Analysts Weigh In On Two Collapsing Biotechs: Zafgen Inc (ZFGN), OncoGenex Pharmaceuticals Inc (OGXI)

Analysts are weighing in on the biopharmaceutical companies Zafgen Inc (NASDAQ:ZFGN) and OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI), as shares of both companies fell sharply today due to various challenges and clinical trial setbacks.

Zafgen Inc

Zafgen shares are collapsing today, down around 60% at time of writing after the company reported a second patient death in an ongoing open label extension trial of beloranib in Prader-Willi Syndrome.

Cowen analyst Phil Nadeau was the first to commented: “The report of a second patient death due to pulmonary embolism while on beloranib treatment is troublesome. The FDA had placed beloranib on partial clinical hold in mid-October following the first patient death that occurred in bestPWS.”

“Unfortunately with two patient deaths due to PE in patients exposed to beloranib, it would seem that Zafgen will have a challenge demonstrating a positive risk-benefit. It can be argued that PWS is a severe condition, that PWS patients are at potential higher risk for DVT and that it still remains unclear what the beloranib’s involvement is in the DVT cases. Nonetheless, all the DVT cases have occurred on beloranib treatment, strongly implying an association. The fact that a patient died of PE despite screening and reconsenting implies it may be difficult to reduce or even assess the risk of DVTs in PWS patients. In order for it to have a path forward beloranib would need to show a strong benefit that outweighs the risks of VTE and death in its Phase III data. As the risk of DVT and death grows, the level of benefit necessary seems increasingly difficult to achieve,” the analyst continued.

Nadeau reiterated an Outperform rating on shares of Zafgen, with a price target of $20, which implies an upside of 214.5% from current levels.

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Phil Nadeau has a total average return of 17% and a 62.7% success rate. Nadeau has a -42.5% average return when recommending ZFGN, and is ranked #176 out of 3644 analysts.

OncoGenex Pharmaceuticals Inc

In a research report released today, Stifel Nicolaus analyst Stephen Willey downgraded shares of Oncogenex from a Buy to a Hold rating, following the news that the company’s Affinity, a Phase-III trial to test Custirsen for prostate cancer, failed to reach a certain statistical threshold for an overall survival. OncoGenex shares reacted to the news, dropping nearly 33% on heavy volume, making it among the top losers today.

Willey commented, “We believe the OS analysis in the prospectively-defined subgroup of poor-prognostic/chemotherapy-experienced CRPC patients enrolled in the P3 AFFINITY trial represented the best opportunity for custirsen to secure a P3 clinical win. And while acknowledging the rigorous statistical threshold doesn’t rule out the potential for a subsequent win on an intent-to-treat (ITT) basis, we believe prior P3 SYNERGY data suggests visibility here is minimal. We believe visibility into 1Q16 PFS data from the P2 SPRUCE trial is similarly-limited and apatorsen’s safety/tolerability profile still remains a source of longer-term concern for us. Despite after-hours trading implying OGXI shares are now at/below cash (fully-diluted basis), we believe it’s prudent to move to the sidelines here.”

According to, analyst Stephen Willey has a total average return of 28% and a 60% success rate. Willey has a -60% average return when recommending OGXI, and is ranked #34 out of 3644 analysts.

Out of the 3 analysts polled by TipRanks, 2 rate Oncogenex stock a Buy, while 1 rates the stock a Hold. With a return potential of 237%, the stock’s consensus target price stands at $6.00.

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