Investors worldwide are scouring for their next big win after the door to the extremely lucrative obesity market was opened by pharmaceutical giants Novo Nordisk and Eli Lilly. Now benefiting on the Swedish stock exchange is a smaller Nordic biotech company.
Pila Pharma
Pila Pharma, a smaller Nordic biotech company listed on the Nasdaq First North exchange in Stockholm, has enjoyed an unusually good stock market year. The company was founded by Dorte X. Gram, a former Novo Nordisk researcher who during her time at the company discovered a potentially new mechanism of action for the treatment of metabolic diseases. Pila Pharma, which went public in the summer of 2021, has experienced an impressive development on the stock exchange throughout 2024, seeing a triple-digit percentage gain from the beginning of the year to now.
The company’s main asset is a TRPV1 antagonist, which is a drug class not previously associated for the treatment of metabolic diseases. Named XEN-D0501, the asset is formulated as an oral tablet and is currently undergoing clinical phase II testing as a treatment for overweight patients with type 2 diabetes. According to Pila Pharma CEO Gustav H. Gram, the company’s stated belief in the drug’s potential to treat obesity, is likely part of the driving force behind the stock increase.
"These years stock developments for a lot of companies in this segment, illustrates that obesity medication is on everybody’s minds. We are of course pleased that investors are now looking at us as a potential player with an innovative approach, even though we still have progress to make, before we can potentially assess whether our unique and potential first-in-class drug, could become a player for the continuously growing and fragmenting obesity market" said Gustav H. Gram. " We potentially have a very interesting drug candidate, which could have helpful effects on these very common global diseases of diabetes and obesity and would differentiate itself from other, currently approved drugs. This is a tablet-based formulation for which we see broad demand on a global scale, and it has a different side-effect profile than the GLP-1 drugs that are known to cause nausea, diarrhea, and constipation."
Investors are searching for stocks with high potential
J.P. Morgan has previously estimated that the global obesity market could exceed $100 billion by 2030. The market’s development is primarily driven by the big diabetes and obesity rivals, US-based Eli Lilly and Denmark-based Novo Nordisk, and their GLP-1 drugs for obesity treatment. Besides the two big players, investors might recognize other Nordic players in the field such as Zealand Pharma and Gubra from Denmark, and US-based Viking Therapeutics, all of which are also developing complex peptide-based products for the next generation of obesity drugs.
"A trend seems to be forming where many investors are looking for new assets from companies that develop novel and innovative projects to address future demand in a fragmenting market. My guess is that our completely different approach, as well as our lower valuation compared to others, might be why many investors have taken an interest in us recently" said Gustav H. Gram. "The obesity market has experienced huge uptake and value growth but we’re still far from reaching the point of saturation with current injectable products. The industry is actively looking for new molecules with mechanisms of action that can improve treatment options and increase competition on the market, provided they’re able to show good efficacy and side-effect profiles."
Results spark interest
In past months, Pila Pharma has experienced a large uptick in international shareholder numbers, and while the new co-owners are welcomed, the company is eyeing a future with more long-term investors at the table.
"The strength of being a stock that’s attractive to private investors shouldn’t be underestimated but we are hoping and of course working toward getting heavier and more long-term institutional investors on board as our valuation hopefully increases. However, in order to attract the interest of larger asset managers and pension funds, we need to be able to show more results. So of course, generating new data plays a central role in our long-term plan to increase our valuation and to make the stock more solid" said Gustav. H. Gram.
At the moment, Pila Pharma is making the last preparations before a new, larger safety study in patients with type 2 diabetes and obesity can commence. In addition to evaluating safety, the company will also look at efficacy parameters such as weight reduction.
The company’s primary drug candidate, XEN-D0501, has in earlier studies shown promising effects in diabetes as well as a large reduction in a biomarker for heart failure. Pila Pharma is therefore also greatly focused on the molecule being tested as a treatment for other diseases that are associated with diabetes and obesity, including different cardiovascular diseases. In addition to the main diabetes track, the company has just initiated a new preclinical study to investigate decrease in progression of abdominal aorta aneurysms, which is a cardiovascular disease.