Weight loss drug contender Zealand Pharma jumps 23% on trial results

LONDON — Shares of Denmark's Zealand Pharma popped nearly 23% in Friday morning deals, notching a record high after an early-stage study of its weight loss drug challenger produced positive results.

The company said Thursday that a course of 16 weekly high doses of long-acting amylin analog petrelintide reduced body weight by up to 8.6% on average in the study. A placebo drug led to a body weight decrease of 1.7%.

One out of 48 study participants withdrew due to negative effects.

Petrelintide was "judged to be safe and well tolerated at all dose levels" and the results provided "robust support" for its potential as an alternative to GLP-1 receptor agonist-based therapies for weight management, Zealand Pharma said in a release.

GLP-1RA-based treatments include Ozempic, the diabetes drug produced by fellow Danish pharmaceutical firm Novo Nordisk, which has exploded in popularity globally for its weight-loss effects. Soaring demand for Ozempic and obesity drug Wegovy have propelled Novo Nordisk to become Europe's most valuable company.

The last few years have seen an ever-intensifying race to produce rival treatments, drawing in dozens of challengers to market leaders Novo Nordisk and the U.S.' Eli Lilly.

David Kendall, chief medical officer of Zealand Pharma, said that the petrelintide study supports the company's conviction that the drug "is very well tolerated and can potentially play an important role as an alternative to incretin-based therapies for the management of overweight and obesity."

It could "deliver weight loss comparable to GLP-1 receptor agonists with a better patient experience," Kendall added.

The company now plans to test petrelintide in a Phase 2 mid-stage clinical trial.

Analysts at Jefferies said in a Thursday note that the initial results indicate that the drug "ticks all the boxes." They support a "possible role for amylin as a more tolerable alternative to GLP-1s," with the potential for weight loss "at least on a par."

Zealand Pharma is separately testing the potential weight loss drug drug survodutide in a partnership with Germany's Boehringer Ingelheim. Postive Phase 2 trial results for that drug in February boosted Zealand's share price at the time.

Zealand Pharma share price.