Zafgen, Inc. (NASDAQ : ZFGN)
Zafgen, Inc. (ZFGN), a biopharmaceutical company announced on Friday that the Food and Drug Administration has put the company’s beloranib trials on partial clinical hold. The hold of the trials is directly related to previous news of a patient’s death in the Phase 3 bestPWS study of beloranib in Prader-Willi Syndrome.
Zafgen, Inc. CEO Comments
“Patient safety is our top priority, and we will work closely with the FDA to implement these measures to support the further development of beloranib,” said Dr. Thomas Hughes, Chief Executive Officer of Zafgen. Globe Newswire
ZFGN Technical Analysis
ZFGN gapped down in price on Friday to $14.14, down from the prior day’s close of $21.02, which is a 33% decrease in price based on unfavorable news. Taking a look at the daily chart, we can see the last time the stock traded below this price level was on October 14th when the stock reached its 52 week low of $10.90. Taking a further look back on the chart, we can see the stock has been in a freefall ever since September 18th when it was trading at $46.23. The most recent and biggest drop occurred on October 9th when the stock was trading at $34.40, only to drop all the way to lows of $10.90 on October 14th, equivalent to a 68% drop in price. The stock tried to rebound on October 15th hitting highs of $22.15 only to get slammed back down. The stock traded over 6.5 times the normal daily trading volume. The stock did reach pre market lows of $13.46 and then spiked up $0.68 at the open, or equivalent to 5%. For trading purposes, my entry point short would have been at $14.00 with a possible add on at $13.50 looking for a move down through $13.00. My stop loss would have been $14.25 fearing anything above that and the stock would start to fill in the gap down.
Company Profile
Zafgen, Inc., incorporated on November 22, 2005, is a biopharmaceutical company. The Company is engaged in improving the health and well-being of patients affected by obesity and complex metabolic disorders. The Company’s focus is on advancing therapeutics for patients suffering from severe obesity and obesity-related disorders. The Company’s lead product candidate, Beloranib is a twice-weekly subcutaneous (SC) injection being developed for the treatment of multiple indications, including severe obesity in two rare diseases, Prader-Willi syndrome (PWS) and hypothalamic injury-associated obesity (HIAO), including craniopharyngioma-associated obesity, and severe obesity. Beloranib is in Phase III stage of development for obesity and hyperphagia in patients with PWS; completed Phase II clinical trial for HIAO, and is in Phase IIb stage of development for severe obesity in the general population.
Beloranib is an injectable small molecule therapy with a mechanism of action that reduces hunger while stimulating the use of stored fat as an energy source. It is the anti-obesity agent with the potential to address two abnormalities that are present in the obese patient—hunger that is inappropriate relative to the amount of energy stored as fat and dysregulation of fat metabolism, which causes more fat to be made and stored in an obese patient than in a lean person. Beloranib acts through potent inhibition of MetAP2, an enzyme that modulates the activity of key cellular processes that control metabolism. MetAP2 inhibitors work, at least in part, by directing MetAP2 binding to cellular stress mediators, thereby reducing the tone of signals that drive lipid synthesis by the liver and fat storage throughout the body. In this manner, MetAP2 inhibition serves the purpose of re-establishing balance to the ways the body packages and metabolizes fat and glucose. MetAP2 inhibitors reduce the production of new fatty acid molecules by the liver and help convert stored fats into useful energy, while reducing hunger.
The Company’s other product candidate, ZGN-839, is in pre-clinical development stage. The Company is also evaluating the additional MetAP2 inhibitors beyond Beloranib as potential development candidates for the treatment of severe obesity in the general population. MetAP2 inhibitors may also have utility in the treatment of other metabolic diseases, such as nonalcoholic fatty liver disease (NAFLD) and nonalcoholic steatohepatitis (NASH). In a mouse model of NAFLD and NASH, its second product candidate, ZGN-839, a MetAP2 inhibitor, reduced the severity of NAFLD and NASH. The Company’s wholly owned subsidiaries include Zafgen Securities Corporation, Zafgen Australia Pty Limited and Zafgen Animal Health, LLC. Reuters
