Shares in weight-loss drug maker Zealand Pharma plunged as much as 23% on Monday after new data on the company’s experimental drug raised concerns about potential side effects.
The Danish drugmaker said its drug sulvodutide, which it licenses to privately held Boehringer Ingelheim, met its primary goal in a late-stage trial, but 19% of patients withdrew from the trial due to gastrointestinal problems, compared with 2.9% with a placebo.
“Despite some interesting body composition and liver signaling data, we view overall safety and tolerability as disappointing (for Zealand),” Barclays analysts said in a note on Monday.
High discontinuation rates, with more than 40% of patients reporting vomiting, could limit the drug’s commercial potential as a treatment for patients suffering from obesity and fatty liver disease, the analysts added.
Zealand Pharma’s share price closed 22.7% lower on Monday, cementing its place at the bottom of the overall European market. Stocks 600 index. The year-to-date decline is nearly 50%.
Sulvodutide was studied over 76 weeks in adults living with obese or overweight adults who did not have type 2 diabetes. Topline data released in April showed average weight loss of up to 16.6%, compared with 3.2% in the placebo group.
“The 19% treatment discontinuation rate due to adverse events is not a rounding error, and the levels of nausea, vomiting, diarrhea, and constipation rates reported here are well above what would be considered commercially viable for (competitive drugs) tirzepatide and semaglutide,” Citi analysts wrote in a Monday note.
The full data on savodutide comes about three months after New Zealand shares suffered their worst day on record after lower-than-expected weight loss statistics in a trial of another experimental anti-obesity drug, petrelintide, disappointed investors.
Further data on petrelintide disclosed on Friday “provided additional details about (its) clinical profile but does little to change our view since the March top line,” Barclays said.
Petrelintide, which Zealand is developing in collaboration with Roche, looks attractive in terms of tolerability, but efficacy does not appear to be as strong as Eli Lilly’s amylin, eloralintide, or other already available incretin-based obesity drugs, they added.
Weight loss drug market expands
The weight loss drug market is currently dominated by: novo nordiskwhich sells semaglutide under the brand names Wegovy and Ozempic. Eli Lillysells Tirzepatide as Zepbound and Mounjaro.
But a number of hopeful market entrants are testing their own anti-obesity drugs, including Zealand Pharma, which is partnering with major pharmaceutical companies. Roche Powerful companies such as Boehringer Ingelheim amgen and AstraZeneca.
Increasing competition is increasing the pressure on companies to differentiate their products. Muscle mass maintenance, oral options, obesity-related diseases, and weight management are among the areas companies are targeting to build a share of the lucrative market.
Novo Inc.’s Wigobee and Lilly Inc.’s Foundayo tablets are dominant, but more companies are looking to enter the market, Investec analyst Jimmy Muchechetere told CNBC’s “Squawk Box Europe” on Monday.
As for Zealand Pharma, the company has long called for an end to what it calls the “weight loss Olympics,” saying there is a heavy focus on the percentage of weight loss achieved.
CEO Adam Steensberg told CNBC in March that he was “very confident” the industry would move “towards tolerability,” referring to how well patients can cope with the drug’s side effects.
“I think very, very quickly, people will start to realize that it’s not the weight loss numbers that matter, it’s how you achieve that weight loss number that matters.”
