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Zafgen shares plummet after death of 2d patient

In a statement, chief executive Thomas Hughes said Zafgen is discussing its next steps with the Food and Drug Administration.
In a statement, chief executive Thomas Hughes said Zafgen is discussing its next steps with the Food and Drug Administration.(Lane Turner/Globe Staff/File 2015)

Zafgen Inc. suffered a major setback in its bid to become an obesity drug pioneer Wednesday when it disclosed the death of a second patient who had taken the Boston company’s experimental drug in a late-stage clinical trial.

The disclosure sent Zafgen’s shares down almost 61 percent, underscoring the risky nature of the biotechnology business and creating fresh uncertainty for a drug candidate that had been expected to be submitted for US regulatory approval as early as next year.

As in the case of the first death, which Zafgen reported in October, the company did not identify the patient or where the trial had occurred. And it did not say whether its drug, called beloranib, caused the blood clotting in the lungs that led to the patient’s death.

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But both of the patients who died had taken beloranib rather than a placebo in the clinical study. The drug, which works to rebalance the way the body makes and uses fat stored in tissues, is meant to treat a rare genetic disorder known as Prader-Willi Syndrome that causes constant hunger and severe and life-threatening obesity. Many patients with the disease are prone to blood clotting and a range of other health problems.

Zafgen chief executive Thomas Hughes declined to discuss the patient deaths Wednesday, a company spokeswoman said. In a statement, Hughes said the company is discussing its next steps with representatives form the Food and Drug Administration.

“Our thoughts are with the patient and their family at this time,” Hughes said. “Patient safety remains our top priority and we are investigating the circumstances around this event.”

Zafgen’s statement said it learned of the patient’s death Tuesday.

The company’s shares plunged $9.65 to $6.28 Wednesday, a decline of nearly 61 percent. Zafgen’s shares had lost 5.8 percent on Tuesday, on a day when broader financial markets traded up strongly, and 4.4 percent on Monday.

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Biotech analyst Joseph Schwartz, managing director at the Boston health care investment bank Leerink Partners, said the company is unlikely to seek regulatory approval now until it conducts at least one more clinical trial. That trial will have to more carefully screen patients and try to address the issue of whether beloranib can trigger clotting, he said.

“It increases the onus on the company to show that the drug is not causing the events,” Schwartz said. “You don’t know if it’s absolutely related to the drug but it doesn’t look good. Now you have two events, so it increases the risk. Although there is a great unmet medical need, the FDA is always concerned about safety foremost.”

Still, he said there remains a chance that beloranib could be approved, though possibly for a smaller patient population and with requirements for more stringent monitoring.

After the first patient death, Zafgen ended the main part of its clinical trial, which enrolled 108 patients and was near completion. It said it would study the data that could enable it to file a new drug application with the FDA and expected to report its findings early next year.

Hughes, in an October interview, said, “Blood clotting is something that occurs commonly in this [patient] population. We have no basis to suggest that taking beloranib triggers clots. What we’re trying to assess is whether beloranib has the ability to amplify clotting.”

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That had been an aim of one part of the Zafgen trial that had continued. While the first patient who had died took the drug in a part of a trial where some other patients were given placebos, the second patient who died was in the trial extension where all patients were given the drug.

Trading in Zafgen’s stock had been heavy before it disclosed the first patient’s death. After the disclosure, a lawsuit filed in US District Court in Boston alleged that Zafgen and Hughes violated federal securities laws by initially withholding disclosure of some nonfatal “adverse events” experienced by patients in the clinical trial. Lawyers for the Boston law firm Block & Leviton LLP, which filed the complaint, said they were seeking class-action status.

Zafgen, founded in 2005, is funded by investors that include venture capital firms Atlas Venture of Cambridge and Third Rock Ventures of Boston. The company raised $96 million in an initial public offering last year, using the money to finance its clinical studies.

It is competing against other companies developing obesity therapies, including Intarcia Therapeutics Inc. of Boston and Vivus Inc. of Mountain View, Calif.


Robert Weisman can be reached at robert.weisman@globe.com. Follow him on Twitter @GlobeRobW.