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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

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

For the quarterly period ended June 30, 2023

OR

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

For the transition period from to

Commission file number: 001-36740

 

FIBROGEN, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

77-0357827

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

409 Illinois Street

 

 

San Francisco, CA

 

94158

(Address of Principal Executive Offices)

 

(Zip Code)

(415) 978-1200

Registrant’s telephone number, including area code:

 

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

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value

FGEN

The Nasdaq Global Select Market

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

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

Emerging growth company

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

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

The number of shares of common stock outstanding as of July 31, 2023 was 98,210,168.

 

 


 

FIBROGEN, INC.

TABLE OF CONTENTS

 

 

 

Page

PART I—FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements

 

2

 

Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 (Unaudited)

 

2

 

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)

 

3

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)

 

4

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)

 

5

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (Unaudited)

 

7

 

Notes to the Condensed Consolidated Financial Statements (Unaudited)

 

8

Item 2.

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

 

27

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

47

Item 4.

Controls and Procedures

 

47

 

 

 

 

PART II—OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

49

Item 1A.

Risk Factors

 

49

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

86

Item 3.

Defaults Upon Senior Securities

 

86

Item 4.

Mine Safety Disclosures

 

86

Item 5.

Other Information

 

86

Item 6.

Exhibits

 

86

 

Signatures

 

88

 

1


Table of Contents

FIBROGEN, INC.

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

June 30, 2023

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

152,585

 

 

$

155,700

 

Short-term investments

 

 

183,131

 

 

 

266,308

 

Accounts receivable, net ($19,951 and $12,088 from related parties)

 

 

25,599

 

 

 

16,299

 

Inventories

 

 

41,179

 

 

 

40,436

 

Prepaid expenses and other current assets

 

 

8,863

 

 

 

14,083

 

Total current assets

 

 

411,357

 

 

 

492,826

 

Restricted time deposits

 

 

2,072

 

 

 

2,072

 

Long-term investments

 

 

 

 

 

4,348

 

Property and equipment, net

 

 

16,829

 

 

 

20,605

 

Equity method investment in unconsolidated variable interest entity

 

 

6,112

 

 

 

5,061

 

Operating lease right-of-use assets

 

 

74,404

 

 

 

79,893

 

Other assets

 

 

4,353

 

 

 

5,282

 

Total assets

 

$

515,127

 

 

$

610,087

 

 

 

 

 

 

 

Liabilities, redeemable non-controlling interests and deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable ($4,578 and $0 to a related party)

 

$

12,802

 

 

$

30,758

 

Accrued and other current liabilities ($25,229 and $63,886 to a related party)

 

 

162,769

 

 

 

219,773

 

Deferred revenue ($3,485 and $9,259 to related parties)

 

 

7,490

 

 

 

12,739

 

Operating lease liabilities, current

 

 

11,011

 

 

 

10,292

 

Total current liabilities

 

 

194,072

 

 

 

273,562

 

Product development obligations

 

 

17,365

 

 

 

16,917

 

Deferred revenue, net of current ($12,015 and $31,044 to a related party)

 

 

165,416

 

 

 

185,722

 

Operating lease liabilities, non-current

 

 

73,813

 

 

 

79,593

 

Senior secured term loan facilities, non-current

 

 

71,408

 

 

 

 

Liability related to sale of future revenues, non-current

 

 

48,399

 

 

 

49,333

 

Other long-term liabilities ($577 and $0 to a related party)

 

 

4,961

 

 

 

6,440

 

Total liabilities

 

 

575,434

 

 

 

611,567

 

 

 

 

 

 

 

Commitments and Contingencies (Note 12)

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable non-controlling interests

 

 

21,480

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

Preferred stock, $0.01 par value; 125,000 shares authorized; no shares issued
   and outstanding at June 30, 2023 and December 31, 2022

 

 

 

 

 

 

Common stock, $0.01 par value; 225,000 shares authorized at June 30, 2023
  and December 31, 2022;
98,204 and 94,166 shares issued and outstanding at
  June 30, 2023 and December 31, 2022

 

 

982

 

 

 

942

 

Additional paid-in capital

 

 

1,625,067

 

 

 

1,541,019

 

Accumulated other comprehensive loss

 

 

(6,250

)

 

 

(5,720

)

Accumulated deficit

 

 

(1,722,073

)

 

 

(1,557,688

)

Total stockholders’ deficit attributable to FibroGen

 

 

(102,274

)

 

 

(21,447

)

Nonredeemable non-controlling interests

 

 

20,487

 

 

 

19,967

 

Total deficit

 

 

(81,787

)

 

 

(1,480

)

Total liabilities, redeemable non-controlling interests and deficit

 

$

515,127

 

 

$

610,087

 

 

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

2


Table of Contents

FIBROGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

1,000

 

 

$

 

 

$

7,000

 

 

$

22,590

 

Development and other revenue (includes $1,839, $1,825, $3,463,
   and $
7,005 from a related party)

 

 

5,158

 

 

 

5,457

 

 

 

9,050

 

 

 

17,219

 

Product revenue, net (includes $20,512, $19,737, $41,884 and $35,959
   from a related party)

 

 

23,889

 

 

 

23,256

 

 

 

48,049

 

 

 

42,137

 

Drug product revenue, net (from a related party)

 

 

14,272

 

 

 

1,093

 

 

 

16,381

 

 

 

8,687

 

Total revenue

 

 

44,319

 

 

 

29,806

 

 

 

80,480

 

 

 

90,633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

5,708

 

 

 

6,809

 

 

 

9,199

 

 

 

11,048

 

Research and development

 

 

95,478

 

 

 

70,963

 

 

 

169,964

 

 

 

159,981

 

Selling, general and administrative

 

 

31,181

 

 

 

30,258

 

 

 

65,455

 

 

 

60,820

 

Total operating costs and expenses

 

 

132,367

 

 

 

108,030

 

 

 

244,618

 

 

 

231,849

 

Loss from operations

 

 

(88,048

)

 

 

(78,224

)

 

 

(164,138

)

 

 

(141,216

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other, net

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(3,069

)

 

 

(141

)

 

 

(5,441

)

 

 

(238

)

Interest income and other income (expenses), net

 

 

2,652

 

 

 

5,199

 

 

 

3,687

 

 

 

4,876

 

Total interest and other, net

 

 

(417

)

 

 

5,058

 

 

 

(1,754

)

 

 

4,638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(88,465

)

 

 

(73,166

)

 

 

(165,892

)

 

 

(136,578

)

Provision for (benefit from) income taxes

 

 

(235

)

 

 

23

 

 

 

(161

)

 

 

136

 

Investment income in unconsolidated variable
   interest entity

 

 

550

 

 

 

565

 

 

 

1,346

 

 

 

885

 

Net loss

 

$

(87,680

)

 

$

(72,624

)

 

$

(164,385

)

 

$

(135,829

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

 

$

(0.90

)

 

$

(0.78

)

 

$

(1.71

)

 

$

(1.46

)

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

97,729

 

 

 

93,475

 

 

 

96,218

 

 

 

93,260

 

 

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

3


Table of Contents

FIBROGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

 

$

(87,680

)

 

$

(72,624

)

 

$

(164,385

)

 

$

(135,829

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(2,337

)

 

 

159

 

 

 

(2,585

)

 

 

408

 

Available-for-sale investments:

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

657

 

 

 

(584

)

 

 

2,055

 

 

 

(3,175

)

Other comprehensive gain (loss), net of taxes

 

 

(1,680

)

 

 

(425

)

 

 

(530

)

 

 

(2,767

)

Comprehensive loss

 

 

(89,360

)

 

 

(73,049

)

 

 

(164,915

)

 

 

(138,596

)

 

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

 

4


Table of Contents

FIBROGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share data)

(Unaudited)

 

 

 

For The Three Month Period

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Nonredeemable
Non-Controlling

 

 

Total

 

 

 

Redeemable
Non-Controlling

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Interests

 

 

Equity (Deficit)

 

 

 

Interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Note 3)

 

Balance at March 31,
   2023

 

 

96,623,309

 

 

$

966

 

 

$

1,589,145

 

 

$

(4,570

)

 

$

(1,634,393

)

 

$

19,967

 

 

$

(28,885

)

 

 

$

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(87,680

)

 

 

 

 

 

(87,680

)

 

 

 

 

Consolidation of Fortis
   (Note 3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

520

 

 

 

520

 

 

 

 

21,480

 

Change in unrealized gain
   or loss on investments

 

 

 

 

 

 

 

 

 

 

 

657

 

 

 

 

 

 

 

 

 

657

 

 

 

 

 

Foreign currency
   translation adjustments

 

 

 

 

 

 

 

 

 

 

 

(2,337

)

 

 

 

 

 

 

 

 

(2,337

)

 

 

 

 

Issuance of common stock
   under ATM Program

 

 

930,511

 

 

 

9

 

 

 

17,267

 

 

 

 

 

 

 

 

 

 

 

 

17,276

 

 

 

 

 

Shares issued from stock
   plans

 

 

650,423

 

 

 

7

 

 

 

2,772

 

 

 

 

 

 

 

 

 

 

 

 

2,779

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

15,883

 

 

 

 

 

 

 

 

 

 

 

 

15,883

 

 

 

 

 

Balance at June 30,
   2023

 

 

98,204,243

 

 

$

982

 

 

$

1,625,067

 

 

$

(6,250

)

 

$

(1,722,073

)

 

$

20,487

 

 

$

(81,787