FibroGen, Inc. (NASDAQ:FGEN) Q1 2024 Earnings Call Transcript

FibroGen, Inc. (NASDAQ:FGEN) Q1 2024 Earnings Call Transcript May 6, 2024

FibroGen, Inc. misses on earnings expectations. Reported EPS is $-0.33272 EPS, expectations were $-0.31. FGEN isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day and thank you for standing by. Welcome to the FibroGen’s First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] 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, Vice President, Investor Relations.

David DeLucia: Good afternoon everyone. Thank you for joining today to discuss our first quarter 2024 financial and business results. I’m David DeLucia, Vice President of Corporate FP&A and Investor Relations at FibroGen. Joining me on today’s call are Thane Wettig, our Chief Executive Officer; Dr. Deyaa Adib, our Chief Medical Officer; Juan Graham, our Chief Financial Officer; Dr. John Hunter, our Chief Scientific Officer; and Chris Chung, our Senior Vice President of China Operations. Following our prepared remarks, we will open the call to your questions. I would like to remind you that remarks made on today’s call include forward-looking statements about FibroGen. 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 Investors section of FibroGen’s website at www.fibrogen.com. With that, I’d like to turn the call over to our CEO, Thane Wettig.

Thane Wettig: Thank you, Dave. Good afternoon everyone and welcome to our first quarter 2024 earnings call. On today’s call, I will focus our stakeholders on the four strategic pillars, shaping our company’s future trajectory. Additionally, I’ll offer insights into the progress of our pamrevlumab and roxadustat programs. Dr. Deyaa Adib, our Chief Medical Officer, will review the top line data from our CD46 targeted antibody drug conjugate FG-3246 in metastatic castration-resistant prostate cancer and articulate why we feel so strongly about our recently released Phase 1 top line results. And Juan Graham, our CFO, will review the financials, after which we will open the call for your questions. Starting on Slide 3. FibroGen has four key strategic pillars that we believe offer significant value today.

First is pamrevlumab where we are preparing for readouts from two pivotal Phase 3 studies in pancreatic cancer. In the coming months, we plan on releasing top line data from Precision Promise, Pancreatic Cancer Action Network’s Phase 2/3 adaptive platform trial for metastatic pancreatic cancer and from our ongoing LAPIS Phase 3 trial in locally-advanced pancreatic cancer. Pancreatic cancer is a disease with substantial unmet clinical need and represents a significant commercial opportunity for pamrevlumab, which has demonstrated an effect in both preclinical and early clinical studies in pancreatic cancer in which we will detail in a moment. Second is roxadustat. Roxadustat is approved in over 40 countries, generates significant net revenue and positive cash flow and provides FibroGen with material and growing economics through our partnerships with AstraZeneca and Astellas Pharma.

We’re expecting an approval decision from the China authorities in the second half of 2024 and for chemotherapy-induced anemia, which, if approved, would represent meaningful revenue growth on top of the substantial revenue generated by roxadustat in anemia associated with chronic kidney disease. FibroGen has regained the rights to roxadustat for AstraZeneca in the U.S. and ROW territories, excluding China and South Korea. This allows us the opportunity to potentially partner roxadustat in certain indications with high unmet needs, such as anemia in patients with lower-risk myelodysplastic syndromes. Third is our early-stage oncology pipeline. We are very excited about the potential of these programs. FG-3246 is a first-in-class potent antibody drug conjugate, or ADC, targeting CD46 for the treatment of metastatic castration-resistant prostate cancer and potentially other solid tumors.

This program also includes the development of an associated CD46 targeted PET biomarker. In April, we released compelling data from our FG-3246 Phase 1 monotherapy trial which Deyaa will go into later on the call. In addition to FG-3246, we have recently submitted an IND for FG-3165, our anti-galectin-9 monoclonal antibody and await FDA clearance of the application. We are also planning to file an IND for FG-3175, our anti-CCR8 monoclonal antibody in 2025. The fourth pillar is our strong cash position. We finished the quarter with approximately $214.7 million in cash, cash equivalents, investments, and accounts receivable. We expect our strong balance sheet to be sufficient to fund our operating plans into 2026. In summary, we believe there are a 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 5. Pamrevlumab is a novel anti-CTGF human monoclonal antibody in clinical development for the treatment of metastatic pancreatic cancer and locally-advanced unresectable pancreatic cancer or LAPC. Pamrevlumab has demonstrated dose and exposure related responses in an early-stage pancreatic cancer trial and having been studied and over 1,000 patients across various conditions and favorable safety and tolerability profile. I would now like to discuss the pamrevlumab opportunity in pancreatic cancer in more detail starting on Slide 6.

The Pancreatic cancer represents one of the largest unmet needs in oncology with an annual instance of nearly 0.5 million patients across the major regions combined. This includes approximately 60,000 PDAC patients in the U.S. There is an overall five-year disease-free survival rate of only 12.5% and for metastatic cancer, the survival rate is approximately 3%. Unfortunately, there have not been any major therapeutic advances for quite some time. On Slide 7, we provide an overview as to why we believe pamrevlumab can provide benefits to patients diagnosed with pancreatic cancer. Based on preclinical data, connective tissue growth factor, or CTGF, plays an important role in the growth and progression of pancreatic tumors. Mouse pancreatic tumor studies have shown that pamrevlumab by inhibiting the biological activity of CTGF can have both direct antitumor effects and effects on the surrounding stroma providing a strong clinical rationale for use in both locally-advanced and metastatic pancreatic cancer.

Moving to Slide 8. We would like to reference the data from our open-label dose escalation Phase 1/2 trial in patients with locally-advanced stage 3 or metastatic stage 4 pancreatic cancer. Almost 90% of these 75 patients were in fact, metastatic with only nine having locally-advanced disease. Pamrevlumab was evaluated in accommodation with gemcitabine and erlotinib as first-line therapy. An important observation in the study was that enhanced clinical benefit was observed at higher drug exposure levels. Once drug plasma levels reached a trough threshold of 150 micrograms per ml, a number of important results were found. The most notable result in this study was that one year survival was 37% for patients who had circulating pamrevlumab levels of 150 micrograms per ml or higher versus 11% for those with lower plasma levels.

These results from the higher exposure cohort patients also included improved median overall survival and improved median progression-free survival. Moving to Slide 9. In late January, we announced the completion of the pamrevlumab arm in Precision Promise, Pancreatic Cancer Action Network’s Phase 2/3 adaptive platform trial for metastatic pancreatic cancer, which evaluates pamrevlumab in combination with the chemotherapy treatment gemcitabine and nab-paclitaxel for patients with metastatic pancreatic ductal adenocarcinoma. The Precision Promise trial is a Phase 2/3 registrational study that is being executed at the top pancreatic cancer centers in the United States. The primary endpoint of the trial is overall survival. In this study, pamrevlumab is being evaluated in both first and second-line metastatic disease.

Slide 10 provides additional details on the Precision Promise study, which is comprised of two stages. In the initial stage of the study or stage 1, one hundred patients with metastatic pancreatic cancer receive pamrevlumab in combination with gemcitabine and nab-paclitaxel. Guided by Basin principles, the graduation threshold for pamrevlumab was a protocol prespecified greater than or equal to 35% predictive probability of success for the primary endpoint of overall survival at the completion of the trial. The pamrevlumab arm successfully graduated to stage 2 in the third quarter of 2022 and an additional 75 patients were enrolled receiving the same pamrevlumab treatment regimen as in stage 1. All patients were dosed until disease progression, and the final analysis is based upon the data collected for all patients up to 12 months after the last patient initiated treatment.

Including patients enrolled during the analysis period between stages 1 and 2, a total of 213 patients participated in the pamrevlumab arm in the study. The pamrevlumab arm of the Precision Promise trial was completed in late January of this year. Pamrevlumab is the first experimental alarm in the Precision Promise trial to meet its prespecified threshold for graduation to stage 2 and we now expect to report top line data in mid-2024, reflecting PanCAN’s updated timing to complete database lock and subsequent analysis of the top line results by the independent statistical Monitoring Committee. On Slide 11, we provide an overview of the global Phase 3 LAPIS trial, a double-blind, placebo-controlled trial in 284 patients with locally-advanced unresectable pancreatic cancer, comparing pamrevlumab to placebo in combination with standard-of-care chemotherapy.

The primary endpoint is overall survival. Given LAPIS is an event-driven trial, we continually monitor the number and trend of events to ensure we have the most up-to-date perspective on when the trial will accrue the required number of events and allow us to lock the database. Since our last update, the pace of events has decreased, which is a common occurrence in this type of oncology study. We now expect top line data from the LAPIS Phase 3 study of pamrevlumab in locally-advanced unresectable pancreatic cancer in the third quarter of 2024, reflecting the current number and trend of overall survival events. Moving to Slide 12, we show a snapshot of the two pamrevlumab registrational studies, which are being conducted in locally-advanced and metastatic patients.

These patients represent almost 90% of all diagnosed pancreatic cancer patients today, giving pamrevlumab the potential opportunity to treat a vast majority of patients across this devastating disease. One important difference between the two studies is the dosing regimen of the Precision Promise study. Pamrevlumab is dosed in 28-day treatment cycles until disease progression or discontinuation, which is distinct from LAPIS, in which pamrevlumab was delivered in a neoadjuvant setting and where it was dosed for up to six months. We believe the ability to dose patients until disease progression in the metastatic setting provides a potential opportunity to amplify clinically meaningful increases in overall survival, driven by those patients benefiting from pamrevlumab treatment.

On Slide 13, we review the U.S. commercial opportunity for pamrevlumab in pancreatic cancer. There have been limited treatment advances over the last two decades in both locally-advanced and metastatic diseases with immuno-oncology therapies providing benefit to a small subset of metastatic patients. Using straightforward assumptions, the total addressable market for pancreatic cancer in the U.S. represents a multibillion-dollar opportunity for pamrevlumab if it can demonstrate a clinically meaningful improvement in overall survival in either locally-advanced or metastatic patients. Even modest penetration in either of these segments represents a substantial commercial opportunity in the U.S. alone, where FibroGen plans to commercialize on its own should pamrevlumab gain approval.

In summary, pamrevlumab, if approved, could represent a meaningful advance in prolonging survival for patients with pancreatic cancer and a game-changing opportunity for FibroGen. We expect top line results in the near-term. Moving now to Slide 15. Roxadustat for anemia of chronic kidney disease continues to perform extremely well in China. First quarter total roxadustat net sales in China by FibroGen and the distribution entity jointly owned by FibroGen and AstraZeneca was $79.4 million compared to $64.1 million in the first quarter of 2023, an increase of 24%. This growth was driven by an increase in volume of 39%. FibroGen’s portion of roxadustat net product revenue in China was $30.5 million for the first quarter on a U.S. GAAP basis compared to $24.2 million in the first quarter of 2023, an increase of 26%.

Moving to Slide 16. Roxadustat continues to expand its category leadership and brand value share in China, rising to 47% in the most recent three-month period ending in February of 2024. The potential addition of the chemotherapy-induced anemia indication would provide an important new treatment alternative for patients with chemotherapy-induced anemia and be a meaningful addition to the roxadustat business in China. Given that there have been several generic applications filed in China, I would like to reiterate the dynamics of the generic market more broadly in China and the exclusivity of roxadustat. The impact of a generic approval and launch in China is meaningfully different than in the U.S. market. Generic players face lead time and execution risk of market adoption after approval as they need to be admitted into hospital formularies on listing at a time.

Originator products do not experience a meaningful deterioration in revenue until at least a generic products are approved. Even then, originator products in China have historically been able to maintain a stream of net revenues and profits after generics enter the market. Despite the expiration of our composition of matter patents in June 2024, we do not expect meaningful deterioration of the roxadustat business in the near-term. In addition to the continued outstanding performance of roxadustat in China, roxadustat penetration in Europe continues to increase, showing strong quarter-over-quarter growth. We expect this growth to continue given the fact that roxadustat is now fully reimbursed in all EU five countries. Roxadustat is the only HIF-PHI indicated in the EU for the treatment of anemia of CKD in both non-dialysis and dialysis patients.

And with GSK’s decision to withdraw the MAA for daprodustat, roxadustat maintains its strong competitive position in the EU. Of note, we have recently been successful in defending roxadustat’s patent portfolio and now believe roxadustat has exclusivity into 2036, positioning it to continue its growth and HIF market leadership over the next decade in the EU. Moving to Slide 17. Earlier in the year, we announced that AstraZeneca returned all U.S. RW rights for roxadustat to FibroGen with the exception of South Korea. FibroGen’s collaboration agreement with AstraZeneca for roxadustat in China remains in place. Regaining the rights roxadustat in the U.S., allows us to pursue roxadustat development opportunities with potential partners in indications such as anemia associated with lower-risk myelodysplastic syndrome.

On Slide 18, we highlight the potential opportunity for roxadustat in patients with anemia associated with lower-risk MDS. There is a well-defined patient population and a clear clinical need given the current therapeutic alternatives which translates into a significant commercial opportunity. We continue outreach to potential interested parties. Moving on to Slide 19. Late last year, we presented data from the Phase 3 MATTERHORN study of roxadustat in patients of anemia of lower-risk myelodysplastic syndrome at the American Society of Hematology Annual Meeting. Although we missed the primary endpoint of transfusion independence, driven by a high placebo response in patients with low transfusion burden at baseline, roxadustat demonstrated a numerical advantage relative to placebo.

When looking specifically at results in patients with a higher transfusion burden at baseline, there was a statistically significant and clinically meaningful advantage in transfusion independence in patients treated with roxadustat versus placebo. Based on these results, we continue to believe that roxadustat represents an important potential therapy for patients in the U.S. and other territories where it has not yet been approved. Lastly, in April, we announced compelling top line results from our Phase 1 monotherapy study of FG-3246 in patients with metastatic castration-resistant prostate cancer. Before I hand it over to Deyaa Adib, our new CMO, I would like to highlight the deep clinical development experience that Deyaa brings to FibroGen.

He has over 28 years of biopharma drug development experience, including multiple global product submissions, approvals, and launches. Most importantly, Deyaa advances our capabilities in both pancreatic cancer and prostate cancer given his prior experiences, we are fortunate to have him leading the clinical development team. Deyaa, over to you.

Deyaa Adib: Thank you, Thane. Before I begin, I would first — that I’m delighted to be part of the team here at FibroGen. I’ve been here for just over two months now and I’m very excited about the prospects of the company’s innovative oncology pipeline. Moving to Slide 21. FG-3246 is a first-in-class ADC for metastatic castration-resistant prostate cancer, colorectal cancer, and other tumor types. FG-3246 binds to a cell receptor target that internalizes upon antibody binding and is present in approximately 50% to 70% of prostate tumors, but that demonstrates a very limited expression in most normal tissue, making it an ideal ADC target candidate. FG-3246 is comprised of an anti CD46 antibody, YS5 linked to an antimitotic agent, MMAE, which is clinically validated and FDA-approved ADC payload.

On Slide 22, we show that FG-3246 has demonstrated efficacy against CD46 expressing tumors in both preclinical and clinical studies. An associated PET imaging biomarker, PET 46, utilizes the same targeting antibody has FG-3246 and is under clinical development at UCSF. It is constituted of the YS5 antibody coupled to the radionuclide, zirconium 89, and in preclinical studies demonstrate specific targeting of and uptake by CD46 positive tumor cells. FG-3246 has demonstrated monotherapy clinical efficacy in metastatic castration-resistant prostate cancer. Now, let’s get into the top line results from the monotherapy Phase 1 trial in mCRPC on Slide 23. In the Phase 1 dose escalation component of the study, dose levels of FG-3246 were administered in 21-day cycles.

In the dose expansion arm of the trial, patients were treated at 2.7 milligrams per kg, adjusted body weight dosing to 100-kilogram, until disease progression or occurrence of toxicity, for example, dose-limiting toxicities. The endpoints were safety, tolerability, and antitumor activity as measured by the decline of prostate-specific antigen from baseline, objective tumor response rate in patients with measurable disease, and radiographic progression-free survival using the prostate cancer working group criteria for tumor response assessment. The completed Phase 1 trial includes a total of 56 metastatic castration-resistant prostate cancer patients who are biomarker unselected and received a median of five prior lines of therapy before receiving FG-3246.

In the efficacy analysis population, we observed a median radiographic progression-free survival of 8.7 months. For RECIST evaluable patients, 20% met the criteria of a partial response or tumor reduction in size of at least 30% compared to baseline with a median duration of response of 7.5 months. PSA reductions of at least 50% were observed in 36% of patients. FG-3246 demonstrated an acceptable safety profile with adverse events consistent with those observed in other anti-body drug conjugate therapies with an MMAE payload. We look forward to publishing the totality of the Phase 1 data in a manuscript in the coming months as we advance the program further into the clinic. We are encouraged by these findings, and we believe a radiographic progression-free survival of 8.7 months is very compelling versus existing standard-of-care in mCRPC setting.

We believe that radiographic PFS is a mature clinically meaningful endpoint versus other early signals, such as PSA50 and objective response rate. Other early-stage data in the same space has only shown results for PSA30 and PSA50 as signals of clinical activity in a limited number of patients, but have not yet shown survival data, which constitutes clinically meaningful endpoints in metastatic castration-resistant prostate cancer. Moving to Slide 24. There is also a combination trial 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, post exposure to a second-generation and receptor signaling inhibitor, therefore, potentially sensitizing them to treatment with FG-3246.

I’m excited to remind everyone that we announced that interim data from the dose escalation portion of the study for FG-3246 in combination with enzalutamide was selected for poster presentation at the 2024 American Society of Clinical Oncology Annual Meeting on June 2nd. Also, a trial for the PET 46 biomarker in prostate cancer is in progress at UCSF. The goal is to develop a screening assay to be able to select patients with high CD46 expression who are most likely to benefit from the treatment with FG-3246. The radiopharmaceutical biomarker will be part of our Phase 2 dose optimization monotherapy trial sponsored by FibroGen. This could potentially enhance screening, patient selection, and enrichment ensuring the proper selection of patients for the target to receive therapy and derive meaningful clinical benefits.

Lastly, we are planning a meeting with the FDA in the third quarter to discuss the details of the FG-3246 development program, contingent upon reaching agreement with the FDA on the trial design, we anticipate the initiation of a Phase 2/3 dose optimization and registration-enabling study in metastatic castration-resistant prostate cancer in the fourth quarter of 2024. Finally, moving to Slide 25. We want to summarize the unique opportunity that FG-3246 presents. FG-3246 presents a novel mechanism of action and a first-in-class opportunity, pairing an antibody against a novel target with a validated chemotherapy payload. FG-3246, they offer treatment beyond prostate cancer with potential applications in multiple lines of metastatic castration-resistant prostate cancer in combination with enzalutamide and other solid tumors such as colorectal cancer.

FG-3246 could potentially represent a paradigm shift in oncology offering not only a novel mechanism of action, but also promising efficacy, safety, and potential across various cancer types. We look forward to updating you on FG-3246 as the studies progress. I will now turn the call over to Juan to discuss the company’s financials. Juan?

Juan Graham: Thank you, Deyaa and again, welcome to FibroGen. I will begin my remarks with a revenue summary for the first quarter of 2024, subsequently providing financial performance details on our China business for the quarter along with 2024 guidance for our China operations. And finally, I will wrap-up with OpEx results and our cash outlook. For the first quarter of 2024, total revenue was $55.9 million compared to $36.2 million for the same period in 2023, an increase of 55% year-over-year. The total revenue increase was driven by net product revenue in China and one-time drug product revenue recognized due to the termination of the U.S. rest of the world AstraZeneca agreement. I will now provide further detail on revenue.

In the first quarter of 2024, we recorded $30.5 million of net product revenue for roxadustat sales in China compared to $24.2 million in the first quarter of 2023, representing an increase of 26% year-over-year. This increase was driven by a volume increase of 39% versus last year. Roxadustat’s performance in China continues to deliver strong results, and we are delighted by this continued growth. In Q1 2024, we recorded $0.9 million in development revenue compared to $3.9 million during the first quarter of 2023. Now, that we have terminated the AstraZeneca U.S. rest of world agreement, we expect our development revenue to decline in 2024 versus last year. As we move forward, we expect quarterly development revenue to be below $0.5 million for the remainder of the year.

In Q1 2024, we recorded $24.5 million of drug product revenue compared to $2.1 million during the first quarter of 2023. As a result of the recent termination of our collaboration with AstraZeneca in the U.S. rest of the world territories, we recorded one-time drug product revenue of $25.7 million, partially offset by a reduction of $1.2 million for roxadustat bulk direct products sold to our partner, Astellas, primarily driven by the weakening of the Japanese yen in the quarter. I will now move to provide further detail on our financial performance in China. As previously mentioned by Thane, total roxadustat net sales from the joint distribution entity or JDE, owned by AstraZeneca and FibroGen was $79.4 million this quarter compared to $64.1 million in the first quarter of 2023, an increase of 24% year-over-year, highlighting the continued strong performance of the EVRENZO franchise in China while also achieving our highest value share since launch at 47% of the category.

From total roxadustat net sales in China, FibroGen’s net transfer price from the sales — from sales to the JDE was $24.5 million for the first quarter compared to $19.3 million in the first quarter of 2023, an increase of 27% year-over-year. Net transfer price is the best reflection of FibroGen’s portion of the cash received from roxadustat in China. During this quarter, we also released $2.6 million from deferred revenue. As a result, FibroGen recorded $27.1 million of net revenue for the quarter from roxadustat sales to the JDE and $3.4 million of direct to distributor sales from FibroGen China, totaling $30.5 million on a U.S. GAAP basis. Our revenue growth highlights the continued robustness in execution and physician and patient adoption of roxadustat in China.

For full year 2024, we are reiterating our forecast for FibroGen China product revenue to be between $120 million to $135 million on a U.S. GAAP basis, which assumes an underlying forecast of roxadustat net sales in China to range from $300 million to $340 million. Now, moving down the income statement. Operating costs and expenses for the first quarter of 2024 were $87 million compared to $112.3 million for the first quarter of 2023, a decrease of $25.3 million or 23% year-over-year. Cost of debt sold for the first quarter of 2024 was $25.8 million, which includes $21.1 million related to the AstraZeneca U.S. rest of the world revenue recognized as part of the termination agreement mentioned earlier. Excluding such one-time charge, our operating expenses came in below our total operating expense guidance, including cost of goods sold of $70 million to $80 million for the quarter.

R&D expenses for the first quarter of 2024 were $38.4 million compared to $74.5 million in the first quarter of 2023, a decrease of 48% and or $36.1 million year-over-year, primarily reflecting reductions in pamrevlumab clinical trial spend as well as other R&D infrastructure. Of our $38.4 million in R&D expenses, approximately 56% was related to pamrevlumab, 37% allocated to support our early-stage pipeline, and the remaining 7% directed towards roxadustat development activities. SG&A expenses for the first quarter of 2024 were $22.8 million compared to $34.3 million in the first quarter of 2023, a decrease of 33.5% and or $11.5 million year-over-year, primarily driven by the company’s cost reduction efforts, resulting in a leaner SG&A infrastructure.

During the first quarter of 2024, we recorded a net loss of $32.9 million or $0.33 net loss for both basic and diluted share as compared to a net loss of $76.7 million or $0.81 per basic and diluted share for the first quarter of 2023. We reiterate our forecast of total operating expenses, including cost of goods sold to be between $70 million to $80 million for the second quarter of 2024. Our operating expenses in the second half of 2024 will be determined by the outcomes of our two pivotal clinical trial readouts for pamrevlumab in pancreatic cancer. Now, shifting towards cash. As of March 31st, we recorded $214.7 million in cash, cash equivalents, investments, and accounts receivable. With the reduction in operating expenses and maintaining a disciplined capital allocation approach, as previously communicated, 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 Thane.

Thane Wettig: Thank you, Deyaa and Juan, for your clinical and financial updates. In closing, we are excited about our near-term prospects and the potential value they provide to stakeholders. To recap, we expect top line data from the following two pamrevlumab pivotal studies. Our Phase 2/3 pancreatic cancer action network Precision Promise trial in metastatic pancreatic cancer in mid-2024 and the LAPIS Phase 3 trial in locally-advanced pancreatic cancer in the third quarter of 2024. Roxadustat continues to perform very well in China where we expect an approval decision of our sNDA for chemotherapy-induced anemia indication in the second half of this year, and our partner, Astellas, continues with the commercialization of roxadustat in Europe, Japan, and other markets.

Additionally, we are excited to regain rights for roxadustat for U.S. ROW territories from AZ and have been exploring potential partnering opportunities in anemia in patients with lower-risk MDS. With our early-stage pipeline, we recently reported compelling top line data from the Phase 1 monotherapy study of FG-3246 in metastatic castration-resistant prostate cancer and will publish the totality of the Phase 1 data in an upcoming manuscript. We will be presenting top line data from the dose escalation Phase 1b study of FG-3246 in combination with enzalutamide in mCRPC at the 2024 American Society of Clinical Oncology Annual Meeting in June. We anticipate initiation of our Phase 2 monotherapy dose optimization study of FG-3246 and in mCRPC in the second half of 2024.

We anticipate FDA clearance of our IND for FG-3165, our anti-galanin9 antibody in the near-term. And we anticipate filing an IND for FG-3175, our anti-CCR8 antibody in 2025. Additionally, we have a strong balance sheet and expect our current cash position, as Juan said, to fund operations into 2026. In summary, we will continue to execute against our strategic priorities as we strive to attain a valuation that we believe is more reflective of our current and future roxadustat revenue stream, near-term pamrevlumab readouts in pancreatic cancer, our oncology pipeline, and our strong balance sheet. I would like to thank all the employees of FibroGen for their continued hard work and resilience over the last few months. I would now like to turn the call over to the operator for Q&A.

Operator: Thank you. [Operator Instructions] Our first question comes from Andy Hsieh with William Blair. You may proceed.

Andy Hsieh: Great. Thanks for taking our questions and congratulations on the progress. So, two quick ones and I have a follow-up. I’m pretty intrigued by your comment about slowing of the event rates as you wrap-up the LAPIS study. Could you educate us on why that is in terms of factors kind of leading to the third quarter readout? And jumping back to roxadustat, there is a nice uptick, as you mentioned, to 47%, I guess, market value share. Can you also explain why that is? What’s driving the uptick in uptake?

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Q&A Session

Thane Wettig: Yes. Hey Andy, thanks for your questions. On the LAPIS and the slowing event rate, it’s really just math. We enrolled 284 patients. There are a certain number of OS events that need to be accrued to hit the prespecified power that we had articulated in our SAP and so as you accrue OS events, there are a fewer number of patients to then accrue the remaining OS events. And that’s where we are with that last part of the trial, where there are, thankfully, a number of patients who are still alive, but fewer patients to accrue these additional OS events. And this is just a common occurrence in an event-driven oncology trial or any event-driven trial of this type. And so like we said, in our prepared remarks, we’re looking every week at the number of OS events.

We’re getting very close to that prespecified number, and we’ll continue to keep you updated on once we receive — once we reach that the number of OS events that reach — then the prespecified power that will allow us to then to lock the database, perform the analysis, and then release top line results. And as we said in the remarks that we expect that to be sometime in Q3. I would anticipate it to be earlier in Q3, but we wanted to say Q3 as opposed to Q2, which was the update last time just to reflect the most recent trend of event rates. Does that make sense?

Andy Hsieh: Yes, that’s very helpful. Thank you.

Thane Wettig: Okay. And then with respect to the 47% value share for roxadustat in addition, obviously, to the continued excellent execution by the AZ and Bina — China FibroGen team. I’ll turn it over to Chris for some additional comments.

Chris Chung: Hi Andy, the local team is not really seeing any fundamental changes in market forces for this optimistic outlook. There are two factors that we can look up. One is all the group in NRDL price cuts that we experienced about 7%. So, if you believe in price sensitivity, that might have helped a little bit. The second factor is the introduction of a new HIF entrant is the [indiscernible], which we think became a little bit of a second push for the class. And because of that, we have an installed base. We have a very, very strong sales force. We think it actually helped us a little bit. But overall, we remain optimistic about the market outlook, but we do not believe this reflects any fundamental change in the market outlook in force.

Thane Wettig: And I think, Andy, once you establish a momentum like roxadustat has done in China, and you create this installed base of prescribers, this installed base of patients and it gets on this momentum role like it’s been on really since it launched. And the reason it’s performing like that is because of the positive experience that is — it provides for patients and clinicians. And so it’s just almost a self-perpetuating set of momentum that we expect to continue to see just because the drug performs extremely well at the patient level.

Andy Hsieh: Got it. Got it. That’s helpful. Thank you. Jumping to 3246, I guess looking across the paradigm for prostate cancer. Most of the options out there is monotherapy, I guess, with the exception of PARPs. As you kind of think about the double — the enzalutamide plus 3246 combination in your discussions with the KOLs, what are they looking for? Just to kind of set up our expectations heading into the ASCO readout. Is there like a bar for success in terms of PSA50 reduction, PFS or response rate based on RECIST?

Thane Wettig: Yes, it’s a great question, Andy. I’m going to turn it over to Deyaa for his thoughts.

Deyaa Adib: So, let me answer. Thank you for the question. First of all, it’s a dose escalation study in combination with enzalutamide and it will include patient populations from the first and second-line setting prior to receiving docetaxel in the mCRPC paradigm. So, having said that, we are looking here to prove the hypothesis that patients who have been previously exposed to second-generation ARSIs are truly overexpressing CD46. So, this is what the objective of the trial is. Secondly, there has not been yet a threshold or a benchmark associated with the results because it’s still a Phase 1 escalation and will be followed by cohort expansion, so based on what we see in terms of patient population first versus second line setting clinical benefit, we will be able to decide and discuss with KOLs, what would be a clinically meaningful benefit, not just that, also what will be the threshold for a radiographic progression-free survival because this will be really the end point upon which we can see start thinking about a registration path when we combine with enzalutamide.

Regarding PSA50, our objective response rate, as you are aware, PSA50 is a pharmacodynamic biomarker, it’s an indication of clinical activity, but it’s not a clear indication for how long patients will have disease-free survival or progression-free survival. In terms of objective response rates, I also would like to remind you, it will pertain only to patients who have measurable disease at baseline. So, we may see signals there, but remember that about 40% of patients with prostate cancer will show up with measurable disease and 60% will show up with only bone lesions in the metastatic setting.

Andy Hsieh: Got it. That’s helpful context. Thank you.

Operator: Thank you. Next question comes from Jason Gerberry with Bank of America. You may proceed.

Unidentified Analyst: Hi, good afternoon. This is Dina on for Jason. Congrats on the progress this quarter and thank you for taking our questions. Just one from us on FG-3246, could you just explain the reason for the Phase 2 dose optimization study that you’re planning on initiating in the second half of this year? Like is there more dose optimization necessary to supplement the Phase 1 data because it sounds like you’re meeting with the FDA ahead of kind of launching this Phase 2 trial. So, just curious how it will inform your Phase 2/3 registrational trial? Thank you.

Thane Wettig: Yes, it’s a really good question, Dina. Thanks for that. Before I hand it over to Deyaa, I’ll stress that we’ve spent a lot of time thinking about what is the optimal design that not only will produce the clinical data that we believe we’ll need to see, but also will be done — we’ll do so in an efficient way, given how competitive the space is. And I think it’s a testament to Deyaa and the experience that he brings not only in terms of overall clinical development experience, but also in the prostate cancer space. So, let me turn it over to him and have him kind of walk you through our thinking. And again, this is pending alignment with the FDA once we do meet with them, but he’ll provide a little bit more guidance in terms of why we’re thinking the way we’re thinking.

Deyaa Adib: Thank you, Thane. So, to answer your question, the purpose of having this Phase 2 component of the Phase 2/3 design is to further optimize the dose that will be later on called the recommended Phase 3 dose. And this is essentially, if you go backwards in 2023, the FDA has initiated Project Optimus and it grows across the board in drug development to ensure that sponsors have identified the right dose moving forward that will offer patients maximum clinical benefit with the lowest risk in terms of adverse events. So, we are essentially complying with the FDA requirements to optimize the dose before we start the Phase 3 registration trial. So, this is our thinking about dose optimization.

Thane Wettig: And then one final comment, Dina, in addition to what Deyaa articulated, is we also plan on, again, pending concordance with the FDA, plan on treating all the patients in this dose optimization phase with the PET46 biomarker as well and then doing a post-hoc analysis to assess the correlation of CD46 expression and response to the ADC. And so that’s also an important component of the dose optimization part of the ongoing design.

Unidentified Analyst: Got it. Thank you so much.

Operator: Thank you. Our next question comes from Paul Choi with Goldman Sachs. You may proceed.

Paul Choi: Hi, thank you. Good afternoon and thank you for taking our questions. Just to follow-up on the prior question with regard to the Phase 2 monotherapy dose optimization. Your timeline calls for data potentially in 2026. I’m just curious if you — if there’s anything in terms of your insight from the monotherapy portion, particularly at the higher doses that might be able to accelerate that timeline for the Phase 2 dose optimization? My second question is just with regard to EVRENZO in China. You’ve maintained your updated timing for the CIA indication for second half of this year. But just to confirm your expectation for inclusion in the NRDL would be for no earlier than calendar 2026? If you could confirm that, that would be great. Thank you.

Thane Wettig: Thanks Paul. Regarding the kind of the 2026 timeline for FG-3246, now that we’ve taken a step back and that we’ve done a lot more thinking around this proposed Phase 2/3 design that we will discuss with the FDA, it’s probably a bit premature to talk about when we would see the totality of that dose optimization data set. Our goal would be to get this trial started as quickly as we can after discussion with the FDA and alignment with them and then begin execution. We think it will be a — it has the potential to be a rapidly enrolling trial. It’s not a huge cohort of patients in this dose optimization phase. And so our plan would be to get to execution as quickly as we possibly can. Deyaa, would you add anything to that?

Deyaa Adib: No. To your point, Thane, this will be a data-driven study and it will inform us in terms of not only dose optimization or the recommended Phase 3 dose, but also enabling us to select the patients who will make the best clinical benefit out of this ADC going into the Phase 3 component of the trial.

Thane Wettig: Great. And then Paul, I’ll ask Chris to comment on the updated CIA timing guidance.

Chris Chung: So, Paul, we updated the timing of the projected approval timeframe based on the current progress at the CD of the review of the technical filing. We are projecting a second half 2024. Although right now, we’re not in a position to comment on the regulatory review process. But to be conservative, we moved it to second half. To answer your specific question, would that mean that we would not have reimbursement for the indication of CIA until January 1st, 2026? The answer is yes. In order for us to qualify for NRDL starting January 1st, 2025, we would need to be approved by 2024 June 30th.

Paul Choi: Okay, great. Thank you.

Thane Wettig: Yes. And so Paul, we do believe that there’s still a chance to hit the approval timing that would allow us to have NRDL inclusion for the CIA indication in 2025, right? And so the team continues to work very closely with the CDE on the review. It’s just premature at this point in time to be able to handicap whether or not we’ll be able to achieve that. But please know that it’s a really important goal for us.

Paul Choi: Okay, great. Thanks for clarifying that. Thank you.

Operator: Thank you. I would now like to turn the call back over to Thane Wettig for any closing remarks.

Thane Wettig: Yes, guys, we appreciate your participation in today’s investor call and your continued interest in FibroGen and thank you for the questions. Enjoy the rest of your day.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.