7b(b)), the U.S. Civil False Claims Act (31 U.S.C. Section 3729 et seq.), 18 U.S.C. Sections 286, 287, 1035, 1347, and 1349, the health care fraud criminal provisions under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) (42 U.S.C. Section 1320d et seq.), the civil monetary penalties law (42 U.S.C. Section 1320a-7a), the exclusions law (42 U.S.C. Section 1320a-7), laws governing government funded or sponsored healthcare programs; (iii) HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”) (42 U.S.C. Section 17921 et seq.); (iv) the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, including the Physician Payments Sunshine Act; (v) licensure, quality, safety and accreditation requirements under applicable federal, state, local or foreign Laws or Governing Bodies; and (vi) all other Laws relating to the regulation of the Sellers or the Sellers’ Business, and (vii) the directives and regulations promulgated pursuant to such statutes and any applicable state or non-U.S. counterpart thereof. “Indebtedness” of any Person means, without duplication, (i) the interest in respect of, principal of and premium (if any) in respect of (x) indebtedness of such Person for money borrowed and (y) indebtedness evidenced by notes, debentures, bonds, or other similar instruments for the payment of which such Person is responsible or liable; (ii) all obligations of such Person with respect to any Contracts relating to the deferred and unpaid purchase price of property or services, including any interest accrued thereon and prepayment or similar penalties and expenses; (iii) all obligations of such Person under leases required to be capitalized in accordance with GAAP; (iv) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction; (v) all obligations of the type referred to in clauses (i) through (iv) of any Persons for the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise, including guarantees of such obligations; and (vi) all obligations of the type referred to in clauses (i) through (v) of other Persons secured by any Encumbrance (other than Permitted Encumbrances), on any property or asset of such Person (whether or not such obligation is assumed by such Person).

“Intellectual Property” means all intellectual property and proprietary rights of any kind, including the following: (i) Trademarks, slogans, logos, designs, symbols, trade dress, internet domain names, uniform resource identifiers, rights in design, brand names, any fictitious names, d/b/a’s or similar filings related thereto, or any variant of any of them, and other similar designations of source or origin, together with all goodwill, registrations and applications related to the foregoing; (ii) Copyrights and copyrightable subject matter (including any registration and applications for any of the foregoing); (iii) trade secrets and other confidential or proprietary business information (including manufacturing and production processes and techniques, research and development information, technology, intangibles, drawings, specifications, designs, plans, proposals, technical data, financial, marketing and business data, pricing and cost information, business and marketing plans, customer and supplier lists and information), know how, proprietary processes, formulae, algorithms, models, industrial property rights, and methodologies; (iv) computer software, computer programs, and databases (whether in source code, object code or other form); (v) Patents, and (vi) all rights to sue for past, present and future infringement, misappropriation, dilution or other violation of any of the foregoing and all remedies at law or equity associated therewith.

“Inventory” means all inventory (including finished goods, supplies, raw materials, work in progress, spare, replacement, and component parts) related to the Business maintained or held by, stored by or on behalf of, or in transit to, any of the Sellers.

“IP Assignment and Assumption Agreement” shall have the meaning set forth in Section 3.2(i).

“IRS” shall have the meaning set forth in Section 4.12(c).

“Key Employees” means the employees set forth on Schedule 9.3(n).

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“Knowledge” or (“Knowledge of Seller” or “Seller Knowledge”) means the actual knowledge of a natural person, or, with respect to a Person that is not a natural person, the actual knowledge of the officers or management of any person, in each case, after due inquiry and including facts of which any such individual should be aware in the reasonably prudent exercise of his or her duties.

“Law” means any federal, state, local, municipal, multinational, or other law, treaty, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling, or requirement issued, enacted, adopted, promulgated, implemented, or otherwise put into effect by or under the authority of any Governmental Body, in each case as in effect as of the Closing Date.

“Lease” means any Personal Property Lease or Real Property Lease.

“Leased Real Property” means all of the real property leased, subleased, used, or occupied by any of the Sellers, together with all buildings, structures, fixtures, and improvements erected thereon, and any and all rights privileges, easements, licenses, hereditaments, and other appurtenances relating thereto, and used, or held for use, in connection with the operation of the Business.

“Liability” means, as to any Person, any debt, adverse claim, liability (including any liability that results from, relates to or arises out of tort or any other product liability claim), duty, responsibility, obligation, commitment, assessment, cost, expense, loss, expenditure, charge, fee, penalty, fine, contribution, or premium of any kind or nature whatsoever, whether known or unknown, asserted or unasserted, absolute or contingent, direct or indirect, accrued or unaccrued, liquidated or unliquidated, or due or to become due, and regardless of when sustained, incurred or asserted or when the relevant events occurred or circumstances existed.

“Locations” shall mean the locations set forth on Schedule 1.1(f).

“Material Adverse Effect” means any event, change, occurrence or state of facts that has had, or is reasonably likely to have, individually or in the aggregate, a material adverse effect on the (i) Purchased Assets, Assumed Liabilities, or Business, taken as a whole, provided, however, that in no event shall any of the following, alone or in combination, be deemed to constitute, or be taken into account, in determining whether there has been, or would be, a Material Adverse Effect: (a) changes in the U.S. economy or capital markets in general but that do not have a disproportionate effect on the Sellers relative to other participants in the industry in which the Sellers conduct the Business, (b) changes that affect generally the industry in which the Sellers operate but that do not have a disproportionate effect on the Business relative to other participants in the industry in which the Sellers conduct the Business, (c) changes after the Agreement Date in any applicable Law or GAAP or (d) the commencement of the Bankruptcy Cases; or (ii) the ability of Sellers to consummate the transactions contemplated hereby pursuant to the terms of this Agreement.

“Order” means any award, writ, injunction, judgment, order, ruling, decision, subpoena, mandate, precept, command, directive, consent, approval, award, decree or similar determination, or finding entered, issued, made, or rendered by any Governmental Body.

“Ordinary Course of Business” means the ordinary and usual course of normal day to day operations of the Business consistent with past practice.

“Organizational Documents” means, with respect to a particular entity Person, (i) if a corporation, the articles or certificate of incorporation and bylaws, (ii) if a general partnership, the partnership agreement and any statement of partnership, (iii) if a limited partnership, the limited partnership agreement and certificate of limited partnership, (iv) if a limited liability company, the articles or certificate of organization or formation and any limited liability company or operating agreement, (v) if another type of Person, all other charter and similar documents adopted or filed in connection with the creation, formation or organization of the Person, and (vi) all amendments or supplements to any of the foregoing.

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“Outside Back-up Date” shall have the meaning set forth in Section 7.2(c).

“Outside Date” shall have the meaning set forth in Section 3.4(b).

“Party” shall have the meaning set forth in the preamble.

“Patent” means any patents and patent applications in any country in the world, together with any patents that may issue therefrom and any future patent filings claiming priority to existing patents or patent applications in any country in the world, including any and all extensions, renewals, continuations, continuations-in-part, divisionals, patents-of-additions, reissues, supplementary protection certificates or foreign counterparts of any of the foregoing and any patents based on applications that claim priority from any of the foregoing, and the right to claim priority to any of the foregoing.

“Permits” means to the fullest extent permitted under applicable law, all notifications, licenses, permits (including environmental, construction and operation permits), franchises, certificates, approvals, consents, waivers, clearances, exemptions, classifications, registrations, variances, orders, tariffs, rate schedules, and other similar documents and authorizations issued by any Governmental Body to any of the Sellers and used, or held for use, in connection with the operation of the Business or applicable to the Purchased Assets or the Assumed Liabilities.

“Permitted Encumbrances” means (i) Encumbrances for utilities and current Taxes not yet due and payable; (ii) easements, rights of way, restrictive covenants, encroachments, and similar non-monetary encumbrances or non-monetary impediments against any of the Purchased Assets which do not, individually or in the aggregate, adversely affect the operation of the Business and, in the case of the Leased Real Property, which do not, individually or in the aggregate, adversely affect the use or occupancy of such Leased Real Property as it relates to the operation of the Business or materially detract from the value of the Leased Real Property, (iii) applicable zoning Laws, building codes, land use restrictions, and other similar restrictions imposed by Law, and (iv) materialmans’, mechanics’, artisans’, shippers’, warehousemans’ or other similar common law or statutory liens incurred in the Ordinary Course of Business, (v) licenses granted on a nonexclusive basis in the Ordinary Course of Business and (vi) such other Encumbrances or title exceptions as Purchaser may approve in writing in its sole discretion or which do not, individually or in the aggregate, materially and adversely affect the operation of the Business.

“Person” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, labor union, estate, Governmental Body, or other entity or group.

“Personal Property Leases” shall have the meaning set forth in Section 4.6.

“Petition Date” means the date on which the Sellers commenced the Bankruptcy Cases.

“Post-Closing Plans” shall have the meaning set forth in Section 6.1(b).

“Pre-Closing Period” means the period commencing on the Agreement Date and ending on the earlier of the date upon which this Agreement is terminated pursuant to Section 3.4 or the Closing Date.

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“Pre-Closing Tax Period” means any taxable period (or portion thereof) ending on or before the Closing Date.

“Prevailing Bidder” shall have the meaning set forth in Section 7.2(c).

“Previously Omitted Contract” shall have the meaning set forth in Section 1.6(b)(i).

“Previously Omitted Contract Designation” shall have the meaning set forth in Section 1.6(b)(i).

“Previously Omitted Contract Notice” shall have the meaning set forth in Section 1.6(b)(ii).

“Products” means the products researched, developed, tested, commercialized, manufactured, sold, licensed or distributed by or on behalf of any of the Sellers in connection with the Business.

“Purchase Price” shall have the meaning set forth in Section 2.1(a).

“Purchased Assets” shall have the meaning set forth in Section 1.1.

“Purchaser” shall have the meaning set forth in the preamble.

“Real Property Lease” shall have the meaning set forth in Section 1.6(a).

“Registered Intellectual Property” means all applications, registrations and filings for Intellectual Property that have been registered or filed with or by any state, government or other public or quasi-public legal authority anywhere in the world, including the United States Patent and Trademark Office or United States Copyright Office, including issued Patents and Patent applications, registered Trademarks and Trademark applications, registered Copyrights and Copyright applications, and internet domain name registrations.

“Regulatory Approvals” means any consents, waivers, clearances, approvals, orders, Permits, or authorizations of any Governmental Body, including, but not limited to, the U.S. Food and Drug Administration (“FDA”), and required in connection with the execution, delivery and performance of this Agreement of any Ancillary Document and the consummation of the transactions contemplated hereby and thereby.

“Rejected Contracts” shall have the meaning set forth in Section 1.6(a)(i).

“Release” means any actual or threatened release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal or leaching into the indoor or outdoor environment, or including migration to or from a property, including but not limited to any Leased Real Property.

“Reporting Requirements” shall have the meaning set forth in Section 4.3(d).

“Representatives” shall have the meaning set forth in Section 8.2.

“Sale and Bidding Procedures Motion” shall have the meaning set forth in Section 7.2(a).

“Sale Hearing” means the hearing to approve this Agreement and seeking entry of the Sale Order.

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“Sale Order” means an order substantially in the form attached hereto as Exhibit F.

“Sellers” shall have the meaning set forth in the preamble.

“Seller Intellectual Property” means all Intellectual Property owned or purported to be owned by any Seller, other than Intellectual Property that is Excluded Intellectual Property.

“Seller Registered Intellectual Property” means all Registered Intellectual Property included in the Seller Intellectual Property.

“Straddle Period” shall have the meaning set forth in Section 11.1(b).

“Tax” and “Taxes” mean any federal, state, provincial, local, or other income, gross receipts, sales, value added, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, escheat windfall profits, capital, production, recapture, net worth, surplus, customs, duties, levies, surtaxes or other taxes, fees, assessments, reassessments or charges of any kind whatsoever, whether disputed or not, together with any interest, additions, installments or penalties with respect thereto and any interest in respect of such additions or penalties, in each case, imposed by a Governmental Body, and any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other Person.

“Tax Proceeding” means any action, suit, investigation, audit, Claim, investigation, or other action or proceeding with respect to Taxes.

“Tax Return” means any return, report, information return, declaration, claim for refund or other document (including any schedule or related or supporting information) supplied or required to be supplied to any Governmental Body with respect to Taxes, including amendments thereto.

“Trademarks” means unregistered and registered trademarks, trade names, service marks, trade dress, design rights, common law trademarks and service marks, and other similar designations of origin, together with the goodwill symbolized by any of the foregoing, and any renewals and extensions of the foregoing.

“Transferred Employee” shall have the meaning set forth in Section 6.1(a).

“Treasury Regulations” means the regulations promulgated under the Code by the United States Department of the Treasury (whether in final, proposed, or temporary form), as the same may be amended from time to time.

“V-Go 20 Lots” means the V-Go lots containing KIS springs and represented by the following lot numbers: (i) VG220003B, (ii) VG220006B, (iii) VG220008B and (iv) VG220012B.

“V-Go 30 Lots” means the V-Go lots containing KIS springs and represented by the following lot numbers: (i) VG320004B, (ii) VG320005B, (iii) VG320007B, (iv) VG320009B, (v) VG320010B and (vi) VG320011B.

“WARN Act” means the United States Worker Adjustment and Retraining Notification Act, and the rules and regulations promulgated thereunder.

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Article XI.

TAXES

11.1Certain Taxes.

(a)Any sales, use, purchase, transfer, franchise, deed, fixed asset, stamp, documentary, use or other Taxes and recording charges which may be payable by reason of the sale of the Purchased Assets or the assumption of the Assumed Liabilities under this Agreement or the transactions contemplated hereby, and that are not exempt under Section 1146(a) of the Bankruptcy Code (“Transfer Taxes”), shall be payable one-half by Purchaser and one-half by Sellers. The Sellers shall, at their own expense, timely file any Tax Return or other document required to be filed with respect to such Taxes, and Purchaser shall join in the execution of any such Tax Return if required by Law. Purchaser and Sellers agree to use their best efforts to obtain any certificate, include a resale certificate, or other documents from any Governmental Body as may be necessary to mitigate, reduce, or eliminate any Transfer Tax.

(b)In the case of any taxable period that begins on or before, and ends after, the Closing Date (a “Straddle Period”), any real property, personal property, ad valorem and similar Taxes allocable to the portion of such Straddle Period ending with the end of the day on the Closing Date shall be equal to the amount of such Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that is in the Pre-Closing Tax Period and the denominator of which is the number of days in the entire Straddle Period, which amount shall be an Excluded Liability.

11.2Allocation of Purchase Price. As soon as reasonably practicable after the Closing Date, the Purchaser shall determine the (i) allocation of the Purchase Price, plus (ii) the Assumed Liabilities, plus (iii) all other items required to be treated as consideration for federal income Tax purposes, among the Purchased Assets and the agreements provided herein, for all purposes (including financial, accounting and Tax) (the “Allocation”) and deliver the Allocation to the Sellers. The Purchaser and Sellers shall each report the federal, state and local income and other Tax consequences of the transactions contemplated hereby in a manner consistent with the Allocation unless otherwise required pursuant to a “determination” within the meaning of Section 1313 of the Code. The Sellers shall provide the Purchaser, and the Purchaser shall provide the Sellers, with a copy of any information required to be furnished to the Secretary of the Treasury under Code Section 1060. Each Party shall notify the other Party if it receives notice that the IRS or other Governmental Body proposes any allocation different than that set forth in the Allocation.

11.3Cooperation on Tax Matters. The Purchaser and the Sellers agree to provide each other with such information and assistance as is reasonably necessary, including access to records, Tax Returns and personnel, for the preparation and filing of any Tax Returns or for the defense of any Tax claim or assessment, whether in connection with a Tax Proceeding or otherwise, in each case related to the Purchased Assets. Any information obtained under this Section 11.3 shall be kept confidential except as may be otherwise necessary in connection with the filing of Tax Returns or claims for refund or in conducting any audit or other proceeding.

11.4Tax Reporting of Contingent Liabilities. Purchaser and each Seller agree that the assumption of any deferred revenue obligations with respect to the Purchased Assets or the Business shall be treated for U.S. federal income tax purposes as an assumption by Purchaser from the applicable Seller of a contingent liability and neither Purchaser nor Seller shall take any position for Tax purposes inconsistent therewith.

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Article XII.

MISCELLANEOUS

12.1Payment of Expenses. Except as otherwise provided in this Agreement (including, but not limited to, Section 3.5 and Section 7.1) and whether or not the transactions contemplated hereby are consummated, Sellers and the Purchaser shall bear their own expenses incurred or to be incurred in connection with the negotiation and execution of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby.

12.2Survival of Representations and Warranties; Survival of Confidentiality. The Parties agree that the representations and warranties contained in this Agreement shall expire upon the Closing Date. The Parties agree that the covenants contained in this Agreement to be performed at or after the Closing shall survive in accordance with the terms of the particular covenant or until fully performed.

12.3Entire Agreement; Amendments, and Waivers. This Agreement, together with the Ancillary Documents, represents the entire understanding and agreement between the Parties with respect to the subject matter hereof. This Agreement may be amended, supplemented, or changed, and any provision hereof may be waived, only by written instrument making specific reference to this Agreement signed by the Party against whom enforcement of any such amendment, supplement, modification, or waiver is sought; provided, that, notwithstanding the foregoing, the Schedules hereto may be amended in accordance with Section 1.6. No action taken pursuant to this Agreement, including any investigation by or on behalf of any Party shall be deemed to constitute a waiver by the Party taking such action of compliance with any representation, warranty, condition, covenant, or agreement contained herein. The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any Party to exercise, and no delay in exercising, any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such Party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by applicable Law.

12.4Execution of Agreement; Counterparts; Electronic Signatures.

(a)This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument, and shall become effective when counterparts have been signed by each of the Parties and delivered to the other Parties; it being understood that all Parties need not sign the same counterparts.

(b)The exchange of copies of this Agreement and of signature pages by facsimile transmission (whether directly from one facsimile device to another by means of a dial-up connection or whether mediated by the worldwide web), by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, or by combination of such means, shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. Signatures of the Parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.

12.5Governing Law. THIS AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH FEDERAL BANKRUPTCY LAW, TO THE EXTENT APPLICABLE, AND WHERE STATE LAW IS IMPLICATED, THE LAWS OF THE STATE OF DELAWARE SHALL GOVERN, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF (EXCEPT FOR ANY LAWS OF THAT STATE WHICH WOULD RENDER SUCH CHOICE OF LAWS INEFFECTIVE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE.

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12.6Jurisdiction, Waiver of Jury Trial.

(a)THE BANKRUPTCY COURT WILL HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN OR AMONG THE PARTIES, WHETHER AT LAW OR IN EQUITY, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY AGREEMENT CONTEMPLATED HEREBY; PROVIDED, HOWEVER, THAT IF THE BANKRUPTCY COURT IS UNWILLING OR UNABLE TO HEAR ANY SUCH DISPUTE, THE COURTS OF THE STATE OF DELAWARE AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN DELAWARE WILL HAVE SOLE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN OR AMONG THE PARTIES, WHETHER AT LAW OR IN EQUITY, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY AGREEMENT CONTEMPLATED HEREBY.

(b)EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

12.7Notices. Unless otherwise set forth herein, any notices, consents, waivers, and other communications required or permitted by this Agreement shall be in writing and shall be deemed given to a Party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid), or (b) sent by facsimile or e-mail, in each case, if sent during the normal business hours of the recipient, with confirmation of transmission by the transmitting equipment confirmed with a copy delivered as provided in clause (a), in the case of each of clauses (a) and (b), to the following addresses, facsimile numbers or e-mail addresses and marked to the attention of the person (by name or title) designated below (or to such other address, facsimile number, e-mail address, or person as a Party may designate by notice to the other Parties):

If to Seller, to:

Valeritas, Inc.
Attn: John E Timberlake, President & Chief Executive Officer
750 Route 202 South, Suite 600
Bridgewater, NJ 08807
jetimberlake@valeritas.com

With a copy (which shall not constitute effective notice) to:

DLA Piper LLP (US)

Rachel Ehrlich Albanese

1251 Avenue of the Americas

New York, NY 10020

Rachel.albanese@us.dlapiper.com

If to Purchaser, to:

Zealand Pharma A/S

Attn: Ravinder Singh Chahil

Sydmarken 11

DK-2860 Søborg

Denmark

rsc@zealandpharma.com

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With a copy (which shall not constitute effective notice) to:

Cooley LLP

Attn: Marc Recht

500 Boylston St.

Boston, MA 02116

mrecht@cooley.com

12.8Binding Effect; Assignment. This Agreement shall be binding upon Purchaser and, subject to entry of the Bidding Procedures Order (with respect to the matters covered thereby) and the Sale Order, upon Sellers, and shall inure to the benefit of the Parties and their respective successors and permitted assigns, including any trustee or estate representative appointed in the Bankruptcy Cases or any successor chapter 7 case. Nothing in this Agreement shall create or be deemed to create any third-party beneficiary rights in any Person or entity not a party to this Agreement except the Purchaser Releasees pursuant to Section 2.3. No assignment of this Agreement or of any rights or obligations hereunder may be made by Sellers or Purchaser (by operation of law or otherwise) without the prior written consent of the other Parties and any attempted assignment without such required consents shall be void.

12.9Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect under any applicable Law in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction and in lieu of such invalid, illegal, or unenforceable provision or portion of any provision, there will be added automatically as a part of this Agreement a valid legal and enforceable provision as similar in terms to such invalid, illegal or unenforceable provision as may be possible.

12.10Bulk Sales Laws. Each Party hereby waives compliance by the other Parties with the “bulk sales,” “bulk transfers” or similar Laws in all applicable jurisdictions in respect of the transactions contemplated by this Agreement or any Ancillary Document.

12.11Certain Interpretive Matters. The information contained in the Schedules is disclosed solely for the purposes of this Agreement and may include items or information not required to be disclosed under this Agreement. No information contained in any Schedule shall be deemed to (i) be an admission by any party hereto to any third Person of any matter whatsoever, including an admission of any violation of any Laws or breach of any agreement, (ii) be deemed to be material (whether individually or in the aggregate) to the business, assets, liabilities, financial position, operations, or results of operations of the Sellers, or (iii) give rise to circumstances which may result in a Material Adverse Effect solely by reason of it being disclosed. Information contained in a Section, subsection or individual Schedule (or expressly incorporated therein) of the Disclosure Schedules shall (A) qualify the representations and warranties made in the identically numbered Section or, if applicable, subsection of Article IV of this Agreement and all other representations and warranties made in any other Section, subsection, or Schedule of Article IV to the extent its applicability to such Section, subsection or Schedule is reasonably apparent on its face, (B) references to agreements in the Disclosure Schedules are not intended to be a full description of such agreements, and all such disclosed agreements should be read in their entirety, and (C) nothing disclosed in any Disclosure Schedule is intended to broaden any representation or warranty contained in Articles IV or V.

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45

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered as of the date first above written.

SELLERS:

VALERITAS, INC.

By:

Name:

Title:

VALERITAS HOLDINGS, INC.

By:  

Name:

Title:

PURCHASER:

ZEALAND PHARMA A/S

By:

Name:

Title:

[Signature Page to Asset Purchase Agreement]

EXHIBIT A

[FORM OF] BILL OF SALE

This Bill of Sale is entered into as of [_________], 2020 by Valeritas, Inc., a Delaware corporation and Valeritas Holdings, Inc., a Delaware corporation, ( collectively, the “Sellers”), in favor of [_________] (“Purchaser”) and its permitted assignee. This Bill of Sale is made pursuant to the Asset Purchase Agreement (the “Agreement”) dated February 9, 2020 by and between Sellers and Purchaser, to transfer the Purchased Assets, as fully defined herein. Any capitalized term used but not defined in this Bill of Sale shall have the meaning set forth in the Agreement.

1.                  Conveyance. For good and valuable consideration in the amount paid under Section 2.1 of the Agreement, the receipt and adequacy of which Sellers hereby acknowledge, Sellers hereby irrevocably sell, convey, assign and transfer to Purchaser, all of their right, title, and interest in and to the Purchased Assets (“Purchased Assets”), all in accordance with the Agreement, the IP Assumption and Assignment Agreement, the Assumption and Assignment of Lease and the Assignment and Assumption Agreement.

2.                  Representations and Warranties. The terms of the Agreement, including, but not limited to, the representations, warranties, covenants, agreements and indemnities relating to the Purchased Assets are incorporated herein by reference. Sellers represent and warrant that (1) Sellers are conveying good and valid title to all Purchased Assets, free and clear of all Claims, Liabilities and Encumbrances; and (2) Sellers have the right to sell the Purchased Assets to Purchaser and shall warrant and defend the right against the lawful claims and demands of all persons in accordance with the terms and conditions of the Agreement.

3.                  Disclaimer of Warranties. Section 1.7 of the Agreement is incorporated herein by reference.

4.                  Further Assurances. Sellers, for themselves and their successors and assigns, hereby covenant and agree that, at any time and from time to time on Purchaser’s written request, Sellers will do, execute, acknowledge, and deliver or cause to be done, executed, acknowledged, and delivered, all such further acts, deeds, assignments, transfers, conveyances, powers of attorney, and assurances as may be reasonably required by Purchaser in order to assign, transfer, set over, convey, assure, and confirm unto and vest in Purchaser and its successors and assigns title to the assets sold, conveyed, and transferred by this Bill of Sale.

5.                  Governing Law. This Bill of Sale is governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Delaware.

6.                  Incorporation of Agreement. This Bill of Sale incorporates by reference all of the terms of the Agreement, including but not limited to Sellers’ representations, warranties, covenants, and agreements relating to the Purchased Assets, as if each term was fully set forth herein. In the event of conflict between the terms of the Agreement and the terms of this Bill of Sale, the terms of the Agreement govern and control.

7.                   Counterparts. This Bill of Sale may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Bill of Sale delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Bill of Sale.

8.                  Binding Effect; Benefit; Assignment. This Bill of Sale will inure to the benefit of and bind the parties and their respective successors and permitted assigns. Nothing in this Bill of Sale, express or implied, may be construed to give any person other than the parties hereto and their respective successors and permitted assigns any right, remedy, claim, obligation or liability arising from or related to this Bill of Sale. This Bill of Sale and the rights and obligations hereunder shall not be assignable by Sellers without the prior written consent of Purchaser, and any such purported assignment without such consent shall be void. This Bill of Sale and the rights and obligations hereunder shall be assignable by Purchaser without the written consent of Sellers.

9.                  Amendment. This Bill of Sale may not be amended or modified except by an instrument in writing signed by or on behalf of each of the parties hereto.

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2

IN WITNESS WHEREOF, Sellers and Purchaser have each duly executed and delivered this Bill of Sale as of the date first written above.

SELLERS:

VALERITAS, INC.

By:

Name:

Title:

VALERITAS HOLDINGS, INC.

By:

Name:

Title:

PURCHASER:

[_____]

By:

Name:

Title:

EXHIBIT B

[FORM OF] ASSIGNMENT AND ASSUMPTION AGREEMENT

This Assignment and Assumption Agreement (the “Agreement”), effective as of [______], 2020 (the “Effective Date”), is by and Valeritas, Inc., a Delaware corporation and Valeritas Holdings, Inc., a Delaware corporation (collectively, “Sellers”), and [_____] (“Purchaser”).

WHEREAS, Sellers and Purchaser have entered into that certain Asset Purchase Agreement, dated as of February 9, 2020 (the “Purchase Agreement”), pursuant to which, among other things, Sellers have agreed to assign all of their rights, title and interest in, and Purchaser has agreed to assume all of Sellers’ duties and obligations under, the Assigned Contracts.

NOW, THEREFORE, in consideration of the mutual covenants, terms, and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

10.              Definitions. All capitalized terms used in this Agreement but not otherwise defined herein are given the meanings set forth in the Purchase Agreement.

11.              Assignment and Assumption. Sellers hereby sell, assign, grant, convey and transfer to Purchaser all of Sellers’ right, title and interest in and to the Assigned Contracts. Purchaser hereby accepts such assignment and assumes all of Sellers’ duties and obligations under the Assigned Contracts and agrees to pay, perform and discharge, as and when due, all of the obligations of Seller under the Assigned Contracts accruing on and after the later of the Effective Date and (ii) the date a Contract becomes an “Assigned Contract” pursuant to the terms of Section 1.6 of the Purchase Agreement.

12.              Terms of the Purchase Agreement. The terms of the Purchase Agreement, including, but not limited to, the representations, warranties, covenants, agreements and indemnities relating to the Assigned Contracts are incorporated herein by reference. The parties hereto acknowledge and agree that the representations, warranties, covenants, agreements and indemnities contained in the Purchase Agreement shall not be superseded hereby but shall remain in full force and effect to the full extent provided therein. In the event of any conflict or inconsistency between the terms of the Purchase Agreement and the terms hereof, the terms of the Purchase Agreement shall govern.

13.              Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction).

14.               Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

15.              Binding Effect; Benefit; Assignment. This Agreement will inure to the benefit of and bind the parties and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, may be construed to give any person other than the parties hereto and their respective successors and permitted assigns any right, remedy, claim, obligation or liability arising from or related to this Agreement. This Agreement and the rights and obligations hereunder shall not be assignable by Sellers without the prior written consent of Purchaser, and any such purported assignment without such consent shall be void. This Agreement and the rights and obligations hereunder shall be assignable by Purchaser without the written consent of Sellers.

16.              Amendment. This Agreement may not be amended or modified except by an instrument in writing signed by or on behalf of each of the parties hereto.

17.              Further Assurances. Each of the parties hereto shall execute and deliver, at the reasonable request of the other party hereto, such additional documents, instruments, conveyances and assurances and take such further actions as such other party may reasonably request to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.

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2

IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the date first above written.

SELLERS:

VALERITAS, INC.

By:

Name:

Title:

VALERITAS HOLDINGS, INC.

By:

Name:

Title:

PURCHASER:

[____]

By:

Name:

Title:

3

EXHIBIT C

[FORM OF] ASSIGNMENT AND ASSUMPTION OF LEASE

This ASSIGNMENT AND ASSUMPTION OF LEASE (this “Assignment”) is made and entered into effective as of [_________], 2020, by and between Valeritas, Inc., a Delaware corporation (“Assignor”), and [_________] (“Assignee”).

W I T N E S S E T H:

WHEREAS, Assignor is the tenant under that certain Office Lease Agreement, dated May 10, 2017, by and between RFP Lincoln 293, LLC and Assignor, as amended by that certain First Amendment to Lease, dated February 11, 2019, by and between BPR 293 Equity Partners, LLC and Assignor (the “Lease”), for the demised premises described therein as set forth on Exhibit A attached hereto (the “Premises”); and

WHEREAS, in connection with that certain Asset Purchase Agreement, dated as of February 9, 2020, by and between Assignor and Valeritas Holdings, Inc., a Delaware corporation and Assignee (the “Purchase Agreement”), Assignor has agreed to assign all of its right, title and interest in and to the Lease to Assignee, and Assignee has agreed to accept such assignment and assume and perform Assignor’s liabilities and obligations arising under the Lease from and after the assignment hereunder, all in accordance with this Assignment and the Purchase Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties agree as follows:

1.       Assignment. Assignor hereby assigns, transfers and delivers to Assignee all of Assignor’s right, title and interest as lessee or tenant in and to the Lease and all of the rights, benefits and privileges of the lessee or tenant thereunder, together with all security and other deposits and advance rent, if any, paid by Assignor under the Lease, to the extent provided under the Purchase Agreement.

2.       Assumption. Assignee hereby assumes all liabilities and obligations of Assignor under the Lease (arising on and after the assignment hereunder) and agrees to perform all obligations of Assignor under the Lease, to the extent provided under the Purchase Agreement.

3.        Governing Law. This Assignment will be governed by and construed in accordance with the internal laws of the State of Delaware (regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof).

4.       Further Assurances. Assignor covenants with Assignee and Assignee covenants with Assignor that each will execute or procure any additional documents necessary to establish the rights of the other hereunder.

5.       Counterparts. This Assignment may be executed by the parties in counterparts (including by means of facsimile or PDF signature pages delivered electronically), in which event the signature pages thereof shall be combined in order to constitute a single original document.

6.       Binding Effect. This Assignment shall be binding upon and inure to the benefit of Assignor, Assignee and their respective successors and assigns. Nothing in this Agreement, express or implied, may be construed to give any person other than the parties hereto and their respective successors and permitted assigns any right, remedy, claim, obligation or liability arising from or related to this Assignment. This Assignment and the rights and obligations hereunder shall not be assignable by Sellers without the prior written consent of Assignee, and any such purported assignment without such consent shall be void. This Agreement and the rights and obligations hereunder shall be assignable by Assignee without the written consent of Sellers.

7.       Amendment. This Assignment may not be amended or modified except by an instrument in writing signed by or on behalf of each of the parties hereto.

8.       Terms of the Purchase Agreement. The terms of the Purchase Agreement are incorporated herein by this reference. In the event of any conflict or inconsistency between the terms of the Purchase Agreement and the terms of this Assignment, the terms of the Purchase Agreement will govern.

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2

IN WITNESS WHEREOF, the parties have executed this Assignment as of the date first set forth above.

ASSIGNOR:

VALERITAS, INC.

By:

Name:       

Title:       

ASSIGNEE:

[__________]

By:

Name:

Title:

EXHIBIT A

Description of Premises

[INCLUDE LEGAL DESCRIPTION FROM LEASE]

EXHIBIT D

[FORM OF] IP ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS IP ASSIGNMENT AND ASSUMPTION AGREEMENT (this “IP Assignment”) is made and entered into as of [______], 2020 by and among [_____] (“Purchaser”) [and one or more other persons designated by the Purchaser], and Valeritas, Inc., a Delaware corporation and Valeritas Holdings, Inc., a Delaware corporation (collectively, the “Sellers”). Purchaser and Sellers are collectively referred to herein as the “Parties” and individually as a “Party.”

WHEREAS, Sellers have agreed to sell to Purchaser and Purchaser has agreed to purchase from Sellers various assets, including without limitation, all intellectual property assets included within the meaning of Seller Intellectual Property and Seller Registered Intellectual Property (collectively, the “Intellectual Property”) as such terms are defined in that certain Asset Purchase Agreement, dated as of February [9], 2020, by and between Purchaser and Sellers (the “Asset Purchase Agreement”), along with the goodwill of the business associated therewith; and

WHEREAS, Purchaser desires to acquire Sellers’ entire right, title and interest in and to such Intellectual Property.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth below and in the Asset Purchase Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

Defined Terms. All capitalized terms not defined herein shall have the meaning ascribed to them in the Asset Purchase Agreement.

Assignment. Sellers hereby irrevocably and unconditionally sell, assign, transfer, deliver, and convey to Purchaser all of Sellers’ right, title and interest in and to the Intellectual Property, including the Seller Intellectual Property and Seller Registered Intellectual Property and the goodwill and all rights associated therewith, and all other corresponding rights that are or may be secured under the laws of the United States, any jurisdiction thereof, any foreign country or any multinational jurisdiction now or hereafter in effect, the same to be held by Purchaser for Purchaser’s own use and enjoyment, and for the use and enjoyment of Purchaser’s successors and assigns and other legal representatives, together with all rights to income, royalties and license fees deriving from the Intellectual Property, all claims for damages by reason of past, present and future infringements or unauthorized uses of the Intellectual Property and the right to sue for and collect such damages, as permitted under the applicable laws of any jurisdiction or country in which such claims may be asserted for the use and benefit of Purchaser and each of Purchaser’s successors, assigns and other legal representatives.

Assistance. Subject to Section 5, Sellers and Purchaser shall execute and deliver such instruments and take such other actions as may reasonably be required in order to carry out the intent of this IP Assignment and to evidence and effectuate the transactions contemplated herein.

Relation to Asset Purchase Agreement. In the event of any conflict or inconsistency between the terms of the Asset Purchase Agreement and the terms hereof, the terms of the Asset Purchase Agreement shall govern.

Severability; Amendment. Any provision in this IP Assignment which is illegal, invalid or unenforceable shall be ineffective to the extent of such illegality, invalidity or unenforceability, without affecting in any way the remaining provisions hereof. This IP Assignment may not be amended except by execution and delivery of an instrument in writing signed by officers of Sellers and Purchaser on behalf of Sellers and Purchaser.

Entire Agreement; No Third-Party Beneficiaries. This IP Assignment, including the Asset Purchase Agreement and the other documents attached or referred to herein, which form a part hereof, embodies the entire agreement and understanding of the Parties, and supersedes all prior or contemporaneous agreements or understandings (whether written or oral) between the Parties, in respect to the subject matter contained herein. This IP Assignment and the obligations hereunder are not intended to confer any rights or remedies to any third party and are not intended to operate, in anyway, as an agreement for the benefit of any third party.

Successors and Assigns. This IP Assignment shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and permitted assigns. This IP Assignment and the rights and obligations hereunder shall not be assignable by Sellers without the prior written consent of Purchaser, and any such purported assignment without such consent shall be void. This IP Assignment and the rights and obligations hereunder shall be assignable by Purchaser without the written consent of Sellers.

Governing Law. This IP Assignment shall be governed and construed in accordance with federal bankruptcy and federal intellectual property law, to the extent applicable, and where state law is implicated, the laws of the State of Delaware (without giving reference to the principles of conflicts of law).

Counterparts. This IP Assignment may be executed in any number of counterparts, all of which, taken together, shall constitute one document. Counterparts of this IP Assignment (or applicable signature pages hereof) that are manually signed and delivered by facsimile or other electronic transmission shall be deemed to constitute signed original counterparts hereof and shall bind the Parties signing and delivering in such manner.

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IN WITNESS WHEREOF, the undersigned parties have caused this IP Assignment to be executed and delivered as of the date first above written.

SELLERS:

VALERITAS, INC.

By:

Name:       

Title:

VALERITAS HOLDINGS, INC.

By:

Name:       

Title:

PURCHASER:

[       ]

By:

Name:       

Title:

EXHIBIT E

[FORM OF] BIDDING PROCEDURES ORDER

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

---------------------------------------------------------------   In re:   Valeritas Holdings, Inc., et al.,¹   Debtors.
--------------------------------------------------------------- x : :
:
:
:
: :
x  
Chapter 11

Case No. 20-______ (___)   (Jointly Administered)   Re: D.I. ____

ORDER (A) ESTABLISHING BIDDING PROCEDURES; (B) APPROVING BID PROTECTIONS; (C) ESTABLISHING PROCEDURES RELATING TO ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES, INCLUDING NOTICE OF PROPOSED CURE AMOUNTS; (D) APPROVING FORM AND MANNER OF NOTICE; (E) SCHEDULING A HEARING TO CONSIDER ANY PROPOSED SALE; AND (F) GRANTING CERTAIN RELATED RELIEF

This matter coming before the court upon the Motion of Debtors for Entry of Orders (I)(A) Establishing Bidding Procedures; (B) Approving Bid Protections; (C) Establishing Procedures Relating to Assumption and Assignment of Certain Executory Contracts and Unexpired Leases, Including Notice of Proposed Cure Amounts; (D) Approving Form and Manner of Notice; (E) Scheduling a Hearing to Consider any Proposed Sale; and (F) Granting Certain Related Relief; and (II)(A) Approving a Sale; (B) Authorizing Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale; and (C) Granting Related Relief

1               The debtors in these chapter 11 cases, along with the last four digits of each debtor’s federal tax identification number, are: Valeritas Holdings, Inc. (8907); Valeritas, Inc. (1056); Valeritas Security Corporation (9654); Valeritas US, LLC (0007). The corporate headquarters and the mailing address for the debtors is 750 Route 202 South, Suite 600, Bridgewater, New Jersey 08807.

(the “Motion”),¹ filed by the above-captioned debtors and debtors in possession (collectively, the “Debtors”) for entry of an order (this “Order”) (a) authorizing and approving the bidding procedures attached hereto as Exhibit 1 (the “Bidding Procedures”) in connection with a Sale, (b) approving the Bid Protections, (c) approving the form and manner of notice of any Auction and any Sale Hearing, (d) scheduling the Sale Hearing, if applicable, and setting other related dates and deadlines, attached hereto as Exhibit 2, (e) establishing procedures for the assumption and assignment of contracts and noticing of related Cure Amounts, and (f) granting related relief all as further described in the Motion; and upon consideration of the First Day Declaration, the Murphy Declaration, and the record of these Chapter 11 Cases; and this Court having found that (i) this Court has jurisdiction over the Debtors, their estates, property of their estates and to consider the Motion and the relief requested therein under 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the District of Delaware, dated February 29, 2012, (ii) this Court may enter a final order consistent with Article III of the United States Constitution, (iii) and the matter being a core proceeding within the meaning of 28 U.S.C. § 157(b)(2), (iv) venue of this Motion in this District is proper under 28 U.S.C. §§ 1408 and 1409, and (v) no further or other notice of the Motion is required under the circumstances; and this Court having reviewed the Motion and having heard the statements in support of the relief requested in the Motion at a hearing before this Court; and having determined that the legal and factual bases set forth in the Motion, the First Day Declaration, and the Murphy Declaration establish just cause for the relief granted in this Order; and this Court having found and determined that the relief sought in the Motion is in the best interests of the Debtors’ estates, their creditors and other parties in interest; and after due deliberation and sufficient cause appearing therefor,

¹ Capitalized terms used but not otherwise defined in this Order shall have the meanings ascribed to them in the Motion or Bidding Procedures (as defined herein), as applicable.

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IT IS HEREBY ORDERED THAT:

I.               Bidding Procedures. The Debtors have articulated good and sufficient reasons for authorizing and approving the Bidding Procedures attached hereto as Exhibit 1, which are fair, reasonable, and appropriate under the circumstances and designed to achieve the highest or otherwise best offer and to maximize the value of the Debtors’ estates. The Bidding Procedures shall govern the submission, receipt, and analysis of all bids relating to the Sale and any party desiring to submit a bid shall do so strictly in accordance with the terms of the Bidding Procedures and this Order.

II.             Sale Notice. The notice, substantially in the form attached hereto as Exhibit 3, provided by the Debtors regarding the Sale, the Auction, and the Sale Hearing (the “Sale Notice”) is reasonably calculated to provide all interested parties with timely and proper notice of the proposed Sale, including: (i) the date, time, and place of the Auction (if one is held); (ii) the Bidding Procedures and certain dates and deadlines related thereto; (iii) the objection deadline for the Motion and the date, time, and place of the Sale Hearing; (iv) reasonably specific identification of the assets subject to any Sale; (v) instructions for promptly obtaining a copy of the form APA; (vi) representations describing any Sale as being free and clear of liens, claims, interests, and other encumbrances, with all such liens, claims, interests, and other encumbrances attaching with the same validity and priority to the sale proceeds; (vii) notice of the proposed assumption of the Designated Contracts by the Debtors and assignment to, the Successful Bidder, and the right, procedures, and deadlines for objecting thereto, and no other or further notice of any Sale shall be required.

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III.            Assumption and Assignment Procedures. The Motion and the Contract Assumption Notice (as defined herein) are reasonably calculated to provide counterparties to the Designated Contracts with proper notice of the intended assumption and assignment of their executory contracts, any Cure Amounts (as defined herein), and the Assumption Procedures (as defined herein), and are appropriate.

IV.           Other Findings. The findings and conclusions set forth herein constitute the Court’s findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052, made applicable to this proceeding pursuant to Bankruptcy Rule 9014. To the extent any of the findings of fact herein constitute conclusions of law, they are adopted as such. To the extent any of the conclusions of law herein constitute findings of fact, they are adopted as such.

NOW, THEREFORE, IT IS ORDERED, ADJUDGED, AND DECREED THAT:

(a)              The Motion is GRANTED as set forth herein.

I.                   Important Dates and Deadlines

2.Sale Hearing. The Sale Hearing will commence on March [20], 2020, at [♦].m., EDT, before the Honorable [♦] of the United States Bankruptcy Court for the District of Delaware, 824 Market St. N., [♦] Floor, Courtroom [♦], Wilmington, Delaware 19801. The Sale Hearing may be adjourned by the Debtors without further notice other than by announcement in open Court, on the Court’s calendar, or in the applicable hearing agenda.

(b)            Sale Objection Deadline. Objections, if any, to the Motion and the sale of the Assets to a Successful Bidder, except objections solely related to the identity of the Successful Bidder, any changes to the Form APA, and adequate assurance of future performance by a Successful Bidder other than the Stalking Horse Bidder (“Initial Objections”), must be made by March [12], 2020, at 4:00 p.m., EDT (the “Sale Objection Deadline”). Objections solely to the conduct of the Auction, the identity of the Successful Bidder, changes to the form APA, and adequate assurance of future performance by a Successful Bidder other than the Stalking Horse Bidder must be made by 4:00 p.m., EDT on March [19], 2020. In each case, all objections must: (a) be in writing; (b) conform to the applicable provisions of the Bankruptcy Rules, the Local Rules, and any orders of the Court; (c) state with particularity the legal and factual bases for the objection and the specific grounds therefor; and (d) be filed with the Court no later than the Sale Objection Deadline and served on (i) the proposed counsel to the Debtors and (ii) counsel to the Stalking Horse Bidder.

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(c)            Response Deadline. Responses or replies, if any, to (a) Initial Objections must be filed by March [19], 2020, at 12:00 p.m., EDT or (b) an objection to the (i) conduct of the Auction, (ii) the proposed Sale to the Successful Bidder, and (iii) the ability of the Successful Bidder to provide adequate assurance of future performance, or the proposed form of adequate assurance of future performance, with respect to the assumption and assignment of any Designated Contracts, must be filed by 4:00 p.m., EDT on March [19], 2020; provided that such deadlines may be extended by agreement of the Debtors and the affected objecting party.

(d)            Competitive Bidding. The following dates and deadlines regarding competitive bidding are hereby established:

(i) Bid Deadline: March [12], 2020, at 4:00 p.m., EDT, the deadline by which all Qualified Bids (as defined in the Bidding Procedures) must be actually received in writing in electronic format by the parties specified in the Bidding Procedures (the “Bid Deadline”); and

(ii) Auction: March [17], 2020, at 9:00 a.m., EDT, is the date and time the Auction, if one is needed; the Auction will be held at the offices of proposed counsel to the Debtors: DLA Piper LLP (US), 1251 Avenue of the Americas, New York, New York 10020, or such other place and time as the Debtors shall notify all Qualified Bidders that have submitted Qualified Bids (which shall be deemed to include the Stalking Horse Bidder).

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1.                  Bidding Procedures and Related Relief

6.The Bidding Procedures, substantially in the form attached hereto as Exhibit 1 and incorporated by reference as though fully set forth herein, are hereby approved in their entirety. The Bidding Procedures shall govern the submission, receipt, and analysis of all Bids relating to any proposed Sale, and any party desiring to submit a higher or better offer for the Assets must comply with the terms of the Bidding Procedures and this Order. The Bidding Procedures shall also govern the terms on which the Debtors will proceed with the Auction, the Sale pursuant to the modified APA, and/or the selection of the Stalking Horse Bidder as the Successful Bidder. The Debtors are authorized to take any and all actions reasonably necessary or appropriate to implement the Bidding Procedures.

(a)            The failure to specifically include or reference any particular provision, section, or article of the Bidding Procedures in this Order shall not diminish or impair the effectiveness of such provision, section, or article, it being the intent of this Court that the Bidding Procedures are authorized in their entirety.

2.                  Auction

(a)            The Debtors are authorized, subject to the terms of this Order and the Bidding Procedures, to take actions reasonably necessary, in the discretion of the Debtors, to conduct and implement the Auction.

(b)            Any party in interest may attend (but not participate in) the Auction if any such party in interest provides the Debtors with written notice of its intention to attend the Auction on or before the Bid Deadline, which written notice shall be sent to proposed counsel for the Debtors via electronic mail, to Maris J. Kandestin, Esq., at maris.kandestin@us.dlapiper.com. For the avoidance of doubt, only Qualified Bidders (including the Stalking Horse Bidder, which shall be deemed a Qualified Bidder at all times) will be entitled to make any Bids at the Auction. For the avoidance of doubt, the Consultation Parties may attend the Auction without sending prior written notice of their intention to do so.

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(c)               The Debtors shall maintain a written transcript of all Bids made and announced at the Auction, including the Baseline Bid, all Overbids, and the Successful Bid. Other than as expressly set forth in this Order or the Bidding Procedures, the Debtors may conduct the Auction in the manner they reasonably determine will result in the highest or otherwise best Qualified Bid.

(d)              Each Qualified Bidder participating at the Auction will be required to confirm on the record at the Auction that (i) it has not engaged in any collusion with respect to the bidding, (ii) its Qualified Bid is a good-faith bona fide offer, and (iii) it intends to consummate the proposed Sale if selected as the Successful Bidder.

(e)              The Debtors (in consultation with the Consultation Parties) reserve the right as they may reasonably determine to be in the best interest of their estates and in the exercise of their fiduciary duties to: (a) determine which bidders are Qualified Bidders; (b) determine which Bids are Qualified Bids; (c) determine which Qualified Bid is the highest or otherwise best proposal and which is the next highest or otherwise best proposal; (d) reject any Bid that is (i) inadequate or insufficient, (ii) not in conformity with the requirements of the Bidding Procedures or the requirements of the Bankruptcy Code or (iii) contrary to the best interests of the Debtors and their estates; (e) impose additional terms and conditions with respect to all potential bidders (other than the Stalking Horse Bidder); (f) extend the deadlines set forth herein or in the Bidding Procedures; and (g) continue or cancel the Auction and/or Sale Hearing, including by announcement in open court without further notice.

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7. In recognition of the considerable time, energy, and resources that the Stalking Horse Bidder has expended in connection with the Stalking Horse Transaction, the Debtors have agreed that if the Stalking Horse Bidder is not the Successful Bidder (or if the Debtors consummate any plan or sale of all or substantially all of the Debtors’ Assets other than the Stalking Horse Transaction), the Stalking Horse Bidder shall be entitled to the Bid Protections, including a Break-Up Fee of 3% of the Purchase Price and an Expense Reimbursement of up to $1,000,000. The Bid Protections shall be deemed allowed administrative expenses under Bankruptcy Code sections 503(b) and 507(a)(2) and shall be paid in accordance with the provisions of the Stalking Horse APA in the event that the Stalking Horse Bidder is not the Successful Bidder.

3.             Sale Hearing Notice and Related Relief

(a)              The Sale Notice is hereby approved. Within three (3) business days following the entry of this Order, or as soon as reasonably practicable thereafter (the “Service Date”), the Debtors will cause the Sale Notice to be served in accordance with the Local Rules on: (a) the Office of the United States Trustee; (b) the Securities & Exchange Commission; (c) the Internal Revenue Service; (d) the Delaware State Treasury; (e) the Delaware Secretary of State; (f) counsel to the Unsecured Creditors’ Committee; (g) counsel to the DIP Lender; (h) the United States Attorney’s Office for the District of Delaware; (i) any party known or reasonably believed to have asserted any lien, claim, or encumbrance or other interest in the Assets; (j) any party known or reasonably believed to have expressed an interest in acquiring some or substantially all of the Assets; (k) any parties that have requested notice in these Cases pursuant to Bankruptcy Rule 2002; (l) all taxing authorities; and (m) to the extent not covered by (a) through (l), all known creditors and parties in interest of the Debtors. The Debtors shall also post the Sale Notice and the Order on the website of the Debtors’ claims and noticing agent located at http://www.kccllc.net/valeritas.

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(b)              Additionally, on the Service Date or as soon as practicable thereafter, the Debtors shall publish notice of the proposed Sale, substantially in the form of the Sale Notice (the “Publication Notice”), once in the national edition of The Wall Street Journal, The New York Times, USA Today, or another publication of similar circulation. Publication of the Publication Notice shall be sufficient and proper notice of any Sale to any other interested parties whose identities are unknown to the Debtors.

4.             Assumption Procedures

(a)              The procedures set forth below regarding the assumption and assignment of the executory contracts and/or executory leases proposed to be assumed and assigned by the Debtors pursuant to section 365(b) and (f) of the Bankruptcy Code in connection with the Sale (the “Assumption Procedures”), substantially in the form attached hereto as Exhibit 4 and incorporated by referenced, are hereby approved.

(b)              The Assumption Procedures shall govern the assumption and assignment of all of the Debtors’ executory contracts and unexpired leases to be assumed and assigned in connection with the Sale (each, a “Designated Contract” and, collectively, the “Designated Contracts”), subject to the payment of any amounts necessary to cure any defaults arising under any Designated Contract (the “Cure Amount”).

(c)               Except as provided in the applicable modified APA, the Debtors shall have no liability or obligation with respect to defaults relating to the Designated Contracts arising, accruing, or relating to a period on or after the effective date of assignment.

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(d)              The Contract Assumption Notice, substantially the form attached hereto as Exhibit 5, is hereby approved.

5.             Other Related Relief

21.Any objections to the entry of this Order and the relief granted herein that have not been withdrawn, waived, resolved, or settled, and all reservations of rights included therein, are hereby overruled on the merits.

22.Notwithstanding Bankruptcy Rule 6004(h), this Order shall be effective and enforceable immediately upon entry hereof.

(a)              To the extent the provisions of this Order are inconsistent with the provisions of any exhibits referenced herein or with the Motion, the provisions of this Order shall control.

(b)              The Debtors are authorized and empowered to take all actions they deem necessary to implement the relief granted in this Order.

(c)               This Court shall retain jurisdiction with respect to all matters arising from or related to the implementation, interpretation, or enforcement of this Order.

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Exhibit 1

Bidding Procedures

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

  In re:   Valeritas Holdings, Inc., et al.,¹   Debtors.
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Chapter 11

Case No. 20-______ (___)   (Jointly Administered)

BIDDING PROCEDURES

Valeritas Holdings, Inc., a Delaware corporation, and its wholly owned subsidiary debtors and debtors in possession in the above-captioned Chapter 11 Cases² (collectively, the “Debtors”) have executed that certain Asset Purchase Agreement (together with all exhibits, schedules, and attachments thereto, the “Stalking Horse APA”), dated as of February 9, 2020, with Zealand Pharma A/S (“Zealand”), by which Zealand or a designee of Zealand as permitted pursuant to the Stalking Horse APA (collectively, the “Stalking Horse Bidder”) proposes to purchase substantially all of the Debtors’ assets (the “Assets”), for a purchase price in the aggregate amount of $23 million in cash plus the assumption of certain liabilities, pursuant to a sale pursuant to section 363 of the Bankruptcy Code. The Stalking Horse Bidder’s proposal to acquire the Debtors’ Assets in accordance with the Stalking Horse APA is referred to as the “Stalking Horse Transaction.”

On February [l], 2020, the Bankruptcy Court entered an order [D.I. [l]] (the “Order”) approving these bidding procedures (the “Bidding Procedures”). The Bidding Procedures set forth the process by which the Debtors, in consultation with the Consultation Parties (as defined and set forth below), will solicit and evaluate higher or otherwise better Bids for the acquisition of the Debtors’ business and Assets. If the Debtors receive one or more Qualified Bids, in addition to the Stalking Horse Transaction, the Debtors will conduct an auction (the “Auction”) among such Qualified Bidders in accordance with these Bidding Procedures. If the Debtors do not receive a Qualified Bid (other than that of the Stalking Horse Bidder), the Debtors will not conduct an Auction and shall designate the Stalking Horse Bidder as the Successful Bidder.

The Debtors will consider Bids that are structured as an offer to purchase the Assets in a sale under section 363 of the Bankruptcy Code (a “Sale”).

1        The debtors in these chapter 11 cases, along with the last four digits of each debtor’s federal tax identification number, are: Valeritas Holdings, Inc. (8907); Valeritas, Inc. (1056); Valeritas Security Corporation (9654); Valeritas US, LLC (0007). The corporate headquarters and the mailing address for the debtors is 750 Route 202 South, Suite 600, Bridgewater, New Jersey 08807.

2      Capitalized terms used but not otherwise defined in these Bidding Procedures shall have the meaning ascribed to them in the Motion or the Stalking Horse APA, as applicable.

KEY SALE PROCESS DATES

Subject to the Debtors’ rights set forth herein, the proposed key dates for the sale process are as follows:

March 2, 2020, at [l]:[l][l].m. (EST)	Proposed hearing to consider entry of the Order approving the Bidding Procedures
March 3, 2020, at 11:59 p.m. (EST)	Deadline for Debtors to provide non-debtor parties with (i) a list of Designated Contracts, and (ii) notice of the proposed Cure Amounts for the Designated Contracts (the “Assumption and Assignment Service Deadline”)
March 12, 2020, at 4:00 p.m. (EDT)	Deadline to object to the Debtors’ proposed assumption and assignment of Designated Contracts and related Cure Amounts
March 12, 2020, at 4:00 p.m. (EDT)	Deadline to object (“Sale Objection Deadline”)3 to Sale (“Sale Objections”)
March 12, 2020, at 4:00 p.m. (EDT)	Bid Deadline
March 16, 2020, at 10:00 a.m. (EDT)	Deadline for Debtors to notify bidders of whether their Bids are Qualified Bids
March 17, 2020, at 9:00 a.m. (EDT)	Auction to be held (if necessary)
March 18, 2020, at 10:00 a.m. (EDT)	Deadline for Debtors to (i) file with the Court the Notice of Successful Bidder and (ii) provide notice to non-Debtor parties of any Designated Contracts
March 19, 2020, at 10:00 a.m. (EDT)	Deadline to object to (i) conduct of the Auction, (ii) the proposed Sale to the Successful Bidder, and (iii) the ability of the Successful Bidder to provide adequate assurance of future performance, or the proposed form of adequate assurance of future performance, with respect to the assumption and assignment of any Designated Contracts
March 19, 2020, at 4:00 p.m. (EDT)	Deadline for Debtors and other parties to file responses to Sale Objections
March 20, 2020, at [l]:[l][l].m. (EDT)	Date of a proposed Sale Hearing to consider entry of the Sale Order
April 2, 2020	Closing

3         This objection deadline applies to all objections to the Motion and the sale of the Assets to a Successful Bidder, with the exception of objections solely related to the identity of the Successful Bidder, any changes to the Form Purchase Agreement, and adequate assurance of future performance by the Successful Bidder.

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Marketing Process

I. Contact Parties

The Debtors, in consultation with their investment banker Lincoln International (“Lincoln”), developed a list of parties whom they believe may be interested in, and whom the Debtors reasonably believe would have the financial resources to consummate, a transaction (a “Transaction”). The list of parties includes both strategic investors and financial investors (collectively, the “Contact Parties”). The Contact Parties include parties whom the Debtors or their advisors previously contacted regarding a Transaction, regardless of whether such parties expressed any interest at such time in pursuing a Transaction. The Debtors will continue to discuss and may supplement the list of Contact Parties throughout the marketing process, as appropriate.

The Debtors may distribute (to the extent not already distributed) to each Contact Party and any other interested party or potential bidder (each, a “Potential Bidder”) an “Information Package” consisting of: (i) a copy of the Bidding Procedures, the Order, and the Motion; (ii) a form confidentiality agreement (a “Confidentiality Agreement”), which shall include typical agreements by the Contact Party not to solicit employees of the Debtors; and (iii) such other materials as may be appropriate under the circumstances.

II. Participation Requirements

To receive due diligence information, including full access to the Debtors’ electronic data room and to additional non-public information regarding the Debtors, a Potential Bidder, other than the Stalking Horse, must deliver the following documents (collectively, the “Preliminary Bid Documents”) by email to each of: (i) proposed counsel for the Debtors, DLA Piper LLP (US), 1201 North Market Street, Suite 2100 Wilmington, Delaware 19801 (Attn: Maris J. Kandestin, Esq., Maris.Kandestin@us.dlapiper.com), and 1251 Avenue of the Americas, New York, New York 10020 (Attn: Rachel Ehrlich Albanese, Esq., Rachel.Albanese@us.dlapiper.com); (ii) proposed investment banker to the Debtors, Lincoln International, 500 West Madison Street, Suite 3900, Chicago, Illinois 60661 (Attn: Brendan J. Murphy, BMurphy@lincolninternational.com, Brian Bock, bbock@lincolninternational.com, and Jeremy Klein, JKlein@lincolninternational.com); (iii) counsel to the DIP Lender, Landis Rath & Cobb LLP, 919 Market Street, Suite 1800, Wilmington, Delaware 19899 (Attn: Adam G. Landis, landis@lrclaw.com, and Kerri Mumford, mumford@lrclaw.com), and Proskauer Rose LLP, Eleven Times Square, New York, New York 10036 (Attn: Peter Antozsyk, Esq., pantoszyk@proskauer.com and Lucy F. Kweskin, Esq., lkweskin@proskauer.com); and (iv) counsel to the official committee of unsecured creditors, if any (the “Committee”) (collectively, the “Bid Recipients”):

a. an executed Confidentiality Agreement on terms acceptable to the Debtors, to the extent not already executed; and

b. evidence by the Potential Bidder of its financial capacity to close a proposed transaction, which may include financial statements of, or verified financial commitments obtained by, the Potential Bidder (or, if the Potential Bidder is an entity formed for the purpose of acquiring the Assets, the party that will bear liability for a breach).

Promptly after a Potential Bidder delivers Preliminary Bid Documents to the Bid Recipients, the Debtors, in consultation with the Consultation Parties, will assess the adequacy of the evidence of its financial capacity and notify the Potential Bidder whether such Potential Bidder has submitted acceptable Preliminary Bid Documents so that the Potential Bidder may proceed to conduct due diligence and ultimately submit a Bid and participate in the Auction, as applicable. Only those Potential Bidders that have submitted acceptable Preliminary Bid Documents (each, a “Bidder”) may submit Bids.

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As soon as reasonably practicable after the Debtors, in consultation with the Consultation Parties, determine that a Potential Bidder is a Bidder, the Debtors will provide such Bidder with access to an electronic data room and reasonable due diligence information as requested by such Bidder (to the extent such Bidder has not already been provided such access and information). All due diligence requests must be directed to Lincoln. Lincoln will work to facilitate meetings between any interested Bidder and the Debtors’ management team. For all Potential Bidders (except for the Stalking Horse Bidder), the due diligence period will end on the Bid Deadline, and after the Bid Deadline, the Debtors will have no obligation to furnish any due diligence information.

The Debtors and their advisors will coordinate all reasonable requests from Bidders for additional information and due diligence access. The Debtors, in consultation with the Consultation Parties, may decline to provide such information to Bidders who, in the Debtors’ business judgment and in consultation with the Consultation Parties, have not established, or who have raised doubt, that such Bidder intends in good faith or has the capacity to consummate a Transaction.

For any Bidder who is a competitor of the Debtors or is affiliated with any competitor of the Debtors, the Debtors reserve the right to withhold, in consultation with the Consultation Parties, any diligence materials that the Debtors determine are business-sensitive or otherwise inappropriate for disclosure to such Bidder at such time.

Each Bidder shall comply with all reasonable requests for additional information and due diligence access by the Debtors or their advisors regarding such Bidder and its contemplated Transaction.

Stalking Horse Bid Deadline and Bid Protections

The Stalking Horse Bidder shall be deemed to be a Qualified Bidder at all times. Likewise, the Stalking Horse APA shall at all times be deemed a Qualified Bid (as defined herein). The Stalking Horse is not required to provide any Deposit other than the deposit set forth in the Stalking Horse APA.

In recognition of the considerable time, energy, and resources that the Stalking Horse Bidder has expended in connection with the Stalking Horse Transaction, the Debtors have agreed that if the Stalking Horse Bidder is not the Successful Bidder (or if the Debtors consummate any sale of all or substantially all of the Debtors’ Assets other than the Stalking Horse Transaction), the Stalking Horse Bidder shall be entitled to the following Bid Protections: (1) a Break-Up Fee of 3% of the Purchase Price, and (2) Expense Reimbursement of up to $1,000,000.

The Bid Protections are payable pursuant to the terms and conditions of, and under certain circumstances as set forth in, the Stalking Horse APA. Payment of the Bid Protections shall be governed by the Stalking Horse APA and the Order. The Bid Protections will be an allowed super-priority administrative expense claim in accordance with the terms of the Stalking Horse APA and pursuant to the Order, senior to all other administrative expense claims against the Debtors’ estates but junior to the DIP Obligations (as defined in the Interim DIP Order).

The Stalking Horse Bidder shall have standing to appear and be heard on all issues related to the Auction, the Sale, and related matters, including the right to object to the conduct of the Auction and interpretation of these Bidding Procedures.

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Auction Process

I.Bid Deadline

A Bidder that desires to make a proposal, solicitation, or offer (each, a “Bid”) shall transmit such proposal, solicitation, or offer via email to each of the Bid Recipients so as to be actually received by them on or before March 12, 2020 at 4:00 p.m. (EDT) (the “Bid Deadline”).

II.Bid Requirements

Each Bid by a Bidder must be submitted in writing and satisfy the following requirements (collectively, the “Bid Requirements”):

a.Purpose: Each Bid must state that it includes an offer by the Bidder to purchase substantially all of the Assets.⁴

b.Purchase Price: Each Bid must clearly set forth the terms of any proposed Transaction, including and identifying separately any cash and non-cash components of the proposed Transaction consideration, such as certain liabilities to be assumed by the Bidder as part of the Transaction, for example (the “Purchase Price”).

c.Deposit: Each Bid must be accompanied by a cash deposit in an amount equal to 10% of the aggregate value of the cash and non-cash consideration of the Bid to be held in an escrow account to be identified and established by the Debtors (the “Deposit”).

d.Marked Agreement: Each Bid must include, at a minimum, a draft asset purchase agreement (the “APA”), together with a redline version of the revised APA against the Stalking Horse APA, including the exhibits and schedules related thereto and any related Transaction documents or other material documents integral to such Bid, pursuant to which the Bidder proposes to effectuate the Transaction (collectively, the “Transaction Documents”). Each Bidder’s APA must provide (i) a commitment to close within two business days after all closing conditions are met and in any event no later than April 2, 2020, and (ii) a representation that the Bidder will use its reasonable best efforts to satisfy all applicable regulatory conditions.

e.Committed Financing: To the extent that a Bid is not accompanied by evidence of the Bidder’s capacity to consummate the Transaction set forth in its Bid with cash on hand, each Bid must include evidence of committed financing that demonstrates that the Bidder has received sufficient debt and/or equity funding commitments to satisfy the Bidder’s Purchase Price and other obligations under its Bid. Such funding commitments or other financing acceptable to the Debtors (in consultation with the Consultation Parties) and must be unconditional and not be subject to any internal approvals, syndication requirements, diligence, or credit committee approvals, and shall have covenants and conditions acceptable to the Debtors (in consultation with the Consultation Parties).

4          The Debtors have determined that, based on the composition of the Assets, only a sale of the Debtors’ business as a going concern will generate value for the Debtors and their estates, creditors, and stakeholders. The Debtors, in consultation with the Consultation Parties, may waive or modify the application of the Qualified Bid conditions in respect of any Bids for a portion of the Assets.

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f. Contingencies; No Financing or Diligence Outs: A Bid shall not be conditioned on a Bidder obtaining, or the sufficiency of, financing or any internal approval, or on the outcome or review of due diligence, but may be subject to the accuracy at the closing of specified representations and warranties or the satisfaction at the closing of specified conditions.

g.Identity: Each Bid must fully disclose the identity of each entity that will be bidding or otherwise participating in connection with such Bid (including each equity holder or other financial backer of the Bidder if such Bidder is an entity formed for the purpose of consummating the proposed Transaction contemplated by such Bid), and the complete terms of any such participation. Under no circumstances shall any undisclosed principals, equity holders, or financial backers be associated with any Bid. Each Bid must also include contact information for the specific person(s) and counsel whom the Debtors’ advisors should contact regarding such Bid.

h.Authorization: Each Bid must contain evidence that the Bidder has obtained authorization or approval from its board of directors (or a comparable governing body acceptable to the Debtors) with respect to the submission of its Bid and the consummation of the Transactions contemplated in such Bid.

i.Substantial Contribution Waiver. Each Bid must contain an express waiver, effective upon submission of the Bid, of any substantial contribution claims by the Bidder.

j.As-Is, Where-Is: Each Bid must include a written acknowledgement and representation that the Bidder: (1) has had an opportunity to conduct any and all due diligence regarding the Assets prior to making its offer; (2) has relied solely upon its own independent review, investigation, and/or inspection of any documents and/or the Assets in making its Bid; and (3) did not rely upon any written or oral statements, representations, promises, warranties, or guaranties whatsoever, whether express, implied by operation of law, or otherwise, regarding the Assets or the completeness of any information provided in connection therewith or the Auction, except as expressly stated in the Bidder’s Transaction Documents.

k.Same or Better Terms. Each Bid shall be based on the Stalking Horse Bid and must be on terms that are not more burdensome than the terms of the Stalking Horse Bid, as determined by the Debtors, in consultation with the Consultation Parties, and considering, among other factors, the scope and manner of the proposed transaction. Each Bid must include duly executed, non-contingent transaction documents necessary to effectuate the Sale and shall include a schedule of assumed contracts to the extent applicable to the Bid, and a copy of the Stalking Horse APA clearly marked to show all changes requested by the Potential Bidder, including those related to the respective Purchase Price and Assets to be acquired by such Qualified Bidder, as well as all other material documents integral to such Bid.

l.Expenses; Disclaimer of Fees. Each Bid (other than that set forth in the Stalking Horse APA) must disclaim any right to receive a break-up fee, expense reimbursement, termination fee, or any other similar form of compensation. For the avoidance of doubt, no Potential Bidder (other than the Stalking Horse Bidder) will be permitted to request, nor be granted by the Debtors, at any time, whether as part of the Auction or otherwise, a break-up fee, expense reimbursement, termination fee, or any other similar form of compensation, and by submitting a Bid any Potential Bidder is waiving any assertion or request for reimbursement on any basis, including under section 503(b) of the Bankruptcy Code.

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By submitting its Bid, each Bidder is agreeing, and shall be deemed to have agreed, to abide by and honor the terms of the Bidding Procedures and to refrain from submitting a Bid or seeking to reopen the Auction after conclusion of the Auction. The submission of a Bid shall constitute a binding and irrevocable offer to acquire the Assets reflected in such Bid.⁵

III.Designation of Qualified Bidders

A Bid will be considered a “Qualified Bid,” and each Bidder that submits a Qualified Bid will be considered a “Qualified Bidder,” if the Debtors, in consultation with the Consultation Parties, determine that such Bid:

a.satisfies the Bid Requirements;

b.is reasonably likely (based on availability of financing, antitrust, or other regulatory issues, experience, and other considerations) to be consummated, if selected as the Successful Bid (as defined below), within a time frame acceptable to the Debtors (in consultation with the Consultation Parties); and

c.Within two (2) business days after the Bid Deadline, the Debtors (after consulting with the Consultation Parties) will notify each Qualified Bidder whether such party is a Qualified Bidder and shall provide the Notice Parties (as defined below), as well as the Stalking Horse Bidder with a copy of each Qualified Bid.

If any Bid is determined not to be a Qualified Bid, the Debtors will refund such Bidder’s Deposit promptly after the Bid Deadline.

Between the date that the Debtors notify a Bidder that it is a Qualified Bidder and the Auction date, the Debtors may (in consultation with the Consultation Parties) discuss, negotiate, or seek clarification of any Qualified Bid from a Qualified Bidder. Without the prior written consent of the Debtors (in consultation with the Consultation Parties), a Qualified Bidder may not modify, amend, or withdraw its Qualified Bid, except for proposed amendments to increase its Purchase Price, or otherwise improve the terms of, the Qualified Bid, during the period that such Qualified Bid remains binding as specified in these Bidding Procedures; provided that any Qualified Bid may be improved at the Auction as set forth herein. Any improved Qualified Bid must continue to comply with the requirements for Qualified Bids set forth in these Bidding Procedures. As stated above, the Stalking Horse shall be deemed a Qualified Bidder at all times, and the Stalking Horse APA shall be a Qualified Bid.

IV.DIP Lender

The DIP Lender⁶ shall automatically be deemed a Qualified Bidder and shall have the right to credit bid on a dollar-for-dollar basis all or a portion of the outstanding DIP Obligations in accordance with section 363(k) of the Bankruptcy Code and applicable law.

5        The Debtors shall deliver to the Prepetition Lenders and DIP Lender, promptly upon receipt, all draft term sheets and other documentation in connection with any Sale transaction.

6        The terms “DIP Lender” and “DIP Obligations” shall have the respective meaning given to those terms under the Interim Order (I) Authorizing the Debtors to Obtain Postpetition Financing, (II) Authorizing

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Nothing in these Bidding Procedures shall be deemed to provide the consent of the DIP Lender (including under 363(f) or otherwise) to the sale of the assets or entry of the Sale Order. Subject to the DIP Order, each of the DIP Lender and the Prepetition Lenders expressly reserves all rights to object or otherwise contest any such sale or aspects thereof including valuation of non-cash consideration and the Debtors’ determination of highest and best bids; provided that until the indefeasible payment of the DIP Obligations in full and termination of the DIP Facility, the Prepetition Lenders shall take no such action if the DIP Lender consents to the Successful Bid or otherwise objects to the Prepetition Lender taking such action.

V.The Auction

If necessary, the Auction shall take place on March 17, 2020, at 9:00 a.m. (EDT) at the offices of proposed counsel for the Debtors, DLA Piper LLP (US), 1251 Avenue of the Americas New York, New York 10020, or such other place and time as the Debtors shall notify all Qualified Bidders that have submitted Qualified Bids (including the Stalking Horse Bidder).

No later than March 16, 2020 at 4:00 p.m. (EDT), the Debtors will notify all Qualified Bidders of the highest or otherwise best Qualified Bid (the “Baseline Bid”) and provide copies of the documents supporting the Baseline Bid to all Qualified Bidders. The determination of which Qualified Bid constitutes the Baseline Bid and which Qualified Bid constitutes the Successful Bid shall take into account any factors the Debtors (in consultation with the Consultation Parties) deem relevant to the value of the Qualified Bid to the Debtors’ estates, including, among other things: (a) the type and amount of Assets sought to be purchased in the Bid; (b) the amount and nature of the total consideration; (c) the likelihood of the Bidder’s ability to close a transaction and the timing thereof including any terms or consideration of such Qualified Bid; (d) the net economic effect of any changes to the value to be received by the Debtors’ estates from the transaction contemplated by the Baseline Bid; and (e) the tax consequences of such Qualified Bid (collectively, the “Bid Assessment Criteria”).

The Auction shall be conducted according to the following procedures:

a.The Debtors Shall Preside Over the Auction; Participation and Attendance at the Auction

The Debtors and their professionals shall direct and preside over the Auction. At the start of the Auction, the Debtors shall describe the terms of the Baseline Bid. All incremental Bids made thereafter shall be Overbids (as defined herein) and shall be made and received on an open basis, and all material terms of each Overbid shall be fully disclosed to all other Qualified Bidders. The Debtors shall maintain a written transcript of all Bids made and announced at the Auction, including the Baseline Bid, all Overbids, and the Successful Bid.

Only Qualified Bidders that have submitted Qualified Bids by the Bid Deadline are eligible to participate in the Auction, subject to the terms of these Bidding Procedures and other limitations as may reasonably be imposed by the Debtors. Qualified Bidders participating in the Auction must appear at the Auction in person or through a duly authorized representative.

the Debtors to Use Cash Collateral, (III) Granting Liens and Providing Superpriority Administrative Expense Status, (IV)  Granting Adequate Protection, (V) Modifying the Automatic Stay, (VI) Scheduling a Final Hearing, and (VII) Granting Related Relief  [D.I. __] and any related final order (each as amended, modified or supplemented in accordance with the terms thereof, the “Interim DIP Order”).

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Any party in interest may attend (but not participate in) the Auction if any such party in interest provides the Debtors with written notice of its intention to attend the Auction on or before the Bid Deadline, which written notice shall be sent to proposed counsel for the Debtors via electronic mail, to Maris J. Kandestin, Esq., at maris.kandestin@us.dlapiper.com. For the avoidance of doubt, only Qualified Bidders (including the Stalking Horse Bidder) will be entitled to make any Bids at the Auction. For the avoidance of doubt, the Consultation Parties may attend the Auction without sending prior written notice of their intention to do so.

b.Terms of Overbids

“Overbid” means any bid made at the Auction by a Qualified Bidder after the Debtors’ announcement of the Baseline Bid. Each Overbid must comply with the following conditions:

(i)Minimum Initial Overbid. Any Overbid following the Baseline Bid shall be no less than the value of the Bid Protections, plus a value equal to $750,000.

(ii)Minimum Overbid Increment. Any Overbid to a Prevailing Highest Bid (as defined below) shall be in increments of no less than $250,000.⁷

(iii)Conclusion of Each Overbid Round. Upon the solicitation of each round of Overbids, the Debtors may announce a deadline (the “Overbid Round Deadline”), subject to extension by the Debtors, by which time any Overbids must be submitted to the Debtors.

(iv)Overbid Alterations. An Overbid may contain alterations, modifications, additions, or deletions of any terms of the Bid no less favorable to the Debtors’ estates than any prior Qualified Bid or Overbid and shall otherwise comply with the terms of these Bidding Procedures.

(v)Announcing Highest Bid. After each Overbid Round Deadline, the Debtors shall determine, in consultation with the Consultation Parties and taking into account the Bid Assessment Criteria, whether an Overbid is higher or otherwise better than the Baseline Bid in the initial Overbid round or, in subsequent rounds, the Overbid previously designated by the Debtors as the prevailing highest or otherwise best Bid (the “Prevailing Highest Bid”). The Debtors shall announce and describe to all Qualified Bidders present at the Auction the material terms of any new Overbid designated by the Debtors as the Prevailing Highest Bid, the identity of the bidder with the Prevailing Highest Bid, as well as the value attributable by the Debtors to such Prevailing Highest Bid based on, among other things, the Bid Assessment Criteria.

c.Consideration of Overbids

The Debtors, in consultation with the Consultation Parties, reserve the right to adjourn the Auction as necessary to (i) facilitate discussions between the Debtors and Qualified Bidders, (ii) provide Qualified Bidders with additional time to consider how they wish to proceed, and (iii) provide Qualified Bidders the opportunity to offer such additional evidence as the Debtors may require, such as with respect to financial capacity or sufficient funding or financing, in order to consummate the proposed Transaction at the prevailing Overbid amount.

7       Any Overbid to a Prevailing Highest Bid by any party other than the Stalking Horse Bidder must provide more value for the Debtors’ estates than any prior bid after taking into account the Bid Protections in each round of bidding.

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d.Closing the Auction

The Auction shall continue until there is only one Qualified Bid that the Debtors determine, after consultation with the Consultation Parties, and taking into account the Bid Assessment Criteria, to be the highest or otherwise best Qualified Bid for the Assets. Such Qualified Bid shall be declared the “Successful Bid,” and such Qualified Bidder, the “Successful Bidder,” and the Auction will be closed. Such acceptance by the Debtors of the Successful Bid (to be made in accordance with the terms of this section V(d) of the Bidding Procedures) is conditioned upon approval by the Court of the Successful Bid. Following the closing of the Auction or termination of the Stalking Horse APA, whichever occurs first, the Debtors shall not initiate contact with, solicit, or encourage proposals from any person or entity with respect to the Assets.⁸

e.No Collusion; Good-Faith Bona Fide Offer

Each Qualified Bidder participating at the Auction will be required to confirm on the record at the Auction that (i) it has not engaged in any collusion with respect to the bidding, (ii) its Qualified Bid is a good-faith bona fide offer, and (iii) it intends to consummate the proposed Transaction if selected as the Successful Bidder.

VI.Backup Bidder

a. Notwithstanding anything in these Bidding Procedures to the contrary, if an Auction is conducted, the Qualified Bidder with the next-highest or otherwise second-best Qualified Bid at the Auction for the Assets shall be required to serve as a backup bidder (the “Backup Bidder”) until such time that the Sale to the Successful Bidder is consummated, but no later than thirty (30) days past the Sale Hearing, and each Qualified Bidder shall agree and be deemed to agree to be the Backup Bidder if so designated by the Debtors.

b. The identity of the Backup Bidder and the amount and material terms of the Qualified Bid of the Backup Bidder shall be announced by the Debtors, after consultation with the Consultation Parties, at the conclusion of the Auction at the same time the Debtors announce the identity of the Successful Bidder. The Backup Bidder shall be required to keep its Qualified Bid (or if the Backup Bidder submits one or more Overbids at the Auction, its final Overbid) open and irrevocable until such time that the Transaction is consummated. The Backup Bidder’s Deposit shall be held in escrow pending consummation of the Sale to the Successful Bidder.

c. If a Successful Bidder fails to consummate the approved Transaction contemplated by its Successful Bid, the Debtors may select the Backup Bidder as the Successful Bidder, and such Backup Bidder shall be deemed a Successful Bidder for all purposes. The Debtors will be authorized, but not required, to consummate all transactions contemplated by the Bid of such Backup Bidder without further order of the Court or notice to any party. In such case, the defaulting Successful Bidder’s Deposit shall be forfeited to the Debtors, and the Debtors specifically reserve the right to seek all available remedies against the defaulting Successful Bidder, including with respect to specific performance.

8        The Debtors shall deliver to the Prepetition Lenders and the DIP Lender, promptly upon receipt, all draft term sheets and other documentation in connection with any Sale transaction. 

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VII.Notice and Consultation Parties

Information that must be provided to the “Notice Parties” under these Bidding Procedures must be provided to the following parties: (a) counsel to the DIP Lender, Landis Rath & Cobb LLP, 919 Market Street, Suite 1800, Wilmington, Delaware 19899 (Attn: Adam G. Landis, landis@lrclaw.com, and Kerri Mumford, mumford@lrclaw.com), and Proskauer Rose LLP, Eleven Times Square, New York, New York 10036 (Attn: Peter Antozsyk, Esq., pantoszyk@proskauer.com and Lucy F. Kweskin, Esq., lkweskin@proskauer.com); (b) Venable LLP (Attn: Jeffrey S. Sabin, Esq., jssabin@venable.com), 1270 Avenue of the Americas, 24^th Fl., New York, New York 10020, as counsel to the Prepetition Lender; and (c) counsel to the Committee, if any.

The term “Consultation Parties” shall mean: (a) the Committee, if any, (b) the DIP Lender, to the extent it does not intend to participate as a Qualified Bidder at the Auction, and (c) the Prepetition Lender, as it does not intend to submit a credit bid for the Assets under section 363(k) of the Bankruptcy Code, and the advisors for each of the foregoing.

X.Reservation of Rights

Without prejudice to the rights of the Stalking Horse Bidder under the terms of the Stalking Horse APA, the Debtors reserve their rights to modify these Bidding Procedures, after consultation with the Consultation Parties, in any manner that they reasonably determine will best promote the goals of these Bidding Procedures, or impose, at or prior to the Auction, additional customary terms and conditions in connection with a Sale, including, without limitation: (a) extending the deadlines set forth in these Bidding Procedures; (b) adjourning the Auction at the Auction; (c) adding procedural rules that are reasonably necessary or advisable under the circumstances for conducting the Auction; (d) canceling the Auction; and (e) rejecting any or all Bids or Qualified Bids.

For the avoidance of doubt, nothing in these Bidding Procedures shall prevent the Debtors from exercising their respective fiduciary duties under applicable law.

XI.Consent to Jurisdiction

All Qualified Bidders at the Auction shall be deemed to have consented to the jurisdiction of the Court and waived any right to a jury trial in connection with any disputes relating to the Auction or the construction and enforcement of these Bidding Procedures.

XII.Sale Hearing / Confirmation Hearing

A hearing to consider approval of the Successful Bid (or to approve the Stalking Horse APA, as applicable, if no Auction is held) (the “Sale Hearing”) is proposed to take place on March 20, 2020, at [l] [l].m., EST, at the Court. At the Sale Hearing, the Debtors will present such Successful Bid to the Court for approval.

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XIII.Return of Deposit

The Deposit of the Successful Bidder shall be applied to the purchase price of such transaction at closing. The Deposits for each Qualified Bidder shall be held in one or more escrow accounts on terms acceptable to the Debtors in their sole discretion and shall be returned (other than with respect to the Successful Bidder and the Backup Bidder) promptly after the Auction.

If a Successful Bidder fails to consummate a proposed transaction because of a breach by such Successful Bidder, the Debtors will not have any obligation to return the Deposit deposited by such Successful Bidder, which may be retained by the Debtors as liquidated damages, in addition to any and all rights, remedies, or causes of action that may be available to the Debtors, and the Debtors shall be free to consummate the proposed transaction with the applicable Backup Bidder without the need for an additional hearing or order of the Court.

XIV.No Modification of Bidding Procedures

These Bidding Procedures may not be modified except with the express prior written consent of the Debtors and the DIP Lender.

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Exhibit 2

Key Sale Process Dates

March 2, 2020, at [l]:[l][l].m. (EST)	Proposed hearing to consider entry of the order approving the Bidding Procedures
March 3, 2020, at 11:59 p.m. (EST)	Deadline for Debtors to provide non-debtor parties with (i) a list of Designated Contracts, and (ii) notice of the proposed Cure Amounts for the Designated Contracts (the “Assumption and Assignment Service Deadline”)
March 12, 2020, at 4:00 p.m. (EDT)	Deadline to object to the Debtors’ proposed assumption and assignment of Designated Contracts and related Cure Amounts
March 12, 2020, at 4:00 p.m. (EDT)	Deadline to object (“Sale Objection Deadline”)9 to Sale (“Sale Objections”)
March 12, 2020, at 4:00 p.m. (EDT)	Bid Deadline
March 16, 2020, at 10:00 a.m. (EDT)	Deadline for Debtors to notify bidders of whether their Bids are Qualified Bids
March 17, 2020, at 9:00 a.m. (EDT)	Auction to be held (if necessary)
March 18, 2020, at 10:00 a.m. (EDT)	Deadline for Debtors to (i) file with the Court the Notice of Successful Bidder and (ii) provide notice to non-Debtor parties of any Designated Contracts
March 19, 2020, at 10:00 a.m. (EDT)	Deadline to object to (i) conduct of the Auction, (ii) the proposed Sale to the Successful Bidder, and (iii) the ability of the Successful Bidder to provide adequate assurance of future performance, or the proposed form of adequate assurance of future performance, with respect to the assumption and assignment of any Designated Contracts
March 19, 2020, at 4:00 p.m. (EDT)	Deadline for Debtors and other parties to file responses to Sale Objections
March 20, 2020, at [l]:[l][l].m. (EDT)	Date of a proposed Sale Hearing to consider entry of the Sale Order
April 2, 2020	Closing

9        This objection deadline applies to all objections to the Motion and the sale of the Assets to a Successful Bidder, with the exception of objections solely related to the identity of the Successful Bidder, any changes to the Form Purchase Agreement, and adequate assurance of future performance by the Successful Bidder.

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Exhibit 3

Sale Notice 

Exhibit 4

Assumption Procedures

Exhibit 5

Contract Assumption Notice

EXHIBIT F

[FORM OF] SALE ORDER

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

	x
	:
In re:	:	Chapter 11
	:
Valeritas Holdings, Inc., et al.,12	:	Case No. 20-______ (___)
	:
Debtors.	:	(Jointly Administered)
	x

12        The debtors in these Chapter 11 Cases, along with the last four digits of each debtor’s federal tax identification number, are: Valeritas Holdings, Inc. (8907); Valeritas, Inc. (1056); Valeritas Security Corporation (9654); Valeritas US, LLC (0007). The corporate headquarters and the mailing address for the debtors is 750 Route 202 South, Suite 600, Bridgewater, New Jersey 08807.

ORDER (I) AUTHORIZING THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS’ ASSETS FREE AND CLEAR OF LIENS, CLAIMS, ENCUMBRANCES, AND INTERESTS, (II) APPROVING THE AGREEMENT, (III) AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (IV) GRANTING RELATED RELIEF

Upon the Motion (the “Sale Motion”)¹³ of the above-captioned debtors and debtors in possession (collectively, the “Debtors”) for entry of an order (this “Sale Order”)¹⁴: (a) authorizing and approving the sale of the Assets free and clear of liens, claims, encumbrances, and other interests to the extent set forth in that certain Asset Purchase Agreement (the “Agreement”) attached to this Sale Order as Exhibit 1, (b) approving the Agreement, (c) authorizing the assumption and assignment of the Assumed Contracts to [______________________] (the “Purchaser”), and (d) granting related relief; and this Court having entered an order on February [__], 2020 (the “Bid Procedures Order”) [ECF No. [l]] approving, among other things, the proposed form of notice of the Sale Hearing; and the Debtors having determined, after an extensive marketing process, that the Purchaser has submitted the highest or otherwise best bid for the Assets; and the Debtors having submitted the Declaration of Brendan J. Murphy (the “Murphy Declaration”) of Lincoln International, the Debtors’ investment banker, in support of the Sale; and upon adequate and sufficient notice of the Sale Motion, the Agreement, and all other related transactions contemplated thereunder and in this Sale Order; and all interested parties having been afforded an opportunity to be heard with respect to the Sale Motion and all relief related thereto; and the Court having reviewed and considered the Sale Motion and any objections thereto; and upon the Murphy Declaration and the full record in support of the relief requested by the Debtors in the Sale Motion; and this Court having found that (i) this Court has jurisdiction over the Debtors, their estates, and property of their estates and to consider the Motion and the relief requested therein under 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the District of Delaware, dated February 29, 2012, (ii) this Court may enter a final order consistent with Article III of the United States Constitution, (iii) this is a core proceeding under 28 U.S.C § 157(b)(2)(A), (iv) venue of the Sale Motion in this District is proper under 28 U.S.C. §§ 1408 and 1409; and it further appearing that the legal and factual bases set forth in the Sale Motion and at the Sale Hearing establish just cause for the relief granted herein; and it appearing that the relief requested in the Sale Motion is in the best interests of the Debtors, their estates, their creditors, and all other parties in interest; and upon the full record of these Chapter 11 Cases and all other pleadings and proceedings, including the Sale Motion, and after due deliberation thereon, and good and sufficient cause appearing therefor,

13        Motion of Debtors for Entry of Orders (I)(A) Establishing Bidding Procedures; (B) Approving Bid Protections; (C) Establishing Procedures Relating to Assumption and Assignment of Certain Executory Contracts and Unexpired Leases, Including Notice of Proposed Cure Amounts; (D) Approving Form and Manner of Notice; (E) Scheduling a Hearing to Consider any Proposed Sale; and (F) Granting Certain Related Relief; and (II)(A) Approving a Sale; (B) Authorizing Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale; and (C) Granting Related Relief [ECF No. [l]].

14        Capitalized terms used but not otherwise defined in this Sale Order shall have the meaning ascribed to them in the Sale Motion or Agreement (as defined herein), as applicable.

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THE COURT HEREBY FINDS THAT¹⁵:

Jurisdiction, Final Order, and Statutory Predicates.

This Court has jurisdiction to hear and determine the Sale Motion pursuant to 28 U.S.C. §§ 157(b)(1) and 1334(a). Venue is proper in this District and in this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

The statutory predicates for the relief requested in the Sale Motion are sections 105(a), 363, and 365 of the Bankruptcy Code and Bankruptcy Rules 2002, 6004, 6006, 9007, and 9014.

This Sale Order constitutes a final order within the meaning of 28 U.S.C. § 158(a). Notwithstanding the provisions of Bankruptcy Rules 6004(h) and 6006(d), and to any extent necessary under Bankruptcy Rule 9014 and rule 54(b) of the Federal Rules of Civil Procedure, as made applicable by Bankruptcy Rule 7054, the Court expressly finds that there is no just reason for delay in the implementation of this Sale Order, waives any stay, and expressly directs entry of judgment as set forth herein.

Notice of the Sale Motion and Cure Amounts.

Notice of the Sale Hearing and the Sale was timely, proper, and reasonably calculated to provide interested parties with timely and proper notice of the Sale and the Sale Hearing, and no other or further notice of the Sale Motion, the Sale, or the Sale Hearing is, or shall be, required. The requirements of Bankruptcy Rule 6004(a) and all applicable Local Rules are satisfied by such notice.

15       All findings of fact and conclusions of law announced by the Court at the Sale Hearing in relation to the Sale Motion are hereby incorporated herein to the extent not inconsistent herewith.

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A reasonable opportunity to object and be heard with respect to the Sale and the Sale Motion and the relief requested therein has been afforded to all interested persons and entities, including the Notice Parties.

Good Faith of Purchaser.

The Agreement was negotiated, proposed, and entered into by the Debtors and the Purchaser without collusion, in good faith, and from arm’s-length bargaining positions.

Neither the Debtors nor the Purchaser has engaged in any conduct that would cause or permit the Agreement or the Sale to be avoided, consummation of the Sale to be avoided, or costs or damages to be imposed, under section 363(n) of the Bankruptcy Code. All payments to be made by the Purchaser and other agreements or arrangements entered into by the Purchaser in connection with the Sale have been disclosed. The Purchaser is purchasing the Assets in good faith and is a good-faith buyer within the meaning of section 363(m) of the Bankruptcy Code. The Purchaser is not an “insider” of any Debtor (as defined under section 101(31) of the Bankruptcy Code). The Purchaser is therefore entitled to all of the protections afforded under section 363(m) of the Bankruptcy Code.

Highest or Otherwise Best Offer.

The Debtors’ marketing and Auction process, including the Debtors’ prepetition marketing process, afforded a full, fair, and reasonable opportunity for any person or entity to make a higher or otherwise better offer to purchase the Assets. The Agreement constitutes the highest or otherwise best offer for the Assets, and the Debtors’ determination that the Agreement constitutes the highest or otherwise best offer for the Assets constitutes a valid and sound exercise of the Debtors’ business judgment.

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Approval of the Sale Motion and the Agreement, and consummation of the transactions contemplated thereby, are in the best interests of the Debtors’ chapter 11 estates, the Debtors’ creditors, and other parties in interest.

No Merger.

The Purchaser is not a mere continuation of the Debtors or their estates and there is no continuity of enterprise between the Purchaser and the Debtors. The Purchaser is not holding itself out to the public as a continuation of the Debtors, including, but not limited to, any warranty or similar obligations. The Purchaser is not a successor to the Debtors or their estates by reason of any theory of law or equity, and the Sale does not amount to a consolidation, merger, or de facto merger of Purchaser and the Debtors.

Validity of Transfer.

The Agreement was not entered into for the purpose of hindering, delaying, or defrauding creditors under the Bankruptcy Code or under the laws of the United States, any state, territory, possession, or the District of Columbia. Neither the Debtors nor the Purchaser is entering into the transactions contemplated by the Agreement fraudulently under applicable federal and state fraudulent conveyance and fraudulent transfer laws.

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The Debtors are the sole and lawful owners of the Assets. The Assets constitute property of the Debtors’ estates and title to the Assets is vested in the Debtors’ estates within the meaning of section 541(a) of the Bankruptcy Code. Subject to section 363(f) of the Bankruptcy Code, the transfer of each of the Assets to the Purchaser will be, as of the Closing Date, a legal, valid, and effective transfer of the Assets, which transfer vests or will vest the Purchaser with all right, title, and interest of the Debtors to the Assets free and clear of (a) all liens (including any liens as that term is defined in section 101(37) of the Bankruptcy Code) and encumbrances relating to, accruing, or arising at any time prior to the Closing Date (collectively, the “Liens”) and (b) all debts arising under, relating to, or in connection with any act of the Debtors or claims (as that term is defined in section 101(5) of the Bankruptcy Code), liabilities, obligations, demands, guaranties, options in favor of third parties, rights, contractual commitments, restrictions, interests, mortgages, hypothecations, charges, indentures, loan agreements, instruments, collective bargaining agreements, leases, licenses, deeds of trust, security interests, conditional sale or other title retention agreements, pledges, judgments, claims for reimbursement, contribution, indemnity, exoneration, infringement, products liability, alter-ego, and matters of any kind and nature, whether arising prior to or subsequent to the commencement of these cases, and whether imposed by agreement, understanding, law, equity, or otherwise, known or unknown, contingent or matured, liquidated or unliquidated, and all rights and remedies with respect thereto (i) that purport to give to any party a right of setoff or recoupment against, or a right or option to effect any forfeiture, modification, profit sharing interest, right of first refusal, purchase or repurchase right or option, or termination of, any of the Debtors’ or the Purchaser’s interests in the Assets, or any similar rights, or (ii) in respect of taxes, restrictions, rights of first refusal, charges of interests of any kind or nature, if any, including, without limitation, any restriction of use, voting, transfer, receipt of income or other exercise of any attributes of ownership) (collectively, as defined in this clause (b), “Claims”), relating to, accruing or arising at any time prior to entry of this Sale Order, with the exception of any such Liens or Claims that are expressly assumed by Purchaser or otherwise permitted under the Agreement (the “Permitted Encumbrances”), including, for the avoidance of doubt, Cure Costs up to the Cure Cap or any other obligations arising under the Assumed Contracts to the extent set forth in the Agreement.

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Section 363(f) Is Satisfied.

The conditions of section 363(f) of the Bankruptcy Code have been satisfied in full; therefore, the Debtors may sell the Assets free and clear of any interest in the property other than the Permitted Encumbrances.

The Purchaser would not have entered into the Agreement and would not consummate the transactions contemplated thereby if the sale of the Assets to the Purchaser were not free and clear of all Liens and Claims, other than Permitted Encumbrances, or if the Purchaser would, or in the future could, be liable for any of such Liens and Claims (other than the Permitted Encumbrances).

The Debtors may sell the Assets free and clear of all Liens and Claims against the Debtors, their estates, or any of the Assets (except the Permitted Encumbrances) because, in each case, one or more of the standards set forth in section 363(f)(1)-(5) of the Bankruptcy Code has been satisfied. Those holders of Liens or Claims against the Debtors, their estates, or any of the Assets who did not object, who withdrew their objections, or whose objections were overruled, to the Sale or the Sale Motion are deemed to have consented pursuant to section 363(f)(2) of the Bankruptcy Code. All other holders of Liens or Claims (except to the extent that such Liens or Claims are Permitted Encumbrances) are adequately protected by having their Liens or Claims, if any, in each instance against the Debtors, their estates, or any of the Assets, attach to the net cash proceeds of the Sale ultimately attributable to the Assets in which such creditor alleges a Lien or Claims, in the same order of priority, with the same validity, force, and effect that such Liens or Claims had prior to the Sale, subject to any claims and defenses the Debtors and their estates may possess with respect thereto.

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Cure Costs and Adequate Assurance of Future Performance.

The assumption and assignment of the Executory Contracts listed in the Agreement (the “Assumed Contracts”) pursuant to the terms of this Sale Order is integral to the Agreement and is in the best interests of the Debtors and their estates, their creditors, and all other parties in interest, and represents the reasonable exercise of sound and prudent business judgment by the Debtors. Subject to the terms and conditions of the Agreement, the Purchaser shall: (a) to the extent necessary, cure or provide adequate assurance of cure, of any default existing prior to the date hereof with respect to the Assumed Contracts, within the meaning of sections 365(b)(1)(A) and 365(f)(2)(A) of the Bankruptcy Code, and (b) to the extent necessary and subject to the Cure Cap, provide compensation or adequate assurance of compensation to any party for any actual pecuniary loss to such party resulting from a default prior to the date hereof with respect to the Assumed Contracts, within the meaning of sections 365(b)(1)(B) and 365(f)(2)(A) of the Bankruptcy Code. The Purchaser’s obligation under the Agreement to pay the Cure Amounts up to the Cure Cap (with the Debtors responsible for any Cure Amounts in excess of the Cure Cap) and to perform the obligations under the Assumed Contracts shall constitute adequate assurance of future performance within the meaning of sections 365(b)(1)(C) and 365(f)(2)(B) of the Bankruptcy Code.

Compelling Circumstances for an Immediate Sale.

Good and sufficient reasons for approval of the Agreement and the Sale have been articulated. The relief requested in the Sale Motion is in the best interests of the Debtors, their estates, their creditors, and other parties in interest. The Debtors have demonstrated both (a) good, sufficient, and sound business purposes and justifications for approving the Agreement and (b) compelling circumstances for consummating the Sale outside the ordinary course of business, pursuant to section 363(b) of the Bankruptcy Code before, and outside of, a plan of reorganization, in that, among other things, the immediate consummation of the Sale to the Purchaser is necessary and appropriate to maximize the value of the Debtors’ estates and the Sale will permit the Debtors to maximize distributions to creditors.

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THE COURT HEREBY ORDERS THAT:

General Provisions.

The findings and conclusions set forth herein constitute the Court’s findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052, made applicable to these Chapter 11 Cases pursuant to Bankruptcy Rule 9014. To the extent that any findings of fact constitute conclusions of law, they are adopted as such. To the extent any conclusions of law constitute findings of fact, they are adopted as such.

The relief requested in the Sale Motion, and the transactions contemplated thereby and by the Agreement, are approved as set forth in this Sale Order and on the record of the Sale Hearing, which is incorporated herein as if set forth fully in this Sale Order, and the Sale contemplated by the Agreement is approved.

All objections to the Sale Motion or the relief requested therein that have not been withdrawn, waived, or settled as announced to the Court at the Sale Hearing or by stipulation filed with the Court, and all reservations of rights included in such objections or otherwise, are hereby denied and overruled on the merits with prejudice. Those parties who did not object or withdrew their objections to the Sale Motion are deemed to have consented to the Sale under to section 363(f)(2) of the Bankruptcy Code.

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Approval of the Agreement.

The Agreement and all other ancillary documents, and all of the terms and conditions thereof, are hereby approved.

Pursuant to sections 363(b) and (f) of the Bankruptcy Code, the Debtors are authorized and empowered to take any and all actions necessary or appropriate to (a) consummate the Sale pursuant to and in accordance with the terms and conditions of the Agreement, (b) close the Sale as contemplated in the Agreement and this Sale Order, and (c) execute and deliver, perform under, consummate, implement, and fully close the Agreement, including the assumption and assignment to the Purchaser of the Assumed Contracts, together with all additional instruments and documents that may be reasonably necessary or desirable to implement the Agreement and the Sale.

The terms and provisions of the Agreement and this Sale Order shall be binding in all respects upon the Debtors, their estates, all creditors of and holders of equity interests in any Debtor, any holders of Liens, Claims, or other interests (whether known or unknown) in, against, or on all or any portion of the Assets, all counterparties to any executory contract or unexpired lease of the Debtors, the Purchaser and all successors and assigns of the Purchaser, and any trustees, if any, subsequently appointed in any of the Debtors’ Chapter 11 Cases or upon a conversion to chapter 7 under the Bankruptcy Code of any of the Debtors’ cases. This Sale Order and the Agreement shall inure to the benefit of the Debtors, their estates and creditors, the Purchaser, and the respective successors and assigns of each of the foregoing.

Transfer of the Assets.

Pursuant to sections 105(a), 363(b), 363(f), 365(b), and 365(f) of the Bankruptcy Code, the Debtors are authorized to transfer the Assets to the Purchaser in accordance with the terms of the Agreement, and such transfer shall constitute a legal, valid, binding, and effective transfer of such Assets. Such transfer shall vest Purchaser with title to the Assets and, other than the Permitted Encumbrances, shall be free and clear of all Liens, Claims, and other interests of any kind or nature whatsoever, with all such Liens, Claims, or other interests to attach to the net cash proceeds ultimately attributable to the property against or in which such Liens, Claims, or other interests are asserted, subject to the terms thereof, with the same validity, force, and effect, and in the same order of priority, which such Liens, Claims, or other interests had prior to the Sale, subject to any rights, claims, and defenses the Debtors or their estates, as applicable, may possess with respect thereto.

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The Debtors are hereby authorized to take any and all actions they deem necessary to consummate the Agreement, including any actions that otherwise would require further approval by shareholders, members, or their boards of directors, as the case may be, without the need to obtain such approvals.

The transfer of the Assets to the Purchaser under the Agreement does not require any consents other than as specifically provided for in the Agreement. Each and every federal, state, and local governmental agency or department is hereby directed to accept any and all documents and instruments necessary or appropriate to consummate the transactions contemplated by the Agreement. A certified copy of this Sale Order may be filed with the appropriate clerk or recorded with the recorder of any state, county, or local authority to act to cancel any of the Liens, Claims, and other encumbrances of record, except those assumed as Permitted Encumbrances.

If any person or entity that has filed statements or other documents or agreements evidencing Claims or Liens on, or interests in, all or any portion of the Assets (other than statements or documents with respect to Permitted Encumbrances) shall not have delivered to the Debtors, in proper form for filing and executed by the appropriate parties, termination statements, instruments of satisfaction, releases of liens and easements, and any other documents necessary for the purpose of documenting the release of all Claims, Liens, or interests which the person or entity has or may assert with respect to all or any portion of the Assets, the Debtors are hereby authorized, and the Purchaser is hereby authorized, on behalf of the Debtors and the Debtors’ creditors, to execute and file such statements, instruments, releases and other documents on behalf of such person or entity with respect to the Assets. The Debtors and Purchaser are each authorized to file a copy of this Sale Order, which, upon filing, shall be conclusive evidence of the release and termination of such Claim, Lien, or interest.

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This Sale Order is and shall be binding upon and govern the acts of all persons and entities, including, without limitation, all filing agents, filing officers, title agents, title companies, recorders of mortgages, recorders of deeds, registrars of deeds, administrative agencies, governmental departments, secretaries of state, federal, state, and local officials, and all other persons and entities who may be required by operation of law, the duties of their office, or contract, to accept, file, register, or otherwise record or release any documents or instruments, or who may be required to report or insure any title or state of title in or to any lease; and each of the foregoing persons and entities is hereby directed to accept for filing any and all of the documents and instruments necessary and appropriate to consummate the transactions contemplated by the Agreement.

All persons and entities that are presently, or on the Closing may be, in possession of some or all of the Assets to be sold, transferred or conveyed to the Purchaser under the Agreement are hereby directed to surrender possession of the Assets to the Purchaser on the Closing Date. Subject to the terms, conditions, and provisions of this Sale Order, all persons and entities are hereby forever prohibited and enjoined from taking any action that would adversely affect or interfere with the ability of the Debtors to sell and transfer the Assets to the Purchaser in accordance with the terms of the Agreement and this Sale Order.

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Assumption and Assignment of Assumed Contracts.

The Debtors are hereby authorized and directed in accordance with sections 105(a), 363, and 365 of the Bankruptcy Code to (a) assume and assign to Purchaser, in accordance with the terms of the Agreement, the Assumed Contracts free and clear of all Liens, Claims, and other interests of any kind or nature whatsoever (other than the Permitted Encumbrances), and (b) execute and deliver to Purchaser such documents or other instruments as Purchaser deems necessary to assign and transfer the Assumed Contracts to Purchaser.

With respect to the Assumed Contracts: (a) the Debtors may assume each of the Assumed Contracts in accordance with section 365 of the Bankruptcy Code; (b) the Debtors may assign each Assumed Contract in accordance with sections 363 and 365 of the Bankruptcy Code, and any provisions in any Assumed Contract that prohibit or condition the assignment of such Assumed Contract or allow the party to such Assumed Contract to terminate, recapture, impose any penalty, condition renewal or extension, or modify any term or condition upon the assignment of such Contract, constitute unenforceable anti-assignment provisions which are void and of no force and effect; and (c) all other requirements and conditions under sections 363 and 365 of the Bankruptcy Code for the assumption by the Debtors and assignment to Purchaser of each Assumed Contract have been satisfied. The Assumed Contracts shall be transferred and assigned to, and following the Closing of the Sale remain in full force and effect for the benefit of, Purchaser, notwithstanding any provision in any such Assumed Contract (including those of the type described in sections 365(c) and (f) of the Bankruptcy Code) that prohibits, restricts, or conditions such assignment or transfer and, pursuant to section 365(k) of the Bankruptcy Code, the Debtors shall be relieved from any further liability with respect to the Assumed Contracts after such assumption and assignment to Purchaser.

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All defaults or other obligations of the Debtors under the Assumed Contracts arising or accruing prior to the closing of the Sale or required to be paid pursuant to section 365 of the Bankruptcy Code in connection with the assumption and assignment of the Assumed Contracts, shall be cured by the Purchaser, subject to the Cure Cap. For the avoidance of doubt, the Debtors shall be responsible for any Cure Amounts in excess of the Cure Cap.

Upon the Closing, in accordance with sections 363 and 365 of the Bankruptcy Code, the Purchaser shall be fully and irrevocably vested in all right, title and interest of each Assumed Contract. To the extent provided in the Agreement, the Debtors shall cooperate with, and take all actions reasonably requested by, the Purchaser to effectuate the foregoing.

Each Assumed Contract counterparty is deemed to have consented to assumption and assignment, and the Purchaser shall be deemed to have demonstrated adequate assurance of future performance with respect to such Assumed Contract pursuant to sections 365(b)(1)(C) and 365(f)(2)(B) of the Bankruptcy Code.

Upon the Debtors’ assignment of the Assumed Contracts to the Purchaser under the provisions of this Sale Order, any additional orders of this Court, and the payment of any Cure Amounts pursuant to the terms hereof or the Agreement, no default shall exist under any Assumed Contract, and no counterparty to any Assumed Contract shall be permitted (a) to declare a default by the Purchaser under such Assumed Contract or (b) to otherwise take action against the Purchaser as a result of any Debtors’ financial condition, bankruptcy, or failure to perform any of its obligations under the relevant Assumed Contract. Each non-Debtor party to an Assumed Contract hereby is also forever barred, estopped, and permanently enjoined from (i) asserting against the Debtors or Purchaser, or the property of any of them, any default or Claim arising out of any indemnity obligation or warranties for acts or occurrences arising prior to or existing as of the closing of the Sale, or, against Purchaser, any counterclaim, defense, setoff, or any other Claim asserted or assertable against the Debtors and (ii) imposing or charging against Purchaser or its affiliates any rent accelerations, assignment fees, increases, or any other fees as a result of the Debtors’ assumption and assignments to Purchaser of the Assumed Contracts.

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The Purchaser shall be deemed to be substituted for the Debtors as a party to the applicable Assumed Contracts and the Debtors shall be relieved, pursuant to section 365(k) of the Bankruptcy Code, from any further liability under the Assumed Contracts.

All non-Debtor counterparties to the Assumed Contracts shall cooperate and expeditiously execute and deliver, upon the reasonable requests of the Purchaser, and shall not charge the Debtors or the Purchaser for any instruments, applications, consents, or other documents that may be required or requested by any public authority or other party or entity to effectuate the applicable transfers in connection with the sale of the Assets.

Prohibition of Actions Against the Purchaser.

Except for the Permitted Encumbrances, or as otherwise expressly provided for in this Sale Order or the Agreement, the Purchaser shall not have any liability or other obligation of the Debtors arising under or related to any of the Assets. Without limiting the generality of the foregoing, and except as otherwise specifically provided herein or in the Agreement, the Purchaser shall not be liable for any Claims or Liens against the Debtors or any of their predecessors or affiliates, and the Purchaser shall have no successor or vicarious liabilities of any kind or character, including, but not limited to, under any theory of antitrust, environmental, successor, or transferee liability, labor law, de facto merger, mere continuation, or substantial continuity, whether known or unknown, now existing or hereafter arising, whether fixed or contingent, whether asserted or unasserted, whether legal or equitable, whether liquidated or unliquidated, including, but not limited to, liabilities on account of warranties, intercompany loans, and receivables among the Debtors, and any taxes arising, accruing, or payable under, out of, in connection with, or in any way relating to the operation of any of the Assets prior to the closing of the Sale. The Purchaser has given substantial consideration under the Agreement for the benefit of the holders of any Liens or Claims. The consideration to be paid by the Purchaser shall constitute valid and valuable consideration for the releases of any potential claims of successor liability against the Purchaser, which releases shall be deemed to have been given in favor of the Purchaser by all holders of Liens or Claims against or interests in the Debtors or any of the Assets.

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Except with respect to Permitted Encumbrances, or as otherwise permitted by the Agreement or this Sale Order, all persons and entities, including, but not limited to, all debt security holders, equity security holders, governmental, tax and regulatory authorities, lenders, trade creditors, litigation claimants, and other creditors, holding Liens, Claims, or other interests of any kind or nature whatsoever against or in all or any portion of the Assets (whether legal or equitable, secured or unsecured, matured or unmatured, contingent or non-contingent, liquidated or unliquidated, senior or subordinate), arising under or out of, in connection with, or in any way relating to the Debtors, the Assets, the operation of the Debtors’ business prior to the Closing of the Sale, or the transfer of the Assets to the Purchaser, hereby are forever barred, estopped and permanently enjoined from asserting against the Purchaser, any of the Purchaser’s affiliates, successors, or assigns, their property or the Assets, such persons’ or entities’ Liens, Claims, or interests in and to the Assets, including, without limitation, the following actions: (a) commencing or continuing in any manner any action or other proceeding against the Purchaser, its affiliates, its successors, assets or properties; (b) enforcing, attaching, collecting, or recovering in any manner any judgment, award, decree, or order against the Purchaser, its affiliates, its successors, assets, or properties; (c) creating, perfecting, or enforcing any Lien or other Claim against the Purchaser, its affiliates, its successors, assets, or properties; (d) asserting any setoff, right of subrogation, or recoupment of any kind against any obligation due the Purchaser, its affiliates or its successors; (e) commencing or continuing any action, in any manner or place, that does not comply or is inconsistent with the provisions of this Sale Order or other orders of the Court, or the agreements or actions contemplated or taken in respect thereof; or (f) revoking, terminating or failing or refusing to transfer or renew any license, permit or authorization to operate any of the Assets or conduct any of the businesses operated with the Assets.

All persons and entities are hereby forever prohibited and enjoined from taking any action that would adversely affect or interfere with the ability of the Debtors to sell and transfer the Assets to the Purchaser in accordance with the terms of the Agreement and this Sale Order.

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Mutual Releases

Except with respect to the obligations under this Sale Order and the Agreement, upon payment of the Purchase Price, Purchaser, its affiliates, subsidiaries, and successors, and all of their past, present and future shareholders, partners, members, board of directors and/or supervisors, managers, officers, employees, agents, representatives and advisors (the “Purchaser Entities”), shall irrevocably and unconditionally release, remise, and forever discharge Seller, its affiliates, and all of their past, present and future shareholders, partners, members, board of directors and/or supervisors, managers, officers, employees, agents, representatives and advisors (the “Seller Entities”) from any and all suits, legal or administrative proceedings, Claims, demands, damages, losses, costs, liabilities, interest or causes of action whatsoever at law or in equity, known or unknown, which Purchaser Entities might now or subsequently may have, based on, relating to or arising out of the Agreement, the Sale, the ownership or use of the Assets, including breaches of statutory or implied warranties, nuisance or other tort actions, rights to punitive damages, common law rights of contribution and rights under insurance maintained by Seller or its affiliates.

Except with respect to the obligations under this Sale Order and the Agreement, upon receipt of payment of the Purchase Price, the Seller Entities shall irrevocably and unconditionally release, remise, and forever discharge the Purchaser Entities from any and all suits, legal or administrative proceedings, Claims, demands, damages, losses, costs, liabilities, interest or causes of action whatsoever at law or in equity, known or unknown, which Seller Entities might now or subsequently may have, based on, relating to or arising out of the Agreement, the Sale, the ownership or use of the Assets, including breaches of statutory or implied warranties, nuisance or other tort actions, rights to punitive damages, common law rights of contribution and rights under insurance maintained by Purchaser or its affiliates.

Other Provisions.

Within one business day of the closing of the Sale, cash proceeds of the Sale in an amount of the outstanding DIP Obligations shall be indefeasibly paid directly to the DIP Lender in satisfaction of the DIP Obligations and shall not be subject to disgorgement for any reason.

The consideration provided by the Purchaser to the Debtors pursuant to the Agreement constitutes reasonably equivalent value and fair consideration for the Assets under the Bankruptcy Code, Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act, and other applicable law within the meaning of 11 U.S.C. § 544(b), under the laws of the United States, any state, territory, possession, or the District of Columbia.

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The transactions contemplated by the Agreement are undertaken by the Purchaser without collusion and in good faith, as that term is defined in section 363(m) of the Bankruptcy Code, and, accordingly, the reversal or modification on appeal of the authorization provided herein to consummate the Sale shall not affect the validity of the Sale, or the assumption and assignment of the Assumed Contracts, unless such authorization and such Sale are duly stayed pending such appeal. The Purchaser is a good faith buyer within the meaning of section 363(m) of the Bankruptcy Code and, as such, is entitled to the full protections of section 363(m) of the Bankruptcy Code.

For cause shown, pursuant to Bankruptcy Rules 6004(h) and 7062(g), this Sale Order shall not be stayed, shall be effective immediately upon entry, and the Debtors and Purchaser are authorized to close the Sale immediately upon entry of this Sale Order.

The failure to specifically include any particular provision of the Agreement in this Sale Order shall not diminish or impair the effectiveness of such provision, it being the intent of the Court that the Agreement be authorized and approved in its entirety; provided that this Sale Order shall govern if there is any inconsistency between the Agreement (including all ancillary documents executed in connection therewith) and this Sale Order.

The Agreement and any related agreements, documents, or other instruments may be modified, amended, or supplemented by the parties thereto and in accordance with the terms thereof, without further order of the Court.

The Court shall retain exclusive jurisdiction to, among other things, interpret, implement, and enforce the terms and provisions of this Sale Order and the Agreement, all amendments thereto and any waivers and consents thereunder and each of the agreements executed in connection therewith to which any Debtor is a party or which has been assigned by the Debtors to the Purchaser, and to adjudicate, if necessary, any and all disputes concerning or relating in any way to the Sale, including, but not limited to, retaining jurisdiction to: (a) compel delivery of the Assets to the Purchaser; (b) interpret, implement, and enforce the provisions of this Sale Order; (c) protect Purchaser against any Liens, Claims, or other interest in or against the Sellers or the Assets of any kind or nature whatsoever, attaching to the proceeds of the Sale; and (d) enter any orders under sections 363 and 365 of the Bankruptcy Code with respect to the Assumed Contracts.

Subject to the sales proceeds provisions contained in the Final DIP Order, and, if and when entered by this Court, the 9019 Order, to the extent that this Sale Order is inconsistent with any prior order or pleading related to the Sale in these Chapter 11 Cases, the terms of this Sale Order shall govern.

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EXHIBIT G

[FORM OF] ESCROW AGREEMENT

THIS ESCROW AGREEMENT (the “Escrow Agreement”) is entered into and effective this [•] day of [•], 2020, by and among Acquiom Clearinghouse LLC (the “Escrow Agent”), Zealand Pharma A/S (“Purchaser”) and Valeritas, Inc. (the “Seller” and together with the Purchaser, the “Parties”).

WHEREAS,

Purchaser and Seller have entered into that certain Asset Purchase Agreement, dated as of February 9, 2020 (the “Acquisition Agreement”), by and among Purchaser, Seller and [Subsidiaries or Affiliates].

Purchaser and Seller desire for the Escrow Agent to act as escrow agent of the Escrow Funds (defined below), and Escrow Agent is willing to act in such capacity subject to the terms and conditions hereof.

Schedule I to this Agreement sets forth the wire transfer instructions for the Purchaser and the Seller and the Escrow Agent.

NOW, THEREFORE, in consideration of the premises herein, the parties hereto agree as follows:

I.       Terms and Conditions

1.1.       Purchaser and Seller hereby appoint the Escrow Agent as their escrow agent, and the Escrow Agent hereby accepts such appointment under the terms and conditions set forth herein and agrees to perform its duties as provided herein.

1.2       In accordance with Section 2.3 of the Acquisition Agreement, Purchaser shall deposit, or cause to be deposited, US$2,300,000.00 in immediately available funds (the “Escrow Funds”) to an account designated by the Escrow Agent (the “Escrow Account”), to be held, disbursed and invested as provided in this Escrow Agreement.

1.3.       Within two Business Days (except as provided below) of receipt of written instructions (“Joint Instructions”), signed by an authorized representative of each of Purchaser and Seller (a list of whom are provided in Exhibit A-1 and Exhibit A-2), the Escrow Agent shall disburse funds held in the Escrow Account as provided in such Joint Instructions and this Section 1.3, but only to the extent that funds are collected and available. The Joint Instructions shall include the amount to be disbursed and shall identify the party to whom the disbursement shall be made. Disbursements shall be made in accordance with the payment instructions set forth in such Joint Instructions. Disbursements to the Purchaser or the Seller pursuant to Joint Instructions shall be transferred by the Escrow Agent into the account designated in Schedule I hereto. For purposes of this Escrow Agreement, “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which the Escrow Agent located at the notice address set forth in Section 4.4 is authorized or required by law or executive order to remain closed.

1.4       In the event that Purchaser or Seller provides a formal notice to the other regarding a claim against funds in the Escrow Funds, the party delivering such notice shall simultaneously deliver a copy of such notice to Escrow Agent; provided, however, that Escrow Agent shall have no duty to act upon any such notice and shall be considered informational only with respect to Escrow Agent.

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II.       Provisions as to the Escrow Agent

2.1.       This Escrow Agreement expressly and exclusively sets forth the duties of the Escrow Agent with respect to any and all matters pertinent hereto and no implied duties or obligations shall be read into this Escrow Agreement against the Escrow Agent. In performing its duties under this Escrow Agreement, or upon the claimed failure to perform its duties, the Escrow Agent shall have no liability except to the extent the Escrow Agent’s willful misconduct, bad faith or gross negligence was finally adjudicated to have been the direct cause of any direct loss to either Party. In no event shall the Escrow Agent be liable for incidental, indirect, special, consequential or punitive damages of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. The Escrow Agent shall have no liability with respect to the transfer or distribution of any funds effected by the Escrow Agent pursuant to wiring or transfer instructions provided to the Escrow Agent in accordance with the provisions of this Escrow Agreement. Any wire transfers of funds made by the Escrow Agent pursuant to this Escrow Agreement will be made subject to and in accordance with the Escrow Agent’s usual and ordinary wire transfer procedures in effect from time to time, including without limitation call-back procedures. The Parties understand that the Escrow Agent’s inability to receive or confirm funds transfer instructions pursuant to such security procedure may result in a delay in accomplishing such funds transfer and agree that the Escrow Agent shall not be liable for any loss caused by any such delay. No provision of this Escrow Agreement shall require the Escrow Agent to risk or advance its own funds or otherwise incur any financial liability or potential financial liability in the performance of its duties or the exercise of its rights under this Escrow Agreement. To the extent practicable, the Parties agree to pursue any redress or recourse in connection with any dispute without making the Escrow Agent a party to the same.

2.2.       This Escrow Agreement constitutes the entire agreement between the Escrow Agent and Purchaser and Seller in connection with the subject matter of this Escrow Agreement, and no other agreement entered into between Purchaser and Seller, or either of them, including, without limitation, the Acquisition Agreement, shall be considered as adopted or binding, in whole or in part, upon the Escrow Agent notwithstanding that any such other agreement may be deposited with the Escrow Agent or the Escrow Agent may have knowledge thereof.

2.3.       The Escrow Agent shall be protected in acting upon any written instruction, notice, request or instrument delivered by the Parties which the Escrow Agent in good faith believes to be genuine and what it purports to be, including, but not limited to, items directing investment or non-investment of funds, items requesting or authorizing release, disbursement or retainage of the subject matter of this Escrow Agreement and items amending the terms of this Escrow Agreement.

2.4.       The Escrow Agent may consult with legal counsel in the event of any dispute or question as to the construction of any of the provisions hereof or its duties hereunder, and it shall incur no liability and shall be fully protected in acting in accordance with the advice of such counsel.

2.5.       In the event of any disagreement between Purchaser and Seller, or between either of them and any other party, resulting in adverse claims or demands being made in connection with the matters covered by this Escrow Agreement, or in the event that the Escrow Agent, in good faith, be in doubt as to what action it should take hereunder, the Escrow Agent shall promptly notify the Parties of such uncertainty and may, at its option, refuse to comply with any claims or demands on it, or refuse to take any other action hereunder, so long as such disagreement continues or such doubt exists, and in any such event, the Escrow Agent shall not be or become liable in any way or to any party for its failure or refusal to act, and the Escrow Agent shall be entitled to continue to refrain from acting until (i) the rights of Purchaser and Seller and all other interested parties shall have been fully and finally adjudicated by a court of competent jurisdiction, or (ii) all differences shall have been adjudged and all doubt resolved by agreement among Purchaser and Seller and all other interested parties, and the Escrow Agent shall have been notified thereof in writing signed by Purchaser and Seller. Notwithstanding the preceding, the Escrow Agent may in its discretion obey the order, judgment, decree or levy of any court, whether with or without jurisdiction, or of an agency of the United States or any political subdivision thereof, or of any agency of any State of the United States or of any political subdivision thereof, and the Escrow Agent is hereby authorized in its sole discretion, to comply with and obey any such orders, judgments, decrees or levies and it shall not be liable to any of the Parties hereto or to any other person, firm or corporation, by reason of such compliance notwithstanding such writ, order or decree be subsequently reversed, modified, annulled, set aside or vacated. The rights of the Escrow Agent under this sub-paragraph are cumulative of all other rights which it may have by law or otherwise.

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2.6.       Purchaser and Seller jointly and severally agree to defend, indemnify and hold harmless the Escrow Agent and each of the Escrow Agent’s officers, directors, agents and employees (the “Indemnified Parties”) from and against any and all losses, liabilities, claims made by any Party or any other person or entity, damages, expenses and costs (including, without limitation, attorneys’ fees and expenses) of every nature whatsoever (collectively, “Losses”) which any such Indemnified Party may incur and which arise directly or indirectly from this Escrow Agreement or which arise directly or indirectly by virtue of the Escrow Agent’s undertaking to serve as the Escrow Agent hereunder; provided, however, that no Indemnified Party shall be entitled to indemnity with respect to Losses that have been finally adjudicated by a court of competent jurisdiction to have been directly caused by such Indemnified Party’s gross negligence, bad faith or willful misconduct. Notwithstanding anything to the contrary herein, Purchaser and Seller agree, solely as between themselves, that any obligation for indemnification under this Section 2.6 shall be borne by the Party or Parties determined by a court of competent jurisdiction to be responsible for causing the Losses for which the Indemnified Party is entitled to indemnification or, if no such determination is made, then one-half by Purchaser and one-half by Seller. The provisions of this section shall survive the termination of this Escrow Agreement and any resignation or removal of the Escrow Agent.

2.7.       Any entity into which the Escrow Agent may be merged or converted or with which it may be consolidated, or any entity to which all or substantially all the escrow business of the Escrow Agent may be transferred, shall be the Escrow Agent under this Escrow Agreement without further act.

2.8.       The Escrow Agent may resign at any time from its obligations under this Escrow Agreement by providing thirty (30) calendar days prior written notice to Purchaser and Seller. Similarly, the Escrow Agent may be removed at any time, with or without cause, by the Parties by providing thirty (30) calendar days prior written notice, signed by an authorized representative of each of Purchaser and Seller, to the Escrow Agent of such removal. In either event, such resignation or removal shall be effective on the date set forth in such written notice, which shall be no earlier than thirty (30) calendar days after such written notice has been furnished, and the Escrow Agent shall have no further obligation thereafter except to hold the Escrow Funds as depository and cooperate reasonably in the transfer of the Escrow Funds to a successor escrow agent. Purchaser and Seller shall promptly appoint a successor escrow agent. In the event no successor escrow agent has been appointed on or prior to the date such resignation is to become effective, the Escrow Agent shall be entitled to tender into the custody of any court of competent jurisdiction all Escrow Funds delivered hereunder and the Escrow Agent shall thereupon be relieved of all further duties and obligations under this Escrow Agreement. The Escrow Agent shall have no responsibility for the appointment of a successor escrow agent hereunder.

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III.       Compensation of the Escrow Agent

3.1.       Purchaser and Seller shall equally pay the fees for the services provided by the Escrow Agent hereunder in accordance with invoices, consistent with the fees set forth on Exhibit B delivered to Purchaser and Seller. The Escrow Agent shall have, and is hereby granted, a prior lien upon the Escrow Fund with respect to its unpaid fees and unsatisfied indemnification rights, superior to the interests of any other persons or entities and is hereby granted the right to set off and deduct any unpaid fees and unsatisfied indemnification rights from the Escrow Fund that remain unpaid for a period of thirty (30) days after providing the Purchaser and Seller with an invoice for such amounts.

IV.       Miscellaneous

4.1.       During the term of this Escrow Agreement, the Escrow Fund shall be held at an account designated by the Escrow Agent at Citizens Bank, that will not earn interest. The Parties recognize and agree that the Escrow Agent will not provide supervision, recommendations or advice relating to either the investment of moneys held in the Escrow Account or the purchase, sale, retention or other disposition of any investment. Any interest that may accrue on Escrow Fund deposits beginning the day immediately following the day Escrow Fund deposits are received, based on the daily average balances of Escrow Funds so held in the Escrow Account. Any interest that may accrue will be credited monthly and become part of the Escrow Fund. Deposits into the Escrow Account are insured, subject to the applicable rules and regulations of the Federal Deposit Insurance Corporation (the “FDIC”), in the standard FDIC insurance amount of $250,000, including principal and accrued interest, and are not secured. Escrow Agent or its affiliates may receive compensation from third parties based on balances deposited in the Escrow Account.

4.2       Purchaser and Seller agree that, subject to the terms and conditions of this Escrow Agreement and until dispersed from the Escrow Account, the owner of the Escrow Funds is the Seller and all interest and income from the investment of the funds shall be reported as having been earned by Purchaser as of the end of the calendar year in which it was earned, whether or not such income was disbursed during such calendar year, to the extent required by the United States Internal Revenue Service (“IRS”). The Escrow Agent shall be deemed a payor of any interest or other income paid upon investment of the Escrow Account for purposes of performing tax reporting. With respect to any other payments made under this Escrow Agreement, the Escrow Agent shall not be deemed a payor and shall have no responsibility for performing tax reporting. The Escrow Agent’s function of making such payments is solely ministerial and upon express direction of the Parties. On or before the execution and delivery of this Escrow Agreement, each of Purchaser and Seller shall provide to the Escrow Agent a correct, duly completed, dated and executed current IRS Form W-9 or Form W-8, whichever is appropriate or any successor forms thereto, in a form and substance satisfactory to the Escrow Agent including appropriate supporting documentation and/or any other form, document, and/or certificate required or reasonably requested by the Escrow Agent to validate the form provided. Notwithstanding anything to the contrary herein provided, except for the delivery and filing of tax information reporting forms required pursuant to the Internal Revenue Code of 1986, as amended, to be delivered and filed with the IRS by the Escrow Agent, as escrow agent hereunder, the Escrow Agent shall have no duty to prepare or file any Federal or state tax report or return with respect to any funds held pursuant to this Escrow Agreement or any income earned thereon. Purchaser and Seller, jointly and severally, agree to indemnify, defend and hold the Escrow Agent harmless from and against any tax, late payment, interest, penalty or other cost or expense that may be assessed against the Escrow Agent on or with respect to the funds deposited under this Escrow Agreement or any earnings or interest thereon unless such tax, late payment, interest, penalty or other cost or expense was finally adjudicated by a court of competent jurisdiction to have been directly caused by the gross negligence, bad faith or willful misconduct of the Escrow Agent. The indemnification provided in this section is in addition to the indemnification provided to the Escrow Agent elsewhere in this Escrow Agreement and shall survive the resignation or removal of the Escrow Agent and the termination of this Escrow Agreement.

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4.3       The Escrow Agent shall provide monthly reports of transactions and balances to the Parties as of the end of each month, until the disbursement of all Escrow Funds. This Escrow Agreement shall terminate upon the final disbursement of all Escrow Funds.

4.4.       Any notice, request for consent, report, or any other communication required or permitted in this Escrow Agreement shall be in writing and shall be deemed to have been given when delivered (i) personally, (ii) by facsimile transmission with written confirmation of receipt, (iii) by electronic mail to the e-mail address given below, and written confirmation of receipt is obtained promptly after completion of the transmission, (iv) by overnight delivery with a reputable national overnight delivery service, or (v) by United States mail, postage prepaid, or by certified mail, return receipt requested and postage prepaid, in each case to the appropriate address set forth below or at such other address as any party hereto may have furnished to the other parties hereto in writing:

If to the Escrow Agent:

Acquiom Clearinghouse LLC

10 South Riverside Plaza, Suite 875

Chicago, IL 60606

Attn: Timothy P. Martin

Facsimile: (312) 474-6099

Email: tmartin@srsacquiom.com

With a mandatory copy to:

Acquiom Clearinghouse LLC

950 17^th Street, Suite 1400

Denver, CO 80202

Facsimile: (720) 554-7828

Email: escrowagent@srsacquiom.com

If to Purchaser:

Zealand Pharma A/S

Attn: Ravinder Singh Chahil

Sydmarken 11

DK-2860 Søborg

Denmark

rsc@zealandpharma.com

With a copy to:

Cooley LLP

Attn: Marc Recht

500 Boylston St.

Boston, MA 02116

mrecht@cooley.com

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If to Seller:

Valeritas, Inc.
Attn: John E Timberlake, President & Chief Executive Officer
750 Route 202 South, Suite 600
Bridgewater, NJ 08807
jetimberlake@valeritas.com

With a copy to:

DLA Piper LLP (US)

Rachel Ehrlich Albanese

1251 Avenue of the Americas

New York, NY 10020

Rachel.albanese@us.dlapiper.com

Any party may unilaterally designate a different address by giving notice of each change in the manner specified above to each other party.

4.5.       This Escrow Agreement shall be governed by and construed according to the laws of the State of Delaware, without regard to principles of conflicts of law. The parties hereto consent to the exclusive jurisdiction of the state and federal courts sitting in the State of Delaware and consent to personal jurisdiction of and venue in such courts with respect to any and all matters or disputes arising out of this Escrow Agreement. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH PARTY HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING IN WHOLE OR IN PART UNDER, RELATED TO, BASED ON OR IN CONNECTION WITH THIS ESCROW AGREEMENT OR THE SUBJECT MATTER HEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN TORT OR CONTRACT OR OTHERWISE. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 4.5 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

4.6.       Except as permitted in Section 2.7, neither this Escrow Agreement nor any rights or obligations hereunder may be assigned by any party hereto without the express written consent of each of the other parties hereto. This Escrow Agreement shall inure to and be binding upon the parties hereto and their respective successors, heirs and permitted assigns.

4.7.       The terms of this Escrow Agreement may be altered, amended, modified or revoked only by an instrument in writing signed by all the parties hereto.

4.8.       If any provision of this Escrow Agreement shall be held or deemed to be or shall in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatsoever.

4.9.       This Escrow Agreement is for the sole benefit of the Indemnified Parties, Purchaser, Seller and the Escrow Agent, and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Escrow Agreement. The Escrow Agent shall have the right to perform any of its duties hereunder through its affiliates, agents, attorneys, custodians or nominees.

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4.10.       No party to this Escrow Agreement shall be liable to any other party hereto for losses due to, or if it is unable to perform its obligations under the terms of this Escrow Agreement because of, acts of God, fire, war, terrorism, floods, strikes, electrical outages, equipment or transmission failure, or other causes reasonably beyond its control.

4.11.       Following the public announcement of the transactions contemplated in the Acquisition Agreement, Escrow Agent may reference the parties as clients and disclose that it is serving as the escrow agent in connection herewith.

4.12.       All titles and headings in this Escrow Agreement are intended solely for convenience of reference and shall in no way limit or otherwise affect the interpretation of any of the provisions hereof.

4.13.       This Escrow Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. All signatures of the parties to this Escrow Agreement and in any Joint Instruction or other instruction, instrument or notice delivered hereunder may be transmitted by facsimile (including PDF) or email, and such transmission will, for all purposes, be deemed to be the original signature of such party whose signature it reproduces, and will be binding upon such party.

4.13. Contemporaneously with the execution and delivery of this Escrow Agreement and, if necessary, from time to time thereafter, each of the parties to this Escrow Agreement (other than the Escrow Agent) shall execute and deliver to the Escrow Agent a Certificate of Incumbency substantially in the form of Exhibit A-1 and A-2 hereto (a “Certificate of Incumbency”) for the purpose of establishing the identity and authority of persons entitled to issue notices, instructions or directions to the Escrow Agent on behalf of each such party. Until such time as the Escrow Agent shall receive an amended Certificate of Incumbency replacing any Certificate of Incumbency theretofore delivered to the Escrow Agent, the Escrow Agent shall be fully protected in relying, without further inquiry, on the most recent Certificate of Incumbency furnished to the Escrow Agent. Whenever this Escrow Agreement provides for joint written notices, joint written instructions or other joint actions to be delivered to the Escrow Agent, the Escrow Agent shall be fully protected in relying, without further inquiry, on any joint written notice, instructions or action executed by persons named in such Certificate of Incumbency.

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT:

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. When a party opens an account, the Escrow Agent will ask for each party’s name, address, date of birth, or other appropriate information that will allow the Escrow Agent to identify such party. The Escrow Agent may also ask to see each party’s driver’s license or other identifying documents.

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IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be executed as of the date first above written.

Acquiom Clearinghouse LLC, as the Escrow Agent

By:

Name: Timothy P. Martin

Title: Senior Director

PURCHASER

ZEALAND PHARMA A/S

By:

Name:

Title:

SELLER

VALERITAS, INC.

By:

Name:

Title:

SCHEDULE I

WIRE TRANSFER INSTRUCTIONS

Purchaser:

Bank Name:

ABA #:

Account Name:

Account #:

Seller:

Bank Name:

ABA #:

Account Name:

Account #:

Escrow Agent:

Bank Name: Citizens Bank

ABA #: 011-500-120

Account Name: Citizens Bank NA fbo Acquiom Clearinghouse Escrow Clients

Account : #1339477782

For further credit: Zealand Pharma/Valeritas Escrow

Attn: Tim Martin

EXHIBIT A-1

Certificate of Incumbency

(List of Authorized Representatives)

Client Name: Zealand Pharma A/S

As an authorized officer of the above referenced entity, I hereby certify that each person listed below is an authorized signer for such entity, and that the title and signature appearing beside each name is true and correct.

Name Title Signature Contact Number Secondary  Contact Number Email

IN WITNESS WHEREOF, this certificate has been executed by a duly authorized officer on:

_________________.

Date

By:

Name:

Title:

EXHIBIT A-2

Certificate of Incumbency

(List of Authorized Representatives)

Client Name: Valeritas, Inc.

As an authorized officer of the above referenced entity, I hereby certify that each person listed below is an authorized signer for such entity, and that the title and signature appearing beside each name is true and correct.

Name Title Signature Contact Number Secondary Contact Number Email

IN WITNESS WHEREOF, this certificate has been executed by a duly authorized officer on:

__________________.

Date

By:

Name:

Title:

EXHIBIT B

SCHEDULE OF ESCROW AGENT FEES

Acceptance Fee: Waived

Initial Fees as they relate to Acquiom Clearinghouse LLC acting in the capacity of Escrow Agent – includes review of the Escrow Agreement; acceptance of the Escrow appointment; setting up of Escrow Account(s) and accounting records; and coordination of receipt of funds for deposit to the Escrow Account(s).

Annual Administration Fee   3,500

For ordinary administrative services by Escrow Agent – includes daily routine account management; interest tracking; monitoring claim notices pursuant to the agreement; disbursement of funds in accordance with the agreement; and delivery of trust account statements to all applicable parties. These fees cover a full year, or any part thereof, and thus are not pro-rated in the year of termination. The annual fee is billed in advance and payable prior to that years’ service.

Acquiom Clearinghouse LLC’s bid is based on the following assumptions:

· Number of Escrow Accounts to be established: One (1)

· Estimated Term: [TBD]

· Amount of Escrow: $2,300,000

· Estimated number of disbursements: 6

· Investment in an account at Citizens Bank that will remain un-invested

Out-of-Pocket Expenses: Billed At Cost

EX-12.1

EXHIBIT 12.1​

CERTIFICATION PURSUANT TO
RULE 13a-14(a)/RULE 15d-14(a) UNDER
THE EXCHANGE ACT AND SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Emmanuel Dulac, certify that:

1.

I have reviewed this annual report on Form 20-F of Zealand Pharma A/S;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.

The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

a.

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.

evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.

The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

a.

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

b.

any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: March 18, 2021

/s/ Emmanuel Dulac

Title: President and Chief Executive Officer

EX-12.2

EXHIBIT 12.2​

CERTIFICATION PURSUANT TO
RULE 13a-14(a)/RULE 15d-14(a) UNDER THE EXCHANGE ACT
AND SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Matthew Dallas, certify that:

1.

I have reviewed this annual report on Form 20-F of Zealand Pharma A/S;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.

The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

a.

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.

evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.

The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

a.

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

b.

any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: March 18, 2021

/s/ Matthew Dallas

Title: Senior Vice President and Chief Financial Officer

97

EX-13.1

EXHIBIT 13.1​

PRINCIPAL EXECUTIVE OFFICER CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Emmanuel Dulac, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes- Oxley Act of 2002, that, to the best of my knowledge:

(1)

The Annual Report on Form 20-F of the Company for the period ended December 31, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 18, 2021

/s/ Emmanuel Dulac

Title: President and Chief Executive Officer

98

EX-13.2

EXHIBIT 13.2​

PRINCIPAL FINANCIAL OFFICER CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Matthew Dallas, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes- Oxley Act of 2002, that, to the best of my knowledge:

(1)

The Annual Report on Form 20-F of the Company for the period ended December 31, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 18, 2021

/s/ Matthew Dallas

Title: Senior Vice President and Chief Financial Officer

99

EX-16.1

Exhibit 16.1​

March 18, 2021

Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-7561
USA

Dear Sirs/Madams:

We have read Item 16F of Form 20-F of Zealand Pharma A/S for the year ended December 31, 2020 to be filed on or around March 18, 2021 and have the following comments:

1.

We agree with the statements made in the second, third, fourth and fifth paragraphs of Item 16F for which we have a basis on which to comment on, and we agree with, the disclosures.

2.

We have no basis on which to agree or disagree with the other statements of the registrant contained therein.

Yours sincerely,

/s/ Sumit Sudan State Authorised Public Accountant	/s/ Kåre Valtersdorf State Authorised Public Accountant
Deloitte Statsautoriseret Revisionspartnerselskab	​
Copenhagen, Denmark	​

100

EX-23.1

Exhibit 23.1​

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-230654) of Zealand Pharma A/S of our reports dated March 18, 2021, with respect to the consolidated financial statements of Zealand Pharma A/S, and the effectiveness of internal control over financial reporting of Zealand Pharma A/S, included in this Annual Report (Form 20-F) for the year ended December 31, 2020.

/s/ EY Godkendt Revisionspartnerselskab

Copenhagen, Denmark

March 18, 2021

101

EX-23.2

Exhibit 23.2​

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements Nos. 333-230654 on Form F-3 of our report dated March 18, 2020, relating to the financial statements of Zealand Pharma A/S, appearing in this Annual Report on Form 20-F for the year ended December 31, 2020.

Copenhagen, March 18, 2021
Deloitte
Statsautoriseret Revisionspartnerselskab
CVR no. 33963556

/s/ Sumit Sudan	/s/ Kåre Valtersdorf
State Authorised	State Authorised
Public Accountant	Public Accountant

102