FibroGen, Inc. (NASDAQ:FGEN) Q1 2023 Earnings Call Transcript

FibroGen, Inc. (NASDAQ:FGEN) Q1 2023 Earnings Call Transcript May 8, 2023

FibroGen, Inc. misses on earnings expectations. Reported EPS is $-0.81 EPS, expectations were $-0.75.

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

Michael Tung: Thank you, Eleanor, and good afternoon everyone. I’m Michael Tung, Vice President of Corporate Strategy and Investor Relations at FibroGen. Joining me on today’s call are Enrique Conterno, our Chief Executive Officer; Dr. Mark Eisner, our Chief Medical Officer; Juan Graham our Chief Financial Officer; Dr. John Hunter, our Chief Scientific Officer; Thane Wettig, our Chief Commercial Officer; and Chris Chung, 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 Astella’s 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 Investors section of FibroGen’s website at www.fibrorgen.com. With that, I would like to turn the call over to Enrique Conterno, our CEO.

Enrique?

Enrique Conterno: 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 developments through thus far in 2023. Juan Graham, our CFO will then review the financials, after which we will open the call for your questions. Starting with slide 3. FibroGen is positioned to create significant value for patients and shareholders by executing on three areas of focus; first, delivering pivotal Phase 3 pamrevlumab data in three high-value indications; idiopathic pulmonary fibrosis, Duchenne muscular dystrophy, and locally advanced unresectable 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 where approved, while continuing the chemotherapy-induced anemia studies in China. Moving on to slide 4. FibroGen represents an exciting catalyst rich opportunity with top line data expected from four Phase 3 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 5. On May 5th, we announced top line data from the MATTERHORN Phase 3 clinical study of roxadustat for treatment of anemia in patients with transfusion-dependent lower-risk myelodysplastic syndromes or MDS. Towards disappointment, the study did not meet its primary efficacy endpoints. The proportion of patients who achieved red blood cell transfusion independence in the first 28 weeks was 47.5% for the roxadustat arm compared to 33.3% for placebo with a p-value of 0.217. The adverse event profile or 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 time lines on Slide 6.

Starting at the bottom of Slide 6 with roxadustat, we anticipate top line data from a China Phase 3 study in patients with chemotherapy-induced anemia shortly. Moving now to Pamrevlumab. I want to remind everybody that we have both FDA Fast Track and FDA Orphan Disease Designations for all three of the indications in Phase 3 developments. idiopathic pulmonary fibrosis, duchenne muscular dystrophy and locally advanced unresectable 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 LELANTOS-1, our Phase 3 study of pamrevlumab in non-ambulatory DMD in the second quarter of 2023. Topline data from the ZEPHYRUS-1, our Phase 3 trial in IPF in mid-2023.

Topline data from the LELANTOS-2 trial in ambulatory patients with DMD in the third quarter of 2023. Looking out for next year, top line data from the LAPIS Phase 3 study in locally advanced unresectable pancreatic cancer expected in the first half of 2024. Top line data from the ZEPHYRUS-2, Phase 3 trial in patient 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 networks Precision Promise adaptive trial platform, evaluating pamrevlumab 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 through across the pamrevlumab 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, 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 seven years.

2023 will be a transformational year for FibroGen. And we look forward to sharing the results of these studies. I would like to extend my gratitude to the patients, caregivers and investigators, as well as to my FibroGen colleagues for their commitment. I’d now like to spend a few minutes highlighting our view of the significant commercial opportunity we see with pamrevlumab, our wholly-owned monoclonal antibody. Slide 7 provides a detailed perspective of the current large and growing IPF commercial opportunity, with a diagnosed prevalence of approximately 330,000 patients across the 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 pamrevlumab has the potential to help a sizable number of patients and 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 a challenging tolerability profile. This translates into a low treatment rate as depicted on the right side of slide eight. In the US, 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 antifibrotic. Of this roughly 10,000 patients that start one of the two approved antifibrotics in a given year, approximately 40 to 50 discontinue 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 US IPF patients not being treated for this progressive and fatal condition. Because of this significant unmet need, we believe pamrevlumab 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 result and our optimism on the likelihood of success of our ZEPHYRUS Phase 3 program. Moving to slide nine. Both Duchenne muscular dystrophy and locally advanced unresectable pancreatic cancer represents significant opportunities to meaningfully help patients.

Beginning with DMD in the left column. Given the devastating nature of DMD and the relentless progression of the disease, we are hopeful that the LELANTOS Phase 3 program can lead to a definitely needed approved therapy. While the currently approved exon skipping therapy produced 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 automate disease progression by targeting the downstream pathological changes to improve muscle function. We are hopeful the antifibrotic mechanism of pamrevlumab may be a treatment that can help these patients and their families. LELANTOS-1 enrolled non-ambulatory DMD patients 12 years and older with more advanced disease.

The primary endpoint is the performance of the upper limb tests which measures functionality of the shoulder elbow wrist and hand and we expect top line data this quarter. LELANTOS-2 enrolled ambulatory DMD patients six 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 topline 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 pamrevlumab had both direct antitumor effects and effects on the stroma and this is why we are evaluating both LAPC and metastatic pancreatic cancer. There have been limited treatment advances over the last two decades with immunooncology therapies failing to demonstrate survival benefits over the current standard-of-care. This creates a potential meaningful commercial opportunity for pamrevlumab if we can demonstrate a significant improvement in overall survival. We expect top line data from our LAPIS 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. FG-3165 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.

FG-3165 has been shown preclinical to prevent Gal9-mediated cell death of T cell subtypes that are critical for antitumor immune responses and is undergoing characterization for its ability to directly target leukemic cell populations. FG-3163 is an anti-CCR8 antibody designed to selectively deplete suppressive T regulatory cells in the tumor micro environment without affecting peripheral T reg cells. Use of FG-3163 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 announced the FibroGen enter into an exclusive license with Fortis Therapeutics for FOR46.

Fortis’ lead drug candidate FOR46 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. FOR46 is currently in Phase 1 development for the treatment of metastatic castration-resistant prostate cancer and other CD46 expressing cancers. As part of the clinical development strategy, FibroGen will continue to develop a PET-based biomarker utilizing a radio-labeled version of the targeting antibody for patient selection. Under the terms of the agreement, there is no upfront consideration. FibroGen will conduct and fund future research, development and manufacturing of FOR46 and PET46.

We have the option to acquire Fortis during the four-year evaluation period for $80 million. Moving now to Slide 12. Roxadustat continues to grow nicely in China. First quarter total roxadustat 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%. FibroGen’s portion of roxadustat 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?

Juan Graham: Thank you, Enrique. 2023 has started on a strong note on many fronts. Our EVRENZO franchise in China continues to perform at a strong pace. All our Phase 3 clinical trials for pamrevlumab and roxadustat have been enrolled. Our early-stage pipeline is growing and advancing. And our financing efforts are enabling us to continue funding our operations while elongating our runway. 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 comparator, includes a onetime $25 million payment received due to a regulatory approval of roxadustat or EVRENZO in the Russian Federation. As of Q1 2023 the breakdown of revenue sources is as follows: We recorded $24.2 million of net product revenue for roxadustat 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 roxadustat 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 roxadustat with our partners we expect co-development revenue to be in the range of $3 million 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 Eluminex. And finally we recorded $2.1 million in drug product revenue for roxadustat bulk drug product or active pharmaceutical ingredients sold to Astellas based on the change in our estimates related to these shipments as per US 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 roxadustat performance in China is as follows.

Total roxadustat net sales from the joint distribution entity jointly owned by AstraZeneca and FibroGen or JDE was $64.1 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 EVRENZO franchise in China. From total roxadustat net sales in China FibroGen’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 FibroGen recorded $21.4 million in net revenue for the quarter from roxadustat sales to the JDE and $2.8 million of direct to distributor sales for FibroGen 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 pamrevlumab programs. Of the $74.5 million spent in the first quarter roughly 55% was dedicated to pamrevlumab development and CMC activities 35% allocated to support our early-stage pipeline and the remaining 10% directed towards roxadustat development activities in the 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 $0.81 net loss for both basic and diluted share as compared to a net loss of $63.2 million or $0.68 per basic and diluted share for the first quarter of 2022. With regards to our financing efforts I want to make reference to financing events. On Slide 13, I make reference that on May 1 we completed a structured loan agreement with Morgan Stanley Tactical Value for up to $150 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 pamrevlumab and roxadustat Phase 3 data readouts, initial pamrevlumab pre-commercialization activities and advancement and expansion of our R&D pipeline. Moving now to Slide 14. At March 31 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.

Enrique Conterno: Thank you, Juan. In closing, I would like to reiterate our confidence as we progress through 2023. We expect top line data from roxadustat pivotal China Phase 3 study in chemotherapy-induced anemia shortly. We expect data for pamrevlumab from three pivotal Phase 3 studies through the third quarter of 2023. LELANTOS-1 in non-ambulatory patients with DMD in the second quarter of 2023, ZEPHYRUS-1 in IPF patients midyear and LELANTOS-2 in ambulatory patients with DMD in the third quarter of 2023. In our early Stage 5 and we expect to file up to two INDs near year-end 2023 for FG-3163, the anti-CCR8 antibody and FG-3165 the anti-Gal9 antibody both in oncology. The Fortis transaction bolsters our early clinical pipeline and its focus 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 pamrevlumab 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.

Q&A Session

Operator: Thank you. At this time we will conduct the question-and-answer session. Our first question comes from the line of Jason Gerberry of Bank of America. Your line is now open.

Jason Gerberry: Hey, guys. Thanks for taking my questions. A couple for me. Just a question on your Phase 2b PRAISE study for pamrev IPF. On the primary efficacy analysis could you characterize the 25 patients who dropped out of study due to discontinuation? What proportion of those patients actually received their final SEC assessment at the week 48 per the observational analysis? And then when you top-line Phase 3 ZEPHYRUS-1 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-1? I know before it was mid-May to mid-August. Just wondering if you refined that time range?

Enrique Conterno: 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 this if necessary.

Mark Eisner: Yes. Thanks, Jason. It’s Mark speaking. So for the PRAISE there were some patients as you mentioned 25 who didn’t complete all of the follow-up visits up to week 48. But many of those completed earlier study time points and contributed FVC data to the study. The study was analyzed by intention to treat so all available data were used in the analysis. In terms of the top-line data and the analytic methods used we will of course provide a variety of sensitivity analyses as a standard practice just to test the robustness of the results from the primary analysis and we’re aligning with FDA on what those will look like. Enrique, maybe back to you on the ZEPHYRUS-1 question.

Enrique Conterno: Yes. Thank you, Mark. On the — 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 midyear for this readout. It’s right on the midyear. And so we are sticking with that characterization of the timing.

Jason Gerberry: Okay. Thanks, guys.

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

Andy Hsieh: Hi. Thanks for taking my questions. Sorry, recovering from a cold so excuse for my voice. First question has to do with the . 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 stream 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 for is it just HR of 1.0 or is a little bit more stringent?

Enrique Conterno: Very good. Thank you, Andy. I will have John Hunter address your question on FOR46 and then I’ll have Mark Eisner address the question on the metastatic cancer trial.

John Hunter: Hi, Andy. Thanks for the questions. It broke up a little bit. So if I start to veer away from the question please correct me. But in terms of the percentage of patients who we expect to be eligible for FOR46 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. And then, just with regards to the…

Andy Hsieh: Yes, we’re curious about the radionuclide used for the imaging agent.

John Hunter: So yes, right now, they’re using 89 zirconium for the imaging, and I believe that is the plan — that is what’s being worked up for the clinical imaging.

Enrique Conterno: And Mark, if you could address the question on the Precision Promise trial?

Mark Eisner: Sure. So the Precision Promise trial of pamrevlumab versus placebo on top of backbone chemotherapy for metastatic pancreatic cancer, there were two stages; stage 1 and stage 2. There are a series of futility analysis conducted on the stage one and then there is a graduation from stage 1 to stage 2, which is based on a pre-specified criteria. Now 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.

Andy Hsieh: Okay. Great. Thanks.

Enrique Conterno: Thank you, Mark.

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

Danielle Brill: Hey, guys. Good evening. Thanks for the question. I have a couple relating to pamrevlumab. First, can you just remind us how we should be thinking about PAM 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.

Enrique Conterno: Yes. Very good. Thank you. I’m going to have Mark address your question Danielle, and I’ll complement some of his answers.

Mark Eisner: Sure. Thanks, Danielle. So, just to remind everyone that the ZEPHYRUS trials are monotherapy trial of pamrevlumab versus placebo, patients can be either treatment experienced or treatment naive. But when the study starts, they’re not to be on any other standard of care background therapy. They are allowed to start background therapy, if the physician taking care of the patient deems it necessary on study. So, we really won’t have a formal test of pamrevlumab on top of standard of care versus standard of care alone. That’s really not the design of the trial. But we will have indirect comparisons of our placebo-corrected difference for PAM versus placebo versus Esbriet Ofev and what they’ve seen in those pivotal trials.

In terms of tolerability, we did have a small combination arm of PRAISE that looked primarily safety and adding PAM to either Esbriet or Ofev was well tolerated. So we’re not anticipating tolerability issues there. And then finally and we could go into this in more detail if you like, what our understanding from speaking to physicians who take care of IPF patients is that, the data set we’re going to generate would enable them to use pamrevlumab as a monotherapy or in combination as they see fit. But to be very, very clear the label will be specific for the monotherapy design that we have. So 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.

Danielle Brill: Great. Thank you.

Enrique Conterno: Thank you, Mark.

Operator: 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.

Paul Choi: 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 IPF based on that study plus the PRAISE 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?

Enrique Conterno: Yeah, good question. Just to recap. I think what we said is that, if we were to have ZEPHYRUS-1’s results that replicate PRAISE, we believe that we will be in a good position to have those discussions with the FDA in order for us to be able to file utilizing the ZEPHYRUS-1 results. And yes we could add the PRAISE results to that. Clearly, I think that will be a very exciting moment for us. 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.

Paul Choi: 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 MSTV, or is that exclusive of those two additional tranches?

Juan Graham: Hi. Paul. Yeah, thanks for the question. And basically the cash guidance that I mentioned basically includes the initial financing or the initial tranche for the MSTV deal, the rest clearly are contingent upon certain milestones being achieved.

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

Paul Choi: Got it. Okay. Thank you very much. I’ll hop back in queue.

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

Michael Yee: Hey guys. Good afternoon. Can you hear me?

Enrique Conterno: We can.

Michael Yee: Good. Two quick questions, thanks. First on pamrevlumab, 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 3? 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.

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

Mark Eisner: Sure. So I think there’s a misunderstanding that’s unfortunately been propagated about the 25 patients who dropped out early and in that they didn’t contribute any data. So the way PRAISE was analyzed it was intention to treat. So patients were included in terms of all the data they provided. So, for example, if a patient was in the study baseline week 12, week 24, week 36 and dropped out at week 48 well all their data up until 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 we don’t agree with that approach. And I think if you look at 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 have a gut check of what I’m saying, you can look at the disease progression endpoint rate, which is FVC percent predicted 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’re counted as a progressor. So that allows a very simple way of incorporating patients into the analysis that it doesn’t really require any fancy statistical methodology. So just to sum it up, we think that our analysis of PRAISE followed the standard way of analyzing data, which is to include all the patient data points that we have on FVC at all the time points. And that will be something similar done in the ZEPHYRUS.

Michael Yee: If I may ask a follow-up, I could actually do more with the view that the dropouts were included but that the dropout estimates when they are included that the data is estimated or imputed rather than not included at all. And that the estimates for the imputed data drive a favorable response. That’s actually growing along with the supplement kind of thing?

Mark Eisner: 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.

Michael Yee: Got it, okay. And then the financing?

Juan Graham: Yes. Hey, Michael this is Juan. Specifically related to your point, I think your question is second and third tranche. On 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 Tactical Value has the option to upsize a third tranche again of up to $37.5 million and this is basically at their discretion new upsize with no other clinical milestones or any such items.

Michael Yee: Got it. Thank you.

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

Annabel Samimy: Hi. Thanks for taking my questions, and I have a few on PAM for IPF. I guess, first, can you talk about any of the additional secondary endpoints that you’re going to be exploring that could further differentiate PAM from current standard of care like time to clinical worsening or exacerbations or maybe total lung capacity. Just in the event in a scenario where PAM has equivalent efficacy maybe better safety, but you’re trying to sort of separate from the crowd? And then just following 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, I wonder how you’re going to be treating that data when all is said and done. And do you have any further details on the combination of PAM and standard-of-care? I know that it was for safety, but do you have any efficacy data? And will you be disclosing any of it? Thank you.

Enrique Conterno : Mark, I’ll have you address the two PAM questions.

Mark Eisner : Sure, absolutely. So the first question has to do with secondary endpoints for pamrevlumab. And I agree with you, this is going to be important to delineate the full efficacy profile of pamrevlumab. One important efficacy, secondary efficacy analysis will be the disease progression of FVC 10% decline or death, because we think this is a clinically meaningful endpoint for clinicians and patients. We do have 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 exacerbation. So those should be rigorously defined. We’re also going to have the quantitative lung fibrosis score. And of course, we’ll have cap or mortality as well although, typically in IPF trials they are 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. We expect this to be the distinct minority of patients. And those patients who do start standard of care many of those will start later on the study. And as you are well aware 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 pamrevlumab versus placebo. And just to clarify that whether or not patients start standard-of-care on study they will continue on the study drug whether that’s PAM or placebo for the remainder of the study, so we should have a very rigorous evaluation of the efficacy of PAM versus placebo at the end of the studies.

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

Mark Eisner : Right. So you’re referring to the substudies of PRAISE. 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. At this point, we’re not planning on releasing anything upfront of the Z1 read out.

Annabel Samimy : Okay. Great. Thank you.

Operator: One moment please for our next question. Please standby. Our next question comes from the line of Yaron Werber of Cowen. Your line is now open.

Yaron Werber : Great. Thanks for taking my question. Mark, potentially for you. I also have a couple. The first one, CTGF is a unique target. And as you noted, obviously, PRAISE was a positive study and it’s supported by the prior animal data on radiation dose in bleomycin-induced models. Some of the KOLs also talk about CTGF 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 go an upstream? And then secondly, Z-2 originally as you noted there’s obviously a secondary important endpoint in Z-1 which is the composite outcomes. That was initially the primary for Z-2 and recently that was changed in January to be sort of aligned to two studies. And just I just wanted to get a sense why the endpoints were now aligned and not keeping outcomes is he primarily for that study. Thank you.

Mark Eisner: Sure. Thanks for the great questions. So the first point is a mechanistic one around where CTGF fits in the pathophysilogic cascade of events that cause fibrosis in the lungs and IPF. And I mean you’re right it’s downstream of T&L, which is thought to be the key driver of IPF. But there are also a number of downstream pathways from CTGF, including the transition of fibroblast to myofibroblast 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 FVC 10% decline or more or death. We decided to change that to FVC to harmonize the two studies I think that it’s very clear that FVC has become the global standard for Phase 3, design and regulatory approval in the major regions of the world, primarily FDA in the US very, very clear on this point EMA and most other health authorities. So we thought it was just better just to make it very clear that FVC is the primary endpoint and that disease progression will be an important secondary endpoint.

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

Enrique Conterno: Well, 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.

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