2023-06-05 15:27:08 ET
Summary
- FibroGen, Inc. results from the phase 3 LELANTOS-1 study, using pamrevlumab for the treatment of patients with non-ambulatory Duchenne Muscular Dystrophy, are expected any day now in Q2 of 2023.
- Results from the phase 3 LELANTOS-2 study, using pamrevlumab for the treatment of patients with ambulatory DMD are expected in Q3 of 2023.
- It is expected that the global market opportunity for Duchenne Muscular Dystrophy will reach $2.1 billion by 2031.
- Results from the phase 3 ZEHPYRUS-1 study, using pamrevlumab for the treatment of patients with idiopathic pulmonary fibrosis, are expected to be released in mid-2023.
FibroGen, Inc. ( FGEN ) is a good speculative biotech play to look into. That's because it has several major data readouts coming up, which if positive, could mean a boost in the stock price. In particular, it has two phase 3 study data readouts of pamrevlumab for the treatment of patients with Duchenne Muscular Dystrophy [DMD] expected in the coming days/weeks. This will be with respect to the use of pamrevlumab for the treatment of patients with ambulatory and non-ambulatory DMD.
This isn't the only catalyst coming out which could change the scope of this biotech. It is expected that FibroGen will report results from the phase 3 ZEPHYRUS-1 study in mid-2023. This study is exploring the use of pamrevlumab for the treatment of patients with idiopathic pulmonary fibrosis [IPF]. Another good aspect to consider about this biotech, would be that it has a few other late-stage studies which are also exploring the use of pamrevlumab for other indications. This would be the use of it to treat patients with unresectable locally advanced pancreatic cancer and idiopathic pulmonary fibrosis.
Pamrevlumab Potential To Treat Patients With Duchenne Muscular Dystrophy
As I stated in the above article, FibroGen has two major data readouts approaching, which deal with the use of pamrevlumab for the treatment of patients with Duchenne Muscular Dystrophy. Duchenne Muscular Dystrophy [DMD] is an inherited disorder whereby progressive muscular weakness occurs and is typically seen in boys. The market opportunity for this indication is good to go after. That's because the global market opportunity for Duchenne Muscular Dystrophy will reach $2.1 billion by 2031 . This disease starts at around the age of 4 years old and there are several symptoms observed with respect to this disorder. Symptoms of people with DMD are as follows:
- trouble getting up
- falling constantly
- sitting down properly
- Seep delay.
As you can see directly above, there are many symptoms to observe to see if someone had DMD. However, the first signs of DMD is tied to speech delay.
The reason why I believe that this biotech has huge potential is the possibility of it being able to use its drug pamrevlumab for the treatment of patients with DMD. It is expected that it will release results from two phase 3 studies in the coming days/weeks. One thing to note is that one phase 3 study is being done to target non-ambulatory DMD patients and then the second phase 3 study is targeting ambulatory DMD patients.
I believe that this is a good move for FibroGen. Why is that? Well, that's because it slightly reduces its risk a bit by going after two subpopulations of DMD, instead of focusing on the entire DMD population for one study. Top line results from the LELANTOS-1 phase 3 study , using pamrevlumab for the treatment of non-ambulatory DMD patients, is expected in Q2 of 2023 (which could be any day now). Then, the other phase 3 study LELANTOS- 2 , is expected to have results released in Q3 of 2023. This other study is going to be exploring the use of this drug for the treatment of patients with ambulatory DMD.
Financials
According to the 10-Q SEC Filing , FibroGen had $373.6 million in cash, cash equivalents, investments and accounts receivable as of March 31, 2023. The reason for the cash on hand is because of it being able to obtain non-dilutive term loan financing for up to $150 million with Morgan Stanley Tactical Value [MSTV]. The initial tranche of $75 million was already given on May 8, 2023.
The second tranche of $37.5 million could be obtained in Q3 of 2023, but only upon the achievement of certain clinical development milestones. MSTV has the option to fund a third tranche of $37.5 million in Q3 of 2023 as part of this agreement as well. Another item to note is that FibroGen obtained net product revenue of $24.2 million in Q1 of 2023 for the sale of roxadustat in China, compared to $18.9 million in the same quarter the prior year. This was a year-over-year increase of 28% in net product revenue of roxadustat. It believes that it has enough cash on hand to fund its operations through 2024. With the upcoming potential to receive additional tranches of the term loan financing, plus the estimate to fund its operations through 2024, it should have sufficient cash for the time being.
Thus, I don't see a need for FibroGen, Inc. to raise cash again in the short-term, but things could change based on need. Especially, if one of the several trial results to be released in 2023, cause the stock to trade higher. In that case, management may decide to raise cash immediately, instead of choosing to wait later on.
Risks To Business
There are several risks that traders/investors should be aware of before investing in FibroGen. The first risks to consider would be with respect to the upcoming study data readouts from the two phase 3 studies, using pamrevlumab to treat patients with DMD. The first phase 3 study to have a data readout from one of these studies would be LELANTOS-1, which is using this drug to treat patients with non-ambulatory DMD. Results from this study are expected to be released any day now in Q2 of 2023. The second phase 3 study, LELANTOS-2, is using pamrevlumab to treat patients with ambulatory DMD. These late-stage results are expected to be released in Q3 of 2023. There is no guarantee that one or both of these studies will meet the primary endpoint in clinical testing.
A second risk to consider would be with respect to the other data readout for another major market indication coming up. This would be the release of results from the phase 3 ZEPHYRUS-1 study , which is using pamrevlumab for the treatment of patients with idiopathic pulmonary fibrosis. Results from this phase 3 study are expected in mid-2023.
The final risk to consider would be with respect to the cash position. Why do I state that? That's because if one or more of the study results to be released in the coming days/weeks cause the stock to trade higher, then it's possible that management might choose to raise cash much earlier than anticipated.
Conclusion
The final conclusion is that FibroGen, Inc. is a good speculative biotech play to look into. As I stated above, it has several trial data readouts that will be released in 2023. Two of them specifically deal with the release of results from the LELANTOS program, which is exploring the use of pamrevlumab in two separate phase 3 studies [LELANTOS-1 and LELANTOS-2]. One study is going to use this drug to treat non-ambulatory DMD patients and then another one targeting ambulatory DMD patients. Data from these studies are going to be released Q2 of 2023 and Q3 of 2023 respectively.
Another set of data expected to be released coming up in mid-2023 would be the use of pamrevlumab for the treatment of patients with IPF. This adds another shot on goal in late-stage clinical testing for the drug pamrevlumab. Besides the use of pamrevlumab in being able to treat patients with DMD and IPF, there is even a chance that it might be able to be used in treating patients with cancer. That's because results, from the phase 3 ZEPHYRUS-1 study, using pamrevlumab in locally advanced unresectable pancreatic cancer, are expected to be released in the 1st half of 2024.
With several data readouts in 2023, plus another major data release in the 1st half of 2024, these are the reasons why I believe that FibroGen, Inc. is a good speculative biotech play to look into.
For further details see:
FibroGen: Several Pamrevlumab Data Releases Could Change Scope Of Biotech