GLP-1s have dominated discussions in 2024 among those exploring weight-loss treatments.
However, Zealand Pharma A/S (CPH: ZEAL), a Danish biotechnology firm, is already developing what it calls the “next generation” of anti-obesity therapy, aiming to outperform industry leaders like Eli Lilly and Novo Nordisk in the long term.
Zealand Pharma is testing Petrelintide, a long-acting amylin analog, for weight loss. Petrelintide boasts a better tolerability profile compared to existing treatments like Wegovy and Zepbound.
Shares of Zealand Pharma have more than doubled since the beginning of this year.
Petrelintide: a potential first-line weight-loss therapy
A Phase 1b trial has shown Petrelintide to be effective in reducing body weight by an average of 8.6%.
In a recent interview with CNBC, Zealand Pharma’s CEO, Adam Steensberg, said:
If we can develop a molecule for weight loss with a benign tolerability profile and demonstrate cardiovascular risk reduction, we have every reason to believe it could become a first-line therapy.
Zealand Pharma plans to proceed with a Phase 2b trial by the end of 2024.
Amylin analogs mimic a hormone that increases satiety and is naturally produced in the human body alongside insulin by the pancreas, a large gland located behind the stomach.
Despite a significant year-to-date rally, Zealand Pharma stock could climb further as it solidifies its place in a high-growth market, projected to be worth around $200 billion by the end of this decade.
However, at the time of writing, the stock does not pay a dividend.
Should you invest in Zealand Pharma stock in October?
While excitement around Petrelintide is growing, analysts at Deutsche Bank caution that much of the optimism may already be priced in.
With a market cap of approximately $9 billion, the stock may have limited upside in the near term.
Last week, Deutsche Bank initiated coverage of Zealand Pharma with a “hold” rating and a price target of DKK 815, indicating only a 4% potential increase from its current level.
Nonetheless, Zealand Pharma is showing strong growth. In the first half of 2024, the company generated DKK 49.2 million in revenue, more than double the DKK 24 million it reported for the same period in 2023.
The company also completed a $1.0 billion upsized equity offering in June, reflecting strong investor interest in its R&D and commercialization efforts. At that time, CEO Adam Steensberg stated:
“Backed by a solid financial position following the capital raise in June, we’re making significant investments in our differentiated obesity candidates to accelerate their development as we explore partnership opportunities.”
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