FDA Hold Has ZFGN Eyeing Worst Day in Years

Zafgen stock is plummeting on concerns about its diabetes treatment

Nov 26, 2018 at 10:17 AM

ZFGN

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

Follow @Schaeffers

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released!