UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K 

(Mark One)

For the fiscal year ended December 31, 20182019

OR

For the transition period from to .

Commission file number: 001-36740 

FIBROGEN, INC.

(Exact name of registrant as specified in its charter) 

Registrant’s telephone number, including area code:

(415) 978-1200 

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

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☑    No  ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐     No  ☑

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☑

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:

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)12b-2 of the Act).    Yes  ☐    No  ☑

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, computed by reference to the closing price as of the last business day of the registrant’s most recently completed second fiscal quarter, June 30, 2018,2019, was approximately $3,548.1$2,463.8 million. Shares of Common Stock held by each executive officer and director and stockholders known by the registrant to own 10% or more of the outstanding stock based on public filings and other information known to the registrant have been excluded since such persons may be deemed affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares of common stock outstanding as of January 31, 20192020 was 85,562,391.87,999,804.

DOCUMENTS INCORPORATED BY REFERENCE

Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K incorporate information by reference from the definitive proxy statement for the registrant’s 20192020 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than after 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS

This Annual Report filed on Form 10-K and the information incorporated herein by reference, particularly in the sections captioned “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” contains forward-looking statements, which involve substantial risks and uncertainties. In this Annual Report, all statements other than statements of historical or present facts contained in this Annual Report, including statements regarding our future financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “believe,” “will,” “may,” “estimate,” “continue,” “anticipate,” “contemplate,” “intend,” “target,” “project,” “should,” “plan,” “expect,” “predict,” “could,” “potentially” or the negative of these terms or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements appear in a number of places throughout this Annual Report and include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things, our ongoing and planned preclinical development and clinical trials, the timing of and our ability to make regulatory filings and obtain and maintain regulatory approvals for roxadustat, pamrevlumab and our other product candidates, our intellectual property position, the potential safety, efficacy, reimbursement, convenience clinical and pharmaco-economic benefits of our product candidates, the potential markets for any of our product candidates, our ability to develop commercial functions, our ability to operate in China, expectations regarding clinical trial data, our results of operations, cash needs, spending of the proceeds from our initial public offering, and the concurrent private placement, financial condition, liquidity, prospects, growth and strategies, the industry in which we operate and the trends that may affect the industry or us. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions described in the section of this Annual Report captioned “Risk Factors” and elsewhere in this Annual Report.

These risks are not exhaustive. Other sections of this Annual Report may include additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The forward-looking statements made in this Annual Report are based on circumstances as of the date on which the statements are made. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Annual Report or to conform these statements to actual results or to changes in our expectations.

This Annual Report also contains market data, research, industry forecasts and other similar information obtained from or based on industry reports and publications, including information concerning our industry, our business, and the potential markets for our product candidates, including data regarding the estimated size and patient populations of those and related markets, their projected growth rates and the incidence of certain medical conditions, as well as physician and patient practices within the related markets. Such data and information involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates.

You should read this Annual Report with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

PART I

ITEM 1. BUSINESS

OVERVIEW

We are a leading biopharmaceutical company discovering, developing and developingcommercializing a pipeline of first-in-class therapeutics. We have appliedapply our pioneering expertise in hypoxia-inducible factor (“HIF”) and connective tissue growth factor (“CTGF”) biology to developadvance innovative medicines for the treatment of anemia, fibrotic disease, and cancer.

Roxadustat, our most advanced product, candidate, is an oral small molecule inhibitor of HIF prolyl hydroxylase (“HIF-PH”) activity that hasacts by stimulating the body’s natural pathway of erythropoiesis, or red blood cell production.

In August 2019, roxadustat (China tradename: 爱瑞卓^®) received New Drug Application (“NDA”) approvalmarketing authorization in anemia associated with chronic kidney disease (“CKD”) in dialysis-dependent (“DD”) patients from the National Medical Products Administration (“NMPA”) (previously known as the China Food and Drug Administration) of the People’s Republic of China (“China”). for the treatment of anemia caused by chronic kidney disease (“CKD”) in non-dialysis-dependent patients. Roxadustat was approved in China for the treatment of anemia caused by CKD in dialysis-dependent patients in December 2018.

In September 2019, roxadustat (Evrenzo ^®) was approved in Japan for the treatment of anemia associated with CKD in dialysis-dependent patients, and in January 2020, Astellas Pharma Inc. (“Astellas”) submitted a supplemental New Drug Application (“NDA”) in Japan for the treatment of anemia in non-dialysis CKD patients.

In conjunction with our collaboration partners, AstraZeneca AB (“AstraZeneca”) and Astellas, Pharma Inc. (“Astellas”), we have completed the Phase 3 trials of roxadustat intended to support our NDA in the United States (“U.S.”) and Marketing Authorization Application (“MAA”) in the European Union and the United Kingdom (“EU”Europe”) for the treatment of anemia in CKD. WeOur NDA filing for roxadustat for the treatment of anemia in patients with dialysis-dependent CKD and our partners are in the process of preparing an NDA for submission topatients with non-dialysis-dependent CKD was accepted by the U.S. Food and Drug Administration (“FDA”) and in February, 2020. Astellas is in the process of preparing an MAA for submission to the European Medicines Agency (“EMA”) this year, both of which would cover anemia patients with dialysis-dependent CKD and non-dialysis-dependent CKD.

In Japan, Astellas submitted an NDA for the treatment of anemia in CKD patients on dialysis in September 2018, which is currently under review by the Pharmaceuticals and Medical Devices Agency (“PMDA”). We expect an approval decision on the Japan dialysis NDA in the second halfquarter of 2019.2020 for the same indications. In addition, AstraZeneca has submitted applications for marketing approval of roxadustat in CKD anemia in Canada, Mexico, Taiwan, Philippines, and Singapore.

Beyond anemia in CKD, roxadustat is in Phase 3 clinical development in the U.S. and Europe and in Phase 2/3 development in China for anemia associated with myelodysplastic syndromes (“MDS”). We also began a Phase 2 clinical trial of roxadustat in the U.S. in chemotherapy-induced anemia (“CIA”) in the third quarter of 2019.

Pamrevlumab ais our human monoclonal antibody that inhibits the activity of CTGF, is advancing towarda central mediator and critical common element in the progression of fibrotic and fibro-proliferative diseases. In 2019, we initiated a Phase 3 clinical developmentprogram for the treatment of idiopathic pulmonary fibrosis (“IPF”) and pancreatic cancer, and is currently in a Phase 2 trial3 clinical program for locally advanced unresectable pancreatic cancer. We also plan to initiate a Phase 3 program for the treatment of Duchenne muscular dystrophy (“DMD”).

Applying our internally developed proprietary technology in recombinant human collagen, FibroGen is also developing a biosynthetic corneal implant in China.2020.

ROXADUSTAT FOR THE TREATMENT OF ANEMIA IN CHRONIC KIDNEY DISEASE

Roxadustat is an internally discovered HIF-PH inhibitor that acts by stimulating the body’s natural pathway of erythropoiesis, or red blood cell production, to treat anemia.

The topline results from our Phase 3 study used to support the China NDA in dialysis, as well as the Phase 3 study in non-dialysis, are described in the section below captioned “Roxadustat for the Treatment of Anemia in Chronic Kidney Disease in China.” We expect CKD non-dialysis patients to be added to the roxadustat label once regulatory inspections of the Phase 3 non-dialysis clinical trial sites are performed by the NMPA.

Globally, the Phase 3 CKD-anemia program encompasses 15 Phase 3 studies of roxadustat in both non-dialysis-dependent (“NDD”) and dialysis-dependent CKD patients designed to support independent regulatory approvals in the U.S., Europe, Japan, and China.

We, and our partners Astellas and AstraZeneca, each announced topline Phase 3 results for roxadustat in 2018 which we plan to include in support of regulatory submissions in the U.S. and Europe in 2019. These results are described in the following section. The pooled safety analyses for the U.S. (both for NDD-CKD and DD-CKD), including the major adverse cardiovascular event (“MACE”) endpoint, a composite endpoint of death, myocardial infarction and stroke, are anticipated to be completed in the second quarter of 2019, and we intend to submit a U.S. NDA in the third quarter of 2019. We expect Astellas to submit an MAA to the EMA shortly thereafter. Both the U.S. NDA and European MAA for roxadustat are expected to cover anemia associated with dialysis dependent CKD and non-dialysis-dependent CKD.

Our partner Astellas has filed its NDA for roxadustat for the treatment of anemia in dialysis patients with the PMDA, and the Phase 3 results used to support the Japan NDA are described in the section below captioned “Roxadustat for the Treatment of Anemia in

Chronic Kidney Disease in Japan. Astellas has completed one of the two Phase 3 studies in non-dialysis CKD expected to serve as a basis for a supplemental NDA in Japan for the treatment of anemia in non-dialysis CKD patients.

CKD affects 10-12% of the adult population globally. While anemia is common in patients at advanced stages of CKD who face increased risks of health consequences, many of those patients are left untreated or are sub-optimally treated for anemia due to safety concerns and limited access to the currently available therapies such as erythropoiesis stimulating agents (“ESAs”). Even in major markets such as the U.S., the use of ESAs to treat anemia in CKD has largely been limited to the dialysis-dependent CKD population in recent years. We and our partners believe that, as an oral agent with an acceptable safety profile, roxadustat could increase treatment access to patients and expand the non-dialysis anemia market.

In the longer term, we believe roxadustat has the potential to address anemia markets beyond CKD, including chemotherapy-induced anemia (“CIA”), anemia related to inflammation (such as inflammatory bowel disease, lupus, and rheumatoid arthritis), MDS, and in surgical procedures requiring red blood cell transfusions. Roxadustat is in ongoing clinical trials in MDS, and we plan to initiate a Phase 2 clinical trial of roxadustat in the U.S. in CIA in 2019.

Completed Phase 3 Clinical Trials of Roxadustat in CKD Anemia for U.S. and European Regulatory Submissions

We recently announced that roxadustat met all pre-specified primary efficacy endpoints in the three U.S. and Europe Phase 3 trials conducted by us, which we have named ANDES in non-dialysis-dependent CKD, HIMALAYAS in incident (newly initiated) dialysis patients, and SIERRAS in dialysis-dependent CKD patients. These results are detailed below and analysis of secondary endpoints is ongoing.

AstraZeneca has also announced positive topline results from each of its roxadustat Phase 3 trials (named OLYMPUS in non-dialysis CKD and ROCKIES in dialysis-dependent CKD). AstraZeneca and FibroGen are collaborating on the development and commercialization of roxadustat for the treatment of anemia in the U.S., China, and other markets in the Americas and in Australia/New Zealand, as well as Southeast Asia.  

Astellas has also announced positive topline results from their trial named ALPS, a roxadustat Phase 3 trial in non-dialysis patients, and PYRENEES, a roxadustat Phase 3 trial in dialysis patients. Astellas and FibroGen are collaborating on the development and commercialization of roxadustat for the treatment of anemia in territories including Japan, Europe, the Commonwealth of Independent States, the Middle East, and South Africa.

The table below is a summary of our Phase 3 CKD anemia trials by regulatory approval region.

Roxadustat Phase 3 CKD Anemia Clinical Trials

Non-Dialysis CKD Patients (ANDES) – FibroGen

ANDES is a 922-patient Phase 3, randomized, double-blinded, placebo-controlled trial designed to evaluate the efficacy and safety of roxadustat vs. placebo for the treatment of anemia in patients with later stage CKD (stages 3, 4 or 5) who are not dialysis dependent. This study was conducted in the U.S. and 14 other countries. Treatment duration was up to 4.5 years, with average duration of 1.7 years. Baseline hemoglobin levels averaged 9.1 g/dL in both the roxadustat (N=616) and the placebo (N=306) arms.

In a pre-specified secondary efficacy analysis, roxadustat reduced the risk of rescue therapy by 81% (hazard ratio (HR)=0.19) defined as the time to first use of blood transfusion, administration of an ESA or intravenous (“IV”) iron in the first 52 weeks of treatment, p<0.0001. In addition, roxadustat reduced the risk of blood transfusion by 74% (HR=0.26) in the time to first blood transfusion during the first 52 weeks of treatment, p<0.0001. 

Incident Dialysis CKD Patients Study (HIMALAYAS) – FibroGen

HIMALAYAS is a 1,043-patient Phase 3 randomized, open-label, active-controlled trial to assess the efficacy and safety of roxadustat compared to epoetin alfa, an ESA, for the treatment of anemia in CKD patients who have newly initiated dialysis treatment for end-stage renal disease (“ESRD”) and have had minimal or no exposure to an ESA prior to study participation. This study was conducted in the U.S. and 17 other countries. Treatment duration was up to 4.4 years, with mean duration of 1.8 years. Mean baseline hemoglobin was 8.43 g/dL in the roxadustat arm (N=522) and 8.46 g/dL in the epoetin alfa arm (N=521).

Roxadustat-treated patients had a statistically significant reduction in hepcidin, a key regulator of iron metabolism, as compared to ESA-treated patients. Roxadustat was shown to increase hemoglobin regardless of baseline inflammation status.

Stable Dialysis CKD Patients Study (SIERRAS) – FibroGen

SIERRAS is a 741-patient U.S. Phase 3, randomized, open-label, active-controlled trial to assess the efficacy and safety of roxadustat compared to epoetin alfa for the treatment of anemia (in maintaining hemoglobin level) in dialysis CKD patients who were receiving stable doses of ESA prior to study participation. Treatment duration was up to 3.5 years, with a mean duration of 1.9 years. Mean baseline hemoglobin levels were 10.3 g/dL in both roxadustat and epoetin alfa arms.

Roxadustat-treated patients had a statistically significant reduction in hepcidin as compared to ESA-treated patients. Roxadustat was shown to increase hemoglobin regardless of baseline inflammation status. In addition, in the pre-specified secondary efficacy analysis, roxadustat-treated patients had a 33% reduction in the risk of blood transfusion compared to epoetin alfa (HR=0.67) in the time to first blood transfusion during treatment, p=0.0337.

Safety – ANDES, HIMALAYAS, and SIERRAS

The preliminary safety analyses of each of these three studies show an overall safety profile consistent with the results observed in prior roxadustat studies. The adverse events reported are consistent with those expected in these study populations with similar background diseases. Fully adjudicated MACE results from the pooled safety analyses both for non-dialysis and dialysis CKD populations for the U.S. and EU, are anticipated to be completed in the second quarter of 2019, and we intend to submit a U.S. NDA in the third quarter of 2019. We expect Astellas to submit an MAA to the EMA shortly thereafter. Both the U.S. NDA and European MAA for roxadustat are expected to cover anemia associated with dialysis dependent CKD and non-dialysis-dependent CKD.

Non-Dialysis CKD Patients (OLYMPUS) – AstraZeneca

OLYMPUS is AstraZeneca’s Phase 3, randomized, double-blinded, placebo-controlled trial designed to evaluate the efficacy and safety of roxadustat vs. placebo for the treatment of patients with anemia in CKD stages 3, 4 or 5 whose disease progression is

moderate to severe and who are non-dialysis dependent. The trial met its primary efficacy endpoint by demonstrating a statistically-significant and clinically-meaningful improvement in mean change from baseline in hemoglobin levels averaged over Weeks 28 to 52 vs. placebo. The trial evaluated 2,781 patients in 26 countries.

Non-Dialysis CKD Patients (ALPS) – Astellas

ALPS is Astellas’ Phase 3, randomized, double-blind, placebo-controlled study of the efficacy and safety of roxadustat for the treatment of anemia in CKD patients not on dialysis. The trial met its primary endpoints by demonstrating superiority in efficacy vs. placebo in terms of both hemoglobin response rate in the first 24 weeks and hemoglobin change from baseline at Weeks 28 to 52. The preliminary safety analysis for this trial shows an overall event profile consistent with the results seen in previous roxadustat studies in CKD patients with anemia.

Stable Dialysis CKD Patients (ROCKIES) – AstraZeneca

ROCKIES is AstraZeneca’s Phase 3, randomized, open-label, active-controlled trial designed to assess the efficacy and safety of roxadustat vs. epoetin alfa, for the treatment of anemia in patients with CKD who are dialysis dependent. The trial met its primary efficacy endpoint by demonstrating a statistically-significant improvement in mean change from baseline in hemoglobin levels averaged over Weeks 28 to 52 vs. epoetin alfa. The trial evaluated 2,133 patients in 18 countries.

Stable Dialysis CKD Patients (PYRENEES) – Astellas

PYRENEES is Astellas’ Phase 3, randomized, active-controlled trial designed to assess the efficacy and safety of roxadustat vs. epoetin alfa or darbepoetin alfa, for the treatment of anemia in patients with CKD who are dialysis dependent. The trial, in 838 patients, met its primary efficacy endpoint.

Estimated Glomerular Filtration Rate Attenuation

We believe there could be significant clinical benefit of roxadustat treatment in the non-dialysis-dependent CKD patients if we are able to show the attenuation of renal disease progression. The estimated glomerular filtration rate (“eGFR”) is a measure of the filtration function of the kidney and renal disease progression. In the preliminary analysis of our pooled Phase 3 non-dialysis studies (ANDES, ALPS, and OLYMPUS) of patients with eGFR 15 or higher (CKD stages 3 and 4), the one-year decline in eGFR in roxadustat treated patients was shown to be significantly less than that in placebo treated patients.

Background of Anemia in CKD

Anemia can be a serious medical condition in which patients have insufficient red blood cells and low levels of hemoglobin (“Hb”), a protein in red blood cells that carries oxygen to cells throughout the body.

Anemia in CKD is associated with increased risk of hospitalization, cardiovascular complications, and death. In addition, anemia frequently causes significant fatigue, cognitive dysfunction, and reduced quality of life. Severe anemia is common in patients with CKD, cancer, MDS, inflammatory diseases, and other serious illnesses.

Anemia is particularly prevalent in patients with CKD. The prevalence of CKD in the adult population is estimated at 10-12% globally, and is generally a progressive disease characterized by gradual loss of kidney function that may eventually lead to kidney failure or ESRD requiring dialysis or a kidney transplant to survive. Blood transfusion is used for treating life-threatening severe anemia. However, blood transfusions reduce the patient’s opportunity for a kidney transplant, increase risk of infections and the risk of complications such as heart failure and allergic reactions.

There are five stages of CKD that are primarily defined by the Glomerular Filtration Rate (“GFR”).

Stages of CKD and Prevalence in the U.S.

Sources: The prevalence of stage 1 through stage 4 CKD was calculated based on 2016 estimates by the United States Renal Data System (“USRDS”) presented in the 2018 USRDS annual data report: Epidemiology of kidney disease in the United States (“2018 USRDS ADR”), using data from the National Health and Nutrition Examination Survey (“NHANES”) 2013-2016 and 2016 data from the U.S. Census Bureau. The prevalence of stage 5 CKD was calculated based on 2016 data from the 2018 USRDS ADR using data from the U.S. National ESRD database, NHANES 2013-2016 and 2016 data from the U.S. Census Bureau.

The prevalence rate of anemia in patients with Hb<12 g/dL is set forth below.

Sources: The prevalence of anemia in stage 1 through stage 4 CKD and stage 5 NDD-CKD was derived from Stauffer and Fan, Prevalence of Anemia in Chronic Kidney Disease in the United States, PLoS ONE (2014). The prevalence of anemia in patients undergoing dialysis was derived from Goodkin et al., Naturally Occurring Higher Hemoglobin Concentration Does Not Increase Mortality among Hemodialysis Patients, J Am Soc Nephrol (2011).

In the U.S., according to the USRDS, a majority of dialysis-eligible CKD patients are currently on dialysis. Of the approximately 509,000 patients receiving dialysis in the U.S., approximately 78% are being treated with ESAs for anemia. Despite the presence of anemia in stages 3 and 4 CKD patients in clinical practice, patients typically do not receive ESA treatment for their anemia until they initiate dialysis. As of 2016, approximately 13% of U.S. NDD-CKD patients were being treated with ESAs prior to initiation of dialysis (2018 USRDS ADR). In many CKD patients, the disease progresses gradually over decades and patients can spend years suffering from the symptoms and negative health effects of anemia before they receive treatment. Many of these patients die from cardiovascular events before they initiate dialysis.

According to IQVIA (formerly Quintiles and IMS Health) MIDAS™ reports, for the twelve months ending September 2018, global ESA sales in all anemia indications totaled $7.6 billion, including $3.5 billion in the U.S.

Roxadustat — A Novel, Orally Administered Treatment for Anemia

Roxadustat is an orally administered small molecule that correctstreats anemia by a mechanism of action that is different from that of ESAs. Aserythropoiesis stimulating agents (“ESAs”). Roxadustat, as a HIF-PH inhibitor, roxadustat activates a response that is naturally activated whenrelies on the natural mechanism by which the body responds to reducedlow oxygen levelslevels. HIF is a transcription factor comprised of a HIF-alpha and a HIF-beta subunit, both of which are required to stimulate erythropoiesis. Under normal oxygen conditions, the HIF-alpha subunit is targeted for rapid degradation through the activity of a family of HIF-PH enzymes. However, under low oxygen conditions, the HIF-PH enzymes cannot function and HIF-alpha accumulates. HIF-alpha then combines with HIF-beta, and the newly formed HIF complex initiates transcription of a number of genes involved in the erythropoietic process, which ultimately leads to increased oxygen delivery to tissues. Roxadustat works by reversibly inhibiting the HIF-PH enzymes, thus mimicking this coordinated natural erythropoietic response through genes encoding the proteins involved in iron absorption, mobilization and transport as well as stimulation of red blood such as when a person adapts to high altitude. cell progenitors.

The responsecoordinated erythropoiesis activated by roxadustat involves the regulation of multiple, complementary processes to promote erythropoiesis and increase the blood’s oxygen carrying capacity.

Coordinated erythropoiesis includes both the stimulation of red blood cell progenitors,erythroid maturation, by increasing the body’s production of erythropoietin (“EPO”), and an increase in iron availability for hemoglobin synthesis.synthesis in part through a decrease in hepcidin levels, which is particularly important in patients with inflammation. Patients taking roxadustat typically have a transient increase in circulating endogenous EPO levels at peak concentration within or near the physiologic range naturally experienced by humans adapting to hypoxic conditions such as at high altitude, following blood donation, or impaired lung function, such as pulmonary edema.

By contrast, ESAs act only to stimulate red blood cell progenitorserythroid maturation without a corresponding increase in iron availability, and are typically dosed at well above the natural physiologic range of EPO. The sudden demand for iron stimulated by ESA-induced erythropoiesis can lead to functional or absolute iron deficiency. We believe these high doses of ESAs are a main cause of the significant safety issues that have been attributed to this class of drugs. In addition, the lack of a coordinated increase in iron availability with ESAs may explain the hyporesponsiveness of patients with inflammation to this class of drugs. It also explains why patients taking ESAs need more IV iron supplementation and red blood cell transfusions than patients taking roxadustat do. Not only are IV iron and blood transfusions more costly than oral iron, but both are also associated with increased risk of hospitalization and death.

In contrast, the differentiated mechanism of action of roxadustat, which involves induction of the body’s own natural pathways to achieve a more complete erythropoiesis, has the potential to provide a safer and more effective treatment of anemia, including in the presence of inflammation, which normally limits iron availability.

We believeBackground of Anemia in Chronic Kidney Disease

Chronic kidney disease is a progressive disease characterized by gradual loss of kidney function that roxadustat hasmay eventually lead to kidney failure or end-stage renal disease (“ESRD”) requiring dialysis or a kidney transplant to survive. CKD affects 12% to 14% of the potential to offer safety, efficacy, reimbursement,global adult population. CKD is more prevalent in developed countries, but is also growing rapidly in emerging markets such as China.  

Anemia can be a serious medical condition in which patients have insufficient red blood cells and convenience advantages over ESAs.

Our clinical trials to date have shown that roxadustat can correct and maintain hemoglobinlow levels of anemic CKD patients with lower circulating EPO levels than what has historically been reported with treatment by ESAs to minimizehemoglobin, a protein in red blood cell transfusion risks, even incells that carries oxygen to cells throughout the presence of inflammation, and without routine IV iron supplementation, thereby offering potential safety and efficacy benefits over ESAs.

Potential for Reduced Hepcidin Levels andbody. Anemia Correction Without Routine IV Iron Supplementation

An important differentiator of roxadustat from ESAs is that roxadustat also mobilizes iron from the body’s iron stores. It has been consistently shown to correct anemia in CKD regardless of iron-repletion status, whereas iron repletion is required as a condition for treatment under ESA labels. Furthermore, roxadustat can correct and maintain hemoglobin without routine IV iron supplementation.

IV iron supplementation is routinely used to support anemia correction in a majority of hemodialysis patients treated with ESAs in the U.S. Many CKD patients have deficient iron stores, or absolute iron deficiency, and cannot absorb enough iron from diet or oral iron supplements to correct this deficiency. Physicians administer IV iron to ensure these patients are iron replete prior to initiating ESA treatment and continue to receive IV iron to mitigate iron depletion caused by ESA-mediated erythropoiesis. Additionally, many CKD patients who have adequate iron stores suffer from functional iron deficiency.

While IV iron can help correct anemia when used in combination with ESAs, published studies have suggested both acute and chronic risk of morbidity and mortality associated with the use of IV iron. Increased use of IV iron has been associated with increased risk of hospitalization, cardiovascular complications and death.death, and frequently causes significant fatigue, cognitive dysfunction, and considerable reduction of quality of life.

We believeAnemia is a complication of chronic kidney disease and becomes increasingly common as the disease advances. In the U.S., approximately 18 million adults have CKD Stages 3-5. Based on literature and market research, we estimate 25%, 50%, and 55% of CKD non-dialysis patients in Stages 3, 4, and 5, respectively, have anemia. This translates to an estimated 4.9 million CKD non-dialysis anemia patients, and we estimate that elevated levelsup to 50% may be addressable based on our expected label. Additionally, 90% of hepcidin,CKD patients on dialysis in the major hormone that regulates iron metabolism, contributes to both absoluteU.S., or approximately 0.5 million, have anemia.

When ESAs were introduced in 1989, they dramatically reduced the need for blood transfusions in CKD patients, which was a material development since transfusions reduce the patient’s opportunity for a kidney transplant and functional iron deficiency.increase the risk of infections and complications such as heart failure and allergic reactions.  However, ourmultiple randomized clinical trials with ESAs suggested safety risks of ESA therapies, and as a result, the anemia guidelines and approved labels have not only consistently shown roxadustat’s abilitychanged to correct anemia withoutmore restrictive use of routine IV iron supplementation, but they have also shown a reduction in hepcidin levels with roxadustat treatment.

Minimizing IV iron use helps to avoidESAs. In the safety risks associated with IV, and, because the costU.S., while 93% of oral iron is significantly less than the cost of IV iron, treatment with roxadustat could also potentially confer significant costs savings from not requiring routine IV iron supplementation.

Potential for Anemia Correction for Patient Populations Who are Hyporesponsive to ESAs

Incident dialysis patients andreceive ESAs, in contrast, the percentage of patients who have chronic inflammation are often hyporesponsiveon one or more ESAs at the time of dialysis initiation declined from 30% in 2006 to ESAs, which necessitates13.6% in 2017, despite the usewell-recognized health risks of higher doses of ESAs to increase hemoglobin levels, thus increasing both safety risk and treatment cost. In contrast, roxadustat has been shown to be similarly effective in patients with inflammation as those without inflammation without increasing dose. Roxadustat’s ability to overcome the suppressive effects of inflammation on erythropoiesis also may enable patients to safely achieve higher hemoglobin levels, which may reduce red blood cell transfusions (as reported in the U.S. Phase 3 study in dialysis patients (SIERRAS) earlier in this section). We believe roxadustat’s consistent treatment effect on CKD anemia regardless of inflammation status may confer clinical safety and efficacy benefits.

While we have not finished analyzing our U.S. and Europe Phase 3 trial data, our China Phase 3 trials showed that roxadustat was able, in these smaller studies, to increase hemoglobin regardless of baseline inflammation status: both in dialysis-dependent CKD patients and non-dialysis-dependent CKD patients (as described in the section below captioned “Roxadustat for the Treatment of Anemia in Chronic Kidney Disease in China.”). Our Phase 2 clinical trials showed similar results.

Potential for Anemia Correction with Moderate EPO Levels

Randomized trials have suggested that high doses of ESAs administered in an attempt to achieve a target hemoglobin level may cause the safety issues associated with ESA therapy. These high ESA doses in the inflamed/hyporesponsive patients result in serum EPO levels much higher than physiological range. In contrast, the level of endogenous EPO elevation among patients treated with roxadustat is typically within or near the range observed when ascending to a higher elevation or giving blood. Treating anemia while maintaining lower circulating EPO levels may mitigate, or even avoid, the risks from exposure to supraphysiologic erythropoietin levels in ESA therapy, and may potentially enable a more effective and safe treatment of anemia in CKD patients.

The following graph depicts:

¹ Milledge & Cotes (1985) J Appl Physiol 59:360;² Goldberg et al. (1993), Clin Biochem 26:183, Maeda et al. (1992), Int J Hematol 55:111; ³ Kato et al. (1994) Ren Fail 16:645; ⁴ The transient peak endogenous EPO concentrations (“Cmax”), data for roxadustat was derived from a subset of 243 patients who achieved a hemoglobin response to roxadustat in our Phase 2 studies for whom we believe doses depicted approximated therapeutic doses. Hemoglobin target ranges for these patients were above the hemoglobin levels specified in the current ESA package insert for CKD patients. Only doses in those patients whose hemoglobin responded in Phase 2 studies are reflected in the figure. The subset of patients included 134 non-dialysis CKD patients treated to thrice-weekly, twice-weekly, or weekly doses of roxadustat for >16 weeks. The subset also included 109 dialysis CKD patients, including incident dialysis patients whose anemia was corrected with therapeutic doses and stable dialysis patients who received maintenance doses. Cmax of endogenous EPO levels were not measured in all patients; instead the range of EPO Cmax levels were estimated based on data derived from a more limited number of patients in whom EPO levels were measured at various roxadustat doses and among whom there was substantial variation in measured EPO levels. Accordingly, individual patients who received roxadustat may have realized EPO Cmax levels significantly above or below these estimated levels. Moreover, the estimates reflected in the graph may not be reflective or predictive of actual EPO Cmax levels or ranges that will be realized in larger populations of patients receiving roxadustat in our Phase 3 clinical trials. ⁵ EPO Cmax was computed from ESA dose distributions based on Flaherty et al. (1990) Clin Pharmacol Ther 47:557.

Potential Cholesterol Benefits

In addition, in our Phase 2 and China Phase 3 clinical trials, we observed reductions in total cholesterol and an improvement in average high-density lipoprotein (“HDL”)/low-density lipoprotein (“LDL”) ratio. Since many CKD patients have high cholesterol levels, which contribute to cardiovascular-related morbidity and mortality, the improvement in the average HDL/LDL ratio observed with roxadustat treatment could confer a benefit to patients.

Potential Reimbursement and Convenience Advantages

Potentially Differentiated Reimbursement Framework

ESAs are included in the Medicare Improvements for Patients and Providers Act bundled payment system in the dialysis-dependent CKD setting and reimbursed under Medicare Part B in the non-dialysis-dependent CKD setting. Based on our roxadustat data to date, we believe roxadustat has the potential to correct anemia through a differentiated mechanism of action and that offers different therapeutic effects than ESA and the potential to displace multiple drugs in current use (such as ESAs and IV iron), and/or those in development (such as agents for suppression of hepcidin). Although the bundle currently covers ESAs or other IV products encompassed by the bundle, due to the differentiated innovative nature of roxadustat, it is unclear whether roxadustat will be included in or excluded from the bundle. We believe that there may be commercial benefits in either event, however are unable to predict the potential benefits until further guidance from the Centers for Medicare and Medicaid Services becomes available.

In the non-dialysis CKD setting, we expect that roxadustat, an oral treatment, should be subject to Medicare Part D, which would allow physicians to prescribe roxadustat without the financial and reimbursement risk associated with purchasing and storing injectable ESAs. We believe that this should encourage significantly greater usage outside of the dialysis setting than injectable agents like ESA.

Potential Reduction of Other Medicationsuntreated anemia.

In addition to potentially eliminating routine IV iron supplementation, based on our Phase 2 and China Phase 3 clinical trial resultsthe safety concerns, which may be a greater impediment in the non-dialysis setting, other factors which contribute to date, we believe that roxadustat has the potential to reduce the useunder-treatment of other medications frequently required in some CKD anemia patients, such as anti-hypertensives and statins.

Oral Administration

Many physicians that treat CKD patients, particularly primary care and family practice physicians, cardiologists, endocrinologists, and internists, do not typically stock or administer ESAs. An easily accessible oral agent that is dispensed by pharmacies could significantly increase the number of physicians treating anemia in non-dialysis patients with CKD,are related to the form of administration and therefore, the numberaccessibility of ESA products. ESAs are administered by infusion or subcutaneous injections, which is more difficult outside of dialysis centers or nephrology practices where non-dialysis patients receiving treatment.are typically treated.

In addition, the oral administrationdialysis-dependent population, most patients start receiving ESAs when the patient is transitioning to dialysis care. Patients face significant increased risk of roxadustat potentially offers a significant convenience advantage for CKD patients who have yet to initiate dialysis and are therefore not regularly visiting a dialysis center. Patients can more easily self-administer medicine in any setting, rather than being subject to the inconvenience and restrictions of regular visits to physicians’ offices or infusion centers to receive treatment with ESAs.

Potential Pharmacoeconomic Advantages

Based on our Phase 2 clinical trial results to date, we believe that roxadustat’s potential pharmacoeconomic advantages over ESA therapy may include safety (with a potential decrease indeath, cardiovascular events and hospitalizations with consequently lower associated treatment costs), lower administrative cost, reduction or elimination ofduring the first year on dialysis, and concurrently initiating anemia therapy adds complexity and safety risks. In addition, patients at an advanced stage CKD are often affected by chronic inflammation that leads to functional iron deficiency, requiring IV iron, and potentially other medications. If demonstrated in our Phase 3 studies, these pharmacoeconomic advantages may support reimbursement worldwide, including in Europe and China.reduced effectiveness of ESAs.

The Market Opportunity for Roxadustat

We believe that there is a significant opportunity for roxadustat, a potentially safer and more effective anemia treatment, to address markets currently served by injectable ESAs. According to IQVIA (formerly Quintiles and IMS Health) MIDAS™ reports,, over the 12 months ending September 30, 2018, global ESA sales in all indications totaled $8.0$7.5 billion in 2018, driven primarily by $5.6$5.4 billion sold in the U.S. and Europe. We believe that a substantial portionEurope, mostly for treatment of ESA sales are for CKD anemia. For example, Amgen reportedanemia in January 2019 that its ESA portfolio of EPOGEN^® (epoetin alfa) and Aranesp® (darbepoetin alfa) had total 2018 worldwide sales of $2.6 billion, of which $2.3 billion was in nephrology where CKD patients are treated.CKD. We further believe that the number of patients requiring anemia therapy will grow steadily as the global CKD population and access to dialysis care continue to expand, particularly in China and other emerging markets including the rest of Asia, Latin America, Eastern Europe, the Middle East, and the Commonwealth of Independent States. In established markets, such as the U.S., asaddition, obesity, hypertension, and diabetes prevalence continue rising, and the mortality of ESRD patients decline, the prevalence of ESRD is expected to grow further. Recent research publisheddeclining, particularly in Journal of American Society of Nephrology predicts the prevalence of ESRD in the U.S. to increase by 29% - 68% by 2030 from the level in 2015, to between 971,000 to 1,259,000 in 2030. The USRDS estimates the total U.S. prevalence of ESRD as of 2016 at 724,075, including 509,014 patients on dialysis and 215,061 transplant recipients.many emerging markets.

Furthermore, we believe that there is a significant opportunity for roxadustat to address patient segments that are currently not effectively served by ESAs, such as anemia in non-dialysis CKD due to under-diagnosis of CKD and under-treatment of anemia in this population. Awareness of health consequences and the burden of CKD may also improve the diagnosis rate of CKD, and thus anemia of CKD.

Recently Completed Roxadustat Phase 3 Clinical Program in CKD Anemia

The table below summarizes the basis of our roxadustat U.S. NDA and planned MAA filing in Europe.  Our NDA filing was accepted by the FDA in February 2020 for CKD anemia in both dialysis and non-dialysis patients. The FDA has set a Prescription Drug User Fee Act goal date of December 20, 2020. We expect Astellas to submit the MAA in Europe in the second quarter of 2020.

Roxadustat Phase 3 CKD Anemia Clinical Program

The primary efficacy endpoint was met in each of the pivotal studies for the U.S. NDA and Europe MAA, as shown below:

Summary of Results from Individual Phase 3 Studies of Roxadustat in CKD Anemia

Summary of Roxadustat U.S. and Europe Phase 3 Primary Efficacy Results

Pooled Efficacy Results in Non-Dialysis Patients

Superior at Raising Hemoglobin

Roxadustat superiority in efficacy was demonstrated in pooled efficacy analyses across the three Phase 3 dialysis-dependent studies and the three non-dialysis-dependent studies.

In the non-dialysis CKD patient population, which is substantiallypool (4,277 patients from OLYMPUS, ANDES, and ALPS), the mean change in hemoglobin (from baseline to the average between Weeks 28-52) in roxadustat patients was also significantly larger than in placebo patients (1.85 g/dL vs. 0.13 g/dL, p<0.001).

Efficacy at Raising Hemoglobin Irrespective of Iron Replete Status

In the non-dialysis pool, roxadustat increased hemoglobin (by 1.94 g/dL) regardless of whether patients were iron-replete (patients shown to have sufficient baseline stores of iron in their body, TSAT ≥20% and Ferritin ≥100 ng/mL) or not iron-replete.

Reduction In Risk of Rescue Therapy and Transfusion

The risk of rescue therapy (blood or red blood cell transfusion, ESA use, or IV iron) was significantly lower in the roxadustat arm (8.9%) than the placebo arm (31.1%) in the pooled non-dialysis patients with a hazard ratio (“HR”) = 0.19 (95% confidence interval “95% CI” of 0.16, 0.23), p<0.0001. The percentage of patients receiving red blood cell transfusions during the first year of treatment was also significantly lower in the roxadustat arm (5.2%) as compared to the placebo arm (15.4%) (HR (95% CI) = 0.26 (0.21, 0.32), p<0.0001).

Reduction of Decline in Kidney Function as Measured by eGFR

In a post hoc subgroup analysis of 2,438 non-dialysis patients with baseline eGFR≥15, the one-year decline in estimated glomerular filtration rate (“eGFR,” a measure of the filtration function of kidney and renal disease progression) in roxadustat-treated patients (-2.8) was lower than that in placebo treated patients (-4.4), with a treatment difference of 1.6 mL/min/1.73m 2.

Reduction of LDL Cholesterol

In the pooled non-dialysis patients, roxadustat lowered low-density lipoproteins (“LDL”), with a mean change from baseline of -17.06 mg/dL compared to an increase of 1.30 mg/dL for placebo patients, a significant treatment difference of -19.83 mg/dL (p<0.0001).

Improvements in Quality of Life Measures

We have also observed improvements in quality of life. In the pooled analysis from the three non-dialysis studies, we observed statistically significant improvements from baseline to Week 12 in quality of life endpoints, including SF-36 Vitality subscale (p=0.0002), SF-36 Physical Functioning subscale (p=0.0369), FACT-AN Anemia subscale (p=0.0012), FACT-AN Total score (p=0.0056), and EQ-5D-SL VAS score (p=0.0005) when comparing roxadustat to placebo in CKD patients not on dialysis.

Pooled Efficacy Results in Dialysis Patients

Superior at Raising Hemoglobin

In the pooled dialysis studies (3,857 patients from HIMALAYAS, SIERRAS, and ROCKIES) the mean change in hemoglobin (from baseline to the average between Weeks 28-52) in roxadustat patients was significantly larger than in epoetin alfa patients (1.22 g/dL vs. 0.99 g/dL, p<0.001).

Efficacy at Raising Hemoglobin in Patients with Inflammation

In a subgroup of dialysis patients with inflammation (C-reactive protein (“CRP”) levels over 4.9 mg/L), the mean change in hemoglobin (from baseline to the average between Weeks 28-52) was significantly higher in roxadustat-treated patients (1.29 g/dL) than epoetin alfa treated patients (0.96 g/dL, p<0.0001).

Lower Intravenous (“IV”) Iron Requirements

In the dialysis CKD patient population. Diabetespool, less mean monthly IV iron supplementation was required at Weeks 28-52 in patients receiving roxadustat versus patients receiving epoetin alfa in pooled analysis, p< 0.0001.

Reduction In Transfusion Risk

In the dialysis pool, during the first year of treatment, patients in the roxadustat arm had a lower transfusion risk (9.5%) as compared to the epoetin alfa arm (12.8%) (HR (95% CI) = 0.82 (0.679, 0.997), p=0.046).

Pooled Cardiovascular Safety Results

In the U.S., the primary safety endpoint is time to first Major Adverse Cardiovascular Event (“MACE”), a composite endpoint of all-cause mortality, stroke and hypertension aremyocardial infarction. In Europe, the leading causesprimary safety endpoint is the time to first MACE+ (“MACE+”) which, in addition to the components in MACE, also includes hospitalization due to heart failure or unstable angina. However, the FDA in the U.S., and the EMA in Europe, will each review MACE, MACE+, and all-cause mortality separately, in addition to other endpoints.

The below cardiovascular safety analyses reflect the pooling strategy and analytical approach we agreed on with the FDA. Similar sets of secondary CKD. Although weanalyses will be submitted to the EMA to serve as the basis for potential approval in dialysis and non-dialysis in Europe, and additional supportive analyses and sensitivity analyses as well as subgroup analyses were also included in the NDA and will be included in the MAA. However, the FDA and EMA will each conduct their own benefit-risk analysis and may use additional statistical analyses other than those agreed with the FDA or set forth below.

Non-Dialysis - Pooled Cardiovascular Safety Data

In our pre-NDA meeting, the FDA agreed that the intent-to-treat analyses followed for long-term safety results would be our primary cardiovascular safety analysis method for non-dialysis in the U.S. as it uses on-treatment and post treatment long term follow-up (until a common study end date) to account for the higher drop-out rate in the placebo arm. The figure below shows that in the 4,270 pooled non-dialysis patients (OLYMPUS, ANDES, and ALPS), the risk of MACE, MACE+, and all-cause mortality in roxadustat patients were comparable to that in placebo patients based on a reference non-inferiority margin of 1.3.  

Dialysis - Pooled Cardiovascular Safety Data

In the pooled on-treatment analysis of 3,880 dialysis patients (HIMALAYAS, SIERRAS, and ROCKIES), the risk of MACE and all-cause mortality in roxadustat patients were not increased (based on a reference non-inferiority margin of 1.3), and roxadustat lowered the risk of MACE+ by 14% compared to the active comparator epoetin alfa, based on a hazard ratio of 0.86 and an upper bound of 95% CI under 1.0. The hazard ratios represent a point estimate approximately 36% of diabetic and 20% of hypertensive CKDrelative risk.  

Incident Dialysis Subgroup - Pooled Cardiovascular Safety Data

In this program, incident dialysis patients are anemic (Hb<12 g/dL), we believe the majority of these patients are currently untreated for anemia since they are under the care of primary care, family practice physicians, and other non-nephrology specialists, such as endocrinologists, diabetologists, cardiologists, and internists, where ESA therapies are not readily available.

We believe thatthose who started participation in roxadustat may provide a safer option to address the CIA market, which was once comparable in size to the dialysis-dependent CKD anemia market. In addition, other types of anemias, including anemia related to inflammatory diseases, MDS, and surgical procedures requiring transfusions that are not addressed adequately with currently available therapies may be addressable opportunities.

To maximize the commercial potential for roxadustat, we incorporated several unique elements into our Phase 3 program. We have performed the first placebo-controlled Phase 3 studies within their first four months of dialysis initiation. In this clinically important subgroup of 1,526 incident dialysis patients, roxadustat reduced the risk of MACE by 30% and MACE+ by 34%, with a trend towards lower all-cause mortality. The lower MACE and MACE+ risks (compared to epoetin alfa) are based on hazard ratios of 0.70 and 0.66, respectively, with the upper bound of 95% CI under 1.0 in non-dialysis CKDboth. We believe this incident dialysis subpopulation is the appropriate setting for comparison of roxadustat versus epoetin alfa since most incident dialysis patients were ESA-naïve or have had only limited exposure to potentially demonstrateESAs prior to study entry. In addition, the benefitsinitiation of anemia therapy in this incident dialysis subgroup resembles clinical practice as the vast majority of US patients start anemia therapy early in dialysis treatment (during the first four months of treatment).  

Non-Dialysis CKD Patients (ANDES) – FibroGen

ANDES is a 922-patient Phase 3, randomized, double-blinded, placebo-controlled trial designed to evaluate the efficacy and safety of roxadustat vs. placebo for the treatment of anemia in patients with later stage CKD (Stages 3, 4 or 5) who are not dialysis-dependent.

U.S. primary efficacy endpoint: roxadustat was superior to placebo in mean hemoglobin change from baseline to the average over Weeks 28 to 52 (2.00 vs. 0.16 g/dL, respectively, p<0.0001).

Europe primary efficacy endpoint: a higher proportion of roxadustat-treated patients (86.0%) achieved a hemoglobin response (defined as achieving a hemoglobin level of at least 11 g/dL on two consecutive visits during the first 24-weeks of treatment and a hemoglobin increase of at least 1.0 g/dL in subjects with baseline hemoglobin >8.0 g/dL, or an increase of at least 2.0 g/dL in subjects with baseline hemoglobin ≤8.0 g/dL), as compared to placebo (6.6%), p<0.0001.

The proportion of subjects who received any rescue therapy (blood/red blood cell transfusion, ESA use, or IV iron) in the first 52 weeks of treatment was 8.9% in the roxadustat arm vs. 28.9% in the placebo arm (HR (95% CI) = 0.19 (0.138, 0.276), p<0.0001). The proportion of subjects who received blood/red blood cell transfusion in the first 52 weeks of treatment was 5.6% in the roxadustat arm vs. 15.4% in the placebo arm (HR (95% CI) = 0.26 (0.165, 0.406), p<0.0001). 

The mean change in LDL cholesterol from baseline to average over Weeks 12-28 was -18.48 mg/dL (n=564) in the roxadustat arm vs. 0.22 mg/dL (n=269) in the placebo arm, with a treatment difference of -17.26 mg/dL (p<0.0001).

In this study, roxadustat-treated patients had a sustained reduction in hepcidin whereas placebo patients did not have a reduction in hepcidin. The mean change from baseline to Week 44 was -22.1μg/L in the roxadustat arm vs. 3.88 μg/L in the placebo arm, for a treatment difference between the two arms of -25.71 μg/L (95% CI: -38.523, -12.903).

In this study, subjects in the roxadustat arm had a substantially higher overall study drug exposure compared to subjects in the placebo arm. Study drug discontinuation was higher in the placebo arm compared to roxadustat arm, and the relative difference in discontinuation rates was especially pronounced in the lowest baseline eGFR category. The overall exposure-adjusted safety profile of roxadustat observed during this study was comparable with placebo and consistent with that expected in the CKD study population. The most commonly reported adverse events with roxadustat in this trial were nausea, hyperkalemia, constipation, and hypertension.

Non-Dialysis CKD Patients (ALPS) – Astellas

ALPS is Astellas’ Phase 3, randomized, double-blind, placebo-controlled study of the efficacy and safety of roxadustat for the treatment of anemia in CKD in 597 patients not on dialysis. The trial met its primary endpoints by demonstrating superiority in efficacy vs. placebo in terms of hemoglobin change from baseline at Weeks 28 to 52 (1.988 for roxadustat vs 0.406 for placebo, p<0.001).

Roxadustat was superior to placebo in its ability to lower LDL from baseline with an LS mean difference of -0.701 mmol/L (95% CI: -0.83, -0.57). Roxadustat was superior to placebo in delaying the need for rescue therapy (HR (95%CI) = 0.238 (0.17, 0.33), p<0.001).

The safety profile observed in this study was in line with the expected event profile in non-dialysis patients. Common adverse events in both treatment groups were ESRD, hypertension, peripheral edema, and decreased glomerular filtration rate.

Non-Dialysis CKD Patients (OLYMPUS) – AstraZeneca

OLYMPUS is AstraZeneca’s Phase 3, randomized, double-blinded, placebo-controlled trial designed to evaluate the efficacy and safety of roxadustat vs. placebo for the treatment of patients with anemia in CKD Stages 3, 4 or 5 whose disease progression is moderate to severe and who are non-dialysis-dependent. The trial in 2,781 patients met its primary efficacy endpoint by demonstrating a statistically-significant improvement in mean change from baseline in hemoglobin levels averaged over Weeks 28 to 52 (1.75 g/dL) as compared with Placebo (0.40 g/dL).

Roxadustat also improved hemoglobin levels from baseline in a subgroup of patients with inflammation (CRP>5 mg/L), with a statistically significant mean increase of 1.75 g/dL, compared to 0.62g/dL with placebo.

Overall safety findings are generally consistent with the non-dialysis patient population. For all patients, the most commonly reported adverse events in the intent-to-treat analysis set were ESRD, pneumonia, urinary tract infection and hypertension.

Stable Dialysis CKD Patients (PYRENEES) – Astellas

PYRENEES is Astellas’ Phase 3, randomized, active-controlled trial designed to assess the efficacy and safety of roxadustat vs. epoetin alfa or darbepoetin alfa, for the treatment of anemia in 838 patients with CKD who are dialysis-dependent. The trial met its primary efficacy endpoint: roxadustat was considered non-inferior to ESAs based on the mean change from baseline in average hemoglobin levels at Weeks 28 to 52 (0.397 vs 0.183; non-inferiority margin = -0.75).

Roxadustat was superior to ESAs in its ability to lower LDL from baseline with an LS mean difference of -0.377 mmol/L (95% CI: -0.451, -0.304). Roxadustat was superior to ESAs in reducing the need for monthly IV iron use (LS mean difference (95%CI) = -31.9 mg (-41.4, -22.4), p<0.001).

The safety profile observed in this study was in line with the expected event profile in dialysis patients. There was a greater proportion of deaths in the roxadustat treatment group compared with the ESA group; however, the study was not powered to assess risk of MACE events or death, as compared to the pooled analysis above. Common adverse events in both treatment groups were hypertension, arteriovenous fistula thrombosis, headache, and diarrhea.

Stable and Incident Dialysis CKD Patients (ROCKIES) – AstraZeneca

ROCKIES is AstraZeneca’s Phase 3, randomized, open-label, active-controlled trial designed to assess the efficacy and safety of roxadustat vs. epoetin alfa, for the treatment of anemia in patients with CKD who are dialysis-dependent. The trial in 2,133 patients met its primary efficacy endpoint by demonstrating a statistically-significant improvement in mean change from baseline in hemoglobin levels averaged over Weeks 28 to 52 (0.77 g/dL) compared with epoetin alfa (0.68 g/dL).

Roxadustat also improved hemoglobin levels from baseline in a subgroup of patients with inflammation (CRP>5 mg/L, demonstrating a statistically significant improvement with a mean increase of 0.80 g/dL compared to 0.59 g/dL with epoetin alfa. Patients treated with roxadustat used less monthly IV iron (mean = 59mg) compared to those treated with epoetin alfa (mean = 91mg) from Week 36 to the end of the study.

Adverse events with roxadustat were generally similar to those seen in patients treated with epoetin alfa and commonly found in dialysis patients. In roxadustat-treated patients, the most commonly reported adverse events were diarrhea, hypertension, pneumonia, headache, and arteriovenous fistula thrombosis.

Stable and Incident Dialysis CKD Patients Study (SIERRAS) – FibroGen

SIERRAS is a 741-patient U.S. Phase 3, randomized, open-label, active-controlled trial to assess the efficacy and safety of roxadustat compared to placebo. We haveepoetin alfa for the treatment of anemia in dialysis CKD patients who were receiving stable doses of ESA prior to study participation.

U.S. primary efficacy endpoint: the mean hemoglobin change from baseline to the average over Weeks 28 to 52 was 0.39 g/dL (roxadustat) vs. -0.09 g/dL (epoetin alfa), a least squares mean treatment difference of 0.48 g/dL (95% CI 0.37, 0.59). Roxadustat met the non-inferiority criteria as the lower bound of 95% CI was well above the non-inferiority margin of ‑0.75 g/dL. Roxadustat also performedachieved superiority, p<0.0001.

Europe primary efficacy endpoint: the largestmean hemoglobin change from baseline to the average over Weeks 28 to 36 was 0.54 g/dL (roxadustat) vs. -0.03 g/dL (epoetin alfa), a least squares mean treatment difference of 0.55 g/dL with a 95% CI (0.40, 0.69). Roxadustat met the non-inferiority criteria as the lower bound of the 95% CI was well above the non-inferiority margin of -0.75 g/dL. Roxadustat also achieved superiority over epoetin alfa, p<0.0001.

As seen in the figures below, in patients with inflammation (CRP>4.9 mg/L), roxadustat doses for maintaining hemoglobin levels were comparable to those with normal CRP and were stable over time as the effect on hemoglobin was durable, whereas epoetin alfa patients required higher mean doses in patients with inflammation (CRP>4.9 mg/L), doses which increased by approximately 50% from baseline after about one year. In these patients with inflammation (CRP>4.9 mg/L) mean change in hemoglobin from baseline to Week 18-24 was 0.61 g/dL in roxadustat vs. -0.03 g/dL in the epoetin alfa group, p<0.0001.

Subjects in the roxadustat group received lower mean IV iron during Weeks 28 to 52 than subjects in the epoetin alfa group (p=0.00091). Roxadustat-treated patients had a greater reduction in hepcidin as compared to ESA-treated patients. Additionally, a lower proportion of subjects on roxadustat received a red blood cell transfusion during treatment than the epoetin alfa group (12.5% and 21.1%, respectively, p=0.0337), with reduction in red blood cell transfusion risk by 33% compared with epoetin alfa; HR (95% CI) = 0.67 (0.466, 0.970), p=0.0337.

Mean LDL cholesterol levels decreased in the roxadustat group from baseline to the average over Weeks 12 to 28 (-13.70 mg/dL) but increased in the epoetin alfa group (1.23 mg/dL) with a treatment difference of -14.67 mg/dL (p<0.0001).

The incidence of treatment emergent adverse events was comparable in the roxadustat and epoetin alfa arms and were generally consistent with those typically expected in study patient population of ESRD on chronic dialysis therapy. The most commonly reported adverse events with roxadustat in this trial were nausea, hypertension, vomiting, and hyperkalemia.

Incident Dialysis CKD Patients Study (HIMALAYAS) – FibroGen

HIMALAYAS is a 1,043-patient Phase 3 study in incident dialysis anemia patients, who are atrandomized, open-label, active-controlled trial to assess the highest risk for death,efficacy and are the most difficult patients to stabilize and treat for anemia in CKD. Based on data from our Phase 2 studies, we believe that roxadustat may offer a safer alternative to ESAs for this particularly vulnerable patient population. We are also evaluating the cardiovascular safety of roxadustat compared to placeboepoetin alfa, an ESA, for the treatment of anemia in non-dialysis CKD patients who have newly initiated dialysis treatment for ESRD and have had minimal or no exposure to an ESA prior to study participation.

U.S. primary efficacy endpoint: the mean hemoglobin change from baseline to the average over Weeks 28 to 52 was 2.57 g/dL (roxadustat) vs. 2.36 g/dL (epoetin alfa), a least squares mean difference of 0.18 g/dL, with the 95% CI of (0.08, 0.29). The non-inferiority criteria was met as the lower bound of the 95% CI was well above the non-inferiority margin of -0.75 g/dL, and superiority over epoetin alfa was also achieved, p=0.0005. In subgroup analyses, roxadustat was also superior to epoetin alfa in hemoglobin change from baseline regardless of iron repletion and inflammation status.

Europe primary efficacy endpoint: a higher proportion of roxadustat-treated patients (88.2%) achieved a hemoglobin response (defined as achieving a hemoglobin level of at least 11 g/dL on two consecutive visits during the first 24-weeks of treatment and a hemoglobin increase of at least 1.0 g/dL in subjects with baseline hemoglobin >8.0 g/dL, or an increase of at least 2.0 g/dL in subjects with baseline hemoglobin ≤8.0 g/dL), as compared to an 84.4% responder rate in the epoetin alfa arm, with the lower bound of the 95% CI (-0.7%, 7.7%) of the treatment difference in responder rate well above the non-inferiority margin of -15%.

Roxadustat-treated patients had a statistically significant reduction in hepcidin, a key regulator of iron metabolism, as compared to ESA-treated patients. Separately, we are evaluating cardiovascularRoxadustat was shown to increase hemoglobin regardless of baseline inflammation status.

The most commonly reported adverse events with roxadustat in this trial were hypertension, diarrhea, and muscle spasms. The safety profile of roxadustat compared to ESA in the dialysis population of CKD patients.

Phase 1 and Phase 2 Clinical Trials

We have an extensive roxadustat clinical pharmacology program which includes many completed Phase 1 studies. Our Phase 2 program includes eight roxadustat studies, four in CKD non-dialysis patients and four in CKD dialysis patients, which achieved the following objectives:

The following chart summarizes the design of our completed Phase 2 studies outside of Japan and China and the primary objectives of each study.

Completed Phase 2 Studies

*Study conducted by Astellas

QW = weekly; BIW = two times per week; TIW = three times per week

Safety Summary

In addition to the more than 1,100 subjects who have been exposed to roxadustat in Phase 1 and Phase 2 clinical studies, our Phase 3 program has studied roxadustat in over 11,000 patients globally. The preliminary Phase 3 safety analyses reported have shown an overall safety profilethis study was consistent with the results observed infrom prior roxadustat studies. The adverse events reported are consistent with those expected in these study populations with similar background diseases. The pooled safety analyses, including MACE for CKD in both non-dialysis and dialysis populations in the U.S. and EU Phase 3 programs, are anticipated to be completed in the second quarter of 2019.  

ROXADUSTAT FOR THE TREATMENT OF ANEMIA IN CHRONIC KIDNEY DISEASE IN CHINA

RoxadustatIn August 2019, roxadustat (China tradename: 爱瑞卓^®) received NDA approvalmarketing authorization in December 2018 from the NMPAChina for the treatment of anemia caused by CKD in dialysisnon-dialysis-dependent patients. Treatment for anemia caused by CKD in dialysis-dependent patients was approved in 2018.

In July 2019, results from our two China Phase 3 clinical trials were published in the New England Journal of Medicine.

In December 2019, roxadustat was included on the updated National Reimbursement Drug List (“NRDL”) released by China’s National Healthcare Security Administration. Roxadustat is included on the first HIF-PH inhibitor to be approved, for any indication, anywhere in the world. We believe this is the first time that China became the first-in-world approval country for a first-in-class drug. We are planning to launch roxadustat in China in the third quarter of 2019.

We believe there is a particularly significant unmet medical needNRDL for the treatment of anemia in CKD.  

Market Opportunity

The currently available forms of treatment in China for anemia in CKD include ESAs, oral iron, intravenous iron, traditional Chinese medicine, and combinations thereof. ESAs are the largest segment, which we estimate to be approximately $275 million in sales, or approximately 80% of the total ESA market based on data from IQVIA China Hospital Pharmaceutical Audit. With the unique benefits of roxadustat to treat previously unaddressable patient populations, we believe the overall CKD anemia market will increase.

China is experiencing epidemiological changes in metabolic diseases due to economic development, urbanization and an aging population. Diabetes and hypertension are the leading causes of CKD in China. Specifically, anemia is undertreated in the rapidlyChina, and rates have been growing population of dialysis patients. In the non-dialysis population, only a small percentage of patients receive anemia treatment, and those who do receive only a minimal level, including patients who are eligible for dialysis and are severely anemic. In the context of the rapidly growing Chinese pharmaceutical market, weover past two decades. We believe that the demand for anemia therapy will continue to grow as a result of an expanding CKD population, as well as the central government’s mandate to make dialysis, which is still in the early stages of infrastructure development, more available through expansion of government reimbursement and build-out of dialysis facilities. The Chinese government has also put pharmaceutical innovation as a top priority for the country. As the standard of living improves in China, the demand for access to innovative drugs increases. In this context, we believe that roxadustat is a particularly promising product for this market.

FibroGen applied for market approval of roxadustat in China as a Domestic Class I innovative drug. This China-specific pathway is independent of any U.S., EU or Japan approval. We expect the population of non-dialysis CKD patients to be added to the roxadustat label in mid-2019 pending scheduling and completion of the standard Phase 3 clinical site inspections by the China Food and Drug Inspection (“CFDI”) under the NMPA.

As part of the approval, we have committed to a 2,000-patient post-approval safety study, which is a mandatory regulatory requirement of approved Domestic Class 1 innovative drugs.

Phase 3 Studies in China

In January 2017, we reported topline results from the two China Phase 3 studies of roxadustat in CKD anemia:

Study 4592-808: Eight-Week Placebo-Controlled Portion of 26-Week Correction in China Non-Dialysis CKD Patients

In the double-blind, placebo-controlled eight-week portion of the 26-week clinical trial of CKD patients not on dialysis in China, 151 anemia patients were randomized 2:1 to receive roxadustat (n=101) or placebo (n=50). Roxadustat met its primary efficacy endpoint of correcting anemia, by achieving a statistically significant increase in hemoglobin levels compared to placebo over eight weeks. Furthermore, the secondary endpoint of hemoglobin response was met as hemoglobin response was achieved by a higher proportion of patients in the roxadustat arm than in the placebo arm.

Roxadustat-treated patients achieved a mean hemoglobin increase of 1.9g/dL from baseline (8.9g/dL) over eight weeks of treatment vs. a mean change in hemoglobin of -0.4g/dL (from 8.9 g/dL baseline) in the placebo arm; the least square mean (“LS Mean”) difference of the two arms is significant, p<0.000000000000001.

A significantly higher proportion of roxadustat patients achieved hemoglobin response (an increase ≥1g/dL from baseline) after eight weeks vs. placebo patients, 84.2% compared to 0.0% (p<0.000000000000001). Sixty-seven percent of the roxadustat-treated patients vs 6% of placebo- patients achieved hemoglobin correction to be at or above the desired range of Hb≥10 g/dL within eight weeks, p=0.000000000000077.

There was a significant increase in hemoglobin level from baseline at every weekly measurement between Weeks two to eight per figure below.

FGCL-4592-808: Mean (+/- SE) Change from Baseline in Hemoglobin (Hb)

After Week eight, placebo patients were converted to roxadustat treatment and patients originally in the roxadustat arm continued treatment through Week 26. Anemia correction and hemoglobin maintenance were observed up to Week 27.

FGCL-4592-808: Mean Change in Hemoglobin over Time in Phase 3 China Non-Dialysis CKD Patients (26 Weeks) Including Placebo Crossover to Roxadustat

In the 26-week portion of this China Phase 3 non-dialysis study, 97.6 % of patients who received up to 26 weeks of roxadustat achieved anemia correction with Hb ≥10.0g/dL. For patients who crossed over from placebo to roxadustat, there was an increase in mean hemoglobin levels over 18 weeks of roxadustat treatment, with mean hemoglobin increasing from 8.6 g/dL (averaged over Weeks seven to nine) to 10.8 g/dL (averaged over Weeks 23 to 27); a statistically significant increase (p <0.0001). Hemoglobin levels declined after Week 27 when patients were no longer receiving roxadustat, as illustrated by the figure above.

In the 26-week portion of this non-dialysis study, roxadustat was shown to increase hemoglobin regardless of baseline inflammation status: both in patients with inflammation (CRP >4.9 mg/L) and in patients without inflammation (CRP ≤4.9 mg/L).

The durability of roxadustat’s effect on hemoglobin levels was further supported by data from the subset of patients (n=23) who participated in the 52-week safety extension of this non-dialysis China Phase 3 study. Approximately 95% of the non-dialysis patients who completed the 52-week safety extension period maintained Hb ≥10.0g/dL at the end of treatment.

In addition, in the eight-week portion of this non-dialysis study, roxadustat led to significant reduction in serum hepcidin levels (-56.1 ng/mL for roxadustat patients vs -15.1 ng/mL for placebo, p=0.00000005). Anemia treatment with roxadustat was effective without the use of IV iron and there was no iron parameter (ferritin or TSAT) requirement for patients at study entry.

Study 4592-806: 26-Week Maintenance in China Dialysis-Dependent CKD Patients

In the Phase 3 CKD study, 304 patients (271 hemodialysis and 33 peritoneal dialysis patients) previously on epoetin alfa were randomized to and treated with roxadustat (n=204) or epoetin alfa (n=100) for 26 weeks. Prior to randomization, patients in this study were previously treated with stable doses of EPO: 7% patients were treated with 利血宝® (“Li Xue Bao”) epoetin alfa, manufactured in Japan and marketed in China by Kyowa Hakko Kirin China Pharmaceutical Co., Ltd. (“Kirin EPO”) and 93% of patients were treated with one of eight other brands of EPO commercially available in China. All the patients randomized to the active comparator arm were treated with Kirin EPO.

The primary endpoint was mean change in hemoglobin from baseline to the average level during the final five weeks of the 26-week treatment period. Roxadustat met the predefined non-inferiority criterion for this primary endpoint in comparison to Kirin EPO in both full analysis set and per protocol set (“PPS”) analysis. In a pre-specified sequential analysis, roxadustat also showed statistical superiority over Kirin EPO for the primary endpoint, the mean hemoglobin increase observed in the roxadustat arm was higher than in the Kirin EPO arm, 0.75g/dL vs. 0.46g/dL, with a significant difference in the LS Mean hemoglobin change in the two treatment arms, p=0.037, in PPS analysis; baseline hemoglobin was 10.4 g/dL in both treatment arms.

Anemia in patients treated with roxadustat was corrected earlier than in Kirin EPO patients, and roxadustat maintained hemoglobin levels at a higher level (between 10-12 g/dL) than those receiving Kirin EPO despite the increase in average dosediabetes and hypertension prevalence will result in an increase of Kirin EPO (relative to average baseline EPO dose) received by patients in the comparator arm (as shown in the inflammation figures below).

FGCL-4592-806: Mean (+/- SE) Change from Baseline in Hemoglobin (Hb)

We performed a subgroup analysis based on patients’ levels of inflammation, a common co-morbidity with CKD anemia patients. Roxadustat raised and maintained hemoglobin levels in patients with inflammation (defined as having baseline CRP levels >ULN 4.9 µg/L) at doses that were equal to or lower than those received by the patients without inflammation. In contrast, patients with inflammation in the Kirin EPO arm realized lower hemoglobin levels than patients with normal CRP levels (despite receiving higher doses of EPO than patients without inflammation), reflecting roxadustat’s potential to overcome the hyporesponsiveness seen in ESA treatment, as discussed in the section above titled “Limitations of the Current Standard of Care for Anemia in CKD”. The two figures below show mean change in hemoglobin with mean patient dose, and mean hemoglobin levels with mean patient dose, in patients with and without inflammation.

FGCL-4592-806: Mean (+/- SE) Change in Hemoglobin (Hb) from Baseline and

Mean (+/- SE) Dose for Patients with and without Inflammation

FGCL-4592-806: Mean (+/- SE) Hemoglobin (Hb) and

Mean (+/- SE) Dose for Patients with and without Inflammation

One hundred and twelve roxadustat patients continued treatment in a safety extension study for a total of 52 weeks. Approximately 96% of the dialysis patients who completed the 52-week safety extension period maintained Hb ≥10.0 g/dL at the end of treatment.

Hepcidin, the key hormone that regulates iron metabolism, is generally elevated and contributory to EPO hyporesponsiveness in patients with inflammation. Consistent with previously reported Phase 2 CKD data from the U.S. and China, a reduction of serum hepcidin levels was observed in our two China Phase 3 studies of roxadustat in CKD. In the Phase 3 dialysis study, the mean decrease in serum hepcidin levels from baseline to the end of 26 weeks of treatment was 30.2 ng/mL in the roxadustat arm vs. 2.2 ng/mL in the EPO comparator arm. In the Phase 3 non-dialysis study, the mean decrease in hepcidin levels at the end of 8-week double-blind treatment period was 56.1 ng/mL in roxadustat arm vs. 15.1 ng/mL in the placebo arm (p=0.00000005).

Roxadustat was generally well tolerated and there were no safety signals observed in the China Phase 3 clinical trials, including through the 52-week safety extension periods. There were no study drug-related deaths. The AEs and SAEs reported in the Phase 3 studies were generally representative of the underlying patient population and associated co-morbidities. Treatment of anemia with roxadustat in these Phase 3 clinical trials did not lead to an increase in blood pressure.

China Phase 2 Studies

We performed two Phase 2 studies in China, one trial in non-dialysis CKD patients, and another trial in CKD patients on dialysis. In these trials, hemoglobin correction in non-dialysis CKD patients and hemoglobin maintenance in dialysis CKD patients replicated the results seen in the U.S. trials. SAEs were progression of CKD, infection and high potassium levels and the most common adverse events were infections, high potassium levels, nausea and dizziness. There were no dose-related trends or imbalances in the nature of adverse events between patients treated with roxadustat compared to patients treated with either placebo (study 047) or epoetin alfa control (study 048) groups.

Market Opportunity

Addressable Patient Populations in China

Based on a large-scale cross-sectional survey performed between September 2009 and September 2010 published in the Lancet (Zhang, et al. Lancet (2012)), there are an estimated 119.5 million CKD patients in China. Based on the prevalence ratios, there were approximately 19 million patients in CKD stages 3, 4, or 5, which we have grouped into three categories: dialysis CKD patients; dialysis-eligible patients who need dialysis under treatment guidelines but are not dialyzed (“Dialysis-Eligible NDD-CKD”); and stages 3 and 4 patients, as well as stage 5 patients who are not eligible for dialysis (“Other NDD-CKD”).

Dialysis-Dependent CKD

Based on the latest estimates and published data, we believe there are approximatelyover 600,000 dialysis patients in China, making it the largest single-country dialysis population in the world. With the substantial growth rate of dialysis patients (over 10% per year from 2011 to 2017), the Ministry of Health and the Chinese Society of Nephrology have publicly recognized the need for further investment in dialysis infrastructure.  

The prevalence rate of CKD dialysis patients that have anemia (defined as hemoglobin < 10g/dL) is estimated to be over 90%.

Dialysis treatment is delivered in the form of hemodialysis or peritoneal dialysis. In China, approximately 85% of dialysis patients with CKD are on hemodialysis. Hemodialysis is performed primarily in dialysis clinics within hospitals, most of which are publicly owned. This is in contrast to the U.S. where freestanding dialysis centers located outside of hospitals is common practice. With recent regulatory changes, the number of privately owned dialysis clinics is growing at a rapid pace, a trend that has provided additional capacity to meet the growing demand. The remaining 15%14-15% of CKD patients (approximately 100,000) are on peritoneal dialysis, which is self-administered at home by patients.patients, a setting roxadustat, with its oral administration, is particularly well-suited for roxadustat. Peritoneal dialysis patients typically visit their nephrologists on a monthly basis at the hospital for monitoring and follow-up.  The prevalence rate of

Non-Dialysis-Dependent CKD

We estimate that there are over 10 million Stage 3-5 non-dialysis CKD patients in China with anemia (defined as Hbhemoglobin < 12) in the dialysis population in China is estimated to be approximately 85%10g/dL).

Dialysis-Eligible NDD-CKD

Dialysis-Eligible NDD-CKD refers to patients who need dialysis under Chinese treatment guidelines but are not dialyzed. The Chinese treatment guidelines recommend initiation of dialysis at eGFR <10 mL/min/1.73m² (eGFR <15 mL/min/1.73m² for diabetic nephropathy patients). The number of Dialysis-Eligible NDD-CKD patients in China has been consistently estimated at 1-2 million. While the size of the dialysis population in China has been growing rapidly, it nevertheless falls far short of the number who require dialysis treatment. We believe the addressable population of non-dialysis patients with anemia (anemic patients that this Dialysis-Eligible NDD-CKDhave been diagnosed and treated for CKD) is approximately 2-3 million, with 1-2 million in Stages 3 and 4 and 1 million in Stage 5 non-dialysis. This Stage 5 population that is dialysis-eligible but not receiving dialysis is characteristic of developing markets like China, and at riskpresents a particular opportunity for roxadustat, as many patients have severe anemia.  The prevalence rate of anemia (defined as Hb <12) in this population in China is estimated to be approximately 90%.

Other NDD-CKD

Other NDD-CKD refers to the sub-groups of CKD patients within non-dialysis who are earlier stage: CKD patients in stage 3 and stage 4, as well as stage 5 who are not eligible for dialysis. As with the Dialysis-Eligible NDD-CKD population, the Other NDD-CKD population is largely untreated with ESAs. Some of these patients receive medical care in endocrinology, cardiology or internal medicine clinics outside of nephrology, where they are treated for their primary disease. The prevalence rate of anemia (defined as Hb <12 for women and <13 for men) in this population in China is estimated to be approximately 50% for Stage 3 and 80% for Stage 4.

Unmet Medical Need and Roxadustat Differentiation in China

We believe there is a particularly significant unmet medical need for the treatment of anemia in CKD in China. Anemia is considered a risk multiplier for CKD patients and is commonly associated with increased rates of cardiovascular events, hospitalizations, CKD progression, and death. Several of the advantages that roxadustat, ouras an oral therapeutic, potentially offers over ESAs are particularly suited to address the unmet medical need in each of the three categories of CKD patients in China.

We believe there is chronic under-treatment of anemia within the CKD patient population on dialysis in China.China due in part to under-prescription of IV iron (often necessary for ESA treatment), and lack of efficacy in patients with inflammation. The most recent treatment guidelines published by the Chinese Society of Nephrology in 2018 recommended treatment to hemoglobin 11.0 g/dL to 12.0 g/dL. Even though over 70% of hemodialysis CKD patients, and approximately 60% of peritoneal dialysis CKD patients are treated with ESAs, based on the Chinese Renal Data System in 2015, less than 60% of dialysis patients reached 10.2 g/dL.

We believe many ofIn the factors that lead to under-treatment of anemia can be overcome with rsoxadustat:

Current ESA Market Size and DriversIn the context of Market Growth inthe rapidly growing China

China is the second largest pharmaceutical market, afterwe believe that the United States. Total Healthcare expendituresdemand for anemia therapy will continue to grow as a result of an expanding CKD population, as well as the central government’s mandate to make dialysis more available through government reimbursement and build-out of dialysis facilities. In addition, as the standard of living improves in China, have been estimatedthe demand for access to be approximately $640 billion in 2015. Total ESA sales in China were approximately $330 million in 2017, of which an estimated 80%, or approximately $275 million,innovative drugs increases. In this context, we believe that roxadustat is derived from CKD anemia sales, based on data from IQVIA China Hospital Pharmaceutical Audit (“CHPA”). The ESA market in China has grown at a 12% compound annual growth rate between 2013 and 2017 based on data from IQVIA CHPA.

In addition to anemia being largely untreated in the non-dialysis CKD population, the CKD population in China is growing steadily.particularly promising product for this market.

Commercialization

AstraZeneca is our commercialization partner for roxadustat in China. Under our collaboration agreement, AstraZeneca will lead commercialization activities and has responsibility for sales and marketing, and market access, and sales.access. FibroGen has responsibility for medical affairs, manufacturing (as the Marketing Authorization Holder), executing sales to distributors, and pharmacovigilance. FibroGen and AstraZeneca will work together to manage distribution.

Pricing

AstraZeneca Pricing and FibroGen have been working closelyReimbursement

In December 2019, roxadustat was included for the treatment of anemia in CKD on the updated NRDL released by China’s National Healthcare Security Administration. The list is effective for a standard two-year period from January 1, 2020 to determine pricing (bothDecember 31, 2021. The negotiated price for self-pay and reimbursement) that reflectsa roxadustat 50 mg capsule is RMB 95. Roxadustat will be subject to price re-negotiation at the value propositionend of roxadustat, including the differentiation of roxadustat in efficacy and other clinical outcomes, lack of routine IV iron supplementation, convenience against current standard of care, cost effectiveness, and affordability.

Reimbursement2021.

We believe reimbursement and hospital listing areis one of the two most critical market access factors for commercialization success in China.  

China, with the other being hospital listings. China is mostly a single-payor market with near universal healthcare provided by the government. Over 95% of the population receives healthcare coverage under one government-funded medical reimbursement plan or another, each with different levels of reimbursement. Commercial health insurance is available but is minimally adopted, and is seen as a supplement above and beyond government reimbursement.  

DialysisReimbursement for roxadustat will differ based on multiple factors including the CKD patient population (dialysis vs. non-dialysis), location, patient employment status, and if roxadustat is reimbursed under Critical Disease Insurance (CDI), where up to 90% of costs are covered. Dialysis-Eligible NDD-CKD and Other NDD-CKD treatment is covered under outpatient care, wherequalified into the “Critical Disease” or “Chronic Disease” insurance programs for such locations. We expect roxadustat reimbursement is generally lower, at an estimated 50-60%.

To obtain government reimbursement for a therapeutic, the government must agree to add it to the NRDL or the provincial reimbursement drug lists at a negotiated price (at times at a significant discount). Prior to this time, the market is self-pay, where patientsrates will be responsible for 100% of the launch price determined by the company. We believe the self-pay market in China is expanding, given the rise in personal income levels in the country. Nevertheless, as roxadustat could potentially address an unmet medical need for a much larger number of patients in China, securing reimbursement from the government is expected to be critical to widespread market adoption.

The government has committed to updating the NRDL in 2019. Previous updates to the NRDL occurred in 2017 and 2009. In addition, there were also NRDL price negotiations in 2018 for oncology drugs. Admission to the NRDL depends on a number of factors, including on-market experience, scale of patient adoption, physician endorsement, cost effectiveness and budget impact. Given that roxadustat was approved at the end of 2018, we may or may not qualify for the NRDL update in 2019. Provincial governments have some discretion to add roxadustat to provincial reimbursement drug lists. With or without beinglargely consistent with those ESAs listed on the NRDL, we can apply for inclusionNRDL. We believe in the provincial reimbursement drug listsnext few years and in many parts of selected provinces, which may take months, depending on the province.country, dialysis patients will generally be reimbursed for 80-90% of their costs for roxadustat and non-dialysis patients in the 50-70% range.

Hospital Listing

Government hospitals currently represent over 90% of the pharmaceutical market in China. In order forBefore roxadustat tocan be prescribed at a government hospital, which is 90% of the market in China, it has to be carried in the hospital formulary. The process of entry into the formulary is commonly referred to as “hospital listing”, and typically requires a long lead time. These decisions. Decisions are made on a hospital-by-hospital basis, with timing that can rangewhere hospital listing committees meet anywhere from every six months to every five years. Some hospitals also have temporary listing procedures thatTemporary listings can accelerate timing.  Private hospital and non-hospital pharmacies, which represent a small minoritybe used in the interim, where the head of the drugdepartment could place an ad-hoc order with the formulary for a single or handful of patients for small quantities of roxadustat. These market access constraints impact all drugs, not just roxadustat. Consistent with the experience of other product launches in China, do not requiresignificant market uptake is usually seen a formulary process to sell a drug. Whilefew years after launch, although in the opportunity forcase of roxadustat, remains significant,it could be sooner given these market access challenges, the rateinclusion in NRDL within 12 months of market uptake for a drug is typically modest in China.approval.

Tendering

Provincial and municipal government agencies will establishTendering is a provincial drug procurement agency to operatelevel procedure. For drugs with multiple brands, it is a mandatory collective tender process for purchases by government hospitals of a medicine included in provincial or local medicine procurement catalogs. The provincial or local medicine procurement catalogs are determined byIn the provincialcase of roxadustat, it is a more administrative process than for most drugs as roxadustat is currently the only drug procurement agency basedof its class (HIF-PHI) available on the National Essential Drugs List, the NDRL, hospital formularies, etc. Ifmarket. The tendering process of roxadustat has been includedis substantially complete in a government hospital formulary, the NDRL or the provincial reimbursement drug list, the relevant hospitals must participateall 31 provinces in collective tender processes for the purchase of roxadustat. During the collective tender process, the provincial drug procurement agency will establish a committee consisting of recognized pharmaceutical experts. The committee will assess the bids submitted by the various participating pharmaceutical manufacturers, taking into consideration, among other things, the quality and price of the drug product and the service and reputation of the manufacturer. Only drug products that have been selected in the collective tender processes may be purchased by participating hospitals. If we are unable to win purchase contracts through the collective tender processes in which we decide to participate, there will be limited demand for roxadustat, and sales revenues from roxadustat will be materially and adversely affected.China.

ROXADUSTAT FOR THE TREATMENT OF ANEMIA IN CHRONIC KIDNEY DISEASE IN JAPAN

Dialysis-Dependent CKD Patients in Japan

In September 2018, Astellas submitted an NDA2019, roxadustat (Evrenzo^®) was approved in Japan for roxadustat for the treatment of anemia associated with CKD in CKDdialysis patients. Our collaboration partner Astellas launched Evrenzo in November 2019, targeting healthcare providers that care for approximately 330,000 dialysis patients on dialysis based on positive results from four Phase 3 studies. We expectacross Japan.

In January 2020, Astellas to receivesubmitted a decision on the dialysissupplemental NDA in the second half of 2019. Topline results from these four Phase 3 studies are as follows:

Phase 3 Study 1517-CL-0307: Double-Blind Study in Hemodialysis

In 2018, Astellas and FibroGen reported results from Astellas’ Phase 3 study of roxadustat in 303 CKD hemodialysis patients with anemia. Average hemoglobin levels were effectively maintained at 10.99 g/dL during Weeks 18 to 24 in roxadustat-treated hemodialysis patients who had previously been treated with ESAs. The primary efficacy endpoint of change in average hemoglobin levels from baseline to Weeks 18 to 24 was -0.04 g/dL and -0.03 g/dL in the roxadustat-treated group and darbepoetin-treated group, respectively. The non-inferiority of roxadustat to darbepoetin alfa in change of average hemoglobin from baseline was confirmed as the lower bound of the 95% CI (-0.18, 0.15) of the treatment difference was greater than the pre-specified non-inferiority margin (-0.75 g/dL).

The hemoglobin maintenance rate (defined as the proportion of patients who achieved an average target hemoglobin level between 10.0 and 12.0 g/dL during Weeks 18 to 24) was 79% in roxadustat-treated patients and 83% in patients in the darbepoetin alfa arm. The hemoglobin maintenance rate of patients with at least one hemoglobin value during Weeks 18-24 was 95% in the roxadustat arm and 91% in the darbepetin alfa arm. Among patients taking roxadustat, serum iron, ferritin, and TSAT were clinically stable; and transferrin and TIBC increased through Week 4 and then remained stable. No remarkable changes in iron parameters occurred with darbepoetin alfa.

Roxadustat was well tolerated in this study, and the safety profile of roxadustat was consistent with that observed in previous studies both in dialysis and non-dialysis patients.

Phase 3 Study 1517-CL-0302: Open-Label Study in Peritoneal Dialysis Patients

In 2017, Astellas and FibroGen reported results from Astellas’ multi-center, open-label Phase 3 study of roxadustat in peritoneal dialysis CKD patients with anemia. This 24-week study enrolled a total of 56 peritoneal dialysis patients, of whom 43 patients had previously received ESAs (ESA-conversion patients), and 13 patients had not previously received ESAs (ESA-naïve patients). Roxadustat was well tolerated and shown to correct hemoglobin levels in ESA-naïve patients and maintain hemoglobin levels within the target range in both ESA-conversion patients and ESA-naïve patients.

The hemoglobin maintenance rate (defined as the proportion of patients who achieved an average target hemoglobin level between 10.0 and 12.0 g/dL during Weeks 18 to 24) was 92% in ESA-naïve patients and 74% in ESA-conversion patients. The hemoglobin maintenance rate of patients with at least one hemoglobin value during Weeks 18 to 24 was 92% in ESA-naïve patients and 87% in ESA-conversion patients. The mean of average hemoglobin levels reached during Weeks 18 to 24 was 11.05 g/dL in ESA-naïve patients and 10.93 g/dL in ESA-conversion patients. The mean change in hemoglobin from baseline to the average during Weeks 18 to 24 was 1.69 g/dL in ESA-naïve patients and 0.14 g/dL in ESA-conversion patients. The preliminary safety analysis for this trial is consistent with the safety profile of roxadustat in previous clinical trials.

Phase 3 Study 1517-CL-0308: Open-Label Study in ESA-Naïve Hemodialysis Patients

In 2018, Astellas completed its 24-week long multi-center, open-label, randomized, non-comparator Phase 3 study of roxadustat in 75 CKD ESA-naïve hemodialysis patients with anemia. The hemoglobin response rate at the end of treatment (defined as the proportion of patients who achieved a hemoglobin level ≥10.0 g/dL and a hemoglobin increase from baseline ≥ 1.0 g/dL) was 86.5% in patients randomized to a starting dose of 50 mg of roxadustat, and 89.2% in patients randomized to a starting dose of 70 mg of roxadustat.

Roxadustat was well tolerated in this study, and the results were consistent with the roxadustat safety profile observed to date.

Phase 3 Study 1517-CL-0312: Open-Label ESA-Conversion Study in Hemodialysis

In 2018, Astellas completed its 52-week, multi-center, open-label, non-comparator Phase 3 study of roxadustat in 164 CKD hemodialysis patients with anemia. This study was an ESA-conversion study. The hemoglobin maintenance rate (defined as the proportion of patients who achieved an average target hemoglobin level between 10.0 and 12.0 g/dL) was 79.1% during Weeks 18 to 24, and 71.2 % during Weeks 46 to 52.

Roxadustat was well tolerated in this study, and the results were consistent with the roxadustat safety profile observed to date.

Non-Dialysis-Dependent CKD Patients in Japan

Our partner Astellas has completed ASP-1517-314, one of the two non-dialysis CKD Phase 3 studies for Japan. The two studies are expected to serve as a basis for a supplemental NDA for the treatment of anemia in non-dialysis CKD patients.

Status with Regulatory Agencies

China

Roxadustat received NDA approvalpatients, supported by three clinical studies in December 2018 from the NMPA for the treatment of anemia caused by CKD in dialysis patients. In doing so, China became the first in-world approval country for a first-in-class (HIF-PH inhibitor) drug. We expect CKDmore than 500 Japanese non-dialysis patients to be added to the roxadustat label in mid-2019 pending scheduling and completion of the standard Phase 3 clinical site inspections by the CFDI.

Japan

In September 2018, Astellas submitted an NDA on roxadustat for the treatment ofwith anemia in CKD patients on dialysis. Astellas plans to submit an NDA for anemia for CKD patients not on dialysis upon completion of both non-dialysis CKD Phase 3 studies in Japan.

U.S. and Europe

In conjunctionassociated with our collaboration partners, we have completed the Phase 3 trials of roxadustat intended to support marketing authorization applications in the U.S. and EU for the treatment of anemia in CKD. We and our partners are in the process of preparing an NDA for submission to the FDA and an MAA for submission to the EMA in 2019.

Investigational New Drug and Clinical Trial Applications

Roxadustat is being studied under one Investigational New Drug Application (“IND”), and several Clinical Trial Applications (“CTAs”), all with a specified indication of treatment of anemia in CKD. We originally submitted the IND in the U.S. to the FDA in April 2006. Our collaboration partner, Astellas, submitted the CTA in Japan with the PMDA in June 2009. We and our collaboration partners Astellas and AstraZeneca have also submitted CTAs in Europe, Latin America, Canada, Russia, and Asia, beginning in 2013.

For the treatment of anemia in MDS patients, we have submitted an IND to the FDA in the U.S. with CTAs in Asia, Europe, and CTA to the NMPA in China in 2017.

ROXADUSTAT FOR THE TREATMENT OF CHEMOTHERAPY-INDUCED ANEMIA AND ANEMIA ASSOCIATED WITH MYELODYSPLASTIC SYNDROMES

Based on roxadustat’s mechanism of action and safety and efficacy profile to date, we believe it has the potential to treat anemia associated with many other conditions, including CIA and MDS.

Background of 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. 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.  

Approximately 40% of total solid tumor cancer patients, or approximately 6.8 million people, undergo chemotherapy each year globally, including 1.7 million in the U.S. and 3.2 million in China. Eighty percent of those patients in developed countries and 40% of patients in China develop CIA. 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 600,000 in the U.S. and 500,000 in China.

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. However, not all CIA patients respond to ESA therapy, which may be due to the etiology of their CIA or inflammatory comorbidity. 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 box warnings for ESAs in cancer populations in 2007, followed by the ESA Risk Evaluation and Mitigation Strategy (“REMS”) program.

Market Opportunity for Roxadustat in Chemotherapy-Induced Anemia

ESA sales for CIA dropped significantly in the U.S. since the reported safety risks of ESA use in cancer patients in 2006, from estimated $2.5 billion in 2006 to less than $0.5 billion in 2019. During the same period, the prevalence of diagnosed CIA remained at similar levels, and is expected to grow slightly as a marginal decline of chemotherapy use is offset by an aging population.

We believe that if our clinical program shows an acceptable safety and efficacy profile, roxadustat would have the potential to address anemia in this population of patients undergoing chemotherapy, including, potentially, those patients with concomitant inflammation.

Clinical Development of Roxadustat in Chemotherapy-Induced Anemia

We began a Phase 2 proof of concept clinical trial of roxadustat in the U.S. in CIA in the third quarter of 2019. This is a single-arm open label study investigating the efficacy and safety of roxadustat for the treatment of anemia in patients receiving myelosuppressive chemotherapy treatment for non-myeloid malignancies, with treatment duration of 16 weeks, and will enroll up to 100 patients.

Background of Anemia in MDSMyelodysplastic Syndromes

MDSMyelodysplastic syndromes are a diverse group of rarebone marrow disorders characterized by poorly formed or dysfunctionalineffective production of healthy blood cells and premature destruction of blood cells in the bone marrow, leading to anemia inanemia. In most cases. Anemia, a serious medical condition,MDS patients, the cause of the disease is associated with increased risks of hospitalization, cardiovascular complications, need for blood transfusions, exacerbation of other serious medical conditions, and death, and frequently leads to significant fatigue, cognitive dysfunction, and decreased quality of life.unknown.

MDS is regarded as the most prevalent form of acquired bone marrow failure syndrome in adults. However, the incidenceIncidence and prevalence of MDS are not yet well understood, and may be greatly underestimated, possibly due to under reporting and under diagnosis.underestimated. MDS diagnosis became reportable under the World Health Organization oncology classification system only in 2001. The

National Cancer Institute estimates approximately 4.9/100,000 people in the U.S. were diagnosed with MDS annually from 2007 to 2011, an increase from 3.3/100,000 annually for 2001, to 2003. 

The incidence rateand since then cases of MDS increases in older populations to 30.2/100,000 people among those 70 and 79 years of age, and further to 59.8/100,000 among those 80 years of age and older. The population-based registries are believed to have underestimated the incidence of MDS due to under diagnosis. It has been reported, using Medicare billing claims data, that the incidence of MDS in patients aged 65 years and older was approximately 162/100,000 as of 2003. tracked by cancer registries. 

The prevalence of MDS in the U.S. is estimated to be between 60,000 and 170,000, and continues to rise as more MDS therapies become available and patients are living longer with MDS.

In China, the incidence of We estimate that currently, approximately 70,000 patients are diagnosed with MDS has been estimated to be 1.51/100,000 in the adult population. This lower rate (relative to other major markets such as the U.S., Western Europe, and Japan) may be due to under diagnosis.United States.

Anemia is the most common clinical presentation in MDS, leading to red blood cell transfusionsseen in approximately 80% of MDS patients, and related risks such as iron overloadproducing symptoms, including fatigue, weakness, exercise intolerance, shortness of breath, dizziness, and significant impairment of the quality of life in affected patients. Dependency on red blood cell transfusions is associated with shorter life expectancy in patients with MDS.cognitive impairment.

Limitations of the Current Standard of Care for MDS and Anemia Associated with MDS

As a bone marrow disorder MDS patients often rely on repeated blood transfusions. Currently, there is no drug approved for the treatment of anemia in MDS patients in China or in the U.S., and transfusions are not readily accessible in China due to limited blood supply.Myelodysplastic Syndromes

Stem cell transplantationtransplant is the only treatment that can curepotentially curative therapy for MDS, but it is available to only a small fraction of higher risk young MDSnot feasible in most patients who are eligible for bone marrow transplant. For these patients, treatment is often delayed until the disease progresses because of the known risks associated with transplantation and low success rates. This treatment option is unavailable to the majority of MDS patients who are older or who are deemed low risk.

There are limited approved pharmacologic treatments for MDS. The FDA-approved treatments for MDS include the aza‑nucleosides (HMA) 5-azacitidine and decitabine which are typically used for treating intermediate or higher risk patients (based on the International Prognostic Scoring System). Further, these therapies are not approved for lower risk MDS patients because of their significant undesirable effects on bone marrow. These hypomethylating agents can achieve remission in a minority of the treated patients for a short duration of time before progression to acute myeloid leukemia, and are associated with significant levels of neutropenia and thrombocytopenia on top of those caused by the underlying disease. Revlimid^® (lenalidomide) is approved in the U.S. and in the EU only for treating MDS patients with 5q (del), a condition present in only 7% to 15% of MDS patients in whom a region of DNA has been deleted on one of the pair of chromosome 5 in the patient’s immature red blood cells. With a 61% to 67% responder rate in this sub-population, treatment with lenalidomide is associated with significant side effects such as neutropenia (55% to 75%) and thrombocytopenia (41% to 44%).

While there are no approved therapies for anemia of MDS in the U.S., treatment guidelines recommend the use of ESAs to address anemia in lower risk MDS patients that have a low EPO level. ESA doses used for MDS anemia are generally five times the doses typically used for treating anemia in CKD patients, and the response rates are as low as 20% to 32% in lower risk MDS patients. The low response rate and high ESA doses typical in MDS are primarily due to inflammation, which contributes to ESA-resistancetheir advanced age and elevated hepcidin levels, functional iron deficiency, and the underlying progressive dysfunctionfrailty.  The high rate of the bone marrow. Patients who initially respond to ESAs generally will develop resistance as their MDS progresses and become dependent on blood transfusions.

Red blood cell transfusion is generally reserved for severe anemia in MDS patients. In the U.S.,leaves recurring red blood cell transfusions are usually used when Hb <9.0 g/dL or lower. However, in China,as the hemoglobin threshold for red blood cell transfusion is as low as <6.0 g/dLmainstay of care in MDS patients. Transfusion can result in direct organ damage through transfusional iron overload.  Transfusion dependent MDS patients duesuffer higher rates of cardiac events, infections and transformation to limited blood supply. Frequentacute 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. Patients receiving red blood cell transfusions impose both financialmay require an iron chelator in order to address toxic elements of iron overload such as lipid peroxidation and time burdens oncell membrane, protein, DNA, and organ damage.  

Lower-risk MDS patients represent approximately 77% of total diagnosed MDS population. Most national and payors since frequent visits tointernational guidelines recommend use of ESAs for anemia only in lower-risk MDS patients presenting with symptomatic anemia with serum EPO levels at or below 500 mU/mL.  

Even among the hospital for blood tests and transfusions are required. More importantly, transfusions are associated with riskeligible subpopulation, the effectiveness of development of alloantibodies, which is related to the number of prior transfusions, and the transmission of infectious agents, a particular concernESAs 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 who may have neutropeniahad low serum EPO levels, and compromised immune systems. Most notably, chronic red blood cell transfusions result in lower-risk categories. New strategies to broaden the eligible population, improve anemia and maintain adequate iron overload where iron can damage the heart, liver and other organs,balance, as well as have a negative impact on clonal evolution and on hematopoietic stem cell therapy outcome. Iron overload from red blood cellavoidance of transfusions, is thought to be inhibitory on erythropoiesis and excess iron impacts hepcidin regulation causing a self-reinforcing feedback loop on erythropoiesis. For these reasons,are highly desired in managing patients with iron overload are treated with iron chelating agentMDS.  

Market Opportunity for Roxadustat in an attempt to reduce iron toxicity, but gastrointestinal and renal side effects lead to one‑year discontinuation rate of iron chelator as high as 49%. Given these risk factors, red blood cell transfusion dependency is a strong non-favorable prognostic factor for survival of MDS patients.

The disease burden of anemia in MDS is high. Severe anemia interferes with the quality of life of patients and their ability to work, in addition to damaging other organ systems due to insufficient oxygen delivery to tissues. When red blood cell transfusions become necessary to sustain bodily functions, the risk of transfusion-related complications can further threaten MDS patients’ lives and well-being.

Our SolutionMyelodysplastic Syndromes

We believe there is a significant need for a safer, more effective, and more convenient approachoption to address anemia in patients with lower-risk MDS. Roxadustat, our orally administered small molecule HIF-PH inhibitor, stimulates the body’s natural mechanism of red blood cell production and iron hemostasis based on cellular-level oxygen-sensing and iron-regulation mechanisms. RoxadustatUnlike ESAs which are limited to providing exogenous EPO, roxadustat activates a coordinated erythropoietic response in the body that includes the stimulation of red blood cell progenitors, an increase in the body’s production of endogenous EPO, and an increase in iron availability for hemoglobin synthesis.synthesis, which we believe is important in a broad range of MDS patients. Moreover, in anemia of CKD, roxadustat has demonstrated the ability in clinical trials to increase and maintain hemoglobin levels in the presence of inflammation as measured by C-reactive protein,CRP, where ESAs have shown limited effect. We believe that we may be able to replicate this result in MDS anemia patients, where it is not uncommon for patients to present with autoimmune and inflammatory conditions.

Clinical Development of Roxadustat in MDSMyelodysplastic Syndromes

We are conducting a Phase 3 placebo controlled, double-blind clinical trial to evaluate the safety and efficacy of roxadustat for treatment of anemia in MDS in the U.S. and Europe. This is a multi-center Phase 3 study in transfusion-dependent, lower risk MDS patients with upWe continue to 24 patients in the open-label, lead-in portion of the trial, followed by theenroll this 160-patient randomized, double-blind, placebo-controlled partPhase 3 clinical study of the study,roxadustat in transfusion-dependent, lower-risk MDS patients, in which subjects will beare randomized 3:2 to receive roxadustat or placebo three-times-weekly for 28 weeks, with safety extension to one year.three-times-weekly. The primary endpoint is the proportion of patients who achieve transfusion independence.independence by 28 weeks with secondary endpoints and safety evaluated at 52 weeks.

In the open-label dose-finding component of this study, 24 lower-risk, transfusion dependent MDS patients with anemia were enrolled in three sequential starting dose cohorts (1.5 mg/kg, 2.0 mg/kg, and 2.5 mg/kg), with roxadustat doses adjusted every eight weeks per a pre-defined algorithm based on hemoglobin response. Best supporting care including red blood cell transfusion was allowed, as needed, per investigator’s discretion. Patients treated with roxadustat achieved a greater than or equal to 8-week transfusion independence rate of 38% in the first 28 weeks and 54% of patients had greater than or equal to 50% reduction in red blood cell transfusion over any eight weeks, from baseline. Roxadustat was generally well tolerated in each dose cohort. The dose level of 2.5 mg/kg was selected as the starting dose for the double-blind component of the study.

In China, we are conducting acontinue to enroll the open-label portion of our Phase 2/3 clinical trial to evaluate the safety and efficacy of roxadustat in non-transfusion dependent, lower risklower-risk MDS patients with anemia. The initialAfter the open-label portion ofwe expect to begin the study will enroll up to 40 patients, followed by135 patients planned for the randomized,135-patient double-blind, placebo-controlled Phase 3 portion of the study, in which subjects will be randomized 2:1 to receive roxadustat or placebo three-times weekly for 26 weeks. The primary endpoint for this study is percentage of patients achieving a hemoglobin response.

We plan on reporting data fromResearch at FibroGen

The HIF-PH enzymes that are the open-label componentstargets of both MDS studiesroxadustat belong to a broader family of enzymes known as 2-oxoglutarate (2OG)-dependent oxygenases. In humans, this family comprises more than 60 members that play important roles in 2019,a diverse range of biological processes including collagen biosynthesis, oxygen sensing, epigenetic regulation, nucleic acid modification/repair, and after reviewlipid metabolism. The first members of this enzyme family to be characterized were the collagen prolyl hydroxylases, which play a critical role in the biosynthesis of collagen and as a result, are potential targets for the treatment of fibrotic disease. The HIF-PH enzymes regulate the stability of the U.S. open-label data, we and our partners will advance toHIF transcription factor, which not only has therapeutic relevance for the double-blind portiontreatment of anemia as exemplified by roxadustat, but also has implications for other diseases where activation of the U.S. transfusion-dependent Phase 3 MDS study.HIF pathway would be expected to have beneficial effects. Other members of the 2OG-dependent oxygenase family with relevance to human disease include the Jumonji domain-containing histone demethylases, which are emerging cancer targets.

HIF-PH Inhibitor Platform

We haveThe fact that all members of the 2OG-dependent oxygenase enzyme family use 2OG as a co-substrate makes them viable targets for small molecule inhibitors that compete with 2OG. FibroGen has been a world leader in prolyl hydroxylase inhibition since the mid-nineties. Over the past two decades, we have built a robust drug discovery platform based on our deep understanding of the inhibition of prolyl hydroxylase enzymes using small molecules. Our platform is supported bybelonging to this family, and. our internal proprietary research and numerous academic collaborations, including a long-standing funded collaboration with a research group at the University of Oulu, Finland, headed for many years by our scientific co-founder, Kari I. Kivirikko, M.D., Ph.D. Dr. Kivirikko is one of the world’s leading experts in collagen prolyl hydroxylases, and he remains an advisor to us.

Prior to the discovery of HIF regulation by prolyl hydroxylase activity, we acquired compound collections from several pharmaceutical companies and assembled a diverse library of prolyl hydroxylase inhibitors to target collagen prolyl hydroxylase enzymes for fibrosis. Consequently, we were particularly well positioned to rapidly generate proof-of-concept for a number of aspects of HIF biology, and to direct medicinal chemistry efforts towards increasing potency and selectivity forhave generated a large library of novel compounds designed to target the newly identified HIF-PH enzymes.2OG-dependent oxygenase family.

We have applied our expertise in the field of HIF-PH inhibition to develop an understanding, not only of the role of HIF in erythropoiesis, but also of other areas of HIF biology with important therapeutic implications. This consistent progression of discovery has led to findings relating to HIF-mediated effects associated with inflammatory pathways, various aspects of iron metabolism, insulin sensitivity and glucose and fat metabolism, neurological disease, and stroke. The extensive patent portfolio covering our discoveries represents an important competitive advantage.

The strength of our platform capitalizes on these internal discoveries, as well as some of the complexities of HIF biology that we and the scientific community have uncovered over the past decades. There are at least three different HIF-PH enzymes that are known to regulate the stability of HIF — these enzymes are commonly referred to in the scientific literature as PHD1, PHD2 and PHD3. Studies of genetically modified mice, in which the individual HIF-PH enzymes have been deleted, have revealed that PHD2 plays a major role in the regulation of erythropoiesis by HIF. In contrast, PHD1 and PHD3 appear to play less important roles in HIF-mediated erythropoiesis, but instead have been implicated in other important biological pathways.

We believe that inhibitors selectively targeting certain prolyl hydroxylases could have important therapeutic applications beyond anemia. For example, as PHD1 has been implicated in ischemic tissue injury, it has been proposed that PHD1 inhibitors may provide a novel therapeutic approach to protect organs and tissues from ischemic damage. PHD3 on the other hand has been implicated in insulin signaling, raising the possibility that PHD3 inhibitors may have therapeutic utility in the treatment of diabetes. Despite the challenges associated with selectively inhibiting just one enzyme from a closely related family, we have made important advances in the identification of selective HIF-PH inhibitors.

We currently have active research programs focused on exploring the therapeutic utility of selective prolyl hydroxylase inhibitors.

PAMREVLUMAB FOR THE TREATMENT OF FIBROSIS AND CANCER

We were founded to discover and develop therapeutics for fibrosis and began studying CTGF shortly after its discovery. Our accumulated discovery research efforts indicate that CTGF is a critical common element in the progression of serious diseases associated with fibrosis.

From our library of human monoclonal antibodies that bind to different parts of the CTGF protein and block various aspects of CTGF biological activity, we selected pamrevlumab, for which we have exclusive worldwide rights. We believe that pamrevlumab blocks CTGF and inhibits its central role in causing diseases associated with fibrosis. Our data to date indicate that pamrevlumab is a promising and highly differentiated product candidate with broad potential to treat a number of fibrotic diseases and cancers.

We are currently conducting Phase 2 trials in pancreatic cancer and DMD and plan on initiating Phase 3 studies in pancreatic cancer and IPF in the second quarter of 2019. We have reported results from ourand a Phase 2 trialstrial in DMD. In the U.S., the FDA has granted Orphan Drug Designation to pamrevlumab for the treatment of IPF, andlocally advanced unresectable pancreatic cancer, and plan on initiating our Phase 3 studies in pancreatic cancer and IPF inDMD. In addition, the second quarterEMA has granted Orphan Medicinal Product Designation to pamrevlumab for the treatment of 2019.DMD. Pamrevlumab has also received orphan drug designation for IPF and Fast Track designation from the FDA for the treatment of both IPF patients and patients with locally advanced unresectable pancreatic cancer from the FDA.cancer.

Overview of Fibrosis

Fibrosis is an aberrant response of the body to tissue injury that may be caused by trauma, inflammation, infection, cell injury, or cancer. The normal response to injury involves the activation of cells that produce collagen and other components of the extracellular matrix (“ECM”) that are part of the healing process. This healing process helps to fill in tissue voids created by the injury or damage, segregate infections or cancer, and provide strength to the recovering tissue. Under normal circumstances, where the cause of the tissue injury is limited, the scarring process is self-limited and the scar resolves to approximate normal tissue architecture. However, in certain disease states, this process is prolonged and excessive and results in progressive tissue scarring, or fibrosis, which can cause organ dysfunction and failure as well as, in the case of certain cancers, promote cancer progression.

Excess CTGF Causes Fibrosis. Pamrevlumab Blocks CTGF and Can Reverse Fibrosis

Excess CTGF levels are associated with fibrosis. CTGF increases the abundance of myofibroblasts, a cell type that drives wound healing, and stimulates them to deposit ECM proteins such as collagen at the site of tissue injury. In the case of normal healing of a limited tissue injury, myofibroblasts eventually die by programmed cell death, or apoptosis, and the fibrous scarring process recedes. In fibrotic conditions, excess CTGF results in chronic activation of myofibroblasts, which leads to chronic ECM deposition and fibrosis (refer to figure above).

Multiple biological agents and pathways have been implicated in the fibrotic process, (Wynn J Pathol (2008)). Many fibrosis pathwaysmany of which converge on CTGF, (refer to figure below), which the scientific literature demonstrates to be a central mediator of fibrosis (Oliver et al., J Inv Derm (2010)).fibrosis. In the case of cancer, the sustained tumor-associated fibrotic tissue promotes tumor cell survival and metastasis. The figure below shows the commonality of cellular mechanisms that may result in fibrosis and cancer.

Most Biological Factors Implicated in Fibrosis Work Through CTGF

CTGF is a secreted glycoprotein produced by fibroblasts, endothelium, mesangial cells and other cell types, including cancers, and is induced by a variety of regulatory modulators, including TGF-ß and VEGF. CTGF expression has been demonstrated to be up-regulated in fibrotic tissues. Thus, we believe that targeting CTGF to block or inhibit its activity could mitigate, stop or reverse tissue fibrosis. In addition, since CTGF is implicated in nearly all forms of fibrosis, we believe pamrevlumab has the potential to provide clinical benefit in a wide range of clinical indications that are characterized by fibrosis.

Until recently, it was believed that fibrosis was an irreversible process. It is now generally understood that the process is dynamic and potentially amenable to reversal. Based on studies in animal models of fibrosis of the liver, kidney, muscle and cardiovascular system, it has been shown that fibrosis can be reversed. It has also been demonstrated in humans that fibrosis caused by hepatitis virus can be reversed (Chang et al. Hepatology (2010)). Additionally, we have generated data in human and animal studies that lung fibrosis progression can be slowed, arrested, or possibly reversed in some instances upon treatment with pamrevlumab. We do not believe that there is clinical evidence that therapies currently on the market directly prevent or reverse fibrosis in IPF.

While certain other companies are working on topical inhibition of CTGF, we are not aware of other products in development that target CTGF inhibition for deep organ fibrosis and cancer.

Clinical Development of Pamrevlumab — Overview

We have performed clinical trials of pamrevlumab in IPF, pancreatic cancer, liver fibrosis and diabetic kidney disease. In eleven Phase 1 and Phase 2 clinical studies involving pamrevlumab to date, including more than 450600 patients who were treated with pamrevlumab (about half of patients dosed for more than six months), pamrevlumab has been well-tolerated across the range of doses studied, and there have been no dose-limiting toxicities seen thus far.

Idiopathic Pulmonary Fibrosis

Understanding IPF and the Limitations of Current Therapies

IPF is a form of progressive pulmonary fibrosis, or abnormal scarring, which destroys the structure and function of the lungs. As tissue scarring progresses in the lungs, transfer of oxygen into the bloodstream is increasingly impaired. Average life expectancy at the time of confirmed diagnosis of IPF is estimated to be between three to five years, with approximately two-thirds of patients dying within five years of diagnosis. Thus, the survival rates are comparable to some of the most deadly cancers. The cause of IPF is unknown but is believed to be related to unregulated cycles of injury, inflammation and fibrosis.

Patients with IPF experience debilitating symptoms, including shortness of breath and difficulty performing routine functions, such as walking and talking. Other symptoms include chronic dry, hacking cough, fatigue, weakness, discomfort in the chest, loss of appetite, and weight loss. Over the last decade, refinements in diagnosis criteria and enhancements in high-resolution computed tomography imaging technology (“quantitative HRCT”) have enabled more reliable diagnosis of IPF without the need for a lung biopsy more clear distinction from other interstitial lung diseases.biopsy.

The U.S. prevalence and incidence of IPF are estimated to be 44,000 to 135,000 cases, and 21,000 new cases per year, respectively, based on Raghu et al. (Am J Respir Crit Care Med (2006)) and on data from the United Nations Population Division. We believe that with the availability of technology to enable more accurate diagnoses, the number of individuals diagnosed per year with IPF will continue to increase.

There are currently two therapies approved to treat IPF in Europe and the U.S., pirfenidone and nintedanib. The approvals and subsequent launches of pirfenidone and nintedanib have clearly shown the commercial potential in IPF. Hoffmann-La Roche (“Roche”) reported worldwide sales of pirfenidone for 2017 of approximately $930 million, and approximately $1.01$1 billion for 2018.2018 and $1.15 billion for 2019 for Esbriet® (pirfenidone). Similarly, Boehringer Ingelheim Pharma GmbH & Co. KG (“Boehringer Ingelheim”) reported total sales of approximately $1.03$1 billion for nintedanibOfev® (nintedanib) in 2017, and approximately $643 million$1.2 billion in the first half of 2018.

In clinical trials, we have used advanced medical imaging technology to quantify changes in fibrosis throughout the lungs. Our data to date using these measures demonstrate that pamrevlumab may stabilize and in some instances reverse pulmonary fibrosis (as measured by HRCT) and improve pulmonary function in IPF patients.

Phase 3 Clinical Development – Randomized, Double-Blind, Placebo-Controlled TrialTrials of Pamrevlumab in IPF

We plancontinue to begin enrollingenroll ZEPHYRUS, our double-blind, placebo-controlled Phase 3 trial of pamrevlumab in theIPF patients. In 2020, we will initiate a second quarter of 2019.IPF study similar in design to ZEPHYRUS. Each study will target approximately 340 patients. The trial will randomize (3:2) approximately 500 IPF patients (who are not being treated during the study with approved therapies) to either pamrevlumab or placebo. This study is powered to meet the FDA requirement of a highly statistically-significant result in the primary U.S. efficacy endpoint offor each study is change from baseline in forced vital capacity (“FVC”). The primary efficacy endpoint in Europe for each study is disease progression (defined by a decline in FVC percent predicted of greater than or equal to 10% or death). Secondary endpoints will include clinical outcomes of disease progression, patient reported outcomes, and quantitative changes in lung fibrosis volume from baseline.

PRAISE – Study 067 – Randomized, Double-Blind, Placebo-Controlled Phase 2 Trial of Pamrevlumab in IPF

In August 2017, we reportedSeptember 2019, positive topline results from PRAISE, our randomized, double-blind, placebo-controlled Phase 2 clinical trial (Study 067), were published in The Lancet Respiratory Medicine. PRAISE was designed to evaluate the safety and efficacy of pamrevlumab in patients with mild-to-moderate IPF (baseline FVC percentage predicted of 55%), as well as topline results from two sub-studies that were added to evaluate the safety of combining pamrevlumab with recently approved IPF therapies.

In the double-blind, placebo-controlled 48-week portion of this study, one hundred-three (103)103 patients were randomized (1:1) to receive either 30mg/kg of pamrevlumab or placebo intravenously every three weeks. Lung function assessments were conducted at baseline and at Weeks 12, 24, 36 and 48. Quantitative HRCT assessments were performed at baseline and on Weeks 24 and 48.

Pamrevlumab met the primary efficacy endpoint of change of FVC percent predicted, a measure of a patient’s lung volume as a percentage of what would be expected for such patient’s age, race, sex and height. The average decline (least squares mean) in FVC percent predicted from baseline to Week 48 was 2.85 in the pamrevlumab arm (n=50) as compared to an average decline of 7.17 in the placebo arm (n=51), a statistically significant difference of 4.33 (p=0.0331, using a linear slope analysis in the Intent to Treat (“ITT”)intent-to-treat population).

Pamrevlumab-treated patients had an average decrease (least squares mean) in FVC of 129 ml at Week 48 compared to an average decrease of 308 ml in patients receiving placebo, a statistically significant difference of 178 ml (p=0.0249, using a linear slope analysis in the ITTintent-to-treat population). This represents a 57.9% relative difference. In addition, the pamrevlumab-treated arm had a lower proportion of patients (10%) who experienced disease progression (defined by a decline in FVC percent predicted of greater than or equal to 10%) or death,death), than did the placebo arm (31.4%) at Week 48 (p=0.0103). The percentage of pamrevlumab patients who experienced disease progression and discontinued therapy was less than 15% of that in the placebo arm.

In this study, we measured change in quantitative lung fibrosis from baseline to Week 24 and Week 48 using quantitative HRCT. The pamrevlumab arm achieved a statistically significant reduction in the rate of progression of lung fibrosis compared to placebo using HRCT to measure quantitative lung fibrosis (“QLF”). The change in QLF volume from baseline to Week 24 for pamrevlumab-treated patients was 24.8 ml vs. 86.4 ml for placebo, with a treatment difference of -61.6 ml, p=0.009. The change in QLF volume from baseline to 48 weeks was 75.4 ml in pamrevlumab-treated patients vs. 151.5 ml in patients on placebo, with a treatment difference of -76.2 ml, p=0.038.

As in our previous open label Phase 2 study, a correlation between FVC percent predicted and quantitative lung fibrosis was confirmed at both Week 24 and 48 in this study.

We are not aware of any other IPF therapies that have shown a statistically significant effect on lung fibrosis as measured by quantitative HRCT analysis.

The treatment effects of pamrevlumab were demonstrated not only on change in FVC, a measure of pulmonary function and IPF disease progression, and change in fibrosis using quantitative HRCT, but pamrevlumab-treated patients also showed a trend of clinically meaningful improvement in a measure of health-related quality of life using the St. George’s Respiratory Questionnaire (SGRQ) vs. a reduction in quality of life seen in placebo patients over the 48 weeks of treatment. The SGRQ quality of life measurement has been validated in chronic obstructive pulmonary disease. In the patients that were evaluated by the UCSD Shortness of Breath Questionnaire, pamrevlumab-treated patients had a significant attenuation of their worsening dyspnea in comparison to placebo.

Pamrevlumab was well-tolerated in the placebo-controlled study. The TEAEstreatment-emergent adverse events were comparable between the pamrevlumab and placebo arms and the adverse events in the pamrevlumab arm were consistent with the known safety profile of pamrevlumab. In this study, as compared with the placebo group, fewer pamrevlumab patients were hospitalized, following an IPF-related or respiratory TEAE,treatment-emergent adverse event, or died for any reason.

The double-blind, active-controlled combination sub-studies were designed to assess the safety of combining pamrevlumab with standard of care medication in IPF patients. Study subjects were on stable doses of pirfenidone or nintedanib for at least three months and were randomized 2:1 to receive 30 mg/kg of pamrevlumab or placebo every three weeks for 24 weeks. Thirty-six patients were enrolled in the pirfenidone sub-study and 21 patients were enrolled in the nintedanib sub-study. Pamrevlumab appeared to be well-tolerated when given in combination with either pirfenidone or nintedanib.

Study 049 – Open-Label Phase 2 Trial of Pamrevlumab in IPF

We completed an open-label extension of Study 049, a Phase 2 open-label, dose-escalation study to evaluate the safety, tolerability, and efficacy of pamrevlumab in 89 patients with IPF. During the initial one-year treatment period, pamrevlumab was administered at a dose of 15 mg/kg in Cohort 1 (53 patients) and 30 mg/kg in Cohort 2 (36 patients) by IV infusion every three weeks for 45 weeks. After 45 weeks of dosing, subjects whose FVC declined less than predicted were allowed to continue dosing in an extension study until they had disease progression. Nineteen patients from Cohort 1 (35.8%) and 18 patients from Cohort 2 (50.0%) entered the extension study. Efficacy endpoints were pulmonary function assessments, extent of pulmonary fibrosis as measured by quantitative imaging and measures of health-related quality of life. We presented data from our open-label Phase 2 IPF extension study (049) at the International Colloquium on Lung and Airway Fibrosis in November 2016, reporting that no safety issues were observed during prolonged treatment with pamrevlumab. Some of the 37 patients who enrolled in the extension study were treated with pamrevlumab for up to five years. Trends regarding improved or stable pulmonary function and stable fibrosis observed during the initial one-year study were also observed in the extension study.

In Cohort 1, we enrolled patients with a wide range of disease severity to assess safety and efficacy. Baseline FVC percent predicted for Cohort 1 was 43% to 90%, with a mean of 62.8%. In contrast, other IPF clinical trials, such as those for pirfenidone and nintedanib, have enrolled patients who on average had mild to moderate disease (mean FVC percent predicted 73.1% to 85.5%). Fourteen patients in Cohort 1 withdrew, and ten of the 14 had severe disease.

In order to enroll IPF patients similar to those in other IPF trials, we amended the protocol for Cohort 2 to include only patients with mild to moderate disease (FVC ≥ 55% predicted). Baseline FVC percent predicted for Cohort 2 was 53% to 112%, with a mean of 72.7%. Based on this definition of disease severity, 37 patients in Cohort 1 and 32 patients in Cohort 2 had mild to moderate disease.

The table below provides a summary of the observed quantitative change in fibrosis for mild to moderate patients in Cohorts 1 and 2 as measured by quantitative HRCT. Twenty-four percent of these patients had improved fibrosis at Week 48. We believe that this is the first trial to demonstrate a reversal of fibrosis (as measured by HRCT) in a subset of IPF patients. Stable fibrosis has been considered the only achievable favorable outcome in IPF. The table below sets forth the number of patients who showed stable or improved fibrosis at Weeks 24 and 48 compared to the amount of fibrosis at the start of the trial.

Changes in Fibrosis in Patients with Mild to Moderate IPF Treated with Pamrevlumab in FGCL-3019-049

 As we observed in our randomized, double-blind, placebo-controlled Phase 2 clinical trial (Study 067), fibrosis improvement or stabilization in patients with mild to moderate disease as measured as reticular fibrosis by quantitative HRCT correlated with improvement or stabilization of pulmonary function measured by FVC (p<0.0001; r=-0.59 Cohorts 1 and 2 combined). The figure below shows FVC changes up to Week 48 for mild to moderate patients with stable or improved fibrosis (as measured by HRCT) vs. patients with worsening fibrosis. Patients with stable or improved fibrosis showed improved pulmonary function, on average, which was significantly different or better than patients with worsening fibrosis who showed a substantial decline in FVC (p= 0.0001, Cohorts 1 and 2 combined). Patients with worsening fibrosis had pulmonary function that was similar to the annual decline in pulmonary function for typical IPF patients.

Categorical Analysis of FVC Change from Baseline (BL) (mean ±SE) in FGCL-3019-049

Eighty-nine patients had at least one adverse event. The most common reported events were cough, fatigue, shortness of breath, upper respiratory tract infection, sore throat, bronchitis, nausea, dizziness, and urinary tract infection. To date, includingIncluding the open-label extension, there have beenwere 45 SAEsserious adverse events in 31 patients, four of which were considered possibly related by the principal investigator to study treatment.the investigational drug. After investigation, it is our belief that there is no causal relationship between pamrevlumab and the serious adverse events deemed possibly related by the principal investigator. During the first year of treatment there were 38 TSAEstreatment-emergent serious adverse events in 24 patients. Adverse events observed to date are consistent with typical conditions observed in this patient population.

Open-Label Phase 1 Trial of Pamrevlumab in IPF

Study 002 was a Phase 1 open-label study to determine the safety and pharmacokinetics of escalating single doses of pamrevlumab. Patients with a diagnosis of IPF by clinical features and surgical lung biopsy received a single IV dose of pamrevlumab at 1, 3, or 10 mg/kg. A total of 21 patients were enrolled in the study; six patients received a dose of 1 mg/kg, nine patients received 3 mg/kg, and six patients received 10 mg/kg. Pamrevlumab was well tolerated across the range of doses studied; and there were no dose-limiting toxicities. TEAE that were considered to be possibly related by the principal investigator to pamrevlumab were mild and self-limited, consisting of pyrexia, cough and headache.

Pancreatic Cancer

Understanding Pancreatic Cancer and the Limitations of Current Therapies

Certain solid malignant tumors have a prominent fibrosis component consisting mostly of ECM that contributes to metastasis and progressive disease. ECM is the connective tissue framework of an organ or tissue.

Pancreatic ductal adenocarcinoma, or pancreatic cancer, is the third leading cause of cancer deaths in the U.S. According to the EuropeEuropean Commission’s European Cancer Information System, there were 100,005 new cases of pancreatic cancer and 95,373 deaths from pancreatic cancer in the EUEurope projected for 2018. The National Cancer Center of Japan estimated that there were 36,239 new cases of pancreatic cancer in 2014, increased from 24,442 cases in 2004. In its report of December 2017, Decision Resources Group estimated that the major market sales (U.S., EU5Europe and Japan) of pancreatic cancer drugs will grow from $1.3 billion in 2016 to approximately $3.7 billion in 2026. According to the U.S. National Cancer Institute, in 2018, there were approximately 55,000an estimated 57,000 new cases of pancreatic cancer projected in the U.S. in 2019. Fifty percent of new cases are metastatic. Another 15-20% have localized resectable tumors. The remaining 30-35% have localized but unresectable tumors.

For those with non-resectable tumors, median survival is eight to 12 months post-diagnosis, and about 8% realize five years of survival; similar to metastatic cases. For those with resectable tumors, 50% survive 17 to 27 months post-diagnosis and ~20% report five-year survival.

Pancreatic cancer is aggressive and typically not diagnosed until it is largely incurable. Most patients are diagnosed after the age of 45, and according to the American Cancer Society, 94% of patients die within five years from diagnosis. 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)). 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. 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. These drugs illustrate that progress in treatment for pancreatic cancer has been modest, and there remains a need for substantial improvement in patient survival and quality of life.

The approved chemotherapeutic treatments for pancreatic cancer target the cancer cells themselves. Tumors are composed of cancer cells and associated non-cancer tissue, or stroma, of which ECM is a major component. In certain cancers such as pancreatic cancer, both the stroma and tumor cells produce CTGF which in turn promotes the proliferation and survival of stromal and tumor cells. CTGF also induces ECM deposition that provides advantageous conditions for tumor cell adherence and proliferation, promotes blood vessel formation, or angiogenesis, and promotes metastasis, or tumor cell migration, to other parts of the body.

Pancreatic cancers are generally resistant to powerful chemotherapeutic agents, and there is now growing interest in the use of an anti-fibrotic agent to diminish the supportive role of stroma in tumor cell growth and metastasis. 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 Development – Randomized, Double-Blind, Placebo-Controlled Trial of Pamrevlumab in Locally Advanced, Unresectable Pancreatic Cancer

We plancontinue to begin enrolling aenroll LAPIS, our double-blind placebo controlled Phase 3 trial of pamrevlumab as a neoadjuvant therapy for locally advanced unresectable pancreatic cancer in the second quarter of 2019.cancer. We intend to enroll approximately 260 patients, randomized 1:1 to receive either pamrevlumab, in combination with gemcitabine and nab-paclitaxel, or chemotherapyplacebo with placebo.gemcitabine and nab-paclitaxel. After completion of the 6-month treatment period, if the results show an improved resection rate in the pamrevlumab arm, we may request a meeting with the FDA to discuss the adequacy of these results to support a marketing application under the provisions of accelerated approval. After this interim assessment of resection rates, the study will continue to collect data on overall survival, the primary endpoint.

Study 069 – Randomized, Open-Label, Active-Controlled Phase 1/2 Trial of Pamrevlumab in Locally Advanced Pancreatic Cancer

We continue to follow patients in our ongoing 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 locally advanced pancreatic cancer that has not been previously treated. 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 is to determine whether the pamrevlumab combination can convert inoperable pancreatic cancer to operable, or resectable, cancer. 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 ongoing study at the American Society of Clinical Oncology Annual Meeting in June 2018. A higher proportion (70.8%) of pamrevlumab-treated patients whose tumors were previously considered unresectable became eligible for surgical exploration than patients who received chemotherapy alone (15.4%), based on pre-specified eligibility criteria at the end of 6 months of treatment. Furthermore, a higher proportion of pamrevlumab-treated patients (33.3%) achieved surgical resection than those who received chemotherapy alone (7.7%).  

In addition, this data showed improved overall survival among patients who were resected vs. not resected (NE vs. 18.56 months, p-value=0.0141) and a trend toward improved overall survival in patients eligible for surgery vs. patients who were not (27.73 vs. 18.40 months, p-value=0.0766). All of the patients on study at the time of the results reported in June 2018 continue to remain on study. No increase in serious adverse events was observed in the pamrevlumab arm and no delay in wound healing was observed post-surgery.

Patients with locally advanced unresectable pancreatic cancer have median survival of less than 12 months, only slightly better than patients with metastatic pancreatic cancer, whereas patients with resectable pancreatic cancer have a much better prognosis with median survival of approximately 23 months and some patients being cured. 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 locally advanced pancreatic cancer patients.

Completed Clinical Trials of Pamrevlumab in Pancreatic Cancer

We completed an open-label Phase 1/2 (FGCL-MC3019-028) dose finding trial of pamrevlumab combined with gemcitabine plus erlotinib in patients with previously untreated locally advanced (stage(Stage 3) or metastatic (stage(Stage 4) pancreatic cancer. These study results were published in the Journal of Cancer Clinical Trials (Picozzi et al., J Cancer Clin Trials 2017, 2:123). Treatment continued until progression of the cancer or the patient withdrew for other reasons. Patients were then followed until death.

Seventy-five patients were enrolled in this study with 66 (88%) having stageStage 4 metastatic cancer. The study demonstrated a dose-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.

Effect of Pamrevlumab Dose on One Year Survival in Pancreatic Cancer

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), as illustrated below. Cmin greater than or equal to 150 µg/mL was associated with significantly improved progression-free survival (p=0.01) and overall survival (p=0.03) vs. those patients with Cmin less than 150 µg/mL. For patients with Cmin >150 µg/mL median survival was 9.0 months compared to median survival of 4.4 months for patients with Cmin <150 µg/mL. Similarly, 34.2% of patients with Cmin >150 µg/mL survived for longer than one year compared to 10.8% for patients with Cmin <150 µg/mL. These data suggest that sufficient blockade of CTGF requires pamrevlumab threshold blood levels of approximately 150 µg/mL in order to improve survival in patients with advanced pancreatic cancer.

Increased Pancreatic Cancer Survival Associated with Increased Plasma Levels of Pamrevlumab

The Kaplan-Meier plot provides a representation of survival of all patients in the clinical trial. Each vertical drop in the curve represents a recorded event (death) of one or more patients. When a patient’s event cannot be determined either because he or she has withdrawn from the study or because the analysis is completed before the event has occurred, that patient is “censored” and denoted by a symbol (●) on the curve at the time of the last reliable assessment of that patient.

In the study, the majority of adverse events were mild to moderate, and were consistent with those observed for erlotinib plus gemcitabine treatment without pamrevlumab. There were 99 TSAEs;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 is our belief that there is no causal relationship between pamrevlumab and the treatment-emergent serious adverse events deemed possibly related by the principal investigator. We did not identify any evolving dose-dependent pattern, and higher doses of pamrevlumab were not associated with higher numbers of SAEsserious adverse events or greater severity of the SAEsserious adverse events observed.

Pamrevlumab for Duchenne Muscular Dystrophy

Understanding DMD and the Limitations of Current Therapies

In the U.S., approximately one in every 5,000 boys have DMD, and approximately 20,000 children are diagnosed with DMD globally each year. There are currently no approved disease-modifying treatments. Despite taking steroids to mitigate progressive muscle loss, a majority of children with DMD are non-ambulatory by adolescence, and median survival is age 25.

DMD is an inherited disorder of one of the dystrophin genes resulting in absence of the dystrophin protein and abnormal muscle structure and function, leading to progressively diminished mobility as well as pulmonary function and cardiac function which result in early death. Constant myofiber breakdown results in persistent activation of myofibroblasts and altered production of ECM resulting in extensive fibrosis in skeletal muscles of DMD patients. Desguerre et al. (2009) showed that muscle fibrosis was the only myo-pathologic parameter that significantly correlated with poor motor outcome as assessed by quadriceps muscle strength, manual muscle testing of upper and lower limbs, and age at ambulation loss. Numerous pre-clinical studies including those in the mdx model of DMD suggest that CTGF contributes to the process by which muscle is replaced by fibrosis and fat and that CTGF may also impair muscle cell differentiation during muscle repair after injury.

Clinical Development of Pamrevlumab for Duchenne Muscular Dystrophy

Based on the FDA review of one year data from our Phase 2 administrative analysis, we intend to begin a Phase 3 study of pamrevlumab in non-ambulatory DMD patients in the second half of 2020.

All 21 non-ambulatory patients from our fully enrolled Phase 2 open-label single-arm trial will have completed at least their firstover one year of treatment with pamrevlumab. While we cannot make direct comparisons between our trial and previously published data due to, among other things, differences in March 2019. Some patientssubject numbers, baseline characteristics, inclusion/exclusion criteria, treatment protocols, and analysis methods, we are encouraged by the data obtained so far. Pamrevlumab was well tolerated in this study.

In June 2019 at the Parent Project Muscular Dystrophy meeting, we reported topline results from this study have been on treatment for over three years. The primary endpoint is change inour one-year administrative analysis comparing our Phase 2 data to recent published natural disease history studies of DMD patients.  

In pulmonary function as measured by changetests, the results from our study indicate a potential reduction in the 1-year decline in FVC percent predicted from baseline. Other endpoints includebaseline for our pamrevlumab-treated patients when compared to FVC data of DMD patients (whether such patients were taking steroids or not) published in 2019 by Ricotti. In the 2019 Ricotti study, the DMD patients were treated with steroids only. Similarly, all of the patients in our Phase 2 pamrevlumab trial were on steroids. In addition, pamrevlumab showed less decline in both percent predicted forced expiratory volume as compared to previously published study results of Meier in 2016, and in percent predicted peak expiratory flow rate, compared to what was observed in the study by Ricotti in 2019.

Our data showed an increase in cardiac function, measured by mean change of left ventricular ejection fraction (“LVEF”), of 0.29% from baseline for our pamrevlumab-treated patients. Whereas, data published in 2018 by McDonald of DMD patients only on steroids showed a mean LVEF decline of 0.82% from baseline in one year.   

In muscle function tests, the majority of the results of this Phase 2 study showed the mean change from baseline in our pamrevlumab-treated patients were more favorable than previously published data. Our results showed a positive increase in grip-strength score in both dominant and non-dominant hands at one year of treatment with pamrevlumab, while earlier results from a 2015 study by Seferian showed a decline at one year as measured by anexpected. In the performance of the upper limb muscle(“PUL”) test and measurementspecifically developed for DMD patients, our pamrevlumab-treated patients had a mean change from baseline of cardiac function (ejection fraction measured-1.53. In the 2019 study by magnetic resonance imaging).

Other Potential Indications for Pamrevlumab

We believe that pamrevlumab has potential to be a treatment for cancers and a broad arrayRicotti of fibrotic disorders, including:

Investigational New Drug and Clinical Trial Applications

Pamrevlumab is being studied patients taking either nothing or only steroids, the annual mean change in the U.S. for the treatment of IPF under an IND that we submitted to the FDAPUL test was -4.13. Furthermore, in August 2003. Pamrevlumab is being studiedour study a strong correlation between change in biceps brachii T2-mapping and change in PUL score was observed, demonstrating stabilization and even possible improvement in the U.S. for the treatment of locally advanced or metastatic pancreatic cancer under an IND that we submitted to the FDA in September 2004. Pamrevlumab is being studied in the U.S. for the treatment of DMD under an IND that we submitted to the FDA in June 2015.muscle fibrosis burden.  

Commercialization Strategy for Pamrevlumab

Our goal, if pamrevlumab is successful, is to be a leader in the development and commercialization of novel approaches for inhibiting deep organ fibrosis and treating some forms of cancer.cancer and muscular dystrophy diseases. To date, we have retained exclusive worldwide rights for pamrevlumab. We plan to retain commercial rights to pamrevlumab in North America and will also continue to evaluate the opportunities to establish co-development partnerships for pamrevlumab as well as commercialization collaborations for territories outside of North America.

FG-5200 FOR THE TREATMENT OF CORNEAL BLINDNESS IN CHINA

Corneal blindness, defined as visual acuity of 3/60 or less, is caused by various factors, including scarring resulting from infections, such as herpes simplex, physical trauma, chemical injury and genetic diseases affecting the function of the cornea. In countries with sufficient tissue banks and skilled surgeons, the treatment for corneal blindness is the replacement of the damaged cornea with a corneal graft from donor corneas from human cadavers. Despite use of immunosuppressive drugs, graft rejection remains a serious problem, resulting in graft failure within five years in approximately 35% of cases in the U.S. We are developing FG-5200 for the treatment of corneal blindness resulting from partial thickness corneal damage.

In China, there are ethical or religious beliefs, cultural norms and significant infrastructure barriers that limit organ donation or tissue banking possibilities, resulting in an extreme shortage of cadaver corneas. In September 2017, the Chinese State Council issued a regulation banning the importation of human tissue which is expected to further diminish the availability of cadaver corneas for implantation in China. In April 2015, a subsidiary of China Regenerative Medicine International Limited received approval for their acellular porcine cornea stroma medical device for the indication of repair of corneal ulcers in China. However, alternatives to cadaver corneas, such as synthetic corneas using collagen derived from porcine tissue or fish scales, are either experimental or to our knowledge, have not yielded satisfactory results for restoration of vision in patients with corneal blindness. In many cases of corneal blindness, infection and other factors lead to serious risks to the patient.

Market OpportunityCOLLABORATIONS

Approximately 48,000 corneal grafts were performed in the U.S. in 2017 using tissue from human cadavers. In contrast, while there are approximately four to five million patients in China with corneal blindness and an incidence of 200,000 cases of corneal blindness each year, there were only approximately 10,000 to 12,000 corneal grafts performed in China in 2017 using tissue from human cadavers. We believe the number of corneal grafts using cadaver tissue in China may decrease significantly due to recent changes in government policy.

FG-5200 as a Potential Solution to This Unmet Medical Need

FG-5200 Corneal Implant

Our expertise in fibrosis and ECM proteins has allowed us to develop processes for producing human collagen types I, II and III, as well as coordinate expression of several enzymes involved in assembly of collagen. We have successfully produced a proprietary version of recombinant human collagen III that is suitable for use in cornea repair.

FG-5200, a corneal implant medical device we are developing in China, is designed to serve as an immediately functional replacement cornea as well as a scaffold to allow for regeneration of the native corneal tissue for the primary purpose of restoration of vision. In contrast, cadaver graft tissue is never “turned over”; in fact, only limited integration occurs over the life of the graft. Our FG-5200 implant is made of recombinant human collagen that has been formed into a highly concentrated fibrillar matrix to provide physical characteristics optimal for corneal implantation.

In animal models, FG-5200 allows for native tissue to completely regrow in less than one year, including both epithelium (the outer cell layer of the cornea) and stroma. The stroma in these animal models is seen to be infiltrated with nerve fibers, leading to the reacquisition of the touch response critical to the avoidance of additional corneal damage.

Corneal implants using human donor tissue are currently being reimbursed by the government, and similar to many other implantable Class III devices in China (including stents and bone grafts), we would expect that FG-5200 could be added to the reimbursement list for medical devices, if approved.

Clinical Testing of FG-5200

An initial clinical study outside of China has been conducted to test the safety and feasibility of using a biosynthetic implant composed of our recombinant human collagen, and substantially similar to FG-5200, for the treatment of severe corneal damage as an alternative to human donor tissue. Ten patients with advanced keratoconus, or severe corneal scarring, were implanted with the recombinant collagen implants and have been followed for more than five years. Two-year follow-up data were reported in Science Translational Medicine (Fagerholm et al., (2010)) and four-year follow-up data were reported in Biomaterials (Fagerholm et al., Biomaterials (2014)). The patients showed excellent tolerance of the implant, with no recruitment of inflammatory dendritic cells into the biosynthetic implant area and no episodes of rejection (one episode of rejection was seen in the cadaver graft control group). Further, patients had a four-year mean corrected visual acuity of 20/54 and gained an average of more than five Snellen lines of vision on an eye chart. Nerve re-growth and touch sensitivity was closer to that of healthy corneas and significantly better than that seen with cadaver corneas with no need for long term immunosuppressive therapy.

FG-5200 Strategy

In January 2016, our subsidiary FibroGen (China) Medical Technology Development Co., Ltd. (“FibroGen Beijing”) received the NMPA’s written notice of classification of our FG-5200 corneal implant as a Domestic Class III medical device. This allows FibroGen to develop, and if approved, to market FG-5200 corneal implants fabricated in China without any prior reference approval outside of China.

We currently plan to manufacture FG-5200 preclinical and clinical trial material in our aseptic good manufacturing practices production suite located at our Beijing manufacturing plant. We completed the process technology transfer and the registration campaign in 2017. Materials from this campaign are being used in preclinical studies that are now complete. We expect to file a CTA for a pivotal clinical trial after final results of the preclinical studies and discussion with the NMPA.

We plan to develop FG-5200 in China first. If FG-5200 is successful in China, we believe there is a future opportunity to develop FG-5200 in other Asian countries where cadaver materials are in short supply, in part because cultural norms and infrastructure and other challenges in tissue banking limit tissue donations. We also believe there is an opportunity to obtain CE Marking to facilitate entry into other markets, such as Latin America. We may develop FG-5200 in the U.S. and Europe as well, where cadaver corneas are available but the required immunosuppressive therapy may make FG-5200 a potentially attractive alternative.

COLLABORATIONS

Our Collaboration Partnerships for Roxadustat

Astellas

We have two agreements with Astellas for the development and commercialization of roxadustat, one for Japan, and one for Europe, the Commonwealth of Independent States, the Middle East and South Africa. Under these agreements we provided Astellas the right to develop and commercialize roxadustat for anemia in these territories.

We share responsibility with Astellas for clinical development activities required for U.S. and EUEurope regulatory approval of roxadustat, and share equally those development costs under the agreed development plan for such activities. Astellas will be responsible for clinical development activities and all associated costs required for regulatory approval in all other countries in the Astellas territories. Astellas will own and have responsibility for regulatory filings in its territories. We are responsible, either directly or through our contract manufacturers, for the manufacture and supply of all quantities of roxadustat to be used in development and commercialization under the agreements.

The Astellas agreements will continue in effect until terminated. Either party may terminate the agreements for certain material breaches by the other party. In addition, Astellas will have the right to terminate the agreements for certain specified technical product failures, upon generic sales reaching a particular threshold, upon certain regulatory actions, or upon our entering into a settlement admitting the invalidity or unenforceability of our licensed patents. Astellas may also terminate the agreements for convenience upon advance written notice to us. In the event of any termination of the agreements, Astellas will transfer and assign to us the regulatory filings for roxadustat and will assign or license us the relevant trademarks used with the products in the Astellas territories. Under certain terminations, Astellas is also obligated to pay us a termination fee.

Consideration under these agreements includes a total of $360.1 million in upfront and non-contingent payments, and milestone payments totaling $557.5 million, of which $542.5 million are development and regulatory milestones, and $15.0 million are commercial-based milestones. Total consideration, excluding development cost reimbursement and product sales-related payments, could reach $917.6 million.  During the second quarter of 2018, Astellas reported positive results from the final phase 3 CKD-dialysis trial of roxadustat in Japan, indicating that Astellas was ready to make an NDA submission for the treatment of anemia with roxadustat in CKD-dialysis patients in 2018, which triggered $15.0 million milestone payment substantially all of which was recognized as revenue during the year ended December 31, 2018 from performance obligations satisfied or partially satisfied. The aggregate amount of such consideration received, including development cost reimbursement and product sales-related payments, through December 31, 2018 totals $487.6 million.

Additionally, under these agreements, Astellas pays 100% of the commercialization costs in their territories. Astellas will pay us a transfer price for our manufacture and delivery of roxadustat based on a calculation based on net sales of roxadustat in the low 20% range.

In addition, Astellas has separately invested $80.5 million in the equity of FibroGen, Inc. to date.

AstraZeneca

We also have two agreements with AstraZeneca for the development and commercialization of roxadustat for anemia, one for China (the “China Agreement”), and one for the U.S. and all other countries not previously licensed to Astellas (the “U.S./RoW Agreement”). Under these agreements we provided AstraZeneca the right to develop and commercialize roxadustat for anemia in these territories. We share responsibility with AstraZeneca for clinical development activities required for U.S. regulatory approval of roxadustat.

In 2015, we reached the $116.5 million cap on our initial funding obligations (under which we shared 50% of the initial development costs), therefore all future development and commercialization costs for roxadustat for the treatment of anemia in CKD in the U.S., Europe, Japan and all other markets outside of China will be paid by Astellas and AstraZeneca.

In China, our subsidiary FibroGen Beijing will conduct the development work for CKD anemia and will hold all of the regulatory licenses issued by China regulatory authorities and be primarily responsible for regulatory, clinical and manufacturing. China development costs are shared 50/50. AstraZeneca is also responsible for 100% of development expenses in all other licensed territories outside of China. We are responsible, through our contract manufacturers, for the manufacture and supply of all quantities of roxadustat to be used in development and commercialization under the agreements.

Under the AstraZeneca agreements, we receive upfront and subsequent non-contingent payments totaling $402.2 million. Potential milestone payments under the agreements total $1.2 billion, of which $571.0 million are development and regulatory milestones, and $652.5 million are commercial-based milestones. Total consideration under the agreements, excluding development cost reimbursement, transfer price payments, royalties and profit share, could reach $1.6 billion.  During the second quarter of 2016, we received an upfront payment of $62.0 million time based development milestone. On December 17, 2018, FibroGen (China) Medical Technology Development Co., Ltd. (“FibroGen China”), received marketing authorization from the NMPA for roxadustat, a first-in-class hypoxia-inducible factor prolyl hydroxylase inhibitor, for the treatment of anemia caused by CKD in patients on dialysis. This approval triggered a $6.0 million milestone payable to us by AstraZeneca. On December 29, 2018, FibroGen China received the First Manufacturing Approval for a Product in the Field in the Territory, which allows production for Phase IV clinical studies, patients’ early experience programs, donation programs, as well as to supply products for testing and assessments required prior to launch. This approval triggered a $6.0 million milestone payable to us by AstraZeneca. Approximately $9.9 million of the total $12.0 million milestone payables was recognized as revenue during the fourth quarter of 2018 from performance obligations satisfied or partially satisfied. The aggregate amount of such consideration, including development cost reimbursement and product sales-related payments, received through December 31, 2018 totals 432.2 million.

Payments under these agreements include over $500 million in upfront, non-contingent and other payments received or expected to be received prior to the first U.S. approval, excluding development expense reimbursement.

AstraZeneca purchased 1,111,111 shares of our common stock at the initial public offering (“IPO”) price for an aggregate purchase price of $20.0 million in a private placement concurrent with our IPO. In connection with the purchase of our shares of common stock in the private placement, AstraZeneca has also entered into a standstill agreement which provides that, until November 2019, neither AstraZeneca nor its representatives will, directly or indirectly, among other things, acquire any additional securities or assets of ours, solicit proxies for our securities, participate in a business combination involving us, or seek to influence our management or policies, except with the prior consent of our board of directors and in certain other specified circumstances involving a change of control of our company. In addition, AstraZeneca has agreed to vote its shares in favor of nominees to our board of directors, increases in the authorized capital stock of the company and amendments to our equity plans approved by the board of directors, in each case as recommended by a majority of our board of directors. AstraZeneca has also agreed, subject to specified exceptions, not to sell shares purchased by it in the private placement for the two-year period following such purchase and to limitations on the volume of its sales of such shares thereafter.

Under the U.S./RoW Agreement, AstraZeneca will pay for all commercialization costs in the U.S. and RoW, AstraZeneca will be responsible for the U.S. commercialization of roxadustat, with FibroGen undertaking specified promotional activities in the ESRD segment in the U.S. In addition, we will receive a transfer price for delivery of commercial product based on a percentage of net sales in the low- to mid-single digit range and AstraZeneca will pay us a tiered royalty on net sales of roxadustat in the low 20% range.

Under the China Agreement, which is conducted through FibroGen China Anemia Holdings, Ltd. (“FibroGen China”), the commercial collaboration is structured as a 50/50 profit share. AstraZeneca will conduct commercializationsales and marketing activities in China as well as serve as the master distributor for roxadustat and will fund roxadustat launch costs in China until FibroGen Beijing has achieved profitability. At that time, AstraZeneca will recoup 50% of their historical launch costs out of initial roxadustat profits in China.

AstraZeneca may terminate the U.S./RoW Agreement upon specified events, including our bankruptcy or insolvency, our uncured material breach, technical product failure, or upon 180 days prior written notice at will. If AstraZeneca terminates the U.S/RoW Agreement at will, in addition to any unpaid non-contingent payments, it will be responsible to pay for a substantial portion of the post-termination development costs under the agreed development plan until regulatory approval.

AstraZeneca may terminate the China Agreement upon specified events, including our bankruptcy or insolvency, our uncured material breach, technical product failure, or upon advance prior written notice at will. If AstraZeneca terminates our China Agreement at will, it will be responsible to pay for transition costs as well as make a specified payment to FibroGen China.

In the event of any termination of the agreements, but subject to modification upon termination for technical product failure, AstraZeneca will transfer and assign to us any regulatory filings and approvals for roxadustat in the affected territories that they may hold under our agreements, grant us licenses and conduct certain transition activities.

Additional Information Related to Collaboration Agreements

Of the $1,113.5 million in development and regulatory milestones payable in the aggregate under our Astellas and AstraZenecaAdditional information related to collaboration agreements $425.0 million is payable upon achievementset forth in Item 7 of milestones relating to the submission and approval of roxadustat in dialysis and non-dialysis CKD populations in the U.S. and Europe.

this Annual Report on Form 10-K. 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 14 to our consolidated financial statements under Item 8 of this Annual Report.

COMPETITION

The pharmaceutical and biotechnology industries are highly competitive, particularly in some of the indications we are developing drug candidates, including anemia in CKD, IPF, pancreatic cancer, and DMD. We face competition from multiple other pharmaceutical and biotechnology companies, many of which have significantly greater financial, technical and human resources and experience in product development, manufacturing and marketing. These potential advantages of our competitors are particularly a risk in IPF, pancreatic cancer, and DMD, where we do not currently have a development or commercialization partner.

We expect any products that we develop and commercialize to compete on the basis of, 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.

If eitherWhen any of our lead product candidates isare approved, they will compete with currently marketed products, and product candidates that may be approved for marketing in the future, for treatment of the following indications:

Roxadustat — Anemia in CKD

IfDrugs that will compete with roxadustat is approved for the treatment of anemia in patients with CKD and launched commercially, competing drugs are expected to include ESAs, particularly in those patient segments where ESAs are used. Currently available ESAs include epoetin alfa (EPOGEN^® marketed by Amgen Inc. in the U.S., Procrit^® and Erypo^®/Eprex^®, marketed by Johnson & Johnson, Inc. and Espo^® marketed by Kyowa Hakko Kirin in Japan and China), darbepoetin (Amgen/Kyowa Hakko Kirin’s Aranesp^® and NESP^®) and Mircera^® marketed by Roche outside the U.S. and byVifor Pharma (“Vifor”), a Roche licensee, in the U.S. and Puerto Rico, as well as biosimilar versions of these currently marketed ESA products. ESAs have been used in the treatment of anemia in CKD for more than 20 years, serving a significant majority of dialysis patients. While non-dialysis CKD patients who are not under the care of nephrologists, including those with diabetes and hypertension, do not typically receive ESAs and are often left untreated, some patients under nephrology care may be receiving ESA therapy. It may be difficult to encourage healthcare providers and patients to switch to roxadustat from products with which they have become familiar.

We may also face competition from potential new anemia therapies currently in clinical development, including in those patientspatient segments not currently addressed by ESAs. Companies such asthat are currently developing HIF-PH inhibitors for anemia in CKD indications include GlaxoSmithKline plc (“GSK”), Bayer Corporation (“Bayer”), Akebia Therapeutics, Inc. (“Akebia”), and Japan Tobacco, who are currently developing HIF-PH inhibitors for anemia in CKD indications.and Zydus Cadila. Akebia is currently conducting Phase 3 studies in CKD patients on dialysis and not on dialysis, as well as additional Phase 1 anda Phase 2 studies.study evaluating pharmacokinetics and pharmacodynamics in dialysis-dependent patients with three-times weekly versus once-a-day dosing. Akebia expects to complete these studies by August 2020. In Japan, Mitsubishi Tanabe Pharmaceutical Corporation, Akebia’s collaboration partner, started a Japan Phase 3 development programsubmitted an NDA for treatment of anemia in November 2017.dialysis and non-dialysis CKD patients in July 2019, and is awaiting an approval decision later in 2020. GSK is also conducting global Phase 3 studies in in CKD patients on dialysis and not on dialysis, as well as Japan Phase 3 studies.and expects to complete those studies by March 2022. GSK and Kyowa Hakko Kirin announced in November 2018 that the two companies signed a strategic commercialization deal in Japan for daprodustat. GSK submitted a Japan NDA for treatment of anemia in dialysis and non-dialysis in August 2019 and is awaiting approval later in 2020. Bayer has completed global Phase 2 studies and its HIF-PH inhibitor is now in Phase 3 development in CKD populations on dialysis and not on dialysis in Japan. Japan Tobacco is also conductingsubmitted an NDA for treatment of anemia associated with CKD in Japan in November 2019, supported by the six Phase 3 studies inconducted in CKD patients on dialysis and not on dialysis in Japan, only. Some of these product candidates may enter the market prior to roxadustat.and its partner JW Pharmaceuticals started a Phase 3 study in dialysis patients in Korea. Zydus Cadila (India) started Phase 3 studies in dialysis and non-dialysis CKD patients in India in 2019.  

In addition, there are other companies developing biologic therapies for the treatment of other anemia indications that we may also seek to pursue in the future, including anemia of MDS. For example, Acceleron Pharma, Inc., in partnership with Celgene Corporation, is in Phase 3 development ofa Bristol-Myers Squibb company (“Celgene”), developed Reblozyl® (luspatercept), a protein therapeutic, candidates to treatwhich was approved in November 2019 by the FDA for anemia and associated complicationstreatment in patients with ß-thalassemia and MDS, and has received orphan drug status fromß-thalassemia. Its Biologics License Application (“BLA”) under review by the EMA and FDA, for these indications.treatment of adult patients with very low to intermediate MDS associated anemia who have ring sideroblast and require red blood cell transfusions, has a Prescription Drug User Fee Act date of April 4, 2020. Acceleron expects an EMA decision on the MAA in the second half of 2020. In Japan, Celgene started a luspatercept Phase 2 study in May 2019. We may face competition for patient recruitment, and enrollment for clinical trials, and potentially in commercial sales. There may also be new therapies for renal-related diseases that could limit the market or level of reimbursement available for roxadustat if and when it is commercialized.

In China, biosimilars of epoetin alfa are offered by Chinese pharmaceutical companies such as EPIAO marketed by 3SBio Inc. as well as more than 15 other local manufacturers. We may also face competition by HIF-PH inhibitors from other companies such as Akebia, Bayer, and GSK, which was authorized by the NMPANational Medical Products Administration (“NMPA”) to conduct trials in China to support its ex-China regulatory filings, as well asfilings. Two domestic companies, Jiangsu Hengrui Medicine Co., Ltd. and Guandong Dongyangguang PharmaceuticalSunshine Health Investment Co., Ltd, a domestic Chinese company, which washave been permitted by the NMPA to conduct clinical trials for CKD anemia patients both on dialysis and not on dialysis.dialysis, and 3SBio Inc. has submitted a clinical trial application to the NMPA to initiate trials for their HIF-PH inhibitor. Another domestic company, China Medical System, in-licensed desidustat, a compound which is currently in Phase 3 trials in India, from Zydus Candila for greater China in January 2020. Akebia announced in December 2015 that it hashad entered into a development and commercialization partnership with Mitsubishi Tanabe Pharmaceutical Corporation for its HIF-PH inhibitor vadadustat in Japan, Taiwan, South Korea, India and certain other countries in Asia, and announced in April 2017 an expansion of their U.S. collaboration with Otsuka to add markets, including China. 3SBio Inc. announced in 2016 its plan on beginningto begin a Phase 1 clinical trial of a HIF-PH inhibitor for the China market.

The first biosimilar ESA, Pfizer’s Retacrit® (epoetin zeta), entered the U.S. market in November 2018. Market penetration of Retacrit and the potential addition of other biosimilar ESAs currently under development may alter the competitive and pricing landscape of anemia therapy in CKD patients on dialysis under the ESRD bundle. The patents for Amgen’s EPOGEN^® (epoetin alfa) expired in 2004 in the EU,Europe, and the final material patents in the U.S. expired in May 2015. Several biosimilar versions of currently marketed ESAs are available for sale in the EU,Europe, China and other territories. In the U.S., a few ESA biosimilars are currently under development. Sandoz, a division of Novartis, markets Binocrit® (epoetin alfa) in Europe and may file a biosimilar Biologics License Application (“BLA”)BLA in the U.S.

The majority of the current CKD anemia market focuses on dialysis patients, who visit dialysis centers on a regular basis, typically three times a week, and anemia therapies are administered as part of the visit. Two of the largest operators of dialysis clinics in the U.S., DaVita Healthcare Partners Inc. (“DaVita”), and Fresenius Medical Care AG & Co. KGaA (“Fresenius”), collectively provide dialysis care to approximately 70%more than 80% of U.S. dialysis patients, and therefore have historically won long-term contracts including rebate terms with Amgen. DaVita recently entered intohas a new six-year sourcing and supply agreement with Amgen effective through 2022. Fresenius’ contract with Amgen expired in 2015, following which Fresenius is providing Roche’s ESA Mircera® to a significant portion of its U.S. dialysis patients. Successful penetration in this market may require a significant agreement with Fresenius or DaVita, on favorable terms and on a timely basis.

Pamrevlumab

We are currently in Phase 2 development of pamrevlumab to treat DMD and are initiating Phase 3 development of pamrevlumab in IPF and pancreatic cancer. Most of our competitors have significantly more resources and expertise in development, commercialization and manufacturing, particularly due to the fact that we have not yet established a co-development partnership for pamrevlumab. For example, both Roche and Boehringer Ingelheim, which market products for the treatment of IPF in the U.S., have successfully developed and commercialized drugs in various indications and have built sales organizations that we do not currently have; both have more resources and more established relationships when competing with us for patient recruitment and enrollment for clinical trials or, if we are approved, in the market.

Idiopathic Pulmonary Fibrosis

If approved and launched commercially to treat IPF, pamrevlumab is expected to compete with Roche’s Esbriet® (pirfenidone), and Boehringer Ingelheim’s Ofev® (nintedanib). We believe that if pamrevlumab can be shown to safely stabilize or reverse lung fibrosis, and thus stabilize or improve lung function in IPF patients, it can compete with pirfenidone and nintedanib for market share in IPF. However, it may be difficult to encourage treatment providers and patients to switch to pamrevlumab from a product they are already familiar with. We may also face competition from potential new IPF therapies.therapies in recruitment and enrollment in our clinical trials and potentially in commercialization.

Pamrevlumab is an injectable protein, which may be more expensive and less convenient than small molecules such as nintedanib and pirfenidone. Other potential competitive product candidates in various stages of development for IPF include Biogen-Idec’s BG-00011, Galapagos NV’s GLPG1690 and GLPG1205, Kadmon Holdings, Inc.’s KD025, Prometic Life Sciences Inc.’sLiminal BioSciences’ PBI-4050, and Roche/Promedior, Inc.’s PRM-151. In particular, GLPG1690 is in a Phase 3 program consisting of two clinical trials with 750 subjects each, intended to support both the U.S. NDA and MAA in Europe.

Pancreatic Cancer

We are developing pamrevlumab to be used in combination with Abraxane^® (nab-paclitaxel) and gemcitabine in pancreatic cancer. Celgene’s Abraxane was launched in the U.S. and Europe in 2013 and 2014, respectively, and was the first drug approved in this disease in nearly a decade. In 2015, Merrimack Pharmaceuticals Inc. (“Merrimack”) received FDA approval for the use of ONIVYDE (irinotecan liposome injection, now licensed to Eli Lilly)Ipsen) for the treatment of patients with metastatic adenocarcinoma of the pancreas after disease progression following gemcitabine-based therapy, and the combination therapy with Abraxane and gemcitabine became the first-line standard of care in these patients. As treatments for pancreatic cancer have shown limited success to date, combination therapies are expected, but the incremental cost may slow a new product adoption in the market, at least until the generic versions of Abraxane becomes available. In addition, we may also face competition from other agentsproducts seeking approval in conjunction with gemcitabine and Abraxane for patient recruitmentincluding FOLFRINOX, a combination chemotherapy regimen of folic acid, 5-fluouracil, oxaliplatin and enrollment in our clinical trials, and potentially in commercialization. NewLink Genetics Corporation’s indoximodirinotecan, Rafael Pharma’s defactinib/CPI-613, and Merrimack’s istiratumab are examples.istiratumab.

Duchenne Muscular Dystrophy

If approved and launched commercially to treat DMD, pamrevlumab is expected to face competition from drugs that were recentlyhave been approved in major markets such as the U.S., EU, and Japan.

On September 19, 2016, the FDA approved Sarepta Therapeutics Inc.’s (“Sarepta”) Exondys 51®51^TM (eteplirsen). This was the first drug approved to treat DMD. Exondys 51®51 is approved to treat patients who have a mutation of the dystrophin gene amenable to exon 51 skipping, therapy. This mutation represents a subset ofrepresenting approximately 13% of patients with DMD. In Europe, Sarepta received a negative opinion for its marketing application for eteplirsen from the EMA in September 2018.

On February 9, 2017, Sarepta has reported a full year Exondys 51 revenue of $380 million in 2019. Sarepta’s Vyondys 53^TM (golodirsen) was also approved by the FDA approved Marathon Pharmaceuticals’ (“Marathon”) corticosteroid Emflaza® (deflazacort)in December 2019 for the treatment of patients five years and older with DMD. Although approveda confirmed genetic mutation that is amenable to exon 53 skipping, which accounts for other indications outside8% of the U.S., this was the first approval for deflazacort in the U.S. and the first approval in the U.S. for the use of a corticosteroid to treat DMD. On March 16, 2016, Marathon announced it had sold the commercialization rights of Emflaza® to PTC Therapeutics.DMD population.

PTC Therapeutics’ product Translarna ^TM received a conditional approval in Europe in 2014, which was renewed in November 2016 with a request for a new randomized placebo-controlled 18-month study by the Committee for Medicinal Products for Human Use of the EMA; however, the FDA informed the sponsor in a complete response letter in October 2017, as well as in its response to PTC Therapeutics’ appeal, that the FDA is unable to approve the application in its current form. While Translarna ^TM targets a different set of DMD patients from those targeted by Sarepta’s Exondys 51®, it is also limited to a subset of patients who carry a specific mutation. Conversely, pamrevlumab is intended to treat DMD patients without limitation to type of mutation.

Pamrevlumab may also face competition from other drugs currently in clinical development in patient recruiting and enrollment in clinical trials, and, if approved, in commercialization. Examples of those compounds currently under clinical development are the drug candidates from Catabasis Pharmaceuticals (“Catabasis”), Santhera Pharmaceuticals (“Santhera”) and Sarepta. Catabasis’ edasalonexent was reported to have preserved muscle function and slowed the progression of DMD compared to rates of change in the control period prior to treatment with edasalonexent in a Phase 2 study, and is currently undergoing Phase 3 development. Sarepta’s golodirsen, a new exon skipping agent, is also currently in Phase 3 development. Santhera’s Raxone®/Catena®Puldysa® (idebenone) MAA for treatment of DMD has been rejected bywas filed with the EMA, and the opinion from the Committee for Medicinal Products for Human Use is expected in the second quarter of 2020. The FDA requested additional clinical data from the idebenone Phase 3 trial currently ongoing in the U.S. and Europe. Santhera offers compassionate use of idebenone in patients with DMD in U.S. and UK. Sarepta’s SRP-9001 is an investigational gene therapy for DMD. Sarepta announced in December 2019 the licensing agreement with Roche that grants Roche the commercial rights to SRP-9001 outside the U.S.  

MANUFACTURE AND SUPPLY

We have historically and in the future plan to continue to enter into contractual arrangements with qualified third-party manufacturers to manufacture and package our products and product candidates for territories outside of China.candidates. We believe that this manufacturing strategy enables us to more efficiently direct financial resources to the research, development and commercialization of product candidates rather than diverting resources to establishing a significant internal manufacturing infrastructure, unless there is additional strategic value for establishing manufacturing capabilities, such as in China. As our product candidates proceed through development, we are discussing the timing of entryexplore or enter into longer term commercial supply agreements with key suppliers and manufacturers in order to meet the ongoing and planned clinical and commercial supply needs for ourselves and our partners. Our timing of entry into these agreements is based on the current development and commercialization plans for roxadustat, pamrevlumab and FG-5200.plans.

Roxadustat

Roxadustat is a small-molecule drug manufactured from generally available commercial starting materials and chemical technologies and multi-purpose equipment available from many third party contract manufacturers. Outside of China, we have used, and plan to continue to use, Shanghai SynTheAll Pharmaceutical Co., Ltd. (“WuXi STA”) and Catalent, Inc. (“Catalent”) to manufacture

as our primary manufacturers of roxadustat APIdrug substance (also known as active pharmaceutical ingredient or “API”) and roxadustat drug product, respectively. WuXi STA is located in China and currently supplies our API globally except for China, for which it manufactures an intermediate to be further manufactured by FibroGen China. WuXi STA has passed inspections by several regulatory agencies, including the FDA and NMPA, and is Current Good Manufacturing Practice (“cGMP”) compliant. Catalent is located in the U.S. and supplies our drug product tablets globally except for Japan, where they are manufactured by Astellas, and China, where they are manufactured by FibroGen China. Catalent has passed several regulatory inspections, including by the FDA, and manufactures commercial products for other clients.

To date, we believe that roxadustat has been manufactured under cGMP and in compliance with applicable regulatory requirements for the manufacture of drug substance and drug product used in clinical trials and we and Astellas have performed audits of the existing roxadustat manufacturers. The intended commercial manufacturing route outside of China has been successfully scaled up to multiple hundred kilogram scale and produced several metric tons of roxadustat drug substance. We are in discussions with multiple parties regarding longer term commercial supply arrangements.

In China, our Beijing facility received the Good Manufacturing Practice (“GMP”) license for Drug SubstanceAPI and Drug Product.drug product. We plan to useare manufacturing drug product fromat our FibroGen Beijing manufacturing facility for commercial supply. We expectare manufacturing API at our Cangzhou manufacturing facility, to bewhich has been fully qualified and licensed for manufacture of roxadustat API for the China market later this year.licensed. We may also qualify a third party manufacturer to produce commercial API under the Marketing Authorization Holder System program.

Irix Pharmaceuticals, Inc.

In July 2002, we and IRIX Pharmaceuticals, Inc. (“IRIX”), a third party manufacturer, entered into a Letter of Agreement for IRIX Pharmaceuticals Single Source Manufacturing Agreement (the “Letter of Agreement”), in connection with a contract manufacturing arrangement for clinical supplies of HIF-PH inhibitors, including roxadustat. The Letter of Agreement contained a service agreement that included terms and schedule for the delivery of clinical materials, and also included a term sheet for a single source agreement for the cGMP manufacture of HIF-PH inhibitors, including roxadustat. Specifically, pursuant to the Letter of Agreement, we and IRIX agreed to negotiate a single source manufacturing agreement that included a first right to negotiate a manufacturing contract for HIF-PH inhibitors, including roxadustat, provided that IRIX is able to match any third party bids within 5%, and the exclusive right to manufacture extends for five years after approval of an NDA. Any agreement would provide that no minimum amounts would be specified until appropriate by forecast, that we and our commercialization partner would have the rights to contract with independent third parties that exceed IRIX’s internal capabilities or in the event that we or our commercialization partner determines for reasons of continuity and security that such a need exists, provided that IRIX would supply a majority of the product if it is able to meet the requirements and the schedule required by us and our partner. Subsequent to the Letter of Agreement, we and IRIX have entered into several additional service agreements. IRIX has requested in writing that we honor the Letter of Agreement with respect to the single source manufacturing agreement. To date, we have offered to IRIX opportunities to bid for the manufacture of HIF-PH inhibitors, including roxadustat. In 2015, Patheon Pharmaceuticals Inc., a business unit of DPx Holdings B.V. (“Patheon”), acquired IRIX.IRIX, and in 2017 ThermoFisher Scientific Inc. acquired Patheon.

Pamrevlumab

To date, pamrevlumab has been manufactured using specialized biopharmaceutical process techniques under an agreement with a qualified third party contract manufacturer, Boehringer Ingelheim. Our contract manufacturer is the sole source for the current clinical supply of the drug substance and drug product for pamrevlumab. Our contract manufacturer is only obligated to supply the amounts of pamrevlumab as agreed on pursuant to work orders that are executed from time to time under our agreement as we determine need for clinical material, and we are not required to make fixed or minimum annual purchases. Our existing agreement allows us to transfer the cell line manufacturing process to another third party manufacturer at our expense, and our contractor is obligated to provide reasonable technology transfer assistance in the event of such a transfer.

FG-5200

The manufacture of FG-5200 requires three distinct steps under cGMP and involves three parties in three locations. Our proprietary recombinant human collagen is produced under contract by a third party in Finland. After quality assurance release, we freeze-dry the material in our U.S. facility. We are still determining any facility licensing requirements for this step. The final step is the production of FG-5200, which will be done in a qualified aseptic manufacturing suite at the FibroGen Beijing manufacturing facility. After completion of the final validation of the sterile process (currently in progress), implants will be manufactured there for product registration testing, clinical testing, as well as for commercial use in the future.

GOVERNMENT REGULATION

The clinical testing, manufacturing, labeling, storage, distribution, record keeping, advertising, promotion, import, export and marketing, among other things, of our product candidates are subject to extensive regulation by governmental authorities in the U.S. and other countries. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations, including in Europe and China, requires the expenditure of substantial time and financial resources. 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.

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. Pharmaceutical products are also subject to regulation by other governmental agencies, such as the Federal Trade Commission, the Office of Inspector General of the U.S. Department of Health and Human Services, the Consumer Product Safety Commission and the Environmental Protection Agency. The clinical testing, manufacturing, labeling, storage, distribution, record keeping, advertising, promotion, import, export and marketing, among other things, of our product candidates are subject to extensive regulation by governmental authorities in the U.S. and other countries. The steps required before a drug or biologic may be approved for marketing in the U.S. generally include:

The testing and approval process requires substantial time, effort and financial resources, and the receipt and timing of any approval is uncertain. The FDA may suspend clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to a potentially unacceptable health risk.

Preclinical studies include laboratory evaluations of the product candidate, as well as animal studies to assess the potential safety and efficacy of the product candidate. Preclinical studies must be conducted in compliance with FDA regulations regarding GLPs. The results of the preclinical studies, together with manufacturing information and analytical data, are submitted to the FDA as part of the IND, which includes the results of preclinical testing and a protocol detailing, among other things, the objectives of the clinical trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated if the first phase or phases of the clinical trial lends themselves to an efficacy determination. The IND will become effective automatically 30 days after receipt by the FDA, unless the FDA raises concerns or questions about the conduct of the trials as outlined in the IND prior to that time. In this case, the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can proceed. The IND must become effective before clinical trials may be commenced.

Clinical trials involve the administration of the product candidates to healthy volunteers, or subjects, or patients with the disease to be treated under the supervision of a qualified principal investigator. Clinical trials must be conducted under the supervision of one or more qualified principal investigators in accordance with GCPs and in accordance with protocols detailing the objectives of the applicable phase of the trial, dosing procedures, research subject selection and exclusion criteria and the safety and effectiveness criteria to be evaluated. Progress reports detailing the status of clinical trials must be submitted to the FDA annually. Sponsors must also timely report to the FDA serious and unexpected adverse events, any clinically important increase in the rate of a serious suspected adverse event over that listed in the protocol or investigator’s brochure, or any findings from other studies or tests that suggest a significant risk in humans exposed to the product candidate. Further, the protocol for each clinical trial must be reviewed and approved by an independent institutional review board (“IRB”), either centrally or individually at each institution at which the clinical trial will be conducted. The IRB will consider, among other things, ethical factors, and the safety of human subjects and the possible liability of the institution.

Clinical trials are typically conducted in three sequential phases prior to approval, but the phases may overlap and different trials may be initiated with the same drug candidate within the same phase of development in similar or different patient populations. These phases generally include the following:

Phase 1. Phase 1 clinical trials represent the initial introduction of a product candidate into human subjects, frequently healthy volunteers. In Phase 1, the product candidate is usually tested for pharmacodynamic and pharmacokinetic properties such as safety, including adverse effects, dosage tolerance, absorption, distribution, metabolism and excretion.

Phase 2. Phase 2 clinical trials usually involve studies in a limited patient population to (1) evaluate the efficacy of the product candidate for specific indications, (2) determine dosage tolerance and optimal dosage and (3) identify possible adverse effects and safety risks.

Phase 3. If a product candidate is found to be potentially effective and to have an acceptable safety profile in Phase 2 studies, the clinical trial program will be expanded to Phase 3 clinical trials to further evaluate clinical efficacy, optimal dosage and safety within an expanded patient population at geographically dispersed clinical study sites.

Phase 4. Phase 4 clinical trials are conducted after approval to gain additional experience from the treatment of patients in the intended therapeutic indication and to document a clinical benefit in the case of drugs approved under accelerated approval regulations, or when otherwise requested by the FDA in the form of post-market requirements or commitments. Failure to promptly conduct any required Phase 4 clinical trials could result in withdrawal of approval.

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 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.

Review of Application

Once the NDA or BLA submission has been accepted for filing, which occurs, if at all, 60 days after submission, the FDA informs the applicant of the specific date by which the FDA intends to complete its review. This is typically 12 months from the date of submission. The review process is often extended by FDA requests for additional information or clarification. The FDA reviews NDAs and BLAs to determine, among other things, whether the proposed product is safe and effective for its intended use, and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, strength, quality and purity. Before approving an NDA or BLA, the FDA may inspect the facilities at which the product is manufactured and will not approve the product unless the manufacturing facility complies with cGMPs and will also inspect clinical trial sites for integrity of data supporting safety and efficacy. During the approval process, the FDA also will determine whether a risk evaluation and mitigation strategy (“REMS”),REMS, is necessary to assure the safe use of the product. If the FDA concludes a REMS is needed, the sponsor of the application must submit a proposed REMS; the FDA will not approve the application without an approved REMS, if required. A REMS can substantially increase the costs of obtaining approval. The FDA may also convene an advisory committee of external experts to provide input on certain review issues relating to risk, benefit and interpretation of clinical trial data. The FDA may delay approval of an NDA if applicable regulatory criteria are not satisfied and/or the FDA requires additional testing or information. The FDA may require post-marketing testing and surveillance to monitor safety or efficacy of a product. FDA will issue either an approval of the NDA or BLA or a complete response letter detailing the deficiencies and information required in order for reconsideration of the application.

Pediatric Exclusivity and Pediatric Use

Under the Best Pharmaceuticals for Children Act, certain drugs or biologics may obtain an additional six months of exclusivity in an indication, if the sponsor submits information requested in writing by the FDA (“Written Request”), relating to the use of the active moiety of the drug or biologic in children. The FDA may not issue a Written Request for studies on unapproved or approved indications or where it determines that information relating to the use of a drug or biologic in a pediatric population, or part of the pediatric population, may not produce health benefits in that population.

We have not received a Written Request for such pediatric studies with respect to our product candidates, although we may ask the FDA to issue a Written Request for studies in the future. To receive the six-month pediatric market exclusivity, we would have to receive a Written Request from the FDA, conduct the requested studies in accordance with a written agreement with the FDA or, if there is no written agreement, in accordance with commonly accepted scientific principles, and submit reports of the studies. A Written Request may include studies for indications that are not currently in the labeling if the FDA determines that such information will benefit the public health. The FDA will accept the reports upon its determination that the studies were conducted in accordance with and are responsive to the original Written Request, agreement, or commonly accepted scientific principles, as appropriate, and that the reports comply with the FDA’s filing requirements.

In addition, the Pediatric Research Equity Act (“PREA”) requires a sponsor to conduct pediatric studies for most drugs and biologicals, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration. Under PREA, original NDAs, BLAs and supplements thereto must contain a pediatric assessment unless the sponsor has received a deferral or waiver. The required assessment must include the evaluation of the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations and support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA, on its own initiative or at the request of the sponsor, may request a deferral of pediatric studies for some or all of the pediatric subpopulations. A deferral may be granted by FDA if they believe that additional safety or effectiveness data in the adult population needs to be collected before the pediatric studies begin. After April 2013, the FDA must send a non-compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation.

Post-Approval Requirements

Even after approval, drugs and biologics manufactured or distributed pursuant to FDA approvals are subject to continuous regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims are subject to prior FDA review and approval. There also are continuing, annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data.

The FDA may impose a number of post-approval requirements as a condition of approval of an NDA or BLA. For example, the FDA may require post-marketing testing, including Phase 4 clinical trials, and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization.

In addition, entities involved in the manufacture and distribution of approved drugs and biologics are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.

Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may also result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:

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. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.

Prescription Drug Marketing Act

The distribution of pharmaceutical products is subject to the Prescription Drug Marketing Act (“PDMA”), which regulates the distribution of drugs and drug samples at the federal level and sets minimum standards for the registration and regulation of drug distributors at the state level. Under the PDMA and state law, states require the registration of manufacturers and distributors who provide pharmaceuticals in that state, including in certain states manufacturers and distributors who ship pharmaceuticals into the state even if such manufacturers or distributors have no place of business within the state. The PDMA and state laws impose requirements and limitations upon drug sampling to ensure accountability in the distribution of samples. The PDMA sets forth civil and criminal penalties for violations of these and other provisions.

Federal and State Fraud and Abuse and Data Privacy and Security and Transparency Laws and Regulations

In addition to FDA restrictions on marketing of pharmaceutical products, federal and state healthcare laws restrict certain business practices in the biopharmaceutical industry. These laws include, but are not limited to, anti-kickback, false claims, data privacy and security, and transparency statutes and regulations.

The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, to induce, or in return for, purchasing, leasing, ordering or arranging for the purchase, lease or order of any good, facility, item or service reimbursable under Medicare, Medicaid or other federal healthcare programs. The term “remuneration” has been broadly interpreted to include anything of value, including for example, gifts, discounts, the furnishing of supplies or equipment, credit arrangements, payments of cash, waivers of payment, ownership interests and providing anything at less than its fair market value. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers and formulary managers on the other. Although there are a number of statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution, the exemptions and safe harbors are drawn narrowly, and our practices may not in all cases meet all of the criteria for a statutory exception or safe harbor protection. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the statute has been violated. The intent standard under the Anti-Kickback Statute was amended by the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010 (collectively “PPACA”), to a stricter intent standard such that a person or entity no longer needs to have actual knowledge of this statute or the specific intent to violate it in order to have committed a violation. In addition, PPACA codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act (discussed below). Further, civil monetary penalties statute imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

The federal false claims laws prohibit, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval to the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government. As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand” for money or property presented to the U.S. government. Recently, several pharmaceutical and other healthcare companies have been prosecuted under these laws for, among other things, allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. Other companies have been prosecuted for causing false claims to be submitted because of the companies’ marketing of the product for unapproved, and thus non-reimbursable, uses. The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of, or payment for, healthcare benefits, items or services.

In addition, we may be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business. HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and its implementing regulations, imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to business associates — independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity. HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions. In addition, state laws govern the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

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 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.

Also, many states have similar healthcare statutes or regulations that apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor. Some states require the posting of information relating to clinical studies. In addition, California requires pharmaceutical companies to implement a comprehensive compliance program that includes a limit on expenditures for, or payments to, individual medical or health professionals. If our operations are found to be in violation of any of the health regulatory laws described above or any other laws that apply to us, we may be subject to penalties, including potentially significant criminal, civil and/or administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion of products from reimbursement under government programs, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. 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.

Pharmaceutical Coverage, Pricing and Reimbursement

In both domestic and foreign markets, our sales of any approved products will depend in part on the availability of coverage and adequate reimbursement from third-party payors. Third-party payors include government health administrative authorities, managed care providers, private health insurers and other organizations. Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products. Sales of our products will therefore depend substantially, both domestically and abroad, on the extent to which the costs of our products will be paid by third-party payors. These third-party payors are increasingly focused on containing healthcare costs by challenging the price and examining the cost-effectiveness of medical products and services. In addition, significant uncertainty exists as to the coverage and reimbursement status of newly approved healthcare product candidates. The market for our products and product candidates for which we may receive regulatory approval will depend significantly on access to third-party payors’ drug formularies, or lists of medications for which third-party payors provide coverage and reimbursement. The industry competition to be included in such formularies often leads to downward pricing pressures on pharmaceutical companies. Also, third-party payors may refuse to include a particular branded drug in their formularies or otherwise restrict patient access to a branded drug when a less costly generic equivalent or other alternative is available.

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 may be required to provide scientific and clinical support for the use of any product to each third-party payor separately with no assurance that approval would be obtained, and we may need to conduct expensive pharmacoeconomic studies in order to demonstrate the cost-effectiveness of our products. This process could delay the market acceptance of any product and could have a negative effect on our future revenues and operating results. We cannot be certain that our products and our product candidates will be considered cost-effective. Because coverage and reimbursement determinations are made on a payor-by-payor basis, obtaining acceptable coverage and reimbursement from one payor does not guarantee that we will obtain similar acceptable coverage or reimbursement from another payor. If we are unable to obtain coverage of, and adequate reimbursement and payment levels for, our product candidates from third-party payors, physicians may limit how much or under what circumstances they will prescribe or administer them and patients may decline to purchase them. This in turn could affect our ability to successfully commercialize our products and impact our profitability, results of operations, financial condition and future success.

In addition, in many foreign countries, particularly the countries of the EUEurope and China, the pricing of prescription drugs is subject to government control. In some non-U.S. jurisdictions, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example, the EUEurope provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of a company placing the medicinal product on the market. We may face competition for our product candidates from lower-priced products in foreign countries that have placed price controls on pharmaceutical products. In addition, there may be importation of foreign products that compete with our own products, which could negatively impact our profitability.

Healthcare Reform

In the U.S. and foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system that could affect our future results of operations as we begin to directly commercialize our products. In particular, there have been and continue to be a number of initiatives at the U.S. federal and state level that seek to reduce healthcare costs. If a drug product is reimbursed by Medicare or Medicaid, pricing and rebate programs must comply with, as applicable, the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990, as amended, and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”). The MMA imposed new requirements for the distribution and pricing of prescription drugs for Medicare beneficiaries. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities that provide coverage of outpatient prescription drugs. Part D plans include both stand-alone prescription drug benefit plans and prescription drug coverage as a supplement to Medicare Advantage plans. Unlike Medicare Part A and B, Part D coverage is not standardized. Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs, and each drug plan can develop its own drug formulary that identifies which drugs it will cover and at what tier or level. However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D drugs, though not necessarily all the drugs in each category or class. Any formulary used by a Part D prescription drug plan must be developed and reviewed by a pharmacy and therapeutic committee. Government payment for some of the costs of prescription drugs may increase demand for our products for which we receive marketing approval. However, any negotiated prices for our future products covered by a Part D prescription drug plan will likely be lower than the prices we might otherwise obtain from non-governmental payors. Moreover, while the MMA applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment that results from Medicare Part D may result in a similar reduction in payments from non-governmental payors.

Moreover, on November 27, 2013, the federal Drug Supply Chain Security Act was signed into law, which imposes new obligations on manufacturers of pharmaceutical products, among others, related to product tracking and tracing. Among the requirements of this new federal legislation, manufacturers will be required to provide certain information regarding the drug product to individuals and entities to which product ownership is transferred, label drug product with a product identifier, and keep certain records regarding the drug product. Further, under this new legislation, manufacturers will have drug product investigation, quarantine, disposition, and notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulterated products, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably likely to result in serious health consequences or death.

Furthermore, political, economic and regulatory influences are subjecting the healthcare industry in the U.S. to fundamental change. Initiatives to reduce the federal budget and debt and to reform healthcare coverage are increasing cost-containment efforts. We anticipate that Congress, state legislatures and the private sector will continue to review and assess alternative healthcare benefits, controls on healthcare spending through limitations on the growth of private health insurance premiums and Medicare and Medicaid spending, the creation of large insurance purchasing groups, price controls on pharmaceuticals and other fundamental changes to the healthcare delivery system. Any proposed or actual changes could limit or eliminate our spending on development projects and affect our ultimate profitability. In March 2010, PPACA was signed into law. PPACA has the potential to substantially change the way healthcare is financed by both governmental and private insurers. Among other cost containment measures, PPACA established: an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents; revised the methodology by which rebates owed by manufacturers to the state and federal government for covered outpatient drugs under the Medicaid Drug Rebate Program are calculated; increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program; and extended the Medicaid Drug Rebate program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations. In the future, there may continue to be additional proposals relating to the reform of the U.S. healthcare system, some of which could further limit the prices we are able to charge for our products, or the amounts of reimbursement available for our products. If future legislation were to impose direct governmental price controls and access restrictions, it could have a significant adverse impact on our business. Managed care organizations, as well as Medicaid and other government agencies, continue to seek price discounts. Some states have 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. 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 have a material adverse impact on our profitability.

Regulation in China

The pharmaceutical industry in China is highly regulated. The primary regulatory authority is the NMPA, including its provincial and local branches. As a developer, manufacturer and supplier of drugs, we are subject to regulation and oversight by the NMPA and its provincial and local branches. The Drug Administration Law of China provides the basic legal framework for the administration of the production and sale of pharmaceuticals in China and covers the manufacturing, distributing, packaging, pricing and advertising of pharmaceutical products. Its implementing regulations set forth detailed rules with respect to the administration of pharmaceuticals in China. In addition, we are, and we will be, subject to other Chinese laws and regulations that are applicable to business operators, manufacturers and distributors in general.

Pharmaceutical Clinical Development

A new drug must be approved by the NMPA before it can be manufactured and marketed for sale. To obtain NMPA approval, the applicant must conduct clinical trials, which must be approved by the NMPA and are subject to the NMPA’s supervision and inspection. There are four phases of clinical trials. Application for registration of new drugs requires completion of Phase 1, 2 and 3 of clinical trials, similar to the U.S. In addition, the NMPA may require the conduct of Phase 4 studies as a condition to approval.

Phase 4 studies are post-marketing studies to assess the therapeutic effectiveness of and adverse reactions to the new drug, including an evaluation of the benefits and risks, when used among the general population or specific groups, with findings used to inform adjustments to dosage, among other things.

NDA and Approval to Market

China requires approval of the NDA as well as the manufacturing facility before a drug can be marketed in China. Approval and oversight are performed at national and provincial levels of the NMPA, involve multiple agencies and consist of various stages of approval.

Under the applicable drug registration regulations, drug registration applications are divided into three different types, namely Domestic NDA, Domestic Generic Drug Application, and Imported Drug Application. Drugs fall into one of three categories, namely chemical medicine, biological product or traditional Chinese or natural medicine.

Our roxadustat NDA for treatment of CKD anemia was submitted by FibroGen Beijing as a domestic entity has submitted a Domestic NDA under the Domestic Class 1 designation, which refers to a new drug which has never been marketed in any country.

In order to obtain market authorization, FibroGen Beijing has submitted to the NMPA anOur NDA package that containsin China contained information similar to what is necessary for a U.S. NDA, including preclinical data, clinical data, technical data on API and drug product, and related stability data. The stability data has been generated from a three-batch registration campaign that was conducted at our Beijing facility, from which samples were successfully tested by the National Institutes for Food and Drug Control.

The NDA package was found acceptable to the NMPA, and FibroGen Beijing was granted a New Drug License confirming the drug as suitable for marketing in December 2018. In addition, FibroGen Beijing was granted a Manufacturing License which lists the Drug Approval Code as well as the name and address of the Manufacturing License holder. Manufacturing further requires a PPP as well as cGMP certification. In 2014, we received a PPP certifying that our manufacturing facility and manufacturing process in that facility are suitable for the manufacture of a drug for clinical or commercial purposes, but we will need to apply for another PPP for our Cangzhou manufacturing facility currently under construction. A PPP requires demonstration that the facility has: (i) legally qualified pharmaceutical and engineering professionals and necessary technical workers; (ii) the premises, facilities and hygienic environment required for drug manufacturing; (iii) institutions, personnel, instruments and equipment necessary to conduct quality control and testing for drugs to be produced; and (iv) rules and regulations to ensure the quality of drugs. The PPP is required prior to conducting the registration campaign for stability and other data for the NDA.

Shortly before NDA approval, FibroGen Beijing conducted a three-batch validation campaign, one of which was observed onsite by the NMPA. Following the successful completion of the validation campaign and associated inspection, FibroGen Beijing was granted a cGMP certification for the commercial production of roxadustat at our Beijing manufacturing facility. We plan to use drug product fromare using our FibroGen Beijing manufacturing facility for commercial supply. We expect oursupply of drug product.  Our Cangzhou manufacturing facility to behas been fully qualified and licensed for manufacture of roxadustat API for the China market, later in 2019.and we will continue to use this facility for commercial supply. We may also qualify a third party manufacturer to produce commercial API under the Marketing Authorization Holder System program.

Pricing, Reimbursement, Hospital Listing, and Tendering

Please see the “Commercialization” discussion above in the section“Roxadustat for the Treatment of Anemia in Chronic Kidney Disease in China.”

Device Regulation

In China, medical devices are classified into three different categories, Class I, Class II and Class III, depending on the degree of risk associated with each medical device and the extent of control needed to ensure safety and effectiveness. Classification of a medical device is important because the class to which a medical device is assigned determines, among other things, whether a manufacturer needs to obtain a production permit and whether clinical trials are required. Classification of a medical device also determines the types of registration required and the level of regulatory authority involved in effecting the product registration. In January 2016, we received the NMPA’s (then the China Food and Drug Administration) approval of our device classification application to designate FG-5200 corneal implants as a Domestic Class III medical device. Class III devices also require product registration and are regulated by the NMPA under the strictest regulatory control.

Before a Class III medical device can be manufactured for commercial distribution, a manufacturer must effect medical device registration by proving the safety and effectiveness of the medical device to the satisfaction of respective levels of the NMPA and clinical trials are required for registration of Class III medical devices. In order to conduct a clinical trial on a Class III medical device, the NMPA requires manufacturers to apply for and obtain in advance a favorable inspection result for the device from an inspection center jointly recognized by the NMPA and the State Administration of Quality Supervision, Inspection and Quarantine. The application for clinical trials involving a Class III medical device with high risk must be approved by the NMPA before the manufacturer may begin clinical trials. A registration application for a Class III medical device must provide required pre-clinical and clinical trial data and information about the medical device and its components regarding, among other things, device design, manufacturing and labeling. The NMPA must provide the application data to the technical evaluation institute for an evaluation opinion within three working days after its acceptance of the application package and decide, within twenty business days after its receipt of the evaluation opinion, whether the application for registration is approved. However, the time for conducting any detection, expert review and hearing process, if necessary, will not be counted in the abovementioned time limit. If the NMPA requires supplemental information, the approval process may take much longer. The registration is valid for five years and application is required for renewal upon expiration of the existing registration certificate. Once a device is approved, a manufacturer must possess a production permit from the provincial level food and drug administration before manufacturing Class III medical devices.

Foreign Regulation Outside of China

We are planning on seeking approvalhave received marketing authorization for roxadustat in Japan for anemia of CKD in dialysis patients, and potentiallyin China for our other product candidates,dialysis and non-dialysis patients. Astellas has submitted a supplemental NDA for non-dialysis patients in Europe, Japan and China as well asintends on submitting an MAA for Europe in the first half of 2020. Our partners also intend to submit for marketing authorization in other countries.countries and we may file for marketing authorization for pamrevlumab or roxadustat in other indications and in other countries in the future. In order to market any product outside of the U.S., we would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, manufacturing, marketing authorization, commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable foreign regulatory authorities before we can commence clinical trials or marketing of the product in foreign countries and jurisdictions. Although many of the issues discussed above with respect to the U.S. apply similarly in the context of other countries we are seeking approval in, including Europe and China, the approval process varies between countries and jurisdictions and can involve different amounts of product testing and additional administrative review periods. For example, in Europe and in China, a sponsor must submit a CTA,clinical trial application (“CTA”), much like an IND prior to the commencement of human clinical trials. A CTA must be submitted to each national health authority and an independent ethics committee.

For other countries outside of the EU,Europe, such as China and the countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical trials, product licensing, pricing, and reimbursement vary from country to country. The time required to obtain approval in other countries and jurisdictions might differ from or be longer than that required to obtain FDA approval. 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.

Regulatory Exclusivity for Approved Products

U.S. Patent Term Restoration

Depending upon the timing, duration, and specifics of the FDA approval of our product candidates, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act. The Hatch-Waxman Act permits a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. 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. Patent term restoration cannot, however, extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. In addition, only one patent applicable to an approved product is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. The U.S. Patent and Trademark Office, in consultation with the FDA, reviews and approves applications for any patent term extension or restoration. In the future, we expect to apply for restoration of patent term for patents relating to each of our product candidates in order to add patent life beyond the current expiration date of such patents, depending on the length of the clinical trials and other factors involved in the filing of the relevant NDA or BLA.

Market exclusivity provisions under the FDCA can also delay the submission or the approval of certain applications of companies seeking to reference another company’s NDA or BLA. The Hatch-Waxman Act provides a 5-year period of exclusivity to any approved NDA for a product containing a NCE never previously approved by FDA either alone or in combination with another active moiety. No application or abbreviated NDA directed to the same NCE may be submitted during the 5-year exclusivity period, except that such applications may be submitted after four years if they contain a certification of patent invalidity or non-infringement of the patents listed with the FDA by the innovator NDA.

Biologic Price Competition and Innovation Act

The Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), established an abbreviated pathway for the approval of biosimilar and interchangeable biological products. The abbreviated regulatory approval pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on similarity to an existing branded product. Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the original branded product was approved under a BLA. However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator BLA holder. The BPCIA is complex and is only beginning to be interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and interpretation are subject to uncertainty.

Orphan Drug Act

Pamrevlumab has received orphan drug designation in IPF, locally advanced unresectable pancreatic cancer, and DMD in the U.S. Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the U.S., or if it affects more than 200,000 individuals in the U.S. there is no reasonable expectation that the cost of developing and making a drug product available in the U.S. for this type of disease or condition will be recovered from sales of the product. 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.

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 designation of such drug also entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers. Competitors, however, may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity. Orphan product exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval of the same drug or biological product as defined by the FDA or if our drug candidate is determined to be contained within the competitor’s product for the same indication or disease. If a drug product designated as an orphan product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan product exclusivity in any indication.

The EMA has granted Orphan designationMedicinal Product Designation to pamrevlumab for the treatment of DMD. Orphan Medicinal Product Designation status in the EUEurope has similar but not identical benefits in that jurisdiction.

Products receiving orphan designation in the EUEurope can receive ten years of market exclusivity, during which time no similar medicinal product for the same indication may be placed on the market. The ten-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation; for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity. Additionally, marketing authorization may be granted to a similar product for the same indication at any time if the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior; the initial applicant consents to a second orphan medicinal product application; or the initial applicant cannot supply enough orphan medicinal product. An orphan product can also obtain an additional two years of market exclusivity in the EUEurope for pediatric studies. No extension to any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications.

Foreign Country Data Exclusivity

The EUEurope also provides opportunities for additional market exclusivity. For example, in the EU,Europe, upon receiving marketing authorization, an NCE generally receives eight years of data exclusivity and an additional two years of market exclusivity. If granted, data exclusivity prevents regulatory authorities in the EUEurope from referencing the innovator’s data to assess a generic application. During the additional two-year period of market exclusivity, a generic marketing authorization can be submitted, and the innovator’s data may be referenced, but no generic product can be marketed until the expiration of the market exclusivity.

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. According to the Provisions for Drug Registration, 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 addition, if an approved drug manufactured in China qualifies as an innovative drug, such as Domestic Class 1, and the NMPA determines that it is appropriate to protect public health with respect to the safety and efficacy of the approved drug, the NMPA may elect to monitor such drug for up to five years. During this post-marketing observation period, the NMPA will not grant approval to another company to produce, change dosage form of or import the drug while the innovative drug is under observation. 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. Each of the data exclusivity period and the observation period runs from the date of approval for production of the NCE or innovative drug, as the case may be.

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. We also rely on trade secrets, know-how and continuing technological innovation to further develop and maintain our competitive position.

Our policy is to seek to protect our proprietary position by, among other methods, filing U.S. and foreign patent applications related to our proprietary technologies, inventions and any improvements that we consider important to the development and implementation of our business and strategy. Our ability to maintain and solidify our proprietary position for our products and technologies will depend, in part, on our success in obtaining and enforcing valid patent claims. Additionally, we may benefit from a variety of regulatory frameworks in the U.S., Europe, China, and other territories that provide periods of non-patent-based exclusivity for qualifying drug products. 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. Additionally, any existing or subsequently granted patents may be challenged, invalidated, circumvented or infringed. We cannot guarantee that our intellectual property rights or proprietary position will be sufficient to permit us to take advantage of current market trends or otherwise to provide or protect competitive advantages. 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. Currently granted patents relating to composition-of-matter for roxadustat and for pamrevlumab are expected, for each product candidate, to expire in 2024 or 2025, in each case exclusive of any patent term extension that may be available. U.S. and foreign patents relating to crystalline forms of roxadustat are expected to expire in 2033, exclusive of any extension. Additional patents and patent applications relating to manufacturing processes, formulations, and various therapeutic uses, including treatment of specific indications and improvement of clinical parameters, provide further protection for product candidates.

The protection afforded by any particular patent depends upon many factors, including the type of patent, scope of coverage encompassed by the granted claims, availability of extensions of patent term, availability of legal remedies in the particular territory in which the patent is granted, and validity and enforceability of the patent. Changes in either patent laws or in the interpretation of patent laws in the U.S. and other countries could diminish our ability to protect our inventions and to enforce our intellectual property rights. Accordingly, we cannot predict with certainty the enforceability of any granted patent claims or of any claims that may be granted from our patent applications.

The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights. Our ability to maintain and solidify our proprietary position for our products and core technologies will depend on our success in obtaining effective claims and enforcing those claims once granted. We have been in the past and are currently involved in various administrative proceedings with respect to our patents and patent applications and may, as a result of our extensive portfolio, be involved in such proceedings in the future. Additionally, in the future, we may claim that a third party infringes our intellectual property or a third party may claim that we infringe its intellectual property. In any of the administrative proceedings or in litigation, we may incur significant expenses, damages, attorneys’ fees, costs of proceedings and experts’ fees, and management and employees may be required to spend significant time in connection with these actions.

Because of the extensive time required for clinical development and regulatory review of a product candidate we may develop, it is possible that any patent related to our product candidates may expire before any of our product candidates can be commercialized, or may remain in force for only a short period of time following commercialization, thereby reducing the advantage afforded by any such patent.

The patent positions for our most advanced programs are summarized below.

Roxadustat Patent Portfolio

Our roxadustat patent portfolio includes multiple granted U.S. patents offering protection for roxadustat, including protection for roxadustat composition-of-matter, for pharmaceutical compositions containing roxadustat, and for methods for treating anemia using roxadustat or its analogs. Exclusive of any patent term extension, the granted U.S. patents relating to the composition-of-matter of roxadustat are due to expire in 2024 or 2025, and granted foreign patents are due to expire in 2024. U.S. and foreign patents relating to crystalline forms of roxadustat are due to expire in 2033.

Oppositions were filed against our European Patent No. 2872488 (the “`488 Patent”), which claims a crystalline form of roxadustat. Final resolution of the opposition proceedings will take time, and we cannot be assured of the breadth of the claims that will remain in the ’488 Patent or that the patent will not be revoked in its entirety.

We believe that, if roxadustat is approved, a full five-year patent term extension under the Hatch-Waxman act will be available for a granted U.S. patent relating to roxadustat, which extension would expire in 2029 or 2030, depending on the patent extended. Refer to “Government Regulation — Regulatory Exclusivity for Approved Products — U.S. Patent Term Restoration.”

We also hold various U.S. and foreign granted patents and pending patent applications directed to manufacturing processes, formulations, and methods for use of roxadustat.

Roxadustat China Patent Portfolio

Our roxadustat China patent portfolio includes granted patents covering roxadustat composition-of-matter, pharmaceutical compositions, methods of use, and manufacturing processes for roxadustat, as well as medicaments containing roxadustat for treating anemia and other conditions. Patents relating to roxadustat composition-of-matter and crystalline forms are due to expire in 2024 and 2033, respectively.

We believe that roxadustat, as a new chemical entity, would be eligible for six years of data exclusivity in China. Furthermore, upon approval as a new drug, roxadustat may receive up to five years of market exclusivity under a NMPA-imposed new drug monitoring period. Refer to “Government Regulation — Regulatory Exclusivity for Approved Products — Foreign Country Data Exclusivity.”

HIF Anemia-relatedAnemia-Related Technologies Patent Portfolio

We also have an extensive worldwide patent portfolio providing broad protection for proprietary technologies relating to the treatment of anemia and associated conditions. This portfolio currently contains granted patents and pending patent applications providing exclusivity for use of compounds falling within various and overlapping classes of HIF-PH inhibitors to achieve various therapeutic effects.

This portfolio reflects a series of discoveries we made from the initial days of our HIF program through the present time. Our research efforts have resulted in progressive innovation, and the corresponding patents and patent applications reflect the success of our HIF program. Such discoveries include the ability of HIF-PH inhibitors:

The table below sets forth representative granted U.S. patents relating to these and other inventions, including the projected expiration dates of these patents.

In addition to the U.S. patents listed above, our HIF anemia-related technologies portfolio includes corresponding foreign patents granted and patent applications pending in various territories worldwide.

Akebia and others have filed oppositions against certain European patents corresponding to some of the above-listed cases.within our HIF anemia-related technologies patent portfolio. In three of these proceedings, for FibroGen European Patent Nos. 1463823, 1633333, and 2322155, the European Patent Office has handed down decisions unfavorable to FibroGen. In the fourth of these proceedings, the European Patent Office issued a decision favorable to FibroGen, maintaining FibroGen European Patent No. 2322153. These2322153 in amended form. All of these decisions are currently under appeal, and these four patents are valid and enforceable pending resolution of the appeals. The ultimate outcomes of such proceedings remain uncertain, and ultimate resolution of such may take twoconsiderable time. 

In addition, Akebia has filed oppositions against FibroGen European Patent Nos. 2289531 and 2298301. Akebia and GSK have also initiated invalidation actions in the United Kingdom against the United Kingdom counterparts of each of these European patents, and GSK has filed for a declaration of non-infringement of certain United Kingdom patents (corresponding to four years or longer.FibroGen European Patent Nos. 2322153 and 2322155) with respect to its daprodustat product. Akebia is also pursuing invalidation actions against corresponding patents in Canada and in Japan, and invalidation actions against corresponding patents in the United Kingdom have been initiated by GSK and by Akebia.Akebia, although FibroGen has reached an agreement with GSK that will lead to dismissal of the UK court actions and the proceedings filed by GSK against the patents in the EPO. Astellas’ proceedings brought against GSK on a quia timet basis have also been dismissed as a result of the settlement agreement. While we believe the ultimate outcome of all proceedings will be that these FibroGen patents will be upheld in relevant part, we note that narrowing or even revocation of any of these patents would not affect our exclusivity for roxadustat or our freedom-to-operate with respect to use of roxadustat for the treatment of anemia.

Pamrevlumab Patent Portfolio

Our pamrevlumab patent portfolio includes U.S. patents providing composition-of-matter protection for pamrevlumab and related antibodies, and for methods of using such in the treatment of fibroproliferative disorders, including IPF, liver fibrosis, and pancreatic cancer. Exclusive of any patent term extension, U.S. patents relating to pamrevlumab composition-of-matter are due to expire in 2024 or 2025. Corresponding foreign patents are due to expire, exclusive of any patent term extension, in 2024.

We believe that, if pamrevlumab is approved, a full five-year patent term extension under the Hatch-Waxman act will be available for a granted patent relating to pamrevlumab, which extension would expire in 2029 or 2030, depending on the patent extended . In addition, we believe that pamrevlumab, if approved under a BLA, should qualify for the 12-year period of exclusivity currently permitted by the BPCIA. Refer to “Government Regulation — Regulatory Exclusivity for Approved Products.”

We also hold additional granted U.S. and foreign patents and pending patent applications directed to the use of pamrevlumab to treat IPF, DMD, pancreatic cancer, liver fibrosis, and other disorders.

Trade Secrets and Know-How

In addition to patents, we rely upon proprietary trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, using confidentiality and other terms in agreements with our commercial partners, collaboration partners, consultants and employees. Such agreements are designed to protect our proprietary information, and may also grant us ownership of technologies that are developed through a relationship with a third party, such as through invention assignment provisions. Agreements may expire and we could lose the benefit of confidentiality, or our agreements may be breached and we may not have adequate remedies for any breach. 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.

In-Licenses

Dana-Farber Cancer Institute

Effective March 2006, we entered into a license agreement with the Dana-Farber Cancer Institute (“DFCI”), under which we obtained an exclusive license to certain patent applications, patents and biological materials for all uses. The patent rights relate to inhibition of prolyl hydroxylation of the alpha subunit of hypoxia-inducible factor (HIFα), and include granted U.S. and foreign patents due to expire in 2022, exclusive of possible patent term extension. The licensed patents relate to use of HIF-PH inhibitors such as roxadustat.

Under the DFCI agreement, we are obligated to pay DFCI for past and ongoing patent prosecution expenses for the licensed patents. We are also obligated to pay DFCI annual maintenance fees, development milestone payments of up to $425,000, sales milestone payments of up to $3 million, and a sub-single-digit royalty on net sales by us or our affiliates or sublicensees of products that are covered by the licensed patents or incorporate the licensed biological materials. In addition, each sublicense we grant is subject to a one-time fixed amount payment to DFCI.

Unless earlier terminated, the agreement will continue in effect, on a country-by-country basis, until the expiration of all licensed patents in a country or, if there is no patent covering a licensed product incorporating the licensed biological materials, until 20 years after the effective date of the agreement. DFCI may terminate the agreement for our uncured material breach, if we cease to carry on our business and development activities with respect to all licensed products, if we fail to comply with our insurance obligations, or if we are convicted of a felony related to the manufacture, use, sale or importation of licensed products. We may terminate the agreement at any time on prior written notice to DFCI.

University of Miami

In May 1997, we entered into a license agreement with the University of Miami (the “University”), amended in July 1999, under which we obtained an exclusive, worldwide license to certain patent applications and patents for all uses. The current patent rights includeconsist of a U.S. and foreign patentspatent that relaterelates to antibodies that specifically bind to biologically active fragments of CTGF, and corresponding nucleic acids, proteins, and antibodies, and areis due to expire in 2019 and 2022, exclusive of any patent term extension or adjustment that may be available. The licensed patents relatepatent relates to pamrevlumab and related products.

Under the University agreement, we are obligated to pay for all ongoing patent prosecution expenses for the licensed patents.patent. We were also obligated to pay an upfront licensing fee of $21,500, all of which has been paid, and development milestone payments of up to $450,000, of which $50,000$150,000 has been paid, as well as an additional milestone payment, in the low hundreds of thousands of dollars, for each new indication for which we obtain approval for a licensed product, and a single digit royalty, subject to certain reductions, on net sales of licensed products by us or our affiliates or sublicensees.

Unless earlier terminated, the agreement will continue in effect, on a country-by-country basis, until the expiration of all licensed patents in a country. The University may terminate the agreement for our uncured material breach or bankruptcy. We may terminate the agreement for the University’s uncured material breach or at any time on prior written notice to the University.

Bristol-Myers Squibb Company (Medarex, Inc.)

Effective July 9, 1998 and as amended on June 30, 2001 and January 28, 2002, we entered into a research and commercialization agreement with Medarex, Inc. and its wholly-owned subsidiary GenPharm International, Inc. (now, collectively, part of Bristol-Myers Squibb Company (“Medarex”)) to develop fully human monoclonal antibodies for potential anti-fibrotic therapies. Under the agreement, Medarex was responsible for using its proprietary immunizable transgenic mice (“HuMAb-Mouse technology”) during a specified research period (“the Research Period”), to produce fully human antibodies against our proprietary antigen targets, including CTGF, for our exclusive use.

The agreement granted us an option to obtain an exclusive worldwide, royalty-bearing, commercial license to develop antibodies derived from Medarex’s HuMAb-Mouse technology, for use in the development and commercialization of diagnostic and therapeutic products. In December 2002, we exercised that option with respect to twelve antibodies inclusive of the antibody from which pamrevlumab is derived. We granted back to Medarex an exclusive, worldwide, royalty-free, perpetual, irrevocable license, with the right to sublicense, to certain inventions created during the parties’ research collaboration, with such license limited to use by Medarex outside the scope of our licensed antibodies.

As 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.

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. We own the patent rights to any inventions that arise during the Research Period that relate to antigens, as well as claims in patents covering inventions directed to (a) methods of use of an antibody, or (b) formulations of antibodies for therapeutic or diagnostic use. Upon exercise of our option to obtain the commercial license, we obtained the sole right but not obligation to control prosecution of patents relating solely to the licensed antibodies or products. Medarex has back-up patent prosecution rights in the event we decline to further prosecute or maintain such patents.

In addition to research support payments by us to Medarex during the Research Period, and an upfront commercial license fee in the form of 181,819 shares of FibroGen Series D Convertible Preferred Stock paid upon exercise of our option, we committed development-related milestone payments of up to $11 million per therapeutic product containing a licensed antibody, and we have paid a $1 million development-related milestone, in the form of 133,333 shares of FibroGen Series G Convertible Preferred Stock, and a cash payment of $2 million, for pamrevlumab to date. At our election, the remaining milestone payments may be paid in common stock of FibroGen, Inc., or cash.

With respect to our sales and sales by our affiliates, the agreement also requires us to pay Medarex low single-digit royalties for licensed therapeutic products and low double-digit royalties plus certain capped sales-based bonus royalties for licensed diagnostic products. With respect to sales of licensed products by a sublicensee, we may elect to pay the foregoing royalties based on our sublicensee’s sales, or a percentage (in the high-teens) of all payments received by us from such sublicensee. We are also required to reimburse Medarex any pass-through royalties, if any, payable under Medarex’s upstream license agreements with Medical Research Council and DNX. Royalties payable by us under the agreement are on a licensed product-by-licensed product and country-by-country basis and subject to reductions in specified circumstances, and royalties are payable for a period until either expiration of patents covering the applicable licensed product or a specified number of years following the first commercial sale of such product in the applicable country.

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.

Third Party Filings

Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing products. Because patent applications can take many years to issue, there may be currently pending applications, unknown to us, which may later result in granted patents that use of our product candidates or proprietary technologies may infringe.

If a third party claims that we infringe its intellectual property rights, we may face a number of issues, including but not limited to, litigation expenses, substantial damages, attorney fees, injunction, royalty payments, cross-licensing of our patents, redesign of our products, or processes and related fees and costs.

We may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property rights alleging that our products, product candidates, and/or proprietary technologies infringe their intellectual property rights. If one of these patents were to be found to cover our products, product candidates, proprietary technologies, or their uses, we could be required to pay damages and could be restricted from commercializing our products, product candidates or using our proprietary technologies unless we obtain a license to the patent. A license may not be available to us on acceptable terms, if at all. In addition, during litigation, the patent holder might obtain a preliminary injunction or other equitable right, which could prohibit us from making, using or selling our products, technologies, or methods.

EMPLOYEES

As of January 31, 2019,2020, we had 461531 full-time employees, 135136 of whom held Ph.D. or M.D. degrees, 359279 of whom were engaged in research and development and 102252 of whom were engaged in manufacturing, sales and marketing, business development, finance, information systems, facilities, human resources or administrative support. None of our U.S. employees are represented by a labor union. The employees of FibroGen Beijing are represented by a labor union under the China Labor Union Law. None of our employees have entered into a collective agreement with us. We consider our employee relations to be good.

FACILITIES

Our corporate and research and development operations are located in San Francisco, California, where we lease approximately 234,000 square feet of office and laboratory space with approximately 35,000 square feet subleased. The lease for our San Francisco headquarters expires in 2023. We also lease approximately 67,000 square feet of office and manufacturing space in Beijing, China. Our lease in China expires in 2021. We are constructinghave 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.

LEGAL PROCEEDINGS

We are not currently a party to any material legal proceedings.

FINANCIAL INFORMATION

Information regarding our revenues, net loss and total assets is contained in our consolidated financial statements under Item 8 of this Annual Report, which information is incorporated by reference here. For the specifics of our segment and geographic revenue, refer to Note 14 to our consolidated financial statements.

Research and development expenses for fiscal years ended December 31, 2019, 2018 and 2017 and 2016 were $209.3 million, $235.8 million, $196.5 million, and $187.2$196.5 million, respectively. We expect our research and development expenses to continue to increase in the future as we advance our product candidates through clinical trials and expand our product candidate portfolio.

Our revenue to date has been generated primarily from our collaboration agreements with Astellas and AstraZeneca for the development and commercialization of roxadustat. For fiscal years ended December 31, 2019, 2018 2017 and 2016,2017, substantially all of our revenue was related to our collaboration agreements.

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. Our website and information included in or linked to our website are not part of this Annual Report.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are available free of charge through our website as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”). The public may read and copy the materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally the SEC 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

We were incorporated in 1993 in Delaware. 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. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated into, this Annual Report.

Our subsidiaries consist of the following: 1) FibroGen Europe Oy (“FibroGen Europe”), a majority owned entity incorporated in Finland in 1996; 2) Skin Sciences, Inc., a majority owned entity incorporated in the State of Delaware in 1995; 3) FibroGen International (Cayman) Limited, a whollymajority owned entity incorporated in the Cayman Islands in 2011; 4) FibroGen China Anemia Holdings Ltd., a majority owned entity incorporated in the Cayman Islands in 2012; 5) FibroGen International (Hong Kong) Limited, a majority owned entity incorporated in Hong Kong in 2011; and 6) FibroGen (China) Medical Technology Development Co., Ltd., a majority owned entity incorporated in China in 2011.

“FibroGen,” the FibroGen logo and other trademarks or service marks of FibroGen, Inc. appearing in this Annual Report are the property of FibroGen, Inc. This Annual Report contains additional trade names, trademarks and service marks of others, which are the property of their respective owners. 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.

ITEM 1A. RISK FACTORS

Investing in our common stock involves a high degree of risk. 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, 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. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. 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.

Risks Related to Our Financial Condition and History of Operating Losses

We have incurred significant losses since our inception and anticipate that we will continue to incur losses for the foreseeable future and may never achieve or sustain profitability. We may require additional financings in order to fund our operations.

We are a clinical-stage biopharmaceutical company with two lead product candidates in clinical development, roxadustat in anemia in chronic kidney disease (“CKD”) and, myelodysplastic syndromes (“MDS”), and chemotherapy-induced anemia, and pamrevlumab (FG-3019) in idiopathic pulmonary fibrosis (“IPF”), pancreatic cancer, and Duchenne muscular dystrophy (“DMD”). Pharmaceutical product development is a highly risky undertaking. ToMost of our revenue generated to date has been based on our collaboration agreements and we have focused our efforts and most of our resources on hypoxia-inducible factor (“HIF”) and fibrosis biology research, as well as developing our lead product candidates. We are not profitable and, other than in 2006 and 2007 due to income received from our Astellas Pharma Inc. (“Astellas”) collaboration, have incurred losses each year since our inception. We have not generated any revenue based onlimited commercial drug product sales to date.date. We continue to incur significant research and development and other expenses related to our ongoing operations. Our net loss for the year ended December 31, 2019, 2018 was approximatelyand 2017 were $77.0 million, $86.4 million and our net loss for the years ended December 31, 2017, and 2016, recast from amounts previously reported due to the adoption of the new revenue standards, were approximately $120.9 million and $58.1 million, respectively. As of December 31, 2018,2019, we had an accumulated deficit of $715.8$784.7 million. As of December 31, 2018,2019, we had capital resources consisting of cash, cash equivalents and short-term investments of $621.4$533.8 million plus $55.8$61.1 million of long-term investments classified as available for sale securities. Despite contractual development and cost coverage commitments from our collaboration partners, AstraZeneca AB (“AstraZeneca”) and Astellas Pharma Inc. (“Astellas”), and the potential to receive milestone and other payments from these partners, and despite our expectation to launch commercialization efforts in the People’s Republic of China (“China”) and Japan for roxadustat for the treatment of anemia caused by CKD, in dialysis patients, we anticipate we will continue to incur losses on an annual basis for the foreseeable future, and we anticipate these losses will increase as we continue our development of and seek regulatory approval for our product candidates and in our commercialization efforts.future. If we do not successfully develop and continue to obtain regulatory approval for our existing or any future product candidates and effectively manufacture, market and sell anythe product candidates that are approved, we may never generate product sales, and even if we do generate product sales, we may never achieve or sustain profitability on a quarterly or annual basis. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital. Our failure to become and remain profitable would depress the market price of our common stock and could impair our ability to raise capital, expand our business, diversify our product offerings or continue our operations.

We believe that we will continue to expend substantial resources for the foreseeable future as we continue late-stage clinical development of roxadustat, grow our operations in the People’s Republic of China, (“China”), expand our clinical development efforts on pamrevlumab, continue to seek regulatory approval, prepare for thelaunch commercialization of our product candidates, and pursue additional indications. These expenditures will include costs associated with research and development, conducting preclinical trials and clinical trials, obtaining regulatory approvals in various jurisdictions, and manufacturing and supplying products and product candidates for ourselves and our partners. In particular, in our planned Phase 3 clinical trial program for roxadustat, which we believe will be the largest Phase 3 program ever conducted for an anemia product candidate, we are expecting to enroll more than 8,000 patients for our U.S. and European programs alone. We are conducting this Phase 3 program in conjunction with Astellas and AstraZeneca, and we are substantially dependent on Astellas and AstraZeneca for the funding of this large program. The outcome of any clinical trial and/or regulatory approval process is highly uncertain and we are unable to fully estimate the actual costs necessary to successfully complete the development and regulatory approval process for our compounds in development and any future product candidates. We believe that the net proceeds from our 2017 public offerings, our existing cash and cash equivalents, short-term and long-term investments and accounts receivable, and expected third partythird-party collaboration revenues will allow us to fund our operating plans through at least the next 12 months. Our operating plans or third partythird-party collaborations may change as a result of many factors, which are discussed in more detail below,including the success of our development and commercialization efforts, operations costs (including manufacturing and regulatory), competition, and other factors that may not currently be known to us, and we therefore may need to seek additional funds sooner than planned, through offerings of public or private securities, debt financings or other sources, such as royalty monetization or other structured financings. Such financings may result in dilution to stockholders, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our business. We may also seek additional capital due to favorable market conditions or strategic considerations even if we currently believe that we have sufficient funds for our current or future operating plans.

Our future funding requirements will depend on many factors, including, but not limited to:

Additional funds may not be available when we require them, or on terms that are acceptable to us. If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate our research and development efforts or other operations or activities that may be necessary to commercialize our product candidates.

AllMost of our recent revenue has been earned from collaboration partners for our product candidates under development.

Substantially all of our revenues recognized in recent years have been from our collaboration partners.

We will require substantial additional capital to achieve our development and commercialization goals, which for our lead product candidate, roxadustat, is currently contemplated to be provided under our existing third party collaborations with Astellas and AstraZeneca.

If either or both of theseour Astellas and AstraZeneca collaborations were to be terminated, we could require significant additional capital in order to proceed with development and commercialization of our product candidates, including with respect to our expected commercialization forof roxadustat for the treatment of anemia caused by CKD, in dialysis patients in China, or we may require additional partnering in order to help fund such development and commercialization. If adequate funds or partners are not available to us on a timely basis or on favorable terms, we may be required to delay, limit, reduce or terminate our research and development or commercialization efforts or other operations.

If we are unable to continue to progress our development efforts and achieve milestones under our collaboration agreements, our revenues may decrease and our activities may fail to lead to commercial products.

Substantially all of our revenues to date have been, and a significant portion of our future revenues are expected to be, derived from our existing collaboration agreements. Revenues from research and development collaborations depend upon continuation of the collaborations, reimbursement of development costs, the achievement of milestones and royalties and profits from our product sales, if any, derived from future products developed from our research. If we are unable to successfully advance the development of our product candidates or achieve milestones, revenues under our collaboration agreements will be substantially less than expected.

Risks Related to the Development and Commercialization of Our Product Candidates

We are substantially dependent on the success of our lead product, candidate, roxadustat, and our second compound in development, pamrevlumab.

To date, we have invested a substantial portion of our efforts and financial resources in the research and development of roxadustat and pamrevlumab. While we have received approval of our NDANew Drug Applications (“NDA”) for roxadustat in China for CKD anemia for patients on dialysis and not on dialysis, and for roxadustat in Japan for CKD anemia in dialysis patients, we will need to make substantial additional investments in both the development and commercialization of roxadustat worldwide and in various indications. Our near-term prospects, including maintaining our existing collaborations with Astellas and AstraZeneca, will depend heavily on successful Phase 3 development and commercialization of roxadustat, including obtaining regulatory approvals for the commercialization of roxadustat for anemia associated with CKD in dialysis dependent patients in China, expected during the second half of 2019.CKD.

Our other lead product candidate, pamrevlumab, is currently in clinical development for IPF, pancreatic cancer and DMD. Pamrevlumab requires substantial further development and investment. Weinvestment and we do not have a collaboration partner for support of this compound, and, while we have promising open-label safety data and potential signals of efficacy, we would need to complete larger and more extensive controlled clinical trials to validate the results to date in order to continue further development of this product candidate.compound. In addition, although there are many potentially promising indications beyond IPF, pancreatic cancer and DMD, we are still exploring indications for which further development of, and investment for, pamrevlumab may be appropriate. Accordingly, the costs and time to complete development and related risks are currently unknown. Moreover, pamrevlumab is a monoclonal antibody, which may require experience and expertise that we may not currently possess as well asgreater financial resources that are potentially greater than those required for our small molecule, lead compound, roxadustat.

The clinical and commercial success of roxadustat and pamrevlumab will depend on a number of factors, many of which are beyond our control, and we may be unable to complete the development or commercialization of roxadustat or pamrevlumab.

The clinical and commercial success of roxadustat and pamrevlumab will depend on a number of factors, including the following:

Many of these factors are beyond our control. Accordingly, we cannot assure you that we will ever be able to achieve profitability through the sale of, or royalties from, our product candidates. If we or our collaboration partners are not successful in obtaining approval for and commercializing our product candidates, or are delayed in completing those efforts, our business and operations would be adversely affected.

If our commercialization efforts for roxadustat in China are unsuccessful, our business, financial condition and results of operations will be materially harmed.

We have invested and continue to invest a significant portion of our efforts and financial resources in the development, approval and now commercialization of roxadustat for the treatment of anemia caused by CKD in dialysis patients in China, as well as in other indications and other geographic regions. With the marketing authorization received from the National Medical Products Administration (“NMPA”) of roxadustat for the treatment of anemia caused by CKD in dialysis patients in China, we plan to launch commercialization efforts in China in the third quarter of 2019 with our commercialization partner AstraZeneca.

Our success of commercialization of roxadustat in China will depend on numerous factors in China, including:

Successful commercialization of roxadustatour products will require significant resources and time, and there is a risk that we may not successfully commercialize roxadustat.them. If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize roxadustatour products and generate revenues, which would deprive us from additional working capital and would materially harm our business. If we do not successfully commercialize roxadustat in China, our collaboration partners and third parties may also lose confidence in our ability to execute in commercialization efforts and become less likely to collaborate with us, andachieve profitability through the sale of or royalties from our business may be harmed.product candidates.

As a Company,company, we have nolimited commercialization experience, and the time and resources to develop such experience are significant. If we fail to achieve and sustain commercial success for roxadustat, in China, either directly or with AstraZeneca,our collaboration partners, our business would be harmed.harmed.

We do not have a sales or marketing infrastructure and have no experience in the sales, marketing or distribution of pharmaceutical products in any country. To achieve commercial success for any product for which we obtain marketing approval, we will need to establish sales and marketing capabilities or make and maintain our existing arrangements with third parties to perform these services at a level sufficient to support our commercialization efforts.

To the extent that we would undertake sales and marketing of any of our products directly, there are risks involved with establishing our own sales, marketing and distribution capabilities. Factors that may inhibit our efforts to commercialize our products on our own include:

With respect to roxadustat, we are dependent on the commercialization capabilities of our collaboration partners, AstraZeneca and Astellas. If either such partner were to terminate its agreement with us, we would have to commercialize on our own or with another third party. We will have limited or little control over the commercialization efforts of such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products, if any, effectively. If they are not successful in commercializing our product candidates, our business and financial condition would suffer.

Commercializing roxadustat in China with AstraZeneca will requirerequires us to establish commercialization systems, including but not limited to, medical affairs, sales, pharmacovigilance, supply-chain, and distribution capabilities to perform our portion of the collaborative efforts. These efforts will require resources and time. In particular, significant resources may be necessary to successfully market, sell and distribute roxadustat to patients with anemia caused by CKD in dialysis patients. If we, along with Astellas and AstraZeneca, are not successful in setting our marketing, pricing and reimbursement strategy, facilitating adoption by hospitals, in China, recruiting sales and marketing personnel or in building a sales and marketing infrastructure, we will have difficulty commercializing roxadustat, which would adversely affect our business and financial condition.

As we evolve from a company primarily involved in research and development to a company potentially involved in commercialization, we may encounter difficulties in managing our growth and expanding our operations successfully.

If we are successful in advancing roxadustat and our other product candidates through the development stage towards commercialization, we will need to expand our organization, including adding marketing and sales capabilities or continuing to contract with third parties to provide these capabilities for us. As our operations expand, we expect that we will also need to manage our existing and additional relationships with various collaborative partners, suppliers and other third parties. Future growth will impose significant added responsibilities on our organization, in particular on management. Our future financial performance and our ability to commercialize roxadustat and our other product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we may not be able to manage our growth efforts effectively, and hire, train and integrate additional management, administrative and sales and marketing personnel, and our failure to accomplish any of these activities could prevent us from successfully growing our company.

Although FibroGen Beijing obtained regulatory approval has been obtained for roxadustat in China in December 2018,and Japan, we may be unable to obtain regulatory approval for our product candidates in other countries, or such approval may be delayed or limited, due to a number of factors, many of which are beyond our control.

The clinical trials and the manufacturing of our product candidates are and will continue to be, and the marketing of our product candidates will be, subject to extensive and rigorous review and regulation by numerous government authorities in the U.S. and in other countries where we intend to develop and, if approved, market any product candidates. Before obtaining regulatory approval for the commercial sale of any product candidate, we must demonstrate through extensive preclinical trials and clinical trials that the product candidate is safe and effective for use in each indication for which approval is sought. The regulatory review and approval process is expensive and requires substantial resources and time, and in general very few product candidates that enter development receive regulatory approval. In addition, our collaboration partners for roxadustat have final control over development decisions in their respective territories and they may make decisions with respect to development or regulatory authorities that delay or limit the potential approval of roxadustat, or increase the cost of development or commercialization. Accordingly, we may be unable to successfully develop or commercialize roxadustat or pamrevlumab or any of our other product candidates.candidates in one or more indications and jurisdictions.

Even though FibroGen Beijing obtainedMoreover, for any Phase 3 clinical trial to support an NDA submission for approval, the FDA and foreign regulatory approvalauthorities require compliance with regulations and standards (including good clinical practices (“GCP”) requirements for roxadustatdesigning, conducting, monitoring, recording, analyzing, and reporting the results of clinical trials) to ensure that (1) the data and results from trials are credible and accurate; and (2) that the rights, integrity and confidentiality of trial participants are protected. Although we rely on third parties to conduct our clinical trials, we as the sponsor remain responsible for ensuring that each of these clinical trials is conducted in China,accordance with its general investigational plan and protocol under legal and regulatory requirements, including GCP. Regulatory authorities enforce these GCP requirements through periodic inspections of trial sponsors, principal investigators and trial sites. If we have not obtained regulatory approval foror any of our product candidatesCROs, trial sites, principal investigators or other third parties fail to comply with applicable GCP requirements, the clinical data generated in our clinical trials may be deemed unreliable. Accordingly, the FDA or other countries and it is possible that roxadustat and pamrevlumab will never receive regulatory authorities may require us to exclude the use of patient data from these unreliable clinical trials, or perform additional clinical trials before approving our marketing applications. The FDA or other regulatory authorities may even reject our application for approval in other countries. Other regulatoryor refuse to accept our future applications.

Regulatory authorities may take actions or impose requirements that delay, limit or deny approval of roxadustat or pamrevlumabour product candidates for many reasons, including, among others:others: