Zealand Pharma A/S ($ZEAL)

Hey, good afternoon, everyone. I'm Yihan Li, Barclays European Biopharma Equity Research Analyst. Today, it is my pleasure to host Zealand Pharma, fireside chat with Adam Steensberg, the CEO of Zealand. So thank you for joining us today, and we are delighted to have you here to walk us through your story. So actually, to start with, I will hand it over to you, Adam, to have a brief introduction of Zealand and do some presentations.

Absolutely. A pleasure to be here. So Zealand Pharma, we are here to address what we believe is the biggest health care challenge of our time, and that's the obesity pandemic and all the diseases that follows the obesity pandemic, you can actually ascribe more than 220 diseases to the increase in obesity that we see these years, and we need to do something about this as a society. So transforming the future of metabolic health, that is what Zealand is about. I will be making forward-looking statements today, as you probably expect. So if you think about our key priorities, then it's to redefine the near-term future of weight management, really focused on our 2 leading assets, petrelintide, which we have in partnership with Roche and then survodutide, which has been partnered out to Boehringer Ingelheim. So these are the 2 leading programs where we, of course, spend a lot of efforts and also there will be tremendous focus on this year. But equally important for us is also to build the pipeline that follows these 2 promising opportunities for weight management. And here it's about leveraging our more than 25 years of history in peptide drug discovery and development, but also working in the metabolic space to really create a pipeline of more than 10 clinical candidates over the next 4 years. And focusing also on tapping into some of the very big changes that we are seeing in the -- how we do research today and thereby committing to also getting to industry-leading cycle times from idea to clinic, partly by opening a new research site in Boston, which we expect to open this year, but also in engaging in more partnerships as just also announced, for instance, in December last year where we partnered up with OTR and small molecules for metabolic diseases. All this and this journey is backed by a very strong financial and solid financial cash position. So we have around USD 2.3 billion in the bank. We expect $700 million more to come in this year. And that means that we have a foundation to actually pursue this ambition of transforming the future of metabolic health. If we just take a step back and try to think about what it is we are trying to address when we think about the obesity pandemic and all the diseases that follows, then we are, I would argue, perhaps 4 years into having seen the launch of the first medicines that can actually help people lose the weight that they're looking for. So it's really, really early in the care of patients. And today, we are only targeting 3% to 5% -- or we only have actually 3% to 5% of the eligible population on treatment. So I think -- and I hope everybody agrees that we are in such early days to actually address this problem that we see. It's also remarkable to think about that while we -- for other chronic diseases where I would argue most of them are less complex than obesity, we actually have up to 8 different tools, different modalities we can help address those situations. In obesity, we basically have one tool in the toolbox that's called GLP-1 based therapies. And the other thing I really would like to underscore in this world where there's still a hyper focus on who gets the highest weight loss number. It's actually not what patient tells you if you ask them. Most patients are looking for a weight loss below 20%. So we might be excited when we see that a drug can give you 25% or 30% weight loss, but patients are looking for a weight loss in -- the majority of patients, at least below 20%. And that also, I believe, is reflected to some degree with how the current GLP-1s are being used on the market today. So while we are used to high numbers in clinical studies from the GLP-1s, real-world evidence suggests that Wegovy provides around 8% average weight loss and tirzepatide around 12% average weight loss in how they are being utilized in the real world. So there's been a hyper focus on the highest number, but that is not how these medicines are being used. And more importantly, if we are to address the consequence of the obesity pandemic, we need to go away from only having patients using these treatments on average for 4 months with less -- around 20% still being on treatment for a year. We need to make this a chronic therapy area where patients stay on therapy. And today, we know that half of the patients that drops off a GLP-1 today is because of GI side effects. So we need to develop tools that can help people stay on therapy and not only when they await those Olympics because then you don't get to the true health benefits. And as importantly, for us as an industry, you actually don't unlock the value in the market if you don't get to chronic therapy because volume is what will drive the value in the future and not prices. So with petrelintide, we are extremely excited about the profile of petrelintide, and we really believe it has the potential to redefine the weight management experience. And really with the data that we released last week in our Phase II study for us underscores this potential that petrelintide can serve as a foundational first choice treatment option, setting really a new standard for what patients can expect when they embark on a weight loss journey. We demonstrated in a Phase II trial design, which was not optimized for maximum efficacy, double-digit weight loss and then a placebo-like tolerability profile when it comes to gastrointestinal AEs with not a single patient vomiting. And we just, again, would like to underscore the best medicines are actually the medicines that patient takes. And I would also challenge people to think about if you have a product that can get you to the weight loss that you would like and you can achieve that without going through the hassle with a lot of GI side effects, a lot of difficult titration regime, stepping up and stepping down. If you can achieve that without all these things, would you choose that? Or would you choose a product that is more effective, but have all these hassles, and know what I would choose. So we are extremely pleased with the data. And we think, as I said before, that petrelintide has this potential to really redefine the weight management experience. Also with the data, they will further now highlighting this opportunity for the combination product that we are also pursuing together with Roche on the combination with petrelintide and CT-388, where we now have a very tolerable base in petrelintide, where we can add some CT-388 to for those patients who need more weight loss or potentially those patients who need the highest weight loss. So the profile of this combination product have given us even more excitement also around what we can achieve there. And the partnership we have with Roche is a true partnership where we have profit sharing, but also co-development and co-commercialization rights and Zealand will use those rights to establish our commercial infrastructure in the U.S. and thus also a launch pad for future medicines as we think about our future pipeline. Now shifting gears to the partnership we have with Roche with Boehringer Ingelheim, which is on survodutide. This is a product that we licensed to Boehringer some years back, and they are responsible for all development and commercial efforts. We just have high single to low double-digit royalties on sales. What Boehringer said at Obesity Week last year was, See Obesity, Think Liver. And I think they were referring to the fact that a vast majority of obesity individuals also have fatty liver disease and up to 35% of obese individuals, they actually have MASH, so signs of diseased liver. And the opportunity with survodutide is to not only leverage the biology of the GLP-1, but also tap into glucagon. And glucagon -- the prime pharmacology of glucagon is to actually get nutritions out of the liver and thus fat out of the liver. So we think we are looking here at a highly differentiated product that can come out and not only speak to the GLP-1 benefits of reducing your appetite, but also speaking directly into liver health and potentially increased energy expenditure and with positive effects on other organs beyond the liver because if you reinstall the liver as the metabolic master switch, in theory, that should have very positive effects on other diseases such as heart disease and kidney disease. So Boehringer will report the full Phase III program in obesity this year on survodutide, and we would hope to see them on the market already next year, which would mean that Boehringer would be the first large pharma company who will get into this space, treating obesity. So that leads me to my concluding slide and just highlighting that we are entering the most catalyst-rich year in Zealand's history. We have further data from the ZUPREME program in patients with type 2 diabetes. We plan -- we expect to start the Phase III study with the monotherapy and also start a Phase II study with the combination therapy for petrelintide this year and then the full program on survodutide, then we will expand our research activities by establishing our Boston research hub and also expect news coming from some of our earlier pipeline programs this year.

That's awesome, like very clear and very helpful. I guess we will start from your amylin asset petrelintide. Just wanted to dig a little bit deeper in terms of your ZUPREME-1 data. So I think a key debate is it is like the dose response dynamic in this trial. Do you think like the third dose cohort somewhat showed the best efficacy. And if we really look at the titration schedule, actually this third dosing cohort reaching the highest dose at week 12 versus dose 4 and dose 5 actually reaching at week 16. So just curious like to which extent do you think this difference in titration timing or exposure actually could have influenced the efficacy outcome across cohorts? And what gives you the confidence just based on the totality of the data, actually the third dose is the optimal dose that you will be able to move forward to Phase III?

We are quite confident that we have shown, you can say, under this study condition, the maximum potential of petrelintide and that is the mid-dose and that we don't get additional weight loss by pushing the doses higher. Remember, in this study, we used a dose escalation every 4 weeks, which was in contrast to what we did in the 16-week study where we dose escalated every 2 weeks. What that led to was a quite significant improvement in tolerability, and we were already excited about the tolerability profile after the 16 weeks data. And now we have an even more tolerable approach, and we still managed to achieve double-digit weight loss in an unoptimized study condition. So we really consider this the sweet spot. I also, again, would like you to refer you back to what I said before on what is the weight loss that people experience on tirzepatide in a real-world setting today, that's 12%. And still you have 50% of patients who stop taking these medicines due to GI side effects. We achieved double-digit weight loss here with not a single patient vomiting. And for me, that is a sweet spot to be in.

Yes, that's very helpful. And another question, I guess, people were asking is really the patient heterogeneity. So we see much more weight loss of female versus male, and also there's some inconsistency between U.S. versus European countries. So I guess like based on this data or like experiences, how would you design your Phase III population outside mix going forward?

Yes. I mean we have known for a long time that there are differences in how much weight men versus females lose in these studies and basically on drug. And again, there are differences between men and women. So that is expected for certain reasons. But we had a higher difference than anticipated with up to 6% more weight loss in women on a placebo-adjusted basis. And we also saw this phenomenon that there was actually 3% more weight loss in the European patients compared to the U.S. patients. A lot of that difference was actually driven by some centers, which preferred -- which performed, you can say, significant below expectations, especially in the male population. So there are some, you can say, operational aspects we have to look into making sure that we don't include similar sites in our Phase III trial, which contributed to that, you can say, finding. And I think it's something we will, of course, make sure to avoid in our Phase III study. So that alone, looking into those underperforming sites would get us into where we had perhaps expected to be with 1% more weight loss. And then, of course, as we think about the Phase III trial, we would also anticipate having around 70% females where we have, as you mentioned, significantly more weight loss. So all that gives us the confidence that in a future Phase III trial, which is, of course, optimized to show the maximum potential of the drug under the conditions is being administered, we will get into the weight loss, which we consider the sweet spot for future weight management. And coming back to what I said in the start, I don't think the battlefield in the future is going to be who gets to the highest number. The battlefield is going to be how can you provide the weight loss that patients are looking for in the most pleasant way.

Yes. Yes, actually, to your point, like the pleasant way, so like the treatment persistence. So notably, your data for efficacy estimates versus treatment estimates, it seems like the delta is relatively small compared to incretins or like your peers. So do you think actually it can be a potential differentiator for petrelintide versus incretins agents.

100% because this is -- the thing is that in real world, in particular, but also in clinical studies, people have difficulties following the titration schemes for the GLP-1s. And there's we're getting used to these huge differences between efficacy estimate and treatment estimates, which I think reflects how difficult it is to actually get on these drugs and get up. With our study, there was a very, very small difference between these two numbers. And as importantly, when we look behind the data and see if patients were able to escalate according to plan, it's basically all patients who can follow the plan. And that's again, back to simplicity. If you ask a key opinion leader, they would argue they can get any patient to the top dose on the GLP-1, but it's not easy. And people want to live easy lives, so that's why I keep coming back to in the future, the battlefield is not going to be about who gets the highest number, it's about who can offer a treatment that delivers the weight loss that the individual patient is looking for in the most benign way. And that's where we think the data set we released with petrelintide sets a completely new standard for how you can get into double-digit weight loss with a very benign tolerability profile.

Cool. Just curious for the full data, can you disclose like which conference we are looking for or actually it's still under progress?

Yes, it's still under progress. We are still progressing on that one, but I can reassure you that we are eager to get the data out and discuss them more broadly. So we are pushing on all fronts there.

Awesome. I think another part of petrelintide is really your collaboration with Roche. So just like based on your data so far, just curious, the latest thoughts or like communication between you and Roche, are you on the same page that you will initiate the Phase IIIa trial -- monotherapy trial in the second half of this year?

You can say we have since the start of this year, communicated that we expect to start the study in the second half. And based on the communication that I've had with my collaborators at Roche and at multiple levels of the organization, that remains to be the expectations. Of course, formal decision-making only will be taken once you have had end of Phase II meeting, once you have had the full data sets evaluated and so on. But I would say when we look at the data, as I also said in the initial prepared remarks, the tolerability profile is even stronger than what we have seen in the 16-week study. We got into double-digit weight loss, and I would say it provides an even more clear positioning as an alternative to what the weight loss experience is in the GLP-1. So we just see an even stronger foundation for this medicine and also as a first choice.

And stepping into combo potential. So what would success look like for this combination therapy relative to your monotherapy? Like any expectation?

Yes, but that's -- it's a very good question. And we are going to very soon start in this first half start of Phase II study to really explore the optimal combination of petrelintide and CT-388. By the way, we think CT-388 looks to be a great GLP-1, GLP. So we are pleased to have that as a combination partner in our collaboration. And Again, for us, it's -- ultimately, of course, we'll need to see the Phase II readout, how it reads out, but it could be a product for those who need higher weight loss than what petrelintide can deliver on its own or for those who are really looking for the highest weight loss, which there's also a subgroup of patients that we'll be looking for. Or it could be one which speaks more to people living with both obesity and type 2 diabetes where the combinations of an amylin and a GLP-1 also looks really great. So there's actually a number of opportunities you can discuss with us for where to position or maybe we'll go forward.

And just curious, like any updates on the co-formulation of the combo therapy?

Updates in which way?

Like co-formulation?

Yes. But that is the clear opportunity that this will be a co-formulated product. That was -- I can reassure you that was a deep part of the diligence when we entered the partnership.

Great. Just switch gears a little bit to survodutide, of course. So the SYNCHRONIZE-1 data will be in this half. So just curious like what kind of data release should we expect for something like press release first and then full presentation, I guess, at the ADA conference?

Yes. So we expect data to be top line and then also be presented throughout the year for both the SYNCHRONIZE-1 and SYNCHRONIZE-2, but actually also importantly, the cardiovascular outcome study, which is also reading out this year and studies in patients from Japan and China. So it's a full Phase III program that will read out, and we do expect top line and then follow with presentations. And you can already see now at the American Diabetes Association that there's a big symposium on survodutide, which we look very much forward to hear what our good colleagues at Boehringer have to say about that.

Awesome. I think like a prior concern for survodutide or potential concern is the tolerability profile based on the Phase II data. And we know for the Phase III, actually, you are testing a higher 6-milligram dose versus 4.8 milligram in Phase II. But at the same time, you have 4-week flexible titration versus 2-week titration in Phase II. So wondering how should we think of the GI tox profile? And how confident are you actually Phase III can have better determination rate, better GI tox that's comparable to your incretin peers?

Yes. We definitely expect that survodutide will come out with a good number on the weight loss and also that Boehringer have shown that you can manage the GI side effects just as with any other incretin by applying more flexible titration and not pushing people to dose escalate according to schedule. I think as we have said for many -- for a long time, if people took the time and look back at how Phase II studies read out for tirzepatide and Wegovy, you would see the same signals in Phase II, which magically disappears in Phase III because you apply antiemetic medication because you do much more flexible dosing. So of course, we also expect that Boehringer have done this in this Phase III study.

Looking forward to that. Another thing, as you mentioned, the mantra, See obesity, Think liver, Treat the Heart. So -- and also like we know the MASH data and also the CVOT data will also be out this year. So just curious like how would -- for example, MASH data kind of accelerate the potential launch in MASH and also for CVOT, how survodutide could treat the preferred -- like as a preferred therapy for the high-risk comorbidity patients like your thought there?

No, but it's -- I think it's an area which the community in general has overlooked a little bit. But the fact is that the liver, if you can improve liver health, if you can get fat out of the liver and make the liver more insulin sensitive more than what you can just expect from a weight loss, then suddenly, you are reinstalling what I would describe as the metabolic switch that can also help other organs. After all, when you eat a burger, the first organ that will meet that burger is the liver. So -- and that liver, if that can better handle that nutrition, your -- the rest of the body will be better at also handling the situation we live in with abundances of food and what have you. So I believe that not only liver could improve in this setting, but if you are in a situation where you also have to release less insulin, for instance, so you don't build up as much adipose tissue, which insulin actually does. If you don't have as many inflammatory markers or -- you also get your lipids in better control, which you should do when you have a better hepatic function, then ultimately, that could spill over and actually cause the heart and the kidney and other organs to also benefit as a secondary phenomenon due to the improved liver health that we would expect to see with this product. So I look very much forward to the full data disclosure. And of course, in MASH, which is the biggest underserved need still in obesity, there's a huge opportunity for Boehringer to not only lead in obesity with this new mechanism, but also come in and become a groundbreaking new therapy for patients, not only with F2 and F3, but also the F4, so cirrhotic patients where they're running a large study. So -- yes.

Awesome. I think that's right on time. Thank you so much for joining us, and thank you, everyone, for listening. It is our pleasure to have you.

Thank you.