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.