Zafgen Inc (NASDAQ:ZFGN) announced its third quarter 2016 financial results.
“We have leveraged our experience with the MetAP2 pathway to develop ZGN-1061, a second-generation molecule that we believe is optimized to harness the powerful benefits of MetAP2 inhibition while minimizing the potential for adverse events,” said Thomas Hughes, Ph.D., President and Chief Executive Officer of Zafgen. “We are focused on advancing development of this highly differentiated compound, and expect to report top-line results from our ongoing Phase 1 clinical trial of ZGN-1061 in the first quarter of 2017. These results will further elucidate the candidate’s key differentiators relative to our first-generation MetAP2 inhibitor, and help inform the doses, design, and patient populations for our Phase 2 clinical program.”
Recent Corporate and Clinical Highlights
- Zafgen implemented a strategic restructuring in July to focus its resources on the development of ZGN-1061, a second generation MetAP2 inhibitor that originated from the Company’s discovery program as part of a multi-year campaign to identify novel compounds that avoided limiting preclinical safety concerns observed with its first-generation MetAP2 inhibitors. The Company is also leveraging its MetAP2 platform to discover additional, highly-differentiated, second-generation candidates that provide clear evidence of efficacy with promising safety margins. As a part of this restructuring, the Company has suspended development of its first-generation candidates, beloranib and ZGN-839, which were being developed for orphan obesity indications and nonalcoholic steatohepatitis, respectively.
- The Company commenced dosing in its ZGN-1061 Phase 1 clinical trial, which is progressing on schedule. The clinical trial includes a single ascending dose (SAD) portion, which will enroll up to 48 healthy patients, as well as a multiple ascending dose (MAD) portion that is evaluating twice-weekly administration of ZGN-1061 for safety, tolerability, and weight loss efficacy over four weeks in up to 24 obese patients. The Company continues to expect to report top-line results from its ongoing Phase 1 clinical trial of ZGN-1061 in the first quarter of 2017.
Third Quarter 2016 Financial Results
“Our strong balance sheet, coupled with the impact of our July restructuring, provides us with the resources to fund development of ZGN-1061 through key value-creating milestones,” stated Patricia Allen, Chief Financial Officer of Zafgen. “We expect our cash runway to extend through the end of 2018, by which time we expect to have data from a Phase 2a clinical trial for ZGN-1061.”
Cash, Cash Equivalents and Marketable Securities
As of September 30, 2016, the Company had cash, cash equivalents and marketable securities totaling $138.7 million.
The Company reported a net loss for the third quarter of 2016 of $14.7 million, or $0.54 per share, compared to a net loss of $19.9 million, or $0.73 per share, for the third quarter of 2015.
The weighted average common shares (basic and diluted) outstanding used to compute net loss per share were 27,322,907 for the third quarter of 2016, compared to 27,138,667 for the third quarter of 2015.
Research and Development Expenses
Research and development expenses for the third quarter of 2016 were $10.0 million, compared to $14.2 million for the third quarter of 2015. The decrease in research and development expenses for the quarter ended September 30, 2016 as compared to the prior year quarter was primarily due to a decrease in preclinical, clinical and manufacturing costs related to beloranib and ZGN-839. These decreases were partially offset by increased spending on ZGN-1061 during the quarter ended September 30, 2016 as preclinical development and manufacturing activities continue and the Company initiated the Phase 1 clinical trial. There was also an increase in personnel related costs primarily related to severance expenses as a result of the reduction in workforce during the third quarter of 2016.
General and Administrative Expenses
General and administrative expenses for the third quarter of 2016 were $4.8 million, compared to $5.5 million for the third quarter of 2015. The decrease in general and administrative expenses for the quarter ended September 30, 2016 as compared to the prior year quarter was primarily due to a decrease in professional fees and non-cash stock-based compensation expense, partially offset by an increase in personnel related costs primarily related to severance expenses as a result of the reduction in workforce during the third quarter of 2016.
2016 Financial Guidance
The Company expects that its cash, cash equivalents and marketable securities balance will be greater than $125 million at December 31, 2016. (Original Source)
Shares of Zafgen closed today at $3.43, up $0.26 or 8.20%. ZFGN has a 1-year high of $18.25 and a 1-year low of $2.89. The stock’s 50-day moving average is $3.41 and its 200-day moving average is $4.79.
On the ratings front, ZFGN stock has been the subject of a number of recent research reports. In a report issued on September 20, FBR analyst Christopher James reiterated a Hold rating on ZFGN. Separately, on August 5, JMP’s Jason Butler reiterated a Hold rating on the stock .
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Christopher James and Jason Butler have a yearly average loss of 21.5% and 1.7% respectively. James has a success rate of 27% and is ranked #4041 out of 4186 analysts, while Butler has a success rate of 35% and is ranked #3090.
Zafgen, Inc. is a biopharmaceutical company, which engages in the development of anti-obesity therapeutics that restores normal fat metabolism and regulatory pathways. Its product: Beloranib, which is under phase 2 clinical development as a treatment for obesity and hyperphagia in Prader-Willi Syndrome, or PW craniopharyngioma-associated obesity.