UPDATED: Zafgen shares crash after second patient in pivotal obesity study dies

Zafgen CEO Tom Hughes

Six weeks after Zafgen ($ZAFG) finally broke an uncomfortable silence and acknowledged that a patient taking its experimental obesity drug beloranib had died, the company is reporting that a second patient has died--this time from bilateral pulmonary emboli. And the news triggered a 50% plunge in the biotech's share price.

Boston-based Zafgen has been probing the death of the first patient, trying to determine what triggered that death, which prompted the FDA to place a partial hold on the study. The company said earlier it would start screening patients for thromboembolic events (blood clotting), which has afflicted patients in earlier studies. The study enrolled patients suffering from a rare eating disorder known as Prader-Willi syndrome, which can be lethal.

The biotech maintained an awkward, stony silence in early October as rumors about trouble in the pipeline spread after execs at the biotech suddenly canceled a planned roadshow with investors. Only days after its stock plunged did the company finally admit that a patient taking beloranib had died, leaving Zafgen under a cloud of suspicion on a safety issue, which can be particularly troublesome for an obesity drug.

Beloranib inhibits MetAP2, an enzyme involved in metabolism. Zafgen had attracted considerable attention for its effort, which aimed at coming up with a therapeutic that could have the same profound impact as gastric bypass surgery. The company has reported dramatic weight loss among patients taking the drug, but faces a high hurdle on safety if it expects to gain regulatory approval.

Facing a delay in completing the study, which was close to wrapping up, the biotech subsequently decided to complete the pivotal effort and deliver the data in hand in early 2016.

"Patient safety remains our top priority and we are investigating the circumstances around this event," noted CEO Tom Hughes in a statement. "We are also engaging in discussions with the FDA while we determine the next steps with the beloranib program."

- read the statement

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