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

Hello, everyone, and welcome to another great session at the Jefferies Virtual Global Healthcare Conference in London. I am doing this fireside chat from London bridge is here behind me. And Enrique, my good friend at FibroGen, Chief Executive Officer, Enrique Conterno, is there at the headquarters in San Francisco, hard at work in bringing forward roxadustat. I just wanted to turn it over to Enrique and maybe take a step back and ask you an important year, this year, of course, culminated with the potential PDUFA date and then even more important 2021 as you go out and try and execute on a commercial launch.

So I wanted to start by asking you, what are you most focused on here, as we get into the end of the year, certainly, regulatory discussions is one of them. How are you thinking about the evolution of the regulatory discussions and the results, and how you're thinking about preparing for 2021?

Well, first, Michael, great to see you, and thank you very much for the invitation. This is no doubt a very exciting time for FibroGen with the PDUFA date coming up quickly. Now there's a lot of attention, of course, on roxadustat. But not just the regulatory process, but also the commercial preparations in the U.S. because we want to make sure that we can have an outstanding launch. Now you asked about the broader priorities, but clearly, roxadustat is also being developed in 2 additional indications, MDS, in Phase III and CIA in Phase II. We expect beta for CIA in the second half of next year, likely maybe spilling into the first half. So that's also pretty exciting. And clearly, we have the China launch, which is, I would describe it as going extremely well. Moving to our second important asset is pamrevlumab Phase III studies, very much focused on execution on this important indications of high unmet needs in IPF, DMD and LAPC. So important work that we're doing, and we can have a discussion. And finally, I think something that we have not discussed a lot, but we are quite focused right now on reenergizing our research efforts. And I'm very excited about some of the progress that I see us, how we're thinking about it, as you know, we brought in a new Chief Scientific Officer, Percy Carter and excited that he's leading those efforts.

Fantastic. Well, I can't wait till you tease us with a new compound.

Yes, very good.

Very good. All right. Well, before we get to talk about that, we need to make sure you execute on roxadustat first. I don't want to get into the details specifically about the interactions. My question ultimately is, as you get here towards the end of the PDUFA, what -- or how will you help investors out, thinking about the 2 or 3 different scenarios. One of those scenarios is approval with a clean, very, very, very clean broad label. One of those scenarios is approval, but maybe it looks a little more like an EPO label and one of them could be a delay. Things happen. It's COVID, I'm not sure. But talk about those different scenarios. And what are the implications of each one of those?

Yes. Clearly, we have a high level of conviction on the overall submission, the strength of our data, so what I'm going to focus on is basically thinking about really the bookends of maybe what the label will look like. And on one hand, I think you have a label -- and I know there's a lot of focus on the box warning, but our label that doesn't have a box warning. On the other hand, you have basically, on the other bookend, a label that has a box warning that looks like the EPO box warning. There are, of course, a number of scenarios in between. The wording of the box -- of a potential box warning would be important, including what populations are included in that box warning. So clearly, I'm unable to comment on our current interactions with the FDA, but I think the cadence is good. And we expect, quite frankly, approval by the -- or an action by the PDUFA date.

Can I -- that's really important. That's great. And I think that's helpful because actually, I've gotten a lot of investor questions about how it may not just be as simple as black box or no black box. Are you implying that if you go look at different classes, different black boxes, say different things, you could actually have comments in a black box only on a specific indication, but on a different indication because I've actually never really seen that. But help me out, now those -- all those are different things. So I need to -- if there is one. I need to read it and then look at that?

Yes. I think we need to wait, of course, for our particular scenario. I'm not implying that we will have that, but all of those are possibilities. Clearly, I think the -- when we look at our data, we continue to feel that the data basically offers a very favorable risk-benefit profile for patients across the continuum. Now one comment on any details at this stage. But yes, I think key is going to be for us, for us to look at the entire label, if there is a box warning, and that needs to be put into the context. And what is the rest of the label also say. So we of course, as you can imagine, we think about all scenarios from a planning perspective, and now we're prepared for all scenarios and prepared to execute.

Okay. So let me talk about, regardless of what the label says, we have to go about and launch. And can you remind us in the United States first, since this is the country we're talking about. Who takes the lead? Is it -- how does it work? What are your economics? What is your involvement in the things? First of all, talk about that first.

Sure. So clearly, we have a great partner in AstraZeneca that has taken the lead in the United States. FibroGen, I think contributes to the launch efforts in the U.S., with the things that we can do well, which is, of course, providing the rationale behind the science and medical affairs. So for example, when it comes to publications and when it comes to running the Phase IIIb studies, right now, with the LDOs those are things that FibroGen has taken the lead on. So we are excited about our preparations. As you mentioned, I think the economics for FibroGen, we do not -- outside of China, we are fully reimbursed for all of our expenses when it comes to commercial efforts and development efforts. So the economics for us is basically that we are getting a royalty in the low 20s in the U.S.

Yes. All right. So since they will have the commercial sales force. But importantly, how does it work for dialysis? And how does it work for nondialysis? In dialysis, we all know that there's 2 big major players Fresenius, DaVita, if I can believe Fresenius was at our conference. They didn't say anything yet because I don't think it's anything to say yet. But -- and then there's a smaller mom-and-pop type dialysis. Do you need to get contracts at those centers? Are they studying your drug right now as we speak in a study? Would they be ready to go? And could you get contracts pretty quickly? How does that work in the dialysis?

Yes. Clearly, we have 2 very different segments in dialysis, nondialysis, not just the patients, but clearly who we are contracting with are different players, right? As you mentioned, when it comes to dialysis, of course, it's the dialysis organizations. And this segment is highly concentrated. For us, I think one of the key catalysts for the broad use of roxadustat is going to be basically getting reimbursement. And that applies to both dialysis and nondialysis. In the dialysis setting, that catalyst is driven by the event of having TDAPA eligibility, if the roxadustat is eligible for TDAPA and we're going to make efforts to try to submit as soon as we get approval to be able to ask CMS, make the submission and ask for that inclusion of roxadustat into TDAPA. In terms of timing, the way we think about it is, we believe that it is possible, but it's also the earliest date that we could get TDAPA affective for roxa would be April 1 of 2021. I think that's a reasonable date, but it's also the earliest date because the effective date for TDAPA is typically at the start of each quarter. And when it comes to the discussions with LDOs, clearly, we've worked with the large dialysis organization for quite some time. They were part of our Phase III trials. They are conducting Phase IIIb studies as we speak. Basically trying to -- clearly, the roxadustat's efficacy and safety is well documented now. But now they're starting it within their setting, which I think is going to be very helpful. And now clearly, there are discussions, right, when it comes to thinking about the preparation for roxa to come into the market and which includes, of course, also contracting. AstraZeneca really takes the lead on those contracting discussions. FibroGen takes the lead on the discussion when it comes to the Phase IIIb studies. And clearly, we have excellent relationships with the large dialysis organization.

Okay. So you have excellent relationships. They're testing the drug out in their own setting. Now there's trial programs going on. They're studying it to see how it impacts their flow. And they're aware of it. I think there's confusion or head scratching going on because people know that, for example, DaVita has a contract, supply contract, publicly with Amgen, and Fresenius is a large Mircera user. But you feel comfortable that there will be not 100% market share, but say, but there would be deals that can be in place so that you will see revenues there.

Yes. I base my confidence on the strength of that data, right? So if we think about roxadustat, there -- if we just take -- look at the number of patients on dialysis, we have to start that there are a number of those patients in dialysis. Most of them are treated for anemia, but we have about 15%, 20% of those patients that are hyporesponsive, right? So where ESAs are really not working very well. Roxadustat -- and they are in very high doses. roxadustat will be an excellent option there, okay? What about the incident dialysis population, where we basically showed a very significant benefit when it comes to MACE and MACE+. So when we think about those, we believe that roxadustat, this is not a -- has -- is a very important option, I think, for the...

There's 2 populations there that logically makes sense. And the strength of the data alone, which is hyporesponders, which, by the way, we confirm with our own doctor checks that those guys are loss-making for the LDOs, by the way, right? You agree with that. They're loss-making.

Yes. That's right because there are very high doses. The payment is capitated.

Yes, they're losing money on the bundle. And second of all, incident dialysis where there's strong cardiovascular data.

That's right. So this is just to say that we need to create a situation that is going to be a win-win for both the dialysis organization and of course, for the right patients to use roxadustat.

How confident are you that it will get it to TDAPA? I mean is that like that's straightforward like getting fast track or priority review? Or like, is there like a whole bunch of stuff that could happen and that's why, I don't think that's actually a huge breakthrough. Like what do we -- how do you explain that to somebody?

Yes, there's a very clear process how to apply for TDAPA, and we had the discussions with CMS. We think that we're going to be eligible. Of course, there's not a lot of presence for drugs that have gone through this process, which is different, maybe from a breakthrough designations or something like that. But we feel that the process is pretty clear. We think it's straightforward.

Okay. I'm going to go read the documents online and figure this out. Okay. And how is it reimbursed? Like how does that workflow happen? So in the dialysis center, Sally comes in, she's at Fresenius, she used to get treated for the anemia, does the script and the prescription all get done there? Or does she get it at Walgreens? And how does all that work?

Clearly, when it comes to the dialysis organization, you basically have a highly integrated system, right, with important protocols and so forth. The -- one of the things that is important to understand, when we think about TDAPA, first of all, you basically have a system, there is a bundle. And keep in mind that the patient actually has a copay for that bundle of about 20%. TDAPA represents an additional payment, right, to the dialysis organization for the use, in this case, of roxadustat. The patient will also have a copay on TDAPA of 20%.

So I know the bundle is about $250 per treatment. If they want to get roxa, the dialysis company will purchase the bottle. And they will get reimbursed for that bottle using TDAPA.

That is correct. The reimbursement is basically 100% of the ASP price, at the average selling price. And when this is dispensed to the patient, the patient is responsible for 20% of that.

Makes sense. Okay, great. So that's helpful because, again, we're not -- nobody on Wall Street is particularly used to how that works. We're used to getting drugs either at the hospital into Medicare Part B or it's a Medicare Part D, which is at the pharmacy level. So -- okay, that's great. Now how about nondialysis? How is that going to work? How does reimbursement work there? That's not to doubt, all right? Is that different situation. It's COVID, right? You have a nephrologist who's taking care of you. Maybe you just forget the script at the pharmacy. How is that different?

Yes, that is different because those patients basically will be getting their prescriptions, like you said, at the pharmacy, and you have very -- 3 different segments. I expect that in the case of roxadustat, about a little bit of north of 50%, it will be basically Medicare. So Part D, about 30% Commercial and then the rest Medicaid.

Medicaid, yes.

So those patients, yes, they will see their nephrologist. Keep in mind that those nephrologists also are basically part of treating patients with dialysis as well, right? So they have different types of patients, patients that are dialysis dependent and patients that are nondialysis dependent. So the experience on one setting, it's going to complement the other, right? So it's -- and this particular case was going to be important, like I said, reimbursement is key. So we need to make sure that we are -- patients are going to have access. There are many ways that patients can have access, but longer term, clearly, formulary, having a formulary placement, I think, is key. Clearly, Part D works differently from commercial and Medicaid, but I feel that we have a great partner that is going -- has been focusing on thinking about this and try to ensure that patients do have access and that we have the right formulary placement as soon as possible and the position as well for the patient.

Why -- I asked on this, the dynamic is different. Because it's not a bundled stuff, stuff like that. This is up straight for Medicare Part D. It should be no different than a cancer drug like Revlimid, you take at the pharmacy, you take it home. You pay your copay. And if it's commercial, you should be covered and there's a copay. That's just a formulary thing. You got to work to get the formulary contracts. What I worry about is a COVID environment where patients may or may not be coming in as much if they're not on dialysis, right? How often do they see their doctors? Is there an urgency to get them on as quickly as in, or there's probably not going to be swapping, so it's more just -- maybe just talk a little bit about that and if there is -- is there less reason to have a black box there or more? Maybe is this somewhat challenging than dialysis?