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

Good morning, and welcome to the 2020 Annual Meeting of Stockholders for FibroGen, Inc. I would now like to turn the conference over to Enrique Conterno, the CEO and Director of FibroGen. Please go ahead.

Thank you and good morning. I'm very happy to welcome everyone to the FibroGen 2020 Annual Meeting of Stockholders. At the request of the Chairperson of our Board, Jim Schoeneck, I will act as Chairman of this meeting. Normally, our annual meetings are held in person, but due to the COVID-19 pandemic, this year's annual stockholder meeting is being held online for the first time in a virtual telecast format to protect the health and well-being of our stockholders, Board of Directors and employees. Since this is the first virtual annual meeting we have conducted, please bear with us if we encounter any technical issues. Before I call the meeting to order, I would like to take a moment to recognize and thank Dr. Toshinari Tamura for serving on our Board of Directors for 11 years. Dr. Tamura joined the Board following his tenure as a Senior Executive at Astellas, where he was instrumental in developing and managing the partnership with FibroGen. And he has provided outstanding counsel and guidance as a Director of FibroGen, in addition to his invaluable service as a member of our Scientific Advisory Board. As a partner, as a director and as an adviser, Dr. Tamura's contributions to FibroGen have been significant, and we are deeply appreciative. We thank him and wish him well. I would like to introduce the members of the Board and Executive Committee management, who are with us today. All of our members of the Board are here today, Jim Schoeneck, Chairman of the Board; Suzanne Blaug, Jeffrey Edwards; Jeffrey Henderson; Dr. Maykin Ho, Thomas Kearns Jr., Dr. Kalevi Kurkijärvi, Gerald Lema, Rory Riggs; and Dr. Roberto Pedro Rosenkranz. The other officers of FibroGen here today are Pat Cotroneo, Chief Financial Officer; Rod Fuhriman, Vice President and Controller; and Michael Tung, Vice President, Investor Relations and Corporate Strategy. Please let me also introduce Michael Lowenstein, Chief Legal Officer, who will act as secretary and inspector of elections of this meeting. I would also like to introduce Greg Vlahos of PricewaterhouseCoopers, FibroGen's auditors, who is available to respond to appropriate questions. Before turning to the formal business of the meeting, I would also like to mention some procedural matters that are different this year due to the online format of the stockholder meeting. First, there is an agenda outlining the components of this meeting, which should be visible in the top right corner of the online portal for this meeting. Second, the stockholders of FibroGen as of April 9, 2020, record date, are able to vote during this meeting, until we close the polls following the presentation of the proposals. You may vote by clicking on the Vote Here button on the bottom-right portion of the website page for this meeting. If a stockholder has already voted online by telephone or mailing a physical proxy card, voting at this meeting is not necessary. However, a vote submitted at this meeting will supersede an earlier vote. Third, questions pertaining to the business of this meeting may be submitted by stockholders during the meeting in the Ask a Question Box, on bottom-left portion on the online portal for this meeting. [Operator Instructions] Fourth, we are recording this meeting, and you'll be able to replay the recording for 30 days from the website page for this meeting. Please wait a day or so after this meeting for the recording to be uploaded. The meeting is now -- the time is now 8:06 Pacific time on Thursday, June 4, 2020, and meeting will now officially come to order. We propose to proceed with a formal business of the meeting as set forth in your notice of annual meeting and proxy statements, and we will address questions pertaining to the business of today's meeting that are submitted through the online portal for this meeting. After the formal part of the meeting, I will give a brief update presentation on the company. Will the secretary please report, at this time, with respect to the mailing of the notice of the meeting and the stockholders' list.

I have at this meeting a complete list of the stockholders of record of FibroGen's common stock on April 9, 2020, the record date for this meeting, and a list of the registered holders is available on the virtual meeting website. I also have with me an affidavit certifying that on or about April 23, 2020, a notice of Annual Meeting of Stockholders of FibroGen was sent to all stockholders of record as of the close of business on April 9, 2020.

Mr. Lowenstein has been appointed by the Board to act as inspector of elections at this meeting and has taken and subscribed the customary oath of office to execute his duties with strict impartiality, which will be filed with the records of the meeting. His function is to decide upon the qualifications of voters, accept their votes and to tally the final votes. Will the secretary please report at this time with respect to the existence of a quorum?

Proxies have been received for 78,413,546 of the 89,068,759 shares of common stock outstanding on the record date, which represents approximately 88.03% of the total number of outstanding shares. This constitutes a quorum for the meeting today, and we may now carry out the official business of the meeting.

Very good. We will now proceed with the formal business of this meeting. There are 3 proposals to be considered by the stockholders at this meeting. The first item of business today is the election of our 4 Class III Director nominees, Thomas Kearns, Dr. Kalevi Kurkijärvi, Gerald Lema and myself, to the Board to hold office until the 2023 Annual Meeting of Stockholders or until their successors are elected. The second item of business today is the approval on an advisory basis of the compensation of FibroGen's named executive officers as disclosed in the company's 2020 proxy statement. The third item of business today the ratification of the selection of PricewaterhouseCoopers by the Audit Committee of the Board of Directors as the independent registered public accounting firm of FibroGen for the year ending December 31, 2020. That was the final proposal for today's meeting. The secretary will now describe the voting procedures.

Each share of common stock is entitled to 1 vote. Voting is by proxy, telephone and mail prior to the annual meeting and by proxy online at www.virtualshareholdermeeting.com/fgen2020 during the annual meeting. You do not need to vote on the virtual meeting website if you have already voted your proxy online, by telephone or by mail. The time is now 8:11 and the polls are now closed for voting. My report as inspector of elections covering the proposals presented at this meeting is as follows: the proposal to elect our Class III Director nominees, Enrique Conterno, Thomas F. Kearns Jr., Dr. Kalevi Kurkijärvi and Gerald Lema to the Board, is carried with each director receiving the votes of the holders of at least 94.5% of the shares voting. The proposal to approve, on an advisory basis, the compensation of FibroGen's named Executive Officers as disclosed in the company's 2020 proxy statement has passed with 63,834,655 voting in favor; 816,731, opposed; and 127,652 abstaining. The selection of PricewaterhouseCoopers by the Audit Committee of the Board of Directors as the independent registered public accounting firm of FibroGen for the year ending December 31, 2020, has been ratified with 77,823,779 voting in favor; 308,758, opposed; and 281,009, abstaining. We expect to report our preliminary voting results, or if available to us on a timely basis, our final voting results on a current report on Form 8-K to be filed with the SEC within 4 business days after the end of this meeting. If not earlier reported, we expect to report our final voting results in an amendment to our Form 8-K within 4 business days after the final results are known to us.

This concludes the formal portion of today's meeting. We now adjourn the meeting before proceeding to the corporate presentation. So I would like to wrap today's meeting with a brief presentation about company business. I would like to remind everyone that this presentation contains forward-looking statements that involve substantial risks and uncertainties. Including those described in the Risk Factors section of our most recent quarterly report on Form 10-Q. Let's start with a brief company overview. First, it is important to reinforce our commitment to our mission, developing innovative, first-in-class medicine for the treatment of chronic and life-threatening or debilitating conditions. And our goal is to deliver value to both patients and shareholders. We have established 3 broad goals: first, ensuring the regulatory and commercial success of roxadustat, a transformational medicine in anemia therapy, first applied to treatments of patients with chronic kidney disease with significant potential for expansion into treatment of other anemias. Second, accelerating the development of pamrevlumab in our 3 high-value indications of idiopathic pulmonary fibrosis, locally advanced and resectable pancreatic cancer and Duchenne muscular dystrophy. And third, reenergizing our research agenda by delivering on our unique scientific expertise of both hypoxia-inducible factor, or HIF, and connective tissue growth factor, or CTGF biology to create a rich and broad pipeline of next-generation drug candidates. Our financial position is strong with approximately $600 million in cash at the end of the first quarter. We have a total of $375 million in anticipated milestones expected through mid-2021, including the $130 million in milestone for the European filing we just earned, plus $245 million of milestones on U.S. and EU approvals and first commercial sale. Based on our current forecast, we expect our estimated 2020 ending cash to be in the range of $720 million to $730 million, and we believe we're well financed for years to come. Let me begin with roxadustat's first-in-class product program. In anemia associated with chronic kidney disease, or CKD, roxadustat was first launched in China. I will cover this exciting launch in more detail later in the presentation. Roxadustat has also been launched in Japan for the treatment of dialysis-dependent patients, and the supplemental new drug application for non-dialysis-dependent patient was submitted in January. In the U.S., the FDA is actively reviewing our roxadustat new drug application for both dialysis-dependent and non-dialysis-dependent patients and has set a PDUFA date of December 20, 2020. In May, the roxadustat marketing authorization application for both dialysis-dependent and non-dialysis-dependent patients was accepted for review by the European Medicines Agency. Finally, there have been additional roxadustat submissions in a number of countries, including Canada, Mexico, Australia and South Korea, to name a few. Beyond chronic kidney disease, our vision is for roxadustat to become the standard of care for anemia broadly. We continue to develop roxadustat for the treatment of anemia associated with myelodysplastic syndrome, or MDS, which is in Phase III, and in chemotherapy-induced anemia, or CIA, which is in Phase II. Moving now to pamrevlumab, our first-in-class antibody that inhibits the activity of connective tissue growth factor, or CTGF, a common factor in fibrotic and proliferative disorders. First, on our important IPF program, given the recent COVID-19 pandemic, we had previously announced a pause in the enrollment of our ZEPHYRUS Phase III trial to ensure patient safety in this vulnerable population with compromised lung function. Working closely with clinical investigators of sites, we have now restarted enrollment of ZEPHYRUS and are on track to initiate ZEPHYRUS 2, our second pivotal Phase III trial in IPF later this year. LAPIS, our ongoing Phase III trial in locally advanced and resectable pancreatic cancer, or LAPC, continues to enroll. Finally, we continue to prepare to initiate a Phase III trial, LELANTOS, evaluating pamrevlumab as a treatment for Duchenne muscular dystrophy, or DMD, in the third quarter of 2020. As you can see from this slide, FibroGen has a robust late-stage pipeline. We are committed to accelerate in the development and rates of clinical trial enrollment across all of our programs. One of the areas that I have been impressed with joining FibroGen is the level of understanding that we have when it comes to both HIF and CTGF factor biology. If biology is involved in a number of different critical metabolic and regulatory processes in the body and provides unique opportunities to target a variety of diseases. Similarly, there are multiple potential application for CTGF biology in fibrosis and oncology. FibroGen has one of, if not the largest, libraries of HIF and CTGF compounds allowing us to potentially target a plethora of therapeutic patients. When speaking about research, the aim here is very clear. It is to develop new drug candidates to ensure and provide a sustainable stream of innovation based on these 2 scientific platforms. We will be providing more details on our earlier research programs, scientific agenda and development time lines in the second half of this year. Now I would like to review roxadustat's highly differentiated efficacy. Roxadustat is the only HIF prolyl hydroxylase inhibitor to date to demonstrate superior efficacy versus epoetin alfa and placebo in the dialysis-dependent and non-dialysis-dependent patient populations' perspective. There is a direct correlation between hemoglobin level and the rate of red blood cells transfusion. And roxadustat has demonstrated a statistically significant reduction, the risk of transfusion in both that the dialysis-dependent and non-dialysis-dependent patient populations. Clinical outcomes are extremely relevant to patients, physicians and payers. Additional benefits of roxadustat in the dialysis patient population include the fact that patients on roxadustat require less IV iron and roxadustat is effective in treating patients with inflammation. Importantly, CV safety was demonstrated across all studied populations. Non-dialysis-dependent, incident dialysis and dialysis dependent. Today, I'd like to highlight the incident dialysis patient population. Let's start first with some definitions. Incident dialysis patients are those patients who are within 4 months of initiating dialysis for the first time. Time to -- the first major adverse cardiovascular event, or MACE, is a composite endpoints for all-cause mortality, myocardial infarction and stroke. And time to first MACE+ is a composite endpoint, which includes MACE events as well as unstable angina and heart failure requiring hospitalization. In incident dialysis patients, roxadustat reduced risk of major adverse cardiovascular events or MACE by 30%. And reduce the risk of MACE+ by 34% compared to epoetin alfa. Both results were statistically significant. There was also a trend towards lower all-cause mortality relative to epoetin alfa. Roxadustat clearly provides a large clinical benefit in the incident dialysis patient population, and we believe this is a natural decision point for health care professional when selecting which therapeutic agent will be utilized in the treatment of anemia. This is highly relevant. As in the U.S., 86% of dialysis patients do not start today anemia therapy until the incident dialysis period. Said another way, only 14% of patients have been exposed to an ESA in the 12 months prior to initiating dialysis. Some of you may have heard the term pipeline in a product. Next slide, please. And I think this slide illustrates the different anemias in which roxadustat could potentially play a role. We're well on our way to addressing the anemia of chronic kidney disease opportunity. But anemia associated with secondary chronic kidney disease, cancer and inflammation are all large unmet medical needs. We and our partners are committed to making roxadustat the standard of care when treating anemia regardless of the etiology of the disease, and this provides a good transition to the next slide. FibroGen has in place 2 important roxadustat partnerships, 1 with AstraZeneca and 1 with Astellas. As of the end of the first quarter of 2020, FibroGen had received over $1 billion total from these 2 partners since the start of the partnerships, made up of approximately $750 million in upfront payments and approximately $250 million in development and regulatory milestones. Still to come are approximately $1.5 billion in outstanding potential milestones, $375 million of which are expected by mid-2021. This $375 million in near-term milestones can be broken down into $130 million on EMA submission, which we have just earned. And $245 million on U.S. and EU approvals and first commercial sale. In addition, we received our royalty and our transfer price in the low to mid-20% range in the U.S., Europe and rest of the world territories, except in China, where there is a 50-50 profit split. Finally, we received full partner reimbursement for both the development and commercialization of roxadustat in all geographies, except in China. Where we share these expenses 50-50 with AstraZeneca. Returning to China. As you know, the first regulatory approval for roxadustat was in China and roxadustat was included in the national drug reimbursement list, or NRDL, which went into effect at the beginning of the year. The launch is going very well. And in the first quarter of 2020, we reported $5 million in net roxadustat revenues despite much of the country being locked down due to COVID-19. A key focus in China has been and continues to be expanding hospital listings, so the roxadustat can be widely prescribed. And the hospital where we are listed as of the end of Q1 represent 30% of the CKD anemia market opportunity, which is great progress. As we stand here today, we have seen a steady return to a new normal in China, and we expect a meaningful ramp in China roxadustat net revenues quarter-on-quarter. China is the largest -- next slide, China is the largest dialysis market in the world. And there is an estimated 120 million people in China living with chronic kidney disease. In 2017, there was an estimated 600,000 patients in China on dialysis, but this patient population continues to grow rapidly. In addition, there are an estimated 1, up to 2 million dialysis stage patients who are not yet receiving dialysis treatment. We have seen meaningful adoption of roxadustat across a wide variety of patients segments and settings, including incident dialysis, stable dialysis, home dialysis, peritoneal dialysis and non-dialysis-dependent patients. This broad utilization is important because it informs us as to the different ways for roxadustat to potentially grow. The launch in China is going well, and we believe it has positive implications and read-through for the rest of the world. It gives us a lot of confidence for the role of roxadustat in both the non-dialysis-dependent and the dialysis-dependent patient populations. Coming back to pamrevlumab. We are implementing a comprehensive plan to accelerate development across the 3 indications of idiopathic pulmonary fibrosis, locally advanced and resectable pancreatic cancer and Duchenne muscular dystrophy, once the situation with COVID-19 improves. Pivotal studies in all 3 indications will be enrolling this year, and we intend to give a more fulsome update on clinical trial status and time lines in the second half of this year. We also recently announced that we are planning clinical trials of pamrevlumab in the treatment of COVID-19. Given our expertise in CTGF biology and its potential application in lung disease, we have a unique approach with pamrevlumab in the treatment of patients suffering from severe pulmonary sequelae of the virus -- of coronavirus. These trials will determine if pamrevlumab treatment of hospitalized COVID-19 patients improves patient outcomes, both during the acute phase of infection and longer term. Finally, these are upcoming -- these are the upcoming milestones for the remainder of the year. We look forward to publishing additional roxadustat data from our Phase III studies, including post analysis, and are expecting roxadustat approval in the U.S. by year-end. Thank you very much for joining us for the meeting and for this brief presentation. Thank you.

Ladies and gentlemen, this does conclude the program, and you may all disconnect. Everyone, have a great day.