Shares of Danish biotech Zealand Pharma not too long ago plunged after detailed knowledge on its weight reduction drug survodutide confirmed far larger affected person dropout charges than main therapies, prompting analysts to slash peak gross sales forecasts and rethink the corporate’s weight problems technique.
However whereas the market’s enthusiasm for the drug has meaningfully cooled, buyers are shifting focus to Zealand’s amylin-based medication, petrelintide, as the subsequent potential driver of the inventory, setting it up for an vital 12 months forward.
The Copenhagen-listed inventory tumbled 23% earlier this month after survodutide, which Zealand has licensed to Boeringer Ingelheim, confirmed uncomfortable side effects grave sufficient for 19% of sufferers to finish the remedy. It did, nevertheless, present a 16.6% weight reduction on common, assembly its major goal.
It got here after shares dropped 36% in March following lower-than-expected efficacy of slightly below 11% for its lead asset, petrelintide, in a mid-stage trial, which CEO Adam Steensberg mentioned hadn’t been optimized for weight reduction. These mark the inventory’s two worst days on file because the firm went public in 2010.
Even so, many are sticking with the inventory.
UBS analysts this week slashed their worth goal on the inventory to 540 Danish kroner from 730 kroner as they minimize survodutide peak gross sales by practically 80%.
“The tolerability knowledge seems extremely disappointing and can probably considerably restrict its utilization,” they wrote in a analysis notice.
“Whereas survodutide knowledge is disappointing to us, we’re nonetheless optimistic on petrelintide, a very powerful asset,” they added, sustaining a Purchase advice on the inventory.
The inventory has recovered a few of its losses, however stays down 38% year-to-date.
The promise of amylin
Petrelintide might want to succeed the place survodutide struggled, with tolerability being key for its business success. But it surely additionally faces competitors from heavyweights like Eli Lilly.
On the American Diabetes Affiliation’s Scientific Classes (ADA) in New Orleans in early June, the trade got here collectively to share medical updates, with amylin as a focus for medical professionals and buyers alike.
“One theme rising from the ADA is the rising acknowledgement of the necessity of a drug with modest weight reduction however pristine tolerability, which is strictly the profile of amylin medicine similar to petrelintide,” UBS mentioned.
Zealand operates in that “candy spot” between double-digit weight reduction and a placebo-like tolerability with petrelintide, CEO Steensberg informed CNBC’s Angelica Peebles on the ADA in New Orleans earlier this month. It additionally suits nicely with medical professionals’ name for a great tolerability profile, notably for weight upkeep after GLP-1 use.
“I really imagine that when these amylin [drugs] launch, we will have that, what I’ve described as an iPhone second, as a result of sufferers are so conscious of the expertise they’ve on the GLP-1s, and when you launch a brand new modality that offers you a greater expertise, folks will queue as much as get entry to that new weight reduction remedy reasonably than staying on the extra cumbersome medicines,” he mentioned.
Amylin, like GLP-1, is a pure hormone that regulates blood sugar and urge for food, however is produced within the pancreas versus the intestine.
Whereas many corporations are creating amylin-based medicine, together with Eli Lilly with eloralintide, the scale of the buyer weight problems market will probably permit a number of gamers, in keeping with UBS.
Petrelintide, which Zealand is creating in partnership with Swiss Roche, is because of provoke late-stage trials within the second half of the 12 months. It’s also resulting from report mid-stage outcomes of petrelintide in diabetes sufferers, who usually wrestle extra with reducing weight.
Regardless of the setbacks, Jyske Financial institution analyst Henrik Hallengreen Laustsen sees a future for survodutide as a remedy for fatty liver illness, and for petrelintide for weight problems.
“My total take away from ADA throughout the corporate shows was the elevated deal with side-effects and differentiation from present best-in-class merchandise,” Laustsen informed CNBC.
“Zealand wants to inform the market what makes [petrelintide] totally different from the opposite Amylin-products,” he mentioned, including that massive gamers Lilly and Novo Nordisk are strongly positioned in each the present and future market.
On survodutide, discontinuation charges have been dramatically larger than marketed weight problems medicine with a placebo-adjusted discontinuation price resulting from adversarial occasions of 18.8%, versus roughly 4% for main therapies Wegovy and Zepbound.
That issues as a result of buyers more and more examine weight problems medicine not simply on efficacy however on what number of sufferers can truly keep on remedy. It additionally places extra stress and draw back threat for shares, elevating the significance of future trials assessing the profit for liver sufferers, in keeping with Jefferies.
A number of analysts, together with Jefferies and UBS, level to the truth that an inflection level for Zealand will probably not come till 2027.
Zealand’s presentation on survodutide additionally landed similtaneously Eli Lilly introduced outcomes of its retatrutide, a so-called “triple-G” which mixes three intestine hormones for max weight reduction. RBC analysts described it as probably probably the most efficacious weight problems remedy in growth, with no efficacy plateau by way of 104 weeks.
That created a brutal backdrop the place Zealand wasn’t solely judged by itself knowledge but additionally seen within the gentle of Lilly’s more and more dominant franchise.
Submit-ADA, buyers seem like valuing survodutide primarily as an asset to obesity-related liver illness, whereas petrelintide more and more carries the obesity-growth narrative.
