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

Okay. Welcome back, everyone, and thank you for joining us on Day 3 of the 42nd Annual Goldman Sachs Global Healthcare Conference. I'm Paul Choi, and I cover the mid-cap biotechnology sector here at the firm. And our next session will be with FibroGen. Joining us from management is CEO, Enrique Conterno. What we'll do as in prior sessions is we'll turn it over to Enrique for some opening commentary, and then we'll go into Q&A. [Operator Instructions] But otherwise, with that, we'll turn it over to Enrique.

Thank you, Paul, and thank you for the invitation. A few comments on FibroGen. We are, of course, excited about the -- having the outcome with the -- here in the U.S., and the preparations are going well. The outcome is July 15. Also waiting for the regulatory decision in Europe. That's another important milestone for us. And of course, I think, continue to be very bullish about our performance in China with roxadustat. So all eyes in roxa, U.S., Europe, China. But we should not forget pamrevlumab, which is our monoclonal antibody, anti-CTGF, basically pursuing 3 indications in idiopathic pulmonary fibrosis, locally advanced unresectable pancreatic cancer and Duchenne muscular dystrophy. And those trials are enrolling well. We have -- we expect readouts for 2 of those indications in the second half of next year. And finally, something we don't often talk about, but it's our belief that we can bring new product with significant clinical value into the clinic. So we've been working both internally and also looking externally to basically strengthen our overall early pipeline. So I look forward to your questions, Paul.

Okay. Thanks, Enrique, and thanks for joining us. Maybe starting with roxadustat in China, we can start with the commercial piece. And you and your partner provided a recent commercial update on the earnings call. But can you maybe talk a little bit about how it's progressed since your last update? What is market uptake like? And I had a follow-up on that as well.

Yes. It's very exciting to see the performance of roxadustat in China. We commercialized the product with AstraZeneca. We have a 50-50 profit share in China, just to remind everyone. And I think what's exciting is basically looking at the adoption of the product, adoption-driven because we are -- we've been now listed in north of 70% of hospitals that comprise -- sorry, hospitals that comprise 70% of the overall anemia CKD opportunity in China. And then, basically, adoption within those hospitals. Our revenue -- sorry, our net sales to distributors in Q1 of this year was $43.5 million. That's basically quarter 5 after updating reimbursement in China. So very significant uptick for the product. I think one thing probably that is worthwhile highlighting is that when we look at the market dynamics in China, what we basically see is now roxadustat becoming the #1 brand in terms of value in China for anemia of CKD, but importantly, when we look at the rest of the market, ESAs, when we look at the ESAs, we've actually have seen that ESAs growth has actually accelerated since the launch of roxadustat. So all of -- I think that speaks extremely well for the overall health of the overall market. The growth that we're seeing -- and I expect that growth has significant led for not just months, but for quarters and years to come. So very excited about what we basically see there.

Great. Could you maybe dive a little more into where you're seeing the growth and adoption in China so far? Are you seeing it primarily in the dialysis setting, incident dialysis and maybe -- or NDD populations? Just help us understand how the practitioners and clinicians and dialysis centers there are taking a look at adopting roxa?

We do. I think the -- let me first try to break that down for you. Around 65% of the volume we see basically roxadustat being utilized through dialysis centers or dialysis settings. The rest basically is non-dialysis-dependent settings. What is important to highlight is maybe that the use of roxadustat is pretty broad. And if there was a surprise that we've had since we launched in China was basically the uptake in NDD. We know that the potential in NDD long-term is very high. So we expect good growth for many years as we build that market. But what we've seen is basically faster uptick than maybe we were expecting in that particular setting. The areas where we see the product being utilized should not be a surprise. We see basically patients, incident dialysis patients, patients that are hyporesponders to ESAs and in -- most of the growth is, when we look at roxa, I mentioned where our growth is coming, but we look at the overall market, I -- we don't have very definitive data, this acceleration that we see in the overall market, it is because we are seeing basically NDD basically taking off. So I think that's very exciting. And we view that as a very significant long-term opportunity for us.

Great. Maybe one more on the commercial piece here before switching to the regulatory side, which is you talked about the unexpected growth in NDD. But as you take a look -- and you think about the opportunity and how you think about the revenue composition over the longer term. How do you think about that NDD being a portion of your longer-term revenue mix in China versus the dialysis setting?

Yes. What I -- I think what we've said, not just for China, but in general, is that we expect that dialysis would be faster uptick, but we believe that the NDD opportunities significantly larger, meaningfully larger than DD. So we expect that opportunity to be larger over time. Maybe something to -- worth highlighting, Paul, is that China has recently issued guidelines, stand-alone guidelines for anemia of CKD. And roxadustat is front and center on some of those guidelines. So we're pleased with how roxadustat is recommended as part of those new guidelines. But I think what that's telling you is also that is exciting, that's going to basically -- is a reaffirmation of better the decision that health care professionals are making in China to utilize roxadustat more and more often.

Great. Maybe we can pivot now to the U.S. regulatory piece. And I guess, question one is, have you had any subsequent interactions or even at an informal level with the FDA since your last update to the street with your quarterly results? And then I had a couple of follow-up questions.

Yes. Clearly, we are working towards the outcome, and that involves quite a bit of preparation. I believe those preparations are going very well. And as part of that, we have exchanges with the FDA, and it is, I think, in the interest of everyone to ensure that the that we can go into that -- into those meeting extremely well prepared so that the AdCom panel can have the most productive discussion possible in that setting. And yes, we've had productive and good discussion with the FDA in preparation for that.

Great. Has the agency any -- offered any sort of commentary that would strike you as sort of different from the way you guys are thinking about it in any sort of meaningful way? And have they provided any suggestions that maybe -- or commentary that -- versus your thinking on how to approach the AdCom that you would sort of message to the street as being potentially novel or incremental?

No. My -- first, I think we don't comment on the regulatory interactions with the FDA. But clearly, I think the discussions are intended to, yes, look at how -- try to understand how the FDA and how we are interpreting all of the data, what are -- is in our interest to understand where the focus will be. As you know, the FDA will have a briefing book. We are preparing one as well for -- to submit to the FDA, and that's -- so all of that, I think, is going to be important, I think, for the AdCom. But one thing that is -- when it comes to any type of AdCom, it's sometimes difficult to predict the exact topics of discussion with the AdCom because we are bringing AdCom committee member that they have a lot of expertise, and they're bringing that external perspective, external to the FDA. So the interest is to make sure that the briefing books are as clear as possible, and that the discussion can be as productive as possible. But from our perspective, we need to be very well prepared and broadly prepared so that we can address any type of questions that they may come.

Great. A little while back, you provided an update on the longer-term roxa data that you previously presented at Kidney Week 2019 that resulted in some changes in some of the cardiovascular hazard ratios and ranges for roxadustat across the various populations you've studied. And so I guess, as you look at that update as you -- and as the company and regulators have digested that updated data, can you maybe update us on your thinking of what the safety signal is, what is the messaging there? And then as a follow-up to that, has the agency expressed any particular view on what -- how to think about the statistics?

Yes. I think what the data -- what the data shows is -- what the analogy shows is basically the roxadustat is comparable to ESAs to EPO in the DD setting and comparable to placebo in the NDD setting. And I think that's what we basically can say based on how we conducted those studies. Clearly, when it comes to the AdCom, we have to be -- we're very well prepared when it comes to MACE, but we've got to be prepared for any topic that may come and ensure that we're providing all of the appropriate background when it comes to anemia of CKD in order to have the full discussion. We -- you may recall that we shared that we had communicated to the FDA when we made some of those changes, the data had both sets of analysis have been submitted to the FDA that were part of the NDA. So that discussion was a productive one. We shared at that time. And at this point in time, I think we feel good going into the outcome.

Okay. Great. Maybe in terms of your preparations themselves, can you maybe talk to us about what are you doing? Are you doing mock AdComs? What sort of practice runs or preparations are you doing here? And then I had a follow-up to that.

Yes. I think the preparation for an AdCom, I think, is -- tends to be pretty rigorous. I would almost describe it as a bit of a science, but there's some art to it as well. And I think you want to make sure that you are creating the situation that is as comparable to the outcome as possible. So yes, you do a number of mock rehearsals, if you wish, they have a formal feedback, formal briefing books, and you get advice and in some cases, criticism, the intent is to make sure that we can learn from each one of those rehearsals to be prepared as possible for questions that may come. What was helpful for -- towards the understanding, and at the end, making sure that the discussion once again can be as productive as possible. I think it's in everyone's interest.

Great. You brought up something interesting earlier, which is that you said you have to prepare for any type of question. And so I guess, as you and your team and outside consultants, think about what the AdCom could look like. What do you think about key topics and potential vote questions could look like as the AdCom approaches here on July 15?

Yes. Clear, I think it's difficult because I think, as you know, I think those questions would depend on the briefing books, and also on the questions that the FDA is asking the outcome to basically brought on at the end of the day. But I think the expectation, as is in every outcome is that the FDA will be seeking feedback on the benefit risk profile of the product. And I expect this is going to be done for each one of the indications, DD and NDD. We do have to -- when I say we have to prepare broadly, I think it's important because we are -- we might be a little bit closer to the product, and we have to -- while there are going to be briefing books and so forth, those need to be helpful so that the AdCom committee members can have all the background, not just on the product, but on anemia of CKD and ensuring that there is a full picture and a full understanding of that, so that the appropriate assessments and the appropriate discussions can happen.

Great. Maybe taking a bigger picture view, how do you and the company sort of think about the agency's stance on the headset as a class. Especially given the updates on your side as well as the recent NDA acceptance of Akebia's vadadustat not too long ago. And so what does that, from your perspective, say to you about the agency's stance on the class?

I mean, it's -- I'm not sure what I would make of it. I think the FDA tends to be very focused on the data of the sponsor. So there are a number of examples where products from the same class have received very different labels based on their own data. And this is particularly important when the data is -- tends to have the number of patients, as you basically see in cardiovascular study. So when it comes to cardiovascular studies, you basically see the FDA labeling for each particular product to basically be reflective of what those specific trials demonstrate as opposed to thinking about all products are the same. It is not that only the first product in the class gets asked to conduct CV studies, all of them ask and then -- so I've seen the -- the experience that I have is that the FDA tends to be quite focused on the specific data. And I think that's what will carry the day for us, which is, I believe the FDA will focus on the overall roxa data in each DD and NDD as they make their assessment and decision here.

Great. You also earlier brought up an important point, which is that, obviously, roxa has been developed and filed for European filing and the MAA filing is under review here with a potential decision coming up here during the summer. So how do you think you and your partner -- think about that opportunity? And sort of what are the next steps there for a potential commercial launch in the European market?

Yes. Clearly, the -- our partner when it comes to Europe and Japan is Astellas. So they are the sponsor in Europe. I -- the discussions with the regulator are I would describe them as proceeding well. But it is probably a better question for Astellas than for us. What I can share is, I think, maybe just highlight what Astellas has communicated. They recently provided guidance for roxadustat when it comes to fiscal year 2021. They shared that they expected revenues -- net revenues from roxadustat to be and I'm translating from yen here, but about $80 million. And they also provided recently as part of their strategic overview, long-term projections for roxadustat for their territories, Astellas' territories. So this includes Japan, Europe and a few other smaller territories. But the projection that they provided, if I recall correctly, was JPY 50 billion to JPY 100 billion, which you would translate -- I don't know what the exchange rate is today, but at the time I translated that, it was about peak sales somewhere between $450 million and $900 million for those geographies. So we are excited about the opportunity to have these products reach patients in Europe, but really across the world. And you're right, I think that we are expecting, I think, the opinion, I think, any time now.

Great. And could you maybe just sort of broadly remind us of the economics with your partner there, Astellas in those territories?

Yes. We basically have a royalty we share for both of our partners in the low 20% range.

Okay. Great.

So we are fully reimbursed on all development and commercial costs outside of China. I think that's important to mention. In China, where we have a 50-50 profit share, but outside of China, we basically would receive a royalty.

Great. Turning to the commercial side here in the U.S. Can you maybe help us understand what is sort of the state of the union with regard to dialysis here in the market in the U.S. as you think about a potential roxadustat launch over the near-term in the U.S. and just kind of what is the impact from COVID as you're launching potentially in the near term?

Yes. Clearly, honestly, we are extremely encouraged from our learnings in China and how much -- how the fast adoption that we've seen for the product in China. Clearly, the dynamics in the U.S. are different from a payer perspective, and I'll discuss those, but I believe that physician adoption will be basically similar to what we basically see in China with faster adoption maybe in the dialysis setting. And in NDD adoption over time, but once again, the opportunity in NDD is significantly larger over time. Clearly, when it comes to DD, the framework for reimbursement is TDAPA. This is a payment adjustment or an additional payment that would be done that the dialysis organization will receive that would be outside of the dialysis bundle. TDAPA is designed to basically foster innovation. And it had last for a period of 2 years. And our preparation is to ensure that once we receive approval in the U.S. that we can submit for TDAPA eligibility right away. And TDAPA eligibility becomes effective. The first day of a quarter, so that's going to be key, I believe. And that's really the true catalyst for use, I think, in the dialysis setting. When it comes to NDD, I think the reimbursement is a bit different. It's a matter -- the Medicare opportunity is slightly north of 50%. Commercial, maybe about 30%, and then Medicaid, the rest. And in order to ensure that the product can reach patients, we will need to be included in formularies. And clearly, for the NDD setting, that would be extremely important. And I think there are a number of benefits that I think that we can highlight for payers. But once we have that coverage, if you wish, across the different settings, I expect that the decision adoption will be very fast.

Great. I do want to talk about the other parts of the pipeline, but maybe just one more on the commercial piece, which is that clinicians are typically not used to treating patients with ESAs in the NDD setting, it's kind of a novelty there. So how do you think about receptivity and how do you think about driving changes in physician behavior there?

Yes. Clearly, it's 2 things that really matter initially is going to be basically, okay, the label that we have, what is the label saying? But then also the experience -- the initial experience the physicians will have with the product. There are a number of clinical benefits, I think, which I think we've shared before, but I believe, for example, in the dialysis setting, we are going to be utilized in incident dialysis, our patients are starting dialysis, I believe that roxadustat can be the product of choice there and also when it comes to patients that are hyporesponders to ESA. And in NDD, I think for the most part, most patients are not treated, but we have to recognize that outside of all the clinical benefits, I think there are significant limitation for the use of ESAs in that setting, including that patients have to go to physicians' offices to have the product administered. So we view, I think, roxadustat offering significantly more convenience as well in addition to some of the clinical space. That -- I mentioned that because I think I failed to mention that in the past and what I -- what we basically see in China is that, that might be a pretty important engine for growth and to increase treatment rates, which at the end, I think it's going to be key, I think, when we look at the NDD segment.

Okay. Great. Let's spend a little bit of time shifting to pamrevlumab, and you focused on 3 development opportunities and maybe we can start with IPF here. Can you maybe just help us understand what's going on and what sort of the enrollment progress with your 2 ZEPHYRUS studies coming out of COVID here and just sort of perhaps provide an enrollment update for us?

Yes. What we basically have seen is as the COVID situation has improved, and particularly, in the U.S. first, we've seen significant improvements in enrollment across all of our trials. But probably most meaningful when it comes to our ZEPHYRUS IPF trial. I think it's important to remind everyone that when it comes to IPF, the data that we produced in that pamrevlumab showed as part of our Phase II is very meaningful. We view that data as basically showing the meaningful effect size, highest -- largest effect size of any product in IPF, whether they are in the market or in development. So if we were to replicate those type of results, I think that will be incredibly important for patients. We have not provided guidance when it comes to when would we expect a reader for IPF, but we expect to provide guidance very soon. We are seeing improvements in enrollment, in particular, when it comes to U.S. and probably driven by, as I mentioned, the overall COVID situation improving in the U.S., but also because there was a failure of a competing product that has made a number of sites and also patients eligible now for pam. So we are excited about basically what we're seeing. Outside of IPF, we have 2 additional indications that we're pursuing. And both of those are expected to read out in the second half of next year. And they are -- we are seeing LELANTOS-1 enrolling well. This is the trial for DMD. And then we're seeing LAPIS, the trial we are conducting for locally advanced and resectable pancreatic cancer, also enrolling very well. So we are excited about having those readouts coming in the second half of next year.

Great. Specifically, perhaps with regard to the pancreatic trial, can you maybe just remind us what is considered a successful result with regard to the endpoint and respectability? And just as you mentioned, timing would be second half of next year, potentially. And how is that data contextualized in the setting of the current parent treatment paradigm?

Yes. Clearly, I think they are very, as you know, very limited options when it comes to unresectable pancreatic cancer. So having a positive trial in -- for that population will be huge. It's a huge unmet need. It's -- when we -- you're correct, when we're thinking about the readout that we will have is a readout based on certain number of resection events. And clearly, I think we need to see a separation, important separation there. The -- based on that readout, we expect to, assuming it's positive, we expect to ask for an accelerated approval and have the discussion with the FDA. Of course, they will be looking also at the overall trend when it comes to overall survival and so forth. But clearly, if there is an important difference when it comes to resection, I think we're going to feel highly confident about the overall benefit. So that's key. I think when it comes to overall survival, I think we will have to wait longer for that to finally read out.

Okay. Great. That makes sense. That will take a little longer. Maybe just turning back to IPF for a moment. And you did highlight a competitive failure, but there is still some competitive intensity in the space as well as establish incumbent drugs such as Esbriet. And so I guess, how do you think about the commercial opportunity there? The drugs that are approved are sort of growing at a multibillion-dollar rate here. And so I guess, is this an opportunity to grow the pie collectively? Or do you maybe think about it more as a share gain sort of a potential market for pamrevlumab here?

Yes. Keep in mind that the needs in IPF are still very significant. And of course, I think we'll have to rely on the data. But assuming that the data, we can replicate the data from our Phase II trial. I believe that pamrevlumab will be used in a very meaningful way as an option to treat patients on -- with IPF. You keep in mind that the current therapies sometimes are not well tolerated. I estimate that maybe about half of the patients, in some cases, are -- don't tolerate those therapy well and need to look for some other options as well. I think what's important about pam and I think what we showed, I think, in the Phase II trial is not just the clinical efficacy that we typically look at. But also, the reason to believe, because, as you know, the first time that really a product has shown from an imaging perspective, basically, I think the improvement when it comes to fibrosis, right? So that to me, I think, is very significant. And clearly, I think it could be a huge benefit. We need to wait for those Phase III trials to read out. But it is -- I have a high level of conviction when it comes to pamrevlumab in IPF and the commercial opportunity, as you just mentioned, I think it's very significant.

Great. While obviously, people are focused on development of roxa for CKD, you are also pursuing development of it in other indications and opportunities. Namely, you're in a late-stage trial for evaluating roxa in MDS. Can you maybe, first, provide us an update on how that trial is going? And then sort of secondly, there is a drug approved from Bristol and Acceleron in this area of anemia for MDS, and just how you think your data stacks up versus REBLOZYL here?

Yes. We are -- as you well mentioned, we are pursuing roxadustat also in MDS. Importantly, that we are in a Phase III trial and the readout for that trial is expected in the first half of next year. So that's coming soon. We are just, for a matter of being complete. We're also, as you know, pursuing chemo-induced anemia and we expect data in the second half of this year for that Phase II trial. Both opportunities are important to us. Clearly, when it comes to MDS, I think we see, I think, the significant success that luspa is having and we need to wait for a readout, but I think the expectation that we have is that our data is going to be somewhat comparable to the data that luspa has shown. As you know, we're starting our product in a broader population than what luspa initially targeted their trials at. And when it comes to chemo-induced anemia, we view that, that opportunity as very significant. In fact, the way that we think about it is CKD being the largest opportunity but chemo-induced anemia being maybe an opportunity that could be about 80% of the opportunity that we see when it comes to anemia CKD, but MDS being a smaller opportunity than that. Clearly, the product that you made reference to is priced differently than an anemia CKD opportunity. I know you've asked me in the past, how would we think about pricing of the product and so forth, that's something that we need to be -- that we need to work through. Of course, it's going to be data dependent. But we need to think about how do we ensure that we can capture the value of the product at the end is delivering. And -- but that sometimes it's difficult to do across indications where the pricing of that is very, very different. So that's some work for us to continue to do. I think what's -- from a commercial perspective, though, what's in front of us is right now, ensuring that we are ready to launch roxadustat across the world as the regulatory decisions in Europe and U.S. are coming very shortly.

Great. Thanks for that. We're coming up on time, Enrique, but I did want to go back to something you mentioned earlier, which is you're talking about, at some point in the not-too-distant future, talking to investors about your next wave of development efforts here. And so could you maybe sort of paint some broad strokes as to where FibroGen might be heading in terms of its next wave of development? You obviously have a lot going on with your current pipeline, but sort of what is the next stage, potentially, of FibroGen look like here?

Yes. Clearly, we need to make sure that first, we leverage the strength of the size that FibroGen has when it comes to both HIF biology and CTGF biology. And it is pretty clear that the HIF biology is quite involved and could have a number of different applications. So we need to make sure that we leverage the opportunities that we have. Throughout the last 1.5 years, we've done a full assessment of all the programs that we have here at FibroGen, and we've been pretty disciplined to make sure that we are investing on the product that have the most merit. And that we believe have likelihood of truly bringing innovation to patients. So that has happened. In addition to our internal efforts, we are also looking externally at opportunities. Now we've been pretty diligent. We have not done a transaction as you know, I think we need to have conviction around the science and the clinical opportunity, but also about making sure that we can create value. So we've looked at a number of things, but we've been disciplined in terms of our assessment and so forth, but you should not be surprised if at some point in time, we bring additional assets. And we are thinking, in particular, in that preclinical space and for signs that we have significant conviction in areas where we think we can move quickly and create a lot of value.

Great. We're just about up on time here, Enrique. So we'll have to end it on that note. Thanks to you and FibroGen for joining us today.

Thank you very much, Paul. Appreciate the invitation.

Yes. Thanks.

Thanks.