Frank -- I sold some of my FGEN holdings near $17, before the news that brought the shares down below $3. The main problem is NOT the below expectation results for pamrevlumab for treating idiiopulmonary fibrosis but the poor quality of executive leadership, especially in its decision to change the research design for phase 3 clinical trials of roxadustat and the resulting FDA action denying approval.
I think the reaction to the latest news was an overreaction, as often occurs on bad news. I expected the shares would recover somewhat, as they have, but the main problem is not the drugs but the management. I believe now that there will be pressure to change the management, possibly in the form of changes to the board of directors. In any case, I think the stock at its present price is undervalued and could rise to as much as $10 to $12, simply because the company is vulnerable to a takeover.
Consider that revenues from roxadustat in China continue to grow. Pamrevlumab still is seen as perhaps the only drug that can treat pancreatic cancer effectively. And the use of roxadustat for increasing red blood cell count is increasing gradually in Europe and selected other countries, including Japan and S. Korea.
I place great value on companies with good quality of management. FibroGen, following the death of its founder, is not one of them. I am disenchanted with the stock, but I still believe that in this kind of market, where development stage biotech firms are often held merely as speculations, it's worthwhile holding the shares.
Art |
