Categories Earnings Call Transcripts, Health Care

FibroGen, Inc. (FGEN) Q2 2022 Earnings Call Transcript

FGEN Earnings Call - Final Transcript

FibroGen, Inc.  (NASDAQ: FGEN) Q2 2022 earnings call dated Aug. 08, 2022

Corporate Participants:

Michael Tung — Vice President of Corporate Strategy and Investor Relations

Enrique Conterno — Chief Executive Officer

Juan Graham — Chief Financial Officer

Mark Eisner — Chief Medical Officer

Thane Wettig — Chief Commercial Officer

Chris Chung — Senior Vice President, China Operations

Analysts:

Michael Yee — Jefferies — Analyst

Jack Podovano — Stifel — Analyst

Andy Hsieh — William Blair — Analyst

Brendan Smith — Cowen — Analyst

Paul Choi — Goldman Sachs — Analyst

Jason Gerberry — Bank of America — Analyst

Presentation:

Operator

Good day and thank you for standing by. Welcome to the FibroGen’s Second Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Michael Tung. Please go ahead.

Michael Tung — Vice President of Corporate Strategy and Investor Relations

Thank you, Bella, 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. Mark Eisner, our Chief Medical Officer; Juan Graham, our Chief Financial Officer; Dr. John Hunter, our Chief Scientific Officer; Thane Wettig, our Chief Commercial Officer; and Chris Chung, our Senior Vice President of China Operations.

The format for today’s call includes prepared remarks from Enrique and Juan, 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 statement, 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.

With that, I would like to turn the call over to Enrique Conterno, our CEO. Enrique?

Enrique Conterno — Chief Executive Officer

Very good. Thank you, Mike, and good afternoon, everyone, and welcome to our second quarter 2022 earnings call. On today’s call, I will provide a high-level summary of the most important accomplishments and developments in the second quarter of 2022, Juan Graham, our CFO, will then review the financials, after which we will open the call for your questions.

Starting with Slight 3. FibroGen is positioned to create significant value for patients and shareholders by executing on our three areas of focus. Number one, accelerating the development of pamrevlumab in three indications with significant unmet medical needs, idiopathic pulmonary fibrosis or IPF, locally advanced unresectable pancreatic cancer, or LAPC, and Duchenne muscular dystrophy, or DMB, Number two, ensuring commercial success of Roxadustat in patients with chronic kidney disease outside the U.S., while continuing to explore our path forward in the U.S. and Number 3, increasing our research productivity to advanced novel programs that leverage internal expertise and accessing external innovation for additional pipeline opportunities.

Let’s move to our clinical trials, beginning with pamrevlumab on Slide 4. Pamrevlumab is a wholly-owned asset in Phase III clinical trials for three high-value indications: IPF, LAPC, and DMD. Each one of these diseases represents an important unmet medical need and each constitutes a significant market opportunity. As we recently announced, during the second quarter, we completed enrollment of the LELANTOS-2 Phase III clinical trial of pamrevlumab in ambulatory patients with DMD. This brings the number of fully-enrolled pivotal pamrevlumab to 4: the ZEPHYRUS-1 trial in IPF, the LELANTOS-1 and LELANTOS-2 trials in non-ambulatory and ambulatory DMD, respectively; and the LAPIS trial in LAPC. Enrollment continues in our second ZEPHYRUS Phase III study in IPF, and we look forward to updating you as the trial progresses.

Moving now to locally advanced pancreatic cancer. As previously discussed, we set a very high bar for event-free survival that would have enabled us to file for accelerated approval. An independent interim analysis of event-free survival in the LAPIS Phase III study was conducted in the second quarter. Based on the interim analysis, we will not be filing a BLA for accelerated approval. As planned, the study will continue to its primary endpoint of overall survival with top line data expected in the first half of 2024. It is very exciting to be expecting data readouts from four pivotal Phase III trials in 2023. The ZEPHYRUS-1 Phase III trial in IPF mid-2023; the LELANTOS-1 and LELANTOS-2 Phase III trials in DMD, in the first half of 2023 and the second half of 2023, respectively; and the MATTERHORN Phase III trial of roxadustat in MDS in the first half of 2023.

I’d now like to spend a few minutes highlighting our perspective on the significant commercial opportunity we see with pamrevlumab in each of the three disease areas on Slide 5, beginning with IPF. With a diagnosed prevalence of approximately 330,000 patients across the U.S., EU, China, and Japan, IPF represents a significant opportunity, with the two approved IPF therapies generating almost USD4 billion in net revenue in 2021. Despite this market size, there remains significant unmet need with these two approved therapies, as characterized by continued disease progression and challenging tolerability. There is sentiment in the IPF community of limitation with the current therapies and a desire for additional therapeutic options.

If the Phase III ZEPHYRUS program produces similar results to the Phase II PRAISE trial, we believe pamrevlumab has the potential to help a sizable number of patients with IPF and be a very significant medicine for FibroGen. In the middle column, you can see the locally advanced pancreatic cancer opportunity. Pancreatic cancer represents one of the largest unmet needs in oncology, given that diagnosed prevalence of over 90,000 patients across the major regions combined, with a low 5-year disease-free survival rate of around 10%. There have been limited treatment advances in the nonmetastatic setting over the last two decades with immune-oncology therapies failing to demonstrate survival benefits over the current standard-of-care. There is limited late-stage development activity in nonmetastatic pancreatic cancer, which creates a meaningful commercial opportunity for pamrevlumab in LAPC if it can demonstrate a significant improvement in overall survival.

In addition, the pancreatic cancer action networks Precision Promise adaptive trial platform evaluating pamrevlumab in combination with standard-of-care for patients with metastatic pancreatic cancer continues to progress. And finally, in the third column, we wrap up the pamrevlumab market section with a snapshot of the DMD opportunity. Given the devastating nature of DMD and the relentless progression of the disease, we’re hopeful that the LELANTOS-2 Phase III program can lead to an approved therapy that is desperately needed by the DMD community.

While the currently approved exon-skipping therapies produce an increase in the dystrophin levels, they are targeted to a small proportion of DMD patients. There is a clear need for therapies that can [Indecipherable] disease progression by targeting the downstream pathological changes to improve muscle function and prolonged ambulation. We believe the antifibrotic mechanism of pamrevlumab may be a solution that can help these patients and their families.

Now let’s move to roxadustat on Slide 6. Roxadustat continues to be approved in additional countries and was recently approved in Mexico and South Africa. It is now approved in China, Europe, Japan, and numerous other countries for the treatment of CKD patients on dialysis and not on dialysis. Evrenzo has an important first-mover advantage in the EU relative to other HIF-PH and Astellas recently received positive reimbursement decisions in the U.K., Finland, Slovakia, and Sweden. We believe the anemia of CKD opportunity in Europe is significant. Our initial uptake has been slower than expected in the EU countries where Evrenzo has launched. The early feedback from healthcare providers prescribing Evrenzo has been positive. As noted earlier, we continue development of roxadustat in MDS with the partners AstraZeneca and Astellas.

Moving now to China. Roxadustat continues its strong performance. As you can see on Slide 7, we are reporting second quarter total roxadustat net sales in China of USD53.1 million by FibroGen under joint distribution entity compared to USD52.8 million in the second quarter of 2021. This was driven by an increase of over 80% in volume offset, benefiting from the price reduction of the NRDL. We continue to expect roxadustat net sales growth for the full year in China, driven by significant growth in volume. FibroGen’s proportion of roxadustat net product revenue in China was USD23.3 million for the second quarter on a U.S. GAAP basis. Juan will elaborate further in the financial update.

Turning now to the updated external market data on Slide 8. Roxadustat continues to be the number one branded treatment for anemia CKD, as measured by the value share in the category, which includes all ESA products and roxadustat. We expect this category leadership to continue as roxadustat volume continues to grow at a fast pace. Next, Slide 9 provides a snapshot of roxadustat unit growth as indexed to December 2020 on the chart on the left as well as year-over-year growth in the table on the right. Of note is a significant unit growth of roxadustat, while the leading ESA brand is slightly up, reflecting the anemia of CKD market expansion that has been driven by roxadustat since its original NRDL listing in 2020.

I will now turn the call over to our CFO, Juan Graham, for the financial update. Juan?

Juan Graham — Chief Financial Officer

Thank you, Enrique. Before jumping into my financial remarks, I would like to highlight the remarkable effort by our team in China despite COVID lockdown challenges, they continue to put patients with CKD anemia at the forefront of everything they do, enabling the outstanding financial results for the quarter. As mentioned by Enrique, we continued to build momentum on our Ccinical trial execution and enrollment for Pamrevlumab. I also want to take some time to thank our colleagues for the day-to-day energy and passion to move our clinical trials forward which we hope will have a significant impact on patients suffering from idiopathic pulmonary fibrosis, locally advanced unresectable pancreatic cancer, and Duchenne muscular dystrophy.

Now getting into our financials, total revenue for the quarter was $29.8 million compared to $24.4 million for the same period in 2021. This represents growth of 22% quarter-over-quarter. Breakdown of revenue sources are as follows. We recorded $23.3 million of net product revenue for roxadustat sales in China compared to $13.4 million in the second quarter of 2021. During the quarter, we also recorded development revenue of $5.5 million associated with co-development efforts for roxadustat with our partners as compared t $19.66 million during the second quarter of 2021. Given the stage of roxadustat development and as anticipated, we expect a reduction in co-development revenue in the coming quarters. Finally, we recorded $1.1 million in drug product revenue for roxadustat bulk drugs or active pharmaceutical ingredients sold to Astellas as compared to a negative $8.6 million in the same period last year.

Diving deeper into the operational results of our roxadustat business in China, total roxadustat net sales from the joint distribution entity jointly owned by AstraZeneca and FibroGen or JDE was $53.1 million this quarter compared to $52.8 million in the second quarter of 2021. It is worth noting that this quarter sales include a one-time gross to net adjustment resulting in a net sales reduction of $3 million related to distributor adjustment due to the new NRDL price.

Excluding this impact, underlying roxadustat sales growth versus Q2 2021 was 6%. Further, the sales performance is a result of the significant volume increase of over 80% offsetting the 2021 NRDL price renewal. As I previously mentioned, the growth experienced by our China operations continues to be strong and in line with our expectations with year-over-year growth in sales. Moving from total roxadustat net sales in China, FibroGen’s net transfer price from sales to the JDE was $18.2 million for the second quarter, consistent with the 30% to 45% range of the JDE’s roxadustat net sales, which we have continuously guided. During this quarter, we released $1.5 million from deferred revenue due to the change in our future estimates as per US GAAP. As we have communicated in the past, the deferred revenue balance in FibroGen China fluctuates based on management estimates of future revenue. It is worth highlighting that we expect further release of deferred revenue in future quarters.

As a result FibroGen recorded $19.7 million in net revenue for the quarter from roxadustat sales to the JDE and $3.5 million of direct to distributor sales from FibroGen China. Making our way down the P&L, operating costs and expenses were $108 million compared to $158.2 million for the second quarter in 2021. This decrease in operating costs is driven by a one-time charge of $25 million related to our partnership with HiFiBiO incurred in the prior year period. Lower R&D expenses with our Phase 3 clinical trials including drug supply costs associated with our Pamrevlumab programs and overall cost management efforts in our infrastructure, inflationary pressures. During the second quarter of 2022, net loss was $72.6 million or $0.78 net loss for both basic and diluted shares as compared to net loss of $134 million or $1.45 per basic and diluted shares for the second quarter last year.

At June 30th, we reported $517.6 million in cash, cash equivalents, investments, and accounts receivable. We estimate our 2022 ending balance of cash, cash equivalents, investments, and accounts receivable to be in the range of $330 million to $360 million. This is a significant improvement to our initial 2022 ending cash guidance. This improvement has been driven through execution, enhancements, unlocking efficiencies, as well as investment prioritization throughout the organization. As I have mentioned in prior quarters, we believe we’re appropriately financed through key initial Pamrevlumab data readouts as we are privileged with a wide array of options to consider, as we continue to look for opportunities to strengthen our cash position over time.

I will conclude my financial remarks by mentioning that today, we are refreshing our S-3 shelf registration statement and have filed a prospectus supplement for an at-the-market or ATM equity offering. We have no near-term plans to utilize the ATM. We view this as a good corporate housekeeping and financial opportunity. Thank you. And now I’ll take the turn call back over to Enrique.

Enrique Conterno — Chief Executive Officer

In closing, and thank you, Juan, we remain committed to advancing pamrevlumab as a potential first-in-class medicine in Phase III development in three indications with significant unmet medical needs: idiopathic pulmonary fibrosis, locally advanced unresectable pancreatic cancer, and Duchenne muscular dystrophy. Notably, we expect top line data in 2023 from pamrevlumab, ZEPHYRUS-1 Phase III trial in IPF and the LELANTOS-1 and LELANTOS-2 Phase III trials in non-ambulatory and ambulatory DMD, respectively, as well as roxadustat MATTERHORN Phase III trial in MDS. Roxadusta continues to perform very well in China. Our partner, Astellas, is moving forward with commercialization of roxadustat in Europe. And in addition to the recent regulatory approvals, we have additional regulatory submissions under review in other geographies.

We continue to have a strong financial position with USD517.6 million in cash, and expect to end 2022 with USD330 million to USD360 million in cash. Additionally, we have multiple options to consider to further strengthen our balance sheet to ensure our long-term success. Now I would like to turn the call back to the operator for questions. Bella?

Questions and Answers:

Enrique Conterno — Chief Executive Officer

[Operator Instructions] Please stand by while we compile the Q&A roster. And our first question comes from the line of Michael Yee with Jefferies. Your line is now open.

Michael Yee — Jefferies — Analyst

Hi, guys. Thank you for the update. We had the two questions. Appreciating the LAPC study past the initial analysis and it’s going to continue, can you tell us if the IPF ZEPHYRUS-1 study has any interim or what can you say about what you’re looking at, is DSMB looking at it, or is there any interim on that study? And with the DMD studies as well that are reading out, what can you say about interims on those studies as well? Thank you.

Enrique Conterno — Chief Executive Officer

Thank you, Michael. I’m going to ask Dr. Eisner to answer your questions.

Mark Eisner — Chief Medical Officer

Thanks for your questions. Appreciate it. The answer is no, there is no further interim analysis for any of the studies including IPF or DMD. All of them of course have independent DMC monitors safety, but there are no planned interim analysis.

Michael Yee — Jefferies — Analyst

Okay and one final question as a follow-up, with the DMD studies, appreciate your novel endpoints and this is sort of travel path, have you talked with FDA on these endpoints and what you need to show and what data is required there to be deemed successful study? Thanks.

Mark Eisner — Chief Medical Officer

Yes. So, we do have endpoints for both the non-ambulatory and ambulatory studies. We have discussed those with FDA. The performance of the upper limb score is the endpoint for the non-ambulatory and for ambulatory it’s the North Star Ambulatory Assessment, these are standardized measures for both types of DMD patients. So, we expect that if we demonstrate efficacy based on these endpoints that there would be a path forward for filing an approval.

Michael Yee — Jefferies — Analyst

Okay, thank you.

Operator

Thank you. Your next question comes from the line of Annabel Samimy with Stifel. Your line is now open.

Jack Podovano — Stifel — Analyst

Hi, this is Jack calling in for Annabel. Thanks for taking our question. For TAM could you provide a little more color on how we should think about the IPF opportunity in the context of the current treatments available, what background treatments are allowed in those trials and how you expect to eliminate the noise around that? Thanks.

Enrique Conterno — Chief Executive Officer

Very good, thank you for the question, and I’m going to ask Mark to discuss our trial design for IPF and Thane to share a bit about what we’ve learned about the opportunity that we would have to look.

Mark Eisner — Chief Medical Officer

Right, so thanks for the question. So, the Zephyrus Phase 3 program of Pamrevlumab, it is placebo-controlled trials, PAM versus placebo for the treatment of IPF. Patients are not to be on background therapy when they enter the trial. We do allow both treatment-naive and treatment-experienced patients on the trial, but when they enter the study they’re not on the monotherapy trial design, Thane?

Thane Wettig — Chief Commercial Officer

Yeah. Thanks, Mark. So as we think about the commercial opportunity, I think there’s a couple of things to keep in mind. First is that we were able to replicate in our Phase 3 Zephyrus program what we’ve seen in the Phase 2 PRAISE trial. We would expect an indication for Pamrevlumab for the treatment of patients with IPF. As we have investigated the current state related to the current standards of care, it’s pretty clear and this is based upon published literature that given the tolerability challenges associated with both [Indecipherable] upwards of 40% to 50% of patients who started on either of those therapies had stop taking it by — at the end of the first year, and so there is a significant unmet need not only as it relates to disease progression, but really as it relates to keeping patients on therapy and again if we reflect on the PRAISE Phase 2 data and we looked at the tolerability profile while not head-to-head against that, we’re pretty confident that we’ve got a product that’s not only demonstrated very significant efficacy, but also tolerability profile that we think could be the differentiation relative to the two current available therapies.

Jack Podovano — Stifel — Analyst

Great, thanks so much.

Operator

And your next question comes from the line of Andy Hsieh with William Blair. Your line is now open.

Andy Hsieh — William Blair — Analyst

Okay. Thanks for taking my questions and congratulations on the very robust China launch — well continued China launch, and also the clinical progress with Pamrevlumab. I have two questions, both on Pamrevlumab, So, the first one has to do with the futility analysis from the last study. I’m just curious about how derisking is that the futility analysis, so, is that kind of like a garden variety hazard ratio greater than one or it’s more integrated than that, and also when looking at the futility analysis, EFS or OS? And my second question has to do with the — also the lack of study design. I noticed that in 2019 when the trial was first initiated only Gem/Abraxane was included, subsequently FOLFIRINOX was added, and so I’m just trying to get an appreciation about how the incorporation of FOLFIRINOX might affect the primary analysis down the road? Thanks for taking my questions.

Enrique Conterno — Chief Executive Officer

Thank you, Andy. I’ll have Mark answer both of your questions on the futility analysis for LAPIS and then on the incorporation of FOLFIRINOX as background — accepted background therapy for that trial.

Mark Eisner — Chief Medical Officer

Sure. So, the independent statistician conducted an analysis of event-free survival and that was actually to look for efficacy that could have supported our early accelerated filing, so we are — based on that analysis we’re moving forward with the overall survival endpoint as planned, which was and remains the primary endpoint for the trial. So, it wasn’t really a futility analysis as much as it was, an early look at efficacy based on the surrogate endpoint of event free survival and on the call we’ve said previously that we did show this as a very high bar to crossover and we thought it was unlikely that we would hit the event free survival of given the very high unmet medical need in pancreatic cancer and the desperate need patients for therapy, we did put this interim EFS analysis in place. But, we are moving forward with the OS, which was our base case among what we were planning.

In terms of the background chemotherapy, you’re quite right, the initial design was Gem/Nab and now it allows — it also allowed for FOLFIRINOX as well. So, a third of the patients I think are on for FOLFIRINOX is about on chemotherapy. The rationale is that this is a commonly prescribed chemotherapy regimen, it’s particularly favored by oncologic surgeons, so we thought it was important to allow both of these commonly used backbone chemotherapy regimens into the trial of Pam versus placebo on top of background chemotherapy. So, will be able to look at both the overall population and subgroups with both of the individual chemotherapy backgrounds.

Andy Hsieh — William Blair — Analyst

That’s very helpful, thank you so much.

Operator

Your next question comes from the line of Aaron Werber with Cowen. Your line is now open.

Brendan Smith — Cowen — Analyst

Hi guys, this is Brendan on of Aaron, thanks for taking my question. Just a couple of questions on DMD from us as well. I guess, looking ahead to those readouts next year and maybe also evolving through the landscape that I know you — you acknowledged in your prepared remarks that I guess are more so for the specific DMD genotypes, I get curious, are you all tracking the different subtypes in the patients in your study and the different background therapies they’re on, can you just remind us do you require them to come off, maybe there is some exon-skipping therapies?

And I guess kind of related to that based on your conversations with regulators up to now, do you expect any additional studies might be necessary to incorporate Pamrevlumab into the current paradigm maybe where there are genetically targeted therapies available and maybe just let us know if there is something you’re considering moving forward/Thanks very much.

Enrique Conterno — Chief Executive Officer

Very good. I think those are questions for Mark. Mark, could you address the questions around DMD.

Mark Eisner — Chief Medical Officer

Sure. So both LELANTOS-1 and 2, patients are on background corticosteroids as standard of care, but they’re not on exon-skipping therapies or other gene therapy, so those will be exclusion criteria for our trial. And then in terms of your question about will additional studies necessary for approval, we don’t think additional studies will be necessary for approval. We think the LELANTOS-1 and LELANTOS-2 either individually or together could serve as the basis for an approval for DMD. There are other interesting clinical questions that we are thinking about that we could be entering down the road, but those will not be necessary for the initial approval.

Brendan Smith — Cowen — Analyst

Okay, great, thanks very much.

Operator

And your next question comes from the line of Paul Choi with Goldman Sachs. Your line is now open.

Paul Choi — Goldman Sachs — Analyst

Hi, thank you. Good afternoon and thanks for taking our questions. I had one question on the commercial side perhaps for other Enrique or Chris, just as you think about the impact from COVID during your Q2 performance, can you maybe just quantify for us how many patients or any slowdown in treatment you may have reserves and how you’re thinking about that impact on the forward here over the balance of 2022? And my second question is on Pamrevlumab, you completed enrollment for the first one trial, but I was wondering if you provide a status update on the second trial, its enrollment status and whether if the Zephyrus-1 is successful, whether that plus your Phase 2 study could potentially serve as a basis for a filing?

Enrique Conterno — Chief Executive Officer

Very good. Thank you, Paul. And I’m going to ask Chris to answer the first question on China and Mark to answer the question around Zephyrus-2 and the ability to file a Zephyru-1 price, Chris?

Chris Chung — Senior Vice President, China Operations

Thank you, Enrique. Thank you, Paul, for the question, I believe you asked if there is a way for us to quantify the impact of COVID on our first half performance, so this background and this is publicly available information, the multinationals in China have just disclosed on average they have lost about 10% of revenues for the first half of the year due to COVID. Obviously, roxadustat has seen an uptake in volume [Indecipherable]. It is very difficult for us to tell you net-net what we — what is done, had it not been for COVID, however, I believe, generally, the market seized the oral administration roxadustat as a significant advantage. So, we suspect we benefited from it. We also came out of the NRDL price reduction with tremendous momentum and that accounts for more of the market uptake, and generally, we had 18 between AstraZeneca and FibroGen, who are experienced now, almost three years after launch and executing very well. So, on the positive side, there were many things going for us, it’s hard for me to tell you how much more business we would have done without COVID, but we’re obviously very pleased with the results and I don’t think those factors I just mentioned would continue to bring us good — good topline in the second half of the year.

Mark Eisner — Chief Medical Officer

Yeah. So, Pamrevlumab for Zephyrus-2, we have not yet provided guidance on when we anticipate enrollment to complete, but we are making very good progress and we’re very excited about our efforts there. In terms of the filing strategy, I think as we’ve said before, we — our base case is Zephyrus-1 and Zephyrus-2 will be needed to file. With that said, if we have strong Zephyrus-1 data because those data will be coming first, we would potentially explore with FDA whether that Zephyrus-1 trial could be filed with the Phase 2 PRAISE study for an initial approval as you suggested.

Brendan Smith — Cowen — Analyst

Okay, thank you very much.

Operator

And your last question comes from the line of Jason Gerberry with Bank of America. Your line is now open.

Jason Gerberry — Bank of America — Analyst

Hi, guys, thanks for taking my questions. Just first on DMD, apologies if I missed this, you stated in the past, but are the ambulatory, non-ambulatory populations potentially like separate — at the basis of separate filings if one work versus another not working, just curious how that would pan out, I just wanted to get your views, is it sort of the non-ambulatory that the higher risk trial of the two from your perspective? And then shifting over to roxa, just commercially as we think ahead of the growth dynamic where you kind of work through with higher volumes offset the NRDL impact, we have maybe a one or two year period of no NRDL comp to deal with, do you expect the NRDL cuts to get smaller with each successive cut, if you have a perspective on that or any analogs that you think are relevant that would be helpful? Thanks.

Enrique Conterno — Chief Executive Officer

Very good. Why don’t we start with the China question first, I’m going to have Chris tackle that one, and then Mark, you can address the question about LELANTOS-1 and LELANTOS-2 and the potential of filing those based on independent results.

Chris Chung — Senior Vice President, China Operations

So, first I want to make sure I understand the question correctly. We did state that we believe part of the volume uptake in the current calendar years due to the NRDL price cut and the question is whether we expect subsequent price cuts of a lower range, so not talking about Roxadustat specifically, but about NRDL generally, the industry expects the first cut to be the most significant, which is what we experienced in 2019. We have to conceal certain amount on price you can get into the NRDL. Subsequent pricing cuts are dependent on a variety of factors, first the rules for price cut change every single year, many will tell you and this is publicly disclosed that the 2021 was significant because budget allocations were diverted to COVID controls. So it’s hard to predict, but as a general rule, the price cuts will decrease with time, it is hard pressed to predict if our next cut would be less than what we experienced in the past. that’s what we would hope for, it would depend on how much volume we actually uptake and how much of the national budget we actually take. The pricing of our competitors at that time just ease us on a variety of factors, but we’re certainly hopeful that the next cut would be smaller than what we just experienced. I hope I answered your question.

Mark Eisner — Chief Medical Officer

And then your question about DMD. I think it’s a really good question about the ambulatory and non-ambulatory population. If you think about deferrals today right basically from skipping therapies have improved — approved on biomarker data than any real clinical evidence besides the biomarker, I think we have a very good chance at filing either the LELANTOS-1 or LELANTOS-2 studies non-ambulatory or ambulatory alone together depending on the data. If the data are strong, I think they could support a filing, so it’s something we’re actively discussing internally. We’ll see what the data show, of course, non-ambulatory LELANTOS-1 is coming first, but the unmet need here is so high and the patients and [Indecipherable] so desperately need of new therapies that we would do everything possible with positive data in hand to try to get that approved as expeditiously as possible.

Operator

And I see no further questions at this time, I would now like to turn the conference back over to Enrique Conterno.

Enrique Conterno — Chief Executive Officer

Thank you, Bella, and thank you to everyone for your participation in today’s investor call and your interest in FibroGen, enjoy the rest of your day. Thank you very much.

Operator

[Operator Closing Remarks]

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