ZAFGEN, INC. (ZFGN) SPO
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|Company Name||ZAFGEN, INC.|
|Company Address||175 PORTLAND STREET
BOSTON, MA 02114
|Employees (as of 3/1/2018)||35|
|State of Inc||DE|
|Fiscal Year End||12/31|
|Exchange||NASDAQ Global Select|
|Shares Over Alloted||0|
|Shareholder Shares Offered||--|
|Lockup Period (days)||180|
|Quiet Period Expiration||8/7/2018|
We estimate that the net proceeds to us from the sale of the securities that we are offering will be approximately $55.9 million, or approximately $64.4 million if the option to purchase additional shares is exercised in full, after deducting underwriting discounts and commissions and estimated offering expenses. We intend to use any proceeds received from this offering to advance the clinical development of ZGN-1258 for rare metabolic indications, initially focusing on Prader-Willi syndrome; develop clinical and nonclinical data necessary to potentially optimize the value of ZGN-1061, including unique mechanistic effects in diabetes, potential liver effects in NASH, and other endpoint data based upon proprietary knowledge of the MetAP2 pathway; select and advance into clinical development an orally active MetAP2 inhibitor for the treatment of liver-specific metabolic disease; and fund working capital and other general corporate purposes. Even if we sell all of the securities subject to this offering, we will still need to obtain additional financing in the future in order to fully fund our business through the FDA regulatory approval process. We may elect to seek such additional financing through public or private equity or debt offerings or other sources, including collaborative or other arrangements with corporate partners or through refinancing our existing debt. There can be no assurance we will be able to obtain such additional financing or that such additional financing will be on terms that are favorable to us. Although we currently anticipate that we will use the net proceeds of this offering as described above, there may be circumstances where a reallocation of funds may be necessary. The amounts and timing of our actual expenditures will depend upon numerous factors, including the progress of our development and commercialization efforts, the progress of our clinical studies, whether or not we enter into strategic collaborations or partnerships and our operating costs and expenditures. Accordingly, our management will have significant flexibility in applying the net proceeds of this offering. The costs and timing of regulatory approval, particularly conducting clinical studies, are highly uncertain, are subject to substantial risks and can often change. Accordingly, we may change the allocation of use of these proceeds as a result of contingencies such as the progress and results of our clinical studies and other development activities, the establishment of collaborations, our manufacturing requirements and regulatory or competitive developments. Pending the application of the net proceeds as described above or otherwise, we may invest the proceeds in short-term, investment-grade, interest-bearing securities or guaranteed obligations of the U.S. government or other securities.
The biopharmaceuticals industry is highly competitive. There are many public and private biopharmaceutical companies, universities, governmental agencies and other research organizations actively engaged in the research and development of products that may be similar to our product candidates or address similar markets. It is probable that the number of companies seeking to develop products and therapies similar to our products will increase. Many of these and other existing or potential competitors have substantially greater financial, technical and human resources than we do and may be better equipped to develop, manufacture and market products. These competitors may develop and introduce products and processes comparable or superior to ours. Existing Type 2 Diabetes Drugs Biguanides (metformin) is first line pharmacotherapy for the treatment of type 2 diabetes primarily due to the extensive experience, low cost and favorable benefit risk associated with it. While metformin is likely to remain the initial choice for the treatment of type 2 diabetes, ZGN-1061 will compete with sulfonylureas, GLP-1 receptor agonists, DPP4 inhibitors, SGLT2 inhibitors, thiazoladinediones, insulin, and various combination products. Although these pharmacotherapies are all effective to some extent in the treatment of type 2 diabetes, they each have notable limitations, and have not been found to halt the progression of type 2 diabetes. Therefore, additional effective and durable options are needed. There are a number of pharmaceutical and biotechnology companies that have type 2 diabetes drugs that are pursuing products with unique mechanisms of action for the treatment of type 2 diabetes. PWS Drugs There are no current pharmacological treatments for regulating hunger and hyperphagia-related behaviors of patients with PWS, and bariatric surgery is contraindicated in patients with PWS. Multiple products are currently under investigation for treatment of hyperphagia and/or obesity in individuals with PWS including assessment of diazoxide choline controlled-release for treatment of hyperphagia by Soleno Therapeutics, Inc., intranasal carbetocin for treatment of hyperphagia by Levo Therapeutics Inc., and liraglutide for weight management by Novo Nordisk. These three investigational products are either under Phase 3 assessment or are preparing for Phase 3 assessment. Several products are being explored in various stages of Phase 1 and Phase 2 of development. No products under investigation by other companies are MetAP2 inhibitors and the safety and efficacy of their product candidates have not yet been established.
We are a biopharmaceutical company dedicated to significantly improving the health and well-being of patients affected by both rare and prevalent metabolic diseases including type 2 diabetes, Prader-Willi syndrome, or PWS, and potentially other metabolically related disorders. We have pioneered the
study of methionine aminopeptidase 2, or MetAP2, inhibitors and are focused on developing novel therapeutics that treat biological mechanisms that underlie metabolic disorders through the MetAP2 pathway. Our lead product candidate is ZGN-1061, a novel fumagillin-class MetAP2 inhibitor administered by subcutaneous injection, which is currently being profiled for its utility in the treatment of type 2 diabetes. Type 2 diabetes is a prevalent, chronic, progressive, multifactorial disorder that leads to increased microvascular and macrovascular disease, and as such increases risk of death from cardiovascular disease, stroke, and kidney failure. Type 2 diabetes is also a leading cause of lower-limb amputation and blindness. Existing agents, while effective in reducing blood glucose levels, fail to reduce progression of the disease, which is driven by loss of function of insulin-producing beta cells and by loss of sensitivity to insulin action. It is estimated that approximately one-third of patients progress to needing insulin (recently estimated to be a $20 billion market based on annual sales). New therapies are needed to improve glycemic control and reduce comorbidities of type 2 diabetes. We completed a Phase 1 clinical trial of ZGN-1061 in the Netherlands, which demonstrated rapid drug absorption and clearance in line with pre-specified criteria established for the molecule. In addition, ZGN-1061 was well-tolerated, with no evidence of pro-thrombotic effects or other safety signals. We are also conducting a Phase 2 clinical trial of ZGN-1061 in Australia and New Zealand, which is designed to demonstrate proof-of-concept efficacy and safety in patients with type 2 diabetes and establish minimally effective doses. The core part of the Phase 2 clinical trial has met its primary objectives at a 0.9 mg dose as compared to a placebo and 12-week data has demonstrated a favorable safety and tolerability profile, with no treatment-related serious adverse events and no cardiovascular safety signals observed. ZGN-1061 was generally safe and well-tolerated, with primarily mild to moderate adverse events and an overall high study completion rate (95%). We expect to report the results of an additional cohort arm dosing up to 1.8 mg early in 2019. In addition to the Phase 2 clinical data for ZGN-1061, nonclinical data on treatment with both ZGN-1061 and liraglutide suggest that combination therapy with these glucose-lowering agents may yield additive improvement in glycemic control and weight loss than either agent alone in patients with type 2 diabetes, demonstrating the potential effect of two complementary mechanisms – MetAP2 and GLP-1. From nonclinical data in a nonalcoholic steatohepatitis, or NASH, model, we further observed that ZGN-1061 markedly reduced liver weight, NAS score and markers of liver damage (ALT and AST). These NASH-related data, combined with previous gene expression data with ZGN-1061 and clinical liver fat content data from Zafgen’s first generation MetAP2 inhibitor, suggest potential clinical value in treating liver-specific metabolic conditions. We anticipate that treatment with ZGN-1061 could improve multiple aspects of NASH, and we will evaluate the potential utility of ZGN-1061 as a NASH therapy in the setting of type 2 diabetes. We have also initiated development of a second, highly-optimized MetAP2 development candidate, ZGN-1258, which is administered by subcutaneous injection. We expect that our initial indication for ZGN-1258 will be PWS. PWS is a rare and complex genetic disorder characterized by physiologic, cognitive and behavioral symptoms including hyperphagia, uncontrollable hunger and its related behaviors, and obesity. Published population studies estimate that the prevalence of PWS in the United States and in the European Union ranges from 1 in 8,000 to 1 in 50,000. The physiological drive to eat in patients with PWS is so powerful that they will go to great lengths to eat large quantities of food, even if it is spoiled, indigestible or unpalatable to others. Unsupervised patients will often eat to the point that it causes serious physical harm or death. As a result, caregivers are often forced to place locks and alarms on refrigerators and pantries that contain food. Despite attempts to control the access to food, the typical adult patient with PWS is morbidly obese and, based on evaluation of published survival data, has an average life expectancy of 32 years of age. Unfortunately, neither dietary intervention nor currently available pharmaceutical therapies bring meaningful benefits to patients with PWS and, as a result, they experience severe and life-threatening consequences of their condition. Furthermore, existing surgical techniques such as bariatric surgery are contraindicated in PWS, as patients with PWS often overeat to a point whereby they can rupture their stomachs, which is frequently a cause of death in this patient population. We initiated IND enabling nonclinical activities in the first quarter of 2018, in preparation for filing an IND with the U.S. Food and Drug Administration, or FDA, and plan to begin Phase 1 clinical development by the end of 2018. We anticipate our Phase 1 clinical program of ZGN-1258 will be focused on evaluation of drug exposure, safety and tolerability following single doses in normal weight and otherwise healthy subjects, and understanding the dose-responsiveness of changes following repeat dosing for circulating biomarkers of drug effect, body weight change, and changes in hunger-related parameters in obese but otherwise healthy subjects. Providing the results of the Phase 1 clinical program are supportive of further development, subsequent clinical trials are anticipated to evaluate the effects of treatment with ZGN-1258 on core therapeutic endpoints in PWS such as improvement of hyperphagia-related behaviors. We expect to conduct a multinational PWS natural history study, which we plan to begin in mid-year 2018. The study will inform our development program and provide important insights into the medical and clinical history of people with PWS. Both ZGN-1061 and ZGN-1258 were discovered by our researchers as part of a multi-year campaign to identify highly potent and novel compounds with nonclinical safety profiles supportive of continued development. One core element of focus for optimization was to reduce or eliminate the potential for pro-thrombotic effects, a limiting factor that led to termination of development of our first-generation compound. To date, both new compounds have similar intrinsic potency against the MetAP2 pathway and display appropriate activity in animal models of type 2 diabetes and obesity. Both compounds display improved safety profiles relative to beloranib for effects on thrombosis. ZGN-1061 and ZGN-1258 are differentiated from each other with respect to their tissue distribution and predominant sites of action in animal models. While treatment with both compounds leads to target engagement and MetAP2 inhibition in key organs of relevance to the treatment of type 2 diabetes and obesity, ZGN-1258 also displays enhanced uptake into the brain and displays greater potency and activity in animal models of hyperphagic behaviors than does ZGN-1061. These differences support the development of ZGN-1061 for treatment of type 2 diabetes, in which metabolic effects related to liver, adipose tissue, and muscle effects are likely to be important, and ZGN-1258 in higher need indications such as PWS, in which brain activity is likely to be more important for therapeutic effects. We own various U.S. federal trademark registrations and applications, and unregistered trademarks, including our corporate name and our corporate logo. We were incorporated under the laws of the State of Delaware in 2005. Our principal executive offices are located at 175 Portland Street, 4th Floor, Boston, Massachusetts 02114 and our telephone number is (617) 622-4003. Our website address is www.zafgen.com.
|Company Counsel||Goodwin Procter LLP|
|Lead Underwriter||Cowen and Company, LLC|
|Lead Underwriter||Piper Jaffray & Co.|
|Transfer Agent||Computershare Trust Company, N.A|
|Underwriter||JMP Securities LLC|
|Underwriter||Wedbush Securities Inc|
|Underwriter Counsel||Ropes & Gray LLC|
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