Investeringspodcasten 270: Special med Zealand Pharma

Well, I don't think there are many Danes who aren't looking at the stock price these days. It's a bit of a dramatic time. But that said, I spend more time making sure we drive our company forward in the right direction.

Well, I've noticed that too. And you have to say, there is a lot of turmoil in the markets at the moment. What we are focused on, and what we are happy about, is that we have never been stronger as a company than today. And as you yourself mention, there are some very, very large both upfronts and also milestone payments in this deal. But where the real value lies is in this 50-50 collaboration. So I would say, I am incredibly confident, and we use all our energy to ensure that we drive the company forward in this direction so that we can create value going forward.

Yes, it is. And it was an incredibly competitive process with many large pharma companies that were interested in partnering with Zealand on this molecule and this opportunity. We believe that we have more to offer than just petrelintide. We have such an incredibly strong development organization that has been doing peptide drug development for over 25 years. So there are also some competencies we want to contribute with. But that said, the reason I have held so firmly to wanting a partnership is because we see a huge value ahead. And as I've said before, you can almost not pay a large enough upfront to compensate for how much value lies ahead. And we want to be part of realizing that, so we didn't just give it away for some random upfront that has short-term value.

Well, we have, I can't share the specific numbers, but it's clear everyone guesses, and I'll put it this way, we reached out to all large pharma companies to make sure they heard our story about where we think the market is going and why we think petrelintide is such a unique opportunity, especially for companies that maybe aren't fully into this market yet. And we have had dialogues with many companies, and I will also say that even far into the process, we had a very large interest with several companies that were ready to move forward with us.

You probably know more about that than I do, but what you can say is that the market is definitely still there, and it was also there 12 months ago. It was also there 12 years ago. People just hadn't fully understood the consequences of this obesity epidemic we are seeing with soon 50% of the world's population being overweight and obese. And the problem is all the disease that follows. So we still believe it is the biggest health crisis we face in modern times. So the market is still there. We believe it is a huge potential going forward. We are maybe even in the camp that sees an even larger potential than some of the numbers you mention, because the consequences of living with obesity are so great. So that there is a bit of hype and cooling in terms of how things are happening right now, I can't relate to that as a company that is in the process of solving what we see as one of the biggest health crises of our time. The market is there, and I think there are incredibly many dynamics in our society that argue that going forward we need to have much more focus on treating chronic diseases instead of only having such a large focus on rare diseases.

Well, it is absolutely crucial to show data beyond just weight loss. Now we are working with petrelintide as an alternative to GLP-1s. So you can say there is a huge group of people who want to lose weight, who have problems being on GLP-1s, and it is enough to provide an alternative, especially if that alternative is easier to be on than the current drugs. But that said, ultimately, you should only be on weight loss medication if it also gives some clinical improvements in your health. And it is so important that we do something about it. Because if we don't do something about the consequences of living with obesity, then there will be so much additional disease. And what I think some people also miss a bit is that it is actually not only a question of whether you are overweight or not. It is a question of how long you live with it. And we are now in a situation just in the US, 30% of two to four-year-olds are overweight and obese. And if you start to project the morbidity that follows, it is crazy. So we have to do something about it. And that is why we also believe that you can call it hype, but I still think people haven't fully understood how big a problem it is. So we also believe that there is a need for many, many more solutions to address this big problem.

And you can say again, it is not trade barriers that are going to remove this problem. It will still be there. So I am incredibly confident that in the future, there will be an enormous willingness in society to do something about this problem. Because if we don't do something about it, we will get so much comorbidity that it will be much more expensive for us than to do something about it. So it is expensive to do something, but it is even more expensive not to do something, to a large extent.

Well, I think there is no doubt that GLP-1s are the first generation of drugs that have come to market that provide the weight loss people are looking for. If you ask people who are overweight and obese, most will come back and say, I would like a 10 to 20% weight loss. And the drugs on the market today can deliver that to a high degree with these GLP-1 based ones. But there are many who have difficulty being on them because they get nausea or vomiting. And many also, once they have achieved the weight loss, may feel that it is a bit problematic that you never have any appetite. We are after all some who like to go out and eat once in a while and have the desire to eat and maybe also like a glass of red wine. And that can be a problem if you lose the desire for those things, especially when you have achieved your weight loss, then your motivation may also be a bit less. And there we believe that amylin, with the way it helps reduce people's food intake, will be a significantly more pleasant way to reduce your food intake. We have seen in earlier clinical studies that there are fewer side effects, at least compared to what we have seen with GLP-1s, when it comes to vomiting and nausea and so on. But I personally think the big difference could be the way it works with the brain to reduce your food intake, where you will still show up and have hunger, but you will just become full faster. That means you have the desire to start a meal, but you will eat a smaller portion. And we believe that is a more pleasant way. And thereby we also believe it will be easier for people to stay on this medication. And these are chronic treatments. There has been a bit too much tendency to look at who gets the highest weight loss instead of who gets the weight loss that patients are looking for and that they can stay on. As I say, the most effective drug for chronic disease is not the most effective drug. The most effective drug for chronic disease is the drug that patients can stay on.

Yes, I completely agree. And it is also a bit self-inflicted by the industry, because we have shown that 30% we could deliver just as much weight loss as bariatric surgery. But we have just forgotten that bariatric surgery is not something you offer to the vast majority of overweight and obese people. It is a very, very small group that has been offered it. And the vast majority who live with overweight are looking for a significantly smaller weight loss. And we are only human. It may be that you want to be the healthiest version of yourself if you lost 30%. But most people are not looking to be the healthiest version. But a healthier version of themselves. You can say, it may be that you can dose a 30% weight loss, but it is not certain that the body can handle what that suddenly means if you lose 30% of your body weight. That is the other thing. And you can say, number one, I don't think it is healthy to lose that 30% if it goes too fast. And number two, if you cannot maintain that weight loss, then we know it is unhealthy if you gain weight again. And especially if you have also lost a lot of muscle mass. And then there is the thing that maybe people don't talk about so much. If you have been very overweight for a long time and you lose a lot of weight, then your whole appearance can also change. And you also have to get used to that, that maybe people look at you in a different way, and it's not just job done.

Well, that is what we believe the science we have seen so far suggests, and if we also show that in future studies, then we think it will be a crucial factor for why it will be easier for people not only to lose weight on an amylin but also to maintain the weight loss by staying on an amylin.

Well, you have to think, we are a completely different company when we make this deal with Roche than we were in 2011 when we made the deal with Boehringer, where it was actually an asset just entering phase one, so a much earlier asset at that time, so we didn't have the muscles and strength to be able to make such a deal and the commitments that also follow with such a deal when we made that deal with Boehringer. The deal we have with Boehringer is a classic license deal, where we have received some milestone payments along the way, and then we get percentages of sales. So it is a very, very good deal as something that a smaller company would often engage in. But it is clear, there is not as much value potential in it as if we make this type of deal we have now made with Roche. But we would not have been able to carry it to the end together with Boehringer at the time we made the deal. So I think it was a good deal we had with them. But it was also very clear to me when we were to make the deal with Roche that it was a completely different type of deal I wanted. One where we have 50% of the rights, which gives, and 50% of the value. And I think what one should pinch oneself in the arm once in a while when thinking, it's not only 50% of the value of petrelintide. We actually also got 50% of the value of the combination product with their GLP-1/GIP molecule CT388. So we haven't just got money in the bank. We have actually also got an extra product in our pipeline. So that is, I think, what many people fall a bit backwards when they really think about it.

Yes, I agree to a high degree. And I think again, people forget here that the biggest problem with GLP-1s is not that they need to be injected once a week. The biggest problem is the side effect profile. And then it is this feeling of losing appetite. And when you have achieved your weight loss, it is annoying to go around having lost your appetite. So it is not the thing about having to inject once a week. That is not the problem that patients will talk about when they talk about GLP-1s. If they are to talk about problems with GLP-1s. I am not in the camp that believes that oral GLP-1s will solve or become a game changer. I think there is a group of patients who will prefer to take a pill instead of an injection. But remember, if you take a pill, you have to take it once a day. An injection you only take once a week. And the needles are so thin. And there are studies that show you can't actually feel the injection. What we have historically known about injection therapies is that it has often been a barrier to starting treatment. But once you are on it with such a simple treatment as this, it is not a problem. In fact, it is nice that you only have to think about it once a week. And when it comes to overweight and weight loss, people have such a great motivation in the beginning that it is not difficult to convince people to go on it. It is the patients themselves who are approaching the doctors today and saying, can I get on this drug? And once you have tried one or two injections, people don't see it as a problem.

It is completely different, and that is also what has been the case today. That is also why the company has not been able to keep up with demand, because the patients themselves have gone to the doctors and demanded these drugs. And there hasn't been the same where the doctors have said, now your blood sugar is really off, now you need treatment. It is very much the patients who have gone to the doctor and said, I have heard about this new drug that can help me lose weight. So can you prescribe one for me? And that is the first time in history where we have seen such a massive patient engagement in actually demanding medication. And the good news is that there are so many positive health effects of going on these medications. So for society, it is incredibly good that patients actually want to involve themselves in this weight loss.

Well, we don't do that. We don't have products on the market yet, but these are thoughts we have very, very much about. And you also have to say at the individual level, if you have been used to snacking a lot, and you stop drinking two half-liter colas and a Mars bar, well then you have already saved quite a lot of money. And so what you save by eating less can to a high degree for many people probably compensate for what it costs to be on these drugs today in Europe. So you can say, I don't think there is a very long way down in price before it is cost-neutral for most people actually to go on weight loss medication even today.

Well, I am not for a second in doubt that in the future the focus will be on what kind of drugs can help people lose the amount of weight they want to lose but also maintain the weight loss, because there is significantly more economics in having patients on long-term treatment than only on treatment for six months or four months. And it is just so, so the drug that gives patients the weight loss they want with the mildest possible side effect profile or the least possible consequences for the life they want to live will be the winner. And that is why we are so, you can say, excited about petrelintide, because we believe it has this profile, it can deliver the weight loss that the vast majority of patients are looking for, and hopefully with a more tolerable side effect profile and a better profile generally when it comes to just becoming full instead of going around having lost your appetite. So we believe that it can become a future foundational therapy, the one that most people go on. And then it is only if you need something more that you will get combination treatments with a GLP-1.

No, I don't know if you get dizzy, but I actually think that if you look back at Zealand Pharma, we have for several years set a very strong focus on where we want to go, where we believe the market should go, and that is what we try to drive our company after. This excitement about very early data sets, it is clear, it will also become less and less as the market becomes more saturated. But today we only have two products on the market, and we have a pipeline of mostly drugs that are based on GLP-1. That means there is still excitement for early outcomes. But it is clear, in a few years, there will not be excitement because you don't show that you are differentiated. You don't show you can do something else. And people will no longer jump on just because in very few patients you see some random signal that it will be the drug that leads in the future. But that is because it is a completely untapped market. You have seen this before. When the new PD-1s came in cancer therapy, a few patients could also move the stock price. TNF alpha for chronic inflammatory diseases, a six-patient study could also push the stock price. So it has been quite wild the last few years. But I think it is an expression of, number one, as we talked about before, that it is such a large market that needs to be addressed, and there are not many drugs. In fact, there are only two real drugs on the market today. Yes. So it is clear that early data pushes a lot, but you will see significantly less of that in the future when the market becomes more saturated.

Well, there is no doubt that the drug that can come to market with Boehringer, where Boehringer is responsible for everything, will probably come with data at the beginning of next year, so that is really, really important. Many probably haven't realized that Boehringer could become the third large pharma company to enter the obesity market with Zealand's product. And that is a quite unique situation for us to be in. Then there is petrelintide which we have with Roche in collaboration now, where we are really focused on driving these phase two projects forward, where we will soon start an additional phase two program in overweight with type 2 diabetes. And then there is progress in that partnership. On Dapiglutide, we have phase 1b data, 28-day data coming in the first half of this year, and we are also starting a large phase two study. So that, and it is clear, at some point we will also start talking with partnerships about opportunities for Dapiglutide. And then we have our rare diseases, which were a big part of Zealand historically, which we also continue with, and where we will also have partnership discussions.

Yes, that is a very correct representation, and it was of course a huge disappointment, because we believe we have a very strong data set, and we also believe that the FDA confirmed that. They just said they would like to see a bit more data, because normally you need two phase three studies to get a product approved. For rare diseases, you can often get through with fewer than the guidelines, but in this situation, they thought they wanted some more evidence. And that means it won't be a market in '25. No. Maybe not in '26. It is clear, it has been delayed, because now we have to start a new phase three study to support it. But that said, you also have to say that we have a complete package on all the other things, and we have done one phase three. We just need to do one more phase three study. So it is still very attractive. It is clear that some of the value has disappeared, but there is still plenty of value. It's not like it's gone to zero. It has maybe 70% of the value it had before. So it is still a very attractive asset, especially when talking about partnerships.

Well, we have now put ourselves in a situation where we have the capital we need to reach the goals with these projects. And that is a completely unique situation to be in. I don't think there are many other biotech companies, and I'm not sure the market has fully realized that we actually have all the funds we need now to get all the way and get these products to market. In addition, we can invest significantly more in our early pipeline, and that is what we intend to do. One of the completely unique things about this collaboration, even though it is a 50-50, is that it is Roche that stands for the investments into production, and we avoid that. So we have the money we need to get these products to market, and at the same time we can increase our investments into research. And that is what we intend to do, with the ambition to build Zealand into a significantly larger business in the coming years.

You're welcome.