Frank -- FGEN lost 80% of its market value on news that its pamrevlumab drug didn't meet endpoints for idiopathic pulmonary fibrosis that would justify further phase 3 clinical trials. The reaction in terms of share price was more like one might expect if a new drug had failed completely for all indications. In this case, clinical trials continue for Duchenne muscular dystrophy and pancreatic cancer. If the pancreatic cancer trials had ended, I would be the first to recommend selling the stock and taking a tax loss.
The first drug, roxadustat, continues to have increased usage in China, where it was first approved. The Chinese government regulators have arbitrarily lowered the price they pay to FGEN and AstraZeneca for making the drug available there. Revenues, however, continue to increase in China, Japan, and elsewhere, where the drug is approved for kidney patients with low hemoglobin. It's my understanding that clinical trials for roxadustat in the U.S. continue only for patients receiving chemo, not kidney patients.
The mess that FibroGen management created with roxadustat trials in the U.S. shows an incredible lack of management quality in the CURRENT management. Yet there are enough positive test results to justify a much higher price than we see today, based solely on continuing trials for both pamrevlumab and roxadustat.
The current price is low enough to make FGEN vulnerable to a takeover, or at least forcing a change in management, which would be all to the good, and would have a positive effect on the share price. Under this scenario, I would look for at least a doubling in the price of the stock. It's still well below what I paid for it, but I think there is enough promise to hold for the time being.
Stock losses can be cushioned by profits in other stocks, and that is a strategy I am using in today's market. As other stocks rise to levels that appear overbought, I expect to write off my FGEN losses against other profits.
Art |
