Zafgen finally breaks its silence, says it's probing death of a patient

More than two days after Zafgen's ($ZFGN) stock started to get crushed under the heavy weight of speculation surrounding its sudden decision to cancel a roadshow presentation to investors, the biotech has finally revealed that a patient died in its late-stage study of its lead obesity drug for Prader-Willi syndrome.

Zafgen said in a terse statement that it has been in talks with the FDA about the death, which occurred in a group which suffers from a rare binge-eating disease.

Here's the statement: "Zafgen recently learned of a patient death which occurred in the company's ongoing double-blind, randomized, placebo-controlled Phase III bestPWS study of beloranib in Prader-Willi syndrome, a rare genetic disorder with a high rate of mortality linked to obesity and its co-morbidities. The cause of death remains unknown at this time. According to normal practice, the event was reported to the U.S. Food and Drug Administration, at which point the Agency initiated a discussion with the company. The company is working with the Agency to expedite a review and understanding of this event, and to determine implications of the event on the conduct of the trial, and anticipates providing an update as its discussions with the Agency progress. The thoughts of the company are with the family of the patient at this time. Zafgen remains committed to ensuring the safety of all patients enrolled in its studies."

In the course of Monday and Tuesday, Zafgen's shares lost more than 50% of their value as the company kept an uncomfortable silence, broken only by an earlier statement today refusing to comment on the share price plunge. The company did not respond to queries from FierceBiotech or other reporters in the field.

After the release, we queried the company's CFO on when the patient died and what day the FDA was alerted, but the executive did not respond.

The rumor mill got started this week after the company cancelled an appearance at an RBC Capital event. But it really cranked up after the company declined to tamp down the feverish reaction on the market, raising a considerable amount of discussion on Twitter about what could have gone wrong.

Zafgen CEO Tom Hughes and other company insiders sold shares in the company just a couple of weeks ago at $42.53 per share. Today, the stock was selling at $17.50.

- here's the release