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A Food and Drug Administration panel voted categorically against the recommendation for approval for treatment of anemia. FibroGen (FGEN) and FGEN’s stock cracked on Friday.
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FibroGen is seeking approval in patients with chronic kidney disease. But panelists voted 13 to 1 against the FDA’s recommendation to approve roxadustat in patients not dependent on dialysis. They voted 12-2 in the case of dialysis dependent patients.
Members of the FDA’s Cardiovascular and Kidney Drugs Advisory Committee have expressed concern that roxadustat increases the risk of death and other dangerous side effects, SVB Leerink analyst Geoffrey Porges said in a note to customers.
“We believe that the potential US approval for roxadustat will be delayed for several years,” he said. And the FDA could ultimately restrict roxadustat to patients who do not respond to standard drugs known as an erythropoietin stimulating agent “if FibroGen continues its development in the United States,” Porges added.
But FibroGen continued to defend roxadustat.
“While we are disappointed with today’s outcome, we believe the scientific evidence supports the approval of roxadustat in the United States and will work with the FDA as it completes its review of the new drug application for the. roxadustat, “said Managing Director Enrique Conterno in a written statement.
FGEN Stock Craters on panel vote
In morning stock exchange trading today, FGEN stock slumped 43.2% to near 14.10.
When tested, roxadustat increased the risk of death, thrombosis, stent occlusion and serious infections, Porges said. He added that it could also cause seizures and metabolic / gastrointestinal side effects.
“Almost all of these imbalances were unknown to investors, and we expect investors to call for changes to the board, management, staff, portfolio and expenses of the company as a result of this complete rejection. “, did he declare.
The FDA is not bound by the committee’s recommendation. In fact, the FDA is currently facing increasing criticism after approving Biogenic‘s (BIIB) Alzheimer’s, Aduhelm, despite a negative vote of the advisory committee.
But Porges doesn’t expect that to happen in this case. He has reduced his expectations for approval in the United States to zero. It also reduced its target price on the FGEN share from 56 to 35, while maintaining its outperformance rating.
Will investors seek restructuring?
Roxadustat is already approved in China and Japan, where FibroGen cleans up partner’s profit sharing and royalties respectively AstraZeneca (AZN). The European Medicines Agency’s Committee for Medicinal Products for Human Use has previously issued a favorable opinion on roxadustat.
FGEN investors are eager to test the results of pamrevlumab, an experimental treatment for pancreatic cancer and Duchenne muscular dystrophy. But these results are not expected until the second half of 2022. This means that the drug could not be launched before 2023.
“The remaining value of FibroGen shares is the value of other geographies for roxadustat, the value of pamrevlumab and the company’s cash flow,” Porges said. “FibroGen can insist that they deserve value for their ‘platform’ and for their early stage assets, but in our opinion we are unlikely to get it.”
Porges expects FGEN investors to also call on FibroGen to restructure after the vote. He argues that the company should become a third smaller.
“Such a restructuring typically takes months to design and implement, but we expect investors to ask for no less given the lack of opportunities for roxadustat and the time until proof ( efficacy) of pamrevlumab in ongoing pivotal trials, ”he said.
FGEN Stock takes another hit
Mizuho Securities analyst Difei Yang also lowered her FGEN share price target from 32 to 18. She kept her neutral rating on equities.
She noted that FibroGen suggested that it could launch roxadustat with a lower initial dose and a risk mitigation strategy.
“However, a number of panelists wanted to see this proposal validated in clinical trials, and therefore voted against approval at this point,” she said.
Yang now thinks the FGEN stock is a short-term business selling story in Europe and China. She also dashed her expectations regarding the approval of roxadustat in the United States.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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