After transitioning from a fledgling biotech to a mature commercial-stage company on the back of its first approval, Zealand Pharma was hit with the challenges of commercialisation and the disappointing sales of its severe hypoglycemia treatment, Zegalogue. As a result, in 2022, the Danish firm did an about face, sacked its CEO, streamlined its operations, and decided to focus on obesity, moves that have driven its market value on the Copenhagen stock exchange up by 63 percent.
Key data readouts across our three clinical programs this year have … positioned Zealand to become a significant player in addressing the evolving global obesity health crisis
Adam Steensberg, CEO
The Challenges of a First Launch
Back in 2021, then president and CEO of the peptide-based medicines firm, Emmanuel Dulac, was nothing short of ecstatic about Zealand’s transition into a fully-fledged commercial-stage outfit thanks to the US approval of its Zegalogue (dasiglucagon) injection for severe hypoglycaemia in diabetes patients. “I am very happy with where we are today, having executed on our first ever filing, approval, acquisition, and in-licensing. This is a lot of ‘firsts’ for a company of our size and we have had to double our number of employees over this period,” he said in PharmaBoardroom interview at the time.
For Zealand, deciding to bring the product to market itself represented a significant shift from the way the company had traditionally operated through partnerships. “We always had the ambition to become a fully-integrated commercial entity,” Dulac asserted. “The best method of maximising return on investment for years of research is by commercialising a product ourselves.”
Faced with the less than favourable COVID-19 pandemic environment and the commercial challenges of a first launch, the drug underperformed and Zealand was forced to lower its sales expectations more than once, going from USD 33.9 million to USD 29.3 million and then to almost half of its original forecasts.
New CEO, Streamlining and Refocus
Hence, in early 2022 the Danish company decided to oust Dulac and bring in a new CEO, executive vice president of R&D and chief medical officer Adam Steensberg. “The Board is focused on ensuring that the company continues to play to its strengths and believes that Dr Adam Steensberg … has the right skills set and experience having developed the company’s rich and deep pipeline under his tenure,” said Martin Nicklasson, chairman of the Board of Zealand Pharma in a release.
Following a review of all of its business operations, Zealand also chose to go back to its partnership approach and to fully restructure its commercial organisation, which meant reducing the workforce in the US by as much as 90 percent as well as bringing down its annual operating expenses by at least 35 percent. “We have made the decision to restructure because we believe that seeking commercial partnerships will generate more value for the company and shareholders as we transform the company into a more focused and cost-effective organization,” claimed Steensberg.
Apart from these drastic measures, the company also decided to focus on its most advanced assets, and on its unique obesity candidate, Amylin.
A Timely Choice
Since the 2022 upheaval at Zealand, fellow Danes Novo Nordisk have brought weight loss drugs front and centre and become Europe’s most valuable company thanks to the obesity treatment Wegovy. Other big pharmas are also betting on obesity, like Eli Lilly with its off-label use obesity drug, tirzeptidebut.
But Zealand may hold unique advantages for investors looking to jump on the obesity bandwagon, according to Fortune, and has already risen by 63 percent in market value on the Copenhagen stock exchange compared to 40 percent for Novo Nordisk. “One of the reasons why Zealand has done so well is that it’s unique because it’s probably the only small/mid-cap investment case in Europe if you want to get in on obesity,” affirmed Suzanne van Voorthuizen, an analyst at Van Lanschot Kempen NV.
Another point in Zealand’s favour is that although it is in an early stage of development, the firm’s Amylin asset is based on an amylin analog, not on the GLP-1 gut hormone most obesity drugs, including Wegovy, are targeting. “The amylin analog could become a big thing for Zealand because it’s a differentiated asset for obesity and they still own all the economics,” van Voorthuizen said. “It’s promising that you do get weight loss, but potentially better safety or at least a very different profile from using a different mechanism.”
Zealand also has candidates that target GLP-1, the furthest along in the clinical phase being Survodutide, developed in partnership with Boehringer Ingelheim GmbH. “Key data readouts across our three clinical programs this year have increased confidence in our pipeline and positioned Zealand to become a significant player in addressing the evolving global obesity health crisis,” said Steensberg.
Zealand’s shares have also been boosted by the fact that the company is joining the Stoxx Europe 600 index and the OMX Copenhagen 25 index.
