Shares of biopharmaceutical company FibroGen, Inc. (FGEN) fell 42.2% on Friday, following news that the Food & Drug Administration Cardiovascular and Renal Drugs Advisory Committee (CRDAC) voted against the use of Roxadustat for treating anemia of chronic kidney disease (CKD). Shares closed at $14.35 on July 16.
FGEN said that the committee based its recommendation on data from a global Phase 3 program encompassing more than 8,000 patients. A negative vote from the committee meant that the FDA would also likely not agree to the usage of roxadustat in the U.S. (See FibroGen stock charts on TipRanks)
Enrique Conterno, CEO of the company, said, “While we are disappointed with today’s outcome… we believe the scientific evidence supports roxadustat approval in the U.S. and will work with the FDA as it completes its review of the New Drug Application for roxadustat.”
Anemia is a condition where fewer red blood cells in the body result in lower hemoglobin levels and is often witnessed in patients suffering from CKD.
Roxadustat enhances the production of red blood cells by increasing the production of erythropoietin, resulting in improved iron absorption and mobilization.
The drug is currently approved in China, Japan, Chile, and South Korea for the treatment of anemia of CKD for adult patients, whether undergoing dialysis or not.
Following the news, a series of analysts cut their price targets on FGEN to reflect the non-approval of Roxadustat in the U.S. and reducing the company’s sales forecasts.
Leerink Partners analyst Geoff Porges assigned a Buy rating to the stock but revised his price target down to $35 (143.9% upside potential) from $56.
Porges said, “We now regard further investment into the development and commercialization of the product in the US market as a waste of capital – the product’s limitations in terms of CV safety, mortality, serious infections, metabolic outcomes, and other events have been convincingly demonstrated by the FDA, and we believe that an approval is now very unlikely.”
Another analyst Difei Yang of Mizuho Securities reiterated a Hold rating on the stock while dropping the price target to $18 (25.4% upside potential) from $32.
Yang said, “We are lowering our U.S. Point of Sales for roxadustat to 0% from 50% and lowering ex-U.S. roxadustat sales estimates following yesterday’s negative AdCom result in dialysis-dependent (DD) and non-dialysis dependent (NDD) patient populations. “
Yang added, “The AdCom voted overwhelmingly against roxadustat in both settings, and the safety profile was the overarching concern across both indications.”
Overall, the stock has a Hold consensus rating based on 1 Buy, 7 Holds, and 1 Sell. The average FibroGen price target of $25.83 implies 80% upside potential to current levels. Shares have lost 68.3% over the past year.
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