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FGEN FibroGen

Participants
Michael Tung Vice President-Corporate Strategy & Investor Relations
Enrique Conterno Chief Executive Officer
Pat Cotroneo Chief Financial Officer
Thane Wettig Chief Commercial Officer
Peony Yu Chief Medical Officer
Chris Chung Senior Vice President, China Operations
Michael Yee Jefferies
Annabel Samimy Stifel
Geoffrey Porges SVB Leerink
Yaron Werber Cowen
Alex Bouilloux Mizuho
Joel Beatty Citi
Call transcript
Operator

Ladies and gentlemen, thank you for standing by and welcome to the FibroGen Third Quarter 2020 Financial Results Conference Call. At this time all participants are in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference call is being recorded. [Operator Instructions] I would now like to hand the conference over to your first speaker Mr. Michael Tung. Thank you. Please go ahead.

Michael Tung

Thank you Robert, and good afternoon everyone. I'm Michael Tung, Vice President of Corporate Strategy and Investor Relations at FibroGen.

Joining me on today's call are Enrique Conterno, our Chief Executive Officer; Dr. Percy Carter, our Chief Scientific Officer; Pat Cotroneo, our Chief Financial Officer; Thane Wettig, our Chief Commercial Officer; Dr. Peony Yu, our Chief Medical Officer; Chris Chung, our Senior Vice President of China Operations; and Dr. Elias Kouchakji, our Senior Vice President of Clinical Development, Drug Safety and Pharmacovigilance. The format for today's call includes prepared remarks from Enrique and Pat after which we will open up the call for Q&A. 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 enrollment 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.fibrogen.com. And with that, I would like to turn the call over to Enrique Conterno, our CEO. Enrique?

Enrique Conterno

Very good. Thank you Mike, and good afternoon everyone and welcome to our third quarter 2020 earnings call. We're making a strong progress on our commitment to bringing our potential first-in-class medicines to patients suffering from chronic and life-threatening conditions, despite the challenges presented by the COVID-19 pandemic. I will begin today's call by providing a high level summary of the most important accomplishments and developments from the last few months. Pat Cotroneo, our CFO will then review the financials, after which we will open up the call to your questions. Today's call will include a high level review of the roxadustat data from the recent American Society of Nephrology Conference, our continued strong China results and updates on roxadustat and our clinical trial programs.

So let us get started with the recent ASN meeting. This year at ASN Kidney Week alongside our partners AstraZeneca and Astellas, we presented new analysis on roxadustat our investigation of first-in-class oral treatment for patients with anemia of CKD. Together with our partners, we had 42 presentations including 10 oral, which add to the understanding of roxadustat's efficacy and safety profile and the unmet need -- and the unmet medical need in anemia of CKD. The roxadustat clinical data demonstrated consistent efficacy and reassuring safety results across the continuum of CKD patients with anemia, adding to the established body of evidence highlighting roxadustat as a potential foundational treatment for this condition affecting millions of patients.

We also presented data on the significant burden of anemia of CKD, a reminder that new treatment options for these patients are sorely needed.

On the efficacy front a major goal in treating anemia is to reduce the risk of red blood cell transfusions, a significant risk for CKD patients. And roxadustat demonstrated a statistically significant improvement in this important clinical measure. The efficacy results were consistent across a wide range of patient populations, including non-dialysis-dependent, incident dialysis, dialysis-dependent and peritoneal dialysis and included analysis in patients with diabetes, heart failure and systemic inflammation. Roxadustat demonstrated the ability to consistently maintain hemoglobin levels above 10 in the vast majority of patients. And data from the trial suggest that the risk of transfusion increased four to fivefold in patients with hemoglobin levels less than 10 versus those with hemoglobin levels greater than 10 regardless of treatment.

Moving to safety. Two late-breaking abstracts explored cardiovascular outcomes of patients with anemia of CKD treated with roxadustat, including the associations of MACE and MACE+ rates at various hemoglobin levels. In this post hoc analysis patients who achieved hemoglobin levels above 10 had lower rates of MACE and MACE+ than patients who achieved hemoglobin rates below 10.

Another presentation of an exploratory analysis showed a lower rate of hospitalization for heart failure in dialysis-dependent CKD patients treated with roxadustat when compared with epoetin alfa.

Finally, multiple presentations reinforced roxadustat's safety profile related to neoplasm, hypertension and ophthalmological effects. In summary, roxadustat was a highlight of the ASN Conference with 20 of the top 10 viewed posters including the top two. We appreciated a widespread interest with the potential for roxadustat to transform the treatment of patients with anemia of CKD.

Moving now to China. In China, we're pleased to report net sales of roxadustat of $22.7 million for the third quarter versus 15.7% in the second quarter. We're seeing an increase in uptake, which is being driven by both an expansion in hospital listings and broad adoption with enlisted hospitals. Hospital listings continue to be a key focus of our launch efforts. Notably as of the end of the third quarter, roxadustat was listed at hospitals representing approximately 55% of the CKD anemia market opportunity in China. This is in comparison to the 45% reported at the end of the second quarter.

We continue to see significant roxadustat utilization across the range of different patient populations with anemia of CKD. About two-thirds of patients from roxadustat are on dialysis split between hemodialysis and peritoneal dialysis. And within hemodialysis, initial adoption has been in patients who do not respond well to ESAs, as well as instanticipate dialysis patients. This broad utilization pattern bodes well for long-term success, and provides important learnings as we prepare to launch roxadustat in the U.S. and other countries. We look forward to keeping you updated as we advance our long-term goal of making roxadustat, the standard of care in treating China's CKD anemia patients.

Let us turn now to the U.S. regulatory review and commercial preparation for roxadustat.

We continue to be pleased with the cadence of and engagement with the FDA. And as we have discussed previously, we will not be making comments on the ongoing interactions with the FDA. We and AstraZeneca are working closely on U.S. launch preparation activities.

Assuming a positive decision by a PDUFA date of December 2020, the plan is to immediately apply for the transitional drug add-on payment adjustment, or TDAPA, which would provide reimbursement for roxadustat for dialysis-dependent patients outside of the prospective payment system bundle. The earliest roxadustat could receive TDAPA coverage would be April 1, 2021. And should that occur, the official launch within the dialysis organization would commence.

Assuming approval, roxadustat will be available in the first quarter of 2021, and we plan to officially launch in a non dialysis-dependent setting in the second quarter of 2021. This is awareness activities and discussions with payers are well under way.

We have submitted manuscripts covering the Phase III data for publication, both for the individual trials and pooled data sets, and expect to have them at the time of launch.

Finally, we continue to work with large dialysis providers on our two ongoing Phase IIIb roxadustat clinical trials in the U.S. dialysis setting. In Europe, the filing for roxadustat for the treatment of anemia in adult patients with CKD, both on dialysis and not on dialysis, is under review by the European Medicines Agency. In Japan, the sNDA filing for the indication of anemia CKD in non-dialysis dependent patients is under review, and we continue to expect the decision by year-end.

Moving now to our pipeline, I would like to provide time line guidance for our clinical trials. Please note that the COVID-19 pandemic continues to present challenges to the conduct of clinical trials across our industry, and we continue to monitor the situation and will take actions as necessary. Starting with roxadustat.

For our Phase III trial in myelodysplastic syndromes, or MDS, we expect top line data in the first half of 2022.

For our Phase II trial in chemotherapy-induced anemia, or CIA patients, we expect top line data in the second half of 2021, and if successful, we plan to quickly initiate a Phase III program.

Moving now to pamrevlumab.

As we have mentioned over the prior months, the most affected of our trial continues to be pamrevlumab's ZEPHYRUS IPF trial in which we paused enrollment, due to the vulnerability of these patients with severely compromised lung function. Unfortunately, the current COVID situation continues to be extremely challenging for enrollment, and has also delayed the initiation of ZEPHYRUS-2.

As such, we will be providing guidance for pamrevlumab in LAPC and DMD, but not on IPF at this time.

Given the different COVID scenarios, there is variability in our projected IPF enrollment time lines, and we will continue to evaluate and plan to update you at the appropriate time. In August, we initiated LELANTOS a Phase III trial of pamrevlumab in approximately 90 patients with non-ambulatory Duchenne muscular dystrophy or DMD. And we expect, top line data in the second half of 2022.

We also plan to initiate, a second Phase III trial LELANTOS-2 in approximately 70 patients with ambulatory DMD.

Finally for LAPIS, our Phase III trial in locally advanced unresectable pancreatic cancer, we expect top line restriction data in the second half of 2022. We remain focused on accelerating enrollment of all of our ongoing clinical trials, while ensuring patient safety.

Lastly, I want to welcome Kirk Christoffersen, who has just joined FibroGen, as Chief Business Officer, with responsibility for business development and alliance management and reporting to me. I will now turn the call over to Pat Cotroneo, our CFO to review the financials. Pat?

Pat Cotroneo

Thank you, Enrique.

As announced today, total revenue for the third quarter of 2020, was $44 million as compared to $33.2 million for the third quarter of 2019. The current quarter revenue consists of net product revenues of $22.7 million for roxadustat sales in China, $20.7 million in development revenue, $2.3 million for sales of bulk drug product to AstraZeneca, and a net reduction of $1.7 million for certain adjustments.

For the same period, operating costs and expenses were $11.7 million and net income was $33 million or $0.36 per basic and $0.35 per diluted share, as compared to operating costs and expenses of $86 million, and a net loss of $49.4 million or $0.57 per basic and diluted share for the third quarter last year.

As mentioned in our last quarter's call, we recently amended our China collaboration with AstraZeneca. The new agreement more optimally aligns both FibroGen and AstraZeneca to maximize the economic value of the roxadustat franchise, and will result in improved and more predictable economics and profitability for FibroGen. Under this amendment, in September 2020, FibroGen Beijing and AstraZeneca completed the establishment of a joint distribution entity that will perform roxadustat distribution, as well as conduct sales and marketing through AstraZeneca. We amended the collaboration in a number of ways, including establishing the cap on sales and marketing expenses. Historically, these co-promotion expenses were billed to FibroGen and payment was deferred until certain profitability and liquidity provisions were met. At that time of the amendment, we also settled the historical co-promotion costs for both parties to reflect an equal sharing of historical losses and made an adjustment of the co-promotion expenses.

As a result of these changes, we reversed approximately $84.4 million of co-promotion expenses, which were recorded as a reduction to selling, general and administrative expenses in the third quarter of 2020. Once the distribution entity is fully operational, FibroGen is expected to recognize revenue based on its sales to the distribution entity, while AstraZeneca is expected to consolidate the distribution entity and recognize revenue on sales to customers. This amendment better aligns the parties' interest and is expected to enable profitability for roxadustat commercialization in China at an earlier point in time. Included in operating costs and expenses for the quarter ended September 30, 2020 was an aggregate non-cash portion totaling $23.6 million, of which $17.9 million was a result of stock-based compensation expense, as compared to an aggregate non-cash portion of $19.6 million, of which $14.8 million was a result of stock-based compensation expense for the same period in the prior year. At September 30, FibroGen had $719.3 million in cash, cash equivalents, restricted time deposits, investments and receivables.

Looking ahead, we have a total of $245 million in potential milestones expected over the next nine months for anticipated U.S. and EU approvals and first commercial sale in the U.S. At this point in time, we have no changes in expectations in any of the anticipated milestones between now and mid-2021. Based on our latest forecast data, we now estimate our 2020 ending cash, cash equivalents restricted time deposits, investments and receivables to be in the range of $770 million to $780 million assuming U.S. NDA approval in Q4 2020. Thank you. And I would now like to turn the call back over to Enrique.

Enrique Conterno

Thank you. And in summary, FibroGen is well positioned to continue to make progress in the current environment.

Our business continuity plans are in effect and we're seeing some impact -- progress in the current environment.

Our business continuity plans are in effect and we're seeing some impact to operations resulting from COVID-19.

We have the capabilities and resources to navigate through these uncertain times and achieve our stated goals.

As roxadustat sales ramp-up in China, our financial position is strong with approximately $720 million in cash at the end of the third quarter and a total of $245 million in approval and first commercial sales milestones expected over the next nine months. We received full partner reimbursement for all development and commercialization of roxadustat in all geographies except China, where we shared these expenses 50/50 with AstraZeneca.

We have an excellent cash position with which to advance our research and development agenda and are looking forward to the roxadustat regulatory decision in the U.S. by year-end. Robert, if you could now open the lines for questions.

Operator

Thank you. [Operator Instructions] We'll have our first question coming from the line of Michael Yee with Jefferies.

Your line is open.

Michael Yee

Hey, guys. Thanks and congrats on the progress, particularly in China. I had a two part question. One was regarding the big picture implications of whether a drug has a black box or not. And while AstraZeneca had some very nice comments this morning, I guess for investors, is there an implication to the opportunity, or do they use -- I'm sure you've thought about this whether a drug has a black box or not.

So maybe just run through what those things might mean. And then the second question relates to the ASN presentation, which you nicely summarized. And I guess the idea that having less cardiovascular events as hemoglobin goes up seems very good, but that's of course how Amgen maybe got in trouble later on. What is the implication of that towards thinking about cardiovascular safety? And don't you need to show the control arms as well? Thank you.

Enrique Conterno

Very good. Thank you, Michael. And let me try to address the first question. I'll try -- we'll try to answer the second question here with Peony as well.

In terms of the box warning, there are a number of scenarios. And let me just remind everyone that we are not planning to comment or speculating on what our interactions with the FDA are right now. But there are a number of -- you can speculate about a number of potential scenarios if you wish.

So on one side, you can take basically no box warning on -- across any of the indications. Maybe to the other end, you can say, well we have a box warning that reads like the box warning that ESAs have. Clearly, somewhere in between maybe a box warning that maybe reads a little bit differently than what the ESAs' box warning is.

As we think through this, clearly when -- first when we look at the dialysis setting, it is pretty clear that today I think the products that are being utilized for treatment -- and patients are treated for anemia in the dialysis setting in the vast majority, we have those products being a -- having a box warning.

So in this particular setting, having a box warning, it is not a disadvantage for use, right? So clearly, not having a box warning is even better, but it's -- I view that as something very manageable given the current setting. When it comes to NDD, we are -- in this particular setting, we have most of the patients being untreated.

So it's an opportunity to basically build the market and make the case for roxadustat as a compelling value proposition to be able to treat these patients. But it's a different situation, because we are trying to increase treatment rates and ensure that instead of having one out of every 10 patients being treated in that setting, that we can move truly the needle over time. Clearly, in that setting, a box warning actually would slow the uptake, in particular, the initial uptake, as physicians get more comfortable with utilizing the product.

So that's maybe some of the frame that -- I don't see longer term when we think about the absolute addressable market that being a huge issue, but it will slow down the uptake in the near term.

In terms of your second question on ASN and I think you are referring to the data that we presented on achieved hemoglobin levels and corresponding MACE outcomes.

Just to recap what our interpretation of this analysis say is, basically that we basically saw higher rates at hemoglobin levels below 8, very high rates of MACE. Rates of MACE decrease as hemoglobin increased. And for hemoglobin above 10, we basically saw the lowest rates of MACE and MACE+ events. And this data was quite consistent. This pattern was quite consistent in both DD and NDD.

Our intent of that analysis -- I think, it's important data, but to me I think the number one interpretation of that analysis -- and let's keep in mind that this is a post hoc analysis, right? So we need to view it that way. It's just mining the data that we basically have from Phase III trials, so we should do so. They are exploring -- we should view them as exploratory analysis. But I think the number one take is that anemia needs to be treated. And we need to treat it seriously, because, clearly, what we basically see is that for low rates -- when hemoglobin is low, we basically see high rates of anemia. By the way this -- also below 10, we saw transfusion rates increase almost four to five-fold.

So it is basically -- our own interpretation is basically around treatment of anemia and the importance of doing so from a medical perspective.

Michael Yee

Yes. Makes sense. Thank you.

Operator

Next question will be coming from the line of Jason Gerberry with Bank of America.

Your line is open.

Unidentified Analyst

Hi. This is Fadia [ph] on for Jason. Thanks for taking our questions. Can you help explain the market dynamics in China? Based on data from AstraZeneca today, the patient numbers more than doubled from 40,000 to 90,000 from 2Q to 3Q, but sales -- the sales increase did not match that rise in the number of patients. Can you help explain that?

Enrique Conterno

Yes.

Let me try to provide some color on China. And then, I'm going to ask Chris Chung to also help provide some additional commentary. Clearly, we are very pleased with our China launch. We achieved reimbursement at the beginning of the year. And as of the end of Q3, we are already listed in 55% of the hospital. This is really quite extraordinary, as we look at comparable launches, even of products that have become very significant products in China.

So very significant listing progress and that is key and I think it's a great signal for long-term success.

In addition to that, of course, we're seeing the adoption within those listed hospitals. And we just reported basically $22.7 million in the Q3 versus the $15.7 million that we reported in Q2, so good consistent progress. And when we look at the underlying business fundamentals, I consider them to be very, very strong. Right now, I think, we view that roxadustat has the potential to become, what I would describe, as a blockbuster in China. I would define that as a product that has revenue north of $0.5 billion, so $500 million, so very significant opportunity and we're launching well to be able to try to aim towards that. Clearly, we also see our utilization across a breadth of patients, which I think is very important, as we think about long-term success; many different opportunities for us to grow with different segments.

As it relates to your question, my understanding -- I'll ask Chris to confirm, because -- but the number of patients that were reported by AstraZeneca, they were cumulative patients, as opposed to the patients in the quarter. And as you know, the duration of -- there are some patients that start treatment, some patients that stop treatment.

So I don't think that we will be able to just do a calculation that we increase the number of patients and we're going to double the demand. But we're very pleased in terms of where we are and the opportunity to have roxadustat start benefiting so many patients in China. And Chris, maybe, if you could comment?

Chris Chung

Sure, Enrique.

So very quickly to supplement what Enrique said, the sales we report are ex-factory sales.

I think patient point more to demand sales in terms of what is actually sold to the patient -- to the hospitals and what's actually prescribed.

So I don't know that we could directly link the two in that linear of a manner.

As Enrique said, there's tremendous uptake, but still we're at the early launch stage where there's some new patients, new prescribers who are just getting on drug. We're trying to track the DOT as best we can, but there's a lot of variability. At this time, it's very difficult to link demand to the number of patients, but as you can see from our ex-factory sales, it's a very robust trajectory and we remain very optimistic in terms of what this tells us about the market opportunity.

Unidentified Analyst

Okay. That’s helpful. Thank you.

Operator

Next question will be coming from the line of Annabel Samimy with Stifel.

Your line is open.

Annabel Samimy

Hi. Thanks for taking my question.

So I had a question about what you expect the launch trajectory. I know that in the dialysis population, you expect to ramp relatively quickly. Can you talk a little bit about how you expect -- or how AstraZeneca expects to build the non-dialysis population? Just beyond some of the reimbursement challenges or hurdles, where do you expect the primary adoption hurdles to be? Given the wealth of data that you have, it seems like physicians can understand the benefit rather quickly, notwithstanding a black box or no black box.

So what are some of the considerations you're thinking about in the NDD population?

Enrique Conterno

Yes. Clearly, the two settings are different, and they also respond to different reimbursement mechanisms.

First thing, I think for a launch anywhere, we need to ensure that roxadustat is going to be reimbursed.

So, we need to work towards reimbursement in both the dialysis setting. I've commented as part of my initial comments on our plan to submit for TDAPA and expect that the earliest date that, we could get reimbursement will be April 1, 2021. In the case of NDD, we are also in discussion with payers. And in this particular case, I think, we need to be placed in formularies, in the different formularies.

So, those arrangements will need to be made and we want to make sure that we are supporting AstraZeneca to be able to have those arrangements as quickly as possible.

So that's an important part of thinking about, just ensuring that there's going to be adequate reimbursement over time. We need to think about -- as we think about NDD that -- in this particular case, it is not just about treating the current patients that are being treated.

So we need to basically educate the overall marketplace on the importance of treating anemia. And that's why, I'm insisting on the comments of some of the benefits, when it comes to anemia and some of the comments that I made during the initial comments in this conference call. That is incredibly important that we are upfront.

Now, roxadustat has as you mentioned a number of benefits.

So, we think that it has the right efficacy safety profile to be able to have a really good uptake in the NDD setting and be able to be a catalyst for the overall expansion of that market. We -- over time, we're not going to be satisfied with just treating 20% more patients, or we need to be thinking about a scaler in terms of expanding this marketplace. And this is going to happen of course over time. And to do that yes, we would need to make sure that we're reaching the appropriate physicians, not only the physicians that are prescribing and treating anemia today, but the ones that we think could -- are seeing those patients that could benefit from roxadustat. But in addition to that, we need to be thinking about patient activation ensuring that patients understand that there is a new treatment option that is up.

So, we have a great partner in AstraZeneca. And we look forward to supporting them and ensuring that we can be as successful, as we can be in that setting. I'm going to ask Thane, if he has any additional comments.

Thane Wettig

Yes. Thanks, Enrique.

Just a couple of additional comments. When we think about the NDD market, we don't think about it as a market build. We think about it as a market rebuild just because of the number of patients who previously have been treated with an ESA that are now not being treated. And you've heard the statistics where, about one in seven patients in the 12 months prior to dialysis are treated with an ESA. At one point in time, it was about one in three.

And so our first goal will be to ensure that, we can rebuild that market on the way to then as Enrique talked about scaling the opportunity in a much different kind of scenario as well. And the second thing is, the advantage of working with a partner like AZ is the significant presence that they have from a patient support and affordability program perspective with their internal AZ 360 hub, which we believe will be an important mechanism to ensure eligible patients have the patient support and reimbursement mechanisms in place to assist them in getting and staying on therapy.

Annabel Samimy

Okay. Great. And if I could just follow-on one more question.

You have quite a bit of cash building, that's only going to get better.

You don't have a tremendous amount of expense with the launch.

So, is there any thought beyond just financing your R&D programs? Any additional thought to business development and things you need to build out? Thanks.

Enrique Conterno

Yes.

So, we're not going to be commenting on business development, but yes, that's something as I mentioned at previous earnings calls that after this initial phase, the first nine months or so which by the way I've been now I think on my job now 10 months, there will be I think an opportunity for us to start thinking about that and be able to think about business development and in particular bringing assets or signs that we believe can create significant value for patients and shareholders.

Annabel Samimy

Great. Thank you.

Operator

Next question will be coming from the line of Geoffrey Porges with SVB Leerink.

Your line is open.

Geoffrey Porges

Thank you, very much. Appreciate all the answers. A couple of quick questions.

First, and I apologize, if you've answered this, but what is the latest thinking on the time for the pamrevlumab pancreatic cancer study readout? And then secondly, could you just confirm Enrique, what you said about the launch timing for NDD and DD specifically next year, assuming success at the FDA? And then lastly, is the data about LDL reduction meaningful to physicians and potentially helpful to launch, or is that something that might be something that you'll be featuring? Thanks.

Enrique Conterno

Very good. Thank you, Geoff.

Just let me first address your question about LAPC. When do we expect a readout? And we mentioned that, we expect top line resection data in the second half of 2022. When it comes to -- your second question was about -- or last question was about LDL and impact of LDL. We think that is a nice marker to have, but at the end, LDL is mainly utilized as a marker for cardiovascular risk. And to that extent, we have cardiovascular outcomes that in a certain way are comprehensive to the entire product.

So yes, it's good to have the LDL data that we have, showing decreases in LDL, but I think even more importantly, it's basically to be able to showcase our overall cardiovascular safety data.

Geoffrey Porges

Okay. And then sorry just the timing specifically for the two indications or populations?

Enrique Conterno

Yes. And in terms of launch for the two, for both DD and NDD, when we are determining the official launch right, because clearly we expect to make the product available as soon as we can after approval, but we expect that the earliest that we would get TDAPA approval would be April 1, 2021.

So that's basically what we're targeting the official launch given that's really what would be the catalyst for the dialysis organizations to incorporate their products or using the product in the way that they -- we think they could. When it comes to NDD, we expect that the official launch would be also in the second quarter of 2021.

Geoffrey Porges

Thank you very much.

Operator

Next question will be coming from the line of Yaron Werber with Cowen.

Your line is open.

Yaron Werber

Yeah. Hi, good afternoon.

So I have a couple of questions Enrique. One is basically a follow-up to what you just were highlighting. With Fresenius and DaVita these better than -- are big clinics and they have pathways and they typically will run pilot programs before they adopt a new drug. I know you've commenced a couple of studies and you're enrolling those studies in those sites. Can you give us an update on that? And how long do you think before you have data, and is it sort of a pseudo or an official pilot program? And then secondly on TDAPA, when we look historically at some of the drugs whether the irons and you can argue they're not that innovative or even Parsabiv, and you can argue Sensipar was out, but launches in dialysis have been pretty slow. And the profit incentive under TDAPA really it's a small and mid-cap -- mid-chain dialysis providers that typically adopted but not the big ones. Why would it be different with roxa? Thank you.

Enrique Conterno

Yeah. I'm going to ask Peony to comment on our Phase 3b studies, which we are conducting with dialysis organizations. Peony would you like to make some comments?

Peony Yu

Yes. Thanks Enrique. Yes, we are working with some of the largest dialysis organizations. And the two studies are going exceptionally well. This is an opportunity for the U.S. dialysis organizations to further study our product. And the studies are expected to be finished in the first half of 2021 and will be in time to support our launch.

Enrique Conterno

And in terms of -- thank you Peony. And in terms of TDAPA, if I understood your question, you're looking at other examples. I will share what my view is here. But having reimbursement doesn't mean that you're going to get use right? The reason why we believe roxadustat will be utilized is because of the overall clinical profile that it offers, not because it has a favorable -- necessarily a favorable reimbursement scheme.

So we think that roxadustat offers a number of benefits.

I think if we think about straight off the bat in incident dialysis, the excellent data that we have with -- showing basically reduced cardiovascular outcomes in this population so that's extremely important. Clearly there are a number of patients, we estimate maybe about 20% of patients on dialysis that do not respond well to ESAs or are in very, very high doses in many cases. We think those are also patients that would be -- given the experience that we have in China, we see patients that would be candidates for roxadustat right away.

So to us I think it's the overall benefit – risk benefit profile that the product offers. TDAPA in itself, I think is important because it allows for the product to be used and to ensure that there's not going to be a negative incentive or a negative economic driver.

So if anything I think it's a positive driver from a reimbursement perspective for the use of the product.

So I would look not to TDAPA, but really to the profile of the product to see why we believe that product will be utilized.

Yaron Werber

Thank you.

Operator

Next question will be coming from the line of Difei Yang with Mizuho.

Your line is open.

Alex Bouilloux

Hi, good afternoon. This is Alex on for Difei. Thank you for taking the questions.

First one, I guess given that you will be potentially first to market in dialysis, could you give us a bit of color on how you're engaging with the large dialysis providers in the U.S.? And if you would expect to secure contracts with the two large providers following approval, or would you expect to secure contracts maybe in a more staggered manner or just with one of them? And then I have a follow-up. Thank you.

Enrique Conterno

Yeah. Clearly we want our -- the utilization of the product to be broad. We're not going to be commenting on where are we on our discussions with the different providers. Clearly we need to make sure that the product will receive approval, but it is pretty clear that we've been working with them pretty closely for quite some time. Keep in mind that we conducted our Phase 3 clinical trials with them.

We are also conducting this 3b -- Phase 3b studies with the dialysis organizations.

So I feel that we are in a really good position. And also what is the overall profile of once again the medicine that we're offering. And we think that it can be of significant value from a medical perspective so -- to patients and to health care organizations.

So we feel good in terms of where we are I think in our discussions.

Our intent is not to -- is to try to offer the product to -- and be able to reach as many patients as we can. And clearly getting TDAPA being effective will be critical towards that goal.

Alex Bouilloux

Okay, great. Thank you. And then just a quick follow-up, another question on China. I'm wondering if you could provide a bit of color around roxa's uptake specifically in stable dialysis patients who are already on ESAs. Are you seeing a bit more conversion to roxa from these patients today versus compared to let's say six months ago?

Enrique Conterno

Yeah. I'm going to ask Chris to maybe provide some comments on that.

Chris Chung

So the way we look at the maintenance dialysis market, first of all is those with controlled hemoglobin levels and uncontrolled hemoglobin levels and also peritoneal dialysis and hemodialysis.

So first of all we look at the PD population. We've done extremely well in the PD population. It speaks well to the clinical profile of roxadustat. The oral administration feature, obviously, is additive and attractive to this population for very obvious reasons.

So we're doing particularly well in PD. `In terms of HD, there is a very different value proposition, for those with uncontrolled hypertension -- uncontrolled hemoglobin and controlled.

For those that are uncontrolled really is, the initial adoption population and a target launch population. It speaks very well to the differentiation based on iron mobilization and inflammation.

So the clinical value proposition there is very, very strong. And that's where we see a lot of the early adopters.

We are seeing migration into the controlled population. And the thesis there is it's important to treat. It's important to treat the target. It's important to maintain, so that there's very little low variability. But as a matter of pricing, we are higher than ESA.

So the value proposition and the differentiation there is a little bit different, but we're very happy to see migration into that population, which frankly was not the initial focus, but with the maturing launch we're seeing adoption.

So we're delighted to see that.

Enrique Conterno

The last thing that I would say, and you did not ask this question, but clearly in addition to looking at the stable patients on dialysis, clearly I think what we see is, really good adoption within the incident dialysis patients, which at the end I think is a great predictor of what the brand could be or what the brand could be and the situation could be in the future.

Alex Bouilloux

Thank you.

Operator

We have our final question coming from the line of Joel Beatty with Citi.

Your line is open.

Joel Beatty

Hi. Thanks for taking my questions. At ASN, Akebia presented data for Vadadustat on their non-dialysis patients, showing that the U.S. MACE looks quite a bit better and it was the ex-U.S. MACE that was really hurting their MACE outcome. I guess with that in mind, could you characterize, how your non-dialysis data looks in terms of any differences between the MACE in the U.S. patients versus patients enrolled ex-U.S.?

Enrique Conterno

Yeah. Maybe let me just make some overarching comments, because clearly our trial is designed a little bit different from vada in terms of we were going as you know, relative to placebo. But importantly also, we treated 11 plus/minus one, whether it was in the U.S. and/or OUS.

So we did not -- we utilized the same treatment targets for roxadustat.

Now when it comes to roxa, I think what's important is when -- first when we look at the overall trial we basically see that, in NDD we were comparable to placebo.

So that's when it comes to MACE.

So that's critically important. We showed non-inferiority. The best trial for us to look at which is not part of our post study, but the first -- the best trial that will be more -- most comparable to the Akebia trials would be DOLOMITES, which is a trial where we compared against an active comparison in darbepoetin and it was conducted outside of the U.S.

So that's -- you're hitting on both points. And the hazard ratio that we saw -- and by the way we treated to, once again, 11 plus/minus one, okay? We saw hazard ratio in MACE of 0.81.

So honestly we feel very good about our data. And I don't know Peony, if you want to add anything else to that.

Peony Yu

Yeah. Thanks Enrique. Yes, we -- so that -- as Enrique said, that the DOLOMITES study is 100% ex-U.S. and we had a very reassuring hazard ratio. And now in our -- in the placebo control which is our main program, we saw consistency in the U.S. data with -- that is consistent with the overall MACE program.

Joel Beatty

Brilliant.

Peony Yu

So we've -- and as you know, that placebo is a high standard for a measurement of safety. And we are glad that, we have chosen this standard.

Joel Beatty

So the great transaction. Maybe one other question is also on the competitive landscape. And I think recently on clinicaltrials.gov GSK, moved sooner the time lines for the readouts for daprodustat. It looks like, November 2020 for dialysis and April 2021 for non-dialysis. Any predictions there for, how the results could look whether they could resemble your data, or are there differences to consider?

Enrique Conterno

I think that's a good question for them.

Joel Beatty

Sounds good. Thank you.

Operator

All right. We don't have any more questions on the line. Speakers, please continue.

Enrique Conterno

Very good. Once again, I appreciate everyone's time today, as we report our third quarter results. We're very pleased with the progress as I mentioned, across a number of fronts. And of course, we are looking forward to the action date, of December 20th for roxadustat, which is the roxadustat PDUFA date, here in the United States. Thank you very much.

Operator

And this concludes today's conference call. Thank you everyone for your participation. And you may now disconnect. Have a good day.