Welcome to the FibroGen's Second Quarter 2019 Financial Results Conference Call. My name is Adrianne, and I’ll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note this conference is being recorded. I'll now turn the call over to Karen Bergman. Karen Bergman, you may begin.

Thank you, Adrianne. Good afternoon, everyone. And thank you for joining our call. Today, we are reporting financial results and corporate update for the second quarter of 2019. Joining me today on the call are Mr. Tom Neff, Chairman and Chief Executive Officer; Dr. Peony Yu, Chief Medical Officer; Ms. Chris Chung, Senior Vice President of China Operations and Managing Director, FibroGen China, Dr. Elias Kouchakji, Senior Vice President, Clinical Development, Drug Safety and Pharmacovigilance; and Mr. Pat Cotroneo, Chief Financial Officer. Following our prepared remarks, Tom will discuss upcoming milestones and we will open the call to Q&A. During this call, we may make forward-looking statements regarding our business, including 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; 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, 2018, and to our quarterly report on Form 10-Q for the quarter ended June 30, 2019, filed with the Securities and Exchange Commission. Copies of these filings may be found in the Investors section of our Web site. We undertake no obligation to update any forward-looking statement whether as a result of our new information, future development or otherwise. The format for today's call includes remarks from FibroGen's management team, and then we'll open the lines 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 Investors section of FibroGen's Web site at www.fibrogen.com. The webcast will be available for two weeks from today's date. And with that, I'd now like to turn the call over to our CEO, Tom Neff.

Thank you, Karen. Welcome everyone and thank you for joining us. Let's start with our anemia program. We are pleased to report that in our pre-NDA meeting with the FDA regarding roxadustat, we reached an agreement with the agency on the content of the NDA including the cardiovascular safety analysis. This is for both the dialysis and non-dialysis dependent CKD populations. We previously announced that we expected the NDA submission in September or October timeframe with the clarity arising from our meeting with FDA. We and our partner AstraZeneca have refined our timing to target an October submission, with the MAA for Europe to be submitted thereafter. We recently announced the publication on July 24, two articles in The New England Journal of Medicine of the pivotal studies of roxadustat China Phase 3 program, 1 reporting the results from China Phase 3 dialysis or study 806 and the other reporting the results from China Phase 3 non-dialysis or study 808. We view publication by the New England Journal of these two pivotal studies supporting regulatory approval for roxadustat in China's validation of the scientific and medical importance as well as the quality of clinical research for these studies. Other updates in China, in December 2018, we announced the approval in China roxadustat for the treatment of CKD anemia and patients receiving dialysis representing the world's first approval for any HIF-PHI. We expect the non-dialysis dependent or NDD indeed portion of the CKD indication to be approved for roxadustat in the third quarter of 2019. In a few minutes Dr. Peony Yu will provide further details regarding roxadustat and Ms Chris Chung will provide updates on China program. Let's turn to Pamrevlumab highlights for the quarter. Starting with Duchenne muscular dystrophy, we presented positive Phase 2 clinical findings from the first…

Thank you, Tom. Roxadustat is the first HIF-PHI for treatment of CKD anemia. And it is the largest known CKD anemia program. More than 10,000 CKD patients from 50 countries participated in our global Phase 3 studies. Over 8,000 of these patients are included in the dialysis or non-dialysis pool for MACE analysis for the U.S. and MACE+ analysis for Europe as primary cardiovascular safety endpoint. As stated by U.S. partner AstraZeneca, our Phase 3 results confirmed the cardiovascular safety of roxadustat. Together with our partners, AstraZeneca and Astellas, we recently had a very good pre-NDA meeting with the FDA on roxadustat. We reach agreement with the FDA on our proposed pull MACE analysis in dialysis and in non-dialysis. We are pleased with the agreement for non-dialysis as it includes an approach to account for the differential dropout between roxadustat and placebo. With agreement on NDA content and format, we are moving as quickly as we can post submission. We do have a large submission, at this time, we are targeting October of this year. For Europe, we are working with Astellas, our EU partner on MAA preparation based on the Phase 3 results in the roxadustat program. Astellas has recently updated MAA submission timeline from calendar year 2019 to their fiscal year 2019, which ends March 2020. We look forward to present Phase 3 study results in upcoming medical conferences such as ASN in November and in peer reviewed journals. In Japan, Astellas submitted NDA for roxadustat treatment of anemia in dialysis dependent CKD patients in last September. The PMDA's regulatory decision on this NDA is expected this year. We and our partners AstraZeneca and Astellas are working together on expanding anemia treatment beyond CKD. In MDS, we have two ongoing clinical studies a Phase 3 U.S. global study in transfusion dependence, MDS patients and a Phase 2, 3 study in non-transfusion dependent MDS patients in China. We are now starting a Phase 2 U.S. study of roxadustat for treating chemotherapy induced anemia on track for starting this quarter. I now like to turn the call back over to Tom.

Thank you, Peony. Next, I'd like to ask Chris Chung, who heads our China operations to offer some comments on roxadustat in China, our country of first approval. Chris, please go ahead.

Thanks Tom. It's been a productive quarter on the China front. We have been projecting a Q3 commercialization date. Certification of our commercial API plant in Cangzhou, the gating factor was achieved in May. I'm pleased to share the news with everyone that the first batches of commercial roxadustat capsules have been shipped. We all know that affordability for our patients is critical to widespread market adoption. Government reimbursement for roxadustat is something that we're actively pursuing. Historically has taken a number of years after NDA approval before a drug is reimbursed by the Chinese government. We have made this as a base case assumption until we secure government reimbursement, the near-term market adoption rate will be slow. Nonetheless, we believe we have a strong case for roxadustat to be included for reimbursement sooner rather than later. Given the scope of the unmet medical need, the novel treatment pathway, the strength of our clinical data and the fact that access to innovative medicines is a top national priority. It is still too early to tell if roxadustat will be included in the 2019 reimbursement cycle, but we should have more clarity by the end of this year. If reimbursement is not obtained, we will have drug available for patients in the self-pay market, and our market development efforts with AstraZeneca will continue to advance. We remain highly optimistic about the market potential for roxadustat in China. We continue to build momentum without investments in marketing, market access and medical affairs and the AstraZeneca field sales force is being scaled up to address the size of the market opportunity. I look forward Tom to keeping everyone updated in the exciting months ahead. Now back to you Tom.

Thank you, Chris. Moving on to pamrevlumab, Dr. Elias Kouchakji will provide a few more details on the Phase 2 data update we recently presented at the PPMD Annual Conference in July. As well as the progress in our Phase 3 studies and IPF and LAPC. Elias, please go ahead.

Thank you, Tom. I would like to start with our Duchenne muscular dystrophy. As Tom mentioned, we presented positive Phase 2 primary clinical data of the first full year of treatment in all 21 non-ambulatory Duchenne muscular dystrophy patient at the PPMD 2019 Annual Conference in June, notably, on cardiac function fibrosis and muscle function. It is important to note the decline in cardiac function is the leading cause of mortality in non-ambulatory Duchenne muscular dystrophy. In this study, we showed an increase in estimated mean change from baseline and left ventricular ejection fraction also known as LVF, a positive 0.29% versus what is in expected decline in LVF. Additionally, a correlation between improvement in LVF and reduction in cardiac fibrosis was presented. Neither of these results has been previously reported in scientific literature. Speaking of the [indiscernible] non-ambulatory Duchenne muscular dystrophy patient, we know this will eventually lead to the further reduction of their quality of life. The results of upper arm muscle function and muscle fibrosis patch showed mean change in pull from baseline of a decline of 1.53. Demonstrating a potential meaningful reduction in the rate of the decline in comparison to the published data. Additionally, the results of estimated mean change in the grip strength score were positive and showed a score increase in both dominant and non-dominant hands at one year of treatment with pamrevlumab. The grip strengthen in this population typically is expected to decline. In this study, pamrevlumab was well-tolerated. We are particularly excited by this result in the non-ambulatory population, which to-date has been the subject of extremely limited clinical trials. We shall be seeking guidance from the FDA on the design of our Phase 3 program. Moving to our program in IPF. We have initiated dosing in ZEPHYRUS Phase 3 study…

Thank you, Elias. Our Chief Financial Officer, Pat Cotroneo will now walk through the financial results for the second quarter of 2019 and our financial outlook through fiscal year 2019. Pat, please proceed.

Thank you, Tom. Aa announced today, total revenue for the quarter ended June 30, 2019 was $191.6 million as compared to $44 million for the second quarter of 2018. For the same period, operating expenses were $78.7 million and net income was $116 million or $1.34 per basic share and a $1.26 per diluted share as compared to operating expenses of $67.2 million and the net loss of $23.4 million or $0.28 per basic and diluted share for the second quarter last year. Included in operating expenses for the quarter ended June 30, 2019 was an aggregate non-cash portion totaling $21.9 million of which $17.6 million was a result of stock-based compensation expense as compared to an aggregate non-cash portion totaling 15.2 million of which $13.2 million was a result of stock-based compensation expense for the same period in the prior year. In accordance with U.S. GAAP, in the second quarter, we are including in our revenue recognition methodology a total of $180 million comprised of $50 million for an anticipated milestone from AstraZeneca relating to the filing of the U.S. NDA and the $130 million in anticipated milestones from Astellas in connection with the EU MAA filings. Out of the $180 million, $171.1 million was recognized in the current quarter and the remaining balance will be recognized in future periods. Under the current U.S. GAAP revenue recognition guidelines, we are required to include estimated consideration from milestones in the determination of revenue recognition in the period that milestone achievement becomes probable. The timing of when the payments related to these not milestones will be remitted to FibroGen depends upon when the milestones are actually achieved. As noted earlier on this call, timing for the NDA filing is targeted for October of this year, and we expect the Astellas MAA submission to occur in the second half of the Astellas 2019 fiscal year with MAA filing in early 2020. Previously, we had reported as any cash range of $720 million to $730 million. Adjusting for our latest forecast, we would increase our 2019 ending cash estimate to $740 million to $750 million. Given that the milestone payments could move into next year, I'd like to provide additional scenarios. Assuming that the EU MAA filing is done and completed in 2020 and the $130 million and associated milestones are paid at that time, our current anticipated ending 2019 cash range will be approximately $610 million to $620 million. This ending cash range assumption also includes $50 million milestone from AstraZeneca for the filing of the U.S. NDA, which should occur within 60 days after NDA submission. At June 30, 2019, FibroGen had $686.1 million in cash, restricted time deposits, cash equivalents, investments and receivables. Thank you. And I would now like to turn the call back over to Tom.

Thank you, Pat. Let's wrap up by pointing out to some key events ahead. For roxadustat in the U.S., we anticipate submitting our NDA -- to the U.S. FDA for the treatment of anemia associated with dialysis dependent and non-dialysis dependent CKD in October 2019. We expect the EU MAA to be submitted by our partner Astellas thereafter. In China, we expect to add non-dialysis dependent CKD patients to the roxadustat label in Q3 2019. We also expect to initiate our Phase 2 study of roxadustat for the treatment of chemotherapy induced anemia in this quarter. For pamrevlumab, we are pushing forward with three indications in the mid-to-late stage development and we are looking forward to keeping you updated on those activities including an IPF progression of our ZEPHYRUS Phase 3 IPF study and locally advanced pancreatic cancer or LAPC initiation and progression of our Lapis Phase 3 study. In DMD, having reported on the first year of treatment and our ongoing Phase 2 DMD study and now advancing our patients through their second third and fourth years of treatment, we plan to seek guidance from the FDA on the design of a Phase 3 program. With that, let me turn this back to Karen to begin the question-and-answer session. Karen, please go ahead.

Thank you, Tom. Adrianne, please open up the line for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions]

We are set for our first question, I think it's from Michael Yee.

Michael Yee, your line is open.

Hey, guys. Good afternoon. Thanks for the question. Two questions. One is for Tom, what were the two or three most important things that you guys discussed with the FDA or topics or key issues regarding approvability in your meeting? And then, separately, regarding the statistical plan there seems to be a concern about non-inferiority on MACE not MACE+ but MACE. Can you talk to your confidence around the statistics and whether that's an issue for the FDA? Thanks so much.

Peony go ahead.

Hi Mike. This is Peony. In the FDA meeting, we have accomplished what we intended for the meeting. You asked about the important agreement or achievement. I will name that. We have gained FDA's agreement on our proposal for a single primary safety cardiovascular endpoint analysis for dialysis as well as cardiovascular safety primary endpoint for non-dialysis. And in terms of the way that the time to MACE primary endpoint is being analyzed in non-dialysis, this will account for differential drop out between our drug and placebo, whereas you know that because placebo doesn't work in treating anemia placebo patients had a tendency to drop out earlier. And so, we have reached agreement on statistical method that accounts for that. You have asked about our confidence on non-inferiority MACE. At this time with these understanding our level of confidence is very high and we do believe as AstraZeneca has stated that our Phase 3 results confirm cardiovascular safety of roxadustat in the CKD population in both dialysis and non-dialysis.

Mike, I would add that what I saw was that we gained a lot of clarity across the board and both our team and AZs team reflected a very high degree of confidence coming out of the meeting. So, there is detailed planning right now, how to get everything done in October early and so everybody is aggressively moving ahead.

Perfect. Thank you for those comments and around the statistics and your confidence. Thanks so much.

Thank you, Mike.

And the next question comes from Geoff Porges from SVB Leerink. Your line is open.

Thank you very much. And I have to ask follow-up questions. Could you confirm whether you have written minutes from the meeting with the agency? And then, Peony, you mentioned the exposure adjusted analysis of the time to first MACE event but could you -- we haven't seen that analysis. But, presumably you have run it already. Can you tell us either what the absolute rates when you adjust for exposure between the two groups and non-dialysis group or at least what range, where they are in terms of relation to each other? And then, could you explain the amendment in your Q that the European regulator is going to look at MACE as well as MACE+, is that the result of a conversation or meeting. And does that make you less confident or any change to your confidence about the European application. Thank you.

Geoff let me deal with the last issue first. There's no back story on the MACE, MACE+ for Europe that we're aware of. So, I think just take at face value. Peony, go ahead and address Geoff's other questions please.

Geoff, we had our FDA meeting towards the end of July. So, usually it will take a little bit longer before we received a meeting minutes. What I'm reporting to you is based on our exchange with the FDA and there was sufficient clarity for us to be sharing what we had just said.

Okay.

Okay.

Great. Thanks.

Thank you.

And our next question comes from Joel Beatty from Citi. Your line is open.

Yes. Hi. Thanks for taking the question. Recently at the end of July there was a New England Journal of Medicine publication and Phase 3 results from China. There was also an editorial in there that generally seems favorable, talked about hypokalemia and the studies with a little bit of reservation. Would you be able to address that? The potential [indiscernible] just said in patients with hypokalemia? And then, also, discuss from the U.S. EU Phase 3 results if that was a finding that seem to show up?

So, Joel, there is a starting point here. The editorial work and structure with these two articles for New England Journal was quite aggressive, intensive and so on, for about a month. And the topic of safety discussion came up right at the end at their editorial board's suggestion, so it was a little surprising. I think Peony can explain how we see it. Go ahead Peony.

Thanks, Tom. That was intensive. So, I believe that we had previously discussed hypokalemia in or around November after ASN last year. And coming back to New England Journal, yes, it was reported that there was an apparent imbalance of hyperkalemia reported as adverse events by investigators in the two China Phase 3 studies. Now, New England Journal supplement for these two manuscripts also showed that there is no imbalance in the hyperkalemia, when we report that the analysis based on central lab data. Just as a background on CKD patients, elevation of blood potassium level is consistent and characteristic of CKD patient populations, because the disease kidneys are not able to properly regulate potassium levels and asset base balance. To address your questions on the larger Phase 3 program that has been reported that indeed is another -- is a good way to further look into those question. So, from what we have seen the reported incidence rates of hyperkalemia adverse events were comparable between roxadustat and comparator arms in the dialysis and the non-dialysis studies. Also, the analysis of potassium central lab values also suggests, there is a hyperkalemia risk with the use of roxadustat. We look forward to presenting the results from these much larger and longer Phase 3 studies in upcoming medical conferences.

Thank you for the question.

Thank you.

And our next question comes from Difei Yang from Mizuho. Your line is open.

Hi. Good afternoon. And thanks for taking my question. On the roxadustat NDA filing, would you remind us who's primarily responsible for -- to submit the NDA, is it AstraZeneca or is it FibroGen?

Difei, hello. I will have Peony address this is, please.

Hi, Difei. Good to hear from you. AstraZeneca is a very good partner in the U.S. In terms of roles and responsibility FibroGen is the IND-holder. And we are also the party responsible for the final after putting together the file and submitting to the FDA. In terms of -- ways of working together, we have a highly collaborative relationship with both of our partners. And we have frequent communication as well as generating the study results together.

Okay. Thank you for the clarification. Now changing subject to IPF, you have started recruiting for the Phase 3, would you remind us when should we be expecting top-line results?

Elias, please go ahead.

Yes. As you said -- Difei, its Elias. We just started enrolling in this study. This study will have to enroll across -- a little bit over 550 patients. This is going to take a little time to enroll as we have seen in all IPF studies. When the last patients is enrolled and have a one-year of treatment, this is [indiscernible] end of the study and at that time would be possibly can see this data between the late 2022 and early 2023.

And our next question comes from Adam Walsh from Stifel. Your line is open.

Hi. Thanks for taking our questions. This is Edwin Zhang for Adam. Congrats again on the progress made in the last quarter. So, I have a few questions, if I may. My first question is on incident dialysis. So, what is your filing and commercial strategy over there? So, based on the efficacy and safety data, do you expect this incident dialysis patient population will be defined and listed in the [indiscernible] label if approved. And similarly -- can you also comment the non-dialysis. So, what is your strategy and view there. And I have a follow up questions. Thank you.

Peony, you can address incident dialysis first.

Okay. Thank you for the question Adam.

Not Adam. It is Edwin.

Oh, Edwin. I'm sorry. Yes. Yes. So, in terms of our submission, we are seeking approval for treating CKD anemia in our dialysis as the primary patient indicate -- as the primary indication and also non-dialysis. Now for incident dialysis, we do believe that this is a very important subgroup in -- which is part of our dialysis. The reason that we say that and also have this discussion supported. You have this discussion with our medical reviewer is that, oftentimes anemia therapy starts around the time of dialysis initiation and we continue to follow the patients during the course of treatment anemia drug as well as during the course of dialysis. And now given the importance of this information for prescribing physician. We do feel that information on the outcome of the incident dialysis patients are important to prescriber and we expect this to have positive impact on commercial potentials. Our FDA medical reviewer has suggested additional analysis and whether and as far as labelling that will be a review issue.

The second question was about NDD, is that correct?

Yes.

So, Peony please address NDD. Can you restate your full question for NDD?

Similar to the incident dialysis population. What is your, the filing and the commercial strategy? And also, maybe comment on the potential competition because you set a high bar in safety, if you are placebo?

Peony go ahead.

Yes. So, we are very pleased with the agreement on the primary safety analysis of our primary cardiovascular safety endpoint in NDD. We had -- because when we were considering the value of a drug whether from a medical point of view and commercial point of view is looking at benefit and risk. And we are very pleased with the positive efficacy results for anemia therapy not only test to keep hemoglobin level up, but also reduce blood transfusion risk as well as attenuation of renal progression that we have previously reported. Now, on the safety side, the ability to demonstrate a drug is as safe as placebo, which is a very high bar because placebo is considered -- to give the drug an opportunity to show how safe it is based on its own merit. And the fact that our drug has a placebo comparator and that will be -- and also it is orally administered, which makes it accessible to patients. We believe that we will, or we will have an opportunity to address the unmet medical need and expand the market beyond what ESA is able to do as -- and we both we and our partner AstraZeneca believe that a non-dialysis market is larger than that of the dialysis market.

Potential market in non-dialysis is larger than the current [indiscernible] dialysis. I think we will probably decline to comment on the competitive aspects, did you have any other questions?

He has left the queue.

Thank you.

Go ahead with this next question please.

We do have a question from Danielle Brill from Piper Jaffray. Your line is up.

Hey, everyone. Thank you for taking my questions. This is Nirav on for Danielle. I just had two, regarding a question that was asked earlier. I'm not sure if it was answered. Would you be able to tell us with the data that you currently have and this statistical analysis that you're doing with the absolute rates where, when you adjust for the drop outs?

We won't be able to discuss that until later in the process.

I see. Okay. Thank you. And the other question I had was regarding the IPF study. I was wondering with the enrollment currently ongoing, if you could give us some color on the geography of the sites? And how many sites are in the United States versus ex-U.S. and if we should expect a significant amount of patients to come ex-U.S.

These are targets now, we haven't accomplished this yet, so Elias please go ahead and explain.

Sure. The target is -- the majority would be from the U.S. and this is globally as is other similar product, which is running globally. We are going in the EU and all other regions, Southeast and the potential number of patients coming from the US versus ex-U.S. We still are targeting to have a very large number from the patients who come from U.S. at the same time. We are seeing this as a very good number of sites that are rolling and eager to be part of our study.

Thank you, Elias, for that. Thank you.

Thank you for that color. Really appreciate it.

Yes.

And this concludes the question answer session. I'll now turn the call back over to Tom Neff for final remarks.

Let me say it's incredibly gratifying to see the advancement of Roxadustat and Pamrevlumab programs. And the recognition of their potential by the medical community as seen by the recent publications of our various clinical results. This is a testament to years of hard work on the part of our dedicated employees. We cannot thank enough to the patients and to their families and to physicians and to investigators, who are participating in our studies. We all have the same goal of expanding therapeutic options for patients who need them. Thank you also to our shareholders, who have followed our story and are seeing the advancement and development of ideas born in our research lab. I'd like to wish everyone a good afternoon and evening. Thank you for joining our call.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating and you may now disconnect.