This Danish biotech's new weight-loss drug disappointed investors, and its stock is tumbling

By Jaimy Lee

Roche, which is betting up to $5.3 billion on the Danish company, also saw its shares take a hit

Zealand Pharma is developing an amylin analog for people with overweight and obesity.

Zealand Pharma's stock tumbled Friday as it sought to defend its experimental weight-loss drug after it fell short of Wall Street's expectations.

Shares of the Danish drug company (ZLDPF) tumbled 34% in European trading on Friday, and partner Roche (RHHBY) (CH:ROG) saw its stock fall nearly 3%.

The companies, which partnered last year in a deal worth up to $5.3 billion, are developing the once-weekly injection, which is called petrelintide.

On Thursday afternoon, they announced Phase 2 results from the ZUPREME-1 trial that tested the drug in 493 patients with overweight and obesity. The study met the primary endpoint, with petrelintide producing 10.7% mean weight loss against 1.7% weight loss in the placebo group. The drug had low rates of gastrointestinal side effects, a common concern for weight-loss treatments.

However, analysts had expected weight loss of at least 16%, and William Blair's Andy Hsieh raised the concern that higher doses of petrelintide won't produce more weight loss. In comparison, increasing the dosing of Eli Lilly's (LLY) Zepbound and Novo Nordisk's (NVO) (DK:NOVO.B) Wegovy usually increases the amount of weight lost.

"This dynamic creates a challenging situation for petrelintide for which its tolerability profile supports higher dosing, but increasing the dose would be unlikely to lead to additional weight loss," Hsieh told investors, when downgrading the stock to market perform from outperform.

Like Novo, Zealand Pharma is a Danish-based company focused on bringing to market a new generation of obesity treatments. Petrelintide is not a GLP-1; it's an amylin analog.

In a call Friday morning, Zealand Pharma's leaders sought to make the case that some patients want a drug with less weight loss and fewer side effects. "Remember, most people are not seeking weight losses above 20%," Zealand CEO Adam Steensberg said on the call. "Most people are looking for a weight loss below 20%. And we think with the profile that we have seen thus far, we can deliver the weight loss that most patients are looking for."

Zealand's stock is down 48% this year, while Roche's shares are up 4%.

-Jaimy Lee

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03-06-26 1245ET