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What changed in FIBROGEN INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of FIBROGEN INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+644 added−759 removedSource: 10-K (2024-02-26) vs 10-K (2023-02-27)

Top changes in FIBROGEN INC's 2023 10-K

644 paragraphs added · 759 removed · 474 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

138 edited+70 added−159 removed128 unchanged
Biggest changeAs a result of the exercise of our option to obtain the commercial license, Medarex is precluded from: (i) knowingly using any technology involving immunizable transgenic mice containing unrearranged human immunoglobulin genes with any of our antigen targets that were the subject of the agreement, (ii) granting to a third party a commercial license that covers such antigen targets or those antibodies derived by Medarex during the Research Period, and (iii) using any antibodies derived by Medarex during the Research Period, except as permitted under the agreement for our benefit or to prosecute patent applications in accordance with the agreement. 34 Medarex retained ownership of the patent rights relating to certain mice, mice materials, antibodies and hybridoma cell lines used by Medarex in connection with its activities under the agreement, and Medarex also owns certain claims in patents covering inventions that arise during the Research Period, which claims are directed to (i) compositions of matter (e.g., an antibody) except formulations of antibodies for therapeutic or diagnostic use, or (ii) methods of production.
Biggest changeAs a result of the exercise of our option to obtain the commercial license, Medarex is precluded from: (i) knowingly using any technology involving immunizable transgenic mice containing unrearranged human immunoglobulin genes with any of our antigen targets that were the subject of the agreement, (ii) granting to a third party a commercial license that covers such antigen targets or those antibodies derived by Medarex during the Research Period, and (iii) using any antibodies derived by Medarex during the Research Period, except as permitted under the agreement for our benefit or to prosecute patent applications in accordance with the agreement.
Transfusion can result in direct organ damage through transfusional iron overload. Transfusion dependent MDS patients suffer higher rates of cardiac events, infections and transformation to acute leukemia, and a decreased overall survival rate when compared with non-transfused patients with MDS, and decreased survival compared to an age-matched elderly population.
Transfusion can result in direct organ damage through transfusional iron overload. Transfusion-dependent MDS patients suffer higher rates of cardiac events, infections, and transformation to acute leukemia, a decreased overall survival rate when compared with non-transfused patients with MDS, and decreased survival compared to an age-matched elderly population.
Product Approval Process In the U.S., the FDA regulates drugs and biological products, or biologics, under the Public Health Service Act, as well as the FDCA, which is the primary law for regulation of drug products. Both drugs and biologics are subject to the regulations and guidance implementing these laws.
U.S. Product Approval Process In the U.S., the FDA regulates drugs and biological products, or biologics, under the Public Health Service Act, as well as the FDCA, which is the primary law for regulation of drug products. Both drugs and biologics are subject to the regulations and guidance implementing these laws.
Additionally, the federal Physician Payments Sunshine Act within the PPACA, and its implementing regulations, require that certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report information related to certain payments or other transfers of value made or distributed to physicians, other healthcare professionals, and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals and to report annually certain ownership and investment interests held by physicians and their immediate family members.
Additionally, the federal Physician Payments Sunshine Act within the PPACA, and its implementing regulations, require that certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report information related to certain payments or other transfers of value made or distributed to physicians, other healthcare professionals, and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, such healthcare professionals and teaching hospitals and to report annually certain ownership and investment interests held by physicians and their immediate family members.
Such obligations may include, without limitation, the Federal Trade Commission Act, the California Consumer Privacy Act of 2018 (“CCPA”), the Canadian Personal Information Protection and Electronic Documents Act, Canada’s Anti-Spam Legislation, the European Union’s General Data Protection Regulation 2016/679 (“EU GDPR”), the EU GDPR as it forms part of United Kingdom (“UK”) law by virtue of section 3 of the European Union (Withdrawal) Act 2018 (“UK GDPR”), the ePrivacy Directive, and the Payment Card Industry Data Security Standard.
Such obligations may include, without limitation, the Federal Trade Commission Act, the California Consumer Privacy Act of 2018 (“CCPA”), the Canadian Personal Information Protection and Electronic Documents Act, Canada’s Anti-Spam Legislation, the European Union’s General Data Protection Regulation 2016/679 (“EU GDPR”), the EU GDPR as it forms part of United Kingdom (“UK”) law by virtue of section 3 of the European Union (Withdrawal) Act 2018 (“UK GDPR”), China’s Personal Information Protection Law, the ePrivacy Directive, and the Payment Card Industry Data Security Standard.
Refer to “Government Regulation — Regulatory Exclusivity for Approved Products.” We cannot ensure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications that may be filed by us in the future, nor can we ensure that any of our existing or subsequently granted patents will be useful in protecting our drug candidates, technological innovations, and processes.
Refer to “Government Regulation — Regulatory Exclusivity for Approved Products.” 23 We cannot ensure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications that may be filed by us in the future, nor can we ensure that any of our existing or subsequently granted patents will be useful in protecting our drug candidates, technological innovations, and processes.
Pursuant to the RIFA, we received $49.8 million from NovaQuest, representing the gross proceeds of $50.0 million net of initial issuance costs, in consideration for a portion of future revenues we will receive from Astellas. For additional details about this financing transaction, see Note 8, Liability Related to Sale of Future Revenues , to the consolidated financial statements.
Pursuant to the RIFA, we received $49.8 million from NovaQuest, representing the gross proceeds of $50.0 million net of initial issuance costs, in consideration for a portion of future revenues we will receive from Astellas. For additional details about this financing transaction, see Note 10, Liability Related to Sale of Future Revenues , to the consolidated financial statements.
Additionally the Securities and Exchange Commission maintains an internet site that contains reports, proxy and information statements and other information. The address of the SEC’s website is www.sec.gov. 36 CORPORATE INFORMATION Our headquarters are located at 409 Illinois Street, San Francisco, California 94158 and our telephone number is (415) 978-1200. Our website address is www.FibroGen.com.
Additionally the Securities and Exchange Commission maintains an internet site that contains reports, proxy and information statements and other information. The address of the SEC’s website is www.sec.gov. CORPORATE INFORMATION Our headquarters are located at 409 Illinois Street, San Francisco, California 94158 and our telephone number is (415) 978-1200. Our website address is www.FibroGen.com.
Anemia becomes increasingly common as kidney function declines and is associated with increased risk of hospitalization, cardiovascular complications and death, and frequently causes significant fatigue, cognitive dysfunction, and considerable reduction of quality of life. China – Roxadustat Commercial Program Since the launch of roxadustat (tradename: 爱瑞卓®) in 2019, the anemia of CKD market has expanded significantly.
Anemia becomes increasingly common as kidney function declines and is associated with increased risk of hospitalization, cardiovascular complications and death, and frequently causes significant fatigue, cognitive dysfunction, and considerable reduction of quality of life. 9 China – Roxadustat Commercial Program Since the launch of roxadustat (tradename: 爱瑞卓®) in 2019, the anemia of CKD market has expanded significantly.
There were 99 treatment-emergent serious adverse events, six of which were assessed as possibly related to the investigational drug by the principal investigator, and 93 as not related to study treatment. After investigation, it was our determination that there is no causal relationship between pamrevlumab and the treatment-emergent serious adverse events deemed possibly related by the principal investigator.
There were 99 treatment-emergent serious adverse events, six of which were assessed as possibly related to the investigational drug by the principal investigator, and 93 as not related to study treatment. After investigation, it was our determination that there was no causal relationship between pamrevlumab and the treatment-emergent serious adverse events deemed possibly related by the principal investigator.
Patients receiving red blood cell transfusions may require an iron chelator in order to address toxic elements of iron overload such as lipid peroxidation and cell membrane, protein, DNA, and organ damage. Lower-risk MDS patients represent approximately 77% of the total diagnosed MDS population.
Patients receiving red blood cell transfusions may require an iron chelator in order to address toxic elements of iron overload such as lipid peroxidation and cell membrane, protein, DNA, and organ damage. 11 Lower-risk MDS patients represent approximately 77% of the total diagnosed MDS population.
Tumor removal is the only chance for cure of pancreatic cancer, but only approximately 15% to 20% of patients are eligible for surgery. We reported updated results from this study at the American Society of Clinical Oncology Annual Meeting in June 2018.
Tumor removal is the best chance for cure of pancreatic cancer, but only approximately 15% to 20% of patients are eligible for surgery. We reported updated results from this study at the American Society of Clinical Oncology Annual Meeting in June 2018.
Additionally, we are, or may become, subject to various U.S. federal and state consumer protection laws which require us to publish statements that accurately and fairly describe how we handle personal data and choices individuals may have about the way we handle their personal data.
Additionally, we are, or may become, subject to various U.S. federal and state consumer protection laws that require us to publish statements that accurately and fairly describe how we handle personal data and choices individuals may have about the way we handle their personal data.
In 2020, we entered into Master Supply Agreement under the AstraZeneca U.S./RoW Agreement to define general forecast, order, supply and payment terms for AstraZeneca to purchase roxadustat bulk drug product from FibroGen in support of commercial supplies.
In 2020, we entered into a Master Supply Agreement under the AstraZeneca U.S./RoW Agreement to define general forecast, order, supply, and payment terms for AstraZeneca to purchase roxadustat bulk drug product from FibroGen in support of commercial supplies.
To the extent that any of our products will be sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws and implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals. 26 Data Privacy and Security In the ordinary course of our business, we may process confidential, proprietary, and sensitive information, including personal data.
To the extent that any of our products will be sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws and implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals. 18 Data Privacy and Security In the ordinary course of our business, we may process confidential, proprietary, and sensitive information, including personal data.
The anti-tumor effects observed with pamrevlumab in preclinical models indicate that it has the potential to inhibit tumor expansion through effects on tumor cell proliferation and apoptosis as well as reduce metastasis. Phase 3 Clinical Trial in Locally Advanced Unresectable Pancreatic Cancer LAPIS is our double-blind placebo-controlled Phase 3 clinical program for pamrevlumab as a therapy for LAPC.
The anti-tumor effects observed with pamrevlumab in preclinical models indicate that it has the potential to inhibit tumor expansion through effects on tumor cell proliferation and apoptosis as well as reduce metastasis. Phase 3 Clinical Trial in Locally Advanced Unresectable Pancreatic Cancer LAPIS is our double-blind placebo-controlled Phase 3 clinical trial of pamrevlumab as a therapy for LAPC.
The study demonstrated a drug exposure-related increase in survival. At the lowest doses, no patients survived for even one year while at the highest doses up to 31% of patients survived one year. 12 A post-hoc analysis found that there was a significant relationship between survival and trough levels of plasma pamrevlumab measured immediately before the second dose (Cmin).
The study demonstrated a drug exposure-related increase in survival. At the lowest doses, no patients survived for even one year while at the highest doses up to 31% of patients survived one year. 8 A post-hoc analysis found that there was a significant relationship between survival and trough levels of plasma pamrevlumab measured immediately before the second dose (Cmin).
In addition, we may be subject to federal and state healthcare regulations. HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and its implementing regulations, imposes certain requirements on covered entities, business associates and their covered subcontractors relating to the privacy, security and transmission of individually identifiable health information.
In addition, we may be subject to federal and state healthcare privacy and security laws. For example, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and its implementing regulations, imposes certain requirements on covered entities, business associates and their covered subcontractors relating to the privacy, security and transmission of individually identifiable health information.
Completed Phase 1/2 Clinical Trial in Locally Advanced Unresectable Pancreatic Cancer We completed an open-label, randomized (2:1) Phase 1/2 trial (FGC004C-3019-069) of pamrevlumab combined with gemcitabine plus nab-paclitaxel chemotherapy vs. the chemotherapy regimen alone in patients with inoperable LAPC that has not been previously treated.
Completed Phase 1/2 Clinical Trial in Locally Advanced Unresectable Pancreatic Cancer We completed an open-label, randomized (2:1) Phase 1/2 trial (FGC004C-3019-069) of pamrevlumab combined with gemcitabine plus nab-paclitaxel chemotherapy vs. the chemotherapy regimen alone in patients with inoperable LAPC that had not been previously treated.
Information about collaboration partners that accounted for more than 10% of our total revenue or accounts receivable for the last three fiscal years is set forth in Note 15, Segment and Geographic Information , to our consolidated financial statements under Item 8 of this Annual Report.
Information about collaboration partners that accounted for more than 10% of our total revenue or accounts receivable for the last three fiscal years is set forth in Note 17, Segment and Geographic Information , to our consolidated financial statements under Item 8 of this Annual Report.
Because pancreatic cancer is difficult to diagnose, over 50% of new cased are metastatic, with a five-year survival rate of approximately 3%. An additional 15-20% of new pancreatic cancer patients are diagnosed with localized resectable tumors, with the remaining 30-35% of newly diagnosed patients having localized, unresectable tumors.
Because pancreatic cancer is difficult to diagnose, over 50% of new cases are metastatic, with a five-year survival rate of approximately 3%. An additional 15-20% of new pancreatic cancer patients are diagnosed with localized resectable tumors, with the remaining 30-35% of newly diagnosed patients having localized, unresectable tumors.
We enrolled 37 patients in this study and completed the six-month treatment period and surgical assessment at the end of 2017. The overall goal of the trial was to determine whether the pamrevlumab combination can convert inoperable pancreatic cancer to operable, or resectable, cancer.
We enrolled 37 patients in this study and completed the six-month treatment period and surgical assessment at the end of 2017. The overall goal of the trial was to determine whether pamrevlumab in combination with chemotherapy can convert inoperable pancreatic cancer to operable, or resectable, cancer.
Nab-paclitaxel in combination with gemcitabine was approved by the FDA in 2013 for the treatment of pancreatic cancer, having demonstrated median survival of 8.5 months. The combination of folinic acid, 5-fluorouracil, irinotecan and oxaliplatin (FOLFIRINOX) was reported to increase survival to 11.1 months from 6.8 months with gemcitabine.
Nab-paclitaxel in combination with gemcitabine was approved by the FDA in 2013 for the treatment of pancreatic cancer, having demonstrated median survival of 8.5 months. The combination of folinic acid, 5-fluorouracil, irinotecan and oxaliplatin (FOLFIRINOX) was reported to increase survival to 11.1 months.
In addition, significant uncertainty exists as to the coverage and reimbursement status of newly approved healthcare product candidates. 27 Because each third-party payor individually approves coverage and reimbursement levels, obtaining coverage and adequate reimbursement is a time-consuming, costly and sometimes unpredictable process.
In addition, significant uncertainty exists as to the coverage and reimbursement status of newly approved healthcare product candidates. 19 Because each third-party payor individually approves coverage and reimbursement levels, obtaining coverage and adequate reimbursement is a time-consuming, costly and sometimes unpredictable process.
We believe that, if pamrevlumab is approved in the U.S. prior to expiration of the composition-of-matter patent, a full five-year patent term extension under the Hatch-Waxman act will be available, extending the term of that patent to 2030.
For example, we believe that if pamrevlumab is approved in the U.S. prior to expiration of the composition-of-matter patent, a full five-year patent term extension under the Hatch-Waxman Act will be available, extending the term of that patent to 2030.
Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory approval process in other countries. 29 Regulatory Exclusivity for Approved Products U.S.
Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory approval process in other countries. 21 Regulatory Exclusivity for Approved Products U.S.
We do not intend our use of display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies. 37
We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies. 29
For example, in Europe, upon receiving marketing authorization, a NCE generally receives eight years of data exclusivity and an additional two years of market exclusivity. If granted, data exclusivity prevents regulatory authorities in Europe from referencing the innovator’s data to assess a generic application.
For example, in Europe, upon receiving marketing authorization, a NCE or new biologic generally receives eight years of data exclusivity and an additional two years of market exclusivity. If granted, data exclusivity prevents regulatory authorities in Europe from referencing the innovator’s data to assess a generic application.
Anemia is the most common clinical presentation in MDS, seen in approximately 80% of MDS patients, and producing symptoms, including fatigue, weakness, exercise intolerance, shortness of breath, dizziness, and cognitive impairment.
Anemia is the most common clinical presentation in MDS, seen in approximately 80% of MDS patients, and produces symptoms of fatigue, weakness, exercise intolerance, shortness of breath, dizziness, and cognitive impairment.
For the fiscal year ended December 31, 2022, 40% of our revenue was related to our collaboration agreements, and 59% of our revenue was from roxadustat commercial sales in China. For the fiscal year ended December 31, 2021, 76% of our revenue was related to our collaboration agreements, and 20% of our revenue was from roxadustat commercial sales in China.
For the fiscal year ended December 31, 2021, 76% of our revenue was related to our collaboration agreements, and 20% of our revenue was from roxadustat commercial sales in China.
Even among the eligible subpopulation, the effectiveness of ESAs in treating anemia in MDS remains limited, with the best clinical study results showing 40% to 60% erythroid response rates, in studies where significantly high doses of ESAs were used, enrolled patients had low serum EPO levels, and in lower-risk categories.
The effectiveness of ESAs in treating anemia in lower-risk categories of MDS remains limited, with the best clinical study results showing 40% to 60% erythroid response rates, where significantly high doses of ESAs were used and enrolled patients had low serum EPO levels.
The prevalence of MDS in the U.S. is estimated to be between 60,000 and 170,000, and continues to rise as more therapies become available and patients are living longer with MDS. Annual incidence rates are estimated to be 4.9/100,000 adults in the U.S., and 1.51/100,000 adults in China.
In most MDS patients, the cause of the disease is unknown. The diagnosed prevalence of MDS in the U.S. is estimated to be between 60,000 and 170,000, and continues to rise as more therapies become available and patients are living longer with MDS. Annual incidence rates are estimated to be 4.9/100,000 adults in the U.S., and 1.51/100,000 adults in China.
Due to the volatility in the current economic and market dynamics, we are unable to predict the impact of any unforeseen or unknown legislative, regulatory, payor or policy actions, which may include cost containment and healthcare reform measures.
Due to the volatility in the current economic and market dynamics, we are unable to predict the impact of any unforeseen or unknown legislative, regulatory, payor or policy actions, which may include cost containment and healthcare reform measures. Such policy actions could impact on our business.
In China, there is also an opportunity for data exclusivity for a period of six years for data included in an NDA applicable to a NCE.
In China, there may also be an opportunity for data exclusivity for a period of six years for data included in an NDA applicable to a NCE.
The approved manufacturer is required to provide an annual report to the regulatory department of the province, autonomous region or municipality directly under the central government where it is located.
The approved manufacturer was required to provide an annual report to the regulatory department of the province, autonomous region or municipality directly under the central government where it is located during the surveillance period.
The incidence and severity of CIA depend on a variety of factors, including the tumor type or the level of toxicity of the therapy, and further increases with each successive chemotherapy round. We believe the addressable population is approximately 500,000 in China.
Of those, approximately half receive chemotheraphy, and half of those are anemic. The incidence and severity of CIA depend on a variety of factors, including the tumor type or the level of toxicity of the therapy, and further increases with each successive chemotherapy round. We believe the addressable population is approximately 500,000 in China.
Healthcare Reform In the U.S. and foreign jurisdictions, we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system that could affect the future results of our operations as we directly commercialize our products.
In addition, there may be importation of foreign products that compete with our own products. Healthcare Reform In the U.S. and foreign jurisdictions, we expect there will continue to be a number of legislative and regulatory changes to the healthcare system that could affect the future results of our operations as we directly commercialize our products.
Of all people diagnosed with pancreatic cancer in the U.S. between 2011 and 2017, the 5-year survival rate was 11%. Globally, an estimated 495,000 people were diagnosed with pancreatic cancer in 2020 and an estimated 466,000 people worldwide died from the disease.
Of all people diagnosed with pancreatic cancer in the U.S. between 2012 and 2018, the 5-year survival rate was 12%. Globally, an estimated 495,000 people were diagnosed with pancreatic cancer in 2020 and an estimated 466,000 people worldwide died from the disease.
Unless earlier terminated, the agreement will continue in effect for as long as there are royalty payment obligations by us or our sublicensees. Either party may terminate the agreement for certain material breaches by the other party, or for bankruptcy, insolvency or similar circumstances. In addition, we may also terminate the agreement for convenience upon written notice.
Unless earlier terminated, the agreement will continue in effect for as long as there are royalty payment obligations by us or our sublicensees. Either party may terminate the agreement for certain material breaches by the other party, or for bankruptcy, insolvency or similar circumstances.
In addition to the information about us and our subsidiaries contained in this Annual Report, information about us can be found on our website. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated into, this Annual Report.
AVAILABLE INFORMATION Our internet website address is www.fibrogen.com. In addition to the information about us and our subsidiaries contained in this Annual Report, information about us can be found on our website. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated into, this Annual Report.
Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process. 30 If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug or biological product for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity.
If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug or biological product for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity.
The patent term restoration period is generally one-half the time between the effective date of an initial IND and the submission date of an NDA or BLA, plus the time between the submission date of the NDA or BLA and the approval of that product candidate application.
The patent term restoration period is generally one-half the time between the effective date of an initial IND and the submission date of an NDA or BLA, plus the time between the submission date of the NDA or BLA and the approval of that product candidate application, to the extent such period occurs after grant of the patent.
The biotechnology industry is an extremely competitive labor market and recruiting and retaining employees is critical to the continued success of our business. We focus on recruiting, retaining, and developing employees from a diverse range of backgrounds to conduct our research, development, commercialization, and administrative activities.
These scores significantly exceed normative industry participation and engagement benchmarks. The biotechnology industry is an extremely competitive labor market and recruiting and retaining employees is critical to the continued success of our business. We focus on recruiting, retaining, and developing employees from a diverse range of backgrounds to conduct our research, development, commercialization, and administrative activities.
ESAs have been recommended for patients experiencing CIA with the desirable goals of improvement in anemia-related symptoms and the avoidance of blood transfusion, which increases risk of infections and the risk of complications such as heart failure and allergic reactions.
ESAs have been recommended for patients who develop CIA with the desirable goals of improvement in anemia-related symptoms and the avoidance of blood transfusions, which increase risk of infections and the risk of complications such as heart failure and allergic reactions.
HiFiBiO In June 2021, we entered into an exclusive license and option agreement with HiFiBiO, pursuant to which we exclusively licensed from HiFiBiO all product candidates in HiFiBiO’s Galectin-9 program and subsequently exclusively licensed all product candidates in HiFiBiO’s CCR8 program.
Exclusive License from HiFiBiO In June 2021, we entered into an exclusive license and option agreement with HiFiBiO (HK) Ltd. (d.b.a. HiFiBiO Therapeutics) (“HiFiBiO”), pursuant to which we exclusively licensed from HiFiBiO all product candidates in HiFiBiO’s Galectin-9 program and subsequently exclusively licensed all product candidates in HiFiBiO’s CCR8 program.
Exclusive of any patent term extension, the last of the U.S. patents relating to pamrevlumab composition-of-matter is due to expire in 2025. Corresponding foreign patents are due to expire, exclusive of any patent term extension, in 2024.
Pamrevlumab Patent Portfolio Our pamrevlumab patent portfolio includes U.S. and foreign patents providing composition-of-matter protection for pamrevlumab. Exclusive of any patent term extension, the last of the U.S. patents relating to pamrevlumab composition-of-matter is due to expire in 2025 and corresponding foreign patents are due to expire, exclusive of any patent term extension, in 2024.
The IRA also, among other things, (1) directs the U.S. Department of Health and Human Services to negotiate the price of certain single-source drugs and biologics covered under Medicare and (2) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation.
The IRA also, among other things, (1) directs the U.S. Department of Health and Human Services (“HHS") to negotiate the price of certain single-source drugs and biologics covered under Medicare and (2) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation. These provisions take effect progressively starting in fiscal year 2023.
Japan - Roxadustat Commercial Program In Japan, our partner Astellas continues the commercial launch of EVRENZO (roxadustat), targeting healthcare providers that care for approximately 330,000 dialysis patients across Japan. EVRENZO is approved for the treatment of anemia associated with CKD in both non-dialysis and dialysis patients.
Japan - Roxadustat Commercial Program In Japan, our partner Astellas continues the commercialization of EVRENZO (roxadustat), targeting healthcare providers that care for approximately 330,000 dialysis patients across Japan. EVRENZO is approved for the treatment of anemia associated with CKD in both non-dialysis and dialysis patients. EVRENZO is one of five HIF-PH inhibitors currently on the market in Japan.
To the extent that our commercial partners, collaboration partners, employees and consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our commercial partners, collaboration partners, employees and consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
For the fiscal year ended December 31, 2020, 59% of our revenue was related to our collaboration agreements, and 41% of our revenue was from roxadustat commercial sales in China.
For the fiscal year ended December 31, 2023, 25% of our revenue was related to our collaboration agreements, and 68% of our revenue was from roxadustat commercial sales in China. For the fiscal year ended December 31, 2022, 40% of our revenue was related to our collaboration agreements, and 59% of our revenue was from roxadustat commercial sales in China.
We received an $8.0 million upfront payment from Eluminex in 2022 and have billed a $3.0 million milestone in the first quarter of 2023 based on Eluminex implanting a biosynthetic cornea in the first patient of its clinical trial in China.
We received an $8.0 million upfront payment from Eluminex in 2022 and thereafter recognized a $3.0 million milestone payment based on Eluminex implanting a biosynthetic cornea in the first patient of its clinical trial in China, a $3.0 million manufacturing related milestone payment and a $1.0 million upfront payment.
The FDA has substantial discretion in the approval process and may refuse to accept any application or decide that the data is insufficient for approval and require additional preclinical, clinical or other studies.
The application must be accompanied by a significant user fee payment. The FDA has substantial discretion in the approval process and may refuse to accept any application or decide that the data is insufficient for approval and require additional preclinical, clinical or other studies.
In 2023, we will focus on expanding the population treated with roxadustat, as well as duration of treatment which we believe is important to managing the risks associated with anemia in CKD. Europe - Roxadustat Commercial Program In Europe, our partner Astellas continues the commercial launch of EVRENZO ® (roxadustat).
In 2024, we will focus on expanding the population treated with roxadustat, as well as the duration of treatment, which we believe is important in effective management of anemia in CKD. Europe - Roxadustat Commercial Program In Europe, our partner Astellas continues the commercialization of EVRENZO ® (roxadustat).
The results of preclinical studies and clinical trials, together with detailed information on the manufacture, composition and quality of the product candidate, are submitted to the FDA in the form of an NDA (for a drug) or BLA (for a biologic), requesting approval to market the product. The application must be accompanied by a significant user fee payment.
The results of preclinical studies and clinical trials, together with detailed information on the manufacture, composition and quality of the product candidate, are submitted to the FDA in the form of an NDA (for a drug) or Biologics License Application (“BLA”) (for a biologic), requesting approval to market the product.
We expect to file INDs for up to two of these programs in the second half of 2023. 18 COLLABORATIONS Collaboration Partnerships for Roxadustat Our revenue to date has been generated primarily from our collaboration agreements with Astellas and AstraZeneca for the development and commercialization of roxadustat. In addition, we started roxadustat commercial sales in China in 2019.
COLLABORATIONS Collaboration Partnerships for Roxadustat Our revenue to date has been generated primarily from our collaboration agreements with Astellas and AstraZeneca for the development and commercialization of roxadustat. In addition, we started roxadustat commercial sales in China in 2019.
We expect topline 28-Week data from this study in the second quarter of 2023. CHEMOTHERAPY-INDUCED ANEMIA As blood cell production in bone marrow is highly prolific, it is particularly vulnerable to the cytotoxic effects of chemotherapy used to treat cancer patients. Many chemotherapy agents directly impair hematopoiesis in bone marrow, including disruption of red blood cell production.
CHEMOTHERAPY-INDUCED ANEMIA As blood cell production in bone marrow is highly prolific, it is particularly vulnerable to the cytotoxic effects of chemotherapy used to treat cancer patients. Many chemotherapy agents directly impair hematopoiesis in bone marrow, including disruption of red blood cell production.
Under the AstraZeneca China Agreement, which is conducted through FibroGen China Anemia Holdings, Ltd., FibroGen Beijing, and FibroGen International (Hong Kong) Limited (collectively, “FibroGen China”), the commercial collaboration was structured as a 50/50 profit share, which was amended by the AstraZeneca China Amendment in the third quarter of 2020, as discussed and defined below.
However, our ongoing collaboration agreement with AstraZeneca for the development and commercialization of roxadustat for the treatment of anemia in China (the “AstraZeneca China Agreement”) continues in full force and is unaffected. 13 Under the AstraZeneca China Agreement, which is conducted through FibroGen China Anemia Holdings, Ltd., FibroGen Beijing, and FibroGen International (Hong Kong) Limited (collectively, “FibroGen China”), the commercial collaboration was structured as a 50/50 profit share, which was amended by the AstraZeneca China Amendment in the third quarter of 2020, as discussed and defined below.
The duration of effect of approved anti-cancer agents to treat pancreatic cancer is limited. Gemcitabine demonstrated improvement in median overall survival from approximately four to six months, and erlotinib in combination with gemcitabine demonstrated an additional ten days of survival.
Radiation treatment may be used for locally advanced diseases, but it is not curative. The duration of effect of approved anti-cancer agents to treat pancreatic cancer is limited. Gemcitabine demonstrated improvement in median overall survival from approximately four to six months, and erlotinib in combination with gemcitabine demonstrated an additional ten days of survival.
The nephrotoxic effects of some cytotoxic agents, such as platinum-containing agents, can also result in decreased production of erythropoietin by the kidneys, further contributing to reduced red blood cell production. Radiation therapy has also been associated with hematologic toxicity.
The nephrotoxic effects of some cytotoxic agents, such as platinum-containing agents, can also result in decreased production of erythropoietin by the kidneys, further contributing to reduced red blood cell production. Radiation therapy has also been associated with hematologic toxicity. There are approximately 10 million new cancer cases each year globally, 4.5 million in China.
For those with resectable tumors, 50% survive 17 to 27 months post-diagnosis and ~20% achieve five-year survival. In its report of December 2017, Decision Resources Group estimated that the major market sales (U.S., Europe and Japan) of pancreatic cancer drugs would grow from $1.3 billion in 2016 to approximately $3.7 billion in 2026.
On average, patients with resectable tumors live for 2.5 years post-diagnosis and have a five-year survival rate of 20-30%. In its report of December 2017, Decision Resources Group estimated that the major market sales (U.S., Europe and Japan) of pancreatic cancer drugs would grow from $1.3 billion in 2016 to approximately $3.7 billion in 2026.
Anemia is a complication of CKD and can be a serious medical condition in which patients have insufficient red blood cells and low levels of hemoglobin, a protein in red blood cells that carries oxygen to cells throughout the body.
CKD is more prevalent in developed countries but is also growing rapidly in emerging markets such as China. Anemia is a complication of CKD and can be a serious medical condition in which patients have insufficient red blood cells and low levels of hemoglobin, a protein in red blood cells that carries oxygen to cells throughout the body.
If pamrevlumab in combination with chemotherapy continues to demonstrate an enhanced rate of conversion from unresectable cancer to resectable cancer, it may support the possibility that pamrevlumab could provide a substantial survival benefit for LAPC patients.
No increase in serious adverse events was observed in the pamrevlumab arm and no delay in wound healing was observed post-surgery. If pamrevlumab in combination with chemotherapy continues to demonstrate an enhanced rate of conversion from unresectable cancer to resectable cancer, it may support the possibility that pamrevlumab could provide a substantial survival benefit for LAPC patients.
(“Astellas”) and AstraZeneca, we have completed 16 Phase 3 studies worldwide in over 11,000 patients to support our marketing approvals of roxadustat (爱瑞卓 ®️ , EVRENZO TM ) to treat CKD anemia in China, Europe, Japan and numerous other countries. Roxadustat Mechanism of Action Roxadustat is an orally administered reversible inhibitor of HIF-PH.
(“Astellas”) and AstraZeneca, we have completed 16 Phase 3 studies worldwide in over 11,000 patients to support our marketing approvals of roxadustat (爱瑞卓 ®️ , EVRENZO TM ) to treat anemia in chronic kidney disease in China, Europe, Japan, and numerous other countries.
Failure to comply with the applicable requirements at any time during the product development process, approval process or after approval may subject an applicant and/or sponsor to a variety of administrative or judicial sanctions, including refusal by the applicable regulatory authority to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters and other types of letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal investigations and penalties brought by FDA and the Department of Justice, or other governmental entities. 24 U.S.
Compliance with environmental laws, rules, and regulations has not had, and is not expected to have, a material effect on our capital expenditures, results of operations, or competitive position, and we do not currently anticipate material capital expenditures for environmental control facilities. 16 Failure to comply with the applicable requirements at any time during the product development process, approval process or after approval may subject an applicant and/or sponsor to a variety of administrative or judicial sanctions, including refusal by the applicable regulatory authority to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters and other types of letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal investigations and penalties brought by FDA and the Department of Justice, or other governmental entities.
Furthermore, our competitors may be able to independently develop and commercialize similar products, or may be able to duplicate our technologies, business model, or strategy, without infringing our patents or otherwise using our intellectual property. Our extensive worldwide patent portfolio includes multiple granted and pending patent applications relating to roxadustat and pamrevlumab.
Furthermore, our competitors may be able to independently develop and commercialize similar products, or may be able to duplicate our technologies, business model, or strategy, without infringing our patents or otherwise using our intellectual property.
(“Falikang”), which performs roxadustat distribution, as well as conduct sales and marketing through AstraZeneca. FibroGen Beijing manufactures and supplies commercial product to Falikang based on an agreed upon transfer price, which includes a gross transfer price, net of a calculated profit share.
(“Falikang”), which performs roxadustat distribution, as well as conduct sales and marketing through AstraZeneca. FibroGen Beijing manufactures and supplies commercial product to Falikang based on a gross transaction price, adjusted for the estimated profit share.
The FDA requires prior approval before implementing any changes to the manufacturing process, investigations and corrections of any deviations from cGMP, and impose reporting and documentation requirements on the sponsor and any third-party manufacturer the sponsor may use. Accordingly, manufacturers must expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.
The FDA requires prior approval before implementing any changes to the manufacturing process, investigations and corrections of any deviations from cGMP, and impose reporting and documentation requirements on the sponsor and any third-party manufacturer the sponsor may use.
Orphan product designation must be requested before submitting an NDA. After the FDA grants orphan product designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.
Orphan product designation must be requested before submitting an NDA. After the FDA grants orphan product designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.
Approximately 15% to 20% of patients are treated with surgery; however, even for those with successful surgical resection, the median survival is approximately two years, with a five-year survival rate of 15% to 20% (Neesse et al. Gut (2011)). Radiation treatment may be used for locally advanced diseases, but it is not curative.
The majority of patients are treated with chemotherapy, but pancreatic cancer is highly resistant to chemotherapy. Approximately 15% to 20% of patients are treated with surgery; however, even for those with successful surgical resection, the median survival is approximately two years, with a five-year survival rate of 15% to 20% (Neesse et al. Gut (2011)).
We completed enrollment of 284 patients, randomized at a 1:1 ratio to receive either pamrevlumab or placebo, in each case in combination with chemotherapy (either FOLFIRINOX or gemcitabine plus nab-paclitaxel).
We completed enrollment of 284 patients, who were randomized at a 1:1 ratio to receive either pamrevlumab or placebo, in each case in combination with chemotherapy (either FOLFIRINOX or gemcitabine plus nab-paclitaxel). We currently expect topline data for the primary endpoint of overall survival in mid-year 2024.
We expect to file INDs for up to two of these programs in the second half of 2023. Licensing Activities Exclusive License with Eluminex In July 2021, we exclusively licensed to Eluminex Biosciences (Suzhou) Limited (“Eluminex”) global rights to our investigational biosynthetic cornea derived from recombinant human collagen type III.
Exclusive License with Eluminex In July 2021, we exclusively licensed to Eluminex Biosciences (Suzhou) Limited (“Eluminex”) global rights to our investigational biosynthetic cornea derived from recombinant human collagen type III.
According to the Implementing Regulations of the China Drug Administration Law, the Chinese government protects undisclosed data from drug studies and prevents the approval of an application made by another company that uses the undisclosed data for the approved drug. In practice, the NMPA has not established an effective mechanism to enforce data exclusivity.
According to the Implementing Regulations of the China Drug Administration Law, the Chinese government would protect undisclosed data from drug studies and prevent the approval of an application made by another company that uses the undisclosed data for the approved drug.
The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label.
Accordingly, manufacturers must expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. 17 The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label.
Further, the protocol for each clinical trial must be reviewed and approved by an independent institutional review board, either centrally or individually at each institution at which the clinical trial will be conducted.
While we have an Exclusive Option Agreement and Evaluation Agreement with Fortis, Fortis currently holds the IND for FG-3246/FOR46. Further, the protocol for each clinical trial must be reviewed and approved by an independent institutional review board, either centrally or individually at each institution at which the clinical trial will be conducted.
We expect any products that we develop and commercialize to compete based on, among other things, efficacy, safety, convenience of administration and delivery, price, the level of generic competition, and the availability of reimbursement from government and other third-party payors. 20 When any of our product candidates are approved, they will compete with currently marketed products, and product candidates that may be approved for marketing in the future, for treatment of the indications described below.
We expect any products that we develop and commercialize to compete based on, among other things, efficacy, safety, convenience of administration and delivery, price, the level of generic competition, and the availability of reimbursement from government and other third-party payors. 15 We expect that in many cases, the products that we commercialize will compete with existing marketed products, as well as product candidates that may be approved in the future, from companies that have large, established commercial organizations.
We expect topline data for the primary endpoint of overall survival in the first half of 2024. 11 Clinical Development in Metastatic Pancreatic Cancer In June 2021, the Pancreatic Cancer Action Network’s (PanCAN) Precision Promise SM adaptive trial platform included pamrevlumab in combination with standard of care chemotherapy treatments for pancreatic cancer (gemcitabine and Abraxane ® ), in its study for patients with metastatic pancreatic cancer.
Phase 2/3 Clinical Trial in Metastatic Pancreatic Cancer In June 2021, the Pancreatic Cancer Action Network’s (PanCAN) Precision Promise SM adaptive trial platform included pamrevlumab in combination with standard-of-care chemotherapy treatments for pancreatic cancer (gemcitabine and Abraxane ® ), for patients with metastatic pancreatic cancer.
Further, for the first time an independent firm established a diversity, equity and inclusion index based upon 10 employee questions within the survey to measure the effectiveness of, and employee sentiment about, our progress in nurturing a culture of diversity, equity, belonging and inclusion; our diversity index score was 88%. These scores significantly exceed normative industry participation and engagement benchmarks.
Further, in 2022, an independent firm established a diversity, equity, and inclusion index based upon 10 employee questions within the survey to measure the effectiveness of, and employee sentiment about, our progress in nurturing a culture of diversity, equity, belonging and inclusion; our diversity index score was 89% (China 90%, U.S. 88%), an increase compared to 88% in 2022.
ESA use also has associated toxicities, including increased thrombotic events, possible decreased survival and accelerated tumor progression, as published from randomized clinical trials and meta-analyses, that led to label restrictions and boxed warnings in the U.S. for ESAs in cancer populations in 2007, followed by the ESA Risk Evaluation and Mitigation Strategy program.
ESA use also has associated toxicities, including increased thrombotic events, possible decreased survival and accelerated tumor progression, as cited in randomized clinical trials and meta-analyses, that led to label restrictions and boxed warnings in the U.S. for ESAs in cancer populations in 2007, followed by the ESA Risk Evaluation and Mitigation Strategy program. 10 Phase 3 Clinical Trial in Chemotherapy-Induced Anemia In May 2023, we announced positive topline data from our Phase 3 clinical study of roxadustat for treatment of anemia in patients receiving concurrent chemotherapy treatment for non-myeloid malignancies in China.
Some states implemented, and other states are considering, price controls or patient access constraints under the Medicaid program, and some states are considering price-control regimes that would apply to broader segments of their populations that are not Medicaid-eligible. Further, it is possible that additional governmental action is taken in response to the COVID-19 pandemic.
It is unclear whether these or similar policy initiatives will be implemented in the future. 20 Some states implemented, and other states are considering, price controls or patient access constraints under the Medicaid program, and some states are considering price-control regimes that would apply to broader segments of their populations that are not Medicaid-eligible.
Each of the data exclusivity period and the observation period runs from the date of approval for production of the NCE or innovative or improved new drug, as the case may be. 31 INTELLECTUAL PROPERTY Our success depends in part upon our ability to obtain and maintain patent and other intellectual property protection for our product candidates including compositions-of-matter, dosages, and formulations, manufacturing methods, and novel applications, uses and technological innovations related to our product candidates and core technologies.
Our success depends in part upon our ability to obtain and maintain patent and other intellectual property protection for our product candidates including compositions-of-matter, dosages, and formulations, manufacturing methods, and novel applications, uses and technological innovations related to our product candidates and core technologies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur obligations under the RIFA could have significant negative consequences for our shareholders, and our business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional non-dilutive financing or enter into collaboration or partnership agreements of a certain size; • requiring the dedication of a portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; • limiting our flexibility to plan for, or react to, changes in our business; • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital; and • if we fail to comply with the terms of the RIFA, resulting in an event of default that is not cured or waived, NovaQuest could seek to enforce their security interest in assets relating to roxadustat that secures such indebtedness.
Biggest changeFor additional details about these financing transactions, see Note 9, Senior Secured Term Loan Facilities and Note 10, Liability Related to Sale of Future Revenues , to the consolidated financial statements. 57 Our obligations under these financing transactions could have significant negative consequences for our shareholders, and our business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional non-dilutive financing or enter into collaboration or partnership agreements of a certain size; • requiring the dedication of a portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; • limiting our flexibility to plan for, or react to, changes in our business; and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
We will only be able to protect our products and proprietary information and technology to the extent that our patents, trade secrets, contractual position, and governmental regulations and laws allow us to do so. Any unauthorized use or disclosure of proprietary information or technology could compromise our competitive position.
We will only be able to protect our products and proprietary information and technology to the extent that our patents, trade secrets, contractual position, and governmental regulations and laws allow us to do so. Any unauthorized use or disclosure of our proprietary information or technology could compromise our competitive position.
Moreover, we are, have been, and may in the future be involved in legal proceedings involving our intellectual property and initiated by third parties, which proceedings can be associated with significant costs and commitment of management time and attention.
Moreover, we are, have been, and may in the future be involved in legal proceedings initiated by third parties involving our intellectual property, which proceedings can be associated with significant costs and commitment of management time and attention.
The plan sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions the HHS can take to advance these principles.
The plan sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles.
Among other things, these provisions: • authorize “blank check” preferred stock, which could be issued by our Board of Directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock; • create a classified Board of Directors whose members serve staggered three-year terms; • specify that special meetings of our stockholders can be called only by our Board of Directors pursuant to a resolution adopted by a majority of the total number of directors; 74 • prohibit stockholder action by written consent; • establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our Board of Directors; • provide that our directors may be removed prior to the end of their term only for cause; • provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum; • require a supermajority vote of the holders of our common stock or the majority vote of our Board of Directors to amend our bylaws; and • require a supermajority vote of the holders of our common stock to amend the classification of our Board of Directors into three classes and to amend certain other provisions of our certificate of incorporation.
Among other things, these provisions: • authorize “blank check” preferred stock, which could be issued by our Board of Directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock; • create a classified Board of Directors whose members serve staggered three-year terms; • specify that special meetings of our stockholders can be called only by our Board of Directors pursuant to a resolution adopted by a majority of the total number of directors; • prohibit stockholder action by written consent; • establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our Board of Directors; • provide that our directors may be removed prior to the end of their term only for cause; • provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum; • require a supermajority vote of the holders of our common stock or the majority vote of our Board of Directors to amend our bylaws; and • require a supermajority vote of the holders of our common stock to amend the classification of our Board of Directors into three classes and to amend certain other provisions of our certificate of incorporation.
We and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.
We and the third parties upon which we rely are subject to a variety of evolving cybersecurity threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.
Product liability claims may result in: • termination of further development of unapproved product candidates or significantly reduced demand for any approved products; • material costs and expenses to defend the related litigation; • a diversion of time and resources across the entire organization, including our executive management; • product recalls, product withdrawals or labeling restrictions; • termination of our collaboration relationships or disputes with our collaboration partners; and • reputational damage negatively impacting our other product candidates in development.
Product liability claims may result in: • termination of further development of unapproved product candidates or significantly reduced demand for any approved products; • material costs and expenses to defend the related litigation; 59 • a diversion of time and resources across the entire organization, including our executive management; • product recalls, product withdrawals or labeling restrictions; • termination of our collaboration relationships or disputes with our collaboration partners; and • reputational damage negatively impacting our other product candidates in development.
While vacating those determinations, the PCAOB noted that, should it encounter any impediment to conducting an inspection or investigation of auditors in mainland China or Hong Kong as a result of a position taken by any authority there, the PCAOB would act to immediately reconsider the need to issue new determinations consistent with the HFCAA and PCAOB’s Rule 6100.
While vacating those determinations, however, the PCAOB noted that, should it encounter any impediment to conducting an inspection or investigation of auditors in mainland China or Hong Kong as a result of a position taken by any authority there, the PCAOB would act to immediately reconsider the need to issue new determinations consistent with the HFCAA and PCAOB’s Rule 6100.
We may not be able to complete any acquisitions or effectively integrate the operations, products or personnel gained through any such acquisition. Provisions in our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, and may prevent attempts by our stockholders to replace or remove our current directors or management.
We may not be able to complete any acquisitions or effectively integrate the operations, products or personnel gained through any such acquisition. 63 Provisions in our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, and may prevent attempts by our stockholders to replace or remove our current directors or management.
Since inception, various regulations and interpretations have been issued by governing authorities and we continue to examine the impacts to our business, which could potentially have a material adverse effect on our business, results of operations or financial conditions. 63 Our foreign operations, particularly those in China, are subject to significant risks involving the protection of intellectual property.
Since inception, various regulations and interpretations have been issued by governing authorities and we continue to examine the impacts to our business, which could potentially have a material adverse effect on our business, results of operations or financial conditions. Our foreign operations, particularly those in China, are subject to significant risks involving the protection of intellectual property.
Navigating the uncertainty and change in the China legal and regulatory systems will require the devotion of significant resources and time, and there can be no assurance that our contractual and other rights will ultimately be maintained or enforced. 64 Changes in China’s economic, governmental, or social conditions could have a material adverse effect on our business.
Navigating the uncertainty and change in the China legal and regulatory systems will require the devotion of significant resources and time, and there can be no assurance that our contractual and other rights will ultimately be maintained or enforced. Changes in China’s economic, governmental, or social conditions could have a material adverse effect on our business.
If our collaboration partners and we are not able to compete effectively against existing and potential competitors, our business and financial condition may be materially and adversely affected. Our product candidates may not achieve adequate market acceptance among physicians, patients, healthcare payors, and others in the medical community necessary for commercial success.
If our collaboration partners and we are not able to compete effectively against existing and potential competitors, our business and financial condition may be materially and adversely affected. 35 Our product candidates may not achieve adequate market acceptance among physicians, patients, healthcare payors, and others in the medical community necessary for commercial success.
We operate in a highly regulated industry and new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations, or decisions, related to healthcare availability, the method of delivery or payment for healthcare products and services could negatively impact our business, operations and financial condition. 57 Further, in the U.S. there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several presidential executive orders, Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under government payor programs, and review the relationship between pricing and manufacturer patient programs.
We operate in a highly regulated industry and new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations, or decisions, related to healthcare availability, the method of delivery or payment for healthcare products and services could negatively impact our business, operations and financial condition. 47 Further, in the U.S. there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several presidential executive orders, Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under government payor programs, and review the relationship between pricing and manufacturer patient programs.
In addition, we may experience delays or technical problems associated with technology transfer of manufacturing processes to any new suppliers. We have relatively limited experience manufacturing or managing third parties in manufacturing any of our product candidates in the volumes that are expected to be necessary to support large-scale clinical trials and sales.
In addition, we may experience delays or technical problems associated with technology transfer of manufacturing processes to any new suppliers. 33 We have relatively limited experience manufacturing or managing third parties in manufacturing any of our product candidates in the volumes that are expected to be necessary to support large-scale clinical trials and sales.
The existence of and any increase in the sales and production of counterfeit pharmaceuticals, or the technological capabilities of counterfeiters, could negatively impact our revenues, brand reputation, business and results of operations. 53 Risks Related to Government Regulation The regulatory approval process is highly uncertain and we may not obtain regulatory approval for our product candidates.
The existence of and any increase in the sales and production of counterfeit pharmaceuticals, or the technological capabilities of counterfeiters, could negatively impact our revenues, brand reputation, business and results of operations. Risks Related to Government Regulation The regulatory approval process is highly uncertain and we may not obtain regulatory approval for our product candidates.
Our Board of Directors also received three litigation demands from our purported shareholders, asking the Board of Directors to investigate and take action against certain current and former officers and directors of ours for alleged wrongdoing based on the same allegations in the pending derivative and securities class action lawsuits. We may in the future receive such additional demands.
Our Board of Directors also received litigation demands from our purported shareholders, asking the Board of Directors to investigate and take action against certain current and former officers and directors of ours for alleged wrongdoing based on the same allegations in the pending derivative and securities class action lawsuits. We may in the future receive such additional demands.
If we cannot prevent unauthorized disclosure of our intellectual property related to our product candidates and technology to third parties, we may not establish or maintain a competitive advantage in our market, which could materially and adversely affect our business and operations. Intellectual property disputes may be costly, time consuming, and may negatively affect our competitive position.
If we cannot prevent unauthorized disclosure of our intellectual property related to our product candidates and technology to third parties, we may not establish or maintain a competitive advantage in our market, which could materially and adversely affect our business and operations. 41 Intellectual property disputes may be costly, time consuming, and may negatively affect our competitive position.
Such events may ultimately prevent regulatory approval for our product candidates on a timely basis, at a reasonable cost, or at all. We currently rely, and expect to continue to rely, on third parties to conduct many aspects of our product manufacturing and distribution, and these third parties may terminate these agreements or not perform satisfactorily.
Such events may ultimately prevent regulatory approval for our product candidates on a timely basis, at a reasonable cost, or at all. 38 We currently rely, and expect to continue to rely, on third parties to conduct many aspects of our product manufacturing and distribution, and these third parties may terminate these agreements or not perform satisfactorily.
We take steps to detect and remediate vulnerabilities, but we may not be able to detect and remediate all vulnerabilities because the threats and techniques used to exploit the vulnerability change frequently and are often sophisticated in nature. Therefore, such vulnerabilities could be exploited but may not be detected until after a security incident has occurred.
We take steps designated to detect and remediate vulnerabilities, but we may not be able to detect and remediate all vulnerabilities because the threats and techniques used to exploit the vulnerability change frequently and are often sophisticated in nature. Therefore, such vulnerabilities could be exploited but may not be detected until after a security incident has occurred.
We rely on a combination of these and other types of patents to protect our product candidates, and there can be no assurance that our intellectual property will create and sustain the competitive position of our product candidates. 50 Biotechnology and pharmaceutical product patents involve highly complex legal and scientific questions and can be uncertain.
We rely on a combination of these and other types of patents to protect our product candidates, and there can be no assurance that our intellectual property will create and sustain the competitive position of our product candidates. Biotechnology and pharmaceutical product patents involve highly complex legal and scientific questions and can be uncertain.
Despite our efforts to protect our trade secrets and other confidential information, a competitor’s discovery of such trade secrets and information could impair our competitive position and have an adverse impact on our business. The cost of maintaining our patent protection is high and requires continuous review and diligence.
Despite our efforts to protect our trade secrets and other confidential information, a competitor’s discovery of such trade secrets and information could impair our competitive position and have an adverse impact on our business. 42 The cost of maintaining our patent protection is high and requires continuous review and diligence.
We believe that we will continue to expend substantial resources for the foreseeable future as we continue to grow our operations in China, expand our clinical development efforts on pamrevlumab, continue to seek regulatory approval, establish commercialization capabilities of our product candidates, and pursue additional indications.
We believe that we will continue to expend substantial resources for the foreseeable future as we continue to grow our operations in China, continue our clinical development efforts on pamrevlumab, continue to seek regulatory approval, establish commercialization capabilities of our product candidates, and pursue additional indications.
If we are not able to ensure coverage or are required to pay substantial amounts to settle or otherwise contest the claims for product liability, our business and operations would be negatively affected. 70 Our business and operations would suffer in the event of computer system failures.
If we are not able to ensure coverage or are required to pay substantial amounts to settle or otherwise contest the claims for product liability, our business and operations would be negatively affected. Our business and operations would suffer in the event of computer system failures.
We could also be required to seek funds through additional collaborations, partnerships, licensing arrangements with third parties or otherwise at an earlier stage than would be desirable and we may be required to relinquish rights to intellectual property, future revenue streams, research programs, product candidates or to grant licenses on terms that may not be favorable to us, any of which may have a material adverse effect on our business, operating results and prospects. 67 In addition, the terms of any financing may adversely affect the holdings or the rights of our stockholders.
We could also be required to seek funds through additional collaborations, partnerships, licensing arrangements with third parties or otherwise at an earlier stage than would be desirable and we may be required to relinquish rights to intellectual property, future revenue streams, research programs, product candidates or to grant licenses on terms that may not be favorable to us, any of which may have a material adverse effect on our business, operating results and prospects. 56 In addition, the terms of any financing may adversely affect the holdings or the rights of our stockholders.
We cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all or that we will be able to satisfy the performance, financial and other obligations in connection with any such financings.
We cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all or that we will be able to satisfy the performance, financial and other obligations in connection with any such financing.
Although we have discussed all known material risks, the risks described below are not the only ones that we may face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.
Although we have discussed all known material risks, the risks described below are not the only ones that we may face. Additional risks and uncertainties not presently known to us or that we deem immaterial may also impair our business operations.
You should carefully consider the risks described below in addition to the other information included or incorporated by reference in this Annual Report on Form 10-K for the year ended December 31, 2022 (“Annual Report”), including our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock.
You should carefully consider the risks described below in addition to the other information included or incorporated by reference in this Annual Report on Form 10-K for the year ended December 31, 2023 (“Annual Report”), including our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock.
We have, are, and may again become involved in, opposition or interference proceedings challenging our patents and patent applications, or the patents and patent applications of others, and the outcome of any such proceedings are highly uncertain.
We have, are, and may again become involved in, opposition, invalidation, or interference proceedings challenging our patents and patent applications, or the patents and patent applications of others, and the outcome of any such proceedings are highly uncertain.
Remediation efforts required to remediate an ineffective system of control over financial reporting may place a significant burden on management and add increased pressure on our financial resources and processes.
Efforts required to remediate an ineffective system of control over financial reporting may place a significant burden on management and add increased pressure on our financial resources and processes.
If this attitude becomes widespread among our potential customers, our ability to promote our products to hospitals may be adversely affected. 56 Considering our current presence and potential expansion in international jurisdictions, the creation, implementation, and maintenance of anti-corruption compliance programs is costly and such programs are difficult to enforce, particularly where reliance on third parties is required.
If this attitude becomes widespread among our potential customers, our ability to promote our products to hospitals may be adversely affected. 46 Considering our current presence and potential expansion in international jurisdictions, the creation, implementation, and maintenance of anti-corruption compliance programs is costly and such programs are difficult to enforce, particularly where reliance on third parties is required.
Accordingly, there can be no assurance that our product candidates do not infringe proprietary rights of third parties, and parties making claims against us may seek and obtain injunctive or other equitable relief, which could potentially block further efforts to develop and commercialize our product candidates, including roxadustat or pamrevlumab.
Accordingly, there can be no assurance that our product candidates do not infringe proprietary rights of third parties, and parties making claims against us may seek and obtain injunctive or other equitable relief, which could potentially block further efforts to develop and commercialize our product candidates, including roxadustat, pamrevlumab or FG-3246.
Sales of roxadustat in China may ultimately be limited due to the complex nature of the healthcare system, low average personal income, pricing controls, still developing infrastructure and potentially rapid competition from other products. The retail prices of any product candidates that we develop will be subject to pricing control in China and elsewhere.
Sales of roxadustat in China may also be limited due to the complex nature of the healthcare system, low average personal income, pricing controls, still developing infrastructure, and potentially rapid competition from other products. The retail prices of any product candidates that we develop will be subject to pricing control in China and elsewhere.
In the highly competitive markets in which our product candidates are expected to compete, protecting our trade secrets, including our strategies for addressing competing products, is imperative, and any unauthorized use or disclosure could impair our competitive position and may have a material adverse effect on our business and operations.
In the highly competitive markets in which our product candidates are expected to compete, protecting our trade secrets, including our strategies for addressing competing products and generic competition, is imperative, and any unauthorized use or disclosure could impair our competitive position and may have a material adverse effect on our business and operations.
We rely heavily on university, hospital, dialysis centers and other institutions and third parties, including the principal investigators and their staff, to carry out our clinical trials in accordance with our clinical protocols and designs. We also rely on a number of third-party CROs to assist in undertaking, managing, monitoring and executing our ongoing clinical trials.
We rely heavily on university, hospital, and other institutions and third parties, including the principal investigators and their staff, to carry out our clinical trials in accordance with our clinical protocols and designs. We also rely on a number of third-party CROs to assist in undertaking, managing, monitoring and executing our ongoing clinical trials.
Violation of the FCPA and other anti-corruption laws can result in significant administrative and criminal penalties for us and our employees, including substantial fines, suspension or debarment from government contracting, prison sentences, or even the death penalty in extremely serious cases in certain countries.
Violation of the FCPA and other anti-corruption laws can result in significant administrative and criminal penalties for us and our employees, including substantial fines, suspension or debarment from government contracting, prison sentences, or even the death penalty in extremely serious cases in certain countries. The U.S.
Responding to challenges from stockholders, such as proxy contests or media campaigns, could be costly and time consuming and could have an adverse effect on our reputation, which could have an adverse effect on our business and operational results, and could cause the market price of our common stock to decline or experience volatility. ITEM 1B.
Responding to challenges from stockholders, such as proxy contests or media campaigns, could be costly and time consuming and could have an adverse effect on our reputation, which could have an adverse effect on our business and operational results, and could cause the market price of our common stock to decline or experience volatility.
In addition, each of those agreements provides our respective partners the right to terminate any of those agreements upon written notice for convenience.
In addition, each of those agreements provides our partners the right to terminate any of those agreements upon written notice for convenience.
Such actions could have a substantial adverse effect on the price of our common shares and could have a material adverse effect on our operations. We are subject to stringent and evolving U.S. and foreign laws, regulations, rules, contractual obligations, policies and other obligations related to data privacy and security.
Such actions could have a substantial adverse effect on the price of our common shares and could have a material adverse effect on our operations. We are subject to stringent and evolving U.S. and foreign laws, regulations, rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security.
Risks Related to Our Intellectual Property If our efforts to protect our proprietary technologies are not adequate, we may not be able to compete effectively in our market. We rely upon a combination of patents, trade secret protection, and contractual arrangements to protect the intellectual property related to our technologies.
Risks Related to Our Intellectual Property If our efforts to protect our proprietary and exclusively licensed technologies are not adequate, we may not be able to compete effectively in our market. We rely upon a combination of patents, trade secret protection, and contractual arrangements to protect the intellectual property related to our technologies.
If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing confidential, proprietary, and sensitive data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in our operations (including availability of data); financial loss; and other similar harms.
If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing confidential, proprietary, and sensitive data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in our operations (including availability of data); delays in our development or other business plans; financial loss; and other similar harms.
Difficulties may include: • costs and challenges associated with scale-up and attaining sufficient manufacturing yields, in particular for biologic products such as pamrevlumab, which is a monoclonal antibody; • contracting with additional suppliers and validation/qualification of additional facilities to meet growing demand; • supply chain issues, including coordination of multiple contractors in our supply chain and securing necessary licenses (such as export licenses); • the timely availability and shelf life requirements of raw materials and supplies, including delays in availability due to the COVID-19 pandemic; • limited stability and product shelf life; • equipment maintenance issues or failure; 43 • quality control and quality assurance issues; • shortages of qualified personnel and capital required to manufacture large quantities of product; • compliance with regulatory requirements that vary in each country where a product might be sold; • capacity or forecasting limitations and scheduling availability in contracted facilities; • natural disasters, such as pandemics, including the COVID-19 pandemic, floods, storms, earthquakes, tsunamis, and droughts, or accidents such as fire, that affect facilities, possibly limit or postpone production, and increase costs; and • failure to obtain license to proprietary starting materials.
Difficulties may include: • costs and challenges associated with scale-up and attaining sufficient manufacturing yields, in particular for biologic products such as pamrevlumab, which is a monoclonal antibody; • contracting with additional suppliers and validation/qualification of additional facilities to meet growing demand; • supply chain issues, including coordination of multiple contractors in our supply chain and securing necessary licenses (such as export licenses); • the timely availability and shelf-life requirements of raw materials and supplies; • limited stability and product shelf life; • equipment maintenance issues or failure; • quality control and quality assurance issues; • shortages of qualified personnel and capital required to manufacture large quantities of product; • compliance with regulatory requirements that vary in each country where a product might be sold; 34 • capacity or forecasting limitations and scheduling availability in contracted facilities; • natural disasters, such as pandemics, floods, storms, earthquakes, tsunamis, and droughts, or accidents such as fire, that affect facilities, possibly limit or postpone production, and increase costs; and • failure to obtain license to proprietary starting materials.
In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position. Our headquarters are located near known earthquake fault zones.
In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveal competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position. 61 Our headquarters are located near known earthquake fault zones.
If the breadth or strength of protection provided by the patents and patent applications we hold with respect to our product candidates is threatened, competitors with significantly greater resources could threaten our ability to commercialize our product candidates.
If the breadth or strength of protection provided by the patents and patent applications we hold with respect to our product candidates is threatened, generic manufacturers and competitors with significantly greater resources could threaten our ability to commercialize our product candidates.
For a description of our pending litigation and SEC investigation, see Note 10, Commitments and Contingencies , to the consolidated financial statements. We may engage in acquisitions that could dilute stockholders and harm our business.
For a description of our pending litigation and SEC investigation, see Note 12, Commitments and Contingencies , to the consolidated financial statements. We may engage in acquisitions that could dilute stockholders and harm our business.
Moreover, the process and timing for the implementation of price restrictions is unpredictable, which may cause potential revenues from the sales of roxadustat to fluctuate from period to period. FibroGen (China) Medical Technology Development Co., Ltd.
Moreover, the process and timing for the implementation of price restrictions are unpredictable, which may cause potential revenues from the sales of roxadustat to fluctuate from period to period. FibroGen (China) Medical Technology Development Co., Ltd.
We have two manufacturing facilities in China, with one located in Beijing and the other in Cangzhou, Hebei. We will be obligated to comply with continuing cGMP requirements and there can be no assurance that we will maintain all of the appropriate licenses required to manufacture our product candidates for clinical and commercial use in China.
We have two manufacturing facilities in China, with one located in Beijing and the other in Cangzhou, Hebei. We are obligated to comply with cGMP requirements but there can be no assurance that we will maintain all of the appropriate licenses required to manufacture our product candidates for clinical and commercial use in China.
Insufficient supply could be a particular risk if we were to obtain regulatory approval of pamrevlumab in all indications being studied (IPF, LAPC, metastatic pancreatic cancer, and DMD). Any delay or interruption in the supply of our product candidates or products could have a material adverse effect on our business and operations.
Insufficient supply could be a particular risk if we were to obtain regulatory approval of pamrevlumab in the indications being studied (LAPC and metastatic pancreatic cancer). Any delay or interruption in the supply of our product candidates or products could have a material adverse effect on our business and operations.
Our pursuit of such opportunities could, however, result in conflicts with our collaboration partners in the event that any of our collaboration partners takes the position that our internal activities overlap with those areas that are exclusive to our collaboration agreements.
Our pursuit of such opportunities could, however, result in conflicts with our collaboration partners in the event that any of our collaboration partners take the position that our internal activities overlap with those areas that are exclusive to our collaboration agreements.
We may experience difficulties in successfully growing and sustaining sales of roxadustat in China. AstraZeneca and we have a profit-sharing arrangement with respect to roxadustat in China and any difficulties we may experience in growing and sustaining sales will affect our bottom line.
AstraZeneca and we have a profit-sharing arrangement with respect to roxadustat in China and any difficulties we may experience in growing and sustaining sales will affect our bottom line.
Clinical trials can be delayed, suspended, or terminated by us, by the relevant institutional review boards at the sites at which such trials are being conducted, or by the FDA or other regulatory authorities, for a variety of reasons or factors, including: • delay or failure to address any physician or patient safety concerns that arise during the course of the trial, including unforeseen safety issues or adverse side effects, or a principal investigator’s determination that a serious adverse event could be related to our product candidates; • delay or failure to obtain required regulatory or institutional review board approval or guidance; • delay or failure to reach timely agreement on acceptable terms with prospective CROs and clinical trial sites; • delay or failure to recruit, enroll and retain patients through the completion of the trial; • patient recruitment, enrollment, or retention, or clinical site initiation or retention problems associated with the Severe Acute Respiratory Syndrome Coronavirus 2 and the resulting Coronavirus Disease (“COVID-19”) pandemic; • patient recruitment, enrollment, or retention, clinical site initiation, or retention problems associated with civil unrest or military conflicts around the world; • delay or failure to maintain clinical sites in compliance with clinical trial protocols or to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols; • delay or failure to initiate or add a sufficient number of clinical trial sites; • delay or failure to manufacture sufficient quantities of product candidate for use in clinical trials; • difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned; • inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, warning letter, or other regulatory action; and • changes in laws or regulations.
Clinical trials can be delayed, suspended, or terminated by us, by the relevant institutional review boards at the sites at which such trials are being conducted, or by the FDA or other regulatory authorities, for a variety of reasons or factors, including: • delay or failure to address any physician or patient safety concerns that arise during the course of the trial, including unforeseen safety issues or adverse side effects, or a principal investigator’s determination that a serious adverse event could be related to our product candidates; • delay or failure to obtain required regulatory or institutional review board approval or guidance; • delay or failure to reach timely agreement on acceptable terms with prospective CROs and clinical trial sites; • delay or failure to recruit, enroll and retain patients through the completion of the trial; • patient recruitment, enrollment, or retention, clinical site initiation, or retention problems associated with civil unrest or military conflicts around the world; • delay or failure to maintain clinical sites in compliance with clinical trial protocols or to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols; • delay or failure to initiate or add a sufficient number of clinical trial sites; • delay or failure to manufacture sufficient quantities of product candidate for use in clinical trials; • difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned; • inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, warning letter, or other regulatory action; and • changes in laws or regulations.
Regulatory authorities may take actions or impose requirements that delay, limit or deny approval of our product candidates for many reasons, including, among others: • our failure to adequately demonstrate to the satisfaction of regulatory authorities or an independent advisory committee that our product candidate is safe and effective in a particular indication, or that such product candidate’s clinical and other benefits outweigh its safety risks; • our failure of clinical trials to meet the level of statistical significance required for approval; • the determination by regulatory authorities that additional clinical trials are necessary to demonstrate the safety and efficacy of a product candidate, • disagreement over the design or implementation of our clinical trials; • our product candidates may exhibit an unacceptable safety signal at any stage of development; 39 • we, or the clinical research organizations (“CROs”) or investigators that conduct clinical trials on our behalf, may fail to comply with regulations or GCPs, clinical trial protocols, or contractual agreements, which may adversely impact our clinical trials; • disagreement over whether to accept results from clinical trial sites in a country where the standard of care is potentially different from that in the U.S.; • we or third-party contractors manufacturing our product candidates may not maintain current good manufacturing practices (“cGMP”), successfully pass inspection or meet other applicable manufacturing regulatory requirements; • regulatory authorities may require us to exclude the use of patient data from unreliable clinical trials, or may not agree with our interpretation of the data from our preclinical trials and clinical trials; or • collaboration partners may not perform or complete their clinical programs in a timely manner, or at all.
Regulatory authorities may take actions or impose requirements that delay, limit or deny approval of our product candidates for many reasons, including, among others: • our failure to adequately demonstrate to the satisfaction of regulatory authorities or an independent advisory committee that our product candidate is safe and effective in a particular indication, or that such product candidate’s clinical and other benefits outweigh its safety risks; • our failure of clinical trials to meet the level of statistical significance required for approval; • the determination by regulatory authorities that additional information (including additional preclinical or clinical data or trials) is necessary to demonstrate the safety and efficacy of a product candidate, • disagreement over the design or implementation of our clinical trials; • our product candidates exhibiting an unacceptable safety signal at any stage of development; • failure either by us or the clinical research organizations (“CROs”) or investigators that conduct clinical trials on our behalf, to comply with regulations or GCPs, clinical trial protocols, or contractual agreements, which may adversely impact our clinical trials; • disagreement over whether to accept results from clinical trial sites in a country where the standard of care is potentially different from that in the U.S.; • failure either by us or third-party contractors manufacturing our product candidates to maintain current good manufacturing practices (“cGMP”), successfully pass inspection, or meet other applicable manufacturing regulatory requirements; • requirements by regulatory authorities to exclude the use of patient data from unreliable clinical trials, or disagreement with our interpretation of the data from our preclinical trials and clinical trials; or • failure by collaboration partners to perform or complete their clinical programs in a timely manner, or at all.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; inability to process personal data or to operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; interruptions or stoppages in our business operations including clinical trials; inability to process personal data or to operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.
If our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.
If our information technology systems or data, or those of third parties upon which we rely, are or were compromised by a cybersecurity incident, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.
Our agreements with Astellas and AstraZeneca provide each of them with the right to terminate their respective agreements with us, upon the occurrence of negative clinical results, delays in the development and commercialization of our product candidates or adverse regulatory requirements or guidance.
Our current agreements with Astellas and AstraZeneca provide them with the right to terminate their agreements with us upon the occurrence of negative clinical results, delays in the development and commercialization of our product candidates or adverse regulatory requirements or guidance.
In particular, the market price of shares of our common stock could be subject to wide fluctuations in response to the following factors: • results of clinical trials of our product candidates, including roxadustat and pamrevlumab; • the timing of the release of results of and regulatory updates regarding our clinical trials; • the level of expenses related to any of our product candidates or clinical development programs; • results of clinical trials of our competitors’ products; • safety issues with respect to our product candidates or our competitors’ products; • regulatory actions with respect to our product candidates and any approved products or our competitors’ products; • fluctuations in our financial condition and operating results, which will be significantly affected by the manner in which we recognize revenue from the achievement of milestones under our collaboration agreements; • adverse developments concerning our collaborations and our manufacturers; • the termination of a collaboration or the inability to establish additional collaborations; • the inability to obtain adequate product supply for any approved drug product or inability to do so at acceptable prices; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • changes in legislation or other regulatory developments affecting our product candidates or our industry; • fluctuations in the valuation of the biotechnology industry and particular companies perceived by investors to be comparable to us; • speculation in the press or investment community; • announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us; • activities of the government of China, including those related to the pharmaceutical industry as well as industrial policy generally; • performance of other U.S. publicly traded companies with significant operations in China; • changes in market conditions for biopharmaceutical stocks; and • the other factors described in this “ Risk Factors ” section. 73 As a result of fluctuations caused by these and other factors, comparisons of our operating results across different periods may not be accurate indicators of our future performance.
In particular, the market price of shares of our common stock could be subject to wide fluctuations in response to the following factors: • results of clinical trials of our product candidates, including roxadustat and pamrevlumab; • the timing of the release of results of and regulatory updates regarding our clinical trials; • the level of expenses related to any of our product candidates or clinical development programs; • results of clinical trials of our competitors’ products; • safety issues with respect to our product candidates or our competitors’ products; • regulatory actions with respect to our product candidates and any approved products or our competitors’ products; • fluctuations in our financial condition and operating results, which will be significantly affected by the manner in which we recognize revenue from the achievement of milestones under our collaboration agreements; • adverse developments concerning our collaborations and our manufacturers; • the termination of a collaboration or the inability to establish additional collaborations; • the inability to obtain adequate product supply for any approved drug product or inability to do so at acceptable prices; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • changes in legislation or other regulatory developments affecting our product candidates or our industry; • fluctuations in the valuation of the biotechnology industry and particular companies perceived by investors to be comparable to us; 62 • speculation in the press or investment community; • announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us; • activities of the government of China, including those related to the pharmaceutical industry as well as industrial policy generally; • performance of other U.S. publicly traded companies with significant operations in China; • changes in market conditions for biopharmaceutical stocks; and • the other factors described in this “ Risk Factors ” section.
Patients may be unwilling to participate in clinical trials of our product candidates for a variety of reasons, some of which may be beyond our control, including: • severity of the disease under investigation; • availability of alternative treatments; • size and nature of the patient population; • eligibility criteria for and design of the study in question; • perceived risks and benefits of the product candidate under study; • ability to enroll patients in clinical trials during the COVID-19 pandemic (particularly for IPF); • ongoing clinical trials of competitive agents; 41 • physicians’ and patients’ perceptions of the potential advantages of our product candidates being studied in relation to available therapies or other products under development; • our CRO’s and our trial sites’ efforts to facilitate timely enrollment in clinical trials; • patient referral practices of physicians; and • ability to monitor patients and collect patient data adequately during and after treatment.
Patients may be unwilling to participate in clinical trials of our product candidates for a variety of reasons, some of which may be beyond our control, including: • severity of the disease under investigation; • availability of alternative treatments; • size and nature of the patient population; • eligibility criteria for and design of the study in question; • perceived risks and benefits of the product candidate under study; • ongoing clinical trials of competitive agents; • physicians’ and patients’ perceptions of the potential advantages of our product candidates being studied in relation to available therapies or other products under development; 32 • our CRO’s and our trial sites’ efforts to facilitate timely enrollment in clinical trials; • patient referral practices of physicians; and • ability to monitor patients and collect patient data adequately during and after treatment.
For additional information regarding our pending litigation and SEC investigation, see Note 10, Commitments and Contingencies , to the consolidated financial statements.
For additional information regarding our pending litigation and SEC investigation, see Note 12, Commitments and Contingencies , to the consolidated financial statements.
Our non-dilutive transaction with NovaQuest could limit cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations, and contain various covenants and other provisions, which, if violated, could result in the acceleration of payments due in connection with such transaction or the foreclosure on security interest.
Our non-dilutive transactions with Morgan Stanley Tactical Value and NovaQuest could limit cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations, and contain various covenants and other provisions, which, if violated, could result in the acceleration of payments due in connection with such transaction or the foreclosure on security interest.
We do not know whether our ongoing or planned clinical trials of roxadustat or pamrevlumab will need to be redesigned based on interim results or if we will be able to achieve sufficient patient enrollment or complete planned clinical trials on schedule.
We do not know whether our ongoing or planned clinical trials will need to be redesigned based on interim results or if we will be able to achieve sufficient patient enrollment or complete planned clinical trials on schedule.
If any third-party manufacturers terminate their engagements with us or fail to perform as agreed, we may be required to identify, qualify, and contract with replacement manufacturers (including entering into technical transfer agreements to share know-how), which process may result in significant costs and delays to our development and commercialization programs.
If any third-party manufacturers terminate their engagements with us or fail to perform as agreed, we may be required to identify, qualify, and contract with replacement manufacturers (including entering into technical transfer agreements to share know-how), which process may result in significant costs and delays to our development and commercialization programs. 39 We may have shortfalls, delays, or excesses in manufacturing.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products if approved or additional pricing pressures.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products if approved or additional pricing pressures, or otherwise adversely affect our business.
Any conflict with our collaboration partners could lead to the termination of our collaboration agreements, delay collaborative activities, reduce our ability to renew agreements or obtain future collaboration agreements or result in litigation or arbitration and would negatively impact our relationship with existing collaboration partners, and could impact our commercial results.
Any conflict with our collaboration partners could lead to the termination of our collaboration agreements, delay collaborative activities, reduce our ability to renew agreements or obtain future collaboration agreements, or result in litigation or arbitration and would negatively impact our relationship with existing collaboration partners, as well as potentially impacting our commercial results.
Furthermore, integral parties in our supply chain are operating from single sites, increasing their vulnerability to natural disasters or other sudden, unforeseen and severe adverse events, such as the COVID-19 pandemic. If such an event were to affect our supply chain, it could have a material adverse effect on our business.
Furthermore, integral parties in our supply chain are operating from single sites, increasing their vulnerability to natural disasters or other sudden, unforeseen and severe adverse events. If such an event were to affect our supply chain, it could have a material adverse effect on our business.
While we have in the past maintained sufficient inventory of materials, active pharmaceutical ingredients (“API”), and drug product to meet our and our collaboration partners’ needs to date, the lead-time and regulatory approvals required to source from and into countries outside of the U.S. increase the risk of delay and potential shortages of supply.
While we have in the past maintained sufficient inventory of materials, API, and drug product to meet our and our collaboration partners’ needs to date, the lead-time and regulatory approvals required to source from and into countries outside of the U.S. increase the risk of delay and potential shortages of supply.
If a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.
If a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition. 65 We do not plan to pay dividends.
The price for pharmaceutical products is highly regulated in China, both at the national and provincial level.
The price of pharmaceutical products is highly regulated in China, both at the national and provincial level.
We compete with many other companies for the resources of these third parties, and large pharmaceutical companies often have significantly more extensive agreements and relationships with such third-party providers, and such third-party providers may prioritize the requirements of such large pharmaceutical companies over ours.
We compete with many other companies for the resources of these third parties, and other companies may have significantly more extensive agreements and relationships with such third-party providers, and such third-party providers may prioritize these relationships over ours.
In addition, if FibroGen Beijing incurs debt on its own behalf in the future, the agreements governing such debt may restrict its ability to pay dividends or make other distributions to us. As of December 31, 2022, approximately $71.2 million of our cash and cash equivalents is held in China.
In addition, if FibroGen Beijing incurs debt on its own behalf in the future, the agreements governing such debt may restrict its ability to pay dividends or make other distributions to us. As of December 31, 2023, approximately $32.1 million of our cash and cash equivalents is held in China.
For example, the California Consumer Privacy Act of 2018 (“CCPA”) applies to personal data of consumers, business representatives, and employees, and requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights.
For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (collectively, “CCPA”) applies to personal data of consumers, business representatives, and employees, and requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights.
Risks arising from our reliance on third-party manufacturers include: • reduced control and additional burdens of oversight as a result of using third-party manufacturers and distributors for all aspects of manufacturing activities, including regulatory compliance and quality control and quality assurance; • termination of manufacturing agreements, termination fees associated with such termination, or nonrenewal of manufacturing agreements with third parties may negatively impact our planned development and commercialization activities; • significant financial commitments we may be required to make with third-party manufacturers for early-stage clinical or pre-clinical programs that may fail to produce scientific results that would justify further development (without the ability to mitigate the manufacturing investments); • the possible misappropriation of our proprietary technology, including our trade secrets and know-how; and • disruptions to the operations of our third-party manufacturers, distributors or suppliers unrelated to our product, including the merger, acquisition, or bankruptcy of a manufacturer or supplier or a catastrophic event, including disruption resulting from the COVID-19 pandemic, affecting our manufacturers, distributors or suppliers.
Risks arising from our reliance on third-party manufacturers include: • reduced control and additional burdens of oversight as a result of using third-party manufacturers and distributors for all aspects of manufacturing activities, including regulatory compliance and quality control and quality assurance; • termination of manufacturing agreements, termination fees associated with such termination, or nonrenewal of manufacturing agreements with third parties may negatively impact our planned development and commercialization activities; • significant financial commitments we may be required to make with third-party manufacturers for early-stage clinical or pre-clinical programs that may fail to produce scientific results that would justify further development (without the ability to mitigate the manufacturing investments); • the possible misappropriation of our proprietary technology, including our trade secrets and know-how; • disruptions to the operations of our third-party manufacturers, distributors or suppliers unrelated to our product, including the merger, acquisition, or bankruptcy of a manufacturer or supplier or a catastrophic event, affecting our manufacturers, distributors or suppliers; and • inability for FibroGen to meet timing and volume obligations to Astellas due to insufficient resources.
The following examples are illustrative: • Others may be able to make compounds or independently develop similar or alternative technologies that are the same as or similar to our current or future product candidates but that are not covered by the claims of the patents that we own or have exclusively licensed. • Patent protection on our product candidates may expire before we are able to develop and commercialize the product, or before we are able to recover our investment in the product. • Our competitors might conduct research and development activities in the U.S. and other countries that provide a safe harbor from patent infringement claims for such activities, as well as in countries in which we do not have patent rights, and may then use the information learned from such activities to develop competitive products for sale in markets where we intend to market our product candidates.
The following examples are illustrative: • Others may be able to make compounds or independently develop similar or alternative technologies that are the same as or similar to our current or future product candidates but that are not covered by the claims of the patents that we own or have exclusively licensed. • Patent protection on our product candidates may expire before we are able to develop and commercialize the product, or before we are able to recover our investment in the product. • Our competitors might conduct research and development activities in the U.S. and other countries that provide a safe harbor from patent infringement claims for such activities, as well as in countries in which we do not have patent rights, and may then use the information learned from such activities to develop competitive products for sale in markets where we intend to market our product candidates. 43 The existence of counterfeit pharmaceutical products in pharmaceutical markets may compromise our brand and reputation and have a material adverse effect on our business, operations and prospects.
In addition, see the risk factor titled “Our product candidates may cause or have attributed to them undesirable side effects or have other properties that delay or prevent their regulatory approval or limit their commercial potential” above.
In addition, see the risk factor titled “ Our product candidates may cause or have attributed to them undesirable side effects or have other properties that delay or prevent their regulatory approval or limit their commercial potential ” above.
The majority of audit work incurred for the audit report included in the 2021 Form 10-K was performed by the U.S.-based independent registered public accounting firm we have retained, PricewaterhouseCoopers LLP, which is headquartered in the U.S. and was not identified in the report issued by the PCAOB on December 16, 2021 as a firm that the PCAOB was unable to inspect.
The majority of audit work incurred for the audit report included in the 2023 Form 10-K was performed by the U.S.-based independent registered public accounting firm we have retained, PricewaterhouseCoopers LLP, which is headquartered in the U.S. and was not identified in the report issued by the PCAOB on December 16, 2021.
We do not plan to pay dividends. Capital appreciation will be your sole possible source of gain, which may never occur. You should not rely on an investment in our common stock to provide dividend income.
Capital appreciation will be your sole possible source of gain, which may never occur. You should not rely on an investment in our common stock to provide dividend income.
Although we regularly assess the likelihood of adverse outcomes resulting from these examinations to determine our tax estimates, a final determination of tax audits or tax disputes could have an adverse effect on our results of operations and financial condition.
Our income tax returns are subject to audits by tax authorities. Although we regularly assess the likelihood of adverse outcomes resulting from these examinations to determine our tax estimates, a final determination of tax audits or tax disputes could have an adverse effect on our results of operations and financial condition.
We also target customers in Asia and have operations in China and may be subject to new and emerging data privacy regimes in Asia, including China’s Personal Information Protection Law, Japan’s Act on the Protection of Personal Information, and Singapore’s Personal Data Protection Act.
We also target customers in Asia and have operations in China and are subject to new and emerging data privacy regimes in Asia, including China’s PIPL, Japan’s Act on the Protection of Personal Information, and Singapore’s Personal Data Protection Act.
The pharmaceutical industry in China is highly regulated and such regulations are subject to change. The pharmaceutical industry in China is subject to comprehensive government regulation and supervision, encompassing the approval, registration, manufacturing, packaging, licensing and marketing of new drugs. In recent years, many aspects of pharmaceutical industry regulation have undergone significant reform, and reform may continue.
The pharmaceutical industry in China is subject to comprehensive government regulation and supervision, encompassing the approval, registration, manufacturing, packaging, licensing and marketing of new drugs. In recent years, many aspects of pharmaceutical industry regulation have undergone significant reform, and reform may continue.
Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse business consequences .
Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation (including class claims) and mass arbitration demands; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse business consequences .
An unfavorable outcome in any such challenge could require us to cease using the related technology and to attempt to license rights to it from the prevailing third party, which may not be available on commercially reasonable terms, if at all, in which case our business could be harmed. 51 Third parties have challenged and may again challenge our patents and patent applications.
An unfavorable outcome in any such challenge could require us to cease using the related technology and to attempt to license rights to it from the prevailing third party, which may not be available on commercially reasonable terms, if at all, in which case our business could be harmed.
A number of risks related to our international operations, many of which may be beyond our control, include: different regulatory requirements in different countries, including for drug approvals, manufacturing, and distribution; potential liability resulting from development work conducted by foreign distributors; economic weakness, including inflation, or foreign currency fluctuations, which could result in increased operating costs and expenses and reduced revenues, and other obligations incident to doing business in another country; workforce uncertainty in countries where labor unrest is more common than in the U.S.; compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; political instability in particular foreign economies and markets; and business interruptions resulting from geopolitical actions specific to an international region, including war and terrorism, or natural disasters, including the differing impact of the COVID-19 pandemic on each region.
A number of risks related to our international operations, many of which may be beyond our control, include: different regulatory requirements in different countries, including for drug approvals, manufacturing, and distribution; potential liability resulting from development work conducted by foreign distributors; economic weakness, including inflation, or foreign currency fluctuations, which could result in increased operating costs and expenses and reduced revenues, and other obligations incident to doing business in another country; workforce uncertainty in countries where labor unrest is more common than in the U.S.; compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; political instability in particular foreign economies and markets; and business interruptions resulting from geopolitical actions specific to an international region, including war and terrorism, or natural disasters, including pandemics. 49 The pharmaceutical industry in China is highly regulated and such regulations are subject to change.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe have constructed a commercial manufacturing facility of approximately 5,500 square meters in Cangzhou, China, on approximately 33,000 square meters of land. Our right to use such land expires in 2068. We believe our facilities are adequate for our current needs and that suitable additional or substitute space would be available if needed. 76
Biggest changeWe have constructed a commercial manufacturing facility of approximately 5,500 square meters in Cangzhou, China, on approximately 33,000 square meters of land. Our right to use such land expires in 2068. We believe our facilities are adequate for our current needs and that suitable additional or substitute space would be available if needed. 67

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe did not have any material accruals for any active legal action in our consolidated balance sheet as of December 31, 2022, as we could not predict the ultimate outcome of these matters, or reasonably estimate the potential exposure. For a discussion of our legal proceedings, refer to Note 10, Commitments and Contingencies , to the consolidated financial statements.
Biggest changeWe did not have any material accruals for any active legal action in our consolidated balance sheet as of December 31, 2023, as we could not predict the ultimate outcome of these matters, or reasonably estimate the potential exposure. For a discussion of our legal proceedings, refer to Note 12, Commitments and Contingencies , to the consolidated financial statements.
ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 77 PART II
ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 68 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAny future determination related to our dividend policy will be made at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. 78 Stockholders As of January 31, 2023, there were 113 registered stockholders of record for our common stock.
Biggest changeAny future determination related to our dividend policy will be made at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. 69 Stockholders As of January 31, 2024, there were 105 registered stockholders of record for our common stock.
The graph assumes an initial investment of $100 on December 31, 2017, in our common stock, the stocks comprising the NASDAQ Composite Index, and the stocks comprising the NASDAQ Biotechnology Index. The stockholder return shown in the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns.
The graph assumes an initial investment of $100 on December 31, 2018, in our common stock, the stocks comprising the Nasdaq Composite Index, and the stocks comprising the Nasdaq Biotechnology Index. The stockholder return shown in the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns.
Stock Price Performance Graph The following graph illustrates a comparison of the total cumulative stockholder return for our common stock since December 31, 2017 to two indices: the NASDAQ Composite Index and the NASDAQ Biotechnology Index.
Stock Price Performance Graph The following graph illustrates a comparison of the total cumulative stockholder return for our common stock since December 31, 2018 to two indices: the Nasdaq Composite Index and the Nasdaq Biotechnology Index.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. ITEM 6. [RESERVED] 79
Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. ITEM 6. [RESERVED] 70

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOperating costs and expenses decreased for the year ended December 31, 2022 compared to the prior year as a result of the net effect of the following: • $60.0 million for acquired in-process research and development asset from HiFiBiO Therapeutics (“HiFiBiO”) in the prior year, which did not recur in the current year; • $19.1 million lower employee-related expenses and $5.6 million lower stock-based compensation expenses primarily due to lower headcount as part of the cost reduction effort we started to implement in the second half of 2021 following the CRL for roxadustat in CKD anemia in the U.S., and payroll tax refunds received during the year ended December 31, 2022, partially offset by overall merit increase during the current year; • $15.0 million lower clinical trial expenses associated with roxadustat post-approval safety studies and Phase 3 trials for pamrevlumab; • $2.3 million lower outside services expenses due to lower promotional expenses and sample costs for roxadustat in China. • $7.4 million higher cost of goods sold due to higher roxadustat product sales; • $7.1 million higher drug development expenses associated with drug substance and drug product manufacturing activities primarily related to pamrevlumab; and • $6.7 million higher legal expenses primarily due to a one-time favorable patent-related court ruling recorded in the prior year.
Biggest changeTotal operating costs and expenses decreased $12.2 million for the year ended December 31, 2023 compared to the prior year as a result of the net effect of the following: • $37.8 million lower drug development expenses associated with drug substance and drug product manufacturing activities related to roxadustat post-approval safety studies in China and pamrevlumab which were largely completed in the prior periods; • $14.8 million lower stock-based compensation primarily resulting from significantly lower stock price and cancellations of stock options and restricted stock units; • $3.8 million lower legal expenses primarily due to lower corporate legal activities; • $24.6 million one-time, non-cash charge of acquired in-process research and development (“IPR&D”) expenses associated with the recent exclusive license for FG-3246 from Fortis Therapeutics (“Fortis”) and the acquisition of Fortis; • $12.6 million of restructuring charge recorded in the third quarter of 2023 related to reduction in force actions in July 2023; • $4.8 million higher employee-related expenses primarily due to the impact from payroll tax refunds received during 2022 that did not recur in the current year, as well as more business travel activities and higher severance during the current year period, offset by the impact from reduction in force actions in July 2023; and • $3.7 million higher outside services expenses due to higher consulting activities in roxadustat post-approval safety studies and efforts to prepare for commercialization in the first half of the year. 72 Our research and development expenses were $282.9 million, $296.8 million and $387.0 million for the years ended December 31, 2023, 2022 and 2021, respectively.
The accrued and other liabilities were also impacted by the classification of a portion of accrued co-promotion expenses from other long-term liabilities to current liabilities based on the updated estimate of timing for payment, and by the timing of invoicing and payment; • Accounts payable increased $5.9 million, primarily driven by the timing of invoicing and payments; • Prepaid expenses and other current assets decreased $4.9 million, primarily due to the collection of $8.0 million from Eluminex for upfront license payment during the first quarter of 2022, and less prepayments made for roxadustat API manufacturing activities, partially offset by a payroll tax refund recorded as other receivables as of December 31, 2022 and received in the first quarter of 2023; • Other long-term liabilities decreased $18.3 million primarily driven by the above-mentioned classification of a portion of accrued co-promotion expenses from other long-term liabilities to current liabilities based on the updated estimate of timing for payment; • Inventories increased $11.0 million, driven by the increased inventory level primarily related to inventory cost capitalized related to Europe and other territories, and FibroGen Beijing’s productions of roxadustat for commercial sales purposes; and • Deferred revenue decreased $4.1 million, primarily related to revenue recognized from the previously deferred revenue of the China performance obligation during the year ended December 31, 2022, and the above-mentioned reclassification to accrued liabilities, resulting from changes in estimated variable consideration associated with the API or bulk drug product deliveries fulfilled with Astellas and AstraZeneca.
The accrued and other liabilities were also impacted by the classification of a portion of accrued co-promotion expenses from other long-term liabilities to current liabilities based on the updated estimate of timing for payment, and by the timing of invoicing and payment; • Accounts payable increased $5.9 million, primarily driven by the timing of invoicing and payments; • Prepaid expenses and other current assets decreased $4.9 million, primarily due to the collection of $8.0 million from Eluminex for upfront license payment during the first quarter of 2022, and less prepayments made for roxadustat API manufacturing activities, partially offset by a payroll tax refund recorded as other receivables as of December 31, 2022 and received in the first quarter of 2023; • Other long-term liabilities decreased $18.3 million primarily driven by the above-mentioned classification of a portion of accrued co-promotion expenses from other long-term liabilities to current liabilities based on the updated estimate of timing for payment; 85 • Inventories increased $11.0 million, driven by the increased inventory level primarily related to inventory cost capitalized related to Europe and other territories, and FibroGen Beijing’s productions of roxadustat for commercial sales purposes; and • Deferred revenue decreased $4.1 million, primarily related to revenue recognized from the previously deferred revenue of the China performance obligation during the year ended December 31, 2022, and the above-mentioned reclassification to accrued liabilities, resulting from changes in estimated variable consideration associated with the API or bulk drug product deliveries fulfilled with Astellas and AstraZeneca.
The overall transaction price for FibroGen Beijing’s product sales to Falikang includes the following elements of consideration: ● Non-refundable upfront license fees; development, regulatory, and commercial milestone payments based on the AstraZeneca China Agreement allocated to the China performance obligation; ● Co-development billings resulting from our research and development efforts, which are reimbursable under the AstraZeneca China Agreement; 99 ● Interim profit/loss share between FibroGen Beijing and AstraZeneca from April 1, 2020 through December 31, 2020; and ● Net transaction price from product sales to Falikang from January 1, 2021 onwards.
The overall transaction price for FibroGen Beijing’s product sales to Falikang includes the following elements of consideration: • Non-refundable upfront license fees; development, regulatory, and commercial milestone payments based on the AstraZeneca China Agreement allocated to the China performance obligation; • Co-development billings resulting from our research and development efforts, which are reimbursable under the AstraZeneca China Agreement; • Interim profit/loss share between FibroGen Beijing and AstraZeneca from April 1, 2020 through December 31, 2020; and • Net transaction price from product sales to Falikang from January 1, 2021 onwards.
Co-development billings are allocated entirely to the co-development services performance obligation when amounts are related specifically to research and development efforts necessary to satisfy the performance obligation, and such an allocation is consistent with the allocation objective. Milestone payments are also considered variable consideration, which requires us to make estimates of when achievement of a particular milestone becomes probable.
Co-development billings are allocated entirely to the co-development services performance obligation when amounts are related specifically to research and development efforts necessary to satisfy the performance obligation, and such an allocation is consistent with the allocation objective. 89 Milestone payments are also considered variable consideration, which requires us to make estimates of when achievement of a particular milestone becomes probable.
Under the AstraZeneca China Amendment, in September 2020, FibroGen Beijing and AstraZeneca completed the establishment of a jointly owned entity, Falikang, which performs roxadustat distribution, as well as conduct sales and marketing through AstraZeneca. W e account for our investment in Falikang under the equity method, and Falikang is not consolidated into our consolidated financial statements.
Under the AstraZeneca China Amendment, in 2020, FibroGen Beijing and AstraZeneca completed the establishment of a jointly owned entity, Falikang, which performs roxadustat distribution, as well as conduct sales and marketing through AstraZeneca. W e account for our investment in Falikang under the equity method, and Falikang is not consolidated into our consolidated financial statements.
We updated our 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.
In addition, we updated our 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.
Total cash consideration received through December 31, 2022 and potential cash consideration for upfront payments and milestone payments under our collaboration agreements are as follows: Cash Received for Upfront Payments and Milestone Payments Through December 31, 2022 Additional Potential Cash Payment for Milestones Total Potential Cash Payments for Upfront Payments and Milestones (in thousands) Astellas--related-party: Astellas Japan Agreement $ 105,093 $ 67,500 $ 172,593 Astellas Europe Agreement 685,000 60,000 745,000 Total Astellas 790,093 127,500 917,593 AstraZeneca: AstraZeneca U.S./RoW Agreement 439,000 810,000 1,249,000 AstraZeneca China Agreement 77,200 299,500 376,700 Total AstraZeneca 516,200 1,109,500 1,625,700 Total $ 1,306,293 $ 1,237,000 $ 2,543,293 The above table does not include development cost reimbursement, transfer price payments, and royalties and profit share under our existing collaboration agreements.
Total cash consideration received through December 31, 2023 and potential cash consideration for upfront payments and milestone payments under our collaboration agreements are as follows: Cash Received for Upfront Payments and Milestone Payments Through December 31, 2023 Additional Potential Cash Payment for Milestones Total Potential Cash Payments for Upfront Payments and Milestones (in thousands) Astellas--related-party: Astellas Japan Agreement $ 105,093 $ 67,500 $ 172,593 Astellas Europe Agreement 685,000 60,000 745,000 Total Astellas 790,093 127,500 917,593 AstraZeneca: AstraZeneca U.S./RoW Agreement 439,000 810,000 1,249,000 AstraZeneca China Agreement 77,200 299,500 376,700 Total AstraZeneca 516,200 1,109,500 1,625,700 Total $ 1,306,293 $ 1,237,000 $ 2,543,293 The above table does not include development cost reimbursement, transfer price payments, and royalties and profit share under our existing collaboration agreements.
The above rebates and discounts all together are eligible to be applied against the distributor’s future sales order, limited to certain maximums until such rebates and discounts are exhausted. We record these rebates and discounts as contract liabilities at the time they become eligible and in the same period that the related revenue is recorded.
The rebates and discounts all together are eligible to be applied against the distributor’s future sales order, limited to certain maximums until such rebates and discounts are exhausted. We record these rebates and discounts as contract liabilities at the time they become eligible and in the same period that the related revenue is recorded.
We calculate the above variable consideration based on gross sales to the distributor, or estimate it utilizing best available information from the distributor, maximum known exposures and other available information including estimated channel inventory levels and estimated sales made by the distributor to hospitals, which involves significant judgment.
We calculate the variable consideration based on gross sales to the distributor, or estimate it utilizing best available information from the distributor, maximum known exposures and other available information including estimated channel inventory levels and estimated sales made by the distributor to hospitals, which involves significant judgment.
FibroGen will 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 on worldwide net sales of other recombinant human collagen type III products that are not cornea products.
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 on worldwide net sales of other recombinant human collagen type III products that are not cornea products.
See Note 9, Product Development Obligations , to the consolidated financial statements for details. There is no stated maturity date related to these loans and each loan may be forgiven if the research work funded by TEKES does not result in an economically profitable business or does not meet its technological objectives.
See Note 11, Product Development Obligations , to the consolidated financial statements for details. There is no stated maturity date related to these loans and each loan may be forgiven if the research work funded by TEKES does not result in an economically profitable business or does not meet its technological objectives.
Falikang is jointly owned by AstraZeneca and FibroGen Beijing. We are not the primary beneficiary of Falikang for accounting purposes, as AstraZeneca is the final decision maker for all the roxadustat commercialization activities, and we lack the power criterion to direct the activities of Falikang (see Note 4, Equity method investment - Variable Interest Entity, to our consolidated financial statements).
Falikang is jointly owned by AstraZeneca and FibroGen Beijing. We are not the primary beneficiary of Falikang for accounting purposes, as AstraZeneca is the final decision maker for all the roxadustat commercialization activities, and we lack the power criterion to direct the activities of Falikang (see Note 5, Equity method investment - Variable Interest Entity, to our consolidated financial statements).
In April 2006, we entered into the Europe Agreement with Astellas for roxadustat for the treatment of anemia in Europe, the Commonwealth of Independent States, the Middle East, and South Africa (“Astellas Europe Agreement”). Under these agreements, the aggregate amount for upfront payments and milestone payments received through December 31, 2022 totals $790.1 million.
In April 2006, we entered into the Europe Agreement with Astellas for roxadustat for the treatment of anemia in Europe, the Commonwealth of Independent States, the Middle East, and South Africa (“Astellas Europe Agreement”). Under these agreements, the aggregate amount for upfront payments and milestone payments received through December 31, 2023 totals $790.1 million.
Drug product revenue includes commercial-grade API or bulk drug product sales to AstraZeneca, under the AstraZeneca U.S./RoW Agreement, and Astellas in support of pre-commercial preparation prior to the New Drug Application or marketing authorization application approval, and to Astellas for ongoing commercial launch in Japan and Europe. We recognize drug product revenue when we fulfill the inventory transfer obligations.
Drug product revenue includes commercial-grade API or bulk drug product sales to AstraZeneca, under the AstraZeneca U.S./RoW Agreement, and Astellas in support of pre-commercial preparation prior to the New Drug Application or marketing authorization application approval, and to Astellas for ongoing commercial activities in Japan and Europe. We recognize drug product revenue when we fulfill the inventory transfer obligations.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes and other financial information included in Item 8 of this Annual Report on Form 10-K for the year ended December 31, 2022 (“Annual Report”).
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes and other financial information included in Item 8 of this Annual Report on Form 10-K for the year ended December 31, 2023 (“Annual Report”).
In addition, we recognized our proportionate share of the reported profits or losses of Falikang, as other income (loss) in the consolidated statement of operations, and as an adjustment to investment in unconsolidated subsidiary in the consolidated balance sheet. See Note 4, Equity method investment - Variable Interest Entity , to the consolidated financial statements for details.
In addition, we recognized our proportionate share of the reported profits or losses of Falikang, as other income (loss) in the consolidated statement of operations, and as an adjustment to investment in unconsolidated subsidiary in the consolidated balance sheet. See Note 5, Equity method investment - Variable Interest Entity , to the consolidated financial statements for details.
We calculate the distributor’s legal right of offset at the individual distributor level. Drug product revenue Drug product revenue includes commercial-grade API or bulk drug product sales to AstraZeneca and Astellas in support of pre-commercial preparation prior to the NDA or Marketing Authorization Application approval, and to Astellas for ongoing commercial launch in Japan and Europe.
We calculate the distributor’s legal right of offset at the individual distributor level. Drug product revenue Drug product revenue includes commercial-grade API or bulk drug product sales to AstraZeneca and Astellas in support of pre-commercial preparation prior to the NDA or Marketing Authorization Application approval, and to Astellas for ongoing commercial activities in Japan and Europe.
As each of our collaboration agreements provide for annual true up to the considerations paid for our commercial supplies, we will re-evaluate the transaction price in each reporting period and record adjustment to revenue as uncertain events are resolved or other changes in circumstances occur. 101
As each of our collaboration agreements provide for annual true up to the considerations paid for our commercial supplies, we will re-evaluate the transaction price in each reporting period and record adjustment to revenue as uncertain events are resolved or other changes in circumstances occur. 92
As of December 31, 2022, future milestone payments for research and preclinical stage development programs consisted of up to approximately $697.9 million in total potential future milestone payments under our license agreements with HiFiBiO (for Gal-9 and CCR8), Medarex, Inc. and others.
As of December 31, 2023, future milestone payments for research and preclinical stage development programs consisted of up to approximately $697.9 million in total potential future milestone payments under our license agreements with HiFiBiO (for Gal-9 and CCR8), Medarex, Inc. and others.
As of December 31, 2022, we have several on-going clinical studies in various stages. Under agreements with various CROs, and clinical study sites, we incur expenses related to clinical studies of our product candidates and potential other clinical candidates.
As of December 31, 2023, we have several on-going clinical studies in various stages. Under agreements with various CROs, and clinical study sites, we incur expenses related to clinical studies of our product candidates and potential other clinical candidates.
As a result, the TEKES loans have been excluded from the table above. 96 Off-Balance Sheet Arrangements During the year ended December 31, 2022, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements.
As a result, the TEKES loans have been excluded from the table above. Off-Balance Sheet Arrangements During the year ended December 31, 2023, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements.
This discussion and analysis generally addresses 2022 and 2021 items and year-over-year comparisons between 2022 and 2021. Discussions of 2020 items and year-over-year comparisons between 2021 and 2020 that are not included in this Annual Report can be found in “Item 7.
This discussion and analysis generally addresses 2023 and 2022 items and year-over-year comparisons between 2023 and 2022. Discussions of 2021 items and year-over-year comparisons between 2022 and 2021 that are not included in this Annual Report can be found in “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 28, 2022. BUSINESS OVERVIEW We are headquartered in San Francisco, California, with subsidiary offices in Beijing and Shanghai, People’s Republic of China (“China”).
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 27, 2023. BUSINESS OVERVIEW We are headquartered in San Francisco, California, with subsidiary offices in Beijing and Shanghai, People’s Republic of China (“China”).
To date, royalty revenue resulting from its collaboration arrangements was immaterial. We allocate the transaction price to performance obligations based on their relative standalone selling price (“SSP”), with the exception of co-development billings allocated entirely to co-development services performance obligations. The SSP is determined based on observable prices at which we separately sell the products and services.
To date, royalty revenue resulting from collaboration arrangements has been immaterial. We allocate the transaction price to performance obligations based on their relative standalone selling price (“SSP”), with the exception of co-development billings allocated entirely to co-development services performance obligations. The SSP is determined based on observable prices at which we separately sell the products and services.
Actual amounts of consideration ultimately received in the future may differ from our estimates, for which we will adjust these estimates and affect the drug product revenue in the period such variances become known. Drug product revenues represented 8%, 0%, and 5% of total revenues for the years ended December 31, 2022, 2021 and 2020, respectively.
Actual amounts of consideration ultimately received in the future may differ from our estimates, for which we will adjust these estimates and affect the drug product revenue in the period such variances become known. Drug product revenues represented 13%, 8%, and 0% of total revenues for the years ended December 31, 2023, 2022 and 2021, respectively.
Pursuant to the RIFA, we received $49.8 million from NovaQuest, representing the gross proceeds of $50.0 million net of initial issuance costs, in consideration for a portion of future revenues we will receive from Astellas.
Pursuant to the RIFA, in the fourth quarter of 2022, we received $49.8 million from NovaQuest, representing the gross proceeds of $50.0 million net of initial issuance costs, in consideration for a portion of future revenues we will receive from Astellas.
In addition, we recognized royalty revenue of $0.6 million and $0.2 million as drug product revenue from the deferred revenue under the Astellas Europe Agreement for the years ended December 31, 2022 and 2021, respectively.
In addition, we recognized royalty revenue of $2.3 million and $0.6 million as drug product revenue from the deferred revenue under the Astellas Europe Agreement for the years ended December 31, 2023 and 2022, respectively.
Due to the distributor’s legal right to offset, at each balance sheet date, we present the liability for rebates and discounts as reductions of 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 we expect to settle the discount in cash.
Due to our legal right to offset, at each balance sheet date, we present the rebates and discounts 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 we expect to settle the discount in cash.
In July 2013, through our China subsidiary and related affiliates, we entered into the China Agreement with AstraZeneca for roxadustat for the treatment of anemia in China (the “AstraZeneca China Agreement”). The aggregate amount for upfront payments and milestone payments received through December 31, 2022 totals $516.2 million.
In July 2013, through our China subsidiary and related affiliates, we entered into a collaboration agreement with AstraZeneca for roxadustat for the treatment of anemia in China (the “AstraZeneca China Agreement”). The aggregate amount for upfront payments and milestone payments received through December 31, 2023 totals $516.2 million.
Net cash provided by financing activities was $46.8 million for the year ended December 31, 2022 and consisted primarily of $49.8 million of net proceeds from sale of future revenues from NovaQuest, $4.2 million of proceeds from the issuance of common stock upon exercise of stock options and purchases under our Employee Share Purchase Plan (“ESPP”), partially offset by $5.2 million of cash paid for payroll taxes on restricted stock unit releases, and $1.5 million of cash paid for transaction costs related to sale of future revenues.
Net cash provided by financing activities was $46.8 million for the year ended December 31, 2022 and consisted primarily of $49.8 million of net proceeds from sale of future revenues from NovaQuest, $4.2 million of proceeds from the issuance of common stock upon exercise of stock options and purchases under our ESPP, partially offset by $5.2 million of cash paid for payroll taxes on restricted stock unit releases, and $1.5 million of cash paid for transaction costs related to sale of future revenues.
As of December 31, 2022, we had cash and cash equivalents of $155.7 million, compared to $171.2 million as of December 31, 2021. Cash is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. Investments, consisting of available-for-sale securities, and stated at fair value, are also available as a source of liquidity.
As of December 31, 2023, we had cash and cash equivalents of $113.7 million, compared to $155.7 million as of December 31, 2022. Cash is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. Investments, consisting of available-for-sale securities, and stated at fair value, are also available as a source of liquidity.
This revenue is generally recognized as deliverables are met and services are performed. License revenues represented 16%, 50% and 8% of total revenues for the years ended December 31, 2022, 2021 and 2020, respectively. Development revenue includes co-development and other development related services.
This revenue is generally recognized as deliverables are met and services are performed. License revenues represented 7%, 16% and 50% of total revenues for the years ended December 31, 2023, 2022 and 2021, respectively. Development revenue includes co-development and other development related services.
Development revenue recognized under our collaboration agreements with Astellas for the year ended December 31, 2022 included the allocated revenue of $2.4 million related to the above-mentioned $25.0 million regulatory milestone associated with the approval in Russia during the first quarter of 2022.
Development revenue recognized under our collaboration agreements with Astellas for the year ended December 31, 2022 included the allocated revenue of $2.4 million related to the above-mentioned $25.0 million regulatory milestone associated with the approval in Russia during the first quarter of 2022, which did not recur in 2023.
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, estimated cost to convert the API to bulk product tablets, and estimated yield from the manufacture of bulk product tablets, among others.
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, foreign exchange impacts and estimated yield from the manufacture of bulk product tablets, among others.
We are also subject to all the risks related to the development and commercialization of novel therapeutics, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business, such as the COVID-19 pandemic or other factors outlined under Part I, Item 1A “ Risk Factors ” in this Annual Report.
We are also subject to all the risks related to the development and commercialization of novel therapeutics, and we may encounter unforeseen expenses, difficulties, complications, delays and other factors outlined outlined under Part I, Item 1A “ Risk Factors ” in this Annual Report, as well as unknown factors that may adversely affect our business.
See Note 6, Leases , to the consolidated financial statements for details. Our outstanding non-cancelable purchase obligations primarily related to manufacturing and supply for pamrevlumab and roxadustat, and other purchases and programs. See Note 10, Commitments and Contingencies , to the consolidated financial statements for details.
See Note 7, Leases , to the consolidated financial statements for details. Our outstanding non-cancelable purchase obligations primarily related to manufacturing and supply for pamrevlumab and roxadustat, and other purchases and programs. See Note 12, Commitments and Contingencies , to the consolidated financial statements for details.
The table above excludes uncertain tax benefits of approximately $72.8 million that are disclosed in Note 13, Income Taxes , to the consolidated financial statements because these uncertain tax positions, if recognized, would be an adjustment to the gross deferred tax assets and the corresponding valuation allowance, if warranted.
The table above excludes uncertain tax benefits of approximately $81.0 million that are disclosed in Note 15, Income Taxes , to the consolidated financial statements because these uncertain tax positions, if recognized, would be an adjustment to the gross deferred tax assets and the corresponding valuation allowance, if warranted.
Cost of goods sold for the year ended December 31, 2022 also included manufacturing costs $1.4 million related to our contract manufacturing revenue from Eluminex. 89 Research and Development Expenses Research and development expenses consist of third-party research and development costs and the fully-burdened amount of costs associated with work performed under collaboration agreements.
Cost of goods sold for the years ended December 31, 2023 and 2022 also included manufacturing costs $0.8 million and $1.4 million, respectively, related to our contract manufacturing revenue from Eluminex. Research and Development Expenses Research and development expenses consist of third-party research and development costs and the fully-burdened amount of costs associated with work performed under collaboration agreements.
The related drug product revenue was $1.6 million and $1.1 million for the years ended December 31, 2022 and 2021, respectively.
The related drug product revenue was $3.1 million and $1.6 million for the years ended December 31, 2023 and 2022, respectively.
As a result, during the year ended December 31, 2022, we reclassified $11.2 million from the related deferred revenue to accrued liabilities. As of December 31, 2022, the related balance in accrued liabilities was $11.2 million, representing our best estimate that this amount will be paid within the next 12 months.
As a result, during the year ended December 31, 2022, we reclassified $11.2 million from the related deferred revenue to accrued liabilities, which remained unchanged as of December 31, 2023, representing our best estimate that this amount will be paid within the next 12 months.
See Note 4, Equity method investment - Variable Interest Entity , to the consolidated financial statements for details. LIQUIDITY AND CAPITAL RESOURCES Financial Conditions We have historically funded our operations principally from the sale of common stock (including our public offering proceeds) and from the execution of collaboration agreements involving license payments, milestones and reimbursement for development services.
See Note 5, Equity method investment - Variable Interest Entity , to the consolidated financial statements for details. 83 LIQUIDITY AND CAPITAL RESOURCES Financial Conditions We have historically funded our operations principally from the sale of common stock (including our public offering proceeds), from the execution of collaboration agreements involving license payments, milestone payments, reimbursement for development services, and the associated product revenue and drug product revenue.
Total product revenue, net increased $35.2 million, or 74% for the year ended December 31, 2022 compared to the year ended December 31, 2021. We recognize product revenue from direct sales to distributors in an amount that reflects the consideration that we expect to be entitled to in exchange for those products, net of various sales rebates and discounts.
Total product revenue, net increased $18.1 million, or 22% for the year ended December 31, 2023 compared to the year ended December 31, 2022. We recognize product revenue from direct sales to distributors in an amount that reflects the consideration that we expect to be entitled to in exchange for those products, net of various sales rebates and discounts.
As of December 31, 2022, our FibroGen Europe Oy (“FibroGen Europe”) subsidiary had $10.1 million of principal outstanding and $6.8 million of interest accrued related to loans from the Finnish government (“TEKES” loans), respectively, which have been included as product development obligations on our consolidated balance sheet.
As of December 31, 2023, our FibroGen Europe Oy (“FibroGen Europe”) subsidiary had $10.4 million of principal outstanding and $7.3 million of interest accrued related to loans from the Finnish government (“TEKES” loans), respectively, which have been included as product development obligations on our consolidated balance sheet.
Periodically, we update our assumptions such as total sales quantity, performance period and other inputs including foreign currency translation impact, among others.
Periodically, we update our assumptions such as total sales quantity, performance period, gross transaction price, profit share and other inputs including foreign currency translation impact, among others.
During the second quarter of 2022, we 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 $1.0 million as drug product revenue, and recorded $23.2 million as deferred revenue due to a high degree of uncertainty associated with the variable consideration for revenue recognition purposes.
Astellas Europe Agreement During the fourth quarter of 2023, we 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.
As of December 31, 2022, a total of $92.5 million of our cash and cash equivalents was held outside of the U.S. in our foreign subsidiaries, including $71.2 million held in China, to be used primarily for our China operations.
As of December 31, 2023, a total of $32.2 million of our cash and cash equivalents was held outside of the U.S. in our foreign subsidiaries, including $32.1 million held in China, to be used primarily for our China operations.
In 2020, we entered into a Master Supply Agreement with AstraZeneca under the AstraZeneca U.S./RoW Agreement (the “AstraZeneca Master Supply Agreement”) to define general forecast, order, supply and payment terms for AstraZeneca to purchase roxadustat bulk drug product from FibroGen in support of commercial supplies. There was no related drug product revenue for year ended December 31, 2022.
In 2020, we entered into a Master Supply Agreement with AstraZeneca under the AstraZeneca U.S./RoW Agreement (the “AstraZeneca Master Supply Agreement”) to define general forecast, order, supply and payment terms for AstraZeneca to purchase roxadustat bulk drug product from FibroGen in support of commercial supplies.
In 2018, we and Astellas entered into an amendment to the Astellas Japan Agreement that will allow Astellas to manufacture roxadustat drug product for commercialization in Japan (the “Astellas Japan Amendment”). The related drug product revenue was $9.5 million and $2.1 million for the years ended December 31, 2022 and 2021, respectively.
In 2018, we 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 was $15.7 million and $9.5 million for the years ended December 31, 2023 and 2022, respectively.
In addition, Development costs continue to be shared 50/50 between the Parties. We recognize revenue upon the transfer of control of commercial products to Falikang in an amount that reflects the allocation of transaction price of the China manufacturing and supply obligation (“China performance obligation”) to the performance obligation satisfied during the reporting period.
We recognize revenue upon the transfer of control of commercial products to Falikang in an amount that reflects the allocation of transaction price of the China manufacturing and supply obligation (“China performance obligation”) to the performance obligation satisfied during the reporting period.
Development and other revenues represented 17%, 30% and 46% of total revenues for the years ended December 31, 2022, 2021 and 2020, respectively. 84 We recognize product revenue when our customer obtains control of promised goods or services in an amount that reflects the consideration we expect to receive in exchange for those goods or services.
We recognize product revenue when our customer obtains control of promised goods or services in an amount that reflects the consideration we expect to receive in exchange for those goods or services. Product revenue represented 68%, 59% and 20% of total revenue for the years ended December 31, 2023, 2022 and 2021, respectively.
Of this amount, $22.6 million was recognized as license revenue and the remainder was included as development revenue; • $22.4 million of development revenue recognized under our collaboration agreements with our partners Astellas and AstraZeneca; 80 • $82.9 million from roxadustat commercial sales in China, mostly from sales to Beijing Falikang Pharmaceutical Co. Ltd.
Of this amount, $22.6 million was recognized as license revenue and the remainder was included as development revenue; • $22.4 million of development revenue recognized under our collaboration agreements with our partners Astellas and AstraZeneca; • $82.9 million from roxadustat commercial sales in China, mostly from sales to Falikang; and • $11.1 million of drug product revenue related to active pharmaceutical ingredient (“API”) deliveries to Astellas.
Cost of goods sold Cost of goods sold increased $7.4 million, or 58%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Cost of goods sold Cost of goods sold decreased ($1.4) million, or (7)% for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Material Cash Requirements We started generating revenue from commercial sales of roxadustat product in China in the third quarter of 2019. Even with the expectation of increases in revenue from product sales, we anticipate that we will continue to generate losses for the foreseeable future.
Material Cash Requirements We generate revenue from commercial sales of roxadustat product in China, Japan and Europe. Even with the expectation of increases in these revenues, we anticipate that we will continue to generate losses for the foreseeable future.
Investment Income (Loss) in Unconsolidated Variable Interest Entity Investment income (loss) in unconsolidated variable interest entity represented our proportionate share of the reported profits or losses of Falikang, an unconsolidated variable interest entity accounted for under the equity method, and was immaterial for the years ended December 31, 2022 and 2021.
Investment Income (Loss) in Unconsolidated Variable Interest Entity Investment income (loss) in unconsolidated variable interest entity represented our proportionate share of the reported profits or losses of Falikang, an unconsolidated variable interest entity accounted for under the equity method.
Based on our current estimates of drug product revenue and revenue from milestone payments under the Astellas Agreements, and taking into the consideration of the terms under the RIFA, we anticipate to reach a payment cap up to $125.0 million by 2031. See Note 8, Liability Related to Sale of Future Revenues , to the consolidated financial statements for details.
Based on our current estimates of drug product revenue and revenue from milestone payments under the Astellas Agreements, and taking into the consideration of the terms under the RIFA, we anticipate to reach a payment cap up to $125.0 million by 2031.
Product revenue from direct sales, net decreased $0.4 million, or 3% for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Product revenue from direct sales, net increased $0.2 million, or 2% for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Astellas Japan Agreement During the year ended December 31, 2021, we updated our estimate of variable consideration related to the API shipments fulfilled under the terms of Astellas Japan Amendment, and accordingly recorded adjustments to the drug product revenue of $2.1 million.
In addition,we updated our 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 $1.3 million for the year ended December 31, 2023.
We recognize development services as revenue in the period in which they are billed to our partners, excluding China. As of December 31, 2022, we expect the future development services to continue through 2024.
We recognize development services as revenue in the period in which they are billed to our partners, excluding China. As of December 31, 2023, we do not expect to incur significant future co-development services.
Our long-term plans for distributing cash flows from FibroGen Beijing may involve any number of scenarios including keeping the money onshore to fund future expansion of our China operations or paying down certain debt obligations.
Our long-term plans for distributing cash flows from FibroGen Beijing may involve any number of scenarios including keeping the money onshore to fund future expansion of our China operations or paying down certain debt obligations. During the year ended December 31, 2023, FibroGen Beijing made a total of $55.5 million repayments of intercompany loans.
Cash Sources and Uses The following table summarizes the primary sources and uses of cash for the years ended December 31, 2022, 2021 and 2020 (in thousands): Years Ended December 31, 2022 2021 2020 Net cash provided by (used in): Operating activities $ (145,933 ) $ (82,232 ) $ 81,602 Investing activities 89,116 (426,972 ) 452,487 Financing activities 46,776 (563 ) 13,343 Effect of exchange rate changes on cash and cash equivalents (5,482 ) 2,597 4,695 Net increase (decrease) in cash and cash equivalents $ (15,523 ) $ (507,170 ) $ 552,127 Operating Activities Net cash used in operating activities was $145.9 million for the year ended December 31, 2022 and consisted primarily of net loss of $293.7 million adjusted for non-cash items and non-operating activities of $77.3 million and a net increase in operating assets and liabilities of $70.4 million.
Cash Sources and Uses The following table summarizes the primary sources and uses of cash for the years ended December 31, 2023, 2022 and 2021 (in thousands): Years Ended December 31, 2023 2022 2021 Net cash provided by (used in): Operating activities $ (315,021 ) $ (145,933 ) $ (82,232 ) Investing activities 153,657 89,116 (426,972 ) Financing activities 122,749 46,776 (563 ) Effect of exchange rate changes on cash and cash equivalents (3,397 ) (5,482 ) 2,597 Net decrease in cash and cash equivalents $ (42,012 ) $ (15,523 ) $ (507,170 ) 84 Operating Activities Net cash used in operating activities was $315.0 million for the year ended December 31, 2023 and consisted primarily of net loss of $284.2 million adjusted for non-cash items and non-operating activities of $88.9 million and a net decrease in operating assets and liabilities of $119.7 million.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.
Recently Issued Accounting Guidance Not Yet Adopted For recently issued accounting guidance, see Note 2, Significant Accounting Policies, to the consolidated financial statements. 88 CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.
(“Astellas”) are collaborating on the development and commercialization of roxadustat in territories including Japan, Europe, Turkey, Russia and the Commonwealth of Independent States, the Middle East, and South Africa. We and AstraZeneca AB (“AstraZeneca”) are collaborating on the development and commercialization of roxadustat in the United States (“U.S.”), China, other markets in the Americas, Australia/New Zealand, and Southeast Asia.
We and AstraZeneca AB (“AstraZeneca”) are collaborating on the development and commercialization of roxadustat in the United States (“U.S.”), China, and other markets in the Americas, Australia/New Zealand, and Southeast Asia.
The related drug product revenue was ($2.2) million for year ended December 31, 2021. AstraZeneca China Amendment In July 2020, FibroGen China and AstraZeneca (together with FibroGen China, the “Parties”) entered into an amendment, effective July 1, 2020, to the AstraZeneca China Agreement, relating to the development and commercialization of roxadustat in China (the “AstraZeneca China Amendment”).
AstraZeneca China Amendment In July 2020, FibroGen China and AstraZeneca (together with FibroGen China, the “Parties”) entered into an amendment, effective July 1, 2020, to the AstraZeneca China Agreement, relating to the development and commercialization of roxadustat in China (the “AstraZeneca China Amendment”).
In addition, development revenue recognized under our collaboration agreements with Astellas decreased in co-development billings related to the development of roxadustat under our collaboration agreements with Astellas for the year ended December 31, 2022 as a result of the substantial completion of Phase 3 trials for roxadustat.
Development revenue recognized under our collaboration agreements with Astellas for the year ended December 31, 2023 was impacted by the decrease in co-development billings due to substantial completion of Phase 3 trials for roxadustat under our collaboration agreements with Astellas for roxadustat.
Sales to Falikang revenue, net increased $35.6 million, or 100% for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Sales to Falikang revenue, net increased $17.9 million, or 25% for the year ended December 31, 2023 compared to the year ended December 31, 2022.
As of December 31, 2022, we had short-term investments of $266.3 million and long-term investments of $4.3 million, respectively, compared to $234.0 million and $167.8 million, respectively, as of December 31, 2021.
As of December 31, 2023, we had short-term investments of $121.9 million, compared to short-term investments of $266.3 million and long-term investments of $4.3 million as of December 31, 2022.
As a result, during the year ended December 31, 2022, we reclassified a total of $57.4 million from the related deferred revenue to accrued liabilities. As of December 31, 2022, the related balance in accrued liabilities was $57.4 million, representing our best estimate that this amount will be paid within the next 12 months.
As a result, during the year ended December 31, 2022, we reclassified a total of $57.4 million from the related deferred revenue to accrued liabilities. As of December 31, 2022, the related balance in accrued liabilities was $57.4 million.
Some of our license agreements provide for periodic maintenance fees over specified time periods, as well as payments by us upon the achievement of development, regulatory and commercial milestones.
See Note 10, Liability Related to Sale of Future Revenues , to the consolidated financial statements for details. 87 Some of our license agreements provide for periodic maintenance fees over specified time periods, as well as payments by us upon the achievement of development, regulatory and commercial milestones.
The promises identified under the AstraZeneca China Agreement (as defined in Note 3, Collaboration Agreements, License Agreement and Revenues ), including the license, co-development services and manufacturing of commercial supplies have been bundled into a single performance obligation (“China performance obligation”).
Falikang bears inventory risk once it receives and accepts the product from FibroGen Beijing, and is responsible for delivering product to its distributors. 90 The promises identified under the AstraZeneca China Agreement (as defined in Note 3, Collaboration Agreements, License Agreement and Revenues ), including the license, co-development services and manufacturing of commercial supplies have been bundled into a single performance obligation (“China performance obligation”).
For China co-development services, we defer revenue until we begin to transfer control of the manufactured commercial product to AstraZeneca, which commenced in the first quarter of 2021 and we expect to continue through 2028, which reflects our best estimates.
For China co-development services, we defer revenue until we begin to transfer control of the manufactured commercial product to AstraZeneca, which commenced in the first quarter of 2021 and we expect to continue through 2033, which reflects our best estimates, taking into account our estimated loss of exclusivity upon expiry of our composition of matter patent in 2024, our existing patent portfolio, and competition from generics.
Significant judgment may be required in determining whether a performance obligation is distinct, determining the amount of variable consideration to be included in the transaction price, and estimating the SSP of each performance obligation.
Significant judgment may be required in determining whether a performance obligation is distinct, determining the amount of variable consideration to be included in the transaction price, and estimating the SSP of each performance obligation. An enumeration of our significant judgments is outlined in Note 3, Collaboration Agreements, License Agreement and Revenues, to our consolidated financial statements.
Our research and development expenses were $296.8 million, $387.0 million and $252.9 million for the years ended December 31, 2022, 2021 and 2020, respectively. Since inception and through December 31, 2022, we have incurred a total of approximately $2.9 billion in research and development expenses, a majority of which relates to the development of roxadustat, pamrevlumab and other HIF-PH inhibitors.
Since inception and through December 31, 2023, we have incurred a total of approximately $3.2 billion in research and development expenses, a majority of which relates to the development of roxadustat, pamrevlumab and other HIF-PH inhibitors.
The price adjustment is calculated based on estimated channel inventory levels; ● Contractual sales rebate: The contractual sales rebate is calculated based on the stated percentage of gross sales by each distributor in the distribution agreement entered between FibroGen and each distributor.
The discounts and rebates primarily consisted of the price adjustments recorded based on government-listed price guidance and estimated channel inventory levels, the contractual sales rebate calculated based on the stated percentage of gross sales by each distributor in the distribution agreement entered between FibroGen and each distributor, and other rebates and discounts, as well as sales return allowance.
Cost of goods sold associated with the roxadustat commercial sales in China was $15.1 million for the year ended December 31, 2022, as compared to $9.3 million for the year ended December 31, 2021, an increase of $5.8 million, resulting from the increase in the sales volume, partially offset by improved unit cost efficiency primarily due to higher production volume.
Cost of goods sold associated with the roxadustat commercial sales in China was $14.9 million for the year ended December 31, 2023, as compared to $15.1 million for the year ended December 31, 2022, a decrease of $0.2 million, resulting from improved unit cost efficiency primarily due to higher production volume, partially offset by the increase in the sales volume. 80 Cost of goods sold associated with the roxadustat drug product revenue in the U.S. was $3.1 million and $3.8 million for the years ended December 31, 2023 and 2022, respectively, associated with the costs of API or bulk drug product delivered to Astellas and AstraZeneca in the respective periods.
In addition, as of December 31, 2022, Astellas had a separate investment of $80.5 million in the equity of FibroGen, Inc. 82 AstraZeneca In July 2013, we entered into a collaboration agreement with AstraZeneca for roxadustat for the treatment of anemia in the U.S. and all territories not previously licensed to Astellas (the “AstraZeneca U.S./RoW Agreement”), except China.
In addition, Astellas has been an equity investor in FibroGen and considered a related party. 73 AstraZeneca In July 2013, we entered into a collaboration agreement with AstraZeneca for roxadustat for the treatment of anemia in the U.S. and all territories except for China and those territories previously licensed to Astellas (the “AstraZeneca U.S./RoW Agreement”).
We believe that the existence of what we consider to be substantive termination penalties on the part of the counterparty create sufficient incentive for the counterparty to avoid exercising its right to terminate the agreement. 97 The transaction price for each collaboration agreement is determined based on the amount of consideration we expect to be entitled for satisfying all performance obligations within the agreement.
We believe that the existence of what we consider to be substantive termination penalties on the part of the counterparty create sufficient incentive for the counterparty to avoid exercising its right to terminate the agreement.
Operating Costs and Expenses Years Ended December 31, Change 2022 vs. 2021 2022 2021 2020 $ % (dollars in thousands) Operating costs and expenses Cost of goods sold $ 20,280 $ 12,871 $ 8,869 $ 7,409 58 % Research and development 296,791 387,043 252,924 (90,252 ) (23 ) % Selling, general and administrative 124,688 123,925 106,406 763 1 % Total operating costs and expenses $ 441,759 $ 523,839 $ 368,199 $ (82,080 ) (16 ) % Total operating expenses decreased $82.1 million, or 16%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, for the reasons discussed in the sections below.
Operating Costs and Expenses Years Ended December 31, Change 2023 vs. 2022 2023 2022 2021 $ % (dollars in thousands) Operating costs and expenses Cost of goods sold $ 18,848 $ 20,280 $ 12,871 $ (1,432 ) (7 ) % Research and development 282,861 296,791 387,043 (13,930 ) (5 ) % Selling, general and administrative 115,252 124,688 123,925 (9,436 ) (8 ) % Restructuring charge 12,606 — — 12,606 NM Total operating costs and expenses $ 429,567 $ 441,759 $ 523,839 $ (12,192 ) (3 ) % ________________________ NM = Not meaningful Total operating expenses decreased $12.2 million, or 3% for the year ended December 31, 2023 compared to the year ended December 31, 2022, for the reasons discussed in the sections below.
To date, no such debt repayments have occurred, nor have there been any other payments or distributions from FibroGen Beijing to entities or investors outside of China. Our capital contributions to FibroGen Beijing and the liquidity position of FibroGen Beijing depend on many factors, including those set forth under Part I, Item 1A “Risk Factors” in this Annual Report.
Our capital contributions to FibroGen Beijing and the liquidity position of FibroGen Beijing depend on many factors, including those set forth under Part I, Item 1A “Risk Factors” in this Annual Report.
Under the RIFA with NovaQuest, as of December 31, 2022, we had $49.3 million of liability related to sale of future revenues on the consolidated balance sheets.
Under the RIFA with NovaQuest, as of December 31, 2023, we had $57.1 million of liability related to sale of future revenues on the consolidated balance sheets, $5.7 million of which we expect to pay within the next 12 months.
Interest expense increased $0.4 million, or 34% for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to the $1.0 million interest expense related to sale of future revenues under the revenue interest financing agreement (“RIFA”) with an affiliate of NovaQuest Capital Management (“NovaQuest”).
Interest expense for the years ended December 31, 2023 and 2022 also included interest expense of $7.7 million and $1.0 million, respectively, related to sale of future revenues under the Revenue Interest Financing Agreement (“RIFA”) with an affiliate of NovaQuest Capital Management (“NovaQuest”) entered into in November 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeGiven the nature of our investments as of December 31, 2022, we believe that our exposure to interest rate risk is not significant. We actively monitor changes in interest rates. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments. 102
Biggest changeGiven the nature of our investments as of December 31, 2023, we believe that our exposure to interest rate risk is not significant. We actively monitor changes in interest rates. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments. 93
The primary objective of our investment activities is to preserve our capital to fund our operations. We also seek to maximize income from our cash and cash equivalents without assuming significant risk. To achieve our objectives, we invest our non-operating cash and cash equivalents primarily in commercial paper and money market funds as of December 31, 2022.
The primary objective of our investment activities is to preserve our capital to fund our operations. We also seek to maximize income from our cash and cash equivalents without assuming significant risk. To achieve our objectives, we invest our non-operating cash and cash equivalents primarily in commercial paper and money market funds as of December 31, 2023.
As of December 31, 2022, we did not have material financial assets and liabilities denominated in foreign currencies that are subject to fluctuation in the exchange rate with the U.S. dollar. Therefore, our financial assets and liabilities are not currently subject to significant foreign currency risk.
As of December 31, 2023, we did not have material financial assets and liabilities denominated in foreign currencies that are subject to fluctuation in the exchange rate with the U.S. dollar. Therefore, our financial assets and liabilities are not currently subject to significant foreign currency risk.

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