Zafgen shares tumble as FDA slaps it with another clinical hold

Executives at Zafgen are no doubt throwing their hands up in despair following the FDA’s decision to place a clinical hold on the group's lead project, ZGN-1061. Their argument would surely be that the diabetes drug has so far not shown any safety issues. However, the FDA appears to have decided that caution is needed given previous concerns with Zafgen’s older project beloranib, which has the same mechanism of action: in 2015 the group reported two patient deaths in a Prader-Willi syndrome trial using beloranib. The FDA did not give any specific reasons for the hold on ZGN-1061, beyond the possibility of cardiovascular risk based on beloranib, but analysts at Leerink argued that Zafgen’s lack of transparency over how ZGN-1061 is metabolised would not have helped matters – especially as the drug has the potential to induce clotting if it is not cleared from the body within 72 hours. While structural changes might lead to faster clearance of ZGN-1061 versus beloranib, the former's use in a much larger, non-orphan, chronic patient population, might have represented more risk than the regulator was comfortable with. Shares in Zafgen crashed by more than 40% yesterday. Additional investor angst might rightly be centered on what the FDA’s caution means for Zafgen’s MetAP2 franchise. The company only has drugs with this mechanism of action and if it cannot convince the regulator of the safety of this approach, then Zafgen’s future might be on permanent hold.