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Zafgen Reports Fourth Quarter and Full Year 2016 Financial Results

BOSTON, March 09, 2017 (GLOBE NEWSWIRE) -- Zafgen, Inc. (Nasdaq:ZFGN), a biopharmaceutical company dedicated to significantly improving the health and well-being of patients affected by metabolic diseases including type 2 diabetes and obesity, today announced its fourth quarter and full year 2016 financial results.

"2017 is set to be a pivotal year for Zafgen, as we further elucidate the efficacy and safety profile for our second generation MetAP2 inhibitor, ZGN-1061, and establish a path forward for the candidate in underserved type 2 diabetes and obesity indications," said Thomas Hughes, Ph.D., President and Chief Executive Officer of Zafgen. "Over the past few months, we have progressed our ongoing Phase 1 clinical trial evaluating ZGN-1061 and, in parallel, have advanced our understanding of ZGN-1061's key differentiating characteristics from beloranib, with a particular emphasis on drug safety. Over the course of this coming year, we plan to leverage the data emerging from our clinical trials and non-clinical studies, along with discussions with experts and regulators, to define an efficient clinical development program for ZGN-1061 in commercially-relevant patient populations."

Recent and Upcoming Clinical Highlights

  • The Company is currently conducting a Phase 1 clinical trial for ZGN-1061, a highly-differentiated, second generation MetAP2 inhibitor. The clinical trial includes a single ascending dose (SAD) portion, which is complete and enrolled approximately 48 healthy patients, as well as a multiple ascending dose (MAD) portion that is currently ongoing and evaluating twice-weekly administration of ZGN-1061 for safety, tolerability, and pharmacodynamic effects, including weight loss efficacy over four weeks in approximately 24 overweight and obese patients. The Company expects to complete dosing of the Phase 1 clinical trial of ZGN-1061 by the end of the first quarter of 2017, and report results early in the second quarter of 2017.
  • Assuming that results of the Phase 1 clinical trial are positive and support advancement, the Company expects to initiate a Phase 2 clinical trial in Australia for ZGN-1061 in patients with obesity and type 2 diabetes in the second half of 2017.
  • The Company has evaluated the properties of both ZGN-1061 and its predecessor compound beloranib with a particular focus on pro-thrombotic characteristics, and has developed a mechanistic basis for compound differentiation and the improved safety margin in non-clinical studies associated with ZGN-1061.

Fourth Quarter and Full Year 2016 Financial Results

"We are in a strong financial position, with a healthy balance sheet and an efficient clinical development plan that will take us through key value-creating milestones for ZGN-1061 with our current resources," stated Patricia Allen, Chief Financial Officer of Zafgen. "We continue to expect our cash runway to extend through the end of 2018, by which time we expect to have data from a Phase 2a clinical trial for ZGN-1061. Based on our current development timelines, we expect that our cash, cash equivalents and marketable securities balance will be greater than $65 million at the end of calendar year 2017."

Cash, Cash Equivalents and Marketable Securities
As of December 31, 2016, the Company had cash, cash equivalents and marketable securities totaling $129.2 million.

Net Loss
The Company reported a net loss for the fourth quarter of 2016 of $10.4 million, or $0.38 per share, compared to a net loss of $23.2 million, or $0.85 per share, for the fourth quarter of 2015. The Company reported a net loss for the year ended December 31, 2016 of $57.9 million, or $2.12 per share, compared to a net loss of $74.3 million, or $2.78 per share, for the year ended December 31, 2015.

The weighted average common shares (basic and diluted) outstanding used to compute net loss per share were 27,332,515 for the fourth quarter of 2016, compared to 27,238,079 for the fourth quarter of 2015. The weighted average common shares (basic and diluted) outstanding used to compute net loss per share were 27,297,934 for the year ended December 31, 2016, compared to 26,756,079 for the year ended December 31, 2015.

Research and Development Expenses
Research and development expenses for the fourth quarter of 2016 were $7.3 million, compared to $17.7 million for the fourth quarter of 2015. Research and development expenses for the year ended December 31, 2016 were $39.9 million, compared to $54.6 million for the year ended December 31, 2015. The decrease in research and development expenses for both periods as compared to the prior year periods was primarily due to a decrease in pre-clinical, clinical and manufacturing costs related to beloranib and ZGN-839, partially offset by increased costs related to ZGN-1061 as we shifted focus to ZGN-1061 in July 2016.

General and Administrative Expenses
General and administrative expenses for the fourth quarter of 2016 were $3.2 million, compared to $5.5 million for the fourth quarter of 2015. General and administrative expenses for the year ended December 31, 2016 were $18.3 million, compared to $19.2 million for the year ended December 31, 2015. The decrease in general and administrative expenses for both periods as compared to the prior year periods was primarily due to a decrease in professional fees. For the fourth quarter of 2016 there was also a decrease in personnel related costs as compared to the prior year period primarily as a result of the reduction in workforce during the third quarter of 2016.

2017 Financial Guidance
The Company expects that its cash, cash equivalents and marketable securities balance will be greater than $65 million as of December 31, 2017.

Conference Call Information

Zafgen will host an investor conference call today, March 9, 2017 at 4:30 p.m., Eastern Time, to discuss the Company's fourth quarter 2016 and full year 2016 results as well as other forward-looking information about Zafgen's business. Investors and other interested parties may participate by dialing (844) 824-7428 in the United States or (973) 500-2177 outside the United States and referencing conference ID number 77476849. The call will also be webcast live on the Company's website at http://ir.zafgen.com/events.cfm. A replay of this conference call will be available beginning at 7:30 p.m. ET on March 9, 2017 through March 16, 2017 by dialing (855) 859-2056 in the United States or (404) 537-3406 outside the United States. To access the replay please provide Conference ID number 77476849.

About ZGN-1061

ZGN-1061 is a fumagillin-class, injectable small molecule second generation MetAP2 inhibitor that modulates the activity of key cellular processes that control the body's ability to make and store fat, and utilize fat and glucose as an energy source. In pre-clinical studies, ZGN-1061 has demonstrated promising efficacy and potency in animal models of type 2 diabetes and obesity, with an improved pharmacokinetic profile and safety margin relative to previous molecules in the MetAP2 class. ZGN-1061 is anticipated to improve glycemic control while also helping to reduce hunger and restore balance to fat metabolism, enabling calories to once again be used as a productive energy source, leading to improved metabolic control and long-term weight loss. ZGN-1061 is currently in Phase 1 clinical development. Zafgen holds exclusive worldwide rights for the development and commercialization of ZGN-1061.

About Zafgen

Zafgen (Nasdaq:ZFGN) is a biopharmaceutical company dedicated to significantly improving the health and well-being of patients affected by metabolic diseases including type 2 diabetes and obesity. Zafgen is focused on developing novel therapeutics that treat the underlying biological mechanisms of metabolic diseases through the MetAP2 pathway. Zafgen has pioneered the study of MetAP2 inhibitors in both common and rare forms of obesity. Zafgen's lead product candidate is ZGN-1061, which is a novel, first-in-class, twice-weekly subcutaneous injection. Zafgen aspires to improve the lives of patients through targeted treatments and has assembled a team accomplished in bringing therapies to patients affected by metabolic diseases.

Safe Harbor Statement

Various statements in this release concerning Zafgen's future expectations, plans and prospects, including without limitation, Zafgen's expectations regarding the use of ZGN-1061 and other MetAP2 inhibitors as treatments for metabolic diseases including type 2 diabetes and obesity, including the improved safety margin, including as it relates to pro-thrombotic characteristics, associated with ZGN-1061 over beloranib, Zafgen's expectations with respect to the timing and success of its pre-clinical studies and clinical trials of ZGN-1061 and its other product candidates, and Zafgen's expected cash, cash equivalents and marketable securities balance as of December 31, 2017, may constitute forward-looking statements for the purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward-looking statements can be identified by terminology such as "anticipate," "believe," "could," "could increase the likelihood," "estimate," "expect," "intend," "is planned," "may," "should," "will," "will enable," "would be expected," "look forward," "may provide," "would" or similar terms, variations of such terms or the negative of those terms. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including, without limitation, Zafgen's ability to successfully demonstrate the efficacy and safety of ZGN-1061 and its other product candidates, the pre-clinical and clinical results for ZGN-1061 and its other product candidates, which may not support further development and marketing approval, actions of regulatory agencies, which may affect the initiation, timing and progress of pre-clinical studies and clinical trials of its product candidates, Zafgen's ability to obtain, maintain and protect its intellectual property, Zafgen's ability to enforce its patents against infringers and defend its patent portfolio against challenges from third parties, competition from others developing products for similar uses, Zafgen's ability to manage operating expenses, Zafgen's ability to obtain additional funding to support its business activities and establish and maintain strategic business alliances and new business initiatives when needed, Zafgen's dependence on third parties for development, manufacture, marketing, sales and distribution of product candidates, the outcome of litigation, and unexpected expenditures, as well as those risks more fully discussed in the section entitled "Risk Factors" in Zafgen's most recent Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission, as well as discussions of potential risks, uncertainties, and other important factors in Zafgen's subsequent filings with the Securities and Exchange Commission. In addition, any forward-looking statements represent Zafgen's views only as of today and should not be relied upon as representing its views as of any subsequent date. Zafgen explicitly disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

   
ZAFGEN, INC.   
CONSOLIDATED STATEMENTS OF OPERATIONS   
(In thousands, except share and per share data)   
(Unaudited)  
 
    Year Ended December 31,  
    2016   2015   2014  
Revenue   $   -     $   -     $   -    
Operating expenses:              
Research and development       39,936         54,618         27,391    
General and administrative       18,289         19,195         8,141    
Total operating expenses       58,225         73,813         35,532    
Loss from operations       (58,225 )       (73,813 )       (35,532 )  
Other income (expense):              
Interest income       894         438         28    
Interest expense       (529 )       (806 )       (870 )  
Foreign currency transaction gains (losses), net       (18 )       (105 )       (104 )  
Total other income (expense), net        347         (473 )       (946 )  
Net loss        (57,878 )       (74,286 )       (36,478 )  
Accretion of redeemable convertible preferred stock to               
  redemption value       -         -         (92 )  
Net loss attributable to common stockholders    $   (57,878 )   $   (74,286 )   $   (36,570 )  
Net loss per share attributable to common stockholders, basic and diluted   $   (2.12 )   $   (2.78 )   $   (3.00 )  
Weighted average common shares outstanding, basic and diluted       27,297,934         26,756,079         12,189,155    
               

 

   
ZAFGEN, INC.   
CONSOLIDATED STATEMENTS OF OPERATIONS   
(In thousands, except share and per share data)   
(Unaudited)  
           
    Three Months Ended December 31,  
    2016   2015  
Revenue   $   -      $   -     
Operating expenses:          
Research and development       7,275         17,706    
General and administrative       3,200         5,540    
Total operating expenses       10,475         23,246    
Loss from operations       (10,475 )       (23,246 )  
Other income (expense):          
Interest income       230         193    
Interest expense       (97 )       (180 )  
Foreign currency transaction gains (losses), net       (97 )       59    
Total other income (expense), net       36         72    
Net loss   $   (10,439 )   $   (23,174 )  
Net loss per share, basic and diluted   $   (0.38 )   $   (0.85 )  
Weighted average common shares outstanding, basic and diluted       27,332,515         27,238,079    
 

 

 
ZAFGEN, INC. 
CONSOLIDATED BALANCE SHEETS 
(In thousands, except share and per share data) 
(Unaudited)
 
    December 31,
    2016    2015 
         
Assets        
Current assets:        
Cash and cash equivalents   $   32,352     $   35,595  
Marketable securities       96,842         149,484  
Tax incentive receivable       347         1,323  
Prepaid expenses and other current assets       1,358         1,708  
Total current assets       130,899         188,110  
Property and equipment, net        661         902  
Other assets       61         94  
Total assets   $   131,621     $   189,106  
Liabilities and Stockholders' Equity        
Current liabilities:        
Accounts payable   $   2,572     $   7,495  
Accrued expenses       3,733         6,112  
Notes payable, current       3,589         2,936  
Total current liabilities       9,894         16,543  
Notes payable, net of discount, long-term       -         3,453  
Total liabilities       9,894         19,996  
Stockholders' equity:        
Preferred stock; $0.001 par value per share; 5,000,000 shares authorized as of December 31, 2016 and 2015; no shares issued and outstanding as of December 31, 2016 and 2015       -         -  
Common stock, $0.001 par value per share; 115,000,000 shares authorized as of December 31, 2016 and 2015; 27,332,551 and 27,242,503 shares issued and outstanding as of December 31, 2016 and 2015, respectively       27         27  
Additional paid-in capital       359,329         348,961  
Accumulated deficit       (237,549 )       (179,671 )
Accumulated other comprehensive loss       (80 )       (207 )
  Total stockholders' equity       121,727         169,110  
Total liabilities and stockholders' equity    $   131,621     $   189,106  
         

This selected financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K which includes the Company's audited consolidated financial statements for the year ended December 31, 2015.

Media/Investor Relations Contact:

Zafgen, Inc.
Patricia Allen
Chief Financial Officer
617-648-9792

Argot Partners
Investor Relations
Laura Perry or Glenn Garmont
212-600-1902
laura@argotpartners.com
glenn@argotpartners.com

Spectrum Science
Media Relations
Michelle Strier
202-587-2582
mstrier@spectrumscience.com