Zafgen Inc. (NASDAQ: ZFGN) has been a popular company among traders in recent history, despite being down on the year. This company has been marked with heavy volatility over the course of the year, and it looks like Wednesday will be a huge day, considering the most recent development in the beloranib study.

The company provided an update on the open label extension (OLE) portion of the pivotal Phase 3 ZAF-311 bestPWS clinical trial evaluating beloranib in patients with Prader-Willi syndrome. On December 1, Zafgen learned that a patient receiving beloranib as part of the OLE portion of the study was diagnosed with bilateral pulmonary emboli and has died.

For some background: Beloranib is a small molecule therapy with a unique mechanism of action that reduces hunger while stimulating the use of stored fat as an energy source.

Dr. Thomas Hughes, CEO of Zafgen, said:

Our thoughts are with the patient and their family at this time. Patient safety remains our top priority and we are investigating the circumstances around this event. We are also engaging in discussions with the FDA while we determine the next steps with the beloranib program.

This stock had been booming since late October. Consensus earnings estimates are rising and momentum has been building, starting just after Zafgen tanked on news of a late stage clinical trial of beloranib, which was released in October.

The question is whether now is a buying opportunity. When Zafgen dropped on unfavorable study results earlier this year, shares rallied about 50% from the low in October. However with this development in the study, shares are hitting an entirely new low. Keep in mind that this price is but a shadow of what this stock was even just six months ago.

So far in 2015, Zafgen has vastly underperformed the market, with the stock down over 48% year to date (as of Tuesday’s close). Over the past 52 weeks, the stock is down only 26.5%.

Shares of Zafgen closed Tuesday down nearly 6% at $15.93, with a consensus analyst price target of $29.57 and a 52-week trading range of $9.53 to $55.36. In early trading indications Wednesday, shares were down 57% at $6.85.

UPDATED at 12:20 p.m. Eastern Time: Zafgen shares were last seen down 60.1% at $6.36 on 11.1 million shares. The new 52-week low is $5.95, and the trading volume already represents more than 11 times normal.

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