Zealand Pharma reports 11.6% weight loss in dapiglutide trial

Zealand Pharma (ZEAL) announced positive Phase 1b trial results for its dual GLP-1/GLP-2 agonist dapiglutide, demonstrating a mean body weight reduction of 11.6% after 28 weeks versus 0.2% for placebo; the drug was well-tolerated. Cantor Fitzgerald reaffirmed an Overweight rating on Zealand Pharma based on potential sales of petrelintide exceeding $5 billion, while Deutsche Bank lowered its price target to DKK485, maintaining a Hold rating, citing minor delays in dapiglutide and survodutide development.

Analysis

Zealand Pharma A/S (Nasdaq: ZEAL) reported encouraging Phase 1b trial results for its GLP-1/GLP-2 receptor dual agonist, dapiglutide, demonstrating a significant mean body weight reduction of 11.6% after 28 weeks, markedly superior to the 0.2% reduction in the placebo group. The treatment was assessed as safe and well-tolerated, with most adverse events being mild gastrointestinal issues, aligning with the class effect of GLP-1 therapies. This outcome, described by the company's Chief Medical Officer as potentially on par with leading once-weekly GLP-1 treatments, is particularly noteworthy given the trial involved no lifestyle modifications. Despite these positive clinical developments and an InvestingPro assessment suggesting the company is undervalued while trading near its 52-week low of $56.85, analyst sentiment presents a mixed picture. Cantor Fitzgerald reaffirmed an Overweight rating, citing potential peak sales exceeding $5 billion for another obesity treatment, petrelintide, and projecting substantial revenue growth of 146.5% for Zealand Pharma in fiscal year 2025. Conversely, Deutsche Bank lowered its price target to DKK485, maintaining a Hold rating, and noted minor, though not materially impactful, delays in dapiglutide and survodutide development. Financially, Zealand Pharma reported 8 million DKK in Q1 2025 revenue and anticipates a significant $1.4 billion upfront payment from its Roche collaboration in Q2 2025, which will substantially bolster its cash reserves and support its strategic initiatives in the competitive obesity market.

Key Decisions for Investors

• Investors should consider the strong clinical data for dapiglutide and the company's undervalued assessment, particularly with the stock near its 52-week low, as potential indicators of upside, balanced against the inherent risks of biotech development.
• The upcoming $1.4 billion payment from Roche in Q2 2025 represents a significant financial catalyst that could de-risk funding for ongoing and future pipeline development; its confirmation and deployment will be key milestones to monitor.
• Given the divergent analyst ratings from Cantor Fitzgerald (Overweight) and Deutsche Bank (Hold, lowered target), investors should carefully weigh the bullish case driven by pipeline potential against concerns such as minor development delays and the competitive landscape before adjusting positions.