Zafgen to scrap lead obesity drug, shares
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[July 20, 2016]
(Reuters) - Zafgen Inc said it was
suspending the development of its lead obesity drug, beloranib, more
than six months after the U.S. Food and Drug Administration asked the
company to halt all tests on the drug following the death of two
patients.
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Zafgen's shares tumbled more than 40 percent in extended trading on
Tuesday after the company also said it would reduce its workforce by
about 34 percent to 31 employees by December.
Obesity treatments have been plagued by safety concerns,
particularly related to heart risk and birth defects, and several
drugs have been taken off the market.
The FDA has approved drugs made by Vivus Inc, Orexigen Therapeutics
Inc and Arena Pharmaceuticals Inc in the past few years, but asked
for additional studies to check for safety of these drugs.
The U.S. Food and Drug Administration asked Zafgen to halt all tests
on the drug in December after a second patient died from an artery
blockage in the lung. The drug was put on partial hold in October
after the first patient died.
Beloranib, administered through an injection, was being tested to
treat Prader-Willi syndrome, a rare genetic disorder that leads to
obesity.
The company said in February that its controversial drug reduced the
weight of overweight diabetic patients, the second trial success in
as many months, raising hopes for the clinical hold to be lifted.
Those hopes were dashed on Tuesday after the company said the costs
and development timelines to obtain marketing approval for beloranib
are too great to justify more investment.
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Zafgen will instead focus on developing another drug, ZGN-1061, to
treat severe and complicated obesity. It is screening patients to
initiate an early-stage study and expects the clinical data by the
end of the first quarter of 2017.
Zafgen said it expected the restructuring to save about $4.8 million
in annualized workforce expenses.
The company, which expects to end 2016 with more than $125 million
in cash, believes that its cash balance is sufficient to fund
operations through the end of 2018.
Up to Friday's close of $6.75, Zafgen stock had fallen almost 80
percent since the company reported the first patient death in
October.
(Reporting by Arunima Banerjee and Ankur Banerjee in Bengaluru;
Editing by Don Sebastian)
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