On Wednesday, Goldman Sachs (NYSE:GS) revised its price target on shares of FibroGen (NASDAQ:FGEN), a biopharmaceutical company, to $0.60 from the previous $2.00, while maintaining a Sell rating on the stock. The adjustment followed the announcement that FibroGen would halt further development of its drug candidate pamrevlumab after it failed to meet primary endpoints in two clinical studies.
FibroGen recently disclosed top-line results from the Phase 2/3 PanCAN Precision Promise and Phase 3 LAPIS studies, which evaluated pamrevlumab in metastatic pancreatic cancer and locally advanced unresectable pancreatic cancer, respectively.
Neither study achieved the primary goal of overall survival, and the treatment arms did not perform as well as the control arms, despite pamrevlumab being generally well-tolerated.
In response to these outcomes, FibroGen is initiating a significant cost reduction plan in the United States. The company plans to end all research and development activities related to pamrevlumab and wind down any remaining financial obligations. Moreover, FibroGen will reduce its U.S. workforce by approximately 75%, which equates to around 135 of the current 180 positions, while its operations in China will remain largely intact.
Goldman Sachs had previously considered the likelihood of clinical success for pamrevlumab to be low due to its past failures in other indications. The firm is awaiting further details on the rest of FibroGen's oncology pipeline.
The competitive landscape for emerging treatments in prostate cancer and mixed data from monotherapy and combination studies of FG-3246 have also contributed to the difficulty in building a positive outlook for the company's shares.
Looking forward, attention turns to FibroGen's second-quarter 2024 financial results, particularly for updates on the commercial performance of roxadustat, the company's drug for chronic kidney disease, in the Chinese market.
The revised 12-month price target of $0.60 is based on a discounted cash flow analysis that now includes an 18% discount rate and a 0% terminal growth rate, reflecting the limited potential from the company's commercial asset in China and the early-stage status of its clinical pipeline.
In other recent news, FibroGen Inc . has been making significant strides in its clinical trials and partnerships. The company reported Q1 2024 earnings of $55.9 million with a net loss of $32.9 million. Despite some trials setbacks, FibroGen remains optimistic about its financial stability, expecting its current funds to support operations until 2026.
The U.S. Food and Drug Administration (FDA) has cleared FibroGen's Investigational New Drug (IND), FG-3165, a targeted therapy for solid tumors. The upcoming Phase 1 trial, expected to begin enrollment later this year, follows preclinical results that showed anti-tumor activity and improved survival rates in mouse cancer models.
In addition, FibroGen has announced a partnership with Regeneron (NASDAQ:REGN) Pharmaceuticals to test two of its experimental cancer drugs in combination with Regeneron's LIBTAYO® therapy. The clinical trial will assess the efficacy of FibroGen's FG-3165 and FG-3175 as both standalone treatments and in conjunction with LIBTAYO® in patients with certain solid tumors. FDA has already cleared an IND application for FG-3165, with an IND submission for FG-3175 expected in 2025.
These are recent developments in FibroGen's ongoing commitment to addressing unmet medical needs in oncology.
InvestingPro Insights
In light of Goldman Sachs' recent revision of FibroGen's price target, InvestingPro data and tips provide additional context for investors considering the company's financial health and stock performance.
The market capitalization of FibroGen stands at a modest $49.24 million, reflecting investor caution amidst recent developments. The company's revenue shows a robust growth of 44.31% over the last twelve months as of Q1 2024, which may be a glimmer of hope for its financial prospects. However, the negative gross profit margin of -76.43% during the same period highlights the challenges in translating revenue into profitability.
InvestingPro Tips suggest that FibroGen is quickly burning through cash and has not been profitable over the last twelve months, with analysts not expecting profitability this year. The stock has experienced volatility with a significant hit over the last six months, although it has seen a strong return over the past month. These insights could be crucial for investors weighing the risks and opportunities of investing in FibroGen.
Investors interested in a deeper analysis can find additional InvestingPro Tips on FibroGen, which can be accessed at https://www.investing.com/pro/FGEN. There are 9 more tips available, offering a comprehensive view of the company's financial health and stock performance. For those considering InvestingPro, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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