Zosano reported 4Q15 results last week, announcing that it will prioritize ZP-Triptan for migraine and suspend development of its transdermal glucagon patch for severe hypoglycemia (phase 2 results reported in late October). The company will only resume glucagon development if it can secure a strategic partnership or additional financing. We see the move as a wise choice, given the company’s dwindling cash runway (lasting until 1Q17) and very stiff glucagon competition: Lilly/Locemia’s intranasal glucagon has already completed phase 3 (FDA filing in the next ~13 months), Xeris’ auto-injector was expected to enter phase 3 “shortly” as of ATTD, and Zealand is in phase 2 with its stable liquid glucagon analog. A glucagon partnership seems like a long shot, as Zosano has cancelled other partnerships with Novo Nordisk (GLP-1 patch) and Lilly (parathyroid hormone for osteoporosis). Better glucagon is unquestionably needed and we think a transdermal patch design could be quite compelling, particularly for a mini-dose indication (Zosano, however, was pursuing the easier severe hypoglycemia application). We hope the company finds a way to press ahead, though investor confidence is dwindling – the market cap is down to ~$30 million from the peak of ~$130 million following its January 2015 IPO. For more on the phase 2 data and key questions for Zosano, see our October report.
-- by Adam Brown and Kelly Close