What changed in this filing

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Item 1. Financial Statements

2024-11-12 compared with 2024-08-06 · 180 added, 165 removed, 573 unchanged (38% of the section changed)

2 unchanged sentences

(In thousands, except per share amounts)

June 30, 2024

September 30, 2024

December 31, 2023

3 unchanged sentences

Accounts receivable, net ($ 15,534 and $ 6,079 from related parties)

Prepaid expenses and other current assets

Prepaid expenses and other current assets ($ 24,785 and $ 0 from a related party)

Total current assets

23 unchanged sentences

no shares issued

and outstanding at June 30, 2024 and December 31, 2023

and outstanding at September 30, 2024 and December 31, 2023

Common stock, $ 0.01 par value;

225,000 shares authorized at June 30, 2024

225,000 shares authorized at September 30, 2024

and December 31, 2023;

100,770 and 98,770 shares issued and outstanding at

June 30, 2024 and December 31, 2023

September 30, 2024 and December 31, 2023

Additional paid-in capital

9 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

License revenue

10 unchanged sentences

Selling, general and administrative

Restructuring charge

Total operating costs and expenses

5 unchanged sentences

Loss before income taxes

Benefit from income taxes

Provision for (benefit from) income taxes

Investment income in unconsolidated variable

7 unchanged sentences

(In thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive income (loss):

14 unchanged sentences

Income (Loss)

March 31, 2024

Change in unrealized gain

or loss on investments

Foreign currency

translation adjustments

Shares issued from stock

plans, net of payroll

Stock-based compensation

June 30, 2024

Balance at March 31,

Consolidation of Fortis

Change in unrealized gain

or loss on investments

Foreign currency

translation adjustments

Issuance of common stock

under ATM Program

Change in unrealized gain or

loss on investments

Foreign currency translation

Shares issued from stock

plans, net of payroll taxes

Stock-based compensation

September 30, 2024

Balance at June 30,

Change in unrealized gain or

loss on investments

Foreign currency translation

Shares issued from stock

plans, net of payroll taxes

Stock-based compensation

September 30, 2023

FIBROGEN, INC.

1 unchanged sentence

(In thousands, except share data)

For The Six Month Period

For The Nine Month Period

Comprehensive

10 unchanged sentences

Stock-based compensation

June 30, 2024

September 30, 2024

December 31, 2022

9 unchanged sentences

Stock-based compensation

Balance at June 30,

September 30, 2023

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

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities

7 unchanged sentences

Non-cash interest expense related to sale of future revenues

Dividend received from unconsolidated variable interest entity

Impairment of investment

52 unchanged sentences

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

Liquidity and Going Concern

The unaudited condensed consolidated financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.

1 unchanged sentence

The financial information included herein should be read in conjunction with the consolidated financial statements and related notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed on February 26, 2024.

Based on its current operating plan, which contemplates the maintenance of a minimum balance of $ 30 million of unrestricted cash and cash equivalents held in accounts in the U.S., as required under the debt covenants associated with the senior secured term loan facilities, the Company believes that its existing cash and cash equivalents and accounts receivable will be sufficient to meet its anticipated cash requirements for at least the next 12 months from the date of issuance of the financial statements.

However, the Company may need additional capital to fund its operations and its liquidity assumptions may materially differ (including assumptions with respect to our research and development expenses, revenue expectations, contractual obligations, ability to repatriate cash from China, partnering or monetization of assets, and others).

In addition, the Company may elect to raise additional funds at any time through equity, equity-linked, debt financing arrangements or from other sources.

The unaudited condensed consolidated financial statements are prepared in accordance with the U.S.

GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and does not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described below.

If the Company is unable to repatriate additional cash from its China operations or raise additional capital in the U.S., within the next 12 months, the Company would not be able to comply with its debt covenants under its senior secured term loan facilities that requires a minimum balance of $ 30 million of unrestricted cash and cash equivalents to be held in accounts in the U.S.

Upon an event of default, the Company’s senior secured term loan facilities would become immediately due and payable.

The Company continues to evaluate measures to repatriate additional cash from its China operations.

There is also the potential that the Company raises additional funds in the U.S.

at any time through equity, equity-linked, or debt financing arrangements or from other sources.

There can be no assurances that these plans will be successful.

As a result of these factors, the Company determined that there is substantial doubt about the Company’s ability to continue as a going concern within 12 months after the date that the financial statements are issued .

Use of Estimates

9 unchanged sentences

Potential common shares that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive and as such, these shares are not included in the calculation of diluted earnings per share.

The Company reported a net loss for each of the three and six months ended June 30, 2024 and 2023.

The Company reported a net loss for each of the three and nine months ended September 30, 2024 and 2023.

Therefore, dilutive common shares are not assumed to have been issued since their effect is anti-dilutive for these periods.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Employee stock options

5 unchanged sentences

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to disaggregate operating expenses into specific categories to provide enhanced transparency into the nature and function of expenses.

This guidance is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

This guidance should be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements.

The Company is currently in the process of evaluating the effects of this guidance on its related disclosures.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

14 unchanged sentences

The Astellas Japan Agreement also provides for tiered payments based on net sales of product (as defined) in the low 20% range of the list price published by Japan’s Ministry of Health, Labour and Welfare, adjusted for certain elements, after commercial launch.

The aggregate amount of consideration received through June 30, 2024 totaled $ 105.1 million , excluding drug product revenue that is discussed under the Drug Product Revenue, Net section below.

The aggregate amount of consideration received through September 30, 2024 totaled $ 105.1 million , excluding drug product revenue that is discussed under the Drug Product Revenue, Net section below.

Based on its current development plans for roxadustat in Japan, the Company does not expect to receive most or all of the additional potential milestones under the Astellas Japan Agreement.

Amounts recognized as license revenue and development revenue under the Astellas Japan Agreement were not material for the three and six months ended June 30, 2024 and 2023.

The transaction price related to consideration received through June 30, 2024 and accounts receivable has been allocated to each of the following performance obligations under the Astellas Japan Agreement (in thousands):

Astellas Japan Agreement

Total Consideration

June 30, 2024

Development revenue

Total license and development revenue

There was no license revenue or development revenue resulting from changes to estimated variable consideration in the current period relating to performance obligations satisfied or partially satisfied in previous periods for the three months ended June 30, 2024 under the Astellas Japan Agreement.

Amounts recognized as license revenue and development revenue under the Astellas Japan Agreement were not material for the three and nine months ended September 30, 2024 and 2023.

The transaction price related to consideration received through September 30, 2024 and accounts receivable has been allocated to each of the performance obligations under the Astellas Japan Agreement, including $ 100.3 million for license and $ 17.1 million for co-development.

The Company does no t expect material variable consideration from estimated future co-development billing beyond the development period in the transaction price related to the Astellas Japan Agreement.

6 unchanged sentences

The Astellas Europe Agreement also provides for tiered payments based on net sales of product (as defined) in the low 20% range .

The aggregate amount of consideration received under the Astellas Europe Agreement through June 30, 2024 totaled $ 685.0 million , excluding drug product revenue that is discussed under the Drug Product Revenue, Net section below.

The aggregate amount of consideration received under the Astellas Europe Agreement through September 30, 2024 totaled $ 685.0 million , excluding drug product revenue that is discussed under the Drug Product Revenue, Net section below.

Based on its current development plans for roxadustat in Europe, the Company does not expect to receive most or all of the additional potential milestones under the Astellas Europe Agreement.

Amounts recognized as license revenue and development revenue under the Astellas Europe Agreement were as follows for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Amounts recognized as license revenue and development revenue under the Astellas Europe Agreement were as follows for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Performance Obligation

1 unchanged sentence

Development revenue

Astellas Europe Agreement

Total Consideration

June 30, 2024

Development revenue

Total license and development revenue

There was no license revenue or development revenue resulting from changes to estimated variable consideration in the current period relating to performance obligations satisfied or partially satisfied in previous periods for three months ended June 30, 2024 under the Astellas Europe Agreement.

The transaction price related to consideration received through September 30, 2024 and accounts receivable has been allocated to each of the performance obligations under the Astellas Europe Agreement, including $ 619.0 million for license and $ 287.7 million for co-development.

There was no license revenue or development revenue resulting from changes to estimated variable consideration in the current period relating to performance obligations satisfied or partially satisfied in previous periods for three months ended September 30, 2024 under the Astellas Europe Agreement.

The Company does not expect material variable consideration from estimated future co-development billing beyond the development period in the transaction price related to the Astellas Japan Agreement.

16 unchanged sentences

Under the terms of the AstraZeneca China Agreement, AstraZeneca agreed to pay upfront consideration and potential milestone payments, totaling $ 376.7 million .

The AstraZeneca China Agreement is structured as a 50/50 profit or loss share (as defined), which was amended under the AstraZeneca China Amendment in 2020 as discussed below, and provides for joint development costs (including capital and equipment costs for construction of the manufacturing plant in China), to be shared equally during the development period.

The aggregate amount of such consideration received for milestone and upfront payments through June 30, 2024 totaled $ 77.2 million .

The AstraZeneca China Agreement is structured as a 50/50 profit or loss share (as defined), which was amended under the AstraZeneca China Amendment as defined and discussed below, and provides for joint development costs (including capital and equipment costs for construction of the manufacturing plant in China), to be shared equally during the development period.

The aggregate amount of such consideration received for milestone and upfront payments through September 30, 2024 totaled $ 77.2 million .

On September 18, 2023, the Company received the formal notice, from Beijing Medical Products Administration, of renewal of its right to continue to market roxadustat in China through 2028.

The Company evaluated the regulatory milestone payment associated with this renewal under the AstraZeneca China Agreement and concluded that this milestone was achieved in the third quarter of 2023.

A s of June 30, 2024, t he $ 4.0 million milestone was recorded as a contract asset and was fully netted against the contract liabilities (deferred revenue) related to the AstraZeneca China Agreement.

Accordingly, the consideration of $ 4.0 mi llion associated with this milestone was included in the transaction price in the third quarter of 2023 and allocated to performance obligations under the AstraZeneca U.S./RoW Agreement and the AstraZeneca China Agreement and was unbilled as of December 31, 2023, recorded as a contract asset and fully netted against the contract liabilities (deferred revenue) related to the AstraZeneca China Agreement.

During the three months ended September 30, 2024 , based on the arrangements under the settlement agreements entered in September 2024 between FibroGen China and AstraZeneca to settle certain historical items, the $ 4.0 million milestone was billed and included in the accounts receivable as of September 30, 2024.

AstraZeneca China Amendment

3 unchanged sentences

(“Falikang”), which performs roxadustat distribution, as well as conducts sales and marketing through AstraZeneca.

Substantially all direct roxadustat product sales to distributors in China are made by Falikang, while FibroGen Beijing continues to sell roxadustat product directly in one province in China.

Substantially all direct roxadustat product sales to distributors in China are made by Falikang, while FibroGen Beijing continues to sell roxadustat product directly in limited areas in China.

FibroGen Beijing manufactures and supplies commercial product to Falikang based on a gross transfer price, which is adjusted for the estimated profit share.

2 unchanged sentences

As a result of the termination of the AstraZeneca U.S./RoW Agreement, during the three months ended March 31, 2024, the Company recorded the final development revenue under the AstraZeneca U.S./RoW Agreement and AstraZeneca China Agreement.

Amounts recognized as license revenue and development revenue under the AstraZeneca U.S./RoW Agreement and AstraZeneca China Agreement were as follows for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Amounts recognized as license revenue and development revenue under the AstraZeneca U.S./RoW Agreement and AstraZeneca China Agreement were as follows for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Performance Obligation

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

License revenue

Development revenue

The transaction price relat ed to consideration received and accounts receivable through the termination of the AstraZeneca U.S./RoW Agreement has been allocated to each of the performance obligations under the AstraZeneca U.S./RoW Agreement and AstraZeneca China Agreement, including $ 344.5 million for license, $ 625.5 million for co-development, information sharing and committee services, and $ 427.5 million for China performance obligation (with cumulative revenue of $ 268.9 million through June 30, 2024) that is recognized as product revenue, as described under Product Revenue, Net section below.

The transaction price related to consideration received and accounts receivable through the termination of the AstraZeneca U.S./RoW Agreement has been allocated to each of the performance obligations under the AstraZeneca U.S./RoW Agreement and AstraZeneca China Agreement, including $ 344.5 million for license, $ 625.5 million for co-development, information sharing and committee services, and $ 458.1 million for China performance obligation (with cumulative revenue of $ 311.1 million through September 30, 2024) that is recognized as product revenue, as described under Product Revenue, Net section below.

Product Revenue, Net

Product revenue, net from the sales of roxadustat commercial product in China was as follows for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Product revenue, net from the sales of roxadustat commercial product in China was as follows for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Direct Sales:

6 unchanged sentences

Net transaction price

Decrease (increase) in deferred revenue

Decrease in deferred revenue

Sales to Falikang revenue, net

4 unchanged sentences

The Company’s legal right to offset is determined at the individual distributor level.

The contract liabilities were included in accrued and other current liabilities in the condensed consolidated balance sheet and the rebates and discounts reflected as reductions to gross accounts receivable for direct sales were immaterial as of June 30, 2024 and December 31, 2023, respectively.

Sales to Falikang – China Performance Obligation

7 unchanged sentences

Periodically, the Company updates its assumptions such as gross transaction price and profit share, performance period, total sales quantity and other inputs including foreign currency translation impact, among others.

Following updates to its estimates, the Company recognized $ 18.1 million and $ 20.6 million from the previously deferred revenue of the China performance obligation during the three and six months ended June 30, 2024, respectively.

The product revenue recognized for the three months ended June 30, 2024 included an increase in revenue of $ 12.2 million resulting from changes to estimated variable consideration in the current period relating to performance obligation satisfied in previous periods.

Comparatively, following updates to its estimates, the Company deferred $ 3.3 million and $ 1.2 million from the previously deferred revenue of the China performance obligation during three and six months ended June 30, 2023, respectively.

Following updates to its estimates, the Company recognized $ 12.5 million and $ 33.1 million from the previously deferred revenue of the China performance obligation for the three and nine months ended September 30, 2024, respectively.

The product revenue recognized for the three months ended September 30, 2024 included an increase in revenue of $ 4.5 million resulting from changes to estimated variable consideration in the current period relating to performance obligation satisfied in previous periods.

Comparatively, following updates to its estimates, the Company recognized $ 2.3 million and $ 1.1 million from the previously deferred revenue of the China performance obligation for the three and nine months ended September 30, 2023, respectively.

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

1 unchanged sentence

Recognized as Revenue

June 30, 2024

September 30, 2024

Product revenue - AstraZeneca China

2 unchanged sentences

Contract assets and liabilities related to rights and obligations in the same contract are recorded net on the condensed consolidated balance sheets.

As of June 30, 2024, deferred revenue included $ 131.3 million related to China performance obligation, which represents the net of $ 158.6 million of deferred revenue presented above and a $ 27.3 million unbilled milestone and co-development revenue under the AstraZeneca China Amendment.

As of June 30, 2024 , approximately $ 3.4 million of the above deferred revenue related to the China unit of accounting was included in short-term deferred revenue, which represents the amount of deferred revenue associated with the China unit of accounting that is expected to be recognized within the next 12 months, associated with the commercial sales in China.

Due to the Company’s legal right to offset, at each balance sheet date, the rebates and discounts, mainly related to profit sharing, are presented as reductions to gross accounts receivable from Falikang, which was $ 2.3 million and $ 3.0 million as of June 30, 2024 and December 31, 2023 , respectively.

As of September 30, 2024, deferred revenue included $ 147.0 million related to China performance obligation.

As of September 30, 2024 , approximately $ 22.1 million of the above deferred revenue related to the China unit of accounting was included in short-term deferred revenue, which represents the amount of deferred revenue associated with the China unit of accounting that is expected to be recognized within the next 12 months, associated with the commercial sales in China.

Due to the Company’s legal right to offset, at each balance sheet date, the rebates and discounts, mainly related to profit sharing, are presented as reductions to gross accounts receivable from Falikang, which was immaterial as of September 30, 2024 and was $ 3.0 million as of December 31, 2023.

Drug Product Revenue, Net

Drug product revenue from commercial-grade active pharmaceutical ingredient (“API”) or bulk drug product sales to Astellas and AstraZeneca was as follows for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Drug product revenue from commercial-grade active pharmaceutical ingredient (“API”) or bulk drug product sales to Astellas and AstraZeneca was as follows for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Astellas Japan Agreement

4 unchanged sentences

The Company updates its estimate of variable consideration related to the API shipments fulfilled under the terms of Astellas Japan Amendment at each balance sheet date.

As a result, the Company recorded a reduction to the drug product revenue of $ 0.4 million for the three months ended June 30, 2024.

As a result, the Company recorded a reduction to the drug product revenue of $ 1.4 million for the three months ended September 30, 2024.

Specifically, the change in estimated variable consideration was based on the API held by Astellas at period end, adjusted to reflect the changes in the estimated bulk product strength mix intended to be manufactured by Astellas, among others.

For the three months ended June 30, 2024, the Company updated its estimate of variable consideration related to the API shipments fulfilled under the terms of Astellas Japan Amendment, and accordingly recorded a reduction to the drug product revenue of $ 0.4 million.

Specifically, the change in estimated variable consideration was based on the API held by Astellas at period end, adjusted to reflect foreign exchange impacts and the changes in the estimated bulk product strength mix intended to be manufactured by Astellas, among others.

1 unchanged sentence

During the three months ended September 30, 2023, the Company updated its estimate of variable consideration related to the API shipments fulfilled under the terms of Astellas Japan Amendment, and accordingly recorded an adjustment to the drug product revenue of $ 0.7 million.

During the three months ended June 30, 2023, the Company fulfilled two shipment obligations under the terms of Astellas Japan Amendment and recognized related drug product revenue of $ 14.4 million in the same period.

3 unchanged sentences

As of June 30, 2024, t he balances related to the API price true-up under the Astellas Japan Agreement were $ 2.2 million in accrued liabilities and $ 0.6 million in other long-term liabilities, representing the Company’s best estimate of the timing for these amounts to be paid.

As of September 30, 2024, t he balances related to the API price true-up under the Astellas Japan Agreement were $ 3.6 million in accrued liabilities and $ 0.6 million in other long-term liabilities, representing the Company’s best estimate of the timing for these amounts to be paid.

As of December 31, 2023, the balances related to the API price true-up under the Astellas Japan Agreement were $ 1.2 million in accrued liabilities and $ 0.7 million in other long-term liabilities.

8 unchanged sentences

As of December 31, 2023, the related balance in accrued liabilities was $ 38.6 million.

The Company further reclassified $ 5.4 million from the related deferred revenue to accrued liabilities and paid $ 35.3 million to Astellas during the six months ended June 30, 2024.

As of June 30, 2024, the balances related to the bulk drug product price true-up under the Astellas Europe Agreement and the Astellas EU Supply Agreement were $ 8.8 million in a ccrued liabilities, representing the Company’s best estimate that these amounts will be paid within the next 12 months.

The Company recognized royalty revenue of $ 1.1 million and $ 0.5 million as drug product revenue from the deferred revenue under the Astellas Europe Agreement during the three months ended June 30, 2024 and 2023, and $ 2.1 million and $ 0.8 million for the six months ended June 30, 2024 and 2023, respectively.

The Company further reclassified $ 5.6 million from the related deferred revenue to accrued liabilities and paid $ 35.3 million to Astellas during the nine months ended September 30, 2024.

As of September 30, 2024, the balances related to the bulk drug product price true-up under the Astellas Europe Agreement and the Astellas EU Supply Agreement were $ 9.0 million in a ccrued liabilities, representing the Company’s best estimate that these amounts will be paid within the next 12 months.

The Company recognized royalty revenue of $ 1.1 million and $ 0.6 million as drug product revenue from the deferred revenue under the Astellas Europe Agreement during the three months ended September 30, 2024 and 2023, and $ 3.2 million and $ 1.5 million for the nine months ended September 30, 2024 and 2023, respectively.

It is the Company’s best estimate that the remainder of the deferred revenue will be recognized as revenue when uncertainty is resolved, based on the performance of roxadustat product sales in the Astellas territory.

3 unchanged sentences

Reclassified to Accrued Liability / Accounts Payable

June 30, 2024

September 30, 2024

Drug product revenue - deferred revenue:

3 unchanged sentences

Accordingly, during the three months ended March 31, 2024, the Company accounted for the termination of the AstraZeneca U.S./RoW agreement as a contract modification under the ASC 606 and recorded a cumulative catch-up net adjustment of $ 25.7 million to the drug product revenue.

The related accounts receivable of $ 26.0 million and the related accrued liabilities of $ 11.5 million as of March 31, 2024 were settled during the three months ended June 30, 2024.

The related accounts receivable of $ 26.0 million and the related accrued liabilities of $ 11.5 million as of March 31, 2024 were settled during the second quarter of 2024.

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

8 unchanged sentences

During the second quarter of 2023, the Company recognized a $ 1.0 million upfront payment under the A&R Eluminex Agreement.

During the third quarter of 2023, the Company recognized a $ 0.5 million upfront payment related to patent transfer under the A&R Eluminex Agreement.

During the first quarter of 2022, FibroGen and Eluminex entered into a separate contract manufacturing agreement, under which the Company is responsible for supplying the cornea product at cost plus 10 % of its product manufacturing costs until its manufacturing technology is fully transferred to Eluminex, which occurred by the end of 2023 .

1 unchanged sentence

Such contract manufacturing activity was generally ceased during the first quarter of 2024.

Amounts recognized as revenue under the agreements with Eluminex were as follows for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Amounts recognized as revenue under the agreements with Eluminex were as follows for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Performance Obligation

1 unchanged sentence

Other revenue - contract manufacturing

Other revenue - patent transfer

As part of its continuing efforts to reduce operating expenses and preserve cash, on September 27, 2024, the Company entered into an Agreement for Termination of Lease and Voluntary Surrender of Premises (“ Lease Termination Agreement ”) with its landlord, ARE-San Francisco No.43 Owner, LLC (“ARE”) related to the Company’s operating lease of its corporate headquarters in San Francisco, California.

The Lease Termination Agreement modifies the lease agreement dated as of September 22, 2006, as subsequently amended and accelerates the expiration date of the term of the Lease from 2028 to no later than December 31, 2024.

Pursuant to the Lease Termination Agreement, the Company paid ARE a total consideration of $ 10.0 million settlement amount, consisting of a $ 8.3 million, paid before September 30, 2024, of a one-time cash payment by FibroGen for past rent, FibroGen’s share of operating costs, taxes, insurance, utilities, and other costs and a lease modification payment;

and a $ 1.7 million security deposit, in the form of a letter of credit, drawn in early October 2024.

As of execution of this Lease Termination Agreement, FibroGen is not responsible for the payment of any further rent payments or operating costs, taxes, insurance, utilities, or any other scheduled monthly payments due under the lease to ARE.

The Company ceased the use of the underlying operating lease right-of-use asset by September 30, 2024.

As a result, as of September 30, 2024, the Company derecognized the related operating lease right-of-use asset of $ 56.1 million and operating lease liabilities of $ 68.5 million, and recorded an approximately $ 1.7 million gain as credits to the selling, general and administrative expenses for the three months ended September 30, 2024.

The remaining operating leases of $ 2.1 million as of September 30, 2024 are mainly associated with the real estate leases for office spaces in Shanghai and Beijing, China, expiring between 2025 and 2027 .

Variable Interest Entities

7 unchanged sentences

Pursuant to an evaluation agreement entered into with Fortis concurrent with the option agreement (together the “Fortis Agreements”), FibroGen has exclusively licensed FG-3246 and will control and fund future research, development, including a Phase 2 clinical study sponsored by FibroGen, and manufacturing of FG-3246 during the up-to four-year option period.

As part of the clinical development strategy, FibroGen will continue the work to develop a PET-based biomarker utilizing a radiolabeled version of the targeting antibody for patient selection.

As part of the clinical development strategy, FibroGen will continue the work to develop a positron emission tomography (“PET”)-based biomarker utilizing a radiolabeled version of the targeting antibody for patient selection.

Additionally, the Company is obligated to make four quarterly payments totaling $ 5.4 million to Fortis in support of its continued development obligations, of which the last payment was $ 1.7 million and made during the three months ended March 31, 2024.

Pursuant to the guidance under ASC 810, Consolidation (“ASC 810”), the Company determined that Fortis is a VIE and that the Company is the primary beneficiary of Fortis, as through the Fortis Agreements the Company has the power to direct activities that most significantly impact the economic performance of Fortis.

Therefore, the Company consolidated Fortis starting from the Option Acquisition Date and continues to consolidate as of June 30, 2024.

Therefore, the Company consolidated Fortis starting from the Option Acquisition Date and continues to consolidate as of September 30, 2024.

Fortis has authorized and issued common shares and Series A preferred shares.

As of the Option Acquisition Date and June 30, 2024 , the Company owned approximately 2 % of Fortis’ Series A preferred shares, which was acquired previously and carried at zero cost.

As of the Option Acquisition Date and September 30, 2024 , the Company owned approximately 2 % of Fortis’ Series A preferred shares, which was acquired previously and carried at zero cost.

The non-controlling interests (“NCI”) attributable to the common shares is classified as nonredeemable NCI, as it is 100 % owned by third party shareholders.

2 unchanged sentences

Fortis’ net loss is allocated to its common shares only as the holders of preferred shares do not have a contractual obligation to absorb such losses.

As of June 30, 2024, total assets and liabilities of Fortis were immaterial.

For the three months ended June 30, 2024, Fortis’ net income (losses) was immaterial.

As of September 30, 2024, total assets and liabilities of Fortis were immaterial.

For the three and nine months ended September 30, 2024, Fortis’ net income (losses) was immaterial.

Equity method investment - Unconsolidated VIE - Falikang

7 unchanged sentences

In addition, the Company recognizes its proportionate share of the reported profits or losses of Falikang as investment gain or loss in unconsolidated VIE in the condensed consolidated statement of operations and as an adjustment to its investment in Falikang in the condensed consolidated balance sheet.

Falikang has not incurred material profit or loss to date.

During the three months ended September 30, 2024, the Company received $ 2.2 million of dividend distribution from Falikang.

The Company may provide shareholder loans to Falikang to meet necessary financial obligations as part of its operations.

4 unchanged sentences

Share of Net Income

June 30, 2024

Dividend Received

September 30, 2024

Falikang is considered a related party to the Company.

2 unchanged sentences

The fair values of the Company’s financial assets that are measured on a recurring basis are as follows (in thousands):

June 30, 2024

September 30, 2024

Money market funds

Commercial paper

government bonds

December 31, 2023

6 unchanged sentences

These inputs include reported trades of and broker/dealer quotes on the same or similar investments, issuer credit spreads, benchmark investments, prepayment/default projections based on historical data and other observable inputs.

There were no transfers of assets between levels during the three months ended June 30, 2024.

There were no transfers of assets between levels during the three months ended September 30, 2024 and June 30, 2024.

During the three months ended March 31, 2024, a total of $ 26.3 million of U.S.

3 unchanged sentences

Cash and cash equivalents consisted of the following (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

3 unchanged sentences

Total cash and cash equivalents

At June 30, 2024 and December 31, 2023, a total of $ 39.3 million and $ 32.2 million of the Company’s cash and cash equivalents were held outside of the U.S.

At September 30, 2024 and December 31, 2023, a total of $ 51.0 million and $ 32.2 million of the Company’s cash and cash equivalents were held outside of the U.S.

in its foreign subsidiaries to be used primarily for its China operations, respectively.

The Company did no t have any short-term or long-term investments as of June 30, 2024.

The Company did no t have any short-term or long-term investments as of September 30, 2024.

As of December 31, 2023, t he Company’s investments consist primarily of available-for-sale debt investments, and the amortized cost, gross unrealized holding gains or losses, and fair value of the Company’s investments by major investments type are summarized in the tables below (in thousands):

24 unchanged sentences

For debt securities, the Company also considers whether (i) it is more likely than not that the Company will be required to sell the debt securities before recovery of their amortized cost basis, and (ii) the amortized cost basis cannot be recovered as a result of credit losses.

Based on the results of its review, the Company did no t recognize any impairment for its available-for-sale investments during the three and six months ended June 30, 2024 and 2023.

Based on the results of its review, the Company did no t recognize any impairment for its available-for-sale investments during the three and nine months ended September 30, 2024 and 2023.

Inventories consisted of the following (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

6 unchanged sentences

Prepaid expenses and other current assets consisted of the following (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

6 unchanged sentences

Total prepaid expenses and other current assets

The unbilled contract assets as of June 30, 2024 and December 31, 2023 included $ 23.3 million and $ 22.5 million, respectively, related to unbilled co-development revenue under the AstraZeneca China Amendment.

In addition, the unbilled contract assets as of June 30, 2024 and December 31, 2023 each included the $ 4.0 million unbilled regulatory milestone payment under the AstraZeneca China Agreement.

See the AstraZeneca China Agreement section in Note 2, Collaboration Agreements, License Agreement and Revenues , for details.

As of each of June 30, 2024 and December 31, 2023 , the Company recorded a $ 28.5 million receivable in prepaid expenses and other current assets, corresponding to the accrued litigation settlement of the same amount related to the Company’s agreement in principle with plaintiffs to settle the class action lawsuit.

Based on the arrangements under the settlement agreements entered in September 2024 between FibroGen China and AstraZeneca to settle certain historical items, the unbilled contract assets as of September 30, 2024 included $ 24.8 million of unbilled receivables from Falikang and $ 1.0 million of unbilled development revenue under the AstraZeneca China Amendment.

Such amounts are no longer subject to right of offset under the settlement agreements.

The unbilled contract assets as of December 31, 2023 included $ 22.5 million of unbilled co-development revenue under the AstraZeneca China Amendment and the $ 4.0 million unbilled regulatory milestone payment under the AstraZeneca China Agreement, which were netted against the contract liabilities (deferred revenue) in the same contract.

These amounts were billed during the three months ended September 30, 2024 under the above-mentioned settlement agreements.

As of each of September 30, 2024 and December 31, 2023 , the Company recorded a $ 28.5 million receivable in prepaid expenses and other current assets, corresponding to the accrued litigation settlement of the same amount related to the Company’s agreement in principle with plaintiffs to settle the class action lawsuit.

As the Company maintains insurance that covers exposure related to the class action lawsuit, this amount is fully recoverable under the Company’s insurance policies.

3 unchanged sentences

Accrued and other current liabilities consisted of the following (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

3 unchanged sentences

Payroll and related accruals

Accrued restructuring charge

Inventory cost related

1 unchanged sentence

Roxadustat profit share to AstraZeneca

Property taxes and other taxes

Lease termination related

Value added taxes and other taxes

Professional services

Current portion of liability related to sale of future revenues

Accrued restructuring charge

Total accrued and other current liabilities

The accrued liabilities of $ 11.0 million and $ 51.0 million for API and bulk drug product price true-up as of June 30, 2024 and December 31, 2023, respectively, resulted from changes in estimated variable consideration associated with the API shipments fulfilled under the terms of the Astellas Japan Amendment, the bulk drug product transferred under the terms of the Astellas Europe Agreement and the Astellas EU Supply Agreement, and the bulk drug product shipments to AstraZeneca under the terms of the AstraZeneca Master Supply Agreement.

During the three months ended June 30, 2024, the Company paid $ 35.3 million to Astellas and $ 11.5 million to AstraZeneca related to accrued amounts.

The accrued liabilities of $ 12.6 million and $ 51.0 million for API and bulk drug product price true-up as of September 30, 2024 and December 31, 2023, respectively, resulted from changes in estimated variable consideration associated with the API shipments fulfilled under the terms of the Astellas Japan Amendment, the bulk drug product transferred under the terms of the Astellas Europe Agreement and the Astellas EU Supply Agreement, and the bulk drug product shipments to AstraZeneca under the terms of the AstraZeneca Master Supply Agreement.

During the second quarter of 2024, the Company paid $ 35.3 million to Astellas and $ 11.5 million to AstraZeneca related to accrued amounts.

See the Drug Product Revenue, Net section in Note 2, Collaboration Agreements, License Agreement and Revenues, for details.

As of June 30, 2024 and December 31, 2023 , the accrued litigation settlement of $ 28.5 million was related to the Company’s agreement in principle with plaintiffs to settle the class action lawsuit, as mentioned above.

As of September 30, 2024 and December 31, 2023 , the accrued litigation settlement of $ 28.5 million was related to the Company’s agreement in principle with plaintiffs to settle the class action lawsuit, as mentioned above.

See the Legal Proceedings and Other Matters section in Note 11, Commitments and Contingencies , for details.

The Company recorded an accrued inventory related cost of $ 8.5 million as of June 30, 2024, as part of the cost of goods sold resulting from the AstraZeneca Termination and Transition Agreement, discussed under Note 2, Collaboration Agreements, License Agreement and Revenues .

Responding to the reported results for pamrevlumab on July 30, 2024, the Company implemented an immediate and significant cost reduction plan in the U.S., including terminating pamrevlumab research and development investment and expeditiously wind down remaining obligations, and reducing U.S.

workforce by approximately 75 % .

As a result, the Company recorded a total of $ 18.6 million non-recurring restructuring charge during the three months ended September 30, 2024, primarily consisting of notice period and severance payments, accrued vacation, and employee benefits contributions.

During the three months ended September 30, 2024, total cash payments under the reduction in force was $ 6.1 million.

The remaining accrued restructuring charge was $ 14.2 million as of September 30, 2024 and will be substantially paid out by early 2025.

The Company recorded an accrued inventory related cost of $ 8.5 million as of September 30, 2024, as part of the cost of goods sold resulting from the AstraZeneca Termination and Transition Agreement, discussed under Note 2, Collaboration Agreements, License Agreement and Revenues .

As of September 30, 2024, the Company included $ 42.4 million of historical co-promotion balances due to AstraZeneca b ased on the arrangements under the above-mentioned settlement agreements entered in September 2024 between FibroGen China and AstraZeneca, as such amounts are no longer subject to right of offset.

Senior Secured Term Loan Facilities

4 unchanged sentences

The Company has determined that certain other features embedded within the Loan should be bifurcated and accounted for separately as a derivative.

At inception and as of June 30, 2024, the fair values of such derivatives were negligible due to the low probability of the underlying events.

At inception and as of September 30, 2024, the fair values of such derivatives were negligible due to the low probability of the underlying events.

The Term Loans shall accrue interest at a fixed rate of 14.0 % per annum, payable monthly in arrears.

3 unchanged sentences

The initial issuance costs and the related transaction costs, totaling $ 3.7 million is amortized as interest expense using the effective interest method over the term of the Initial Term Loan and are reported on the balance sheet as a direct deduction from the amount of the Initial Term Loan.

The effective annual interest rate of the Initial Term Loan was 16.13 % for the three and six months ended June 30, 2024 and 2023 .

The Company recorded interest expense of $ 2.9 million and $ 5.8 million, respectively, for the three and six months ended June 30, 2024 .

The Company recorded interest expense of $ 1.7 million for the three and six months ended June 30, 2023.

As of June 30, 2024 , the related accrued interest was $ 0.4 million.

The Company was in compliance with all debt covenants associated with the senior secured term loan facilities as of June 30, 2024 , including maintaining a minimum balance of $ 30 million of unrestricted cash and cash equivalents held in accounts in the U.S.

The Company’s senior secured term loan facilities as of June 30, 2024 were as follows (in thousands):

June 30, 2024

The effective annual interest rate of the Initial Term Loan was 16.13 % for the three and nine months ended September 30, 2024 and 2023 .

The Company recorded interest expense of $ 2.9 million and $ 8.7 million, respectively, for the three and nine months ended September 30, 2024, respectively.

The Company recorded interest expense of $ 2.9 million and $ 4.5 million for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024 , the related accrued interest was $ 0.4 million.

The Company was in compliance with all debt covenants associated with the senior secured term loan facilities as of September 30, 2024 , including maintaining a minimum balance of $ 30 million of unrestricted cash and cash equivalents held in accounts in the U.S.

The Company’s senior secured term loan facilities as of September 30, 2024 were as follows (in thousands):

September 30, 2024

Principal of senior secured term loan facilities

22 unchanged sentences

On a quarterly basis, the Company reassesses the expected total revenue and the timing of such revenue, recalculates the amortization of debt discount and transactions costs and effective interest rate, and adjusts the accounting prospectively as needed.

The Company’s estimated effective annual interest rate was 15.63 % as of June 30, 2024.

The following table summarizes the activities of the liability related to sale of future revenues for the six months ended June 30, 2024:

Six Months Ended

June 30, 2024

The Company’s estimated effective annual interest rate was 15.59 % as of September 30, 2024.

The following table summarizes the activities of the liability related to sale of future revenues for the nine months ended September 30, 2024:

Nine Months Ended

September 30, 2024

Liability related to sale of future revenues - beginning balance

4 unchanged sentences

Liability related to sale of future revenues, non-current

During the three and six months ended June 30, 2024, the Company recognized, under Astellas Agreements, development revenue of $ 0.3 million and $ 0.6 million , respectively, and drug product revenue of $ 0.7 million and $( 0.5 ) million , respectively.

During the three and nine months ended September 30, 2024, the Company recognized, under Astellas Agreements, development revenue of $ 0.4 million and $ 1.0 million , respectively, and drug product revenue of $( 0.3 ) million and $( 0.7 ) million , respectively.

See Note 2, Collaboration Agreements, License Agreement and Revenue , for details.

During the three and six months ended June 30, 2024 , the Company recognized the related interest expense of $ 1.7 million and $ 3.7 million, respectively.

During the three and six months ended June 30, 2023, the Company recognized the related interest expense of $ 1.3 million and $ 3.6 million, respectively.

During the three and nine months ended September 30, 2024 , the Company recognized the related interest expense of $ 2.0 million and $ 5.8 million, respectively.

During the three and nine months ended September 30, 2023 , the Company recognized the related interest expense of $ 2.1 million and $ 5.6 million, respectively.

During the first quarter of 2024, the Company paid $ 5.7 million accrued interest.

Based on the current estimates of drug product revenue and revenue from milestone payments under the Astellas Agreements, and taking into the consideration of the terms discussed above, the Company anticipates reaching a Payment Cap up to $ 125.0 million by 2031.

Benefits from income tax for the three and six months ended June 30, 2024 and 2023 were primarily due to foreign taxes.

Provisions for (benefits from) income tax for the three and nine months ended September 30, 2024 and 2023 were primarily due to foreign taxes.

Based upon the weight of available evidence, which includes its historical operating performance, reported cumulative net losses since inception, the Company has established and continues to maintain a full valuation allowance against its net deferred tax assets as it does not currently believe that realization of those assets is more likely than not.

1 unchanged sentence

Astellas is an equity investor in the Company and is considered a related party.

The Company recorded license and development revenue related to collaboration agreements with Astellas of $ 0.3 million and $ 1.8 million for the three months ended June 30, 2024 and 2023, and $ 0.6 million and $ 3.5 million for the six months ended June 30, 2024 and 2023, respectively.

In addition, the Company recorded drug product revenue from Astellas of $ 0.7 million and $ 14.3 million for the three months ended June 30, 2024 and 2023, and $( 0.5 ) million and $ 16.4 million for the six months ended June 30, 2024 and 2023, respectively.

The Company recorded license and development revenue related to collaboration agreements with Astellas of $ 0.4 million and $ 2.4 million for the three months ended September 30, 2024 and 2023, and $ 1.0 million and $ 5.8 million for the nine months ended September 30, 2024 and 2023, respectively.

In addition, the Company recorded drug product revenue from Astellas of $( 0.3 ) million and $ 1.3 million for the three months ended September 30, 2024 and 2023, and $( 0.7 ) million and $ 17.7 million for the nine months ended September 30, 2024 and 2023, respectively.

See Note 2, Collaboration Agreements, License Agreement and Revenues , for details.

The Company’s expense related to collaboration agreements with Astellas was immaterial for each of the three and six months ended June 30, 2024 and 2023.

As of June 30, 2024 and December 31, 2023 , accounts receivable from Astellas were $ 0.3 million and $ 0.8 million, respectively.

As of June 30, 2024 and December 31, 2023 , total deferred revenue from Astellas was $ 9.4 million and $ 16.9 million, respectively.

As of June 30, 2024, the amounts due to Astellas, included in accrued and other current liabilities, and other long-term liabilities, totaled $ 11.6 million.

The Company’s expense related to collaboration agreements with Astellas was immaterial for each of the three and nine months ended September 30, 2024 and 2023.

As of September 30, 2024 and December 31, 2023 , accounts receivable from Astellas were $ 0.2 million and $ 0.8 million, respectively.

As of September 30, 2024 and December 31, 2023 , total deferred revenue from Astellas was $ 8.1 million and $ 16.9 million, respectively.

As of September 30, 2024, the amounts due to Astellas, included in accrued and other current liabilities, and other long-term liabilities, totaled $ 13.2 million.

As of December 31, 2023 , the amount due to Astellas, included in accrued and other current liabilities, and other long-term liabilities, totaled $ 40.5 million.

2 unchanged sentences

See the Equity method investment - Unconsolidated VIE - Falikang section of Note 4, Variable Interest Entities , for details.

The net product revenue from Falikang was $ 46.0 million and $ 20.5 million for the three months ended June 30, 2024 and 2023, and $ 73.1 million and $ 41.9 million for the six months ended June 30, 2024 and 2023, respectively.

The net product revenue from Falikang was $ 42.2 million and $ 26.5 million for the three months ended September 30, 2024 and 2023, and $ 115.3 million and $ 68.3 million for the nine months ended September 30, 2024 and 2023, respectively.

See the Product Revenue, Net section in Note 2, Collaboration Agreements, License Agreement and Revenues , for details.

The investment income in Falikang was $ 1.2 million and $ 0.6 million for the three months ended June 30, 2024 and 2023 and $ 1.8 million and $ 1.3 million for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024 and December 31, 2023, the Company’s equity method investment in Falikang was $ 6.9 million and $ 5.3 million , respectively.

The investment income in Falikang was $ 0.9 million and $ 0.7 million for the three months ended September 30, 2024 and 2023 and $ 2.7 million and $ 2.0 million for the nine months ended September 30, 2024 and 2023 , respectively.

During the three months ended September 30, 2024, the Company received $ 2.2 million of dividend distribution from Falikang.

As of September 30, 2024 and December 31, 2023, the Company’s equity method investment in Falikang was $ 5.8 million and $ 5.3 million , respectively.

See the Equity method investment - Unconsolidated VIE - Falikang section of Note 4, Variable Interest Entities , for details.

The other income from Falikang was immaterial for each of the three and six months ended June 30, 2024 and 2023.

As of June 30, 2024 and December 31, 2023 , accounts receivable, net, from Falikang, were $ 3.8 million and $ 5.2 million, respectively.

The other income from Falikang was immaterial for each of the three and nine months ended September 30, 2024 and 2023.

As of September 30, 2024 and December 31, 2023 , accounts receivable, net, from Falikang, were $ 15.3 million and $ 5.2 million, respectively.

Commitments and Contingencies

Contract Obligations

As of June 30, 2024 , the Company had outstanding total non-cancelable purchase obligations of $ 19.7 million, including $ 11.2 million for manufacture and supply of pamrevlumab, $ 0.8 million for manufacture and supply of roxadustat, and $ 7.6 million for other purchases and programs.

As of September 30, 2024 , the Company had outstanding total non-cancelable purchase obligations of $ 1.0 million for manufacture and supply of roxadustat, and $ 6.0 million for other purchases and programs.

The Company expects to fulfill its commitments under these agreements in the normal course of business, and as such, no liability has been recorded.

Some of the Company’s license agreements provide for periodic maintenance fees over specified time periods, as well as payments by the Company upon the achievement of development, regulatory and commercial milestones.

As of June 30, 2024 , 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 the Company’s license agreements with HiFiBiO (HK) Ltd.

HiFiBiO Therapeutics) (for Gal-9 and CCR8), Medarex, Inc.

As of September 30, 2024 , 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 the Company’s license agreements with HiFiBiO (HK) Ltd.

HiFiBiO Therapeutics) (for Gal-9 and CCR8), and Medarex, Inc.

These milestone payments generally become due and payable only upon the achievement of certain developmental, clinical, regulatory and/or commercial milestones.

The event triggering such payment or obligation has not yet occurred.

As of June 30, 2024, the Company had $ 73.9 million of operating lease liabilities.

As of September 30, 2024, the Company had $ 2.0 million of operating lease liabilities.

In addition, see Note 7, Senior Secured Term Loan Facilities and Note 8, Liability Related to Sale of Future Revenues for details of the related obligations.

3 unchanged sentences

A loss or a range of loss is disclosed when it is reasonably possible that a material loss will incur and can be estimated, or when it is reasonably possible that the amount of a loss, when material, will exceed the recorded provision.

The Company did not have any material accruals for any active legal action, except for the class action settlement mentioned below, in its condensed consolidated balance sheet as of June 30, 2024, as the Company could not predict the ultimate outcome of these matters, or reasonably estimate the potential exposure.

The Company did not have any material accruals for any active legal action, except for the class action settlement mentioned below, in its condensed consolidated balance sheet as of September 30, 2024, as the Company could not predict the ultimate outcome of these matters, or reasonably estimate the potential exposure.

Between April 2021 and May 2021, five putative securities class action complaints were filed against FibroGen and certain of its current and former executive officers (collectively, the “Defendants”) in the U.S.

18 unchanged sentences

• Two of the Delaware Chancery Derivative Actions, filed on April 14, 2022, and June 1, 2023, have been consolidated (the “Delaware Chancery Consolidated Derivative”).

On February 1, 2024, Defendants moved to dismiss the Delaware Chancery Consolidated Derivative action and a hearing on the motion was held on May 9, 2024.

In the other two Delaware Chancery Derivative Actions, filed in the Delaware Court of Chancery on December 3, 2023 and April 3, 2024, Defendants have not been formally served, though the parties are in the process of negotiating a stay of the actions pending resolution of the motion to dismiss the Delaware Chancery Consolidated Derivative action;

• Two of the Delaware Federal Derivative Actions remain stayed pending resolution of the motion to dismiss the Delaware Chancery Consolidated Derivative action;

On February 1, 2024, Defendants moved to dismiss the Delaware Chancery Consolidated Derivative action, which the Court granted on October 2, 2024.

The Delaware Chancery Consolidated Derivative was dismissed with prejudice on October 30, 2024.

The other two Delaware Chancery Derivative Actions, filed in the Delaware Court of Chancery on December 3, 2023 and April 3, 2024, were consolidated and stayed pending resolution of the motion to dismiss the Delaware Chancery Consolidated Derivative action;

• The Delaware Federal Derivative Actions remain stayed pending resolution of the motion to dismiss the Delaware Chancery Consolidated Derivative action;

• The California Federal Derivative Action was voluntarily dismissed on January 22, 2024.

3 unchanged sentences

The SEC followed up with a subpoena for additional documents in the second quarter of 2024.

The Company is fully cooperating with the SEC.

The Company cannot predict with any degree of certainty the outcome of the SEC’s investigation or determine the extent of any potential liabilities.

The Company also cannot predict whether there will be any loss as a result of the investigation nor can it provide an estimate of the possible loss or range of loss.

The Company is fully cooperating with the SEC, and is currently discussing with the SEC for a potential settlement.

The Company cannot predict the outcome.

Any adverse outcome in this matter or any related proceeding could expose the Company to substantial damages, penalties, or reputational harm that may have a material adverse impact on the Company’s business, results of operations, financial condition, growth prospects, and price of its common stock.

10 unchanged sentences

The Company believes the estimated fair value of these arrangements is minimal.

Subsequent Event

On July 30, 2024, the Company reported results from Pancreatic Cancer Action Network’s (“PanCAN’s”) Precision Promise SM adaptive trial platform that included pamrevlumab, its antibody developed to inhibit the activity of CTGF, in combination with standard-of-care chemotherapy treatments for pancreatic cancer, for patients with metastatic pancreatic cancer.

The pamrevlumab experimental arm in PanCAN’s Precision Promise Phase 2/3 adaptive platform trial did not meet the primary endpoint of overall survival as determined by the protocol pre-specified Bayesian statistical analysis.

On July 30, 2024, the Company also reported results from LAPIS, its double-blind placebo-controlled Phase 3 clinical program for pamrevlumab in 284 LAPC 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).

The study did not meet the primary endpoint of overall survival.

Responding to the above results, the Company is implementing an immediate and significant cost reduction plan in the U.S., including terminating pamrevlumab research and development investment and expeditiously wind down remaining obligations, and reducing U.S.

workforce by approximately 75 % (the Company notified employees on August 2, 2024).

The Company expects that the majority of the restructuring charges related to the headcount reductions, primarily consisting of notice period and severance payments, accrued vacation and employee benefits contributions, will be recognized in the second half of 2024, and that the implementation of the headcount reductions, including cash payments, will be substantially complete by the end of the first quarter of 2025.

The Company may incur additional expenses not currently contemplated due to events associated with these cost reduction measures.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements