Zafgen Suspends Development Of Beloranib; Shares Plunge More Than 40%

(RTTNews) - Zafgen Inc. (ZFGN) announced the company is suspending further development of beloranib in order to focus its resources on ZGN-1061. The beloranib Investigational New Drug application was placed on full clinical hold in December 2015 by the U.S. FDA. To address the clinical hold, Zafgen recently held a Type A meeting with the FDA. Following its discussions, Zafgen has determined that the obstacles, costs and development timelines to obtain marketing approval for beloranib are too great to justify additional investment in the program.

Zafgen plans to reorganize its operations to align with its new priorities focused on ZGN-1061 development. Zafgen's workforce is being reduced by approximately 34%, to a total of 31 employees, by December 2016. The company also expects to incur a non-recurring charge of approximately $2.4 million in the third quarter of 2016 related to the restructuring. The company said, both Patrick Loustau, President, and Alicia Secor, Chief Commercial Officer, will be leaving Zafgen to pursue other opportunities.

Zafgen believes that its current cash balance is sufficient to fund operations through the end of 2018, at which time it expects to have completed a Phase 2a clinical trial for ZGN-1061.

Shares of Zafgen were down more than 40% after hours.