What crisis? Zafgen fiddled while its stock burned
October 14, 2015
File this under ‘What were they thinking?
Two days after mounting speculation over a key clinical trial sent Zafgen stock plunging 54 percent, the little drug maker finally released a statement that relieved investors. And by the end of the day, Zafgen shares began recovering – somewhat – from their steep decline.
In its statement, the company disclosed that a patient died in its clinical study of an obesity drug in patients with a rare genetic disorder, but that the trial is continuing. To investors, this was a positive and suggested the drug did not cause the patient death. Zafgen did not confirm this, but investors were encouraged. Nonetheless, the episode is a textbook case of how not to handle the threat of bad news.
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