Biotech General Discussion

Yesterday, after hours, $FGEN shares plunged as it announced "clarification" to prior disclosures of cardiovascular safety for its HIF-PH inhibitor, Roxadustat (Roxa), in the treatment of anemia caused by chronic kidney disease (See our IQ card for Roxa in CKD anemia). The company clarified that the prior data was based on after-the-fact (post-hoc) subpopulation analysis (stratificiation), not the prespecified analysis. In yesterday's press release, the company presented data from both the after-the-fact and the prespecified analysis, which significantly differed. The prior data that did not clarify that it was based on after-the-fact changes to the analysis, was presented publicly both at a major scientific meeting oral presentation in the fall of 2019 and in at least some presentations since that time.

So what does this mean for FGEN value and Roxa's future?

1) The clarification reduces, albeit by a small amount in our view, the chance of success in gaining FDA approval. The FDA called an Adcomm, so it has some questions about safety and efficacy. Yesterday's "clarification" relates to the primary safety data. According to FGEN on its call yesterday, the FDA had both sets of data in the NDA filing, although it apparently contacted the FDA this week to clarify the ad-hoc from the pre-specified data. Even with the pre-specified data, Roxa still looks statistically equivalent to the standard of care or placebo in the appropriate patient populations. However, it no longer looks statistically better in some key populations and gets closer to statistically inferior in some subpopulations. Maybe questions about the strength of the prespecified safety analysis is one reason the FDA called the Adcomm in the first place? FGEN clarified in its investor call last night, both sets of data were submitted to the FDA with the NDA package, and the prespecified analysis is likely what the FDA will rely on most heavily.

2) The clarification reduces the value of Roxa and FGEN to a modest degree because even if approved in the U.S., and possibly in other jurisdictions where it is approved (China and Japan) or is under review (Europe EMA), getting physicians to switch from their current standard of card, EPOs, which has been the standard of care for years, will be more difficult. The long-term cardiovascular data no long is as favorable to Roxa and borders on inferior in some populations. However, the drug still has advantages: Larger increase in hemoglobin than EPO in some key populations; lower transfusion in risk in key populations; possibly reduces LDL-C and less iron supplement is required than EPOs.

This latest issue is yet another safety data presentation issue for Roxa and FGEN. The data presentations from its long-term safety trial (sometimes called a major cardiac event or MACE trial) have caused confusion over the years, starting with the initial presentation in May 2019. The confusing data presentations is one reason that FGEN's stock price has been on a rollercoaster and long-term downward trend since 2018.

This "correction" likely hit large institutional investors and investment banks by surprise, since volatility was low last week, and thus investors were not seeing huge risk in Roxa's upcoming Adcomm. Thus, we did not include FGEN's upcoming Adcomm on our April Big-Mover future events list. However, volatility measures will likely increase significantly with today's FGEN stock move, and Roxa's Adcomm might make it on to our Big-Mover catalyst list next month. The question for investors now: Will the market over-react and create a buying opportunity for FGEN, because Roxa still looks like a good drug with advantages over standard of care.

#FGEN $FGEN #Roxadustat #anemia #vadadustat #CKD