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BioWorld Today: Zafgen files $86.25M IPO to advance obesity candidate beloranib

April 22, 2014 - BioWorld Today

Zafgen Inc. defied recent trends to downsize biotech initial public offerings (IPO) by filing with the SEC to seek a raise of up to $86.25 million, excluding overallotments. If the offering amount stands, Zafgen would slide into a tie with Radius Health Inc. for third place among 22 biotechs sitting in the IPO queue, according to BioWorld Snapshots, behind Alder Biopharmaceuticals Inc. and Intra-Cellular Therapies Inc., which filed to raise $115 million apiece.

Cambridge, Mass.-based Zafgen is targeting the obesity market with an interesting asset, beloranib. The first-in-class selective methionine aminopeptidase 2 (MetAP2) inhibitor has a mechanism entirely different from the big three in the space: the launched products Belviq (lorcaserin) from Arena Pharmaceuticals Inc. and Qsymia (phentermine/topiramate) from Vivus Inc. and Orexigen Therapeutics Inc.’s candidate Contrave (naltrexone/bupropion), which has a June 10 PDUFA date. Blocking MetAP2 is believed to reduce the production of new fatty acid molecules by the liver and help to convert stored fats into useful energy.

The premise underlying Zafgen’s technology is that obese and lean individuals metabolize fat differently, with obese bodies “programmed” to create and store more fat through metabolic adaptations that impair the normal release and breakdown of fatty acids from adipose tissue.

According to Zafgen, adipose tissue traps fat, storing and not releasing it very efficiently, preserving the obese state. Rather than reducing food intake, which doesn’t really unlock that fat, Zafgen is targeting the underlying abnormality, attempting to normalize the metabolism of fat in the cell.

Founded in 2005, Zafgen raised $2 million in a series A round in 2006 and $20 million a year later in a series B that included Atlas Venture, Third Rock Ventures and Great Point Ventures.

The company secured a $33 million series C in 2011, and Atlas and Third Rock returned in 2012 for a series D raise of $21 million in which Alta Partners joined the syndicate.

In December 2013, Zafgen closed a $45 million series E, adding RA Capital Management, Brookside Capital, Venrock and undisclosed blue chip and private investors. At the time, company president and CEO Thomas Hughes told BioWorld Today the funding was expected to take the company through “some pretty important clinical activities” that included advancement into phase IIb and, possibly, phase III studies in severe obesity and hyperphagia, or insatiable life-threatening hunger and hunger-related behaviors, in Prader-Willi syndrome (PWS).

Two Phase I studies showed that beloranib led to significant weight loss – an average of 4.3 kg across three treatment arms compared to a gain of 0.6 kg for placebo – plus improvements in cardiometabolic risk markers – triglycerides, LDL cholesterol, waist circumference and diastolic blood pressure – in severely obese women. The randomized, double-blind, placebocontrolled studies evaluated the safety, tolerability and efficacy of the drug – dosed as a twice weekly subcutaneous injection – for 25 days. Patients were allowed to eat normally and were not counseled to change their exercise habits.

At the Annual J.P. Morgan Healthcare Conference in January, Zafgen reported initial findings from a phase IIa study of beloranib in PWS showing improvements in body weight, hunger-related behaviors and body composition, including reductions in body fat content and preserved lean body mass, following four weeks of treatment. The changes were observed despite increased caloric intake, which was a component of the trial. Known markers of beloranib response, including those associated with cardiovascular disease risk, also were improved.

Zafgen plans to initiate a phase III program for beloranib in PWS this year and is finalizing the program design, based on conversations with the FDA and other regulatory authorities. The FDA granted orphan drug designation to beloranib in PWS, and the company has filed for the designation with the European Medicines Agency.

The company also is pursuing an orphan drug approach in obesity associated with craniopharyngioma, a rare benign brain tumor that occurs near the optic nerve, pituitary gland and hypothalamus. Radical surgery and follow-up radiation for these tumors often result in disruption or removal of neighboring structures, including the hypothalamus. Hyperphagia occurs in approximately half of these patients, resulting in obesity. Zafgen plans to launch a phase IIa trial to evaluate the impact of beloranib on body weight, body composition and hyperphagia in patients with craniopharyngioma-associated obesity during the first half of this year.

GOAL: BROADER TREATMENT OF SEVERELY OBESE PATIENTS

In 2007, the company inked an exclusive license with Children’s Medical Center Corp. for global patent rights covering the use of beloranib and related molecules as anti-obesity agents. In 2009, Zafgen executed a second, exclusive global license for the compound with South Korea’s Chong Kun Dang Pharmaceutical Corp. Zafgen maintains global ownership of the asset outside South Korea. Although composition-of-matter patents on beloranib will expire in 2019, an issued U.S. patent relating to beloranib polymorph compositions of matter does not expire until 2031 and an issued U.S. patent to methods for treating obesity expires in 2029. Similar patent applications are pending in Europe.

In addition to beloranib, Zafgen has preclinical candidate ZGN- 839 targeting nonalcoholic steatohepatitis, nonalcoholic fatty liver disease, abdominal obesity and type 2 diabetes. In its filing, the company said it expects to file an investigational new drug application next year for the follow-on MetAP2 inhibitor. Proceeds from the IPO are expected to advance beloranib in PWS and craniopharyngioma-associated obesity and preclinical work on ZGN-839.

In addition to the medical need, the orphan indications for beloranib are clearly designed for a potential path to rapid approval. The company’s long-term goal is to apply beloranib or its follow-on MetAP2 inhibitor as a treatment for severely obese patients in the general population.

“The nature of the weight loss that we see and the impact on related aspects such as inflammatory markers and cholesterol levels marry the drug nicely to the high unmet need population, which is the severely obese,” Hughes previously told BioWorld Today.

Hughes joined Zafgen in 2008 from Novartis AG, where he served as vice president and global head of cardiovascular and metabolic diseases at the Novartis Institutes for Biomedical Research. Dennis Kim, chief medical officer, is an alum of Orexigen. In January, the company brought in Alicia Secor, whose resume includes Synageva Biopharma Corp. and Sanofi SA unit Genzyme Corp., as chief commercial officer.

In its S-1, Zafgen reported cash and equivalents of $35.5 million and a deficit of $68.6 million as of Dec. 31, 2013.

Filing as an emerging growth company, Zafgen plans to list on the Nasdaq Global market as ZFGN. Leerink Partners and Cowen and Co. are joint bookrunners on the deal, which is not yet priced.