Zafgen, Inc. ZFGN issued a statement that a patient death has occurred in its ongoing double-blind, randomized, placebo-controlled phase III bestPWS study evaluating beloranib for Prader-Willi syndrome. The company has reported the event to the FDA.
However, the cause of the patient’s death is still undetermined. The company is currently working with the FDA to expedite a review and understanding of this event.
Speculations about the potential bad news had started a couple of days back when it cancelled certain investor meetings. The stock went spiraling down while the company remained silent. The stock plunged 54.2% following speculations. However, the company recovered 23.8% after it broke its silence and issued the above statement. Overall, the stock is down 43.3%.
Wait and Watch
Beloranib is the lead candidate at Zafgen. Apart from Prader-Willi syndrome, the candidate is being developed for other indications including obesity caused by hypothalamic injury (including craniopharyngioma-associated obesity) and severe obesity in the general population. For the Prader-Willi syndrome indication, the company enjoys orphan drug designation in both the U.S. and EU. The European Commission has also granted orphan drug designation for beloranib for the treatment of craniopharyngioma.
If the death is found to be associated with Zafgen use, it could be a major blow for the company. Thus, investor focus is expected to remain on further updates from the company on the phase III bestPWS study.
Zafgen carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Anika Therapeutics Inc. ANIK, Amgen AMGN and Bayer BAYRY. Anika and Amgen hold a Zacks Rank #1 (Strong Buy), while Bayer is a Zacks Rank #2 (Buy) stock.
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