FibroGen jumps after lung disease data 'more than could have been hoped for'
Despite missing expectations for the quarter, FibroGen (FGEN) is on the rise after the biotech's drug pamrevlumab, a treatment for fatal lung disease idiopathic pulmonary fibrosis, successfully completed a mid-stage FDA test. Following the announcement, several research firms raised their price targets on the stock, with some analysts recalling Roche's (RHHBY) recent acquisition of Intermune, which develops pirfenidone, a medication also used for the treatment of idiopathic pulmonary fibrosis. RESULTS, DATA: Last night, FibroGen reported second quarter losses per share of (48c) and revenue of $29M, compared to consensus of (47c) and $34.3M, respectively. The company also announced positive topline results from its Phase 2 randomized, double-blind, placebo-controlled study and two combination safety sub-studies of pamrevlumab in patients with idiopathic pulmonary fibrosis, or IPF. Pamrevlumab met the primary efficacy endpoint of change of forced vital capacity percent predicted, a measure of change in lung volume, from baseline to week 48 of the study. Consistent with previous clinical studies, pamrevlumab was well tolerated in IPF patients. FibroGen plans to present these and additional results at the upcoming 2017 European Respiratory Society International Congress in September. The company anticipates meeting with the U.S. FDA to address the clinical and regulatory path forward for pamrevlumab in this indication, it noted. STIFEL TARGET DOUBLED: This morning, Stifel analyst Thomas Shrader raised his price target for FibroGen to $80 from $38 saying the trial result seems "more than could have been hoped for." The analyst told investors that if these results are repeated in the pivotal Phase 3 trial, pamrevlumab could be an "important and valuable drug." This value is probably further underscored by Roche's acquisition of InterMune for $8.3B after its pirfenidone reached about a $35M quarterly sales rate, Shrader contended. The analyst, who reiterated a Buy rating on FibroGen's shares, estimates that pamrevlumab has a 50% chance of succeeding in IPF. Meanwhile, Jefferies analyst Michael Yee also raised his price target for FibroGen to $75 from $50 saying "significant value creation should occur now" after the company reported positive Phase 2 IPF lung data for FG-3019. The analyst told investors in a research note of his own that he believes the $5B market capitalization implied by his new price target could prove conservative. Like his peer at Stifel, Yee also noted that InterMune had comparable data and was acquired by Roche for $8B. The analyst reiterated a Buy rating on FibroGen. Two other analysts raised their price targets for FibroGen following the study data. Citi analysts Joel Beatty upped his price target on the shares to $65 from $48, saying the monotherapy benefit appears comparable to the two approved IPF drugs, which is encouraging. He increased his probability of success for pamrevlumab in IPF to 65% from 20%. Additionally, Leerink analyst Geoffrey Porges raised his price target for FibroGen to $82 from $52 and reiterated an Outperform rating on the shares. Pivotal IPF trials are likely to be initiated in 2018, most likely with assistance from a partner, which would also offer a source of non-dilutive financing, Porges added. PRICE ACTION: In late morning trading, shares of FibroGen have gained almost 50% to $49.70. FGEN RHHBY