Clinical Catalysts And Roche Alliance Will Advance Obesity Amid Risks

Key Takeaways

• Major data from obesity drug trials and new industry alliances position the company for expanded future revenues, lowered commercialization risks, and greater global market access.
  
• Strong financial reserves enable self-funded innovation and product launches, with pipeline diversification aligning well with emerging trends in obesity treatment.
  
• Heavy dependence on external partnerships, intense competition, pipeline uncertainties, and pricing pressures threaten sustainable growth, margin stability, and successful commercialization of new therapies.

Catalysts

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

• Substantial upcoming clinical catalysts, including Phase II (petrelintide) and Phase III (survodutide) data in obesity and obesity-related comorbidities, are expected within the next 12–18 months; positive results could validate Zealand's differentiated pipeline and drive significant future revenue growth from milestone payments and royalties as therapies advance toward commercialization.
  
• The alliance with Roche for petrelintide significantly derisks commercialization and broadens access to manufacturing and distribution scale, positioning Zealand to capitalize on the global surge in obesity and metabolic disorder prevalence-a trend expected to underpin sustained long-term demand and topline expansion.
  
• Emerging evidence that amylin-based therapies (like petrelintide) may offer a more tolerable weight-loss alternative for a broader obesity patient population-especially those intolerant to GLP-1s-supports the potential for larger market penetration, which could enhance future revenues and net margins as the market matures.
  
• Zealand's robust cash position, bolstered by the Roche upfront and anticipated milestone payments, enables them to fully self-fund obligations in ongoing partnerships while accelerating R&D into early-stage innovation, reducing financial risk and supporting long-term earnings and margin stability even ahead of major product launches.
  
• The growing focus on combination and multi-mechanism obesity drugs (e.g., amylin plus incretin combinations) and accelerated regulatory pathways for innovative peptides aligns with Zealand's core expertise and pipeline, creating opportunities to capture outsized value from industry investment momentum and delivering upside to projected long-term net income as new products reach market.

Zealand Pharma Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Zealand Pharma's revenue will decrease by 36.7% annually over the next 3 years.
• Analysts are not forecasting that Zealand Pharma will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Zealand Pharma's profit margin will increase from 73.3% to the average US Biotechs industry of 29.9% in 3 years.
• If Zealand Pharma's profit margin were to converge on the industry average, you could expect earnings to reach DKK 692.0 million (and earnings per share of DKK 10.03) by about August 2028, down from DKK 6.7 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting DKK3.5 billion in earnings, and the most bearish expecting DKK-5.4 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 95.7x 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

• Zealand Pharma's heavy reliance on milestone and royalty payments from partnerships (especially Roche and Boehringer Ingelheim) exposes it to the risk of subdued long-term revenue growth and margin compression, as these streams are generally less lucrative than direct product commercialization.
  
• The upcoming pivotal pipeline assets (like petrelintide and dapiglutide) are still in mid/late-stage development; any clinical trial failure, regulatory delay, or negative differentiation versus existing or emerging obesity/GLP-1 therapies could substantially impair future revenues and earnings growth.
  
• Increasing market competition in obesity and metabolic therapeutics from established players (Novo Nordisk, Eli Lilly, and others with strong GLP-1 and amylin programs), as well as emerging biotechs, raises the risk of Zealand's therapies struggling to capture or sustain market share, directly pressuring long-term revenue forecasts.
  
• Persistent high R&D spending, highlighted by management's commitment to accelerate pipeline innovation, may continue to outpace topline growth if lead assets are delayed, fail to achieve market traction, or face reimbursement/pricing pressure, further widening net losses and weighing on future net margins.
  
• Industry-wide pricing pressure and evolving reimbursement dynamics for obesity and metabolic drugs-exacerbated by political and regulatory scrutiny in major markets-could compress future revenues and limit the company's ability to expand earnings and maintain healthy margins over time.

Valuation

• The analysts have a consensus price target of DKK830.75 for Zealand Pharma based on their expectations of its future earnings growth, profit margins and other risk factors. 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 analyst's consensus, you'd need to believe that by 2028, revenues will be DKK2.3 billion, earnings will come to DKK692.0 million, and it would be trading on a PE ratio of 95.7x, assuming you use a discount rate of 4.9%.
  
• Given the current share price of DKK370.9, the analyst price target of DKK830.75 is 55.4% 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.