10-Q 1 fgen-20220331.htm 10-Q 10-Q
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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, 2022

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, 2022 was 93,297,542.

 

 


 

FIBROGEN, INC.

TABLE OF CONTENTS

 

 

 

Page

PART I—FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

 

2

 

Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 (Unaudited)

 

2

 

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021 (Unaudited)

 

3

 

Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2022 and 2021 (Unaudited)

 

4

 

Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2022 and 2021 (Unaudited)

 

5

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 (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

 

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

37

Item 4.

Controls and Procedures

 

37

 

 

 

 

PART II—OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

38

Item 1A.

Risk Factors

 

38

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

78

Item 3.

Defaults Upon Senior Securities

 

78

Item 4.

Mine Safety Disclosures

 

78

Item 5.

Other Information

 

79

Item 6.

Exhibits

 

79

 

Signatures

 

80

 

1


Table of Contents

FIBROGEN, INC.

PART I—FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

March 31, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

185,896

 

 

$

171,223

 

Short-term investments

 

 

242,179

 

 

 

233,967

 

Accounts receivable, net ($38,755 and $10,930 from related parties)

 

 

43,883

 

 

 

17,401

 

Inventories

 

 

43,067

 

 

 

31,015

 

Prepaid expenses and other current assets

 

 

9,390

 

 

 

20,453

 

Total current assets

 

 

524,415

 

 

 

474,059

 

Restricted time deposits

 

 

2,072

 

 

 

2,072

 

Long-term investments

 

 

93,488

 

 

 

167,796

 

Property and equipment, net

 

 

26,881

 

 

 

28,277

 

Equity method investment in unconsolidated variable interest entity

 

 

4,155

 

 

 

3,825

 

Operating lease right-of-use assets

 

 

87,990

 

 

 

91,112

 

Other assets

 

 

6,933

 

 

 

6,680

 

Total assets

 

$

745,934

 

 

$

773,821

 

 

 

 

 

 

 

 

Liabilities, stockholders’ equity and non-controlling interests

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

36,353

 

 

$

26,097

 

Accrued and other current liabilities ($49,677 and $4 to a related party)

 

 

203,299

 

 

 

172,599

 

Deferred revenue ($3,303 and $3,201 to related parties)

 

 

4,744

 

 

 

15,857

 

Operating lease liabilities, current

 

 

10,978

 

 

 

10,944

 

Total current liabilities

 

 

255,374

 

 

 

225,497

 

Product development obligations

 

 

17,374

 

 

 

17,613

 

Deferred revenue, net of current ($26,285 and $25,891 to a related party)

 

 

184,893

 

 

 

186,801

 

Operating lease liabilities, non-current

 

 

85,948

 

 

 

88,776

 

Other long-term liabilities

 

 

24,330

 

 

 

26,021

 

Total liabilities

 

 

567,919

 

 

 

544,708

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value; 125,000 shares authorized; no shares issued
   and outstanding at March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.01 par value; 225,000 shares authorized at March 31, 2022
   and December 31, 2021;
93,289 and 92,881 shares issued and outstanding at
   March 31, 2022 and December 31, 2021

 

 

933

 

 

 

929

 

Additional paid-in capital

 

 

1,490,859

 

 

 

1,476,414

 

Accumulated other comprehensive loss

 

 

(6,505

)

 

 

(4,163

)

Accumulated deficit

 

 

(1,327,239

)

 

 

(1,264,034

)

Total stockholders’ equity

 

 

158,048

 

 

 

209,146

 

Non-controlling interests

 

 

19,967

 

 

 

19,967

 

Total equity

 

 

178,015

 

 

 

229,113

 

Total liabilities, stockholders’ equity and non-controlling interests

 

$

745,934

 

 

$

773,821

 

 

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

2


Table of Contents

FIBROGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

License revenue (includes $22,590
   and $
0 from a related party)

 

$

22,590

 

 

$

 

Development and other revenue (includes $5,180
   and $
3,611 from a related party)

 

 

11,762

 

 

 

14,587

 

Product revenue, net (includes $16,223 and $10,406 from
   a related party)

 

 

18,881

 

 

 

15,362

 

Drug product revenue (includes $7,594 and
   $
4,030 from a related party)

 

 

7,594

 

 

 

8,480

 

Total revenue

 

 

60,827

 

 

 

38,429

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

Cost of goods sold

 

 

4,238

 

 

 

3,401

 

Research and development

 

 

89,018

 

 

 

74,676

 

Selling, general and administrative

 

 

30,564

 

 

 

30,779

 

Total operating costs and expenses

 

 

123,820

 

 

 

108,856

 

Loss from operations

 

 

(62,993

)

 

 

(70,427

)

 

 

 

 

 

 

 

Interest and other, net

 

 

 

 

 

 

Interest expense

 

 

(97

)

 

 

(501

)

Interest income and other income (expenses), net

 

 

(322

)

 

 

(453

)

Total interest and other, net

 

 

(419

)

 

 

(954

)

 

 

 

 

 

 

 

Loss before income taxes

 

 

(63,412

)

 

 

(71,381

)

Provision for income taxes

 

 

113

 

 

 

134

 

Investment income (loss) in unconsolidated variable
   interest entity

 

 

320

 

 

 

(240

)

Net loss

 

$

(63,205

)

 

$

(71,755

)

 

 

 

 

 

 

 

Net loss per share - basic and diluted

 

$

(0.68

)

 

$

(0.78

)

 

 

 

 

 

 

 

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

 

 

93,043

 

 

 

91,688

 

 

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

3


Table of Contents

FIBROGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Net loss

 

$

(63,205

)

 

$

(71,755

)

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

249

 

 

 

(70

)

Available-for-sale investments:

 

 

 

 

 

 

Unrealized loss on investments, net of tax effect

 

 

(2,591

)

 

 

(55

)

Other comprehensive loss, net of taxes

 

 

(2,342

)

 

 

(125

)

Comprehensive loss

 

$

(65,547

)

 

$

(71,880

)

 

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

 

4


Table of Contents

FIBROGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

(Unaudited)

 

 

 

For The Three Month Period

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Non
Controlling

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Interests

 

 

Total

 

Balance at December 31,
   2021

 

 

92,880,533

 

 

$

929

 

 

$

1,476,414

 

 

$

(4,163

)

 

$

(1,264,034

)

 

$

19,967

 

 

$

229,113

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(63,205

)

 

 

 

 

 

(63,205

)

Change in unrealized gain or
   loss on investments

 

 

 

 

 

 

 

 

 

 

 

(2,591

)

 

 

 

 

 

 

 

 

(2,591

)

Foreign currency translation
   adjustments

 

 

 

 

 

 

 

 

 

 

 

249

 

 

 

 

 

 

 

 

 

249

 

Shares issued from stock
   plans, net of payroll taxes
   paid

 

 

408,051

 

 

 

4

 

 

 

(2,707

)

 

 

 

 

 

 

 

 

 

 

 

(2,703

)

Stock-based compensation

 

 

 

 

 

 

 

 

17,152

 

 

 

 

 

 

 

 

 

 

 

 

17,152

 

Balance at March 31,
   2022

 

 

93,288,584

 

 

$

933

 

 

$

1,490,859

 

 

$

(6,505

)

 

$

(1,327,239

)

 

$

19,967

 

 

$

178,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31,
   2020

 

 

91,440,633

 

 

$

914

 

 

$

1,399,774

 

 

$

(4,499

)

 

$

(974,011

)

 

$

19,271

 

 

$

441,449

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(71,755

)

 

 

 

 

 

(71,755

)

Change in unrealized gain or
   loss on investments

 

 

 

 

 

 

 

 

 

 

 

(55

)

 

 

 

 

 

 

 

 

(55

)

Foreign currency translation
   adjustments

 

 

 

 

 

 

 

 

 

 

 

(70

)

 

 

 

 

 

 

 

 

(70

)

Shares issued from stock
   plans, net of payroll taxes
   paid

 

 

639,766

 

 

 

7

 

 

 

1,313

 

 

 

 

 

 

 

 

 

 

 

 

1,320

 

Stock-based compensation

 

 

 

 

 

 

 

 

19,384

 

 

 

 

 

 

 

 

 

 

 

 

19,384

 

Balance at March 31,
   2021

 

 

92,080,399

 

 

$

921

 

 

$

1,420,471

 

 

$

(4,624

)

 

$

(1,045,766

)

 

$

19,271

 

 

$

390,273

 

 

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

5


Table of Contents

FIBROGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(63,205

)

 

$

(71,755

)

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

 

 

 

 

 

 

Depreciation

 

 

2,450

 

 

 

2,723

 

Amortization of finance lease right-of-use assets

 

 

134

 

 

 

2,616

 

Net accretion of premium and discount on investments

 

 

928

 

 

 

131

 

Investment (gain) loss in unconsolidated variable interest entity

 

 

(320

)

 

 

240

 

Loss on disposal of property and equipment

 

 

5

 

 

 

 

Stock-based compensation

 

 

17,152

 

 

 

19,384

 

Realized loss on sales of available-for-sale securities

 

 

5

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(26,481

)

 

 

1,336

 

Inventories

 

 

(12,000

)

 

 

(4,288

)

Prepaid expenses and other current assets

 

 

11,382

 

 

 

(5,457

)

Operating lease right-of-use assets

 

 

3,132

 

 

 

(3,118

)

Other assets

 

 

(459

)

 

 

(2,503

)

Accounts payable

 

 

10,207

 

 

 

(669

)

Accrued and other liabilities

 

 

65,993

 

 

 

(294

)

Operating lease liabilities, current

 

 

31

 

 

 

546

 

Deferred revenue

 

 

(13,024

)

 

 

17,196

 

Accrued interest for finance lease liabilities

 

 

(21

)

 

 

(29

)

Operating lease liabilities, non-current

 

 

(2,835

)

 

 

2,535

 

Other long-term liabilities

 

 

(1,550

)

 

 

(3,578

)

Net cash used in operating activities

 

 

(8,476

)

 

 

(44,984

)

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,638

)

 

 

(518

)

Payment made for acquired in-process research and development asset

 

 

(35,000

)

 

 

 

Purchases of available-for-sale securities

 

 

(20,912

)

 

 

(196,243

)

Proceeds from sales of available-for-sale securities

 

 

7,382

 

 

 

 

Proceeds from maturities of investments

 

 

76,103

 

 

 

42

 

Net cash provided by (used in) investing activities

 

 

25,935

 

 

 

(196,719

)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Repayments of finance lease liabilities

 

 

(1

)

 

 

(3,299

)

Repayments of lease obligations

 

 

(101

)

 

 

(101

)

Cash paid for payroll taxes on restricted stock unit releases

 

 

(2,974

)

 

 

(4,757

)

Proceeds from issuance of common stock

 

 

183

 

 

 

6,077

 

Net cash used in financing activities

 

 

(2,893

)

 

 

(2,080

)

Effect of exchange rate change on cash and cash equivalents

 

 

107

 

 

 

(1,102

)

Net increase (decrease) in cash and cash equivalents

 

 

14,673

 

 

 

(244,885

)

Total cash and cash equivalents at beginning of period

 

 

171,223

 

 

 

678,393

 

Total cash and cash equivalents at end of period

 

$

185,896

 

 

$

433,508

 

 

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

6


Table of Contents

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 a leading biopharmaceutical company developing and commercializing a pipeline of first-in-class therapeutics. The Company applies its pioneering expertise in hypoxia-inducible factor ("HIF") biology, 2-oxoglutarate enzymology, and connective tissue growth factor to advance innovative medicines for the treatment of anemia, fibrotic disease, and cancer.

Pamrevlumab, a human monoclonal antibody targeting connective tissue growth factor, is in Phase 3 clinical development for the treatment of idiopathic pulmonary fibrosis, locally advanced unresectable pancreatic cancer and Duchenne muscular dystrophy.

Roxadustat is an oral small molecule inhibitor of HIF prolyl hydroxylase (“HIF-PH”) activity that is approved for the treatment of anemia caused by chronic kidney disease (“CKD”) in dialysis and non-dialysis patients, under the tradename EVRENZO®, in the European Union, Great Britain, Japan, South Korea, Chile, Russia, the United Arab Emirates, and Kuwait. Roxadustat is being commercialized in China for CKD anemia in dialysis and non-dialysis patients under the tradename: 爱瑞卓®.

Roxadustat is in Phase 3 clinical development for anemia associated with myelodysplastic syndromes. We have completed a Phase 2 study of roxadustat in chemotherapy-induced anemia and are running a Phase 3 trial for roxadustat in China.

We have a pipeline of late-stage clinical programs as well as pre-clinical drug candidates at various stages of development that include both small molecules and biologics. We have leveraged our internally developed 2-oxoglutarate and connective tissue growth factor biology expertise as well as in-licensing of additional programs, such as antibodies targeting Galectin-9 protein (“Gal-9”) and C-C Motif Chemokine Receptor 8 (“CCR8”), to further enhance our late-stage preclinical pipeline. Our goal is to build a diversified pipeline with novel drugs that will address unmet patient needs in oncology, immunology, and fibrosis.

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, FibroGen Europe Oy and FibroGen China Anemia Holdings, Ltd. All inter-company transactions and balances have been eliminated in consolidation. For any variable interest entity (“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, 2021, filed on February 28, 2022 and as amended on March 4, 2022 (“2021 Form 10-K”).

7


Table of Contents

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, specifically, estimates in variable consideration for drug product sales, and estimates in transaction price per unit for the China performance obligation (as defined and discussed under Significant Accounting Policies below). 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 2021 Form 10-K, except for the updates to the following:

Stock-Based Compensation

The Company maintains equity incentive plans under which incentive and nonqualified stock options are granted to employees, which are comprised of stock options, service-based restricted stock units ("RSUs"), performance-based RSUs and total shareholder return (“TSR”) awards.

The Company measures and recognizes compensation expense for all stock options, service and performance-based restricted stock units granted to its employees and directors based on the estimated fair value of the award on the grant date. The Company uses the Black-Scholes valuation model to estimate the fair value of stock option awards. The determination of the grant date fair value of options using the Black-Scholes valuation model is affected by the Company’s estimated common stock fair value and requires management to make a number of assumptions including the expected life of the option, the volatility of the underlying stock, the risk-free interest rate and expected dividends. To estimate the fair value of the TSR awards, the Company uses the Monte Carlo valuation model to simulate the probabilities of achievement, which requires management to make a number of assumptions including 30-day average price, volatility of the underlying stock and our peers, and the risk-free interest rate.

The compensation cost of service-based stock options and restricted stock units is recognized net of any estimated forfeitures on a straight-line basis over the employee requisite service period. Compensation cost for performance-based RSUs is expensed over the respective vesting periods when the achievement of performance criteria is probable. Compensation cost for the TSR awards is recognized over the requisite service period, regardless of when, if ever, the market condition is satisfied.

The Company believes that the fair value of stock options granted to non-employees is more reliably measured than the fair value of the services received.

8


Table of Contents

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. For the three months ended March 31, 2022 and 2021, the Company reported a net loss, respectively. Therefore, dilutive common shares are not assumed to have been issued since their effect is anti-dilutive.

Diluted weighted average shares excluded potential common shares related to stock options, restricted stock units (including service-based RSUs, performance-based RSUs and TSR awards) and shares to be purchased under the employee stock purchase plan totaling 12.2 million and 7.8 million for the three months ended March 31, 2022 and 2021, respectively, as they were anti-dilutive.

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, rapid technological change, obtaining second source suppliers, regulatory approval from the U.S. Food and Drug Administration (“FDA”) or other regulatory authorities, the results of clinical trials and the achievement of milestones, market acceptance of the Company’s product candidates, competition from other products and larger companies, protection of proprietary technology, strategic relationships and dependence on key individuals.

Recently Issued Accounting Guidance Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides companies with optional financial reporting alternatives to reduce the cost and complexity associated with the accounting for contracts and hedging relationships affected by reference rate reform. This guidance is effective as of March 12, 2020 through December 31, 2022. Subsequently in January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which clarifies ASU 2020-04 and provides certain optional expedients that allow derivative instruments impacted by changes in the interest rate used for margining, discounting or contract price alignment to qualify for certain optional relief. ASU 2021-01 is effective in the same timeframe as ASU2020-04. The relief offered by this guidance, if adopted, is available to companies for the period March 12, 2020 through December 31, 2022. The Company has certain lease arrangements that are linked to t