UPDATE 2-Zealand Pharma shares drop 25% after a quarter of patients quit obesity drug trial

Eli Lilly

Eli Lilly

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Updates shares, adds graphic, adds details on tolerability throughout, analysts' comments in paragraphs 5, 16

Survodutide trial saw one in four patients drop out due to side effects at highest dose

Rigid dosing schedule could be affecting tolerability, analysts say

Analysts see liver disease data as a silver lining

By Bhanvi Satija and Stine Jacobsen

COPENHAGEN, June 8 (Reuters) - Zealand Pharma's ZELA.CO shares tumbled as much as 25% on Monday after trial data for its injectable obesity drug survodutide showed high rates of patients quitting treatment due to side effects, despite encouraging effects in patients with liver disease.

The Danish drugmaker's partner Boehringer Ingelheim, which owns the rights to solely develop and commercialise survodutide, presented late-stage data from two studies of the drug over the weekend at a medical conference.

The market for obesity drugs is expected to cross $100 billion by 2030 and is becoming increasingly competitive, with investors focusing on safety, and benefits from newer drugs that go beyond weight loss numbers.

Zealand's shares were the biggest fallers on Europe's Stoxx 600 index on Monday, trading down 22.8% by 0918 GMT. They have dropped more than 40% this year. Shares of Novo Nordisk NOVOb.CO also fell 2.8%.

"Overall, we view the safety and tolerability as disappointing...despite data confirming some interesting body-composition, liver signals," Barclays analysts said in a note.

TOLERABILITY ISSUES DUE TO 'RIGID' DOSING

Nearly one in four patients, or 25%, taking the highest 6-milligram dose of survodutide stopped treatment due to side effects, with about one in five dropping out specifically because of gastrointestinal problems, the data showed.

Novo Nordisk's NOVOb.CO Wegovy and Eli Lilly's LLY.N Zepbound showed dropout rates of 7% and 6%, in their respective trials.

Analysts said that the issues were partly due to the rigid schedule used in both studies, one with overweight or obese patients and the other with liver disease patients, that left little room to reduce dosing if they experienced side effects.

While more flexibility to lower doses was introduced, roughly three in four patients had less than three months of treatment period remaining by then.

Boehringer is investing in additional studies to address tolerability, including how to start patients on the drug, adjust doses, and switch patients from other GLP-1 drugs, with a focus on reducing side effects.

SILVER LINING

Jefferies analysts said that data from the group of liver disease patients was "perhaps the silver lining," and could support a differentiated role for the drug.

Up to 84.2% of patients showed a liver fat reduction of at least 30%, compared with 24.3% on a placebo after 48 weeks.

Barclays analysts said tolerability issues were also a concern for liver disease patients and may not be fully resolved by adjusting how the dose is increased.

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