On Thursday, Zealand Pharma A/S (NASDAQ:ZEAL) stock received a Buy rating from BTIG, reflecting optimism about the company's potential in the obesity treatment market. The firm's analyst highlighted Zealand's year-to-date performance, which has significantly outstripped the broader biotech sector, and anticipates further growth driven by forthcoming clinical data.
Zealand's stock has seen a notable increase, rising 78.3% compared to the 12.1% gain of the XBI biotech index. The company's obesity pipeline, which includes a range of incretins and an amylin analog named petrelintide, is considered to have best-in-class features. Petrelintide, in particular, is expected to become a next-generation treatment option.
Clinical data for petrelintide is expected in the first half of 2024, with a 16-week study involving 48 participants. This data event is seen as a potential turning point for Zealand's shares. The treatment is anticipated to be well-received due to its ability to preserve lean body mass and cause fewer gastrointestinal side effects compared to the standard of care.
Additionally, the company has two near-commercial rare disease therapies with little competition, which are expected to be highly successful and potentially reach $1.9 billion in combined peak sales. Zealand's partnership with Boehringer Ingelheim on a GLP-1/GCG agonist is also seen as a strong player in the obesity market with payor support.
The company's other drug, glepaglutide, is positioned to challenge Gattex, with a current run-rate of over $800 million, for the treatment of short bowel syndrome (SBS). The lack of impressive Phase 3 data from competitors last month further strengthens Zealand's position in this rare disease market.
Lastly, the manufacturing-related Complete Response Letter (CRL) for Zealand's congenital hyperinsulinism (CHI) program dasiglucagon is expected to be resolved with a New Drug Application (NDA) resubmission later in the first half of 2024. This adds to the company's portfolio of rare disease treatments facing minimal competition.
The positive outlook from BTIG is capped with a price target of DKK 840 for Zealand Pharma, setting a high expectation for the company's growth and success in the coming year.
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