A Weight-Loss Rival Just Crashed 23%. Why That's Great News for Eli Lilly and Novo Nordisk.

Written by Bram Berkowitz for The Motley Fool -> Zealand Pharma reported a high drop-out rate in a phase III trial of Survodutide, due to undesirable side effects experienced by patients. That's good news for Eli Lilly and Novo Nordisk, which currently dominate the weight-loss drug space. Eli Lilly also revealed promising new data for one of its weight-loss drugs, which is still undergoing trials. The GLP weight-loss space has become increasingly competitive as new players have entered what many believe is a game-changing new market that’s still in the early innings. But getting in the game is easier said than done. Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue » Shares of the Danish biotech company Zealand Pharma (OTC:ZLDPF) had crashed nearly 23%, as of 12:10 p.m. ET today, after a late-stage study of one of its new weight-loss drugs showed disappointing results. The drug being tested, Servodutide, is a GLP-1 dual-receptor agonist used to treat obesity and associated conditions. The late-stage study showed that a high percentage of participants dropped out due to adverse effects. This is good news for companies like Eli Lilly and Novo Nordisk , who currently dominate the GLP-1 space . Here’s why. On the positive front, the phase III trial of Servodutide showed that over 84% of participants in the 76-week study achieved at least a 30% relative reduction in liver fat. Furthermore, participants showed sustained weight loss of up to 16.6%. However, 19% of participants dropped out due to gastrointestinal side effects, including nausea, vomiting, diarrhea, and constipation. Over 40% of people in the study reported vomiting, according to analysts from Barclays . “Overall, we view the safety/tolerability as disappointing for [Zealand], despite data confirming some interesting body-composition/liver signals,” Barclays analyst Yihan Li wrote in a research note today. “A 19% treatment discontinuation rate due to... adverse events... is not a rounding error, and nausea, vomiting, diarrhea, and constipation incidence at the levels reported here sit well above what we consider commercially viable against [rival drugs] tirzepatide and semaglutide,” Citigroup analysts wrote in a research note, according to CNBC. The simple answer is that Zealand’s study shows that both dominant players likely still have a significant lead in the space and can retain market share . In fact, shares of Eli Lilly, which now has a market cap of over $1 trillion, traded roughly 2.5% higher as of this writing due to company-specific news. At the American Diabetes Association meeting in New Orleans, Eli Lilly presented data from two trials of its new weight-loss drug, Retatrutide. Unlike Eli Lilly’s first two generations of GLPs, Retatrutide is a weekly low-dose, 4 mg GLP-1 injection that is a triple-receptor agonist attempting to suppress one’s appetite, improve metabolism, and burn fat. Only about 4% of participants in the Retatrutide studies dropped out. Participants also achieved an average weight loss of roughly 19%, similar to Eli Lilly’s older GLP, Zepbound. Analysts were broadly positive on the new data and said they could see Eli Lilly extending its lead in the obesity space. Zealand’s struggles are certainly good news for both Eli Lilly and Novo Nordisk, as less competition reduces pricing pressure. However, the two companies have seen their stocks move in opposite directions over the past year, with Eli Lilly’s surging and Novo Nordisk’s plunging. Novo Nordisk has been dealing with increasing competition, and its recent pipeline of weight-loss drugs has not impressed the market. Meanwhile, Eli Lilly has rocketed higher over the past year, driven by a more diversified pipeline and success with new GLP-1 receptors. The recent success with Retatrutide is yet another reason to make Eli Lilly the stock to own in the GLP space. Before you buy stock in Zealand Pharma A/s, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Zealand Pharma A/s wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $443,191 !* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,258,838 !* Now, it’s worth noting Stock Advisor’s total average return is 941 % — a market-crushing outperformance compared to 206% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor , and join an investing community built by individual investors for individual investors. *Stock Advisor returns as of June 8, 2026. Citigroup is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eli Lilly. The Motley Fool recommends Barclays Plc and Novo Nordisk. The Motley Fool has a disclosure policy . 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