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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-36740

 

FIBROGEN, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

77-0357827

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

409 Illinois Street

 

 

San Francisco, CA

 

94158

(Address of Principal Executive Offices)

 

(Zip Code)

(415) 978-1200

Registrant’s telephone number, including area code:

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value

FGEN

The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes No ☑

The number of shares of common stock outstanding as of April 30, 2024 was 99,475,398.

 

 


 

FIBROGEN, INC.

TABLE OF CONTENTS

 

 

 

Page

PART I—FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements

 

2

 

Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 (Unaudited)

 

2

 

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023 (Unaudited)

 

3

 

Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2024 and 2023 (Unaudited)

 

4

 

Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the Three Months Ended March 31, 2024 and 2023 (Unaudited)

 

5

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (Unaudited)

 

6

 

Notes to the Condensed Consolidated Financial Statements (Unaudited)

 

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

41

Item 4.

Controls and Procedures

 

42

 

 

 

 

PART II—OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

43

Item 1A.

Risk Factors

 

43

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

80

Item 3.

Defaults Upon Senior Securities

 

80

Item 4.

Mine Safety Disclosures

 

80

Item 5.

Other Information

 

80

Item 6.

Exhibits

 

80

 

Signatures

 

82

 

1


FIBROGEN, INC.

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

March 31, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

105,734

 

 

$

113,688

 

Short-term investments

 

 

71,865

 

 

 

121,898

 

Accounts receivable, net ($7,122 and $6,079 from related parties)

 

 

37,083

 

 

 

12,553

 

Inventories

 

 

27,335

 

 

 

41,565

 

Prepaid expenses and other current assets

 

 

36,150

 

 

 

41,855

 

Total current assets

 

 

278,167

 

 

 

331,559

 

Restricted time deposits

 

 

1,658

 

 

 

1,658

 

Property and equipment, net

 

 

12,166

 

 

 

13,126

 

Equity method investment in unconsolidated variable interest entity

 

 

5,776

 

 

 

5,290

 

Operating lease right-of-use assets

 

 

64,751

 

 

 

68,093

 

Other assets

 

 

3,350

 

 

 

3,803

 

Total assets

 

$

365,868

 

 

$

423,529

 

 

 

 

 

 

 

Liabilities, redeemable non-controlling interests and deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

4,353

 

 

$

17,960

 

Accrued and other current liabilities ($45,870 and $39,814 to a related party)

 

 

164,286

 

 

 

172,891

 

Deferred revenue ($7,901 and $7,220 to related parties)

 

 

12,863

 

 

 

12,740

 

Operating lease liabilities, current

 

 

15,231

 

 

 

14,077

 

Total current liabilities

 

 

196,733

 

 

 

217,668

 

Product development obligations

 

 

17,446

 

 

 

17,763

 

Deferred revenue, net of current ($2,343 and $9,705 to a related party)

 

 

147,118

 

 

 

157,555

 

Operating lease liabilities, non-current

 

 

62,511

 

 

 

66,537

 

Senior secured term loan facilities, non-current

 

 

72,213

 

 

 

71,934

 

Liability related to sale of future revenues, non-current

 

 

52,216

 

 

 

51,413

 

Other long-term liabilities ($2,458 and $656 to a related party)

 

 

3,786

 

 

 

2,858

 

Total liabilities

 

 

552,023

 

 

 

585,728

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable non-controlling interests

 

 

21,480

 

 

 

21,480

 

Stockholders’ deficit:

 

 

 

 

 

 

Preferred stock, $0.01 par value; 125,000 shares authorized; no shares issued
   and outstanding at March 31, 2024 and December 31, 2023

 

 

 

 

 

 

Common stock, $0.01 par value; 225,000 shares authorized at March 31, 2024
   and December 31, 2023;
99,474 and 98,770 shares issued and outstanding at
   March 31, 2024 and December 31, 2023

 

 

995

 

 

 

988

 

Additional paid-in capital

 

 

1,652,243

 

 

 

1,643,641

 

Accumulated other comprehensive loss

 

 

(6,507

)

 

 

(6,875

)

Accumulated deficit

 

 

(1,874,853

)

 

 

(1,841,920

)

Total stockholders’ deficit attributable to FibroGen

 

 

(228,122

)

 

 

(204,166

)

Nonredeemable non-controlling interests

 

 

20,487

 

 

 

20,487

 

Total deficit

 

 

(207,635

)

 

 

(183,679

)

Total liabilities, redeemable non-controlling interests and deficit

 

$

365,868

 

 

$

423,529

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

2


FIBROGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Revenue:

 

 

 

 

 

 

License revenue

 

$

 

 

$

6,000

 

Development and other revenue (includes $294 and $1,624
   from a related party)

 

 

878

 

 

 

3,891

 

Product revenue, net (includes $27,113 and $21,372
   from a related party)

 

 

30,538

 

 

 

24,161

 

Drug product revenue, net (includes $1,184 and $2,109
   from a related party)

 

 

24,486

 

 

 

2,109

 

Total revenue

 

 

55,902

 

 

 

36,161

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

Cost of goods sold

 

 

25,753

 

 

 

3,491

 

Research and development

 

 

38,392

 

 

 

74,486

 

Selling, general and administrative

 

 

22,820

 

 

 

34,275

 

Total operating costs and expenses

 

 

86,965

 

 

 

112,252

 

Loss from operations

 

 

(31,063

)

 

 

(76,091

)

 

 

 

 

 

 

 

Interest and other, net

 

 

 

 

 

 

Interest expense

 

 

(4,996

)

 

 

(2,372

)

Interest income and other income (expenses), net

 

 

2,570

 

 

 

1,036

 

Total interest and other, net

 

 

(2,426

)

 

 

(1,336

)

 

 

 

 

 

 

 

Loss before income taxes

 

 

(33,489

)

 

 

(77,427

)

Provision for income taxes

 

 

33

 

 

 

74

 

Investment income in unconsolidated variable
   interest entity

 

 

589

 

 

 

796

 

Net loss

 

$

(32,933

)

 

$

(76,705

)

 

 

 

 

 

 

 

Net loss per share - basic and diluted

 

$

(0.33

)

 

$

(0.81

)

 

 

 

 

 

 

 

Weighted average number of common shares used to calculate
   net loss per share - basic and diluted

 

 

98,982

 

 

 

94,691

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

3


FIBROGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Net loss

 

$

(32,933

)

 

$

(76,705

)

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

392

 

 

 

(248

)

Available-for-sale investments:

 

 

 

 

 

 

Unrealized gain (loss) on investments, net of tax effect

 

 

(24

)

 

 

1,398

 

Other comprehensive gain (loss), net of taxes

 

 

368

 

 

 

1,150

 

Comprehensive loss

 

 

(32,565

)

 

 

(75,555

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

4


FIBROGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(In thousands, except share data)

(Unaudited)

 

 

 

For The Three Month Period

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Nonredeemable
Non-Controlling

 

 

Total

 

 

 

Redeemable
Non-Controlling

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Interests

 

 

Deficit

 

 

 

Interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Note 3)

 

Balance at
   December 31, 2023

 

 

98,770,247

 

 

$

988

 

 

$

1,643,641

 

 

$

(6,875

)

 

$

(1,841,920

)

 

$

20,487

 

 

$

(183,679

)

 

 

$

21,480

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(32,933

)

 

 

 

 

 

(32,933

)

 

 

 

 

Change in unrealized
   gain or loss on
   investments

 

 

 

 

 

 

 

 

 

 

 

(24

)

 

 

 

 

 

 

 

 

(24

)

 

 

 

 

Foreign currency
   translation
   adjustments

 

 

 

 

 

 

 

 

 

 

 

392

 

 

 

 

 

 

 

 

 

392

 

 

 

 

 

Shares issued from stock
   plans, net of payroll
   taxes paid

 

 

704,151

 

 

 

7

 

 

 

(160

)

 

 

 

 

 

 

 

 

 

 

 

(153

)

 

 

 

 

Stock-based
   compensation

 

 

 

 

 

 

 

 

8,762

 

 

 

 

 

 

 

 

 

 

 

 

8,762

 

 

 

 

 

Balance at
   March 31, 2024

 

 

99,474,398

 

 

$

995

 

 

$

1,652,243

 

 

$

(6,507

)

 

$

(1,874,853

)

 

$

20,487

 

 

$

(207,635

)

 

 

$

21,480

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at
   December 31, 2022

 

 

94,166,086

 

 

$

942

 

 

$

1,541,019

 

 

$

(5,720

)

 

$

(1,557,688

)

 

$

19,967

 

 

$

(1,480

)

 

 

$

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(76,705

)

 

 

 

 

 

(76,705

)

 

 

 

 

Change in unrealized
   gain or loss on
   investments

 

 

 

 

 

 

 

 

 

 

 

1,398

 

 

 

 

 

 

 

 

 

1,398

 

 

 

 

 

Foreign currency
   translation
   adjustments

 

 

 

 

 

 

 

 

 

 

 

(248

)

 

 

 

 

 

 

 

 

(248

)

 

 

 

 

Issuance of common
   stock under ATM
   Program

 

 

1,541,579

 

 

 

15

 

 

 

31,116

 

 

 

 

 

 

 

 

 

 

 

 

31,131

 

 

 

 

 

Shares issued from stock
   plans, net of payroll
   taxes paid

 

 

915,644

 

 

 

9

 

 

 

898

 

 

 

 

 

 

 

 

 

 

 

 

907

 

 

 

 

 

Stock-based
   compensation

 

 

 

 

 

 

 

 

16,112

 

 

 

 

 

 

 

 

 

 

 

 

16,112

 

 

 

 

 

Balance at March 31,
   2023

 

 

96,623,309

 

 

$

966

 

 

$

1,589,145

 

 

$

(4,570

)

 

$

(1,634,393

)

 

$

19,967

 

 

$

(28,885

)

 

 

$

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

5


FIBROGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(32,933

)

 

$

(76,705

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation

 

 

810

 

 

 

2,542

 

Amortization of finance lease right-of-use assets

 

 

10

 

 

 

423

 

Net accretion of premium and discount on investments

 

 

(1,294

)

 

 

(689

)

Investment income in unconsolidated variable interest entity

 

 

(589

)

 

 

(796

)

Loss on disposal of property and equipment

 

 

 

 

 

1

 

Stock-based compensation

 

 

8,762

 

 

 

16,112

 

Non-cash interest expense related to sale of future revenues

 

 

 

 

 

2,249

 

Impairment of investment

 

 

 

 

 

1,000

 

Realized loss on sales of available-for-sale securities

 

 

 

 

 

271

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(24,685

)

 

 

(1,299

)

Inventories

 

 

13,786

 

 

 

(1,940

)

Prepaid expenses and other current assets

 

 

5,271

 

 

 

38

 

Operating lease right-of-use assets

 

 

3,286

 

 

 

3,237

 

Other assets

 

 

219

 

 

 

1,072

 

Accounts payable

 

 

(13,587

)

 

 

40,473

 

Accrued and other liabilities

 

 

(2,989

)

 

 

(66,266

)

Operating lease liabilities, current

 

 

1,180

 

 

 

(371

)

Deferred revenue

 

 

(10,202

)

 

 

(18,877

)

Accrued interest expense related to sale of future revenues

 

 

(3,638

)

 

 

 

Accrued interest for finance lease liabilities

 

 

14

 

 

 

(56

)

Operating lease liabilities, non-current

 

 

(4,001

)

 

 

(2,720

)

Other long-term liabilities

 

 

1,292

 

 

 

710

 

Net cash used in operating activities

 

 

(59,288

)

 

 

(101,591

)

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(29

)

 

 

(591

)

Purchases of available-for-sale securities

 

 

(8,628

)

 

 

(2,472

)

Proceeds from sales of available-for-sale securities

 

 

 

 

 

1,730

 

Proceeds from maturities of investments

 

 

59,933

 

 

 

104,815

 

Net cash provided by investing activities

 

 

51,276

 

 

 

103,482

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Repayments of finance lease liabilities

 

 

(12

)

 

 

(71

)

Repayments of lease obligations

 

 

 

 

 

(101

)

Cash paid for payroll taxes on restricted stock unit releases

 

 

(153

)

 

 

 

Proceeds from issuance of common stock under ATM Program, net of commissions

 

 

 

 

 

30,750

 

Proceeds from issuance of common stock under employee stock plans

 

 

 

 

 

907

 

Net cash provided by (used in) financing activities

 

 

(165

)

 

 

31,485

 

Effect of exchange rate change on cash and cash equivalents

 

 

223

 

 

 

(526

)

Net increase (decrease) in cash and cash equivalents

 

 

(7,954

)

 

 

32,850

 

Total cash and cash equivalents at beginning of period

 

 

113,688

 

 

 

155,700

 

Total cash and cash equivalents at end of period

 

$

105,734

 

 

$

188,550

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

6


FIBROGEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Significant Accounting Policies

Description of Operations

FibroGen, Inc. (“FibroGen” or the “Company”) is headquartered in San Francisco, California, with subsidiary offices in Beijing and Shanghai, People’s Republic of China (“China”). FibroGen is developing and commercializing a diversified pipeline of novel therapeutics that work at the frontier of cancer biology and anemia.

Pamrevlumab, a human monoclonal antibody targeting connective tissue growth factor, is in Phase 3 clinical development for the treatment of locally advanced unresectable pancreatic cancer. Pamrevlumab is also in Phase 2/3 development for the treatment of metastatic pancreatic cancer. To date, the Company has retained exclusive worldwide rights for pamrevlumab.

Roxadustat is an oral small molecule inhibitor of HIF prolyl hydroxylase activity. Roxadustat (爱瑞卓®, EVRENZOTM) is approved in China, Europe, Japan, and numerous other countries for the treatment of anemia in chronic kidney disease (“CKD”) for patients who are on dialysis and not on dialysis. Roxadustat is in clinical development for chemotherapy-induced anemia in China.

FibroGen is also developing earlier stage clinical and preclinical product candidates, FG-3246, FG-3165 and FG-3175, to address unmet patient needs in oncology.

Basis of Presentation and Principles of Consolidation

The condensed consolidated financial statements include the accounts of FibroGen, its wholly-owned subsidiaries and its majority-owned subsidiaries, as well as any variable interest entity (“VIE”) for which FibroGen is the primary beneficiary. All inter-company transactions and balances have been eliminated in consolidation. For any VIE for which FibroGen is not the primary beneficiary, the Company uses the equity method of accounting.

The Company operates as one reportable segment — the discovery, development and commercialization of novel therapeutics to treat serious unmet medical needs.

The unaudited condensed consolidated financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) applicable to interim financial reporting and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and footnote disclosures normally included in the annual consolidated financial statements. The financial information included herein should be read in conjunction with the consolidated financial statements and related notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed on February 26, 2024.

Based on its current operating plan, which contemplates the maintenance of a minimum balance of $30 million of unrestricted cash and cash equivalents held in accounts in the U.S., as required under the debt covenants associated with the senior secured term loan facilities, the Company believes that its existing cash and cash equivalents, short-term investments and accounts receivable will be sufficient to meet its anticipated cash requirements for at least the next 12 months from the date of issuance of the financial statements. However, the Company may need additional capital to fund its operations and its liquidity assumptions may materially differ. For example, the Company may utilize its available financial resources sooner than it currently expects and may incur additional expenses. In addition, the Company may elect to raise additional funds at any time through equity, equity-linked, debt financing arrangements or from other sources.

7


Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions include valuation and recognition of revenue and deferred revenue, specifically, estimates in variable consideration for drug product sales, and estimates in transaction price per unit for the China performance obligation. On an ongoing basis, management reviews these estimates and assumptions. Changes in facts and circumstances may alter such estimates and actual results could differ from those estimates. In the Company’s opinion, the accompanying unaudited condensed consolidated financial statements include all normal recurring adjustments necessary for a fair statement of its financial position, results of operations and cash flows for the interim periods presented.

Significant Accounting Policies

The accounting policies used by the Company in its presentation of interim financial results are consistent with those presented in Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed on February 26, 2024.

Net Loss per Share

Potential common shares that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive and as such, these shares are not included in the calculation of diluted earnings per share. The Company reported a net loss for each of the three months ended March 31, 2024 and 2023. Therefore, dilutive common shares are not assumed to have been issued since their effect is anti-dilutive for these periods.

Diluted weighted average shares excluded the following potential common shares related to stock options, service-based restricted stock units (“RSUs”), performance-based RSUs (“PRSUs”), total shareholder return (“TSR”) awards and shares to be purchased under the 2014 Employee Stock Purchase Plan (“ESPP”) for the periods presented as they were anti-dilutive (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Employee stock options

 

 

12,484

 

 

 

7,578

 

RSUs, PRSUs and TSR awards

 

 

3,605

 

 

 

2,762

 

ESPP

 

 

533

 

 

 

362

 

 

 

 

16,622

 

 

 

10,702

 

Risks and Uncertainties

The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, the results of clinical trials and the achievement of milestones, research developments, actions by regulatory authorities, market acceptance of the Company’s product candidates, competition from other products and larger companies, the liquidity and capital resources of the Company, intellectual property protection for the Company’s proprietary technology, strategic relationships, and dependence on key individuals, suppliers, clinical organization, and other third parties.

Recently Issued Accounting Guidance Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires all public entities, including public entities with a single reportable segment, to provide in interim and annual periods one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance. In addition, this guidance requires disclosures of significant segment expenses and other segment items as well as incremental qualitative disclosures. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods after December 15, 2024, with retrospective application required, and early adoption permitted. The Company is currently in the process of evaluating the effects of this guidance on its related disclosures.

8


In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires enhanced income tax disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently in the process of evaluating the impact of this pronouncement on its related disclosures.

2. Collaboration Agreements, License Agreement and Revenues

Astellas Agreements

Astellas Japan Agreement

In June 2005, the Company entered into a collaboration agreement with Astellas Pharma Inc. (“Astellas”) for the development and commercialization (but not manufacture) of roxadustat for the treatment of anemia in Japan (“Astellas Japan Agreement”). Under this agreement, Astellas agreed to pay license fees, other upfront consideration and various milestone payments, totaling $172.6 million. The Astellas Japan Agreement also provides for tiered payments based on net sales of product (as defined) in the low 20% range of the list price published by Japan’s Ministry of Health, Labour and Welfare, adjusted for certain elements, after commercial launch.

The aggregate amount of consideration received through March 31, 2024 totaled $105.1 million, excluding drug product revenue that is discussed under the Drug Product Revenue, Net section below. Based on its current development plans for roxadustat in Japan, the Company does not expect to receive most or all of the additional potential milestones under the Astellas Japan Agreement.

Amounts recognized as license revenue and development revenue under the Astellas Japan Agreement were not material for the three months ended March 31, 2024 and 2023.

The transaction price related to consideration received through March 31, 2024 and accounts receivable has been allocated to each of the following performance obligations under the Astellas Japan Agreement (in thousands):

Astellas Japan Agreement

 

Total Consideration
 Through
March 31, 2024

 

License

 

$

100,347

 

Development revenue

 

 

17,099

 

Total license and development revenue

 

$

117,446

 

 

There was no license revenue or development revenue resulting from changes to estimated variable consideration in the current period relating to performance obligations satisfied or partially satisfied in previous periods for the three months ended March 31, 2024 under the Astellas Japan Agreement. The Company does not expect material variable consideration from estimated future co-development billing beyond the development period in the transaction price related to the Astellas Japan Agreement.

In 2018, FibroGen and Astellas entered into an amendment to the Astellas Japan Agreement that allows Astellas to manufacture roxadustat drug product for commercialization in Japan (the “Astellas Japan Amendment”). The related drug product revenue is described under the Drug Product Revenue, Net section below.

Astellas Europe Agreement

In April 2006, the Company entered into a separate collaboration agreement with Astellas for the development and commercialization of roxadustat for the treatment of anemia in Europe, the Middle East, the Commonwealth of Independent States and South Africa (“Astellas Europe Agreement”). Under the terms of the Astellas Europe Agreement, Astellas agreed to pay license fees, other upfront consideration and various milestone payments, totaling $745.0 million. Under the Astellas Europe Agreement, Astellas committed to fund 50% of joint development costs for Europe and North America, and all territory-specific costs. The Astellas Europe Agreement also provides for tiered payments based on net sales of product (as defined) in the low 20% range.

The aggregate amount of consideration received under the Astellas Europe Agreement through March 31, 2024 totaled $685.0 million, excluding drug product revenue that is discussed under the Drug Product Revenue, Net section below. Based on its current development plans for roxadustat in Europe, the Company does not expect to receive most or all of the additional potential milestones under the Astellas Europe Agreement.

9


Amounts recognized as license revenue and development revenue under the Astellas Europe Agreement were as follows for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

 

 

Three Months Ended March 31,

 

Agreement

 

Performance Obligation

 

2024

 

 

2023

 

Astellas Europe Agreement

 

Development revenue

 

$

287

 

 

$

1,529

 

 

The transaction price related to consideration received through March 31, 2024 and accounts receivable has been allocated to each of the following performance obligations under the Astellas Europe Agreement as follows (in thousands):

Astellas Europe Agreement

 

Total Consideration
 Through
March 31, 2024

 

License

 

$

618,975

 

Development revenue

 

 

287,004

 

Total license and development revenue

 

$

905,979

 

 

There was no license revenue or development revenue resulting from changes to estimated variable consideration in the current period relating to performance obligations satisfied or partially satisfied in previous periods for three months ended March 31, 2024 under the Astellas Europe Agreement. The Company does not expect material variable consideration from estimated future co-development billing beyond the development period in the transaction price related to the Astellas Japan Agreement.

In 2021, the Company entered into an EU Supply Agreement with Astellas under the Astellas Europe Agreement (“Astellas EU Supply Agreement”) to define general forecast, order, supply and payment terms for Astellas to purchase roxadustat bulk drug product from FibroGen in support of commercial supplies. The related drug product revenue is described under the Drug Product Revenue, Net section below.

AstraZeneca Agreements

AstraZeneca U.S./Rest of World (“RoW”) Agreement

Effective July 30, 2013, the Company entered into a collaboration agreement with AstraZeneca AB (“AstraZeneca”) for the development and commercialization of roxadustat for the treatment of anemia in the U.S. and all other countries in the world, other than China, not previously licensed under the Astellas Europe and Astellas Japan Agreements (“AstraZeneca U.S./RoW Agreement”).

On February 23, 2024, the Company and AstraZeneca entered into an agreement to terminate the AstraZeneca U.S./RoW Agreement, effective as of February 25, 2024. Pursuant to the termination and transition agreement, AstraZeneca returns all of their non-China roxadustat rights to the Company, with the exception of South Korea, and provides certain assistance during a transition period. In addition, as a part of this termination and transition agreement, AstraZeneca will receive tiered mid-single digit royalties on FibroGen’s sales of roxadustat in the terminated territories, or thirty-five percent of all revenue FibroGen receives if it licenses or sells such rights to a third-party. Neither party incurred any early termination penalties.

The aggregate amount of consideration for milestone and upfront payments received under the AstraZeneca U.S./RoW Agreement through the termination totaled $439.0 million, excluding drug product revenue under the Master Supply Agreement with AstraZeneca under the AstraZeneca U.S./RoW Agreement (“AstraZeneca Master Supply Agreement”), entered in 2020, which is described under the Drug Product Revenue, Net section below. In addition, resulting from the above-mentioned termination and transition agreement, the Company and AstraZeneca settled the outstanding balances relating to past transactions under the AstraZeneca Master Supply Agreement. Accordingly, during the three months ended March 31, 2024, the Company accounted for the termination of the AstraZeneca U.S./RoW agreement as a contract modification under the Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”) and recorded a cumulative catch-up adjustment as described under the Drug Product Revenue, Net section below.

The Company’s collaboration agreement with AstraZeneca for roxadustat in China, as described below, remains in place.

10


AstraZeneca China Agreement

Effective July 30, 2013, the Company (through its subsidiaries affiliated with China) entered into a collaboration agreement with AstraZeneca for roxadustat for the treatment of anemia in China (“AstraZeneca China Agreement”). Under the terms of the AstraZeneca China Agreement, AstraZeneca agreed to pay upfront consideration and potential milestone payments, totaling $376.7 million. The AstraZeneca China Agreement is structured as a 50/50 profit or loss share (as defined), which was amended under the AstraZeneca China Amendment in 2020 as discussed below, and provides for joint development costs (including capital and equipment costs for construction of the manufacturing plant in China), to be shared equally during the development period.

The aggregate amount of such consideration received for milestone and upfront payments through March 31, 2024 totaled $77.2 million.

On September 18, 2023, the Company received the formal notice, from Beijing Medical Products Administration, of renewal of its right to continue to market Roxadustat in China through 2028. The Company evaluated the regulatory milestone payment associated with this renewal under the AstraZeneca China Agreement and concluded that this milestone was achieved in the third quarter of 2023. Accordingly, the consideration of $4.0 million associated with this milestone was included in the transaction price and allocated to performance obligations under the AstraZeneca U.S./RoW Agreement and the AstraZeneca China Agreement, $3.5 million of which was recognized as revenue during the third quarter of 2023 from performance obligations satisfied or partially satisfied. As of March 31, 2024, the $4.0 million milestone was recorded as a contract asset and was fully netted against the contract liabilities (deferred revenue) related to the AstraZeneca China Agreement.

AstraZeneca China Amendment

In July 2020, FibroGen China Anemia Holdings, Ltd., FibroGen (China) Medical Technology Development Co., Ltd. (“FibroGen Beijing”), and FibroGen International (Hong Kong) Limited and AstraZeneca entered into an amendment to the AstraZeneca China Agreement, relating to the development and commercialization of roxadustat in China (the “AstraZeneca China Amendment”). Under the AstraZeneca China Amendment, in 2020, FibroGen Beijing and AstraZeneca completed the establishment of a jointly owned entity, Beijing Falikang Pharmaceutical Co., Ltd. (“Falikang”), which performs roxadustat distribution, as well as conducts sales and marketing through AstraZeneca.

Substantially all direct roxadustat product sales to distributors in China are made by Falikang, while FibroGen Beijing continues to sell roxadustat product directly in one province in China. FibroGen Beijing manufactures and supplies commercial product to Falikang based on a gross transfer price, which is adjusted for the estimated profit share. The net product revenue from the sales to Falikang and the net product revenue from direct sales distributors in China are described under Product Revenue, Net section below.

Prior to the above-mentioned termination of the AstraZeneca U.S./RoW Agreement, the Company evaluated under the ASC 606 and accounted for the AstraZeneca U.S./RoW Agreement and the AstraZeneca China Agreement as a single arrangement with the presumption that two or more agreements executed with a single customer at or around the same time should be presumed to be a single arrangement. As a result of the termination of the AstraZeneca U.S./RoW Agreement, during the three months ended March 31, 2024, the Company recorded the final development revenue under the AstraZeneca U.S./RoW Agreement and AstraZeneca China Agreement. Amounts recognized as license revenue and development revenue under the AstraZeneca U.S./RoW Agreement and AstraZeneca China Agreement were as follows for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

 

 

 

Three Months Ended March 31,

 

Agreement

 

Performance Obligation

 

2024

 

 

2023

 

AstraZeneca U.S./RoW Agreement and AstraZeneca China Agreement

 

Development revenue

 

$

468

 

 

$

2,032

 

 

The transaction price related to consideration received and accounts receivable through the termination of the AstraZeneca U.S./RoW Agreement has been allocated to each of the performance obligations under the AstraZeneca U.S./RoW Agreement and AstraZeneca China Agreement, including $344.5 million for license, $625.6 million for co-development, information sharing and committee services, and $399.5 million for China performance obligation (with cumulative revenue of $222.9 million through March 31, 2024) that is recognized as product revenue, as described under Product Revenue, Net section below.

There was no license revenue or development revenue resulting from changes to estimated variable consideration in the current period relating to performance obligations satisfied or partially satisfied in previous periods for the three months ended March 31, 2024 under the AstraZeneca U.S./RoW Agreement through the agreement termination.

11


Product Revenue, Net

Product revenue, net from the sales of roxadustat commercial product in China was as follows for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Direct Sales:

 

 

 

 

 

 

Gross revenue

 

$

3,786

 

 

$

3,060

 

Discounts and rebates

 

 

(360

)

 

 

(273

)

Sales returns

 

 

(1

)

 

 

2

 

Direct sales revenue, net

 

 

3,425

 

 

 

2,789

 

 

 

 

 

 

 

 

Sales to Falikang:

 

 

 

 

 

 

Gross transaction price

 

 

43,560

 

 

 

34,249

 

Profit share

 

 

(19,023

)

 

 

(14,988

)

Net transaction price

 

 

24,537

 

 

 

19,261

 

Decrease in deferred revenue

 

 

2,576

 

 

 

2,111

 

Sales to Falikang revenue, net

 

 

27,113

 

 

 

21,372

 

Total product revenue, net

 

$

30,538

 

 

$

24,161

 

Direct Sales

Product revenue from direct roxadustat product sales to distributors in China is recognized in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those products, net of various sales rebates and discounts. The total discounts and rebates were immaterial for the periods presented.

Due to the Company’s legal right to offset, at each balance sheet date, the rebates and discounts are presented as reductions to gross accounts receivable from the distributor, or as a current liability to the distributor to the extent that the total amount exceeds the gross accounts receivable or when the Company expects to settle the discount in cash. The Company’s legal right to offset is determined at the individual distributor level. The contract liabilities were included in accrued and other current liabilities in the condensed consolidated balance sheet and the rebates and discounts reflected as reductions to gross accounts receivable for direct sales were immaterial as of March 31, 2024 and December 31, 2023, respectively.

Sales to Falikang – China Performance Obligation

Substantially all direct roxadustat product sales to distributors in China are made by Falikang. FibroGen Beijing manufactures and supplies commercial product to Falikang. The net transfer price for FibroGen Beijing’s product sales to Falikang is based on a gross transfer price, which is adjusted to account for the 50/50 profit share for the period.

The roxadustat sales to Falikang marked the beginning of the Company’s China performance obligation under the Company’s agreements with AstraZeneca. Product revenue is based on the transaction price of the China performance obligation. Revenue is recognized when control of the product is transferred to Falikang, in an amount that reflects the allocation of the transaction price to the performance obligation satisfied during the reporting period, and is expected to continue through 2033, which reflects our best estimates. Any net transaction price in excess of the revenue recognized is added to the deferred balance to date, and will be recognized in future periods as the performance obligation is satisfied.

Periodically, the Company updates its assumptions such as total sales quantity, performance period, gross transaction price and profit share and other inputs including foreign currency translation impact, among others. Following updates to its estimates, the Company recognized $2.6 million from the previously deferred revenue of the China performance obligation during the three months ended March 31, 2024. The product revenue recognized for the three months ended March 31, 2024 included a decrease in revenue of $2.1 million resulting from changes to estimated variable consideration in the current period relating to performance obligation satisfied in previous periods. Comparatively, following updates to its estimates, the Company recognized $2.1 million from the previously deferred revenue of the China performance obligation during the three months ended March 31, 2023.

12


The following table includes a roll-forward of the related deferred revenue that is considered as a contract liability (in thousands):

 

 

 

Balance at
December 31, 2023

 

 

Additions

 

 

Recognized as Revenue

 

 

Currency
Translation
and Other

 

 

Balance at
March 31, 2024

 

Product revenue - AstraZeneca China
   performance obligation - deferred revenue

 

$

(179,851

)

 

$

(24,950

)

 

$

27,113

 

 

$

1,057

 

 

$

(176,631

)

Deferred revenue includes amounts allocated to the China performance obligation under the AstraZeneca arrangement as revenue recognition associated with this unit of accounting is tied to the commercial launch of the products within China and to when the control of the manufactured commercial products is transferred to AstraZeneca. Contract assets and liabilities related to rights and obligations in the same contract are recorded net on the condensed consolidated balance sheets. As of March 31, 2024, deferred revenue included $149.7 million related to China performance obligation, which represents the net of $176.6 million of deferred revenue presented above and a $26.9 million unbilled milestone and co-development revenue under the AstraZeneca China Amendment.

As of March 31, 2024, approximately $5.0 million of the above deferred revenue related to the China unit of accounting was included in short-term deferred revenue, which represents the amount of deferred revenue associated with the China unit of accounting that is expected to be recognized within the next 12 months, associated with the commercial sales in China.

Due to the Company’s legal right to offset, at each balance sheet date, the rebates and discounts, mainly related to profit sharing, are presented as reductions to gross accounts receivable from Falikang, which was $3.4 million and $3.0 million as of March 31, 2024 and December 31, 2023, respectively.

Drug Product Revenue, Net

Drug product revenue from commercial-grade active pharmaceutical ingredient (“API”) or bulk drug product sales to Astellas and AstraZeneca was as follows for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Astellas Japan Agreement

 

$

(2,205

)

 

$

1,732

 

Astellas Europe Agreement

 

 

1,021

 

 

 

377

 

AstraZeneca U.S./RoW Agreement

 

 

25,670

 

 

 

 

Drug product revenue, net

 

$

24,486

 

 

$

2,109

 

Astellas Japan Agreement

The Company updates its estimate of variable consideration related to the API shipments fulfilled under the terms of Astellas Japan Amendment at each balance sheet date. As a result, the Company recorded a reduction to the drug product revenue of $2.2 million for the three months ended March 31, 2024. Specifically, the change in estimated variable consideration was based on the API held by Astellas at period end, adjusted to reflect the changes in the estimated bulk product strength mix intended to be manufactured by Astellas, and foreign exchange impacts, among others.

During the three months ended March 31, 2023, the Company updated its estimate of variable consideration related to the API shipments fulfilled under the terms of Astellas Japan Amendment, and accordingly recorded an adjustment to the drug product revenue of $1.7 million. Specifically, the change in estimated variable consideration was based on the API held by Astellas at period end, adjusted to reflect the changes in the estimated bulk product strength mix intended to be manufactured by Astellas, and estimated yield from the manufacture of bulk product tablets, among others.

As of March 31, 2024, the balances related to the API price true-up under the Astellas Japan Agreement were $1.6 million in accrued liabilities and $2.5 million in other long-term liabilities, representing the Company’s best estimate of the timing for these amounts to be paid. As of December 31, 2023, the balances related to the API price true-up under the Astellas Japan Agreement were $1.2 million in accrued liabilities and $0.7 million in other long-term liabilities.

13


Astellas Europe Agreement

The Company transferred bulk drug product for commercial purposes under the terms of the Astellas Europe Agreement and the Astellas EU Supply Agreement in the prior years. The Company recognized the related fully burdened manufacturing costs as drug product revenue in the respective periods and recorded the constrained transaction price in deferred revenue due to a high degree of uncertainty associated with the variable consideration for revenue recognition purposes. The Company updates its estimate of variable consideration related to the bulk drug product transferred in prior years at each balance sheet date.

During the fourth quarter of 2023, the Company transferred bulk drug product for commercial purposes under the terms of the Astellas Europe Agreement and the Astellas EU Supply Agreement, and recognized the related fully-burdened manufacturing costs of $0.8 million as drug product revenue, and recorded $17.7 million as deferred revenue due to a high degree of uncertainty associated with the variable consideration for revenue recognition purposes. In addition, the Company updated its estimate of variable consideration related to the bulk drug product transferred in prior years. Specifically, the change in estimated variable consideration was based on the bulk drug product held by Astellas at the period end, adjusted to reflect the changes in the estimated transfer price, forecast information, shelf-life estimates and other items. As a result, for the year ended December 31, 2023, the Company reclassified $38.7 million from the related deferred revenue to accrued liabilities. As of December 31, 2023, the related balance in accrued liabilities was $38.6 million. Further for the three months ended March 31, 2024, the Company reclassified $5.7 million from the related deferred revenue to accrued liabilities. As of March 31, 2024, the balances related to the bulk drug product price true-up under the Astellas Europe Agreement and the Astellas EU Supply Agreement were $44.3 million in accrued liabilities, representing the Company’s best estimate that these amounts will be paid within the next 12 months.

The Company recognized royalty revenue of $1.0 million and $0.4 million as drug product revenue from the deferred revenue under the Astellas Europe Agreement during the three months ended March 31, 2024 and 2023, respectively. It is the Company’s best estimate that the remainder of the deferred revenue will be recognized as revenue when uncertainty is resolved, based on the performance of roxadustat product sales in the Astellas territory.

The following table includes a roll-forward of the above-mentioned deferred revenues that are considered as contract liabilities related to drug product (in thousands):

 

 

 

Balance at
December 31, 2023

 

 

Recognized as Revenue

 

 

Reclassified to Accrued Liability / Accounts Payable

 

 

Balance at
March 31, 2024

 

Drug product revenue - deferred revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Astellas Europe Agreement

 

$

(16,925

)

 

$

1,021

 

 

$

5,660

 

 

$

(10,244

)

AstraZeneca U.S./RoW Agreement

As described under AstraZeneca Agreements section above, pursuant to the termination and transition agreement related to the AstraZeneca U.S./RoW Agreement, the Company and AstraZeneca settled the outstanding balances relating to past transactions under the AstraZeneca Master Supply Agreement. Accordingly, during the three months ended March 31, 2024, the Company accounted for the termination of the AstraZeneca U.S./RoW agreement as a contract modification under the ASC 606 and recorded a cumulative catch-up net adjustment of $25.7 million to the drug product revenue. As of March 31, 2024, the related accounts receivable was $26.0 million and the related accrued liabilities were $11.5 million. Comparatively, the related accrued liabilities were $11.2 million as of December 31, 2023. Both the accounts receivable and accrued liabilities have been settled in April 2024.

Corresponding to the drug product revenue, during the three months ended March 31, 2024, the Company recorded the related cost of goods sold of $21.1 million.

14


Eluminex Agreement

In July 2021, FibroGen exclusively licensed to Eluminex Biosciences (Suzhou) Limited (“Eluminex”) global rights to its investigational biosynthetic cornea derived from recombinant human collagen Type III.

Under the terms of the agreement with Eluminex, as amended and restated in January 2022, Eluminex made an $8.0 million upfront payment to FibroGen during the first quarter of 2022. In addition, FibroGen may receive up to a total of $64.0 million in future manufacturing, clinical, regulatory, and commercial milestone payments for the biosynthetic cornea program, as well as $36.0 million in commercial milestones for the first recombinant collagen III product that is not the biosynthetic cornea. FibroGen will also be eligible to receive mid-single-digit to low double-digit royalties based upon worldwide net sales of cornea products, and low single-digit to mid-single-digit royalties based upon worldwide net sales of other recombinant human collagen type III products that are not cornea products.

In April 2023, FibroGen and Eluminex entered into an Amended and Restated Exclusive License Agreement (“A&R Eluminex Agreement”) in order to add to the license rights to recombinant human collagen Type I (in addition to the rights to collagen Type III that were already licensed). The A&R Eluminex Agreement included additional total upfront payments of $1.5 million.

During the three months ended March 31, 2023, the Company recognized a $3.0 million milestone payment based on Eluminex implanting a biosynthetic cornea in the first patient of its clinical trial in China, and a $3.0 million manufacturing related milestone payment.

During the first quarter of 2022, FibroGen and Eluminex entered into a separate contract manufacturing agreement, under which the Company is responsible for supplying the cornea product at cost plus 10% of its product manufacturing costs until its manufacturing technology is fully transferred to Eluminex, which occurred by the end of 2023. The related contract manufacturing revenue was recorded as other revenue and included in development and other revenue in the condensed consolidated statement of operations.

Amounts recognized as revenue under the agreements with Eluminex were as follows for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

 

 

 

Three Months Ended March 31,