Zealand stock falls 35% after trial setback, CEO remains optimistic

The CEO of pharmaceutical company Zeeland Pharma sought to calm investors over recent trial results, which showed patients lost less weight than expected and sent the stock down more than 35%.

Speaking to CNBC, CEO Adam Steinsberg criticized what he called the “weight loss Olympics,” where markets and companies focus too much on the amount of weight lost, rather than on factors like staying on medication long-term and dealing with side effects.

He added that the world does not need these products that lead to very high rates of weight loss, referring to the medicines developed Novo Nordisk and Eli Lilly. He added that the latest trial was not optimized for maximum weight loss.

“I need to focus on what patients need, not what the current market wants to see,” Steensberg said. “We have long called for an end to the weight loss Olympics.”

New Zealand is developing petrilintide in partnership with the Swiss pharmaceutical heavyweight Rosh. Intermediate trial results, released after the closing bell on Thursday, showed the drug led to an average weight loss of 10.7% over 42 weeks. Analysts had largely expected a weight loss of between 13% and 20%.

New Zealand shares were last seen trading 35% lower, on track for their worst day on record and lowest close since August 2023. Rosh Decreased 3%.

Addressing weight maintenance, rather than losing as much weight as possible quickly, has emerged as a way for companies to differentiate themselves as they try to enter the lucrative weight-loss drug market, which is estimated to be worth up to $150 billion by 2030.

Steensberg said he is “pretty sure” there is a shift in the industry “toward tolerance,” referring to how well patients can handle the side effects of medications.

“I think that very soon, people will start to realize that it’s not about the number of weight loss, it’s about how you achieve that number of weight loss.”

“If you then look at the real world, you will actually discover that most patients treated today with existing products never reach those numbers that we see in clinical studies,” he said, because “in a real-world setting, people can’t afford them,” he said, referring to Novo Nordisk and Eli Lilly drugs already on the market.

Petrelintide is an amylin analogue that targets a hormone produced in the pancreas that affects appetite and slows stomach emptying, rather than the gut hormones GLP-1 or GIP that are targeted by weight-loss treatments currently on the market, such as Novo’s Wegovy and Lilly’s Zepbound.

The majority of patients in Novo’s Wegovy trial Some forms of side effects– Most common in the digestive system, such as nausea, diarrhea, and vomiting. Most are mild to moderate and transient. The trend is similar to Lilly’s Zepbound.

A Novo spokesperson said direct comparisons between trials are challenging due to differences in study design and reporting practices. A study of high-dose semaglutide, the active ingredient in Wegovy and Ozempic, found that patients lost up to 21% of their body weight, with only 5.4% ending treatment due to side effects, the spokesperson said. Only 3.3% discontinued treatment due to gastrointestinal side effects.

Lilly did not respond to CNBC’s request for comment.

In the trial results, Zeeland said that at the maximum dose of betrilintide, “there were no cases of vomiting and no treatment discontinuation due to adverse gastrointestinal events.” The trial included 493 overweight and obese people.

It also has a drug in development that combines betrilintide with Roche’s CT-388, a GLP-1/GIP receptor, which Zealand says may be a better option for patients who need to lose a significant amount of weight.

One study of more than 125,000 patients indicated that about 50% of people were obese. Stop taking GLP-1 appetite-modulating medications Within a year. High costs and side effects are common reasons for discontinuation.

A A study published in the British Medical Journal found in January that people who lost weight with the help of GLP-1 drugs regained the weight much faster after stopping than those who lost weight with diet and exercise.

The study found that obese patients who stopped taking GLP-1 medications were expected to return to their starting weight after 1.7 years, compared to 3.9 years for those who lost weight with behavioral change alone.

The rate at which patients lose weight due to the drugs has been a major factor driving Novo and Lilly’s stock prices in recent years.

Novo shares It is trading 75% below its peak In mid-2024, while Lilly’s shares rose during the same period as its drugs Provide a higher rate of weight loss.

On Friday, Jefferies analysts said Petrilintide has the potential to achieve Wegovy-like efficacy and tolerability on par with placebo which “suggests this is a viable drug.”

But they added that it would likely be viewed as a second-best treatment to Lilly’s amylin treatment.

“For us as a small company, to be among the leading products in a new category… is a very sweet spot to be in,” Stenzberg said, adding that it is too early to make such decisions.

“If you look historically at the markets, if you are among the top three to launch into a new category with an attractive profile, you will become a very important player in that category.”

He added that the latest trial was not optimized for maximum weight loss, as it was roughly 50/50 between genders, and that women tended to lose more weight than men.

“Most companies would get close to that being 70% female,” he said, adding that he was “confident” that petrelintide would lead to weight loss in the mid-teens once starting conditions improve.

He said that the results of the experiment published Thursday were about “finding doses and then proving their safety and solid ability.”

New Zealand said it expects to begin a phase 3 study later this year. But Barclays analysts said the market was unlikely to support a phase 3 “fix” of petrilintide within two years.