Good day and thank you for standing by. Welcome to the FibroGen 's Second Quarter 2022 Earnings 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, Michael Tung. Please go ahead.

Thank you, Bella, and good afternoon, everyone. I'm Michael Tung, Vice President of Corporate Strategy and Investor Relations at FibroGen. Joining me on today's call are Enrique Conterno, our Chief Executive Officer; Dr. Mark Eisner, our Chief Medical Officer; Juan Graham, our Chief Financial Officer; Dr. John Hunter, our Chief Scientific Officer; Thane Wettig, our Chief Commercial Officer; and Chris Chung, our Senior Vice President of China Operations. The format for today's call includes prepared remarks from Enrique and Juan, after which we will open the call for Q&A. I would like to remind 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 statement, whether as a result of new information, future events or otherwise. The press release reporting our financial results and business update and a webcast of today's conference call can be found on the Investors section of FibroGen's website at www.fibrogen.com. With that, I would like to turn the call over to Enrique Conterno, our CEO, Enrique?

Very good. Thank you, Mike, and good afternoon, everyone, and welcome to our second quarter 2022 earnings call. On today's call, I will provide a high level summary of the most important accomplishments and developments in the second quarter of 2022. Juan Graham, our CFO, will then review the financials, after which we will open the call for your questions. Starting with Slide 3, FibroGen is positioned to create significant value for patients and shareholders by executing on our three areas of focus. Number one, accelerating the development of Pamrevlumab in three indications with significant unmet medical needs, idiopathic pulmonary fibrosis or IPF, locally advanced and resectable pancreatic cancer or LAPC, and Duchenne muscular dystrophy or DMD. Number two, ensuring commercial success of roxadustat in patients with chronic kidney disease outside the US while continue to explore a path forward in the US. And number three, increasing our research productivity to advance novel programs that leverage internal expertise and accessing external innovation for additional pipeline opportunities. Let's move to our clinical trials beginning with pembrolizumab on Slide 4. Pembrolizumab is a wholly-owned asset in Phase 3 clinical trials for three high value indications, IPF, LAPC, and DMD, each one of these diseases represents an important unmet medical need and each constitutes a significant market opportunity. As we recently announced during the second quarter, we completed enrollment of the LELANTOS-2 Phase 3 clinical trial of pembrolizumab in ambulatory patients with DMD. This brings the number of fully enrolled pivotal pembrolizumab trials to four. The Zephyrus-1 trial in IPF, the LELANTOS-1 and LELANTOS-2 trials in non-ambulatory and ambulatory DMD respectively, and the LAPIS trial in LAPC. Enrollment continues in our second Zephyrus Phase 3 studying IPF and we look forward to updating you as the trial progresses. Moving now to locally advanced…

Thank you, Enrique. Before jumping into my financial remarks, I would like to highlight the remarkable effort by our team in China despite COVID lockdown challenges, they continue to put patients with CKD anemia at the forefront of everything they do, enabling the outstanding financial results for the quarter. As mentioned by Enrique, we continued to build momentum on our clinical trial execution and enrollment for Pamrevlumab. I also want to take some time to thank our colleagues for the day-to-day energy and passion to move our clinical trials forward which we hope will have a significant impact on patients suffering from idiopathic pulmonary fibrosis, locally advanced unresectable pancreatic cancer, and Duchenne muscular dystrophy. Now getting into our financials, total revenue for the quarter was $29.8 million compared to $24.4 million for the same period in 2021. This represents growth of 22% quarter-over-quarter. Breakdown of revenue sources are as follows. We recorded $23.3 million of net product revenue for roxadustat sales in China compared to $13.4 million in the second quarter of 2021. During the quarter, we also recorded development revenue of $5.5 million associated with co-development efforts for roxadustat with our partners as compared to $19.66 million during the second quarter of 2021. Given the stage of roxadustat development and as anticipated, we expect a reduction in co-development revenue in the coming quarters. Finally, we recorded $1.1 million in drug product revenue for roxadustat bulk drugs or active pharmaceutical ingredients sold to Astellas as compared to a negative 8.6 million in the same period last year. Diving deeper into the operational results of our roxadustat business in China, total roxadustat net sales from the joint distribution entity jointly owned by AstraZeneca and FibroGen or JDE was $53.1 million this quarter compared to $52.8 million in the second quarter of…

In closing, thank you, Juan. We remain committed to advancing Pamrevlumab as a potential first-in-class medicine in Phase 3 development in three indications with significant unmet medical needs, idiopathic pulmonary fibrosis, locally advanced and resectable pancreatic cancer, and Duchenne muscular dystrophy. Notably, we expect topline data in 2023 from Pamrevlumab, Zephyrus-1 Phase 3 trial in IPF, and the LELANTOS-1 and LELANTOS-1 Phase 3 trials in non-ambulatory and ambulatory DMD respectively, as well as roxadustat, MATTERHORN Phase 3 trial in MDS. Roxadustat continues to perform very well in China. Our partner Astellas is moving forward with commercialization of roxadustat in Europe and in addition to the recent regulatory approvals we have additional regulatory submissions under review in other geographies. We continue to have a strong financial position with $517.6 million in cash and expect to end 2022 with $330 million to $360 million in cash. Additionally, we have multiple options to consider further strengthen our balance sheet to ensure our long-term success. Now I would like to turn the call back to the operator for questions, Bella?

[Operator Instructions] And our first question comes from the line of Michael Yee with Jefferies. Your line is now open.

Thank you for the update. We had two questions appreciating the LAPC study past the initial analysis and it's going to continue, can you tell us if the IPF ZEPHYRUS-1 study has any interim or what can you say about what you're looking at, is DSMB looking at it, or is there any interim on that study? And with the DMD studies as well that are reading out, what can you say about interims on those studies as well? Thank you.

Thank you, Michael. I'm going to ask Dr. Eisner to answer your questions.

Thanks for your questions. Appreciate it. The answer is no, there is no further interim analysis for any of the studies including IPF or DMD. All of them of course have independent DMC monitors safety, but there are no planned interim analysis.

Okay and one final question as a follow-up, with the DMD studies, appreciate your novel endpoints and this is sort of travel path, have you talked with FDA on these endpoints and what you need to show and what data is required there to be deemed successful study? Thanks.

Yes. So, we do have endpoints for both the non-ambulatory and ambulatory studies. We have discussed those with FDA. The performance of the upper limb score is the endpoint for the non-ambulatory and for ambulatory it's the North Star Ambulatory Assessment, these are standardized measures for both types of DMD patients. So, we expect that if we demonstrate efficacy based on these endpoints that there would be a path forward for filing an approval.

Thank you. Your next question comes from the line of Annabel Samimy with Stifel. Your line is now open.

Hi, this is Jack calling in for Annabel. Thanks for taking our question. For pam, could you provide a little more color on how we should think about the IPF opportunity in the context of the current treatments available, what background treatments are allowed in those trials and how you expect to eliminate the noise around that? Thanks.

Very good, thank you for the question, and I'm going to ask Mark to discuss our trial design for IPF and Thane to share a bit about what we've learned about the opportunity that we would have with pam.

All right. So for the ZEPHYRUS Phase 3 program of pamrevlumab, it is placebo-controlled trials of pam versus placebo for the treatment of IPF. Patients are not to be on background therapy when they enter the trial. We do allow both treatment-naive and treatment-experienced patients on the trial, but when they enter the study, they're not on either pirfenidone or nintedanib, so it's a monotherapy trial design. Thane?

Yes. Thanks, Mark. So as we think about the commercial opportunity, I think there's a couple of things to keep in mind. First is that we were able to replicate in our Phase 3 ZEPHYRUS program what we've seen in the Phase 2 PRAISE trial. We would expect an indication for pamrevlumab for the treatment of patients with IPF. As we have investigated the current state related to the current standards of care, it's pretty clear, and this is based upon published literature, that given the tolerability challenges associated with both Ofev and Esbriet, upwards of 40% to 50% of patients who start on either of those therapies have stopped taking it by the end of the first year. And so there's a significant unmet need, not only as it relates to disease progression, but really as it relates to keeping patients on therapy. And, again, if we reflect on the PRAISE Phase 2 data and we look at the tolerability profile, while not head-to-head against either Ofev or Esbriet, we're pretty confident that we've got a product that not only demonstrated a very significant efficacy but also a tolerability profile that we think could lead to differentiation relative to the two current available therapies.

And your next question comes from the line of Andy Hsieh with William Blair. Your line is now open.

Okay. Thanks for taking my questions and congratulations on the very robust China launch -- well continued China launch, and also the clinical progress with Pamrevlumab. I have two questions, both on Pamrevlumab, So, the first one has to do with the futility analysis from the last study. I'm just curious about how derisking is that the futility analysis, so, is that kind of like a garden variety hazard ratio greater than one or it's more integrated than that, and also when looking at the futility analysis, EFS or OS? And my second question has to do with the -- also the lack of study design. I noticed that in 2019 when the trial was first initiated only Gem/Abraxane was included, subsequently FOLFIRINOX was added, and so I'm just trying to get an appreciation about how the incorporation of FOLFIRINOX might affect the primary analysis down the road? Thanks for taking my questions.

Thank you, Andy. I'll have Mark answer both of your questions on the futility analysis for LAPIS and then on the incorporation of FOLFIRINOX as background -- accepted background therapy for that trial.

Sure. So, the independent statistician conducted an analysis of event-free survival and that was actually to look for efficacy that could have supported our early accelerated filing, so we are -- based on that analysis we're moving forward with the overall survival endpoint as planned, which was and remains the primary endpoint for the trial. So, it wasn't really a futility analysis as much as it was, an early look at efficacy based on the surrogate endpoint of event free survival and on the call we've said previously that we did show this as a very high bar to crossover and we thought it was unlikely that we would hit the event free survival of given the very high unmet medical need in pancreatic cancer and the desperate need patients for therapy, we did put this interim EFS analysis in place. But, we are moving forward with the OS, which was our base case among what we were planning. In terms of the background chemotherapy, you're quite right, the initial design was Gem/Nab and now it allows -- it also allowed for FOLFIRINOX as well. So, a third of the patients I think are on for FOLFIRINOX is about on chemotherapy. The rationale is that this is a commonly prescribed chemotherapy regimen, it's particularly favored by oncologic surgeons, so we thought it was important to allow both of these commonly used backbone chemotherapy regimens into the trial of Pam versus placebo on top of background chemotherapy. So, will be able to look at both the overall population and subgroups with both of the individual chemotherapy backgrounds.

Your next question comes from the line of Aaron Werber with Cowen. Your line is now open.

Hi guys, this is Brendan on of Aaron, thanks for taking my question. Just a couple of questions on DMD from us as well. I guess, looking ahead to those readouts next year and maybe also evolving through the landscape that I know you -- you acknowledged in your prepared remarks that I guess are more so for the specific DMD genotypes, I get curious, are you all tracking the different subtypes in the patients in your study and the different background therapies they're on, can you just remind us do you require them to come off, maybe there is some exon-skipping therapies? And I guess kind of related to that based on your conversations with regulators up to now, do you expect any additional studies might be necessary to incorporate Pamrevlumab into the current paradigm maybe where there are genetically targeted therapies available and maybe just let us know if there is something you're considering moving forward/Thanks very much.

Very good. I think those are questions for Mark. Mark, could you address the questions around DMD.

Sure. So both LELANTOS-1 and 2, patients are on background corticosteroids as per standard of care, but they're not on exon-skipping therapies or other gene therapy, so those will be exclusion criteria for our trial. And then in terms of your question about will additional studies necessary for approval, we don't think additional studies will be necessary for approval. We think the LELANTOS-1 and LELANTOS-2 either individually or together could serve as the basis for an approval for DMD. There are other interesting clinical questions that we are thinking about that we could be entering down the road, but those will not be necessary for the initial approval.

And your next question comes from the line of Paul Choi with Goldman Sachs. Your line is now open.

Hi, thank you. Good afternoon and thanks for taking our questions. I had one question on the commercial side perhaps for other Enrique or Chris, just as you think about the impact from COVID during your Q2 performance, can you maybe just quantify for us how many patients or any slowdown in treatment you may have reserves and how you're thinking about that impact on the forward here over the balance of 2022? And my second question is on Pamrevlumab, you completed enrollment for the first one trial, but I was wondering if you provide a status update on the second trial, its enrollment status and whether if the Zephyrus-1 is successful, whether that plus your Phase 2 study could potentially serve as a basis for a filing?

Very good. Thank you, Paul. And I'm going to ask Chris to answer the first question on China and Mark to answer the question around Zephyrus-2 and the ability to file a Zephyru-1 price, Chris?

Thank you, Enrique. Thank you, Paul, for the question, I believe you asked if there is a way for us to quantify the impact of COVID on our first half performance, so this background and this is publicly available information, the multinationals in China have just disclosed on average they have lost about 10% of revenues for the first half of the year due to COVID. Obviously, roxadustat has seen an uptake in volume, not a decrease. It is very difficult for us to tell you net-net what we -- what is done, had it not been for COVID, however, I believe, generally, the market seized the oral administration roxadustat as a significant advantage. So, we suspect we benefited from it. We also came out of the NRDL price reduction with tremendous momentum and that accounts for more of the market uptake, and generally, we had 18 between AstraZeneca and FibroGen, who are experienced now, almost three years after launch and executing very well. So, on the positive side, there were many things going for us, it's hard for me to tell you how much more business we would have done without COVID, but we're obviously very pleased with the results and I don't think those factors I just mentioned would continue to bring us good -- good topline in the second half of the year.

Yes. So, Pamrevlumab for Zephyrus-2, we have not yet provided guidance on when we anticipate enrollment to complete, but we are making very good progress and we're very excited about our efforts there. In terms of the filing strategy, I think as we've said before, we -- our base case is Zephyrus-1 and Zephyrus-2 will be needed to file. With that said, if we have strong Zephyrus-1 data because those data will be coming first, we would potentially explore with FDA whether that Zephyrus-1 trial could be filed with the Phase 2 PRAISE study for an initial approval as you suggested.

Okay, thank you very much.

And your last question comes from the line of Jason Gerberry with Bank of America. Your line is now open.

Hi, guys, thanks for taking my questions. Just first on DMD, apologies if I missed this, you stated in the past, but are the ambulatory, non-ambulatory populations potentially like separate -- at the basis of separate filings if one work versus another not working, just curious how that would pan out, I just wanted to get your views, is it sort of the non-ambulatory that the higher risk trial of the two from your perspective? And then shifting over to roxa, just commercially as we think ahead of the growth dynamic where you kind of work through with higher volumes offset the NRDL impact, we have maybe a one or two year period of no NRDL comp to deal with, do you expect the NRDL cuts to get smaller with each successive cut, if you have a perspective on that or any analogs that you think are relevant that would be helpful? Thanks.

Very good. Why don't we start with the China question first, I'm going to have Chris tackle that one, and then Mark, you can address the question about LELANTOS-1 and LELANTOS-2 and the potential of filing those based on independent results.

So, first I want to make sure I understand the question correctly. We did state that we believe part of the volume uptake in the current calendar years due to the NRDL price cut and the question is whether we expect subsequent price cuts of a lower range, so not talking about Roxadustat specifically, but about NRDL generally, the industry expects the first cut to be the most significant, which is what we experienced in 2019. We have to conceal certain amount on price you can get into the NRDL. Subsequent pricing cuts are dependent on a variety of factors, first the rules for price cut change every single year, many will tell you and this is publicly disclosed that the 2021 was significant because budget allocations were diverted to COVID controls. So it's hard to predict, but as a general rule, the price cuts will decrease with time, it is hard pressed to predict if our next cut would be less than what we experienced in the past. that's what we would hope for, it would depend on how much volume we actually uptake and how much of the national budget we actually take. The pricing of our competitors at that time just ease us on a variety of factors, but we're certainly hopeful that the next cut would be smaller than what we just experienced. I hope I answered your question.

Yes, that's helpful. Thank you.

And then your question about DMD. I think it's a really good question about the ambulatory and non-ambulatory population. If you think about deferrals today right basically from skipping therapies have improved -- approved on biomarker data than any real clinical evidence besides the biomarker, I think we have a very good chance at filing either the LELANTOS-1 or LELANTOS -2 studies non-ambulatory or ambulatory alone together depending on the data. If the data are strong, I think they could support a filing, so it's something we're actively discussing internally. We'll see what the data show, of course, non-ambulatory LELANTOS-1 is coming first, but the unmet need here is so high and the patients and their parents are so desperately need of new therapies that we would do everything possible with positive data in hand to try to get that approved as expeditiously as possible.

And I see no further questions at this time, I would now like to turn the conference back over to Enrique Conterno.

Thank you, Bella, and thank you to everyone for your participation in today's investor call and your interest in FibroGen, enjoy the rest of your day. Thank you very much.

This concludes today's conference call. Thank you for your participation, you may now disconnect.