- FibroGen's stock is on pace for its best daily performance ever since it began trading publicly in November 2014.
- The biotech's drug pamrevlumab successfully completed a mid-stage FDA test.
- Jefferies analyst Michael Yee wrote that "significant value creation should occur now" for FibroGen.
Shares of FibroGen are soaring more than 45 percent in midday 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 as much as 52 percent, or $17.45 a share, to $50.80 in early trading Tuesday. It is on pace for the best daily performance ever since it began trading publicly in November 2014. The stock traded more than twelve times its 30-day average volume, with nearly 5 million shares changing hands on Tuesday.
While phase 2 testing for idiopathic pulmonary fibrosis is complete, FibroGen announced it will continue phase 2 testing of 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.