Zealand Pharma shares slide as obesity drug trial reveals high dropout rate

Zealand Pharma (ZEAL) shares slid 24% in European afternoon trading, bringing year-to-date losses to around 47%, after partner Boehringer Ingelheim released full results from a late-stage trial of survodutide — an experimental obesity injection — showing a high rate of patient dropouts due to gastrointestinal side effects.

The trial, for which Boehringer released complete data on Sunday, found that 19% of patients discontinued the study due to adverse events including nausea, vomiting and diarrhea, compared with a dropout rate of 2.9% among those on placebo. The German drugmaker, which is privately held, said the side effects were mostly mild to moderate and occurred during the dose-escalation phase.

Survodutide did demonstrate meaningful efficacy results: the drug achieved reductions of 63% in liver fat and 34% in visceral fat — stored deep in the abdomen around organs including the liver and pancreas — while limiting muscle-mass loss. Boehringer had previously reported weight loss of up to 16.6% after 76 weeks of treatment.

Analysts at Jefferies said the survodutide data would likely disappoint Zealand investors given the high frequency of gastrointestinal events and the notable discontinuation rate, which they said pointed to a tolerability profile worse than therapies already on the market.

Zealand Chief Medical Officer David Kendall said the data reinforced survodutide's potential as a differentiated therapy for patients living with overweight or obesity and associated metabolic dysfunction.

Under the terms of their licensing agreement, Boehringer holds sole responsibility for the drug's global development and commercialization. Zealand is entitled to royalties on future sales and potential milestone payments of €315mn ($362.9mn), subject to outstanding targets.