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United States securities and exchange commission logo
November 8, 2021
Pat Cotroneo
Chief Financial Officer
FIBROGEN INC
409 Illinois Street
San Francisco, CA 94158
Re: FIBROGEN INC
Form 10-K for the
Fiscal Year Ended December 31, 2020
Filed March 1, 2021
File No. 001-36740
Dear Mr. Cotroneo:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K filed March 1, 2021
Cover Page
1. At the onset of Part 1,
provide prominent disclosure that you are not a Chinese operating
company but a United
States holding company with operations conducted by your
subsidiary and through
contractual arrangements with a variable interest entity (VIE)
based in China and that
this structure involves unique risks to investors. Explain whether
the VIE structure is
used to replicate foreign investment in Chinese-based companies
where Chinese law
prohibits direct foreign investment in the operating companies, and
disclose that investors
may never directly hold equity interests in the Chinese operating
company. Your
disclosure should acknowledge that Chinese regulatory authorities could
disallow this
structure, which would likely result in a material change in your operations
and/or value of your
common stock, including that it could cause the value of such
securities to
significantly decline or become worthless. Provide a cross-reference to your
detailed discussion of
risks facing the company as a result of this structure.
Pat Cotroneo
FirstName LastNamePat Cotroneo
FIBROGEN INC
Comapany 8,
November NameFIBROGEN
2021 INC
November
Page 2 8, 2021 Page 2
FirstName LastName
2. At the onset of Part 1, provide prominent disclosure about the legal
and operational risks
associated with being based in or having a significant portion of the
company s operations
in China. Your disclosure should make clear whether these risks could
result in a material
change in your operations and/or the value of your common stock or
could significantly
limit or completely hinder your ability to offer or continue to offer
securities to investors
and cause the value of such securities to significantly decline or be
worthless. Your
disclosure should address how recent statements and regulatory actions
by China s
government, such as those related to the use of variable interest
entities and data security
or anti-monopoly concerns, has or may impact the company s ability
to conduct its
business, accept foreign investments, or list on an U.S. or other
foreign exchange. Your
Business section should address, but not necessarily be limited to,
the risks highlighted in
Part 1.
3. At the onset of Part 1, clearly disclose how you will refer to the
holding company,
subsidiaries, and VIE when providing the disclosure throughout the
document so that it is
clear to investors which entity the disclosure is referencing and
which subsidiaries or
entities are conducting the business operations. Refrain from using
terms such as we or
our when describing activities or functions of a VIE. Disclose
clearly the entity
(including the domicile) in which investors are purchasing their
interest.
4. At the onset of Part 1, provide a clear description of how cash is
transferred through your
organization. Disclose your intentions to distribute earnings or
settle amounts owed under
the VIE agreements. Quantify any cash flows and transfers of other
assets by type that
have occurred between the holding company, its subsidiaries, and its
VIE, and direction of
transfer. Quantify any dividends or distributions that a subsidiary or
VIE have made to the
holding company and which entity made such transfer, and their tax
consequences.
Similarly quantify dividends or distributions made to U.S. investors,
the source, and their
tax consequences. Describe any restrictions on foreign exchange and
your ability to
transfer cash between entities, across borders, and to U.S. investors.
Describe any
restrictions and limitations on your ability to distribute earnings
from your businesses,
including subsidiaries and/or VIEs, to the parent company and U.S.
investors as well as
the ability to settle amounts owed under the VIE agreements.
Summary, page 3
5. In a separate summary discussion, disclose clearly that the company
uses a structure that
involves a VIE based in China and what that entails and provide early
in the summary a
diagram of the company s corporate structure, including who the
equity ownership
interests are of each entity. Describe all contracts and arrangements
through which you
purport to obtain economic rights and exercise control that results in
consolidation of the
VIE s operations and financial results into your financial
statements. Identify clearly the
entity in which investors are purchasing their interest and the
entity(ies) in which the
company s operations are conducted. Describe the relevant
contractual agreements
between the entities and how this type of corporate structure may
affect investors and the
Pat Cotroneo
FirstName LastNamePat Cotroneo
FIBROGEN INC
Comapany 8,
November NameFIBROGEN
2021 INC
November
Page 3 8, 2021 Page 3
FirstName LastName
value of their investment, including how and why the contractual
arrangements may be
less effective than direct ownership and that the company may incur
substantial costs to
enforce the terms of the arrangements. Disclose the uncertainties
regarding the status of
the rights of the United States holding company with respect to its
contractual
arrangements with the VIE, its founders and owners, and the challenges
the company may
face enforcing these contractual agreements due to uncertainties under
Chinese law and
jurisdictional limits.
6. In your summary of risk factors, disclose the risks that your
corporate structure and being
based in or having a significant portionof the company s operations
in China poses to
investors. In particular, describe the significant regulatory,
liquidity, and enforcement
risks with cross-references to the more detailed discussion of these
risks . For example,
specifically discuss risks arising from the legal system in China,
including risks and
uncertainties regarding the enforcement of laws and that rules and
regulations in China
can change quickly with little advance notice; and the risk that the
Chinese government
may intervene or influence your operations at any time, or may exert
more control over
offerings conducted overseas and/or foreign investment in China-based
issuers, which
could result in a material change in your operations and/or the value
of your common
stock. Acknowledge any risks that any actions by the Chinese
government to exert more
oversight and control over offerings that are conducted overseas
and/or foreign investment
in China-based issuers could significantly limit or completely hinder
your ability to offer
or continue to offer securities to investors and cause the value of
such securities to
significantly decline or be worthless.
7. On page 1 and as a separate risk factor under Item 1A, disclose each
permission that you
or your subsidiaries are required to obtain from Chinese authorities
to operate and issue
these securities to foreign investors, including approvals needed to
transfer scientific data.
State whether you or your subsidiaries are covered by permissions
requirements from the
CSRC, CAC or any other entity, and state affirmatively whether you
have received all
requisite permissions and whether any permissions have been denied,
including those
related to the transfer of scientific data. Revise for the
consequences to you and your
investors if you do not receive or maintain the approvals,
inadvertently conclude that such
approvals are not required, or applicable laws, regulations, or
interpretations change and
you are required to obtain approval in the future.
Item 1A. Risk Factors, page 49
8. Revise your risk factors to acknowledge that if the PRC government
determines that the
contractual arrangements constituting part of your VIE structure do
not comply with PRC
regulations, or if these regulations change or are interpreted
differently in the future, your
shares may decline in value or become worthless if you are unable to
assert your
contractual control rights over the assets of your PRC subsidiaries
that conduct a
significant portion of your operations.
9. Given the Chinese government s significant oversight and discretion
over the conduct of
Pat Cotroneo
FIBROGEN INC
November 8, 2021
Page 4
your business, please revise to separately highlight the risk that the
Chinese government
may intervene or influence your operations at any time, which could
result in a material
change in your operations and/or the value of your common stock.
10. For your summary risk factor discussion and the full risk factor
section, please provide the
risk factors related to China prior to your other risk factor
discussions.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Sasha Parikh at 202-551-3627 or Kevin Vaughn at
202-551-3494 if you
have questions regarding comments on the financial statements and related
matters.
FirstName LastNamePat Cotroneo Sincerely,
Comapany NameFIBROGEN INC
Division of
Corporation Finance
November 8, 2021 Page 4 Office of Life
Sciences
FirstName LastName