Who Traded Zafgen (ZFGN) on Illegal Insider Information?
After days of speculation and a more 50% drop in its share price, Zafgen (NASDAQ: ZFGN) finally announced what the heck was going on. As expected, the news is not good.
Zafgen said it learned of a patient death in the ongoing Phase 3 bestPWS study of beloranib in Prader-Willi Syndrome, a rare genetic disorder with a high rate of mortality linked to obesity and its co-morbidities. Zafgen said the cause of the death is unknown at this time. The company said the event was reported to the FDA and the initiated a discussion with the Company.
The bigger question surrounds the leak and possible insider trading. There is little doubt that someone knew about the death and traded on it before the big price drop.
Speculation started on Monday when reports hit that the company canceled its RBC roadshow. Shares closed down 36% that day. This led to rumors of issues with data, possible M&A, Ex-US partnership, CEO departure and Safety issue with beloranib. Shares closed down another 29% on Tuesday.
While StreetInsider prides itself on getting reliable, fast, market moving information - and has posted several items on ZFGN over the past couple days - none of the information is illegal. Today's news and the trading action over the last couple of days in ZFGN smells and there is little doubt the SEC will be looking into it.
With today's news shares of Zafgen are down another 10% to $14.10 - now down 59% from Friday's close.