Zafgen ends lead drug development, shares plummet
pharmafile | July 21, 2016 | News story | Research and Development | zafgen
Zafgen has announced that it has dropped development of its lead drug candidate, beloranib, in order to focus on a Phase I drug which translates to a 34% reduction in the workforce and has sent stock plummeting over 50%.
Beloranib was under investigation for the treatment of Prader-Willi syndrome, a rare genetic disorder that causes obesity. The US Food and Drug Administration ordered the suspension of a Phase III trial for the drug in December when a second patient on the trial died.
While the company had met with the FDA to discuss a proposed risk mitigation strategy for the drug, Zafgen determined that the obstacles, costs and development timelines to obtain marketing approval were “too great to justify additional investment in the program.”
As a result, the workforce at Zafgen will be cut by 34%, or 16 job losses. Included in those losses are president Patrick Loustau and chief commercial officer Alicia Secor. At the time of writing, stock had fallen 52%, cutting the market cap to $89.29 million. Zafgen ended June 30 of this year with approximately $150.5 million in cash and cash equivalents.
The company will now turn its attention to early-stage trial drug, ZGN-1061, in severe and complicated obesity indications.
CEO Thomas Hughes made every effort to present the positives for the company in a statement. He says: “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 indications.”
Sean Murray
