Zealand Pharma reports early stage success of weight loss drug, shares soar

(Reuters) -Denmark's Zealand Pharma said an early-stage study showed a high dose of its drug petrelintide helped reduce weight by an average 8.6% after 16 weekly doses, sending its shares up to an all-time high on Friday.

The company said the data paves the way for a mid-stage trial for weight loss, which it expects to start in the second half of the year.

The weight loss achieved with the high dose of the drug was much higher than the 1.7% reduction with a placebo in one part of the trial that involved 48 participants. Another part of the early-stage study was testing the drug in 20 people with lower doses.

Shares in Zealand Pharma have doubled in value since the start of the year, as investors are betting on the company's weight loss product pipeline in a booming market for obesity drugs.

The stock touched a record high of 824.50 Danish crowns ($118.20) during early trade on Friday, before paring some gains, and was up 17% at 1212 GMT.

Petrelintide belongs to a class of drugs known as the long-acting amylin analog, which mimics a hormone called amylin that is co-secreted with insulin in response to ingested nutrients.

Jefferies analysts said in a note the results of the study support potential for weight loss with amylin at least on par with GLP-1 drugs, but with an improved tolerability profile.

"Tolerability is impressive despite one discontinuation in our view, supporting a possible role for amylin as a more tolerable alternative to GLP-1s," the brokerage said referring to a class of drugs the same as Eli Lilly's Mounjaro and Zepbound and Novo Nordisk's Ozempic and Wegovy.

Following the study results, Goldman Sachs analysts raised their peak petrelintide sales estimate to an annual $5 billion from $2 billion.

Zealand is also working with German drugmaker Boehringer Ingelheim to test another drug survodutide, which belongs to the GLP-1 agonists class.

($1 = 6.9755 Danish crowns)

(Reporting by Leroy Leo in Bengaluru and Greta Rosen Fondahn in Gdansk; Editing by Shilpi Majumdar and Elaine Hardcastle)