FibroGen Inc (FGEN) 2022 Q4 法說會逐字稿

Thank you for standing by, and welcome to FibroGen's Fourth Quarter and Full Year 2022 Financial Results Earnings Call. (Operator Instructions)

I would now like to hand the call over to your host, Mike Tung. Please, go ahead.

Thank you, Latif, and good afternoon, everyone. I'm Michael Tung, Vice President of Corporate Strategy and Investor Relations at FibroGen. Joining me on today's call are Enrique Conterno, our Chief Executive Officer; Dr. Mark Eisner, our Chief Medical Officer; Juan Graham, our Chief Financial Officer; Dr. John Hunter, our Chief Scientific Officer; Thane Wettig, our Chief Commercial Officer; and Chris Chung, our Senior Vice President of China Operations. The format for today's call includes prepared remarks from Enrique and Juan, after which, we will open up the call for Q&A.

I would like to remind you that remarks made on today's call include forward-looking statements about FibroGen. Such statements may include, but are not limited to, our collaborations with AstraZeneca and Astellas, financial guidance, the initiation, enrollment, design, conduct and results of clinical trials, our regulatory strategies and potential regulatory results, our research and development activities, commercial results and results of operations, risks related to our business and certain other business matters.

Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in that statement. A more complete description of these and other material risks can be found in FibroGen's filings with the SEC, including our most recent Form 10-K and Form 10-Q.

FibroGen does not undertake any obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The press release reporting our financial results and business update and a webcast of today's conference call can be found on the Investors section of FibroGen's website at www.fibrogen.com.

Now with that, I would like to turn the call over to Enrique Conterno, our CEO. Enrique?

Thank you, Mike, and good afternoon, everyone, and welcome to our fourth quarter and full year 2022 earnings call. On today's call, I intend to provide a high-level summary of important accomplishments and developments for 2022 and recent months, Juan Graham, our CFO, will then review the financials. After which, we will open the call for your questions.

Starting with Slide 3. FibroGen is positioned to create significant value for patients and shareholders by executing on 3 areas of focus. Number one, delivering pivotal Phase III pamrevlumab data in 3 high-value indications: idiopathic pulmonary fibrosis, Duchenne muscular dystrophy, and locally advanced unresectable pancreatic cancer; number two, increasing our research productivity by advancing novel programs that leverage internal expertise and access external innovation for additional pipeline opportunities; number three, ensuring the commercial success of roxadustat in patients with chronic kidney disease where approved, while continuing to explore additional indications.

Moving on to Slide 4. FibroGen represents an exciting catalyst-rich opportunity. Top line data, 5 pivot of Phase III trials are expected this year and an additional 2 by mid-2024. In 2022, we completed enrollment of multiple clinical trials for both pamrevlumab and roxadustat. And our progress showcases our capability to deliver on a clinical trial goals and advance our pipeline.

We are preparing for various clinical trial outcome scenarios, which could include multiple regulatory filings and ultimately launches to expeditiously deliver these potential therapies to patients. Operationally, we're well prepared to execute our plan. And importantly, we have a strong financial position and a continued focus on financial discipline with a wide array of options to consider as we look for opportunities to strengthen our cash position over time.

Now let's move to our clinical trial time lines on Slide 5. Starting with pamrevlumab. I want to remind everyone that we have both FDA fast track and FDA orphan disease designation for all 3 of these indications. Idiopathic pulmonary fibrosis or IPF, Duchenne muscular dystrophy, or DMD, and locally advanced unresectable pancreatic cancer or LAPC are each diseases with significant unmet medical need and represent meaningful potential opportunities to improve the lives of patients.

Moving chronologically, we expect top line data from the LELANTOS-1, a Phase III trial of pamrevlumab in non-ambulatory patients with DMD in the second quarter of 2023. Top line data from ZEPHYRUS-1, our Phase III trial in IPF in mid-2023. Data from our LELANTOS-2 trial in ambulatory patients with DMD in the third quarter of 2023.

Now looking out to next year, our LAPIS Phase III study in locally advanced pancreatic cancer is expected to read out in the first half of 2024. And finally, our ZEPHYRUS-2 Phase III trial in patients with IPF is expected to report out mid-2024.

In addition, although not on the slide, the Pancreatic Cancer Action Network' PanCAN Precision Promise adaptive trial platform, evaluating pamrevlumab in combination with standard of care for patients with metastatic pancreatic cancer continues to progress.

A common question we receive is whether there is any read-through between the pamrevlumab trials. IPF, DMD and LAPC are 3 very different diseases, all with a common feature of fibrosis, but each with a unique pathophysiology affecting different organs. In IPF, fibrosis in the lung tissue causes progressive and irreversible damage.

DMD is a rare genetic pediatric disease characterized by fibrosis -- by fibrosis in the muscles. And LAPC is an oncology indication in which tumor associated fibrosis is a key feature of the disease. Given these differences in disease pathophysiology, we believe there's limited or no read-through on efficacy from one of these conditions to the others.

On the safety side, pamrevlumab has been studied in over 1,000 patients and has demonstrated a favorable adverse event and safety profile, including in patients who have been dosed for up to 7 years.

Moving to the roxadustat time lines. On the bottom of Slide 5, we anticipate readouts from the MATTERHORN Phase III trial in patients with anemia of myelodysplastic syndromes in the second quarter of 2023. And data from our China Phase III study in patients with chemotherapy-induced anemia expected in the second quarter of 2023 as well. This will be a transformational year for FibroGen, and we look forward to sharing these results -- the results of these studies. I would like to extend my gratitude to patients, caregivers and investigators as well as to my FibroGen colleagues for their commitment.

I'd now like to spend a few minutes highlighting our view of the significant commercial opportunity we see with pamrevlumab, our wholly-own monoclonal antibody. Starting on Slide 6. I will be providing a more detailed perspective on our view of the IPF opportunity than in past calls. With a diagnosed prevalence of approximately 330,000 patients across the U.S., EU, China and Japan, IPF represents a significant opportunity with the 2 approved IPF therapies generating together almost $4 billion in global net revenue in 2021.

Despite the size and growth of the IPF market, there remains an important unmet need with the 2 approved anti-fibrotic therapies as characterized by continued disease progression and challenging tolerability. There is a sentiment in the IPF community of limitations with the current therapies, and we believe pamrevlumab has the potential to help. A sizable number of patients have become a relevant product for the treatment of IPF.

As we highlight on Slide 7, we believe the IPF patients could benefit from new therapeutic options. IPF is a progressive disease where fibrosis in the lung tissue leads to a reversible loss of lung function, resulting in high morbidity and mortality. In fact, median survival following diagnosis of IPF is only 3 to 5 years. The limitations of current treatment options are well characterized. Having a modest effect on slowing the progressive loss of lung function along with a challenging tolerability profile.

This translates into a low treatment rate as depicted on the right side of Slide 7. In the U.S., there is a prevalence of approximately 120,000 patients with IPF with approximately 30,000 patients diagnosed each year. Of these 30,000 newly diagnosed patients, we estimate that only about 1/3 of these patients are treated with an anti-fibrotic.

And of this, roughly 10,000 patients, the start 1 of the 2 approved anti-fibrotics in a given year, approximately 40% to 50% discontinued treatment in the first 12 months, usually due to side effects, which includes severe nausea, diarrhea, and photosensitivity, resulting in a large proportion of diagnosed U.S. IPF patients not being treated with standard of care for this progressive and deadly condition.

Because of this significant unmet need, we believe pamrevlumab has the potential to be an important addition to current IPF treatment options, competing effectively for newly diagnosed patients, for existing patients who have not been treated with anti-fibrotics and as well as those patients who have stopped anti-fibrotic treatment due to challenging tolerability.

Moving on to Slide 8. Duchenne muscular dystrophy and locally advanced unresectable pancreatic cancer each represents significant opportunities. Starting with DMD in the left column. Given the devastating nature of DMD and the relentless progression of the disease, we are hopeful that the LELANTOS Phase III program can lead to an approved therapy that is desperately needed by the DMD community.

While the currently approved exon-skipping therapies produced an increase in dystrophin levels, they target only a small portion of DMD patients. I have yet to demonstrate a meaningful clinical improvement in symptoms or disease progression.

There's clear need for DMD therapies that can attenuate disease progression by targeting the downstream pathological changes to improve muscle function and prolonged ambulation.

We're hopeful the anti-fibrotic mechanism of pamrevlumab may be a treatment that can help these patients and their families. LELANTOS-1 enrolled non-ambulatory patients 12 years and older with more advanced DMD disease. The primary endpoint is the performance of upper limb tests, which measure functionality of the shoulder, elbow, wrist and hand.

LELANTOS-2 enrolled ambulatory patients 6 to 12-years old with less advanced DMD disease. The primary endpoint is the North Star Ambulatory Assessment, which is a measure of ambulatory function.

In the right-hand column, we show a snapshot of the locally advanced pancreatic cancer opportunity. Pancreatic cancer represents one of the largest unmet needs in oncology, given the diagnosed prevalence of over 90,000 patients across the major regions, combined with a low 5-year disease-free survival rate of around 10%.

We believe that pamrevlumab has both direct antitumor effects and effects on the trauma. This is why we're evaluating both LAPC as well as metastatic pancreatic cancer. There have been limited treatment advances over the last 2 decades with immuno-oncology therapies failing to demonstrate survival benefits over the current standard of care. This creates a potential meaningful opportunity for pamrevlumab if we can demonstrate a significant improvement in overall survival.

Now let's move to the update on roxadustat on Slide 9. Roxadustat is currently in Phase III clinical trials for the treatment of anemia in myelodysplastic syndrome, MDS in the U.S. and Europe. And for the treatment of patients with chemotherapy-induced anemia, or CIA, in China.

Starting with myelodysplastic syndromes or MDS. MDS are rare blood disorders that occurred because of abnormal development of blood cells within the bone marrow. It is estimated that more than 10,000 patients are diagnosed with MDS each year in the U.S. and overall prevalence is estimated to be between 60,000 and 170,000 patients in the U.S. Anemia is a major complication present in 85% of patients with MBS when first diagnosed, and causes fatigue, shortness of breath, dizziness and weakness and over time can lead to frequent red blood cell transfusions.

More recently, luspatercept was approved in this indication, and its successful launch illustrates the unmet medical need. We expect top line data from our global Phase III MATTERHORN MDS trial in the second quarter of 2023.

Finally, we also expect top line data from our China Phase III chemotherapy-induced anemia trial in the second quarter of 2023.

Moving on to Slide 10. I do want to take a moment and comment on our early stage pipeline. We expect to file up to 2 INDs in the second half of 2023. FG-3165 is an anti-GAL9 antibody, developed to reverse immune resistance in many solid tumors and inhibit target-driven cancer progression in AML, acute myeloid leukemia. FG-3165 has been shown preclinically to prevent Gal9 mediated cell death of T cell subtypes that are critical for antitumor immune responses and is undergoing characterization for its ability to directly target leukemic cell populations.

FG-3163 is an anti-CCR8 antibody designed to selectively deplete suppressive T regulatory cells in the tumor microenvironment without affecting peripheral T regulatory cells. Use of FG-3163 in solid tumors has broad potential to activate immune responses and induce tumor cell killing without disrupting normally immune homeostasis.

Additionally, we have undisclosed preclinical development programs that leverage our expertise in HIF and CTGF biology.

And moving now to China on Slide 11. Roxadustat continues its robust growth in China. We are reporting fourth quarter total roxadustat net sales in China of $53.1 million by FibroGen and joint distribution entity compared to $32 million in the fourth quarter of 2021.

This growth was driven by an increase in volume of over 90%. Roxadustat net sates growth for full year 2022 in China was $22.7 million, which was driven by an increase in volume of over 80%.

FibroGen's portion of Roxadustat net product revenue in China was $23.4 million for the fourth quarter and $82.9 million for the full year 2022 on a U.S. GAAP basis.

Juan will elaborate further in the financial update. Next, on Slide 12 -- Slide 12 provides a snapshot of roxadustat unit grows as indexed to December 2020 on the chart on the left as well as year-over-year growth in the table on the right. Of note, is a significant unit growth of roxadustat, while the leading ESA brand is up slightly, reflecting the anemia of CKD market expansion that has been driven by roxadustat since its original NRDL listing in 2020.

I'm going to now turn the call over to our CFO, Juan Graham, for the financial update. Juan?

Thank you, Enrique. As 2022 has come to a close, I want to begin by thanking our colleagues in the United States and China for their ongoing commitment to advancing our commercial assets as well as our clinical pipelines. As we open 2023, we are excited about the opportunities ahead with 5 Phase III clinical trials reading out during the course of the year. We are well positioned to continue to deliver on our strategic priorities as we have our upcoming Phase III trial readouts for pamrevlumab and roxadustat as our roxadustat asset continues on its growth trajectory in China and the Astellas territories, and as we advance our preclinical pipeline. 2023 is a pivotal year for FibroGen and we're excited to be in a position to potentially deliver life-altering therapies for patients.

Now getting into our financial results. Full year revenue for 2022 was $140.7 million versus $235.3 million in 2021. 2021 included a $120 million milestone payment from our partner, Astellas related to the European Commission approval of Evrenzo for the treatment of adult patients with symptomatic anemia associated with CKD. For the fourth quarter of 2022, total revenue was $34.4 million compared to $16.5 million for the same period in 2021.

Breakdown of revenue sources for the fourth quarter is as follows: We recorded $23.4 million of net product revenue for roxadustat sales in China compared to $5.5 million in the fourth quarter of 2021, which represents an increase of $17.9 million or a 328% increase year-over-year. During the quarter, we also recorded development revenue of $4.5 million associated with co-development efforts for roxadustat with our partners as compared to $10 million during the fourth quarter of 2021.

Due to the state of development of roxadustat with our partners, we expect core development revenue to be in the range of $3 million to $5 million per quarter for 2023.

Lastly, we recorded $6.5 million in drug product revenue for roxadustat bulk drug or active pharmaceutical ingredients sold to Astellas as compared to $1.1 million during the fourth quarter of 2021.

The increase was primarily associated with the volume of shipments in the quarter, partially offset by a change in our estimates related to these shipments, mostly impacted by the Japanese yen depreciation versus the U.S. dollar.

Now diving deeper into roxadustat in China. Total roxadustat net sales from the joint distribution entity jointly owned by AstraZeneca and FibroGen or JDE was $53.1 million this quarter compared to $32 million in the fourth quarter of 2021, an increase of 66%.

After last year's NRDL price adjustment, 2022 sales performance of roxadustat resulted from a significant volume increase of over 90% versus fourth quarter of 2021. It is worth noting that the full year 2022 volume increase versus full year 2021 was over 80%, benefiting from the NRDL price renegotiation. As we enter 2023, we expect meaningful net sales growth for roxadustat in China.

Moving from roxadustat net sales in China. FibroGen's net transfer price from sales to the JDE was $17.2 million for the fourth quarter, consistent with the 30% to 45% range of the JDE's roxadustat net sales, which we have continuously guided. During this quarter, we recorded an additional $3.1 million from the previously deferred balance due to the change in our future estimates as per U.S. GAAP.

The main driver being favorable renminbi currency impacts. As we have communicated in the past, the deferred revenue balance in FibroGen China fluctuates based on management estimates of future revenue. As a result, FibroGen recorded $20.3 million in net revenue for the quarter from roxadustat sales to the JDE and $3.1 million of direct to distributor sales from FibroGen China.

As I move into the P&L, it is worth noting our focus on execution, enabling us to be more disciplined in our spending. Our operating costs and expenses for the fourth quarter of 2022 were $100.5 million compared to $151.8 million for the fourth quarter of 2021. The main changes of R&D expenses versus 2021 were a $35 million expense related to the option execution to in-license the anti-CCR8 program for HiFiBiO during Q4 2021 and lower clinical trial expenses and drug supply costs associated with our pamrevlumab programs.

R&D expenses for the fourth quarter of 2022 were $61.6 million compared to $113.9 million in the fourth quarter of 2021. Of the $61.6 million, roughly 61% was dedicated to pamrevlumab development and CMC activities. 21% allocated to support our early-stage pipeline and the remaining 18% directed towards roxadustat development activities in the United States and China.

SG&A expenses for the fourth quarter of 2022 were $34 million compared to $34.7 million in the fourth quarter of 2021, representing a 2% reduction year-over-year.

This change was driven by our cost management efforts more than offsetting inflationary pressures. During the fourth quarter of 2022, we recorded a net loss of $66.2 million or $0.70 net loss for both basic and diluted share as compared to a net loss of $134.1 million or $1.45 per basic and diluted share for the fourth quarter of 2021.

With regards to our financing efforts, during Q4, we completed a revenue interest monetization transaction with NovaQuest Capital Management of $50 million or 22.5% of Astellas related drug product revenue. This financing further strengthens our balance sheet to continue supporting our strategic priorities.

On Slide 13 of our presentation, we make reference that at December 31, we reported $442.7 million in cash, cash equivalents, investments and accounts receivable. Our ending cash balance is roughly $48 million higher than the midpoint of our most recent year-end cash guidance, which included the revenue interest monetization transaction with no request. The cash increase is driven by a mix of savings, spend prioritization and movement of onetime payments into 2023. Going forward, we believe that we are well funded through multiple key clinical milestones, and we expect our cash, cash equivalents, investments and accounts receivable to be sufficient to fund our operating plan into the second half of 2024.

As we've previously stated, we are privileged to have a variety of options to further strengthen our balance sheet to meet our strategic objectives. As we close on 2022, we are pleased with our team's performance, achieving strong operational and financial results. As we enter 2023, we believe we're well positioned to execute on our strategic, operational and financial goals in a pivotal year for FibroGen.

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

In closing, I would like to reiterate our confidence and excitement as we embark on 2023. We are committed to advancing pamrevlumab as a potential first-in-class medicine in 3 indications with significant unmet medical need. And as noted, we expect top line data from 3 pamrevlumab pivotal Phase III studies in 2023, LELANTOS-1 in non-ambulatory patients with DMD in the second quarter of 2023. ZEPHYRUS-1 in IPF patients in the year and LELANTOS-2, in ambulatory patients with DMD in the third quarter of 2023.

In addition, we expect top line data from 2 roxadustat pivotal Phase III studies. MATTERHORN, in patients with anemia of MDS in the second quarter of this year and China CIA study in the second quarter of this year as well. In our early-stage file and we expect to file up to 2 INDs in the second half of 2023, FG-3163, an anti-CCR8 antibody. And FG-3165 an anti-Gal9 antibody, both in oncology.

Roxadustat continues to perform very well in China, and our partner Astellas continues with the commercialization of roxadustat in Europe and Japan. We believe we are properly financed through key top line pamrevlumab data releases, and we're privileged with a wide array of options to consider as we continue to look for opportunities to strengthen our cash position over time.

Now I would like to turn it over to the operator for the Q&A.

(Operator Instructions)

Our first question comes from the line of Michael Yee of Jefferies.

This is Andrew Tsai on for Michael. Two on IPF, please. First one is -- can you remind us what prompted you to change the primary endpoint of your second Phase III study recently? I believe it was from a time to progression type of analysis to FVC change at week 48. So what went -- what happened there?

And then secondly is what percent of enrolled patients in these IPF studies for both pamrevlumab and placebo, do you expect to go on rescue therapy? And how does rescue therapy impact your study outcome as well as your stats analysis?

Very good. I'm going to ask Dr. Eisner to address both pamrevlumab questions.

Sure. Thanks for the question. So we are constantly in touch with regulators, including FDA, European authorities and others, and we monitor the external environment closely. And it's always been true that ZEPHYRUS-1 has had the primary endpoint of FVC. And it's become clear that the FVC is actually the global standard for approval. So we've just harmonized and aligned, both ZEPHYRUS-1 and ZEPHYRUS-2 to have FVC as the primary endpoint. Key secondary endpoint will be the disease progression defined as FVC 10% or more decline or death. So that will continue to be there. And just to wrap it up, we're confident that this will meet global regulatory standards for approval.

In terms of background standard of care. So just to remind everyone, these are both monotherapy trials. In other words, it's pamrevlumab versus placebo in patients who are not on standard of care. Patients can be either treatment naive at baseline or experienced in the past. We do allow patients to initiate standard of care on the trial. If their physician deems this appropriate. These are both approved therapies. We don't believe this will be a very common event and we don't believe it will have a substantive impact on the overall results because these trials are well powered, and we plan on an intention to treat analysis.

And very last one, if I may. Is that okay, if I can ask the last one?

Of course.

Speaking of the powering, would the powering assumptions for both Phase III studies be the same on the primary endpoint? And Secondly, what would you say is a clinically meaningful efficacy result in the Phase III data? What kind of separation versus placebo and FVC do you want to see?

Right. So the first question is about the powering of ZEPHYRUS-1 and ZEPHYRUS-2 for forced vital capacity. I mean both studies aim to enroll 340 patients. We enrolled slightly more in ZEPHYRUS-1. So yes, the powering will be the same for both studies, and we think highly adequate for detecting an effect size that's planned for.

In terms of a clinically meaningful effect for FVC, that's a really good question. We have designed the Phase III program to be highly similar to the Phase II program or PRAISE study, with the intention that we can replicate what we see as very highly clinically and statistically meaningful results in PRAISE in the Phase III program. So that is the intent. That said, we are powered for effect sizes that are somewhat smaller. I think there's not a clear standard for what is meaningful, but we do intend to replicate PRAISE or something close to that. So we're very confident that we will find a meaningful result in the ZEPHYRUS program.

Our next question comes from the line of Jason Gerberry of Bank of America.

Just a follow-up on that last question. So is efficacy in the ballpark of PRAISE something that gets you in the right zone of a discussion regarding ability to file based on PRAISE's ZEPHYRUS-1. And then, Enrique, when you talk about the IPF market, a lot of the shortcomings of the current standard of care therapies has brought up and the tolerability issues.

And what I wonder is even if you don't assume any increase in treatment rate, so you still have 1/3 of new starts getting treated. I'm just wondering how big could the market be if these drugs had a more appropriate duration of therapy that might be commensurate with a drug that's reasonably tolerated. Just wondering if you sort of increase that duration of therapy toggle, how big could that market be? And then just lastly, client had some data, and they're going to have 24-week data in 2Q, I believe. Just wanted to get your thoughts just on what you saw from the competitor approach.

So the first question around efficacy. I think it's important to remember when we're framing a question that the current standard of care is limited by poor tolerability and specifically GI side effects, nausea, diarrhea and those sorts of things. So we expect pamrevlumab to have a much better tolerability profile. So we have to think about both the benefit and the tolerability when answering your question.

The second point is, yes, we are aiming to replicate PRAISE and we've kept the design similar in terms of the primary endpoint of 48 weeks in both Phase II and Phase III. FVC is the end point. But it will be a totality of the results, right? It will be the primary endpoint, the secondary endpoints and the tolerability together determine the overall benefit risk profile. So I don't think it's as simple as saying no particular threshold on FVC because it's going to be kind of the comprehensive look at the product. And I'll turn the next part of the question over to Enrique.

Sure. So I think your question was, given the introduction of a product, if I understood the premise of your question, that may have better tolerability how could that impact the overall market size. We have to look at the overall profile of the product, right? But that includes the efficacy. And as Mark stated, we -- our intent is to replicate PRAISE. But assuming the profile of the product has the -- replicates the efficacy and good tolerability profile, I think we have to start by thinking about, okay, if 40% to 50% of the patients are discontinuing therapy within the first year, you can imagine that, that's a significant driver for many of those patients to go into a new therapy.

Those patients were already multi-compelled to seek a treatment. And now we're basically offering an option that is highly -- potentially more efficacious even though we don't have -- we won't have head-to-head trials and with a good tolerability profile.

But I think we also need to think about the patients that are not being treated today. I think it's -- we have to think about the full opportunity for the product because out of 30,000 patients, and this is the U.S. that we're talking about, that are diagnosed every year, only about 1/3 are being treated with the anti-fibrotics. So the expansion of the treatment rate, I think, is also a significant opportunity for PAM to be able to offer a benefit risk profile that is different from that of the other products, and significantly enable meaningful overall market growth.

So we think about our opportunities, this is probably the one area that we're trying to emphasize with investors where we see an opportunity that is larger than maybe what's reported out there given the dynamics I just mentioned.

Yes. And just briefly, in terms of the client results, you had alluded to the week 24 results. So just a couple of points. I mean, first of all, they're early in development. We've seen the Phase IIa data, which are at 12 weeks. So whether that can extrapolate to 24 weeks or more importantly, 48 to 52 weeks, which will be required for approval is a question, the sort of longer-term safety remains a question.

And of course, the efficacy beyond 12 weeks, those will be questions as well as the dose response and how is that holding up. So a lot of questions there still we'll be watching as you are for the week 24 results. But even with that, there's still going to be a lot more to be answered in later-stage clinical trials.

Our next question comes from the line of Andy Hsieh of William Blair.

Great. Maybe we can start with LELANTOS-1. I know it's like a 1-year trial, but I'm just curious in terms of the non-ambulatory patient disease progression in terms of patients succumbing to the disease, how long does it take if you want to see that signal in terms of OS separation do you need? And are there any signs that based on real-world experience, they can start to see something like that?

Right. So thanks for the question. I think you're asking about in the non-ambulatory population of LELANTOS-1, whether we would expect to be powered for overall survival or mortality signal. I think that would be challenging. I mean it's a study of slightly less than 100 patients. We are looking at performance of the upper limb as a primary endpoint. We'll also be looking at forced vital capacity, percent predicted in other secondary endpoints that can reflect the overall disease progression, I think overall survival would be a challenge, although it's certainly something we will be tracking.

And related to client, in one of their Q&A, I believe, they mentioned about filing based on 1 study or the potential of doing something like that. And so that challenges the conventional wisdom at least regarding the regulatory pathway of IPO. I'm just curious from your interaction with the FDA, do you see kind of a shift in terms of the agency's stance? And would that kind of open up if data supports to file on one.

Good question about the filing strategy. And I would bring it back to our program, in particular, -- and what we said before and what we continue to believe is that if -- it will be data dependent and FDA feedback dependent about whether we can file ZEPHYRUS-1 before the results of ZEPHYRUS-2. In particular, we'd be looking for highly clinically and statistically meaningful results on the primary endpoint, secondary endpoints and also a very good benefit risk profile in terms of the safety and how that all plays in.

If we see those kinds of findings, we will, of course, be discussing that with the FDA about whether we could file based on the single trial or whether we need to base that on both trials for filing.

In terms of the broader regulatory landscape, I do think this continues to evolve. If the precedent is still -- has been 2 trials. But I think this will be dependent on the data, in our case, that we generate and the feedback from the FDA.

Yes. It's worth noting -- my colleague, Thane, reminds me that both Roche and BI have one trial in IPF as indicated by their ct.gov postings.

Right. Right, exactly. Got it. Maybe just one quick question. Could you remind us for the IPF studies, do you have incorporated like an interim efficacy look?

No interim efficacy evaluations, no.

Our next question comes from the line of Danielle Brill of Raymond James.

I guess, first, I want to clarify. You said a few times now that you're powered to replicate PRAISE and the ZEPHYRUS trials. But there seems to be clear precedent that effect sizes are lower in Phase III versus Phase II. So I just -- I just wanted to clarify, did you consider this and other potential factors that may impair treatment of effect size when you powered the trial. And then I have a couple of follow-ups.

Yes. Let me just quickly address this. Yes, we did. As Mark mentioned, we are very well powered. Well, our intent is to replicate PRAISE. When we power, we basically did some discounting of the FVC and we still powered over 90%. So we took some of those dynamics that you referenced into account.

That's very helpful. And then another question that comes up when talking to investors, is the potential impact of COVID and potential data integrity issues that may arise given the study was conducted throughout the pandemic. Can you just comment on measures that you took to mitigate any missed infusions or dropouts in the study?

Sure. So First of all, I think -- I mean you're right, COVID has been a challenge over the last few years. I think one point to consider is that patients with IPF, because they have severe underlying lung disease are counseled by their physicians to be cautious and to avoid exposure, thereby minimizing the risk of infection. So we're expecting that, that will help to mitigate the effect of COVID and its impacts on these patients. But we have taken a lot of careful approach to maintaining patient recruitment -- I mean, patient maintenance on the studies, we have allowed some flexibility in terms of follow-up visit windows, things of that nature, which regulatory authorities have allowed for.

We've allowed home infusions in countries where that's allowed. So we've taken a lot of measures to be really thoughtful and to try to do our best to keep patients on the study and maintain data integrity. And we are confident that we will have a very robust data set at the end of the trials.

Excellent. And maybe I can just squeeze in one last one on manufacturing. I know you switched manufacturers for pamrevlumab. Will you have commercial manufacturing in place by the time of launch? And are there any FDA requirements for bioequivalency or dosing needed prior to approval?

Yes. Thank you. Yes, the answer is yes. We believe we will have -- be able to have commercial products manufactured at expected launch dates. So we've made quite a lot of progress on our manufacturing capabilities. As you know, we've conducted a tech transfer with Samsung. And I believe that has gone very well. So at this point, I think our thinking is that analytical comparability will be the only thing that will be required for us to be able to utilize the commercial product from Samsung.

Our next question comes from the line of Yaron Werber of Cowen.

Great. Enrique, I got a couple. Maybe just the first one, just to follow up on the last question. The analytical comparability, is that something you can do in parallel to the Phase III? Has that been done already? Or is that a part of the Phase III? And can you confirm that you actually are using supply out of Samsung in at least one of the Phase IIIs. And then secondly, on the MATTERHORN study, the data we're going to get, I believe, is the 24-week data. Can you file on that? Or do you need to wait for the 52-week data for MDS?

Yes. I'll let Mark answer, I think, the second question. But analytical comparability is basically comparing the product on an analytical basis, right, all of the characteristics of the product when we look at product that was manufactured by BI and the product that is manufactured by Samsung. So it doesn't require any study of that in clinical trials. I believe we are -- we're in a really good position.

Of course, we also discuss this with regulatory -- with regulatory agencies. So at this stage, I think we feel good in terms of where we are from manufacturing and overall CMC perspective. I'm going to let now Mark answer the MDS question.

Sure. So the primary efficacy endpoint in MATTERHORN is at week 28, although the study goes through a week 52 for secondary efficacy endpoints and safety endpoints as well. So it is our plan based on the 28-week data, assuming that it's positive to have the discussion with FDA about whether that data at week 28 would suffice for filing. But it's our position that, that should be the case, but that would have to be dependent on the efficacy, the strength of the efficacy, the safety, the benefit risk and the FDA's feedback.

Our next question comes from the line of Annabel Samimy of Stifel.

Sorry, I didn't hear the name. So just going back to a couple of the questions. Now I understand that you haven't really disclosed what the -- I guess, the FVC reductions you're aiming for in your powering. But I'm just -- in terms of talking to physicians, is there a scenario, do they have some kind of, I guess, reduction or benchmark of reduction in mind or improvement rather in FVC where if it's statistically significant, but maybe it's lower than PRAISE or around the same range or maybe lower than the other products on the market, but they're able to have a tolerable drug that patients stay on. Is that sufficient for the physician community if you have statistical significance in your trial?

So I guess that's sort of the first question I have. The second is are you looking at any -- can you remind us what specific fibrosis biomarkers that you're looking at so that physicians can also, I guess, appreciate benefit beyond just FVC improvement? That's the first question and then one on LELANTOS.

Clearly, our -- I'm going to just provide a quick top line, but then I'm going to ask Mark to comment. But clearly, the intent that we have is to replicate PRAISE. And -- there's been some discussion about whether in Phase III trials, sometimes the effect size maybe to decrease somewhat. That could be the case, but we've also made what I'm going to call some minor adjustments to the study, for example, lowering the FVC at baseline in terms of inclusion criteria, so that we can ensure that they are -- we are enrolling patients that are progressing and so forth. So the intent is to replicate PRAISE.

Now I'm going to have Mark talk of your question in terms of what could be meaningful from a commercial perspective.

No, I don't really think that physicians, when we talk to them, highlight a specific FVC threshold that would be necessary, right? I mean I think it's -- as you said, we expect the tolerability to be much improved versus standard of care and patients can't benefit from treatments that they can't stay on. So that -- yes, we do think there'll be a significant benefit with pamrevlumab in terms of tolerability. I mean we do expect to hit robust FVC results in terms of reducing the attenuation of FVC decline.

And we also have other endpoints like the disease progression endpoint, the quantitative lung fibrosis by high-resolution CT scan, disease progression endpoints like acute IPF exacerbation, hospitalization and mortality. So we'll have a very rich array of endpoints to characterize the benefit of the drug even above and beyond FVC.

And in terms of biomarkers, I mean, QLF, the quantitative lung fibrosis score is an imaging biomarker that we do think we have very meaningful results in Phase II and PRAISE, and we are including the endpoint in Phase III. So we're hopeful to continue to be able to show not only that patients have reduction in the decline of their lung function as measured by FVC, but less evolution of scarring or fibrosis by the QLF score. So we're going to have quite a comprehensive view of what pamrevlumab can do for the patient based on the whole sequence of endpoints.

Annabel, this is Thane. Maybe just to add a little bit of color to what Enrique and Mark has said. When we put a profile in front of clinicians, and they have a really good understanding for what do we expect from both (inaudible) given the 8-plus years on the market. They don't recite back to us a specific FVC difference relative to placebo that they would expect to see. And in fact, if you look at the Phase III trials between (inaudible), the absolute differences between those drugs and placebo are quite different from one another, but in relative terms, they're fairly similar to one another.

What they tend to tell us is, and this is the key reason why we believe more patients aren't treated as they just don't believe the risk benefit is in favor of treating with the drug for many of these patients. And so that means that they're not only taking a look at the potential reduction in FVC decline they're also taking a look at the tolerability, the quality of life aspects for the individual patient.

And so when we share with them the pamrevlumab profile, and we show just a very base case FVC reduction difference from placebo that's in the ballpark of (inaudible), which even though PRAISE was actually a bit better than that. When they look at the totality of the profile, there are a lot of patient cases that we put in front of them where they put for pamrevlumab relative to the 2 current identified product options.

Okay. Great. That's actually really helpful. So then just a quick question on LELANTOS-1 and 2. So clearly, there are slightly different endpoints because you've got different patient populations here. The non-ambulatory obviously have more upper limb measurements then you have the North Star Ambulatory for LELANTOS-2. Is there any crossover in any of the endpoints on LELANTOS-1 and LELANTOS-2 such that, say, if there is no benefit on ambulatory assessment, but there could be some benefit on upper limb assessments or functional assessments like that, like you saw in LELANTOS-1. Is there anything there that could be drawn or cross compared in that way. It just seems like the 2 different end points or so are such different hurdles for these 2 different patient populations.

Yes. No, interesting question. Yes. I mean remember, recall for everyone that LELANTOS-1, the non-ambulatory study comes first before LELANTOS-2, the ambulatory study. And because as you're alluding to, the non-ambulatory patients have already lost the ability to walk, they're wheelchair bound and their function is much more limited. We are needing to use the performance of the upper limb, which is a validated endpoint that assesses upper function because they've already lost so much lower than other function.

So while I -- so I think it will be a bit challenging to be predicting LELANTOS-2 outcomes based on LELANTOS-1. In other words, if we see a signal in LELANTOS-1, we could see even a bigger signal in LELANTOS-2 because they still have so much more function -- the North Star Ambulatory Assessment provides a more sort of holistic evaluation of the patient.

I think at the end of the day, the data will be the data. But I think we're starting -- the first readout you're going to get is the most difficult patient population, the non-ambulatory population who's already lost the most function and the signal to noise for the endpoints are the most challenging. Later, we'll get LELANTOS-2 I think because these patients have more function at baseline, it will be a little bit more clear cut in terms of evaluating the efficacy.

At this time, I'd like to turn the call back over to Enrique Conterno for closing remarks. Sir?

No. Thank you very much to everyone for your participation in today's investor call and join your interest in FibroGen. And very much enjoy the rest of your day. Thank you very much.

This concludes today's conference call. Thank you for participating. You may now disconnect.