FibroGen Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 6, 2023

There are 9 speakers on the call.

Operator

Hello,

Speaker 1

and welcome to the FibroGen's Third Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. Please be advised that today's conference is being recorded. It is now my pleasure to introduce Vice President of Investor Relations, David DeLucia.

Speaker 2

Good afternoon, everyone. Thank you for joining today to discuss our Q3 2023 Financial and Business Results. I'm David Della Chia, Vice President of Corporate FP and A and Investor Relations at FibroGen. Joining me on today's call are Thane Wettig, our Chief Executive Officer Juan Graham, our Chief Financial Officer Doctor. John Hunter, our Chief Scientific Officer and Chris Chung, our Senior Vice President of China Operations.

Speaker 2

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 ks and Form 10 Q.

Speaker 2

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 would like to turn the call over to Thane Wettig.

Speaker 3

Thanks, Dave, and good afternoon, everyone. Welcome to our Q3 2023 earnings call. I would like to begin today's call by acknowledging that November is Global Pancreatic Cancer Awareness Month, a time when we reflect on the importance of raising awareness about pancreatic cancer and the need for continued research, support and more effective therapies for this devastating disease. On today's call, I will focus our stakeholders on the 4 strategic pillars that will guide the company into the future as well as provide an update on our pamrevlumab and roxadustat assets. Doctor.

Speaker 3

John Hunter, our Chief Scientific Officer, We'll then review our exciting early stage oncology pipeline. Last, Juan Graham, our CFO, will review the financials, after which we will open the call for your questions. Starting on Slide 3, FibroGen has 4 key strategic pillars that we believe offer significant value today. First is pemrevlumab with upcoming pivotal trial readouts for 2 pancreatic cancer indications through the first half of twenty twenty four, one readout in locally advanced disease and the other in metastatic disease. Pancreatic cancer represents a significant commercial opportunity with substantial unmet need And pamrevlumab has demonstrated effect in both preclinical and early clinical studies, which we will detail in a moment.

Speaker 3

2nd 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. 3rd is our early stage oncology pipeline. We are very excited about the potential of these programs. FG-three thousand two hundred and forty six is a 1st in class potent antibody drug conjugate or ADC for the treatment of metastatic castration resistant prostate cancer.

Speaker 3

This opportunity also includes the development of an associated PET biomarker diagnostic. In addition to FG-three thousand two hundred and forty six, we are also undertaking IND enabling activities on 2 innovative oncology antibodies with the intention of filing INDs and commencing clinical activities in 2024. 4th is our strong cash position. In the Q3, we successfully executed on implementation of our company wide cost reduction plan, now resulting in an expected reduction of total annualized expenses of $120,000,000 which provides the company a bridge to achieve a number of key milestones across our portfolio. We have taken necessary steps to improve our financial position and will continue to focus on financial discipline.

Speaker 3

In summary, we believe there are few biotechnology companies of our market cap that have such a compelling mix of commercial, late stage and early stage assets. When you combine our assets, our strong balance sheet and the quality of our talented colleagues at FibroGen, we believe that we have a strong foundation to drive significant shareholder value creation today and into the future. Moving to Slide 5, pamrevlumab is a novel anti CTGF human monoclonal antibody in clinical development For the treatment of locally advanced unresectable pancreatic cancer or LAPC and metastatic pancreatic cancer, pamrevlumab has been studied in over 1,000 patients across various conditions, has demonstrated dose and exposure related responses in an early stage pancreatic cancer trial as well as a favorable adverse event and safety profile. On Slide 6 and before we dive into the pancreatic cancer data and opportunity, I would like to provide a recap of recently announced pemrevimab results. In August, we reported top line data from our Phase 3 LELANTOS II study, a placebo controlled trial of pamrevlumab for the treatment of ambulatory patients with DMD on background corticosteroids.

Speaker 3

The study did not meet the primary endpoint of change in the NorthStar Ambulatory Assessment total score from baseline to week 52. FibroGen would like to thank the patients, caregivers and clinical trial investigators for their dedication to participating in this important study, which contributes toward the understanding of this devastating disease. Looking ahead, We anticipate upcoming results from 2 pamrevlumab trials in pancreatic cancer. We expect results from the LAPIS Phase 3 in locally advanced disease in the Q1 of 2024 and we expect results from the pancreatic cancer Action Networks Precision Promise registrational adaptive platform trial evaluating pamrevlumab in both first line and second line metastatic pancreatic cancer in the first half of twenty twenty four. I would now like to discuss the pamrevlumab opportunity in pancreatic cancer in more detail starting on Slide 8.

Speaker 3

Pancreatic cancer represents one of the largest unmet needs in oncology with an annual instance of nearly 500,000 patients across the major regions combined. This includes approximately 60,000 PDEQ patients in the United States. There is an overall 5 year disease free survival rate of only 12.5%, and for metastatic cancer rates are as low as 3%. On Slide 9, we provide an overview as to why we believe pamrevlumab can provide benefits to patients diagnosed with pancreatic cancer. Based on preclinical data, CTGF plays an important role in the growth and progression of pancreatic tumors.

Speaker 3

Mouse tumor studies have shown that pamrevlumab 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. Given the upcoming Phase 3 readouts, We would like to remind investors of what we believe are compelling preclinical and early clinical data that informed our decision to move pamrevlumab forward in pancreatic cancer. On Slide 10, pamrevlumab in combination with gemcitabine in a KPC mouse model slowed tumor growth, decreased metastatic burden, inhibited formation of acetates or buildup of fluid in the abdomen and substantially approved survival. On Slide 11, the same mouse model also provided a mechanistic rationale for pamrevlumab's beneficial effect on animal survival. Pamrevlumab as a monotherapy and in combination with gemcitabine made tumor cells more susceptible to chemotherapy induced cell death or apoptosis through quantitative reduction in XIAP, a protein involved in apoptotic resistance and promotion of cell survival.

Speaker 3

Moving to Slide 12, we would like to reference the data from our open label dose escalation Phase III trial in patients with locally advanced Stage III or metastatic Stage IV pancreatic cancer. Most of these 75 patients were in fact metastatic and only 9 had locally advanced disease. Pamrevorimab was valued in combination with gemcitabine and erlotinib as first line therapy. An important observation in the study was a 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.

Speaker 3

Most notable result in this study was that 1 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 in the higher dose cohort patients plasma drug levels above the 150 micrograms per ml threshold included improved median overall survival and improved median progression free survival. Moving to Slide 13, pivotal trials are being conducted with pamrevlumab in both locally advanced and metastatic patients. These patients represent almost 90% of all diagnosed pancreatic cancer patients today, giving pabrevlumab a potential opportunity to treat a vast majority of patients across this devastating disease. On Slide 14, 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 pemrevlumab to placebo in combination with standard of care chemotherapy.

Speaker 3

The primary endpoint is overall survival and we expect top line data from this study in the Q1 of next year. On Slide 15 is an overview of the pancreatic cancer Action Network's PRECISION PROMISE trial. This is a Phase twothree registrational study that is being executed at the top pancreatic centers in the United States. Like the LAPPAS trial in locally advanced disease, the primary endpoint of the PRECISION PROMISE trial is overall survival. Pamrevlumab is being evaluated in both first and second line therapy for metastatic disease and was the 1st experimental treatment arm in the PRECISION PROMISE platform trial to be evaluated in the first line metastatic setting.

Speaker 3

Moving to Slide 16, We show a snapshot of both pamrevlumab registrational Phase 3 studies. 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 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 6 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 pemrevlumab treatment. On Slide 17, we review the U.

Speaker 3

S. Commercial opportunity for pamrevlumab in pancreatic cancer. There have been limited treatment advances over the last 2 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.

Speaker 3

Is a multibillion dollar commercial opportunity for pamrevlumab, Ipican demonstrate a significant improvement in overall survival in either locally advanced or metastatic patients. In fact, metastatic pancreatic cancer alone represents a larger market opportunity in the U. S. For pamrevlumab than we were forecasting for IPF. Moving on to roxadustat on Slide 19, I would like to provide a recap of recently announced roxadustat results as well as review our upcoming milestones.

Speaker 3

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 alfa on the primary endpoint of change in hemoglobin level from baseline to the average level during weeks 9 through 12. These data were recently presented in an oral presentation at the ESMO Congress 2023 in Madrid on October 21. I'm excited to announce that in July, our supplemental new drug application or sNDA for roxadustat in patients with chemotherapy induced anemia has been accepted by the China Health Authority and we continue to expect an approval decision in mid-twenty 24. Upon approval, FibroGen will receive a milestone payment from AstraZeneca.

Speaker 3

We believe this indication could represent a meaningful incremental net revenue opportunity on top of the anemia of CKD indication. Moving now to Slide 20. Roxadustat for anemia of chronic kidney disease continues to performed extremely well in China. 3rd quarter total roxadustat net sales in China by FibroGen and the distribution entity jointly owned by FibroGen and AstraZeneca was $77,100,000 compared to $59,000,000 in the Q3 of 2022, an increase of 31%. This growth was driven by an increase in volume of 37%.

Speaker 3

FibroGen's portion of roxadustat net revenue in China was $29,400,000 for the 3rd quarter on a U. S. GAAP basis compared to $17,400,000 in the Q3 of 2022, an increase of 69%. Moving to Slide 21, roxadustat continues to expand its category leadership and brand value share in China, rising to 42% in the most recent 3 month period ending in August of 2023. The potential addition of the chemotherapy induced anemia indication would create an additional catalyst to both continued share and volume growth of roxadustat in China.

Speaker 3

Given that there have been several generic applications filed in China, I would like to briefly touch on 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 individual hospital formularies 1 at a time.

Speaker 3

Originator products do not experience a meaningful deterioration in business until at least 4 or more 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. Our composition of matter patents expire in June of 2024 and 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, the roxadustat launch in Europe is accelerating, showing robust quarter over quarter growth. We expect this growth to continue to accelerate given the strong competitive position of roxadustat.

Speaker 3

Roxadustat is the only hip 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 dapradustat, combined with market exclusivity for roxadustat beyond 2,030, roxadustat is well positioned to continue its growth and market leadership throughout this decade. I will now hand it off to John Hunter, our CSO, to cover our early stage pipeline. John?

Operator

Thank you, Thane. Moving to Slide 23, we have shot of our early stage oncology pipeline programs that are currently in the clinic or at later stages of non clinical development. On Slide 24 is an overview of the exclusive license deal that we entered into with Fortis in Q2 of this year for 446, Now called FG-three thousand two hundred and forty six. FG-three thousand two hundred and forty six is a potential 1st in class antibody drug conjugate or ADC For metastatic castration resistant prostate cancer, colorectal cancer and other tumor types, FG-three thousand two hundred and forty six binds to a cell receptor target that internalizes upon antibody binding and is present at high levels in prostate cancer and other tumor types, but that demonstrates very limited expression in most normal tissues making it an ideal ADC target candidate. Moving to Slide 25, FG-three thousand two hundred and forty six is comprised of an anti CD46 antibody, YS5, Linked to the anti mitotic agent MMAE, which is a clinically and commercially validated ADC payload, FT-three thousand two hundred and forty six is demonstrated efficacy against CD46 expressing tumors in both preclinical and clinical studies.

Operator

The associated PET imaging biomarker, PET46, utilizes the same targeting antibody as FG-three thousand two hundred and forty six and is under development at UCSF. It is comprised of the YS-five antibody coupled to the radionuclide Zirconium-eighty nine And in preclinical studies demonstrate specific targeting of an uptake by CD46 positive tumors. We plan to explore its potential for use in identifying FG-three thousand two hundred and forty six responsive patients in a Phase 2 trial that is described on Slide 20 7. Moving to Slide 26. As we noted in our last earnings call, FK-three thousand two hundred and forty six has demonstrated monotherapy clinical in multiple myeloma and metastatic castration resistant prostate cancer.

Operator

Interim data from the ongoing Phase 1 trial in cancer showed that 4 out of 21 evaluable patients had partial responses based on resist criteria at the 2 highest study doses and an overall PSA50 response rate of 45% in heavily pretreated patients who had a median of 5 prior therapies. The safety profile for FG-three thousand two hundred and forty six was consistent with other MMAE based ADC therapeutics With neutropenia being the most common adverse event, updated data from the trial will be reported upon study completion projected for Q1, 2024. On Slide 27, we show ongoing and planned clinical trials for FG-three thousand two hundred and forty six. 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 treatment with FG-three thousand two hundred and forty six.

Operator

Initial data from this trial is expected in the second half of twenty twenty four. A trial for the PET46 biomarker in prostate cancer is in progress at UCSF. The goal is to develop screening assay to select patients with high CD46 expression who are most likely to benefit from treatment with FG-three thousand two hundred and forty six. 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 PET46. Patients will not be stratified at the start of the study, but the correlation between PET positivity and FG-three 3,246 efficacy will be assessed at the end of the study with the potential to use the PET46 biomarker to stratify patients in a pivotal Phase 3 trial.

Operator

We anticipate the initiation of the Phase 2 trial in metastatic castration resistant prostate cancer in the second half of twenty twenty four. Moving to Slide 28, I would like to briefly cover our preclinical oncology pipeline. The pipeline includes 2 immuno oncology antibody programs, one targeting Galectin-nine or Gal-nine and the other targeting the CCR8 gs protein coupled receptor. FG3,165 is an anti GAL9 antibody developed to reverse immune resistance in solid tumors. GAL-nine is a soluble immunosuppressive molecule that is over expressed in many tumor indications and that has been implicated in maintaining an immune suppressed tumor microenvironment.

Operator

FG-three thousand one hundred and sixty five has been shown preclinically to reverse multiple Gal-nine mediated mechanisms of immune suppression, including prevention of Gal-nine mediated effector T cell apoptosis, reversal of Gal-nine mediated signaling in T cells and disruption of dimerization of the immune checkpoints TIM-three and VISTA. This data was presented at the Society For Immunotherapy and Cancer Annual Meeting this past weekend and the poster will be available on our website. We are working towards a Q1 twenty twenty four IND filing for this program. Moving to 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, antibody mediated depletion of CCR8 positive Tregs results in potent antitumor effects in preclinical tumor models.

Operator

FG-three thousand one hundred and seventy five is an anti CCR8 antibody designed to selectively disrupt and deplete Tregs in the tumor microenvironment Without affecting peripheral T regulatory cells, given its highly specific targeting of Tregs in the tumor microenvironment, We see FG-three thousand one hundred and seventy five as having broad therapeutic potential in solid tumors. I will now turn the call over to Juan to discuss the company's financials.

Speaker 4

Thank you, John. Before jumping into the financial update, I would like to spend a moment to acknowledge and thank Our FibroGen colleagues around the world. I'm continuously inspired by many interactions with our team in which I see tremendous resilience, positive mindset and exceptional operational capability that enables us to deliver on key clinical, operational and financial milestones. Now diving into these quarter's financial results. For the Q3 of 2023, total revenue was $40,100,000 compared $15,700,000 for the same period in 2022, a robust increase of 155% year over year.

Speaker 4

This significant growth showcases the strength of our business. I will now provide further texture on our revenue. As of Q3 2023, we recorded $29,400,000 of net product revenue for roxadustat sales in China compared to $17,400,000 in the Q3 of 2022, representing an increase of 69% year over year and highlighting the strong performance of roxadustat in China. During the Q3, we recorded $6,800,000 as development revenue with co development efforts for roxadustat with our partners as compared to $2,500,000 during the Q3 of 2022. For the Q4 and as we have previously guided, we expect co development revenue to range from $3,000,000 to $5,000,000 In the Q3, due to the successful completion of post approval safety studies associated with roxadustat in China, We triggered a $4,000,000 milestone payment from AstraZeneca.

Speaker 4

Dollars 2,600,000 of this milestone was recognized as license revenue, $900,000 was recognized as co development revenue and the remainder is classified as deferred revenue. Finally, in the Q3, we also recorded $1,300,000 in drug product revenue for roxadustat bulk drug product or active pharmaceutical ingredients sold to our partner Astellas. I will now move to provide further detail on our financial performance in China. As previously mentioned by Thane, total roxadustat net sales for the Joint Distribution Entity or JDE owned by AstraZeneca and FibroGen was $77,100,000 this quarter compared to $59,000,000 in the Q3 of 2022, A substantial increase of 31% year over year highlighting the continued strong performance of the Abrenso franchise in China, while also achieving our highest value share since launch at 42% of the category. From total roxadustat net sales in China, FibroGen's net transfer price from sales to the JDE was $24,200,000 for the 3rd quarter compared to $19,500,000 in the Q3 of 2022, an increase of 24% year over year.

Speaker 4

Net transfer price is the best reflection of FibroGen's portion of the cash received by roxadustat in China. During this quarter, we also released $2,300,000 from deferred revenue. As a result, FibroGen recorded $26,500,000 in net revenue for the quarter from roxadustat sales to the JDE and $2,900,000 of direct to distributor sales from FibroGen China, totaling $29,400,000 on a U. S. GAAP basis.

Speaker 4

Our revenue growth highlights the continued robustness in execution and physician and patient adoption of roxadustat in China. Now moving down the income statement, our operating costs and expenses for the Q3 of 2023 were $103,600,000 compared to $109,400,000 for the Q3 of 2022, a decrease of $5,800,000 year over year. It is worth noting that this quarter's operating expenses include a $12,600,000 restructuring charge related to a reduction in force during the Q3. R and D expenses for the Q3 of 2023 were $61,200,000 compared to $75,200,000 in the 3rd quarter of 2022. The reduction in R and D expenses is primarily attributable to the shutdown of our late stage trials in pemrevlumab as well as the reduction of U.

Speaker 4

S. R and D headcount. Of the $61,200,000 in R and D expenses, Approximately 45% was related to pemrevlumab, 40% allocated to support our early stage pipeline and the remaining 15% directed towards roxadustat development activities in the U. S. And China.

Speaker 4

SG and A expenses for the Q3 of 2023 were $25,600,000 compared to $29,900,000 in the Q3 of expenses is primarily attributable to reduced infrastructure costs as well as the reduction of U. S. SG and A headcount. During the Q3 of 2023, we recorded a net loss of $63,600,000 or $0.65 net loss for both basic and diluted share as compared to a net loss of $91,700,000 or $0.98 per basic and diluted share for the Q3 of 2022. The impact of the above mentioned restructuring charge of $12,600,000 related to the reduction in U.

Speaker 4

S. Workforce represents approximately $0.13 loss per both basic and diluted share. On Slide 30, we highlight our performance against our prior savings guidance. I am pleased to announce an improvement in our expected savings to be in the upper range of our previously communicated guidance of $100 We are now forecasting a reduction of $120,000,000 in total annualized expenses, which roughly translates to around $30,000,000 per quarter. After adjusting for one time charges in the 3rd quarter, we achieved over 60% of our total expected savings this quarter versus expected savings of approximately 20% that we communicated during our Q2 update.

Speaker 4

We now expect to achieve 75% to 85% of our quarterly savings in the Q4 of 2023 and deliver on our quarterly expected run rate savings of $30,000,000 in the Q1 of 2024. Now shifting towards cash as of September 30, we reported $283,000,000 in cash, cash equivalents, investments and accounts receivable. Our cash balance reflects a change of $78,100,000 versus the prior quarter, which captures a variety of one time cash outflows such as a $14,100,000 historical co promotion expense in China, severance payments as well as clinical trial shutdown costs, which increased our cash utilization in the quarter. As we move forward, we expect our cash burn rate to reflect the reduction in operating expenses and we expect 4th quarter cash burn to be substantially lower. 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.

Speaker 4

Thank you. And now I would like to turn the call back over to Thane.

Speaker 3

Thanks, Juan. In closing, we are excited about our near term prospects and the value they provide to stakeholders. To recap, we expect top line data from the following 2 pemrevlumab pivotal studies. Our Phase 3 LAPPAS trial in locally advanced pancreatic cancer in the Q1 of 2024 and the Phase twothree pancreatic cancer action network Precision Promise trial in metastatic pancreatic cancer in the first half of twenty twenty four. Roxadustat continues to perform very well in China, where our sNDA has been accepted for the chemotherapy induced anemia indication and our partner Astellas continues with the commercialization of roxadustat in Europe, Japan and other markets.

Speaker 3

In our early stage pipeline, we expect top line results from the Phase 1 monotherapy trial of FG-three thousand two hundred and forty six, a first in class antibody drug conjugate targeting a novel epitope on CD46 for metastatic castration resistant prostate cancer by the Q1 of 2024 and anticipate the initiation of a Phase 2 trial in mCRPC in the second half of twenty twenty four. We anticipate filing an IND for FG3,165, our anti Gal-nine antibody in the Q1 of 2024. We anticipate filing an IND for FG-three thousand one hundred and seventy five, our anti CCR8 antibody in the second half of twenty twenty four And 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 evaluation that we believe is more reflective of our current and future roxadustat revenue stream, near term pamrevlumab readouts in pancreatic cancer, our early stage pipeline and our strong balance sheet. I would like to thank all the employees of FibroGen for their continued hard work and perseverance over the last few months.

Speaker 3

I would now like to turn the call over to the operator for Q and A.

Speaker 1

Thank And our first question comes from the line of Paul Choi with Goldman Sachs.

Speaker 4

Hi, Paul.

Speaker 5

I was mute there. This is Kaleel calling in for Paul. Thank you so much for taking our questions. I guess, I have a couple of quick questions. So with regard to roxadustat in China, could you please provide some additional color on, one, your expectations when you might start to see an eventual impact from generic competition beyond next year in terms of either pricing or market share?

Speaker 5

And then 2, given the idiosyncrasies of China that you mentioned, How does that really affect the company's strategy in mitigating substantial impacts from potential generics?

Speaker 3

Yes. Thanks for the question. I'll go ahead and start off and ask Chris Chung, Who is in China right now to follow-up with supplemental comments. There are a number of things in play that make it really difficult to pinpoint When we would expect meaningful impact of generic entry, this is a much different dynamic than in the U. S.

Speaker 3

Market, Where you have patent expiration, you have a generic launch, and you see immediate erosion of the brand share. And in fact, It's typical over the course of the 1st 12 months of generic penetration in a market like the United States, you see 90% to 95% of the value eroded. It's different than that in China for a number of different reasons as we tried to outline in the call. The first reason is because of the fact that each of the generics by the time they are able to gain approval are going to have to go hospital by house hospital in order to establish the listing. And we really don't anticipate until we see multiple generics being available And then the advent of the potential for volume based procurement or volume based purchasing before you would see a meaningful impact on the brands, both price as well as market share.

Speaker 3

And so while we do expect at some point in time there to be the potential for volume based purchasing. We just can't state when that will be. It's going to be dependent upon the review of the generic It's going to be dependent upon the approval of those generic drug products and it's going to be dependent upon the government then calling for volume based purchasing. And so there are a lot of unknowns that make it difficult at this point in time for us to then kind of forecast much beyond 2024. Regardless of what happens, even in the advent of multiple generics being available, we do see in China with other multinationals A very strong continued value of revenue stream for the originator that continues on in perpetuity on for several years.

Speaker 3

In fact, there's Large multinational, that has, about 15 products that are a part of volume based And with those 15 products combined, they are realizing well over $1,500,000,000 in revenue. So We still believe that there are great prospects for roxadustat in China. And in addition to that, we have the CIA indication, which we expect a decision on in the middle part of the year, which gives us an additional opportunity for both volume as well as revenue Catalysts. Chris, let me ask you to go ahead and add some comments to that.

Speaker 6

Yes. You know what, I'm not much to add beyond what Sane just provided. I thought it was a comprehensive overview. And I would add that what Sane just described is not specific to roxadustat is very consistent with how the industry is responding to regulations and how the industry is performing.

Speaker 1

And our next question comes from the line of Andy Hsieh with William Blair.

Speaker 7

Thanks for taking our questions. So mostly on actually 3,246, Maybe from a strategic perspective, how would you position that asset? So would that be in the pre T move setting like what we've Seeing with the Phase 2 PSMA 4 and along the same lines, given the popularity of the PSMA PET imaging agents, Should that be perceived as a headwind for CD47 as well? And maybe, also related to that, but maybe from a Kind of clinical trial and data perspective. So for the Q1 data readout, it's listed here 53 patients total.

Speaker 7

So it seems like you have presented data on 21 before. So That mean we should expect additional 32 patients in the Q1 update? So any sort of clarifications on that would be much appreciated.

Speaker 3

Thanks, Andy. I'm going to turn this one over to John.

Operator

Yes, Andy, thanks for the questions. I'll take them in order. In terms of the positioning, we are looking to go into a pre chemo setting, although obviously the recent success of Pluvicto is sort of has to be factored in when we start to really plan out where we're going to target the Phase 3, but That is still our plan. With regards to the PET imaging, if I understood the question correctly, If the question was does the broader use of PSMA PET imaging agents increase the likelihood and maybe comfort of investigators using our PET imaging agent for CD46. I would say the answer is yes.

Operator

In metastatic castration resistant prostate cancer, it's become very common for physicians to now do that imaging for Pluvicto and other competitive PSMA radionuclide labeled antibodies. And then finally with regards to the additional number of patients. So the interim data last year at ASCO had 21 patients who were resist evaluable. I think that they had maybe like mid-thirty number of patients in that. So There are additional patients who have entered into the trial since that readout and also some of the patients who were on drug then continue to receive treatment, which I think will have an impact on the measured progression free survival.

Speaker 3

Thanks, John. And to Andy, we're going to follow the data. And ultimately, these men undergo several lines of treatments, because none of these treatments that are available today or probably even into the near future are curative. And so, well, the Phase 2 trial will be really, really important to inform then the Phase 3 design.

Speaker 7

Got it. Okay. Maybe one last one about the generic sexadustat. So I guess in the U. S, it's not really And your approach for the originator to drop the price and start the price competition.

Speaker 7

Is that Not the case for China. Is there a case where you can kind of drop the price and really compete

Speaker 3

Chris, let me start and then you can follow-up. It's really dependent, Andy, on really the product that you're talking about. As you know in the U. S, it's very, very rare for the originator to drop the price just because there's no way you could ever make up the value and volume. I think it because of the way that the volume based procurement or purchasing works in China, I think that there is likely an opportunity to decrease the price to some extent, but nowhere near what you would see a generic price point to be.

Speaker 3

Again, just because it doesn't make sense to do that, you'd maintain volume at a higher price and be far better off than maintaining more volume at a much lower price. So Chris, maybe if you want to speak to roxadustat in particular?

Speaker 6

Yes, absolutely, Zane. So, thank you for the question. So looking at how multinationals and the bigger brands have historically Responded to generic competition. 1st, when there's generic competition, the decision to lower the price is solely the election of the originator drug. And on the market, we've seen ranges from 0% to 15%.

Speaker 6

Once there are enough number of generic drugs on the market and the government calls volume based purchasing, the originator drug can elect to still participate in the market at a particular preset discount that is required by the government. So historically, the 2 brands are either 10% or 30%, and for the bigger brands, it's typically 30%. And this is dictated by the government.

Speaker 7

Got it. That's super helpful. Thank you so much.

Speaker 1

Thank you. One moment please for our next question. And our next question comes from the line of Jason Gerberry with Bank of America.

Speaker 8

Hi, good afternoon. This is Dina on for Jason. We just had a couple of questions on

Speaker 6

3,246.

Speaker 8

This is based on the activity that you're seeing in the MCR PC patients In the Phase 1 trial, thus far, are you planning to assess, 3,246 in earlier lines? And I know you're planning to enrich for patients that express CD46. Could you just please remind us what percentage of the patient population you expect to be in this subgroup of CD46 expressors? Thank you so much.

Speaker 4

John? Yes.

Operator

Thanks for the question. Just with regards to going into earlier lines, The enzalutamide combo study that's being run as an investigator sponsored trial at UCSF does open the possibility of going into a first line setting if that is positive. So we are following that carefully to see what those results look like and then we would make a decision I think based on those results. Just with regards To the percentage of patients who we expect to be positive, we have a pretty limited data set at this point regarding by IHC for patients that either do or do not express CD46. We do think that the pet biomarker will give us much better data on that and really kind of guide our thinking.

Operator

Based on the data that we have in hand right now, we've been estimating between 50% 70% of the patients with metastatic castration resistant prostate cancer will be CD46 positive. But I do want to stress that we are looking to acquire more data points to sort of firm that number up?

Speaker 3

And we won't be enriching in the Phase II trial. We're going to be assessing the patients ahead of treatment with, RCD-three thousand two hundred and forty six or RCD-forty six. And then once the efficacy results are in, then we'll do a correlation with the PET positivity and in the efficacy results.

Speaker 8

Got it. Thank you. And just a quick follow-up, just thinking more Broadly kind of your strategy for this Fortis potential acquisition during these next 4 year period. You have obviously success in this MCRPC trial will be important, but Do you have any plans to assess this indication or this sorry, asset and other indications in the next 4 years?

Speaker 3

Yes, we do. In fact, we've got the plans to do a tumor expansion trial as well. And it's just a matter of determining exactly when the right time is to do that tumor expansion trial, whether we go ahead and pull the trigger on it earlier or wait until we see some sort of an efficacy signal in the Phase 2 trial, we'll just we'll make that call at some point in the future. But yes, there are definitely plans and you heard John speak about multiple myeloma in his remarks as well.

Speaker 8

Thank you so much.

Speaker 1

Thank you. I'll now hand the call back over to CEO, Thane Wedig for any closing remarks.

Speaker 3

Well, thanks everybody. We appreciate your participation in today's investor call and your interest in FibroGen. Enjoy the rest of your day. Thank you.

Speaker 1

Ladies and gentlemen, thank you for participating. This concludes today's program and you may now

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Earnings Conference Call
FibroGen Q3 2023
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