Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Our Take On This Busted IPO

|About: Zafgen, Inc. (ZFGN)

When truth is replaced by silence,the silence is a lie.” ― Yevgeny Yevtushenko

The Busted IPO Forum is the only offering on its kind targeting this overlooked and potentially lucrative niche in the market.  If you would like to try that service risk-free for two weeks, you can initiate your free 14 day trial HERE.  Our initial model 15-stock portfolio is up and running.

Man is not what he thinks he is, he is what he hides.” ― André Malraux

Recently I got a question on a "Busted IPO" called Zafgen (ZFGN) which I have never researched.  Today, we take a look at this small cap name in our instablog of the day.

Company Overview:

Zafgen is a Boston based 'Tier 4' biotech concern that is focused on the development of therapeutics for patients suffering from metabolic diseases comprising type 2 diabetes and obesity.  The company came public in late 2014, sports a market capitalization of approximately $250 million and trades for just under $9.00 a share.


The company has a limited and early stage pipeline


This is the primary drug candidate in Zafgen's pipeline.  This compound is an investigational MetAP2 inhibitor for the treatment of type 2 diabetes.  A phase 2 trial has been enroll and is ongoing.  The study is designed to trial is designed to confirm ZGN-1061's pharmacokinetic profile and evaluate safety, tolerability, and glucose-lowering efficacy.  Interim data should be out in the sometime mid-year.


The company is initiating GLP toxicology studies for this clinical compound.  It plans to file an investigational new drug (NYSE:IND) application with the FDA to target Prader-Willi syndrome

Analyst Commentary & Balance Sheet:

This is a sparsely covered small cap equity.  Only one analyst firm has chimed in on Zafgen that I can find over the past nine months.  Last month, Cowen & Co. assigned a Hold rating to the stock.  Several insiders made a total of four small buys in 2017 totaling just over $120,000.  There were no insider sells over that time period.  The company ended the third quarter with just under $95 million in cash and guided it expected to end 2017 with at least $70 million of cash on the balance sheet.


It is hard to get too excited about such an early stage concern with little coverage.  Good interim results from its Phase 2 study could boost the shares when released in a few months.  However, the company appears years and at least one capital raise before it has a chance to reach commercialization stage.  In addition, a previous compound Beloranib targeting the same disease areas had developed suspended in 2016.  Given all this, I am passing on making any investment recommendation on Zafgen at this time.

History is a set of lies agreed upon.” ― Napoléon Bonaparte

For those that want to learn about more advanced option strategies to put in their investor 'toolbox', I highly recommend the free 30 minute report and 7 minute video my Investors Alley's colleague Jay Soloff has put together. Jay has been teaching about and using option strategies successfully for two decades. The free video and report can be downloaded HERE

Thank You & Happy Hunting,

Bret Jensen

Founder, The Biotech ForumThe Busted IPO Forum & The Insiders Forum

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.