FibroGen Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 6, 2024

There are 9 speakers on the call.

Operator

day, and welcome to the FibroGen Second Quarter 2024 Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to David De Lucia, VP of Investor Relations.

Operator

Please go ahead.

Speaker 1

Good afternoon, everyone. Thank you for joining today to discuss our Q2 2024 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 Doctor. Daya Adib, our Chief Medical Officer Juan Graham, our Chief Financial Officer Chris Chung, our Senior Vice President of China Operations and Doctor.

Speaker 1

John Hunter, our Chief Scientific 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.

Speaker 1

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. 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 atwww.fibrogen.com. With that, I'd like to turn the call over to our CEO, Dan Guedig.

Speaker 2

Thanks, Dave, and good afternoon, everyone, and welcome to our Q2 2024 earnings call. On today's call, I will focus our stakeholders on the updated go forward strategy for the company and highlight the attractive opportunities that FibroGen has in front of it. Doctor. Daya Adib, our Chief Medical Officer, will provide an overview of the prostate cancer landscape, discuss the development plan of our CD46 targeted antibody drug conjugate, FG-three thousand two hundred and forty six and associated PET-forty six imaging agent in metastatic castration resistant prostate cancer and articulate why we feel so strongly about 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.

Speaker 2

On Slide 3, I would like to provide a recap of the recently announced late stage pemrevlumab clinical trial results in pancreatic cancer. Last week, we reported top line data from the pemrevlumab experimental arm in pan CAN's PRECISION PROMISE Phase twothree adaptive platform trial, which compared treatment with pamrevlumab combined with gemcitabine plus nab paclitaxel 2 gemcitabine plus nab paclitaxel alone for the treatment in first line and second line patients with metastatic pancreatic ductal adenocarcinoma. The pamrevlumab arm of the study did not meet the primary endpoint of overall survival as determined by the protocol pre specified Bayesian statistical analysis. We also announced top line data from the FibroGen sponsored Phase 3 LAPIS trial, which compared treatment with pamrevlumab combined with gemcitabine plus nab paclitaxel or polferidox to placebo combined with gem plus nabapitaxel or polferidox for the treatment of locally advanced unresectable pancreatic cancer. The study also did not meet the primary endpoint of overall survival.

Speaker 2

When FibroGen advanced pemrevlab into Phase 3 development, we knew the challenges associated with the 1st in class mechanism targeted at 3 very difficult diseases idiopathic pulmonary fibrosis, Duchenne muscular dystrophy and pancreatic cancer, diseases with substantial unmet need and little advancement in patient outcomes over the past several years. Most unfortunately for patients as well as other FibroGen stakeholders, pamrevlumab will not be a solution that will enable patients to live longer and more productive lives. Specific to pancreatic cancer, we were hopeful that pamrevlumab would demonstrate a meaningful overall survival benefit, especially after we learned at the graduation Stage 1 to Stage 2 of the precision promise adaptive platform trial. This was simply not the result. We would like to thank the patients and clinical trial investigators for their dedication and participation in both pancreatic cancer trials.

Speaker 2

Due to these results, the company is implementing a significant cost reduction plan, which unfortunately includes reducing headcount in the U. S. By approximately 75%. I would like to express my deepest gratitude to our FibroGen colleagues who have dedicated so much of their time and energy for the prospect of bringing much needed therapies to some of the most challenging and deadly diseases affecting humanity. On Slide 4, I would like to highlight the exciting assets that FibroGen has.

Speaker 2

1st is FG-three thousand two hundred and forty six, a 1st 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 imaging agent. In April, we released compelling data from our FG-three thousand two hundred and forty six Phase 1 monotherapy trial and in June additional compelling preliminary data from the dose escalation portion of the Phase onetwo investigator sponsored study of FG-three thousand two hundred and forty six in combination with enzalutamide in patients with mCRPC. The combination data was presented at the 2024 ASCO Annual Meeting. Daya will provide more detail on these 2 Phase 1 studies later in the call.

Speaker 2

We anticipate 2 catalysts for FG-three thousand two hundred and forty six in 2025. Top line data from the Phase 2 portion of the combination trial in the first half of twenty twenty five and the initiation of the Phase 2 monotherapy trial in the Q1 of 2025. 2nd 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. Due to strong RoxTwo Step performance in China, we are raising our guidance for full year 2024.

Speaker 2

We now expect FibroGen's full year net product revenue under U. S. GAAP to be between $135,000,000 $150,000,000 up from $120,000,000 to $135,000,000 and full year roxadustat net sales in China of $320,000,000 to $350,000,000 up from our previous guidance of $300,000,000 to $340,000,000 Juan will cover our financials in more detail later in the call. We are also expecting an approval decision from the China authorities in the second half of twenty twenty four 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. Next, FibroGen has a number of partnering opportunities for our remaining pipeline.

Speaker 2

Earlier this year, we regained the rights to roxadustat from 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. Based on the data presented at ASH in December of last year, which demonstrated a meaningful difference in transfusion independence between roxadustat and placebo in patients with anemia associated with lower risk MDS, who entered the trial with a higher transfusion burden.

Speaker 2

We believe roxadustat is an excellent candidate for a focused Phase 3 trial in lower risk MDS, a condition which represents a significant unmet need with a substantial commercial opportunity. 2nd, we have made a difficult decision to stop internal development of the 2 immuno oncology programs we licensed from HiPhi Bio in 2021. Given the organizational changes we announced last week, we simply don't have the substrate to advance these programs as quickly as they deserve. We continue to be very excited about the potential of these programs and believe there are partnering opportunities for both of these assets. We have made important advancements to de risk these programs, including optimizing the affinity of and receiving IND clearance for FG-three thousand one hundred and sixty five, our anti GALLECT-nine monoclonal antibody, enabling the product to be Phase 1 ready.

Speaker 2

We have also made significant progress optimizing the activity of FG-three thousand one hundred and seventy five, our anti CCR8 monoclonal antibody advancing it to a point where we believe it has best in class potential. As we announced in June, we have also signed a clinical trial supply agreement with Regeneron to study both of these assets in combination with Libtayo. We will begin partnering discussions for both FG3,165 and FG3,175 with interested parties in the near future. Lastly is our strong cash position. We finished the 2nd quarter with approximately $147,100,000 in cash, cash equivalents and accounts receivable.

Speaker 2

We expect our balance sheet to be sufficient to fund our operating plans into 2026. In summary, we believe that we have a strong foundation to drive significant shareholder value creation today and into the future. I will now turn the call over to Daya Adib, our Chief Medical Officer to discuss prostate cancer and FG-three thousand two hundred and forty six. Daya?

Speaker 3

Thank you, Thane. Moving on to Slide 6, I would like to provide a brief overview of the prostate cancer landscape and the high unmet need in late stage disease. Prostate cancer is the most common cancer in men in the United States, who currently have a 1 in 8 lifetime risk of developing the disease. There are approximately 290,000 new diagnoses of prostate cancer each year in the U. S.

Speaker 3

With 65,000 diagnoses where the cancer has metastasized, became castrate resistant and are drug treatable. The 5 year survival rate in these late stage patients is approximately 30%. There is a significant unmet medical need for therapies that extend survival in these late stage patients that have progressed on androgen receptor signaling inhibitors or ARSIs and chemotherapy. Turning to Slide 7, FG-three thousand two hundred and forty six is a potential 1st in class ADC targeting CD46 in development for metastatic castration resistant prostate cancer. With potential future development in colorectal cancer and other tumor types.

Speaker 3

FG-three thousand two hundred and forty six 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 very limited expression in most normal tissues, making it an ideal ADC target candidate. FG-three thousand two hundred and forty six is comprised of an anti CD46 antibody, YS-five linked to the anti mitotic agent MMAE, which is a clinically validated and FDA approved ADC payload. An associated PET imaging agent, PET-forty six, utilizes the same targeting antibody as MG3246 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 an uptake by CD46 positive tumor cells.

Speaker 3

On Slide 8, we highlight the importance of the companion PET imaging agent, PET46, to the development pathway of FG-three thousand two hundred and forty six. We believe that utilizing PET46 as a patient selection biomarker will allow FG-three thousand two hundred and forty six to achieve a differentiated clinical profile in prostate cancer treatment paradigm. We believe that PED46 biomarker will be superior to CD46 IHC due to the fact that PED46 is applicable to the entire mCRPC population, while IHC is reserved for patients who have biopsy accessible disease. This will allow the company to better enrich the patient population studied throughout the clinical development program. Now let's go into the top line results from the monotherapy Phase 1 study in metastatic CRPC Slide 9.

Speaker 3

In the Phase 1 dose escalation component of the trial, dose levels of FG-three thousand two hundred and forty six were administered in 21 day cycles. In the dose expansion arm of the trial, patients who are treated at 2.7 mgkg adjusted body weight capping to 100 kilograms until disease progression or the occurrence of an unacceptable toxicity, for example, a DLT. The endpoints were safety, tolerability and antitumor activity as measured by the decline of prostatic specific antigen from baseline, objective tumor response rate in patients who have 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 were biomarker unselected and have received a median of 5 prior lines of therapy before they were administered FG-three thousand two hundred and forty six. In the efficacy population, we observed a median radiographic progression free survival of 8.7 months.

Speaker 3

For RECIST evaluable patients, 20% met the criteria of a partial response or a tumor reduction in size of at least 30% with a median duration of response of 7.5 months. PSA reductions of more than 50% were observed in 36% of patients. FG-three thousand two hundred and forty six demonstrated an acceptable safety profile with adverse events consistent with those observed in other antibody drug conjugate therapies that have an MMAE payload. We look forward to publishing the totality of the Phase 1 data in a manuscript in the upcoming months as we plan the advancement of the program further in the clinic. Moving to Slide 10.

Speaker 3

There is also a combination study with emzalutamide that is currently being run at UCSF as a sponsored trial as an investigator sponsored trial. We announced positive interim results from this dose escalation component of the study, which is a Phase 1btwo trial of FG-three thousand two hundred and forty six in combination with enzalutamide in patients with mCRPC at the ASCO 2024 Annual Meeting. The presentation included data from 17 biomarker unselected unselected patients in the dose escalation component of the study. Over 70% of patients in the study received at least 2 prior ARSIs, which included prior enzalutamide. The primary endpoint was determination of the maximally tolerated dose or MTD for FG-three thousand two hundred and forty six in combination with enzalutamide.

Speaker 3

The MTD was established at 2.1 mg per kg adjusted body weight with primary G CSF prophylaxis in combination with enzalutamide at the prescription dose of 1 60 milligram per day. The combination treatment demonstrated an encouraging preliminary results showing an estimate of radiographic PFS of 10.2 months with PSA declining observed in 71% or 12 out of 17 evaluable patients. We're excited to announce that we expect top line results from the Phase 2 component of this investigator initiated study in first half of twenty twenty five. And these results will also include additional data on patients screened with PET-forty six during the Phase 2 component enrollment period. On Slide 11, I would like to discuss a few endpoints in metastatic CRPC.

Speaker 3

We believe that radiographic PFS is a clinically meaningful endpoint versus other surrogate signals such as PSA50 and objective response rate. Other earlier stage data in the same space has only shown results from PSA30 and PSA50 as signals of clinical activity in a very limited number of patients, but have not yet shown survival data, which constitutes the clinically meaningful endpoints in metastatic castration resistant prostate cancer. For FG-three thousand two hundred and forty six, we believe a radiographic PFS of 8.7 months as monotherapy in a heavily pretreated unselected population and radiographic PFS of 10.2 months in combination with enzalutamide in an earlier treatment line with pretreated ARSci patients is very compelling versus existing standard of care in the mCRPC set. Moving to Slide 12. We highlight all the recent and ongoing studies for FG-three thousand two hundred and forty six.

Speaker 3

We are expecting to see more data generated for PET46 biomarker in prostate cancer that is in progress at UCSF this year. As we have articulated, the goal is to develop a companion PET imaging agent to select those patients with high CD46 expression who are most likely to benefit from the treatment with FG-three thousand two hundred and forty six. MET-forty six will be part of a Phase 2 dose optimization monotherapy sponsored by FibroGen and could potentially enhance screening, patient selection and enrichment, ensuring proper selection of patients for the targeted therapy to receive a clinically meaningful benefit. On Slide 13, we highlight the upcoming catalysts for FG-three thousand two hundred and forty six program. We are meeting with the FDA this quarter.

Speaker 3

We expect to file FibroGen's IND for FG-three thousand two hundred and forty six this quarter as well as filing the FibroGen's IND for PEG-forty six next quarter. We anticipate the initiation of a Phase 2 dose optimization study in mCRPC in the Q1 of 2025 and expect top line results from the Phase 2 portion of the combination study being run at UCSF in combination with enzalutamide in first half of twenty twenty five. Finally, moving to Slide 14, we want to summarize the unique opportunity that FG-three thousand two hundred and forty six represents. The molecule represents a novel mechanism of action and a 1st in class opportunity, pairing an antibody against a novel target with a validated chemotherapy payload. FG-three thousand two hundred and forty six, they offer a treatment beyond prostate cancer with potential applications in multiple treatment lines of MR CRPC in combination with enzalutamide and other solid tumors such as colorectal cancer.

Speaker 3

FG-three thousand two hundred and forty six 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-three thousand two hundred and forty six as studies progress. I will now turn the call back to Tane to discuss ruxadustat. Thane?

Speaker 2

Thank you, Deya. Moving now to Slide 16, roxadustat for anemia of chronic kidney disease continues to perform extremely well in China. 2nd quarter total roxadustat net sales in China by FibroGen and the distribution entity jointly owned by FibroGen and AstraZeneca totaled $92,300,000 compared to $76,400,000 in the Q2 of 2023, an increase of 21%. This growth was driven by an increase in volume of 33%. FibroGen's portion of roxadustat net product revenue in China was $49,600,000 for the 2nd quarter on a U.

Speaker 2

S. GAAP basis, compared to $23,900,000 in the Q2 of 2023, an increase of 108%. Moving to Slide 17, rox2set continues its category leadership and brand value share in China, maintaining a 46% share in the most recent 3 month period ending of May 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 rox2 step business in China.

Speaker 3

Given that there

Speaker 2

have been several generic applications filed and 2 applications approved in China, I would like to reiterate the dynamics of the generic market 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 one listing at a time.

Speaker 2

Originator products do not experience a meaningful deterioration in revenue until they are subjected to volume based purchasing, which only occurs after at least 4 generic products are approved and the government includes the originator in the BBP process. 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 of 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 quarter over quarter growth. We expect this growth to continue given the fact that roxadustat is reimbursed in all EU 5 countries and is the only FPHI indicated in the EU for the treatment of anemia of CKD in both non dialysis and dialysis patients.

Speaker 2

Importantly, roxadustat has exclusivity into 2,000 and 36 in the EU, positioning it to continue its growth and hip market leadership over the next decade plus. Moving to Slide 18, earlier in the year, we announced that AstraZeneca returned all U. S. And ROW roxadustat rights to China, with the exception of South Korea. FibroGen's collaboration agreement with AZ for roxadustat in China remains firmly in place.

Speaker 2

Regaining the rights to roxadustat in the U. S. Allows us to pursue roxadustat development opportunities with potential partners and indications such as anemia associated with lower risk myelodysplastic syndromes. I will now turn the call over to Juan to discuss the company's financials.

Speaker 4

Juan? Thank you, Dane. Firstly, I would like to take a few moments to thank the entire FibroGen team for their hard work and dedication over the years. The organization has courageously focused on developing therapies in very difficult diseases affecting humanity. And while our objective was not achieved, I expect our learnings to provide valuable information for the development of new therapies in the future to provide options for patients affected with pancreatic cancer.

Speaker 4

I will focus my remarks with a revenue summary for the Q2 of 2024, subsequently providing financial performance details on our China business for the quarter. And finally, I will wrap up with operating expense results and our cash outlook. For the Q2 of 2024, total revenue was $50,600,000 compared to $44,300,000 for the same period in 2020 3, an increase of 14% year over year. We recorded $49,600,000 of net product revenue for roxadustat sales in China compared to $23,900,000 in Q2 of 2023, representing an increase of 108% year over year. The drivers for this increase were: 1, volume growth of 33% versus last year and 2, changes in assumptions of our future revenue expectations leading to a deferred revenue release of $18,000,000 roxadustat performance in China continues to deliver strong results supporting patients with CKD.

Speaker 4

In Q2 2024, we recorded $300,000 in development revenue compared to $5,200,000 during the Q2 of 2023. As mentioned last quarter, after the termination of the AstraZeneca U. S. Rest of world agreement, we expect quarterly development revenue to be below $500,000 for the remainder of the year. In Q2 2024, we recorded $700,000 of drug product revenue compared to $14,300,000 during the Q2 of 2020 3.

Speaker 4

The performance of roxadustat in the Astellas territories has continuously been weaker than expected. We continue to assess the impact of future forecasted net sales performance and associated royalties to FibroGen, which we anticipate will lower the future projected cash inflows related to the sellers territories. I will now move to provide further detail on our financial performance in China. Total Roxadustat net sales from the Joint Distribution Entity or JDE owned by AstraZeneca and FibroGen and direct to distributor sales from FibroGen was $92,300,000 this quarter compared to $76,400,000 in the Q2 of 2023, an increase of 21% year over year. This growth has enabled us to achieve and maintain a brand value share of 46 percent in the category in China.

Speaker 4

From total roxadustat net sales in China, FibroGen's net transfer price from sales to the JDE was $28,000,000 this quarter compared to $23,800,000 in the Q2 of 2023, an increase of 18% year over year. Net transfer price is the best reflection of FibroGen's portion of the cash received from roxadustat in China. During the quarter, as I stated earlier, we also released $18,000,000 from deferred revenue due primarily to changes in forward looking expectations for roxadustat in China. As a result, FibroGen recorded $46,000,000 in net revenue for the quarter for roxadustat sales to the JDE and $3,600,000 of direct to distributor sales from FibroGen China, totaling $49,600,000 on a U. S.

Speaker 4

GAAP basis. Our revenue growth highlights the continued robustness in execution and physician and patient adoption of roxadustat in China. For full year 2024 4 year models, we are raising our forecast for FibroGen China net product revenue to be between $135,000,000 to $150,000,000 in the U. S. GAAP basis, which assumes the forecast of roxadustat net sales in China should range from $320,000,000 to $350,000,000 Now moving down the income statement, Operating costs and expenses for the Q2 of 2024 were $61,600,000 compared to 132 $400,000 for the Q2 of 2023, a decrease of $70,800,000 or 53% year over year.

Speaker 4

Operating expenses for the quarter came in below our guidance range of $70,000,000 to $80,000,000 a reflection of our continuous drive on disciplined spend showcased in our Q2 results. R and D expenses for the Q2 of 2024 were $34,100,000 compared to $95,500,000 in the Q2 of 2023, a decrease of 64% or $61,400,000 year over year, primarily reflecting reductions in pemrevlumab clinical trial spend, R and D infrastructure and one time Fortis acquisition expenses. Of our $34,100,000 of R and D expenses, approximately 58% was related to pemrevlumab, 18% directed to FG3246, 18% to support our immuno oncology pipeline assets with the remaining 5% directed towards roxadustat development activities. We expect our pamrevlumab and immuno oncology R and D expenses to decline significantly in the second half of the year. SG and A expenses for the Q2 of 2024 were $22,300,000 compared to $31,200,000 in the Q2 of 2023, a decrease of 29 percent or $8,900,000 year over year, primarily driven by the company's cost reduction efforts resulting in a leaner SG and A infrastructure.

Speaker 4

Finally, cost of goods sold for the Q2 of 2024 was 5 point $2,000,000 compared to $5,700,000 for the Q2 of 2023. During the Q2 of 2024, we recorded a net loss of $15,500,000 or $0.16 net loss for both basic and diluted share as compared to a net loss of $87,700,000 or $0.90 per basic and diluted share for the Q2 of 2023. Given the recent negative pamrevlumab outcome, we are winding down any remaining obligations related to pamrevlumab and our immuno oncology assets during the second half of twenty twenty four. We have also announced a reduction in our U. S.

Speaker 4

Workforce of approximately 75%. With this backdrop and excluding any restructuring charges in the 3rd or Q4, we expect our total operating expenses including cost of goods sold in the 3rd Q4 to be between $45,000,000 $55,000,000 per quarter, with the Q3 estimated to be at the higher end and the 4th quarter estimated to be at the lower end of this range. Now shifting towards cash. As of June 30, we reported $147,100,000 in cash, cash equivalents and a claims receivable. It is important to spend a few moments highlighting the changes in our cash balance.

Speaker 4

Our cash burn in the 2nd quarter reflects a true up payment to Astellas of $35,300,000 We expect any future true up payments to be significantly lower moving forward as Astellas has reduced their future orders of roxadustat to reflect a slower than anticipated launch in their territories. Additionally, we also had a one time inventory settlement payment of $11,500,000 to AstraZeneca in the quarter due to the termination of our U. S. Rest of world agreement. Excluding these cash outflows, our net operating cash burn was $20,800,000 in the 2nd quarter.

Speaker 4

We expect our second half twenty twenty four quarterly net operating cash burn to be lower than what we experienced in the 2nd quarter. We believe that the focus towards cost reduction and cash maximization initiatives will enable us to continue to pursue our strategic direction. Finally, and as we have continually communicated, we expect our cash, cash equivalents and accounts receivable to fund our operating plans into 2026. Thank you. And now I will turn the call back over to Ming.

Speaker 2

Thank you, Juan. In closing, we remain excited about the company's prospects and the potential value they provide to stakeholders. Roxadustat continues to perform very well in China, where we expect an approval decision of our sNDA for the chemotherapy induced anemia indication in the second half of this year. And our partner ourselves continues with the commercialization of roxadustat in Europe, Japan and other markets. Additionally, given that we regain rights for roxadustat for US RNW territories from AstraZeneca, we are actively exploring potential partnering opportunities in anemia in patients with lower risk MDS.

Speaker 2

With regards to FG-three thousand two hundred and forty six and PEP-forty six, we recently reported compelling top line data from the Phase 1 monotherapy study of FG-three thousand two hundred and forty six in metastatic castration resistant prostate cancer and will publish the totality of the Phase 1 data in an upcoming manuscript. We've also presented compelling preliminary top line data from the dose escalation Phase 1b study of FG-three thousand two hundred and forty six in combination with enzalutamide and mCRPC at the 2024 ASCO Annual Meeting in June. We anticipate initiation of our Phase 2 monotherapy dose optimization study of FG-three thousand two hundred and forty six in mCRPC in the Q1 of 2025 and we anticipate top line results from the Phase 2 portion of the combination study in the first half of twenty twenty five. As we stated earlier in the call, we will initiate partnership discussions for our 2 early stage immuno oncology assets FG3,165 and FG3,175 with the aim of ensuring their continued development and providing FibroGen with potential access to non dilutive capital. Finally, we have a strong balance sheet and expect our current cash position, as Juan said, to fund operations into 2026.

Speaker 2

In summary, we have made some very difficult, but necessary decisions based upon the outcomes of our 2 late stage pemrevlumab trials in pancreatic cancer. We believe these decisions best position FibroGen to successfully execute against our updated strategic priorities as we strive to attain evaluation that we believe is more reflective of our current and future roxadustat revenue streams, 1st class ADC and companion PET imaging agent and our strong balance sheet.

Speaker 4

I would like to thank all of

Speaker 2

the employees of FibroGen for their continued hard work and perseverance over the last few months. I would now like to turn the call over to the operator for Q and A.

Operator

Thank you. We will now begin the question and answer session. The first question comes from Andy Hsieh with William Blair. Please go

Speaker 4

ahead. Hi.

Speaker 5

This is Dalton Greenwood on for Andy Hsieh. Thank you for taking our questions. Given the singular focus on FG-three thousand two hundred and forty six now, do you have any plans on accelerating its development just to maximize the asset's value for shareholders? In parallel, you have a very robust China business based on the strength of roxadustat's clinical profile. Could you comment on the liquidity of cash generated in China?

Speaker 5

In other words, how do you as a U. S. Entity access the cash derived from roxadustat revenue? Thank you.

Speaker 2

Hey, Dalton. This is Thane. Thanks for your questions. I'll touch on the $3,246,000 question and then I'll ask Juan to touch on the question about liquidity of cash from our China operations. And obviously Chris Chung is here as well to complement Juan if needed.

Speaker 2

As it relates to 3,246, we it has always been a priority asset for us since we acquired it from Fortis in May of last year. We just didn't highlight it to the extent that we highlighted pamrevlumab just because of proximity of the catalyst for pamrevlumab from that time. And so it has been and will continue to be an asset that we will try to prosecute with speed because that's the name of the game in our business is quality and speed. We have important an important interaction coming up with the FDA this quarter, which will help inform the design of the Phase 2 trial and we would expect them to be able to plan on the initiation of the Phase 2 program after that point in time. So yes, we are prosecuting it as quickly as we can.

Speaker 4

Yes. And with regards to your second question, this is one. With regards to the cash in China, cash generation in China, over the course of the last year or so, we have been repatriating cash from China based on a facility that we had set up as registered debt with our China operations. We will continue on that front. And beyond that, we are also exploring other facilities, other avenues to continue to repatriate cash from China.

Speaker 4

So those are I think some of the elements that we're continuously evaluating to bring and bring that money back to the U. S.

Speaker 1

Great. Thank you.

Operator

The next question comes from Jason Gerberry with Bank of America. Please go ahead.

Speaker 6

Hi. Yes, this is Dina Ramadin on for Jason Gerberry. I just had 2 questions from us. The first is just I guess on sort of an expected timeline of how soon you could look to partner your 2 preclinical candidates. How early could you begin to have those discussions?

Speaker 6

Is it kind of fair to assume that you'd look to generate some Phase 1 data beforehand? Or would that be on the back of more of like a preclinical data? And then I have one follow-up.

Speaker 2

Thanks, Tina, for the question. So the data package that we would have to showcase to potential interested parties will be a preclinical data set. Clearly for the anti GALLECTIN-nine antibody, it's a very extensive data set because of the fact that we had recently had the IND cleared. And so we believe there's sufficient information there for potential partners to be able to make the determination of what the path forward could mean and the potential value to them. For CCRA, we had previously stated that we expected to file an IND sometime in the 2025 timeframe.

Speaker 2

And so we've done, as I've said in the opening comments, we've done quite a lot of work on affinity, maturation, specificity, potency and feel like as we compare our antibody to other antibodies, other CCRH, as best we can compare them, in SAR comparisons and things of that nature that we feel very, very good about the optimization work that our team has done on the CCR8 antibody. And so that would be information that a potential partner would have access to as well. And just to maybe reiterate, there's really a couple of different dynamics in play with these two particular targets. There's only one other anti Gal9 antibody in the clinic and that's from Galp Oncology, which is a PureTech spin off. And so we think we're in a really good position from a timing perspective with our Gal-nine antibody.

Speaker 2

And then with the CCRA category, while we aren't in as favorable of a competitive position, it is an incredibly hot space right now as I'm sure you're aware. There's a lot of activity and it seems like there's emerging excitement about the mechanism as well. So we feel good about the ability to partner both of these assets and we're going to start those activities immediately.

Speaker 6

Got it. Thank you. And then one more follow-up from me here. Just what is I guess what's the nature of the update we can expect from the top line data of G3246's combo trial with enzalasamide. Just in terms of patient number of patients and duration of follow-up that we could expect to see?

Speaker 6

And then wondering if you could please maybe set a bar that you would consider clinically meaningful on the PFS benefit that you'd like to see, sort of confirm the durability of response that we saw at the prior data cut? Thank you.

Speaker 2

That's a really good question, Dean. I'll turn it over to Deane to answer that one and then I'll follow-up if needed. Deane, do you want to take that one?

Speaker 3

Sure. Thank you, Tayah, and thank you Dina for this question. So the combination study at UCSF, as you have seen at ASCO has already completed the Phase 1 dose escalation and they have already started the Phase 2 expansion component after realizing the recommended Phase 2 dose. So having said that, the data that you have seen from dose escalation is very, very encouraging because of the fact that the majority of those 17 patients were post 2 prior ARSIs. This population is They have also failed abiretron acetate.

Speaker 3

They then constitute this area of medical needs. So for those patients to have 10.2 months radiographic PFS, this is very exciting. The bar for this setting, meaning after patients have failed 2 prior ARSIs is around 6 months RPFS. So as you can see, the combo has already exceeded the current bar, which is only 6 months. In terms of moving up the treatment line, once they we are going to see potentially much higher RPFS.

Speaker 3

And in this case, the comparison will be somewhere between 18 to 20 months. This is the current bar with abiretterone acetate and enzalutamide in the first strictly first line setting. So this is the current landscape and we are hoping that in the Q1 of or I mean first half of next year, we will be able to publish the top line results from the combination having a total of 36 patients in the study. So it will be a robust data set to give us a meaningful signal of clinical activity in either line, second line or first line setting.

Speaker 2

Thanks, Deja. That was excellent. But Adena, one thing that I would add is that these additional patients that are being enrolled now as part of the expansion cohort will also have PET imaging data as well. So that's in addition to a more mature RPFS that Daya spoke to, we'll also begin to see some information and be able to characterize CD46 expression and potential response as well. Small numbers, but it will be an important additional data point for us.

Speaker 6

Appreciate all the color. Thank you so much.

Operator

Next question comes from Paul Choi with Goldman Sachs. Please go ahead.

Speaker 7

Hi, good afternoon and thank you for taking our questions. My first question is on the updated guidance. And can you maybe comment on how much of this may be driven by a potential raise guidance may be driven by potential approval of a CI indication versus continued volume growth from the CKD indication? And then my second question is, I believe in July a generic roxadust dose that was approved. Curious if you are starting to see it in the marketplace there yet.

Speaker 7

And just what your thoughts are on the pricing impact? I think you had about a 12% headwind from pricing on your volume offsetting your volume this quarter. So any updated thoughts on the pricing impact from the competitive launch would be appreciated.

Speaker 2

Yes. Thanks, Paul. It's May. I'll go ahead and start and then I'm going to turn it over to Chris as well. In terms of the underlying performance of roxadustat in China and the raise of the guidance, it's 100% due to continued strong performance by the team in the anemia CKD indication and that indication by itself.

Speaker 2

There's no pre ordering in anticipation of a CIA approval or anything like that. So it's all just inherent strong underlying demand. In terms of the generic entrants, as we said in our opening remarks, there have been 2 generics that are approved. This walk down from 33% volume growth to 31% to 21% revenue growth, there was a 7% price reduction as part of the VPP renewal at the end of last year. And so there's not a 12% price headwind, there was a 7% price headwind.

Speaker 2

And then the expected pricing will really be dependent upon what happens if and when the government calls for VBP for Roxdu set to be included in VBP. Let me ask Chris to add some additional color given her intimate knowledge of the environment there.

Speaker 8

Yes. Thank you, Zane. So, Paul, we have not seen the launch of either generic on the market. So it's very difficult to give you a sense of market adoption. With respect to pricing, at this point in time, there are no plans to change pricing in response to generic entry until we are subject to both.

Speaker 7

Okay, great. And if I could squeeze in one pipeline question please just on 3,246 to follow-up on the combination data. I guess as you think about planning that, obviously you'll work on the dose optimization starting next year. But as you look down the road, is there any particular population beyond the PET positive that you think might be additionally benefiting from the combination? Or will your primary focus in terms of like increasing the probability of success be focused primarily on the pet positive population?

Speaker 2

Yes. So I'll start off and then, Deo, I'm going to turn it over to you. Sure. So really what we're going to be exploring in the Phase 2, Paul, is with the PET is trying to understand if there is a correlation between CD46 expression in response to the drug that could then allow us to enrich the base 3 portion of the trial. And so we're not using it as any sort of a diagnostic or patient selection criteria as part of the Phase 2.

Speaker 2

We're using it to understand if there is a correlation and if there is then that would really enable us to enrich the Phase 3 portion of the trial. Deo, we'll go ahead and add to that and then Paul, we'll see if that addressed your question.

Speaker 3

Yes, Paul. So thank you for the question. I completely confirm what Phil has just mentioned. But in top of that, remember that data derived from our Phase 1 study that was conducted by Fortis, in addition to the current combination, QPSF with enzalutamide has all been conducted in an unselected population. So that is very true.

Speaker 3

Our primary focus will be to enhance the opportunity for patients to derive clinical benefit by pre selecting them with BED46. But when we talk to our KOLs, they also tell us that there could be another opportunity in all comers if the data continue to show robustness and strong signal of RPFS. So this is like not something that we will abandon, but it is going to be another opportunity in all comers as long as we continue to see very strong data. But the primary focus will be PET46 preselection.

Speaker 7

Okay, got it. Thank you very much.

Speaker 2

And then guys, we still have a few more minutes. So Dalton, Deena, Paul, if you have any additional questions?

Operator

There appear to be no further questions in the queue. So this will conclude our question and answer session. I would like to turn the conference back over to Sane Weddig for any closing remarks.

Speaker 2

Thank you. And we really appreciate the participation in

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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Earnings Conference Call
FibroGen Q2 2024
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