Welcome to the FibroGen Incorporated First Quarter 2018 Financial Results Conference Call. My name is Michelle and I'll be your operator for today's conference. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. For opening remarks and introduction, I will now turn the call over to Karen Bergman, Vice President of Investor Relations and Corporate Communications. Please go ahead.

Michelle, thank you. Good afternoon everyone and thank you for joining our call today. Today, we are reporting financial results and corporate update for the first quarter of 2018. Joining me on the call today are Tom Neff, Chairman and Chief Executive Officer, Dr. Seth Porter, Vice President of Fibrosis Therapeutics, Dr. Peony Yu, Chief Medical Officer and Mr. Pat Cotroneo, Chief Financial Officer. Following our prepared remarks, Tom will wrap up with a discussion of key objectives and upcoming milestones. And then we will open the call for Q&A where we will also be joined today by Dr. Elias Kouchakji, Senior Vice President, Clinical Development, Drug Safety and Pharmacovigilance. During this call, we may make forward-looking statements regarding our business, including our collaborations with AstraZeneca and Astellas, financial guidance, the initiation enrolment, design, conduct and results of clinical trials, our regulatory strategies, and potential regulatory results, our research and development activities and certain other business matters. For risks and uncertainties regarding our business and statements made on the call today, as well as factors beyond our control that may cause differences between current expectations and actual results, we refer you to our annual report on Form 10-K for the fiscal year ended December 31, 2017, and our quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2018, filed with the Securities and Exchange Commission. Copies of these filings can be found in the Investors section of our website. We undertake no obligation to update any forward-looking statement whether as a result of new information, future developments, or otherwise. The format for today's call will include remarks from FibroGen's management team, and then we'll open the lines up to take your questions. The press release reporting our financial results and business update and a webcast of today's conference call can be found on the investor section of FibroGen's website at www. Fibrogen.com. The webcast will be available for two weeks from today's date. And with that it's my pleasure to turn the call over to our CEO, Tom Neff.

Thank you, Karen. Good afternoon to everyone, sorry for the technical screw up the slowed us down to get started. Thank you for joining us today. We have two exciting last-stage drug candidates Roxadustat for anemia and Pamrevlumab for treatment of deep organ fibrosis and solid tumors. And we now have a strong clinical data in multiple therapeutic indications with both with significant market need in each case. I'd like to provide a brief first quarter update including outlook for our programs and a few additional comments on Roxadustat program in China. Our Phase 3 program in Roxadustat to treat anemia in CKD patients targets approval in four regulatory jurisdictions with the global clinical program approaching completion, the Roxadustat team in increasingly busy with the preparation of NDA submissions. In the US and EU starting with our Roxadustat at global program, in these territories, with the seven Phase 3 studies designed to meet US and EU regulatory requirements, we have enrolled over 8,000 CKD patients over the past few years. We recently reached agreement with AstraZeneca that the final patient recruitment for a total of five studies sponsored by our two companies will be completed across the board in early June 2018 or next month. We expect to reach the requisite number of adjudicated MACE accruals for the dialysis and non-dialysis pools with last patient, last study visit expected by end of September. We plan to report top line results from these five studies before year-end 2018. To fulfill pool MACE requirements for the US, we expect to combine the results in FibroGen and AstraZeneca studies with the relevant Astellas European studies. This will mean a total of three studies of Roxadustat versus placebo and non-dialysis dependent CKD and four studies in Roxadustat [indiscernible] and dialysis dependent CKD. We plan…

Thank you, Tom. As mentioned, we are completing multiple phase 3 studies to meet the registration requirements of four regulatory agencies in collaboration with AstraZeneca in the US and China, and with Astellas in Europe region and Japan. Tom has covered China where our NDA is currently under review by the Chinese regulatory agency. My update today will focus on progress in the US, Europe, and in Japan. Our US EU phase three program consists of four dialysis studies in which Roxadustat is compared with EPO and three non-dialysis studies in which Roxadustat is compared to a placebo. We have reach alignment with AstraZeneca in completing enrollment in June, we have already enrolled more than 4,200 patients total in the three non-dialysis studies and we will have enrolled over 4,600 patients across the four dialysis studies. With the last patient in September, we expect to have sufficient data for MACE endpoint analysis. Primary efficacy assessment of the Roxadustat phase 3 program is based on results from the individual studies which we plan to report in the fourth quarter of this year. The adjudicated MACE data from these seven phase 3 studies will be analyzed in two pools, the dialysis and separately the non-dialysis prior to our NDA submission planned for first half of 2019 .The independent Data Safety Monitoring Board or DSMB has been conducting periodic safety review of these clinical studies since phase 2 and throughput phase 3 with evaluation by treatment arm. At the most recent DSMB meeting, at the end of this March, we received the recommendation to continue studies as per current protocols. Next, I would like to briefly highlight our decision on using placebo as a comparator in our large US EU non-dialysis program which is about to finish. Placebo is considered a gold standard…

Thank you, Peony. Dr. Seth Porter will now discuss the status of our Pamrevlumab product platform and corresponding lead therapeutics indications. Seth?

Thank you, Tom. In IPF, positive results and ongoing analysis from our randomized double blind placebo control phase 2 clinical trial continues to be well received by clinical thought leaders. Four FibroGen abstracts had been accepted for poster presentation at the upcoming ATS 2018 meeting in San Diego. These include quantitative measures of changes in lung fibrosis by HRCT, health related quality of life assessment by the St. George Respiratory Questionnaire or SGRQ, PK and PKPD modeling for Pamrevlumab in IPF patients, and updated preclinical results from the mouse model of radiation induced lung fibrosis. With respect to HRCT, Pamrevlumab demonstrated a statistically significant reduction compared to placebo in progression of lung fibrosis using the most up to date methods for quantifying fibrosis in IPF patients. These results are consistent with results previously published from our open-label IPF study. The quantitative HRCT poster will be presented on Sunday May 20. The SGRQ assessment of health related quality of life is an instrument that has been broadly used in IPF clinical studies. Patients treated with Pamrevlumab extended to have improved scores in the SGRQ assessment consistent with FTC and HRCT results while placebo treated patients tended to show worsening scores as expected for the progressive disease. The SGRQ poster will be presented on Monday May 21. The data to be presented from the radiation induced fibrosis model expands upon the results we published last year showing that lung fibrosis is associated with a spectrum of changes in gene expression patterns and that systemic treatment with Pamrevlumab can effectively reverse or mitigate many of those fibrosis associated gene expression changes. That poster will be presented on Sunday May 20. Our understanding of the clinical potential of Pamrevlumab in pulmonary fibrosis has grown from animal and human studies. That, combined with positive efficacy…

Thank you, Seth. Pat Cotroneo, our Chief Financial Officer will now walk us through financial highlights for the first quarter of 2018 Pat?

Thank you, Tom. Quick comment before I discuss results. As of January 1, 2018, we adopted on a fully retrospective basis the accounting standards update 2014-09 titled revenues from contracts with customers also known as AFC-606. Unless otherwise indicated, all financial results of the previous periods and years have been recast as if the company had adopted this standard since the start of our current collaboration agreements; Astellas since 2015 and AstraZeneca since 2013. For more information on our adoption of this new revenue guidance please see note one of our quarterly report on Form 10-Q filed with the SEC earlier today. As announced today, total revenue for the quarter ended March 31, 2018, was $31.9 million as compared to $29.4 million for the first quarter of 2017. For the same period, operating expenses were $72.5 million and net loss was $41.4 million or $0.50 per basic and diluted share as compared to operating expenses of $58.3 million, a net loss of $30.6 million or $0.48 per basic and diluted share for the same period in the prior year. Included in operating expenses for the quarter ended March 31, 2018 was an aggregate noncash portion totaling $12.4 million, of which, $10.9 million was a result of stock-based compensation expense. As compared to an aggregate noncash portion totaling $10.5 million of each $8.4 million was a result of stock-based compensation expense. Upon the adoption of the new revenue guidance under AFC-606 as of January 1, 2018, we recast our consolidated statement of operations and balance sheet from the amounts previously reported. This resulted in a $2.6 million increase in revenue for the first quarter of 2017 and a cumulative net reduction in revenues through year-end 2017 of $34.7 million which will be recognized over the future remaining development period. As of March 31, 2018, we had $730.4 million in cash as compared to $762.2 million at the end of 2017. For these purposes, total cash refers to cash, including cash, cash equivalents, receivables, investments, consisting primarily of investment grade corporate debt and restricted time deposits relating to our building lease. We are currently projecting a yearend cash balance in the range of $600 million to $620 million, excluding milestone payments that may be received under our collaboration agreements with AstraZeneca and Astellas. Thank you, everyone. And I would like to turn the call back over to Tom.

Thank you, Pat. 2018 looks to be an exciting and defining year for both Roxadustat and Pamrevlumab. For Roxadustat, patient enrolment in the five US phase 3 studies run by FibroGen and AstraZeneca will conclude in the second quarter of 2018. We plan to report top line results from phase 3 Roxadustat clinical studies in CKD, anemia in the fourth quarter of 2018, along with AstraZeneca. In China, we anticipate a market approval decision for Roxadustat by year end 2018. For Pamrevlumab in IPF, we have seen statistically significant benefits from Pamrevlumab therapy and progression of fibrosis, as measured by quantitative HRCT. These and other results will be presented this month at ATS. We expect to report on the Phase 3 program in our next quarterly call. In pancreatic cancer, we will report updated Phase 2 trial results for Pamrevlumab in locally advanced and resectable pancreatic cancer at the ASCO annual meeting in June. We expect to reach agreement with FDA on pivotal clinical trial design mid-year, supporting a registration pathway for locally advanced and resectable pancreatic cancer. With that, I would like to turn the call back over to Karen for Q&A. Karen?

Thank you, Tom. Michelle, if you kindly open up the lines for questions.

[Operator Instructions] First question in the queue ma'am comes from Joel Beatty with Citi.

The first one is regarding the non-inferiority goal for the MACE events in the phase 3 roxadustat program. Could you give a sense of what that boundary is or how much of a wiggle room there is, if to realize non-inferiority?

So, Joel, thanks for the question. So we are looking at - we're using - we analyze - so - now just to refresh ourselves, the non-dialysis studies are the ones that use placebo control as the one I mentioned. And so the non - and we will - now the studies are still blinded, and so we will need to wait until unblinding to make that comparison of the adjudicated MACE across the three studies from over 4200 patients. And to show - to demonstrate the non-inferiority. So, and then in dialysis, we will be pulling from four studies and similarly, the roxadustat will be grouped into one treatment arm and then will be compared with the epo comparators across these studies. And the first path will be non-inferiority and once we succeed in that, then - if and when we do succeed in that, then we will move for superiority comparison. So I hope that answers your question, Joel.

The next question comes from Michael Yee with Jefferies.

Roxa question and a follow up. On the MACE analysis, can you guys just talk about why you're waiting a couple of months to release the data as opposed to just putting it all out with the top line efficacy at once? Maybe talk a little bit about what was driving that rather than just put it all out there for everybody in one press release? And then related to that, following along the last question, we want to understand how you handicap non-inferiority versus superiority and specifically whether or not your full base case is, it is non-inferiority with all the MACE going and expanding in the right direction for roxa.

Michael, I didn't quite follow that last phrase in the second question. Could you say it one more time?

I would just like to understand whether the base case is that it is non-inferiority with a trend favoring the drug arm on all MACE events and whether or not the types of patients today versus ten years ago in treat and the lower event rate has been accounted for. Thank you.

Okay. So let me do the first part and then Peony, you're going to get the meat of this thing. It would be wrong to say there was a delay with regard to the accrual of safety pools. What we have to do is to take the five studies that AstraZeneca and ourselves will report out in the fourth quarter. So these are now obviously, AstraZeneca in Europe is running these studies and then we - to those studies, we didn't have to add the Astellas studies, which is not part of the reporting in the fourth quarter and done under a set of rules for Europe that differs a little bit from what we're doing in the US. And so in order to properly account for the amount of time we think it will take for our two partners to sign off on the various things that have to be done, because usually this goes deep into their organizations and it takes a little while for everybody to get signed off. We provide for some extra time to set up a calendar and goals and so on. It would also be fair to say that if top line reporting is in December, lots of people are incentivized to have the MACE thing turned around by March, but we're not saying that officially, we're saying easy, mid-year and we agreed with that. So in effect, report out that pooled MACE and then submit NDA in the time periods after December 31. But it's the issue of adding the fourth study in dialysis and the third study in non-dialysis at that point and whether or not there'll be any challenges in integrating those studies that take any time, it's just hard to tell how much time it might take, as you've got three organizations at that point working on these things. So that's the answer there and Peony go ahead and address the rest of it please.

Okay. So Tom, I would also like to add one more supplement, a small point to what you were saying about the adjudicated data, the reason it takes longer is operationally it has a few more steps, because one needs to obtain novel data by the independent party to send to the external independent adjudication experts.

Yeah. You're right about that actually. We have to add the adjudication step in the calculus.

Exactly. And whereas when we report out the efficacy result from the study, it is as soon as we complete the study and clear the data, we can analyze it. So we save that spend. And so instead of delaying reporting to you the top line result, this is why we do at a different time. So the second part of your question, you have asked us what's the difference between our patient and the treat patient is an excellent question. Indeed, we are studying a patient population of CKD patients not on dialysis that have not - I have not seen any publication on in previous control trials. The studies that supported approval of the ESA had higher entry hemoglobin criteria and they are less advanced in the security of the CKD. And however since 2011, the label change for ESA, the treatment standard have changed. So in our study, patients - those baseline hemoglobin needs to be below 10. And they tend to have a lower EGFR than the studies that have been reported so far. And as far as what would be the implication of the MACE event, right, typically patients with more advanced chronic kidney disease tend to have a higher risk such as mortality or hospitalization. But overall, in our study, right now, it's blinded that when we mix up the placebo treated and the Roxadustat patients together, the overall event rate observed is lower than what has been reported by treat.

So let me - it's an interesting question you asked, Michael. Let me add one other thing here. In the non-dialysis study versus placebo, there's never been a study of this treatment population before, so there's no comparative that would make any sense. In the treat study, they looked at patients that had a median EGFR at around 30, 28 type of range. So this is between stage 3b and 4. We are looking at substantially more advanced disease in the patients in our non-dialysis study versus placebo. So we will be seeing median EGFRs in the mid to low teens is my expectation. And so this pool and the notion that there's not any therapy available for it also attaches to the notion that a lot of countries and medical practices have decided that this rigid rule of enrolling people in the dialysis at EGFR15 doesn't really make any sense. And so we're seeing this profound number of patients that are between EGFR 8 and 12 routinely in all the countries in the EU5 and US and so on. And so, the world out there has evolved quite a bit since, since the treat study. And in the dialysis portion, well, it is true that the event rates are less frequent and therefore it takes longer. We still have the issue of the inflammation and hypo response in about a third of the patients and simply put, there's a large number of patients for whom EPO cannot work at all and those patients are not handled very well in the system right now in the US under the bundle, but with roxa for whatever reason, the inflammation just has no impact on the therapy. So while epo will completely fails, roxa sails through these things as if there was no impediment from an inflammation and so that segment of the population, we've heard from CMS, the idea they view that as an unmet medical need now, given current therapies. And so as you're thinking about these ideas, I think these various points you might want to consider in the overall picture.

So Tom, I would like to add that, just to remind everyone, this is Elias that the treat is targeted hemoglobin of 13.5, which is by itself is could lead to a different profile and different number of MACE event. That by itself does make a big difference in treat than what's been done now as - in the clinical trials for the non-dialysis. Again, in MACE's study for treat was either end point is MACE itself I suppose beneficial, while in our studies, we are pulling MACE multiple studies as a safety endpoint. That's why this is taking later on time to be able to pull all this data, then when we complete the efficacy analysis, which is the hemoglobin itself. So these two things as we have a big differentiation between our programs in a way to treat versus the plan to do.

Let me also point out Michael that as far as I know, amongst the other companies that are copying the roxa technology, there are no placebo studies being on non-dialysis at all and as far as I know, there are no collections of incident dialysis in a manner that would be sufficient to arrive at conclusions. And so that's distinction.

Appreciate it. It was very interesting because you're not treating to the high level as treat, yet give rate charge is low, so there are some things to think about and appreciate the color.

The next question in the queue comes from Terence Flynn with Goldman Sachs.

This is actually Gavin on for Terence. Had a quick question on Pamrevlumab on the phase 3 design that we should expect mid-year, can you provide any more color on that design. I know a competitor recently shared their design on background of standard of care. So I was just wondering a commentary on that and then whether or not we're going to get it in term in the DMD study.

So let me start with the question. For this - the part of mid-year, are you referring to pancreatic cancer or IPF?

Apologize, the IPF study.

Okay. So I mean for us, we are following where our data takes us is general idea and this has been innovation from the very beginning. Elias, if you'd like to comment on this please.

Yes. At least, I would like to remind everyone this is the design that you're talking about this company, they have very little of data in their phase 2 studies, while we have complete phase 2 studies, which has showed the statistical significant results. That is by itself is certainly does to potentially - and that is consistent with the overall 9 when you add it on top of 067, this has given us a much different power and level of understanding of our product in this population and this is - at that time, this is what we will be taking in the direction and to our studies, what the design will be. It's appropriately based on this data, not on a minimal data that has been planned previously. So, that would be the most direction will be taking at this time and this discussion will be occurring with the regulatory agencies using less data. See, the DMD question, we are feeling very good that we are able to complete the enrollment in this study as well as we understand the other product versus trying to open non-ambulatory, it is facing a lot of hurdle in enrolling this population. This study is to be run for up to three years. We will hope to take a look in to some interim analysis when our patient complete the first year of a treatment and that will not occur till next year. So this time, so this is where we take a look as a cumulative data. From the three points that Seth mentioned before, pulmonary function, muscle function and imaging that we are doing at the same time.

Gavin, is this what you were looking for with your question.

Yeah.

The next question in the queue comes from Geoffrey Porges with Leerink.

My question is related to timing specifically. First on the China approval, it sounds as though you may be a little bit less confident about the timing of the approval this year compared to the past certainly. Your language route was the same, but it may be the first country approved for roxadustat as opposed to language in the past, where it seemed very confident that we could come perhaps even sooner than the end of the year. So has something changed there in terms of that timing? Secondly you haven't mentioned MDS on this call. Could you give us an update on where your progress in MDS. And the outlook for roxadustat in that indication? And then thirdly, you commented on Pamrevlumab and potentially a pivotal trial for IPF, but could you give us a sense of when we might understand what that looks like? Is it something that you will be providing mid-year or is it still too soon to even say when we'll know what the pivotal trial design and timing will look like?

Okay. So last one first. We've had programs in parallel in pancreatic cancer and IPF. And what we try to do is make it so that the FDA interactions are a few weeks apart. And so one of them will be in early June and the other one will be right around the 4th of July. We expect to have pretty good comprehension of where we are after these meetings, given the totality of what we know right now. So we will be looking to share what we can in early August. The next time we have an earnings call. The comment about China, it would be very presumptuous of me to presume that we are going to get approved first in China, because China has to decide to approve us first, right, and so it is the nature of things that we have to say under the circumstances that if we are approved in China, therefore and so on. In China, there have been a large number of reforms in the past couple of years, some of which have effective baseline assumptions in the program. Timing wise, I don't think we've - we're talking about timing that's moved out by any substantial length of time as it relates to drug approval or as it relates to getting the follow-on manufacturing license is done. I think that how they're going to treat in innovative programs is literally a live issue right now with the senior people in China that make decisions about this stuff. And so we are watching very closely how it goes. The sense we get is that we have very strong sponsorship from people that really believe China needs an alternative in anemia, because unlike other countries, China's challenges are the baseline therapy and chronic anemia care…

And Tom as you told us, we should not be presumptuous. I mean in China, you always tell us - in China, we follow the rules and laws of China and as is the first class 1.1, candidate being evaluated for NDA, we just need to follow the process and things are moving really well.

MDS?

I was going to say the other question that Geoff had asked about was MDS. So Peony, why don't you go ahead and?

Yeah. So, thank you. So MDS is our first additional anemia indication beyond CKD. And we are very excited about the opportunity to address this through unmet medical need, where in fact, we have two parallel teams working on MDS study. One is the US team is working on a global study on MDS patients who are transfusion dependent and the China team is working on a Phase 2/3 MDS study in patients who are non-transfusion dependent, but are and anemic. Both teams are doing a good job in study start-up activities and we have a number of sites started at the virtual screening patients. So in the coming months, we are looking forward to provide you more update.

The next question in the queue comes from Andy Hsieh with William Blair.

Just from a timing perspective, Tom. So in China, after approval, how long do you think the drug will be available commercially and after that, how long would it take reimbursement to get approved? So it was really just a modeling question, I just want to get a sense of when the company can start recognizing revenues in China?

So let me make sure I understand your first question right. Did you say how long the drug will be available?

Sorry. How long would it take for - basically the lag time between approval and the commercial availability?

Okay. So China differs in a very distinct way from other countries and jurisdictions and that when you're doing business in China for China and getting reimbursed in China, you first have to obtain a hospital listing. And so hospital listing process is by itself cycle time of anywhere from 6 to 15 months per hospital. And to find a way to manage this, we used the AstraZeneca milestones when they launched BRILINTA in China for hospital listings. And so conceptually, I believe the most recent briefing I got from commercial side in China was that we are about 25% to 30% larger than the BRILINTA effort in terms of the number of hospitals that are being sought in the listings. It populates the major goals for the first couple of years, because it's absolute necessity to get that done before you move into what we would think of as commerce selling. And so, as I think about what we face with the institutional side in China, where you do the hospital listed first and then after that, you're going to start selling through the provincial auction process. It will take three or four years to get to the point where you have substantial traction and then this is what everybody expects and this has been the totality of experience in China for those kinds of products. In addition however to the basic in hospital, 3A hospital. We have other aspects, pharmacy distribution is out there as part of the picture, direct sales, privately direct sales to people that right now, for instance, would prefer to have the EPO over the domestic EPOs and they're willing to pay a considerably higher premium price. So these market segments are ones that are addressable in addition, because it will be large on…

There are no further questions in the queue at this time. So I'll turn the call over to Mr. Neff for closing remarks.

Thank you all for the joining the call today. We anticipate sharing additional clinical data insights on regulatory process during the remainder of 2018 and into 2019. We will also be participating in webcasting two upcoming conferences, the 2018 Jefferies Annual Healthcare Conference in June 5 to 8 in New York and the Goldman Sachs Annual Global Healthcare Conference on June 12 to 14 in Los Angeles in Rancho Palos Verdes. We would look forward to seeing anyone that's visiting those conferences. And of course, they'll be live and available online, the Goldman conferences has got a video feed, so you can see it live. I would like to express my sincere thanks to the FibroGen teams in the United States and China for their dedication and hard work. We have accomplished an enormous amount the last 12 months and we have even more to do in the next 12 months. And my gratitude to our partners and our investors for their support, as we pursue our programs. We look forward to seeing you at the Jefferies Conference, the Goldman Sachs Conference. I'd like to wish everyone a good afternoon and good evening. Thank you.

Thank you. Ladies and gentlemen, this concludes today's teleconference. Thank you for participating. You may now disconnect.