FibroGen Analyst Removes US Roxadustat Sales From Model After AdCom Snub

FibroGen, Inc. FGEN shares were slumping over 40% following a negative AdCom verdict and a string of downgrades in reaction to the adverse regulatory development.

The FibroGen Analyst: BofA Securities analyst Jason Gerberry downgraded FibroGen shares from Buy to Neutral and reduced the price target from $43 to $29.

The FibroGen Takeaways: An approval for FibroGen's roxadustat is highly unlikely given the FDA panel's commentary and challenging pathway for conducting pre-approval registrational trials, Gerberry said in the downgrade note. 

The FDA panel, comprised largely of cardiologists, voted against approving roxadustat to treat anemia in both dialysis-dependent and non-dialysis-dependent patients, the analyst said. 

"The primary issues raised by the Adcom stemmed from concerns about CV safety risk and the need to appropriately characterize those risks with a pre-registration study," he said. 

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The company's willingness to further investigate in more studies may be impacted by the fact that the drug has only composition of matter patent runway that expires by 2029-30, Gerberry said. 

Concerns that cardiovascular safety issues are unlikely to be resolved by ongoing studies prompted BofA to remove roxadustat chemotherapy-induced anemia and myelodysplastic syndrome indications from its U.S. revenue forecast, the analyst said.

"We are less compelled to recommend FGEN without a likely U.S. launch given limited PO upside and lack of catalysts," he said. 

Phase 3 data for pamrevlumab in idiopathic pulmonary fibrosis is due in early 2023, Gerberry said. 

Based on the Adcom's decidedly negative votes, BofA stripped roxadustat U.S. sales entirely from its Fibrogen model, the firm said.

The remaining value ascribed to FibroGen shares is driven by roxadustat's contribution from approved, or recommended for approval, markets such as China, Japan and the EU, the analyst said. 

FGEN Price Action: At last check, FibroGen shares were slumping 45.87% at $13.44. 

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