Roche Partnership Will Advance Peptide Therapies Amid Obesity Risks

Key Takeaways

• Differentiated obesity pipeline, strategic partnerships, and robust real-world efficacy set Zealand Pharma to outpace market growth and competitor expectations in metabolic diseases.
  
• Capital-efficient R&D and broad program scope position the company for rapid label expansion, high patient adherence, and durable, outsized recurring revenues.
  
• Reliance on successful trials, partnerships, and premium pricing exposes Zealand Pharma to revenue risks, intensified competition, and margin pressures in a challenging regulatory and commercial environment.

Catalysts

A biotechnology company, engages in the discovery, development, and commercialization of peptide-based medicines in Denmark and the United States.

• Analysts broadly agree that the differentiated obesity pipeline, including petrelintide and survodutide, positions Zealand Pharma for substantial market share; however, the unique partnership with Roche and Roche's rapid, massive investments in U.S. manufacturing capacity could allow Zealand to achieve global leadership and outpace even current obesity market expansion estimates, driving revenue multiples that far exceed consensus.
  
• While analyst consensus highlights the blockbuster potential of late-stage pipeline assets, they may be underestimating how the breadth of Zealand's combination and monotherapy programs, combined with data suggesting superior tolerability and efficacy in real-world settings, could sharply raise long-term adherence rates and capture outsized recurring revenues, significantly boosting earnings and operating margins compared to GLP-1 competitors.
  
• The strategic focus on addressing high unmet needs in obesity-related comorbidities-such as MASH and short bowel syndrome-alongside anticipated regulatory tailwinds and expedited pathways, sets the stage for rapid label expansion and accelerated revenue streams from multiple indications, compounding total topline growth for years to come.
  
• Zealand's nimble, capital-efficient R&D engine, powered by expertise in peptide drug platforms and now supercharged by an unparalleled cash position and major milestone payments, is poised to deliver a multi-generational pipeline with lower development risk and better margins than slower-moving, less focused biotechs.
  
• As the global obesity and metabolic disease epidemic intensifies, and direct-to-consumer/payor-driven demand for better tolerated, long-term therapies accelerates, Zealand's first-mover advantage in next-gen peptide treatments could open up entirely new commercial channels, enabling them to tap into both high-margin prescription and cash-pay patient populations, further expanding revenue and profit upside beyond what traditional models forecast.

Zealand Pharma Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Zealand Pharma compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Zealand Pharma's revenue will decrease by 14.0% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 73.3% today to 24.4% in 3 years time.
• The bullish analysts expect earnings to reach DKK 1.4 billion (and earnings per share of DKK 18.92) by about August 2028, down from DKK 6.7 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 63.0x on those 2028 earnings, up from 3.9x today. This future PE is greater than the current PE for the US Biotechs industry at 10.5x.
• Analysts expect the number of shares outstanding to decline by 0.38% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 4.92%, as per the Simply Wall St company report.

Zealand Pharma Future Earnings Per Share Growth

Risks

• The company is heavily dependent on successful outcomes for several late-stage clinical trials (especially for petrelintide, survodutide, and dapiglutide), so any delays, failures, or lack of meaningful differentiation in these trials could significantly undermine future expected revenues and strain liquidity.
  
• Zealand Pharma's revenue and profit outlook is highly reliant on collaborations with partners like Roche and Boehringer Ingelheim, and a shift in priorities, termination of deals, or underperformance of partnered assets would lead to earnings volatility and revenue gaps given the milestone-based structure of current income.
  
• The company acknowledges intensifying competition in the obesity therapeutics sector from large-cap players like Novo Nordisk, Eli Lilly, and emerging biotech entrants, which could result in greater pricing pressures, limit market share growth, and thereby compress future net margins.
  
• Heightened global drug price regulation, reimbursement obstacles, and mounting healthcare cost containment (especially in the US and Europe) may prevent Zealand Pharma and its partners from achieving premium pricing or broad access for new therapies, ultimately constraining revenue growth and sustainable profitability.
  
• Zealand's limited commercial infrastructure outside the Nordics, combined with the high spend on R&D and SG&A to advance its pipeline and support growth, may erode net margins and increase the risk of loss-making solo launches, particularly if new products fail to meet high adoption expectations or market expansion is slower than anticipated.

Valuation

• The assumed bullish price target for Zealand Pharma is DKK1120.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Zealand Pharma's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of DKK1120.0, and the most bearish reporting a price target of just DKK400.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be DKK5.8 billion, earnings will come to DKK1.4 billion, and it would be trading on a PE ratio of 63.0x, assuming you use a discount rate of 4.9%.
  
• Given the current share price of DKK370.9, the bullish analyst price target of DKK1120.0 is 66.9% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.