Has a Zafgen Turnaround Begun?

By Chris Lange Updated Jan 13, 2:50PM EST · Published Jan 20, 8:40AM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Has a Zafgen Turnaround Begun? — © Thinkstock

Despite facing setbacks recently, Zafgen Inc. (NASDAQ: ZFGN) pushed ahead and led the bulls early on Wednesday on news of positive results. Some might even be wondering if this is the start of a turnaround for this biotech. The company announced positive efficacy results from the bestPWS ZAF-311 study, a Phase 3 trial evaluating the safety and efficacy of beloranib.

The clinical trial achieved its co-primary efficacy endpoints, as beloranib demonstrated a statistically significant reduction in both body weight and hyperphagia-related behaviors, making it the first investigational drug to demonstrate a positive impact on these two hallmark challenges in Prader-Willi syndrome (PWS).

Beloranib is a MetAP2 inhibitor in patients with PWS, which is the most common genetic cause of life-threatening obesity. Pathologic hunger-related behaviors, known as hyperphagia, dominate the lives of individuals with PWS and drive patients to engage in problematic behaviors that can lead to excessive overeating, choking and stomach rupture.

On December 2, 2015, the U.S. Food and Drug Administration (FDA) notified Zafgen that the beloranib investigational new drug (IND) application had been placed on complete clinical hold due to an imbalance in severe venous thromboembolic events, including two patient deaths. However Zafgen does not seem overly concerned as it plans to address the FDA later this quarter.
[nativounit]
Thomas Hughes, Ph.D., CEO of Zafgen, commented:

This clear efficacy outcome is a crucial first step in moving discussions forward with the Food and Drug Administration regarding continued development of beloranib. While we take the previously reported adverse events very seriously, we now have the robust data to provide greater perspective on the benefit/risk relationship of beloranib in this high-risk patient population. We thank our investigators, and the patients and their families for participating in the bestPWS ZAF-311 clinical trial.

So far in 2016, Zafgen has performed relatively in line with the broad markets, with the stock down 10.7% year to date. Looking at the chart, over the past 52 weeks the stock is down 85%.

Shares of Zafgen closed Tuesday down 3.3% at $5.62, with a consensus analyst price target of $18.57 and a 52-week trading range of $5.34 to $55.36. Following the release of the results, the stock shot up over 45% at $8.28 in early trading indications on Wednesday.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.