Hello and welcome to the FibroGen's Third Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. It is now my pleasure to introduce Vice President of Investor Relations, David DeLucia.

Good afternoon, everyone. Thank you for joining today to discuss our third quarter 2023 financial and business results. I am 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; Juan Graham, our Chief Financial Officer; Dr. Mark Eisner, 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, enrolment, 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.fibrorgen.com. With that, I would like to turn the call over to Thane Wettig.

Thanks Dave, and good afternoon, everyone. Welcome to our third quarter 2023 earnings call. I'd like to begin today's call by acknowledging that November is Global Pancreatic Cancer Awareness Month, a time when we reflect on the importance of raising awareness about pancreatic cancer and the need for continued research, support and more effective therapies for this devastating disease. On today's call, I will focus our stakeholders on the four strategic pillars that will guide the company into the future, as well as provide an update on our pamrevlumab and roxadustat assets. Dr. John Hunter, our Chief Scientific Officer, will then review our exciting early-stage oncology pipeline. Last, Juan Graham, our CFO, will review the financials, after which we will open the call for your questions. Starting on Slide three, fibrogen has four key strategic pillars that we believe offer significant value today. First is pamrevlumab, with upcoming pivotal trial readouts for two pancreatic cancer indications through the first half of 2024, one readout in locally advanced disease and the other in metastatic disease. Pancreatic cancer represents a significant commercial opportunity with substantial unmet need and pamrevlumab has demonstrated effect in both preclinical and early clinical studies, which we will detail in a moment. Second is roxadustat. Roxadustat is approved in over 40 countries around the world, generates significant net revenue and provides FibroGen with material and growing economics through our partnerships with AstraZeneca and Astellas Pharma. Third is our early-stage oncology pipeline. We are very excited about the potential of these programs. FG-3246 is a first-in-class potent antibody drug conjugate, or ADC, for the treatment of metastatic castration-resistant prostate cancer. This opportunity also includes the development of an associated PET biomarker diagnostic. In addition to FG-3246, we are also undertaking IND-enabling activities on two innovative oncology antibodies with the…

Thank you, Thane. Moving to Slide 23, we have a snapshot of our early-stage oncology pipeline programs that are currently in the clinic or at later stages of non-clinical development. On Slide 24 is an overview of the exclusive license deal that we entered into with Fortis in Q2 of this year for 446, now called FG-3246. FG-3246 is a potential first-in-class antibody drug conjugate, or 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 at high levels in prostate cancer and other tumor types, but that demonstrates very limited expression in most normal tissues, making it an ideal ADC target candidate. Moving to Slide 25, FG-3246 is comprised of an anti-CD46 antibody, YS5, linked to the antimyotic agent, MMAE, which is a clinically and commercially validated ADC payload. FG-3246 has demonstrated efficacy against CD46-expressing tumors in both preclinical and clinical studies. The associated PET imaging biomarker, PET46, utilizes the same targeting antibody as FG-3246 and is under development at UCSF. It is comprised of the YS5 antibody coupled to the radionuclide zirconium-89 and in preclinical studies demonstrates specific targeting of and uptake by CD46-positive tumors. We plan to explore its potential for use in identifying FG-3246 responsive patients in a Phase 2 trial that is described on Slide 27. Moving to Slide 26, as we noted in our last earnings call, FG-3246 has demonstrated monotherapy clinical efficacy in multiple myeloma and metastatic castration-resistant prostate cancer. Interim data from the ongoing Phase 1 trial in prostate cancer showed that four out of 21 evaluable patients had partial responses based on resist criteria at the two highest study doses and an overall PSA50 response rate of 45% in heavily pretreated patients who had…

Thank you, John. Before jumping into the financial update, I would like to spend a moment to acknowledge and thank our FibroGen colleagues around the world. I'm continuously inspired by many interactions with our team in which I see tremendous resilience, positive mindset and exceptional operational capability that enables us to deliver on key clinical operational and financial milestones. Now diving into these quarters financial results; for the third quarter of 2023, total revenue was $40.1 million compared to $15.7 million for the same period in 2022, a robust increase of 155% year-over-year. This significant growth showcases the strength of our business. I will now provide further texture on our revenue. As of Q3 2023, we recorded $29.4 million of net product revenue for Roxadustat sales in China compared to $17.4 million in the third quarter of 2022, representing an increase of 69% year-over-year and highlighting the strong performance of Roxadustat in China. During the third quarter, we recorded $6.8 million as development revenue associated with co-development efforts for Roxadustat with our partners as compared to $2.5 million during the third quarter of 2022. For the fourth quarter, and as we have previously guided, we expect co-development revenue to range from $3 million to $5 million. In the third quarter, due to the successful completion of post-approval safety studies associated with Roxadustat in China, we triggered a $4 million milestone payment from AstraZeneca, $2.6 million of this milestone was recognized as licensed revenue, $0.9 million was recognized as co-development revenue, and the remainder is classified as deferred revenue. Finally, in the third quarter, we also recorded $1.3 million in drug product revenue for Roxadustat bulk drug product or active pharmaceutical ingredients sold to our partner Astellas. I will now move to provide further detail on our financial performance in China.…

Thanks, Juan. In closing, we are excited about our near-term prospects and the value they provide to stakeholders. To recap, we expect top-line data from the following two Pamrevlumab pivotal studies. Our Phase III LAPIS trial in locally advanced pancreatic cancer in the first quarter of 2024, and the Phase II-III Pancreatic Cancer Action Network Precision Promise trial in metastatic pancreatic cancer in the first half of 2024. Roxadustat continues to perform very well in China, where our SNDA has been accepted for the chemotherapy-induced anemia indication, and our partner Astellas continues with the commercialization of Roxadustat in Europe, Japan and other markets. In our early-stage pipeline, we expect top-line results from the Phase I monotherapy trial of FG-3246, a first-in-class antibody drug conjugate targeting a novel epitope on CD46 for metastatic castration-resistant prostate cancer by the first quarter of 2024, and anticipate the initiation of a Phase II trial in MCRPC in the second half of 2024. We anticipate filing an IND for FG-3165, our anti-Gal-9 antibody, in the first quarter of 2024. We anticipate filing an IND for FG-3175, our anti-CCR8 antibody, in the second half of 2024, and 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 redoubts in pancreatic cancer, our early-stage pipeline, and our strong balance sheet. I would like to thank all the employees of FibroGen for their continued hard work and perseverance over the last few months. I would now like to turn the call over to the operator for Q&A.

[Operator instructions] And our first question comes from the line of Paul Choi with Goldman Sachs.

Hi, I was muted there. This is Khalil [ph] calling in for Paul. Thank you so much for taking our questions. I guess I have a couple quick questions. So with regard to Roxadustat in China, could you please provide some additional color on, one, your expectations when you might start to see an eventual impact from generic competition beyond next year in terms of either pricing or market share? And then, two, given the idiosyncrasies of China that you mentioned, how does that really affect the company's strategy in mitigating such an eventual impact from potential generics?

Yeah, thanks for the question. I'll go ahead and start off and ask Chris Chung, who is in China right now, to follow up with supplemental comments. There are a number of things in play that make it really difficult to pinpoint when we would expect meaningful impact of generic entry. This is a much different dynamic than in the US market, where you have patent expiration, you have a generic launch, and you see immediate erosion of the brand share. And in fact, it's typical over the course of the first 12 months of generic penetration in a market like the United States, you see 90% to 95% of the value eroded. It's different than that in China for a number of different reasons, as we tried to outline in the call, but the first reason is because of the fact that each of the generics, by the time they are able to gain approval, are going to have to go hospital by hospital in order to establish the listing and we really don't anticipate until we see multiple generics being available and then the advent of the potential for volume-based procurement or volume-based purchasing before you would see a meaningful impact on the brands, both price as well as market share. And so while we do expect at some point in time there to be the potential for volume-based purchasing, we just can't state when that will be. It's going to be dependent upon the review of the generic applications. It's going to be dependent upon the approval of those generic drug products and it's going to be dependent upon the government then calling for volume-based purchasing and so there are a lot of unknowns that make it difficult at this point in time for us to then kind of forecast much beyond 2024. Regardless of what happens, even in the advent of multiple generics being available, we do see in China with other multinationals a very strong continued value or revenue stream for the originator that continues on in perpetuity on for several years. In fact, there's a large multinational that has about 15 products that are a part of volume-based purchasing and with those 15 products combined, they are realizing well over a $1.5 billion in revenue. So we still believe that there are great prospects for Roxadustat in China and in addition to that, we have the CIA indication, which we expect a decision on in the middle part of the year, which gives us an additional opportunity for both volume as well as revenue catalysts. Chris, let me ask you to go ahead and add some comments to that.

Yeah, you know what? I'm not sure I have much to add beyond what Thane just provided. I thought it was a comprehensive overview. And I would add that what Thane just described is not specific to Roxadustat and it's very consistent with how the industry is responding to regulations and how the industry is performing. Thane, back to you.

[Operator instructions] And our next question comes from the line of Andy Shea [ph] with William Blair.

Thanks for taking our questions. So mostly on FG-3246, maybe from a strategic perspective, how would you position that asset? So would that be in the pre-chemo setting like what we've seen with the Phase 2 PSMA4 and along the same lines, given the popularity of the PSMA PET imaging agent, should that be perceived as a headwind for CD47 as well and maybe also related to that, but maybe from a kind of clinical trial and data perspective, so for the Q1 data readout, it's listed here 53 patients total. So it seems like you have presented data on '21 before. So does that mean we should expect additional 32 patients in the Q1 update? So any sort of clarifications on that would be much appreciated.

Thanks, Andy. I'm going to turn this one over to John.

Yeah, Andy, thanks for the questions. I'll take them in order. In terms of the positioning, we are looking to go into a pre-chemo setting. Although obviously the recent success of PLUVICTO has sort of -- has to be factored in when we start to really plan out where we're going to target the Phase 3, but that is still our plan. With regards to the PET imaging, if I understood the question correctly, if the question was, does the broader use of PSMA PET imaging agents increase the likelihood and maybe comfort of investigators using our PET imaging agent for CD46? I would say the answer is yes. In metastatic castration-resistant prostate cancer, it's become very common for physicians to now do that imaging for PLUVICTO and other competitive PSMA radionuclide-labeled antibodies. And then finally, with regards to the additional number of patients, so the interim data last year at ASCO had 21 patients who were resist-evaluable. I think that they had maybe like mid-30 number of patients in that. So there are additional patients who have entered into the trial since that readout and also some of the patients who were on drug then continue to receive treatment, which I think will have an impact on the measured progression-free survival.

Thanks, John. And Sandy, we're going to follow the data and ultimately, these men undergo several lines of treatments because none of these treatments that are available today or probably even into the near future are curative and so the Phase 2 trial will be really, really important to inform then the Phase 3 design.

Got it. Okay. Maybe one last one about the generics, Roxadustat. So I guess in the US, it's not really an approach for the originator to drop the price and start a price competition. Is that not the case for China? Is there a case where you can kind of drop the price and really compete with generic entrant?

Yeah, Chris. Let me start and then you can follow up. It's really dependent, Andy, on really the product that you're talking about. As you know, in the US, it's very, very rare for the originator to drop the price just because there's no way you could ever make up the value and volume. I think because of the way that the volume-based procurement or purchasing works in China, I think that there is likely an opportunity to decrease the price to some extent, but nowhere near what you would see a generic price point to be. Again, just because it doesn't make sense to do that. You'd maintain volume at a higher price and be far better off than maintaining more volume at a much lower price. So Chris, maybe if you want to speak to Roxadustat in particular?

Yeah, absolutely, Thane. So thank you for the question. So looking at how multinationals and the bigger brands have historically responded to generic competition. First, when there's generic competition, the decision to lower the price is solely the election of the originator drug and on the market, we've seen ranges from 0% to 15%. Once there are enough number of generic drugs on the market and the government calls volume-based purchasing, the originator drug can elect to still participate in the market at a particular preset discount that is required by the government. So historically, the two bands are either 10% or 30%, and for the bigger brands, it's typically 30%. And this is dictated by the government.

And our next question comes from the line of Jason Gerberry with Bank of America.

Hi, good afternoon. This is Dina [ph] on for Jason. We just had a couple questions on FG-3246. This is based on the activity that you're seeing in the MCRPC patients in the Phase 1 trial thus far. Are you planning to assess 3246 in earlier lines? And I know you're planning to enrich for patients that express CD46. Could you just please remind us what percentage of the patient population you expect to be in this subgroup of CD46 expressors? Thank you so much.

John?

Yeah, thanks for the question. Just with regards to going into earlier lines, there, the endelutamide combo study that's being run as an investigator sponsored trial at UCSF does open the possibility of going into a first line setting if that is positive. So, we are following that carefully to see what those results look like and then we would make a decision, I think, based on those results. Just with regards to the percentage of patients who we expect to be positive, we have a pretty limited data set at this point regarding, expression by IHC for patients that either do or do not express CD46. We do think that the PET biomarker will give us much better data on that and really kind of guide our thinking, but based on the data that we have in hand right now, we've been estimating between 50% and 70% of the patients with metastatic castration resistant prostate cancer will be CD46 positive, but I do want to stress that we are looking to acquire more data points to sort of firm that number up. And we won't be enriching in the Phase 2 trial. We're going to be assessing the patients ahead of treatment with our CD3246 or our CD46 and then once the efficacy results are in, then we'll do a correlation with the PET positivity and in the efficacy results.

Got it. Thank you. And just a quick follow up. Just thinking more broadly, kind of your strategy for this, for this potential acquisition during these next four year period, you have obviously success in this MCRPC trial will be important, but, do you have any plans to assess this indication or this, sorry, asset and other indications in the next four years?

Yeah, we do. We've got -- we've got the plans to do a tumor expansion trial as well and it's just a matter of determining exactly when the right time is to do that tumor expansion trial, whether we go ahead and pull the trigger on it earlier or wait until we see some sort of an efficacy signal in the Phase two trial. We'll just -- we'll make that call at some point in the future. But yeah, there's there are definitely plans and you heard John speak about multiple myeloma in his remarks as well.

Thank you. I'll now hand the call back over to CEO, Thane Wettig for any closing remarks.

Well, thanks, everybody. We appreciate your participation in today's investor call and your interest in FibroGen. Enjoy the rest of your day. Thank you.

Ladies and gentlemen, thank you for participating. This concludes today's program and you may now disconnect.