FibroGen, Inc

Good day, 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 speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Michael Tong. Please go ahead.

Thank you, Eleanor, and good afternoon, everyone. I'm Michael Tong, Vice President of Corporate Strategy and Investment Relations at Fiverton. Joining me on today's call are Enrique Quintero, our Chief Executive Officer, Dr. Mark Eisner, our Chief Medical Officer, Juan Graham, our Chief Financial Officer, Dr. John Hunter, our Chief Scientific Officer, Feng Wedig, our Chief Commercial Officer, and Chris Chong, our Senior Vice President of China Operations. The format for today's call includes prepared remarks from Enrique and Juan, after which we will open the call for Q&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 Farbergen's filing with the SEC, including our most recent Form 10-K and Form 10-Q. Farbergen 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 investor section of FibreGen's website at www.fibregen.com. With that, I would like to turn the call over to Enrique Quintero, our CEO. Enrique?

Very good. Thank you, Mike, and good afternoon, everyone, and welcome to our first quarter 2023 earnings call. On today's call, I'll provide a summary of important accomplishments and development 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 three. Fundragin is positioned to create significant value for patients and shareholders by executing on three areas of focus. delivering pivotal phase III pancreatic data in three high-value indications, idiopathic pulmonary fibrosis, Eugene muscular dystrophy, and locally advanced and resectable pancreatic cancer. Second, 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 four. Pavergine represents an exciting catalyst-rich opportunity, with top-line data expected from four phase three trials through the third quarter of this year. and an additional two by mid-2024. 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. In addition, we are progressing our preclinical pipeline, including potentially filing up to two 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 five. On May 5th, we announced top-line data from a Matterhorn Phase III clinical study of Roxel Duster 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 endpoint. The proportion of patients who achieved red blood cell transfusion independence in the first 28 weeks was 47.5% for the roxodustar arm, compared to 33.3% for placebo, with a p-value of 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 timeline from slide 6. Starting at the bottom of slide 6 with Roxadustat, We anticipate top-line data from a China Phase III study in patients with chemotherapy-induced anemia shortly. Moving now to panbrelumab. 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 III development. Idiopathic pulmonary fibrosis, Duchenne muscular dystrophy, and locally advanced and resectable pancreatic cancer are each diseases with significant unmet medical needs and represent meaningful potential opportunities to improve the lives of patients. Moving chronologically, we expect top-line data from LELANTUS-1, our Phase III trial of pembrelumab in non-ambulatory patients with DMD in the second quarter of 2023, top-line data from Cephras-1, our phase three trial in IPF in mid-2023. Top line data from Allelantis-2 trial in ambulatory patients with DMD in the third quarter of 2023. Looking out to next year, top line data from our Lapis phase three study in locally advanced and resectable pancreatic cancer expected in the first half of 2024. Top line data from our Cephras-2 phase three trial in patients with IPF, which completed enrollment in the first quarter of 2023, is expected mid-2024. Finally, although not on the slide, the Pancreatic Cancer Action Network's Precision Promise Adapted Trial Platform evaluating panbrelumab 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 panbreloma trials. IPF, DMD, and LAPC are three 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. 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, Panbreluma 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 seven years. 2023 will be a transformational year for Fibrojet, and we look forward to sharing the results of these studies. I would like to extend my gratitude to the patients, caregivers, and investigators who as well as to my Fabergen colleagues for their commitment. I'd now like to spend a few minutes highlighting our view of the significant commercial opportunity we see with panprevlimab, 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 US, EU, China, and Japan, IPF represents a significant opportunity as the two approved IPF therapies generated together over $4 billion in global net revenue in 2022. Despite the size and growth of the IPF market, there remains important unmet medical need with the approved antifibrotic 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 Umbrella has the potential to help a sizable number of patients that become a relevant product for the treatment of IPF. As we highlight on slide eight, 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 three to five years. The limitations of current treatment options are well characterized, having a modest effect on slowing the progressive loss of lung function along with the challenging total ability profiles. This translates into a low treatment rate, as depicted on the right side of slide eight. 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 an antifibrotic. Of these roughly 10,000 patients that start one of the two approved antifibrotics in a given year, approximately 40 to 50 discontinued treatment in the first 12 months, usually due to side effects which include severe nausea, diarrhea, and photosensitivity. 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 admin need, we believe panbreloma 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 antifibrotics, and those patients who have stopped antifibrotic treatment due to challenging tolerability. I want to reiterate our confidence in the praise results and our optimism on the likelihood of success of our CFRS Phase III program. Moving to slide nine. Both Duchenne muscular dystrophy and locally advanced and resectable pancreatic cancer represent 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're hopeful that the Lelantus Phase III program can lead to a definitely needed approved therapy. While the currently approved exon skipping therapy produces 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. There is a clear need for DMD therapies that can attenuate disease progression by targeting the downstream pathological changes to improve muscle function. We are hopeful the anti-fibrotic mechanism of prambrelumab may be a treatment that can help these patients and their families. The LANTUS-1 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 top-line data this quarter. The LANTUS-2 enrolled ambulatory DMT patients 6 to 12 years old with less advanced disease. The primary endpoint is the North Star ambulatory assessment, which is a measure of ambulatory function. And we expect top-line data in the third quarter of this year. In the right-hand column, we show a snapshot of the locally advanced pancreatic cancer opportunity. Pancreatic cancer represents one of the largest unmet needs in oncology, with a diagnosed prevalence of over 90,000 patients across the major regions combined, and a low five-year disease-free survival rate of approximately 10%. We believe that Panveluma has both direct anti-tumor effects, and effects on the stroma. And this is why we're evaluating both LAPC and metastatic pancreatic cancer. There have been limited treatment advances over the last two decades with immune oncology therapies failing to demonstrate survival benefits over the current standard of care. This creates a potential meaningful commercial opportunity for permvalumab if we can demonstrate a significant improvement in overall survival. We expect top line data from our LAPI study in the first half of 2024. Moving on to slide 10, I do want to take a moment and comment on our early stage pipeline. We expect to file up to two INDs near the end of this year. FG3165 is an anti-Gal9 antibody developed to reverse immune resistance in many solid tumors and inhibit target-driven cancer progression in acute myeloid leukemia, AML. FG3165 has been shown preclinical to prevent Gal9-mediated cell death of T-cell subtypes that are critical for anti-tumor immune responses. and is undergoing characterization for its ability to directly target leukemic cell populations. AFG-3163 is an anti-CCR8 antibody designed to selectively deplete suppressive T regulatory cells in the tumor microenvironment without affecting peripheral T break cells Use of FG3163 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. Moving to slide 11. Today we announce the FibroGen entry 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 I development for the treatment of metastatic castration-resistant produce cancer and other CD46-expressing cancers. As part of the clinical development strategy, 5GEN will continue to develop a PET-based biomarker utilizing a radiolabeled 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 four-year evaluation period for $80 million. Moving now to slide 12, Roxadusta continues to grow nicely in China. First quarter, total Roxadusta net sales in China by Fibrogen and the distribution entity jointly owned by Fibrogen and AstraZeneca was $64.1 million, compared to $43.5 million in the first quarter of 2022, an increase of 47%. This growth was driven by an increase in volume of over 50%. Fiverr's portion of Roxadusta net product revenue in China was $24.2 million for the first quarter of 2023 on a U.S. GAAP basis. Juan will provide more detail in the financial update. I will now turn the call over to our CFO, Juan Graham, for this financial update. Juan?

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 three clinical trials for Pemreblimab and Roxadustad 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. None of this happens without the hard work, dedication, and leadership of our team members. I want to take this time to recognize these achievements so early in the year. As we look ahead, we have four pivotal clinical trials reading out through the third quarter of this year and two more by mid-2024. We're both optimistic and excited about our path forward. Moving into our financial results, for the first quarter of 2023, total revenue was $36.2 million compared to $60.8 million for the same period in 2022. It is worth noting that prior year competitor includes a one-time $25 million payment received due to a regulatory approval of Raksadustat or of RENSO in the Russian Federation. As of Q1 2023, the breakdown of revenue sources is as follows. We recorded $24.2 million of net revenue product revenue for Ruxa-Dustat sales in China compared to $18.9 million in the first quarter of 2022. This represents an increase of $5.3 million or 28% year-over-year. During the quarter, we also recorded development revenue of $3.7 million associated with co-development efforts for Ruxa-Dustat with our partners as compared to $11 million during the first quarter of 2022. As we previously stated, Due to the stage of development of Roxa-Dustat with our partners, we expect co-development revenue to be in the range of $3 to $5 million per quarter for 2023. We also recorded license revenue of $6 million associated with the milestone payments from our biosynthetic cornea program with Illuminex. And finally, we recorded $2.1 million in drug product revenue for Roxa-Dustat Bulk Drug Act 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. GAAP. Comparatively, the drug product revenue was $7.6 million during the first quarter of 2022, primarily related to a shipment made in that quarter. Further financial commentary for our Roxodustat performance in China is as follows. Total ruxidus.net sales from the joint distribution entity jointly owned by AstraZeneca and Fibrogen, or JDE, was $64.1 million this quarter compared to $43.5 million in the first quarter of 2022, a substantial increase of 47% year-over-year, highlighting the strong performance of the Avrenso franchise in China. From total ruxidus.net sales in China, FibreGen's net transfer price from sales to the JDE was $19.3 million for the first quarter. During this quarter, we recorded an additional $2.1 million from the previously deferred balance due to the change in our future estimates as per U.S. GAAP. As a result, FibreGen recorded $21.4 million in net revenue for the quarter from Ruxadustat sales to the JDE and $2.8 million of direct-to-distributor sales for FiberGene China. Moving down the income statement, our operating costs and expenses for the first quarter of 2023 were $112.3 million compared to $123.8 million for the first quarter of 2022, a reduction of $11.5 million year-over-year. R&D expenses for the first quarter of 2023 were $74.5 million compared to $89 million in the first quarter of 2022. The $14.5 million reduction was related to lower R&D costs due to lower clinical trial expenses and drug supply costs associated with our Pimreblumab programs. Of the $74.5 million spent in the first quarter, roughly 55% was dedicated to Pimreblumab development and CMC activities, 35% allocated to support our early stage pipeline, and the remaining 10% directed towards Ruxudista development activities in the US and China. SG&A expenses for the first quarter of 2023 were $34.3 million compared to $30.6 million in the first quarter of 2022, representing a 12% increase year over year, primarily driven by employee-related costs and other expenses. During the first quarter of 2023, we recorded a net loss of $76.7 million, or 81 cents net loss per both basic and diluted share, as compared to a net loss of $63.2 million, or 68 cents per basic and diluted share for the first quarter of 2022. With regards to our financing efforts, I want to make reference to two financing events. On slide 13, I make reference that on May 1st, we completed a structured loan agreement with Morgan Stanley Tactical Value for up to $150 million. The initial tranche of $75 million has been funded. The second tranche of $37.5 million will be funded in the third quarter of 2023 upon achievement of certain clinical development milestones. Finally, Morgan Stanley Tactical Value has the option to fund a third tranche of up to $37.5 million in the third quarter of 2023. Secondly, during and subsequent to Q1, we accessed our existing ATM facility, raising net proceeds of $48.4 million 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 Pemrevlimab and Roxidustat Phase III data readouts, initial Pemrevlimab pre-commercialization activities, and advancement and expansion of our R&D pipeline. Moving now to slide 14, at March 31st, which includes $30.8 million of net proceeds raised through our ATM facility, we reported $373.6 million in cash, cash equivalents, investments, and accounts receivable. 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.

Thank you, Juan. In closing, I would like to reiterate our confidence as we progress through 2023. We expect top-line data from a Roxodustad Pivotal China Phase III study in chemotherapy-induced anemia shortly. We expect data for Panbrevlima from three Pivotal Phase III studies through the third quarter of 2023. in non-ambulatory patients with DMD in the second quarter of 2023, sephiroth-1 in IPF patients mid-year, and elanthus-2 in ambulatory patients with DMD in the third quarter of 2023. In our early stage pipeline, we expect to file up to two INDs near year-end 2023 for FG3163, the anti-CCR8 antibody, and FG3165, the anti-GOLD9 antibody, both in oncology. The 40th 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 Panvelo data releases, and we expect our cash to be able to fund our operating plans through 2024. I would like now to turn it over to our operator, Eleanor, for Q&A.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile our Q&A roster. One moment, please. Our first question comes from the line of Jason Gurberry of Bank of America. Your line is now open.

Hey, guys. Thanks for taking my questions. A couple for me. Just a question on your Phase IIb PRAISE study for PAMR of IPF. On the primary efficacy analysis, could you characterize the 25 patients who dropped out of the study due to discontinuation? What proportion of those patients actually received their final FEC assessment at the week 48 per the observation only analysis. And then when you top line Phase III Zephyrus I 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? And then lastly, if I missed this, but have you refined your range for Zephyrus I? I know before it was mid-May to mid-August. I'm just wondering if you've refined that time range.

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

Yeah, 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 through week 48. But many of those completed, you know, earlier study time points and contributed FDC data to the study. The study was analyzed by intention to treat. So, you know, all available data were used in the analysis. In terms of the top line data and the analytic methods used, we will, of course, provide a variety of sensitivity analyses as a standard practice. just to test the robustness of the results from the primary analysis. And, you know, we're aligning with FDA on what those will look like. Enrique, maybe back to you on the Zephyrus 1 date question.

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

Thank you. One moment for our next question, please.

Please stand by for our next question.

Our next question comes from the line of Andy Shea of William Blair. Your line is now open.

Okay, thanks for taking my question. Sorry, I'm recovering from a cold, so excuse for my voice. The first question has to do with the 8047 ADC. Two-parters, if you don't mind. One is, what proportion of patients do you think will be eligible for treatment? And second part, what radionuclide will be used for the imaging portion of the development plan? And any plans to procure, basically, what's your plan in procuring the plot? That's question number one. Question number two, for the investigator-sponsor 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 1.0 or it's a little bit more stringent? Thanks for taking my question.

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

Hi, Andy. Thanks for the question. 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, 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. Oh, yeah, and then just with regard to the .

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

So, yeah, right now, they're using 89 zirconia for the imaging, and I believe that is the plan that, you know, that is what's being worked up for the clinical imaging.

And Mark, if you could address the question on the precision trial, the precision PROMIS trial.

Sure. So the precision PROMIS trial of Pemrevumab versus placebo on top of backbone chemotherapy for metastatic pancreatic cancer, there were two stages, stage one and stage two. There are a series of futility analyses conducted on the stage one. And then there is a graduation from stage one to stage two, 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 the study is being conducted by PanCan. So that's about all we can say right now about the status of the trial.

Thank you, Mark.

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.

Hey, guys, good evening. Thanks for the question. I have a couple relating to PEM Revlimab. First, can you just remind us how we should be thinking about PEM in combination with standard of care? I know your data set is limited, but I'm curious if you would consider these to be 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 tolerability in the combo. And then, also one more reminder that I need, what are your assumptions for discontinuation rates in Zephyrus 1? Thank you.

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

Sure. Thanks, Daniel. So, just to remind everyone that the Zephyrus trials are a monotherapy trial of Pamirevimab 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 physician taking care of the patient deems it necessary on study. So, we really won't have a, you know, a formal test of Pamiravimab on top of standard of care versus standard of care alone. That's really not the design of the trial. but we will have indirect comparisons of our placebo-corrected difference for PAM versus placebo versus, you know, Espirid, Ofeb, and what they've seen in those pivotal trials. In terms of tolerability, we did have a small combination arm of praise that looked at primarily safety, and adding PAM to either Espirid or Ofeb was well-tolerated, so we're not anticipating tolerability issues there. And then finally, you know, and we could go into this in more detail if you like, you know, 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 Pemrevumab as a monotherapy or, you know, in combination as a C-fit. But to be very, very clear, the label will be specific for the monotherapy design that we have. So that's, you know, That's the first part of your question. The second part of your question has to do with the projected discontinuation rates for Zephyrus 1. We haven't disclosed this publicly, but we're making every and all effort to keep patients on study. We're very pleased with how that's going. It's been a big focus for us for both 091 and 095. So we are anticipating a very robust data set at the end of the study.

Great. Thank you. Thank you, Mark.

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.

Hi, good afternoon and thank you for taking our question. Two from us, please. First, Enrique, I think in the past you've previously stated that you believe that should Zephyrus 1 succeed that you could file PEM Revit for ICF based on that study plus the PREY 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?

Yeah, good question. Just to recap, I think what we said is that if we were to have CFRS 1 results that replicate PRACE, 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 CFRS 1 results And yes, we could add the appraised results to that. Clearly, I think that would be a very exciting moment for us. But at this point in time, I think until we have those results, I don't think we can get any type of alignment or confirmation from the FDA. Okay.

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

Yeah, thanks for the question. Basically, the cash guidance that I mentioned basically includes the initial financing or the initial tranche for the MSTB deal. The rest clearly are contingent upon certain milestones being achieved.

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

Okay. Thank you very much. I'll hop back into the queue.

Thank you. One moment please for the next question. Please stand by.

Our next question comes from the line of Michael Yee of Jefferies. Your line is now open.

Hey, guys. Good afternoon. Can you hear me? We can. Good. Two quick questions. Thanks. First on PIM, Revlimab, 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, the strength of 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 three. And then my second question is a follow-up on the financing. I know you mentioned that there are two 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 two tranches? Thank you.

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

Sure. So I think there's a misunderstanding that's unfortunately been propagated about the 25 patients who dropped out early. 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 baseline week 12, week 24, week 36, and dropped out at week 48, well, all their data up to week 36 would have been used. And an analysis that just simply throws those patients out will be severely biased and provide incorrect estimates. So, you know, we don't agree with that approach. And I think, you know, if you look at, you know, 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 predict a decline of 10% or more or death. I mean, that's a responder definition, right? You either progress or you don't. And if you drop out early, you're just counted as, you know, you're not, you're counted as a progressor. So that allows a very simple way of incorporating patients into the analysis that doesn't really require any fancy statistical methodology. So just to sum it up, you know, we think that You know, our analysis of PRAISE followed 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.

If I may ask a follow-up, I know.

If I may ask a follow-up, it has to actually do more with the view that the drawouts 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 supplementation.

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 efficacy endpoint analysis.

Got it. Okay. And then the financing process.

Yes. Hey, Michael. This is Juan. Specifically related to your point, I think your question is second and third tranche. And the second tranche is basically an upsizing of 35.7 million 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, and then basically Morgan Stanley, as well as Tactical Value, has the option to upsize a third tranche, again, of up to $37.5 million, and this is basically at their discretion to upsize with no other clinic milestones or any such items.

Got it. All right. Thank you. Very good. Thank you.

Thank you. One moment for our next question, please. One moment, please. Our next question comes from the line of Annabelle Samini of Skifo. Your line is now open.

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, you know, just following up 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. So I guess, you know, I wonder how you're going to be treating that data when all is 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.

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

Sure, absolutely. So the first question has to do with secondary endpoints for pamrevilumab. And I agree with you, this is going to be important to, you know, delineate the full efficacy profile of pamrevilumab. One important efficacy, secondary efficacy analysis will be the disease progression of FEC 10% decline or death, 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 hospitalizations 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 death or mortality as well, although typically in IPF trials, not sufficient numbers of death to have full statistical power, but we'll have a variety of secondary endpoints to try to fully flesh out the efficacy of PAM. 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, you know, we expect this to be, you know, the distinct minority of patients. And those patients who do start standard of care, you know, many of those will start later on the study. And as you are well aware, you know, 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, Pembrolumab 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, you know, regardless. So, we should have a very rigorous evaluation of the efficacy of PAM versus placebo at the end of the studies.

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

Oh, right, so you're referring to the sub-studies appraised. Those were 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 1, you know, at this point we're not planning on releasing anything up front of the Z1 readout.

Okay, great.

Thank you. Thank you. One moment, please, for our next question. Please stand by. Our next question comes from the line of Yaron Werber of Cohen. Your line is now open.

Great. Thanks for taking my questions, Mark. Potentially for you, I also have a couple. The first one, CTGF is a unique target and, you know, as you noted, obviously PRAISE was a positive study. And it's supported by the prior animal data and radiation-induced and blue mice-induced models. Some of the KOLs also talk about CTGF is downstream of some of the other kind of upstream intermediaries. 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 to two studies. I just wanted to get a sense why the endpoints were now aligned and not keeping the outcomes as a primary for that study. Thank you.

Sure. Thanks for the great question. The first point is a mechanistic one around, you know, 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 CTGF. And your second question about Zephyrus 2 and that primary endpoint, you are correct. Initially, the primary endpoint was the disease progression endpoint of FDC, 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 III. design and regulatory approval in the major regions of the world, primarily FDA and the U.S., 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 FDC is the primary endpoint and that disease progression will be an important secondary endpoint.

Thank you.

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

Thank you, Eleanor, 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 day.

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