Kyntra Bio, Inc. (KYNB) Earnings Call Transcript & Summary

Good day, everybody. My name is Jason Gerberry. I cover smid-cap biotech and specialty pharmaceutical for Bank of America. I'm pleased to be introducing our next company presenter, FibroGen and new CEO, Enrique Conterno. FibroGen is -- most would know the company for its development of roxadustat for anemia associated with dialysis or renal disease, but the company also has an emerging early-to-midstage pipeline with pamrevlumab for fibrotic disorders. So Enrique, first off, thanks for joining us at the conference on a virtual basis.

No, thank you, Jason. It's a pleasure for me to be here and talk about the progress we're making at FibroGen.

Great. I mean, look, you're no longer new to the role, but I imagine that the opportunity with roxadustat was an important factor as to why you joined the company. As we look at the marketplace for anemia disorders associated with renal disease and chemo-induced anemia, we once upon a time saw almost a $10 billion market. That's obviously compressed as a result of some label restrictions around the current standard of care. But I'm curious, your views on the HIF class, which is where roxadustat is a drug within. Your thoughts, from a commercial standpoint, can the category get back to those historical peak levels, either on a combined basis or even if the market more gradually or rapidly migrates to HIFs? So maybe we can start there.

Sure. So -- and I think you got it right. I think I -- yes, I joined FibroGen in early January, and part of the reason I joined is, I saw the promise with this transformational medicine for anemia, generally, of course, first, in -- when it comes to CKD. And my answer would be, yes, not only to get to the previous levels when we think about the overall anemia treatment but beyond that. And I think we have to keep in mind that the use was there, the category was larger at that point in time. And the reason we basically saw some of the declines in the category were related to some of the restrictions on the labels for ESAs. Now clearly, all of this needs to come in the context of data. And in particular, I'm excited to talk a little bit more about roxadustat and how I view that when it comes to the data that we have in CKD. And maybe that will be the next section. But clearly, we're also studying roxadustat in chemo-induced anemia, in MDS, and we do have a portfolio of other opportunities that we're looking at for us to truly, not just pursue anemia in CKD, like we are today, where we have the submission accepted in the U.S., expected to submit in Europe in Q2. Commercially, having success in both China and Japan. And of course, that's key, but eventually, we want to make sure that we're treating all sorts of anemia with the promise that roxadustat has.

Got it. Great. And as we think about where the market once was, where it is now, some of the major haircuts, and correct me if I'm wrong, were the CKD stage 3/5 treatment rates have come down quite a bit. The treat to target, the quantity of drug for a class that was priced on a quantity basis in dialysis has gone down. And then the lack of the chemo-induced anemia market has taken a massive hit because of the safety perceptions or implications, however you want to frame it. So from your perspective, are one of those levers really what you see as more near term and sort of the clear opportunity in front. I would imagine it would be the CKD 3/5 treatment rates might be sort of the key low-hanging fruit here, whereas the chemo-induced anemia opportunity probably is a longer-term type of driver.

I think, yes. And I think we do just because of the sequence of how we pursue these indications. Clearly, we are very near the action date by the FDA that's expected, December 20 of this year. And basically what we see and I think you said it well, when it comes to dependent dialysis patients, yes, those patients continue to be treated for anemia, 95% of them. That's -- so the use there on the treatment side, I think, continues. But when it comes to nondependent dialysis, I think we've seen a huge drop off in terms of treatment rates. Today, in fact, what we basically see is for -- when we look at the 12 months prior to going onto dialysis, we see about 13% to 14% use of ESAs in that patient cohort. That number used to be as high as 30%. So clearly, there's a huge opportunity to scale that market up. That needs to be driven by the data. And we think that we have the data to try to support a massive shift in terms of ensuring that anemia is treated in a safe way in patients, both that are dialysis-dependent or nondialysis-dependent. So that is a more near-term opportunity just because that indication is coming first. But we are pursuing chemo-induced anemia, and we see a pretty large opportunity there as well.

Great. And before we jump into some of the details, how do you see it all fit in? Do you see -- you've got potentially biosimilar ESAs, branded ESAs, potentially multiple HIF in-class competitors? Do you see this market as a dominant treatment option? Do you see the market being more fragmented based on what we know today?

Yes. I -- clearly, I think like any other market I think it's going to depend on the data that the new entrant -- that the new products basically bring and the differentiation that they bring into -- and becoming new standards of care. And I think in this particular case, I think it's pretty significant. I think it's -- the differentiation of roxadustat, I think is quite meaningful when -- and I'd like to focus on maybe 3 points. And the differentiation that I think about is not just relative to current treatment, but maybe other potential future treatments. Because keep in mind that FibroGen have -- or had and have the largest library of HIF-PHIs. And there are a number of compounds that the company looked at. And the reason roxa was picked is because we felt it basically provided the best benefit-risk profile for treating anemia. So the -- as I think about this particular class, which, by the way, was further validated by one of our competitors for using data. But in particular, as I think about the differentiation of roxa, number one, I think you have to start with efficacy. Keep in mind that not only do we meet our primary efficacy end points, we were basically statistically superior to EPO on our trials in DD. So that's important. Of course, we also show efficacy. It was relative to placebo in NDD. And quite -- when we look at -- one of the benefits of having achieved efficacy when it comes to hemoglobin is that it translates into lower transfusion rates. We actually had lower transfusions with roxa than with EPO, and of course, much lower relative to placebo in the NDD segment. So that benefit to me, I think, is pretty significant. Clearly, in the -- when we look at the totality of the data, I find our overall cardiovascular data pretty compelling. And in particular, I think we need to highlight the incident dialysis data, whereby we basically show a reduction in risk of MACE events at a time that is critical. And this is -- incident dialysis, basically, covers those patients within the first 4 months of starting dialysis. That is the time when a treatment decision is made when it comes to anemia. So I feel like we are perfectly accurate to wish -- with a huge benefit in that cohort of patients, to be able to have a significant position longer term in that segment. So that I find also quite meaningful. And clearly, the data is highly -- it was -- compared to EPO, it's highly differentiated based on what we can see. And finally, I think something that maybe people don't emphasize as much, but I think we need to keep in mind when we look at the overall NDD segment and we look at the broad spectrum of patients that we were able to enroll, including iron-replete and non-iron-replete as well. So those -- we had a broad spectrum of patients that were -- basically were enrolled in the trial. And I think that's going to be an element of differentiation longer term as well for the product. So I like the chances that given the outcome that are so meaningful with this particular product.

Okay. Now the U.S. market, it's an important market. If you look at consensus, I think that The Street does view the U.S. as a particularly important market. So mindful that this is a process that's being driven, I presume, by your partner, can you talk -- can you share any thoughts regarding your partners’ launch preparedness for roxa in the U.S. and/or preparations ahead of any FDA interactions like an Adcom?

Yes. So I -- clearly, the U.S. is the most important market, and we are treating it as such. And yes, I think AstraZeneca is leading much of our commercial preparations. And FibroGen does have an important role, and I'll speak to that to ensure that we can be as ready and as prepared to be -- truly realize the promise that roxadustat has to be a transformational medicine in CKD anemia. First, I think -- right now, I think one of the critical elements that we have to work on is, of course, ensuring that we appropriately manage the regulatory process, questions from the FDA and so forth. I think as far as the Adcom, we have received no indication that there will be an Adcom or that an Adcom is planned. It's -- that could change, of course, at any time. But as of today, we have not received such indication. Now regardless of that, we continue to prepare as if we were going to have an Adcom. We need to be ready to ensure if there is an Adcom that we can have the best showing possible of all of our data and all the questions that may be asked. One other element that is critical is really the overall publication strategy. And you will see a robust publication strategy this year, including a number of abstracts and presentations or presentations as part of ASN. That is a big important target for us. There will be some other medical forum where we release publications, but that is going to be key. And in particular, as we focus on the elements of differentiation that I described. Yes, generally, publication, but really relevant publications, ones that truly matter in terms of the relevance that this product could have in clinical practice. Finally, as we launch, clearly, it is going to be key that we basically get the right reimbursement for the product and that we are establishing the value proposition for the product for roxadustat in the U.S. marketplace. And I'm delighted to see what I'm seeing from AstraZeneca. I had a chance to meet and review with the U.S. team the plans, and we are in good constant communication, not just at top level but throughout with the different teams. So I'm excited to see the prioritization importance that AstraZeneca is providing to roxadustat in -- as basically, we prepare for a U.S. launch after the PDUFA action data at the end of the year.

Got it. How important -- with ESAs, it's priced in a way that there's more value generated if more drug is consumed with roxa. It's obviously going to be doses that is titrated to the individual level, weight-based. So would you envision a pricing scheme that does capture more value if more drug is utilized and you're treating to higher target hemoglobin levels?

Yes. We are not discussing pricing strategy at this stage. I appreciate the question. As you know, that's probably -- that's not on either AstraZeneca's and FibroGen's best interest to be discussing that publicly at this stage. I think you will hear about our pricing once, basically, we launch the product. But you do raise an important point, which is, at the end, how do we think about the overall value of the product. And keep in mind that, of course, if we broke or reduce this MACE events and then send out a product that on -- a product that reduces transfusions, a product that has good predictable response when it comes to efficacy across many different patients, I think that product can provide significant value, both clinically and also from an economic perspective to the health care system.

Yes. Now whether an Adcom is scheduled or not scheduled, I appreciate the comment that the expectation probably is that it doesn't. So from your perspective, does this have any read-through at all, perhaps how the FDA may be thinking about safety? I know there's a lot of investor focus regarding how safety risk, particularly CV safety risk, ultimately gets characterized to the class relative to the ESA category?

Yes. I -- honestly, I don't think about it that way. It's -- I think it's always not wise to speculate on how the FDA is thinking about something. Keep in mind that an Adcom is typically established to try to get external feedback on whether it's approvability or a particular labeling or the risk-benefit on a particular subset of the population. So there are a number of reasons why an Adcom could be -- come to life and be called for. But I am quite confident that the FDA, given the data set that we have put forward, will -- based on the data, I think, will have a chance to have the appropriate review and come to all of the right conclusions in terms of the benefit risk profile of the product. Now that doesn't mean that they have an Adcom or not. It's -- and I don't see an Adcom or the lack of as a positive or negative. It's just part of the process.

Got it. Okay. Look, maybe we can just jump ahead to the China launch and the update provided on the 1Q update where I thought that the sales and the commentary around the hospital listing seemed generally positive. It seems like the tone or the messaging regarding the further ramp up in revenue, in this marketplace where you guys would seemingly have at least a 3- or 4-year lead head start versus your competitors, who I think have to satisfy a lengthy clinical burden to get to market. So can you talk a little bit about the -- what you're seeing in China at the moment? And what gets you excited about this market opportunity?

Clearly, I think -- I do. I think I'm excited in that we basically had about $5 million -- we had $5 million in net roxadustat revenues in China in Q1. This is the first quarter when we had posted the NRDL. So it's an important quarter to look at. But also, we need to keep in mind that this was a quarter where China was largely under lockdown for much of the quarter, at least 2 of the 3 months. We basically had COVID-19, basically, impacting hospitals, patient visits and so forth. And I think what I've commented on is not just the $5 million and the fact that we expect a meaningful ramp up in revenue over the next few quarters. But the fact that we are -- we ended with listing that basically represent over 30% of the overall China opportunity. That's -- and this is across both DD and NDD. So I had the opportunity to manage China for Lilly, so I have some experience. And I can say that this is a very meaningful ramp up in terms of access to hospitals for any product. So when I look at hospital adoption, when I look at the adoptions or hospital listing, and when I look at the adoption of the product, the uses of the product within those hospitals, I really like what I see. And I think it gives me confidence, not just for China, but I think what this product would do everywhere else, right? It's very exciting to see.

Yes. How do you think about the pace of hospital listings going forward through the remainder of the year? I think you said you're at 30% right now. And even that, in and of itself, I think you guys have characterized it as pretty unprecedented. I think the U.S. investors generally haven't had to analyze in great level of depth or had great visibility into how the processes work in China. It's very unusual that we analyze the China launch first. So can you help us think about how this evolved?

It does. I think you can look at a number of benchmarks of products that have become blockbusters in China. And when I look at the uptick that we have in terms of listings and access to the overall opportunity, and I will put in parts, despite the fact that we had COVID-19 in the first quarter, I do think it is unprecedented. I expect that the listings and the uptick in listing will continue. So we're not commenting on at this stage, but we intend to provide another comment -- some more commentary at the end of, of course, Q2, both net product sales and listings. But I think what I basically see is that I'm highly encouraged with -- both what we have achieved and also the continuous trends that we basically see in terms of use of the product and listing adoption. One of the...

When you talk about blockbusters in China, are we talking about old drugs like lipitor that were well beyond their western market patent life that hit $1 billion threshold? Are you talking about more innovative therapies and how those progress?

Yes. I'm really speaking -- I -- given that the NRDL has evolved over the years and provinces adopt reimbursement much quicker than in the past, it's not always fair to just look back and -- but I think you can look at our products today, in some cases, the products are -- they're early in their life cycle and to try to see what is it that they have achieved when it comes to hospital listings. So I'm really thinking of innovative therapies and what is the ramp up. So yes. I -- honestly, if you go back, and I'm going to go back a few years, but you go back 5, 6 years, to get meaningful reimbursement, both reimbursement on hospital leases in China, it used to be a process that used to take years, 4, 5, 6 years, before you had meaningful listings, meaningful reimbursement. So we are 1 quarter post the NRDL, and we are -- we feel very good about the support that we're getting, the use. And something that I commented on the call briefly was that, importantly, we are seeing use across very different segments, which I think is very important, which is -- because I think it tells you something about the ability to scale these products, whether it's in dialysis centers, whether it's in home dialysis or whether it's in nondependent dialysis. So we've seen uptick across. Of course, we need more data to look at a number of additional parameters, whether it's what's the source of this patient, were these patients naive to therapy, were they on ESA before. So that color, I think we'll be able to provide sometime in the future as we get more and more substantive data. But I think what we basically have seen right now is good use, broad use across all of the segments that we're interested in.

And from a safety labeling perspective in China, can you talk about how it's conveyed or communicated to health care providers, the safety profile relative to ESAs, because one unique aspect of this is that you're doing your MACE outcome trials in this population on a post-market basis?

Yes. So keep in mind that ESAs in China do have a black box, and we do not. So our -- the product profile in China includes, of course, some of the efficacy profile, some of the safety elements, but it does not include, I think as you allude to, all of the pooled safety data from all of our trials and so forth. Clearly, that's -- as we get approval in the U.S., and over time, I expect that more data will be added to our Chinese label. It's difficult to say when will that happen. But right now I think it's the -- I think if I understood your question, our label does not include a black box.

Yes. Okay. Fair enough. And there has been some recent focus from investors regarding competitors in the HIF class. So with data recently released in the dialysis setting, maybe you had mentioned roxa on hemoglobin response being superior. Just wondering how much of that was driven by potentially trial design differences? For example, differences in dosing algorithms and target hemoglobins and the ability to use different rescue treatments. Wondering how one can make that cross-trial inference that maybe one agent might be more affected than another.

Yes. I think if you're -- so let me make a comment on -- which I think is a great opportunity. Anytime a competitor releases data, I think it does a few things. First, I think in this particular case, it reinforces the -- further reinforces the overall HIF-PHI class, okay? But I think it's also an opportunity to highlight why roxadustat and why I'm so encouraged about roxadustat. And keep in mind that roxadustat, as I mentioned, when it comes to hemoglobin in DD, we basically showed statistical superiority versus EPO. Clearly, that's -- and hemoglobin is something that basically translates to transfusion rates, lower transfusion rates, better achievement of hemoglobin target. So I find that to be a very compelling metric. Now that's something that we have shared, which is that we have lower transfusion rates than EPO. Of course, lower transfusion rates in the case of NDD relative to placebo, but that is an outcome that is very important. I also talked about incident dialysis and the data that we have there. Given that, that is a natural decision point, I feel that our data basically puts us in a different category from any therapy at this stage to be able to raise the needs of those patients. So I really like the hand that we have there. It's a hand that is, I believe, is highly differentiated. And now with the data from our competitor, in a certain way, validates that class, but at the same time it, I think, further highlights the elements of differentiation that are meaningful that we basically we have.

Got it. Great. Well, Enrique, we are up against our time. So I want to thank you so much for joining us and sharing your insights on the latest developments at FibroGen. So thank you very much.

Thank you very much, Jason. It's been a pleasure.

All right. Well, with that, have a good day, Enrique. And operator, we can conclude the call.