Shares of weight loss drug maker Zealand Pharma plummeted as much as 23% on Monday after new data on its experimental medicine raised concerns over its potential side effects.

The Danish drugmaker said that while its drug survodutide, which it has licensed to privately-held Boehringer Ingelheim, met its key targets in a late-stage study, 19% of patients dropped out of the study due to gastrointestinal events, compared to 2.9% on placebo.

"Overall, we view the safety/tolerability as disappointing for [Zealand], despite data confirming some interesting body-composition/liver signals," said Barclays analysts in a note on Monday. 

The high discontinuation rate, with more than 40% of patients reporting vomiting, might limit the drug's commercial potential as a treatment for obesity or those suffering from fatty liver disease, the analysts added.

Shares of Zealand Pharma ended Monday's session 22.7% lower, firmly at the bottom of the pan-European Stoxx 600 index. It adds to a nearly 50% drop year-to-date.

Survodutide was tested in adults living with obesity or overweight adults, without type 2 diabetes, over 76 weeks. Topline data announced in April showed average weight loss of up to 16.6% versus 3.2% with the placebo.

Analysts at Citi wrote in a note on Monday: "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."

The full survodutide data comes about three months after Zealand stock suffered its worst day on record when a trial of another of its experimental anti-obesity drugs, petrelintide, disappointed investors with lower-than-expected weight loss statistics. 

Further data on petrelintide disclosed on Friday provided "incremental detail around [its] clinical profile, but little to change our view since the topline in March," said Barclays.

Petrelintide, which Zealand is developing together with Roche, looks attractive in terms of tolerability, but efficacy does not look as strong as Eli Lilly's amylin, eloralintide, or other already available incretin​-​based obesity treatments, they added.

The market for weight loss drugs is currently dominated by Novo Nordisk, which sells semaglutide under the brand names Wegovy and Ozempic, and Eli Lilly, which sells tirzepatide as Zepbound and Mounjaro.

But a flurry of hopeful market entrants are testing their own anti-obesity drugs, including Zealand Pharma, which is partnering with bigger drugmakers Roche and Boehringer Ingelheim, and heavyweights like Amgen and AstraZeneca.

Heightened competition has increased the pressure on companies to differentiate their products. Muscle mass preservation, oral options, obesity-related diseases, and weight management are some areas companies are targeting to build their share of the lucrative market.

While Novo's Wegovy and Lilly's Foundayo pills have dominated, more players are about to enter the market, Investec analyst Jimmy Muchechetere told CNBC's "Squawk Box Europe" on Monday.

As for Zealand Pharma, it has long called for an end to what it calls the "weight loss olympics," and says there is an outsized focus on percentage weight loss achieved.

CEO Adam Steensberg told CNBC in March he was "extremely certain" there would be a shift in the industry "towards tolerability," referring to how well patients can cope with side effects of the medications.

"I think very, very soon, people start to realize that it's not about that weight loss number, it's about how you achieve that weight loss number."