Zealand Pharma (NASDAQ: ZEAL) is a biotherapeutic company specializing in peptide-based treatments for gastrointestinal, metabolic and other specialty diseases. Seeland Pharma was founded in Denmark in 1997 and is currently working on novel analogues to glucagon, a hormone that increases blood sugar levels by breaking down glycogen. This product, dasiglucagon, is modified to last longer in the human body than regular glucagon.
New Zealand’s share price rose from $ 31 to $ 34 on March 22, as news broke of the US Food and Drug Administration’s approval of Dasiglucagon for the treatment of severe hypoglycemia. As of April 12, the stock is back above $ 32. What is in store for those who own the stock or are considering buying it?
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What is Severe Hypoglycemia?
Severe hypoglycemia is an emergency caused when insufficient blood sugar is circulating – a problem that diabetics often face. Seeland expects to address type 1 diabetics who are unable to produce insulin and who are at risk due to several daily insulin injections. In summary, if a diabetic patient injects too much insulin into their body at one time or takes too much diabetes medication, the risk of severe hypoglycemia increases. Hypoglycemia, commonly defined as blood sugar levels less than 70 mg / dL, can be fatal if left untreated. It accounts for 10% of the deaths in type 1 diabetics under the age of 50. (Severe hypoglycemia has a limit of 54 mg / dL.)
Set a new precedent?
In the past, glucagon was the standard for the treatment of severe hypoglycemia. Before Dasiglucagon there were only two companies Novo Nordisk (NYSE: NVO) and Eli Lilly (NYSE: LLY)had approved emergency glucagon kits for use. Other types of glucagon 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 arm was given dasiglucagon, another was given a placebo, and another was given the Novo Nordisk 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 the primary endpoint, dasiglucagon had a median of 10 minutes, glucagon a median of 12 minutes, and placebo a median of 40 minutes. After 15 minutes, 99% of dasiglucagon patients versus 95% of glucagon patients had fully recovered. Side effects were similar between the dasiglucagon and glucagon test arms, with nausea and vomiting being the most serious side effects and injection site reactions occurring in several patients.
While the data comparing dasiglucagon and glucagon emergency kits is quite similar, there is one advantage to dasiglucagon: traditional glucagon emergency kits require complicated mixing just prior to injection, while dasiglucagon does not. Similar to Gvoke, Seeland’s product is an injection pen that is stable at room temperature.
With glucagon consumption increasing 10% during COVID-19, this represents a unique market opportunity for Zealand as more and more diabetics have a hard time without regular medical care. Fears during COVID are not unfounded; Diabetics tend to have weaker immune systems and are therefore more susceptible to the disease. And even after the coronavirus has faded, severe hypoglycemia will still be a formidable problem, reported by 35% of type 1 diabetics. As Phase 3 trials of a different delivery system for Dasiglucagon will begin this year, Zealand is looking forward to some turbulent news.
In December, Zealand had cash and cash equivalents of $ 157.6 million, liabilities of $ 87.4 million and total revenues of $ 58 million. When Dasiglucagon hits the market this summer, it will be the first product on sale. For a quick comparison, Gvoke is $ 280 per dose. If we multiply that by the total of 6.8 million insulin users in the United States and divide the result by 14 (since 1 in 14 people with diabetes on insulin will have at least one episode of severe hypoglycemia annually), it translates into potential market sales of $ 136 million each Year. So far, however, Xeris has only had annual sales of around $ 20 million from the drug. Given Xeris’ market cap of just $ 263 million, Zealand’s market cap of around $ 1.41 billion seems premature at best.
Given the competitive landscape in the current severe hypoglycemia market, the lack of upcoming catalyst advertisements in New Zealand, and the fact that Dasiglucagon won’t start selling until this summer, I would advise healthcare investors to be cautious before buying in Zealand despite recent approval to be . Sit tight until there is more positive news about dasiglucagon sales or other Zealand products – possibly results from the phase 3 study of glepaglutide in short bowel syndrome.
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