Key insights
- Zealand Pharma's shares dropped significantly due to concerning safety data from its weight loss drug survodutide. A high patient dropout rate (19%) attributed to gastrointestinal issues, including vomiting, raises doubts about its commercial viability against competitors like tirzepatide and semaglutide. This event highlights the critical importance of safety and tolerability in the highly competitive obesity drug market, potentially impacting investor sentiment towards similar pharmaceutical ventures.
Shares of weight loss drug maker Zealand Pharma plummeted as much as 26% on Monday after new data on its experimental medicine raised concerns over its potential side effects.
The Danish drugmaker said that while its drug survodutide met its key targets in a late-stage study, 19% of patients dropped out of the study due to gastrointestinal events, compared to 2.9% on placebo.
“Safety/tolerability remains the key issue,” said Barclays analysts in a note on Monday.
The high discontinuation rate, with more than 40% of patients reporting vomiting, might limit the drug’s commercial potential as a treatment for obesity or those suffering from fatty liver disease, the analysts added.
Shares of Zealand Pharma were last seen down 24%, adding to nearly 50% drop year-to-date.
The full survodutide data comes about three months after Zealand stock suffered its worst day on record when a trial of another of its experimental anti-obesity drugs disappointed investors with lower-than-expected weight loss statistics.
Analysts at Citi wrote in a note on Monday: “A 19% treatment discontinuation rate due to... adverse events... is not a rounding error, and nausea, vomiting, diarrhea, and constipation incidence at the levels reported here sit well above what we consider commercially viable against [rival drugs] tirzepatide and semaglutide.”