Zealand Pharma Takes on “Big Boys” Novo Nordisk and Eli Lilly with Obesity Drug

Danish biotech firm Zealand Pharma is making significant strides in the competitive obesity treatment market, aiming to challenge industry leaders Novo Nordisk and Eli Lilly. The company's CEO, Adam Steensberg, asserts that there is still ample room for innovation and collaboration in the rapidly growing obesity market, despite the dominance of existing drugs like Wegovy and Zepbound.

With Zealand Pharma's share price surging by 100% in the past year, investors are showing confidence in the potential of the company's anti-obesity drugs. Rather than selling to a larger company, Steensberg expresses the company's interest in partnering with others to develop future treatments. The company has been collaborating with German pharma group Boehringer Ingelheim for over a decade, working on a weight loss drug currently in late-stage trials.

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Novo Nordisk and Eli Lilly's obesity drugs, Wegovy and Zepbound, have gained immense popularity, with celebrity endorsements and demonstrated success in aiding weight loss. The success of these drugs has led to supply shortages, proving lucrative for the companies. Novo Nordisk, in particular, became Europe's largest drugmaker by market capitalization after trial results in November showcased Wegovy's efficacy in reducing the risk of death by 18%.

Despite the lead of Novo Nordisk and Eli Lilly, Steensberg believes there is still a need for more choices in weight-loss treatments, especially considering the multitude of diseases associated with obesity. Analysts predict that the weight-loss drugs market could grow from $6 billion to as much as $100 billion by the end of the decade.

Zealand Pharma is developing alternative treatments based on a hormone called amylin, which promotes a feeling of fullness after eating rather than suppressing appetite. The company expects about 10% royalties from potential sales of its weight loss drug. In addition to competing in the obesity market, Zealand and Boehringer are testing their weight loss treatment, survodutide, for its effectiveness in tackling NASH, a chronic liver disease.

The innovative approach of Zealand's amylin-based treatment has generated excitement among investors. Early-stage trials suggest similar weight loss benefits with reduced side effects compared to traditional GLP-1 agonist drugs like Wegovy. Amylin works on satiety, offering a different method to induce calorie intake reduction without the unpleasant side effects associated with appetite suppression.

With positive trial results, Zealand Pharma's amylin treatment could become a significant player in the obesity treatment landscape, making the company an attractive acquisition target in the evolving pharmaceutical sector.