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As Rival Sputters, FibroGen Heads to Nasdaq Via $146M IPO

Xconomy San Francisco — 

When it comes to raising money from public investors, timing is everything. And it certainly didn’t hurt San Francisco-based FibroGen’s IPO pitch when one of its rivals released some data that spooked Wall Street investors a few weeks ago.

FibroGen is debuting on Nasdaq today under the ticker symbol “FGEN” after pricing 8.1 million shares at $18 apiece. FibroGen sold one million shares more than it originally intended, priced near the top of its projected $16 to $19 per share range, and raised just under $146 million before discounts due to underwriters. Those underwriters have a 30-day option to buy another 1,215,000 shares at the IPO price. The initial price values FibroGen at more than $1 billion right out of the gate.

Shares were up about 23 percent in midday trading on Friday.

FibroGen founder, chairman, and CEO Thomas Neff held 12.6 percent of the company’s shares before the IPO. Astellas Pharma (10.5 percent) was the only other shareholder with more than a 5 percent stake, according to the company’s IPO prospectus.

FibroGen is developing drugs for anemia, certain types of fibrosis, and other conditions. Its most advanced drug is roxadustat, which is part of a class of experimental therapies that exploit the biology of hypoxia inducible factor (HIF)—a system of checks and balances that makes sure cells have the right amount of oxygen to survive. Like a few other companies, among them Cambridge, MA-based Akebia Therapeutics (NASDAQ: AKBA), FibroGen is trying to show that a HIF-modulating drug can produce an effective, and safe, oral anemia pill. The concept is to trick the body into thinking its at high altitude, stimulating the body to make more red blood cells—the natural corrective response to low-oxygen conditions.

It’s a risky endeavor with a big reward: Injectable anemia biologics like Amgen’s Epogen still bring in billions of dollars despite safety issues that have curtailed their use. The payout for replacing them with a pill that might alleviate those issues is substantial.

Still, that’s been easier said than done. Palo Alto, CA-based Affymax infamously collapsed and later liquidated after an anemia drug it had won FDA approval for—called peginesatide (Omontys), aimed at challenging Amgen’s anemia superiority—was yanked off the shelves due to some severe, and sometimes fatal, allergic reactions. And while Akebia announced “positive” results for its anemia prospect, AKB-6548, in a mid-stage trial in late October, it also disclosed some safety issues, including one patient death in its study “possibly” related to treatment. Shares plummeted almost 40 percent.

That’s opened the door a bit for FibroGen; roxadustat, which is partnered with Astellas Pharma and AstraZeneca, is in Phase 3 testing for the anemia people get when their kidneys are failing. The studies FibroGen and its partners are running across the world will enroll between 7,000 and 8,000 patients, “the largest Phase 3 program ever conducted for an anemia product candidate,” according to its IPO prospectus.

FibroGen’s second drug is FG-3019, an antibody that blocks the activity of connective tissue growth factor, which is thought to be implicated in fibrosis, a type of tissue scarring that contributes to a range of diseases. FibroGen is testing it in mid-stage trials in idiopathic pulmonary fibrosis (IPF), liver fibrosis, and pancreatic cancer. It owns worldwide rights to the drug.

Both of FibroGen’s lead drugs face serious competition: Boehringer Ingelheim and Roche (via its buyout of InterMune) already have FDA-approved drugs for IPF. And aside from Akebia, others such as GlaxoSmithKline and Bayer, are also developing HIF-modulating anemia pills.

FibroGen has burned through over $217 million since its inception in 1993, and had about $175.5 million in cash on hand as of Sept. 30.

Goldman Sachs, Citigroup Global Markets, Leerink Partners, RBC Capital Markets, Stifel, Nicolaus & Co., and William Blair are underwriting the company’s IPO.