FibroGen, Inc

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 speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David DeLucia. Please go ahead.

Good afternoon, everyone. Thank you for joining today to discuss our second quarter 2023 financial and business results. I'm David DeLucia, Vice President of Corporate FP&A and Investor Relations at FibreJump. Joining me on today's call are Thayne Weddick, our Interim Chief Executive Officer, Juan Graham, our Chief Financial Officer, Dr. Mark Eisner, our Chief Medical Officer, Dr. John Hunter, our Chief Scientific Officer, Chris Chung, our Senior Vice President of China Operations, and Enrique Quintero, our Outgoing Chief Executive Officer. 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 FiberGem. Such statements may include but are not limited to our collaborations with AstraZeneca and Astellas, financial guidance, the initiation, enrollment, design, conduct, and results of clinical trials, our regulatory strategies and potential regulatory results, our research and development activities, commercial results and results of operations, risks related to our business, and certain other business matters. Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in that statement. A more complete description of these and other material risks can be found in FibroGen's filings with the SEC, including our most recent Form 10-K and Form 10-Q. FibroGen 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 Conterno.

Thank you, Dave, and good afternoon, everyone. First, I would like to take a moment to thank my FibreGen 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 Pembrevlima trials with Duchenne muscular dystrophy and pancreatic cancer, a thriving Roxadusta 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. I am proud of the quality of our leadership team and delighted that Zane 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 three years as chief commercial officer and at Lilly for about 10 years in his capacity as 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. Thayne Weddick.

Thank you, Enrique, for all that you have done for FibreGen over the past three 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 second quarter 2023 earnings call. On today's call, I will focus our stakeholders on the four strategic pillars that will guide the company into the future, as well as provide an update on our Pamplumab and Roxidustat assets. Dr. 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. Lastly, Juan Graham, our CFO, will review the financials, after which we will open the call for your questions. Starting on slide three, Fibrogen has four key strategic pillars that we believe offer significant value today. First is Pemrevumab, with three upcoming late-stage readouts starting this quarter and through the first half of next year. Each indication, which I will walk through in more detail in the coming slides, represents a significant commercial opportunity in diseases of substantial unmet need. Second is Roxidustat. Roxidustat is approved in over 40 countries around the world, generates significant net revenue, and provides fibrogen with material and growing economics through our partnerships with AstraZeneca and Astellas Pharma. Third is our early-stage oncology pipeline. We recently completed the in-license of 446, now known as FG3246, a first-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 FG3246, we are also undertaking IND-enabling activities on two innovative oncology molecules with the intention of commencing clinical activities in 2024. Fourth is our strong cash position. Post our Zephyrus One 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 will continue to focus on financial discipline. In summary, we believe there are few biotechnology companies of our market cap that have such a compelling mix of commercial, late-stage, and early-stage assets. When you combine our assets, our strong balance sheet, and the quality of our talented colleagues at Fibrogen, we believe that we have a strong foundation to drive significant shareholder value creation today and into the future. Moving to slide five, 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. Pamrevimab 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. On slide six, I would like to provide a recap of recently announced Pamrevimab results, as well as review our upcoming milestones. In June, we reported top-line data from our Phase III Lelantos-1 study, a placebo-controlled trial of Pamrevelmab for the treatment of non-ambulatory patients with DMD on background corticosteroids. The study did not meet the primary endpoint of performance of the upper limb 2.0 score at Week 52 compared to baseline. ViroGEM 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 Zephyrus 1 study in IPF. The study compared treatment with Pamrevomab 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 Pamrevomab arm compared to 330 mL in the placebo arm, correlating to a placebo-corrected difference of 70 mL. 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 2, our second 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 three Pamrelvimab trials. We expect top-line data from Melantos 2 and ambulatory DMD later this quarter. We expect results from Lapis and LAPC in the first quarter of 2024. And we expect results from the Pancreatic Cancer Action Networks Precision Promise Adaptive Trial Platform Evaluating Pemrevumab 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 2024. 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 one in every 5,000 newborn boys. About 20,000 children are diagnosed with DMD globally each year. The fatal disease is caused by a genetic mutation leading to the absence or defect of dystrophin, a protein necessary for normal muscle function. 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 LLANTOS-2 enrolled 73 ambulatory DMD patients, 6 to 12 years of age. The primary endpoint is the North Star Ambulatory Assessment, a measure of ambulatory function, and we expect top line results later this quarter. Given the devastating nature of DMD and the relentless progression of the disease, we are hopeful the LLANTOS-2 Phase III study can lead to a regulatory filing and ultimately provide a desperately needed therapy for these patients. On slide nine, we provide a perspective of the commercial opportunity for comrevelmab in DMD. In 2022, branded revenue of DMD therapies exceeded $1.1 billion 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 than symptoms or disease progression. There is a clear need for DMV therapies that can attenuate disease progression by targeting the downstream pathological changes to improve muscle function. We are hopeful that the anti-fibrotic mechanism of Pemrevilmab may be a treatment that can help these patients and their families and represents a significant commercial opportunity for Pemrevilmab. 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 half a million patients across the major regions combined, and an overall five-year disease-free survival rate of approximately 12%. On slide 12, we would like to provide a brief overview as to why we believe an anti-CTGF antibody like Pamrevimab 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. Mouth tumor studies have shown that Pamrevomab can have both direct anti-tumor 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 Pamrevomab in both LAPC and metastatic patients. These patients represent almost 90% of all diagnosed pancreatic cancer patients today, giving Pamrevimab a potential opportunity to treat a vast majority of patients across this devastating disease. On slide 14, we provide an overview of the Phase III LAPIS trial, a double-blind, placebo-controlled trial in 284 patients with locally advanced unresectable pancreatic cancer, comparing Pamrevimab to placebo in combination with standard-of-care chemotherapy. The primary endpoint is overall survival, and we expect top-line data from this study in the first quarter of 2024. On slide 15 is an overview of the Pancreatic Cancer Action Network's Precision PROMIS trial. This is a Phase 2-3 registration study with an FDA-approved study design. The primary endpoint is overall survival, which represents a definitive registration endpoint. The Pamrevimab combination therapy is offered to patients as either a first or second line treatment option. Pamrevimab was the first 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 2024. On slide 16, we review the commercial opportunity for Pamrevimab in pancreatic cancer. There have been limited treatment advances over the last two decades in both unresectable and metastatic disease, with immuno-oncology therapies providing benefit to a small subset of metastatic patients. This creates a potential multi-billion dollar commercial opportunity for Pamrevimab if it can demonstrate a significant improvement in overall survival in either locally advanced or metastatic patients. Moving on to roxidustat on slide 18. I would like to provide a recap of recently announced roxidustat results as well as review our upcoming milestones. In May, we announced top line data from our Matterhorn Phase III clinical study of roxidustat for treatment of anemia in patients with transfusion-dependent lower risk myodysplastic syndromes. The study did not meet its primary efficacy endpoint. Also in May, we announced positive top line data from our Phase III clinical study of roxidustat for the treatment of anemia in patients receiving concurrent chemotherapy treatment for non-myeloid malignancies in China. Roxidustat 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 roxidustat in patients with chemotherapy-induced anemia and expect approval in mid-2024. We believe this indication could represent a meaningful incremental net revenue opportunity, providing Roxidustat a potential pathway to achieving over $500 million in annual net sales in China. Moving now to slide 19, Roxidustat for anemia of chronic kidney disease continues to perform extremely well in China. Second quarter total Roxidustat net sales in China by Fibrogen and the distribution entity jointly owned by Fibrogen and AstraZeneca was $76.4 million compared to $53.1 million in the second quarter of 2022, an increase of 44%. This growth was driven by an increase in volume of over 40%. Fibrogen's portion of ROXA-duced debt net product revenue in China was $23.9 million for the second quarter on a U.S. GAAP basis. Moving to slide 20. Roxadustat remains the category leader in brand share in China, rising to 39% in the second quarter 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. We expect this growth to continue to accelerate given the strong competitive position of Roxadustat. Roxidustat 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 Daprodustat, combined with market exclusivity for Roxidustat beyond 2030, Roxidustat is well positioned to continue its growth throughout this decade. Moving to slide 22 in our early stage oncology pipeline. On May 8th, we announced that Fibrogen entered into an exclusive license with Portis Therapeutics for FG3246, a potential first-in-class opportunity that our CSO, John Hunter, will describe in more detail on the next few slides. Under the terms of the agreement, there was no upfront cash consideration. Fibrogen will conduct and fund future research, development, and manufacturing of FG3246 and an associated biomarker, We have the option to acquire Fortis during the four-year evaluation period for $80 million. We anticipate the initiation of a phase two trial in metastatic castration-resistant prostate cancer, or MCRPC, in the second half of 2024 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.

Thank you, Sam. Moving to slide 23, a recently in-licensed clinical program, FG3246, 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. expressed at high levels in a majority of metastatic castrate-resistant prostate cancers and colorectal tumors, and is also found at high levels in a subset of other solid tumors. Moving to slide 24, FG3246 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 four out of 21 evaluable patients had a partial response based on resist criteria and where a PSA50 response rate of 45% was observed. The patients in this phase one study were heavily pretreated with a median of five prior therapies. The safety profile for FG3246 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 FG3246. In addition to the phase one 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. The rationale for this combination is based on preclinical data demonstrating upregulation of CD46 in tumor cells following enzalutamide treatment, therefore potentially making them more responsive to treatment with FG3246. Initial data from this trial is expected in the second half of 2024. There is currently a PET biomarker study trial in progress for the program, also being run at UCSF. YS5, coupled to zirconium-89. The goal is to develop a screening assay to select patients with high CD46 expression who are most likely to benefit from treatment with FG3246. This biomarker will be part of a Phase II 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-positive stratify patients in a pivotal Phase III trial. We anticipate the initiation of the Phase II trial in metastatic castration-resistant prostate cancer in the second half of 2024. 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 FG3165, an anti-galactin-9 antibody developed to reverse immune resistance in solid tumors. The lectin-9, or GAL9, is a soluble immunosuppressive molecule that is overexpressed in many tumor indications and that has been implicated in maintaining an immune-suppressed tumor microenvironment. FG3165 has been shown preclinically to reverse multiple GAL9-mediated mechanisms of immune suppression, including the prevention of GAL9-mediated effector T-cell hepatosis and TIM3 dimerization. We will present preclinical data for this program at a cancer immunotherapy conference later this year and are working towards a first quarter 2024 IND filing. Moving to slide 27 in 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 FG3175 is an anti-CCR8 antibody designed to selectively disrupt and deplete Tregs in the tumor microenvironment without affecting peripheral T regulatory cells. Given the highly competitive clinical landscape for antibodies targeting CCR8, we had developed optimized versions of our previously FG3163 during its development. While FG3163 had been shown to have acceptable potency and monotherapy efficacy in a preclinical model of colorectal cancer, we decided to advance FG3175 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 FG3175 as having broad therapeutic potential in solid tumors. I will now turn the call over to Juan to discuss the company's financials.

Juan? Thank you, John. Good afternoon, everyone. I will jump straight into the quarter's financial results. For the second quarter of 2023, total revenue was $44.3 million compared to $29.8 million for the same period in 2022, a robust increase of 49% year-over-year. I will now provide further detail on our revenue. As of Q2 2023, we recorded $23.9 million of net product revenue for Roxadustat net sales in China compared to $23.3 million in the second quarter of 2022, representing an increase of 3% year-over-year. During the quarter, we also recorded $14.3 million in drug product revenue for Roxadustat bulk drug product or active pharmaceutical ingredient sold to Estelis. Comparatively, drug product revenue was $1.1 million during the second quarter of 2022. We recorded development revenue of $4.1 million associated with co-development efforts for Roxadustat with our partners as compared to $5.2 million during the second quarter 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 million to $5 million per quarter for the remainder of 2023. Finally, we recorded license revenue of $1 million associated with a milestone payment from our biosynthetic corneum program with Illuminex. 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 Rock's reduced adnex sales from the joint distribution entity jointly owned by AstraZeneca and Fibrogen, or JDE, was $76.4 million this quarter compared to $53.1 million in the second quarter of 2022, a substantial increase of 44% year-over-year, highlighting the continued strong performance of the Avrenso 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 $23.8 million for the second quarter compared to $18.2 million in the second quarter of 2022, an increase of 31% year-over-year. Net transfer price is the best reflection of FibroGen's portion of the cash received by Roxadustat in China. During this quarter, we deferred $3.3 million in revenue due to the change in our future estimates as per U.S. GAAP, primarily driven by unfavorable renminbi currency impact amongst other estimates. As we have communicated in the past, the deferred revenue balance in Fibergen China fluctuates based on management estimates of future revenue. As a result, Fibrogen recorded $20.5 million in net revenue for the quarter from Ruxadustat sales to the JDE, and $3.4 million of direct-to-distributor sales from Fibrogen China, totaling $23.9 million on a U.S. GAAP basis. Now moving down the income statement, our operating costs and expenses for the second quarter of 2023 are were $132.4 million compared to $108 million for the second quarter of 2022. The variance of $24.3 million year-over-year is primarily driven by a one-time charge of acquired in-process R&D of $24.6 million, resulting from the recent non-cash asset acquisition of Fortis Therapeutics as per U.S. GAAP. Excluding such one-time non-cash charge, our operating expenses would be essentially flat year over year. R&D expenses for the second quarter of 2023 were $95.5 million compared to $71 million in the second quarter of 2022. As I just mentioned, R&D expenses for the quarter include a one-time charge of acquired and possessed R&D expenses of $24.6 million resulting from the recent non-cash asset acquisitions of Fortis Therapeutics. Excluding such one-time charge, R&D expenses were $70.9 million for the quarter, again, essentially flat year-over-year. Of the $70.9 million of R&D expenses that I just mentioned, approximately 59% was dedicated to Pemreblumab development and CMC activities. 29% allocated to support our early stage pipeline, and the remaining 12% directed towards Ruxudustad development activities in the United States and China. Given the outcome of the IPF trial, Cephras-1, with subsequent impact on the termination of Cephras-2, we will see a significant reduction in R&D expenses related to Pemrevlimab in the coming quarters. SG&A expenses for the second quarter of 2023 were $31.2 million compared to $30.3 million in the second quarter of 2022, remaining relatively flat year over year. During the second quarter of 2023, we recorded a net loss of $87.7 million or 90 cents net loss per both basic and diluted share as compared to a net loss of $72.6 million or 78 cents per basic and diluted share for the second quarter of 2022. The impact of the above-mentioned one-time charge of $24.6 million related to the non-cash asset acquisition of Fortis represents approximately 25 cents net loss per basic and diluted share. On July 14, 2023, as part of a broader cost reduction effort, we announced a restructuring plan to lower our operating expenses. The plan includes an expected reduction to FibreGen'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 to $15 million, the majority of which will be incurred in the third quarter of 2023. 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 flight 29, I lay out our expected future gap savings associated with the reductions I just mentioned. In the first half of 2023, our average gap operating expenses and one-time charges were approximately $105 million per quarter. Excluding one-time expenses and charges, we anticipate expected savings of approximately $100 to $120 million in total annualized gap expenses, or $25 to $30 million per quarter. We expect to achieve up to 20% of these quarterly savings in the third quarter of 2023, 60 to 80% of expected quarterly savings in the fourth quarter of 2023, and achieve our quarterly expected run rate savings in the first quarter of 2024. Now shifting towards cash, as of June 30th, we reported $361.3 million in cash, cash equivalents, investments, and accounts receivable. Our cash balance includes $71.3 million 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. Thank you. And now I would like to turn the call back over to Thayne.

Thanks, Juan. In closing, we are committed to advancing Pamrelvomab as a potential first-in-class medicine in three indications with significant unmet medical need And as noted, we expect top-line data from the following three late-stage studies, Phase III Lelantos II in ambulatory DMD this quarter, Phase III Lapis in LAPC in the first quarter of 2024, Phase II-III Pancreatic Cancer Action Network or PANCAN Precision Promise Trial in metastatic pancreatic cancer in the first half of 2024. 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 Roxidustat in Europe and Japan. In our early stage pipeline, we anticipate filing an IND for FG3165, the anti-GAU9 antibody, in the first quarter of 2024, filing an IND for FG3175, our anti-CCR8 antibody, in the second half of 2024, and the initiation of a Phase II trial of FG3246 for metastatic castration-resistant prostate cancer in the second half of 2024. 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&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 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Michael Yee with Jefferies. Please proceed with your question. Hi.

This is on the line for Michael Yee. Thanks for taking my question. I think I have two questions, if I may. First, for Ruxa Dustad, could you help us understand the patent and exclusivity situation for Ruxa in China? What is your base case for the timing of a potential generic entry, and what are the ways to extend the exclusivity? And then for 446, why are you excited about this ADC program? And I also noticed you have a phase one. Well, there was a phase one 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.

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

Thank you. Can you hear me? Yes. Okay. Thank you. So thank you for the question. We confirm that the health authority in China has accepted a number of generic applications for Roxidustat. in CPD, of course. Just to clarify, an acceptance is an administrative acceptance of a filing. It just means that technical review is about to commence. It does not represent an approval in any shape or form. Our composition matter patent expires in mid-2024. Given the patent linkage system in China, we are not expecting any generic of Roxoducet 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 US, 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. We remain optimistic about our options on the exclusivity front. We are pursuing 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 Roxadeeza and CKD. We believe there is tremendous market potential in that space alone for significant growth in the future. Of course, CIA would represent another sizable market if we were together. Shane, back to you.

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?

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 a partial response rate of about 20%, a very good PSA 50 response rate. So that was quite exciting relative to other assets that we were looking at. But also, you know, the mechanism is very well validated. As I had mentioned, there are, I think, now five approved ADCs that use MMAE as the payload. Additionally, when we really did a deep dive in the CD46 expression, we saw that it was quite restricted to tumors for the most part with only a couple of normal tissues showing any considerable expression. You know, we have 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. We have an ongoing translational medicine effort to identify IHC antibodies that we may use to be able to run a BASCA 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.

Thanks, John. I mean, I think 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 fibrinogen. One is, as you said, in metastatic castrate-resistant prostate cancer in monotherapy. The other one is in enzocombotherapy, which is a current ongoing study at UCSF, as you mentioned. The other one is either solid tumors and or multiple myeloma. 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 a deep biology underlying this program that's very exciting.

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

Okay, thank you. Can I follow up on the first one? Is there any way to extend your exclusivity for ROCSA when you know, after your CIA indication gets approved?

So how should we be thinking about it? So there is a fourth amended intellectual property law in China. The law itself was activated June 1st, 2021. At this point in time, the regulations have not yet been implemented. So we are looking at those opportunities with a bated breath. I think the decision would come down to what the Chinese government eventually decides to implement.

Okay, thank you.

You're welcome.

One moment for our next question. Our next question comes from the line. of Yaron Warber of TD Cohen. Please proceed with your question.

Hi, this is Joyce on for your own. 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're thinking that this is going to come to the US 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.

Yeah, 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?

Yeah, so the question had to do with the primary endpoint of the study, which is overall survival. As we mentioned in an earlier call, we did do an interim analysis for event-free survival as a potential surrogate marker. It was a very high bar analysis. It did not meet that analysis, so we're continuing the trial for overall survival as the primary endpoint, and we expect that to read out in the first half of next year.

Great.

Thank you.

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.

Oh, 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 if 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 be more effective here than, say, the non-ambulatory setting. Thanks.

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

Absolutely. So with respect to generic challenges, so first and foremost, our competition matter patent is valid, and all generic applicants on the patent linkage 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 patents, crystalline patents are not considered part of the patent linkage system, which means they're not enforceable by the health authority, but they are enforceable by the court of law. And that is what we will have to pursue. 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.

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 already lost so much function. They're wheelchair-bound, and, you know, the signal-to-noise ratio of the endpoint, the performance of the upper limb, we expected 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 FEC percent predicted, ejection fraction by cardiac MRI, you know, unfortunately. And, you know, 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 still have much more function. I think the North Star 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. Got it. Thank you.

One moment for our next question. Our next question comes from the line of Annabelle Samimi of Stifle. Please proceed with your question.

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

Yeah, so I'll try to address both your questions. So the second part first, yeah, I think that all implants are going to be more challenging in the non-ambulatory population than the ambulatory. Well, I will say that the cardiac MRI is not really the same relevance for the younger patients who are age 6 to 12, because that's a relatively, cardiac manifestations are relatively later manifestation in the disease. So, for ambulatory, it's the North Star. It's stair climb. It's 10-meter walk. Other endpoints like that are the primary and secondary endpoints. So, you know, ultimately, you know, the North Star, I think, has been quite well looked at in the setting of other studies. And, you know, we expect that it's a validated endpoint, and we're looking forward to those results.

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

Right, so I think your question is, for example, if 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 you know, regulatory pathways with the FDA. So, it'll 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 up.

Okay. And then, if I can ask one more question with regard to this. So, panreplumab is an antifibrotic agent. Are there any other markers that you looked at from the Volantos-1 trial to give you an idea that there is there's actually antifibrotic activity. And, you know, I couldn't help but sense the confidence about just, you know, going into this trial. And so I'm just wondering if you saw anything else that gave you some hope.

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. You know, I think the ambulatory Olantos 2 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 Olantos 2.

Okay, great. Thank you.

Thank you for the questions.

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

Hello, this is Alex Ramsey for Andy Shea at William Blair. So a couple of questions from us, if you don't mind. So the first question is about the term loan with Morgan Stanley's tactical value. We're just curious about the status of the $75 million initial term loan, and if there are any plans to pay back that loan earlier than the May 2026 maturation date, or if that's 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 Pemrolumab. And we definitely understand that you're probably early in analysis. We're just wondering if anything popped out during the initial analysis. Thanks so much.

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

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

Thanks, Juan. Mark? Right. So in terms of the Zephyrus one, Yes, disappointing results in terms of the primary endpoint and the secondary endpoints. Most of which showed kind of numerically better results for PAM versus placebo, but none of which were statistically significant. There were three major issues going into the trial that I think we and everyone was focused on. Number one was would the placebo decline at 48 weeks in Zephyrus 1 be adequate to show a treatment effect. And it was. It was 330 ml decline, which compared very similarly to praise at 308 ml. The second point was the influence of prior history of standard of care. And about half the patients were treatment experienced, about half were 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 studies? That turned out to be about 14% started OFEV or SBIRT on study. And again, that did not make any meaningful difference in the study results. So, you know, 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 have predicted. 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 you know, the phase two to phase three translation in this disease, IPF, is very, very challenging. If you look at, you know, the Galapagos Gilead or you look at the Roche data, you know, they've run into similar challenges. And I don't think these challenges are completely understood at this time.

All right.

Got it. Thank you so much. Very helpful.

Thank you for the question.

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

Paul Choi Hi, thanks. Good afternoon, and thank you for taking our questions. Maybe returning to the subject of DMD for a minute and a little length, too, is there any component of the North Star assessment that you think where PEM REVOLUMAV might show particular benefit? Any gleanings there in the ambulatory population would be helpful.

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, you know, the 10-meter walk, the stair climb, you know, other components. But, you know, at this point in time, it's difficult to answer that question. And, you know, I think we'll have to await the data.

Okay. Okay. Fair enough. And then turning to your oncology pipeline and FG3246, you'll have the combination study with Xtandi next year. I'm 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.

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

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 FT-3246 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. Mark, you might want to add anything.

Sorry, John. I was just going to say, I have the exact same perspective. If it does increase T46 expression, you know, with enzalutamide, that is, that we could expect to see a greater degree of clinical efficacy. That's the hypothesis that's being tested.

Great. Thank you.

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

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 Pemrevimab readouts with a robust and 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 of our accomplishments going forward. Thank you.

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