FibroGen (FGEN) shares rose sharply on Tuesday after the company announced that it has earned a $10 milestone payment from Astellas Pharma. The milestone payment was triggered following the dosing of the first patient in Phase 3 studies in Japan evaluating roxadustat for the treatment of anemia in patients with chronic kidney disease (CKD).

FGEN has a collaboration with Astellas for its lead product candidate in Japan, the Commonwealth of Independent States, the Middle East and South Africa. The company also has a collaboration with AstraZeneca (AZN)     in the U.S., China and other markets. As I have noted before, the potential value of these licensing deals is significantly higher than FGEN’s current market capitalization. After climbing up to $30 last year, FGEN shares have struggled this year, failing to break through $20. However, the current price levels represent an attractive entry point in my opinion. With roxadustat continuing to progress well, FGEN offers tremendous upside.