Zealand Pharma A/S (ZEAL) Earnings Call Transcript & Summary

It's my pleasure to be joined by Adam Steensberg, the CEO of Zealand. We're going to have a fireside chat. [Operator Instructions].

But let's kick off. Adam, perhaps you could talk us through your amylin petrelintide Phase Ib data. You've had the initial headlines and then you've also presented additional data recently at ObesityWeek, so perhaps you can talk us through that.

Yes. Thanks for the question, and thanks for the invite. Happy to be here. Yes, so we were extremely happy to not only release the top line in June earlier this year, but also be able to present the full dataset at ObesityWeek a few weeks back as an oral presentation. And I would say what I believe, stands out for this dataset is that, you can say, I think for the first time, we really, you can say, show with a novel category that is not based on a GLP-1 backbone that we can achieve GLP-1 like weight loss and then at least in our minds, the tolerability profile, especially when it comes to GI tolerability, it's a completely different experience for the patient. So we have significantly less nausea and vomiting, constipation and diarrhea compared to what we would normally expect from a GLP-1-based therapy. So I think that is really, you can say, what excited us so much. And at the conference, perhaps people did not pay too much attention to that notion because many people would take this as a given, but I mean, we have titration regimes for any molecule include like in the GLP-1 space and also for the amylins, but what stands out with our titration scheme in the Phase I study is that every patient could actually follow the titration scheme. And that is not what you normally see with a GLP-1. And I think it just, again, is a testament to I think we are, you can say, on to somewhat -- some -- a new opportunity, which will be preferred by many patients over the GLP-1-based therapies.

Got it. And tolerability does seem to be the big focus. And you mentioned that there was some titration. There was 1 patient that discontinued with moderate nausea and vomiting. Was there anything specific about that patient? Or I guess, what drives confidence that in a larger trial, we won't see more of that -- those moderate events?

Yes. So we actually -- we had 3 cohorts: One, where the top dose ended up being 2.4 milligram and one where the top dose was 4.8 milligram and then a 9 milligram. And in the last cohort, we actually started patients at a 1 milligram dose which was just a test out where, you can say, the right starting dose should be, and that was where we had 1 patient who decided to leave the study after 2 doses. Honestly, I wouldn't describe this patient as a typical GLP-1 experience at least based on our experience when we have worked with GLP-1 molecules. But what we'll do in Phase II is that we will have all patients starting at a lower starting dose in order to avoid, you can say, and also secure that we have the most, you can say, tolerable approach for this therapy.

Got it. And so you're moving into a Phase IIb trial, but you're evaluating 5 doses. What's the reason for so many doses in the Phase IIb? And I guess, when it comes down to it, would your preference be to have placebo-like tolerability and kind of weight loss toward the 15% end of the target or push closer to 20% weight loss at the expense of some tolerability?

Yes. So again, thanks for that question. And I think it's really in this, you can say, time where everybody rush and rush and rush to progress their molecules as fast as possible, I think sometimes it's just important to remind ourselves that probably the most important time in any drug development program is actually Phase II where you really get to understand your molecule, so you bring the right doses into Phase III, right? You bring the right, you can say, concept and your understanding -- you want to understand your molecule before you move into Phase III, especially if you have an ambition as we have to build a new kind of foundational therapy within obesity. You don't want to rush into the Phase III phase because mistakes has to be -- those mistakes if they appear in Phase III are very expensive, and they can set you back and they can basically ruin a brand. So for us, it's extremely important to do this right. We are aware that speed is also important. That's why we are, you can say, putting all efforts behind it, but quality is so important when you bring things forward. The other thing I would say, when it comes to maximizing weight loss, and that's also back to why we have so many doses in this study, I think for a long time as an industry, we have been running after that holy grail of achieving a bariatric surgery-like weight loss of 30%. But the interesting thing is now we know how, you can say, patients behave with the currently available weight loss medications that are out there. And very few patients actually ever get to the top doses of the 2 currently available once weekly GLP-1-containing molecules. We think there are several reasons for that. One, of course, being the issues with tolerability nausea, vomiting, constipation, diarrhea and just that general feeling of losing your appetite, which many patients may not feel as the most pleasant experience. But the other thing is that most of the patients on treatment today, when you ask them, are actually looking for a 10% to 20% weight loss. Very few patients are looking for a 30% weight loss. And say, why wouldn't they be looking for that since it will probably provide them with the optimal or most healthy body compensation? Well, guess what, it actually -- it doesn't come for free. You only achieve these weight loss by significantly reducing your energy intake and most people like to eat. So we -- while we as clinicians actually want to drive that optimal outcome, many patients say, "Well, if I achieve a 15% weight loss, I'm actually happy, and I'm definitely a more healthy version compared to what I was before." So I think at least these are some of the things that make us, you can say, think about how we want to develop a petrelintide. It is not just about achieving the highest weight loss, it's also about achieving the weight loss that patients are looking for. And that's why we want to introduce several doses. Also coming back to the other thing that is important to evaluate here, there's been so much focus on weight loss and very little focus on weight maintenance. I personally believe it's a huge issue that the average, you can say, stay time on a GLP-1 today is just around 5 months because then you don't get the long-term health benefits of being on a treatment. So we need to think about how do we develop molecules that do not only help patients to lose weight but also to maintain the weight loss. And that's where you need to think into novel concept, you need to think into molecules that patients can actually stay on and not just achieve the weight loss because the most unhealthy thing you can actually do to your body is to do this yo-yo where you lose weight and then regain weight, that will actually do the opposite of what we are trying to achieve as an industry. So we are trying to really put the patient in focus and not just, you can say, the headline in press releases in focus right now with how we think about petrelintide.

Very clear. So the Phase IIb, the primary endpoint is weight loss at 28 weeks, but that's going to remain blinded and then we won't get the final data until 42 weeks. So what's the rationale of having that interim read? And also within the study, how are you going to be assessing the potential for amylin to preserve lean mass relative to fat mass?

Yes. So it is a 42-week study, but we have decided to have the primary endpoint after 28 weeks, but keeping it blinded. What we would use that 28-week data point for is really inform our, you can say, preparations for the end of Phase II meeting with the FDA, so to be able to progress faster into Phase III, just saving a few weeks. But we have also decided to keep the study blinded for the full duration in order to increase the quality and the integrity of the dataset. And very important, you can say, assessment will, of course, be muscle preservation. Animal models across many different species suggest that amylin can actually preserve muscle mass to a larger extent then when you lose weight on a GLP-1. And we don't have human evidence yet, but it's something we would get out of this study if we can also, you can say, repeat the findings. And it's, you can say, it would be a major upside to the whole opportunity with petrelintide if we show preservation of muscle mass because it is very obvious that for people to maintain a weight loss, you're much better off if you have more muscles because muscles contributes to resting energy metabolism. So it's much easier to maintain it. You don't need to fast as much as you do if you have less muscle. And also, normally, it's well appreciated that muscles actually contributes to health as long as it's functional, healthy muscle, if you will. So for us, it's a very important thing to look into. It's something which could further differentiate petrelintide compared to all the GLP-1s that are out there.

Great. The most advanced amylin in development is Novo's cagrilintide. Our understanding is that like petrelintide it has a more balanced activity on the amylin and calcitonin receptors. But aside from that, what are the key differences between the 2? And how should we be thinking about the implications of those differences when we get the Phase III data for CagriSema in the next few weeks potentially?

Right. It's actually a quite -- I think it's actually a quite remarkable observation because we also have that observation. When we look into how petrelintide and cagrilintide stimulates amylin-3, amylin-1 and calcitonin, they are extremely similar in our preclinical assessments. And you can say, those both programs are based on a huge screening program with neither of the companies knowing what the other did, and we still came out with that exact same receptor profile. And I don't think that was by coincidence, that was by design. So we, as you can imagine, agree very much to the receptor profile that Novo have on cagrilintide. We believe the reason that we have, you can say, 1 thing that is separating the 2 molecules is that our molecule is stable at neutral pH, whereas cagrilintide is only stable at acetic formulations. And we think that creates some unique opportunities for us. At least our observation is we can dose our molecule significantly higher doses than what Novo is pursuing right now. We also believe we have a significantly higher bioavailability so we get more drug in. Every time we give 1 milligram, we will get 80% of that into the bloodstream, we think Novo will be significantly less. So you can say, of course, we look forward to also see the CagriSema data and perhaps even more so the cagrilintide arm in that study. I think it's really important and that's at least how we will look at this is that it's a 2.4 milligram dose, which would probably be more similar to a 1 milligram dose of our molecule, and we are now taking up to 9 milligrams into Phase II. So we can use it for some. And of course, we would be as excited as anyone else to see if they also have information around muscle preservation.

Great. And you mentioned that some of the kind of endorsement, I guess, that both of you have gone for the same receptor profile. But there are other amylins in development that we believe are more amylin biased, so potentially AstraZeneca and Lilly. Perhaps you could talk us why you think your balanced approach is optimal? And are there any potential downsides to having the more calcitonin activity than perhaps the others?

Yes. But it's interesting, and it's, of course, different design principles. And until you have human data, you only have your hypothesis and animal data. And we have speculated that this -- the receptor balance that we achieved was the right one to be very balanced on amylin-3 and calcitonin. You're correct that both Lilly and Astra has been out articulating that they believe more the amylin-only pathway because of tolerability issues and that could arise with being on calcitonin and, I mean, what I normally say is look at the data, and we now would say what many people have maybe not realized over the last few weeks, we've actually started to see clinical data for some of these other approaches. And now in my book, at least, if you look into the Astra data that were presented at ObesityWeek also a few weeks back, it's really underwhelming when it comes to weight loss after a single dose. And I would say, from a tolerability profile, it's a small dataset, but if anything, it actually looks less tolerable, so I don't -- I mean at least for us, it underscores that our ideas seems to be confirmed that our approach looks right, both from the Novo data, from our data. And then I would say, on the other hand, we also saw data from more, in our minds at least, the molecule that was even more biased towards calcitonin coming out last week. And here, we again saw, you can say, the balance between when you see weight loss and Novo's share was actually not favorable. So we -- I would say, from our point of view, we have just been confirmed that we still believe we have something that is by far best-in-class and perhaps the only opportunity that has a life as a monotherapy and not just an add-on to a GLP-1.

Okay. You mentioned there the additional data last week from Gubra appreciating that it's only Phase I single ascending dose data in a small patient set. Interestingly, looking at the profile of their weight loss, the maximum weight loss appeared to occur at 22 days versus around 7 days with petrelintide despite the fact that your half lives are quite similar. So do you think that reflects the difference in the receptor bias or do you think it's just too small a dataset to really...

I know a lot of people they get excited when they see surprisingly long effects. From my own experience is that if there are surprises especially when it's very late into the observation phase, you should probably not be too excited. You should probably more blame it for a study effect because there is no reason to believe that you give a single dose of a molecule and in 42 weeks -- days later, you still have -- you will achieve your maximum effect. Small studies, patients behave definitely. I think the right time to look is at day 7, where you are anyways supposed to give the next dose. You should not be too excited about what happens 42 days later. That is likely because a patient participated in the clinical study.

Got it. Also at ObesityWeek, we started to see preclinical data for small molecule approaches to targeting amylin. How feasible in your view is it target amylin with a small molecule? And are there any differences to targeting amylin relative to GLP-1 when it comes to small molecules?

Yes. I'm not a small molecule guy, so I'm not the right person to ask. But my -- when I ask people around, I would say, it's probably easier to work on the GLP-1 receptor than the amylin receptor, also considering that we have 2 receptors, which you have to target in the right way and amylin is a more complex entity. So let's see, and I mean, there's still a long way until we have -- we're going to see clinical data from any of those approaches, in my mind.

Okay. You've been open that you are looking for partner and that discussions are increasing. What attributes are you looking for in a potential partner? And you have mentioned in the past to wish to retain some co-commercialization rights, is that a reasonable ask do you think to Zealand?

Yes. So we think we have, by far, the best-in-class molecule in what we believe will become the biggest category within weight management in the future. So that's a highly, highly attractive value proposition, especially for somebody who don't have a strong foothold in obesity yet. And so I think it's a very reasonable ask, also because we have a lot of competencies within this space. We have been working with peptides for more than 25 years and have, you can say, a lot of experience and skills of which many large pharma companies don't have yet. What we would be looking for in a partnership, and I would not only be looking for it, I would also request it is that we would only partner with somebody who shares the vision and ambition for petrelintide, and that is to design and develop this into a future foundational therapy, something that ultimately will become first-line therapy compared and then would push the GLP-1s off to become more specialist prescription, that's really how we see the, you can say, the attribute of this molecule that has this potential. So it's a strong commitment from a pharma partner. It's also, of course, since we are looking for a true co-development and co-commercialization partnership, there's also needs to be a good cultural fit. It has to be a very ambitious group who dares to think about winning in their BCT space and not just getting into it because you look at the share prices of companies who are already there. So it's about daring to dream about winning in the 30s in the obesity space and then wanting to be a partner with us. That's the partner we're looking for. And I would say, in my mind, it could be any of the largest pharma companies, of course, yes, who have that ambition.

Okay. Let's move on to dapiglutide. This is your GLP-1, GLP-2 agonist. As far as I'm aware, you're the only one taking this approach. So what's the rationale for evaluating this mechanism in obesity? And why are you the only ones doing it, I guess?

Yes. I actually think there's one other company with an earlier approach. But I mean, other than that, you're right. And I would say, I think, it's been highly recognized for many years actually that what drives diseases, so as many diseases associated with obesity, it's not just metabolic channels but also low-grade inflammation. So when you have a metabolic disturbance, you often see low-grade inflammation. And the GLP-1, GLP-2 we believe we have the opportunity to harvest all the benefits of the GLP-1s, which I guess everyone are aware of today. But then with the GLP-2, we would actually be able to control inflammation to a larger extent. So it's really, you can say, in our minds, the opportunity to do even more for the comorbidities associated with obesity. So getting a product that gives patients the weight loss they're looking for, but being even better at addressing some of these comorbidities that we see with obesity and which are really the main driver for us being in this space because I still think that world have not realized how much disease we will see on the back of this obesity pandemic because it's not just a number, when you look into 50% of the population soon being obesity and overweight, it's also driven by the fact that it's children who becomes obese. And you only see diseases when you have had long-standing obesity. It doesn't happen the day after you became obese. So we have this, you can say, burden that is ahead of us that we will start to look into very soon because childhood obesity was not something we saw 50 years ago. That is something that started 30 years ago and now is very abundant with 30% of the 2- to 4-year-old in the U.S. [indiscernible]. So comorbidities is a major driver. And I just think with dapi we have this opportunity to do even more.

Got it. So you've shown that dapi can lead to weight loss, so come 6.2, 8.3% placebo-adjusted weight loss at 12 weeks -- 13 weeks, sorry. When will you start to see -- when will we start to get evidence of that GLP-2 component, though, to really differentiate it from other GLP-1 containing treatments?

Yes. So I mean I think we already have evidence that we have receptor engagement, and we are where we want to be with, you can say, the relative ratio between GLP-1 and GLP-2. But when will we have the true clinical outcomes? That will, of course, take some time because we need the Phase II data before we will see if it also turns into clinical benefits. So -- but we will start to have markers early on, but they will be directional for our decision-making. But it's really once we have the Phase II data, not only from a weight loss perspective but also for dedicated Phase II studies in patients who have specific comorbidities.

And is there a difference in your -- the attributes that you're looking for, for a potential partner for this rather than petrelintide or is it a similar scope?

I mean, our focus right now, that is the partnership discussions on petrelintide. That's where we are hyper focused. This is what we anticipate to move forward first, and then you can say next will be the dapi discussions.

Got it. Okay. Let's move on to your most advanced obesity asset, survodutide, sometimes gets a bit lost in the story now. It's in Phase III trials for obesity. What do you view to be the benchmark for efficacy there? And how will it differentiate from other obesity assets that will be on the market by the time it launches 2027 onwards?

Yes. I mean it's not a program we talk a lot about here at a conference with mainly focused on public companies. But it's a program we licensed to Boehringer, who is, I guess, the 15th largest pharma company. And right now, when we look at this space, Boehringer likely to be the third company to enter the obesity space. We have a very, very competitive molecule, survodutide, for which we have high single to low double-digit royalties. And it's interesting because, of course, all the focus is on weight loss and who -- as we discussed and historically, who achieved the most and the fastest, but this is not about who achieved the most or the fastest weight loss. We believe, and I think the data that Boehringer have shown thus far, we'll get a very significant weight loss, and we would expect it to be quite close to tirzepatide, but really where it differentiates this molecule is its potential to address liver health because it has this glucagon component, which, from a physiological perspective, goes in and gets fat out of the liver, we believe it's the perfect molecule to address not just weight loss, but also liver health and Boehringer presented data from a MASH study earlier in the year, which showed that 40% of patients actually have fibrosis improvement, which is, as they put it, groundbreaking data. I mean nobody else has shown data to that extent. And I think -- so that is the key differentiator for this molecule. It's not weight loss, in my mind, when it comes to the GLP-1 category. That's a [ chip box ] in the future, you will not win prescribers of patients or because you have 2% more or 2% less weight loss, it's about what more can you do or how can you do things differently if you have GLP-1, and there, I just think survodutide is standing out as one of the most differentiated GLP-1s in late-stage development right now.

Got it. And as you mentioned, we had the MASH data that were very encouraging. Boehringer has now started a Phase III MASH trial or trials. When you think about it or when we think about it, should we be thinking about this as a MASH as a separate market to obesity or do you view them as a -- it's a way for survodutide to win within obesity capturing the overlap?

Yes. I mean that's a very good question. And it's again something I think the world will become more and more aware about this, that it's actually 35% of all obese individuals who have some degree of MASH. And because a liver can compensate for longer, back to what I spoke about before, [indiscernible] MASH is one of those conditions, I think we will see significant more MASH in the future, especially end stages. It's not bad to have an F1 and F2, you can live with that. But once you get to F4, that's -- and there's no solutions today. And because in my book, at least, you can probably -- many patients can live with 35 years of obesity without getting MASH. But after that, that's where you will start to see many livers saying, "I cannot do this anymore." So we need therapies. So I really think it's the opportunity to differentiate within the obesity. If you sit with an obese patient in front of you as a physician and you have decided to prescribe the GLP-1, why would you not prescribe the one that actually does the most for a disease which cannot be handled today? I hate to say it, but there's actually many good treatments for a diseased heart today. There's many good treatment for diabetes, but there are none for -- at least very effective drugs, I believe, today for treating MASH.

Okay. Let's just -- no, I've only got 8 seconds left. Any closing words that you'd like to say? Or I guess, what's kind of the key things we should be looking for next to Zealand in the next kind of 6 to 12 months-or-so?

Yes. But we're going to start the Phase IIb study now with petrelintide. We're going to progress our partnership discussions and then you can say there will be data from the other obesity programs. And then, yes, just a very exciting next 12 months ahead of us.

Okay. With that, we'll close the session. Thank you, Adam, for your time, and thank you everyone else for attending.

Thank you.