Shares of FibroGen (FGEN - Free Report) skyrocketed on Tuesday after the biotech company reported strong results in its most recent series of tests for its new drug that is set to help treat a fatal lung disease.
Just yesterday, FibroGen posted a second-quarter loss of $0.48 a share and revenues of $29 million, which both missed our Zacks Consensus Estimates. But those losses could be poised to turn into profits after the biotech company announced strong progress on its most recent drug trial.
The San Francisco-based biopharmaceutical company successfully completed its mid-stage FDA test. FibroGen’s pamrevlumab, a drug that aims to treat the fatal lung disease idiopathic pulmonary fibrosis, recently completed its phase 2 randomized, double-blind, placebo-controlled test to see how well the drug is able to treat fibrotic disease.
IPF causes lung tissue to scar, which also slows down oxygen flow from the lungs into the bloodstream. It makes it hard to breath, and there is currently no cure for disease.
The company refers to pamrevlumab as “a proprietary anti-connective tissue growth factor (CTGF) antibody being evaluated in fibrotic disease and cancer.” FibroGen’s most recent testing showed that the drug helped increase lung capacity and volume from the start of the trial to week 48 of the study.
“We are very encouraged by the topline IPF Phase 2 clinical study results that we announced today, in which pamrevlumab-treated patients had a significantly lower rate of decline in lung function, as compared to the placebo-treated patients,” FibroGen CEO Thomas B. Neff said in a statement.
“In addition, pamrevlumab continued to be well tolerated as a monotherapy in this IPF study, and was well tolerated in combination with pirfenidone and nintedanib. We believe that the promising outcomes of these studies enable us to advance pamrevlumab into Phase 3 clinical development.”
Shares of FibroGen hit a new all-time intraday trading high of $51.70 per share on Tuesday. The company’s stock soared over 50% in morning trading, and it is still up around 50% in early afternoon trading. FibroGen stock has already traded over 7.6 million shares on Tuesday—its average volume is less than 500,000.
Before yesterday’s significant announcement, FibroGen stock had slowly climbed from $21.30 per share in early January to $35 a share as of Friday.
"Significant value creation should occur now," Jefferies Group analyst Michael Yee wrote in a note to clients after the FibroGen report was released. Yee thinks the new drug could eventually add $3 to $4 billion to FibroGen's current market cap of roughly $3.5 billion.
“We are conducting further analyses and look forward to presenting additional data from this study in the months ahead. We believe these results support a Phase 3 program in patients suffering from this debilitating and deadly disease,” FibroGen’s Chief Medical Officer Peony Yu, M.D. said in a statement Monday.
FibroGen expects to meet with the FDA to address the next steps for pamrevlumab. The company also plans to present its pamrevlumab findings in September at the 2017 European Respiratory Society International Congress.
The company’s other drug, roxadustat, is actually its most advanced product candidate. The drug is currently in the global Phase 3 clinical development program and will be entering Phase 3 in the U.S. for the treatment of anemia in chronic kidney disease.
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