FGEN

FibroGen ($FGEN) Director Acquires 300,000 Shares Amid Stock Collapse: Recovery Signal After Clinical Failure and Restructuring?

03/24/2025 13:05

FibroGen ($FGEN) director James Schoeneck has made significant back-to-back stock purchases last week, a notable move coming at a challenging time when the pharmaceutical company's shares have hit record lows following major clinical trial failures and extensive restructuring. According to SEC Form 4 filings on March 20 and 21, Schoeneck first purchased 250,000 shares at an average price of $0.35 per share, investing approximately $88,000, followed by an additional 50,000 shares the next day at $0.34 per share, adding about $17,040 more. The total purchase of 300,000 shares worth approximately $105,000 over two days represents a substantial insider buy for this small-cap biotech, which currently has a market capitalization of just about $32 million. FibroGen's shares plummeted in July 2024 after its cancer drug pamrevlumab failed in two clinical studies. The stock dropped 48% in a single day and has continued its downward trajectory since. This clinical failure dealt a severe blow to the company's pipeline, prompting management to implement a massive restructuring plan that included reducing its U.S. workforce by approximately 75%, affecting 127 employees. The company estimated in August that restructuring-related costs would range from $16 million to $18 million, with the majority expected in the second half of 2024. This restructuring appears to be a desperate measure to reduce cash burn rate and extend the company's runway. FibroGen's financial situation is clearly reflected in its recently reported results. In its Q4 earnings announced on March 17, 2025, the company reported earnings of $0.18 per share, but revenue drastically decreased by 88.4% to just $3.14 million. This represents a steep decline compared to $50.64 million and $46.33 million reported in Q2 and Q3 of 2024, respectively. Meanwhile, as part of its survival strategy, FibroGen recently sold its China unit to AstraZeneca for $160 million. This asset sale suggests the company is focusing on securing cash reserves. Against this backdrop, Director Schoeneck's substantial purchases carry several implications. Insiders typically buy shares when they believe the company is undervalued in the market. Particularly, a large purchase by a board member can be interpreted as a signal of confidence in the company's long-term outlook. Schoeneck's purchase price of around $0.35 per share represents a roughly 65% discount compared to FibroGen's trading price of over $1 before the pamrevlumab failure announcement in July 2024. The current share price is approximately 88% below its 52-week high of $2.80. FibroGen is currently focusing on its immuno-oncology assets, FG-3165 (anti-galectin 9) and FG-3175 (anti-CCR8), and in June 2024, entered into a clinical trial supply agreement with Regeneron Pharmaceuticals to evaluate these assets in combination with Libtayo in upcoming trials. Whether this pipeline can become the company's future growth driver depends on forthcoming clinical results. Biotech industry experts note that it's extremely difficult for small biotech companies like FibroGen to recover after major clinical failures. However, some success stories have shown recovery through remaining pipeline assets or platform technologies. Investors should closely monitor whether Schoeneck's purchases represent merely a bargain buy or signal positive changes anticipated within the company. Additionally, they should pay attention to future clinical trial plans, potential additional fundraising, and possibilities of strategic partnerships or acquisitions.

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