Zealand Pharma CEO discusses the competition between Wegovy and Zepbound in targeting the next generation of obesity drugs.

• Zealand Pharma, a Danish biotech company, is focusing on developing the next generation of weight loss drugs, as competitors are entering a market that is currently dominated by major players Novo Nordisk and Eli Lilly.
• In an interview with CNBC, CEO Adam Steensberg announced early-stage trial results for the company's GLP-1 treatment, but emphasized that its obesity drug candidate is what sets the company apart.
• Steensberg stated that Zealand Pharma is currently seeking a pharmaceutical partner to expand its global market reach, despite takeover speculation.

Zealand Pharma, a Danish biotech company, is focusing on developing the next generation of weight loss drugs as competitors enter a market dominated by major players.

Adam Steensberg, CEO of the company, stated on CNBC Thursday that the early-stage trials of their experimental obesity injection have shown promising results in terms of higher-quality weight loss, with less muscle loss and fewer side effects, compared to traditional GLP-1 treatments. The company is currently seeking a global pharmaceutical partner to collaborate with, Steensberg added.

Steensberg stated that our focus in the 2030s is to establish next-generation molecules that are not based on GLP-1s.

Last month, Zealand Pharma declared positive top-line results from a phase 1b trial of its weight-loss drug, a GLP-1/GLP-2 receptor dual agonist called Dapiglutide. This puts the company in competition with major obesity players Novo Nordisk and Eli Lilly, whose GLP-1s Wegovy and Zepbound, respectively, have gained immense popularity for their weight loss effects.

Steensberg stated that the company's distinct obesity drug candidate, Petrelintide, a long-acting amylin analog, could differentiate it from competitors, providing an alternative for users who cannot tolerate GLP-1s.

"This is our crown jewel, where we have the highest expectations," Steensberg said.

He stated that this therapy has the potential to become a foundational treatment in the future, offering weight loss benefits while also having a better tolerability profile.

Weight loss treatment is a new area of research, and Amylin analogs are one of the emerging options. These drugs work by mimicking a hormone that is produced in the pancreas along with insulin to increase feelings of fullness. Unlike GLP-1 agonists, which mimic hormones produced in the gut to suppress appetite and regulate blood sugar, Amylin analogs target the pancreas.

"Steensberg stated that GLP-1s and amylin analogs represent two vastly different human experiences. He explained that working on satiety would make the experience more pleasurable. As a result, individuals can remain on the treatment for an extended period."

CagriSema, a candidate developed by Novo Nordisk, combines the GLP-1 component Semaglutide with amylin analog Cagrilintide for the treatment of diabetes.

In June, Zealand Pharma reported positive results from a phase 1b trial of Petrelintide, indicating that a series of 16 weekly injections led to an average weight reduction of 8.6%.

The company initially stated that the research findings demonstrated "strong evidence" for the drug's potential as a substitute for GLP-1s. After the biotech company's second-half results in August, Steensberg increased his confidence, asserting that amylin analogs could become "the foundation therapy for weight management in the future."

Steensberg stated in an interview with CNBC on Thursday that if we can create a molecule that provides patients with the desired weight loss while having a benign tolerability profile and also shows a reduction in cardiovascular risk, it could become a first-line therapy.

Seeking a global pharma partner

Over the past few months, Zealand Pharma, a company founded over 25 years ago with a focus on peptide-based medicines, has experienced significant growth as it has expanded its offerings to include treatments for obesity. As a result, its stock price has increased by over 110% so far this year.

Despite intense competition in the industry, Novo Nordisk and Eli Lilly remain market leaders, with their blockbuster drugs being crucial to patients worldwide.

GLP-1 drug labels have been expanded by several drug regulators, including those in the U.S. and European Union, for treating obesity-related comorbidities and other illnesses. However, concerns persist about the drugs' potential side effects, such as muscle loss and suicidal thoughts, and U.S. authorities have expressed opposition to the high costs of the treatments.

The demand for treatments is increasing rapidly, and analysts predict that the market could reach $200 billion by 2030.

Emily Field, head of European pharmaceuticals research at Barclays, stated that the weight loss market is expected to become more "dispersed" in the future as pharmaceutical companies focus on specific customer groups. She suggested that treatments for muscle loss could be a valuable way to "distinguish" oneself in the market.

She pointed out that a company of Zealand Pharma's size and range would face challenges in accomplishing this task on its own.

Field stated over the phone that manufacturing themselves was not something Zealand could consider. Although many people still owned it, they were uncertain about whether it would be bought or not.

Steensberg ruled out speculation about a takeover on Thursday, stating that it is not part of their plans. However, he acknowledged that despite a $1 billion capital raise earlier this year, the company would require a partner.

"Steensberg stated that our clear ambition is to continue as a partnering company in the next phase of our life, and that it is an attractive opportunity to partner with Zealand for a large pharma company."

Partnership discussions are ongoing and are expected to continue into the first half of next year.

Overweight and obese patients will participate in phase 2 trials for Petrelintide and Dapiglutide in late 2024 and the first half of 2025, respectively.