TLDR
- Jefferies downgraded Zealand Pharma from Buy to Hold, citing a lack of near-term catalysts
- Price target cut to DKK320 from DKK505 — a 37% reduction
- Survodutide’s probability of success lowered to 40% from 60% after disappointing Phase III data
- Key catalysts for survodutide and petrelintide unlikely before 2027–2028
- ZEAL stock fell 5.32% on the news; Copenhagen-listed ZELA dropped 2.7%
Zealand Pharma (ZEAL) stock dropped 5.32% on Tuesday after Jefferies downgraded the Danish biotech from Buy to Hold, slashing its price target by 37% to DKK320 from DKK505.
The Copenhagen-listed stock (ZELA) also fell 2.7% to DKK273.40, underperforming the OMXC25 benchmark, which was down 0.5%.
Jefferies applied a 35% discount to its sum-of-the-parts valuation to account for the lack of key near-term catalysts expected over the next 6 to 12 months.
The downgrade follows disappointing Phase III data for survodutide, Zealand’s obesity and liver disease drug candidate, presented at the American Diabetes Association meeting.
Jefferies cut survodutide’s probability of success to 40% from 60% as a result. That’s a meaningful move for a company where the obesity pipeline carries a lot of weight.
Survodutide Setback Weighs on Outlook
The firm said key liver disease MASH results for survodutide are now not expected until the second half of 2027, making that readout critical for derisking the asset.
Survodutide’s overall valuation now hinges on Phase III liver disease trial success and early launch metrics — both events still more than a year away.
Jefferies added that building conviction in petrelintide, Zealand’s amylin-based obesity candidate, will also take time.
The brokerage noted that competitor obesity drug data expected over the coming year could make it harder for petrelintide to stand out before more advanced trial results are available.
Petrelintide in Phase 3, But Patience Required
Despite the downgrade, Jefferies acknowledged that Zealand’s long-term valuation remains attractive. The firm pointed to the company’s net cash position, rare disease portfolio, and risk-adjusted value of its obesity assets as supporting factors.
Zealand Pharma is valued at around $3 billion, and InvestingPro data shows the stock trading at a P/E ratio of 3.13, flagging it as potentially undervalued on a Fair Value basis.
Petrelintide did advance into Phase 3 trials in collaboration with Roche, following strong Phase 2 ZUPREME-1 results that showed double-digit weight loss and placebo-like tolerability.
Phase 3 trials are expected to begin in the second half of 2026.
Deutsche Bank also recently raised its price target for Zealand Pharma to DKK300 from DKK275, citing positive survodutide trial results — though that move now looks premature given the latest data disappointment.
Jefferies said investors may need to wait until 2027 and 2028 for clinical readouts that could materially shift sentiment on the stock.
The company also recently increased its share capital by DKK53,183 through the exercise of employee warrants, issuing 53,183 new shares at varying prices.
Zealand proposed Camilla Sylvest for election to its Board of Directors, pending shareholder approval at a meeting scheduled for May 2026.
The stock is currently trading at DKK273.40 in Copenhagen, with the US-listed ZEAL down 5.32% on the session.
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