FibroGen Inc (FGEN) 2019 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the FibroGen Fourth Quarter and Full Year 2019 Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Mike Tung. Thank you. Please go ahead, sir.

Thank you, Justin, and good afternoon, everyone. Thank you for joining us on today's call to discuss FibroGen's performance for the fourth quarter and full year 2019. Today's call will be led by Enrique Conterno, our Chief Executive Officer; Enrique will be joined by Dr. Peony Yu, our Chief Medical Officer; and Ms. Chris Chung, our Senior Vice President of China Operations, Dr. Elias Kouchakji, our Senior Vice President of Clinical Development, Drug Safety and Pharmacovigilance; and Mr. Pat Cotroneo, our Chief Financial Officer.

Before we begin, I would like to point out that we may 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; our regulatory strategies and potential regulatory results; our research and development activities; commercial results and results of operations; risks related to our business and certain other business matters. For risks and uncertainties regarding our business and statements made on the call today as well as factors beyond our control that may cause differences between current expectations and actual results, we refer you to our annual report on Form 10-K for the fiscal year ended December 31, 2019, all 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 development or otherwise.

The format for today's call includes prepared remarks from FibroGen's management team, and then we'll open the lines to take your questions. The press release reporting our financial results and business update and a webcast of today's conference call can be found on the Investors section of FibroGen's website at www.fibrogen.com. The webcast will be available for 30 days from today's date.

And now I'd like to hand the call over to Enrique Conterno, our CEO.

Thank you, Mike, and good afternoon, everyone. And welcome to our fourth quarter and full year 2019 earnings call. I'm excited to join the call today in my new role as FibroGen's CEO. I will start this morning by sharing a few thoughts about FibroGen and some initial impressions. I would also like to give you a sense of my initial areas of focus moving forward to deliver value to both patients and shareholders.

FibroGen has 2 world-class scientific platforms, and our success comes from keeping patients and science at the core of what we do. Before I provide an overview of our progress, I would like to take this opportunity to acknowledge Tom Neff, the founder of FibroGen, who passed away last year. I thank him for his invaluable contribution to making FibroGen what it is today, and I look forward to honoring his legacy.

I am highly appreciative of what the company has accomplished, and I look forward to continuing to build on this strong foundation. I have been spending time with my team, getting a clear sense of our strengths and challenges, and I've had the opportunity to hear from our shareholders and the broader investment community. My assessment is clear. FibroGen has a unique opportunity to leverage our world-class science in 3 areas of focus: number one, ensuring regulatory and commercial success of roxadustat, a transformational medicine in anemia therapy, first demonstrated in patients with chronic kidney disease, with great potential for expansion of treatment to other anemias; number two, accelerating the development of pamrevlumab in 3 high-value indications, idiopathic pulmonary fibrosis, locally advanced unresectable pancreatic cancer and Duchenne muscular dystrophy; and number three, maximizing our scientific and medical understanding of HIF and CTGF biology to provide future innovation.

Before we move into a review of 2019, I'd like to provide some overall perspective on the roxadustat commercial opportunity. As anemia associated with chronic kidney disease, or CKD, continues to grow in worldwide prevalence, our work has never been more important. Anemia is common in patients with CKD stages 3 to 5, and the rate of anemia increases as CKD progresses. We estimate that there are 4.9 million CKD non-dialysis patients with anemia in the United States. And up to 50% may be addressable based on our expected label. Additionally, there are approximately 0.5 million dialysis patients with anemia in the U.S.

In 2019, we made significant progress with roxadustat and achieved several critical advances, and we see continued momentum through 2020. Notably, the roxadustat NDA was submitted in the U.S. for the treatment of dialysis-dependent and non-dialysis-dependent CKD anemia late last year. And the filing was recently accepted with a PDUFA date of December 20, 2020. In China, we and our partner, AstraZeneca, achieved roxadustat inclusion in the National Reimbursement Drug list, an important milestone to accelerate market adoption and coverage. Initial uptick of hospital listings and demand are encouraging. In Japan, our partner, Astellas, received approval and launched roxadustat, which has the trade name, Evrenzo, in anemia in dialysis-dependent CKD patients, and submitted a supplemental NDA for the non-dialysis indication in this past January. Finally, in Europe, we and our partner, Astellas, look forward to the upcoming submission of roxadustat for treatment of dialysis and non-dialysis-dependent CKD anemia in the second quarter of this year.

Moving on to pamrevlumab, a first-in-class antibody, which inhibits the activity of connective tissue growth factor, a common factor in chronic fibrotic and proliferative disorders. In 2019, we initiated our ZEPHYRUS Phase III clinical program of pamrevlumab in patients with idiopathic pulmonary fibrosis. Last year, we also initiated our LAPIS Phase III clinical program of pamrevlumab for the treatment of patients with locally advanced unresectable pancreatic cancer. In Duchenne muscular dystrophy, we reported positive Phase II data in 2019, and we expect to begin the pivotal Phase III program in the second half of this year. All 3 of these indications are orphan diseases, with limited treatment options, accelerating enrollment in all of these Phase III programs is a top priority for me in 2020. We are in a position to create significant value for patients and shareholders. Our 2020 priorities are focused on getting roxadustat approved in the U.S., advancing pamrevlumab development and finally, leveraging our expertise in both hypoxic factor and connected tissue growth factor biology to expand our pipeline on novel drug candidates.

Now I'll turn it over to Peony, who will provide you with a more in-depth discussion of roxadustat.

Thank you, Enrique, and good afternoon, everyone. 2019 was a great year for roxadustat, and I would like to review some of the highlights. The roxadustat NDA was submitted to the FDA for the treatment of anemia in both dialysis-dependent CKD and non-dialysis-dependent CKD patients in December 2019. And FDA has accepted our NDA filing with PDUFA date of December 20, 2020. Roxadustat was approved in China for the treatment of anemia in DD CKD patients at the end of in 2018 and for the treatment of NDD-CKD anemia in August 2019. Chris will go into more detail later in the call when she provides an update on FibroGen China.

In Japan, roxadustat was approved for the treatment of anemia in DD CKD patients in September 2019 and a supplemental NDA for NDD-CKD was submitted this past January. With positive momentum, we look forward to advancing roxadustat in 2020.

In the U.S., we continue to support the FDA's review of our NDA and expect approval before the end of the year. There has been no indication at this time the FDA will hold an advisory committee meeting, but we are preparing as if there were one. To optimize our business success in the U.S., we and our partner, AstraZeneca, continue commercialization preparation to pave the way for roxadustat to become accessible to patients. With the robust efficacy and safety profile demonstrated in a large Phase III program of over 8,000 patients, we believe roxadustat can potentially better address CKD anemia than what is currently available to CKD patients on dialysis and those not on dialysis.

I shall first summarize key positive efficacy and cardiovascular safety results from the over 3,800 patient pool of dialysis-dependent patients, where roxadustat was compared to epoetin alfa, and patient had a average treatment duration of 1.8 years.

As reported at the ASN meeting, in dialysis patients, roxadustat met the primary efficacy endpoint with larger hemoglobin increase than epoetin alfa in each of the 3 pivotal studies and in the pool analysis, while mean achieved hemoglobin levels were within the intended range. Roxadustat-treated patients had lower transfusion risk than EPO patients, while lowering MACE+ risk in the dialysis patient pool. Notably, unlike ESA, roxadustat maintain efficacy without increasing dose requirements in the presence of inflammation. Importantly, less IV iron supplementation was required with roxadustat with EPO.

Within the dialysis patient population, we are particularly excited about the cardiovascular safety results of the incident dialysis population. These patients entered the study during the first 4 months of dialysis initiation and had an average treatment duration of 1.5 years. We enrolled over 1,500 incident dialysis patients in this program, the largest in this population ever conducted.

Here, we demonstrated a meaningful reduction in cardiovascular safety risk, as roxadustat-treated incident dialysis patients had a 30% lower MACE risk and a 34% lower MACE+ risk than epoetin alfa-treated patients. We believe the high-risk incident dialysis population is the right and most appropriate setting for comparison of roxadustat versus the epoetin alfa, since most patients are ESA-naive to prior to study entry.

Now moving on to our non-dialysis program. I will summarize key positive efficacy and cardiovascular safety results from the over 4,200 pool of non-dialysis-dependent patients, where roxadustat was compared to placebo. As a reminder, the vast majority of NDD patients in the U.S. receive no ESA treatment, especially after the ESA label change over the period of 2007 to 2011. And placebo control is the preferred standard for safety comparison.

In NDD patients, roxadustat was superior to placebo in the primary efficacy endpoint of mean change in hemoglobin level from baseline and significantly reduce transfusion risk compared to placebo. Because roxadustat is conducive to iron mobilization, we demonstrate the roxadustat's efficacy in patients with lower iron stores than required for ESA. 40% of the patients in our Phase III NDD studies have baseline iron stores below the minimum required for treatment with ESA, and demonstrate the hemoglobin response to roxadustat was similar to that of patients with iron repletion.

With respect to cardiovascular safety, roxadustat was comparable to placebo in risk of MACE and MACE+, while achieved a mean hemoglobin level of 11 grams per deciliter. With this favorable efficacy and safety profile, in addition to the convenience of oral dosing, we believe roxadustat can potentially overcome a number of hurdles of ESAs and expand anemia treatment in NDD patients. Beyond CKD, we continued development of roxadustat for the treatment of anemia associated with myelodysplastic syndrome for chemotherapy-induced anemia, while evaluating for additional diseases. Our vision for roxadustat is to become the standard-of-care for anemias broadly.

Last December, we presented the positive results from the open-label portion of the Phase III global study evaluating roxadustat for treatment of anemia in MDS patients at the Annual American Society of Hematology Meeting. In 2019, we also initiated a Phase II study in chemotherapy-induced anemia.

CIA represents a large patient population whose anemia is often left untreated today. To make roxadustat available to the rest of the world, our partner, AstraZeneca, in collaboration with our team, is submitting marketing application of roxadustat for CKD anemia in a number of countries. We've already submitted to Canada, Mexico and several Asian countries. It is great to see all this progress in the months, following the 3 prominent scientists, including Dr. Bill Kaelin, our long time adviser and collaborator, were awarded the 2019 Nobel Prize in medicine for discoveries in oxygen sensing, which serve as the important scientific basis for the development of roxadustat. We appreciate the medical community's strong support for roxadustat and look forward to the opportunity in working with physicians, nurses and patients to improve anemia care globally.

I would now like to turn the call over to Chris Chung, who will discuss the recent developments in China.

Thank you, Peony. 2019 was also a milestone year for FibroGen China. Roxadustat was launched the middle of last year. This established FibroGen as a commercial stage company. Beyond FibroGen, it was a historical milestone in global drug development, in that, for the first time in history, China was the first launch country for a first-in-class drug. Roxadustat was added to the 2019 National Reimbursement Drug List, or NRDL, effective January 1, 2020. Reimbursement by the government greatly reduces the co-pay portion for patients and is critical to market adoption.

As Peony already stated in August, the NMPA approved roxadustat for non-dialysis. Roxadustat has the unique benefit of oral administration, and we believe the NDD approval will greatly extend the reach of roxadustat to patients in need beyond dialysis. FibroGen earned $22 million in milestone payments from AstraZeneca, triggered by the NRDL inclusion.

Looking forward to 2020, with reimbursement for roxadustat now available on a national basis, our top priority is hospital listings. A drug needs to be listed in a hospital formulary before it can be dispensed for 90-plus percent of the potential market represented by government hospitals. This process is done on a hospital by hospital basis.

Given the transformative nature of roxadustat, an equally important priority for us is physician education. As for the market potential in China, we believe there are over 600,000 dialysis patients in China, making this the largest dialysis population in the world. It is expected to continue to grow in the foreseeable future at a low double-digit rate. We estimate the addressable population in non-dialysis with anemia to be around 2 million to 3 million patients.

Anemia treatment has historically been limited to oral iron, intravenous iron and ESAs. We believe the oral nature of roxadustat and the absence of a box warning could greatly expand the addressable NDD patient base as well as increased treatment rates and persistency in this population.

Coronavirus continues to be an evolving situation in China and beyond. While ensuring the health of our employees, our top priority is in making sure that roxadustat is available to patients. As of today, both our drug product facility in Beijing, and our API facility in Hangzhou, have returned to operations after a short period of shutdown. Our ability to conduct in person visits to physicians and hospitals continues to be affected, and we will continue to monitor and assess the situation closely.

I will now turn the call over to Elias Kouchakji, who will provide an update on the pamrevlumab program.

Thank you, Chris, and good afternoon. I would like today to review our accomplishments with pamrevlumab over the last year and update you on our plan for 2020. In 2019, the FDA and the EMA, both granted orphan drug designation for pamrevlumab and the treatment of the Duchenne muscular dystrophy, also known as DMD. This has strengthened our commitment to developing our novel antibody as a potential new treatment option for those suffering from this debilitating and progressive disease.

Also, in the last year, we began enrollment in our pivotal Phase III trials, in both idiopathic pulmonary fibrosis and in pancreatic cancer. These studies are ZEPHYRUS, a Phase III randomized, double-blind, placebo-controlled study; evaluating pamrevlumab in IPF; and LAPIS, a Phase III randomized, double-blind, placebo-controlled study and locally advanced unresectable pancreatic cancer. In September of last year, Lancet Respiratory Medicine published our PRAISE Phase II study data in IPF. The published data for this randomized, double-blind, placebo-controlled study showed that both: one, the decline in forced vital capacity percent predicted; and two, the proportion of patient with the disease progression were significantly lower in the pamrevlumab group than in the placebo group. In an accompanying editorial, Dr. Athol Wells of Royal Brompton Hospital wrote, "It is difficult to imagine a more encouraging Phase II trial." As we move forward with our Phase III program, we are gratified by the interest of our KOLs in the pulmonology community have shown in pamrevlumab as a potential new therapy for IPF.

In 2020, we are planning to accelerate and expand development of pamrevlumab. We are focused on accelerating enrollment of our ongoing ZEPHYRUS Phase III study in IPF. And to strengthen our regulatory submission, we now plan to add a second Phase III study. This change will mitigate the risk of having single study of approximately 560 patient, and now we plan to enroll approximately 340 patient in each of these 2 studies. The primary efficacy endpoint, and this is going to be the change from baseline and forced vital capacity, FVC, and the secondary endpoint will include clinical outcomes of disease progression, patient-reported outcomes and quantitative changes in lung fibrosis volume from baseline.

Moving on to the LAPC Phase III trial, LAPIS. We will continue to activate sites in the U.S. and globally to expand and accelerate enrollment of this, approximately 260-patient trial. In the second half of 2020, we also look forward to starting a Phase III trial evaluating pamrevlumab as a treatment for Duchenne muscular dystrophy. We are in discussion with the FDA and EMA to finalize the design of the program.

I will turn now the call over to our CFO, Pat Cotroneo, for the financial update. Pat?

Thank you, Elias. As announced today, total revenue for the quarter ended December 31, 2019, was $8 million as compared to $108.1 million for the fourth quarter of 2018. The current quarter revenue was made up of $43.2 million in license and development revenue, plus $1.1 million in net product revenue, less an adjustment relating to API pricing for Japan, which I will describe momentarily. For the same period, operating costs and expenses were $108.4 million, and net loss was $98.1 million or $1.12 per basic and diluted share as compared to operating costs and expenses of $88.1 million and a net income of $21 million or $0.25 per basic share and $0.23 per diluted share for the fourth quarter last year.

Included in our fourth quarter 2019 revenue recognition methodology is a total of $22 million in milestones associated with the inclusion of roxadustat to the China NRDL in December. In the fourth quarter 2019, we recorded net product revenues of $1.1 million for roxadustat sales in China. In addition, in the fourth quarter 2019, we recorded a reduction of $36.3 million for commercial API delivered to Astellas in 2018, prior to approval and the establishment of the listed price in Japan. The original sale of API was based on an estimated listed price. The actual price was set by the Japanese Ministry of Health, Labor and Welfare in Q4 2019. Included in operating costs and expenses for the quarter ended December 31, 2019, was an aggregate noncash portion totaling $22.1 million, of which $17.4 million was a result of stock-based compensation expense as compared to aggregate noncash portion of $15 million, of which $13.7 million was a result of stock-based compensation expense for the same period in the prior year.

As stated in our Q2 2019 results, in accordance with U.S. GAAP, we recognized a total of $180 million, comprised of $50 million for an anticipated milestone from AstraZeneca related to the filing of the U.S. NDA, and $130 million in anticipated milestones from Astellas in connection with the EU MAA filings, when such milestone achievement become probable. As noted earlier on this call, our NDA submission was accepted for review by the FDA in February, and we expect the Astellas MAA submission to occur in the second quarter of 2020. Based on these milestones and our latest forecast data, we estimate our 2020 ending cash to be in the range of $720 million to $730 million, assuming U.S. NDA approval in Q4 2020.

Looking ahead, we have a total of $425 million in anticipated milestones expected over the next 18 months, which includes the $180 million of milestones on NDA and MAA submissions already mentioned, plus $245 million of milestones on approvals and first sale. The $245 million is essentially equally split between our anticipated NDA and MAA approvals.

At December 31, 2019, FibroGen had $627.1 million in cash, restricted time deposits, cash equivalents, investments and receivables.

Thank you. And I would now like to turn the call back over to Enrique.

In closing, this is an exciting time for FibroGen. Roxadustat is launching in China and Japan, and has been submitted in the U.S., Canada and other countries and soon in Europe. We are committed to bringing pamrevlumab as a first-in-class and best-in-class new medicines to patients in 3 high-value indications, namely idiopathic pulmonary fibrosis, locally advanced unresectable pancreatic cancer and Duchenne muscular dystrophy. We look to reenergize our research agenda to deliver on our unique scientific expertise of both hypoxia inducible factor and connected tissue growth factor biology to create a fulsome pipeline of next-generation drug candidates. We are in a strong financial position as roxadustat sales ramp up, with approximately $630 million in cash and another $425 million in anticipated roxadustat milestone payments expected over the next 18 months. In addition, we received partner reimbursement for development and commercialization of roxadustat in all geographies outside China. In China, we shared these expenses with AstraZeneca, 50-50.

I want to thank our team here at FibroGen for their dedication to improve the lives of patients that we serve. I would also like to thank Jim Schoeneck, who served as interim CEO and who will continue as Chairman of the Board.

Now I would like to turn the call back to the operator for questions. Justin?

(Operator Instructions)

And our first question comes from Michael Yee from Jefferies.

Congrats, Enrique, on on all the accomplishments recently. 2 questions. One on pamrevlumab. I thought it was quite notable as you focused on accelerating IPF and pancreatic and just sort of the overall program. Maybe you could comment about specifically what you're doing to do that? Is that just site activation? Is that just more boots on the ground? Maybe talk about that. And whether you actually think you could get an interim on resection rate in pancreatic cancer in, say, 2021. Is that an achievable milestone?

And then on roxa, my question is, there is, obviously, some competitors around you, one of which will have Phase III data coming up shortly. Maybe you could comment on what we should keep in mind or what you're looking for and how to put that into context? I'm sure there'll be a lot of focus on that and compare it to your data.

Very good. Thank you, Michael. I'm going to ask Elias to address the question on pamrevlumab in terms of enrollment, what actions are we taking Elias? And also, could we have an interim look on both LAPC as well as IPF. And I'm going to ask then Peony to address the roxa questions.

Mike, thank you for your question. So first of all, as for the IPF study, we are accelerating the site activation in the U.S. -- not only in U.S., as globally. So we are actively very aggressively submitting all our CTAs and starting our European sites to be activated. Additionally, we are in more active contact with our sites, with our investigators, and we are more engaged with our community, the pulmonology community, and we are receiving a big interest. And a matter of fact, we are getting contacted, but some of these sites asking us about opening their sites for this study. So this is first things we are doing at this time. And as you heard, this is going to be, again, the European studies. The second study is going to be activated.

Is the second part of your question is, can you remind me?

For pancreatic cancer, do you think you could get an interim on resection rate in 2021? Is that a very reasonable or achievable data point?

So we are -- similarly, we are aggressively are going after the sites in the way of rolling sites. We are started to receive CTA approval in Europe at the same time, and we are pushing us hard as possible to enroll these patients as fast as possible. Just a reminder, this patient is not prescreened because you have to wait for the patient to be diagnosed or unresectable, locally advanced unresectable before they get treated. If they are already treated, they cannot be in this study. So we are doing everything as possible that you're able to achieve these milestones, and we are pushing very hard to -- we expanded and increased the number of our sites at the same time.

Michael, maybe I can add. We're not providing, at this time, timelines when it comes to enrollment, we intend to provide more detailed timelines in the second half of this year for all of our trials when it comes to pamrevlumab. We are looking at the resection rate as one of the possibilities for us to request a meeting with the FDA for an accelerated approval. And we'll provide more details on that in the second half of this year.

Perfect. Perfect. And then on roxa?

Peony?

Okay. Mike, thank you for the question. We are aware that there are -- there's another HIF-PHI program that may be disclosing their Phase III data this year. To address your questions, I wanted to remind ourselves that roxadustat is the only HIF-PHI program that already demonstrated positive efficacy and safety data. So without seeing competitors data is difficult to compare who has better data. And we know that in -- when you conduct a clinical trial, especially in safety outcome trial, one could expect a variety of outcome. And we are -- we have demonstrated a very favorable benefit and risk ratio. Now, however, I could comment on the Phase III study design, that we have design a program to demonstrate safety in comparison to placebo and with the hope and confidence of gaining clean safety label for non-dialysis. And then in -- and we -- in incident dialysis, which is a highly relevant in treating anemia in dialysis patients, we have demonstrated a 30% reduction in MACE risk and a 34% reduction in MACE+ risk.

Based on what I have seen on trial -- Clinicaltrials.gov, none of the HIF-PHI Phase III program have the sample size even near what we have, which is over 1,500 patients.

And our next question comes from Geoffrey Porges from SVB Leerink.

Quickly, Chris, could you talk a little bit more about the launch of roxadustat in China, particularly how much of a delay do you think that the circumstances they are posing to you? And when do you think we might start to see a reduction ramp up and particularly, when you think you'll be through getting on to the hospital formulary list, at least the major institutions?

And then just a little bit more on R&D. Enrique, you mentioned sort of investing in both CTGF and HIF biology to broaden the pipeline. But could you give us a sense of what the opportunities you see there are because many companies in your situation would be saying, we need to go to another area, we have pretty good molecules already. So what you see is the opportunity from further investments around the biology of those targets from the pipeline?

Very good. Chris, take us on China now, then try to address the R&D question.

Absolutely. Jeff, so I believe your first question was about the impact of the coronavirus. So as we all know, it's an evolving situation. And as we know, for the last 30 to 45 days, many things were shut down in China. Many companies are returning to work. And as reported earlier, our 2 factories are back to full normal operations. We were extremely encouraged by the uptake in listings in the early part of the year immediately after NRDL inclusion and before the coronavirus outbreak. We believe as China returns to normal operations, the momentum will be regained. As to when that's happened, I think your guess is as good as anybody else's. We are generally optimistic that we have the team in place and with the strength of the AstraZeneca sales and key accounts team and the strength of the product, we think we could regain the momentum very quickly once that happens.

I believe the second question you had, Jeff, was when will the demand uptake be seen and how are we doing in terms of listings, in particular with the major hospitals. So in terms of demand, that comes, obviously, after only if you're listed. And we believe demand would come naturally after listing. As to how big of that demand is, again, it depends on the rate of the listings that we are focusing on in 2020. In terms of the major hospitals, as most innovative companies will tell you, there are approximately 6,000 major academic centers in China. Roxadustat is no different in terms of when we expect to complete listings. I think if you look at historic data for all the multinationals, it takes anywhere from 5 to 6 years to list all the hospitals. However, historically, it's been the case that it took a while after launch to gain entry into NRDL. We were fortunate enough that, that time frame was not long for roxadusat. And we are optimistic that we could finish listings in a time frame shorter than what was historically the benchmark for multinationals.

Clearly, one of the areas, Jeff, that I have been quite impressed when coming to FibroGen, and this has been a very positive surprise, has been to see the level of understanding that we have when it comes to both HIF biology and CTGF biology. It is known that both, in particular, HIF is involved in a number of different diseases. So the opportunities for us to explore and leverage this is quite unique.

And then when it comes to CTGF, similarly, the application for CTGF are likely in the fibrosis and cancer areas. Now when speaking about research, I think the aim here is very clear. It is to develop new drug candidates to be able to have a sustainable stream of innovation based on these 2 scientific platforms, where we are the leading edge of understanding and signed. So very excited about that. And we, once again, will be providing more details on this with a caveat, of course, that we might not be able to share everything that we know for -- it may not be in FibroGen's best interest. But we intend to do so, provide more feedback on our research and our agenda in the second half of this year.

And our next question comes from Andy Hsieh from William Blair.

Congratulations on all the progress worldwide. So I want to ask a clarifying question about kind of the change in the IPF studies. So just wanted to really understand what caused the change from a 1 study, large IPF study to a 2 -- kind of 2 identical studies? Is that kind of prompted by the regulators or what? Just wanted to understand that dynamic.

Very good. Thank you for your question. I'm going to have Elias address the question. Elias, the question relates to what caused the change in the IPF program to go from 1 study to 2 studies?

So this was not triggered by any regulatory agency. This is triggered by our internal review and to take a look about the level of risk if it's going with a single study versus going with the 2 studies, that is most of the time is in the clinical development, the Phase III studies that you do 2 of them. And that will reduce the level of the statistical significance is required and this is any mishaps as this could be happening to reach that highly statistically significant. So when we assess that risk as we thought that there's a much better approaches to mitigate that risk. And at the same time, did not increase the size of the study tremendously. As you see, that is between the combined 2 studies versus 1 studies that the increase is manageable. That is the real reasons that for us as we move from 1 study into 2 studies.

We heard about this as a -- continuously previously about why we are doing single study. Is it riskier or not? And that is only as a step for a risk medication to ensure the success of the program.

Got it. And just a question on the potential Adcom. So just curious about the company's strategy. I know you guys have probably kind of preparing for that. Just the strategy or the plan of attack for the potential outcome, just given the fact that there's a lot of stakeholders, dialysis providers, CMS payers that might be watching very carefully at that again, potential Adcom?

Very good. Yes, let me have Peony address the potential Adcom for roxadustat. Peony?

Yes. So in our interaction with the FDA, there is no indication for an Adcom at this time. We will be -- we are preparing and will be well prepared if there is one. There are 3 possible time points that FDA may notify a sponsor of our Adcom, either before the NDA submission or at the time of initial -- 60 days of initial checklist before -- or by the time of the day 74 letter, where they inform the sponsor about NDA acceptance or any time during the FDA's review. And the final decision on Adcom or not really lies within the FDA.

Yes. And maybe just to add to Peony's response. Clearly, we are conducting a very thorough preparation regardless that we have not been given this indication or outcome. We have to prepare regardless. And in order to do that, we're following what is considered best practices for outcome preparation. Of course, we think about all stakeholders, but in particular, been able to address the questions that may come at the outcome. So that work is in progress.

And our next question comes from Joel Beatty from Citi.

The first one is on the IPF Phase III program that switched from 1 trial to 2. Could you talk about how the powering of that Phase III program is affected from that switch? And do you anticipate that both Phase III trials will need to be successful? Or could the previous Phase II trial carry some weight as well?

Very good. Elias, the question is related to IPF and how is the powering effective, and whether both Phase III trials need to be successful. If you could address that.

Yes. So we powered this study to plan for success. So that is our first aim. So we maintain a, the study to be highly powered similarly to the first study that we planned, which is we're not changing anything in that study than the size of the patient and enroll in that study. So we will maintain a very high level of powering of the study. And we -- based on our analysis of all the data that we currently have from our Phase IIa and Phase IIb studies. And we're taking in consideration is the available data in IPF from this other study that led to the approval of the other 2 products nintedanib and pirfenidone . So we combined all this data. We combined all this data and that was the basis for our powering of our strategy. So I hope this has answered your question.

Yes.

Yes. Thank you, Elias. Maybe I can also complement Elias' question. Joe, clearly, the change that we're making is to increase the likelihood of success for -- and yes, we are expecting both Phase III trials need to be successful. We need both trials to be successful for us to have a successful program.

Understood. And then if I could ask one other question. On roxadustat, could you tell us about the launch preparations that are underway, particularly anything unique for the type of drug that it is, such as to TDAPA payment agreements or agreements with dialysis providers?

Yes. Let me try to address that question. Clearly, we are working on preparations for launch in the U.S. Really, we have a great partner in AstraZeneca that is leading that effort. And we will complement AstraZeneca when it comes to medical affairs and our science to ensure that we have a highly successful launch. Clearly, there are many aspects that one has to prepare for when it comes to U.S. launch.

And you're making comments about TDAPA. As you know, CMS every year updates, what is called the end-stage renal disease prospective payment system, or commonly known as the bundle. This rule has continued to evolve and now has a policy that provides for this add-on payment TDAPA, which basically provides a payment for drugs that otherwise would be included in the bundle. We clearly are looking when it comes to the dialysis segment at making sure that we're fully prepared and being -- it is always difficult to say how the rule will continue to evolve. But I, based on our discussion with the CMS, we believe that we're in a very good position. We also are looking to, of course, the non-dialysis-dependent segment. And as you know, we have, of course, patients that are covered through Medicare, in particular, Part D and also patients on Medicaid and also patients on commercial insurance. So we are -- we need to make sure that at the end of the day, this product is going to be reimbursed broadly, and we are -- AstraZeneca is leading the charge to ensure that it is going to be the case.

And our next question comes from Paul Choi from Goldman Sachs.

I want to ask with regards to the Phase III for roxa and MDS. There is a company facing a PDUFA hearing about to commercialize a drug for anemia of MDS and potentially in the not-too-distant future. So I was just wondering, as you think about the Phase III trial design, can you maybe just clarify for us, is there an interim built-in where you do -- if you do see an adequate separation with regard to transfusion independence rates at interim? Is that something you could stop the early trial -- the trial early on? And then I had a follow-up.

Peony, could you address the question on MDS competition, and we have interim.

Yes. Happy to. Thanks for the question, Paul. So we have paid 2 parts to our Phase III study in patients with MDS anemia. We have disclosed the first part, which is the open-label lead-in component and presented that positive result at ASH in 2019. The rest of the study is double-blind, placebo control. And at this time, we do not have a plan for interim analysis. Now in terms of comment on the competition of the -- I believe that you must be referring to luspatercept, Paul, right?

Yes. That's correct.

Yes. It is a drug with a different mechanism of action. And that program is targeting only patients. MDS patients with ring sideroblasts, RS positive, whereas our program does not have that restriction. And also, our agent is a HIF-PHI, and it is orally available, and while as the other drug is parenterally-administered. So they are -- those are some of the very obvious differences. And this is an area of a great unmet medical need, and we feel very comfortable wanting to, and could pursue this program and confident in the successful unit.

Great. And then just as a follow-up for pamrevlumab, specifically with regard to DMD. I know that you've disclosed which aspects of the program are advancing, but are you thinking maybe about a potential broader development program here and any other subpopulations? Any color there you could offer would be great.

So Elias, I think the question is here related to pamrevlumab in DMD. And if you could provide maybe some color on the broader program? Are we looking at other subpopulations as well?

So currently, as you know, our study is in non-ambulatory, and we're concentrating this discussion, Paul, about the non-ambulatory. At the same time, during our discussion with the agencies, we are talking about the ambulatory population and looking at -- to see that how the program will look like is if we add this population to our sites. We are in, as we said, in progressing the discussion with the agencies, including the EMA, not only the FDA, and we can give way more guidance on this in following earnings calls. But at this time, this -- the first study that we are concentrating on is the non-ambulatory study.

And our next question comes from Difei Yang from Mizuho Securities.

Just a couple. So with regards to the Adcom meeting, in the case if one was to take place, how much advance notice do you expect to get?

Peony, do you want to address the question on the Adcom, what is the advance notice?

Difei, I believe FDA usually gives at least 45 business days before the actual meeting.

Okay. And the next one is that as you're getting closer to commercialization, how you see or what's your current thinking with regards to -- for the DD setting, that dialysis setting, whether the drug will be in the bundle or not in the bundle?

Yes, it is difficult. I'm going to try to address that question. Clearly, it is difficult to predict whether we're going to be in the bundle or not, but we are preparing for both scenarios by having discussions with CMS. If we were to be in the bundle, as we have described, we believe that roxa would be eligible for TDAPA and the drug, the add on payment, which would be key under that type scenario.

Thank you. And now I would like to turn the call back over to Enrique Conterno for closing remarks.

Thank you very much. We appreciate everyone's participation in today's investor call and your interest in FibroGen. Please follow-up with our Investor Relations team if you have any questions we have not addressed on the call, and enjoy the rest of your day. Thank you very much.

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