Zafgen Initiated At Buy, $47 Target By SunTrust (15 min)

In a report published Wednesday, SunTrust Robinson Humphrey analyst Edward Nash initiated coverage of Zafgen, Inc. ZFGN with a Buy rating and price target of $47. The company is developing a product for the treatment of PraderWilli syndrome (PWS) and hypothalamic injury associated obesity (HIAO). Beloranib inhibits a key metabolic enzyme, called methionine aminopeptidase 2 (MetAP2) and has received Orphan Drug Designation for PWS in the EU and US. It will help meet the unmet needs for both HIAO and PWS. "Following clinical development in these indications, Zafgen intends to target broader metabolic indications with much larger patient populations such as general obesity and nonalcoholic steatohepatitis (NASH). We believe Zafgen is differentiated from conventional obesity players by focusing on Orphan obesity indications while holding promising potential to address a much larger obesity market with the followon programs," Nash stated. Of the six clinical trials completed by Zagfen for the use of beloranib for PWS, HIAO and severe/complicated obesity, the results have demonstrated meaningful clinical efficacy and a benign safety profile. "Despite changes in clinical trial design, we believe there is a high probability of success for the ongoing ZAF-311 Phase III trial for beloranib in PWS," the SunTrust report said. Top-line data for a six-month randomized period is likely to be released in 1Q16, which the analyst believes could act as a powerful catalyst for the stock. In addition, the strong balance heet "likely supports a position of strength for Zafgen."