Zafgen, Inc. (NASDAQ: ZFGN)
On Wednesday shares of Zafgen, a biopharma company developing treatments for obesity and metabolic disorders, spiked more than 78% after the company announced that its primary drug candidate, beloranib achieved endpoint goals for efficacy in Phase 3 trials. The drug is being developed for the treatment of Prader-Willi Syndrome (PWS), a genetic disorder that causes uncontrollable hunger and leads to life-threatening obesity. From a safety standpoint, the Phase 3 trials have been disappointing, with two patient deaths. The FDA put the drug candidate on partial clinical hold in October and on full clinical hold after the second death in December. Even without medical treatment, PWS patients are at risk of unexpected and sudden death, and ongoing research has yet to establish what, if any role beloranib played in the death of patients involved in the trials. Based on Wednesday’s trading, investors seem to believe that efficacy results are a huge positive, and that Zafgen will resolve the safety issues.
“This clear efficacy outcome is a crucial first step in moving discussions forward with the Food and Drug Administration regarding continued development of beloranib,” stated Thomas Hughes, Ph.D., Chief Executive Officer of Zafgen. “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. “Zafgen also added that the company plans to continue its dialog with the FDA following the trial results. Yahoo Finance
ZFGN Technical Analysis
Traders and investors loved the phase 3 news for beloranib, driving ZFGN stock up 111% to a high of $11.88 on 22 times average daily volume. Most of the buying came during the initial 40 minutes of trading while the broader markets were selling-off hard. The stock hit $11 per share in the premarket before pulling back to its opening price of $7.46. After the high of the day was hit, profit takers pulled the stock back near $9 and from there it traded in a range between $9 and $10 for most of the day before closing the day up 79% at $10.04. If a strong market or some other catalyst keeps the bulls in buying mode, resistance areas are near $11.00, $11.88, $13.04 and $13.58. Beyond that the December gap closes at $15.74. If sellers appear to be taking control, I will watch support levels near $9.00, $8.50, $7.33, $6.65 and the gap close at $6.08.
Zafgen Company Profile
Zafgen, Inc. 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 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. 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. Google Finance