Biotech FibroGen soars more than 50% on positive lung disease treatment study

An x-ray of a man with idiopathic pulmonary fibrosis.

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An x-ray of a man with idiopathic pulmonary fibrosis.

Shares of FibroGen are soaring more than 50 percent in pre-market trading Tuesday after the biotech reported positive study results for a potential blockbuster drug.

The biotech company’s drug pamrevlumab, a treatment for fatal lung disease idiopathic pulmonary fibrosis, successfully completed a mid-stage FDA test.

“Significant value creation should occur now,” Jefferies analyst Michael Yee wrote in a note after the results. The analyst believes the drug should add $3 to $4 billion to FibroGen’s market cap eventually or $35 to $50 to its share price.

The stock surged 52 percent, or $17.45 a share, to $50.80 in early trading Tuesday.

While phase 2 testing for idiopathic pulmonary fibrosis is complete, FibroGen announced it will continue phase 2 testing pamrevlumab as a treatment for both pancreatic cancer and Duchenne muscular dystrophy.

Idiopathic pulmonary fibrosis is a disease which scars lung tissue, leading to organ dysfunction and eventual failure within a few years of diagnosis. FibroGen said in its most recent quarterly report that “pamrevlumab was well tolerated” by patients in phase 2 study. Jefferies’ Yee believes the drug should post similar results in phase 3.

FibroGen reported a loss of $33.2 million in the second quarter, and reported an EPS loss of 48 cents per share, slightly missing Wall Street’s expectations of a loss of 47 cents per share.

The company’s stock was up more than 56 percent this year before Tuesday’s open, and was leading the iShare Nasdaq Biotechnology ETF in pre-market trading.

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