Is Fibrogen Still a Buy Following Data Analysis Faux Pas? Analyst Weighs In

No one likes being given the wrong information. Investors reacted in dismay and sent Fibrogen (FGEN) shares deep into the red following the company’s embarrassing announcement. The biotech company said it had gotten the analysis for its therapy for sufferers of anemia related to chronic kidney disease, well, wrong.

The company said that the data from the late-stage study of roxadustat had “included post-hoc changes to the stratification factors.” The data was used instead of the original stratification plan, in presentations and several press releases last year. Leerink analyst Geoff Porges says it was also “presumably” used in the submission to the FDA.

Management said it was carrying out an “internal review to ensure such issues do not occur in the future.”

The major “oops,” says Porges, is nothing less than stunning.

“The re-statement reduced the benefit from roxa vs controls in every case, erased the appearance of superiority over ESAs in incident dialysis patients, and increased the apparent risk of a negative effect of roxa on CV safety in non-dialysis patients,” the analyst said. “It’s not clear to us whether the company previously mis-presented, or mis-represented, the results of the analysis, but either way this disclosure, long after the NDA had been submitted, and after both PDUFA dates have passed, raises questions about the reception that the company will get when they appear at the newly announced FDA Cardio Renal Advisory Committee meeting on July 15.”

The disclosure is also sure to raise several questions amongst investors. Does roxadustat still have any chance of approval? Will it affect the company’s partnership with AstraZeneca? Will management survive?

As far as Roxadustat is concerned, Porges anticipates one of two likely outcomes. If, as management has suggested, the FDA was informed of the issue and already aware of the “different statistical analyses,” then it “could approach the review without prejudice.” The drug could then even be granted approval by the end of the summer.

On the other hand, if the FDA has only recently been notified of the issue, then Porges says, there is the “real possibility that the agency will require a complete audit of all of the trial results, endpoints and analyses in the database, which could require many months.”

Porges takes the prudent approach and now does not expect approval until 1Q22.

Interestingly, though, Porges sticks to an Outperform (i.e. Buy) rating, and while the price target is reduced from $64 to $56, the revised figure still implies upside of a hefty 198%. (To watch Porges’ track record, click here)

Overall, TipRanks analysis of 9 analyst ratings shows an indecision between the bulls and the naysayers on FGEN: 4 suggest Buy, 4 say Hold, and only one recommends Sell. Importantly, the 12-month average price target stands at $47.17, marking nearly 151% in upside potential from where the stock is currently trading. (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.