What happened

The rising stock market had many winners on Wednesday, but alas for its shareholders FibroGen (FGEN -3.45%) wasn't one of them. The biotech's shares declined by over 9% following a downgrade from a famous investment bank.

So what

Goldman Sachs analyst Paul Choi has downshifted his recommendation for FibroGen stock. According to him, it's now a sell; previously he tagged it as a neutral. He also trimmed his price target from $16 per share to $11.

A medical professional using a microscope.

Image source: Getty Images.

Choi's concern is the company's leading product, roxadustat, which targets anemia due to chronic kidney disease. The drug has been stuck in the U.S. regulatory pipeline for quite some time. Of roxadustat, he wrote in a research note that it "faces an uphill struggle with regard to the path forward in the U.S."

"Absent regulatory clarity and convincing data and with competitor vadadustat poised to be the first to leapfrog onto the market, we expect [FibroGen] shares to underperform relative to the group," Choi added.

Vadadustat is a pipeline drug from peer biotech Akebia Therapeutics widely expected to get a Food and Drug Administration nod in the near future; Akebia submitted a New Drug Application for it in June. Meanwhile, the following month an FDA advisory committee officially recommended that the regulator not approve roxadustat, citing the potentially elevated risk of patients developing blood clots and experiencing seizures.

Now what

While I should note that the FDA is not required to follow the recommendations of its advisory committees, it frequently defers to their expertise. Additionally, this committee's vote against recommending approval for roxadustat was overwhelming, at 12 members against two. That does not bode well at all for FibroGen, so Choi's adjustment feels sensible and justified.