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

I'm Paul Choi, and I cover the small and mid-cap biotechnology sector here at Goldman Sachs. It's my pleasure to welcome Enrique Conterno, CEO of FibroGen. We'll do a little Q&A with Enrique here. The team -- management team is also available here in the audience. If along the way, if anybody in the audience has a question, please feel free to raise your hand, and we'll try and get a mic to you. Also, if you want to ask a question anonymously, you can e-mail it to us and we'll read it over the webcast here. So Enrique, maybe I'll let you start with maybe some high-level comments and just kind of the year ahead for FibroGen. You've had from a mix of good news and bad news earlier this year with regard to the clinical front, but you also obviously have some potentially thesis changing events coming up here ahead. So could you maybe just talk about maybe at a high level, how you're thinking about FibroGen in 2023.

Thank you very much for the invitation. Great to be here. Clearly, I think as we think about the year ahead, there's no question we -- all eyes are on the IPF readout. Not only we've highlighted that's our highest conviction trial, but it's also coming very quickly. What we've said -- what we said last week, we sort of stated that this readout should be expected within the next few weeks. And it's such an important readout, not just for FibroGen, I think, but we need to be thinking about the patients of this devastating disease and the opportunity to truly offer a new treatment option for them. We do have additional readouts outside of IPF. In particular, I will highlight in the first half of next year, we have a readout in pancreatic cancer and resectable pancreatic cancer, but it's -- given how near we are to [ seperate ] all eyes are on that. It's probably something that we have not discussed a lot, but we do have a clinical pipeline or a pipeline that is growing. We licensed in antibody-drug conjugates. Recently, that is in Phase I that we expect is going to be coupled with the pet biomarker and then we have 2 additional preclinical products that are expected to enter the clinic within the next 12 months. So lots of fronts for us to talk about, but clearly all eyes on IPF.

Okay. We'll get to IPF for sure, but maybe we can start with the commercial piece because Roxa has been doing well in China. So can you maybe provide us an update on uptake of Roxa in China. You also are partnered with it in Europe as well. And just sort of any color you can provide on how things have changed over the course of this year relative to the COVID environment maybe in years past?

Yes. I think Roxadustas performed, I think, very well in China. The great news for us is that we see the growth that is very significant continuing to happen. So very good growth continued adoption of the product. It is truly becoming the standard of care. So for us is that it's very exciting. Keeping in mind that when we look at our Q1 results, the sales in China by FibroGen and the joint distribution entity, we were basically based on Q1, analyzing north of 250. So it's a product that is becoming larger and with very high growth rates. So I think it's very, very exciting for us. I still believe we are in the earlier innings when it comes to anemia of CKD. There's lots of opportunity. And importantly, we had a positive trial in [ chemo in just anemia ] in China, so we intend to file in China for [ chemo in just anemia ]. So that's exciting because it opens an additional opportunity for us.

Great. maybe we'll talk about CIA in a second, but just in terms of you on the market itself, you talked about it being in the early innings with regard to the CKD anemia launch and just maybe where are the sort of opportunities remaining for additional regions? Or is it more -- do you think about Europe with your other partner as being sort of the expansion driver. Could you maybe elaborate a little bit on that?

Yes. I was really -- when talking about early innings, I was really referring just to China to the China opportunity, and I think it's driven just by -- we have, I think, really good listing across hospitals. We're growing across all regions. It's really just additional adoption and in particular, when it comes to NDD, I think that's where the probably larger opportunity long term is. When it comes to Europe, we are just starting to launch. We've received recently reimbursement in a number of those countries. So what we see is basically very significant growth rates month-to-month, but from a very low base. So we need to see how that's going to develop. But it is promising to see Europe finally starting to move, but we need more data.

Okay. Great. Now you recently had a clinical win with Roxa in CIA. Can you maybe share for us how big is that market opportunity in your mind in China? And then how do you think about the regulatory process there, sort of what are next steps and then potentially commercialization for the CIA market there in China.

Clearly, the opportunity for us is to try to file as quickly as possible. So we're working on that right now. We've -- clearly, the addressable opportunity is going to depend on the exact label that we get. But given the patient population that we studied, we think that peak revenue of about $150 million is something reasonable in terms of what we could get from that indication. It's exciting for us because we've done well in China, and we think that we can capitalize on what we've done already over there.

Okay. Is there an opportunity for indication-specific pricing relative to your current pricing under NRDL or is that probably unlikely in your mind?

No, no. It's typically when a product in China gets an additional indication for that indication to be covered by the NRDL, it would need to be part of that. So there needs to be a formal decision to do that. So we -- that's something that we haven't decided together with AstraZeneca yet. I think ideally, we want to be covered by the end, but we have to look at all of them dynamics.

Okay. Great. Maybe turning to IPF, which is an area, as you mentioned that an event that's coming up. Could you maybe start with characterizing the market landscape and the outlook. And then as you think about the market and sort of the white space potentially for pamrevlumab here, how would you characterize that?

Yes, I think I'd like to think about the market by thinking about how what is the current treatment landscape? And let's focus on the -- in the U.S. because I think it's pretty telling. When we look at the U.S. market, you have about 30,000 patients diagnosed with IPF every single year. Of those 30,000, we see about 10,000 of those patients being treated with antifibrotic. So the question is why are in more patients treated? And there are many reasons why patients are not treated. But clearly, I think at the end, I think there's an assessment made that maybe it's too early to treat with a fibrotic some of those patients, in some cases, the side effect profile that is seen by the physicians. They don't agree that the benefit is going to be important enough because the current treatment do have some issues when it comes to tolerability. And out of the 10,000 patients that are -- let's call the number, round number, 10,000 patients that are treated today about -- only about 5,000 of those remain within therapy 12 months afterwards. So the discontinuation rates tend to be really high and tolerability being the issue while patients do discontinue. So when we think about PAM, I think it's -- we need to be thinking about could PAM expand the treatment rate? I believe so. I believe that patients today that are not -- or physicians that are not utilizing a therapy because of the significant tolerability issues. Are they -- we are a new option for those patients and maybe they will utilize the product now first line for some of those patients. Clearly, we want to make sure that -- and this is data dependent, of course, but we want to make sure that PAM is positioned well first line. But for those patients that discontinue that are motivated to seek treatment and are discontinued because of tolerability issues, we believe that PAM could be a good option for them as well. So we view those as the primary addressable markets for us. And when we look at the numbers, because the adherence rates are -- we expect they're going to be higher with PAM than with the current treatments. We view very significant potential in terms of the outcomes that we can deliver in Rio in the real world for those patients as well as the -- what that could mean in terms of revenue in the IPF.

Great. You spoke about 30 patients -- 30,000 patients in the U.S., marking specifically. But how much of that, I guess, tends to be clinical identification versus perhaps other forms of identification like postmortem or anything like that. Is that number may be underdiagnosed in your mind? Is it -- or is it more just more of a terms of like more reasonable or current market estimates.

Yes, we are looking at those numbers from claims data. So these are actual diagnosed patients, right, the 30,000 patients. Could we see the diagnosis rates go up? I don't know. I'll be honest, I think at this point in time, I think the focus, given that the treatment rate could be so much higher, let's make sure that we focus on that. And -- if we have a product that delivers on the efficacy like we think PAM can has a good tolerability profile. I think that could really be a really important option for patients.

Okay. Great. Maybe speaking -- continuing on the landscape. This has been an area where yourselves and others have increasingly brought assets into the clinic here. And maybe -- can you speak to the growing competitive intensity in IPF and maybe fibrotic diseases more broadly. You're obviously working on other areas with pamrevlumab. But could you maybe just speak about the competitive intensity in that space.

Yes, I think there are -- clearly, there's a pretty significant unmet need, in particular when it comes to IPF. So you see a number of companies with product candidates basically trying to enter the space. There are a number of products. Some of them were in Phase III, but did not work out. Some of them are right now in Phase II entering Phase III. So we do have, I think, I will define the space as not very crowded, right? It's pretty -- not highly competitive from that perspective. It is a difficult disease to treat. But I do like the Phase II data that we have. I think it's -- our data is clearly a 48-week data from a duration perspective. The effect size, I think, is very significant. The other products, all of them have data that is shorter in duration. Not always the data can be extrapolated to 48 weeks. So there are a number of assumptions that are being made. So it's great that patients will have additional -- potentially additional options that people are starting, but they need to show a lot more. Great to have so far.

So maybe just you could recap your prior Phase II PRAISE data for us. And how has that informed your design at a high level for your upcoming ZEPHYRUS-1 and ongoing on ZEPHYRUS-2 studies here.

Very good. The PRAISE data is particularly, I think, instructive because we saw an effect size that is very significant. When it comes to FVC percent predicted or FVC in absolute mls, we basically saw an effect size of about 58% to 60%. So what that means is we basically attenuated the decline in pulmonary function relative to placebo or we declined 58% to 60% less than what placebo decline. Placebo declined around 300 mls and pamrevlumab declined 178 mls less than placebo did. That's a pretty important difference. Clearly, this is a lethal disease. So the opportunity to slow down the progression of this disease is critically important. The PAM was randomized, the study was randomized 1:1. So we basically saw about 100 patients in that study. And in addition to the result that we got on the primary, we also looked at a secondary analysis on disease progression. This is a category analysis where we look at either death or a decline of FVC in percent predictive of more than 10%. And once again, PAM did extremely well. In the case of placebo, you saw about 31% of patients basically either had the a death event or FVC decline in percent practice of more than 10% versus 31% for placebo versus 10 in the case of PAM. And then in addition to that, we did run a number of exploratory analysis, one that I particularly like is looking at the relationship between quantitative lung fibrosis with FVC and once again, we see an important correlation. What I'm trying to basically convey is that it wasn't just the primary, but when we look at the entire picture of our data in Phase II, it is all really fitting very nicely together. And that's why we have a high degree of confidence in our Phase III trial. By the way, the Phase III trial is also looking at data just like in PRAISE at 48 weeks. We are looking at a monotherapy trial, just like PRAISE did. And the dosing is identical to what we basically did in PRAISE. So PRAISE was published in the land set and we're looking forward to having the readout very, very soon. And as I mentioned, coming in a few weeks.

Okay. Great. So since it's coming up, if it's ZEPHYRUS-1 knock on what is positive for you guys. How do you think about what level of detail you guys would provide with your top line results and -- sort of how much granularity would you provide to the market in terms of the data?

Yes. It's -- that's something that we've thought about. Clearly, I think when companies are thinking about releasing data, the companies do look at providing data for investors and also to the medical community and sometimes there's a trade-off that gets made. I think in our case, the way we're thinking about it, we're going to provide enough data for the investor for investors to make -- to have the same level of conviction that we have. So I think we intend to provide significant detail. Whatever detail we have at that time, but we expect to have the primary and the secondaries and some comments on overall safety. And we expect that to be included in the press release, but we also would expect to have an investor call as a result.

Okay. Great. Maybe digging to that a little further. You spoke when you were talking about the current treatment landscape, some of the issues with regard to tolerability as well as patient compliance for a novel therapeutic and IPF, I think from your perspective, what do you think pamrevlumab needs to show here with your ZEPHYRUS-1 data coming up to be viewed positively by the clinical community?

Yes. It's a good question. Clearly, reputation of PRAISE for us, it looks like a home run. I think -- that's -- not only we had a positive study in PRAISE. We have a positive study now in -- with separate one with really good effect size. When we ask physicians about what's expected, I think physicians -- you have to look at that from the perspective of the options that they have today. And because tolerability is such a big issue, they are putting a big premium on that on PAM. But assuming that the profile of PAM is storable as we expect as we've seen in PRAISE-2 and other studies. I think the -- as long as we have something that is clinically and statistically meaningful, we will be, I think, in the game. What's that number? I think it's difficult to say. But clearly, something that is a meaningful attenuation in the reduction of pulmonary function.

Okay. Great. One of the things you mentioned earlier, Enrique was that, for some reason, even when patients are diagnosed, either due to what they heard about drugs or some sort of physician decision, they choose not to go on to standard of care at the time of their initial diagnosis. And so I think a common question you guys and we often get is just thinking about in your ZEPHYRUS-1 study, how to think about the number of patients who have either been on standard of care or decided to not go on standard of care? And how do we think about those patients potentially performing in your study?

Yes, I think it's a really good question. I think that's something that we thought quite a bit because clearly, we need to be thinking about the placebo decline in the study. The -- just to be clear, when we looked at -- when we run PRAISE, only about 10% of patients in place had been exposed to prior standard of care therapy because standard of care had just been launched, so about 10% of patients. We expect the number to be much more balanced in this study. So maybe 50-50, maybe even more naive patients than patients that have been exposed to prior therapy when we think about ZEPHYRUS-1. The question is, okay, those patients have been exposed to prior therapy? Are they going to be declining at the same rate when entering the study or not -- the study is a monotherapy study. We think they are because there's a little bit of a self-selection of patients, patients enter a clinical study because typically, they are not doing well. And by the way, that's what we see in other studies. You look at other studies and you see patients that are either power exposed to therapy, but including patients that are on combination therapy basically declining as fast as patients that are declining on placebo. And we think this is just a self-selection effect of patients that are decided to enter a clinical study. Patients, just to be clear, patients that are entering the study that are entering monotherapy, so they cannot be on standard of care. At the physician discretion, however, their clinical judgment, they -- a physician could decide that at some point in the study, patients should be added to standard of care, of course, the physician, patient, they don't know in which they are, whether in placebo or on the PAM arm, but we expect and we know that there will be some patients where there will be a drop in of the standard of care in one of the arms. We had said about 9 months back, the number was around 10%, but we have said that we will not be updating that number. We don't think that's going to influence the overall outcome of the trial. Keep in mind that many of those patients are added to the stand of care decided late in the study, so not a lot of time for standard of care to work anyway. So we think we're powered well enough to be able to see show that pamrevlumab works.

Okay. Just on a related note, when you think about your top line results, will you talk about patients who did receive drop band therapy? Will you separate that out versus those that didn't? How are you thinking about that maybe with your initial data?

Yes. I honestly, I hadn't thought about that, but I know that's something that might be interesting to the community. We may show that the -- I don't think we'll include that in the press release. I'm speaking here. I need to give this more thought, but it is likely that we will include that in an investor presentation.

Okay. Great. Maybe looking for down the road, if your study is successful here. You've previously stated that you think that PRAISE and ZEPHYRUS-1 could be sufficient to support a regulatory filing, given that there are available treatment options on market, can you maybe walk us through what your thinking is as to why these 2 studies could serve as the basis for a regulatory filing?

Well, I think if we -- I mean I think it's important to look at the results of ZEPHYRUS-1, but let's assume those results are clinically and statistically meaningful. So midst the primary, and I think it's convincing. The secondaries are consistent with the direction of the primary. And then we have an overall good tolerable products, safe product. If those conditions are met, I think our intention would be to engage the FDA for us to go -- to try to submit the product as soon as possible. I would highlight that you have other companies, including Roche that was conducting one study, the study failed, but they were conducting one study or BI that is conducting a 1 study. The reality is we are doing when we're doing 2 studies, those companies clearly saw the 1 study was enough for us to be able to meet that. From the time of approval of Ofev and Esbriet, it's been time now and those studies got approved on the basis of 2 studies. If we have a very convincing ZEPHYRUS-1, we think that, that could be enough. But even if you put us to a standard of a 2 randomized, well-controlled studies, we do have PRAISE. So that makes 2 studies. So I think we have a really good case. Clearly, because we have ZEPHYRUS-2 out there, it's human to think, well, why don't we just let that trial finish, complete, but I don't think that's fair for patients because this is a little disease, this is progressive. So if the data is convincing, I think that we should aim to file and engage the FDA to do so.

But to be fair, at this time Ofev and Esbriet, were filed. There were no approved options on the at the time you are applying potentially in a different situation or different environments.

We are. But clearly, the way I would think about it, it's pretty clear that we're enrolling naive patients, patients that are not being treated, right, or patients that have failed therapy, right? So those -- what -- why are those patients not being treated or have the [ Natal ] therapy. Well, I think it's clearly they needs new treatment option. And we show very convincing result, I think is -- I understand your point, but I think it's -- we are basically looking at some of those patients, patients that are either naive or that have tolerability issues. And given treatment rates today and where they are and given the fact that more than 50% of patients or about 50% of patients discontinue with the first 12 months, it seems to me that new options are needed.

Definitely. Could you maybe speak to what physician commentary has been like as you've been developing pamrevlumab I'm just thinking about placebo-controlled studies versus using a study perhaps down the road with an active comparator? Is that something physicians would like to see down the road? Is ZEPHYRUS-1 a study? And just maybe sort of what your thinking is on that?

Yes. I think the question is whether we could study PAM against an active comparator, I think it's difficult. And it will be difficult for any study because you're looking at study sizes that would be much larger, right? Because now you not only have to show difference versus placebo, but potentially you're doing this so that you can show that your product is going to be maybe superior, right, to an option from an [indiscernible] perspective. But the size of the study is make them feasible from an economic perspective, it will be really, really difficult to do. My sense is physicians are looking for additional options, and they know today that tolerability is a pretty big issue. So having a product with a better profit -- tolerability profile, I think it would offer, I think, a very important option for patients, for physicians. And I think that PAM can offer that excellent efficacy and a tolerability profile that allows it to basically more reliable benefit patients in the real world.

Okay. Great. Maybe looking a little further ahead to your commercialization plan. Could you maybe think about how you're thinking about your launch strategy, maybe even when you would start building out your commercial infrastructure for IPF and just how you think about scaling up should pamrevlumab approved and onto the market here?

Yes. We've been given that some significant thoughts because, clearly, let's assume that we have a positive trial, very convincing, and we file. At that point in time, we need to start thinking about our launch preparations. We've done, I think, excellent work around CM&C so that we are ready from an olfaction perspective. That's critical, I think, for companies because you -- this is something that could take time. And at this point in time, we feel very good about where we are today. From a people resource commercial perspective, I think there are a number of things that we've already done, which is in terms of thinking, analysis, research so that we can understand the landscape and the expectations of payers, physicians, patients. Importantly, of course, the label will also be very informative. But I -- we need to -- as we scale up, we need to be thinking about how do we scale up. For example, I see us scaling up in medical probably sooner maybe than, of course, some of our front-facing the organization in front of the customer. Typically, I think for the organization that is facing the customer, we're talking about self-representatives and a sales organization in the U.S. you want to be a lot closer to an approval and have the confidence that, that's going to happen when doing that. But a lot of the preparation we think about pricing strategy and positioning of the product and how we intend to commercialize the product, all of that will basically be leading up to that. So the -- something important to highlight is that IPF is -- given the needs in the market, we -- our research tells us that we should see uptake that is very fast, which means that it's not really resource intensive from a people perspective. So it's -- for us, I think we can meet the needs of patients and prescribers and also, at the same time, become profitable and cash flow positive very, very quickly.

Okay. Great. Can you maybe also speak to your approach to the international market? It seems like -- I think you're talking largely about your plans for the U.S., but just have you engaged in any partnering discussions for the international market for IPF?

Yes. I think it's -- I think what we've shared is that when it comes to the U.S., we intend to basically pursue that as FibroGen, when it comes to our international markets, we are intending to seek a partner. And there are a lot of partners that are aware of the data, and -- that we intend to have those discussions which they don't have.

Great. We're coming up on time here, but I just want to maybe spend a minute on your non-IPF pipeline. Specifically, you talked about a couple of other things that you've in-licensed and developed and just sort of how you think about maybe the cadence of that progressing over the next year or 2 as the pamrevlumab programs that advance?

Yes. Very good. Yes. So we recently licensing an antibody drug conjugate, call that 446. Basically, product is in Phase I, and we are looking at metastatic castrate-resistant prostate cancer. We are looking at the expression of CD46 and we are developing a pet biomarker to basically enrich the population that we look at in a potential Phase II trial. For us, I think the science is pretty exciting. I think the possibilities are pretty important. We already have some clinical data in Phase I. So we're pretty excited about our ability to continue to develop that product. In addition to this antibody drug conjugate, we have 2 additional products that are -- could be entering the clinic within the first -- within the next year. We target in either Q4 of this year or Q1 of next year. We have a Gal-9 as well as CCR8, most of them monoclonal antibodies cell. And both of them in the immuno-oncology space. So it's exciting to also expand and progress the pipeline and be able to advance that beyond PAM.

Okay. Great. We're out of time here, so we'll have to end it on that note. My thanks to Enrique and FibroGen for joining us. Thank you.

Thank you very much, Paul.