Clinical Trials And Regulatory Advances Will Open US Markets

Key Takeaways

• Advancing precision oncology and rare disease treatments positions the company for future revenue growth and strong market opportunities in underserved populations.
  
• Liquidity improvements and strategic pipeline diversification reduce financial risk while enhancing long-term earnings stability and optionality.
  
• Divestment of China operations and reliance on unproven drug candidates increase revenue risk, while ongoing losses and delayed commercialization heighten financial instability and shareholder dilution.

Catalysts

A biopharmaceutical company, discovers, develops, and commercializes therapeutics to treat serious unmet medical needs.

• Ongoing Phase II and upcoming Phase III clinical trials for FG-3246 and FG-3180 (ADC and companion PET imaging agent) in metastatic castration-resistant prostate cancer aim to address a large, underserved patient population, with the potential for significant market expansion and first-mover advantage in a $5B+ annual US market-supporting potential future revenue growth.
  
• The positive regulatory progress and planned Phase III trial for roxadustat in anemia due to lower-risk myelodysplastic syndromes-targeting an orphan disease with no oral treatments and a clear pathway to US market exclusivity-position the company to capitalize on increasing global demand for novel therapies in chronic and rare diseases, with potential for durable new revenue streams.
  
• The sale of FibroGen China to AstraZeneca is expected to unlock ~$210M in non-dilutive capital, enabling payoff of outstanding debt, elimination of China repatriation limitations, and extending the cash runway to 2028-improving liquidity, supporting pipeline advancement, and limiting the need for potentially dilutive fundraising, thus positively impacting net margins and earnings stability.
  
• Integration of a precision medicine approach for FG-3246, including the use of a companion PET imaging biomarker (FG-3180), aligns with increased regulatory and clinical acceptance of targeted therapies, which may accelerate clinical development, improve trial success rates, and increase the net present value of pipeline assets.
  
• Pipeline diversification (oncology and hematology assets, multiple shots on goal) and flexibility to partner or independently advance clinical programs provide strategic optionality to capture benefits from rising healthcare expenditure and broader access to innovative treatments, potentially yielding higher revenue resilience and improved long-term earnings visibility.

FibroGen Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming FibroGen's revenue will decrease by 3.9% annually over the next 3 years.
• Analysts are not forecasting that FibroGen will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate FibroGen's profit margin will increase from -1189.8% to the average US Biotechs industry of 14.0% in 3 years.
• If FibroGen's profit margin were to converge on the industry average, you could expect earnings to reach $911.8 thousand (and earnings per share of $0.23) by about August 2028, up from $-87.4 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 253.5x on those 2028 earnings, up from -0.4x today. This future PE is greater than the current PE for the US Biotechs industry at 15.6x.
• Analysts expect the number of shares outstanding to grow by 0.69% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.36%, as per the Simply Wall St company report.

FibroGen Future Earnings Per Share Growth

Risks

• The company is divesting its China operations, which previously represented an important revenue and cash flow source, and its future operations will be focused exclusively on R&D-stage assets in the U.S.-this reduces revenue diversification and exposes FibroGen to high dependency on unproven drug candidates, increasing the risk of revenue shortfalls and greater earnings volatility.
  
• The lead pipeline assets, FG-3246 and FG-3180, remain in early
• to mid-stage clinical development, and the company is several years and multiple pivotal trials away from any commercialization; delays or failures in clinical trials could result in prolonged periods of minimal or no revenue and persistent net losses.
  
• Roxadustat is being positioned for a new narrow indication after prior clinical and regulatory setbacks, and even if approved, the minimum expected market exclusivity is only seven years, with significant uncertainty around additional intellectual property protection-posing risks to long-term revenue potential and the ability to maintain net margins after market entry.
  
• The biotech faces intensifying competition in metastatic castration-resistant prostate cancer (mCRPC) and MDS from both established pharma companies and innovative startups; this raises the risk that FibroGen's relaunch strategies may fail to achieve substantial market share, limiting top-line growth and negatively impacting earnings prospects.
  
• The company's financials continue to reflect high net losses, very low revenues, reliance on future milestones, and a prolonged absence of meaningful commercial income; if clinical development or partnership timelines slip, the company may be forced to raise additional dilutive capital, pressuring per-share value, increasing shareholder dilution, and negatively affecting net margins and long-term earnings stability.

Valuation

• The analysts have a consensus price target of $43.0 for FibroGen based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $6.5 million, earnings will come to $911.8 thousand, and it would be trading on a PE ratio of 253.5x, assuming you use a discount rate of 10.4%.
  
• Given the current share price of $9.48, the analyst price target of $43.0 is 78.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.