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Why FibroGen Inc Skyrocketed Higher Today

What happened

FibroGen (NASDAQ: FGEN) is up nearly 50% at 1:10 p.m. Tuesday after releasing positive data from its phase 2 trial testing pamrevlumab in patients with a lung disease called idiopathic pulmonary fibrosis (IPF).

So what

To see how well the drug was working, the trial used forced vital capacity (FVC), a pretty standard measurement for lung function. How much air the patient is able to blow out of their lungs -- the FVC -- is then compared to what would be predicted for the patient's age to get the FVC percent predicted.

Patients taking pamrevlumab saw their FVC drop by 2.85 points over the 48 week treatment compared to a decline of 7.17 points in the patients who took a placebo. Measured in volume, that's a 129 ml decline for patients taking pamrevlumab versus a 308 ml decline for those that got placebo. Pamrevlumab isn't a cure for IPF, but it's clearly slowing the decline of the disease.

In a separate part of the study, FibroGen treated patients with pamrevlumab who were already taking either Roche's Esbriet or Boehringer Ingelheim's Ofev to treat their IPF to test the safety of combining the medications, noting that both sets of combinations were "well tolerated."

Image source: Getty Images.

Now what

Investors will get to see the full data set at the European Respiratory Society meeting next month.

Given the positive data, FibroGen is planning to move the drug into a phase 3 program. These are likely to be expensive trials, which would eat up a good portion of the $415 million in cash and equivalents that Fibrogen ended the second quarter with after raising cash in a secondary offering -- especially considering it has another phase 3 program for its other drug, roxadustat -- so the company is looking for partners. Shares could go higher if FibroGen can secure good terms for its partnership.

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Brian Orelli and The Motley Fool have no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.