Zafgen Inc. (NASDAQ: ZFGN) shares were absolutely stomped on Monday after the company announced that the U.S. Food and Drug Administration (FDA) had put a clinical hold on its Investigational New Drug Application (IND) for its first U.S. clinical trial of ZGN-1061, the firm’s second-generation, investigational MetAP2 inhibitor currently in development for the treatment of type 2 diabetes.

Despite this crushing loss, where we saw shares down about 41% on Monday, one analyst is still positive on the stock. Wedbush maintained an Outperform rating for the stock but lowered its price target to $9 from $15, still implying upside of 66% from Monday’s close of $5.41

The FDA cited the possibility of cardiovascular (CV) safety risk in the ongoing development of ZGN-1061, and the company plans to assess these options and request a Type A meeting with the agency to discuss next steps with the program.

In Wedbush’s report, the firm was clear to note:

As a reminder, the Company recently completed patient enrollment outside U.S. (Australia and New Zealand sites) in the ZGN-1061 higher (1.8 mg) dose cohort for the Phase 2 trial designed to demonstrate proof-of-concept safety and efficacy in T2D patients. Most importantly, no CV safety signals were reported to date from both the lower (0.9 mg) and higher (1.8 mg) dose cohort and results from the higher dose cohort are anticipated in early 2019. We do not see the clinical hold on the ZGN-1061 IND impacting ZGN-1258 development for Prader-Willi Syndrome (PWS) at this time and look forward to the initiation of ZGN-1258 Phase 1 trial in Q1:19. The delay in clinical development of ZGN-1061 extended cash runway through 2020. We view recent weakness in the stock as a buying opportunity.

In June, positive 12 weeks Phase 2 proof-of-concept results were reported from the initial low (0.9 mg) dose cohort. The low dose Phase 2 results achieved statistical significance and demonstrated a favorable safety and tolerability profile, including no evidence of thrombotic effects.

Overall, Wedbush sounds fairly confident looking forward on Zafgen, although it did adjust its expectations. The firm concluded saying:

We look forward to updates on the clinical development of ZGN-1061 after the Type A meeting with the FDA (anticipated in Q1:19). We project potential achievement of blockbuster ($1 billion) revenues in 2029 for ZGN-1061 for T2D after launch in 2025

Shares of Zafgen were last seen up about 5% at $5.70, in a 52-week range of $3.52 to $12.35. The consensus analyst price target is $12.60.

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