Last month, the FDA approved Biogen’s Alezheimer’s disease drug Aducanumab, in a controversial decision that went against the advisory committee’s recommendation. When looking at the case of FibroGen’s (FGEN) roxadustat, the biotech’s therapy for sufferers of anemia related to chronic kidney disease (CKD), H.C. Wainwright’s Edwin Zhang thinks a repeat scenario is unlikely.
Last week, the AdCom delivered an “overwhelmingly” one-sided vote against the treatment’s approval; 13-1 on the decision whether the drug was suited to treat dialysis-dependent patients and 12-2 against approving it for non-dialysis-dependent patients. The panel raised the alarm bells on roxadustat’s safety profile, citing concerns the drug increases the risk of death and other side effects.
The market did what the market does in such situations and sent shares down by 46% in the subsequent session.
Roxadustat is currently being considered for approval in the EU, but the panel’s decision does not bode well for success across the pond, and Zhang thinks the decision could also impact sales in China and Japan, where is the drug is already approved to treat chronic kidney disease patients.
“As the Adcom strongly voted against roxa, we believe the FDA will most likely follow the Committee’s recommendation, mainly for two reasons. First, FDA’s briefing document and the agency’s presentation are clearly not in favor of roxa. In other words, the FDA’s position is more in line with the Adcom negative results. Second, the recent saga of Aducanumab Adcom makes the FDA less likely to repeat such controversy by a reversal of another consensus opinion from the roxa Adcom. In light of the clear Adcom outcome, we expect the FDA to issue its regulatory decision fairly soon,” Zhang opined.
Overall, Zhang says the company will need to make a lot of “effort” in the near term to to restore “public trust and investor confidence.”
For now, there’s no change to Zhang’s rating, which stays a Neutral (i.e. Hold), while the analyst has no fixed price target in mind for the shares. (To watch Zhang’s track record, click here)
It appears most of Zhang’s colleagues agree; based on 7 Holds and 1 Buy and Sell, each, the stock has a Hold consensus rating. That said, the average price target tells quite a different story; the figure clocks in at $25.17, suggesting shares could climb ~83% higher in the year ahead. (See FGEN stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
