It wasn’t supposed to be this way. Zealand Pharma should be in the honeymoon glow of its first drug launch with a drug approved less than a year ago. Instead, it’s losing its CEO and shedding 90% of its U.S. workforce.
What went wrong? It’s an issue plaguing a growing number of biotechs that are launching their first drugs but struggling with the heavy lifting required on the commercial side. Combine this with the hostile COVID environment, and a launch can swiftly implode.
Zealand grabbed an FDA approval last May for Zegalogue, designed to treat severe hypoglycemia in diabetes patients, as well as V-GO, its wearable for blood sugar control.
But sales have disappointed, falling below what Zealand had believed it could make. In its financials released March 10, the Denmark-based company said it was expecting product sales of 190 million Danish krone ($29.3 million), plus or minus 10%, a downgrade on its former estimate of 220 million Danish krone ($33.9 million).
Wednesday, it cut that figure again. Sales from its two products are “now expected to be DKK 115 million +/- 10%,” the company said in an update. That’s a little more than half its inital estimate.
So, out comes the ax. It fell first on CEO Emmanuel Dulac, who is already out the door and has been replaced by Adam Steensberg, M.D., who had been head of R&D and CMO. The idea is to restructure around Zealand’s pipeline in the hope of finding another successful product to sell.
And that means “streamlining” its commercial operations. Translation: The company will cull 90% of its U.S. workforce and cut back its annual operating expenses by at least 35% compared to 2021, the company said in a statement.
Zealand plans to look for partners to handle Zegalogue and V-Go, presumably hoping to find a company that can help it actually sell its two approved products.
“[W]e believe that seeking commercial partnerships will generate more value for the company and shareholders as we transform the company into a more focused and cost-effective organization,” Steensberg said.
Zealand’s extreme cuts come on the heels of similar problems at Acacia Pharma, which has also struggled to sell its first drug. Acacia tried a solo launch with Barhemsys—FDA-approved in early 2020 to protect against postoperative nausea and vomiting—but faltered amid the pandemic as many surgeries were canceled and its commercial operations couldn’t keep up.
Acacia was one step shy of insolvency, but it found a white knight of sorts in Eagle Pharmaceuticals, which has swooped down and offered to buy out the biotech, albeit at a bargain price.