Zafgen hammered (again) as FDA clamps partial hold on PhIII obesity drug

Two days after belatedly acknowledging the death of a patient in its Phase III study of the obesity drug beloranib, Zafgen ($ZFGN) put out word this morning that the FDA had imposed a partial clinical hold on the trials underway in the program. The hold will require added time to complete special patient screening, and the news blasted its already battered share price, which swiftly plunged 26%.

Investors had been jumpy about Zafgen--which has been studying a potentially radical breakthrough in obesity medications--ever since Monday, when word spread that the biotech had abruptly canceled a planned road show. Rumors about a potential problem quickly circulated through Twitter and then exploded as the company refused to comment for two painfully long days.

Fears about what could have gone wrong, along with the tight-lipped public posture, drove down the value of the company's shares by more than 50% in 48 hours.

Analysts who follow the company, including RBC's Simos Simeonidis, had held on to the hope that the patient was in the placebo arm, which would have instantaneously cleared the air and rallied backers. But the FDA notified the company verbally of the partial clinical hold last night after the patient's group status was clarified.

Investigators still haven't determined what killed the patient, or whether it was linked to the drug. Patients in this study suffer from Prader-Willi syndrome, a rare binge-eating disorder, which can be lethal. So there are many other reasons besides the drug that could explain the death. But regulators are notoriously cautious when it comes to obesity drugs, quick to require new studies or hand out rejections if signs of safety issues arise--and the added air of uncertainty will now hinder Zafgen.

For now, though, the brakes are being applied to all the trials now underway so that the company can zero in on one known safety risk as more is learned about the cause of death.

"Due to previously reported thromboembolic events (blood clotting) in ongoing and prior clinical trials of beloranib and the unknown nature of the death, the FDA gave verbal notice of a partial clinical hold to institute measures to ensure patient safety," Zafgen reported. "Patients currently participating in the ZAF-311 study will be screened for existing thrombotic disease prior to receiving further study drug and regularly monitored through the completion of the study. Given that the study is near complete, at this time, the Company expects to report top-line results in the first quarter of 2016. Similar screening and monitoring is being considered for the ongoing Phase 2b study (ZAF-203) in patients with severe obesity complicated by Type 2 diabetes. The Company now anticipates that the PWS Phase 3 clinical trial, ZAF-312, will be initiated after ZAF-311 is completed and a full assessment of the safety and efficacy of beloranib is performed by the FDA."

- here's the release