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FibroGen Gains Japanese Approval for Roxadustat; Mizuho Securities Sees 79% Upside

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FibroGen and its partner, Astellas Pharma, announced on November 27 that Japan’s Ministry of Health, Labour and Welfare (MHLW) approved EVRENZO (roxadustat) for the treatment of anemia of chronic kidney disease (CKD) in adult patients who aren’t on dialysis. This is the second roxadustat approval in Japan through the collaboration, after the therapy was approved and launched for use in adult patients with anemia of CKD on dialysis last year. 

“Today’s approval is another milestone achievement for both FibroGen and Astellas,” K. Peony Yu, M.D., FibroGen’s (FGEN) Chief Medical Officer, stated. “By bringing roxadustat to adult patients living with anemia of CKD, both on dialysis and not on dialysis, we are continuing our efforts to meet the significant unmet medical need of patients in this community.” 

The results of three clinical studies evaluating the therapy in more than 500 Japanese patients with anemia of CKD not on dialysis served as the basis for the approval.  

Of these three, the first was an open-label Phase 3 conversion study compared to active comparator, darbepoetin alfa, which met the primary efficacy endpoint of non-inferiority and continued to demonstrate maintenance of hemoglobin (Hb) levels over time. In the study, roxadustat was well tolerated, and the safety profile was comparable to that of darbepoetin alfa. The other two studies (one Phase 3 and one Phase 2) supported the safety and efficacy of roxadustat in erythropoiesis-stimulating agent (ESA)-untreated patients. 

Additionally, this approval triggers a milestone payment of $15 million to FibroGen from Astellas. 

Looking more closely at the drug, roxadustat is an orally administered inhibitor of hypoxia-inducible factor (HIF) prolyl hydroxylase (PH), and is designed to increase Hb levels in order to correct anemia. 

Mizuho Securities analyst Difei Yang reiterated a Buy rating and $72 price target on November 27, arguing that another major catalyst is still on tap for 2020. 

“The primary near-term catalyst for FibroGen shares remains the 12/20/20 PDUFA for roxadustat in the DD and NDD settings in the U.S., in our view. The shares appear to have 50-60% probability of FDA approval priced in, and we believe Roxa is highly likely to get the FDA approval, ~90% probability of success,” Yang explained. 

Turning now to the rest of the Street, 3 Buys, 1 Hold and 1 Sell have been issued over the last three months. Therefore, FGEN gets a Moderate Buy analyst consensus. Based on the $81 average price target, shares could soar 102% in the next year. (See FibroGen stock analysis on TipRanks

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