FibroGen, Inc.FGENNASDAQ
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Operator: Hello, and thank you for standing by. Welcome to FibroGen Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to Gaia Shamis. You may begin.
Gaia Vasiliver-Shamis: Thank you, [ Twanda ]. Good afternoon, everyone, and thank you for joining us today to discuss FibroGen's First Quarter 2025 Financial and Business Results. I'm Gaia Shamis from LifeSci Advisors. Joining me on today's call are Thane Wettig, Chief Executive Officer; and David DeLucia, Chief Financial Officer. Following the prepared remarks, we will open the call to your questions. I would like to remind you that remarks made on today's call include forward-looking statements about FibroGen. Such statements may include, but are not limited to, collaborations with AstraZeneca and Astellas, financial guidance, the initiation, enrollment, design, conduct and results of clinical trials, regulatory strategies and potential regulatory results, research and development activities, commercial results and results of operations, risks related to our business and certain other business matters. Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in that statement. A more complete description of these and other material risks can be found in FibroGen's filings with the SEC, including our most recent Form 10-K and Form 10-Q. FibroGen does not undertake any obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The press release reporting the company's financial results and business update and a webcast of today's conference call can be found on the Investors section of FibroGen's website at www.fibrogen.com. With that, I would like to turn the call over to CEO, Thane Wettig. The?
Thane Wettig: Thank you, Gaia. Good afternoon, everyone, and welcome to our third quarter 2025 earnings call. On today's call, I will provide an update on our ongoing efforts with a focus on our 3 main priorities: the completion of the sale of FibroGen China, the continued progress with our lead asset, FG-3246, a potential first-in-class antibody drug conjugate targeting CD46 and its companion PET imaging agent in metastatic castration-resistant prostate cancer and the path forward for roxadustat as a potential treatment for anemia due to lower-risk myelodysplastic syndromes. Then David DeLucia, our CFO, will review the financials, after which we will open the call for your questions. On Slide 3, I would like to start with the sale of FibroGen China to AstraZeneca that we recently completed for approximately $220 million. This was a truly transformative transaction that provided us with the most efficient means to access the company's cash held in China, extending our cash runway into 2028. Following the transaction, we successfully paid off the term loan facility with Morgan Stanley Tactical value. Second, we continue to progress FG-3246 and FG-3180 in metastatic castration-resistant prostate cancer, or mCRPC, and initiated the Phase II monotherapy trial of FG-3246 and FG-3180 earlier this quarter. Additionally, we expect the top line results from the investigator-sponsored trial of FG-3246 in combination with enzalutamide in mCRPC to be presented at a medical conference in the first quarter of 2026. Third, as we have previously stated, we had a successful Type C meeting with the FDA in July, providing us with a clear regulatory path forward for roxadustat. We remain on track to submit the Phase III trial protocol for roxadustat for the treatment of lower-risk myelodysplastic syndromes in patients with high transfusion burden later this quarter. We are confident that with our mid- and late-stage assets, simplified capital structure and upcoming near-term catalysts across both clinical programs, we are well positioned to advance meaningful therapeutic options for patients and significant value for shareholders. I will now provide a brief overview of our FG-3246 and FG-3180 programs in mCRPC. Slide 5 summarizes the high unmet need in late-stage prostate cancer. Approximately 290,000 men are diagnosed with prostate cancer each year in the U.S. with about 65,000 drug-treatable patients where the cancer has metastasized and become castrate resistant. This group of patients has a grim 5-year survival rate of approximately 30%, underscoring the significant opportunity for new life-extending treatments. We believe that FG-3246 could be this new treatment option and estimate the total addressable market to be well over $5 billion annually. On Slide 6, we highlight the novelty of CD46, a tumor-selective target that has several distinguishing features. First, CD46 is upregulated during tumor genesis and helps tumors evade complement-dependent cytotoxicity. Second, its expression is also upregulated in the progression from localized castration-sensitive prostate cancer to metastatic castration-resistant prostate cancer and further overexpressed following treatment with androgen signaling inhibitors. Notably, CD46 is highly expressed in mCRPC tissues with lower interpatient variability and higher median expression compared with PSMA, making it an attractive therapeutic target. Turning to Slide 7. FG-3246 is our potential first-in-class ADC in development for mCRPC. The ADC combines the YS5 antibody with an MMAE payload to specifically target the tumor selective epitope of CD46. YS5 is a fully human IgG1 monoclonal antibody that was engineered to specifically target the tumor selective epitope of CD46 whose expression is limited in normal tissue. FG-3246 represents an androgen receptor agnostic approach, clinically differentiating it from other prostate cancer treatments currently in development, many of which target PSMA. The companion PET imaging agent, FG-3180, utilizes the same YS5 targeting antibody as FG-3246 and is also under clinical development. We believe that having a patient selection biomarker would not only allow us to better enrich the patient population in a future Phase III trial, it could also enable differentiation of FG-3246 in the prostate cancer treatment paradigm. In addition, FG-3180 could represent an important commercial opportunity as a companion diagnostic to FG-3246, similar to the existing PSMA PET agents. Slide 8 recaps the top line results from the 2 FG-3246 clinical trials to date. On the left side, we highlight the Phase I monotherapy study, where a median radiographic progression-free survival of 8.7 months was observed in patients with mCRPC that were heavily pretreated and were not biomarker selected. PSA reductions of greater than 50% were achieved in 36% of these patients. On the right, we highlight the previously reported preliminary efficacy data from the Phase Ib portion of the investigator-sponsored combination study with enzalutamide which demonstrated a preliminary estimate of 10.2 months of radiographic progression-free survival with PSA declines observed in 71% of evaluable patients. The top line results from the IST are expected to be presented at a medical conference in the first quarter of 2026. Together, these results highlight what we believe is compelling clinical activity with FG-3246 with competitive rPFS results compared to other approved and investigational treatments in both the monotherapy and combination settings. Moving to Slide 9. Based on the Phase I monotherapy results, we initiated the FG-3246 Phase II monotherapy dose optimization trial in September. We plan to enroll 75 patients in the post-ARPI pre-chemo setting across 3 dose levels to determine the optimal dose for Phase III based on efficacy, safety and PK parameters. It is important to note that FG-3180 will be an integral part of the study as we seek to demonstrate the correlation between CD46 expression and response to the ADC in this all-comers population. One other important design element is the use of G-CSF as primary prophylaxis to mitigate grade 3 or greater neutropenia commonly seen with MMAE payloads and also experienced in the Phase I monotherapy trial. The addition of G-CSF is designed to reduce dose interruptions and downward adjustments and may enable a better tolerated and more consistent treatment with the ADC. An interim analysis of the Phase II trial is planned for the second half of 2026 and will include efficacy, safety, PK and exposure response data that will be reported as they become available given the open-label design of the trial. On Slide 10, I'd like to highlight 3 important steps we have taken with the design of the Phase II monotherapy trial with the aim of building on the 8.7 months of rPFS demonstrated in the Phase I monotherapy trial. First, leveraging the preliminary evidence of an exposure response relationship, the Phase II study will use 3 of the highest doses from the Phase I dose escalation and expansion study. Second, primary prophylaxis with G-CSF will be utilized to potentially mitigate neutropenia, which could enable more consistent exposure to the ADC with fewer dose interruptions or adjustments early in the course of treatment. This could consequently extend the duration of therapy and potentially enhance the efficacy of the ADC. Third, enrolling healthier patients in earlier lines of therapy versus the 5 median lines of therapy in the Phase I trial. Together, we believe that these design elements have the potential to improve upon the Phase I results and achieve an rPFS of 10 months or greater, which we believe is the benchmark for commercial competitiveness. Slide 11 shows our long-term development strategy for FG-3246 and FG-3180, which provides us with important optionality in prostate cancer. We have a well-designed Phase II monotherapy trial in the post-ARPI pre-chemo setting in mCRPC to attempt to further build upon the 8.7 months of rPFS demonstrated in the Phase I monotherapy study. In addition, the Phase II study will explore the correlation between CD46 expression and response to the ADC, potentially validating FG-3180 as a predictive patient selection biomarker in future studies. We are confident that our development pathway for FG-3246 unlocks sequential or parallel registrational pathways as FG-3246 will be evaluated in multiple lines of therapy in monotherapy and/or in combination with an ARPI and in an all-comers population or patients with high expression of CD46. Slide 12 highlights the recent and upcoming catalysts for the FG-3246 and the FG-3180 program. Looking ahead, we expect the top line results from the IST of FG-3246 in combination with enzalutamide to be presented at a medical conference in the first quarter of 2026. With the recent initiation of the Phase II monotherapy trial, we expect to report the interim results in the second half of 2026. To summarize, on Slide 13, FG-3246 targets a novel epitope on prostate cancer cells with first-in-class potential, given there are no other CD46 targeted projects in clinical development. Targeting CD46 with FG-3246 has already demonstrated promising early efficacy signals with an acceptable safety profile, both in monotherapy and combination settings. We are excited for the upcoming milestones and look forward to updating you as the program progresses. Turning now to roxadustat. Slide 15 highlights the unmet need and the potential for roxadustat in the approximately 49,000 patients with anemia associated with lower-risk MDS in the U.S. alone. Current treatments are effective in less than 50% of patients. With no oral options currently on the market or in late-stage development, a significant opportunity exists to offer a potential new treatment that is durable with convenient oral administration to patients in the second line and beyond setting. Moving to Slide 16. I would like to briefly highlight the data from a post-hoc analysis in a subgroup of patients with anemia of lower-risk MDS who entered Phase III MATTERHORN study of roxadustat with a high transfusion burden. In this analysis, using the international working group definition for high transfusion burden of 4 or more RBC units in 2 consecutive 8-week periods, roxadustat showed a meaningful treatment effect with 36% of patients achieving transfusion independence for greater than or equal to 8 weeks versus only 7% in the placebo group with a nominal p-value of 0.04. These results are highly similar to the pivotal trial results for the 2 most recently approved therapies for anemia associated with lower-risk MDS. Based on these results, as we turn to Slide 17, our target indication for roxadustat is in patients with lower MDS and high transfusion burden who are refractory to or ineligible for prior ESA treatment, where we believe roxadustat has the potential to elevate the standard of care in the second line and beyond treatment settings. In July, we had a positive Type C meeting with the FDA where we aligned on key design elements and the regulatory path forward for roxadustat. The potential pivotal Phase III trial summarized on Slide 18, will include patients requiring 4 or more RBC units in 2 consecutive 8-week periods prior to randomization -- who, as I alluded to on the previous slide, are refractory to, intolerant to or ineligible for prior ESAs. We also agreed with the FDA on important dosing elements, including the starting dose of 2.5 milligrams per kilogram and on the management of potential thrombotic risk, which could include trial eligibility, dose modification and discontinuation criteria. We are currently evaluating 8-week and 16-week RBC transfusion independence as the primary endpoint for the trial. The team continues to work diligently on finalizing the Phase III protocol, and we remain on course for submission in the fourth quarter of this year. We are currently exploring our clinical development options, which include maintaining roxadustat as a wholly owned asset and running the Phase III trial on our own or partnering the program. We are actively engaged in this process, and we'll ultimately choose the path that we believe is in the best interest of shareholders. To summarize on Slide 19, there is significant opportunity for roxadustat in anemia associated with lower-risk MDS with no other oral treatments currently available or in late-stage development. Furthermore, we believe our target indication would support an orphan drug designation, which, if granted, would provide us with 7 years of data exclusivity in the U.S. This potential exclusivity, combined with an attractive market opportunity and an efficient commercial model represents a substantial economic opportunity for roxadustat in anemia associated with lower-risk MDS. With that, I will now turn the call over to Dave to discuss the company's financials. Dave?
David DeLucia: Thank you, Thane. I will first review the updated FibroGen China transaction details and then provide the company's financial performance for the third quarter of 2025. As a reminder, our China operations are reflected as discontinued operations throughout our financials. On Slide 21, we highlight the summary of the key financial terms of the transaction. Upon the close of the transaction in August 2025, FibroGen received an enterprise value of $85 million plus FibroGen net cash held in China at closing of approximately $135 million, with a total consideration of approximately $220 million. This is a $60 million increase from our initial net cash guidance in February. Upon close of the China transaction, we paid off our senior secured term loan with Morgan Stanley Tactical Value, resulting in a cash outflow of approximately $80.9 million. This includes the $75 million principal balance, accrued and unpaid interest and an applicable prepayment penalty. The net cash payable at closing is subject to holdbacks of $10 million, which is comprised of a $6 million holdback to offset final net cash adjustments and a $4 million holdback to satisfy any indemnity claims. I am happy to announce that we have received $6.4 million associated with the first holdback last week. We expect to receive the second holdback of $4 million in the second quarter of 2026. This truly transformative transaction allowed us to pay down our senior term loan facility with MSTV, provided full access to our cash in China and extended the company's runway into 2028 to support U.S. development initiatives. Given the company's current market capitalization of approximately $45 million, we believe these increases in expected net cash received upon the close of the transaction represent a meaningful outcome for shareholders. Now on to the company's financials for the third quarter. For the third quarter of 2025, total revenue was $1.1 million compared to $0.1 million for the same period in 2024. For full year 2025, we reiterate total revenues to be between $6 million and $8 million. Now moving down the income statement. Total operating costs and expenses for the third quarter of 2025 were $6.5 million compared to $47.8 million for the third quarter of 2024, a decrease of $41.3 million or 86% year-over-year. R&D expenses for the third quarter of 2025 were $1.2 million compared to $20 million in the third quarter of 2024, a decrease of $18.8 million or 94% year-over-year. SG&A expenses for the third quarter of 2025 were $5.3 million compared to $9.4 million in the third quarter of 2024, a decrease of $4.1 million or 43% year-over-year. During the third quarter of 2025, we recorded a net loss from continuing operations of $13.1 million or $3.25 net loss per basic and diluted share as compared to a net loss of $48.3 million or $12.01 per basic and diluted share for the third quarter of 2024. For full year 2025, we are updating our guidance for our total operating costs and expenses, including stock-based compensation, to be between $50 million and $60 million. At the midpoint, this represents a 70% reduction from full year 2024. Now shifting towards cash. As of September 30, we reported $121.1 million in cash, cash equivalents, accounts receivable and investments in the U.S. We expect the company to now have cash runway into 2028. In summary, we believe we have taken important steps to reduce our fixed cost infrastructure across both project and FTE spend to maximize our cash runway and enable investment in our U.S. pipeline opportunities. Thank you, and I will now turn the call back over to Thane.
Thane Wettig: Thank you, Dave. To conclude today's remarks, -- with a substantially strengthened financial position and an extended cash runway through multiple clinical milestones into 2028, we are well positioned to advance our mid- and late-stage clinical development programs for FG-3246 and roxadustat, respectively. We look forward to reporting the top line results from the investigator-sponsored study of FG-3246 in combination with enzalutamide at a medical conference in the first quarter of 2026. The recently initiated Phase II monotherapy trial of FG-3246 is progressing as planned, and we expect to report the interim results in the second half of 2026. Finally, with the positive feedback received from the FDA, we now have a regulatory path forward to advance roxadustat for the treatment of anemia associated with lower-risk MDS, and we'll submit the pivotal Phase III protocol before the end of this year. We have made substantial progress this year, transforming FibroGen into a lean and laser-focused organization, firmly positioning us to finish this year on a high note with an exciting future ahead. We look forward to providing further updates to our stakeholders over the coming months. I would now like to turn the call over to the operator for Q&A.
Operator: [Operator Instructions]. Our first question comes from the line of Andy Hsieh with William Blair.
Andy Hsieh: Congratulations on closing that $220 million deal with AstraZeneca, just really transformative for the company. We have 3 questions across the pipeline program. So one is on the roxadustat MDS pivotal trial. You mentioned about the potential thrombotic risk. They're a very prudent thing to incorporate into the trial. But I'm just curious maybe from an epidemiology perspective in that second line or later setting, refractory intolerable to ESAs, what proportion of patients do you think might be screened out because of the thrombotic risk? And maybe related to that, basically, I'm just curious about the cost of running that Phase III trial and whether or how would that impact the 2028 cash guidance that you provided? And I have a quick follow-up.
Thane Wettig: Yes. Thanks, Andy. Nice to hear from you, and I appreciate the questions. As it relates to the thrombotic risk and what that can potentially do to the size of the patient population, I think it will be dependent really upon 2 things. One is what is the ultimate kind of exclusion criteria that we align on with the FDA? And then second, ultimately, what does the data report from the Phase III trial. I think it's too early for us to even kind of estimate, is it a really small proportion of the total population of Phase II and beyond patients in lower-risk MDS or is it more of a moderate portion of the population. Our hypothesis is it's a pretty small amount of the patient potential, but we won't know that until we really align on the inclusion and exclusion criteria with the agency, ultimately run the trial, see the data and then figure out exactly what the label says should we have a positive trial and a positive registration. In terms of the cost of the trial, we're estimating it that it will cost in the neighborhood of $50 million to $60 million. And that's assuming about 200 patients, an enrollment period of 18 to 24 months. But I'll let Dave comment on how we're thinking about that in terms of our cash runway and our guidance. Dave?
David DeLucia: Yes, sure. Thank you, Thane. So right now, our current guidance reflects a cash runway into 2028, and that does not contemplate taking on the Phase III study on our own. So to your point, Andy, obviously, it would impact our cash guidance. We think that it could bring -- if we decide to take it on our own without raising incremental capital, it could take the cash guidance into the second half of 2027, give or take. But we do expect that we'll be looking to bring on incremental capital to help support the cost of running the Phase III study if we were to take it on our own.
Thane Wettig: And Andy, maybe, yes. So one final comment on that, Andy. As we said in our prepared remarks, as we are evaluating the potential to run the trial on our own versus the partnering process, which we have commenced, ultimately, it's going to come down to kind of a combination of what we would call strategic and economic considerations. On the economic front, we would have to bring in additional capital per Dave's point. We've started to have those conversations just to see what the potential or the likelihood for us to be able to do that. And then we'll compare that as we advance the partnering process. We'll be able to compare that kind of side by side and ultimately do what we think is in the best interest of shareholders.
Andy Hsieh: I see. Okay. Great. And then maybe kind of a big picture question on prostate cancer landscape. There's a lot of targets out there, PSMA, C1, DLL3, CD46, obviously, and then I guess, most interestingly, [indiscernible] , which has a negative expression correlation profile versus PSMA. So I guess, do we have additional maybe academic work that look at some of the overlapping expression profile that could actually be advanced stages for CD47 to kind of position based on the expression levels? Just kind of curious about your thinking on that front.
Thane Wettig: Thanks, Andy. It's a really good question and one that we talk about on a pretty regular basis, and we've got a great group of KOLs who are beginning to help us think through this as well. If we think about expression levels of CD46, we probably can best characterize it as it relates to expression levels of PSMA. And we know that there is a great degree of concordance patients who express the CD46 epitope and those that express PSMA. We do know that as patients are treated with androgen receptor inhibitors and are treated with a taxane or potentially even Pluvicto that we see some resistance to PSMA development. We actually see PSMA expression levels go down. We're going to be able to tell a lot more, we believe, from our Phase II monotherapy trial, where we're going to treat all patients with the CD46 PET imaging agent to be able to characterize the very expression levels. We do think we'll have some data on many of those patients in terms of their previous PSMA expression levels as well. We'll be able to then do a correlation assessment based upon those expression levels in response to the ADC. And then we'll also be able to look at the data, albeit in probably a smaller number of patients of how our ADC performs in patients who were previously on Pluvicto and those that weren't, again, given this kind of the signal that we've seen where it seems that as patients progress and are treated with the taxanes and potentially with Pluvicto that their PSMA levels are altered to some degree. We're not probably going to have much data from our Phase II as it relates to any of the other targets. There is -- as you stated, there is some academic work that's been done that looks at expression levels of STIP1, TROP2, CD46, PSMA, et cetera. And so it's probably premature for us to comment on this point in time as it relates to how CD46 might overlap with the expression of some of those other targets.
Andy Hsieh: Look forward to the second half [indiscernible] .
Operator: Our next question comes from the line of Matthew Keller with H.C. Wainwright.
Matthew Keller: So just one from us. On FG-3246, I was wondering if you could provide a little bit more color on what your thoughts are and what we can expect specifically from the top line data out of the IST study. And really what I'm trying to get at is more specifically, what are you considering a success from this data readout?
Thane Wettig: Yes. Thanks, Matt. I'll go ahead and start, and Dave, feel free to add comments afterwards as well. In the preliminary efficacy data from the Ib portion of the combination trial, there was a preliminary efficacy estimate of 10.2 months. So if we would see something consistent with that, I think that, that would be pretty encouraging for us. I think it's going to be important to look at the data on the roughly 44 patients or so and how that data shakes out based upon the number of prior ARPIs that a particular patient has been on. We think that, that will be a part of the disclosure given the IST nature of that particular trial. Clearly, we're hands off on the disclosure and what that disclosure, that information will say. But I think that, that will be also an important part of the learning. We do know that the more -- the higher the number of ARPIs that patients are treated with, obviously, regardless of what comes next, you see a declining rPFS. And so I think that, that will be an important part of the disclosure. Dave, anything to add to that?
David DeLucia: No, I think you hit the nail on the head, saying. Thank you.
Operator: Our next question comes from the line of Chen Lin with Lin Asset Management.
Chen Lin: Many of my questions have been answered. Just curious, there's a line of liability of $63 million on your report. Is that related to the milestone payment for the ADC asset?
David DeLucia: I'll take that. So no, that liability is actually related to the royalties associated with our royalty financing with NovaQuest Capital Management, and that is associated with our royalty stream from roxadustat sales in CKD in the European and Japanese territories where we are partnered with Astellas.
Chen Lin: Okay. Okay. Great. So that's a royalty stream. And you own royalty, right? So -- and then you sold some royalty, that's for that. Okay. Is there a minimum payment for that royalty? Or what's the liability looks like? Or just -- it will just -- your future revenue will be covered?
David DeLucia: Yes. Currently, the way the deal is structured is that we own NovaQuest 22.5% of any of the royalties received in those territories. So FibroGen Inc. owns 77.5% and then the 22.5% are paid out to NovaQuest Capital Management on an annual basis.
Chen Lin: Okay. Okay. Great. So it's a line item and not actual the royalty that you own going forward. Great. Thank you. So do you have any other line item for the potential future milestone you need to pay for the ADC going forward in the financial report?
Thane Wettig: Yes, Dave, I'll take that one. So China, the only future milestone that we would have in the relatively near term related to the agreement that we struck with Fortis in May of 2023 would be if we decide based upon the Phase II data, if we decide to move the program into Phase III, we would then exercise the option to acquire Fortis Therapeutics for $80 million. We would then run the Phase III trial. And if the data supports then a filing and the product were ultimately to get approved in either the U.S. or Europe, we would then owe them an additional milestone based on approval of $75 million. And then there will be no royalty obligation on net sales to Fortis after that. There would be a very small single-digit royalty obligation to UCSF, but not to Fortis.
David DeLucia: And just to add to that, the reason why we don't carry the liability on the balance sheet is because it is fully at our discretion. So as Thane pointed out, if the Phase II trial is successful and we like what we see, we can exercise that option. If we do not like what we see, then we can return the asset back to Fortis Therapeutics. So it is fully in FibroGen's discretion based upon the outcome of the Phase II study of FG-3246.
Chen Lin: Okay. Great. That's clarifying a lot. When do you decide to -- expect to decide which path will you go with LRMDS, this new Phase III trial? Or do you need to -- do you want to wait for the Phase II interim results? Or you plan to move it forward before that?
Thane Wettig: Yes. Thanks, Chen. Now these are completely independent of one another. And so we're looking at the low-risk MDS opportunity for roxadustat by itself as a stand-alone. I would think that we'd be able to have some clarity on the path forward, whether we do it on our own versus whether we partner it probably in the second quarter of next year, we'll have better clarity on that.
Operator: Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Thane for closing remarks.
Thane Wettig: Yes. Thank you, and thanks, everybody, for joining us for today's third quarter earnings call, and we appreciate your continued interest in FibroGen. Have a great rest of your day. Thank you.
Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.