Zafgen (ZFGN) Stock Is Tumbling On Clinical Hold News

Zafgen ZFGN Stock News

Zafgen Inc (NASDAQ: ZFGN) is seeing dramatic declines early on in the trading session this morning after announcing that the FDA has placed a clinical trial of ZGN 1061 on hold. Of course, the news upset investors who are abandoning their positions. Today, we’ll talk about:

  • The clinical hold;
  • what we’re seeing from ZFGN as a result; and
  • what we’ll be watching for with regard to the stock ahead.

ZFGN Announces Clinical Hold

As mentioned above, Zafgen is having an incredibly rough start to the trading session this morning after the company issued a press release announcing a clinical hold. In the release, the company said that it received a letter from the United States Food and Drug Administration last week. In the letter, the FDA informed the company that the Investigational New Drug Application for the trial of ZGN-1061 had been placed on hold.

ZGN-1061 is the company’s second-generation, investigational MetAP2 inhibitor. At the moment, ZFGN is working to develop the drug as a potential treatment for type 2 diabetes.

In the release, the company said that the FDA cited concerns with regard to cardiovascular safety risk. This concern is based on the prior compound. However, the FDA did outline multiple paths for the company to move forward. These paths included both clinical and nonclinical options.

In the release, ZFGN said that it plans to assess its options and request a Type A meeting with the FDA to discuss possible next steps surrounding the development of the drug.

There is a silver lining here however. In the release, the company reminded investors that it continues to advance its Phase 2 clinical trial of ZGN-1061. It’s important to remember that dosing in this trial was recently completed. In the release, ZFGN said that the results are still blinded, but to date, there have been no adverse cardiovascular events. with doses of up to 1.8 mg.

Another part of the silver lining here is the company’s cash position. Due to these delays, the company’s expected burn will reduce and it now expects to have a cash runway that will extend through 2020.

What We’re Seeing From The StockĀ 

While there is a silver lining here if you look hard enough, the cloud is still a dark one, and it’s concerning for Zafgen investors. After all, this delay could become something more concerning, especially considering that the asset is being used in multiple clinical trials. If the cardiovascular risks are proven to be too much, it could threaten the company’s ability to stay afloat. On the other hand, in previous studies, cardiovascular risk has not been a concern. On top of that, in a Phase 2 study where dosing was recently completed, cardiovascular events are nonexistent. Nonetheless, investor concern is leading to dramatic declines. Of course, our partners at Trade Ideas were the first to alert us to the declines. Currently (11:10), ZFGN is trading at $5.24 per share after a loss of $3.86 per share or 42.36% thus far today.

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on ZFGN. In particular, we’re interested in following this clinical hold. While the FDA doesn’t make moves like this without sufficient concern, data from previous and ongoing clinical studies seem to be promising and may alleviate any cardiovascular risk concerns. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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