Good day, and thank you for standing by. Welcome to the FibroGen's First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David DeLucia, Vice President of Investor Relations.

Good afternoon, everyone. Thank you for joining today to discuss our first quarter 2024 financial and business results. I'm David DeLucia, Vice President of Corporate FP&A and Investor Relations at FibroGen. Joining me on today's call are Thane Wettig, our Chief Executive Officer; Dr. Deyaa Adib, our Chief Medical Officer; Juan Graham, our Chief Financial Officer; Dr. John Hunter, our Chief Scientific Officer; and Chris Chung, our Senior Vice President of China Operations. Following our prepared remarks, we will open the call to your questions. I would like to remind you that remarks made on today's call include forward-looking statements about FibroGen. Such statements may include but are not limited to, our collaborations with AstraZeneca and Astellas; financial guidance; the initiation, enrollment, design, conduct and results of clinical trials; our regulatory strategies and potential regulatory results; our research and development activities; commercial results and results of operations; risks related to our business and certain other business matters. Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in that statement. A more complete description of these and other material risks can be found in FibroGen's filings with the SEC, including our most recent Form 10-K and Form 10-Q. FibroGen does not undertake any obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The press release reporting our financial results and business update and a webcast of today's conference call can be found on the Investors section of FibroGen's website at www.fibrogen.com. With that, I'd like to turn the call over to our CEO, Thane Wettig.

Thank you, Dave. Good afternoon, everyone, and welcome to our first quarter 2024 earnings call. On today's call, I will focus our stakeholders on the 4 strategic pillars, shaping our company's future trajectory. Additionally, I'll offer insights into the progress of our pamrevlumab and roxadustat programs. Dr. Deyaa Adib, our Chief Medical Officer, will review the top line data from our CD46 targeted antibody drug conjugate, FG-3246 in metastatic castration-resistant prostate cancer and articulate why we feel so strongly about our recently released Phase I top line results. And Juan Graham, our CFO, will review the financials, after which we will open the call for your questions. Starting on Slide 3. FibroGen has four key strategic pillars that we believe offer significant value today. First is pamrevlumab where we are preparing for readouts from two pivotal Phase III studies in pancreatic cancer. In the coming months, we plan on releasing top line data from Precision Promise, Pancreatic Cancer Action Network's Phase II/III adaptive platform trial for metastatic pancreatic cancer and from our ongoing LAPIS Phase III trial in locally advanced pancreatic cancer. Pancreatic cancer is a disease with substantial unmet clinical need and represents a significant commercial opportunity for pamrevlumab, which has demonstrated an effect in both preclinical and early clinical studies in pancreatic cancer in which we will detail in a moment. Second is roxadustat. Roxadustat is approved in over 40 countries, generates significant net revenue and positive cash flow and provides FibroGen with material and growing economics through our partnerships with AstraZeneca and Astellas Pharma. We're expecting an approval decision from the China authorities in the second half of 2024 and for chemotherapy-induced anemia, which, if approved, would represent meaningful revenue growth on top of the substantial revenue generated by roxadustat in anemia associated with chronic kidney disease.…

Thank you, Thane. Before I begin, I would first that I'm delighted to be part of the team here at FibroGen. I've been here for just over 2 months now and I'm very excited about the prospects of the company's innovative oncology pipeline. Moving to Slide 21. FG-3246 is a first-in-class ADC for metastatic castration-resistant prostate cancer, colorectal cancer and other tumor types. FG-3246 binds to a cell receptor target that internalizes upon antibody binding and is present in approximately 50% to 70% of prostate tumors, but that demonstrates a very limited expression in most normal tissue, making it an ideal ADC target candidate. FG-3246 is comprised of an anti-CD46 antibody, YS5 linked to an antimitotic agent, MMAE, which is clinically validated and FDA-approved ADC payload. On Slide 22, we show that FG-3246 has demonstrated efficacy against CD46 expressing tumors in both preclinical and clinical studies. An associated PET imaging biomarker PET46 utilizes the same targeting antibody has FG-3246 and is under clinical development at UCSF. It is constituted of the YS5 antibody coupled to the radionuclide zirconium-89, and in preclinical studies demonstrate specific targeting of and uptake by CD46 positive tumor cells. FG-3246 has demonstrated monotherapy clinical efficacy in metastatic castration-resistant prostate cancer. Now let's get into the top line results from the monotherapy Phase I trial in mCRPC on Slide 23. In the Phase I dose escalation component of the study, dose levels of FG-3246 were administered in 21-day cycles. In the dose expansion arm of the trial, patients were treated at 2.7 milligrams per kg adjusted body weight dosing to 100-kilogram until disease progression or occurrence of toxicity, for example, dose-limiting toxicities. The endpoints were safety, tolerability and antitumor activity as measured by the decline of prostate-specific antigen from baseline, objective tumor response rate in patients with…

Thank you, Deyaa. And again, welcome to FibroGen. I will begin my remarks with a revenue summary for the first quarter of 2024, subsequently providing financial performance details on our China business for the quarter along with 2024 guidance for our China operations and finally, I will wrap up with OpEx results and our cash outlook. For the first quarter of 2024, total revenue was $55.9 million compared to $36.2 million for the same period in 2023, an increase of 55% year-over-year. The total revenue increase was driven by net product revenue in China and onetime drug product revenue recognized due to the termination of the U.S. rest of the world AstraZeneca agreement. I will now provide further detail on revenue. In the first quarter of 2024, we recorded $30.5 million of net product revenue for roxadustat sales in China compared to $24.2 million in the first quarter of 2023, representing an increase of 26% year-over-year. This increase was driven by a volume increase of 39% versus last year. Roxadustat performance in China continues to deliver strong results, and we are delighted by this continued growth. In Q1 2024, we recorded $0.9 million in development revenue compared to $3.9 million during the first quarter of 2023. Now that we have terminated the AstraZeneca U.S. rest Of world agreement, we expect our development revenue to decline in 2024 versus last year. As we move forward, we expect quarterly development revenue to be below $0.5 million for the remainder of the year. In Q1 2024, we recorded $24.5 million of drug product revenue compared to $2.1 million during the first quarter of 2023. As a result of the recent termination of our collaboration with AstraZeneca in the U.S. rest of the world territories, we recorded onetime drug product revenue of $25.7 million,…

Thank you, Deyaa and Juan, for your clinical and financial updates. In closing, we are excited about our near-term prospects and the potential value they provide to stakeholders. To recap, we expect top line data from the following two pamrevlumab pivotal studies. Our Phase II/III pancreatic cancer action network Precision Promise trial in metastatic pancreatic cancer in mid-2024 and the LAPIS Phase III trial in locally advanced pancreatic cancer in the third quarter of 2024. Roxadustat continues to perform very well in China where we expect an approval decision of our sNDA for chemotherapy-induced anemia indication in the second half of this year, and our partner Astellas continues with the commercialization of roxadustat in Europe, Japan and other markets. Additionally, we are excited to regain rights for roxadustat for U.S. ROW territories from ACE and have been exploring potential partnering opportunities in anemia in patients with lower-risk MDS. With our early-stage pipeline, we recently reported compelling top line data from the Phase I monotherapy study of FG-3246 in metastatic castration-resistant prostate cancer and will publish the totality of the Phase I data in an upcoming manuscript. We will be presenting top line data from the dose escalation Phase Ib study of FG-3246 in combination with enzalutamide in mCRPC at the 2024 American Society of Clinical Oncology Annual Meeting in June. We anticipate initiation of our Phase II monotherapy dose optimization study of FG-3246 and in MCRPC in the second half of 2024. We anticipate FDA clearance of our IND for FG-3165, our anti-Gal9 antibody in the near term and we anticipate filing an IND for FG-3175, our anti-CCR8 antibody in 2025. Additionally, we have a strong balance sheet and expect our current cash position, as Juan said, to fund operations into 2026. In summary, we will continue to execute against our strategic priorities as we strive to attain a valuation that we believe is more reflective of our current and future roxadustat revenue stream, near-term pamrevlumab readouts in pancreatic cancer, our oncology pipeline and our strong balance sheet. I would like to thank all the employees of FibroGen for their continued hard work and resilience over the last few months. I would now like to turn the call over to the operator for Q&A.

[Operator Instructions] Our first question comes from Andy Hsieh with William Blair.

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

Yes. Andy, thanks for your questions. On the LAPIS and the slowing event rate, it's really just math. We enrolled 284 patients. There are a certain number of OS events that need to be accrued to hit the prespecified power that we had articulated in our SAP and so as you accrue OS events, there are a fewer number of patients to then accrue the remaining OS events. And that's where we are with that last part of the trial, where there are, thankfully, a number of patients who are still alive but fewer patients to accrue these additional OS events. And this is just a common occurrence in an event-driven oncology trial or any event-driven trial of this type. And so like we said, in our prepared remarks, we're looking every week at the number of OS events. We're getting very close to that prespecified number, and we'll continue to keep you updated on once we receive -- once we reach that the number of OS events that reach -- then the prespecified power that will allow us to then to lock the database, perform the analysis and then release top line results. And as we said, in the remarks that we expect that to be sometime in Q3. I would anticipate it to be earlier in Q3 but we wanted to say Q3 as opposed to Q2, which was the update last time just to reflect the most recent trend of event rates. Does that make sense?

Yes, that's very helpful.

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

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

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

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

Yes. It's a great question, Andy. I'm going to turn it over to Deyaa for his thoughts.

So let me answer. Thank you for the question. First of all, it's a dose escalation study in combination with enzalutamide, and it will include patient populations from the first and second-line setting prior to receiving docetaxel in the mCRPC paradigm. So having said that, we are looking here to prove the hypothesis that patients who have been previously exposed to second-generation, our ARSIs are truly overexpressing CD46. So this is what the objective of the trial is. Secondly, there has not been yet a threshold or a benchmark associated with the results because it's still a Phase I escalation and will be followed by cohort expansion so based on what we see in terms of patient population, first versus second line setting, clinical benefit, we will be able to decide and discuss with KOLs, what would be a clinically meaningful benefit not just that, also what will be the threshold for a radiographic progression-free survival because this will be really the end point upon which we can start thinking about a registration path when we combine with enzalutamide. Regarding PSA50 or objective response rate. As you are aware, PSA50 is a pharmacodynamic biomarker, it's an indication of clinical activity but it's not a clear indication for how long patients will have disease-free survival or progression-free survival. In terms of objective response rates, I also would like to remind you, it will pertain only to patients who have measurable disease at baseline. So we may see signals there. But remember that about 40% of patients with prostate cancer will show up with measurable disease and 60% will show up with only bone lesions in the metastatic setting.

Next question comes from Jason Gerberry with Bank of America. .

This is Dina on for Jason. Congrats on the progress this quarter. Just one from us on FG-3246. Could you just explain the reason for the Phase II dose optimization study that you're planning on initiating in the second half of this year? Like is there more dose optimization necessary to supplement the Phase I data because it sounds like you're meeting with the FDA ahead of kind of launching this Phase II trial. So just curious how it will inform your Phase II/III registrational trial?

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

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

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

Our next question comes from Paul Choi with Goldman Sachs.

Just to follow up on the prior question with regard to the Phase II monotherapy dose optimization. Your time line calls for data potentially in 2026. I'm just curious if you -- if there's anything in terms of your insight from the monotherapy portion, particularly at the higher doses that might be able to accelerate that time line for the Phase II dose optimization. My second question is just with regard to Evrenzo in China. You've maintained your updated timing for the CIA indication for second half of this year. But just to confirm your expectation for inclusion in the NRDL would be for no earlier than calendar 2026. If you could confirm that, that would be great.

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

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

Great. And then Paul, I'll ask Chris to comment on the updated CIA timing guidance.

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

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

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

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

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