FibroGen Q1 2023 Earnings Call Transcript

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Provided by Quartr
May 8, 2023

Key Takeaways

  • Pipeline and Milestones: In 2023 FibroGen expects top-line data from three pivotal Phase 3 trials of pamrevlumab in idiopathic pulmonary fibrosis and Duchenne muscular dystrophy, plus a roxadustat chemotherapy-induced anemia study in China, with additional pamrevlumab readouts in mid-2024.
  • Roxadustat in China: Q1 2023 combined net sales of roxadustat in China were $64.1 million (up 47% year-over-year), generating FibroGen product revenue of $24.2 million under U.S. GAAP.
  • Matterhorn Phase 3 Miss: The Phase 3 Matterhorn trial of roxadustat in transfusion-dependent lower-risk myelodysplastic syndromes failed to meet its primary endpoint (47.5% vs. 33.3% transfusion independence; p=0.217), though safety was consistent with prior findings.
  • Early-Stage Expansion: FibroGen plans to submit up to two INDs by year-end 2023 for FG-3163 (anti-CCR8) and FG-3165 (anti-Gal9) in oncology and has licensed the CD46-targeted ADC “446” from Fortis Therapeutics to bolster its pipeline.
  • Financial Position: As of March 31, FibroGen held $373.6 million in cash, equivalents, investments and receivables and has secured financing—including an ATM equity program and a $150 million Morgan Stanley loan facility—to fund operations into 2024.
AI Generated. May Contain Errors.
Earnings Conference Call
FibroGen Q1 2023
00:00 / 00:00

There are 12 speakers on the call.

Operator

Good day

Speaker 1

and thank you for standing by. Welcome to FibroGen's First Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, There will be a question and answer session. You will then hear an automated message advising your hand is raised.

Speaker 1

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Michael Tung. Please go ahead.

Speaker 2

Thank you, Eleonore, and good afternoon, everyone. I'm Michael Tong, Vice President of Corporate Strategy and Investor Relations at FibroGen. Joining me on today's call are Enrique Conterno, our Chief Executive Officer Doctor. Mark Eisner, our Chief Medical Officer Juan Graham, our Chief Financial Officer Doctor. John Hunter, our Chief Scientific Officer Thane Wettig, our Chief Commercial Officer and Chris Chong, our Senior Vice President of China Operations.

Speaker 2

The format for today's call includes prepared remarks from Enrique and Juan, after which we will open the call for Q and A. I would like to remind you that remarks made on today's call include forward looking statements about FibroGen. Such statements may include, but are not limited to, our collaborations with AstraZeneca and Astellas financial guidance The initiation, enrollment, design, conduct and results of clinical trials our regulatory strategies and potential regulatory results Our research and development activities, commercial results and results of operations, risks related to our business and certain other business matters. Each forward looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in that statement. A more complete description of these and other material risks can be found in FibroGen's filings with the SEC, including our most recent Form 10 ks and Form 10 Q.

Speaker 2

Pharmagen does not undertake any obligation to update publicly any forward looking statements whether as a result of new information, future events or otherwise. The press release reporting our financial results and business update and a webcast of today's conference call can be found on the Investors section of FibroGen's website at www.fibrogen.com. With that, I would like to turn the call over to Enrique Cantera, our CEO. Enrique?

Speaker 3

Very good. Thank you, Mike, and good afternoon, everyone, Welcome to our Q1 2023 earnings call. On today's call, I'll provide a summary of important accomplishments and development through thus far in 2023. Juan Graham, our CFO, will then review the financials, after which we will open the call for your questions. Starting with Slide 3.

Speaker 3

Pyrogen is positioned to create significant value for patients and shareholders by executing on 3 areas of focus. 1st, Delivering pivotal Phase 3 pamrevlumab data in 3 high value indications idiopathic pulmonary fibrosis, 2nd, increasing our research productivity by advancing novel programs that leverage internal expertise and access external innovation for additional pipeline opportunities and third, ensuring The commercial success of roxadustat in patients with chronic kidney disease were approved, while continuing the chemotherapy induced anemia study in China. Moving on to Slide 4. Fabergen represents an Citing Catalyst rich opportunity with top line data expected from 4 Phase III trials through the Q3 of this year and an additional 2 by mid-twenty 24. Operationally, we are well prepared for various clinical trial outcome scenarios, which could include multiple regulatory filings and ultimately launches to expeditiously deliver these therapies to patients.

Speaker 3

In addition, we are progressing our preclinical pipeline, including potentially filing up to 2 INDs near year end 2023. We have taken steps to augment Our strong financial position and continue our focus on financial discipline. Moving on to Slide 5. On May 5, we announced top line data From a Matterhorn Phase 3 clinical study of roxadustar for treatment of anemia in patients with transfusion dependent lower risk myelodysplastic syndromes or MDS. To our disappointment, the study did not meet its primary efficacy endpoints.

Speaker 3

The proportion of patients who achieved red blood cell transfusion independence in the 1st 28 weeks was 47.5 percent for the roxadustat arm compared to 33.3% for placebo with a p value of 0.217. The adverse event profile of roxadustat That was observed in the preliminary safety analysis was generally consistent with previous findings. Safety will be further evaluated at study completion. Now let's move to our clinical trial timelines on Slide 6. Starting at the bottom of Slide 6 with roxadustat, we anticipate top line data from our China Phase 3 study patients with chemotherapy induced anemia shortly.

Speaker 3

Moving now to pamrevlumab. I want to remind everybody that we have both FDA Fast Track and FDA Orphan Disease Designations For all three of the indications in Phase 3 developments idiopathic pulmonary fibrosis, Duchenne muscular dystrophy and locally advanced and resectal pancreatic cancer are each diseases with significant unmet medical need And represent meaningful potential opportunities to improve the lives of patients. Moving chronologically, we expect Top line data from Lelantus 1, our Phase 3 trial of pamrevlumab in non ambulatory patients with DMD In the Q2 of 2023, top line data from CEFRAS 1, Our Phase 3 trial in IPF in mid-twenty 23, top line data from ALLENANTOS II trial in ambulatory patients with DMD in the Q3 of 2023. Looking out to next year, top line data from our LAPIS Phase 3 study in locally advanced and reinfectable pancreatic cancer expected in the first half of twenty twenty four. Top line data from our CEFROS II Phase III trial In patients with IPF, which completed enrollment in the Q1 of 2023 is expected mid-twenty 24.

Speaker 3

Finally, although not on the slide, the pancreatic cancer action networks, precision promise adaptive trial platform, Evaluating pamrelumab in combination with standard of care for patients with metastatic pancreatic cancer continues to progress. A common question we receive is whether there's any read through across the PAMRELMA trials. IPF, DMD and LAPC are 3 very different diseases, all with a common feature of fibrosis, But each with a unique pathophysiology affecting different organs. In IPF, Fibrosis in the lung tissue causes progressive and irreversible damage. DMD is a rare genetic pediatric disease characterized by fibrosis in the muscles.

Speaker 3

LAPC is an oncology indication in which tumor associated fibrosis is a key feature of the disease. Given these differences in disease pathology, we believe there is limited or no efficacy read through from one of these conditions to another. On the safety side, pamrelumab has been studied in over 1,000 patients and has demonstrated a favorable adverse event and safety profile, Including in patients who have been dosed for up to 7 years, 2023 Will be a transformational year for FibroGen. And we look forward to sharing the results of these studies.

Speaker 4

I would

Speaker 3

like to extend my gratitude to the patients, caregivers and investigators as well as to my FibroGen colleagues for their commitment. I'd now like to spend a few minutes highlighting our view of the significant commercial opportunity we see with pamrevlumab, our wholly owned monoclonal antibody. Slide 7 provides a detailed perspective of the current large and growing IPF commercial opportunity. With a diagnosed prevalence Of approximately 330,000 patients across the U. S, EU, China and Japan, IPF represents a significant opportunity As the 2 approved IPF therapies generated together over $4,000,000,000 in global net revenue in 2022.

Speaker 3

Despite the size and growth of the IPF market, there remains important unmet medical need with the approved anti fibrotic therapies, which are characterized by continued disease progression and challenging tolerability. There is sentiment in the IPF community of limitations with the current therapies, and we believe PAMRELUM has the potential to help A sizable number of patients have become a relevant product for the treatment of IPF. As we highlight on Slide 8, We believe that IPF patients could benefit from new therapeutic options. IPF is a progressive disease where fibrosis in the lung tissue leads to reversible loss of lung function, resulting in high morbidity and mortality. In fact, Median survival following diagnosis of IPF is only 3 to 5 years.

Speaker 3

The limitations Obscuring treatment options are well characterized, having a modest effect on slowing the progressive loss of lung function along with a challenging This translates into a low treatment rate as depicted on the right side of Slide 8. In the U. S, there is a prevalence of approximately 120,000 patients with IPF, with approximately 30,000 patients diagnosed each year. Of these 30,000 newly diagnosed patients, We estimate that only about a third of these patients are treated with anti fibrotic. Of these roughly 10,000 patients that start 1 of the 2 approved anti fibrotics in a given year, approximately 40 to 50 discontinued treatment in the 1st 12 months, usually due to side effects, which include severe nausea, diarrhea and photosensitivity.

Speaker 3

This results in a large proportion of diagnosed U. S. IPF patients not being treated for this progressive and fatal condition. Because of this significant unmet need, we believe Pambrolum has the potential To be an important addition to current IPF treatment options including newly diagnosed patients, Existing patients who have not been treated with anti fibrotics and those patients who have stopped Antifibrotic treatment due to challenging tolerability. I want to reiterate our confidence in the press results and our optimism on the likelihood of success of our CEFRUS Phase 3 program.

Speaker 3

Moving to Slide 9. Both Duchenne muscular dystrophy and locally advanced and respectable pancreatic cancer represents significant opportunities to meaningfully help patients. Beginning with DMD in the left column. Given the devastating nature of DMD and the relentless progression of the disease, we are hopeful that the LELANTOS Phase 3 program can lead to a definitely needed approved therapy. While the currently approved exon skipping therapies produce an increase in dystrophin levels, They target only a small proportion of DMD patients and have yet to demonstrate a meaningful clinical improvement in symptoms or disease progression.

Speaker 3

There is a clear need for DMD therapy that can attenuate disease progression by targeting the downstream Pathological changes to improve muscle function. We are hopeful the anti fibrotic mechanism of pamrevlumab may be a treatment that can help these patients and their families. ELANTOS-one enrolled non ambulatory DMD patients 12 years and older with more advanced disease. The primary endpoint is the performance of the upper limb test, which measures functionality of the shoulder, elbow, wrist and hand, and we expect tomline data this quarter. The Lantus II enrolled ambulatory DMD patients 6 to 12 years old with less advanced disease.

Speaker 3

The primary endpoint is the Northstar ambulatory assessment, which is a measure of ambulatory function and we expect top line data in the Q3 of this year. In the right hand column, we show a snapshot of the locally advanced pancreatic cancer opportunity. Pancreatic cancer represents 1 of the largest unmet needs in oncology with a diagnosed prevalence of over 90,000 patients across the major regions combined and a low 5 year disease free survival rate of approximately 10%. We believe that Pembrolumab had both direct antitumor effects and effects on the stroma. And this is why we're evaluating both LAPC and metastatic pancreatic cancer.

Speaker 3

There have been limited treatment advances over the last 2 decades with Immuno oncology therapies failing to demonstrate survival benefits over the current standard of care. This creates A potential meaningful commercial opportunity for pembrolumab, if we can demonstrate a significant improvement in overall survival. We expect top line data from our LAPI study in the first half of twenty twenty four. Moving on to Slide 10. I do want to take a moment and comment on our early stage pipeline.

Speaker 3

We expect to file up to 2 INDs near the end of this year. FG-three thousand one hundred and sixty five It's an anti GAL-nine antibody developed to reverse immune resistor in many solid tumors and inhibit target driven cancer progression in acute myeloid leukemia, AML. FG3,165 has been shown preclinical to prevent GAIL-nine mediated sales death of T cell subtypes that are critical for antitumor immune responses and is undergoing characterization for its ability to directly target leukemic cell populations. FG-three thousand one hundred and sixty three is an anti CCR8 antibody Designed to selectively deplete suppressive T regulatory cells in the tumor microenvironment Without affecting peripheral Tbrec cells, use of FG-three thousand one hundred and sixty three in solid tumors has broad potential to activate immune responses and induce tumor cell death without disrupting normal immune homeostasis. In addition, we have undisclosed preclinical development programs, which leverage our expertise in HIF and CTGF biology.

Speaker 3

Moving to Slide 11. Today, we announced the FibroGen enter into an exclusive license With Fortis Therapeutics for 446. Fortis Lead drug candidate 446 represents a potential first in class opportunity. This antibody drug conjugate targets a novel epitope on CD46, which is present on certain cancer cells, including prostate and colorectal cancers, but absent in most normal tissues. 446 is currently in Phase 1 development for the treatment of metastatic castration resistant proteus cancer and other CD46 expressing cancers.

Speaker 3

As part of the clinical development strategy, FibroGen will continue to develop A PET based biomarker utilizing a radio labeled version of the targeting antibody for patient selection. Under the terms of the agreement, there is no upfront consideration. FibroGen will conduct and fund future research, Development and manufacturing of 446 and PET46. We have the option to acquire 40s during the 4 year evaluation period for $80,000,000 Moving now to Slide 12, roxadustat continues to grow nicely in China. 1st quarter total roxadustat net sales in China by FibroGen and the distribution entity jointly owned by FibroGen and AstraZeneca was $64,100,000 compared to $43,500,000 in the Q1 of 2022, an increase of 47%.

Speaker 3

This growth was driven by an increase in volume of over 50%. FibroGen's portion obroxadusta net product revenue in China was $24,200,000 for the Q1 of 2023 on a U. S. GAAP basis. Juan will provide more detail in the financial update.

Speaker 3

I will now turn the call over to our CFO, Juan Graham

Speaker 5

Thank you, Enrique. 2023 has started on a strong note on many fronts. Our Evrenso franchise in China continues to perform at a strong pace. All our Phase 3 clinical trials for pemrevlumab and roxadustat have been enrolled. Our early stage pipeline is growing and advancing and our financing efforts are enabling us to continue funding our operations while elongating our runway.

Speaker 5

None of this happens without the hard work, dedication and leadership of our team members. I want to thank take this time to recognize these achievements so early in the year. As we look ahead, We have 4 pivotal clinical trials reading out through the Q3 of this year and 2 more by mid-twenty 24. We're both optimistic and excited about our path forward. Moving into our financial results.

Speaker 5

For the Q1 of 2023, Total revenue was $36,200,000 compared to $60,800,000 for the same period in 2022. It is worth noting that prior year competitor includes a one time $25,000,000 payment received due to a regulatory approval of roxadustat or Abrenco in the Russian Federation. As of Q1 2023, The breakdown of revenue sources is as follows. We recorded $24,200,000 of net product revenue for roxadustat sales in China compared to $18,900,000 in the Q1 of 2022. This represents an increase of $5,300,000 or 28% year over year.

Speaker 5

During the quarter, we also recorded development revenue of $3,700,000 associated with co development efforts for roxadustat with our partners as compared to $11,000,000 during the Q1 of 2022. As we previously stated, due to the stage of development of roxadustat with our partners, we Expect co development revenue to be in the range of $3,000,000 to $5,000,000 per quarter for 2023. We also recorded license revenue of $6,000,000 associated with the milestone payments from our biosynthetic cornea program with Illuminex. And finally, we recorded $2,100,000 in drug product revenue for roxadustat Bulk drug product or active pharmaceutical ingredient sold to Astellas based on the change in our estimates related to these shipments as per U. S.

Speaker 5

GAAP. Comparatively, the drug product revenue was $7,600,000 during the Q1 of 2022, primarily related to a shipment made in that quarter. Further financial commentary for roxadustat performance in China is as follows. Total roxadustat net Sales from the joint distribution entity jointly owned by AstraZeneca and FibroGen or JDE was $64,100,000 this quarter compared to $43,500,000 in the Q1 of 2022, a substantial increase of 47% year over year, highlighting the strong performance of the Abrenco franchise in China. From total ruxedustat net sales in China, FibroGen's net transfer price from sales to the JDE was $19,300,000 for the Q1.

Speaker 5

During this quarter, we recorded an additional $2,100,000 from the previously deferred balance due to the change in our future estimates as per U. S. GAAP. As a result, FibroGen recorded $21,400,000 in net revenue for the quarter from roxadustat sales to the JDE and $2,800,000 of direct to distributor sales for FibroGen China. Moving down the income statement, our operating costs and expenses for the Q1 of 2023 were $112,300,000 compared to $123,800,000 for the Q1 of 2022, a reduction of $11,500,000 year over year.

Speaker 5

R and D expenses for the Q1 of 2023 were $74,500,000 compared to $89,000,000 in the Q1 of 2022. The $14,500,000 reduction was related to lower R and D costs due to lower clinical trial expenses and drug supply costs associated with our pemrevlumab programs. Of the $74,500,000 spent in the Q1, roughly 55% was dedicated to pamrevlumab development and CMC activities, 35% allocated to support our early stage pipeline and the remaining 10% directed towards roxadustat development activities in the U. S. And China.

Speaker 5

SG and A expenses for the Q1 of 2023 were $34,300,000 compared to $30,600,000 in the Q1 of 2022, representing a 12% increase year over year, primarily driven by employee related costs and other expenses. During the Q1 of 2023, We recorded a net loss of $76,700,000 or $0.81 net loss per both basic and diluted share as compared to a net loss of $63,200,000 or $0.68 per basic and diluted share for the Q1 of 2022. With regards to our financing efforts, I want to make reference to financing events. On Slide 13, I make reference that on May 1, We completed a structured loan agreement with Morgan Stanley Tactical Value for up to $150,000,000 The initial tranche of $75,000,000 has been funded. The second tranche of $37,500,000 will be funded in the Q3 of 2023 upon achievement of certain clinical development milestones.

Speaker 5

Finally, Morgan Stanley tactical value has the option to fund a third tranche of up to $37,500,000 in the Q3 of 2023. Secondly, during and subsequent to Q1, we accessed our existing ATM facility, raising net proceeds of $48,400,000 with participation of high quality long term focused investors. In addition to strengthening our balance sheet, these financing events support the funding of our operating plan, including all pivotal pemrevlumab and roxadustat Phase 3 data readouts, initial pemrevlumab pre commercialization activities and advancement and expansion of our R and D pipeline. Moving now to Slide 14. At March 31, which includes $30,800,000 of net proceeds raised through our ATM facility, We reported $373,600,000 in cash, cash equivalents, investments and accounts receivable.

Speaker 5

With our current financing efforts and maintaining a disciplined capital allocation approach, we expect our cash, Cash equivalents, investments and accounts receivable to be sufficient to fund our operating plans through 2024. Thank you. And now I would like to turn the call back over to Enrique.

Speaker 3

Thank you, Juan. In closing, I would like to reiterate our As we progress through 2023, we expect top line data from a roxadustat pivotal China Phase 3 study In chemotherapy induced anemia shortly. We expect data for pamrevlumab from 3 Pivotal Phase 3 studies through the Q3 of 2023. ELANTOS 1 In non ambulatory patients with DMD in the Q2 of 2023, sephras 1 in IPF patients midyear and ELANTAS 2 In ambulatory patients with DMD in the Q3 of 2023. In our early stage pipeline, we expect to file up to 2 INDs Near year end 2023, for FG-three thousand one hundred and sixty three, the anti CCRI antibody And FG-three thousand one hundred and sixty five, the anti Gol-nine antibody, both in oncology.

Speaker 3

The Fortis transaction bolsters our early clinical pipeline and is focused also in oncology. Roxadustat Continues to perform very well in China and our partner Astellas continues with the commercialization of roxadustat in Europe and Japan. After additional financing initiatives, we believe we are properly financed Through key top line parbello data releases and we expect our cash to be able to find our operating plans through 2024. I would like now to turn it over to operator, Eleonore for Q and A.

Speaker 1

Thank you. At this time, we will conduct the question and answer session. Please stand by while we compile our Q and A roster. One moment please. Our first question comes from the line of Jason Gerberry of Bank of America.

Speaker 1

Your line is now open.

Speaker 6

Hey guys, thanks for taking my questions. Couple for me, just question on your Phase 2b PRAISE study for pamrev IPF. On the primary efficacy analysis, could you characterize the 25 patients who dropped out of study due to discontinuation? What proportion of those patients actually received their final SEC assessment at the week 48 per the observation only analysis? And then when you top line Phase 3 ZEPHYRST1 results, do you plan on doing the data on an observation only basis or will you provide Any other sensitivity analyses that the regulators may care about?

Speaker 6

And then lastly, if I missed this, but have you refined your range for Zephyrus-one? I know before it was Mid to mid August. Just wondering if you refine that time range.

Speaker 3

Very good. Jason, thank you very much for your question. I'm going to have Doctor. Eisner respond to some of these questions, address your questions, And I'll complement as necessary.

Speaker 7

Yes. Thanks, Jason. It's Mark speaking. So for the Praise, There were some patients, as you mentioned, 25 who didn't complete all of the follow-up visits up to week 48. But many of those completed earlier study time points and contributed FVC data to the study.

Speaker 7

The study was now analyzed by intention to treat. So all available data were used in the analysis. In terms of the top line data and the analytic methods used, we will of course I'll provide a variety of sensitivity analyses as is standard practice just to test the robustness of the results from the primary analysis. And we're aligning with FDA on what those will look like. Enrique, maybe back to you on the Zephyrus 1 date question.

Speaker 3

Yes. Thank you, Mark. On the any I think your question was whether there's additional refinement On the mid year estimate that we have, I think we are continuing to basically look at Mid year for this readout is right on the mid year and so we are sticking with that characterization of the timing. Okay. Thanks guys.

Speaker 1

Thank you. One moment for our next question please. Please standby for our next question. Our next question comes from the line of Andy Hsieh of William Blair. Your line is now open.

Operator

Okay. Thanks for taking my questions. Sorry, We're coming from a cold, so excuse for my voice. First question has to do with the CD47 ADC. Two partners, if you don't mind.

Operator

One is what proportion of patients do you think will be eligible for treatment? And second part, what radio nuclei will be used for the imaging A portion of the development plan and any plans to procure, basically what's your plan in procuring Question number 1. Question number 2, for the investigator sponsored study in metastatic pancreatic cancer, Is there an interim analysis? And if so, how should we think about the efficacy hurdle? Is it just HR of

Speaker 3

Very good. Thank you, Andy. I will have John Hunter address Your question on 446 and then I'll have Mark Eisner Address the question on the metastatic cancer trial.

Speaker 8

Hi, Andy. Thanks for the questions. It broke up a little bit. So if I start to veer away from the question, please correct me. But in terms of the percentage of patients who we Expect to be eligible for 446 based on biomarker imaging.

Speaker 8

To date with what we've seen, we would say it would be over 50%, But we only have a very small data set to work with at this point. So we're hoping to refine it as we get more patients Through the trial and also as we get the pet imaging analysis online.

Speaker 3

Any

Speaker 8

yes, and then just with regard to the

Operator

Yes, we're curious about the radionuclide used for the imaging agent.

Speaker 8

So yes, right now They're using 89 zirconia for the imaging and I believe that is the plan that is what's being worked up For the clinical imaging.

Speaker 3

And Mark, If you could address the question on the precision trial, promise the precision promise trial.

Speaker 7

Sure. So the PRECISION PROMISE trial of pamrevlumab versus placebo on top of backbone chemotherapy for metastatic Pancreatic cancer, there were 2 stages, stage 1 and stage 2. There are a series of futility analyses which is based on a pre specified criteria. Because the study is ongoing and because the study is unblinded By its design, we are not generally privy to any further information because this study is being conducted by PanCAN. So that's about all we can say right now about the status of the trial.

Speaker 1

Thank you. Please hold for our next question. One moment please. Our next question comes from the line of Danielle Brill of Raymond James. Your line is now open.

Speaker 9

Hi, guys. Good evening. Thanks for the question. I have a couple relating to pemrevlumab. First, can you just Remind us how we should be thinking about PAM in combination with standard of care.

Speaker 9

I know your data set is limited, but I'm curious if you would consider these The complementary therapies or is it unlikely that the combo will generate incrementally more efficacy? And then also curious what we should expect in terms of And then, also one more reminder that I need, what are your assumptions for discontinuation rates in Zephyrus-one? Thank you.

Speaker 3

Very good. Thank you. I'm going to have Mark address your question, Daniel, and I'll complement Some of these answers.

Speaker 7

Sure. Thanks, Danielle. So just to remind everyone that the Zephyrus trials are A monotherapy trial of pamrevlumab versus placebo, patients can be either treatment experienced or treatment naive, but when the study starts, they're Not to be on any other standard of care background therapy. They are allowed to start background therapy if the So we really won't have a formal test of pamrevlumab on top of standard of care versus standard of care alone, that's really not the design of the trial. But we will have In direct comparisons, the Var placebo corrected difference for PAM versus placebo versus Esbriet, Ofab and what they've seen in those pivotal trials.

Speaker 7

In terms of tolerability, we did have a small combination Arm of praise that looked at primarily safety and adding PAM to either Resverde or OFAB was well tolerated. So we're not Anticipating tolerability issues there. And then finally, and we could go into this in more detail if you like. What our understanding from Speaking to physicians who take care of IPF patients is that, the data set we're going to generate would enable them to Use pamrevlumab as a monotherapy or in combination as they see fit. But to be very, very clear, the label will The specific for the monotherapy design that we have.

Speaker 7

So that's the first part of your question. The second part of your question has To do with projected discontinuation rates for Zephyrus-one, we haven't disclosed this publicly, but we're making every and all effort to keep patients on steady. We're very pleased with how that's going. It's been a big focus for us for both 90 1 and 95. So we are anticipating a very Robust dataset at the end of the study.

Speaker 9

Great. Thank you.

Speaker 3

Thank you, Mark.

Speaker 1

Thank you. Please hold for our next question. One moment please. Our next question comes from the line of Paul Choi of Goldman Sachs. Your line is now open.

Speaker 10

Hi, good afternoon and thank you for taking our questions. 2 from us, please. First, Enrique, I think in the past you've previously stated that you believe that should CEFRISS-one succeed that you could file I'm going to add for IPF based on that study plus the PRRAY study. Can you remind us what your regulatory discussions have said on that point? Is this something you've gotten in terms of written confirmation from the agency in terms of your previous interactions?

Speaker 3

Yes. Good question. Just to recap, I think what we've said is that If we were to have SEFPRSS1 results that replicate praise, We believe that we will be in a good position to have those discussions with the FDA in order for us to be able to File utilizing the CEFROS I results and yes, we could add the press results to that. Clearly, I think that will be a very exciting A moment for us, but I at this point in time, I think until we have those results that I don't think we can get Any type of alignment or confirmation from the FDA.

Speaker 10

Okay, got it. Thanks for that. My second question is for Juan, just on the cash runway guidance into through 2024. Does your statement there assume the additional tranches from your recent financing with MSTB Or is that exclusive of those 2 additional tranches?

Speaker 5

Hi, Paul. Yes, thanks for the question. And Basically the cash guidance for that I mentioned basically includes the initial Financing or the initial tranche for the MSTB deal, the rest clearly are contingent

Speaker 3

Yes. I think it's important to understand, Paul, that as we think about our cash runway, We are projecting as part of this runway that we will have 1 or more positive studies and therefore Our investment needs are larger and particularly in 2024. And as Juan mentioned, We including that the $75,000,000 from MSPF plus the first tranche, but not the second one.

Speaker 10

Got it. Okay. Thank you very much. I'll hop back in queue.

Speaker 1

Thank you. One moment please for the next question. Our next question comes from the line of Michael Yee of Jefferies. Your line is now open.

Speaker 4

Hey guys, good afternoon. Can you hear me? We can. Good. Two quick questions.

Speaker 4

Thanks. First on pemrevlumab, I know there were some questions earlier about statistical methods And estimates and dropouts, can you just comment on some of the investor questions around The use of estimates or imputation, but really estimates for the 25% of people that dropped out versus, let's just say, the 75% of the people that actually Fully completed the study to strengthen the data in those 75% of people. I know that investors have looked at that And there's been various consternation or fears around that 75% of the data. So maybe just comment about that And how you feel about that and whether you're using estimates or imputation in the Phase 3? And then my second question is a follow-up on the financing.

Speaker 4

I know you mentioned That there are 2 different tranches based on milestones and optionality. Can you just comment, is that Specifically related to actually having positive data in some of these studies or maybe just help us fill that out a little bit for the 2 tranches? Thank you.

Speaker 3

Very good. Well, Mark will address your first question and Juan, your second question. Mark, could you please address the question about PAM, on this question about The 25 patients that discontinued and whether you can provide some additional Color on feedback from investors and so forth.

Speaker 7

Sure. So I think there's a misunderstanding that's unfortunately been propagated about the 25 patients who dropped out early, and in that they didn't contribute any data. So the way Praise was analyzed, it was intention to treat. So patients were included In terms of all the data they provided. So for example, if a patient, was in the study week baseline, week 12, week 24, week 36 And dropped out at week 48 where all their data up to week 36 would have been used.

Speaker 7

And an analysis that just simply throws those patients out We'll be severely biased and provide incorrect estimates. So we don't agree with that approach. And I think If you look at some of how clinical trials are typically analyzed, they're analyzed according to intention to treat to avoid that kind of problem. And I think if you want to sort of have a gut check of what I'm saying, you can look at the disease progression endpoint rate, which is FEC percent predicted decline of 10% or more or death. I mean that's a responder definition, right?

Speaker 7

You either progress or you don't. And if you drop out early, you're just counted as you're not you're counted as a progressor. So That allows a very simple way of incorporating patients into the analysis that It doesn't really require any fancy statistical methodology. So just to sum it up, we think that our analysis of PRACE follow the standard Way of analyzing data, which is to include all the patient data points that we have on FEC at all the time points And that will be something similar done in the Zephyrus.

Speaker 4

If I may ask a follow-up, it has to actually do more with the view that The dropouts were included, but that the dropout estimates when they are included that the data is estimated or imputed Rather than not included at all and that the estimates or the imputed data drive a favorable response. That's actually more along with the supplement An employer.

Speaker 7

Sure. So again, I think that's a misunderstanding. The 25 patients at the point they dropped out, there was no imputation done for the primary The endpoint analysis.

Speaker 4

Got it. Okay. And then the financing?

Speaker 5

Yes. Hey, Michael. This is Juan. Specifically related to your point, I think your question is 2nd and third tranche. On the second tranche is basically an up sizing of $35,700,000 that would be available Upon meeting certain clinical development endpoints or milestones over the course of 2023, We haven't disclosed what those are at this point.

Speaker 5

And then basically Morgan Stanley as well as technical value has the to upsize a 3rd tranche again of up to $37,500,000 and this is basically at their discretion to upsize with no other clinic milestones or any such items.

Operator

Got it.

Speaker 4

All right. Thank you. Very good. Thank you.

Speaker 1

Thank you. One moment for our next question please. One moment please. Our next question comes from the line of Annabel Samimy of Stifel, your line is now open.

Speaker 9

Hi. Thanks for taking my questions. And I have a few on Pam for IPF. I guess, first, can you talk about any of the additional secondary endpoints that you're going to be exploring that could further differentiate PAM from Current standard of care, like time to clinical worsening or exacerbations or maybe total lung capacity, just in the event in a scenario where Pam has equivalent efficacy, maybe better safety, but you're trying to sort of separate, from the crowd. And then just following From some earlier questions, I know you mentioned that some patients could be Offered standard of care while in the study, but they're not starting on standard of care.

Speaker 9

So I guess, I wonder how you're going to be treating that data when all is said and done. And do you have any further details on the combination of PAM and standard of care? I know that it was for safety, but do you have any Efficacy data and will you be disclosing any of it? Thank you.

Speaker 3

Mark, I'll have you address the 2 PAM questions.

Speaker 7

Sure, absolutely. So the first question has to do with Secondary endpoints for pamrevlumab and I agree with you. This is going to be important Delineate the full efficacy profile of pamrevlumab, one important efficacy Secondary efficacy analysis will be the disease progression of FVC 10% decline or DAP because we think this is a clinically meaningful Endpoint, for clinicians and patients. We do have a time to disease progression, which is defined as the time to hospitalization For IPF or IPF exacerbation or death and we centrally adjudicate and IPF exacerbations, so those should be rigorously defined. We're also going to have the quantitative lung Fibrosis score and of course we'll have a taphor mortality as well, although typically in IPF trials there are not sufficient numbers of depth to have Full statistical power, but we'll have a variety of secondary endpoints to try to fully flush out the efficacy of PAM.

Speaker 7

In terms of standard of care, so we stratify the studies both Zephyrus 1 and Zephyrus 2 by Prior history of standard of care, so we'll be able to analyze by prior history in terms of patients who start standard of care on study. We expect this to be the distinct minority of patients and those patients who do start standard of care, Many of those will start later on the study. And as you are well aware, those The standard of care doesn't work quickly. So we're not actually anticipating this is going to have much of an effect clinically on the endpoint, but the best way to analyze it is Intention to treat by primary assignment pemrevlumab versus placebo. And just to clarify that whether or not patients Start standard of care on study, they will continue on the study drug, whether that's PAM or placebo for the remainder of the study So we should have a very rigorous evaluation of the efficacy of PAM versus placebo at the end of the

Speaker 4

studies. Okay.

Speaker 9

And will you be releasing any other prior data with PAM and standard of care other than the tolerability?

Speaker 7

Right. So you're referring to the sub studies of PRRAYZE. Those are quite small cohorts run for a short period of time and really there wasn't They were really inadequately designed or powered to provide any real efficacy data and given how soon we're going to have Zephyrus-one, at this point we're not planning on releasing anything Upfront of the Z1 readout.

Speaker 9

Okay, great. Thank you.

Speaker 1

Thank you. One moment please for our next question. Please standby. Our next question comes from the line of Yaron Werber of Cowen.

Speaker 11

Mark, potentially for you, I also have a couple. The first one, CTGF is a unique target. And as you noted, obviously, PRAYCE was a positive study. And it's supported by the prior animal data and radiation induced and gliomycin induced models. Some of the KOLs also talk about CTGS It's downstream of some of the other kind of upstream intermediaries.

Speaker 11

So any sense and I don't know if you can share any more information about How central is CTGF signaling as opposed to going upstream? And then secondly, Z2 originally, as you noted, There's obviously a secondary important endpoint in Z1, which is the composite outcomes. That was initially the primary for Z2 And recently that was changed in January to be sort of aligned the 2 studies. I just want to get a sense why the endpoints were now aligned and not

Speaker 7

The first point is a mechanistic one around where CTGF fits in the pathophysiologic cascade of events that cause fibrosis in the lungs and IPF. And I mean, you're right, it's downstream of TNF, which is thought to be a key Driver of IPF, but there are also a number of downstream pathways from CTGF, including The transition of fibroblasts to myofibroblasts, which is an important step in The deposition of extracellular matrix and fibrosis in patients with IPF. It is a complex biology. We are continuing to study it and think about it from a mechanistic point of view. So there certainly will be more information forthcoming About the more biological and translational information about CTG.

Speaker 7

And your second question about Zephyris II and the primary endpoint, you are correct. Initially, the primary endpoint was the disease progression endpoint of FVC 10% decline or more or death. We decided to change that to FDC to harmonize the two studies. I think that it's very clear that FDC has become The global standard for Phase 3 design and regulatory approval in the major regions of the world, primarily FDA and the U. S.

Speaker 7

Very, very clear on this point, EMA and most other health authorities. So we thought it was just better just to Make it very clear that FVC is a primary endpoint and that disease progression would be an important secondary endpoint.

Speaker 1

Thank you. At this time, I would like to turn it back to Enrique Quintero for closing remarks.

Speaker 3

Thank you, Eleonore, and We very much appreciate your participation in today's investor call and your interest in FibroGen. Hope you very much enjoy the rest of your

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