Zealand Pharma (NASDAQ: ZEAL) is a biotherapeutics company that specializes in peptide-based treatments for gastrointestinal, metabolic, and other specialty diseases. Founded in 1997 in Denmark, Zealand Pharma is currently working on novel analogs to glucagon, a hormone that increases blood sugar levels via the breakdown of glycogen. This product, Dasiglucagon, is modified to last longer in the human body than traditional glucagon.
On March 22, Zealand's stock price increased from $31 to $34 when news broke regarding the U.S. Food and Drug Administration's approval of Dasiglucagon for treating severe hypoglycemia. As of April 4, the stock is back to $31. For those who own the stock or are considering buying it, what lies ahead?
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What is severe hypoglycemia?
Severe hypoglycemia is an emergency condition that is caused when there is not enough blood sugar circulating -- an issue diabetics may often face. Zealand expects to target Type 1 diabetics who cannot produce insulin and are at risk because of multiple daily insulin injections. To summarize, if a diabetic patient injects too much insulin into his/her body at once or takes too much diabetes medication, the risk of severe hypoglycemia increases. Defined generally as having a blood glucose level of less than 70 mg/dL, hypoglycemia can be fatal if left untreated, accounting for 10% of deaths among young Type 1 diabetics.
Setting a new precedent?
In the past, glucagon was the standard-of-care treatment for severe hypoglycemia. Before Dasiglucagon, only two companies, Novo Nordisk (NYSE: NVO) and Eli Lilly (NYSE: LLY), had glucagon emergency kits approved for use. Other types of glucagon that are currently commercially available include Eli Lilly's nasal glucagon, Baqsimi, and Xeris Pharmaceuticals's (NASDAQ: XERS) stable glucagon injection, Gvoke.
In phase 3 studies, one trial arm received Dasiglucagon, another received placebo, and another received Novo Nordisk's version of glucagon (also known as GlucaGen). Using time to plasma glucose recovery (basically, time for the patient's blood sugar to stabilize at healthy levels) as a primary endpoint, Dasiglucagon reached a median of 10 minutes, glucagon reached a median of 12 minutes, and placebo reached a median of 40 minutes. After 15 minutes, 99% of Dasiglucagon patients versus 95% of glucagon patients fully recovered after 15 minutes. Side effects were similar between Dasiglucagon and glucagon trial arms, with nausea and vomiting being the most serious side effect and injection-site reactions occurring in several patients as well.
While the data comparing Dasiglucagon and glucagon emergency kits is quite similar, there is one advantage in store for Dasiglucagon: Traditional glucagon emergency kits require complicated mixing right before administering via injection, while Dasiglucagon does not. In fact, similar to Gvoke, Zealand's product is an injection pen that is stable at room temperature.
With glucagon use increasing by 10% during COVID-19, this represents an unique market opportunity for Zealand as more and more diabetic patients tough it out without seeing health professionals on a regular basis due to warranted fears. Diabetics tend to have weaker immune systems and are therefore more susceptible to COVID-19. With phase 3 trials on another delivery system for Dasiglucagon about to commence this year, Zealand is looking forward to tumultuous news ahead.
However, given the competitive landscape of the current severe hypoglycemia market (especially with Gvoke getting a head start of $20 million in net sales as of Q4 2020), the lack of imminent Zealand catalyst readouts, and the fact that Dasiglucagon will start selling in June 2021, despite the recent approval, I would advise investors to be cautious before buying into Zealand until more positive news in Dasiglucagon sales or other Zealand products emerges. Other products in phase 3 trials include Glepaglutide for Short Bowel Syndrome.
As of December 2020 earnings, Zealand currently has $157.6 million in cash and equivalents, $87.4 million in total liabilities, and $58.0 million in total revenues. As of April 8, Zealand's market cap is 8.78 billion DKK, which is $1.41 billion in U.S. dollars. Zealand's market cap should rise in the short-term, but this will largely depend on whether Zealand can fend off Gvoke successfully in the coming months.
Jia Jie Chen has no position in any of the stocks mentioned.
