FDA Hold Has ZFGN Eyeing Worst Day in Years

The regulatory body said Zafgen's diabetes treatment presents heart safety risks

Shares of Zafgen Inc (NASDAQ:ZFGN) are getting destroyed this morning, after the Food and Drug Administration (FDA) put a clinical hold on a trial of the company's experimental diabetes treatment, citing heart safety risks. The company plans to request a meeting with the FDA to go over next steps for ZGN-1061.

Zafgen stock was last seen 44.5% lower at $5.05 -- in territory not charted since January. The shares are pacing for their worst day since July 2016, and are back below their 200-day moving average for the first time in 2018. Prior to today, the equity had been up about 100% year-to-date, with pullbacks contained by its 32-week moving average.

ZFGN is also on the short-sale restricted list today. Nevertheless, several shorts are likely cheering today's plummet. Short interest on the stock represents more than a week's worth of trading, at Zafgen's average daily volume.

Meanwhile, the equity could be vulnerable to negative analyst notes. Half of the four analysts following the stock maintain "strong buy" opinions, and the average 12-month price target of $13.20 represents upside of more than 160% from current levels