The terms of the agreement with Royalty Pharma suggest the market potential of Zealand Pharma’s polycythemia vera drug candidate may be undervalued, according to Jefferies analysts.
In a royalty purchase and sale pact with Royalty Pharma, Zealand Pharma has exchanged most of its economic interest in the investigational polycythemia vera drug rusfertide that it had once developed with Protagonist Therapeutics.
Under the terms of the agreement, announced Wednesday night, Zealand will get $50 million upfront and stands to receive up to $50 million more on the first anniversary of the deal’s closing. In exchange, Zealand will surrender most of its remaining economic interests in rusfertide—those it hadn’t already returned to ex-partner Protagonist—including regulatory and sales milestones, as well as certain royalties on yearly product sales.
In 2012, Zealand partnered with Protagonist to advance disulfide-rich peptide therapies, one of which would eventually be rusfertide. The deal leveraged Protagonist’s platform for targets of Zealand’s choosing, Genetic Engineering & Biotechnology News reported at the time. Zealand was in charge of all preclinical and clinical work, though Protagonist retained the option to co-finance and co-develop the resulting assets.
The collaboration was terminated in 2014, kicking off a years-long dispute about payments still owed to Zealand. The two companies came to a resolution in August 2021, with both parties agreeing to a reduced milestone structure, plus royalties, though specifics of this new arrangement remain undisclosed.
In 2024, Protagonist partnered with Takeda to develop and commercialize rusfertide. Takeda and Protagonist in March announced that the FDA accepted their new drug application for rusfertide, granting it priority review. A decision is expected in the third quarter of this year.
Under the Wednesday deal with Royalty, Zealand will only retain the right to 0.25% royalties on global sales of rusfertide in excess of $1.5 billion—a stipulation that Jefferies said shows that Zealand expects rusfertide’s future sales to exceed current forecasts.
The terms of the Royalty deal suggest “consensus may underestimate the drug’s commercial potential,” the firm told investors late on Wednesday, pointing to the approximately $1.2 billion forecast by Takeda’s 2034 fiscal year.
“While the undisclosed milestones prevent a precise valuation analysis, Zealand’s decision to retain royalty exposure only above $1.5bn suggests it sees a realistic path to sales exceeding that level,” Jefferies said. The group has high expectations for rusfertide, pegging peak sales to hit around $2 billion.
Designed to be given subcutaneously every week, rusfertide works by mimicking the hormone hepcidin, which helps regulate the production of red blood cells. This mechanism addresses the underlying iron dysregulation in polycythemia vera, in turn lowering the excess production of red blood cells that is characteristic of the blood cancer, according to Zealand’s Wednesday release.
Phase 3 data released in March last year showed a 77% response rate in patients on rusfertide versus 33% in placebo comparators. Participants were on background treatment with standard of care. Rusfertide likewise significantly boosted the proportion of patients who didn’t need phlebotomy from weeks 20 through 32.
