Obesity drug developer Zafgen is announcing today that it has closed a $33 million Series C financing led by its existing investors, including Third Rock Ventures and Atlas Venture. This doubles the total amount of cash raised by the Cambridge, MA-based startup to $66 million.
Zafgen CEO Thomas Hughes says the company will use the proceeds to move its lead weight-loss drug candidate through Phase 2 clinical trials. In January, Zafgen announced that in an early-stage, one-month trial, its lead drug candidate helped patients lose 2.2 pounds a week. And on June 24, it said that in a Phase 1B trial, the drug produced significant improvements in low-density lipoprotein (LDL) cholesterol, triglycerides, and C-reactive protein (CRP) levels—all important markers of cardiovascular risk that are typically elevated in people who are overweight.
Hughes says the company’s experimental drug—a methionine aminopeptidase 2 (MetAP2) inhibitor called ZGN-433— has exceeded expectations. “We’ve established a rate of weight loss that’s about two-to-four times what one sees in other investigational agents,” Hughes says. “And we see almost a complete normalization of cardiovascular risk.”
Zafgen is currently completing a second Phase 1b study and plans to begin the Phase 2 early next year. The company has also been reformulating the molecule, transforming it from an intravenous drug that has to be given in a medical facility to a “subcutaneous” form that patients could give themselves at home, in an injection just below the skin. Prior to starting the Phase 2, Hughes says, the company will complete a small trial to show the new formulation is as safe and effective as the old one.
The folks at Zafgen seem undeterred by the FDA’s recent rejections of obesity drugs. Mountain View, CA-based Vivus (NASDAQ: VVUS) and San Diego-based Arena Pharmaceuticals (NASDAQ: ARNA) both failed to get their experimental obesity treatments cleared by the FDA. More recently, shares of San Diego-based Orexigen Therapeutics (NASDAQ: OREX) plummeted after the FDA said it would need to see results from a study of long-term cardiovascular outcomes before it would consider approving the company’s combo treatment naltrexone and bupropion (Contrave).
Hughes says he’s kept a close ear to the ground during the FDA’s discussions about those drugs—even going so far as to attend the public sessions that the agency held before handing down its rulings. “We not only paid close attention to what was said, but also to the body language of the regulators,” Hughes recalls. “It’s been a really educational year for us.”
The key takeaway, Hughes says, is that the FDA is not going to support any drug that’s aimed at the general population of overweight individuals unless, he says, “it’s incredibly effective or unbelievably safe.” All three of the treatments were only moderately effective and the FDA had safety concerns about all of them, Hughes points out.
Unlike those companies, Zafgen is designing its treatment only for a subset of patients who are severely obese, meaning they are so overweight that their health is in serious danger, and they would be prime candidates for bariatric surgery. That means the drug won’t be targeted at millions of people who merely need to shed a few pounds.
Even though Zafgen hasn’t yet advanced to the final stage of clinical development, Hughes says Zafgen is already thinking about its Risk Evaluation and Mitigation Strategy (REMS). These are plans that the FDA often requires drugmakers to put in place to reduce the chances of a new drug being improperly used in the marketplace. The REMS would establish registries of physicians, patients, and maybe even pharmacies, so the company can keep tabs on who’s taking the drug, Hughes says. He hopes that the fact that ZGN-433 has to be injected will add an additional barrier against misuse by people who aren’t ideal candidates for such a potent weight-loss drug.
Zafgen’s obesity program is unique in that the company started developing ZGN-433 before it could fully define how it works. Zafgen’s scientists originally believed MetAP2 inhibitors would cut off the blood supply to fat tissue, in turn promoting weight loss. But as they scrutinized the compound, it became clear to them that what it was really doing was changing the way the body metabolizes fat.
Hughes explains that when people reach the state of severe obesity, their liver overproduces fat, and the adipose tissue hordes that fat rather than releasing it. It’s a problem that exercise and dieting can’t fix. Zafgen’s drug reduces the over-production of fat in the liver, and stimulates the body to release the fat and transform it into an energy source, Hughes says.
Zafgen now has plenty of capital to take the drug through Phase 2 and beyond, if necessary, Hughes says. He says he’s open to forming a partnership with a Big Pharma company to take the drug further. And despite the recent negative FDA rulings in the obesity space, “there’s a lot of interest from pharma in our program,” Hughes says. “Obesity remains one of the largest unmet medical needs. The perception is that there is definitely a market there.”
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