Be­lea­guered Zaf­gen crushed af­ter FDA de­mands force it to dump lead drug

Stymied at the FDA with a lin­ger­ing clin­i­cal hold on its lead obe­si­ty drug, Zaf­gen is dump­ing the ther­a­py and re­treat­ing to a pre­clin­i­cal pro­gram in the pipeline.

The biotech an­nounced af­ter the mar­ket closed on Tues­day that it will now cir­cle the wag­ons around ZGN-1061 af­ter be­lo­ranib was linked with the death of two pa­tients in a piv­otal study. Zaf­gen al­so says it will once again re­duce its ranks, chop­ping 34% of the sur­vivors and cut­ting the pay­roll to 31. The re­or­ga­ni­za­tion is claim­ing the jobs of Patrick Lous­tau, pres­i­dent, and Ali­cia Sec­or, chief com­mer­cial of­fi­cer.

Zaf­gen’s al­ready bat­tered shares plunged 50% by mid-morn­ing Wednes­day. Its shares have shed close to 90% of their 52-week high price, leav­ing the mar­ket cap at $93 mil­lion; less than the cash it has on hand.

Zaf­gen strug­gled might­i­ly for months to over­come its prob­lems, but ul­ti­mate­ly the biotech was over­whelmed af­ter a pa­tient died in their Phase III study for Prad­er-Willi syn­drome, which they de­ter­mined was caused by a pul­monary em­bolism. Sub­se­quent­ly an­oth­er pa­tient tak­ing the drug died, al­so from a pul­monary em­bolism, forc­ing the FDA to or­der a com­plete stop to any fur­ther dos­ing.

Zaf­gen cut its near-com­plete stud­ies short, rolling out pos­i­tive da­ta on weight loss and re­fo­cus­ing on rare dis­eases, but it was all for naught. Reg­u­la­tors weren’t in a for­giv­ing mood, or ready to let the de­vel­op­ment pro­gram con­tin­ue the way the biotech had pro­posed. The FDA didn’t fall­en in line with Zaf­gen’s plan to blaze a path for­ward with a new Phase III study tied to a risk mit­i­ga­tion strat­e­gy. In a call with an­a­lysts on Tues­day evening, CEO Tom Hugh­es said that while the agency ap­peared re­cep­tive to its risk mit­i­ga­tion strat­e­gy, reg­u­la­tors de­mand­ed more time for dis­cus­sion and looked for a longer Phase III that would “great­ly ex­tend” the time­line and cost need­ed to be­gin com­mer­cial­iza­tion work.

As is of­ten the case with Zaf­gen, ex­ecs spun the news hard, with Hugh­es dogged­ly in­sist­ing on the pos­i­tive as­pects of start­ing with a clean slate and a new drug. But Zaf­gen is mov­ing from a piv­otal stage back to a pre­clin­i­cal drug that has yet to be test­ed in hu­mans. Hugh­es in­sist­ed that 1061, which has on­ly been test­ed in an­i­mals, is sig­nif­i­cant­ly de-risked, a po­si­tion few ex­pe­ri­enced drug de­vel­op­ers would con­sid­er plau­si­ble, giv­en the ex­tra­or­di­nar­i­ly high rate of fail­ure for all pre­clin­i­cal pro­grams, let alone the spe­cial de­mands placed on any obe­si­ty drug.

Zaf­gen will still have to con­tend with an­gry in­vestors who watched the share price for the biotech plunge last year as com­pa­ny ex­ec­u­tives re­fused for sev­er­al days to say just why they had can­celled a planned road show. On­ly af­ter a pro­longed pause did the com­pa­ny re­veal that first death, still try­ing to de­ter­mine whether he was in the drug arm or the place­bo group. Sahm Ad­ran­gi’s Ker­ris­dale Cap­i­tal lat­er mount­ed a short at­tack on the wound­ed com­pa­ny, say­ing that be­lo­ranib had ze­ro chance of ever get­ting an ap­proval and was worth noth­ing more than what the com­pa­ny had in the bank, which they would prob­a­bly squan­der any­way.

An­a­lysts were left to sort through the wreck­age Wednes­day morn­ing. RBC’s Simos Sime­oni­dis de­cid­ed to dis­con­tin­ue cov­er­age of Zaf­gen and oth­er obe­si­ty-re­lat­ed biotechs — which have seen lit­tle that could be con­sid­ered pos­i­tive news in some time — and some oth­er skep­tics ad­just­ed their fore­casts for Zaf­gen’s shares to match the amount of cash the com­pa­ny still has in hand.

CEO Tom Hugh­es’ state­ment:

“Giv­en the height­ened com­plex­i­ty and fu­ture cost of be­lo­ranib de­vel­op­ment, bal­anced against the emerg­ing prod­uct pro­file of ZGN-1061, we be­lieve that the long-term op­por­tu­ni­ty for ZGN-1061 is more ro­bust than for be­lo­ranib. Giv­en our deep knowl­edge of this new and ex­cit­ing drug class, and our strong cash po­si­tion, we be­lieve we are well-po­si­tioned to ad­vance ZGN-1061 as a po­ten­tial new treat­ment for preva­lent obe­si­ty-re­lat­ed in­di­ca­tions.”

Is a pow­er­house Mer­ck team prepar­ing to leap past Roche — and leave Gilead and Bris­tol My­ers be­hind — in the race to TIG­IT dom­i­na­tion?

Roche caused quite a stir at ASCO with its first look at some positive — but not so impressive — data for their combination of Tecentriq with their anti-TIGIT drug tiragolumab. But some analysts believe that Merck is positioned to make a bid — soon — for the lead in the race to a second-wave combo immuno-oncology approach with its own ambitious early-stage program tied to a dominant Keytruda.

Endpoints Premium

Premium subscription required

Unlock this article along with other benefits by subscribing to one of our paid plans.

Fangliang Zhang, AP Images

UP­DAT­ED: Leg­end fetch­es $424 mil­lion, emerges as biggest win­ner yet in pan­dem­ic IPO boom as shares soar

Amid a flurry of splashy pandemic IPOs, a J&J-partnered Chinese biotech has emerged with one of the largest public raises in biotech history.

Legend Biotech, the Nanjing-based CAR-T developer, has raised $424 million on NASDAQ. The biotech had originally filed for a still-hefty $350 million, based on a range of $18-$20, but managed to fetch $23 per share, allowing them to well-eclipse the massive raises from companies like Allogene, Juno, Galapagos, though they’ll still fall a few dollars short of Moderna’s record-setting $600 million raise from 2018.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 83,100+ biopharma pros reading Endpoints daily — and it's free.

As it hap­pened: A bid­ding war for an an­tibi­ot­ic mak­er in a mar­ket that has rav­aged its peers

In a bewildering twist to the long-suffering market for antibiotics — there has actually been a bidding war for an antibiotic company: Tetraphase.

It all started back in March, when the maker of Xerava (an FDA approved therapy for complicated intra-abdominal infections) said it had received an offer from AcelRx for an all-stock deal valued at $14.4 million.

The offer was well-timed. Xerava was approved in 2018, four years after Tetraphase posted its first batch of pivotal trial data, and sales were nowhere near where they needed to be in order for the company to keep its head above water.

Drug man­u­fac­tur­ing gi­ant Lon­za taps Roche/phar­ma ‘rein­ven­tion’ vet as its new CEO

Lonza chairman Albert Baehny took his time headhunting a new CEO for the company, making it absolutely clear he wanted a Big Pharma or biotech CEO with a good long track record in the business for the top spot. In the end, he went with the gold standard, turning to Roche’s ranks to recruit Pierre-Alain Ruffieux for the job.

Ruffieux, a member of the pharma leadership team at Roche, spent close to 5 years at the company. But like a small army of manufacturing execs, he gained much of his experience at the other Big Pharma in Basel, remaining at Novartis for 12 years before expanding his horizons.

Covid-19 roundup: Ab­b­Vie jumps in­to Covid-19 an­ti­body hunt; As­traZeneca shoots for 2B dos­es of Ox­ford vac­cine — with $750M from CEPI, Gavi

Another Big Pharma is entering the Covid-19 antibody hunt.

AbbVie has announced a collaboration with the Netherlands’ Utrecht University and Erasmus Medical Center and the Chinese-Dutch biotech Harbour Biomed to develop a neutralizing antibody that can treat Covid-19. The antibody, called 47D11, was discovered by AbbVie’s three partners, and AbbVie will support early preclinical work, while preparing for later preclinical and clinical development. Researchers described the antibody in Nature Communications last month.

Pfiz­er’s Doug Gior­dano has $500M — and some ad­vice — to of­fer a cer­tain breed of 'break­through' biotech

So let’s say you’re running a cutting-edge, clinical-stage biotech, probably public, but not necessarily so, which could see some big advantages teaming up with some marquee researchers, picking up say $50 million to $75 million dollars in a non-threatening minority equity investment that could take you to the next level.

Doug Giordano might have some thoughts on how that could work out.

The SVP of business development at the pharma giant has helped forge a new fund called the Pfizer Breakthrough Growth Initiative. And he has $500 million of Pfizer’s money to put behind 7 to 10 — or so — biotech stocks that fit that general description.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 83,100+ biopharma pros reading Endpoints daily — and it's free.

Bris­tol My­ers is clean­ing up the post-Cel­gene merg­er pipeline, and they’re sweep­ing out an ex­per­i­men­tal check­point in the process

Back during the lead up to the $74 billion buyout of Celgene, the big biotech’s leadership did a little housecleaning with a major pact it had forged with Jounce. Out went the $2.6 billion deal and a collaboration on ICOS and PD-1.

Celgene, though, also added a $530 million deal — $50 million up front — to get the worldwide rights to JTX-8064, a drug that targets the LILRB2 receptor on macrophages.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 83,100+ biopharma pros reading Endpoints daily — and it's free.

Leen Kawas, Athira CEO (Athira)

Can a small biotech suc­cess­ful­ly tack­le an Ever­est climb like Alzheimer’s? Athi­ra has $85M and some in­flu­en­tial back­ers ready to give it a shot

There haven’t been a lot of big venture rounds for biotech companies looking to run a Phase II study in Alzheimer’s.

The field has been a disaster over the past decade. Amyloid didn’t pan out as a target — going down in a litany of Phase III failures — and is now making its last stand at Biogen. Tau is a comer, but when you look around and all you see is destruction, the idea of backing a startup trying to find complex cocktails to swing the course of this devilishly complicated memory-wasting disease would daunt the pluckiest investors.

GSK presents case to ex­pand use of its lu­pus drug in pa­tients with kid­ney dis­ease, but the field is evolv­ing. How long will the mo­nop­oly last?

In 2011, GlaxoSmithKline’s Benlysta became the first biologic to win approval for lupus patients. Nine years on, the British drugmaker has unveiled detailed positive results from a study testing the drug in lupus patients with associated kidney disease — a post-marketing requirement from the initial FDA approval.

Lupus is a drug developer’s nightmare. In the last six decades, there has been just one FDA approval (Benlysta), with the field resembling a graveyard in recent years with a string of failures including UCB and Biogen’s late-stage flop, as well as defeats in Xencor and Sanofi’s programs. One of the main reasons the success has eluded researchers is because lupus, akin to cancer, is not just one disease — it really is a disease of many diseases, noted Al Roy, executive director of Lupus Clinical Investigators Network, an initiative of New York-based Lupus Research Alliance that claims it is the world’s leading private funder of lupus research, in an interview.