What’s next for the weight loss drug maker
Shares of Danish biotech Zealand Pharma recently plunged after detailed data on its weight loss drug survodutide showed far higher patient dropout rates than leading treatments, prompting analysts to slash peak sales forecasts and rethink the company’s obesity strategy.
But while the market’s enthusiasm for the drug has meaningfully cooled, investors are shifting focus to Zealand’s amylin-based medicine, petrelintide, as the next potential driver of the stock, setting it up for an important year ahead.
The Copenhagen-listed stock tumbled 23% earlier this month after survodutide, which Zealand has licensed to Boeringer Ingelheim, showed side effects grave enough for 19% of patients to end the treatment. It did, however, show a 16.6% weight loss on average, meeting its primary target.
It came after shares dropped 36% in March following lower-than-expected efficacy of just under 11% for its lead asset, petrelintide, in a mid-stage trial, which CEO Adam Steensberg said hadn’t been optimized for weight loss. These mark the stock’s two worst days on record since the company went public in 2010.
Even so, many are sticking with the stock.
UBS analysts this week slashed their price target on the stock to 540 Danish kroner from 730 kroner as they cut survodutide peak sales by nearly 80%.
“The tolerability data looks highly disappointing and will likely significantly limit its usage,” they wrote in a research note.
“While survodutide data is disappointing to us, we are still positive on petrelintide, the most important asset,” they added, maintaining a Buy recommendation on the stock.
The stock has recovered some of its losses, but remains down 38% year-to-date.
The promise of amylin
Petrelintide will need to succeed where survodutide struggled, with tolerability being key for its commercial success. But it also faces competition from heavyweights like Eli Lilly.
At the American Diabetes Association’s Scientific Sessions (ADA) in New Orleans in early June, the industry came together to share clinical updates, with amylin as a focal point for medical professionals and investors alike.
“One theme emerging from the ADA is the growing acknowledgement of the need of a drug with modest weight loss but pristine tolerability, which is exactly the profile of amylin drugs such as petrelintide,” UBS said.
Zealand operates in that “sweet spot” between double-digit weight loss and a placebo-like tolerability with petrelintide, CEO Steensberg told CNBC’s Angelica Peebles at the ADA in New Orleans earlier this month. It also fits well with medical professionals’ call for a good tolerability profile, particularly for weight maintenance after GLP-1 use.
“I truly believe that when these amylin [drugs] launch, we can have that, what I’ve described as an iPhone moment, because patients are so aware of the experience they have on the GLP-1s, and once you launch a new modality that gives you a better experience, people will queue up to get access to that new weight loss…
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