FibroGen Q2 2023 Earnings Call Transcript

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Provided by Quartr
August 7, 2023

Key Takeaways

  • Pamrevlumab Phase 3 LELANTOS I (non-ambulatory DMD) and ZEPRIS I (IPF) failed primary endpoints, prompting discontinuation of IPF trials. Three late-stage pamrevlumab readouts (ambulatory DMD, LAPC, metastatic pancreatic cancer) are expected by mid-2024.
  • Roxadustat net sales in China grew 44% YoY to $76.4 M in Q2 2023, with FibroGen’s share at $23.9 M; filed sNDA for chemotherapy-induced anemia in China (approval expected mid-2024) and European launch is accelerating with exclusivity beyond 2030.
  • Early stage oncology pipeline expanded with FG-3246 (anti-CD46 ADC) showing monotherapy responses in heavily pretreated mCRPC and a PET biomarker strategy, plus IND filings planned for anti-Gal9 (FG-3165) in Q1 2024 and anti-CCR8 (FG-3175) in 2H 2024.
  • Company-wide cost reduction plan (32% workforce cut) and disciplined capital allocation extend cash runway into 2026, supported by $361.3 M in cash, equivalents, investments and accounts receivable at June 30, 2023.
  • Q2 2023 revenue rose 49% YoY to $44.3 M, driven by roxadustat product and drug sales, while net loss widened to $87.7 M ($0.90 EPS) due to a one-time $24.6 M acquired in-process R&D charge and ongoing operating expenses.
AI Generated. May Contain Errors.
Earnings Conference Call
FibroGen Q2 2023
00:00 / 00:00

There are 13 speakers on the call.

Operator

Good afternoon, everyone.

Speaker 1

Good day, and thank you for standing by. Welcome to the FibroGen Second Quarter 2023 Earnings Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be a question and answer 23. Q1.

Speaker 1

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

Speaker 2

Q2 2019. Good afternoon, everyone. Thank you for joining today to discuss our Q2 2023 financial and business results. I'm David Dellachia, Vice President of Corporate FP and Investor Relations at FibroGen. Joining me on today's call are Thane Wedek, our Interim Chief Executive Officer Juan Graham, our Chief Financial Officer Doctor.

Speaker 2

Mark Eisner, our Chief Medical Officer Doctor. John Hunter, our Chief Scientific Officer Chris Chung, our Senior Vice President of China Operations and Enrique Contreerno, our outgoing Chief Executive Officer. Q2. Following our prepared remarks, we will open the call to your questions. I would like to remind you that remarks made on today's call include forward looking statements about FibroGen.

Speaker 2

Such statements may include, but are not limited to, our collaborations with AstraZeneca and Astellas financial guidance initiation, enrollment, design, conduct and results of clinical trials our regulatory strategies and potential regulatory results results, our research and development activities, commercial results and results of operations, risks related to our business and certain other business matters. Quarter. 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. Quarter. 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

FibroGen does not undertake any obligation to update publicly any forward looking statements, Q2, 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. Quarter. With that, I would like to turn the call over to Enrique Conterno.

Speaker 3

Thank you, Dave, and good afternoon, everyone. First, I would like to take a moment to thank my FibroGen colleagues. Thank you for your commitment and dedication during my tenure as CEO. It is important for me to highlight that despite the setback we have recently faced, I remain enthusiastic about FibroGen's opportunities given our remaining near term readouts from our pamrevlumab trials with Duchenne muscular dystrophy and pancreatic cancer, a thriving roxadustat business in China and our exciting early stage pipeline. Furthermore, we have a strong cash position that allows us to see through the evolution of our pipeline as well as a talented team across the board.

Speaker 3

I am proud of the quality of our leadership team and delighted that Thane will be leading FibroGen as Interim CEO. I have known Zane for over 25 years and have worked closely with him at FibroGen during his 3 years as Chief Commercial Officer and at Lilly for about 10 years in his capacity Chief Marketing Officer for Lilly Diabetes, where he launched several blockbuster medicines during a period of unprecedented growth of Lilly's diabetes business. During our times working together, I have appreciated his excellent judgment, keen business instincts and ability to lead organizations effectively. So without further delay, I'd like to pass the call to Mr. Thane Wedek.

Speaker 4

Thank you, Enrique for all that you have done for FibroGen over the past 3 years. You have built an outstanding leadership team, created a performance oriented culture and built our early stage pipeline. Personally, I've had the benefit of working with you for the better part of the past 14 years at Lilly and here at FibroGen and I will do my best to lead FibroGen toward a bright future. I'm personally excited about the opportunities we have in front of us to bring value to patients and create value for shareholders, many of which we will highlight in this call. Good afternoon, everyone, and welcome to our Q2 2023 earnings call.

Speaker 4

Q2. On today's call, I will focus our stakeholders on the 4 strategic pillars that will guide the company into the future as well as provide an update on our pamrevlumab and roxadustat assets. Doctor. John Hunter, our Chief Scientific Officer, will then review our exciting early stage oncology pipeline, providing a perspective that we have not yet discussed in this type of forum. Q1.

Speaker 4

Lastly, Juan Graham, our CFO, will review the financials, after which we will open the call for your questions. Starting on Slide 3, FibroGen has 4 key strategic pillars that we believe offer significant value today. 1st is pemrevlumab with 3 upcoming late stage readouts starting this quarter and through the first half of next year. Indication, which I will walk through in more detail in the coming slides, represents a significant commercial opportunity in diseases of substantial unmet need. 2nd is roxadustat.

Speaker 4

Roxadustat is approved in over 40 countries around the world, generates significant net revenue and provides 5.5% of the total revenue growth of 5.5% of the

Operator

total revenue growth of 5.5% of the

Speaker 5

total revenue growth

Speaker 4

of approximately $1,000,000,000 of the 3rd is our early stage oncology pipeline. We recently completed the in license of 446, now known as FG-three thousand two hundred and forty six, 1st in class potent antibody drug conjugate or ADC for the treatment of metastatic castration resistant prostate cancer. This license also includes a biomarker driven opportunity through the development of an associated PET biomarker diagnostic. In addition to FG-three thousand two hundred and forty six, we are also undertaking IND enabling activities on 2 innovative oncology molecules with the intention of commencing clinical activities in 2024. 4th is our strong cash position.

Speaker 4

Results, we have implemented a company wide cost reduction plan that extends our cash runway into 2026, which provides the company a bridge to achieve numerous value inflection points across our portfolio. We have taken the necessary steps to improve our strong financial position and we'll continue to focus on financial discipline. In summary, we believe there are new biotechnology companies of our market cap that have such a compelling mix of commercial, late stage and early stage assets. Quarter. When you combine our assets, our strong balance sheet and the quality of our talented colleagues at FibroGen, we believe that we have strong foundation to drive significant shareholder value creation today and into the future.

Speaker 4

Moving to Slide 5, pamrevlumab is an anti CTGF human monoclonal antibody in clinical development for the treatment of ambulatory Duchenne muscular dystrophy or DMD, locally advanced unresectable pancreatic cancer or LAPC and metastatic pancreatic cancer. Pamrevlumab 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. On Slide 6, I would like to provide a recap of recently announced pamrevlumab results as well as review our upcoming milestones. In June, we reported top line data from our Phase 3 LELANTOS I study, placebo controlled trial of pamrevlumab for the treatment of non ambulatory patients with DMD on background corticosteroids. Study did not meet the primary endpoint of performance of the upper limb 2.0 score at week 52 compared to baseline.

Speaker 4

FibroGen would like to thank the patients, caregivers and clinical trial investigators for their dedication to participating in these important studies, which contribute towards the understanding of this devastating disease. In June, we announced top line data from our ZEPRIS 1 study in IPF. Study compared treatment with pamrevlumab to placebo and did not meet the primary endpoint of change from baseline in forced vital capacity or FVC at week 48 with a p value of 0.29. The mean decline in FVC from baseline to week 48 was 260 ml in the pamrevlumab arm compared to 330 ml in the placebo arm correlating to a placebo corrected difference of 70 ml. Quarter.

Speaker 4

The secondary endpoint of time to disease progression, which is a composite of FBC percent predicted decline of greater than or equal to 10% or death was also not met with a hazard ratio of 0.78. Based upon these results, We discontinued Zephyrus II, our 2nd Phase III IPF clinical trial. We would like to thank the patients and clinical trial investigators for their dedication and participation in both of these IPF trials. Looking ahead, we anticipate upcoming results from 3 pamrevlumab trials. We expect top line data from ELANTOS II in ambulatory DMD later this quarter.

Speaker 4

We expect results from LAPIS in LAPC in the Q1 of 2024. And we expect results from the pancreatic cancer action network's Precision Promise adaptive trial platform evaluating pamrevlumab in both first line and second line settings in combination with standard of care for patients with metastatic pancreatic cancer in the first half of twenty twenty four. I will now go into each of these opportunities in more detail, starting with Duchenne muscular dystrophy. DMD is a rare and debilitating neuromuscular disease that affects approximately 1 in every 5,000 newborn boys. 2nd quarter, a protein necessary for normal muscle function.

Speaker 4

The absence of dystrophin results in muscle weakness, muscle loss, fibrosis and inflammation. Patients with DMD are often wheelchair bound before the age of 12 and their progressive muscle weakness may lead to serious medical problems relating to respiratory and cardiac muscle. On Slide 8, We note that Lelantos II enrolled 73 ambulatory DMD patients, 6 to 12 years of age. Q2. The primary endpoint is the Northstar ambulatory assessment, a measure of ambulatory function and we expect top line results later this quarter.

Speaker 4

Given the devastating nature of DMD and the relentless progression of the disease, we are hopeful that Lelantos II Phase III study can lead to a regulatory filing and ultimately provide a desperately needed therapy for these patients. Q2. On Slide 9, we provide a perspective of the commercial opportunity for pamrevlumab in DMD. In 2022, branded revenue of DMD therapies exceeded $1,100,000,000 despite the fact that the currently approved exon skipping therapies target only a small proportion of DMD patients and have yet to demonstrate a meaningful clinical improvement in symptoms or disease progression. There was a clear need for DMD therapies that can attenuate disease progression by targeting the downstream pathological changes to improve muscle function.

Speaker 4

We are hopeful that the anti fibrotic mechanism of pamrevlumab maybe a treatment that can help these patients and their families and represents a significant commercial opportunity for pamrevlumab. Moving on to pancreatic cancer on Slide 11. Pancreatic cancer represents one of the largest unmet needs in oncology with an annual incidence of nearly 500,000 patients across the major regions combined and an overall 5 year disease free survival rate of approximately 12%. On Slide 12, we would like to provide a brief overview to why we believe an anti CTGF antibody like pamrevlumab would provide benefits to patients diagnosed with pancreatic cancer. Based on preclinical data, CTGF plays an important role in the growth and progression of pancreas tumors.

Speaker 4

Mouse tumor studies have shown that pamrevlumab can have both direct antitumor effects and effects on the surrounding stroma, providing a strong clinical rationale for the use in both LAPC and metastatic pancreatic cancer. Moving to Slide 13. Late stage trials are being conducted with pemrevlumab in both LAPC and metastatic patients. Patients represent almost 90% of all diagnosed pancreatic cancer patients today, giving pamrevlumab a potential opportunity to treat a vast majority of patients across this devastating disease. On Slide 14, we provide an overview of the Phase 3 LAPIS trial, a double blind placebo controlled trial in 284 patients with locally advanced unresectable pancreatic cancer, comparing pamrevlumab to placebo in combination with standard of care chemotherapy.

Speaker 4

The primary endpoint is overall survival and we expect top line data from this study and the Q1 of 2024. On Slide 15 is an overview of the pancreatic cancer Action Networks Precision Promise trial. This is a Phase IIIII registration study with an FDA approved study design. Q2. The primary endpoint is overall survival, which represents a definitive registration endpoint.

Speaker 4

The pamrevlumab combination therapy is offered to patients as either a 1st or second line treatment option. Tamrevlumab was the 1st experimental treatment arm to be offered as a first line treatment in PANCAN's innovative Precision Promise trial. We expect top line data from this study in the first half of twenty twenty four. On Slide 16, we review the commercial opportunity for pamrevlumab in pancreatic cancer. There have been limited treatment advances over the last 2 decades in both unresectable and metastatic disease, with immuno oncology therapies providing benefit to a small subset of metastatic patients.

Speaker 4

This creates a potential multi $1,000,000,000 commercial opportunity for pamrevlumab, if it can demonstrate a significant improvement in overall survival in either locally advanced or metastatic patients. Moving on to roxadustat on Slide 18. I would like to provide a recap of recently announced roxadustat results as well as review our upcoming milestones. Q2. In May, we announced top line data from our Matterhorn Phase 3 clinical study of roxadustat for treatment of anemia in patients with transfusion dependent lower risk myodysplastic syndromes.

Speaker 4

The study did not meet its primary efficacy endpoint. Also in May, we announced positive top line data from our Phase 3 clinical study of roxadustat for the treatment of anemia in patients receiving concurrent chemotherapy treatment for non myeloid malignancies in China. Roxadustat demonstrated non inferiority compared to recombinant erythropoietin alpha on the primary endpoint of change in hemoglobin level from baseline to the average level during weeks 9 through 12. I am pleased to announce that we have filed a supplemental new drug application with the China Health Authority for roxadustat in patients with chemotherapy induced anemia and expect approval in mid-twenty 24. We believe this indication could represent a meaningful incremental net revenue opportunity, providing roxadustat a potential pathway to achieving over $500,000,000 in annual net sales in China.

Speaker 4

Moving now to Slide 19, roxadustat for anemia of chronic kidney disease continues to perform extremely well in China. 2nd quarter total roxadustat net sales in China by FibroGen and the distribution entity jointly owned by FibroGen and AstraZeneca was $76,400,000 compared to $53,100,000 in the Q2 of 2022, an increase of 44%. This growth was driven by an increase in volume of over 40%. FibroGen's portion of roxadustat net product revenue in China was $23,900,000 for the 2nd quarter on a U. S.

Speaker 4

GAAP basis. Moving to Slide 20. Roxadustat remains the category leader in brand share in China, rising to 39% Q2 of 2023. I would like to briefly touch on roxadustat in Europe. In addition to the continued outstanding performance of roxadustat in China, the roxadustat launch in Europe is accelerating, showing robust quarter over quarter growth.

Speaker 4

Roxadustat is the only HIF PHI indicated in the EU for the treatment of anemia of CKD in both non dialysis and dialysis patients. And with GSK's recent decision to withdraw the MAA for dapradustat combined with market exclusivity for roxadustat beyond 2,030, roxadustat is well positioned to continue its growth throughout this decade. Moving to Slide 22 and our early stage oncology pipeline. Quarter. On May 8, we announced that FibroGen entered into an exclusive license with Fortis Therapeutics for FG-three thousand two hundred and forty six, quarter, a potential first in class opportunity that our CSO, John Hunter will describe in more detail on the next few slides.

Speaker 4

Under the terms of the agreement, there was no upfront cash consideration. FibroGen will conduct and fund future research, development and manufacturing of FG-three thousand two hundred and forty six and an associated biomarker PET-forty six. We have the option to acquire Fortis during the 4 year evaluation period for $80,000,000 Anticipate the initiation with the potential for additional trials targeting other CD46 expressing cancers. I will now hand the call off to John to cover our early stage pipeline.

Speaker 6

Thank you, Thane. Moving to Slide 23, our recently in licensed clinical program G3246 is an antibody drug conjugate or ADC comprised of an anti CD46 antibody, YS5, linked to the anti mitotic agent MMAE, which is a clinically and commercially validated ADC warhead. In colorectal tumors and is also found at high levels in a subset of other solid tumors. Moving to Slide 24, FG-three thousand two hundred and forty six has demonstrated monotherapy clinical efficacy in multiple myeloma and metastatic castration resistant prostate cancer. Shown here are interim data from the ongoing Phase 1 trial in prostate cancer, where 4 out of 21 evaluable patients had a partial response based on resist criteria and where a PSA50 response rate of 45% was observed.

Speaker 6

The patients in this Phase 1 study were heavily pretreated with a median of 5 prior therapies. The safety profile for FG-three thousand two hundred and forty six was consistent with other MMAE based ADC therapeutics with neutropenia being the most common adverse event. Additional data from the trial will be reported upon study completion. Moving to Slide 25, we show ongoing and planned clinical trials for FG-three thousand two hundred and forty six. In addition to the Phase 1 dose escalation and expansion study referenced on the previous slide, there is also a combination study with enzalutamide that is currently being run at UCSF.

Speaker 6

The rationale for this combination is based on preclinical data demonstrating up regulation of CD46 in tumor cells following enzalutamide treatment, therefore potentially making them more responsive to treatment with G3246. Initial data from this trial is expected in the second half of twenty twenty four. There is currently a PET biomarker study trial in progress for the program also being run at UCSF. This biomarker will be part of a Phase 2 study run by FibroGen in which up to 100 patients will be enrolled following a PET scan with PET46. Patients will not be stratified at the start of the study, but the correlation between PET positivity and FG-three thousand two hundred and forty six efficacy will be assessed at the end of the study with the potential to use the PET biomarker to stratify patients in a pivotal Phase III trial.

Speaker 6

Q2. We anticipate the initiation of the Phase II trial in metastatic castration resistant prostate cancer in the second half of twenty twenty four. Moving to Slide 26, I would like to spend some time on our preclinical oncology program. The first program I'd like to discuss is FG-three thousand one hundred and sixty five, an anti Galectin-nine antibody developed to reverse immune resistance in solid tumors. Elekta9 or Gal-nine is a soluble immunosuppressive molecule that is overexpressed in many tumor indications that has been implicated in maintaining an immune suppressed tumor microenvironment.

Speaker 6

FG-three thousand one hundred and sixty five has been shown preclinically to reverse multiple Gal-nine mediated mechanisms of immune suppression, including the prevention of Gal-nine mediated effector T cell apoptosis and TYM-three dimerization. We will present preclinical data for this program at a cancer immunotherapy conference later this year and are working towards a Q1 2024 IND filing. Moving to Slide 27 and our CCR8 program. CCR8 is a receptor that is highly expressed on tumor infiltrating T regulatory cells known as Tregs with very limited expression outside of the tumor microenvironment. FG-three thousand one hundred and seventy five is an anti CCR8 antibody designed to selectively disrupt and deplete Tregs in the tumor microenvironment without affecting peripheral T regulatory cells.

Speaker 6

Given the highly competitive clinical landscape for antibodies targeting CCRA, we had developed optimized versions of our previously FG3,163 during its development. While FG3,163 has been shown to have acceptable potency and monotherapy efficacy in a preclinical model of colorectal cancer, we decided to advance FG-three thousand one hundred and seventy five as our clinical candidate as we feel it has a marked competitive advantage based on relative potency and projected clinical dosing. Given its highly specific targeting of Tregs in the tumor microenvironment, we see FG-three thousand one hundred and seventy five as having broad therapeutic potential in solid tumors. Quarter. I will now turn the call over to Juan to discuss the company's financials.

Speaker 6

Juan?

Speaker 7

Thank you, John. Good afternoon, everyone. I will jump straight into the quarter's financial results. For the Q2 of 2023, total revenue was $44,300,000 compared to $29,800,000 for the same period in 2022, a robust increase of 49% year over year. I will now provide further detail on our revenue.

Speaker 7

As of Q2 2023, We recorded $23,900,000 of net product revenue for roxadustat net sales in China compared to $23,300,000 Q2, representing an increase of 3% year over year. During the quarter, we also recorded $14,300,000 in drug product revenue for roxadustat, Bald Drug Product or active pharmaceutical ingredient sold to Astellas. $4,100,000 associated with co development efforts for roxadustat with our partners as compared to $5,200,000 during the Q2 of 2022. As I have 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 quarter for the remainder of 2023. Finally, we recorded license revenue of $1,000,000 associated with a milestone payment from our biosynthetic cornea program with Aluminex.

Speaker 7

Given the strong performance of our business in China, I will provide further context on our financials and performance. As previously mentioned by Thane, total roxadustatinex sales from the joint distribution entity jointly owned by AstraZeneca and FibroGen or JDE was $76,400,000 this quarter compared to $53,100,000 in the Q2 of 2022, a substantial increase of 44% year over year, highlighting the continued strong performance of the Orenco franchise in China, achieving our highest market share since launch at 39% of the ESA and HIF categories combined. From total roxadustat net sales in China, FibroGen's net transfer price from sales to the JDE was $23,800,000 for the Q2 compared to $18,200,000 in the Q2 of 2022, an increase of 31% year over year. Net transfers price is the best reflection of FibroGen's portion of the cash received by roxadustat in China. During this quarter, we deferred $3,300,000 in revenue due to the change in our future estimates as per U.

Speaker 7

S. GAAP, primarily driven by unfavorable renminbi currency impact amongst other estimates. As we have communicated in the past, the deferred revenue balance in FibroGen China fluctuates based on management estimates of future revenue. As a result, FibroGen recorded $20,500,000 in net revenue for the quarter from roxadustat sales to the JDE $3,400,000 of direct to distributor sales from FibroGen China totaling $23,900,000 on a U. S.

Speaker 7

GAAP basis. Now moving down the income statement. Our operating costs and expenses for the Q2 of 2023 were $132,400,000 compared to $108,000,000 for the Q2 of 2022. The variance of $24,300,000 year over year is primarily driven by a one time charge of acquired in process R and D of $24,600,000 resulting from the recent non cash asset acquisition of Fortis Therapeutics as per U. S.

Speaker 7

GAAP. Excluding such one time non cash charge, Our operating expenses would be essentially flat year over year. R and D expenses for the Q2 of 2023 were $95,500,000 compared to $71,000,000 in the Q2 of 2022. As I just mentioned, R and D expenses for the quarter include a one time charge of acquired and processed R and D expenses of 24,600,000 dollars resulting from the recent non cash asset acquisitions of Fortis Therapeutics. Excluding such one time charge, R and D expenses were $70,900,000 for the quarter, again, essentially flat year over year.

Speaker 7

Of the $70,900,000 R and D expenses that I just mentioned, approximately 59% was dedicated to pemrevlumab development and CMC activities, 29% allocated to support our early stage pipeline and the remaining 12% directed towards roxadustat development activities in the United States and China. Given the outcome of the IPF trial, CEFRAS 1, with subsequent impact on the termination of CEFRAS II, we will see a significant reduction in R and D expenses related to pamrevlumab in the coming quarters. SG and A expenses for the Q2 of 2023 were $31,200,000 compared to $30,300,000 in the Q2 of 2022, remaining relatively flat year over year. During the Q2 of 2023, we recorded a net loss of $87,700,000 or $0.90 net loss per both basic and diluted share as compared to a net loss of $72,600,000 or $0.78 per basic and diluted share for the Q2 of 2022. Represents approximately $0.25 net loss per basic and diluted share.

Speaker 7

On July 14, 2023, as part of a broader cost reduction effort, we announced a restructuring plan to lower our operating expenses. Plan includes an expected reduction to FibroGen's U. S. Workforce of approximately 32% or 104 employees. We estimate that the related non recurring restructuring payments to be in the range of $13,000,000 to 15,000,000 dollars, the majority of which will be incurred in the Q3 of 2023.

Speaker 7

In addition to headcount related reduction, We are also expecting reductions in other expenses associated with our recently announced termination of our IPF trials and general reduction in infrastructure costs. On Slide 29, I lay out our expected future GAAP savings associated with the reductions I just mentioned. In the first half of twenty twenty three, our average GAAP operating expenses and one time charges were approximately $105,000,000 per quarter. Excluding one time expenses and charges, we anticipate expected savings of approximately $100,000,000 to $120,000,000 in total annualized GAAP expenses or $25,000,000 to $30,000,000 per quarter. We expect to achieve up to 20% of these quarterly savings in the Q3 of 2023, 60% to 80% of expected quarterly savings in the Q4 of 2023 and achieve our quarterly expected run rate savings in the Q1 of 2024.

Speaker 7

Now shifting towards cash, as of June 30, we reported $361,300,000 in cash, cash equivalents, investments and accounts receivable. Our cash balance includes $71,300,000 of net proceeds raised through our debt facility with Morgan Stanley tactical value and additional use of our ATM facility during the quarter. With the reduction of operating expenses 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 into 2026. Q3. Thank you.

Speaker 7

And now I would like to turn the call back over to Thane.

Speaker 4

Thanks, Juan. In closing, we are committed to advancing pemrevlumab as expect top line data from the following 3 late stage studies: Phase 3 Lelantos II in ambulatory DMD this quarter, Phase 3 LAPC in LAPC in the Q1 of 2024, Phase 2, 3 Pancreatic Cancer Action Network or Decision Promise trial in metastatic pancreatic cancer in the first half of twenty twenty four. Roxadustat continues to perform very well in China, where we recently filed our sNDA for the CIA indication and our partner Astellas continues with the commercialization of roxadustat in Europe and Japan. Q1. In our early stage pipeline, we anticipate filing an IND for FG3,165, the anti gal9 antibody in the Q1 of 2024, filing an IND for FG-three thousand one hundred and seventy five, our anti CCR8 antibody in the second half of twenty twenty four and the initiation of a Phase 2 trial of FG-three thousand two hundred and forty six for metastatic castration resistant prostate cancer and the second half of twenty twenty four.

Speaker 4

We have completed incremental financing transactions to further strengthen our balance sheet and expect our current cash position to fund operations into 2026. I would like to thank all of the employees of FibroGen for their continued hard work and Perseverance over the last few months. I would now like to turn the call back over to the operator for Q and A.

Speaker 1

Thank you. Our first question comes from the line of Michael Yee with Jefferies. Please proceed with your question.

Speaker 5

Hi, this is Geraldine Wang on the line for Michael Yee. Thanks for taking my question. I think I have Two questions, if I may. First for roxadustat, could you help us understand the patent and exclusivity situation for roxa in China. And what is your base case for the timing of a potential generic entry and what are the ways to extend the exclusivity?

Speaker 5

And then for 446, Why are you excited about this ADC program? And I also noticed you have a Phase 1 well, there was a Phase 1 in multiple myeloma. So are you also pursuing the opportunity in this indication? Or are there any other indications that you are thinking about? Thank you.

Speaker 4

Thank you for your question. The first part of it related to roxadustat, China, patent term exclusivity, generic entry, I'd like for Chris Chung to address that question. Chris?

Speaker 8

Thank you, thank you for the question. We confirm that The health authority in China has accepted a number of generic applications for roxadustat in CKD, of course. Just to clarify, an acceptance is an administrative acceptance of a filing. It just means that technical review is about to commence. Buyers in mid-twenty 24.

Speaker 8

Given the patent linkage system in China, we are not expecting any generics of roxadustat to be marketed until at least after that expiry date. Now of course, the composition matter patent represents only one of many patents that we have in our patent portfolio, all of which we intend to defend rigorously in China. Also a point that I should point out, unlike in the U. S, there is life for a originated brand after patent expiry. In some cases, the volume of the originated brand actually increases, although of course at a lower price.

Speaker 8

We remain optimistic about our options on the exclusivity front. We are pursuing our intellectual property options and market access tactics to preserve and extend that period of time. As you saw earlier, we saw a robust growth and market share increase of roxadustat in CKD. We believe There is tremendous market potential in that space, a little for significant growth in the future. Of course, CIA would represent another sizable market if we were together.

Speaker 4

Thank you, Chris. And then related to the question about, 446, about why we're excited. I'd like for John Hunter to address that question and then if Mark has any comments after that to add on to that. John?

Speaker 6

Sure. Thanks, Zane. I think one of the biggest points of excitement was really seeing monotherapy efficacy in a very hard to treat patient population. As I had mentioned, these patients were heavily pretreated and we saw partial response rate of about 20%, a very good PSA50 response rate. So that was Quite exciting relative to other assets that we are looking at, but also the mechanism is very well validated.

Speaker 6

As I I had mentioned there are I think now 5 approved ADCs that use MMAE as the payload. Additionally, when we really did a deep dive into CD46 expression, we saw that it was quite restricted to tumors for the most part with only a couple of normal tissue showing any considerable expression. We had an entire package that we felt looked very good and we were very excited to bring it in. I'll talk about potential other indications and then I think I'll turn it over to Mark to address the multiple myeloma question. We are in fact looking at indications to expand into.

Speaker 6

We have an ongoing translational medicine effort to identify IHC antibodies that we may use to be able to run a basket trial in patients from other solid tumor indications where the prevalence of CD46 expression might not be as high, but where we can select patients who do have that high expression to enter into a trial. These are very early efforts. So we will hope to update you as they progress. And now Mark, I'll hand it over to you for any additional comments.

Operator

Thanks, John. I mean, I think what we're I'm also very excited about the molecule because or the ADC because it has several potential ways to help patients and to really add value to FibroGen. 1 is, as you said, in metastatic castrate resistant prostate cancer and monotherapy. The other one is an ENSA combo therapy, which is a current ongoing study at UCSF as you mentioned. The other one is either solid tumors and or multiple myeloma.

Operator

So multiple diseases seem to be driven by CD46. This is a very novel ADC. We have a parallel PET imaging biomarker strategy that we're pursuing. So I think there's a novelty and deep biology underlying this program that's very exciting.

Speaker 4

And I think maybe just to conclude, related to the excitement for quarter. The Fortis asset is the favorable deal terms with no upfront cash consideration, success based milestones and the opportunity over a 4 year period of evaluation to potentially acquire the company for $80,000,000 In addition to obviously what John and Mark just spoke about, we're really excited about the opportunity. Operator?

Speaker 5

Thank you. Can I follow-up on the first one? Is there any way to And your exclusivity for roxa when after your CIA indication gets approved?

Speaker 8

So how should we be thinking about it? So There is a 4th amended intellectual property law in China. The law itself was activated June 1, 2021. At this point in time, the regulations have not yet been implemented. So we are looking at those opportunities with updated breadth.

Speaker 8

I think the decision would come down to what the Chinese government eventually decides to implement.

Speaker 5

Okay. Thank you.

Speaker 1

Our next question comes from the line of Jaron Werber of TD Cohen. Please proceed with your question.

Speaker 9

Hi. This is Joyce on for Yaron. Thanks so much for taking our question. Maybe just a couple from us. First on CIA, can you tell us about your latest thinking around whether this is ultimately going to be a China only strategy or if you are thinking that this is going to come to the U.

Speaker 9

S. As well? And then for the LAPIS study, could you just quickly remind us about the potential use of event free survival as a surrogate for accelerated approval. Thank you.

Speaker 4

Yes. Thanks, Joyce. Related to CIA, As of right now is a China only opportunity. And Mark, would you like to touch on the question on lapis?

Operator

Yes. So the question had to do with the primary endpoint of the study, which is overall survival. As we've mentioned in an earlier call, we did do an interim analysis for event free survival as a potential surrogate marker. Was a very high bar analysis. It did not meet that analysis.

Operator

So we're continuing the trial for overall survival as the primary endpoint and we expect that to read out in first half of next year.

Speaker 9

Great. Thank you.

Speaker 1

One moment for our next question. Our next question comes from the line of Jason Gerberry of Bank of America. Please proceed with your question.

Speaker 10

Hey, guys. Thanks for taking my question. Just coming back to the patent topic in China, is the process with the generic challengers entirely an issue of patent validity and if the patent is found valid then there's a barrier until the expiry of the crystalline form IP or is there a potential avenue of those generic challengers have different non infringing crystalline form molecules they could Potentially have an avenue to be found non infringing. Just wanted to understand, that dynamic a little bit better. And then On Pamrev for ambulatory DMD, wondering if you could highlight any important mechanistic differences why Pamrev might

Speaker 4

Thanks, Jason. Chris, if you could take the first question.

Speaker 8

Absolutely. So with respect to generic challenges, so first and foremost, our competition matter patent is valid and all generic applicants on the patent leakage system in China have declared that they respect those patents. So that is a fact, and this is why we're very confident that there will be no generic on the market until after that expiry. With respect to the crystalline patent crystalline patents are not considered part of the patent linkage system, which means they're not enforceable by health authority. They are enforceable by the court of law, and that is what we will have to pursue.

Speaker 8

As to whether A generic applicant could potentially have a crystalline form, an alternative polymorph patent that could get around us. That unfortunately, I think it's a question we have to defer to the patent attorneys to answer. I hope that's helpful.

Operator

So the other question was around ambulatory versus non ambulatory DMD. And I think we've always said that we expected non ambulatory DMD to be the most challenging because the patients have DMD to be the most challenging because the patients have already lost so much function, they're wheelchair bound and The signal to noise ratio of the endpoint, the performance of the upper limb, we expect it to be a challenge and turned out to be a challenge. We also didn't see any clinically meaningful efficacy in terms of the other secondary endpoints, including FVC percent predicted, ejection fraction by cardiac MRI, unfortunately. And it's very sad for all of us at FibroGen because we're really hoping to be able to deliver a therapy for these patients with non ambulatory DMD, which is so desperately needed. So now we turn our attention to ambulatory DMD where, because these are younger patients, they already they still have much more function.

Operator

I think the NorthStar ambulatory assessment is a more holistic type of endpoint. We do feel like we still have a possibility of showing a benefit in this patient population and we're really looking forward to Those top line results in the near future.

Speaker 10

Got it. Thank you.

Speaker 1

One moment for our next question. Our next question comes from the line of Annabel Samimy of Stifel. Please proceed with your question.

Speaker 9

Hi. Thanks for taking my question. Just while we're on the DMD topic, I guess, one of the Things we're wondering is, if in the ambulatory GMD trial, you don't necessarily seek function, but you benefit on some of these other markers such as the injection fraction or FEC. Do you see an avenue filing on that. And in the non ambulatory, understanding that the non ambulatory is more challenging, with SEC and injection fraction.

Speaker 9

Are they is it also more challenging on those measures as well? Or was it strictly on the functional endpoints that you were referring to? Thank you.

Operator

Yes. So I'll try to address both your questions. So the second part first. Yes, I think that all endpoints are going to be more challenging in the non ambulatory population and the ambulatory. Well, I will say that the cardiac MRI is not really The same relevance for the younger patients who are aged 6 to 12 because that's a relatively cardiac manifestations are relatively later manifestation in the disease.

Operator

So for ambulatory, it's the NorthStar, it's a stair climb, it's 10 meter walk, other endpoints like that are the primary and secondary endpoints. So ultimately, the NorthStar I think has been quite well looked at in the setting of other studies and we expect that it's a validated endpoint and we're looking forward to those results.

Speaker 9

Okay. Sorry. And is there any avenue for you to file if you're seeing secondary benefits, as opposed to the North Star?

Operator

Right. So I think your question is, for example, The North Star is kind of a near miss and there are secondary endpoints that are positive. So in that case, potentially, I mean, any positive data that we see in the ambulatory trial, I think would be the basis for us to want to really explore regulatory pathways with the FDA. So So it will be a data driven decision, but we of course will look at all the endpoints and really look for any signs of efficacy in that trial that's coming out.

Speaker 9

Okay. And then if I can ask one more question with regard to this. So pamrevlumab is an anti fibrotic agent. Are there any other markers that you looked at from the LELANTOS-one trial to give you an idea that There is actually anti fibrotic activity and I couldn't help but sense the confidence about this going into this trial. And so I'm just wondering if you saw anything else that gave you some hope?

Operator

Unfortunately, the Melantos 1 trial was really there was no endpoint that really showed any signs of efficacy. It may be due to the non ambulatory population and how advanced it is. I think the ambulatory MOLANTOS II trial data will really help us to answer what clinical benefit and otherwise can be shown in DMD. So I think the studies will together tell the full story. So we have half the answer, and we're eagerly awaiting the rest of the information from OLYMPOS-two.

Speaker 9

Okay, great. Thank you.

Operator

Thank you for the questions.

Speaker 1

One moment for our next question. Our next question comes from the line of Alexandra Ramsay from William Blair. Please proceed with your question.

Speaker 11

Hello. This is Alex Ramsay on for Andy Hsieh at William Blair. So a couple of questions from us, if you don't mind. So the first question is about term loan with Morgan Stanley's tactical value. We're just curious about the status of the $75,000,000 initial term loan.

Speaker 11

And are there any plans to pay back that loan earlier than the May 2026 commensurate date or is that dictated by the terms of the loan? And then second, Mark, we were curious to hear if you have any insights on the Zephyrus data and if you have any hypothesis in terms of why it underperformed for pemrevlumab. And we definitely understand that you're probably early in analysis, but we're just wondering if anything popped out during the initial analysis. Thanks so much.

Speaker 4

Yes. Thanks, Alex. I'll have Juan address the MSTV question and then turn it over to Mark.

Speaker 7

Hey, Alex. Yes, on the term loan, as you pointed out, We have an initial draw of $75,000,000 that has actually occurred as of the beginning of May, May 8, I believe it was, We received the $75,000,000 So that's what we would expect to hold until term maturity at this point in time. There's no plans for early repayment.

Operator

Right. So in terms of the Zephyrus 1 study, Yes, disappointing results in terms of the primary endpoint and the secondary endpoints, none of them. Most of which showed kind of numerically better results for PAM versus placebo, but none of which were statistically significant. There were 3 major issues going into the trial that I think we and everyone was focused on. Number 1 was with the placebo decline at 48 weeks in Zephyrus-one be adequate to show a treatment impact and it was, it was 3 30 ml decline, which compared very similarly to PRAE's at 308 ml.

Operator

The second point was the influence of prior history of standard of care and about half The patients were treatment experienced about how for treatment naive and that really made no real meaningful difference on the results. And then the last point that I think was a lot of focus are, what about those patients who started standard of care on study? Turned out to be about 14% started OFAB or aspirate on study. And again, that did not make any meaningful difference in the study results. The top three things we were really focused on and I think the analyst and investor community was focused on really turned out to be within what we would predicted.

Operator

So at this time, we don't have any clear reason why the surplus results were less significant than the praise results except to say that the Phase 2 to Phase 3 translation in this disease, IPF is very, very challenging. If you look at The Galapagos Gilead or you look at the Roche data, they've run into similar challenges and I don't think these challenges are completely understood at this time.

Speaker 11

All right, got it. Thank you so much. Very helpful.

Operator

Thank you for the questions.

Speaker 1

One moment for our next question. Our next question comes from the line of Paul Choi with Goldman Sachs. Please proceed with your question.

Speaker 12

Hi, thanks. Good afternoon and thank you for taking our questions. Maybe returning to the subject of DMD for a minute and Leland just to Is there any component of the NorthStar assessment that you think where pemrevlumab might show Particular benefit, any gleanings there in the ambulatory population would be helpful.

Operator

Right. Well, the short answer Paul is we really don't know. I mean the total score is designed for the total score, and we'll be looking at that. We'll also be looking at the pardon me, 10 meter walk, the stair climb, other components. But At this point in time, it's difficult to answer that question and I think we'll have to wait the data.

Speaker 12

Okay, Fair enough. And then turning to your oncology pipeline and FG-three thousand two hundred and forty six, you'll have the combination study with Xtandi next year. Just curious if you can maybe sort of frame expectations for what responses might look like whether it's on PSA or how you're thinking about comping the results versus either monotherapy studies or other Xtandi studies with chemo. Any framework or context there would be appreciated. Thank you.

Speaker 4

Thanks, Paul. I'll have John address that second question.

Speaker 6

Sure. Although I think Mark might have better insight into it. But just with regards to how we're viewing it, We kind of have a baseline now with the monotherapy results and we know what to expect with FT3246 alone. So really I think with the Xtandi combination, we'll be looking to see if there is additional benefit. And we'd be looking both at the PSA50 and at overall response rate given that we did see those in the earlier Phase 1 trial.

Speaker 6

Mark, you might

Operator

want to add anything. Yes. Sorry, John, I was just going to say the exact same perspective. If it does increase CD46 expression with enzalutamide that is that we could expect to see a greater degree of clinical efficacy. That's the hypothesis that's being tested.

Speaker 12

Great. Thank you.

Speaker 1

Quarter. I'm showing no further questions at this time. I would now like to turn the conference back over to Thane Witted for closing remarks.

Speaker 4

Thank you. So we really appreciate your participation in today's investor call and your interest in FibroGen. We believe we have a really exciting future ahead of us with the pamrevlumab readouts with a robust growing roxadustat business with an exciting early stage pipeline and a really strong balance sheet. And so we look forward to maintaining the engagement and keeping you abreast Q2 of our accomplishments going forward. Thank you.

Speaker 1

Thank you for and your participation in today's conference. This does conclude the program. You may now disconnect.

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