FibroGen, Inc. (NASDAQ:FGEN) Q2 2023 Earnings Call Transcript

FibroGen, Inc. (NASDAQ:FGEN) Q2 2023 Earnings Call Transcript August 7, 2023

Operator: Good day, and thank you for standing by. Welcome to the FibroGen’s Second Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. After the speaker’s 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. Please go ahead.

David DeLucia: Good afternoon, everyone. Thank you for joining today to discuss our second quarter 2023 financial and business results. I am David DeLucia, Vice President of Corporate FP&A and Investor Relations at FibroGen. Joining me on today’s call are Thane Wettig, 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 Conterno, 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 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.fibrorgen.com. With that, I would like to turn the call over to Enrique Conterno.

Enrique Conterno: Thank you, Dave, and good afternoon, everyone. First, I would like to take a moment to thank my FibroGen colleagues. Thank you for your commitments and dedication during my tenure as CEO. It is important for me to highlight that despite the setback we have recently faced, I remain enthusiastatic about FibroGen’s opportunities given our remaining near-term readouts from our pamrevlumab trials with duchenne muscular dystrophy and pancreatic cancer, our thriving roxadustat business in China and our exciting early-stage pipeline. Furthermore, we have a strong cash position that allows us to see through the evolution of our pipeline, as well as our talented team across the board. I am proud of the quality of our leadership team and delighted that Thane will be leading FibroGen as Interim CEO.

I have known Thaane for over 25 years and have worked closely with him at FibroGen during his three years as Chief commercial Officer, and at Lily for about 10 years in his capacity as Chief Marketing Officer for Lily Diabetes where he launched several blockbuster medicines during a period of unprecedented growth of Lily’s diabetes business. During our times working together, I have appreciated his excellent judgments keen business instincts and ability to lead organizations effectively. So, without further delay, I’d like to pass the call to Mr. Thane Wettig.

Thane Wettig: Thank You, Enrique, for all that you have done for FibroGen over the past three years. You have built an outstanding leadership team, created the performance-oriented culture and built our early-stage pipeline and personally, I’ve had the benefit of working with you for the better part of the past 14 years at Lily 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 pamrevlumab and roxadustat 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 3, FibroGen has four key strategic pillars that we believe offers significant value today. First is pamrevlumab 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 roxadustat. Roxadustat 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 FibroGen-3246 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 FibroGen-3246, 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-1 results, we have implemented a company-wide cost reduction plan that extends our cash runway into 2026, which provides the company a bridge to achieve numerous value inflection points across our portfolio.

We have taken the necessary steps to improve our strong financial position and we 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 of 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 an anti-CTG, a human monoclonal antibody in clinical development for the treatment of ambulatory duchenne muscular dystrophy or DMD, locally advanced unresectable pancreatic cancer or LAPC and metastatic pancreatic cancer.

Pamrevlumab has been studied in over 1,000 patients and has demonstrated a favorable adverse event and safety profile, including in patients, who have been dosed for up to seven years. On Slide 6, I would like to provide a recap of recently announced pamrevlumab results, as well as review our upcoming milestones. In June, we reported top-line data from our Phase 3 LELANTOS-1 study, a placebo-controlled trial with pamrevlumab 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. FibroGen would like to thank the patients, caregivers and clinical trial investigators for their dedication to participating in these important studies, which contribute towards the understanding of this devastating disease.

In June, we announced top line data from our ZEPHYRUS-1 study in IPF. The study compared treatment with pamrevlumab to placebo and did not meet the primary endpoint of change from baseline, enforced vital capacity or FVC at week-48, with a P-value of 0.29, the mean decline in FVC from baseline to week, 48 was 260 ml in the pamrevlumab arm, compared to 330 ml in the placebo arm correlating to a placebo-corrected difference of 70 ml. The secondary endpoint of time to disease progression which is a composite of FVC percent predicted decline of greater than or equal to 10% or death was also not met with a hazard ratio of 0.78. Based on these results we discontinued ZEPHYRUS-2, our second Phase 3 IPF clinical trial. We would like to thank the patients in clinical trial investigators for their dedication and participation in both of these IPF trials.

Looking ahead, we anticipate upcoming results from three pamrevlumab trials. We expect top-line data from LeLantos 2 and ambulatory DMD later this quarter. We expect results from LAPIS in LAPC in the first quarter of 2024 and we expect results from the Pancreatic Cancer Action Network’s precision promise adaptive trial platform, evaluating pamrevlumab in both first-line and second-line settings in combination with standard-of-care for patients with metastatic pancreatic cancer in the first half of 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 five thousand 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 for 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 related to respiratory and cardiac muscle. On Slide 8, we note that LeLantos 2 enrolled 73 ambulatory DMD patients of 6 to 12 years of age. The primary endpoint is the North Star ambulatory assessment, a major 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 that LeLantos 2 Phase 3 study can lead to a regulatory filing and ultimately provide a desperately needed therapy for these patients.

On Slide 9, we provide a perspective of the commercial opportunity for pamrevlumab 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 in symptoms or disease progression. There is a clear need for DMD therapies that can attenuate disease progression by targeting the downstream pathological changes to improve muscle function. We are hopeful that the anti fibrotic mechanism of pamrevlumab maybe a treatment that can help these patients and their families and represents a significant commercial opportunity for pamrevlumab. Moving on to pancreatic cancer on Slide 11.

Pancreatic cancer represents one of the largest unmet needs in oncology with an annual incidence of nearly half a million patients across the major regions combined and an overall 5-year disease-free survival rate of approximately 12%. On Slide 12, we would like to provide a brief overview as to why we believe an Anti CTGF antibody like pamrevlumab would provide benefits to patients diagnosed with pancreatic cancer. Based on preclinical data, CTG up plays an important role in the growth and progression of pancreas tumors. Mouse tumor studies have shown that pamrevlumab 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 pamrevlumab in both LAPC and metastatic patients. These patients represent almost 90% of all diagnosed pancreatic cancer patients today giving pamrevlumab a potential opportunity to treat a vast majority of patients across this devastating disease. On Slide 14, we provide an overview of the Phase 3, LAPIS trial, a double-blind, placebo-controlled trial in 284 patients with locally advanced unresectable pancreatic cancer, comparing pamrevlumab to placebo in combination with standard-of-care chemotherapy. 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 Promise 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 endpoints. The pamrevlumab combination therapy is offered to patients as either a first or second line treatment. Pamrevlumab 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 pamrevlumab 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 multibillion-dollar commercial opportunity for pamrevlumab if it can demonstrate a significant improvement in overall survival in either locally advanced or metastatic patients. Moving onto roxadustat on Slide 18. I would like to provide a recap of recently announced roxadustat results, as well as review our upcoming milestones. In May, we announced top-line data from our Matterhorn phase 3 clinical study of roxadustat for treatment of anemia in patients with transfusion-dependent lower risk myelodysplastic syndrome. This study did not meet its primary efficacy endpoints. Also in May, we announced positive top line data from our Phase 3 clinical study of roxadustat for the treatment of anemia in patients receiving concurrent chemotherapy treatment for non-myeloid malignancies in China.

Roxadustat demonstrated non-inferiority, compared to recombinant erythropoietin alpha on the primary endpoint of change in hemoglobin level from baseline, to the average level during weeks nine through 12. I am pleased to announce that we have filed a supplemental new drug application with the China Health Authority for roxadustat in patients with chemotherapy-induced anemia and expect approval in mid 2024. We believe this indication could represent a meaningful incremental net revenue opportunity providing roxadustat a potential pathway to achieving over $500 million in annual net sales in China. Moving now to Slide 19, roxadustat for anemia of chronic kidney disease continues to perform extremely well in China. Second quarter total roxadustat 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 roxadustat net product revenue in China was $23.9 million for the second quarter on a US 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 roxadustat in Europe. In addition to the continued outstanding performance of roxadustat in China, the roxadustat had 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. Roxadustat is the only HIF-PHI indicated in the EU for the treatment of anemia of CKD in both non-dialysis and dialysis patients.

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And with GSK’s recent decision to withdraw the MAA for Daprodustat, combined with market exclusivity for roxadustat beyond 2030, roxadustat is well positioned to continue its growth throughout this decade. Moving to Slide 22 and our early-stage oncology pipeline. On May 8th we announced that FibroGen entered into an exclusive license with Fortis Therapeutics for FibroGen-3246, 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 FibroGen-3246 and an associated biomarker PET-46. We have the option to acquire Fortis during the four-year evaluation period for $80 million.

We anticipate the initiation of a Phase 2 trial in metastatic castrateion-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 Juan to cover our early-stage pipeline.

John Hunter: Thank you, Thane. Moving to Slide 23 our recently in-licensed clinical program FibroGen-3246 is an antibody drug conjugate for ADC comprised of an anti CD46, antibody YS5 linked to the anti-mitotic agent MMAE, which is a clinically and commercially validated ADC warhead. The CD46 episode targeted by FibroGen-3246 has 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, FibroGen-3246 has demonstrated monotherapy clinical efficacy in multiple myeloma at 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 we’re at PSA 50 response rate of 45% was observed.

The patients in this Phase 1 study were heavily pretreated with a median of five prior therapies. The safety profile for FibroGen-3246 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 FibroGen-3246. In addition to the Phase 1 dose escalation and expansion study referenced on the previous slide, there is also a combination study with enzalutamide that is currently being run at UCSF. 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 FibroGen-3246.

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. The Pet Imaging Agent is comprised of the CD46 targeting antibody 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 FibroGen-3246. This biomarker will be part of a Phase 2 study run by FibroGen in which up to 100 patients will be enrolled following a PET scan with PET 46. Patients will not be stratified at the start of the study but the correlation between PET positivity and FibroGen-3246 efficacy will be assessed at the end of the study with the potential to use the PET biomarker to stratify patients in a pivotal Phase 3 trial.

We anticipate the initiation of the Phase 2 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 programs. The first program I’d like to discuss is FibroGen-3165 an anti-galectin-9 antibody antibodies developed to reverse immune resistance in solid tumors. Galectin-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 FG-3165 has been shown pre-clinically to reverse multiple GAL9 mediated mechanisms of immune suppression including the prevention of GAL9 mediated effector T Celli mitosis and TIM 3 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 tumor microenvironment. FG-3175 is an anti CCR8 antibody designed to selectively disrupt and defeat Tregs in the tumor microenvironment without affecting peripheral T regulatory cells. Given the highly competitive clinical landscape for antibodies targeting CCR8, we have developed optimized versions of our previously FG-3163 during its development. While FG-3163 have been shown to have acceptable potency and monotherapy efficacy in a preclinical model of colorectal cancer, we decided to advance FG-3175 as our clinical candidate as we feel it has marked competitive advantage based on relative and projected clinical dosing.

Given is highly specific targeting of Tregs in the tumor microenvironment we FG-3175 is having broad therapeutic potential in solid tumors. I will now turn the call over to Juan to discuss the company’s financials. Juan?

Juan Graham: 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 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 ball drug product or active pharmaceutical ingredient sold to Astellas. 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 cornea program with Eluminex. Given the strong performance around business in China, I will provide further context on our financials and performance. As previously mentioned by Thane, total roxadustat net 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 EVRENZO franchise in China, achieving our highest market share since launch of 39% of the ISA and his 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% percent year-over-year. Net transfers price is the best reflection of FibroGen’s portion of the cash received by roxadustat in China. During this quarter, we deferred $3.3 million in revenue due to the change in our future estimates as per US GAAP, primarily driven by unfavorable renminbi a currency impact amongst other estimates. As we have communicated in the past, the deferred revenue balance in FibroGen China fluctuates based on management estimates for future revenue. As a result, FibroGen recorded $20.5 million in net revenue for the quarter from roxadustat sales through the JDE and $3.4 million of direct-to-distributor sales from FibroGen China, totaling $23.9 nine million on a US GAAP basis.

Now moving down the income statement, our operating costs and expenses for the second quarter of 2023 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 us 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 in-process 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 pamrevlumab development and CMC activities, 29% allocated to support our early-stage pipeline and the remaining 12% directed towards roxadustat development activities in the United States and China. Given the outcome of the IPF trial ZEPHYRUS-1with subsequent impact on the termination of ZEPHYRUS-2, we will see a significant reduction in R&D expenses related to pamrevlumab 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 $0.90 net loss per both basic and diluted share as compared to a net loss of $72.6 million or $0.78 per basic and diluted share for the second quarter of 2022. The impact of the abovementioned one-time charge of $24.6 million related to the non-cash asset acquisition of Fortis represents approximately $0.25 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 FibroGen’s US workforce of approximately 32% or 104 employees. We estimate that the related non-recurring restructuring payments to be in the range of $13 million to $15 million.

The majority of which will be incurred in the third quarter of 2023. In addition to headcount-related reductions, we are also expecting reductions in other expenses associated with a recently announced termination of our IPF trials and general reduction in infrastructure costs. On Slide 29, I lay out our expected future GAAP savings associated with the reductions I just mentioned. In the first half of 2023, our average GAAP 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 million to $120 million in total, annualized GAAP expenses or $25 million 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 we’d like to turn the call back over to Thane.

Thane Wettig: Thanks, Juan. In closing, we are committed to advancing pamrevlumab 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 3, LeLantos 2, and ambulatory DMD this quarter; phase 3, LAPIS in LAPC in the first quarter of 2024; Phase 2, 3 Pancreatic Cancer Action Network or Pan Can’s 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 roxadustat in Europe and Japan. In our early-stage pipeline, we anticipate filing an IND for FG-3165, the anti-GAL9 antibody in the first quarter of 2024, filing an IND for FG-3175 our anti-CCR8 antibody in the second half of 2024 and the initiation of a phase 2 trial of FG-3246 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.

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Michael Yee with Jefferies. Please proceed with your question.

Unidentified Analyst: Hi. This is [Indiscernible] on the line for Michael Yee. Thanks for taking my question. I think I have two questions if I may? First for roxadustat, could you help us understand the patent and exclusivity situation for roxa in China? And what is your base case for the timing of a potential generic entry? And what are the ways to extend the exclusivity? And then for 446, why are you excited about this ADC program? And I also noticed you have a Phase 1, well, there was a Phase 1 in multiple myeloma, so are you also pursuing the opportunity in this indication? Or are there any other indications that you are thinking about? Thank you.

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

Chris Chung : Thank you. Thank you, Thane. Can you hear me?

Thane Wettig: Yes.

Chris Chung : Okay. Thank you for the question. We confirm that the Health Authority in China has accepted a number of generic applications for roxadustat of course. Just to clarify, an acceptance is an administrative acceptance of a filing. It just means that technical review. It’s about to commence. It does not represents a 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 generics of roxadustat to be marketed until at least after that expiry date. Now, of course the composition matter patent represents only one of many patents that we have in our patent portfolio, all of which we intend to defend vigorously in China. Also, a point that I should point out, unlike in the U.S. there is life for a originator brand after patent expiry.

In some cases, the volume of the originator 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 in market share increase of roxadustat in PKD. 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 to get it. Thane, back to you.

Thane Wettig: 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?

John Hunter: Sure, Thanks, Thane. I think one of the biggest points of excitement was really seeing monotherapy, efficacy in a very hard to treat patient population. As I mentioned, these patients were heavily pretreated. And, we saw partial response rate of about 20%, a very good PSA 50 response rate. So that was quite exciting relative to other assets that we are looking at. But also, 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 into CD46 expression, we saw that it was quite restricted to tumors for the most part with only a couple of normal tissue showing any considerable expression. So, we had an entire package that we felt looks very good and we were very excited to bring it in.