FibroGen, Inc. (NASDAQ:FGEN) Q3 2023 Earnings Call Transcript

FibroGen, Inc. (NASDAQ:FGEN) Q3 2023 Earnings Call Transcript November 6, 2023

FibroGen, Inc. beats earnings expectations. Reported EPS is $-0.52, expectations were $-0.68.

Operator: Hello and welcome to the FibroGen’s Third Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. It is now my pleasure to introduce Vice President of Investor Relations, David DeLucia.

David DeLucia: Good afternoon, everyone. Thank you for joining today to discuss our third quarter 2023 financial and business results. I am David DeLucia, Vice President of Corporate FP&A and Investor Relations at FibroGen. Joining me on today’s call are Thane Wettig, our Chief Executive Officer; Juan Graham, our Chief Financial Officer; Dr. Mark Eisner, our Chief Scientific Officer and Chris Chung, our Senior Vice President of China Operations. Following our 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, our collaborations with AstraZeneca and Astellas, financial guidance, the initiation, enrolment, design, conduct and results of clinical trials, our regulatory strategies and potential regulatory results, our 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 our 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.fibrorgen.com. With that, I would like to turn the call over to Thane Wettig.

Thane Wettig: Thanks Dave, and good afternoon, everyone. Welcome to our third quarter 2023 earnings call. I’d like to begin today’s call by acknowledging that November is Global Pancreatic Cancer Awareness Month, a time when we reflect on the importance of raising awareness about pancreatic cancer and the need for continued research, support and more effective therapies for this devastating disease. On today’s call, I will focus our stakeholders on the four strategic pillars that will guide the company into the future, as well as provide an update on our pamrevlumab and roxadustat assets. Dr. John Hunter, our Chief Scientific Officer, will then review our exciting early-stage oncology pipeline. Last, Juan Graham, our CFO, will review the financials, after which we will open the call for your questions.

Starting on Slide three, fibrogen has four key strategic pillars that we believe offer significant value today. First is pamrevlumab, with upcoming pivotal trial readouts for two pancreatic cancer indications through the first half of 2024, one readout in locally advanced disease and the other in metastatic disease. Pancreatic cancer represents a significant commercial opportunity with substantial unmet need and pamrevlumab has demonstrated effect in both preclinical and early clinical studies, which we will detail in a moment. Second is roxadustat. Roxadustat is approved in over 40 countries around the world, generates significant net revenue and provides FibroGen with material and growing economics through our partnerships with AstraZeneca and Astellas Pharma.

Third is our early-stage oncology pipeline. We are very excited about the potential of these programs. FG-3246 is a first-in-class potent antibody drug conjugate, or ADC, for the treatment of metastatic castration-resistant prostate cancer. This opportunity also includes the development of an associated PET biomarker diagnostic. In addition to FG-3246, we are also undertaking IND-enabling activities on two innovative oncology antibodies with the intention of filing INDs and commencing clinical activities in 2024. Fourth is our strong cash position. In the third quarter, we successfully executed on implementation of our company-wide cost reduction plan, now resulting in an expected reduction of total annualized expenses of $120 million, which provides the company a bridge to achieve a number of key milestones across our portfolio.

We have taken necessary steps to improve our financial position and will continue to focus on financial discipline. In summary, we believe there are few biotechnology companies of our market cap that have such a compelling mix of commercial, late-stage and early-stage assets. When you combine our assets, our strong balance sheet, and the quality of our talented colleagues at FibroGen, we believe that we have a strong foundation to drive significant shareholder value creation today and into the future. Moving to Slide five, Pamrevlumab, is a novel anti-CTGF human monoclonal antibody in clinical development for the treatment of locally advanced unresectable pancreatic cancer, or LAPC, and metastatic pancreatic cancer. Pamrevlumab has been studied in over 1,000 patients across various conditions, has demonstrated dose and exposure-related responses in an early-stage pancreatic cancer trial, as well as a favourable adverse event and safety profile.

On Slide six, and before we dive into the pancreatic cancer data and opportunity, I would like to provide a recap of recently announced Pamrevlumab results. In August, we reported top-line data from our phase 3 LELANTOS-2 study, a placebo-controlled trial of Pamrevlumab for the treatment of ambulatory patients with DMD on background corticosteroids. The study did not meet the primary endpoint of change in the North Star Ambulatory Assessment total score from baseline to Week 52. FibroGen would like to thank the patients, caregivers and clinical trial investigators for their dedication to participating in this important study, which contributes toward the understanding of this devastating disease. Looking ahead, we anticipate upcoming results from two Pamrevlumab trials in pancreatic cancer.

We expect results from the LAPIS Phase III study in locally advanced disease in the first quarter of 2024, and we expect results from the Pancreatic Cancer Action Network’s Precision Promise Registrational Adaptive Platform trial evaluating Pamrevlumab in both first-line and second-line metastatic pancreatic cancer in the first half of 2024. I would now like to discuss the Pamrevlumab opportunity in pancreatic cancer in more detail starting on Slide 8. Pancreatic cancer represents one of the largest unmet needs in oncology, with an annual incidence of nearly 0.5 million patients across the major regions combined. This includes approximately 60,000 PDAC patients in the United States. There is an overall five-year disease-free survival rate of only 12.5%, and for metastatic cancer, rates are as low as 3%.

On Slide 9, we provide an overview as to why we believe Pamrevlumab can provide benefits to patients diagnosed with pancreatic cancer. Based on preclinical data, CTGF plays an important role in the growth and progression of pancreatic tumors. Mouse tumor studies have shown that Pamrevlumab can have both direct antitumor effects and effects on the surrounding stroma, providing a strong clinical rationale for use in both locally advanced and metastatic pancreatic cancer. Given the upcoming Phase 3 readouts, we would like to remind investors of what we believe are compelling preclinical and early clinical data that informed our decision to move Pamrevlumab forward in pancreatic cancer. On Slide 10, Pamrevlumab in combination with gemcitabine in a KPC mouse model, slowed tumor growth, decreased metastatic burden, inhibited formation of acetates or buildup of fluid in the abdomen, and substantially improved survival.

On Slide 11, the same mouse model also provided a mechanistic rationale for Pamrevlumab’s beneficial effect on animal survival. Pamrevlumab as a monotherapy and in combination with gemcitabine made tumor cells more susceptible to chemotherapy-induced cell death or apoptosis through quantitative reduction in XIAP, a protein involved in apoptotic resistance and promotion of cell survival. Moving to Slide 12, we would like to reference the data from our open-label dose escalation Phase 1-2 trial in patients with locally advanced stage III or metastatic stage IV pancreatic cancer. Most of these 75 patients were in fact metastatic and only nine had locally advanced disease. Pamrevlumab was evaluated in combination with gemcitabine and erlotinib as first-line therapy.

An important observation in the study was that clinical benefit was observed at higher drug exposure levels. Once drug plasma levels reached a trough threshold of 150 micrograms per ml, a number of important results were found. The most notable result in this study was that one-year survival was 37% for patients who had circulating pamrevlumab levels of 150 micrograms per ml or higher versus 11% for those with lower plasma levels. These results in the higher dose cohort patients with plasma drug levels above the 150 micrograms per ml threshold included improved median overall survival and improved median progression-free survival. Moving to Slide 13, pivotal trials are being conducted with Pamrevlumab in both locally advanced and metastatic patients.

These patients represent almost 90% of all diagnosed pancreatic cancer patients today, giving Pamrevlumab a potential opportunity to treat a vast majority of patients across this devastating disease. On Slide 14, we provide an overview of the global Phase 3 LAPIS trial, a double-blind placebo-controlled trial in 284 patients with locally advanced, unrespectable pancreatic cancer, comparing Pamrevlumab to placebo in combination with standard-of-care chemotherapy. The primary endpoint is overall survival, and we expect top-line data from this study in the first quarter of next year. On Slide 15 is an overview of the Pancreatic Cancer Action Network’s Precision Promise trial. This is a Phase 2, 3 registrational study that is being executed at the top pancreatic centers in the United States.

Like the LAPIS trial in locally advanced disease, the primary endpoint of the Precision Promise trial is overall survival. Pamrevlumab is being evaluated in both first and second-line therapy for metastatic disease and was the first experimental treatment arm in the Precision Promise platform trial to be evaluated in the first-line metastatic setting. Moving to Slide 16, we show a snapshot of both Pamrevlumab registrational Phase 3 studies. One important difference between the two studies is the dosing regimen of the Precision Promise study. Pamrevlumab is dosed in 28-day treatment cycles until progression or discontinuation, which is distinct from LAPIS, in which Pamrevlumab was delivered in a neoadjuvant setting and where it was dosed for up to six months.

We believe the ability to dose patients until disease progression in the metastatic setting provides a potential opportunity to amplify clinically meaningful increases in overall survival driven by those patients benefiting from Pamrevlumab treatment. On Slide 17, we review the U.S. commercial opportunity for Pamrevlumab in pancreatic cancer. There have been limited treatment advances over the last two decades in both locally advanced and metastatic diseases with immuno-oncology therapies providing benefit to a small subset of metastatic patients. Using straightforward assumptions, the total addressable market for pancreatic cancer in the U.S. is a multibillion-dollar commercial opportunity for Pamrevlumab if it can demonstrate a significant improvement in overall survival in either locally advanced or metastatic patients.

In fact, metastatic pancreatic cancer alone represents a larger market opportunity in the U.S. for Pamrevlumab than we were forecasting for IPF. Moving on to Roxadustat on Slide 19, I would like to provide a recap of recently announced Roxadustat results as well as review our upcoming milestones. In May, we announced positive top-line data from our Phase 3 clinical study of Roxadustat for the treatment of anemia in patients receiving concurrent chemotherapy treatment for non-myeloid malignancies in China. Roxadustat demonstrated non-inferiority compared to recombinant erythropoietin alpha on the primary endpoint of change in hemoglobin level from baseline to the average level during weeks nine through 12. These data were recently presented in an oral presentation at the ESMO Congress 2023 in Madrid on October 21.

I’m excited to announce that in July, our supplemental new drug application or SNDA for Roxadustat in patients with chemotherapy-induced anemia has been accepted by the China Health Authority and we continue to expect an approval decision in mid-2024. Upon approval, FibroGen will receive a milestone payment from AstraZeneca. We believe this indication could represent a meaningful incremental net revenue opportunity on top of the anemia of CKD indication. Moving now to Slide 20, Roxadustat for anemia of chronic kidney disease continues to perform extremely well in China. Third quarter total Roxadustat net sales in China by FibroGen and the distribution entity jointly owned by FibroGen and AstraZeneca was $77.1 million compared to $59 million in the third quarter of 2022, an increase of 31%.

This growth was driven by an increase in volume of 37%. FibroGen’s portion of Roxadustat net product revenue in China was $29.4 million for the third quarter on a US GAAP basis compared to $17.4 million in the third quarter of 2022, an increase of 69%. Moving to Slide 21, Roxadustat continues to expand its category leadership and brand value share in China, rising to 42% in the most recent three-month period ending in August of 2023. The potential addition of the chemotherapy-induced anemia indication would create an additional catalyst to both continued share and volume growth of Roxadustat in China. Given that there have been several generic applications filed in China, I would like to briefly touch on the generic market more broadly in China and the exclusivity of Roxadustat.

The impact of a generic approval and launch in China is meaningfully different than in the US market. Generic players face lead time and execution risk of market adoption after approval as they need to be admitted into individual hospital formularies one at a time. Originator products do not experience a meaningful deterioration in business until at least four or more generic products are approved. Even then, originator products in China have historically been able to maintain a stream of net revenues and profits after generics enter the market. Our composition of matter, patents expire in June of 2024, and we do not expect meaningful deterioration of the Roxadustat business in the near term. In addition to the continued outstanding performance of Roxadustat in China, the Roxadustat launch in Europe is accelerating, showing robust quarter-over-quarter growth.

We expect this growth to continue to accelerate given the strong competitive position of Roxadustat. Roxadustat is the only HIF-PHI indicated in the EU for the treatment of anemia of CKD in both non-dialysis and dialysis patients, and with GSK’s decision to withdraw the MAA for daprodustat, combined with market exclusivity for Roxadustat beyond 2030, Roxadustat is well positioned to continue its growth and market leadership throughout this decade. I will now hand it off to John Hunter, our CSO, to cover our early-stage pipeline. John?

John Hunter: Thank you, Thane. Moving to Slide 23, we have a snapshot of our early-stage oncology pipeline programs that are currently in the clinic or at later stages of non-clinical development. On Slide 24 is an overview of the exclusive license deal that we entered into with Fortis in Q2 of this year for 446, now called FG-3246. FG-3246 is a potential first-in-class antibody drug conjugate, or ADC, for metastatic castration-resistant prostate cancer, colorectal cancer, and other tumor types. FG-3246 binds to a cell receptor target that internalizes upon antibody binding and is present at high levels in prostate cancer and other tumor types, but that demonstrates very limited expression in most normal tissues, making it an ideal ADC target candidate.

Moving to Slide 25, FG-3246 is comprised of an anti-CD46 antibody, YS5, linked to the antimyotic agent, MMAE, which is a clinically and commercially validated ADC payload. FG-3246 has demonstrated efficacy against CD46-expressing tumors in both preclinical and clinical studies. The associated PET imaging biomarker, PET46, utilizes the same targeting antibody as FG-3246 and is under development at UCSF. It is comprised of the YS5 antibody coupled to the radionuclide zirconium-89 and in preclinical studies demonstrates specific targeting of and uptake by CD46-positive tumors. We plan to explore its potential for use in identifying FG-3246 responsive patients in a Phase 2 trial that is described on Slide 27. Moving to Slide 26, as we noted in our last earnings call, FG-3246 has demonstrated monotherapy clinical efficacy in multiple myeloma and metastatic castration-resistant prostate cancer.

Interim data from the ongoing Phase 1 trial in prostate cancer showed that four out of 21 evaluable patients had partial responses based on resist criteria at the two highest study doses and an overall PSA50 response rate of 45% in heavily pretreated patients who had a median of five prior therapies. The safety profile for FG-3246 was consistent with other MMAE-based ADC therapeutics, with neutropenia being the most common adverse event. Updated data from the trial will be reported upon study completion projected for Q1 2024. On Slide 27, we show ongoing and planned clinical trials for FG-3246. In addition to the Phase 1 dose escalation and expansion study referenced on the previous slide, there is also a combination study with enzalutamide that is currently being run at UCSF.

The rationale for this combination is based on preclinical data demonstrating upregulation of CD46 in tumor cells following enzalutamide treatment, therefore potentially making them more responsive to treatment with FG-3246. Initial data from this trial is expected in the second half of 2024. A trial for the PET46 biomarker in prostate cancer is in progress at UCSF. The goal is to develop a screening assay to select patients with high CD46 expression who are most likely to benefit from treatment with FG-3246. This biomarker will be part of a Phase 2 study run by FibroGen in which up to 100 patients will be enrolled following a PET scan with PET46. Patients will not be stratified at the start of the study, but the correlation between PET positivity and FG3246 efficacy will be assessed at the end of the study with the potential to use the PET46 biomarker to stratify patients in a pivotal Phase 3 trial.

We anticipate the initiation of the Phase 2 trial in metastatic castration resistant prostate cancer in the second half of 2024. Moving to Slide 28, I would like to briefly cover our preclinical oncology pipeline. The pipeline includes two immuno-oncology antibody programs, one targeting galectin-9 or Gal9 and the other targeting the CCR8 G-protein coupled receptor. FG-3165 is an anti-Gal9 antibody developed to reverse immune resistance in solid tumors. Gal9 is a soluble immunosuppressive molecule that is overexpressed in many tumor indications and that has been implicated in maintaining an immune suppressed tumor microenvironment. FG-3165 has been shown preclinically to reverse multiple Gal9 mediated mechanisms of immune suppression, including prevention of Gal9 mediated effector T-cell apoptosis, reversal of Gal9 mediated signalling in T-cells and disruption of dimerization of the immune checkpoints TIM3 and VISTA.

This data was presented at the Society for Immunotherapy and Cancer Annual Meeting this past weekend and the poster will be available on our website. We are working towards a Q1 2024 IND filing for this program. Moving to our CCR8 program; CCR8 is a receptor that is highly expressed on tumor infiltrating T regulatory cells known as Tregs with very limited expression outside of the tumor microenvironment. Antibody mediated depletion of CCR8 positive Tregs results in potent anti-tumor effects in preclinical tumor models. FG-3175 is an anti-CCR8 antibody designed to selectively disrupt and deplete Tregs in the tumor microenvironment without affecting peripheral T regulatory cells. Given its highly specific targeting of Tregs in the tumor microenvironment, we see FG-3175 as having broad therapeutic potential in solid tumors.

I will now turn the call over to Juan to discuss the company’s financial.

Juan Graham: Thank you, John. Before jumping into the financial update, I would like to spend a moment to acknowledge and thank our FibroGen colleagues around the world. I’m continuously inspired by many interactions with our team in which I see tremendous resilience, positive mindset and exceptional operational capability that enables us to deliver on key clinical operational and financial milestones. Now diving into these quarters financial results; for the third quarter of 2023, total revenue was $40.1 million compared to $15.7 million for the same period in 2022, a robust increase of 155% year-over-year. This significant growth showcases the strength of our business. I will now provide further texture on our revenue. As of Q3 2023, we recorded $29.4 million of net product revenue for Roxadustat sales in China compared to $17.4 million in the third quarter of 2022, representing an increase of 69% year-over-year and highlighting the strong performance of Roxadustat in China.

During the third quarter, we recorded $6.8 million as development revenue associated with co-development efforts for Roxadustat with our partners as compared to $2.5 million during the third quarter of 2022. For the fourth quarter, and as we have previously guided, we expect co-development revenue to range from $3 million to $5 million. In the third quarter, due to the successful completion of post-approval safety studies associated with Roxadustat in China, we triggered a $4 million milestone payment from AstraZeneca, $2.6 million of this milestone was recognized as licensed revenue, $0.9 million was recognized as co-development revenue, and the remainder is classified as deferred revenue. Finally, in the third quarter, we also recorded $1.3 million in drug product revenue for Roxadustat bulk drug product or active pharmaceutical ingredients sold to our partner Astellas.

I will now move to provide further detail on our financial performance in China. As previously mentioned by Thane, total Roxadustat net sales for the joint distribution entity or JDE owned by AstraZeneca and FibroGen was $77.1 million this quarter compared to $59 million in the third quarter of 2022. A substantial increase of 31% year over year, highlighting the continued strong performance of the EVRENZO franchise in China, while also achieving our highest value share since launch at 42% of the category. From total Roxadustat net sales in China, FibroGen’s net transfer price from sales to the JDE was $24.2 million for the third quarter compared to $19.5 million in the third quarter of 2022, an increase of 24% year-over-year. Net transfer price is the best reflection of FibroGen’s portion of the cash received by Roxadustat in China.

During this quarter, we also released $2.3 million from deferred revenue. As a result, FibroGen recorded $26.5 million in net revenue for the quarter from Roxadustat sales to the JDE and $2.9 million of direct to distributor sales from FibroGen China, totaling $29.4 million on a US GAAP basis. Our revenue growth highlights the continued robustness in execution and physician and patient adoption of Roxadustat in China. Now moving down the income statement, our operating costs and expenses for the third quarter of 2023 were $103.6 million compared to $109.4 million for the third quarter of 2022, a decrease of $5.8 million year over year. It is worth noting that this quarter’s operating expenses include a $12.6 million restructuring charge related to a reduction in force during the third quarter.

R&D expenses for the third quarter of 2023 were $61.2 million compared to $75.2 million in the third quarter of 2022. The reduction in R&D expenses is primarily attributable to the shutdown of our late stage trials in Pamrevlumab, as well as the reduction of US R&D headcounts. Of the $61.2 million in R&D expenses, approximately 45% was related to Pamrevlumab, 40% allocated to support our early stage pipeline, and the remaining 15% directed towards Roxadustat development activities in the US and China. SG&A expenses for the third quarter of 2023 were $25.6 million compared to $29.9 million in the third quarter of 2022, a decrease of $4.3 million year-over-year. The reduction in SG&A expenses is primarily attributable to reduced infrastructure costs, as well as the reduction of US SG&A headcounts.

During the third quarter of 2023, we recorded a net loss of $63.6 million, or $0.65 net loss for both basic and diluted share, as compared to a net loss of $91.7 million, or $0.98 per basic and diluted share for the third quarter of 2022. The impact of the above-mentioned restructuring charge of $12.6 million related to the reduction in US workforce represents approximately $0.13 loss for both basic and diluted share. On Slide 30, we highlight our performance against our prior savings guidance. I am pleased to announce an improvement in our expected savings to be in the upper range of our previously communicated guidance of $100 million. We are now forecasting a reduction of approximately $120 million in total annualized expenses, which roughly translates to around $30 million per quarter.

After adjusting for one-time charges in the third quarter, we achieved over 60% of our total expected savings this quarter versus expected savings of approximately 20% that we communicated during our second quarter update. We now expect to achieve 75% to 85% of our quarterly savings in the fourth quarter of 2023 and deliver on our quarterly expected run rate savings of $30 million in the first quarter of 2024. Now shifting towards cash, as of September 30, we reported $283 million in cash, cash equivalents, investments and accounts receivable. Our cash balance reflects a change of $78.1 million versus a prior quarter, which captures a variety of one-time cash outflows, such as a $14.1 million historical co-promotion expense in China, severance payments, as well as clinical trial shutdown costs, which increased our cash utilization in the quarter.

As we move forward, we expect our cash burn rate to reflect the reduction in operating expenses, and we expect fourth quarter cash burn to be substantially lower. With the reduction in operating expenses and maintaining a disciplined capital allocation approach, as previously communicated, we expect our cash, cash equivalents, investments and accounts receivable to be sufficient to fund our operating plans into 2026. Thank you, and now I would like to turn the call back over to Thane.

Thane Wettig: Thanks, Juan. In closing, we are excited about our near-term prospects and the value they provide to stakeholders. To recap, we expect top-line data from the following two Pamrevlumab pivotal studies. Our Phase III LAPIS trial in locally advanced pancreatic cancer in the first quarter of 2024, and the Phase II-III Pancreatic Cancer Action Network Precision Promise trial in metastatic pancreatic cancer in the first half of 2024. Roxadustat continues to perform very well in China, where our SNDA has been accepted for the chemotherapy-induced anemia indication, and our partner Astellas continues with the commercialization of Roxadustat in Europe, Japan and other markets. In our early-stage pipeline, we expect top-line results from the Phase I monotherapy trial of FG-3246, a first-in-class antibody drug conjugate targeting a novel epitope on CD46 for metastatic castration-resistant prostate cancer by the first quarter of 2024, and anticipate the initiation of a Phase II trial in MCRPC in the second half of 2024.

We anticipate filing an IND for FG-3165, our anti-Gal-9 antibody, in the first quarter of 2024. We anticipate filing an IND for FG-3175, our anti-CCR8 antibody, in the second half of 2024, and we have a strong balance sheet and expect our current cash position, as Juan said, to fund operations into 2026. In summary, we will continue to execute against our strategic priorities as we strive to attain a valuation that we believe is more reflective of our current and future Roxadustat revenue stream, near-term Pamrevlumab redoubts in pancreatic cancer, our early-stage pipeline, and our strong balance sheet. I would like to thank all the employees of FibroGen for their continued hard work and perseverance over the last few months. I would now like to turn the call over to the operator for Q&A.

Operator: [Operator instructions] And our first question comes from the line of Paul Choi with Goldman Sachs.

UnidentifiedAnalyst: Hi, I was muted there. This is Khalil [ph] calling in for Paul. Thank you so much for taking our questions. I guess I have a couple quick questions. So with regard to Roxadustat in China, could you please provide some additional color on, one, your expectations when you might start to see an eventual impact from generic competition beyond next year in terms of either pricing or market share? And then, two, given the idiosyncrasies of China that you mentioned, how does that really affect the company’s strategy in mitigating such an eventual impact from potential generics?

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Q&A Session

Thane Wettig: Yeah, thanks for the question. I’ll go ahead and start off and ask Chris Chung, who is in China right now, to follow up with supplemental comments. There are a number of things in play that make it really difficult to pinpoint when we would expect meaningful impact of generic entry. This is a much different dynamic than in the US market, where you have patent expiration, you have a generic launch, and you see immediate erosion of the brand share. And in fact, it’s typical over the course of the first 12 months of generic penetration in a market like the United States, you see 90% to 95% of the value eroded. It’s different than that in China for a number of different reasons, as we tried to outline in the call, but the first reason is because of the fact that each of the generics, by the time they are able to gain approval, are going to have to go hospital by hospital in order to establish the listing and we really don’t anticipate until we see multiple generics being available and then the advent of the potential for volume-based procurement or volume-based purchasing before you would see a meaningful impact on the brands, both price as well as market share.

And so while we do expect at some point in time there to be the potential for volume-based purchasing, we just can’t state when that will be. It’s going to be dependent upon the review of the generic applications. It’s going to be dependent upon the approval of those generic drug products and it’s going to be dependent upon the government then calling for volume-based purchasing and so there are a lot of unknowns that make it difficult at this point in time for us to then kind of forecast much beyond 2024. Regardless of what happens, even in the advent of multiple generics being available, we do see in China with other multinationals a very strong continued value or revenue stream for the originator that continues on in perpetuity on for several years.

In fact, there’s a large multinational that has about 15 products that are a part of volume-based purchasing and with those 15 products combined, they are realizing well over a $1.5 billion in revenue. So we still believe that there are great prospects for Roxadustat in China and in addition to that, we have the CIA indication, which we expect a decision on in the middle part of the year, which gives us an additional opportunity for both volume as well as revenue catalysts. Chris, let me ask you to go ahead and add some comments to that.

Chris Chung: Yeah, you know what? I’m not sure I have much to add beyond what Thane just provided. I thought it was a comprehensive overview. And I would add that what Thane just described is not specific to Roxadustat and it’s very consistent with how the industry is responding to regulations and how the industry is performing. Thane, back to you.

Operator: [Operator instructions] And our next question comes from the line of Andy Shea [ph] with William Blair.

UnidentifiedAnalyst: Thanks for taking our questions. So mostly on FG-3246, maybe from a strategic perspective, how would you position that asset? So would that be in the pre-chemo setting like what we’ve seen with the Phase 2 PSMA4 and along the same lines, given the popularity of the PSMA PET imaging agent, should that be perceived as a headwind for CD47 as well and maybe also related to that, but maybe from a kind of clinical trial and data perspective, so for the Q1 data readout, it’s listed here 53 patients total. So it seems like you have presented data on ’21 before. So does that mean we should expect additional 32 patients in the Q1 update? So any sort of clarifications on that would be much appreciated.

Thane Wettig: Thanks, Andy. I’m going to turn this one over to John.