Company Update (NASDAQ:ZFGN): Zafgen Inc Refocuses Resources on Development of Differentiated Second-Generation MetAP2 Inhibitor ZGN-1061

Zafgen Inc (NASDAQ:ZFGN), a biopharmaceutical company dedicated to significantly improving the health and well-being of patients affected by obesity and complex metabolic disorders, announced today that, following a comprehensive review of its assets and clinical programs, as well as feedback from regulatory authorities, the Company is refocusing its resources on development of a differentiated second-generation MetAP2 inhibitor, ZGN-1061, in severe and complicated obesity.

“As the leader of the MetAP2 inhibitor field, we have spent many years validating the tremendous potential of this pathway for the treatment of complicated obesity with beloranib, which in multiple clinical trials demonstrated robust reductions in body weight, improvements in glycemic control, and other benefits related to cardiovascular disease risk,” said Thomas Hughes, Ph.D., President and Chief Executive Officer of Zafgen. “However, given the heightened complexity and future cost of beloranib development, balanced against the emerging product profile of ZGN-1061, we believe that the long-term opportunity for ZGN-1061 is more robust than for beloranib. Given our deep knowledge of this new and exciting drug class, and our strong cash position, we believe we are well-positioned to advance ZGN-1061 as a potential new treatment for prevalent obesity-related indications.”

The beloranib Investigational New Drug (IND) application was placed on full clinical hold in December 2015 by the U.S. Food and Drug Administration (FDA). To address the clinical hold, Zafgen recently held a Type A meeting with the FDA to discuss the clinical and preclinical data for beloranib as well as a proposed risk mitigation strategy for beloranib in Prader-Willi syndrome (PWS). Following its discussions with the FDA and review of other considerations, Zafgen has determined that the obstacles, costs and development timelines to obtain marketing approval for beloranib are too great to justify additional investment in the program, particularly given the promising emerging profile of ZGN-1061. The Company is therefore suspending further development of beloranib in order to focus its resources on ZGN-1061.

ZGN-1061, like beloranib, is a fumagillin-class MetAP2 inhibitor that was discovered by Zafgen’s researchers as part of a multi-year campaign to identify novel compounds that avoided limiting preclinical safety concerns observed with beloranib, including teratogenicity and effects on testicular function. The compound has similar efficacy, potency, and range of activity in animal models of obesity as beloranib, but displays highly differentiated properties and a reduced potential to impact thrombosis, supporting the value of the compound as a more highly optimized MetAP2 inhibitor.

Zafgen is currently screening patients to initiate a Phase 1 clinical trial evaluating ZGN-1061 for safety, tolerability, and weight loss efficacy over four weeks of treatment, and currently expects Phase 1 clinical data by the end of the first quarter of 2017. Based on the clinical data demonstrating beloranib’s significant effect on body weight and glycemic control in patients with severe obesity complicated by type 2 diabetes, Zafgen plans to focus later-stage development of ZGN-1061 in severe and complicated obesity.

As part of the strategic restructuring, the Company plans to reorganize its operations to align with its new priorities focused on ZGN-1061 development. Zafgen’s workforce is being reduced by approximately 34%, to a total of 31 employees, by December 2016. Zafgen expects the restructuring to result in approximately $4.8 million in reduced annualized workforce expenses once the plan is fully implemented. The Company also expects to incur a non-recurring charge of approximately $2.4 million in the third quarter of 2016 related to the restructuring.

In addition, both Patrick Loustau, President, and Alicia Secor, Chief Commercial Officer, will be leaving the Company to pursue other opportunities.

“We would like to thank Patrick, Alicia, and all of our employees for their hard work and dedication over the past several months as we explored every reasonable path to remove the full clinical hold on the beloranib IND and advance beloranib development,” continued Dr. Hughes. “We would also like to express our deepest gratitude to the investigators, patients and families who participated in our beloranib trials. While we are disappointed that we could not see beloranib through to approval, we are excited about the potential of ZGN-1061, and look forward to advancing this high-value candidate in the clinic.”

Zafgen ended June 30, 2016 with approximately $150.5 million in cash and cash equivalents and now expects to end 2016 with greater than $125 million. The Company believes that its current cash balance is sufficient to fund operations through the end of 2018, at which time it expects to have completed a Phase 2a clinical trial for ZGN-1061. (Original Source)

The market did not react well to the news. Shares are trading down nearly 41% to $3.99 in after-hours trading. ZFGN has a 1-year high of $47.98 and a 1-year low of $5.34. The stock’s 50-day moving average is $6.42 and its 200-day moving average is $6.58.

On the ratings front, Zafgen has been the subject of a number of recent research reports. In a report issued on June 13, FBR analyst Christopher James reiterated a Buy rating on ZFGN. Separately, on May 17, Canaccord Genuity’s Arlinda Lee reiterated a Hold rating on the stock and has a price target of $7.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Christopher James and Arlinda Lee have a total average return of -13.3% and -25.1% respectively. James has a success rate of 38.3% and is ranked #3922 out of 4064 analysts, while Lee has a success rate of 20.2% and is ranked #3967.

Zafgen, Inc. is a biopharmaceutical company, which is engaged in the developing of anti-obesity therapeutics that restores normal fat metabolism and regulatory pathways. The company’s 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. Zafgen was founded on November 22, 2005 and is headquartered in Boston, MA.


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