Roth starts Zafgen at buy

Roth Capital Partners launched coverage of Zafgen (NASDAQ:ZFGN) with a “buy” rating and $9 price target. The stock closed at $4.90 on April 19.

“We expect a number of events over the coming 12 months to drive investor interest in Zafgen,” writes analyst Sa’ar Yaniv.

The company’s ZGN-1061 is a second generation MetAP2 inhibitor and a follow-on molecule to beloranib, a previous generation compound that demonstrated high efficacy in obesity and diabetes, but had unacceptable safety/toxicity.

Mr. Yaniv said that that animal study demonstrated that ZGN-1061 has similar efficacy to beloranib, but improved safety and toxicity.

Phase 1 results this quarter could alleviate the safety/toxicity overhang, and with additional data at American Diabetes Association and European Association for the Study of Diabetes conferences, as well as a Phase 2 study starting in the second half this year, with data in 2018, “we believe shares are compelling at this level,” he added.