Robbins Arroyo LLP: Zafgen, Inc. (ZFGN) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed in the United States District Court for the District of Massachusetts. The complaint alleges that officers and directors of Zafgen, Inc. (NASDAQGS: ZFGN) violated the Securities Exchange Act of 1934 between January 12, 2015 and October 16, 2015, by making materially false and misleading statements about Zafgen’s business practices. Zafgen is a biopharmaceutical company that focuses on the development of therapeutics for patients suffering from obesity and obesity-related disorders. Its valuation is closely tied to the value of beloranib, its anti-obesity drug.
Zafgen Accused of Failing to Disclose Adverse Events Linked to Its Anti-Obesity Drug
According to the complaint, Zafgen saw heaving selling by insiders in September 2015. Then, beginning on October 12, 2015, shares plummeted by 54.7% from $34.76 to $15.75 per share. It was unclear what contributed to the decline in share price until a subsequent Boston Globe report noted rumors of a patient death in an ongoing Phase 3 beloranib study had circulated in the marketplace as early as October 13, 2015. On October 14, 2015, Zafgen confirmed that a patient in its Phase 3 trial of beloranib had died. However, Zafgen failed to disclose that the patient was receiving beloranib – and not a placebo – or anything about thrombotic events in prior clinical trials. The company’s stock price rose on this partial, misleading disclosure, closing at $21.02 per share on October 15, 2015.
Then, late in the day on October 15, 2015, the Food and Drug Administration informed Zafgen that it had placed beloranib on partial clinical hold. This forced Zafgen to make corrective disclosures on October 16, 2015, including that: the patient who died was receiving beloranib and that there had been four thrombotic adverse events in prior clinical studies of beloranib—two more than previously reported—as well as two additional, previously undisclosed thrombotic events in ongoing studies, for a total of six thrombotic events out of 400 patients receiving beloranib compared to zero thrombotic events in the approximately 150 patients treated with a placebo. On this news, Zafgen stock dropped sharply, falling 50.7%, to close at $10.36 per share on October 16, 2015.
Zafgen Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.