Good day and welcome to the FibroGen Third Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to hand the call over to David DeLucia, Vice President of Investor Relations. Please go ahead.

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

Thank you, Dave. Good afternoon, everyone, and welcome to our third quarter 2024 earnings call. On today's call, I will highlight our current strategy for the company and the exciting opportunity for FG-3246 and FG-3180, our first-in-class antibody drug conjugate targeting TD46, and our PET imaging agent in metastatic castration-resistant prostate cancer. I will also highlight the continued strong performance of roxadustat in China and the potential for roxadustat development for the treatment of anemia due to lower-risk myelodysplastic syndrome. Then Juan Graham, our CFO, will review the financials, after which we will open the call for your questions. On Slide 3, I would like to highlight the strategic pillars for our company. First, advancing FG-3246 and FG-3180 in mCRPC remains a key priority. In the second quarter of this year, we shared important data from two Phase 1 studies highlighting the potential of FG-3246 as both monotherapy and in combination with enzalutamide. I'll provide a more detailed overview of where we are with the program and the upcoming 2025 catalysts in a moment. Second, roxadustat continues to demonstrate very strong performance in China, generating significant net revenue and positive cash flow with robust year-over-year revenue and volume growth. Thanks to this impressive performance, we are reiterating our guidance of FibroGen's full-year net product revenue under U.S. GAAP to be between $135 million and $150 million and raising the bottom end of our full-year guidance for roxadustat net sales in China to $330 million to $350 million. In addition, we anticipate an approval decision from the China authorities in early 2025 for chemotherapy-induced anemia, which, if approved, would represent a meaningful growth opportunity on top of the substantial revenue generated by roxadustat in anemia associated with chronic kidney disease. If approved, FibroGen will receive a $10 million milestone payment from…

Thank you, Thane. I will focus my remarks with a revenue summary for the third quarter of 2024, subsequently providing financial performance details of our China business for the quarter. And finally, I will wrap up with operating expense results and our cash outlook. I also want to remind everyone that more information on our financial results is available in our press release and our recently filed 10-Q. For the third quarter of 2024, total revenue was $46.3 million compared to $40.1 million for the same period in 2023. An increase of 15% year over year. We recorded $46.2 million of net product revenue for roxadustat sales in China compared to $29.4 million in the third quarter of 2023, representing an increase of 57% year over year. In Q3 2024, we recorded $0.4 million in development revenue compared to $6.8 million during the third quarter of 2023. As mentioned in prior quarters, after the termination of the AstraZeneca-U.S. West of the World Agreement, we expect quarterly development revenue to be below $0.5 million for the remainder of 2024. In Q3 2024, we recorded negative $0.3 million of direct product revenue compared to $1.3 million during the third quarter of 2023. We recognized $1.1 million from our Astellas royalties in the EU and at the same time, we recorded a $1.4 million true-up from our Astellas royalties in Japan due to product mix. Now, moving on to our financial performance in China. Total roxadustat net sales from the joint distribution Entity, or JDE, owned by AstraZeneca and FibroGen and direct-to-distributor sales for FibroGen was $96.6 million in the third quarter compared to $77.1 million in the third quarter of 2023, an increase of 25% year-over-year. This growth has enabled us to achieve and maintain a brand value share of 45% of…

Thank you, Juan. To conclude, we remain excited about the company's positive outlook and the potential value we can create for stakeholders. Roxadustat continues to perform extremely well in China, where we expect an approval decision of our SMDA for the chemotherapy-induced anemia indication early next year, and our partner Astellas continues with the commercialization of roxadustat in Europe, Japan, and other markets. Aiming to enhance roxadustat's value to FibroGen, we are actively exploring development in anemia in patients with lower-risk MDS, either by ourselves or through partnership discussions. Our oncology pipeline of FG-3246 and FG-3180 and MCRPC continues to advance after showing compelling top-line data in the Phase 1 monotherapy study and in the interim data from the Phase 1b dose escalation portion of the investigator-sponsored study of FG-3246 in combination with enzalutamide. We look forward to the publication of the Phase I monotherapy data in the coming months. The anticipated initiation of the Phase II monotherapy dose optimization study in the first quarter of 2025 and the top-line results from the Phase II portion of the combination IST in the first half of 2025. In summary, we will continue to execute on our current strategic priorities as a leaner and more focused organization as we continue to strive towards evaluation that we believe is more reflective of our current and future roxadustat revenue stream, first-in-class Phase II-ready ADC and companion PET imaging agent, and our strong balance sheet. I will now turn the call over to the operator for Q&A.

And our first question will come from Andy Hsieh of William Blair. Please go ahead.

Thanks for taking our question, Juan. Hopefully, you're feeling okay there. So, in terms of the investigator-sponsor study, the Phase II portion, would it be the Stage 1 nine patients followed by the 15-patient Stage 2 in terms of kind of the top line that can be expected the first half of next year? Just trying to get a sense of how you manage your expectations and frame the extent of the release of data.

Yes. Thanks, Andy, for your question. This is Thane. So, I think that we should expect in the top-line results for the IST in combination with enzalutamide to include not only, obviously, the patients from the escalation cohort, but also RPFS data from the expansion cohort, which is dosed at 2.1 mg per kg along with 160 mg per day of enzalutamide. And so, you know, we have to wait for Rahul Agarwal, who is the sponsor of the IST, to confirm exactly what data will be available when, in other words, as patients are enrolled, you know, we'll see six months RPFS data on some, but maybe not six months on others. And then as the trial continues to those patients, then the patients who had a six-month RPFS, then we'll have further RPFS readings. And then those that didn't quite have a six-month RPFS will then progress to a six-month data point. So, it will mature over time. But our best guidance at this point in time is that in the first half of next year, that we should expect top-line results on both the escalation cohort and the expansion cohort. Roughly 36 patients in total.

That's helpful. Thank you. And maybe just a bit on the PET imaging agent. So, obviously, the standard of care now is basically you get, you know, either gallium-based or fullerene-based agent infused. 30 minutes later, you get an image. I'm just curious if that is similar to the zirconium-89. How long do patients typically have to wait to get a PET image? So, just basically kind of on the logistical side of things.

Yes, so that's what's being explored right now. Andy, as part of the ongoing work at UCSF with the PET imaging agents, the expectation isn't that it will be, you know, minutes. It will be days post-exposure to the PET imaging agent. The work in the coming, you know, months ahead of the Phase 2 start will determine exactly the number of days, but it won't be 30 minutes ahead, and then you administer the first dose of the ADC. It will likely be, let's say, you know, six days or so.

Got it. That's helpful. Thank you so much.

The next question comes from Paul Choi of Goldman Sachs. Please go ahead.

Hi, Thane and team. This is Khalil calling in for Paul. Thank you so much for taking our questions. I guess a couple quick ones from us. Quickly, I guess on FG30 -- sorry, on the Phase 2 that you're planning to initiate next quarter, or I suppose the Q1 of '25, I think you mentioned 75 patients earlier in this call. I just wanted to clarify, will all of those be imaged as well with FG-3180? And then I had a quick follow-up on roxadustat after that.

Yes, thanks, Khalil. The majority of them will be treated with the imaging agents at the outset of therapy, followed by then treatment with the ADC. Not all 75 of them, and that's because, you know, we'll be filing the IND for FG-3246 this quarter, and we'll file the IND for the PET imaging agent next quarter. So we won't have the PET imaging agent ready exactly when the first patient is expected to be dosed in the monotherapy trial, but it won't be too long after that when we will start treating patients with the PET imaging agent. So the expectation is the majority of them, of the 75, will receive the PET imaging agent.

Got it. Okay, that makes sense. And then my quick follow-up on roxadustat was just on guidance. I think the midpoint of your trying to sort of imply continued growth into the fourth quarter of roxadustat, but then the net sales that you gave of 135 to 150, the high end of that guidance implies a very modest like year-over-year decline in the fourth quarter. I may have missed this earlier, but Juan, if you're still on the line, I think you mentioned the $12.5 million release from the JDE. If you could just touch on that again and just explain what's driving the decrease sequentially that this guidance is implying in the fourth quarter, that'd be really helpful for us.

Yes, Khalil, good question. And thank you for bearing with me for my remarks with a little bit of the end of a cold here that I'm having. What I basically alluded to your question, the 135 to 150 still somewhat contemplates a potential approval of the CIA indication. If that were to happen the way that our single performance obligation model basically elucidates that we would need to accrue further into deferred revenue given the future expected performance of the asset from an accounting perspective. So in that sense, our sales would basically, our sales guidance would have that into consideration as we are providing you this perspective at this point in time. So we will see over the course of the remainder of the year if we have that approval or not. If the CIA indication flows into 2025, then we may be on the higher end of the spectrum here.

Okay, cool. I'm so sorry, but just to clarify, you mentioned I may have misheard, but did you mention a $12.5 million change in the deferred revenue? Was that an increase or a decrease? I think I missed that earlier in the call.

That's an increase to this quarter's revenue, and it's basically a release of our deferred revenue. However, the way that the single performance obligation model operates is that if, for instance, we get a CIA approval and an enhancement of our future revenue, we would need to defer more revenue and therefore reduce our revenue for that specific quarter. So that's the dynamic of how our single performance obligation model works, that if we have future expected revenue that is above and beyond to what we're currently expecting, then this quarter or the quarter under which that happens, we will need to accrue further into our deferred revenue on the expectation of that future revenue curve.

Understood. Okay, that makes sense. Thank you so much, and I hope you feel better. Appreciate the time.

This concludes our question and answer session. I'd like to turn the call over to Thane Wettig for any closing remarks.

So thank you for joining us today for -- today's third quarter earnings call and for your continued interest in FibroGen. Enjoy the rest of your day. Thanks, everyone.

The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.