Zealand Pharma, a Danish biotech company, experienced its two worst trading days on record following disappointing clinical data for its obesity drug survodutide. The stock dropped 23% earlier this month after detailed results revealed that 19% of patients discontinued treatment due to severe side effects, despite the drug achieving an average weight loss of 16.6% and meeting its primary target [1]. This sharp decline followed a previous 36% drop in March when petrelintide, Zealand's lead asset, demonstrated lower-than-expected efficacy of just under 11% in a mid-stage trial. CEO Adam Steensberg noted that the trial had not been optimized for weight loss [1].
These setbacks prompted analysts to significantly reduce their peak sales forecasts for survodutide and reconsider Zealand's obesity drug strategy. UBS analysts cut their price target for Zealand Pharma from 730 Danish kroner to 540 kroner, slashing survodutide's peak sales estimate by nearly 80%. They commented, "The tolerability data looks highly disappointing and will likely significantly limit its usage," but maintained a Buy recommendation, citing optimism for petrelintide as the company's most important asset [1].
Despite the negative sentiment surrounding survodutide, investors and analysts are now focusing on petrelintide, an amylin-based drug, as Zealand's next potential growth driver. The industry consensus, highlighted at the American Diabetes Association's Scientific Sessions in New Orleans, is that there is a growing need for obesity drugs offering modest weight loss with excellent tolerability—a profile that amylin drugs like petrelintide may fulfill [1].
Zealand Pharma's stock has recovered some losses but remains down 38% year-to-date. The company faces competition from major players such as Eli Lilly, and petrelintide will need to demonstrate superior tolerability to succeed commercially [1].
CONCLUSION
Zealand Pharma's recent clinical setbacks have led to a sharp decline in its stock and a reassessment of its obesity drug portfolio. While survodutide's tolerability issues have dampened market enthusiasm, analysts remain optimistic about petrelintide's potential, especially given the industry's focus on tolerability. The coming year will be crucial for Zealand Pharma as it seeks to regain investor confidence and establish petrelintide as a viable competitor in the weight loss drug market.