What Negative Roxadustat FDA AdCom Vote Means for Fibrogen's (FGEN) Stock?

Thursday afternoon, FibroGen, Inc. (NASDAQ: FGEN) announced that the U.S. Food and Drug Administration (FDA) Cardiovascular and Renal Drugs Advisory Committee (CRDAC) voted against recommending the US approval of roxadustat – the company's anti-anemia drug candidate.

The panel voted 13-to-1 against approval for treatment of non-Dialysis patients, and 12-to-1 against approval for In-Dialysis patients, citing safety concerns in both populations.

While the FDA is not required to follow the Committee's vote when making the final decision, the agency always takes the vote results into strong consideration.

Fibrogen investors were clearly taken aback by nearly unanimous verdicts, as Fibrogen’s shares are sliding 45% lower in the light of the news.

So, what lies ahead for the Fibrogen, following the disappointing vote?

No Clear Path to the US Market

Stifel analyst Annabel Samimy points out that the panel was adamant in their safety concerns, but agreed that “an oral therapy would significantly reduce the burden on patients’ lives.” She believes that “with an additional study, NDD is still a viable population”, albeit models a two-year delay for a study to take place.

Jason M. Gerberry from BoFa Securities is less optimistic and quotes: “We don’t see a path to US mkt.” In his view, the FDA is unlikely to decide against the panel’s vote in the light of recent scrutiny of Biogen’s Aduhelm’s approval and views the possibility of the additional trial as low due to time and financial constraints.

Roxadustat Still has Other Markets

Despite the US hiccup, roxadustat remains approved or recommended for approval in China, Japan and EU.

With the US market excluded from their models, both analysts assign a $29 Price Target to the shares driven by the sales potential in the markets above, which assumes over 100% upside from current levels.

Stifel downgraded Fibrogen from “Buy” to “Hold” and lowered the Price Target to $29 from $55.

BofA Securities downgraded Fibrogen from “Buy” to “Neutral” and lowered the Price Target to $29 from $43.

Written by Vlad Schepkov | [email protected]

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