Zealand stock falls 35% after trial setback, CEO remains optimistic

The chief executive of drugmaker Zealand Pharma sought to calm investors about the latest trial results, which showed patients lost less weight than expected and prompted the stock to fall more than 35%.

Speaking to CNBC, CEO Adam Steensberg criticized what he called the “weight loss Olympics,” where markets and companies focus too heavily on the amount of weight lost, rather than on factors such as staying on the medicine long-term and dealing with side effects.

The world doesn’t need these products that amount to very high rates of weight loss, he said, referring to medicines developed by Novo Nordisk and Eli Lilly. The latest trial had also not been optimized for maximum weight loss, he added.

“I need to focus on what the patients need, not what the current market like to see,” Steensberg said. “We have for a long time called to end the weight loss Olympics.”

Zealand is developing the drug petrelintide in partnership with Swiss pharma heavyweight Roche. Mid-stage trial results released after the closing bell on Thursday showed the drug led to an average weight reduction of 10.7% over 42 weeks. Analysts had largely expected between 13% and 20% weight loss.

Shares of Zealand were last seen trading 35% lower, on track for their worst day ever and the lowest close since August 2023. Shares of Roche fell 3%.

Addressing weight maintenance, rather than losing the most amount of weight quickly, has emerged as a way for companies to differentiate themselves as they try to enter the lucrative weight-loss drug market, which has been estimated to be worth as much as $150 billion by 2030.

Steensberg said he was “extremely certain” there would be a shift in the industry “towards tolerability,” referring to how well patients can cope with side effects of the medications.

“I think very, very soon, people start to realize that it’s not about that weight loss number, it’s about how you achieve that weight loss number.”

“If you then look into real world, you will actually discover that most patients who are on treatment today with the current products never get to those numbers that we see in clinical studies,” because “in a real-world setting, people cannot tolerate it,” he said, referring to Novo Nordisk’s and Eli Lilly’s drugs already on the market.

Petrelintide is an amylin analog that targets a hormone produced in the pancreas that affects appetite and slows gastric emptying, rather than the GLP-1 or GIP gut hormones targeted by weight-loss treatments currently on the market, such as Novo’s Wegovy and Lilly’s Zepbound.

A majority of patients on Novo’s Wegovy experience some form of side effects, most commonly gastrointestinal, such as nausea, diarrhea, and vomiting. Most are mild to moderate and…