Of course it was a disappointment, but it was always a likely scenario.

That is the feeling at Zealand Pharma the day after the biotech company announced that its candidate danegaptide had missed the primary endpoint in a phase II proof-of-concept trial in which it was being tested for the protection against cardiac reperfusion injuries in patients with an acute myocardial infarction (blood clot in the heart).

“It’s a very tricky therapeutic area and a really difficult indication, in which many have tried and failed before us, and we were very aware of that when we launched this study,” says Britt Meelby Jensen, CEO of Zealand Pharma.

But danegaptide, which Zealand has developed from scratch, had shown promising data in animal studies.

“Meanwhile there’s a huge medical need for such a drug, so we believed it made sense to have a go. Unfortunately it didn’t have the effect we had hoped and in our line of business we have to take the consequence of that. That’s the way it is when you develop drugs,” she adds.

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Subdued reception

And the announcement did receive a somewhat subdued reception from analysts, although Zealand Pharma’s share price dipped by about eight percent shortly after the market opened on Thursday.

“This program was high-risk as we see it, and we hadn’t really attached any value to it. We would buy any share that loses value because the value of the diabetes deal supports our DKK 200 price target,” Jefferies’ healthcare analyst Peter Welford writes, alluding to the biotech’s partnership with Sanofi concerning diabetes combo Lixilan.

This drug consists of Sanofi's high-grossing basal insulin Lantus and the Zealand Pharma-developed GLP-1 analogue Lyxumia. The US FDA accepted an application for the diabetes combo for review last month.

Danske Bank has dropped its target price for Zealand Pharma to DKK 181 from DKK 200, but the bank's healthcare analyst, Thomas Bowers, does not see it as a huge setback for Zealand Pharma.

“This was an opportunity for them, as I usually call it. A good chance for them to move on, and it would have been good for them to diversify their pipeline so they would be less dependent on success with LixiLan. Had the study been successful, it could have boosted the share, and it’s obviously unfortunate that the opportunity has passed. But it was a high-risk project, so the market didn’t take much notice,” Thomas Bowers says.

Fitting with the strategy

Britt Meelby Jensen is still not sure what is to become of danegaptide after this.

“We are obligated to announce this sort of thing immediately and it doesn’t look like we will advance danegaptide in this area, but we have to analyze the data thoroughly and then we’ll see what happens,” she says.

The CEO had clearly hoped for better results, but having to advance danegaptide alone would not really have tied in with the company’s new strategy, she says.

“We launched a new strategy last year, as you know, focused on taking selected specialty drugs all the way to regulatory filing alone. And we always knew that if this study came out positive, danegaptide would not be one of those products we would advance alone. For one, there would be the scope of a phase III study, which would be huge. Secondly, even though we had produced good phase II results, there would still be a relatively high risk of not being able to replicate those results in phase III,” Britt Meelby Jensen says.

Zealand Pharma will now focus all its efforts on two other proprietary products. The company said in February that it had initiated two phase II studies, one with ts stable glucagon analogue, ZP4207, for hypoglycemia in diabetes, and one with ZP1848 for short bowel syndrome.

“Those projects fit with the strategy we have launched and have a slightly better risk-profile, so we will carry on fully focused on those candidates,” she says.

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- translated by Martin Havtorn Petersen

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