Zafgen Controversy Means Stock Is Worth $25 Now, Notes SunTrust

• Zafgen Inc ZFGN shares have plunged 67 percent since October 13, after trading above $40 in 2015.
• SunTrust Robinson Humphrey’s Edward Nash maintained a Buy rating on the company, while reducing the price target from $47 to $25.
• The partial clinical hold of a trial for belaronib has raised concerns over the timely approval of the drug and its commercial success, Nash stated.

Analyst Edward Nash attributes the sharp decline in Zafgen’s shares last week to the company’s silence in the face of analyst and investor inquiries and speculations around clinical trial issues. The company later reported that the FDA had placed the trial for belaronib on partial clinical hold after the death of a patient during the trial.

The partial hold is aimed at screening the currently enrolled patients for existing thrombotic disease prior to receiving further study drug and to establish a monitoring program through the completion of the study, the SunTrust Robinson Humphrey report mentioned.

Nash believes that Zafgen shares are undervalued at the current trading levels. “Despite the apparent heightened risks associated with beloranib's regulatory and commercial success, we believe there is a path forward for Zafgen if superior efficacy is demonstrated in the Phase III PWS trial,” he wrote.

“We believe the significant unmet medical need in PWS patients could potentially warrant flexibility among regulatory agencies, physicians, and patients/ families,” Nash added.