Zafgen Doubles: What Do The Experts Think?

Recently, analysts from FBR & Co. and RBC Capital Markets gave their take on Zafgen Inc ZFGN after the company's stock price soared on news that their beloranib drug had positive Phase III data.

RBC Capital Markets upgraded Zafgen from Sector Perform to Outperform and raised their price target to $21. FBR & Co. upgraded Zafgen to Outperform and raised their price target from $9 to $20.

RBC Capital Markets

Simos Simeonidis, an analyst at RBC Capital Markets, wrote, "We are upgrading ZFGN to Outperform on the positive beloranib Phase III data...we believe that the strength of the efficacy data...together with the appropriate risk mitigation strategy, facilitated by the unmet need in PWS, can lead to the lifting of the clinical hold, re-opening a path towards beloranib's approval."

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RBC noted that beloranib tested positive for assisting in weight loss and controlling hyperphagia behavior, which exceeded market expectations. While secondary endpoints will be reported at a later date, the positive data from this trial increases the possibility of the FDA approving the drug which would significantly grow Zafgen's revenues and make them a key player in the obesity medication market.

FBR & Co

Christopher James, an analyst at FBR & Co., wrote, "We have seen strong efficacy data from the ZAF-311 Phase III study in PWS across both co-primary endpoints... we think the high unmet need in PWS and strong efficacy readout in the ZAF-311 Phase III trial make beloranib a compelling treatment for PWS patients, so long as safety issues can be better managed."

Analysts noted that Zafgen's drug beloranib has the ability to treat patients with few other alternative drug choices, which makes the positive data from the trial even more encouraging. Going forward, analysts will be looking for further positive clinical data and will note in particular the success of the drug in meeting the desired targets for safety and efficacy.

At the time of this publication, Zafgen was trading at $90, down 1.43 percent.