FibroGen Inc (FGEN) 2016 Q1 法說會逐字稿

Welcome to the First Quarter 2016 FibroGen Earnings Conference Call. My name is Anna, and I will 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. Please note that this conference is being recorded.

I will now turn the call over to Jennifer Williams. Jennifer, you may begin.

Thank you. Good afternoon and thank you all for joining our call. On this call we expect to 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, research and development activities and certain other business matters.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes that are difficult to predict, and many of which are outside of our control. For risks and uncertainties regarding or business and statements made on the call today, as well as factors that may cause differences between current expectations and actual results, we refer you to our Form 10-K for the fiscal yearended December 31, 2015 and Form 10-Q for the quarterly period ended March 31, 2016 filed with the SEC, copies of which 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. A webcast of this conference call will be available for replay on the Investor page at FibroGen's website, www.fibrogen.com.

I will now hand the call over to Tom Neff, Chief Executive Officer of FibroGen.

Thank you, Jennifer. Good afternoon to everyone. Thank you for joining us on today's call. We will provide updates to our programs, discuss recent accomplishments and highlight key near-term and long-term goals.

Joining me for the discussion today are Mr. Pat Cotroneo, Chief Financial Officer; Dr. Peony Yu, Chief Medical Officer; Ms. Chris Chung, Vice President of China Operations; and Dr. Seth Porter, Vice President of Fibrosis Therapeutics.

Let me start with some updates on our CKD anemia program in the US, China and Japan. And then our Phase 2 studies with 3019. With respect to the US program, we had agreed with AstraZeneca, our US partner that FibroGen would enroll its Phase 3 studies with a baseline goal of completing target enrollments by April/May 2016, and if possible, meeting stretched goal of achieving those targets by December 2015. At this point, the update for the three FibroGen sponsored studies is as follows; in study 064 which is dialysis conversion patients, 600 patients total, we beat the stretched goal and reach our agreed upon target in September 2015 and studied 060 pre-dialysis, 600 patients.

We reached the agreed upon enrollment target at the beginning of March 2016. And study 063, which is a larger study involving incident dialysis patients, meaning patients new to dialysis for which target enrollment was 750; we reported on the last call that we and AstraZeneca decided to focus on enrollment of US patients in this study and we expect to enter this modified enrollment plan to reach enrollment target as of Q3 2016. At present, I'm pleased to report that we've enrolled over 80% of the 750 patients of the target agreed to with AstraZeneca. And we expect to meet our target enrollment in Q3 2016.

As we noted in our last call, we expect to have discussions on clinical optimization with our partners and former collective view on completion dates from that effort sometimes the second half of 2016. We continue to affirm our expectation to file our new drug application in 2018. The DSMB, or the Data Safety Monitoring Board, most recently met on Friday, April 29, we and our partners AstraZeneca and Astellas presented to the full committee which then meet in closed session. In conclusion, the DSMB provided us with written directions on by the Chairman on behalf of all attending independent members that the enrollment for all studies may continue without modification.

Turning to our China program, our Phase 3 enrollment is proceeding on-schedule. As you know, we plan to enroll a total of 450 patients in our dialysis and non-dialysis Phase 3 studies in China. The dialysis study targeting 300 patients is over 80% enrolled at this point. We expect to complete enrollment in May 2016 in a six month study and we expect first reportable data by yearend. The non-dialysis study, 150 patients is about 1/3 enrolled, and we expect to complete enrollment in Q3. This is a placebo-controlled study with primary assessment at eight weeks of treatment. We expect first reportable data by yearend.

Later in this call, I'll ask Ms. Chris Chung, Managing Director of our Beijing operations, to review the launch preparation underway with our partner AstraZeneca.

As discussed in our last call, we are preparing for expansion of Roxadustat into oncology-related anemias. We are starting with myelodysplastic syndrome or MDS. We expect to have our regulatory submission accepted during Q2 in China. For the US we will differ an update until there is an agreed upon plan. We have a pre-IND meeting with the FDA this week. We will address this topic more in future calls.

With respect to Japan, we noted previously that Astellas has completed Roxadustat Phase 2b studies in Japan and CKD dialysis and non-dialysis patients. Reviewed by the Japanese regulatory authorities, the PMDA has been positive and Astellas now plans to move onto Phase 3. We expect the Japan Phase 3 program starting Q2, triggering a $10 million milestone payable most likely in the third quarter of 2016.

Turning to our second major clinical program relating to 3019, FG-3019, our monoclonal antibody targeting the activity of connective tissue growth factor. With respect to idiopathic pulmonary fibrosis, we continue to enroll study 067 or Phase 2 placebo-controlled study of FG-3019 for treatment for IPF. We enrolled approximately 75 patients and we'd like to enroll at least 90. The team has set a goal to deliver data in July 2017. There is some other news on FG-3019 this quarter. A peer reviewed article relating to our exploratory Phase 2 study in IPF was published online by the European Respiratory Journal in March and accompanied in the May imprint addition by an editorial authored by [Dr. Lucas Reshaldi], Professor of Respiratory Medicine in Chair of an Institutional Lung Disease at University of Southampton.

The ERJ showed FG-3019 was well tolerated in patients in the study. 24% of study completers experienced a measurable improvement in their lung fibrosis as measured by high resolution computed tomography or HRCT, and 35% were stable or improved. For subject in the high dose group with baseline FPC percent predicted above 55%, 37% of those patients showed improvement in pulmonary function at the end of the primary term of the study. This parameter was the endpoint in the Phase 3 studies for pirfenidone and our results suggest we may be able to improve the overall result in current standard of care. These learnings from the 049 study formed the basis of the dose and inclusion criteria for our placebo-controlled study 067.

The ERJ editorial found that the quote reduction of fibrotic changes in the lung to be exciting, and stated that given that neither of the approved IPF treatments target CTGF, the results provided a promising basis for combination studies of FG-3019 with either pirfenidone.

Turning now to pancreatic cancer; we continue to progress our Phase 2 trial in patients with unresectable locally advanced pancreatic cancer. Let me provide some background. In a given year about half of the newly diagnosed pancreatic cancer cases are metastatic for which the five-year survival rate is 1%. Approximately 15% of the cases in any given year have locally advanced pancreatic cancer and qualify for immediate resection surgeries, which are critical procedures most commonly. The remaining 35% of the cases are patients who are either borderline resectable, or who have failed the resection evaluation. It is this latter category of patients, those not eligible for surgery that is the focus of our 069 study.

The overall goal of the trial is to determine whether FG-3019 in combination with chemotherapy can convert inoperable or unresectable cancer to operable or resectable cancer. Patients are eligible for the trial only if they have been fully evaluated for tumor recession and are assessed as ineligible for resection, i.e., our score is not being candidates for surgery. In our ongoing study, subjects are randomized to two cohorts, one receiving FG-3019 combined with standard of care chemotherapy which is Gemcitabine or Gemzar, and Rofloxacin and the other receiving chemotherapy alone.

We reported initial results in the study, as per GI Meeting in January, and we continue to see promising preliminary data from the study. First, there is a contrasting result between the two arms and converting tumor score to unresectable at the time of randomization, the tumor score is resectable after six months of treatment. Five patients at the FG-3019 plus chemotherapy arm have had positive scores for resectability versus one patient in the standard of care arm. For the FG-3019 arm, this is 100% of the patients who've completed the study, and five out of six overall when the patient who discontinued early due to chemotherapy toxicity is taken into account.

The control arm has one positive resection rescore out of seven patients. Even though the numbers are small, the result to-date in the FG-3019 arm appears highly improbable to have occurred by chance. Second, of the nine patients treated with FG-3019, all are still alive and none have experienced clinical progression while on FG-3019 and all but one are still on study. By comparison of the seven patients receiving standard of care therapy, three progressed before completing treatment, two of those seven have died, including one during the study and one after study completion.

While we recognize that the number of patients completing the study is small and it is too early to definitively access the benefit risk between the study arms, the current trend shows that so far the subjects on chemotherapy alone are progressing earlier, some with fatal outcome. We will continue to enroll and monitor the study until we have a reasonable number of valuable patients to show consistent or larger separation and benefit between the two study arms; when we think we have sufficient benefit risk evidence and in collaboration with regulators we will plan and design a pivotal clinical trial. Prior to the current study, we completed a dose escalation study of FG-3019 in locally advanced and metastatic pancreatic cancer. We will be submitting the manuscript from that study describing the results to an appropriate peer review journal this month.

Let me turn to muscular dystrophy; with respect to our DMD program, we continue to enroll our Phase 2 study and non-ambulatory DMD patients with a primary efficacy endpoint of pulmonary function is measured by Force Vital Capacity, or FVC. At present, we expect to complete enrollment by Q1 2017. We plan to conduct a preliminary assessment after all the valuable subjects have completed one year of dosing. We expect to expand our existing I&D by submitting a protocol for the treatment of ambulatory DMD patients in Q3 of this year. Dr. Seth Porter will address the 3019 programs in more detail later on this call.

Moving to the financial results; I'd like to make a couple of brief points. In terms of cash balances, we had cash and equivalents to $309.9 million at the end of Q1 as compared to $336.9 million at the end of Q4 or December 31, 2015. We have reviewed our projected P&L for the rest of 2016 adjusting for somewhat lower than expected operating expenses in Q1. In addition, we take into account a contractual milestone of $62 million we expect to receive from AstraZeneca in June and a $10 million milestone in Q3 from Astellas. We expect the end of year cash and equivalents to exceed $310 million given these adjustments.

I will now ask Dr. Peony Yu, our Chief Medical Officer, to provide some additional detail regarding our Roxadustat global program. Peony?

Thank you, Tom. As Tom stated, the Phase 3 program continues to progress nicely. Our Roxadustat global clinical regulatory strategy includes four independent regulatory improvement pathways; US, Europe, China and Japan, all are moving forward with very good momentum. We enter Phase 3 with extensive Phase 2 data, including Roxadustat correction and maintenance of hemoglobin levels in dialysis and non-dialysis CKD patients in the presence of inflammation and without a need for supplemental intravenous iron in patients of different ethnicities in multiple regions.

I would like to address a recent Roxadustat publication presenting some of that data. This publication is based on one of our six Phase 2 studies completed prior to start of our global Phase 3 program. The clinical journal of the American Society of Nephrology recently published a paper on the results from our Phase 2b study of Roxadustat for treatment of anemia in CKD patients who are not receiving dialysis. In this study, a 145 anemic CKD patients were treated Roxadustat for up to 24 weeks. In the six cohorts of this study, we tested various starting doses, dose adjustment strategies and dosing frequency, three times, twice and once weekly.

Roxadustat achieved an overall hemoglobin response rate of 92% across the study using the various dosing regiments. These data help inform our selection of doses for the Phase 3 program. Among the results published are data showing Roxadustat's potential to correct anemia in the presence of inflammation. In the study, Roxadustat corrected hemoglobin to a similar extent in CKD patients with those normal and dose with elevated baseline levels of C-reactive protein, or CRP, which is a measure of inflammation. This result suggests that Roxadustat has the potential to being used in treating anemia of inflammation, which can occur in association with multiple autoimmune diseases and other illnesses outside of CKD.

Additional study result show Roxadustat corrected hemoglobin irrespective of iron status at baseline and without the use of IV-iron, which was prohibited during the study. Consistent with those results, the study also show Roxadustat led to a significant reduction in Hepcidin levels. Reduction of Hepcidin levels would result in release of iron from body storage and increased absorption of iron from the gut for making red blood cells. The data also show a significant reduction of total cholesterol with affect that was durable throughout the treatment period. This added affect may help address one of the key cardiovascular risk factors in CKD patients. And finally the safety profile in the study was consistent with background CKD; there was no safety concerns.

Thank you. And I will now hand this back to Tom.

Thank you, Peony. I would like to ask Chris Chung, our Vice President of China operations to provide some comments regarding loss preparation for Roxadustat and CKD anemia in China.

Thanks, Tom, for inviting me to this telecom. Let me introduce myself, I'm responsible for FibroGen's operations in China. With full enrollment of our Phase 3 insight, I will address the March preparation work that has been initiated.

FibroGen has established a 40,000 square feet manufacturing facility in Beijing. It has been certified as a GMP plant by the Chinese FDA and the majority of our approximately 60 staff in China is employed in manufacturing-related positions. We completed the NDA registration campaigns for API and drug product at this facility in April of 2015, and as of today, we have on hand the 12 month stability data needed to support our NDA. We plan to produce commercial material and launch from this facility after securing a specific GMP license for Roxadustat after NDA approval.

We remain optimistic about the market prospects of Roxadustat in China. The Chinese National Registry, also called the China National Renal Data System, reported that at yearend 2015 China had approximately 450,000 dialysis patients, which represents a 15% year-over-year growth rate since 2011 when China first started tracking data at this national level. We expect the dialysis population to continue to grow at these in the foreseeable future. The 2015 figures represent the first deal that China surpassed US levels with respect to number of patients treated on dialysis. The increasing dialysis treatment rates in China are primarily driven by improving government funded medical reimbursement coverage.

Dialysis became eligible for severe disease reimbursement designation in 2013, which not only made dialysis much more affordable to patients, but has allowed hospitals to invest in the expansion of dialysis facility and expand access to care. The data we have access to indicate that in large cities, 85% to 95% of total cost is reimbursed. The percent reimbursement is lower in smaller cities and even lower in rural areas, but the trend line over the past years has been that reimbursement coverage levels increased overtime. We believe these positive metrics will continue for the next few years until government goals of treatment capacity are reached.

Despite these very large numbers, we believe that only a minority of dialysis-stage patients in China have received or will receive treatment on dialysis which leaves an equally large if not even larger population of dialysis stage non-dialysis patients who could benefit from an oral anemia treatment. This is the patient population that is rare in the United States and represents a further opportunity for Roxadustat.

As a domestic 1.1 bioventure in China, FibroGen has a contractual relationship with AstraZeneca to perform sales and marketing and distribution. AstraZeneca is ranked second among foreign pharma in China as measured by sales. The launch activities for Roxadustat are performed jointly with FibroGen conducting medical affairs and AstraZeneca sales, marketing, and market access. We're working together to develop a launch plan that is commensurate with the sizeable market opportunity that Roxadustat represents.

As a closing note, all of us at FibroGen are incredibly excited about the prospect of China potentially being the first launch country for Roxadustat.

With that, Tom, I will turn this back to you.

Thank you, Chris. I'd now like to address some more detail on our second major development program relating to treatment of fibrosis and other fiber-prolific cancers with FG-3019. Dr. Seth Porter, our Vice President of Fibrosis Therapeutics will review the ongoing clinical studies in that area.

Thank you, Tom. We would like to provide updates regarding our ongoing Phase 2 studies in idiopathic pulmonary fibrosis, Duchenne muscular dystrophy, and pancreatic cancer.

First in the area of IPF; as Tom mentioned, we have an ongoing Phase 2 randomized double-blind placebo-controlled study to evaluate the safety and efficacy of FG-3019 and IPF patients with mild to moderate disease. The primary efficacy endpoint for 067 has changed from baseline and force capacity and secondary endpoints include various assessments of pulmonary function as well as pulmonary fibrosis as measured by high resolution CT.

We are also pursuing a sub-study in which patients will receive six months treatment with FG-3019 in combination with currently approved therapies; Pirfenidone or Nintedanib or one of these approved therapies alone. The study will provide needed safety data that provides a platform for further more extensive combination trials. We expect 40 to 60 patients to be enrolled this year.

Turning out to pancreatic cancer, patients are eligible for our ongoing Phase 2 trial only if they have been fully evaluated for tumor resection and failed scoring for respectability, that is, have been scored as not being candidates for surgery. Subjects are randomized to receive FG-3019 in combination with standard care chemotherapy Gemcitabine plus Robaxin or chemotherapy alone. Up until the end of last year, this study was randomized one-to-one with a target enrollment of 40 patients. The randomization scheme is also two-to-one with a target enrollment of 42 patients to provide a larger and for assessment of safety and efficacy in the combination treatment arm.

Further protocol, eligibility for surgical exploration is determined from specific criteria based on the plasma biomarker CA19-9, FTG PEP imaging, tumor response based on CT imaging, and the NCC end criteria for resectable or borderline-resectable tumors. As Tom said, we continue to see promising preliminary data. As this is a proof-of-concept study, we won't necessarily have to complete the target enrollment before deciding on next steps to move this program forward. We are currently considering how to select and define endpoints for what might be a pivotal trial based on this kind of study design.

Moving onto another Phase 2 program. Muscular dystrophy is characterized by extensive muscle fibrosis and aggressive muscle loss and weakness, which ultimately to pulmonary or cardiac failure. Most therapies currently under development target specific subsets of Duchenne muscular dystrophy patients with specific genetic defects. Preclinical study suggests that CTGF contributes to the process by which muscle is replaced by fat and fibrosis. And FG-3019 treatment may improve muscle strength and exercise endurance. Accordingly, FG-3019 has the potential to treat all patients with DMD regardless of the underlying genetic defect.

We continue to enroll our Phase 2 open label study for non-ambulatory DMD patients. This is an open label single arm study in which each patient will receive FG-3019 every two weeks for up to two years. Primary endpoint is pulmonary function as measured by forced vital capacity and key secondary endpoints include arm strength and function. As Tom mentioned, we hope to report data from a preliminary assessment after full year of dosing.

Tom, back to you.

Thank you, Seth. Moving on to the financials. Pat Cotroneo will now review the financial highlights for the Company. Pat?

Thank you, Tom. As announced in our press release today, total revenue for the quarter ended March 31, 2016 was $28.3 million. For the same period, operating expenses were $55.1 million and net loss was $27.8 million, or $0.45 per basic and diluted share. Included in operating expenses for the quarter ended March 31, 2016 was an aggregate non-cash portion totaling $8.6 million, of which $7.3 million was a result of stock-based compensation expense.

As Tom mentioned, in terms of our cash balances as of March 31, 2016, we had $309.9 million in cash as compared to $336.9 million at the end of 2015. For these purposes, cash refers to cash including restricted cash, cash equivalents, receivables and investments consisting primarily of investment grade corporate debt. On our balance sheet, the category of long-term consists entirely of investment grade corporate debt with remaining maturities of 2.5 years or less. We note that we expect to receive another contractual non-contingent payment from AstraZeneca of $62 million in the second quarter. This will complete the $402 million of non-contingent license payments under the 2013 collaboration agreement.

For the quarter ended March 31, 2016, revenue increased 74% and research and development expenses decreased 14% as compared to the same period last year. Largely due to the fact that we had reached the 50-50 spending cap with AstraZeneca during the fourth quarter of 2015 on our initial funding obligations for Roxadustat. In particular, the first quarter of 2016 was the first full quarter in which we no longer shared 50% of the development cost compared to the prior periods, as Astellas and AstraZeneca are now responsible for funding future development and commercialization cost for Roxadustat and CKD through launch for all territories, excluding China in which AstraZeneca pays 50% of development costs.

Looking to 2016, as Tom mentioned, we anticipate total cash at year-end to be in access of $310 million. I will now turn the call back over to Tom.

Thank you, Pat. I'd like to take this moment to comment on some recent transitions in the Company. As many of you Dr. Frank Valone has stepped down as Chief Medical Officer. Frank is reducing his role to part-time status and he will continue to oversee the China CKD anemia program through the submission of our NDA. We thank Frank for his leadership and consider ourselves fortunate to have benefited from his guidance over the years at CMO. We are pleased to continue to benefit from his expertise as he transitions to a more limited role as Senior Fellow.

I'm also pleased to announce that Dr. Peony Yu, who has served the Company for 8 years as Vice President of Clinical Development and who has led the global anemia program into Phase 3, has been appointed Chief Medical Officer. Her acceptance of this position ensures continuity and allows us to focus on continued progress as we advance multiple clinical programs in parallel.

Thank you, Frank, and thank you, Peony, for your past and ongoing contributions to FibroGen. We are now ready to start the question-and-answer session.

(Operator Instructions) Michael Yee from RBC Capital Markets.

Tom, two questions. One on Roxadustat, I appreciate the update. On the cardiovascular safety analysis, I know that's an important part of the whole program. Can you just talk a little bit about the event rates, how that's proceeding? How that plays a role into un-blinding the study and the timing of all of that and talk about the event rates, is that in-line with your expectations? And then on 3019, you announced some updated data, talk a little bit about that have you talked the FDA since the initial January data? Give us an update on discussions with the FDA.

So let me do this - for the CV safety and Roxadustat, let me have Peony address this question. And then I will take on the second question about 3019. Peony?

Yes, Mike, as you know, our US global program is the event-driven program. The event rate are being collected from across our studies and our partners studies that includes three studies being run by FibroGen, two studies by AstraZeneca and studies by Astellas. And these events have certain trigger terms that goes to the [Casian] committee. We have been planning to get together with our partners to discuss the event rate for clinical optimization in the second half of this year, and at that time, we will be able to provide a more accurate timing on our submission date. Based on what we are seeing today, we believe that we are still on-track for filling NDA in 2018.

Michael, with respect to FG-3019 and the pancreatic program, which I think is what your questions aimed at, we have not yet talked to FDA. We did have the clinical lead site come down and see us last week, [Dr. Vincent Pakozi] at Virginia Mason in Seattle. And as a way of getting one's arms around this, I asked him what does Virginia Mason - the docs, this is the largest pancreatic site in the West Coast, and so I asked what do they see here and what's of note?

So we talked about the resection rate change and the idea that 3019 arm and all the patients on drug are still alive and the control arm looks much worse and look like some sort of mortality or survivability study could be done pretty efficiently. But then he sort of surprised me with one other statement, he said that Virginia Mason, the one thing that has caused a great deal of focus and interest in this program is that of the 9 patients on 3019, we haven't seen what we normally see, and at this moment people are pretty amazed and what we refers to is that in this patient population you would expect about 20% of the patients to die within two months and you would expect 40% to 45% or something like that to have progressed. And so on our study, we haven't heard any deaths yet in 9 patients, that's sort of what he is talking about, but as he's also saying, there hasn't been any clinical progression judgment.

There is one patient that had Gemzar toxicity that was taken out of study and then four months later after being off 3019 for that time, had a findings of nusun in the pancreas, so there is a patient that has a progression-like event but it was off-study. And so, what they are talking about is 3019 treated patients as a group - no deaths, no findings of clinical progression. And so, he is very excited about this, he is also very highly credentialed; went to Harvard Med School and was trained at Dana Faber and he is the Chair or the ASCO Committee on the pancreatic cancer arena. So he is sharing a couple of big sessions next month in June in ASCO. And so, we're looking at this from his perspective the past few days because he has been working with us for six years now. He has been in the trenches on 3019; he really first saw that the antibody did things reliably to patients that were big benefits, like improvements in CA19-9 and improvements in PET Score and so on.

He also explained something that I think is important conceptually. I think many of the listeners where might be interest in and that is why isn't there some big research criteria on CT Scan score on these studies, and as he puts it, a pancreatic tumor in a 3D dimensional volume, given tumor will take up one unit of volume and there will be five units of scar. So the tumor is actually sparse in the volume. And so as a result, the recess doesn't really show anything because the scar doesn't reflect any change. And this kind of visualization has been really helpful for the audiences that we talk to and it really represents, I think, the first step, legitimate step, into fiber-prolifered cancers where you're consciously modulating the fibrosis as part of the treatment of the cancer.

And we have seen a couple of big companies show up recently after having seen the ASCO GI data in January who have sort of realized this, that we're doing something that is very unique and very important for the platform of cancers that are fiber proliferative.

Terence Flynn from Goldman, Sachs. Please go ahead.

Hi, this is Cameron on for Terence. Couple of questions, first on 3019 and pancreatic, can you tell us how many patients are enrolled and why you feel is a reasonable number prior to having a meeting with regulators? And then on second, on roxa, you mentioned MDS in China, can you tell us anything more about these efforts and when we might expect some initial data?

So, Seth you want to go over the enrollment on 3019 pancreatic and then Peony, the MDS in China?

With regard to the 069 state in pancreatic cancer, we have a total of 16 rolled, 6 in the 3019-plus standard care and 7 in the standard care alone. Of the 9 - actually 3019 plus standard care, 3 remain on treatment. And the remaining 6 have been evaluated. And then for the standard care alone - all 7 have been evaluated. So that's what we have today, then we are continuing to enroll that study.

We are very excited about submitting and expecting that our CTA be accepted by the Chinese government in second quarter of this year. And so, we are very fortunate to be doing this as a venture 1.1 and this is being considered as if this is Chinese domestic drug.

Now, however, in China it does take about a year for CFDA to view and approve before we can start the trial; we plan that, looking forward, that will be around second quarter of 2017. Now, this is going to be a placebo-controlled trial in the patients with MDS who tend to be very anemic. In China, there is known to have severe blood shortage. The treatment guideline for transfusion threshold is hemoglobin 6 or lower. And in contrast, in the US it's hemoglobin 9. So you can imagine how much unmet medical need there is. And the opportunity to address this unmet medical need was very much encouraged by the key opinion leaders as well as the regulators and welcome by the patients. So this is going to be because of our lack of approved treatment we have the opportunity to conduct a placebo-controlled trial there.

Seamus Fernandez from Leerink.

So the first one, just as we think about the even rates; Peony, you mentioned that the event rates as come in will be evaluated by you and your partners sometime, I guess, in the months ahead. How should we think about if the event rates were to come in below expectations, what are the corrections that could be taken or achieved to keep the event rates moving forward in a timely fashion?

The second question is, with regard to the data that's available; the understanding as we have it is that the patients most likely to be affected with higher event rates are those that have the highest EPO sort of treatment exposure. So basically those that are receiving the highest doses of EPO. Is there any way to sort of over recruit the studies or to sort of select those patients who maybe resistance to EPO such that you're more likely to see an impact in that regard?

And then Tom my last question was for you; with regard to 3019, I know you said in the past that you see a significant number of potential indications for CTGF. If you were to partner the compound, can you just give us a little bit of perspective on what you see as the opportunity for 3019?

Let me do this in reverse order and let me start with the 3019 part. In looking at partnering activity, conceptually you have very, very broad platform because this address is all forms of fibrosis with natural or caused by surgery or by poisons or whatever. And so most of the categories there is very little in therapy, there is no proven anti-fibrotic therapy at all.

And so, this is a great opportunity in terms of value creation. It's a complicated opportunity from a partnering point of view because most of the pharma companies in the past have looked at this and said, well, we'd like to do one indication and then of course we have to have control over everything, so we want to absolute license of all indications and we'll decide later what to do, and we've said no to that proposition probably three dozen times over the past 10 years because we aren't about that at all. The idea that has got traction in recent years are people that have proposed geographics - so for example, Japan and Europe for the partner and US and China for us, and some agreement to specific protocol development like four or five indications that are fully funded. And truth be known, right about the time we did our IPO, we were looking at a proposal like that which went away largely because of the amount of time that the IPO took. There were some changes in the management of the counterpart company and as usual with these partnering things - it's very unique opportunity to guess it's all got to be just right.

And so this opportunity passed, but in the meantime, as we generate more data, and I'll get back to why this isn't just a set put as we generate more data there is more and more interest, and the point that needs to be made here is that our Board made a decision with the help of outside advisors in 2012 as a formal matter to partner anemia in the US and to allow the proceeds from that those transactions to be used to reinvest and drive the antibody forward because everything we saw in our work in various categories of fibrosis therapy or fibro prolific cancer therapy where green lights look pretty downhill in terms of opportunity. And so the mandate since that time is to move forward systematically with the pilot studies which we have been doing.

And so, to me I think it's fair to say the Pancreatic data has inspired a lot of interest in other cancers and there are new players around our institute trying to figure out what is to make agreement in that territory. There are also people that are interested in some of the major categories like liver fibrosis or diabetic nephropathy and that sort of another universe of folks. And there are those that look at something like pulmonary fibrosis, it's something that's appropriate as an orphan type indication.

We acknowledge all this stuff, and what I would say is that we're going to move in the direction of the pathway we see the fastest route of registration. And this is a complicated judgment, obviously, but we are attending to this all the time. And so, IPF and pancreatic, for example, are both pretty interesting at this point; at some juncture we're going to have to choose what our priority is there as it relates to the most rapid pathway registration. And the objective really is to get the antibody being made legally in the US and Europe because there are some many different opportunities that, much like some of the biologics, physicians tend to define opportunities that's by getting access to the antibody and designing their own trials, and we can then understand the places to best focus our efforts and our resources.

So we are open to partnering when people are serious about the platform and we're anxious to hear from people on that category. We're pretty insistent that we're just not going to roll over dead and hand people rights that they don't promise contractually to do things. And we are also very committed to an orphan strategy based on data and based on reasonable expectations. And so those are the elements there.

Let me turn to your question about recruitment of the patients and the CKD studies, and you mentioned that the patients that have the highest EPO exposures tend to have a higher vent rates. We agree with that, let me say, though, that in terms of the study you have really two distinctly different studies going on, one into dialysis where you're comparing against standard care EPO and there is two subsets there; one is conversion patients which have been on EPO for three or four years already, so arguably a lot of - the manifest toxicity is largely been expressed so you're really looking at an EPO enriched population. And then the other category which is incident dialysis, and this is where FDA hasn't ordered companies to do studies because in the past none of them done. We are very focused on the incident population and the reason why is that there is a subset there where it's just been acknowledged by our regulators in the US as a place for unmet medical need and that's patients that have chronic inflammation in addition to the kidney failure. So we call these inflammations hypo-response patients and we think this is about 40% of the dialysis population. And we can dial into some degree those patients because CRP levels are measured routinely in these studies and what we're doing this year in the events rate is watching very, very closely how rapidly incident dialysis is being enrolled in both AstraZeneca's hands and in our hands in parallel efforts.

And much of the dating of the dialysis program in terms of when we submit is going to be tied to our perception in the next few months of how much leverage needs to be applied into the incident programs.

In terms of tactics, we have a fantastic partner, AstraZeneca, they are very committed with these programs, and if longer studies or larger studies are needed they are very, very clear that they are unreservedly supportive in doing what's necessary. They have a tremendous track record in doing large long studies, and the teams that have done those studies, we are fortunate to be in contact with, and so they know a lot about what needs to be dome and how to get it done. And so this year is a very important year in terms of particularly for incident dialysis. For the non-dialysis portion, I'm going to ask - since that is not against EPO, the whole situation works differently and I'm going to Peony to try to take on the non-dialysis portion in terms of answering your questions.

So as Tom said, we are enrolling very well, in both in the dialysis and in the non-dialysis we are making - we have made very solid progress and you asked a question about the event rate were different than the original assumption then what do you do? Well, the answer is that in order to achieve the target number of events, one would have to do some of the fine titration of patient number and/or treatment duration.

Given Roxadustat being a high priority Phase 3 project in all three companies; FibroGen, AstraZeneca, and Astellas, and our commitment to get this study done targeting approval of Roxadustat we are in a quite good place to make any titration needed because we collectively don't have - we have more than just one clinical trial team. We have more than two, actually, we have three and we are enrolling from over a thousand study sites around the world. So we have the capability to make any titrations needed. What we need to do is to get together and compare numbers to refine the timing.

Kennen MacKay from Credit Suisse.

Hi, this is [Slanix Alex] calling in for Kennen. First quick question regarding the 063 study, the incident dialysis trial I believe. Could you put a light a little bit more color on why the focus on US enrollment?

That's a pretty simple one, so I can do it pretty quickly. Out there in the dialysis world, the US is unique because the US ESRD Medicare system essentially pays all the cost for dialysis when you cut through all the different insurance programs and so on that are available. And so as a program that's fully funded by the government, there are some things that have happened that are different than other countries. And in particular, in the US there are no restrictions on the use of EPO because it's paid for fully by the program which has been known as the ESRD program - and similarly with IV-iron.

And so, in the US you have patient cohorts that arguably would not even be on therapy because they wouldn't be alive in other countries, and these are people that have chronic inflammatory conditions and require very large amounts of EPO and very large amounts of IV-iron to maintain hemoglobin levels. And so we've seen - actually, in our slide deck if you look, there is 2012 database from the dialysis program; this is after the bundling and after the FDA package insert changes. And you can see that the use of EPO is much higher and the two quartiles that are the big consumers versus other patients. And those are the inflammation hypo-response sub-categories.

As I said, this is not something that's seen elsewhere because other countries have not been willing to accept the cost of EPO without restriction. So for example in China, we see volume caps that have been instituted by the government that really prohibit the use of EPO above 2x package insert and that's a typical sort of tie-up, costing mechanism. There are various kinds that are used in other countries and I think most everyone here knows about the UK NICE Institution which puts significant restrictions on use of EPO and/or IV-iron.

I should also point out that we have established the IV-iron when used excessively is something that causes Hepcidin to up-regulate significantly. Hepcidin operates by blocking the export of iron from cells, which means that red blood cells cannot be made through normal mechanisms. And so, really high Hepcidin levels are paradoxical to the therapy because they interfere with the therapy and this is one of the reasons our regulators are so interested and what we're doing because Roxadustat down regulates Hepcidin and we don't need IV-iron. And so we're distinctive and very different than other companies in this realm because of the fact that we would not be an EPO or IV-iron consumer, and for the particular sub-class of information, hypo-response, there is the real possibility of much better outcomes. And so, this is why we're focused on the US in a nutshell.

In addition to that, FDA with the Company Affymax in 2012 had a Phase 4 order that they issued on Omontys demanding that a study in incident dialysis be performed at a sufficient scale that's statistical stitch could be drawn between death, stroke, or MI. And that is several hundred patients at a minimum, and so that takes a lot of effort and it also tends to require a more focused or more undue focus, if you like, the necessary focus on the US because you got to get these kinds of patients in order to satisfy FDA's [decom].

Tom Shrader from Stifel.

I have a couple of little ones. In pancreatic cancer I think it's probably reasonable that if you have resectible cancer, you're better off then if you don't. How strong is the medical data that if you get to being resectable via chemo, your chances are better? And really what I'm asking is, is this an obvious candidate for accelerated approval, or is there work to be done here?

So I think you're asking how much background information is there if you treat patients with unresectable pancreatic cancer to convert them with chemo - and frankly, there has been a lot of work done on that; it's becoming an area of great interest over the last few years but there isn't a lot of data on that. And where there is focus on it, people tend to focus on those who are borderline resectible. Our trial is relatively unique in that we're looking at patients who are deemed to be unresectable and seeing if we can convert them to resectability.

In addition there, we have had various key opinion leaders give us advice and they have described circumstances in which patients have been resected like this, and this occurs because in the standard of care arm 5% to 10% of the patients will be eligible for resection after six months of therapy. And what they have found, this is anecdotal, is that the same basic survival rates apply, which is to say in the overall system, something like 15% to 20% chance of survival at 5 years.

And with best care, for example, I've heard this from Virginia Mason last week, with best care it would be at 40%, 5-year survival. And the expectation when somebody has failed resection scoring initially, they don't get a whipple immediately, but instead they are sort of in this twilight zone. It is about 1%; it is 1% to 1.5% survival at 5-years. Again, according to the Virginia Mason key opinion leaders that were here last week. And so, that's a rough feel for the numbers, and the key punch-line here is that's an awful lot of clinical benefit whether it's 20% survival or 40% survival with 5-years compared to 1% or 2% survival with 5-years. And so that's the other way to look at it.

And then it looks like in the incident dialysis trial, you're allowing patients in who've seen a little bit of ESA now, it's a recent change. Is that just medical reality that a lot of patients have seen some level of ESA before they get to dialysis?

So what we have found is that when we try to enroll incident dialysis, patients in the US; some of the patients who really are treatment naive until they were hospitalized and their consulting nephrologists gave them a shot of EPO. Then they go to the dialysis center and then an investigator will tell us, well, this patient is no longer eligible for your study even though they are still anemic. And this is the rational for changing that patient selection criteria to include this kind of patients.

To a fault, these patients end up in emergency wards first; the incident dialysis. I think in the US system it's acknowledged that 45% of the entries are emergency cases. And the immediate treatment standard of care when their disorders are recognized, because a lot of cases that are undiagnosed, just to give them EPO. But it's only given one or two shots before they are in a position to be in the trial. And so, once we've realized this, that the physicians are very frustrating because it's turning down candidates that are otherwise ideal. We said: we don't really care if the patients have one or two shots of EPO because you're going to need two or three weeks of therapy with EPO to get hemoglobin changed. So the real issue is do we see any movement in hemoglobin, and if you don't, why not amendment of the study? And so, that's been the rational, and that sales why we made the change.

We have no further questions at this time. I would like to turn the call over to Tom Neff for closing remarks.

Thanks to everybody on the line today for participating in our call. We look forward to speaking with you again and proving future updates next quarter.

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