FGEN

Why Are FibroGen ($FGEN) Insiders Still 'Shopping' After an 80% Stock Crash?

07/02/2025 20:40

FibroGen ($FGEN) is sending mixed signals to investors. While the stock has plummeted over 80% from $30 to the $5 range in the past year, company insiders are actively 'shopping' for shares. FibroGen is a San Francisco-based clinical-stage biotech company with roxadustat for chronic kidney disease anemia and an oncology pipeline. Despite a modest $26.5 million market cap, the small-cap maintains partnerships with global pharma giants like AstraZeneca and Astellas, keeping it on the industry radar. Most notable is the insider buying pattern. On July 2, Director James Schoeneck purchased 23,567 shares at $5.07 per share. This continued buying even after the June 16 1-for-25 reverse stock split demonstrates his conviction. In March, he had already acquired 250,000 and 50,000 shares respectively, accumulating over 320,000 shares at low prices. CEO activities are equally compelling. Current CEO Thane Wettig bought 145,000 shares at $0.35 per share in March, while former CEO Deyaa Adib purchased over 22,000 shares in June 2024. Considering the reverse split, their purchase prices were significantly below current levels. Why are insiders buying so aggressively? First, the pending $160 million sale of FibroGen's China subsidiary to AstraZeneca, expected to close in Q3 2025, will enable debt repayment and extend cash runway into late 2027. Second, roxadustat is already approved and commercialized in China, Europe, and Japan. Third, the Phase 2 trial for cancer candidate FG-3246 is set to begin mid-2025, with potential significant stock impact if results are positive. Risks remain substantial. The July 2024 clinical failure of pamrevlumab led to a 75% workforce reduction, and revenues have collapsed. Recent quarterly revenue dropped 95% year-over-year to $2.74 million, with annual net losses reaching $120 million. Yet insiders appear to view these challenges as temporary. Continued buying post-reverse-split suggests genuine value investing rather than mere stock defense. While clinical failures are common in biotech, approved products like roxadustat and a promising pipeline offer recovery potential. Investors should monitor key indicators: AstraZeneca deal timing and terms, FG-3246 clinical progress, and roxadustat international sales trends. The August 11 earnings report should provide concrete updates on these developments. Risk scenarios include delayed or worsened AstraZeneca deal terms, potentially causing cash flow issues. Negative FG-3246 results could drive further stock decline, making even the current $5 level overvalued. Conversely, optimistic scenarios offer significant upside. Successful AstraZeneca deal completion combined with positive FG-3246 data could reveal current market cap as undervalued. Given insiders' average purchase prices in the $1-2 range (reverse-split adjusted), their target likely exceeds $10. FibroGen represents a classic high-risk, high-reward biotech investment. While insider buying signals confidence, it alone shouldn't drive investment decisions. Careful monitoring of AstraZeneca deal progress and clinical results, within one's risk tolerance, is essential.