FibroGen Inc (FGEN) 2017 Q1 法說會逐字稿

Welcome to FibroGen, Inc. First Quarter 2017 Financial Results Conference Call. My name is Adrienne, and I will be your operator today. (Operator Instructions) Please note, this conference is being recorded. A webcast of this call will be available on the company website two weeks from today's date. For opening remarks and introduction, I'll now turn the call over to Karen Bergman, Vice President, Investor Relations and Corporate Communications. Karen, you may begin.

Thank you, Adrienne. Good afternoon, everyone, and welcome to FibroGen's financial results and corporate update call for the first quarter of 2017. The call will be led by Tom Neff, our Chief Executive Officer. Tom will start with an overview of our corporate strategy and execution on our product development programs in the first quarter. We today will be joined by Dr. Peony Yu, Chief Medical Officer, who will provide updates on roxadustat development for CKD anemia and for anemia associated with myelodysplastic syndromes or MDS; Dr. Seth Porter, Vice President of Fibrosis Therapeutics, who will discuss FibroGen's development programs for pamrevlumab, including our Phase II study for idiopathic pulmonary fibrosis and pancreatic cancer; and Mr. Pat Cotroneo, Chief Financial Officer, who will review financial performance in the first quarter.

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, many of which are outside of our control.

For risks and uncertainties regarding our 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 year ending December 31, 2016, and quarterly reports, including our Form 10-Q for the period ended March 31, 2017, filed with the Securities and Exchange Commission. Copies of these filings 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.

The format for today's call will include remarks from FibroGen's management team and then we'll open up the lines to take your questions. A webcast of this conference call will be available for replay on the Investors page of FibroGen's website, www.fibrogen.com. At this time, it is my pleasure to turn the call over to our CEO, Tom Neff.

Thank you, Karen. Good afternoon, and thank you for joining us today. This is an exciting time for FibroGen as we prepare for an eventful summer and rest of year across our pipeline in multiple therapeutic indications. We will be releasing important data in Q3 from our pamrevlumab or FG-3019 antibody development program in idiopathic pulmonary fibrosis or IPF. We are on track to report top line clinical results from a Phase II double-blind placebo-controlled study measuring lung function of fibrosis reversal. Concurrently, we will report the results of double-blind active-controlled substudies evaluating pamrevlumab safety with the 2 currently approved drugs; one study with pirfenidone, Esbriet, and the other with nintedanib, OFEV. In addition, some important preclinical data is on tap for publication. The original study of radiation-induced lung fibrosis, demonstrating the ability of pamrevlumab to reverse lung fibrosis, was published earlier this year in the Journal of the National Cancer Institute. A follow-on study describing changes in pulmonary gene expression caused by radiation in gene clusters attenuated by treatment with pamrevlumab is currently being submitted for publication. We will also be reporting on a comparison of the effectiveness of the 2 approved IPF drugs versus pamrevlumab in the same radiation-induced fibrosis model at an IPF summit this summer. These results are highly favorable and provide clear contrasts of the mechanism of action for each of these agents.

Coupled with the results of the exploratory study in IPF patients published in the European Respiratory Journal in May 2016, we anticipate that the combination and consistency of results to date in these clinical and preclinical studies will place [this candid] therapy in a strong position to initiate pivotal studies in IPF. We believe that IPF can be a significant value generator for pamrevlumab due to severe unmet medical need and limited life expectancy seen at the time of diagnosis. The first approval, U.S.-wise, of therapeutic IPF medicines was about 2 years ago. And even though neither appears to be disease modifying, OFEV and Esbriet together are currently reporting annualized sales of $1.5 billion. Given that patient and physician awareness of approved therapies continues to increase, these products are expected to continue rapid sales growth.

Starting nearly a decade ago, when we first observed reversal in radiation-induced lung fibrosis with FG-3019, we have been fully committed to address the fibrotic damage caused by this serious chronic disease. Because of the important roles of CTGF and fibrosis in tumor biology, we study pamrevlumab for multiple fibroproliferative indications.

Earlier in the first quarter, we published seminal results from a previous pancreatic cancer clinical study in a patient population, 88% of whom had metastatic disease. In this study, increased pamrevlumab levels in the blood stream correlated with improved survival. In the current study of locally advanced pancreatic cancer, or LAPC, we expect to complete the active treatment period by year-end. As reported at ASCO GI over the last 2 years, we continue to see favorable differences between pamrevlumab treated and control arms in resectability and in trends in overall survival.

In ongoing discussions with members of our advisory board, we have been encouraged to press forward aggressively for this indication. We will be meeting with the Pancreatic Cancer Research Team, a consortium of clinical investigators, prior to the ASCO meeting next month. PCRT is an international collaborative organization conducting clinical trials in pancreatic cancer patients. Since publication of pamrevlumab preclinical and clinical data, there has been increased interest from scientific and advocacy communities for the development of pamrevlumab in liver diseases, including hepatocellular carcinoma and cholangiocarcinoma. In addition, we and our Japanese collaborators have reported compelling results of pamrevlumab in models of malignant mesothelioma, as has been reported in Molecular Cancer Therapeutics.

Later in this call, Dr. Porter will address our IPF program as well as various aspects of our fibroproliferation program, looking at pamrevlumab in cancer settings as well as plans for our current clinical trial in unresectable locally advanced pancreatic cancer.

Moving on to our late stage roxadustat program in CKD and dialysis anemia. We and our partners, Astellas and AstraZeneca, currently have Phase III programs at 4 regulatory jurisdictions worldwide, involving 15 Phase III studies, and have enrolled over 10,400 patients. We are closest to approval decisions in China and on the heels of reporting positive clinical results from our 2 Phase III pivotal trials this past January. We are completing the safety assessment treatment period of the Phase III program this month and we expect to complete the China NDA submission by the end of the third quarter 2017.

For the past 2 years, we have actively collaborated with AstraZeneca on the commercialization plan for roxadustat and developing a brand strategy that will differentiate the HIF mechanism from currently available therapies strategically across multiple patient populations. For dialysis patients who are unable to reach target with ESAs, most commonly due to undertreatment and underlying inflammation, a group that we estimate to be approximately half of the treated population, we expect roxadustat to offer an alternative therapy capable of achieving the desired hemoglobin target without the type of dose increases observed in ESAs and without any I.V. iron. For nondialysis patients, roxadustat is expected to increase treatment rate and compliance rate as the first oral alternative for this outpatient population. For nondialysis patients who are dialysis stage or stage 5 CKD prior to dialysis initiation, we expect to offer rapid correction in a population severity where anemia is typically the most difficult problem that they face. For dialysis patients who are treated with peritoneal dialysis, which is a home-based modality, we expect the accessibility of roxadustat to make peritoneal dialysis more attractive for patients. Dialysis in China has been experiencing double-digit growth in recent years due to promulgation of a new reimbursement system called Severe Disease that makes dialysis reasonably affordable for most patients in major cities. The Chinese government is encouraging expansion of peritoneal dialysis as a less capital-intensive way to build out the country's dialysis capacity. Patients with anemia who are hyporesponsive to treatment with ESAs due to underlying inflammation, for whom we expect roxadustat to offer an alternative therapy capable of achieving the desired hemoglobin target without the type of doses increases seen with ESAs. We expect that these points of differentiation will improve -- inform pricing strategy as we further develop our program.

FibroGen has now received authorization for the use of roxadustat as a China-approved drug name. Please note that up to now, we have referred to roxadustat in China as FG-4592. We are continuing in our efforts to expand the development of roxadustat in other indications in China and in the U.S. We now have approval in MDS for Phase III studies in both China and the U.S. that will commence later this year. Later on in this call, Dr. Peony Yu will provide updates in our U.S./ROW programs and the plan for our MDS studies.

Moving on to financial highlights. At the end of the first quarter, FibroGen finished with $314.2 million of cash. On April 11, 2017, FibroGen closed a financing that raised net proceeds of $115.1 million. The reasons for this financing stem from our realization that the opportunities in China are going to be considerably larger than we originally planned as our regulators have encouraged advancement of parallel development oncology and inflammation-related anemias, beginning even prior to our first approval in CKD anemia. After much study by our team and marketing partner, AstraZeneca, along with key opinion leaders who are expert in current standard of care in various tumor types, we see attractive opportunities to expand clinical development activity in the near term.

In addition, we have been very surprised at the rapid increase in the level of interest in our China-based anemia programs, coming from PRC-based investment groups. In particular, we have had ongoing contact for the past 2 years with 2 large, well-regarded investment groups with outstanding reputations and track records, both in China and in the United States. These groups have done detailed work regarding our anemia program in China as part of extensive efforts to understand our company. These investors see our anemia program as an outstanding investment opportunity and have been intrigued with the possibilities of our Caiman subsidiary over the China [Wolfe], where we have admitted minority investors in the past.

Each group has expressed high interest in becoming long-term investors in FibroGen parent company common stock. Recent discussions focused on this financing round to support the scale of resources supporting our expected growth, as additional anemia studies beyond CKD dialysis had not been part of our financing plan at the time of the IPO. Each group also encouraged continued FibroGen innovation in PRC; for example, with the corneal implant program currently being developed in Beijing; and with FG-3019, our pamrevlumab antibody.

This financing was completed on April 11. There was no price discount offered. The U.S. portion of this round was oversubscribed and allocated very quickly, primarily with support from our current institutional shareholders. We had total demand which significantly exceeded the ceiling on the offering, which is $120 million. As a result of this transaction, we have updated our current guidance on year-end 2017 cash to $370 million.

Later in this call, Pat Cotroneo, our CFO, will discuss our financial results for the first quarter. Following that, I will wrap up remarks today with an update on 2017 milestones and then open up the call for your questions. I would now like to turn this call over to Dr. Peony Yu. Peony?

Thank you, Tom. We are making steady progress in our large global Phase III CKD anemia program, targeting 4 independent regulatory pathways. We are on track for the U.S. NDA submission in 2018. To date, no safety signals have been identified. The DSMB met in April and again recommended we continue our study for the U.S. and Europe without protocol modification. In China, we're on track for filing the NDA for CKD anemia by the third quarter of 2017. As discussed in our January call, both Phase III studies in China met their primary end points. In the dialysis 806 Study, not only did roxadustat met the noninferiority criteria for its primary end point, change in hemoglobin level at the end of treatment, the hemoglobin increase was significantly higher in the roxadustat arm than the Kirin EPO arm in the protocol analysis, when both treatment arms were treated to the same hemoglobin target range of 10 to 12 grams per deciliter.

Dialysis patients with inflammation measured by elevated C-reactive protein level were less responsive to EPO in the comparator arm, consistent with the published historical ESA studies. In contrast, roxadustat was shown to correct and maintain hemoglobin levels in inflamed patients with high CRP as in those with normal CRP levels.

Consistent with our Phase II findings, our China Phase III trial demonstrated roxadustat's ability to overcome the suppressive effects of inflammation on erythropoiesis and show that roxadustat is potentially more than just an oral treatment alternative to ESAs for anemia therapy in CKD patients.

To date, no safety signal has been identified in our China Phase III studies. The 52-week extension of both the dialysis and the nondialysis studies will be completed in mid-June. And we are on track to complete the China NDA submission in Q3 2017.

MDS has been described as bone marrow failure disorder, in which patients are unable to make enough red blood cells and the chronic inflammation further contributes to the anemia. Anemia in MDS can be severe enough to be life-threatening, but treatment options are limited. Most MDS patients end up requiring chronic red blood cell transfusions despite the known risks, including infections and iron overload. We are excited about the upcoming study for treating anemia associated with MDS. The FDA has accepted our IND for a Phase III trial. This is a global multicenter Phase III study in transfusion-dependent, lower-risk MDS patients. Following a small open-label lead-in, 160 patients will be randomized 3:2 into the double-blind placebo-controlled study to receive roxadustat versus placebo for 28 weeks with safety extension to 1 year. The primary endpoint is the proportion of patients who achieve transfusion independence. This study is starting the third quarter of 2017.

In China, where chronic transfusion is not an option due to severe blood shortages, anemia therapy for MDS patients is a critical need.

In March of 2017, we received approval from the China CFDA on our Phase II, III [MDS anemia CTA]. Following a small open-label component, 135 patients will be randomized 2:1 to a double-blind placebo-controlled Phase III study to receive roxadustat or placebo for 26 weeks. The primary endpoint here is the percent of patients who achieve hemoglobin response. This study is expected to initiate in the fourth quarter of 2017. For pivotal MDS study, each is designed to meet the regions' respective regulatory requirements. These trials will enable us to evaluate roxadustat in both transfusion-dependent and nontransfusion-dependent MDS patients. Our MDS program represents the beginning of our pursuit of hematology oncology-related anemia indications for roxadustat.

And with that, I'd like to turn the call back to Tom.

Thank you, Peony. Dr. Seth Porter, who heads up our pamrevlumab anti-CTGF and Fibrosis Therapeutics program, will now talk about progress in IPF and pancreatic cancer.

Thank you, Tom. As Tom mentioned, we are close to completing the randomized Phase IIb trial in IPF. In addition, we expect to complete enrollment in the locally advanced pancreatic cancer trial and continue to enroll in our pilot study in Duchenne muscular dystrophy. Pamrevlumab is our wholly-owned and proprietary monoclonal antibody against connective tissue growth factor. CTGF is an essential point through which many factors and conditions associated with fibrosis work.

Based on our data, we believe that the blockade of CTGF will be a more effective approach to fibrotic disease and multiple cancers. We've conducted research in a mouse radiation-induced fibrosis model, demonstrating that pamrevlumab treatment of pulmonary disease enabled a durable reversal of fibrosis as assessed by CT imaging and by histological examination. The reversal resulted in improved pulmonary function and prolonged survival. A subsequent soon-to-be-submitted manuscript shows that treatment with pamrevlumab, in the same study, reversed gene expression associated with lung injury. The changes paralleled other improvements in lung structure and function.

We are now completing a comparison of pamrevlumab to pirfenidone and nintedanib as single agents and in combination in the same mouse fibrosis model. Results demonstrate superior performance of pamrevlumab for inhibition of fibrosis and reversal of gene expression associated with fibrosis. We expect to present these results at an IPF conference this year.

Applying findings from animal studies to IPF patients in an open-label clinical trial, we observed that pamrevlumab was able to reverse lung fibrosis, as measured by quantitative high-resolution CT imaging, with a statistically significant improvement in pulmonary function associated with stable or improved fibrosis. Those results were published in 2016 in the European Respiratory Journal.

Last year, we fully enrolled our placebo-controlled Phase IIb 48-week comparison of pamrevlumab to placebo in IPF patients as well as 2 substudies to test pamrevlumab in combination with either pirfenidone or nintedanib. Our principal focus in the substudies is on safety assessments of combination treatment. The IPF patient population, with a median life expectancy following diagnosis of 3 to 5 years, needs an effective treatment option, and we hope to be able to provide that with pamrevlumab. While IPF is classified as an orphan disease, we believe there is substantial commercial potential for an agent with an excellent safety profile that has shown potential for disease modification in at least some patients.

Furthermore, we have good reason to believe that pamrevlumab can be safely combined with other therapeutics, suggesting that pamrevlumab, if approved, could become the standard therapy for IPF, to which other therapies could be added.

Studies continue on the mechanism of CTGF in disease and the therapeutic effects of pamrevlumab. Data from FibroGen and others indicate that, in fibrosis, elevated local CTGF levels lead to activation and aberrant proliferation of myofibroblasts, a cell type that plays a crucial role in normal wound healing and in fibrosis. Elevated CTGF inhibits chemotherapy-induced apoptosis of cancer cells and may also inhibit apoptosis affecting myofibroblasts. The pathology of CTGF [muted] fibrosis is for the most part similar in all organs and tissues that experience fibrosis.

Preclinical and clinical data indicate that blockade of CTGF can be effective in the treatment of certain cancers, in which biological mechanisms have parallels to fibrosis. In work conducted in a mouse model of pancreatic cancer, published in PNAS in 2013, we and other collaborators showed that CTGF enhances the survival of pancreatic tumor cells by making tumor cells resistant to the cell death ordinarily induced by chemotherapeutic agents. In contrast, pamrevlumab enhanced the activity of chemotherapy and increased survival.

Switching our focus to human disease and fibroproliferative disorders, we published results from our first pancreatic cancer trial in January 2017 in the Journal of Cancer Clinical Trials. These demonstrated that achieving above threshold levels of circulating pamrevlumab in pancreatic cancer patients, in combination with chemotherapy, yielded threefold improvement in 1 year and doubling of median survival, compared to outcomes with lower levels of circulating antibody.

We previously reported findings from our ongoing open-label trial in locally advanced unresectable pancreatic cancer. The interim results continue to indicate that treatment with pamrevlumab, plus chemotherapy, for 6 months alters tumors sufficiently to enhance eligibility of a patient for surgical exploration and surgery completion. We expect to complete enrollment in the trial soon to enable completion of treatment in all subjects by the end of 2017.

In both IPF and pancreatic cancer, pamrevlumab continues to be well tolerated, with no safety concerns. We are hopeful that the results from the IPF and pancreatic cancer studies will place us in a strong position to initiate pivotal programs in 2 indications with considerable unmet medical need. Thank you for your time today. And now back to Tom.

Thank you, Seth. Pat Cotroneo, our Chief Financial Officer, will now walk through financial highlights for the first quarter of the year 2017. Pat?

Thanks, Tom. As announced today, total revenue for the quarter ended March 31, 2017, was $26.9 million. For the same period, operating expenses were $58.3 million and net loss was $33.2 million or $0.52 per basic and diluted share. Included the operating expenses for the quarter ended March 31, 2017, was an aggregate noncash portion totaling $10.5 million, of which $8.4 million was a result of stock-based compensation expense.

In terms of our total cash balance, we had $314.2 million as of March 31, 2017, as compared to $342.2 million at the end of 2016. For these purposes, total cash refers to cash, including cash, cash equivalents, receivables, investments consisting primarily of investment-grade corporate debt and restricted time deposits relating to our building lease. On our balance sheet, the category of long-term investments consists entirely of investment-grade corporate debt with remaining maturities of fewer than 2 years. As Tom mentioned, for 2017 we are currently projecting year-end cash of approximately $370 million, which includes the effect of a recent offering that raised $115.1 million in net proceeds and closed April 11, 2017.

I will now turn the call back over to Tom.

Thank you, Pat. We anticipate a busy second half of the year with a number of milestones on the horizon for both for our [lead] programs. Milestones for roxadustat include: in China, we anticipate completing our NDA submission in CKD anemia by the end of Q3 '17; in MDS anemia, we expect to initiate patient dosing in a U.S. Phase III clinical study in Q3 '17 and in a Phase II, III study in China in Q4 '17. We continue to plan to submit the U.S. NDA for roxadustat in 2018.

For pamrevlumab, or FG-3019, in Q3 2017, we report top line results from IPF trial containing 3 studies. First is a comparison of pamrevlumab with placebo. Second is a combination safety evaluation with nintedanib. And third, a combination safety evaluation with pirfenidone.

In locally advanced pancreatic cancer, we expect surgical assessment data by January 2018 or possibly sooner.

We can now turn to your questions. Operator?

(Operator Instructions) And our first question comes from Terence Flynn from Goldman Sachs.

This is Cameron on for Terence. Maybe just 2 from us. First, for roxa, can you provide any more specific guidance on when we should be expecting the first data from the U.S. and European Phase III trials? And then second, for your roxa regulatory filing in China in 3Q, can you just tell us what the [gating] steps are?

Okay. For the U.S., we have not made decisions yet about any sequence or order or groupings of the studies that have been requested by U.S. FDA and are subject to a joint venture with Astellas, pursuant to their agreement with EMA.

In China, the key steps, there is a pre-NDA submission that we will be doing shortly. This will lead to discussions with regulators about the specific steps in the NDA. We will be planning a joint filing of 806 and 808, meaning the dialysis and non-dialysis. It will be a 52-week period for, one, 806, the dialysis; 26 weeks for the non-dialysis. And then the request of additional data from the CDE will come if and when they want it for the 52-week extension on non-dialysis. So that's the sequence of events in China.

And the next question comes from Geoff Porges from Leerink.

Congratulations on all of the progress and all the looming milestones. First, on roxadustat, could you let us know what sort of dose increase you expect for MDS compared to the CKD dose, if any? And then Tom and Peony, there's a lot more activity going on in the HIF category generally, with 4 programs and sort of thousands and thousands of patients all of a sudden potentially being recruited to trials. Could you talk, Tom, about how your program and molecule compares to the others in development? But where you see yourselves in terms of timing, but more importantly where you see the profile that you might ultimately have compared to those other profiles?

So Peony, do you want to take the first part of this question?

Sure, Tom, yes. So Geoff, as you know, that because of the -- as far as for dose requirement of ESA or EPO for the treatment of MDS or CIA, is typically about -- that dose is about 5x of the dose being used in chronic kidney disease anemia. Now our drug has a -- as you know, our drug has a complete different mechanism of action, where we turn on the red blood cell-making machinery and impact the various parts of the manufacturing cycle, so to say. Then what we expect that the amount of dose in MDS to be -- the starting dose is now set at about 50% higher than that of CKD. The maximum allowable dose is the same as that in CKD dialysis patients.

Great, that's very helpful.

So Geoff, with respect to the timing of the HIF program, I believe it's the case that we are well ahead of any other program, worldwide. That degree of aheadness is different in different jurisdictions. In China, I've recently seen assessments that we're 6 or 7 years ahead of first competitor. In the U.S., there -- a lot of people make a lot of noise and I recognize you're trying to wade through all that. My observations would be that we're well along in our plan in Phase III, and others are just beginning. And these are very large studies to recruit.

As far as things that are distinctive and different, I would point to a couple of aspects. One, obviously we are doing China as a Chinese company, regulated directly by CDE and CFDA. No one else is doing that.

In the U.S. and Europe, our focus is in non-dialysis on placebo patients. So it's the entire pool of CKD patients. Our premise has been that the use of ESAs will and has dried up almost completely in non-dialysis settings. So we are now seeing something like 4%, 5% ESA exposure before dialysis. That's gone down steadily since the 2011 package insert. Everyone else, to my knowledge, is doing active control comparisons in non-dialysis. We don't quite see the logic of that. And then in dialysis, we have a significant focus on incident dialysis, which is a very straight-ahead comparison of safety in ESA and the HIF biology. I'm not real clear on what others are doing. By way of observation, we have heard a couple of people that have -- dropping out. We've seen a couple of others get into some complicated patent issues. So I think that we just continue to execute and keep moving ahead. That's our focus. We have quite a large interest in anemia chronic disease and other inflammatory comorbidities where anemia is a significant problem. And we also intend to explore the oncology applications, both in arenas where you see really severe anemia and really no prior experience in major journals with EPO, like, for example, with multiple myeloma as well as some of the categories where chemotherapy is clearly interfered with the progression of dosings, interfered by severe anemia. So for instance, in China, in lung cancer, we're seeing per capita rates of 7x the U.S. So the population in China is 4.5x the U.S. You can do all those numbers. And we see patients that are getting treated to hemoglobin 5 or 5.5 and they can't tolerate any more chemo. So there's a compelling unmet medical need in that kind of setting. And so we're trying to focus on places where there are such compelling unmet medical needs as we expand beyond CKD dialysis. I hope that's a helpful overview.

That's very helpful, Tom. Can I just throw in a question on pamrevlumab?

Go ahead.

So I just -- it was helpful to hear Seth talk about what's coming up. And in the past, you've talked about other indications as well, beyond those that you're studying. It sounds as though you're fairly convinced that there is a path forward in the new adjuvant pancreatic cancer setting. And then conditional upon the IPF results that we're going to see very soon, that would determine the path forward there. When do you think we might hear about other indications that you may pursue or explore with pamrevlumab?

Okay. So in general, we look at the opportunities ahead in the following manner. We have the first active anti-fibrotic agent that I'm aware of where you can see material effect on matrix [menoncologen] and then fibronectin and so on in ways where there's clinical benefit. And so we view our fibrosis study and pulmonary fibrosis as really scratching the surface of a whole series of other organic fibrotic diseases in the kidney and liver and so on. What the priorities are depends a little bit on whether -- if and when we partner. So we have thought very carefully about a few of these indications, not all of them. And we know certain companies out there that have spent a lot of time on ones that we have looked at as well as some others. So it's not yet obvious to me what is next after pulmonary fibrosis, so I can't really supply that answer, although there's a list of about 1/2 dozen indications that we've talked about in the past that I'd reaffirm we're interested in. In fiber proliferation, it's a very fascinating arena, because we're so surprised how this works in so many different ways, right? And the evidence continues to pile up. There's an impact by the antibody on cancers that has measurable and reproducible effects. A researcher named Tuveson in Cold Spring Harbor has quite -- done a quite a lot of work on that. And so I think that we are seeing things that are reproducible effects in the pancreatic stage. Another example, with CA 19-9 and PET scans, we've seen consistent effects. And so, as students of this, we're sort of taking this where the -- we're going where the data is taking us. And I think that there are several other indications. It's not yet clear whether a larger indication should be a priority here, because even small indications, there's so much unmet need; like mesothelioma, for instance. It's a very, very difficult situation for patients. So we're evaluating those things as we go along and not any conclusions yet about what direction, what oncology applications are best seen as the next priorities. So I think it's the case that we've been data-driven with pancreatic cancer from the outset 10 years ago. We have similar data streams in other cancers. And you can see it in publications if you dial up 3019 or pamrevlumab and just look through literature. And we'll -- we're being primarily affected by our sense of those data streams as we look at other opportunities, but we think there are a number -- and of course, I have mentioned before, there is an intense amount of interest in combination therapy with immunotherapeutic agents and solid tumors. And increasingly, the narrative seems to be this antibody has something to do with awakening T cells in solid tumors. And so we are also studying that, and that whole arena, of course, is quite large, independent of our direct investigations in areas like pancreatic cancer. I hope that's helpful.

(Operator Instructions) And our next question comes from Joel Beatty from Citi.

This is Shawn calling for Joel. I'd also like to reiterate a congratulations on all the upcoming milestones. Two questions today. They're probably more for Seth about pamrevlumab and kind of on the fibrosis strategy. First, what would good results look like in the IPF study? Is success in the main placebo-controlled part of the trial sufficient? Or would you have to show efficacy in the combination to have confidence moving forward?

Seth, do you want to take that?

Sure. So I'll just remind you that the Phase IIb trial is primarily focused on the comparison of pamrevlumab to placebo. And so that's where our focus will be. With regard to the combination treatment, really it's for 6 months as opposed to a year, and the sample size is smaller. So we're looking primarily for safety of combination of pamrevlumab with those agents. It's very -- we are certainly looking at the FVC and quantitative HRCT outcomes in that combination study, but again, it’s a shorter study with smaller number of patients. So with regard to efficacy, we're focused on the comparison to placebo. And I think the results that we reported in the open-label study that was reported last year provides a good sense of what we would expect in terms of comparing pamrevlumab in that study to historical controls. I think you can make a pretty good comparison to -- or assessment or prediction of what we would expect for this comparison to placebo.

Yes, I'd like to underscore that the studies with pirfenidone and nintedanib are intended to be overall safety assessments. They are not intended to be efficacy studies. And so we won't be judging the efficacy portion of those studies in a way that defines the next step in Phase III. That's not the purpose of those studies. However, the placebo study will be highly informative as to our next step in Phase III.

I'd like to make one more comment that, other than measuring FVC as the -- in other placebo-controlled studies published by other companies, our study will also provide measurement of fibrosis by way of HRCT. And -- so we are very excited to see what that looks like compared to placebo.

That's (inaudible). Okay?

A quick follow-up, if possible.

Go ahead.

Do you have any clarity on what the path forward will look like in pancreatic cancer indication? Specifically, will resectability be a sufficient target for the primary end point? Or will you have to show survival data?

I'll try to answer that. We, in developing the pancreatic cancer indication, have had several interactions with expert advisers. And although they are very impressed and encouraging us to be very aggressive moving forward, no one's sure what to think about an end point such as resectability statistics. So we make the assumption that in the worst case, you will be seeing an overall survival metric. And even with that, these studies are not too terribly large and can be enrolled pretty rapidly. So we aren't trying to walk a plank where we're assuming something that's highly improbable with regulators. We're much more in the mindset of sharing the data and having the discussion about what's logical as a next step. The advisory board's work that I've seen, there was very specific encouragement. In fact, a couple of the advisers came back after about a month later and revised their advice by saying, "I've studied more of your pancreatic program and I think you ought to be more aggressive than we have been advising." So I think there's a real interest in this agent, and many people who are considered senior key opinion leaders at major academic institutions have been on record as saying they expect this agent to be a core therapy in pancreatic cancer soon. So I think you're -- it's an interesting situation, but we'll do the work that has to be done that's asked for by our regulators.

And our next question comes from Thomas Shrader from Stifel.

This is Alex on for Tom Shrader. Like many before me, congrats on the continued progress. I had a few questions, first with incident dialysis patients and then with lower-risk MDS. So to begin, the Phase III roxadustat trial completed in China, wherein dialysis and non-dialysis CKD patients -- were there incident dialysis patients involved in the Phase III China studies? And will the regulatory filings submitted in China cover this population? Or do you plan on conducting more trials, specifically that target, incident dialysis patients?

So the circumstances of the program in China involve a regulatory priority that are somewhat constraining with respect to which studies will be done and so on. And our focus has been on executing exactly what the regulatory bodies, both over clinical development and over various priorities in the system, have desired to see. And so the studies involve patients in non-dialysis that are not being treated with alternate therapies, and in dialysis have EPO therapy, some of whom have iron support, most of whom do not.

In China, you're still less than half of the patients each year that need dialysis being able to get dialysis, because the system still is being built out. And outside of the cities, of course, the use of ESAs is completely impractical, because the access to 3A hospitals is not feasible on a regular basis. And in non-dialysis, in categories to stage 5, where people have to wait to eGFR 5 or 6 to even get onto an initiation list in a major city for dialysis or patients that couldn't get dialysis in past years, the situations are very, very acute in terms of the severity of anemia and what to do about it. In addition, in most of the country, there are no cold storage, sterile pathways that you can maintain things like ESAs in. So the spirit of this in non-dialysis is to provide a first treatment option for patients. And in dialysis, it's very much the case that just being able to get to more patients over time, get to the peritoneal population so that they don't have to go to 3A hospitals even though they're doing peritoneal dialysis. It's the kind of the initial focus that exists. I'm quite sure, over time, as the regulators in China see the data from the U.S. and from Europe, but particularly from the U.S. in incident, they will react accordingly. And we will respond to their observations, as we're obliged to do, in the pathway we're in. However, the next major study is a post-approval safety study or what we call PAS study. And this is a few thousand patients, where we collect data for a couple of years. And this is an absolute requirement of the administrative exclusivity program that we're a part of in Class 1.1 therapies and [bioventure] category in China.

Okay, excellent. And then with roxadustat anemia associated low-risk MDS, specifically within China, in the U.S. it seems like there haven't been that many new approvals in the last few years in this indication. Is it the same in China? Can you educate us a little bit on the treatment options for this indication within China? And then potentially, when the data reads out, what should I be thinking about to make a comparison?

Okay. So in the U.S. in MDS, it has been the case for many years that the ESA therapies are allowed and are reimbursed, but have not been approved by FDA. If you go back to the ODAC meeting in 2008 about ESA safety, [Dr. Fasder] said at the beginning of the meeting that all that they talked about that day would apply to everything except for MDS therapy. And so everybody has recognized it's a very difficult situation that exists. However, as treatment evaluation and treatment options have clarified over time, the standard is to use transfusion until the point that the patient can no longer tolerate it. And so FDA's viewpoint is that the last stage of the decline of that ability to make red blood cells in the marrow is really dependence on transfusion. And as such, they are asking us to see if our therapy can get people off of transfusion, implication being you can extend the period of time the patient's alive, because there's a lifetime amount of transfusion that's tolerated. If you start later, you stay alive longer.

In China, there's no such equivalent situation. So the first lesson from our regulators is that transfusion is not standard care therapy in China. And this is because the public blood supply isn't really a significant reliable source, and there's been serious issues with hepatitis B and C infection and so on. So the instruction from regulators is not to assume that's part of standard of care. With regard to ESA therapy, it's very rare. There is no approval for anything. So in China, you have severely anemic patients. And actually, Dr. Peony Yu, I'm going ask her to add some more about China, because she's recently been doing studies in China with some of the key opinion leaders in MDS, so she can give you some more color on the population. Peony, go ahead, please.

Yes. Thank you, Tom. In a recent meeting with about a dozen hematologist (inaudible) in MDS, they are very enthusiastic about participation in this upcoming Phase II, III clinical trial using roxadustat. As Tom said that -- transfusions on a chronic basis is not really not much of an option for the patients there. Even the professional groups' recommendation for threshold for considering transfusion is for hemoglobin to be less than 6. And I still recall hearing from division heads telling me that in her -- in their -- some of their hospitals, the hemoglobin at which patients receive transfusion could be as low as 3, 4, 5. That's never been heard of in the U.S., because physicians here will think about transfusions for someone whose hemoglobin is below 9 and oftentimes just somewhere between 8 and 9. And also, another difference is that health -- the health coverage in China often does not pay for the cost of the transfusion itself, even when there's blood available and want the family members to donate blood to reliably get blood over there. So the need there is much more urgent in China than it is in the U.S.

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

Thank you, operator. We thank you all for joining this call today. We're looking forward to reporting data and our progress in our China and U.S. programs during the coming quarters and the opportunity to build momentum in our product development programs. We are excited to be in a position to aggressively develop the anemia franchise in China and ultimately to reach patients in many areas where ESAs and transfusions are not available and where ESAs may not really be the safest option. Our focus on bringing therapies to patients who do not have adequate treatment options as we build value in our product development programs across multiple indications continues to be the core focus of our efforts. This is all accomplished by the dedication and incredible efforts of our team in the U.S. and in China and through collaborations with our partners, our clinical thought leaders, key opinion leaders, various investigators in so many different trials that are ongoing now, and expert regulatory and scientific advisers, among others. I would especially like to extend my thanks to everyone in our U.S. and China offices and to our shareholders for their continuing interest in our programs. I'd like to wish everyone a good afternoon and evening and a very calm and enjoyable move into summer in the next couple of months. Thank you for being on this call. Appreciate it.

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