Danish biotech Zealand Pharma is targeting the “next generation” of weight loss drugs as competitors pile into a market dominated by heavyweights Novo Nordisk and Eli Lilly.

CEO Adam Steensberg told CNBC Thursday that early-stage trials of its experimental obesity injection point to higher-quality weight loss — with reduced muscle loss and fewer side effects — versus traditional GLP-1 treatments. The company is now scouting for a global pharma firm to partner with, he added.

“Our focus is really what’s needed in the 2030s, and it’s really about establishing, you can say, the next-generation molecules that are not based on GLP-1s,” Steensberg said.

Last month, Zealand Pharma announced positive top-line results from a phase 1b trial of its weight loss drug, a GLP-1/GLP-2 receptor dual agonist called Dapiglutide. It puts the company head-to-head with major obesity players Novo Nordisk and Eli Lilly, whose GLP-1s Wegovy and Zepbound, respectively, have exploded in popularity for their weight loss effects.

However, Steensberg said it’s the company’s separate obesity drug candidate, Petrelintide, a long-acting amylin analog, which could set it apart from the competition, offering an alternative for users who cannot tolerate GLP-1s.

“That’s what we call our crown jewel. This is the one where we have the highest expectations,” Steensberg said.

“We have a very strong feeling that this could become a foundational therapy in the future – something that provides the weight loss that patients are looking for but with the potential for a better tolerability profile,” he added.

Amylin analogs are a nascent form of weight loss treatment. They work by mimicking a hormone that is co-secreted with insulin in the pancreas to increase satiety. This differs from GLP-1 agonists, which mimic incretin hormones produced in the gut to suppress appetite and regulate blood sugar.

“It’s two very different human experiences,” Steensberg said, comparing GLP-1s with amylin analogs. “If you work on satiety, it will be a more pleasant experience. So once you get into it, you can stay long-term [on the] treatment.”

Novo Nordisk is also experimenting with its own version of the treatment, combining the GLP-1 component Semaglutide with amylin analog Cagrilintide in a candidate called CagriSema.

In June, Zealand Pharma also announced positive results from a phase 1b trial of Petrelintide, which showed that a course of 16 weekly injections reduced body weight by up to 8.6% on average.

The company said at the time that the findings showed “robust support” for the drug’s potential as an alternative to GLP-1s. Following the biotech firm’s first-half results in August, Steensberg upped the ante, saying amylin analogs have the potential to become “the future backbone therapy for weight management.”

“If we can develop a molecule that is giving patients the weight loss they’re looking for with a very benign tolerability profile, and we can also show risk reduction when it comes to cardiovascular health, I think we have all the reasons to believe it could become a first-line therapy,” Steensberg told CNBC in the interview Thursday.

Zealand Pharma, which was founded almost three decades ago with a focus on peptide-based medicines, has ridden a rising tide over recent months as it has ventured further into obesity treatments. So far this year, its share price is up more than 110%.

Competition in the sector is fierce, however, with Novo Nordisk and Eli Lilly still dominating the market as their so-called miracle drugs become essential to consumers across the globe.

Several drug regulators, including in the U.S. and European Union, have now expanded GLP-1 drug labels for use in treating obesity-related comorbidities and other illnesses. It comes as concerns remain around the drugs’ other possible side effects, such as muscle loss and suicidal thoughts, and U.S. authorities have pushed back against the high costs of the treatments.

Nevertheless, appetite for the treatments continues to balloon, with analysts estimating that the sector could be worth up to $200 billion by 2030.

Emily Field, head of European pharmaceuticals research at Barclays, said the weight loss market was likely to grow more “fragmented” over time as pharmaceutical companies target different segments, noting that treatments to counter muscle loss could be a good way to “differentiate.”

However, she noted that a company of Zealand Pharma’s size and scope would struggle to do so alone.

“It’s not something Zealand could even think about, manufacturing themselves. A lot of people who have owned it still own it, but are wondering if it’s going to get bought or not,” Field said over the phone.

Steensberg on Thursday ruled out growing speculation around a takeover, saying it’s “definitely not part of our plans.” But he noted that even with a significant $1 billion capital raise earlier this year, the company would need a partner.

“We have a clear ambition to continue into the next phase of our life as a partnering company,” Steensberg said. “We have to have a lot to offer and I think it’s a very attractive opportunity to partner with Zealand right now for a large pharma company.”

He added that partnership discussions are underway and likely to continue into the first half of next year.

Petrelintide and Dapiglutide will now progress to phase 2 trials on overweight and obese patients in late 2024 and the first half of 2025, respectively.