Zealand Plunge Pulls Roche Lower After Obesity Shot Disappoints

(Bloomberg) — An experimental obesity shot from Roche Holding AG and Zealand Pharma A/S failed to meet industry expectations in a study, casting doubt on their prospects of competing in the fast-growing market and sending their shares lower.

The duo said the petrelintide shot delivered 10.7% weight loss after 42 weeks of treatment, well short of results for existing treatments from Eli Lilly & Co. and Novo Nordisk A/S. Even though the drug showed side effects so mild that they were similar to placebo, that disappointed investors looking at weight-loss percentages as their main comparison.

Shares of Zealand dropped by a record 32%, while Roche fell as much as 3.3% in early trading Friday.

Investors are also comparing the results of petrelintide with a similar drug in development from Lilly that delivered as much as 20% weight loss after 48 weeks in a study last year. The Roche-Zealand version had needed to clear a bar of 13% to 15% weight loss with clean tolerability, Lucy Codrington, a Jefferies analyst, wrote in a note before the results.

Analysts at KBC Securities cut their peak sales estimate for petrelintide by about two-thirds from $22 billion to $7 billion, saying the outcome makes the compound unlikely to be a first-choice treatment in the increasingly crowded field. Petrelintide may be “better suited for weight-loss maintenance,” the KBC team led by Jacob Mekhael wrote in their note.

Crowded Field

Posted late on Thursday, the results are also a blow for the year-old partnership between Roche and Zealand. Petrelintide was the centerpiece of their $5.3 billion collaboration deal, a cornerstone of Roche’s effort to push into the weight-loss field. The Swiss pharmaceutical giant says it’s aiming to be at least No. 3 in the market, now dominated by Lilly and Novo Nordisk A/S.

Unlike the GLP-1 drugs available now, the Roche-Zealand experimental shot mimics a different gut hormone called amylin. The aim is to provide weight loss with fewer side effects.

In the trial, Roche said patients reported “almost no” nausea once they had reached their maintenance dose, and just 4.8% of people who got petrelintide dropped out of the study due to side effects after 42 weeks of treatment. In comparison, about 7% of the patients on the highest dose of Lilly’s experimental drug dropped out due to side effects.

“Did we expect to see one or two more percent of weight loss in the trial? Yes,” Zealand Chief Executive Officer Adam Steensberg said in a call with analysts. He argued, however, that in the real world most patients don’t take the strongest doses available for weight loss drugs, which can cause vomiting, diarrhea and other gastrointestinal problems.

In the Roche-Zealand trial group that achieved the most weight loss, 98% of patients reached the maintenance dose. Women lost much more weight than men; the patient population was roughly evenly split. European participants also lost more than US participants did, Zealand said in a call with analysts.

Trial Design

The duo’s trial design differed to that of Lilly’s rival amylin drug, eloralintide.

“We note Lilly’s study tested patients with a slightly higher body mass index, 75% of whom were women, who tend to perform better than men in weight-loss trials,” said John Murphy, a Bloomberg Intelligence analyst. “Petrelintide’s trial was gender-balanced.”

If 80% of the participants in the Roche-Zealand trial had been women, the drug would have achieved about 12.5% weight loss at 42 weeks, according to analysts led by Yihan Li at Barclays. This would have still fallen short, however, of Lilly’s eloralintide that achieved nearly 16% weight loss at 42 weeks.

The petrelintide results are from a mid-stage study, and more work is necessary before the partners can get regulatory approval to sell the drug. Roche has said petrelintide probably won’t be on the market before 2028.

Roche is moving forward with planning for late-stage trials, said Manu Chakravarthy, head of cardiovascular, renal and metabolism product development. The company is still working with the trial results to ensure it has the right trial design, he said.

“The goal here is gentle weight loss,” Chakravarthy said.

Roche has been releasing more data as its efforts to enter the obesity field pick up pace. In January, it disclosed that patients on another one of its experimental shots lost 18% more weight than those who got placebo in a study. That drug, which works in a similar way as Zepbound, came from the obesity-medicines pipeline it acquired in its $3.1 billion purchase of Carmot Therapeutics Inc. in 2023.

–With assistance from Madison Muller, Fabienne Kinzelmann and Lisa Pham.

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