This is one we have covered all week. Zafgen Inc. (NASDAQ: ZFGN) announced this week a death in their “Phase 3 bestPWS study of beloranib in Prader-Willi Syndrome, a rare genetic disorder with a high rate of mortality linked to obesity and its co-morbidities.” (Quote from Tuesday’s press release.)
Let me say this up-front:
It is a courageous thing to get involved in a trial of a drug as a patient. Whether you are getting the drug itself or the placebo, you are contributing towards a better life for all humanity. The person that died, regardless of the reason, was a very good person for even being involved.
Drug companies in the United States are abused by lawsuits. Sure, someone should pay when someone dies due to reckless conduct, if that is the case. Drug companies have to conduct trials. The participants usually know all of the risks up-front. I don’t know if that is the case here. We don’t even officially know the cause of death with this patient’s death.
Public companies are often stunned when terrible things happen. They don’t see it coming and suddenly they have a PR nightmare that could either heavily damage the company – or even put the company out of business completely. In this case, on top of the death of the patient, now we see law groups stepping up to the plate to “investigate” on behalf of shareholders. Is that a good thing? I don’t really like it. Today we have SEVERAL law groups reaching out to investors to discuss their potential damage claims against ZFGN. I argue the very act of putting out such a press release is not only suspect as a possible attempt to capitalize off of the death of a patient in this trial, but putting out such press releases so close to the announcement of the death further damages shareholder’s equity – especially when we don’t have an officially announced cause of death yet.
The chart obviously shows the losses on the stock STARTED after the open on Monday of this week. Someone at the Company will have to answer for how the word got out to investors. Anyone shorting or capitalizing on options on ZFGN will likely be investigated by the SEC at some point. Some reports say the Company was canceling meetings and showing outward signs of freaking out on Monday. We know that somewhere somebody got the news and got it out.
When you wonder why their isn’t a drug for some possibly curable or treatable disease, go and look at today’s press releases from these various law firms. Think of how brave a company must be to even attempt to do what ZFGN is doing.
Now, let’s get everyone’s FRIDAY take in the Buzz:
Calderquacks is buying on the dip:
$ZFGN bought on the dip. Lets see what happens
— Calderquacks (@CalderQuacks) October 16, 2015
Pharmalot sees the legal firms coming after this:
As predicted a couple of days ago, lawyers are circling Zafgen for botching a disclosure.. from Wed: http://t.co/pVthx5j83H #pharma $ZFGN
— pharmalot (@pharmalot) October 16, 2015
Bursatil sees this one still bleeding:
$ZFGN Keeps bleeding -43%
— Bursatil Biotech (@Bursatilbiotech) October 16, 2015
Schulz likes the chart? Not sure what he sees, unless he is talking about the buying opportunity:
.@BuyersStrike Nice chart 🙂 $ZFGN
— Schulz (@portefeuillefun) October 16, 2015
Void Bot sees a pop:
13:50 Pops: $ZFGN +3.9%
— Large Void Bot (@LargeVoidBot) October 16, 2015
Fara will come in at $10:
$ZFGN i ll be long if she hits $10
— FARA (@FARA1111) October 16, 2015
Trevor thinks the only buying is covering shorts:
$ZFGN only buying is covering… getting ugly quick… still havent seen the panic bars
— Trevor A (@InvestNStars) October 16, 2015
Pan is in at $12.08 – but it’s hard to pick a buying price with a stock like this!
$ZFGN back in 12.08 long
— Pan (@Panatl) October 16, 2015
Drew Powers is covering at $12.03, locking in a gain on a short:
covered rest $ZFGN 12.03 – best trade of the week so far!
— Drew Powers (@PowerTrades4U) October 16, 2015
Gerber is not happy here for several reasons:
Don’t know why bio taking such a beating but when highly touted mgmt backed by A-list VCs dumps shares 3 wks b/f FDA hold, what next? $ZFGN
— William Gerber (@WilliamGerber1) October 16, 2015
This is where Drew pushed his short idea earlier:
for anyone wanting to jump on a short $ZFGN is in a good spot. Can gain a dollar and only risk a quarter.
— Drew Powers (@PowerTrades4U) October 16, 2015
A Tall Texan asks the big question: Is there more upside than downside left in this one?
$ZFGN Taking a stab at this level on pullback. Seems more upside than down from here.
— A Tall Texan (@uumbop) October 16, 2015