Courtesy of Benzinga
Clinical-stage biopharma companies often face the risk of running out of cash reserves to fund their operations until they can push their investigational assets out of the clinics into the commercialization stage.
After Abeona Therapeutics Inc (NASDAQ: ABEO) opted to explore strategic options earlier in the week, one more biotech has made a similar announcement.
What Happened
Zafgen Inc (NASDAQ: ZFGN), a micro-cap biopharma, announced Thursday morning it plans to explore strategic options to maximum shareholder value.
The strategic alternatives being evaluated include an acquisition, merger, business combination, in-licensing or other strategic transaction involving the company and its assets.
Late last year, the FDA had placed a clinical hold on the development of Zafgen’s ZGN-1061, a MetAP2 inhibitor that is being evaluated for Type 2 diabetes, citing cardiovascular risk. The stock shed roughly 40% of its value in reaction to the development.
Subsequently, on May 30, when the company made an announcement concerning the minutes of a Type A meeting it had with the FDA to discuss a resolution to the clinical hold, the stock plunged to a record low.
In July, the company reached an agreement with the FDA on an in vivo animal study design and protocol to establish relevant safety margins for ZGN-1061.
Based on the preliminary results from the study, the company now said it does not presently expect the data to warrant resolution of the clinical hold for ZGN-1061.
Cash to Last More Than 2 Years
Zafgen said its projected cash runway is likely to last greater than two years, thanks to its previously announced and recently implemented plans to reduce operating expenses and prioritize key resources.
MTS Health Partners has been retained as exclusive advisor to assist the company in exploring alternatives.
In pre-market trading Thursday, Zafgen shares were sliding 11.79% to 72 cents.
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