On Nov. 8, FibroGen (NASDAQ:FGEN) and its partner AstraZeneca (NYSE:AZN) reported safety and efficacy data from a pooled analysis of six large phase 3 clinical trials with roxadustat, a drug aimed at treating anemia in patients with chronic kidney disease (CKD).

In the non-dialysis-dependent group, the results incorporate the experience of nearly 4,300 patients. Just shy of 3,900 patients were included in the dialysis-dependent cohort. Large data sets like this are important for regulators such as the U.S. Food and Drug Administration to get comfortable with the drug's side-effect profile.

Kidneys made out of pills.

Source: Getty Images.

Roxadustat takes aim at a large patient population

One out of seven Americans, equating to 14% of the population, faces chronic kidney disease (CKD). Impaired kidneys cannot properly filter blood or make the hormone erythropoietin, which tells the body to make more oxygen-carrying red blood cells. Two primary drivers of CKD are high blood pressure and diabetes.

As CKD progresses, patients often face a lifetime of dialysis, increased chances for heart attacks and stroke, and kidney failure. Anemia, or the loss of red blood cells, occurs in roughly 23% of CKD patients and increases with the severity of disease. Most CKD anemia patients undergo dialysis three times a week. During those visits, patients receive infusions of iron or an erythropoietin-stimulating agent such as Epogen, which is made by Amgen (NASDAQ:AMGN).

To give some context, one market research firm expects the market for erythropoietin-stimulating agents to exceed $17 billion by 2025.

Why are the results meaningful?

FibroGen's roxadustat represents a potential new class of oral drug. The data highlighted that roxadustat did not increase major adverse cardiovascular events (MACE) compared to placebo in patients who were not on dialysis. For those on dialysis, roxadustat reduced the potential for MACE by 30% compared to patients receiving Epogen. MACE includes heart attacks and strokes.

A second measure called MACE+, which is required by European regulators, adds both unstable angina and congestive heart failure if patients require hospitalization. Roxadustat's effect looked similar using the MACE+ endpoint.

FibroGen further noted that only 9.8% of roxadustat-treated patients needed "rescue therapy" (defined as red blood cell transfusion, Epogen, or iron) compared to 31.1% in the placebo group. Patients on roxadustat required fewer red blood cell transfusions than patients on placebo or Epogen.

With the data in hand, FibroGen and its partner AstraZeneca plan to quickly file for approval in the U.S. Roxadustat has already gained marketing approvals in China and in Japan for CKD patients on dialysis. Japanese pharmaceutical company Astellas will likely try to do the same for Europe, where it has the rights to roxadustat.

What does this mean for investors?

First, FibroGen and AstraZeneca believe the data should pave the way for an approval and the first option to bring an orally available drug into the market to compete with the infused drugs like Epogen.

Second, the stock might bounce around a bit. Why? Some investors hoped the data would reveal roxadustat's superiority, not just noninferiority. A bull-versus-bear tug-of-war might happen until the approval and launch. Investors will need clarity about whether all or only certain types of CKD patients will be included in the final approval, because this could limit the potential number of patients eligible for roxadustat.

One additional big issue is that 80% of dialysis centers are owned by two groups: DaVita (NYSE:DVA) and Fresenius Medical Care (NYSE:FMS). These groups enter into long-term contracts for supplying drugs like Epogen or similar agents. How much influence or pricing pressure can DaVita and Fresenius exert? Further, these centers are familiar with providing infused drugs. An oral treatment like roxadustat could have the patient picking up the prescription at the pharmacy, not the clinic.

Third, AstraZeneca might elect to buy FibroGen. Once approved, roxadustat will likely join the ranks of blockbuster drugs. This generally means more than $1 billion in sales annually. It may make more sense for AstraZeneca to own 100% of the drug in the U.S. market.

For a buy-and-hold investor, FibroGen looks relatively safe. With big pharma partners on board, the likelihood for a successful FDA submission improves, providing a catalyst for the stock. The launch will be one to follow, as roxadustat will fight to gain market share against well-entrenched alternatives available today. Patient preference for an easily administered oral drug could win out in the end.