Good day, and thank you for standing by. Welcome to the FibroGen Sale of FibroGen China conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one-one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Gaia Shamis, with LifeSci Advisors. Please go ahead.
Thank you, Daniel. Good morning, everyone, and thank you for joining today's call to discuss the sale of FibroGen China. I'm Gaia Shamis with 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 everyone that the 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 the statement. A more complete description of these and other material risks can be found in FibroGen's filing with the SEC, including their 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 sale of FibroGen China and a webcast of today's conference call can be found on the investor section of FibroGen's website at www.fibrogen.com. With that, I would like to turn the call over to the CEO, Thane Wettig. Thane.
Thank you, Gaia. Good morning, everyone, and welcome to our conference call to discuss FibroGen's announcement of the sale of FibroGen China. On today's call, I will highlight the transformative nature of the announced transaction and how it supports our strategic priorities for 2025. David DeLucia, our CFO, will review the transaction details, after which I will provide more color on the current go-forward strategic priorities for the company, which includes the exciting opportunity in metastatic castration-resistant prostate cancer, or mCRPC, for FG-3246 and FG-3180, our first-in-class antibody-drug conjugate targeting CD46 and its companion PET imaging agent, and the potential for roxadustat development for the treatment of anemia due to lower-risk myelodysplastic syndrome. We will then open up the call for your questions.
Starting with slide III, the sale of FibroGen China is the final step in the transformation of the company into a U.S.-focused organization developing differentiated assets in high-value therapeutic areas of oncology and oncology-related diseases. The transaction not only simplifies our operations, allowing us to become laser-focused on our U.S. pipeline, but also allows us to pay off our senior-term loan facility with Morgan Stanley Tactical Value, simplifying our capital structure. A paydown of this loan, combined with full access to the company's net cash balance in China, extends the company's runway into 2027. This infusion of non-dilutive capital allows the company to advance the development of FG-3246 and FG-3180, our potential first-in-class antibody-drug conjugate targeting CD46, and our PET imaging agent, and mCRPC. We expect the initiation of the phase II monotherapy study for FG-3246 in the second quarter of 2025.
This study will also include a sub-study for FG-3180 as a companion diagnostic radiopharmaceutical. Lastly, we believe that roxadustat represents an important potential therapy for patients with anemia associated with lower-risk MDS. We plan to meet with the FDA in the second quarter of this year to further explore this opportunity, which we are considering developing on our own or via a potential partnership. We believe the regulatory interaction with the FDA next quarter will provide important clarity on the best path forward with the aim of realizing additional value for roxadustat in this high-value indication. Before we jump into the specifics of the China transaction, I would like to personally thank the FibroGen China team, led by Christine Chung, our Head of China Operations, and her deeply experienced leadership team, for their unwavering commitment to patients and successful commercialization of roxadustat in China.
FibroGen China has been an exemplary organization since its inception, and we know the entity will be in good hands moving forward. With that, I will now turn the call over to Dave to discuss the details of the transaction. Dave?
Thanks, Thane. I would like to reiterate Thane's comments around the hard work and commitment of our China organization. It has been a pleasure working alongside such talented and dedicated individuals. On slide four, we highlight the summary of key financial terms of the transaction. Under the terms of the agreement, FibroGen will receive an enterprise value of $85 million, plus FibroGen net cash held in China at closing, estimated to be approximately $75 million, totaling approximately $160 million. The value of FibroGen net cash in China includes FibroGen's portion of Falikang net cash, which is the joint distribution entity owned by FibroGen and AstraZeneca. The net cash payable at closing is subject to customary post-closing final adjustments. There is a $6 million holdback to serve as an offset against potential closing net cash adjustments, which will be released approximately 90 days post-closing.
There is a $4 million holdback to satisfy any indemnity claims, which will be released net of any claims paid or unresolved nine months post-closing. The transaction is expected to close by mid-2025, pending customary closing conditions, including regulatory review in China. The transaction does not include the Eluminex license agreement, whose rights will continue to be retained by FibroGen going forward. As Thane stated earlier, this transaction is truly transformative for FibroGen and allows the company to pay down its senior-term loan facility with MSTV, fully access our cash in China, and extend the company's runway into 2027 to support our U.S. development initiatives. I will turn the call back to Thane to provide an overview of our U.S. pipeline opportunities. Thane?
Thanks, Dave. I will now provide a brief overview of our exciting program in metastatic castration-resistant prostate cancer. Slide five highlights the unique opportunity that FG-3246 and FG-3180 present in mCRPC. FG-3246 is a potential first-in-class ADC with a novel antibody, YS5, which binds to a tumor-selective epitope of CD46 on the surface of cancer cells, including prostate cancer. The asset has already demonstrated promising early efficacy signals, both as a monotherapy and in combination with enzalutamide in two phase I studies, with an acceptable safety profile consistent with other MMAE-based ADC therapies. The program also includes FG-3180, a companion PET imaging agent. We believe that having a patient selection biomarker would allow us to better enrich the patient population in the phase III portion of the clinical development program, as well as enable the differentiation of FG-3246 in the prostate cancer treatment paradigm.
In addition, FG3180 could represent an important commercial opportunity as a companion diagnostic to FG-3246, similar to the PSMA- PET imaging agents. Lastly, FG-3246 has potential in multiple lines of mCRPC, as well as in other solid tumors. Slide six highlights the phase II monotherapy dose optimization trial design based on our discussion with the FDA. We plan to enroll 75 patients in the post-ARSI pre-chemo setting across three 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 a key 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 primary prophylaxis with G-CSF, which is intended to mitigate adverse events associated with neutropenia commonly seen with MMAE payloads.
The addition of G-CSF may enable a better-tolerated and more consistent treatment with the ADC, thereby extending duration of therapy and potentially enhancing efficacy measures such as rPFS. We have an interim analysis planned for mid-2026, which will include efficacy, safety, PK, and exposure response data, and we intend to share relevant data to all stakeholders as they become available, given the open-label design of the trial. Slide seven highlights the development strategy for FG-3246 and FG-3180, which we believe provides significant optionality in prostate cancer. We have a robust phase II monotherapy trial in the pre-chemo setting in mCRPC to further build upon the compelling efficacy data of 8.7 months of rPFS in 40 heavily pretreated biomarker unselected patients from the phase I monotherapy study.
The phase II monotherapy trial is designed to select the optimal dose for phase III based on the benefit-risk profile from this phase II trial. We believe that there are three factors that could drive rPFS even higher than was observed in the phase I monotherapy trial. First, preliminary evidence of exposure-response relationship, which allows us to focus our phase II study on three of the highest tolerated doses from the phase I dose escalation and expansion study. Second, utilizing primary prophylaxis with G-CSF to mitigate against neutropenia and allow patients more consistent exposure to the ADC with fewer dose interruptions or adjustments. Third, enrolling healthier patients in earlier lines of therapy versus the median five prior lines of therapy in the phase I trial.
In addition, the 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 registration pathways, as FG-3246 will be evaluated in multiple lines of therapy, in monotherapy and/or in combination with an ARSI, and in all-comers or potentially CD46 high selected patient populations. Turning to slide eight, we wanted to briefly touch on the potential opportunity for roxadustat in anemia associated with lower-risk MDS. Presently, there is a lack of effective and convenient second-line and beyond treatments, given the currently available therapies' reduced transfusion burden in approximately 50% of patients and require in-office administration every three to four weeks.
There are no oral options available or in late-stage development, which could be a meaningful differentiator for roxadustat and potentially translate into a significant commercial opportunity. Based on other lower-risk MDS development programs, we believe the indication would support an orphan drug designation, which would provide seven years of data exclusivity in the U.S. This potential exclusivity, combined with an attractive market opportunity and efficient commercial model, provides a significant economic opportunity for further development of roxadustat in the U.S. We look forward to our FDA meeting planned for the second quarter of 2025, which could pave the way for developing roxadustat for anemia associated with lower-risk MDS on our own or through a partnership. To conclude, on slide nine, we believe the sale of FibroGen China is a transformative transaction for FibroGen, and we are excited about the next chapter in the company's story.
We are confident that the shift to a lean U.S. organization focused on high-value indications in oncology and oncology-related diseases has the potential to create tremendous value for patients and stakeholders alike. With an extended cash runway into 2027, we plan to advance our exciting pipeline in the coming months, initiating the phase II monotherapy study for FG-3246 and FG-3180 in mCRPC, as well as meet with the FDA to determine the potential development path for roxadustat in the treatment of anemia associated with lower-risk MDS. These events will set the stage for the remainder of 2025 and beyond.
In summary, as a leaner and more focused organization, we will continue to execute on our strategic plan and strive towards evaluation that we believe is more reflective of our first-in-class phase II-ready CD46 targeting ADC and our potential phase III-ready opportunity in anemia associated with lower-risk MDS, bolstered by our strength and balance sheet and elongated cash runway. We look forward to providing further updates to our stakeholders and our year-end earnings release next month. I will now turn the call over to the operator for Q&A.
As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Andy Hsieh with William Blair. Your line is open.
Oh, great. Thanks for taking our questions, and congratulations on the deal. Really transformative, as you mentioned. Just a couple of questions on the CD46 ADC asset. With the cash infusion from the China territory rights, I'm curious if that would push the timing forward in terms of the opt-in to Fortis so we can basically have more control over the entire development program. That is kind of question number or part one. We also attended the ASCO GU conference, and there is a KOL presentation on basically targets outside of PSMA, and CD46 came up. That is basically the next viable target. I'm curious if you can share some of the KOL feedback on the target and how tractable it is in prostate cancer. Just curious about what you've heard from the team.
Lastly, maybe from a capital allocation standpoint, just curious about maybe this question is for Dave, how you kind of balance out the development of 3246 and also the MDS anemia opportunity in the U.S. Thanks for taking our questions.
Hey, Andy. Thanks so much for the questions. I'll handle the first two ones, and I will turn it over to Dave to talk about the capital allocation part of your question. First, as it relates to the opt-in period that we have with Fortis and whether or not this transaction allows us to pull that forward, it really doesn't. The reason is because we've always based the option that we will ultimately choose to either move forward with or not based upon the outcome of the phase II trial.
The design that we have right now, where we will start the phase II next quarter, will run through not only an interim analysis, but also then the final analysis, which will give us the data that we need to determine whether or not we've got a product that we think would be competitive as part of a phase III design. If we do believe it would be competitive and we want to take it into phase III, that's when we would exercise the Fortis option. There's really no benefit for us pulling that option forward. We want to make sure that when we do exercise the $80 million option, that it is based upon a complete set of data that gives us the confidence of what we would potentially see in the phase III program.
In terms of the CD46 target, it's potentially an exciting target in addition to the PSMA-focused therapies. We are hearing that from KOLs. We had a team that was at ASCO GU last week meeting with a number of the sites that we are lining up for the phase II trial, and they're excited about the opportunity. They're excited about another option in the post-ARSI pre-chemo setting, one, because what we're hearing from thought leaders is this ARSI switch regimen is not, especially in the academic setting, is not as common or as attractive of an option for patients as previously thought, just because you don't get that much additional benefit when you switch from one ARSI to another. What these KOLs tell us that they hear from patients is that patients want to put off chemotherapy as long as possible.
We think that there's a really important sweet spot in the treatment paradigm post-ARSI and pre-chemo, and that's what we're hearing from thought leaders. They do desire a non-PSMA approach. There are a number of PSMA options out there. In their belief, based upon the data that's been generated to date, the monotherapy data in the 8.7 months of rPFS that was disclosed last year, as well as the preliminary efficacy data that Rahul Aggarwal from UCSF has disclosed as part of his IST in combination with enzalutamide, give people the perspective, give the KOLs the perspective that the target is active.
It is just a matter of making sure that we do the phase II development and really highlight what we believe is the optimal dose from a benefit-risk profile, elucidate the role that the PET imaging agent can play in a potential phase III design, and then move forward from there. Dave, you want to touch on the capital allocation question, and we will loop back with Andy to see if this answered his questions?
Yeah, absolutely. Andy, thank you for the questions. Appreciate it. I think for us and how we think about balancing the development of FG-3246 and MDS is FG-3246 is our lead asset, and we are intent on kicking off the initiation of the phase II study here in the second quarter, right? From our perspective, from an MDS anemia opportunity, we really want to meet with the FDA to get a better feel for the development pathway go forward for roxadustat in MDS. As you think about our capital allocation, we are set on running our phase II study and kicking that off for FG-3246, and then really want to take an opportunistic approach with the MDS opportunity based upon the feedback that we receive from the FDA and the potential development pathway forward.
As Thane alluded to earlier, we would potentially pursue that internally or seek a partner for that opportunity as well.
Yeah, that's super helpful. Thank you so much.
Thanks, Andy.
Thank you. As a reminder to ask a question, please press star one one. Again, that is star 11 to ask a question. Our next question comes from Matthew Keller with H.C. Wainwright. Your line is open.
Great. Good morning and congrats on today's announcement. Obviously, very exciting news. Two quick questions from us. Kind of touched on previously, but can you talk about maybe how today's announcement may alter your calculus behind your own internal development, U.S. development of roxadustat? Relatedly, is it possible that the extension and really the improvement of your cash runway changes or even accelerates timelines for the other clinical programs, such as 3246?
Hey, Matt, thanks for the questions. I'll tackle them, and then I'll let Dave add in as well. The transaction really doesn't change the dynamics of the potential development of roxadustat. As Dave said, we have an important interaction coming up next quarter with the FDA, where we're going to seek their feedback and their guidance on what that potential development pathway could look like. We'll be exploring a couple of key questions, one around dosing and another around the patient population that we would target with an additional phase III trial. Based upon that feedback, we would potentially look to bolster our current cash position with additional capital to assist us in the startup of that program, if in fact we decide to do it, and if in fact we decide to do it on our own.
We could also seek a development partner, which would then likely reduce our needs from an external capital perspective. Really, the transaction does not change the roxadustat portion. In terms of the additional development opportunities that we have for the ADC, it does not speed those up. We have the clinical development pathway very well lined out. We have 75 patients that we are going to roll across three different dose cohorts. We plan on enrolling these patients at 25 different sites. Based upon our estimates of ramp rate and enrollment rate, we would see an interim analysis sometime in the middle of 2025. This transaction will not speed that up. We are continuing to plan on the start of that trial next quarter.
Yep. No, totally makes sense. Congrats again, and thanks for taking our questions.
No. Thanks, Matt.
Thank you. I'm showing no further questions at this time. I would now like to turn it back to Thane Wettig for closing remarks.
No, thanks. We appreciate everybody joining us for today's conference call and hearing our commentary on what we believe is the transformative nature of this transaction with AstraZeneca in China. We're very excited about the go-forward opportunities for FibroGen in terms of our ability to create value for stakeholders. Enjoy the rest of your day. Thanks, everyone.
This concludes today's conference call. Thank you for participating. You may now disconnect.