A competition to treat anemia just got complicated

Yesterday, the biotech company Akebia Therapeutics revealed some surprising news: The company’s in-development treatment for anemia failed its safety goal in a major trial. That was bad news for Akebia, whose shares fell nearly 75%, and ostensibly good news for a rival firm called FibroGen, which is developing a similar anemia treatment.

But despite the blow to a direct competitor, FibroGen’s stock price slipped, suggesting the market sees a more complicated story than might appear.

Both companies’ drugs work by blocking a bodily protein called hypoxia-inducible factor, or HIF. Doing so tricks the body into thinking it’s in a low-oxygen environment and thus producing more oxygen-carrying red blood cells, a discovery that won the Nobel Prize in medicine last year.

No HIF-targeting drug has won FDA approval, and because the treatments from Akebia and FibroGen are so similar, a setback for one could impact the other. The FDA might consider Akebia’s issues to be a risk for the whole class of drugs, Cowen analyst Yaron Werber wrote in a note to clients, meaning both drugs might carry black-box safety warnings once approved, which could limit prescriptions for FibroGen as well as Akebia.