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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes☑ No ☐

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

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

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

The number of shares of common stock outstanding as of ~~October 31, 2017~~April 30, 2023 was ~~82,008,777.~~97,582,416.

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

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

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

The accounting policies used by the Company in its presentation of interim financial results are consistent with those presented in Note 2 to the consolidated financial statements included in the 2022 Form 10-K.

There was no license revenue or development revenue resulting from changes to estimated variable consideration in the ~~first Phase 3 clinical study~~current period relating to performance obligations satisfied or partially satisfied in previous periods for the three months ended March 31, 2023 under the Astellas Japan Agreement. The Company does not expect material variable consideration from estimated future co-development billing beyond the development period in the transaction price related to the Astellas Japan Agreement.

In 2018, FibroGen and Astellas entered into an amendment to the Astellas Japan Agreement that allows Astellas to manufacture roxadustat drug product for commercialization in Japan ~~of roxadustat for treatment of anemia associated with chronic kidney disease in patients on dialysis.~~(the “Astellas Japan Amendment”). The ~~amount was received in early July 2016. The Company evaluated~~related drug product revenue is described under the ~~criteria under ASC 605-28 and concluded that the aforementioned milestone was substantive.~~Drug Product Revenue section below.

In April 2006, the Company entered into a separate collaboration agreement with Astellas for the development and commercialization of roxadustat for the treatment of anemia in Europe, the Middle East, the Commonwealth of Independent States and South Africa (“Astellas Europe Agreement”). Under the terms of the Astellas Europe Agreement, Astellas ~~paid~~agreed to pay license fees, ~~and~~ other upfront consideration ~~totaling $320.0 million (such amounts were fully received as of February 2009). The Europe Agreement also provides for additional development~~ and ~~regulatory approval~~various milestone payments, ~~up to $425.0~~totaling $745.0 million. ~~Clinical milestone payments of $40.0 million and $50.0 million were received in 2010 and 2012, respectively. The Company evaluated~~Under the ~~criteria under ASC 605-28 and concluded that each of those milestones was substantive. Under the~~Astellas Europe Agreement, Astellas committed to fund ~~50%~~50% of joint development costs for Europe and North America, and all territory-specific costs. The Astellas Europe Agreement also provides for tiered payments based on net sales of product (as defined) in the low 20% ~~range.~~range.

On March 21, 2022, EVRENZO® (roxadustat) was registered with the Russian Ministry of Health. The Company evaluated the regulatory milestone payment associated with the approval in Russia under the Astellas Europe Agreement and concluded that this milestone was achieved in the first quarter of 2022. Accordingly, the consideration of $25.0 million associated with this milestone was included in the transaction price and allocated to performance obligations under the Astellas Europe Agreement, all of which was recognized as revenue during the first quarter of 2022 from performance obligations satisfied.

The aggregate amount of consideration received under the Astellas Europe Agreement through March 31, 2023 totaled $685.0 million, excluding drug product revenue that is discussed under the Drug Product Revenue section below.

There was no license revenue or development revenue resulting from changes to estimated variable consideration in the current period relating to performance obligations satisfied or partially satisfied in previous periods for three months ended March 31, 2023 under the Astellas Europe Agreement. The remainder of the transaction price related to the Astellas Europe Agreement includes $5.8million of variable consideration from estimated future co-development billing and is expected to be recognized over the remaining development service period.

Under the Astellas Europe Agreement, Astellas has an option to purchase roxadustat bulk drug product in support of commercial supplies. During the first quarter of 2021, the Company entered into an EU Supply Agreement with Astellas under the Astellas Europe Agreement (“Astellas EU Supply Agreement”) to define general forecast, order, supply and payment terms for Astellas to purchase roxadustat bulk drug product from FibroGen in support of commercial supplies. The related drug product revenue is described under the Drug Product Revenue section below.

Effective July 30, 2013, the Company entered into a collaboration agreement with AstraZeneca AB (“AstraZeneca”) for the development and commercialization of roxadustat for the treatment of anemia in the U.S. and all other countries in the world, other than China, not previously licensed under the Astellas Europe and Astellas Japan Agreements (“AstraZeneca U.S./RoW Agreement”). It also excludes China, which is covered by a separate agreement with AstraZeneca described below. Under the terms of the AstraZeneca U.S./RoW Agreement, AstraZeneca ~~has~~ agreed to pay upfront, non-contingent, non-refundable and time-based payments, ~~totaling $374.0 million, which were fully received in various amounts through June 2016. In addition, the U.S./RoW Agreement also provides for development~~ and ~~regulatory approval based~~potential milestone payments, ~~of up~~totaling $1.2 billion. AstraZeneca commits to $550.0 million, which include potential future indications which the companies choose to pursue, and commercial related milestone payments of up to $325.0 million. During 2015, the Company received a $15.0 million development milestone payment as a result of the finalization of its two audited pre-clinical carcinogenicity study reports. The Company evaluated the criteria under ASC 605-28 and concluded that the aforementioned milestone was substantive.

Under the U.S./RoW Agreement, the Company and AstraZeneca will share equally in the development costs of roxadustat not already paid for by Astellas, up to a total of $233.0 million (i.e. the Company’s share of development costs is $116.5 million, which was reached during the fourth quarter of 2015). Any additional development costs incurred by FibroGen during the development period in excess of the $233.0 million (aggregated spend) will be fully reimbursed by AstraZeneca. AstraZeneca will pay the Company tiered royalty payments on AstraZeneca’s future net sales (as defined in the agreement) of roxadustat in the low 20% ~~range.~~range. In addition, the Company ~~will~~is entitled to receive a transfer price for ~~delivery~~shipment of commercial product based on a percentage of AstraZeneca’s net sales (as defined in the agreement) in the low- to mid-single digit range.

The aggregate amount of consideration received under the AstraZeneca U.S./RoW Agreement through March 31, 2023 totaled $439.0 million, excluding drug product revenue that is discussed separately below. While FibroGen and AstraZeneca continue to develop roxadustat in the U.S. for the treatment of anemia in patients with myelodysplastic syndromes, the Company has not been able to agree on a path forward for AstraZeneca to fund further roxadustat development for chronic kidney disease anemia in the U.S. Therefore, the Company does not expect to receive most or all of the remaining AstraZeneca U.S./RoW Agreement milestones from AstraZeneca.

In 2020, the Company entered into a Master Supply Agreement with AstraZeneca under the AstraZeneca U.S./RoW Agreement (“AstraZeneca Master Supply Agreement”) to define general forecast, order, supply and payment terms for AstraZeneca to purchase roxadustat bulk drug product from FibroGen in support of commercial supplies. The related drug product revenue is described under the Drug Product Revenue section below.

Effective July 30, 2013, the Company (through its subsidiaries affiliated with China) entered into a collaboration agreement with ~~AstraZeneca~~AztraZeneca for ~~the development and commercialization (but not manufacture) of~~ roxadustat for the treatment of anemia in China (“AstraZeneca China Agreement”). Under the terms of the AstraZeneca China Agreement, AstraZeneca agreed to pay upfront consideration and potential milestone payments, totaling ~~$28.2 million, which were fully received in 2014. In addition, the China Agreement provides for AstraZeneca to pay regulatory approval and other approval related milestones of up to $161.0~~$376.7 million. The ~~China Agreement also provides for sales related milestone payments of up to $167.5 million and contingent payments of $20.0 million related to possible future compounds. The~~AstraZeneca China Agreement is structured as a 50/50 profit or loss share (as defined), which was amended under the AstraZeneca China Amendment in 2020 as discussed below, and provides for joint development costs (including capital and equipment costs for construction of the manufacturing plant in China), to be shared equally during the ~~development.~~development period.

The aggregate amount of such consideration received for milestone and upfront payments through March 31, 2023 totaled $77.2 million.

In ~~September 2016,~~July 2020, FibroGen China Anemia Holdings, Ltd., FibroGen (China) Medical Technology Development Co., Ltd. (“FibroGen Beijing”), and FibroGen International (Hong Kong) Limited and AstraZeneca ~~approved~~entered into an amendment to the ~~protocol related~~AstraZeneca China Amendment, relating to the development and commercialization of roxadustat ~~for the treatment of anemia~~ in ~~patients with myelodysplastic syndromes (“MDS”), for which the Company has received approval from the~~ China Food and Drug Administration for its clinical trial application for a Phase 2/3 trial and acceptance of its investigational new drug application from the U.S. Food and Drug Administration for a Phase 3 trial. As a result, for revenue recognition purposes, during the third quarter of 2016, the Company extended the estimated joint development service period for(the “AstraZeneca China Amendment”). Under the AstraZeneca ~~agreements from the end of 2018 to the end of~~China Amendment, in 2020, ~~to allow for development of MDS.~~

In October 2017, the China Food and Drug Administration accepted the Company’s recently submitted New Drug Application (“NDA”) for registration of roxadustat for anemia in dialysis-dependent CKD and non-dialysis-dependent CKD (NDD-CKD) patients. This NDA submission triggers a $15.0 million milestone payment to the Company by AstraZeneca, which is expected to be received and fully recognized under the Company’s current revenue recognition policy as license and milestone revenue in the fourth quarter of 2017.

~~The table below summarizes the accounting treatment for the various deliverables pursuant to each of the Astellas~~FibroGen Beijing and AstraZeneca ~~agreements. License amounts identified below are included in~~completed the ~~“License~~establishment of a jointly owned entity, Beijing Falikang Pharmaceutical Co., Ltd. (“Falikang”), which performs roxadustat distribution, as well as conducts sales and milestone revenue” line item in the condensed consolidated statements of operations. All other elements identified below are included in the “Collaboration services and other revenue” line item in the condensed consolidated statements of operations.marketing through AstraZeneca.

Substantially all direct roxadustat product sales to distributors in China are made by Falikang, while FibroGen Beijing continues to sell roxadustat product directly in one province in China. FibroGen Beijing manufactures and supplies commercial product to Falikang based on a gross transfer price, which is adjusted for the estimated profit share.

The ~~total arrangement~~transaction price related to consideration received through March 31, 2023 and accounts receivable has been allocated to each of the following ~~deliverables~~performance obligations under the ~~Japan~~AstraZeneca U.S./RoW Agreement and AstraZeneca China Agreement, along with any associated deferred revenue as follows (in thousands):

* China performance obligation revenue is recognized as product revenue, as described under Product Revenue, Net section below.

** Contract assets and liabilities related to rights and obligations in the same contract are recorded net on the consolidated balance sheets. As of March 31, 2023, deferred revenue included $156.2 million related to the AstraZeneca U.S./RoW Agreement and AstraZeneca China Agreement, which represents the net of $175.3 million of deferred revenue presented above and a $19.1 million unbilled co-development revenue under the ~~Europe Agreement were as follows (in thousands):~~AstraZeneca China Amendment.

There was no license revenue or development revenue resulting from changes to estimated variable consideration in the current period relating to performance obligations satisfied or partially satisfied in previous periods for the three months ended March 31, 2023 under the AstraZeneca U.S./RoW Agreement. The ~~total arrangement consideration has been allocated to each~~remainder of the ~~following deliverables under~~transaction price related to the ~~Europe Agreement, along with any associated deferred revenue as follows (in thousands):~~

~~Amounts recognized as revenue under the~~AstraZeneca U.S./RoW Agreement ~~were~~and AstraZeneca China Agreement includes $9.8millionof variable consideration from estimated future co-development billing and is expected to be recognized over the remaining development service period, except for amounts allocated to the China performance obligation. The amount allocated to the China performance obligation is expected to be recognized as the Company transfers control of the commercial drug product to Falikang, and is expected to continue through 2028, which reflects our best estimates.

The net product revenue from the sales to Falikang and the net product revenue from direct sales distributors in China are described under Product Revenue, Net section below.

5. Balance Sheet Components

~~The fair values of our financial liabilities that are carried at historical cost are as follows (in thousands):~~

September 30, 2017

Level 1

Level 2

Level 3

Total

Lease financing obligations

$
—

$
—

$
98,028

$
98,028

December 31, 2016

Level 1

Level 2

Level 3

Total

Lease financing obligations

$
—

$
—

$
97,856

$
97,856

~~The fair values of our financial liabilities were derived by using an income approach, which required Level 3 inputs such as discounted estimated future cash flows.~~

~~There were no transfers of assets or liabilities between levels for any of the periods presented.~~

4.	~~Balance Sheet Components~~

Cash and Cash Equivalents

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


	September 30, 2017		December 31, 2016		March 31, 2023		December 31, 2022
Cash	$	104,875	$	79,239	$	145,810	$	135,819
Money market funds		546,498		94,543		42,740		19,881
Total cash and cash equivalents	$	651,373	$	173,782	$	188,550	$	155,700

At ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, a total of ~~$19.1~~$98.9 million and ~~$24.3~~$92.5 million ~~respectively,~~ of ~~our~~the Company’s cash and cash equivalents were held outside of the U.S. in ~~our~~its foreign subsidiaries to be used primarily for ~~our~~its China ~~operations.~~operations, respectively.

1316

Table of Contents

Investments

~~Investments~~

~~All~~The Company’s investments ~~are classified as available-for-sale.~~consist primarily of available-for-sale debt investments. The amortized cost, gross unrealized holding gains or losses, and fair value of the Company’s ~~available-for-sale~~ investments by major investments type are summarized in the tables below (in thousands):


	March 31, 2023
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
Corporate bonds	$	41,760	$	1	$	(457	)	$	41,304
Commercial paper		42,970		—		—			42,970
U.S. government bonds		72,130		1		(565	)		71,566
Agency bonds		9,183		—		(108	)		9,075
Asset-backed securities		2,491		—		(7	)		2,484
Total investments	$	168,534	$	2	$	(1,137	)	$	167,399

	December 31, 2022
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
Corporate bonds	$	83,080	$	—	$	(1,072	)	$	82,008
Commercial paper		57,381		—		—			57,381
U.S. government bonds		112,547		5		(1,207	)		111,345
Agency bonds		11,690		—		(222	)		11,468
Asset-backed securities		2,484		—		(10	)		2,474
Foreign government bonds		5,007		—		(27	)		4,980
Convertible promissory note		1,000		—		—			1,000
Total investments	$	273,189	$	5	$	(2,538	)	$	270,656

September 30, 2017

Amortized Cost

Gross Unrealized
Holding Gains

Gross Unrealized
Holding Losses

Fair Value

Corporate bonds

$
75,826

$
62

$
(16
)

$
75,872

Certificate of deposits

1,036

—

—

1,036

Bond and mutual funds

17,182

1,069

—

18,251

Equity investments

126

81

—

207

Total investments

$
94,170

$
1,212

$
(16
)

$
95,366

December 31, 2016

Amortized Cost

Gross Unrealized
Holding Gains

Gross Unrealized
Holding Losses

Fair Value

Corporate bonds

$
126,550

$
182

$
(49
)

$
126,683

Certificate of deposits

1,037

—

—

1,037

Bond and mutual funds

22,305

157

—

22,462

Equity investments

125

100

—

225

Total investments

$
150,017

$
439

$
(49
)

$
150,407

The following table summarizes, for all available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position (in thousands):


	March 31, 2023
	Less than 12 Months					12 Months or More					Total
	Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses
Corporate bonds	$	2,469	$	(7	)	$	36,084	$	(450	)	$	38,553	$	(457	)
U.S. government bonds		4,955		(1	)		43,794		(564	)		48,749		(565	)
Agency bonds		—		—			9,075		(108	)		9,075		(108	)
Asset-backed securities		2,483		(7	)		—		—			2,483		(7	)
Total	$	9,907	$	(15	)	$	88,953	$	(1,122	)	$	98,860	$	(1,137	)

	December 31, 2022
	Less than 12 Months					12 Months or More					Total
	Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses
Corporate bonds	$	6,738	$	(147	)	$	75,270	$	(925	)	$	82,008	$	(1,072	)
U.S. government bonds		22,326		(13	)		67,909		(1,194	)		90,235		(1,207	)
Agency bonds		—		—			11,468		(222	)		11,468		(222	)
Asset-backed securities		2,474		(10	)		—		—			2,474		(10	)
Foreign government bonds		-		—			4,980		(27	)		4,980		(27	)
Total	$	31,538	$	(170	)	$	159,627	$	(2,368	)	$	191,165	$	(2,538	)

At ~~September 30, 2017, all of~~March 31, 2023, the available-for-sale investments had remaining contractual maturities ~~within two years.~~ of less than twelve months.

The Company periodically reviews its available-for-sale investments for other-than-temporary impairment. The Company considers factors such as the duration, severity and the reason for the decline in value, the potential recovery period and ~~our~~its intent to sell. For debt securities, the Company also considers whether (i) it is more likely than not that the Company will be required to sell the debt securities before recovery of their amortized cost basis, and (ii) the amortized cost basis cannot be recovered as a result of credit losses. ~~During~~Based on the ~~three and nine months ended September 30, 2017 and 2016,~~results of its review, the Company did ~~not~~not recognize any other-than-temporary impairment ~~loss.~~loss during the three months ended March 31, 2023 and 2022.

Table of Contents

Inventories

Inventories consisted of the following (in thousands):


	March 31, 2023		December 31, 2022
Raw materials	$	1,226	$	1,241
Work-in-progress	$	37,273		36,003
Finished goods	$	3,957		3,192
Total inventories	$	42,456	$	40,436

Accrued and Other Current Liabilities

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


	September 30, 2017		December 31, 2016		March 31, 2023		December 31, 2022
Preclinical and clinical trial accruals	$	26,989	$	29,550	$	42,953	$	57,780
API and bulk drug product price true-up						30,758		75,055
Payroll and related accruals		14,654		14,232		12,230		22,562
Accrued co-promotion expenses - current						36,688		36,677
Roxadustat profit share to AstraZeneca						7,311		7,280
Property taxes and other taxes						8,041		7,691
Professional services		2,144		1,252		8,354		5,480
Current portion of liability related to sale of future revenues						3,212		—
Other		10,330		5,880		7,495		7,248
Total accrued liabilities	$	54,117	$	50,914
Total accrued and other current liabilities					$	157,042	$	219,773

The accrued liabilities of $30.8 million for API and bulk drug product price true-up as of March 31, 2023 resulted from changes in estimated variable consideration associated with the API shipments fulfilled under the terms of the Astellas Japan Amendment, the bulk drug product transferred under the terms of the Astellas Europe Agreement and the Astellas EU Supply Agreement, and the bulk drug product shipments to AstraZeneca under the terms of the AstraZeneca Master Supply Agreement. See the Drug Product Revenue section in Note 2, Collaboration Agreements, License Agreement and Revenues, for details.

On November 4, 2022, the Company entered into a Revenue Interest Financing Agreement (the “RIFA”) with an affiliate of NovaQuest Capital Management (“NovaQuest”), pursuant to which the Company granted NovaQuest 22.5% of its drug product revenue and 10.0% (20.0% for fiscal year 2028 and thereafter) of its revenue from milestone payments that it is entitled to under the Astellas Agreements, for a consideration of $50.0 million (“Investment Amount”) before advisory fees.

In November 2022, the Company received the Investment Amount, net of initial issuance costs, and accounted for it as long-term debt based on the terms of the RIFA because the risks and rewards to NovaQuest are limited by the terms of the transaction. The related debt discount and transaction costs are amortized as interest expense ~~was allocated~~based on the projected balance of the liability as of the beginning of each period. As payments are made to ~~research and development and general and administrative expense~~NovaQuest, the balance of the liability related to sale of future revenues is being effectively repaid over the life of the RIFA. The payments to NovaQuest are accounted for as ~~follows (in thousands):~~a reduction of debt.

The Company may prepay its obligations to NovaQuest in full at any time during the term of RIFA. The prepayment amount varies from $80.0 million to $125.0 million less any revenue interest payments made up to such prepayment date. Under the RIFA the Company shall pay to NovaQuest up to a specified maximum amount (“Payment Cap”) of (a) $100.0 million, if the payment is made on or before December 31, 2028; (b) $112.5 million, if the payment is made on or after January 1, 2029, but on or before December 31, 2029; or (c) $125.0 million, if the payment is made after January 1, 2030.

14After January 1, 2028, if the product (as defined) is not commercialized for a consecutive twelve-month period, then, the payments owed under the RIFA by the Company to NovaQuest for each fiscal year shall be the greater of: (i) the amount which would otherwise be due pursuant to revenue interest payments terms; or (ii) $10.0 million.

~~The assumptions used to estimate~~Before December 31, 2028, if the ~~fair value~~sum of ~~stock options granted and purchases~~all payments under the RIFA paid to NovaQuest, does not equal or exceed $62.5 million, then the Company shall pay NovaQuest the difference of these two amounts by no later than March 1, 2029. If, by no later than December 31, 2030, the sum of all payments under the RIFA paid to NovaQuest does not equal or exceed $125.0 million, then the Company shall pay NovaQuest the difference of these two amounts by no later than March 1, 2031.

NovaQuest will retain this entitlement until it has reached the Payment Cap, at which point 100% of such revenue interest on future global net sales of Astellas will revert to the Company.

Over the course of the RIFA, the effective interest rate is affected by the amount and timing of drug product revenue and revenue from milestone payments recognized, the changes in the timing of forecasted drug product revenue and revenue from milestone payments, and the timing of the Company’s ~~2014 Employee Share Purchase Plan (“ESPP”) using~~payments to NovaQuest. On a quarterly basis, the ~~Black-Scholes option valuation model were~~Company reassesses the expected total revenue and the timing of such revenue, recalculates the amortization of debt discount and transactions costs and effective interest rate, and adjusts the accounting prospectively as ~~follows:~~

needed. The ~~provisions for income taxes for the three and nine months ended September 30, 2017 were due to foreign taxes.~~

~~The provision for income taxes~~Company’s estimated effective annual interest rate was 19.64% for the three months ended ~~September 30, 2016~~March 31, 2023.

During the three months ended March 31, 2023, the Company recognized, under Astellas Agreements, development revenue of $1.6 million and drug product revenue of $2.1 million. See Note 2, Collaboration Agreements, License Agreement and Revenue, for details. During the three months ended March 31, 2023, the Company recognized the related non-cash interest expense of $2.2 million.

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

Astellas is an equity investor in the Company and is considered a related party. The Company recorded license and development revenue related to collaboration agreements with Astellas of ~~$4.6~~$1.6 million and ~~$4.8~~$27.8 million ~~during~~for the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016, respectively, and $12.9~~2022, respectively. The Company also recorded drug product revenue from Astellas of $2.1 million and ~~$21.8~~$7.6 million ~~during~~for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016,~~2022, respectively. See Note 2, Collaboration Agreements, License Agreement and Revenues, for details.

The ~~Company recorded~~Company’s expense related to collaboration agreements with Astellas was immaterial for each of ~~$0.2 million and $1.8 million during~~ the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016, respectively, and $0.8 million and $4.8 million during the nine months ended September 30, 2017 and 2016, respectively.~~2022.

As of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, accounts receivable from Astellas were ~~$4.6~~$1.6 million and ~~$4.1~~$1.5 million, ~~respectively,~~respectively.

As of March 31, 2023 and December 31, 2022, total deferred revenue from Astellas was $23.4 million and $40.3 million, respectively.

As of March 31, 2023, theamounts due to Astellas, ~~were $0.5~~included in accounts payable, accrued and other current liabilities, and other long-term liabilities, totaled $78.7 million. As of December 31, 2022, the amount due to Astellas, included in accrued and other current liabilities, was $63.9 million.

Falikang, an entity jointly owned by FibroGen Beijing and AstraZeneca is an unconsolidated VIE accounted for as an equity method investment, and considered as a related party to the Company. FibroGen Beijing owns 51.1% of Falikang’s equity. See Note 3, Equity method investment - Variable Interest Entity, for details.

The net product revenue from Falikang was $21.4 million and ~~$1.6~~$16.2 million for the three months ended March 31, 2023 and 2022, respectively. See the Product Revenue, Net section in Note 2, Collaboration Agreements, License Agreement and Revenues, for details.

~~Julian N. Stern,~~The investment income in Falikang was $0.8 million and $0.3 million for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023 and December 31, 2022, the Company’s equity method investment in Falikang was $5.9 million and $5.1 million, respectively. See Note 3, Variable Interest Entity, for details. The other income from Falikang was immaterial for each of the three months ended March 31, 2023 and 2022.

As of March 31, 2023 and December 31, 2022, accounts receivable, net, from Falikang, were $9.9 million and $10.5 million, respectively.

In October 2017, the China Food and Drug Administration accepted the Company’s recently submitted NDA for registration of roxadustat for anemia in dialysis-dependent CKD and NDD-CKD patients. This NDA submission triggers a $15.0 million milestone payment to the Company by AstraZeneca, which is expected to be received and fully recognized under the Company’s current revenue recognition policy as license and milestone revenue in the fourth quarter of 2017.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and in our Securities and Exchange Commission (“SEC”) filings, including our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 filed with the SEC on ~~March 1, 2017.~~February 27, 2023 (“2022 Form 10-K”).

The following discussion and information contained elsewhere in this Quarterly Report on Form 10-Q contain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), Section 27A of the Securities Act of 1933, as amended (“Securities Act”) and within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are often identified by the use of words such as “may,” “will,” “expect,” ~~“believe,”~~ “anticipate,” “intend,” “could,” “should,” “estimate,” or “continue,” and similar expressions or variations. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Such forward-looking and other statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors,” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. New risks emerge from time to time, and it is not possible for our management to predict all risks, 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 any forward-looking and other statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking and other statements. While we may elect to update these forward-looking and other statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking and other statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q and are cautioned not to place undue reliance on such forward-looking statements.

We ~~were incorporated~~are headquartered in ~~1993~~San Francisco, California, with subsidiary offices in ~~Delaware~~Beijing and Shanghai, People’s Republic of China (“China”). We are a ~~science-based~~leading biopharmaceutical company discovering, developing and ~~developing~~commercializing a pipeline of first-in-class therapeutics. ~~Roxadustat (FG-4592), our most advanced~~Our lead product candidate and product are pamrevlumab and roxadustat, respectively. We apply our pioneering expertise in hypoxia-inducible factor (“HIF”) biology, 2-oxoglutarate enzymology, and connective tissue growth factor biology to advance innovative medicines for the treatment of anemia, fibrotic disease, and cancer.

Pamrevlumab, a human monoclonal antibody targeting connective tissue growth factor, is in Phase 3 clinical development for the treatment of idiopathic pulmonary fibrosis (“IPF”), locally advanced unresectable pancreatic cancer (“LAPC”), and Duchenne muscular dystrophy (“DMD”). To date, we have retained exclusive worldwide rights for pamrevlumab.

Roxadustat is an oral small molecule inhibitor of HIF prolyl hydroxylase (“HIF-PH”) ~~activity~~activity. Roxadustat (爱瑞卓®, EVRENZOTM) is approved in ~~Phase 3 clinical development~~China, Europe, Japan, and numerous other countries for the treatment of anemia in chronic kidney disease (“CKD”)~~. Pamrevlumab (FG-3019), a fully-human monoclonal antibody that inhibits the activity of connective tissue growth factor (“CTGF”)~~ for patients who are on dialysis and not on dialysis. Roxadustat is in ~~Phase 2~~ clinical development for ~~the treatment~~anemia of ~~idiopathic pulmonary fibrosis~~CKD, anemia associated with myelodysplastic syndromes (“~~IPF”~~MDS”), ~~pancreatic cancer,~~ and ~~Duchenne muscular dystrophy (“DMD”).~~chemotherapy-induced anemia in China.

Our goal is to build a diversified pipeline with novel drugs that will address unmet patient needs in oncology, immunology, and fibrosis. We ~~have taken a global approach~~expect to file up to two INDs near year-end 2023: one for an antibody targeting CCR8 and the development and future commercialization of our product candidates, and this includes development and commercialization in the People’s Republic of China (“China”). We are capitalizing on our extensive experience in fibrosis and hypoxia inducible factor (“HIF”) biology and clinical development to advance a pipeline of innovative medicinesother for ~~the treatment of anemia, fibrotic disease cancer, corneal blindness and other serious unmet medical needs.~~an antibody targeting Galectin-9.

Our revenue for the three ~~and nine~~ months ended ~~September 30, 2017 decreased compared~~March 31, 2023 included the revenue recognized related to the ~~same periods a year ago primarily due to the impact~~following:

As a comparison, our revenue for the three months ended March 31, 2022 included the revenue recognized related to the following:

Operating costs and expenses for the three ~~and nine~~ months ended ~~September 30, 2017 increased~~March 31, 2023 decreased compared to the same period a year ago primarily ~~due to higher~~as a result of the net effect of the following:

For the three months ended ~~September 30, 2017 were also impacted by a $3.0 million reduction in assessed property tax resulted from the final assessment we obtained during the first quarter of 2017.~~

~~During the three and nine months ended September 30, 2017,~~March 31, 2023, we had a net loss of ~~$37.7~~$76.7 million, ~~and $104.1 million, respectively,~~ or a net loss per basic and diluted share of ~~$0.50 and $1.49, respectively,~~$0.81, as compared to a net loss of ~~$24.2~~$63.2 million, or a net loss per basic and ~~$27.7 million~~diluted share of $0.68 for the same ~~periods~~period a year ago, due to ~~a decrease~~decreases in revenue, ~~and an increase~~offset by decreases in operating ~~expenses.~~costs and expenses as discussed above.

Cash and cash equivalents, investments, and accounts receivable totaled ~~$755.4~~$373.6 million at ~~September 30, 2017, an increase~~March 31, 2023, a decrease of ~~$420.8~~$69.1 million from December 31, ~~2016,~~2022, primarily due to the ~~net proceeds from the follow-on offerings of $115.1 million closed~~cash used in ~~April 2017 and $356.2 million closed in August 2017,~~operations, partially offset by ~~cash used~~the net proceeds received under our at-the-market program, discussed under the Liquidity and Capital Resources section below.

We are well positioned over the next year to report topline results from six pivotal clinical studies with two different drug candidates:

Pamrevlumab - our first-in-class antibody developed to inhibit the activity of connective tissue growth factor, a common factor in ~~operations.~~fibrotic and fibro-proliferative disorders characterized by persistent and excessive scarring that can lead to organ dysfunction and failure. Our upcoming clinical trial results for pamrevlumab are:

Roxadustat ~~for the Treatment~~- our commercial-stage product, an oral small molecule inhibitor of ~~Anemia in Chronic Kidney Disease~~

~~Roxadustat, the most advanced~~ HIF-PH ~~inhibitor in clinical development,~~activity that acts by stimulating the body’s natural pathway of erythropoiesis, or red blood cell production. ~~We, along with our collaboration partners, Astellas Pharma Inc. (“Astellas”) and AstraZeneca AB (“AstraZeneca”), continue to advance~~Our upcoming clinical trial results for roxadustat ~~through a global~~ are:

The United States ~~Europe, Japan, and China in both dialysis-dependent CKD patients and CKD patients who are not dialysis-dependent. We are currently targeting a New Drug Application~~ (“~~NDA”~~U.S.”) ~~filing for roxadustat in the U.S. in 2018, subject to accrual of sufficient major adverse cardiac events (“MACE”) for pooled analyses.~~

~~In January 2017, we reported topline results from our two China Phase 3 studies of roxadustat in CKD anemia. In October 2017, the China~~ Food and Drug Administration (“~~CFDA”~~FDA”) ~~accepted for review our new drug application for the registration of roxadustat~~has granted Fast Track and Orphan Drug designations to ~~treat anemia in dialysis-dependent and non-dialysis-dependent CKD patients.~~

In the double-blind, placebo-controlled non-dialysis Phase 3 trial in China, 151 anemia patients were randomized 2:1 to receive roxadustat (n=101) or placebo (n=50) for 8 weeks. As reported in January 2017, roxadustat met its primary efficacy endpoint of correcting anemia, by achieving a statistically significant increase in hemoglobin levels compared to placebo over eight weeks. After week 8, 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 7 to 9) 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 patients without inflammation (CRP ≤4.9 mg/L). In addition, in the 8-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.

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 our Phase 3 dialysis study in China, 304 patients previously on epoetin alfa were randomized to and treated with roxadustat (n=204) or epoetin alfa (n=100) for 26 weeks. 112 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.

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.

~~In Japan, Astellas completed the first of six roxadustat Phase 3 trials in Japan, evaluating roxadustat~~pamrevlumab for the treatment of anemia in CKD patients on peritoneal dialysis (PD), with or without previous treatment with erythropoiesis-stimulating agents (ESAs). The study enrolled a total of 56 PD patients, of whom 43 patients had previously received ESAs (ESA-conversion patients),IPF, LAPC, and ~~13 patients who had not previously received ESAs (ESA-naïve patients)~~DMD (with DMD also receiving Rare Pediatric Disease designation). Roxadustat was well tolerated and shown to correct hemoglobin levels in ESA-naïve patients and maintain hemoglobin (Hb) levels within the target range in both ESA-conversion patients and ESA-naïve patients.

The Hb maintenance rate, as measured by the proportion of subjects with average Hb levels within the target Hb range of 10.0 to 12.0 g/dL for weeks 18 to 24, was 92% in ESA-naïve patients who were corrected from baseline hemoglobin levels and 74% in ESA-conversion patients. The preliminary safety analysis for this trial is consistent with the safety profile of roxadustat in previous clinical trials.

~~Roxadustat~~Pamrevlumab for the Treatment of ~~Anemia in Myelodysplastic Syndromes (MDS)~~Idiopathic Pulmonary Fibrosis

We ~~plan to initiate a~~have now completed enrollment of both of our two Phase 3 clinical trial to evaluate the safety and efficacy of roxadustat for treatment of anemia in MDS patients in the United States in the fourth quarter of 2017. We also plan on initiating a Phase 2/3 MDS clinical trial in China in the fourth quarter of 2017 or the first quarter of 2018.

~~Pamrevlumab (FG-3019) – Monoclonal Antibody Against Connective Tissue Growth Factor (CTGF)~~

Pamrevlumab is our fully human monoclonal antibody that inhibits the activity of CTGF, a central mediator and critical common element of the progression of fibrosis and associated serious diseases. We are currently conducting Phase 2 trials ~~in pancreatic cancer and DMD and recently concluded our Phase 2 double-blind trial in IPF.~~

~~In August 2017, we reported positive topline results from our randomized, double-blind, placebo-controlled Phase 2 clinical trial designed to evaluate the safety and efficacy~~ of pamrevlumab in IPF patients, ZEPHYRUS-1 and ZEPHYRUS-2.

Similar to our completed Phase 2 randomized trial in 101 IPF patients (PRAISE), both of our Phase 3 ZEPHYRUS studies are double-blind, placebo-controlled trials with ~~mild-to-moderate IPF. We also reported topline results from two sub-studies that were added to evaluate the safety of combining pamrevlumab with recently approved IPF therapies.~~

~~Pamrevlumab met the~~a primary efficacy endpoint of change ofin forced vital capacity (“FVC”) ~~percent predicted,~~at 48 weeks. FVC is a ~~measure~~lung function test measuring the volume of air exhaled by a ~~patient’s lung volume as a percentage of what would be expected~~patient.

Secondary efficacy endpoints 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”) 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 ITT population). In addition, the pamrevlumab-treated arm had a lower proportion of patients (10%) who experiencedeach study include disease progression (defined by a decline in FVC percent predicted of greater than or equal to 10% or ~~death than did the placebo arm (31.4%) at week 48 (p=0.0103). The percentage~~death), acute IPF exacerbation, and quantitative changes in lung fibrosis volume from baseline.

ZEPHYRUS-1 is our first Phase 3 trial of pamrevlumab in 356 IPF patients ~~who experienced decline~~and we expect topline data from ZEPHYRUS-1 in ~~lung function~~mid-2023.

ZEPHYRUS-2 is our second Phase 3 trial of ~~FVC percent predicted~~pamrevlumab in 372 IPF patients and we expect topline data from ZEPHYRUS-2 in mid-2024.

Pamrevlumab for the Treatment of ~~10% or more and discontinued~~Locally Advanced Unresectable Pancreatic Cancer

LAPIS is our double-blind placebo-controlled Phase 3 clinical program for pamrevlumab as a therapy ~~was less than 15%~~for LAPC. We completed enrollment of 284 patients that ~~in the placebo arm.~~

Pamrevlumab was well tolerated in the placebo-controlled study. The treatment 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.

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 forare randomized at ~~least three months and were randomized 2:~~a 1:1 ratio to receive ~~30 mg/kg of~~either 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~~each case in combination with ~~either pirfenidone~~chemotherapy (either FOLFIRINOX or ~~nintedanib.~~

~~In pancreatic cancer, we continue to follow patients in our ongoing open-label, randomized (2:1) Phase 2 trial designed to determine if pamrevlumab in combination with~~ gemcitabine ~~and nab-paclitaxel, can convert stage 3 inoperable cancer to resectable, or operable, cancer.~~plus nab-paclitaxel). We expect ~~to define a registrational strategy~~topline data for the primary endpoint of overall survival in the first half of ~~2018.~~2024.

In June 2021, the Pancreatic Cancer Action Network’s (PanCAN) Precision PromiseSM adaptive trial platform included pamrevlumab in combination with standard of care chemotherapy treatments for pancreatic cancer (gemcitabine and Abraxane®), in its study for patients with metastatic pancreatic cancer. The pamrevlumab portion of the trial is still ongoing. Drug candidates in the Precision Promise study will continue to ~~enroll~~progress (including from Phase 2 to Phase 3) unless stopped sooner for safety or futility. The pamrevlumab combination therapy is offered to patients as either a first- or second-line treatment option. Pamrevlumab was the first experimental treatment arm to be offered as a first-line treatment in PanCAN’s innovative Precision Promise trial. The objective of Precision Promise is to expedite the study and approval of promising therapies for pancreatic cancer by bringing multiple stakeholders together, including academic, industry and regulatory entities.

LELANTOS-1 is our double-blind, placebo-controlled Phase 3 clinical trial evaluating pamrevlumab as a treatment for DMD, in combination with systemic corticosteroids. LELANTOS-1 completed enrollment of 99 non-ambulatory DMD patients randomized at a 1:1 ratio to pamrevlumab or placebo for a treatment period of 52 weeks. The primary endpoint will assess change in upper limb function from baseline to Week 52 and additional endpoints will include pulmonary, cardiac, performance, and fibrosis assessments. We expect topline data from this study in the second quarter of 2023.

LELANTOS-2 is our double-blind, placebo-controlled Phase 3 trial evaluating pamrevlumab in DMD, in combination with systemic corticosteroids. LELANTOS-2 completed enrollment of 73 ambulatory patients aged 6-12, randomized at a 1:1 ratio to pamrevlumab or placebo for a treatment period of 52 weeks. The primary efficacy endpoint will assess ambulatory function, measured by the change in North Star Ambulatory Assessment from baseline to Week 52. We expect topline data from this study in the [third] quarter of 2023.

Roxadustat is our commercial-stage product, an oral small molecule inhibitor of HIF-PH activity that acts by stimulating the body’s natural pathway of erythropoiesis, or red blood cell production.

Roxadustat (爱瑞卓®️, EVRENZOTM) is approved in China, Europe, Japan, and numerous other countries for the treatment of anemia in CKD for patients who are on dialysis and not on dialysis.

In China, roxadustat (tradename: 爱瑞卓®) continues to see significant volume growth in the treatment of anemia caused by CKD in non-dialysis and dialysis patients. In the first quarter of 2023, roxadustat achieved an over 50% increase in sales volume relative to the first quarter of 2022. As of February 2023, roxadustat was the top CKD anemia brand in China with approximately 35% value share within the segment of erythropoiesis stimulating agents and HIF-PH inhibitors (roxadustat is the only HIF-PH inhibitor on the market in China).

We recently reported topline data from the 140 patient Phase 3 arm of MATTERHORN, our Phase ~~2 open-label~~2/3 placebo-controlled, double-blind clinical trial of ~~pamrevlumab~~roxadustat for the treatment of anemia in MDS. MATTERHORN did not meet its primary efficacy endpoint. The proportion of patients who achieved red blood cell transfusion independence in the first 28 weeks was 47.5% for the roxadustat arm compared to 33.3% for the placebo arm (p=0.217). The adverse event profile of roxadustat that was observed in the preliminary safety analysis was generally consistent with previous findings. Safety will be further evaluated at study completion.

We have completed enrollment of our active-controlled Phase 3 clinical trial in China of roxadustat in chemotherapy-induced anemia for non-myeloid malignancies. The primary efficacy endpoint is the mean change in hemoglobin level from baseline to the level averaged over Weeks 9-13. This trial has enrolled 159 subjects and we expect topline data from this study in the second quarter of 2023.

On April 29, 2023, we entered into a financing agreement (the “Financing Agreement”) with investment funds managed by Morgan Stanley Tactical Value, as lenders, and Wilmington Trust, National Association, as the administrative agent, providing for senior secured term loan facilities consisting of (i) a $75.0 million initial term loan, (ii) a $37.5 million delayed draw term loan that will be funded upon the achievement of certain clinical development milestones, and (iii) an uncommitted delayed draw term loan of up to ~~22 non-ambulatory DMD patients.~~$37.5 million, to be funded at the Lenders sole discretion.

For additional details about this financing transaction, see Note 11, Subsequent Event, to the condensed consolidated financial statements.

On May 5, 2023, we entered into an exclusive option agreement to acquire Fortis Therapeutics (“Fortis”) with its novel Phase 1 antibody-drug conjugate, FOR46, that targets a novel epitope on CD46 preferentially expressed on certain cancer cells. FOR46 is in development for the treatment of metastatic castration-resistant prostate cancer with potential applicability in other solid tumors and hematologic malignancies.

Pursuant to an evaluation agreement entered into with Fortis concurrent with the option agreement, FibroGen has exclusively licensed FOR46 and will control and fund future research, development, including a Phase 2 clinical study sponsored by FibroGen, and manufacturing of FOR46 during the option period. As part of the clinical development strategy, we will continue the work to develop a PET-based biomarker utilizing a radiolabeled version of the targeting antibody (“PET46”) for patient selection.

FibroGen will pay Fortis $5.0 million during the four-year option period in support of their continued development obligations.

If we exercise the option to acquire Fortis, we will pay Fortis $80.0 million, and thereafter, Fortis would be eligible to receive from FibroGen up to $200.0 million in contingent payments associated with the achievement of various regulatory approvals. If we acquire Fortis, we would also be responsible to pay UCSF, an upstream licensor to Fortis, development milestone fees and a single digit royalty on net sales of therapeutic or diagnostic products arising from the collaboration. If FibroGen chooses not to acquire Fortis, its exclusive license to FOR46 would expire.

In July 2021, we exclusively licensed to Eluminex Biosciences (Suzhou) Limited (“Eluminex”) global rights to its investigational biosynthetic cornea derived from recombinant human collagen Type III. In April 2023, FibroGen and Eluminex entered into an Amended and Restated Exclusive License Agreement in order to add to the license rights to recombinant human collagen Type I.

During the three months ended March 31, 2023, we recognized a $3.0 million milestone payment based on Eluminex implanting a biosynthetic cornea in the first patient of its clinical trial in China, and a $3.0 million manufacturing related milestone payment.

Our current and future research, development, manufacturing and commercialization efforts with respect to roxadustat ~~and our other product candidates currently in development~~ depend on funds from our collaboration agreements with Astellas and ~~AstraZeneca as described below.~~AstraZeneca. See Note 2, Collaboration Agreements, License Agreement and Revenues, to the condensed consolidated financial statements for details.

In June 2005, we entered into a collaboration agreement with Astellas for the development and commercialization (but not manufacture) of roxadustat for the treatment of anemia in Japan (“Astellas Japan Agreement”). In April 2006, we entered into ~~the Europe Agreement~~a separate collaboration agreement with Astellas for roxadustat for the treatment of anemia in Europe, the Commonwealth of Independent States, the Middle East, and South ~~Africa.~~Africa (“Astellas Europe Agreement”). Under these agreements, ~~we provide Astellas~~ the ~~right to develop and commercialize roxadustat for anemia indications in these territories.~~

We share responsibility with Astellas for clinical development activities required for U.S. and the European Union (“EU”) 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 to 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 2016, we recognized $10.0 million of revenue as a result of the initiation by Astellas of the first Phase 3 clinical study in Japan of roxadustat for treatment of anemia associated with CKD in patients on dialysis. The amount was received in early July 2016. ~~The~~ aggregate amount of ~~such~~ consideration received through ~~September 30, 2017 totals $472.6~~March 31, 2023 totaled $790.1 million.

On March 21, 2022, EVRENZO® (roxadustat) was registered with the Russian Ministry of Health. We evaluated the regulatory milestone payment associated with the approval in Russia under ~~these agreements,~~the Astellas ~~pays 100% of the commercialization costs in its territories. Astellas will pay us a transfer price, based on net sales,~~Europe Agreement and concluded that this milestone was achieved in the ~~low 20% range for our manufacture and delivery~~first quarter of ~~roxadustat.~~

~~In addition, as~~2022. Accordingly, the consideration of ~~September 30, 2017, Astellas had separate investments of $80.5~~$25.0 million associated with this milestone was included in the ~~equity~~transaction price and allocated to performance obligations under the Astellas Europe Agreement, all of which was recognized as revenue during the first quarter of 2022 from performance obligations satisfied.

In 2018, we and Astellas entered into an amendment to the Astellas Japan Agreement that allows Astellas to manufacture roxadustat drug product for commercialization in Japan (the “Astellas Japan Amendment”). The related drug product revenue was $1.7 million and $7.6 million for three months ended March 31, 2023 and 2022, respectively.

During the first quarter of 2021, we entered into an EU Supply Agreement with Astellas under the Astellas Europe Agreement to define general forecast, order, supply and payment terms for Astellas to purchase roxadustat bulk drug product from FibroGen ~~Inc.~~in support of commercial supplies (the “Astellas EU Supply Agreement”). The related drug product revenue was $0.4 million for the three months ended March 31, 2023. There was no related drug product revenue for the three months ended March 31, 2022.

In July 2013, we entered into ~~the U.S./RoW Agreement~~ a collaboration agreement with AstraZeneca for roxadustat for the treatment of anemia in the U.S. and all territories not previously licensed to Astellas, except ~~China.~~China (the “AstraZeneca U.S./RoW Agreement”). In July 2013, through our China subsidiary and related affiliates, we entered into ~~the China Agreement~~ a collaboration agreement with AstraZeneca for roxadustat for the treatment of anemia in ~~China.~~China (the “AstraZeneca China Agreement”). Under ~~these~~the AstraZeneca agreements, ~~we provide~~the aggregate amount of consideration received through March 31, 2023 totaled $516.2 million.

Under the 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.

~~Now that we have reached the $116.5 million cap on our initial funding obligations (during~~China Agreement, which time we shared 50% of the joint initial development costs), all development and commercialization costs for roxadustat for the treatment of anemia in CKD in the U.S., Europe, Japan and all other markets outside ofis conducted through FibroGen China ~~have been paid by Astellas and AstraZeneca since reaching the cap.~~

~~In China,~~Anemia Holdings, Ltd., FibroGen (China) Medical Technology Development Co., Ltd. (“FibroGen Beijing”) ~~will conduct~~, and FibroGen International (Hong Kong) Limited (collectively, (“FibroGen China”), the ~~development work~~commercial collaboration was structured as a 50/50 profit share, which was amended by the AstraZeneca China Amendment in the third quarter of 2020, as discussed and defined below in AstraZeneca China Amendment.

In 2020, we entered into a Master Supply Agreement with AstraZeneca under the AstraZeneca U.S./RoW Agreement (the “AstraZeneca Master Supply Agreement”) to define general forecast, order, supply and payment terms for ~~CKD anemia, will hold all~~AstraZeneca to purchase roxadustat bulk drug product from FibroGen in support of the regulatory licenses issued by China regulatory authorities, and will 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,commercial supplies. There was no related drug product revenue for the ~~manufacture~~three months ended March 31, 2023 and ~~supply of all quantities of roxadustat~~2022.

In July 2020, FibroGen China and AstraZeneca entered into an amendment, effective July 1, 2020, to ~~be used in~~the AstraZeneca China Agreement, relating to the development and commercialization ~~under the AstraZeneca agreements.~~

roxadustat in China (the “AstraZeneca China Amendment”). Under the AstraZeneca ~~agreements, we will receive~~China Amendment, in September 2020, FibroGen Beijing and AstraZeneca completed the establishment of a jointly owned entity, Beijing Falikang Pharmaceutical Co., Ltd. (“Falikang”), which performs roxadustat distribution, as well as conducts sales and marketing through AstraZeneca.

FibroGen Beijing manufactures and supplies commercial product to Falikang based on an agreed upon transfer price, which includes gross transfer price, net of calculated profit share. Revenue is recognized upon the transfer of control of commercial products to Falikang in an amount that reflects the allocation of transaction price of the China manufacturing and supply obligation (“China performance obligation”) to the performance obligation satisfied during the reporting period. We recognized related net product revenue of $24.2 million and $18.9 million for the three months ended March 31, 2023 and 2022, respectively.

The above table does not include development cost reimbursement, transfer price payments, and royalties and profit share ~~could reach $1.6 billion. During the second quarter of 2016,~~under our existing collaboration agreements. While we ~~received an upfront payment of $62.0 million as a time based development milestone.~~ ~~The aggregate amount of such consideration received throughSeptember 30, 2017 totals $417.2 million.~~

~~Payments under these agreements include over $500.0 million~~continue to commercialize roxadustat in ~~upfront, non-contingent~~China with AstraZeneca, and ~~other payments received or expected to be received prior to the first U.S. approval, excluding development expense reimbursement.~~

~~Under the U.S./RoW Agreement, AstraZeneca will pay for all commercialization costs~~develop roxadustat in the U.S. and RoW and AstraZeneca will be responsible for the U.S. commercialization of roxadustat, with FibroGen undertaking specified promotional activities in the end stage renal disease 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 commercialization 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.

~~In September 2016, AstraZeneca approved the protocol related to the development of roxadustat~~ for the treatment of anemia in patients with MDS, ~~for which~~ we have ~~received approval from the China Food and Drug Administration (“CFDA”)~~not been able to agree on a path forward for ~~our clinical trial application in China~~AstraZeneca to fund further roxadustat development for ~~a Phase 2/3 trial and acceptance of our investigational new drug application (“IND”) from the FDA for a Phase 3 trial~~CKD anemia in the U.S. ~~As a result, for revenue recognition purposes, during the third quarter~~Therefore, we do not expect to receive most or all of ~~2016, we extended the estimated joint development service period for the~~these potential AstraZeneca ~~agreements from the end of 2018 to the end of 2020, to allow for development of MDS.~~

In October 2017, the China Food and Drug Administration accepted our recently submitted NDA for registration of roxadustat for anemia in dialysis-dependent CKD and NDD-CKD patients. This NDA submission triggers a $15.0 million milestone payment to FibroGen by AstraZeneca, which is expected to be received and fully recognized under our revenue recognition policy as license and milestone revenue in the fourth quarter of 2017.

~~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 for paying for a substantial portion of the post-termination development costs under the agreed development plan until regulatory approval.milestones from AstraZeneca.

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 for paying 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.

Total cash consideration received through September 30, 2017 and potential cash consideration, other than development cost reimbursement, transfer price payments, royalties and profit share, pursuant to our existing collaboration agreements are as follows:

~~These collaboration agreements also provide for reimbursement of certain fully burdened research and development costs as well as direct out of pocket expenses.~~

~~Our revenue to date has been generated substantially from our collaboration agreements with Astellas and AstraZeneca.~~

Under our revenue recognition policy, license revenue includes amounts from upfront, non-refundable license payments and amounts allocated pursuant to the ~~relative~~standalone selling price method from other consideration received ~~(other than substantive milestone payments)~~ during the respective periods. This revenue is generally recognized as deliverables are met and services are performed. ~~Milestone~~

Development revenue includes ~~payments from milestones which are deemed to be substantive in nature~~co-development and ~~is recognized in its entirety~~other development related services. We recognize development services as revenue in the period in which they are billed to our partners, excluding China. As of March 31, 2023, we expect the milestone is achieved. License and milestone revenues represented 73% and 69% of total revenue for the three months ended September 30, 2017 and 2016, respectively, and 73% and 77% of total revenue for the nine months ended September 30, 2017 and 2016, respectively.

~~Collaboration~~future development services ~~include~~to continue through 2024. For China co-development services, ~~manufacturing~~we defer revenue until we begin to transfer control of ~~clinical supplies, committee services~~the manufactured commercial product to AstraZeneca, which commenced in the first quarter of 2021 and ~~information sharing. Collaboration services revenues are recognized over the non-contingent performance period, ranging from 36~~we expect to ~~89 months.~~continue through 2028, which reflects our best estimates. Other revenues consist of ~~royalty payments received, which are recorded on a monthly basis as they are reported to us,~~contract manufacturing revenue and ~~have been included with collaboration services~~sales of research and ~~other revenue in the condensed consolidated statements of operations, as they~~development material and have not been material for any of the ~~years~~periods presented. ~~Collaboration~~

We recognize product revenue when our customer obtains control of promised goods or services ~~and other revenues represented 27% and 31% of total revenue~~in an amount that reflects the consideration we expect to receive in exchange for ~~the three months ended September 30, 2017 and 2016, respectively, and 27% and 23% of total revenue for the nine months ended September 30, 2017 and 2016, respectively.~~those goods or services.

Drug product revenue includes commercial-grade API or bulk drug product sales to AstraZeneca, under the AstraZeneca U.S./RoW Agreement, and Astellas in support of pre-commercial preparation prior to the New Drug Application or marketing authorization application approval, and to Astellas for ongoing commercial launch in Japan and Europe. We recognize drug product revenue when we fulfill the inventory transfer obligations. The amount of variable consideration that is included in the transaction price may be constrained, and is included in the drug product revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period when the uncertainty associated with the variable consideration is subsequently resolved. Actual amounts of consideration ultimately received in the future may differ from our estimates, for which we will adjust these estimates and affect the drug product revenue in the period such variances become known.

~~We have not generated any revenues based on the sale of FDA or CFDA approved products.~~ In the future, we ~~may generate~~will continue generating revenue ~~from product sales and~~ from collaboration agreements in the form of license fees, milestone payments, reimbursements for collaboration services and royalties on drug product sales, and from product sales. We expect that any revenues we generate will fluctuate from quarter to quarter ~~as a result of~~due to the uncertain timing and amount of such payments and sales.

Total revenue decreased ~~$2.8~~$24.7 million, or 9%41% for the three months ended ~~September 30, 2017, and decreased $64.5 million, or 44% for the nine months ended September 30, 2017,~~March 31, 2023, compared to the same ~~periods~~period a year ago for the reasons discussed in the sections below.

License ~~and milestone~~ revenue decreased ~~$0.9~~$16.6 million, or 4%73% for the three months ended ~~September 30, 2017, and decreased $52.9 million, or 46% for the nine months ended September 30, 2017,~~March 31, 2023, compared to the same ~~periods~~period a year ~~ago due to decreases in the license and milestone~~ago.

License revenue recognized under ~~both of~~ our collaboration agreements with ~~AstraZeneca~~Astellas for the three months ended March 31, 2022 represented the allocated revenue related to a $25.0 million regulatory milestone payment associated with the approval of EVRENZO® (roxadustat) in Russia that was included in the transaction price during the first quarter of 2022 when such milestone was achieved.

License revenue recognized under our license agreement with Eluminex for the three months ended March 31, 2023 represented a $3.0 million milestone payment based on Eluminex implanting a biosynthetic cornea in the first patient of its clinical trial in China, and a $3.0 million manufacturing related milestone payment when such milestones were achieved.

Development and other revenue decreased $7.9 million, or 67% for the three months ended March 31, 2023, compared to the same period a year ago.

Development revenue recognized under our collaboration agreements with ~~Astellas.~~Astellas for the three months ended March 31, 2022 included the allocated revenue of $2.4 million related to the above-mentioned $25.0 million regulatory milestone payment associated with the approval in Russia during the first quarter of 2022. In addition, development revenue recognized under our collaboration agreements with Astellas for the three months ended March 31, 2023 was impacted by the decrease in co-development billings related to the development of roxadustat under our collaboration agreements with Astellas as a result of the substantial completion of Phase 3 trials for roxadustat.

~~License and milestone~~Development revenue recognized under our collaboration agreements with AstraZeneca decreased due to the impact of the extension of the estimated joint development service period for the AstraZeneca agreements, for revenue recognition purposes, from the end of 2018 to the end of 2020. We made this extension in the third quarter of 2016 due to the approval of the development budget for the treatment of anemia in patients with MDS. License and milestone revenue for the nine months ended September 30, 2017 was also impacted by an upfront payment of $62.0 million received during the second quarter of 2016, with no corresponding milestones in the current year periods.

License and milestone revenue recognized under our collaboration agreements with Astellas decreased primarily due to a $10.0 million of development milestone revenue recorded during the second quarter of 2016, with no corresponding milestones in the current year periods.

~~Collaboration services and other revenue decreased $2.0 million, or 21%,~~ for the three months ended ~~September 30, 2017, and decreased $11.6~~March 31, 2023 was impacted by the decrease in CKD-related co-development billings in the U.S.

Other revenue recognized for the three months ended March 31, 2023 was primarily related to our contract manufacturing agreement with Eluminex, under which we are responsible for supplying the cornea product at 110% of our product manufacturing costs until our manufacturing technology is fully transferred to Eluminex.

Sales to Falikang revenue, net increased $5.1 million, or 32% for the three months ended March 31, 2023, compared to the same periods a year ~~ago primarily due to a decrease in~~ago. The gross transfer price increased $11.5 million and the collaboration services revenue recognized under our collaboration agreements with AstraZeneca from the impact of the extension of the estimated joint development service period for the AstraZeneca agreements, for revenue recognition purposes, from the end of 2018 to the end of 2020. We made this extension in the third quarter of 2016 due to the approval of the development budget for the treatment of anemia in patients with MDS. Collaboration services and other revenue for the nine months ended September 30, 2017 was also impacted by the allocation of the upfront payment of $62.0calculated profit share increased $6.1 million ~~during the second quarter of 2016, with no corresponding milestones in the current year periods.~~

Collaboration services revenue recognized under our collaboration agreements with Astellas remained relatively flat for the three and nine months ended September 30, 2017, compared to the same periods a year ago.

~~Total operating expenses increased $11.1 million, or 21%,~~ for the three months ended ~~September 30, 2017, and $11.9 million, or 7%, for the nine months ended September 30, 2017,~~March 31, 2023, compared to the same ~~periods~~period a year ago, respectively, primarily due to the increase in sales volume during the current year period.

Periodically, we update our assumptions such as total sales quantity, performance period and other inputs including foreign currency translation impact, among others. Following updates to our estimates, we recognized $2.1 million and $2.3 million for the three months ended March 31, 2023 and 2022, respectively, from the previously deferred revenue of the China performance obligation.

Drug product revenue decreased $5.5 million, or 72% for the three months ended March 31, 2023, compared to the same period a year ago.

During the first quarter of 2023, we updated our estimate of variable consideration related to the API shipments fulfilled under the terms of Astellas Japan Amendment, and accordingly recorded adjustments to the drug product revenue of $1.7 million. Specifically, the change in estimated variable consideration was based on the API held by Astellas at period end, adjusted to reflect the changes in the estimated bulk product strength mix intended to be manufactured by Astellas, and estimated yield from the manufacture of bulk product tablets, among others.

During the first quarter of 2022, we fulfilled a shipment obligation under the terms of Astellas Japan Amendment and recognized related drug product revenue of $9.8 million in the same period. In addition, during the first quarter of 2022, we updated our estimate of variable consideration related to the API shipments fulfilled under the terms of Astellas Japan Amendment, and recorded a reduction to the drug product revenue of $2.2 million. Specifically, the change in estimated variable consideration was based on the API held by Astellas at period end, adjusted to reflect the changes in the estimated bulk product strength mix intended to be manufactured by Astellas, estimated cost to convert the API to bulk product tablets, and estimated yield from the manufacture of bulk product tablets, among others.

During the first quarter of 2022, we updated our estimate of variable consideration related to the bulk drug product transferred in prior years. Specifically, the change in estimated variable consideration was based on the bulk drug product held by Astellas at the period end, adjusted to reflect the changes in the estimated transfer price, forecast information, shelf-life estimates and other items. As a result, we reclassified the related deferred revenue to accrued liabilities during the year ended December 31, 2022. As of December 31, 2022, the related balance was $57.4 million in accrued liabilities. Further during the first quarter of 2023, we reclassified $16.6 million from the related deferred revenue to accrued liabilities. As of March 31, 2023, the balances related to the bulk drug product price true-up under the Astellas Europe Agreement and the Astellas EU Supply Agreement were $57.5 million in accounts payable and $16.4 million in accrued liabilities, representing our best estimate that these amounts will be paid within the next 12 months.

In addition, we recognized royalty revenue of $0.4 million as drug product revenue from the deferred revenue under the Astellas Europe Agreement for the three months ended March 31, 2023. It is our best estimate that the remainder of the deferred revenue will be recognized as revenue and when uncertainty is resolved, based on the performance of roxadustat product sales in the Astellas territory.

There was no shipment of bulk drug product to AstraZeneca as commercial supply under the terms of the AstraZeneca Master Supply Agreement during the three months ended March 31, 2023 and 2022.

During the first quarter of 2022, we evaluated the current developments in the U.S. market, and updated our estimates of variable consideration associated with bulk drug product shipments to AstraZeneca in prior years as commercial supply under the terms of the AstraZeneca Master Supply Agreement. As a result, we reclassified $11.2 million from the related deferred revenue to accrued liabilities during the year ended December 31, 2022. As of each of March 31, 2023 and December 31, 2022, the related balance in accrued liabilities was $11.2 million, representing our best estimate that this amount will be paid within the next 12 months.

Total operating costs and expenses increased $11.6 million, or 9% for the three months ended March 31, 2023, compared to the same period a year ago for the reasons discussed in the sections below.

Cost of goods sold decreased $0.7 million, or 18% for the three months ended March 31, 2023, compared to the same period a year ago.

Cost of goods sold, associated with the roxadustat commercial sales in China, consists of direct costs to manufacture commercial product, as well as indirect costs including factory overhead, storage, shipping, quality assurance, idle capacity charges, and inventory valuation adjustments. Cost of goods sold associated with the roxadustat commercial sales in China was $3.2 million for the three months ended March 31, 2023, as compared to $2.6 million to the same period a year ago, an increase of $0.6 million, or 21%, resulting from the increase in the sales volume, partially offset by improved unit cost efficiency due to higher production volume.

Cost of goods sold in the U.S., associated with costs of the roxadustat API or bulk drug product delivered to Astellas and AstraZeneca, was immaterial for the three months ended March 31, 2023 and 2022. We expect costs of goods sold to increase in relation to drug product revenue as we deplete inventories that we had expensed prior to receiving regulatory approvals.

Cost of goods sold also included manufacturing costs related to our contract manufacturing revenue from Eluminex, which was immaterial for the three months ended March 31, 2023 and 2022.

Research and development expenses consist of ~~third party~~third-party research and development costs and the fully-burdened amount of costs associated with work performed under collaboration agreements. Research and development ~~costs~~expenses include employee-related expenses for research and development functions, expenses incurred under agreements with clinical research organizations, other clinical and preclinical costs and allocated direct and indirect overhead costs, such as facilities costs, information technology costs and other overhead. ~~Research~~We expense research and development costs ~~are expensed~~ as incurred. ~~Costs~~We recognize costs for certain development activities ~~are recognized~~ based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and our clinical sites. Research and development expenses also include in-process research and development assets that have no alternative future use other than in a particular research and development project.

The following table summarizes our research and development expenses incurred during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 and ~~2016:~~2022:

The program-specific expenses summarized in the table above include costs we directly attribute to our product candidates. We allocate research and development salaries, benefits, stock-based compensation and other indirect costs to our product candidates on a program-specific basis, and we include these costs in the program-specific expenses. ~~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.~~

Research and development expenses ~~increased $9.8~~decreased $14.5 million, or ~~24%,~~16% for the three months ended ~~September 30, 2017,~~March 31, 2023, compared to the same period a year ~~ago. The increase was~~ago, primarily due to increases in drug development expenses of $6.8 million, employee-related costs of $3.4 million, clinical trial costs of $0.7 million, and stock-based compensation expense of $0.5 million, partially offset by a decrease in outside services of $2.0 million. Drug development expenses increased primarily due to higher drug substance manufacturing activities related to pamrevlumab. ~~Employee-related costs increased due to higher headcount and higher average compensation level. Clinical trial costs increased~~ as a result of the ~~progression~~net effect of the ~~MDS studies. Stock-based compensation expense increased due to cumulative impact~~following:

~~General~~Selling, general and administrative (“SG&A”) expenses consist primarily of employee-related expenses for executive, operational, finance, legal, compliance, and human resource functions. ~~Other general and administrative~~SG&A expenses also include facility-related costs, ~~and~~ professional fees, accounting and legal services, other outside services including co-promotional expenses associated with our commercialization efforts in China, recruiting fees and expenses associated with obtaining and maintaining patents.

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research and development and potential commercialization of our product candidates. We also anticipate increased expenses, including exchange listing and SEC requirements, director and officer insurance premiums, legal, audit and tax fees, regulatory compliance programs, and investor relations costs associated with being a public company and ceasing to be an emerging growth company. Additionally, if and when we believe the first regulatory approval of one of our product candidates appears likely, we anticipate an increase in payroll and related expenses as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of our product candidates.

~~General and administrative~~SG&A expenses increased ~~$1.3~~$3.7 million, or ~~11%,~~12% for the three months ended ~~September 30, 2017,~~March 31, 2023, compared to the same period a year ago, primarily ~~due to increases~~as a result of the net effect of the following:

We share responsibility with AstraZeneca for clinical development activities required for U.S. regulatory approval of roxadustat. During the fourth quarter of 2015, the $116.5 million cap on our share of development costs for roxadustat was reached. As such, all 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 have been paid by Astellas and AstraZeneca since reaching the cap. In China, our subsidiary FibroGen Beijing will conduct the development work for CKD anemia, will hold all of the regulatory licenses issued by China regulatory authorities, and be primarily responsible for regulatory, clinical and manufacturing. All development and commercialization costs for roxadustat in China will be shared equally with AstraZeneca.

Interest expense includes ~~payments made for imputed~~ interest related to ~~the facility lease financing obligations for our leased facilities in San Francisco~~sale of future revenues and ~~China, as well as~~ interest related to the Technology Development Center of the Republic of Finland product development obligations.

Interest expense ~~remained relatively flat~~ for the three ~~and nine~~ months ended ~~September 30, 2017, compared~~March 31, 2023 represented the interest related to sale of future revenues under the Revenue Interest Financing Agreement (“RIFA”) with an affiliate of NovaQuest Capital Management (“NovaQuest”). See Note 6, Liability Related to Sale of Future Revenues, to the ~~same period a year ago, with no significant offsetting impacts.~~condensed consolidated financial statements for details. Interest expense was immaterial for the three months ended March 31, 2022.

Interest income and other income (expenses), net primarily include interest income earned on our cash, cash equivalents and investments, foreign currency transaction gains (losses), remeasurement of certain monetary assets and liabilities in non-functional currency of our subsidiaries into the functional currency, realized gains (losses) on sales of ~~investments.~~ investments, and other non-operating income and expenses.

Interest income and other income (expenses), net ~~increased $0.2~~improved $1.4 million, or ~~28%, increased $0.4 million, or 15%,~~422% for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2023, compared to the same ~~periods~~period a year ago, primarily due to higher interest ~~earned on~~income from our ~~cash, cash equivalents and~~ investments ~~associated~~ with higher interest rate during the ~~higher average balances, partially offset by the unrealized foreign~~ ~~currency translation gain on our monetary assets denominated in foreign currency as a result of U.S. Dollar weakening.~~current year period.

~~The provisions for income taxes for the three and nine months ended September 30, 2017 were due to foreign taxes.~~

~~The provision~~Provisions for income taxes for the three months ended ~~September 30, 2016 was~~March 31, 2023 and 2022 were primarily due to ~~the discrete tax effect arising from an unrealized loss in other comprehensive income (loss) related to available-for-sale securities, and~~ foreign taxes. The benefit from income taxes for the nine months ended September 30, 2016 was due to the discrete tax effect arising from cumulative unrealized gains in other comprehensive income (loss) related to available-for-sale securities, partially offset by foreign taxes.

Based upon the weight of available evidence, which includes our historical operating performance, reported cumulative net losses since inception and expected continuing net loss, we have established ~~and continue to maintain~~ a full valuation allowance against our net deferred tax assets as we do not currently believe that realization of those assets is more likely than not. We intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance.

Investment income in unconsolidated variable interest entity represented our proportionate share of the reported profits of Falikang, an unconsolidated variable interest entity accounted for under the equity method, and was immaterial for the three months ended March 31, 2023 and 2022. See Note 3, Variable Interest Entity, to the condensed consolidated financial statements for details.

We have historically funded our operations principally from the sale of ~~convertible preferred stock and~~ common stock (including our public offering proceeds) ~~and~~, from the execution of ~~certain~~ collaboration agreements involving license payments, ~~milestones and~~milestone payments, reimbursement for development ~~services.~~services, and the associated product revenue and drug product revenue.

~~Table~~On November 4, 2022, we entered into a RIFA with NovaQuest with respect to our revenues from Astellas’ sales of ~~Contents~~roxadustat in Europe, Japan and the other Astellas territories. Pursuant to the RIFA, we received $49.8 million from NovaQuest, representing the gross proceeds of $50.0 million net of initial issuance costs, in consideration for a portion of future revenues we will receive from Astellas. For additional details about this financing transaction, see Note 6, Liability Related to Sale of Future Revenues, to the condensed consolidated financial statements.

On ~~April 11, 2017,~~February 27, 2023, we ~~closed~~entered into an ~~offering of our common stock. In this offering,~~Amended and Restated Equity Distribution Agreement (the “at-the-market agreement”) with Goldman Sachs & Co., LLC and BofA Securities, Inc. (each a “Sales Agent”), which amended and restated its Equity Distribution Agreement with Goldman Sachs & Co., LLC, dated August 8, 2022, to add BofA Securities, Inc. as an additional Sales Agent under that agreement. Under the at-the-market agreement, we ~~sold 5,228,750~~may issue and sell, from time to time and through the Sales Agents, shares of our common stock ~~at a public~~having an aggregate offering price of ~~$22.95 per share. Net proceeds from this offering were $115.1~~up to $200.0 million ~~after deducting underwriting discounts and commissions of $4.9 million. In addition,~~(the “ATM Program”). Under the ~~total offering expenses were approximately $0.6 million. On August 24, 2017, the Company completed another follow-on offering of its common stock. In this offering, the Company~~ATM Program, we sold ~~a total of 9,200,000~~1,541,579 shares of ~~its~~our common stock ~~at a public offering price~~and received net proceeds of ~~$40.75 per share. Net proceeds from this offering were $356.2~~approximately $30.8 million ~~after deducting underwriting discounts and commissions~~during the three months ended March 31, 2023, See Note 7, At-the-Market Program, to the condensed consolidated financial statements for details.

As of ~~September 30, 2017,~~March 31, 2023, we had cash and cash equivalents of ~~$651.4 million.~~$188.6 million, compared to $155.7 million as of December 31, 2022. Cash is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. Investments, consisting ~~principally~~ of ~~corporate and government debt~~available-for-sale securities, and stated at fair value, are also available as a source of liquidity. As of ~~September 30, 2017,~~March 31, 2023, we had short-term investments of $167.4 million, compared to short-term investments of $266.3 million and long-term investments of ~~$78.6~~$4.3 million ~~and $16.8 million, respectively.~~as of December 31, 2022. As of ~~September 30, 2017,~~March 31, 2023, a total of ~~$19.1~~$98.9 million of our cash and cash equivalents was held outside of the U.S. in our foreign subsidiaries, including $77.6 million held in China, to be used primarily for our China operations.

~~Operating Capital Requirements~~On April 29, 2023, we entered into a financing agreement (the “Financing Agreement”) with investment funds managed by Morgan Stanley Tactical Value, as lenders, and Wilmington Trust, National Association, as the administrative agent, providing for senior secured term loan facilities consisting of (i) a $75.0 million initial term loan, (ii) a $37.5 million delayed draw term loan that will be funded upon the achievement of certain clinical development milestones and, (iii) an uncommitted delayed draw term loan of up to $37.5 million, to be funded at the Lenders sole discretion. For additional details about this financing transaction, see Note 11, Subsequent Event, to the condensed consolidated financial statements.

Cash flows from Falikang, a distribution joint venture between FibroGen Beijing and AstraZeneca, and cash flows into FibroGen Beijing, are currently intended to remain onshore in China. Our long-term plans for distributing cash flows from FibroGen Beijing may involve any number of scenarios including keeping the money onshore to fund future expansion of our China operations or paying down certain debt obligations. To date, weno such debt repayments have ~~not generated~~occurred, nor have there been any other payments or distributions from FibroGen Beijing to entities or investors outside of China. Our capital contributions to FibroGen Beijing and the liquidity position of FibroGen Beijing depend on many factors, including those set forth under Part II, Item 1A “Risk Factors” in this Quarterly Report.

The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods set forth below (in thousands):

Net cash used in operating activities was $101.6 million for the three months ended March 31, 2023 and consisted primarily of net loss of $76.7 million adjusted for non-operating cash items of $21.1 million, and a net decrease in operating assets and liabilities of $46.0 million. The significant non-operating cash items included stock-based compensation expense of $16.1 million, depreciation expense of $2.5 million and non-cash interest expense related to sale of future revenues of $2.2 million. The significant items in the changes in operating assets and liabilities included the following:

Net cash used in operating activities was $8.5 million for the three months ended March 31, 2022 and consisted primarily of net loss of $63.2 million adjusted for non-operating cash items of $20.4 million, offset by a net increase in operating assets and liabilities of $34.4 million. The significant non-operating cash items included stock-based compensation expense of $17.2 million, and depreciation expense of $2.5 million. The significant items in the changes in operating assets and liabilities included the following:

Investing activities primarily consist of purchases of property and equipment, purchases of investments, purchase of acquired in-process research and development asset and proceeds from the maturity and sale of investments.

Net cash provided by investing activities was $103.5 million for the three months ended March 31, 2023 and consisted primarily of $104.8 million of proceeds from maturities of investments and $1.7 million of proceeds from sales of available-for-sale securities, partially offset by $2.5 million of cash used in purchases of available-for-sale securities.

Net cash used in investing activities was $25.9 million for the three months ended March 31, 2022 and consisted primarily of $76.1 million of proceeds from maturities of investments and $7.4 million of proceeds from sales of available-for-sale securities, partially offset by $35.0 million of cash paid for the acquired in-process research and development asset, and $20.9 million of cash used in purchases of available-for-sale securities.

Financing activities primarily reflect proceeds from the issuance of our common stock, cash paid for payroll taxes on restricted stock unit releases, repayments of our lease liabilities and obligations.

Net cash provided by financing activities was $31.5 million for the three months ended March 31, 2023 and consisted primarily of $30.8 million net proceeds received under the ATM Program. See Note 7, At-the-Market Program, to the condensed consolidated financial statements for details.

Net cash used in financing activities was $2.9 million for the three months ended March 31, 2022 and consisted primarily of $3.0 million of cash paid for payroll taxes on restricted stock unit releases.

We started generating revenue from commercial sales of roxadustat product ~~sales. We do not know when, or if, we will generate any revenue from product sales. We do not expect to generate significant~~in China in the third quarter of 2019. Even with the expectation of increases in revenue from product sales, ~~unless and until~~ we ~~obtain regulatory approval of and commercialize one or more of our current or future product candidates. We~~ anticipate that we will continue to generate losses for the foreseeable ~~future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products.~~future. To date, we have funded certain portions of our research and development and manufacturing efforts ~~in China~~globally through collaboration partners and ~~Europe through outside parties.~~capital investment. There is no guarantee that sufficient funds will be available to continue to fund these development efforts through commercialization or otherwise. Although ~~our share of expenses for roxadustat will decrease as a result of~~ AstraZeneca is currently funding all non-China collaboration expenses not reimbursed by Astellas, including development of MDS in the U.S., we expect our research and development expenses to continue to increase as we invest in our other programs. Additionally, we have not been able to agree on a path forward for AstraZeneca to fund further roxadustat development in the U.S. for CKD anemia. We are also subject to all the risks related to the development and commercialization of novel therapeutics, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our ~~business.~~business, such as the COVID-19 pandemic or other factors outlined under Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q. We anticipate that we will need substantial additional funding in connection with our continuing operations.

We believe that our existing cash and cash equivalents, short-term and long-term investments and accounts receivable, together with the financing amount under the RIFA received in November 2022 and the net proceeds received under our ATM program, will be sufficient to meet our anticipated cash requirements for at least the next 12 ~~months.~~months from the date of issuance of the financial statements included in this Quarterly Report on Form 10-Q. However, we may need additional capital thereafter and our liquidity assumptions could turn out to be wrong, or may change over time, and we could utilize our available financial resources sooner than we currently expect. In addition, we may elect to raise additional funds at any time through equity, equity-linked, or debt financing ~~arrangements.~~arrangements or from other sources. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors. ~~We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.~~ Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth under Part II, Item 1A “Risk ~~Factors”~~Factors” in this Quarterly Report on Form 10-Q. We may not be able to secure additional financing to meet our operating requirements on acceptable terms, or at all. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted. If we raise additional financing by the incurrence of indebtedness, we will be subject to increased fixed payment obligations and could also be subject to restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business. If we are unable to obtain needed additional funds, we will have to reduce our operating costs and expenses, which would impair our growth prospects and could otherwise negatively impact our business.

As of March 31, 2023, we had $86.8 million of operating lease liabilities. The ~~following table sets forth~~material cash requirements related to our lease liabilities included $13.5 million expected to be paid within the ~~primary sources~~next 12 months.

As of March 31, 2023, we had outstanding total non-cancelable purchase obligations of $51.9 million, including $22.4 million for manufacture and ~~uses~~supply of pamrevlumab, $4.1 million for manufacture and supply of roxadustat, and $25.4 million for other purchases and programs. We expect to fulfill our commitments under these agreements in the normal course of business, and as such, no liability has been recorded. The material cash requirements related to our non-cancelable purchase obligations included $28.9 million expected to be paid within the next 12 months.

Under the RIFA with NovaQuest, as of March 31, 2023, we had $51.6 million of liability related to sale of future revenues on the consolidated balance sheets, $3.2 million of which we anticipate to pay within the next 12 month. Based on our current estimates of drug product revenue and ~~cash equivalents for each~~revenue from milestone payments under the Astellas Agreements, and taking into the consideration of the ~~periods set forth below:~~

Net cash used in operating activities was $65.3 million for the nine months ended September 30, 2017 and consisted primarily of net loss of $104.1 million adjusted for non-cash items of $33.6 million and a net increase in operating assets and liabilities of $5.2 million. The significant non-cash items included stock-based compensation expense of $27.6 million, depreciation expense of $4.6 million and amortization of premium on investments of $1.5 million. The significant items in the changes in operating assets and liabilities included increases resulted from deferred revenue of $4.1 million and accounts receivable of $1.8 million, partially offset by a decrease resulted from other assets of $1.7 million. The changes in deferred revenue and accounts receivable were relatedFuture Revenues, to the ~~timing~~consolidated financial statements for details.

Some of our license agreements provide for periodic maintenance fees over specified time periods, as well as payments by the ~~receipt~~Company upon the achievement of ~~upfront~~development, regulatory and commercial milestones. As of March 31, 2023, future milestone payments for research and ~~recognition~~preclinical stage development programs consisted of ~~revenues~~up to approximately $697.9 million in total potential future milestone payments under our ~~collaboration~~license agreements with ~~Astellas~~HiFiBiO (for Gal-9 and ~~AstraZeneca.~~CCR8), Medarex, Inc. and others. These milestone payments generally become due and payable only upon the achievement of certain developmental, clinical, regulatory and/or commercial milestones. The ~~change in other assets was primarily driven by the~~event triggering such payment ~~during the current year period for the land use right fee for the commercial active pharmaceutical ingredients manufacturing facility that we are establishing in China.~~or obligation has not yet occurred.

Net cash provided by operating activities was $25.7 million for the nine months ended September 30, 2016 and consisted primarily of net loss of $27.7 million adjusted for non-cash items of $30.0 million and a net increase in operating assets and liabilities of $23.3 million. The significant non-cash items included stock-based compensation expense of $24.3 million, depreciation expense of $4.5 million and amortization of premium on investments of $2.1 million. The significant items in the changes in operating assets and liabilities included increases resulted from deferred revenue of $14.7 million, accounts receivable of $7.7 million and accrued liabilities of $4.2 million, partially offset by a decrease resulted from accounts payable of $4.5 million. The changes in deferred revenue and accounts receivable were related to the timing of the receipt of upfront payments and recognition of revenues under our collaboration agreements with Astellas and AstraZeneca. The change in accounts payable and accrued liabilities were primarily driven by clinical trial activities and the timing of payments.Off-Balance Sheet Arrangements

~~Investing activities primarily consist of purchases of property and equipment, purchases of investments, and proceeds from the maturity and sale of investments.~~

Net cash provided by investing activities was $49.9 million for the nine months ended September 30, 2017 and consisted of proceeds from maturities of available-for-sale securities of $33.8 million and sales of available-for-sale securities of $21.1 million, partially offset by cash used in purchases of property and equipment of $5.0 million.

Net cash provided by investing activities was $15.7 million for the nine months ended September 30, 2016 and consisted of proceeds from maturities of available-for-sale securities of $12.6 million and sales of available-for-sale securities of $4.3 million, partially offset by cash used in purchases of fixed assets of $1.1 million.

~~Financing activities primarily reflect proceeds from the issuance of our common stock, cash paid for payroll taxes on restricted stock unit releases, repayments of our lease liability.~~

~~Net cash provided by financing activities was $493.1 million for~~During the three months ended September 30, 2017 and consisted primarily of $471.2 million of total proceeds from follow-on offerings in April and August of 2017, net of underwriting discounts and commission costs, $28.6 million of proceeds from the issuance of common stock upon exercise of stock options and purchases under ESPP, partially offset by $6.0 million of cash paid for payroll taxes on restricted stock unit releases.

Net cash provided by financing activities was $3.6 million for the nine months ended September 30, 2016 and consisted of $6.1 million of proceeds from the issuance of common stock upon exercise of stock options and purchases under ESPP, partially offset by $2.2 million of cash paid for payroll taxes on restricted stock unit releases and $0.3 million of repayments on our lease liability.

~~During the three and nine months ended September 30, 2017,~~March 31, 2023, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements.

~~There have been no material changes in our contractual obligations compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016.~~

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes in our critical accounting policies, estimates and judgments during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 compared with the disclosures in Part II, Item 7 of our ~~Annual Report on~~2022 Form ~~10-K for the year ended December 31, 2016.~~10-K.

~~In March 2016, the Financial Accounting Standards Board (“FASB”) issued~~ ~~Accounting Standards Update (“ASU”)~~ ~~2016-09,~~ ~~Compensation - Stock Compensation (Topic 718)~~. This guidance identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. This guidance was effective for the annual reporting period beginning after December 15, 2016, including interim periods within that reporting period. We adopted this guidance as of January 1, 2017 and have elected to continue with our existing policy to estimate forfeitures expected to occur when calculating stock compensation expense. Upon adoption, we recorded a retrospective increase of $19.5 million in deferred tax assets for previously unrecognized excess tax benefits that existed as of December 31, 2016, and a corresponding increase of $19.5 million in the valuation allowance against these deferred tax assets, as substantially all of our U.S. and foreign deferred tax assets, net of deferred tax liabilities, are subject to a full valuation allowance. As such, the net impact from these retrospective adjustments was zero to our accumulated deficit. The adoption of this guidance had no impact to our consolidated financial statements for the three and nine months ended September 30, 2017.

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting~~. This guidance provides guidance about which changes to the terms or conditions of a stock-based payment award require an entity to apply modification accounting in Topic 718. This guidance is effective for annual reporting period beginning after December 15, 2017, including interim periods, with early adoption permitted. We are currently evaluating the impact on our consolidated financial statements upon the adoption of this guidance.

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~. This guidance requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability. This guidance is effective for the annual reporting period beginning after December 15, 2019, including interim periods within that reporting period. We are currently evaluating the impact on our consolidated financial statements upon the adoption of this guidance.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~. Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. We are currently evaluating the impact on our consolidated financial statements upon the adoption of this guidance.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Financial Instruments-Overall (Subtopic 825-10)~~, which requires equity investments that are not accounted for under the equity method of accounting to be measured at fair value with changes recognized in net income, simplifies the impairment assessment of certain equity investments, and updates certain presentation and disclosure requirements. This guidance is effective for annual reporting periods beginning after December 15, 2017 and interim periods within those annual periods. We are currently evaluating the impact on our consolidated financial statements upon the adoption of this guidance.

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ ~~(“ASU 2014-09”), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605,~~ ~~Revenue Recognition~~. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU No. 2016-08, ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations~~ ~~(“ASU 2016-08”); ASU No. 2016-10,~~ ~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing~~ ~~(“ASU 2016-10”); ASU No. 2016-12,~~ ~~Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients~~ ~~(“ASU 2016-12”); and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers~~ (“ASU 2016-20”). We must adopt ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 with ASU 2014-09 (collectively, the “new revenue standards”). The amendments may be applied retrospectively to each prior period (full retrospective) or retrospectively with the cumulative effect recognized as of the date of initial application (modified retrospective). We have commenced our implementation activities related to the adoption of ASU 2014-09 and are in the process of applying the five-step model of the new standard to our various revenue related arrangements. We have completed step 1 (Identify the contract(s) with a customer) and concluded that our collaboration agreements with Astellas and AstraZeneca are the only material contracts which will be impacted by the adoption of the new revenue standards. We are in the process of completing step 2 (Identify the performance obligations in the contract) and have not yet reached a conclusion on whether the distinct criteria evaluated under ASC 605-25 for each performance obligation would result in a similar conclusion under the new revenue standards. With respect to milestones that were previously recognized under ASC 605-28, the milestone method is not applicable under the new revenue standards, and they are considered part of the overall arrangement consideration which will result in a deferral of revenue under the new revenue standards as part of the adoption. We will adopt the new revenue standards in the first quarter of 2018 and apply the full retrospective method to restate each prior reporting period presented in the consolidated financial statements. The new revenue standard is principle based and interpretation of those principles may vary from company to company based on their unique circumstances. It is possible that interpretation, industry practice, and guidance may evolve as companies and the accounting profession work to implement this new standard. As we complete our evaluation of this new standard, new information may arise that could change our current understanding of the impact to revenues recognized and our views on the expected impact to the periods prior to adoption.

WeDuring the three months ended March 31, 2023, we believe there ~~has been~~were no material ~~change in~~changes to our exposure to market risks as ~~disclosed~~set forth in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our ~~Annual Report on~~2022 Form ~~10-K for the year ended December 31, 2016.~~10-K.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2023, the end of the period covered by this Quarterly Report on Form 10-Q. Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Based on ~~management’s~~our evaluation, ~~our principal executive officer~~the Chief Executive Officer and ~~principal financial officer~~Chief Financial Officer have concluded that our disclosure controls and procedures were effective ~~as of September 30, 2017~~ at the reasonable assurance ~~level.~~level as of March 31, 2023.

~~There~~During the quarter ended March 31, 2023, we completed the implementation of an enterprise resource planning (“ERP”) system, with which we expect to improve the efficiency of certain financial and transactional processes. As a result, we have updated the design and documentation of internal controls, processes and procedures which occurred following the ERP implementation to ensure we continue to maintain effective internal control over financial reporting.

Except as described in the previous paragraph, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended ~~September 30, 2017~~March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In designing and evaluating the disclosure controls and procedures, management recognizes that because of the inherent limitations in all control systems, any controls and procedures, no matter how well designed and operated, can provide only reasonable not absolute, assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and ~~that management is required to apply its judgment in evaluating~~ the benefits of ~~possible~~ controls and procedures must be considered relative to their costs. ~~Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.~~

We are ~~not currently~~ a party to various legal actions that arose in the ordinary course of our business. We recognize accruals for any legal action when we conclude that a loss is probable and reasonably estimable. We did not have any material accruals for any active legal ~~proceedings.~~action in our condensed consolidated balance sheet as of March 31, 2023, as we could not predict the ultimate outcome of these matters, or reasonably estimate the potential exposure. See Note 10, Commitments and Contingencies, to the condensed consolidated financial statements for details.

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 Quarterly Report on Form 10-Q, including our condensed 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.

We have marked with an asterisk (*) those risks described below that reflect substantive changes from the risks described under Part I, Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022, filed on February 27, 2023 (“2022 Form 10-K”).

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 pamrevlumab (FG-3019), in idiopathic pulmonary fibrosis (“IPF”), pancreatic cancer, Duchenne muscular dystrophy (“DMD”) and liver fibrosis. Pharmaceutical product development is a highly risky undertaking. To date, 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 in each year since our inception. We have not generated any significant revenue based on product sales to date. We continue to incur significant research and development and other expenses related to our ongoing operations. Our net loss for the years ended December 31, 2016, 2015 and 2014 was approximately $61.7 million, $85.8 million and $59.5 million, respectively. As of September 30, 2017, we had an accumulated deficit of $573.8 million. As of September 30, 2017, we had capital resources consisting of cash, cash equivalents and short-term investments of $730.0 million plus $16.8 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, and the potential to receive milestone and other payments from these partners, we anticipate we will continue to incur losses 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. If we do not successfully develop and obtain regulatory approval for our existing or any future product candidates and effectively manufacture, market and sell any 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, seek regulatory approval, prepare for the 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 over 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 party collaboration revenues will allow us to fund our operating plans through at least the next

12 months. Our operating plans or third party collaborations may change as a result of many factors, which are discussed in more detail below, 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~~FibroGen will depend on a number of factors, many ~~factors,~~of which are beyond our control and involve risks, 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.following:

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

~~During the years ended December 2016, 2015 and 2014, substantially all of our revenues recognized were 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 these collaborations were to be terminated, we could require significant additional capital in order to proceed with development and commercialization of our product candidates, 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 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 products pamrevlumab and roxadustat.

To date, we have invested a substantial portion of our efforts and financial resources in the research and development of ~~roxadustat,~~pamrevlumab and roxadustat.

Our near-term success depends in large part on pamrevlumab, which is currently our lead product candidate. Roxadustat is our only product candidate that has advanced into a potentially pivotal trial, and it may be years before the studies required for its approval are completed, if ever. Our other product candidates are less advanced in development and may never enter into pivotal studies. We have completed 26 Phase 1 and 2 clinical studies with roxadustat in North America, Europe and Asia, in which over 1,400 subjects have participated and for which we reported favorable primary and secondary safety and efficacy endpoint results. Based on our discussions with regulatory authorities, we believe that we have an acceptable plan for the conduct of our Phase 3 clinical programs to support NDA submissions in the U.S. and China. We have discussed our Phase 3 clinical development program with three national health authorities in the EU and obtained scientific advice from the European Medicines Agency. 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.

~~Our other lead product candidate, pamrevlumab, is currently~~ in clinical development for ~~IPF,~~idiopathic pulmonary fibrosis (“IPF”), locally advanced unresectable pancreatic cancer, ~~DMD,~~metastatic pancreatic cancer, and ~~liver fibrosis.~~Duchenne muscular dystrophy (“DMD”). Pamrevlumab requires substantial further development and ~~investment. We~~commercialization investments, and, at this time, we do not have a collaboration partner ~~for~~to 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 liver fibrosis, 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 as~~greater financial resources ~~that are potentially greater~~ than ~~those required~~ for our small molecule, ~~lead compound,~~ roxadustat.

~~The clinical~~Our near-term prospects also depend in large part on our continued development 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~~in the People’s Republic of China (“China”), Japan, Europe, the United States (“U.S.”), and ~~commercial success~~elsewhere. Roxadustat has been approved in the European Union, Great Britain, China, Japan, and other countries for the treatment of ~~roxadustat~~anemia in chronic kidney disease (“CKD”) for patients who are on dialysis and ~~pamrevlumab will depend~~not on dialysis. However, we received a ~~number of factors, including the following:~~

~~Many of these factors are beyond our control. Accordingly, we cannot assure you~~there is a risk that we ~~will ever be able~~are unsuccessful or we fail to ~~achieve profitability through the sale~~comply with rules or regulations applicable to development or commercialization of ~~or royalties from,~~ our ~~product candidates. If~~products. There is also a risk that we ~~or our collaboration partners are not successful in obtaining approval for and commercializing our product candidates, or~~ are delayed ~~in completing those efforts,~~due to the need to develop these capabilities or due to a lack of resources. All of which would adversely affect our business and ~~operations would be adversely affected.~~financial condition.

WeDrug development and obtaining marketing authorization is a very difficult endeavor and we may ultimately be unable to obtain regulatory approval for our various product candidates in one or ~~such approval may be delayed~~more jurisdictions and in one or limited, due to a number of factors, many of which are beyond our control.*more indications.

The ~~clinical trials~~development, manufacturing, marketing, and ~~the manufacturing~~selling of our products and 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~~drug development and approval ~~process is~~processes are expensive and ~~requires~~require substantial resources and time, and in general, very few product candidates that enter development ultimately 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.

~~We have not obtained regulatory approval~~Moreover, for any clinical trial to support a New Drug Application (“NDA”)/Biologics License Application submission for approval, the FDA and foreign regulatory authorities require compliance with regulations and standards (including good clinical practices (“GCP”) requirements for designing, 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 ~~product candidates~~clinical trials, we as the sponsor remain responsible for ensuring that each of these clinical trials is conducted in accordance with its general investigational plan and ~~it is possible that roxadustat~~protocol under legal and ~~pamrevlumab will never receive~~ regulatory ~~approval in any country.~~ requirements, including GCP.

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

Any of these factors, many of which are beyond our control, could jeopardize our or our collaboration partners’ abilities to obtain regulatory approval for ~~and successfully market roxadustat. Because~~ our ~~business and operations~~product candidates in one or more indications.

The FDA or other regulatory authorities may require more information (including additional preclinical or clinical data to support approval), which may delay or prevent approval or cause us to abandon the development program altogether.

Even if we believe our clinical trials are successful, regulatory authorities may not agree that our completed clinical trials provide adequate data on safety or efficacy. Approval by one regulatory authority does not ensure approval by any other regulatory authority. For example, while we have received approval of our marketing authorization applications for roxadustat in the ~~near-term~~European Union, Great Britain, China, Japan, and other countries for the treatment of anemia in CKD for patients who are ~~almost entirely dependent upon~~on dialysis and not on dialysis, we received a CRL in CKD anemia in the U.S. from the FDA regarding roxadustat’s NDA for the treatment of anemia due to CKD, stating that it could not be approved in its present form. In addition, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process or commercial uptake in other countries.

Even if we do obtain regulatory approval, our product candidates may be approved for fewer or more limited indications than we request, approval may be contingent on the performance of costly post-marketing clinical trials, or approval may require labeling that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. In addition, if our product candidates produce undesirable side effects or safety issues, the FDA may require the establishment of Risk Evaluation and Mitigation Strategy (or other regulatory authorities may require the establishment of a similar strategy), that may restrict distribution of our approved products, if any, and impose burdensome implementation requirements on us.

Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.

The CRL we received from the FDA for roxadustat ~~any~~has decreased the likelihood of approval and successful commercialization of roxadustat in the U.S. and potentially other markets. There is a significant ~~delays~~risk that our U.S./Rest of World Collaboration Agreement with AstraZeneca will be amended or ~~impediments~~terminated.

In August 2021, the FDA issued a CRL regarding roxadustat’s NDA for the treatment of anemia due to ~~regulatory~~CKD in adult patients, stating that it could not be approved in its present form. The CRL and the subsequent delay due to discussions with AstraZeneca have decreased the likelihood of approval and successful commercialization of roxadustat in the U.S. and therefore will decrease and/or delay expected revenue. While we continue to commercialize roxadustat in China with AstraZeneca, and develop roxadustat in the U.S. for the treatment of anemia in patients with MDS, we have not been able to agree on a path forward for AstraZeneca to fund further roxadustat development in the U.S. and there is a significant risk we will be unable to do so. There is also a significant risk that the AstraZeneca U.S./RoW Agreement will be amended or terminated. Any of these risks could have a material ~~adverse effect~~impact on our business, operating results, and ~~prospects.~~financial condition.

Furthermore, in both the U.S. and China, we also expect to be required to perform additional clinical trials in order to obtain approval or as a condition to maintaining approval due to post-marketing requirements. If the FDA requires a risk evaluation and mitigation strategy (“REMS”), for any of our product candidates if approved, the substantial cost and expense of complying with a REMS or other post-marketing requirements may limit our ability to successfully commercialize our product candidates.

Preclinical, Phase 1 and Phase 2 clinical trial results may not be indicative of the results that may be obtained in larger ~~controlled Phase 3~~ clinical ~~trials required for approval.~~trials.

Clinical development is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. Success in preclinical and early clinical trials, which are often highly variable and use small sample sizes, may not be predictive of similar results in humans or in larger, controlled clinical trials, and successful results from ~~early or small~~ clinical trials in one indication may not be replicated ~~or show as favorable an outcome, even if successful. For example,~~ in the past we developed an earlier generation product candidate aimed at treating anemia in CKD that resulted in a clinical hold for a safety signal seen in that product in Phase 2 clinical trials. The clinical hold applied to that product candidate and roxadustat was lifted for both product candidates after submission of the requested data to the FDA. While we have not seen similar safety concerns involving roxadustat to date, our Phase 2 clinical trials have involved a relatively small number of patients exposed to roxadustat for a relatively short period of time compared to the Phase 3 clinical trials that we will be conducting, and only a fraction of the patients in the Phase 2 clinical trials were randomized to placebo. Accordingly, the Phase 2 clinical trials that we have conducted may not have uncovered safety issues, even if they exist. In addition, some of the safety concerns associated with the treatment of patients with anemia in CKD using Erythropoiesis Stimulating Agents (“ESAs”) did not emerge for many years until placebo-controlled studies had been conducted in large numbers of patients. The biochemical pathways that we believe are affected by roxadustat are implicated in a variety of biological processes and disease conditions, and it is possible that the use of roxadustat to treat larger numbers of patients will demonstrate unanticipated adverse effects, including possible drug interactions, which may negatively impact the safety profile, use and market acceptance of roxadustat. We studied the potential interaction between roxadustat and three statins (atorvastatin, rosuvastatin and simvastatin), which are used to lower levels of lipids in the blood. An adverse effect associated with increased statin plasma concentration is myopathy, which typically presents in a form of myalgia. The studies indicated the potential for increased exposure to those statins when roxadustat is taken simultaneously with those statins and suggested the need for statin dose reductions for patients receiving higher statin doses. We performed additional clinical pharmacology studies to evaluate if the effect of any such interaction could be minimized or eliminated by a modification of the dosing schedule that would separate the administration of roxadustat and the statin, however, such studies showed no minimization of effect. It is possible that the potential for interaction between roxadustat and statins could lead to label provisions for statins or roxadustat relating, for example, to dose scheduling or recommended statin dose limitations. In CKD patients statin therapy is often initiated earlier than treatment for anemia, and risks of myopathy have been shown to decrease with increased time on drug. While we believe the prior statin treatment history of such patients at established doses may reduce the risk of adverse effects from any interaction with roxadustat and facilitate any appropriate dose adjustments, we cannot be sure that this will be the case.other indications.

The FDA has informed us that our Phase 3 trials must include, as a safety endpoint, a major adverse cardiac events (“MACE”), endpoint, which is a composite endpoint designed to identify major safety concerns, in particular relating to cardiovascular events such as cardiovascular death, myocardial infarction and stroke. In addition, we expect that our Phase 3 clinical trials supporting approval in Europe will be required to include MACE+ as a safety endpoint which, in addition to the MACE endpoints, also incorporates measurements of hospitalization rates due to heart failure or unstable angina. As a result, our ongoing and planned Phase 3 clinical trials may identify unanticipated safety concerns in the patient population under study. The FDA has also informed us that the MACE endpoint will need to be evaluated separately for our Phase 3 trials in non-dialysis dependent-CKD patients and our

Phase 3 trials in dialysis dependent-CKD patients. The MACE endpoint will be evaluated in pooled analysis across Phase 3 studies of similar study populations and requires demonstration of non-inferiority relative to comparator, which means that the MACE event rate in roxadustat-treated patients must have less than a specified probability of exceeding the rate in the comparator trial by a specified hazard ratio. The number of patients necessary in order to permit a statistical analysis with adequate ability to detect the relative risk of MACE or MACE+ events in different arms of the trial, referred to as statistical power, depends on a number of factors, including the rate at which MACE or MACE+ events occur per patient-year in the trial, treatment duration of the patients, the required hazard ratio, and the required statistical power and confidence intervals.

In addition, we cannot be sure that the potential advantages that we believe roxadustat may have for treatment of patients with anemia in CKD as compared to the use of ESAs will be substantiated by our Phase 3 clinical trials or that we will be able to include a discussion of such advantages in our labeling should we obtain approval. We believe that roxadustat may have certain benefits as compared to ESAs based on the data from our Phase 2 clinical trials conducted to date, including safety benefits, the absence of a hypertensive effect, the potential to lower cholesterol levels and the potential to correct anemia without the use of IV iron. However, our belief that roxadustat may offer those benefits is based on a limited amount of data from our Phase 2 clinical trials and our understanding of the likely mechanisms of action for roxadustat. Some of these benefits, such as those associated with the apparent effects on blood pressure and cholesterol, are not fully understood and, even if roxadustat receives marketing approval, we do not expect that it will be approved for the treatment of high blood pressure or high cholesterol based on the data from our Phase 3 trials, and we may not be able to refer to any such benefits in the labeling. While the data from our Phase 2 trials suggests roxadustat may reduce low-density lipoprotein (“LDL”), and reduce the ratio of LDL to high-density lipoprotein (“HDL”), the data show it may also reduce HDL, which may be a risk to patients. In addition, causes of the safety concerns associated with the use of ESAs to achieve specified target Hb levels have not been fully elucidated. While we believe that the issues giving rise to these concerns with ESAs are likely due to factors other than the Hb levels achieved, we cannot be certain that roxadustat will not be associated with similar, or more severe, safety concerns.

Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials after achieving positive results in ~~early stage~~early-stage development, and we may face similar setbacks. In addition, the CKD patient population has many afflictions that may cause severe illness or death, which may be attributed to roxadustat in a manner that negatively impacts the safety profile of our product candidate. If the results of our ongoing or future clinical trials for roxadustat are inconclusive with respect to efficacy, if we do not meet our clinical endpoints with statistical significance, or if there are unanticipated safety concerns or adverse events that emerge during clinical trials, we may be prevented from or delayed in obtaining marketing approval for roxadustat, and even if we obtain marketing approval, any sales of roxadustat may suffer.

Our preclinical and Phase 2 results to date for pamrevlumab may not be indicative of the results that may be obtained in larger, controlled Phase 2 clinical trials or Phase 3 clinical trials required for approval.*

Success in preclinical and early clinical trials, which are often highly variable and use small sample sizes, may not be predictive of similar results in humans or in larger, controlled clinical trials, and successful results from early or small clinical trials may not be replicated or show as favorable an outcome, even if successful. We have conducted only a limited number of Phase 2 clinical trials with pamrevlumab. We have conducted ~~a randomized placebo-controlled study in 103 IPF patients with substudies comparing pamrevlumab to 57 IPF patients receiving one of two standards of care,~~ an open-label Phase 2 dose escalation study of pamrevlumab for IPF in 89 patients, a Phase 2 dose finding trial of pamrevlumab combined with gemcitabine plus erlotinib in 75 patients with pancreatic cancer and a randomized double-blind placebo controlled study for liver fibrosis in subjects with hepatitis B. We cannot be sure that the results of these trials will be substantiated in double-blinded trials with larger numbers of patients, that larger trials will demonstrate the efficacy of pamrevlumab for these or other indications or that safety issues will not be uncovered in further trials. In the Phase 2 clinical trial for IPF, we used quantitative high resolution computed tomography (“HRCT”), to measure the extent of lung fibrosis. While we believe that quantitative HRCT is an accurate measure of lung fibrosis, it is a novel technology that has not yet been accepted by the FDA as a primary endpoint in pivotal clinical trials. In addition, while we believe that the animal studies that we have conducted to date suggest that pamrevlumab has the potential to arrest or reverse fibrosis and reduce tumor mass, we cannot be sure that these results will be indicative of the effects of pamrevlumab in human trials. In addition, the IPF and pancreatic cancer patient populations are extremely ill and routinely experience SAEs, including death, which may be attributed to pamrevlumab in a manner that negatively impacts the safety profile of our product candidate. If the additional clinical trials that we are planning or are currently conducting for pamrevlumab do not show favorable efficacy results or result in safety concerns, or if we do not meet our clinical endpoints with statistical significance, or demonstrate an acceptable risk-benefit profile, we may be prevented from or delayed in obtaining marketing approval for pamrevlumab in one or both of these indications.

We do not know whether our ongoing or planned ~~Phase 3~~ clinical trials inof roxadustat or ~~Phase 2 clinical trials in~~ pamrevlumab will need to be redesigned based on interim results or if we will be able to achieve sufficient patient enrollment or ~~be completed~~complete planned clinical trials on ~~schedule, if at all.~~schedule.

Clinical trials can be delayed, ~~or terminated for a variety of reasons, including delay or failure to:~~

~~In addition, we could encounter delays if a clinical trial is~~ suspended, or terminated by us, by the relevant ~~IRBs~~institutional review boards at the sites at which such trials are being conducted, or by the FDA or other regulatory ~~authorities. A suspension~~authorities, for a variety of reasons or ~~termination~~factors, including:

In particular, identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. The timing of our clinical trials depends on the rate at which we can recruit and enroll patients in testing our product candidates. Patients may be unwilling to participate in clinical trials of our product candidates for a variety of reasons, some of which may be beyond our control, including:

Any delays in completing our clinical trials will increase the costs of the trial, delay the product candidate development and approval process and jeopardize our ability to commence marketing and generate revenues. Any of these occurrences may materially and adversely harm our business, ~~and~~ operations, and prospects.

Our product candidates may cause or have attributed to them undesirable side effects or have other properties that delay or prevent their regulatory approval or limit their commercial potential.

Undesirable side effects caused by our product candidates or that may be identified as related to our product candidates by physician investigators conducting our clinical trials or even competing products in development that utilize a similar mechanism of action or act through a similar biological disease pathway could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in the delay or denial of regulatory approval by the FDA or other regulatory authorities and potential product liability claims. ~~Adverse events~~If we determine that there is a likely causal relationship between a serious adverse event and ~~SAEs that emerge during treatment with our product candidates or other compounds acting through similar biological pathways may be deemed to be related to~~ our product candidate, and such safety event is material or significant enough, it may result in:

The occurrence of any or all of these events may cause the development of our product candidates to be delayed or terminated, which could materially and adversely affect our business and prospects. ~~Refer to “Business — Our Development Program for Roxadustat” and “Business — Pamrevlumab for the Treatment of Fibrosis and Cancer” for a discussion of the adverse events and SAEs that have emerged in clinical trials of roxadustat and pamrevlumab.~~

Clinical trials of our product candidates may not uncover all possible adverse effects that patients may experience.

Clinical trials are conducted in representative samples of the potential patient population, which may have significant variability. Pamrevlumab is being studied in patient populations that are at high risk of death and adverse events, and even if unrelated to pamrevlumab, adverse safety findings in these trials may limit its further development or commercial potential. Clinical trials are by design based on a limited number of subjects and of limited duration for exposure to the product used to determine whether, on a potentially statistically significant basis, the planned safety and efficacy of any product candidate can be achieved. As with the results of any statistical sampling, we cannot be sure that all side effects of our product candidates may be uncovered, and it may be the case that only with a significantly larger number of patients exposed to the product candidate for a longer duration, ~~may~~that a more complete safety profile beis identified. Further, even larger clinical trials may not identify rare serious adverse effects or the duration of such studies may not be sufficient to identify when those events may occur. There have been other products, including ~~ESAs, that have been approved by the regulatory authorities but~~erythropoiesis stimulating agents (“ESAs”), for which safety concerns have been uncovered following ~~approval.~~approval by regulatory authorities. Such safety concerns have led to labeling changes or withdrawal of ESAs products from the ~~market, and~~market. While roxadustat is chemically unique from ESAs, it or any of our product

candidates may be subject to ~~similar~~known or unknown risks. For example, roxadustat for use in anemia in CKD is being developed to address a very diverse patient population expected to have many serious health conditions at the time of administration of roxadustat, including diabetes, high blood pressure and declining kidney function.

~~Although to date we have not seen evidence of significant safety concerns with our product candidates currently in clinical trials, patients~~Patients treated with our products, if approved, may experience adverse reactions and it is possible that the FDA or other regulatory authorities may ask for additional safety data as a condition of, or in connection with, our efforts to obtain approval of our product candidates. If safety problems occur or are identified after our product candidates reach the market, we may, or regulatory authorities may require us to amend the labeling of our products, recall our products or even withdraw approval for our products.

~~We may fail to enroll a sufficient number of patients in~~If our ~~clinical trials in a timely manner, which could delay~~manufacturers or ~~prevent clinical trials of our product candidates.~~

Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. The timing of our clinical trials depends on the rate at which we can recruit and enroll patients in testing our product candidates. Patients may be unwilling to participate in clinical trials of our product candidates for a variety of reasons, some of which may be beyond our control:

Patients may be unwilling to participate in our clinical trials for roxadustat due to adverse events observed in other drug treatments of anemia in CKD, and patients currently controlling their disease with existing ESAs may be reluctant to participate in a clinical trial with an investigational drug. We may not be able to successfully initiate or continue clinical trials if we cannot ~~rapidly enroll a sufficient number~~properly manufacture the appropriate volume of eligible patients to participate in the clinical trials required by regulatory agencies. If we have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit or terminate on-going or planned clinical trials, any of which could have a material and adverse effect on our business and prospects.

~~If we or third party manufacturers on which we rely cannot manufacture sufficient quantities of our~~ product, ~~candidates, or at sufficient quality,~~ we may experience delays in development, regulatory approval, launch or successful commercialization.

Completion of our clinical trials and commercialization of our ~~product candidates~~products require access to, or development of, facilities to manufacture and manage our product candidates at sufficient yields, quality and at commercial scale. WeAlthough we have ~~not yet~~ entered into ~~any~~ commercial supply agreements ~~with~~for roxadustat and pamrevlumab, we will need to enter into additional commercial supply agreements, including for backup or second source third-party manufacturers. We may not be able to enter into these agreements with satisfactory terms or on a timely manner. In addition, we may experience delays or technical problems associated with technology transfer of manufacturing processes to any new suppliers.

We have relatively limited experience manufacturing or managing third parties in manufacturing any of our product candidates in the volumes that are expected to be necessary to support large-scale clinical trials and sales. In addition, we have limited experience forecasting supply requirements or coordinating ~~forecasting~~ supply chain (including export and customs management) for launch or commercialization, which is a complex process involving our third-party manufacturers and logistics providers, and for roxadustat, our collaboration partners. We may not be able to ~~sufficiently~~accurately forecast supplies for commercial launch or do so in a timely manner and our efforts to establish these manufacturing and supply chain management capabilities may not meet our requirements as to quantities, scale-up, yield, cost, potency or quality in compliance with ~~cGMP.~~cGMP, particularly if the marketing authorization or market uptake is more rapid than anticipated or we have an unanticipated surge in demand.

We have a limited amount of roxadustat and pamrevlumab in storage, limited capacity reserved at our third-party manufacturers, and, even if we have or are able to put sufficient supply agreements in place for our development and commercialization plan, there are long lead times required to manufacture and scale-up the manufacture of additional supply, as well as for raw materials and components for manufacture of our products, as required for both late-stage clinical trials, post-approval trials, and commercial supply. There is a general risk of delayed drug supply due to delays experienced by any third-party provider in the supply chain, including raw material and components suppliers, export and customs locations, and shipping companies. In addition, if we are not able to obtain regulatory approval of roxadustat in the U.S. in CKD anemia, we may have excess supply manufactured in anticipation of commercialization. Such roxadustat excess supply could be wasted, for example, if it expires prior to being used in other clinical trials or prior to being used in other territories where such roxadustat formulation is approved. If we are unable to forecast, order or manufacture sufficient quantities of roxadustat or pamrevlumab on a timely basis, it may delay our development, launch or commercialization in some or all indications we are currently pursuing. ~~For example, prior~~Insufficient supply could be a particular risk if we were to ~~agreement with~~obtain regulatory ~~authorities on the scope~~approval of ~~our~~ ~~Phase 3 IPF trial design, there is uncertainty as to whether our supply plans will meet our clinical requirements~~pamrevlumab in ~~a timely manner~~all indications being studied (IPF, locally advanced unresectable pancreatic cancer, metastatic pancreatic cancer, and DMD). Any delay or interruption in the supply of our product candidates or products could have a material adverse effect on our business and ~~operations~~.operations.

Our commercial drug product and the product we use for clinical trials must be ~~conducted with product~~ produced under applicable cGMP regulations. Failure to comply with these regulations by us or our third-party manufacturers may require us to recall commercial product or repeat clinical trials, which would impact sales revenue and/or delay the regulatory approval process.

We or our partners may add or change manufacturers, change our manufacturing processes, or change packaging specifications to accommodate changes in regulations, manufacturing equipment or to account for different processes at new or second source suppliers. Changes made to roxadustat or pamrevlumab including, but not limited to, demonstration of comparability to regulatory approved/ in approval products and processes, additional clinical trials, delays in development or commercialization, earlier expiration dates, shorter shelf life, or specification failures, may materially impact our operations and potential profitability.

We, and even an experienced ~~third party~~third-party manufacturer, may encounter difficulties in ~~production, which difficulties~~production. Difficulties may include:

Regulatory authorities will do their own benefit risk analysis and may reach a different conclusion than we or our partners have, and these regulatory authorities may base their approval decision on different analyses, data, and statistical methods than ours.

Even if we believe we have achieved positive clinical results, such as superiority or non-inferiority, in certain endpoints, populations or sub-populations, or using certain statistical methods of analysis, the FDA and European Medicines Agency (“EMA”) will each conduct their own benefit-risk analysis and may reach different conclusions, using different statistical methods, different endpoints or definitions thereof, or different patient populations or sub-populations. Furthermore, while we may seek regulatory advice or agreement in key commercial markets prior to and after application for marketing authorization, regulatory authorities may change their approvability criteria based on the data, their internal analyses and external factors, including discussions with expert advisors. For example, while we have received approval of our marketing authorization applications for roxadustat in the European Union, Great Britain, China, Japan, and other countries for the treatment of anemia in CKD for patients who are on dialysis and not on dialysis, we received a CRL in CKD anemia in the U.S. from the FDA. Regulatory authorities may approve one of our product candidates for fewer or more limited indications than we request or may grant approval contingent on the performance of costly post-approval clinical trials. While we have and will present to regulatory authorities certain pre-specified and post hoc (not pre-specified) sub-populations, sub-group, and sensitivity analyses (for example, incident dialysis), multiple secondary endpoints, and multiple sets of stratification factors and analytical methods (such as long-term follow up analyses), including adjusted and censored data, regulatory authorities may reject these analyses, methods, or even parts of our trial design or certain data from our studies, the rationale for our pre-specified non-inferiority margins or other portions of our statistical analysis plans. In addition, even if we are able to provide positive data with respect to certain analyses, regulatory authorities may not include such claims on any approved labeling. The failure to obtain regulatory approval, or any label, population or other approval limitations in any jurisdiction, may significantly limit or delay our ability to generate revenues, and any failure to obtain such approval for all of the indications and labeling claims we deem desirable could reduce our potential revenue.

Even if we are able to obtain regulatory approval of our product candidates, the label we obtain may limit the indicated uses for which our product candidates may be marketed.

With respect to roxadustat, ~~we expect that~~ regulatory approvals if obtained ~~at all, will~~could limit the approved indicated uses for which roxadustat may be ~~marketed,~~marketed. For example, our label approved in Japan, includes the following warning: “Serious thromboembolism such as cerebral infarction, myocardial infarction, and pulmonary embolism may occur, possibly resulting in death, during treatment with roxadustat.” Additionally, in the U.S., ESAs have been subject to significant safety ~~limitations~~warnings, including the boxed warnings on ~~usage as directed by the “Black Box” warnings included in~~ their labels. ~~Refer to “Business — Roxadustat for the Treatment of Anemia in Chronic Kidney Disease — Limitations of the Current Standard of Care for Anemia in CKD”. In addition, in the past, an approved ESA was voluntarily withdrawn due to serious safety issues discovered after approval.~~ The safety concerns relating to ESAs may result in labeling for roxadustat containing similar warnings even if our Phase 3 clinical trials do not suggest that roxadustat has similar safety issues. Even if the label for roxadustat does not contain all of the warnings contained in the Black Box warning for ESAs, thewarnings. Any label for roxadustat may contain other warnings ~~that~~or limit the market opportunity or approved indications for roxadustat. These warnings could include warnings against exceeding specified Hbhemoglobin targets and other warnings that derive from ~~the lack of clarity regarding the basis for~~ the safety issues associated with ESAs, even if our Phase 3 clinical trials do not themselves raise safety concerns.

As an organization, we have never completed a Phase 3 clinical trial or received approval for a New Drug Application (“NDA”) before, and may be unable to do so efficiently or at all for roxadustat or any product candidate we are developing.

We are currently conducting Phase 2 clinical trials for pamrevlumab and plan on initiating Phase 3 clinical trials for pamrevlumab in the future. We have initiated Phase 3 clinical trials of roxadustat. The conduct of Phase 3 clinical trials and the submission of a successful NDA is a complicated process. As an organization, we have not completed a Phase 3 clinical trial before, have limited experience in preparing, submitting and prosecuting regulatory filings, and have not received approval for an NDA before. Consequently, we may be unable to successfully and efficiently execute and complete necessary clinical trials in a way that leads to NDA submission and approval of roxadustat or for any other product candidate we are developing, even if our earlier stage clinical trials are successful. We may require more time and incur greater costs than our competitors and may not succeed in obtaining regulatory approvals of product candidates that we develop. Failure to commence or complete, or delays in, our planned clinical trials would prevent us from or delay us in commercializing roxadustat or any other product candidate we are developing.

In addition, in order for any Phase 3 clinical trial to support an NDA submission for approval, the FDA and foreign regulatory authorities require compliance with regulations and standards, including good clinical practices (“GCP”) requirements for designing, conducting, monitoring, recording, analyzing and reporting the results of clinical trials to ensure that the data and results from trials are credible and accurate and 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 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 or any of our CROs, 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 and the FDA or other regulatory authorities may require us to exclude the use of patient data from our clinical trials not conducted in compliance with GCP or perform additional clinical trials before approving our marketing applications. They may even reject our application for approval or refuse to accept our future applications for an extended time period. For example in China, the China Food and Drug Administration (“CFDA”) recently issued guidance related to its clinical trial data integrity regulations. While trial sites and CROs bear liability for the accuracy and authenticity of data they are directly responsible for, the sponsor ultimately bears full responsibility for submitted clinical data and the drug application dossier. Fraudulent clinical data could result in a ban in China of a sponsor’s product-related NDA applications for three years and other NDA applications for one year. We have taken extensive steps to ensure the integrity of our China clinical data. However, we cannot assure you that upon inspection by a regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP requirements or that our results will be deemed authentic or may be used in support of our regulatory submissions.

If we are unable to establish sales, marketing and distribution capabilities or enter into or maintain agreements with third parties to market and sell our product candidates, we may not be successful in commercializing our product candidates if and when they are approved.

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.

We face substantial competition ~~which may result~~ in others discovering, developing or commercializing products before, or more successfully, than we do.*the discovery, development and commercialization of product candidates.

The development and commercialization of new pharmaceutical products is highly competitive. Our future success depends on our ability and/or the ability of our collaboration partners to achieve and maintain a competitive advantage with respect to the development and commercialization of our product candidates. Our objective is to discover, develop and commercialize new products with superior efficacy, convenience, tolerability, and safety.

We expect that in many cases, the products that we commercialize will compete with existing ~~market-leading~~marketed products of companies that have large, established commercial organizations. We face competition from generics that could enter the market after expiry of our patents.

If roxadustat is approved 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 addition, we will likely face competition from other companies developing products in the ~~U.S., Procrit~~^® ~~and Erypo~~^®~~/Eprex~~^® ~~, marketed by Johnson & Johnson Inc., and Espo~~ ^® ~~marketed by Kyowa Hakko Kirin (“KHK”),~~same diseases or indications in ~~Japan and China), darbepoetin (Amgen/KHK’s Aranesp~~^® ~~and NESP~~^® ~~) and Mircera~~ ^® marketed by Hoffmann-La Roche (“Roche”) outside of the U.S. and by Vifor Pharma (formerly a company of Galenica Group (“Vifor”)), a Roche licensee, in the U.S. and Puerto Rico, as well as biosimilar versions of these currently marketed ESAwhich we are developing or commercializing products. ESAs have been used in the treatment of anemia in CKD for over 20 years, serving a significant majority of dialysis dependent CKD patients. While NDD-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~~will also face competition from potential new anemia therapies currently in clinical development, including those patient segments not currently addressed by ESAs. Companies such as GlaxoSmithKline plc (“GSK”), Bayer Corporation (“Bayer”), Akebia Therapeutics, Inc. (“Akebia”), and Japan Tobacco, who are currently developing HIF prolyl hydroxylase (“HIF-PH”) inhibitors for anemia in CKD indications, may be in competition with roxadustat for patient recruitment, ~~and~~ enrollment for clinical ~~trials and may be~~trials.

Refer to Item 1. “Business - Competition” in ~~direct competition with roxadustat if and when it is approved and launched commercially. Akebia is currently conducting two Phase 3 studies in non-dialysis-dependent CKD patients primarily in~~our Annual Report for a discussion of the U.S., one started in December 2015 and the other in February 2016, and initiated two Phase 3 studies in DD-CKD, one in July 2016 and the other in August 2016, also primarily in the U.S. More recently, Akebia started a Phase 2 study with three-times-weekly 20-week dosing in dialysis patients in May 2017. In September 2017, Mitsubishi Tanabe Pharmaceutical Corporation, Akebia’s collaboration partner, announced topline results from a vadadustat Japan Phase 2 study in 51 NDD patients, and its plan to start a Japan Phase 3 development program, rather than including Japan sites in their global Phase 3 program. GSK started Phase 3 studies in NDD-CKD and DD-CKD in the U.S. in September 2016, and in Japan in June 2016. Bayer has completed global Phase 2 studies and recently announced its HIF-PH inhibitor is now in continued development in Japan only, currently in Phase 2. In September 2017, Japan Tobacco started two Phase 3 open label studies in Japan, one in 30 peritoneal dialysis patients and one in 26 ESA naïve hemodialysis patients. Some of these product candidates may enter the market prior to roxadustat.

~~In addition, there~~specific companies that 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 myelodysplastic syndromes (“MDS”), for which we ~~received approval from the~~ ~~CFDA~~ ~~for our~~ ~~Phase 2/3~~ ~~clinical trial application in China and acceptance of our investigational new drug application (“IND”)~~ ~~and the Phase 3 pivotal study protocol~~ ~~from the FDA~~, and expected to start those studies in the second half of 2017. For example, Acceleron Pharma Inc., in partnership with Celgene Corporation, is in Phase 3 development of protein therapeutic candidates to treat anemia and associated complications in patients with ß-thalassemia and MDS, and has received orphan drug status from the EMA and FDA for these indications. There may also be new therapies for renal-related diseases that could limiton the market or ~~level of reimbursement available for roxadustat if and when it is commercialized~~.in late-stage development with which we may compete.

In China, biosimilars of epoetin alfa are offered by Chinese pharmaceutical companies such as EPIAO marketed by 3SBio Inc. as well as over 15 other local manufacturers. We may also face competition by HIF-PH inhibitors from other companies such as Akebia, Bayer, and GSK who recently was authorized by the CFDA to conduct trials in China to support its ex-China regulatory filings. Akebia announced in December 2015 that it has 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 recently announced an expansion of their U.S. collaboration with Otsuka to add markets, including China. 3SBio Inc. also ~~announced in 2016 its~~ ~~plan on beginning a Phase 1 clinical trial of a HIF-PH inhibitor for the China market.~~

The introduction of biosimilar ESAs into the market in the U.S. may occur by the time roxadustat enters the market and may alter the competitive and pricing landscape of anemia therapy in DD-CKD patients under the end stage renal disease bundle. The patents for Amgen’s epoetin alfa, EPOGEN, expired in 2004 in the European Union (“EU”), 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, China and other territories. In the U.S., a few ESA biosimilars are currently under development or regulatory review, including Retacrit® (epoetin zeta), marketed by Pfizer in Europe and for which Pfizer resubmitted a Biologics License Application (“BLA”) after receiving a complete response letter (“CRL”) from the FDA denying approval of its BLA submitted in October 2015. While FDA’s Advisory Committee recommended approving the BLA in May 2017, FDA issued another CRL on June 22, 2017. Sandoz, a division of Novartis, markets Binocrit^® ~~(epoetin alfa) in Europe and plans to file a biosimilar BLA in 2017 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% of the U.S. dialysis patients, and therefore have historically won long-term contracts including rebate terms with Amgen. DaVita recently entered into a new 6-year sourcing and supply agreement with Amgen effective through 2022. Fresenius’ contract with Amgen expired in 2015, and Fresenius is now administering Mircera^® in a significant portion of its U.S. dialysis patients since Mircera was made available by Vifor. Successful penetration of this market may require AstraZeneca to reach a significant agreement with Fresenius or DaVita on favorable terms and on a timely basis.

If pamrevlumab is approved and launched commercially to treat IPF, competing drugs are expected to include Roche’s pirfenidone, which is approved for marketing in Europe, Canada, Japan and the U.S., and Boehringer Ingelheim’s nintedanib which has been approved in the U.S. and EU. Nintedanib is also in development for non-small cell lung cancer and ovarian cancer. Other potential competitive product candidates in various stages of Phase 2 development for IPF include Promedior Inc.’s PRM-151, Biogen-Idec’s STX-100, and Prometic Life Sciences Inc.’s PBI-4050.

If pamrevlumab is approved and launched commercially to treat pancreatic cancer, we expect it to be used in combination instead of as monotherapy, and, likely competition for pamrevlumab would be from other agents also seeking approval in combination with gemcitibine and nab-paclitaxel from companies such as NewLink Genetics Corporation, Merrimack Pharmaceuticals, Inc. (“Merrimack”) and Halozyme Therapeutics, Inc. Gemcitabine and/or nab-paclitaxel are the current standard of care in the first-line treatment of metastatic pancreatic cancer. Celgene Corporation’s Abraxane ^® (nab-paclitaxel) was launched in the U.S. and Europe in 2013 and 2014, and was the first drug approved in this disease in nearly a decade. In 2015, Merrimack received FDA approval for the use of ONIVYDE (irinotecan liposome injection) for the treatment of patients with metastatic adenocarcinoma of the pancreas after disease progression following gemcitabine-based therapy.

If pamrevlumab is approved and launched commercially to treat DMD, pamrevlumab may face competition for some patients from Sarepta Therapeutics, Inc. (“Sarepta”), as well as PTC Therapeutics, Santhera Pharmaceuticals, Pfizer, Summit plc and Tivorsan Pharmaceuticals. Sarepta is researching and developing clinical candidates for many of the specific mutations in the dystrophin gene and recently received accelerated approval in the United States for its first drug Exondys 51 (eteplirsen). The approval is limited to patients who have a confirmed mutation in the DMD gene that is amenable to exon 51 skipping. This mutation represents a subset of approximately 13% of patients with DMD. Marathon Pharmaceuticals received approval for its drug Emflaza (deflazacort) on February 9, 2017 and on March 16, 2017 announced that it had sold the commercialization rights to Emflaza to PTC Therapeutics. PTC Therapeutics’ product ataluren (Translarna^TM ) received conditional approval in Europe in 2014 and a complete response letter from the FDA in October of 2017 stating that the FDA is unable to approve the application in its current form. Translarna targets a different set of DMD patients from those being targeted by Sarepta’s existing exon-skipping therapeutic candidate; however it is also limited to a subset of patients who carry a specific mutation.

Conversely, pamrevlumab and some other potential competitors are intended to treat DMD patients regardless of the specific mutation. For example, Santhera Pharmaceuticals recently reported positive Phase 3 data with its drug idebenone (Raxone^®~~/Catena~~^®) in a trial measuring changes in lung function for DMD patients, however the FDA has asked for additional data from an ongoing trial prior to considering Raxone for approval. Previously we had expected this additional trial to be confirmatory rather than necessary for submission. Idebenone is a synthetic short-chain benzoquinone and a cofactor for the enzyme NAD(P)H:quinone oxidoreductase (NQO1). Pfizer’s product candidate, which is in Phase 2 development to treat DMD, is an antibody targeting myostatin which is a protein that regulates muscle growth. The goal of the program is to increase muscle growth and muscle strength in patients with DMD. Summit plc and Tivorsan Pharmaceuticals are both working on drugs involving the utrophin pathway. Utrophin is a protein similar to dystrophin that is potentially implicated in all DMD patients. ~~Summit is conducting a Phase 2 trial and Tivorsan intends to submit an IND and start Phase 1 in 2017~~. In October 2016, Summit and Sarepta announced a collaboration in which the companies have agreed to collaborate on Summit’s utrophin modulator pipeline including its lead candidate ezutromid. The companies will co-develop the pipeline and Sarepta will receive the rights to the compounds in Europe, Turkey, and the Commonwealth of Independent States. Sarepta also has an option on the rights to the program for Latin America. Summit will retain commercialization rights in all other countries including the ~~U.S.~~

If FG-5200 is approved and launched to treat corneal blindness resulting from partial thickness corneal damage without active inflammation and infection in China, it is likely to compete with other products designed to treat corneal damage. For example, in April 2015, a subsidiary of China Regenerative Medicine International Limited received approval for their acellular porcine cornea stroma medical device to treat patients in China with corneal ulcers and in April 2016, Guangzhou Yourvision Biotech Co. Ltd, a subsidiary of Guanhao Biotech, received approval for their acellular porcine cornea medical device to treat patients in China with infectious keratitis that does not respond to drug treatment.

The success of any or all of these potential competitive products may negatively impact the development and potential for success of pamrevlumab. In addition, any competitive products that are on the market or in development may compete with pamrevlumab for patient recruitment and enrollment for clinical trials or may force us to change our ~~clinical trial comparators, whether placebo or active, in order to compare pamrevlumab against another drug, which may be the new standard of care.~~products.

Moreover, many of our competitors have significantly greater resources than we do. Large pharmaceutical companies ~~in particular,~~ have extensive experience, greater scale, and efficiency, in clinical testing, obtaining regulatory approvals, recruiting patients, manufacturing pharmaceutical products, and commercialization. In the potential anemia market for roxadustat, for example, large and established companies such as Amgen and Roche, among others, compete aggressively to maintain their market shares. In particular, the currently marketed ESA products are supported by large pharmaceutical companies have greater experience and expertise in commercialization in the anemia market, including in securing reimbursement, government contracts and relationships with key opinion leaders; conducting testing and clinical trials; obtaining and maintaining regulatory approvals and distribution relationships to market products; and marketing approved products. These companies also have significantly greater scale research and marketing capabilities than we do and may also have products that have been approved or are in later stages of development, and have collaboration agreements in our target markets with leading dialysis companies and research institutions. These competitors have in the past successfully prevented new and competing products from entering into the anemia market, and we expect that their resources will represent challenges for us andIf our collaboration partners ~~AstraZeneca~~ and ~~Astellas. If~~ we ~~and our collaboration partners~~ are not able to compete effectively against existing and potential competitors, our business and financial condition may be materially and adversely ~~affected~~.affected.

Our ~~future commercial success depends upon attaining significant~~product candidates may not achieve adequate market acceptance ~~of our product candidates, if approved,~~ among physicians, patients, ~~third party~~healthcare payors, and others in the ~~health care community.~~medical community necessary for commercial success.

Even if ~~we obtain marketing approval for roxadustat, pamrevlumab or any other~~our product candidates ~~that we may develop or acquire in the future, these product candidates~~receive regulatory approval, they may not gain adequate market acceptance among physicians, ~~third party~~patients, healthcare payors, ~~patients~~ and others in the ~~health care~~medical community. ~~Market~~Demonstrating safety and efficacy of our product candidates and obtaining regulatory approvals will not guarantee future revenue. The degree of market acceptance of any of our approved product ~~depends~~candidates will depend on ~~a number of other~~several factors, including:

•

the relative convenience and ease of ~~Contents~~

•

~~the ability of treatment providers, such as dialysis clinics, to enter into relationships with us without violating their existing agreement; and~~

administration;

•

the frequency and severity of adverse events;

•

the effectiveness of ~~our~~ sales and marketing ~~efforts.~~

efforts; and

•

any unfavorable publicity relating to the product candidate.

~~Limited~~In addition, see the risk factor titled “Our product candidates may cause or have attributed to them undesirable side effects or have other properties that delay or prevent their regulatory approval or limit their commercial potential” above. If any product candidate is approved but does not achieve an adequate level of acceptance by such parties, we may not generate or derive sufficient revenue from that product candidate and may not become or remain profitable.

No or limited reimbursement or insurance coverage of our approved products, ~~if any,~~ by ~~third party~~third-party payors may render our products less attractive to patients and healthcare providers.

Market acceptance and sales of any approved products will depend significantly on reimbursement or coverage of our products by ~~third party~~government or third-party payors and may be affected by existing and future healthcare reform measures or ~~the~~ prices of related products for which ~~third party~~the government or third-party reimbursement applies. Coverage and reimbursement by the government or a ~~third party~~third-party payor may depend upon a number of factors, including the ~~third party~~ payor’s determination that use of a product is:

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a covered benefit under ~~its~~applicable health plan;

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safe, effective and medically necessary;

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appropriate for the specific patient;

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cost-effective; and

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neither experimental nor investigational.

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Obtaining coverage and reimbursement approval for a product from a government or other ~~third party~~third-party payor is a time consuming and costly process that could require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our products to the payor, which we may not be able to provide. Furthermore, the reimbursement policies of ~~third party~~governments and third-party payors may significantly change in a manner that renders our clinical data insufficient for adequate reimbursement or otherwise limits the successful marketing of our products. Even if we obtain coverage for our product candidates, ~~third party~~the pricing may be subject to re-negotiations or third-party payors may not establish adequate reimbursement amounts, which may reduce the demand for, or the price of, our products. ~~If reimbursement is not available or is available only to limited levels, we may not be able to commercialize certain of our products.~~

~~Price controls may limit the price at which products such as roxadustat, if approved, are sold.~~ For example, ~~reference~~our current National Reimbursement Drug List reimbursement pricing for China is effective for a standard two-year period (between January 1, 2022 to December 31, 2023), after which time we will have to renegotiate a new price for roxadustat.

Reference pricing is used by various EUEurope member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices. In some countries, weour partner or ~~our partner~~we may be required to conduct a clinical trial or other studies that compare the cost-effectiveness of our product candidates to other available products in order to obtain or maintain reimbursement or pricing approval. Publication of discounts by ~~third party~~third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unacceptable levels, weour partner or ~~our partner~~we may elect not to commercialize our products in such countries, and our business and financial condition could be adversely affected.

Risks Related to Our Reliance on Third Parties

If our collaborations ~~with Astellas or AstraZeneca~~ were terminated or if Astellas or AstraZeneca were to prioritize other initiatives over their collaborations with us, ~~whether as a result of a change of control or otherwise,~~ our ability to successfully develop and commercialize our ~~lead~~ product ~~candidate, roxadustat,~~candidates would suffer.

We have entered into collaboration agreements with respect to the development and commercialization of our lead product candidate, roxadustat, with Astellas and AstraZeneca. These agreements provide for reimbursement of our development costs by our collaboration partners and also provide for commercialization of roxadustat throughout the major territories of the world.

Our agreements with Astellas and AstraZeneca provide each of them with the right to terminate their respective agreements with us, upon the occurrence of negative clinical results, delays in the development and commercialization of our product candidates or adverse regulatory requirements or guidance. In addition, each of those agreements provides our respective partners the right to terminate any of those agreements upon written notice for convenience. The termination of any of our collaboration agreements would require us to fund and perform the further development and commercialization of roxadustat in the affected territory, or pursue another collaboration, which we may be unable to do, either of which could have an adverse effect on our business and operations. ~~In addition, each of those agreements provides our respective partners the right to terminate any of those agreements upon written notice for convenience.~~ Moreover, if Astellas or AstraZeneca, or any successor entity, were to determine that their collaborations with us are no longer a strategic priority, or if either of them or a successor were to reduce their level of commitment to their collaborations with us, our ability to develop and commercialize roxadustat could suffer.

In ~~addition, some~~2021, we received a CRL for roxadustat for the treatment of ~~our~~anemia due to CKD in adult patients in the U.S. While we continue to co-commercialize roxadustat in China with AstraZeneca and develop roxadustat in the U.S. for the treatment of anemia in patients with MDS, we have not been able to agree on a potential path forward for AstraZeneca to fund further roxadustat development in the U.S. for CKD anemia and there is a significant risk we will be unable to do so. There is also a significant risk that the AstraZeneca U.S./RoW Agreement will be amended or terminated. Our collaborations are exclusive for roxadustat and preclude us from entering into additional collaboration agreements with other parties in ~~the area or field of exclusivity.~~those geographies and indications already licensed.

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If we ~~fail to~~do not establish and maintain strategic collaborations related to our product candidates, we will bear all of the risk and costs related to the development and commercialization of any such product candidate, and we may need to seek additional financing, hire additional employees and otherwise develop expertise at significant cost. This in turn may negatively affect the development of our other product candidates as we direct resources to our most advanced product candidates.

~~Conflicts with our~~Our collaboration partners ~~could jeopardize our collaboration agreements and our ability to commercialize product candidates.~~

~~Our collaboration partners~~also have certain rights to control decisions regarding the development and commercialization of our product candidates with respect to which they are providing funding. If we have a disagreement over strategy and activities with our collaboration partners, our plans for obtaining regulatory approval may be revised and negatively affect the anticipated timing and potential for success of our product candidates. Even if a product under a collaboration agreement ~~is approved,~~receives regulatory approval, we will remain substantially dependent on the commercialization strategy and efforts of our collaboration partners, and ~~neither of~~ our collaboration partners ~~has~~have limited or no experience in commercialization of ~~a novel drug such as roxadustat~~an anemia drug. If our collaboration partners are unsuccessful in ~~the dialysis market.~~their commercialization efforts, our results will be negatively affected.

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With respect to our collaboration agreements for roxadustat, there are additional complexities in that ~~we and~~ our collaboration partners, Astellas and AstraZeneca, and we must reach consensus on certain portions of our ~~Phase 3~~ development ~~program.~~programs and regulatory activities. In addition, there are aspects of commercial operations that require cooperation among the collaboration partners, including safety data reporting. Multi-party decision-making is complex and involves significant time and effort, and there can be no assurance that the parties will cooperate or reach consensus, or that one or both of our partners will not ask to proceed independently in some or all of their respective territories or functional areas of responsibility in which the applicable collaboration partner would otherwise be obligated to cooperate with us. Any disputes or lack of cooperation with us by either Astellas or AstraZeneca, or both, may negatively impact the timing or success of our ~~planned Phase 3 clinical studies.~~regulatory approval applications.

We ~~intend to~~may conduct proprietary research programs in specific disease areas that are not covered by our collaboration agreements. Our pursuit of such opportunities could, however, result in conflicts with our collaboration partners in the event that any of our collaboration partners takes the position that our internal activities overlap with those areas that are exclusive to our collaboration ~~agreements, and we should be precluded from such internal activities.~~agreements. Moreover, disagreements with our collaboration partners could develop over rights to our intellectual ~~property.~~property, including the enforcement of those rights. In addition, our collaboration agreements may have provisions that give rise to disputes regarding the rights and obligations of the parties. Any conflict with our collaboration partners could lead to the termination of our collaboration agreements, delay collaborative activities, reduce our ability to renew agreements or obtain future collaboration agreements or result in litigation or arbitration and would negatively impact our relationship with existing collaboration ~~partners.~~partners, and could impact our commercial results.

Certain of our collaboration partners could also become our competitors in the future. If our collaboration partners develop competing products, fail to obtain necessary regulatory approvals, terminate their agreements with us prematurely or fail to devote sufficient resources to the development and commercialization of our product candidates, the development and commercialization of our product candidates and products could be delayed.

~~We rely on third parties for the conduct of most of~~If our preclinical and clinical ~~trials for our product candidates, and if our third party~~trial contractors do not properly ~~and successfully~~ perform their agreed upon obligations, ~~under our agreements with them,~~ we may not be able to obtain or may be delayed in receiving regulatory approvals for our product candidates.

We rely heavily on university, hospital, dialysis centers and other institutions and third parties, including the principal investigators and their staff, to carry out our clinical trials in accordance with our clinical protocols and designs. We also rely on a number of ~~third party~~third-party CROs to assist in undertaking, managing, monitoring and executing our ongoing clinical ~~trials, including those for roxadustat.~~trials. We expect to continue to rely on CROs, clinical data management organizations, medical institutions and clinical investigators to conduct our development efforts in the ~~future, including our Phase 3 development program for roxadustat.~~future. We compete with many other companies for the resources of these third parties, and large pharmaceutical companies often have significantly more extensive agreements and relationships with such ~~third party~~third-party providers, and such ~~third party~~third-party providers may prioritize the requirements of such large pharmaceutical companies over ours. The third parties on whom we rely may terminate their engagements with us at any time, which may cause delay in the development and commercialization of our product candidates. If any such third party terminates its engagement with us or fails to perform as agreed, we may be required to enter into alternative arrangements, which would result in significant cost and delay to our product development program. Moreover, our agreements with such third parties generally do not provide assurances regarding employee turnover and availability, which may cause interruptions in the research on our product candidates by such third parties.

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~~Moreover, while~~Despite our reliance on ~~these~~ third parties for certain development and management activities, will reduce our control over these activities, it will not relieve us of our responsibilities. For example, the FDA and foreign regulatory authorities require compliance with regulations and standards, including GCP requirements for designing, conducting, monitoring, recording, analyzing and reporting the results of clinical trials to ensure that the data and results from trials are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. Although we rely on third parties to conduct oursuch as clinical trials, we, as the sponsor, remain responsible for ensuring that ~~each of~~ these ~~clinical trials is~~activities are conducted in accordance with ~~its general~~the FDA and foreign regulatory authorities’ investigational ~~plan~~plans and ~~protocol under legal and regulatory~~protocols, including GCP requirements. Regulatory enforcement of GCP requirements ~~including GCP. Regulatory authorities enforce these GCP requirements~~can occur through periodic inspections of trial sponsors, principal investigators, and trial sites.

~~If any~~To ensure the quality and accuracy of our ~~CROs, trial sites, principal investigators or other third parties fail to~~data remains uncompromised and reliable, our third-party service providers must comply with applicable GCP requirements, ~~other~~ regulations, ~~trial protocol~~protocols, and agreements. Failures to do so by such third-party partners, or ~~other requirements under their agreements with us, the quality~~needing to replace such third-party service providers, may delay, suspend or accuracy of the data they obtain may be compromised or unreliable, and the trials of our product candidates may not meet regulatory requirements. If trials do not meet regulatory requirements or if these third parties need to be replaced, theterminate development of our product candidates, ~~may be delayed, suspended or terminated, regulatory authorities may require us to exclude the use~~result in exclusion of patient data from ~~our~~ approval applications, or ~~perform~~require additional clinical trials before ~~approving our~~approval of marketing applications. ~~Regulatory authorities~~Such events may even reject our application for approval or refuse to accept our future applications for an extended time period. We cannot assure you that upon inspection by a regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP requirements or that our results may be used in support of our regulatory submissions. If any of these events occur, we may not be able to obtainultimately prevent regulatory approval for our product candidates on a timely basis, at a reasonable cost, or at all.

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We currently rely, and expect to continue to rely, on third parties to conduct many aspects of our ~~clinical studies~~product manufacturing and ~~product manufacturing,~~distribution, and these third parties may terminate these agreements or not perform satisfactorily.*

We do not have ~~any~~ operating manufacturing facilities at this time other than our roxadustat ~~and FG-5200~~ manufacturing ~~facility~~facilities in China, and our current commercial manufacturing ~~facility plans~~plants in China are not expected to satisfy the requirements necessary to support development and commercialization outside of China. Other than in and for China specifically, we do not expect to independently manufacture our products. We currently rely, and expect to continue to rely, on third parties to scale-up, manufacture and supply roxadustat and our other product candidates outside of China. We rely on third parties for distribution, including our collaboration partners and their vendors, except in China where we have established a jointly owned entity with AstraZeneca to manage most of the distribution in China. Risks arising from our reliance on ~~third party~~third-party manufacturers include:

•

reduced control and additional burdens of oversight as a result of using ~~third party~~third-party manufacturers and distributors for all aspects of manufacturing activities, including regulatory compliance and quality control and quality assurance;

•

termination of manufacturing agreements, termination fees associated with such termination, or nonrenewal of manufacturing agreements with third parties ~~in a manner or at a time that~~ may negatively impact our planned development and commercialization activities;

•

significant financial commitments we may be required to make with third-party manufacturers for early-stage clinical or pre-clinical programs that may fail to produce scientific results that would justify further development (without the ability to mitigate the manufacturing investments);

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the possible misappropriation of our proprietary technology, including our trade secrets and know-how; and

•

disruptions to the operations of our ~~third party~~third-party manufacturers, distributors or suppliers unrelated to our product, including the merger, acquisition, or bankruptcy of ~~the~~a manufacturer or supplier or a catastrophic event, including disruption resulting from the COVID-19 pandemic, affecting our manufacturers, distributors or suppliers.

Any of these events could lead to development delays or failure to obtain regulatory approval or affect our ability to successfully commercialize our product candidates. Some of these events could be the basis for action by the FDA or another regulatory authority, including injunction, recall, seizure or total or partial suspension of production.

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~~The facilities used by~~Considering we do not control our contract ~~manufacturers~~manufacturers’ facilities and operations used to manufacture our product candidates, must pass inspections by the FDA and other regulatory authorities. Although, except for China, we do not control the manufacturing operations of, and expect to remain completely dependent on, our contract manufacturers for manufacture of drug substance and finished drug product, webut are ~~ultimately~~still responsible for ~~ensuring that our product candidates are manufactured in compliance with~~ cGMP ~~requirements. If~~adherence, if our contract manufacturers cannot successfully manufacture material that conforms to our or our collaboration partners’ specifications, or the regulatory requirements, ~~of the FDA or other regulatory authorities, we may not be able to secure and/or maintain regulatory approval for our product candidates and~~ our development orand commercialization plans and activities may be ~~delayed. In addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. In addition, although~~adversely affected. Although our longer-term agreements are expected to provide for requirements to meet our quantity and quality requirements (e.g., through audit rights) to manufacture our products candidates for clinical studies and commercial sale, we ~~will~~ have limited or minimal direct control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified ~~personnel and we expect to rely on our audit rights to ensure that those qualifications are maintained to meet our requirements.~~personnel. If our contract manufacturers’ facilities do not pass inspection, are not approved or have their approvals withdrawn by regulatory authorities, ~~or if regulatory authorities do not approve these facilities for the manufacture of our products, or withdraw any such approval in the future,~~ we would need to identify and qualify alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our products, if approved. Moreover, any failure of our ~~third party~~third-party manufacturers, to comply with applicable regulations could result in ~~sanctions~~legal sanctions/penalties being imposed on us or adverse regulatory consequences, including clinical holds, warnings or untitled letters, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which would be expected to significantly and adversely affect ~~supplies~~our product supplies.

If any third-party manufacturers terminate their engagements with us or fail to perform as agreed, we may be required to identify, qualify, and contract with replacement manufacturers (including entering into technical transfer agreements to share know-how), which process may result in significant costs and delays to our development and commercialization programs.

We may experience delays or technical problems associated with technology transfer, scale-up, or validation of our ~~products to us and our collaboration partners.~~biologics manufacturing.

~~Any of our third party manufacturers may terminate their engagement with us at any time and we~~We have ~~not yet~~ entered into ~~any~~an initial commercial supply ~~agreements~~agreement for the manufacture of ~~active pharmaceutical ingredients~~pamrevlumab with Samsung Biologics Co., Ltd. (“~~APIs”~~Samsung”) ~~or drug products. With respect to roxadustat, AstraZeneca~~ and ~~Astellas have certain rights to assume~~are transitioning our manufacturing of ~~roxadustat~~pamrevlumab from Boehringer Ingelheim to Samsung. However, we may experience delays or technical problems associated with:

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technology transfer of the manufacturing process to Samsung;

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scale-up and production of cGMP batches;

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analytical method validation and transfer to Samsung;

•

process validation, including process characterization and process performance qualification batches; and

•

set up and execution of appropriate stability studies.

We have made certain manufacturing commitments to Samsung, and there is a contractual risk we will not require the ~~existence~~quantities of ~~those rights may limit~~pamrevlumab we have committed to, particularly if we cease some of our ~~ability to enter into favorable long-term supply agreements, if at all, with other third party manufacturers.~~pamrevlumab clinical trials. In addition, our product candidates and any products that we may develop may compete with other product candidates and products for access and prioritization to manufacture. Certain ~~third party~~third-party manufacturers may be contractually prohibited from manufacturing our product due to non-compete agreements with our competitors or a commitment to grant another party priority relative to our products. There are a limited number of ~~third party~~third-party manufacturers that operate under cGMP and that might be capable of manufacturing to meet our requirements. Due to the limited number of ~~third party~~third-party manufacturers with the contractual freedom, expertise, required regulatory approvals and facilities to manufacture our products on a commercial scale, identifying and qualifying a replacement ~~third party~~third-party manufacturer would be expensive and time-consuming and may cause delay or interruptions in the production of our product candidates or products, which in turn may delay, prevent or impair our development and commercialization efforts.

We ~~have a letter agreement with IRIX Pharmaceuticals, Inc. (“IRIX”), a third party manufacturer~~also carry the risk that we ~~have used in the past, pursuant~~may need to ~~which we agreed~~pay termination fees to negotiate a single source manufacturing agreement that included a right of first negotiation for the cGMP manufacture of HIF-PH inhibitors, including roxadustat, provided that IRIX is able to match any third party bids within 5%. The exclusive right to manufacture extends for five years after approval of an NDA for those compounds, and any agreement would provide that no minimum amounts would be specified until appropriate by forecast and that we and a commercialization partner would have the rights to contract with independent third parties that exceed IRIX’s internal manufacturing capabilitiesSamsung or other manufacturers in the event that we or our commercialization partner determines for reasons of continuity of supply and security that such a need exists, provided that IRIX would supply no less than 65% of the product if it is able to provide this level of supply. Subsequent to the letter agreement, we and IRIX have entered into several additional service agreements. IRIX has requested in writing that we honor the letter agreement with respect to the single source manufacturing agreement, and if we were to enter into any such exclusive manufacturing agreement, there can be no assurance that IRIX will not assert a claim for right to manufacture ~~roxadustat~~lower volumes or ~~that IRIX could manufacture roxadustat successfully and in accordance with applicable regulations for a commercial product and~~not at all depending on the ~~specifications~~results of our ~~collaboration partners.~~clinical trials. In ~~2015, Patheon Pharmaceuticals Inc., a business unit of DPx Holdings B.V. (“Patheon”), acquired IRIX, and in 2017 ThermoFisher Scientific Inc. acquired Patheon.~~

~~If any~~addition, third party ~~manufacturer terminates its engagement with us~~manufacturers tend to change their upfront fees or ~~fails~~postponement/cancelation fees over time or upon initiation of additional contracts, and this may lead to ~~perform as agreed, we~~unanticipated financial loss for FibroGen.

We also carry the risk that if all three indications are successful, the commercial demand may exceed planned production supply at Samsung. In this event, it may be ~~required~~necessary to find ~~replacement~~third party manufacturers ~~which would result in significant cost~~who have the capacity and ~~delay~~capability to ~~our development programs. Although we believe that~~produce the required quantities of pamrevlumab. This may be subject to availability of such manufacturers since there are ~~several potential alternative manufacturers~~only a limited number of suppliers who ~~could manufacture our product candidates,~~have the larger scale bioreactors that are needed for commercial pamrevlumab supply. If we need to find a supplier in China, there may ~~incur significant~~be additional delays in importing custom raw materials and ~~added costs in identifying, qualifying and contracting with any such third party or potential second source manufacturer. In any event, with any third party manufacturer we expect to enter~~supplements into technical transfer agreements and share our know-how with the third party manufacturer, which can be time-consuming and may result in delays. These delays could result in a suspension or delay of our Phase 3 clinical trials or, if roxadustat is approved and marketed, a failure to satisfy patient demand.China.

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Certain ~~of the~~ components of our ~~product candidates~~products are acquired from single-source suppliers ~~and have been purchased~~or without long-term supply agreements. The loss ~~of any~~ of these suppliers, or their failure to supply, ~~us with supplies of sufficient quantity and quality to complete our drug substance or finished drug product of acceptable quality and an acceptable price,~~ would materially and adversely affect our business.

We do not have an alternative supplier of certain components of our commercial products and product candidates. ~~To date,~~While we have ~~used purchase orders~~obligations for ~~the supply of materials that we use~~second-source suppliers in our ~~product candidates. We~~roxadustat collaboration agreements, we may be unable to enter into long-term commercial supply arrangements ~~with~~for some of our ~~vendors,~~other products, or do so on commercially reasonable terms, which could have a material adverse impact upon our business. ~~In addition,~~Although we have entered into long-term clinical and commercial supply arrangements for pamrevlumab, we currently rely on our contract manufacturers to purchase from third-party suppliers some of the materials necessary to produce our product candidates. We do not have direct control over the acquisition of those materials by our contract manufacturers. ~~Moreover, we currently do not have any agreements for the commercial production of those materials.~~

The logistics of our supply chain, which include shipment of materials and intermediates from countries such as China and India add additional time and risk (including risk of loss) to the manufacture of our product candidates. While we have in the past maintained sufficient inventory of materials, ~~API,~~active pharmaceutical ingredients (“API”), and drug product to meet our and our collaboration partners’ needs ~~for roxadustat~~ to date, the ~~lead time~~lead-time and regulatory approvals required to source from and into countries outside of the U.S. increase the risk of delay and potential shortages of supply.

Risks Related to Our Intellectual Property

If our efforts to protect our proprietary technologies are not adequate, we may not be able to compete effectively in our market.

We rely upon a combination of patents, trade secret protection, and contractual arrangements to protect the intellectual property related to our technologies. We will only be able to protect our products and proprietary information and technology ~~by preventing unauthorized use by third parties~~ to the extent that our patents, trade secrets, ~~and~~ contractual position, and governmental regulations and laws allow us to do so. Any unauthorized use or disclosure toof proprietary information or ~~misappropriation by third parties of our trade secrets or confidential information~~technology could compromise our competitive position. Moreover, we are, ~~involved in,~~ have ~~in the past~~ been, ~~involved in,~~ and may in the future be involved in legal ~~or administrative~~ proceedings involving our intellectual property and initiated by third parties, ~~and~~ which proceedings can ~~result in~~be associated with significant costs and commitment of management time and attention. ~~As our product candidates continue in development, third parties may attempt to challenge the validity and enforceability of our patents and proprietary information and technologies.~~

We ~~also are involved in,~~ have in the past been involved, ~~in,~~ and may in the future be involved, in initiating legal or administrative proceedings involving the product candidates and intellectual property of our competitors. These proceedings can result in significant costs and commitment of management time and attention, and there can be no assurance that our efforts would be successful in preventing or limiting the ability of our competitors to market competing products.

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Composition-of-matter patents ~~relating to the API~~ are generally considered ~~to be~~ the strongest form of intellectual property protection for pharmaceutical products, as such, patents provide protection not limited to any one method of use. Method-of-use patents protect the use of a product for the specified method(s), and do not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method. We rely on a combination of these and other types of patents to protect our product candidates, and there can be no assurance that our intellectual property will create and sustain the competitive position of our product candidates.

Biotechnology and pharmaceutical product patents involve highly complex legal and scientific questions and can be uncertain. Any patent applications ~~that~~ we own or license may fail to result in granted or issued patents. Even if patents do successfully issue from our applications, third parties may challenge their validity or enforceability, which may result in such patents being narrowed, invalidated, or held unenforceable. Even if our patents and patent applications are not challenged by third parties, those patents and patent applications may not prevent others from designing around our claims and may not otherwise adequately protect our product candidates. If the breadth or strength of protection provided by the patents and patent applications we hold with respect to our product candidates is threatened, competitors with significantly greater resources could threaten our ability to commercialize our product candidates. Discoveries are generally published in the scientific literature well after their actual development, and patent applications in the U.S. and other countries are typically not published until 18 months after their filing, and in some cases are never published. Therefore, we cannot be certain that weour licensors or ~~our licensors~~we were the first to make the inventions claimed in our owned and licensed patents or patent applications, or that weour licensors or ~~our licensors~~we were the first to file for patent protection covering such inventions. Subject to meeting other requirements for patentability, for U.S. patent applications filed prior to March 16, 2013, the first to invent the claimed invention is entitled to receive patent protection for that invention while, outside the U.S., the first to file a patent application encompassing the invention is entitled to patent protection for the invention. The U.S. moved to a “first to file” system under the Leahy-Smith America Invents Act, ~~(“AIA”),~~ effective March 16, 2013. This system also includes procedures for challenging issued patents and pending patent applications, which creates additional uncertainty. We have, are, and may again become involved in, opposition or interference proceedings challenging our patents and patent applications, or the patents and patent applications of others, and the outcome of any such proceedings are highly uncertain. An unfavorable outcome in any such proceedings could reduce the scope of or invalidate our patent rights, allow third parties to commercialize our technology and compete directly with us, or result in our inability to manufacture, develop or commercialize our product candidates without infringing the patent rights of others.

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In addition to the protection afforded by patents, we seek to rely on trade secret protection and confidentiality agreements to protect proprietary know-how, information, or technology that is not covered by our patents. Although our agreements require ~~all of our~~ employees to ~~assign their~~acknowledge ownership by us of inventions conceived as a result of employment from the point of conception and, to ~~us,~~the extent necessary, perfect such ownership by assignment, and we require ~~all of our~~ employees, consultants, advisors and ~~any~~ third parties who have access to our trade secrets, proprietary know-how and other confidential information and technology to enter into appropriate confidentiality agreements, we cannot be certain that our trade secrets, proprietary know-how and other confidential information and technology will not be subject to unauthorized disclosure, use, or misappropriation or that our competitors will not otherwise gain access to or independently develop substantially equivalent trade secrets, proprietary know-how and other information and technology. Furthermore, the laws of some foreign countries, in particular, China, where we have operations, do not protect proprietary rights to the same extent or in the same manner as the laws of the U.S. As a result, we may encounter significant problems in protecting and defending our intellectual property globally. If we ~~are unable to~~cannot prevent unauthorized disclosure of our intellectual property related to our product candidates and technology to third parties, we may not ~~be able to~~ establish or maintain a competitive advantage in our market, which could materially and adversely affect our business and operations.

Intellectual property disputes ~~with third parties and competitors~~ may be costly, ~~and~~ time consuming, and may negatively affect our competitive position.*

Our commercial success may depend on our avoiding infringement of the patents and other proprietary rights of third parties as well as on enforcing our patents and other proprietary rights against third parties. ~~Pharmaceutical and biotechnology intellectual property disputes are characterized by complex, lengthy and expensive litigation over patents and other intellectual property rights. We may initiate~~

Our collaboration partners or ~~become party to, or be threatened with, future litigation or other proceedings regarding intellectual property rights with respect to our product candidates and competing products.~~

~~As our product candidates progress toward commercialization,~~ we ~~or our collaboration partners~~ may be subject to patent infringement claims from third parties. We attempt to ensure that our product candidates do not infringe ~~third party~~third-party patents and other proprietary rights. However, the patent landscape in competitive product areas is highly complex, and there may be patents of third parties of which we are unaware that may result in claims of infringement. Accordingly, there can be no assurance that our product candidates do not infringe proprietary rights of third parties, and parties making claims against us may seek and obtain injunctive or other equitable relief, which could potentially block further efforts to develop and commercialize our product candidates, including roxadustat or pamrevlumab. Any litigation involving defense against claims of infringement, regardless of the merit of such claims, would involve substantial litigation expense and would be a substantial diversion of management time.

~~We intend, if necessary, to vigorously enforce our intellectual property in order to protect the proprietary position~~56

Table of our product candidates, including roxadustat and pamrevlumab. Active efforts to enforce our patents may include litigation, administrative proceedings, or both, depending on the potential benefits that might be available from those actions and the costs associated with undertaking those efforts against third parties. We carefully review and monitor publicly available information regarding products that may be competitive with our product candidates and assert our intellectual property rights where appropriate. We previously prevailed in an administrative challenge initiated by a major biopharmaceutical company regarding our intellectual property rights, maintaining our intellectual property in all relevant scope, and will continue to protect and enforce our intellectual property rights. Moreover, third parties may continue to initiate new proceedings in the U.S. and foreign jurisdictions to challenge our patents from time to time.Contents

We may consider administrative proceedings and other means for challenging ~~third party~~third-party patents and patent applications. ~~Third parties may also challenge our patents and patent applications, through interference, reexamination,~~ ~~inter partes~~ review, and post-grant review proceedings before the U.S. Patent and Trademark Office (“USPTO”) or through other comparable proceedings, such as oppositions or invalidation proceedings, before foreign patent offices. An unfavorable outcome in any such challenge could require us to cease using the related technology and to attempt to license rights to it from the prevailing third party, which may not be available on commercially reasonable terms, if at all, in which case our business could be harmed. ~~Even if we are successful, participation in administrative proceedings before the USPTO or a foreign~~

Third parties have challenged and may again challenge our patents and patent ~~office may result in substantial costs and time on the part of our management and other employees.~~applications. For example, ~~oppositions have been filed~~various challenges against ~~four FibroGen European patents within~~ our ~~HIF Anemia-related Technologies Patent Portfolio. (An opposition is a European Patent Office mechanism providing for a third-party challenge to a granted European patent.) In three~~hypoxia-inducible factor anemia-related technologies patent portfolio are ongoing in several territories, including Europe, the United Kingdom, and Japan. Regardless of ~~these proceedings, for FibroGen European Patent Nos. 1463823, 1633333 and 2322155,~~final outcome, the European Patent Office has handed down decisions unfavorable to FibroGen. These decisions are currently under appeal, and these three patents are valid and enforceable pending resolution of the appeals. In the fourth of the challenged cases, the European Patent Office issued a decision favorable to FibroGen, maintaining FibroGen European Patent No. 2322153. An appeal of this decision may be filed by one or more parties to the opposition. The ultimate outcomes of these proceedings remain uncertain, and ultimate resolution of each of the appeal proceedings may take two to four years or longer. While we believe these FibroGen patents will be upheld in relevant part, we note thatpotential narrowing or ~~even~~ revocation of any of ~~these~~the hypoxia-inducible factor anemia-related technology patents ~~would~~does not affect our exclusivity for roxadustat or our freedom-to-operate with respect to use of roxadustat for the treatment of ~~anemia.~~anemia in these or other territories.

~~Table~~Oppositions were filed against European Patent Nos. 2872488 (the “`488 Patent”) and 3470397 (the “`397 Patent”), which claims relate to a crystalline form of ~~Contents~~roxadustat, and against European Patent No. 3003284 (the “`284 Patent”), which claims photostable formulations of roxadustat. Similar challenges have been filed in China against patents which claim a crystalline form of roxadustat. Final resolution of such proceedings will take time, and we cannot be assured that these patents will ultimately survive as originally granted or at all.

Furthermore, there is a risk that any public announcements concerning the status or outcomes of intellectual property litigation or administrative proceedings may adversely affect the price of our stock. If securities analysts or our investors interpret such status or outcomes as negative or otherwise creating uncertainty, our common stock price may be adversely affected.

Our reliance on third parties and agreements with collaboration partners requires us to share our trade secrets, which increases the possibility that a competitor may discover them or that our trade secrets will be misappropriated or disclosed.

Our reliance on ~~third party~~third-party contractors to develop and manufacture our product candidates is based upon agreements that limit the rights of the third parties to use or disclose our confidential information, including our trade secrets and know-how. Despite the contractual provisions, the need to share trade secrets and other confidential information increases the risk that such trade secrets and information are disclosed or used, even if unintentionally, in violation of these agreements. In the highly competitive markets in which our product candidates are expected to compete, protecting our trade secrets, including our strategies for addressing competing products, is imperative, and any unauthorized use or disclosure could impair our competitive position and may have a material adverse effect on our business and operations.

In addition, our collaboration partners are larger, more complex organizations than ours, and the risk of inadvertent disclosure of our proprietary information may be increased despite their internal procedures and contractual obligations that we have in place with ~~our collaboration partners.~~them. Despite our efforts to protect our trade secrets and other confidential information, a competitor’s discovery of such trade secrets and information could impair our competitive position and have an adverse impact on our business.

~~We have an extensive worldwide patent portfolio.~~ The cost of maintaining our patent protection is high and ~~maintaining our patent protection~~ requires continuous review and ~~compliance in order to maintain worldwide patent protection.~~diligence. We may not be able to effectively maintain our intellectual property position throughout the major markets of the world.

The ~~USPTO~~U.S. Patent and Trademark Office and foreign patent authorities require maintenance fees and payments as well as continued compliance with a number of procedural and documentary requirements. Noncompliance may result in abandonment or lapse of the subject patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance may result in reduced royalty payments for lack of patent coverage in a particular jurisdiction from our collaboration partners or may result in competition, either of which could have a material adverse effect on our business.

We have made, and will continue to make, certain strategic decisions in balancing costs and the potential protection afforded by the patent laws of certain countries. As a result, we may not be able to prevent third parties from practicing our inventions in all countries throughout the world, or from selling or importing products made using our inventions in and into the U.S. or other countries. Third parties may use our technologies in territories in which we have not obtained patent protection to develop their own products and, further, may infringe our patents in territories which provide inadequate enforcement mechanisms, even if we have patent protection. Such ~~third party~~third-party products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

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The laws of some foreign countries do not protect proprietary rights to the same extent as do the laws of the U.S., and we may encounter significant problems in securing and defending our intellectual property rights outside the U.S.

Many companies have encountered significant problems in protecting and defending intellectual property rights in certain countries. The legal systems of certain countries ~~particularly certain developing countries such as China,~~ do not always favor the enforcement of patents, trade secrets, and other intellectual property rights, particularly those relating to pharmaceutical and biotechnology products, which could make it difficult for us to stop infringement of our patents, misappropriation of our trade secrets, or marketing of competing products in violation of our proprietary rights. In China, our intended establishment of significant operations will depend in substantial part on our ability to effectively enforce our intellectual property rights in that country. Proceedings to enforce our intellectual property rights in foreign countries could result in substantial costs and divert our efforts and attention from other aspects of our business, and could put our patents in these territories at risk of being invalidated or interpreted narrowly, or our patent applications at risk of not being granted, and could provoke third parties to assert claims against us. We may not prevail in all legal or other proceedings that we may initiate and, if we were to prevail, the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

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Intellectual property rights do not address all potential threats to any competitive advantage we may have.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and intellectual property rights may not adequately protect our business or permit us to maintain our competitive advantage. The following examples are illustrative:

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Others may be able to make compounds or independently develop similar or alternative technologies that are the same as or similar to our current or future product candidates but that are not covered by the claims of the patents that we own or have exclusively licensed.

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We or any of our licensors or strategic partners might not have been the first to make the inventions covered by the issued patent or pending patent application that we own or have exclusively licensed.

~~We or any of our licensors or strategic partners might not have been the first to file patent applications covering certain of our inventions.~~

~~Others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights.~~

~~The prosecution of our pending patent applications may not result in granted patents.~~

Granted patents that we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors.

Patent protection on our product candidates may expire before we are able to develop and commercialize the product, or before we are able to recover our investment in the product.

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Our competitors might conduct research and development activities in the U.S. and other countries that provide a safe harbor from patent infringement claims for such activities, as well as in countries in which we do not have patent rights, and may then use the information learned from such activities to develop competitive products for sale in markets where we intend to market our product candidates.

The existence of counterfeit pharmaceutical products in pharmaceutical markets may compromise our brand and reputation and have a material adverse effect on our business, operations and prospects.

Counterfeit products, including counterfeit pharmaceutical products, are a significant problem, particularly in China. Counterfeit pharmaceuticals are products sold or used for research under the same or similar names, or similar mechanism of action or product class, but which are sold without proper licenses or ~~approvals.~~approvals, and are often lower cost, lower quality, different potency, or have different ingredients or formulations, and have the potential to damage the reputation for quality and effectiveness of the genuine product. Such products may be used for indications or purposes that are not recommended or approved or for which there is no data or inadequate data with regard to safety or efficacy. Such products divert sales from genuine products, often are of lower cost, often are of lower quality (having different ingredients or formulations, for example), and have the potential to damage the reputation for quality and effectiveness of the genuine product.products. If counterfeit pharmaceuticals illegally sold or used for research result in adverse events or side effects to consumers, we may be associated with any negative publicity resulting from such incidents. Consumers may buy counterfeit pharmaceuticals that are in direct competition with our pharmaceuticals, which could have an adverse impact on our revenues, business and results of operations. In addition, the use of counterfeit products could be used in non-clinical or clinical studies, or could otherwise produce undesirable side effects or adverse events that may be attributed to our products as well, which could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in the delay or denial of regulatory approval by the FDA or other regulatory authorities and potential product liability claims. With respect to China, although the government has recently been increasingly active in policing counterfeit pharmaceuticals, there is not yet an effective counterfeit pharmaceutical regulation control and enforcement system in China. As a result, we may not be able to prevent third parties from selling or purporting to sell our products in China. The proliferation of counterfeit pharmaceuticals has grown in recent years and may continue to grow in the future. The existence of and any increase in the sales and production of counterfeit pharmaceuticals, or the technological capabilities of counterfeiters, could negatively impact our revenues, brand reputation, business and results of operations.

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Risks Related to Government Regulation

The regulatory approval process is highly uncertain and we may not obtain regulatory approval for ~~the commercialization of~~ our product candidates.

The time required to obtain approval by the FDA and comparable foreign regulatory authorities is unpredictable, but typically takes many years following the commencement of preclinical studies and clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. WeFor example, while we have received approval of our marketing authorization applications for roxadustat in the European Union, Great Britain, China, Japan, and other countries for the treatment of anemia in CKD for patients who are on dialysis and not ~~obtained regulatory approval~~on dialysis, we received a CRL for ~~any product candidate, and it~~roxadustat in CKD anemia in the U.S. from the FDA. It is possible that ~~neither~~ roxadustat ~~nor pamrevlumab, nor any future~~will not obtain regulatory approval in additional countries or indications. It is possible that our other product candidates we may discover, in-license or acquire and seek to develop in the future, will ~~ever obtain regulatory approval.~~

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~~Our product candidates could fail to receive regulatory approval from the FDA or other regulatory authorities for many reasons, including:~~

~~disagreement over the design or implementation of our clinical trials;~~

~~failure to demonstrate that a product candidate is safe and effective for its proposed indication;~~

~~failure of clinical trials to meet the level of statistical significance required for approval;~~

~~failure to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;~~

~~disagreement over our interpretation of data from preclinical studies or clinical trials;~~

~~disagreement over whether to accept efficacy results from clinical trial sites outside the U.S. where the standard of care is potentially different from that in the U.S.;~~

the insufficiency of data collected from clinical trials of our present or future product candidates to support the submission and filing of an NDA or other submission or to obtain regulatory approval;

~~disapproval of the manufacturing processes or facilities of either our manufacturing plant or third party manufacturers with whom we contract for clinical and commercial supplies; or~~

~~changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval.~~

The FDA or other regulatory authorities may require more information, including additional preclinical or clinical data to support approval, which may delay or prevent approval and our commercialization plans, or we may decide to abandon the development program altogether. Even if we donot obtain regulatory approval our product candidates may be approved for fewer or more limited indications than we request, approval may be contingent on the performance of costly post-marketing clinical trials, or approval may require labeling that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. In addition, if our product candidates produce undesirable side effects or safety issues, the FDA may require the establishment of REMS or other regulatory authorities may require the establishment of a similar strategy, that may, restrict distribution of our approved products, if any, and impose burdensome implementation requirements on us. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.

Even if we believe our current or planned clinical trials are successful, regulatory authorities may not agree that our completed clinical trials provide adequate data on safety or efficacy. Approval by one regulatory authority does not ensure approval by any other regulatory authority. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others. We may not be able to file for regulatory approvals and even if we file we may not receive the necessary approvals to commercialize our product candidates in any ~~market.~~particular jurisdiction.

~~If our product candidates obtain marketing approval, we will be~~Our current and future relationships with customers, physicians, and third-party payors are subject to ~~more extensive~~ healthcare fraud and abuse laws, ~~regulation~~false claims laws, transparency laws, and ~~enforcement and our failure~~other regulations. If we are unable to comply with ~~those~~such laws, we could ~~have a material adverse effect on our results of operations~~face substantial penalties.

Our current and future relationships with customers, physicians, and third-party payors are subject to health care laws and regulations, which may constrain the business or financial ~~condition.~~

arrangements and relationships through which we research, as well as, sell, market and distribute any products for which we obtain marketing approval. If we obtain approval in the U.S. for any of our product candidates, the regulatory requirements applicable to our operations, in particular our sales and marketing efforts, will increase significantly with respect to our operations and the potential for administrative, civil and criminal enforcement by the federal government and the states and foreign governments will increase with respect to the conduct of our business. The laws that may affect our operations in the U.S. include:

the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;

Statute; federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third party payors that are false or fraudulent;

laws; the Health Insurance Portability and Accountability Act, ~~of 1996 (“HIPAA”), which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program~~including as amended by Health Information Technology for Economic and ~~making false statements relating to healthcare matters;~~

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HIPAA, as amended by Health Information Technology and Clinical Health Act, and its implementing regulations, which imposes certain requirements relating to the privacy, security, and transmission of individually identifiable health information;

Clinical Health Act, and its implementing regulations; the federal physician sunshine requirements under the Patient Protection and Affordable Care Act, ~~(“PPACA”), which requires manufacturers of drugs, devices, biologics,~~as amended by the Health Care and ~~medical supplies to report annually to~~Education Reconciliation Act; and the CMS, information related to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members;

Trade Agreement Act. In addition, foreign and state law equivalents of each of the above federal laws ~~such as the U.S. Foreign Corrupt Practices Act (“FCPA”), anti-kickback and false claims laws~~ that may apply to items or services reimbursed by any ~~third party~~third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain ~~circumstances, many of which differ from each other in significant ways, thus complicating compliance efforts; and~~circumstances.

the Trade Agreements Act (“TAA”), which requires that drugs sold to the United States Government must be manufactured in the United States or in TAA approved and designated countries. Drugs manufactured in countries not approved under the TAA, may not be sold to the United States without specific regulatory approval. We have little experience with this regulation and there is a risk that drugs made from Chinese-made API may not be sold to an entity of the United States such as the Veterans Health Administration (“VA”) due to our inability to obtain regulatory approval. While there have been recent VA policy changes that appear to allow for sale of drugs from non-TAA approved countries, this policy may change or there may be additional policies or legislation that affect our ability to sell drug to the U.S. Government.

The scope of these laws and our lack of experience in establishing the compliance programs necessary to comply with this complex and evolving regulatory environment increases the risks that we may violate the applicable laws and regulations. If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject to significant penalties, including administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of our operations, the exclusion from participation in federal and state healthcare programs and imprisonment, any of which could materially adversely affect our ability to operate our business and our financial results.

~~The impact of recent U.S. healthcare reform, its potential partial~~Even if resolved in our favor, litigation or ~~full repeal, and~~ other ~~changes in the healthcare industry and in healthcare spending is currently unknown, and may adversely affect our business model.~~

The commercial potential for our approved products, if any, could be affected by changes in healthcare spending and policy in the U.S. and abroad. We operate in a highly regulated industry and new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or decisions, relatedlegal proceedings relating to healthcare ~~availability, the method of delivery or payment for healthcare products and services could negatively impact our business, operations and financial condition.~~

In the U.S., the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”) altered Medicare coverage and payments for pharmaceutical products. The legislation expanded Medicare coverage for drug purchases by the elderly and introduced a new reimbursement methodology based on average sales prices for physician-administered drugs. The MMA also provided authority for limiting the number of drugs that will be covered in any therapeutic class and as a result, we expect that there will be additional pressure to reduce costs. For example, the CMS in implementing the MMA has enacted regulations that reduced capitated payments to dialysis providers. These cost reduction initiatives and other provisions of the MMA could decrease the scope of coverage and the price that may be received for any approved dialysis products and could seriously harm our business and financial condition. While the MMA applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policies and payment limitations in setting their own reimbursement rates, and any reduction in reimbursement that results from the MMA may cause a similar reduction in payments from private payors. Similar regulations or reimbursement policies have been enacted in many international markets which could similarly impact the commercial potential for our products.

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Under the Medicare Improvements for Patients and Providers Act (“MIPPA”), a basic case-mix adjusted composite, or bundled, payment system commenced in January 2011 and transitioned fully by January 2014 to a single reimbursement rate for drugs and all services furnished by renal dialysis centers for Medicare beneficiaries with end-stage renal disease. Specifically, under MIPPA the bundle now covers drugs, services, lab tests and supplies under a single treatment base rate for reimbursement by the Centers for Medicare and Medicaid Services (“CMS”) based on the average cost per treatment, including the cost of ESAs and IV iron doses, typically without adjustment for usage. It is unknown whether roxadustat, if approved, will be included in the payment bundle. Under MIPPA, agents that have no IV equivalent in the bundle are currently expected to be excluded from the bundle until 2025. If roxadustat were included in the bundle, it may reduce the price that could be charged for roxadustat, and therefore potentially limit our profitability. Based on roxadustat’s differentiated mechanism of action and therapeutic effects, and discussions with our collaboration partner, we currently believe that roxadustat might not be included in the bundle. If roxadustat is reimbursed outside of the bundle, it may potentially limit or delay market penetration of roxadustat.

More recently, the PPACA was enacted in 2010 with a goal of reducing the cost of healthcare and substantially changing the way healthcare is financed by both government and private insurers. The PPACA, among other things, increases the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extends the rebate program to individuals enrolled in Medicaid managed care organizations, establishes annual fees and taxes on manufacturers of certain branded prescription drugs, and creates a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D. In addition, other legislative changes have been proposed and adopted in the U.S. since the PPACA was enacted. On August 2, 2011, the Budget Control Act of 2011 created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers of up to 2% per fiscal year, which went into effect on April 1, 2013.

It is likely that federal and state legislatures within the U.S. and foreign governments will continue to consider changes to existing healthcare legislation. We cannot predict the reform initiatives that may be adopted in the future or whether initiatives that have been adopted will be repealed or modified. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may adversely affect:

~~the demand for any products that may be approved for sale;~~

~~the price and profitability of our products;~~

~~pricing, coverage and reimbursement applicable to our products;~~

~~the ability to successfully position and market any approved product; and~~

~~the taxes applicable to our pharmaceutical product revenues.~~

Some of the provisions of the PPACA have yet to be fully implemented, while certain provisions have been subject to judicial and Congressional challenges. In January 2017, Congress voted to adopt a budget resolution for fiscal year 2017, that while not a law, is widely viewed as the first step toward the passage of legislation that would repeal certain aspects of the PPACA. Further, on January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the Affordable Care Act to waive, defer, grant exemptions from, or delay the implementation of any provision of the Affordable Care Act that would impose a fiscal burden on states or a cost, fee, tax, penalty or regulatory burden on individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. Congress also could consider subsequent legislation to replace elements of the Affordable Care Act that are repealed. Given these possibilities and others we may not anticipate, the full extent to which our business, results of operations and financial condition could be adversely affected by the recent proposed legislation and the Executive Order is uncertain. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our drugs.

Furthermore, legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the regulatory approvals of our product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent regulatory approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.

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~~We may not be able to conduct, or contract others to conduct, animal testing in the future, which could harm our research and development activities.~~

Certain laws and regulations relating to drug development require us to test our product candidates on animals before initiating clinical trials involving humans. Animal testing activities have been the subject of controversy and adverse publicity. Animal rights groups and other organizations and individuals have attempted to stop animal testing activities by pressing for legislation and regulation in these areas and by disrupting these activities through protests and other means. To the extent the activities of these groups are successful, our research and development activities may be interrupted or delayed.

Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could result in significant liability for us and harm our reputation.

~~We are exposed to the risk of employee fraud or other misconduct, including intentional failure to:~~

~~comply with FDA regulations or similar regulations of comparable foreign regulatory authorities;~~

~~provide accurate information to the FDA or comparable foreign regulatory authorities;~~

~~comply with manufacturing standards we have established;~~

~~comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities;~~

~~comply with the FCPA and other anti-bribery laws;~~

~~report financial information or data accurately;~~

~~or disclose unauthorized activities to us.~~

Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions, delays in clinical trials, or serious harm to our reputation. We have adopted a code of conduct for our directors, officers and employees, but it is not always possible to identify and deter employee misconduct. The precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could harm our business, results of operations, financial condition and cash flows, including through the imposition of significant fines or other sanctions.

~~If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could harm our business.~~

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations applicable to our operations in the U.S. and foreign countries. These current or future laws and regulations may ~~impair~~cause us to incur significant expenses and could distract our ~~research, development or manufacturing efforts. Our failure to comply with these laws~~technical and ~~regulations also may result in substantial fines, penalties~~management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other ~~sanctions.~~

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~~Risks Related to Our International Operations~~

~~We are establishing international operations and seeking approval to commercialize our product candidates outside of~~interim proceedings or developments. Such actions could have a substantial adverse effect on the ~~U.S., in particular in China, and a number of risks associated with international operations could materially and adversely affect our business.~~

~~We expect to be subject to a number of risks related with our international operations, many of which may be beyond our control. These risks include:~~

~~different regulatory requirements for drug approvals in foreign countries;~~

~~different standards of care in various countries that could complicate the evaluation~~price of our ~~product candidates;~~

~~different U.S.~~common shares and ~~foreign drug import and export rules;~~

~~reduced protection for intellectual property rights in certain countries;~~

~~unexpected changes in tariffs, trade barriers and regulatory requirements;~~

~~different reimbursement systems and different competitive drugs indicated to treat the indications for which our product candidates are being developed;~~

~~economic weakness, including inflation, or political instability in particular foreign economies and markets;~~

~~compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;~~

~~compliance with the FCPA, and other anti-corruption and anti-bribery laws;~~

~~foreign taxes, including withholding of payroll taxes;~~

~~foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country;~~

~~workforce uncertainty in countries where labor unrest is more common than in the U.S.;~~

~~production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;~~

a reliance on CROs, clinical trial sites, principal investigators and other third parties that may be less experienced with clinical trials or have different methods of performing such clinical trials than we are used to in the U.S.;

~~potential liability resulting from development work conducted by foreign distributors; and~~

~~business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters.~~

~~The pharmaceutical industry in China is highly regulated and such regulations are subject to change.~~

The pharmaceutical industry in China is subject to comprehensive government regulation and supervision, encompassing the approval, registration, manufacturing, packaging, licensing and marketing of new drugs. Refer to “~~Business — Government Regulation — Regulation in China~~” for a discussion of the regulatory requirements that are applicable to our current and planned business activities in China. In recent years, the regulatory framework in China regarding the pharmaceutical industry has undergone significant changes, and we expect that it will continue to undergo significant changes. Any such changes or amendments may result in increased compliance costs on our business or cause delays in or prevent the successful development or commercialization of our product candidates in China. Chinese authorities have become increasingly vigilant in enforcing laws in the pharmaceutical industry, in some cases launching industry-wide investigations, oftentimes appearing to focus on foreign companies. The costs and time necessary to respond to an investigation can be material. Any failure by us or our partners to maintain compliance with applicable laws and regulations or obtain and maintain required licenses and permits may result in the suspension or termination of our business activities in China.

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Patients’ use of traditional Chinese medicine in violation of study protocols in our China studies may lead the China Food and Drug Administration (“CFDA”) and regulators in other jurisdictions in which we are seeking approval to suspend our studies, reject our study data and withhold approval for roxadustat.

A common issue encountered in conducting clinical studies in China is patients’ use of traditional Chinese medicine in violation of study protocols. We believe that many patients with anemia in CKD are currently being treated with traditional Chinese medicine, and it is possible that such patients may continue their use of traditional Chinese medicine after enrollment in our studies and in violation of study protocols. If the patients participating in our China clinical studies do not comply with study protocols and continue to use traditional Chinese medicine, adverse events may emerge in our studies that are due to such traditional Chinese medicine or the interaction between such traditional Chinese medicine and roxadustat. In addition, the use of traditional Chinese medicine by patients in our studies may confound our study results. The occurrence of such adverse events or the confounding of our study results may lead the CFDA and regulators in other jurisdictions in which we are seeking approval to, among other things, suspend our studies, reject our study data and withhold approval for roxadustat.

We are planning on using our own manufacturing facilities in China to produce roxadustat drug product, FG-5200 corneal implants, and possibly roxadustat API. As an organization, we have limited experience in the construction, licensure, or operation of a manufacturing plant, and, accordingly we cannot assure you we will be able to meet regulatory requirements to operate our plant and to sell our products.*

In 2014, we received a Pharmaceutical Production Permit (“PPP”) for our facility in Beijing, China, and are currently building a manufacturing facility in Cangzhou, Hebei, in which we intend to manufacture roxadustat for commercial sale. The PPP allowed us to produce the NDA registration campaign of roxadustat according to cGMP. However, we have not yet received a license for commercial manufacture of roxadustat. As an organization, we have limited experience building and licensing manufacturing facilities which must be constructed, licensed and operated in conformity with applicable cGMP requirements. We will be obligated to comply with continuing cGMP requirements and there can be no assurance that we will receive and maintain all of the appropriate licenses required to manufacture our product candidates for clinical and commercial use in China. In addition, we and our product suppliers must continually spend time, money and effort in production, record-keeping and quality assurance and appropriate controls in order to ensure that any products manufactured in our facilities meet applicable specifications and other requirements for product safety, efficacy and quality and there can be no assurance that our efforts will succeed for licensure or continue to be successful in meeting these requirements.

We would require separate approval for the manufacture of FG-5200. In addition, we may convert our existing manufacturing process of FG-5200 to a semi-automated process which may require us to show that implants from our new manufacturing process are comparable to the implants from our existing manufacturing process. There can be no assurance that we will successfully receive licensure and maintain approval for the manufacture of either or both of roxadustat or FG-5200, either of which would be expected to delay or preclude our ability to develop and commercialize those product candidates in China and may materially adversely affect our business and operations and prospects in China.

Manufacturing facilities in China are subject to periodic unannounced inspections by the CFDA and other regulatory authorities. We expect to depend on these facilities for our product candidates and business operations in China. Natural disasters or other unanticipated catastrophic events, including power interruptions, water shortages, storms, fires, earthquakes, terrorist attacks, government appropriation of our facilities, and wars, could significantly impair our ability to operate our manufacturing facilities. Certain equipment, records and other materials located in these facilities would be difficult to replace or would require substantial replacement lead time that would impact our ability to successfully commercialize our product candidates in China. The occurrence of any such event could materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.

Our decision to seek approval in China for roxadustat prior to approval in the U.S. or Europe is largely unprecedented and could be subject to significant risk, delay and expense.*

Our subsidiary FibroGen (China) Medical Technology Development Co., Ltd. (“FibroGen Beijing”), plans to seek approval for roxadustat in China as a Domestic Class 1 Drug, which we believe, if approved, would be the first CFDA approval of a first in class drug candidate while Phase 3 trials are ongoing in the U.S. and Europe. Because of this largely novel regulatory pathway, the CFDA approval process may take longer than we currently expect, or the CFDA may require us to submit additional data including data from the U.S. or European Phase 3 trials. In addition, negative data from the U.S. or European Phase 3 trials could impact the CFDA approval process. Any such development delays would result in significant delay in our commercialization plans for roxadustat in China. Elements of our plan for approval of roxadustat and other product candidates in China are based on communications with the CFDA, some of which are not reflected in formal written communications, regulations, findings or determinations. Accordingly, while we believe we have understandings with the CFDA regarding the domestic drug approval process and the clinical and manufacturing

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(including bio-equivalency) data currently required for approval and the timing and process of a potential approval, the regulatory authorities may later determine that changes are required in the drug approval process, or that additional or different clinical or manufacturing data must be generated, any of which could significantly delay approval of roxadustat or any of our other product candidates, and materially and adversely affect our plans and operations in China. It is possible that other unforeseen delays in the China regulatory process could have a material adverse effect on our ~~development~~operations.

We are subject to stringent and ~~commercialization~~evolving U.S. and foreign laws, regulations, rules, contractual obligations, policies and other obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of ~~roxadustat~~our business operations; reputational harm; loss of revenue or profits; and other adverse business consequences.*

In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share confidential, proprietary, and sensitive information, including personal information, business data, trade secrets, intellectual property, information we collect about trial participants in ~~China.~~connection with clinical trials, sensitive third-party data, business plans, transactions, and financial information.

Our data processing activities may subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.

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In the U.S., federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), the Health Insurance Portability and Accountability Act, and other similar laws (e.g., wiretapping laws). For example, ~~prior~~the California Consumer Privacy Act of 2018 (“CCPA”) applies to ~~enrolling our Phase 3 studies,~~personal data of consumers, business representatives, and employees, and requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights. The CCPA provides for civil penalties of up to $7,500 per violation and allows private litigants affected by certain data breaches to recover significant statutory damages. In addition, the ~~Ministry~~California Privacy Rights Act of ~~Science and Technology established~~2020 expands the CCPA’s requirements, including by adding a new ~~approval process~~right for individuals to ~~obtain routine blood~~correct their personal data and urine samples that contain genetic information. Our Phase 3 CKD clinical trial sites have received such approval, but applications are reviewed only on a quarterly basis, thus new studies or work at additional clinical trial sites could be delayed until they receive such approval.

In addition, there are new and evolving environmental and manufacturing regulations in China. The application thereof may impact our API manufacturing location or strategy. In order to prevent or mitigate any delay in commercialization, we are establishing a ~~5,500 square meter commercial API manufacturing facility in Cangzhou, Hebei, with~~new regulatory agency to implement and enforce the ~~intention~~law.

Outside the U.S., an increasing number of ~~being operational shortly after NDA approval. Any delays~~laws, regulations, and industry standards may govern data privacy and security. For example, the European Union’s General Data Protection Regulation (“EU GDPR”), the United Kingdom’s GDPR (“UK GDPR”), Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais) (Law No. 13,709/2018), and China’s Personal Information Protection Law impose strict requirements for processing personal data, including health-related information. For example, under the EU GDPR, companies may face fines of up to 20 million Euros or 4% of annual global revenue, whichever is greater; or private litigation related to ~~these regulations or our new manufacturing facility~~ ~~could adversely affect~~ ~~the~~ ~~cost timing~~processing of ~~our commercialization~~personal data. We also target customers in ~~China~~.

In May 2016, China announced implementation of a three-year pilot program for the Marketing Authorization Holder System (“MAH”) in certain piloted regions. We are considering applying to participate in this program,Asia and if accepted, we may be able to outsource drug product or API manufacturing to third parties while retaining the manufacturing license. However, we cannot know if we will be accepted into the MAH program, or how long such program will be available.

~~Even if roxadustat is approved in China, we and our collaboration partner in China, AstraZeneca, may experience difficulties in successfully generating sales of roxadustat in China.~~

~~We and AstraZeneca~~ have a profit sharing arrangement with respect to roxadustat in China. Even if roxadustat is approved for sale in China, we and AstraZeneca may experience difficulties in our marketing, commercialization and sales effortsoperations in China and our business and operations could be adversely affected. In particular, sales of roxadustat in China may be limited due to the complex nature of the healthcare system, low average personal income, lack of patient cost reimbursement, pricing controls, poorly developed infrastructure and potentially rapid competition from other products.

~~The market for treatments of anemia in CKD in China is highly competitive.~~

Even if roxadustat is approved in China, it will face intense competition in the market for treatments of anemia in CKD. Roxadustat would compete with ESAs, which are offered by established multinational pharmaceutical companies such as Kyowa Hakko Kirin China Pharmaceutical Co., Ltd. and Roche and Chinese pharmaceutical companies such as 3SBio Inc. and Di’ao Group Chengdu Diao Jiuhong Pharmaceutical Factory. Many of these competitors have substantially greater name recognition, scientific, financial and marketing resources as well as established distribution capabilities than we do. Many of our competitors have more resources to develop or acquire, and more experience in developing or acquiring, new products and in creating market awareness for those products. Many of these competitors have significantly more experience than we have in navigating the Chinese regulatory framework regarding the development, manufacturing and marketing of drugs in China, as well as in marketing and selling anemia products in China. Additionally, we believe that most patients with anemia in CKD in China are currently being treated with traditional Chinese medicine, which is widely accepted and highly prevalent in China. Traditional Chinese medicine treatments are often oral and thus convenient and low-cost, and practitioners of traditional Chinese medicine are numerous and accessible in China. As a result, it may be difficult to persuade patients with anemia in CKD to switch from traditional Chinese medicine to roxadustat.

~~There is no assurance that roxadustat will be included in the Medical Insurance Catalogs.~~

Eligible participants in the national basic medical insurance program in China, which consists of mostly urban residents, are entitled to reimbursement from the social medical insurance fund for up to the entire cost of medicines that are included in the Medical Insurance Catalogs. Refer to “~~Business — Government Regulation — Regulation in China~~.” We believe that the inclusion of a drug in the Medical Insurance Catalogs can substantially improve the sales of a drug. The Ministry of Labor and Social Security in China (“MLSS”) together with other government authorities, select medicines to be included in the Medical Insurance Catalogs based on a variety of factors, including treatment requirements, frequency of use, effectiveness and price. The MLSS also occasionally removes medicines from such catalogs. There can be no assurance that roxadustat will be included, and once included, remain in the Medical Insurance Catalogs. The exclusion or removal of roxadustat from the Medical Insurance Catalogs may materially and adversely affect sales of roxadustat.

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~~We may not be successful in the tender processes for the purchase of medicines by state-owned and state-controlled hospitals.~~

Most hospitals in China participate in collective tender processes for the purchase of medicines listed in the Medical Insurance Catalogs and medicines that are consumed in large volumes and commonly prescribed for clinical uses. During a collective tender process, the hospitals 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.

~~Even if FG-5200 can be manufactured successfully and achieve regulatory approval, we may not achieve commercial success.~~

We have not yet received a license to manufacture FG-5200 in our Beijing manufacturing facility or at scale, and we will have to show that FG-5200 from our China manufacturing facility meets the applicable regulatory requirements. There can be no assurance that we can meet these requirements or that FG-5200 can be approved for development, manufacture and sale in China.

Even if we are able to manufacture and develop FG-5200 as a medical device in China, the size and length of any potential clinical trials required for approval are uncertain and we are unable to predict the time and investment required to obtain regulatory approval. Moreover, even if FG-5200 can be successfully developed for approval in China, our product candidate would require extensive training and investment in assisting physicians in the use of FG-5200.

~~The retail prices of any product candidates that we develop~~ may be subject to ~~control,~~new and emerging data privacy regimes in Asia, including ~~periodic downward adjustment, by Chinese government authorities.~~China’s Personal Information Protection Law, Japan’s Act on the Protection of Personal Information, and Singapore’s Personal Data Protection Act.

The price for pharmaceutical products is highly regulated in China, both at the national and provincial level. Price controls may reduce prices to levels significantly below those that would prevail in less regulated markets or limit the volume of products whichIn addition, we may be ~~sold, either~~unable to transfer personal data from Europe and other jurisdictions to the U.S. or other countries due to data localization requirements or limitations on cross-border data flows. Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of ~~which~~personal data to other countries. In particular, the European Economic Area (“EEA”) and the United Kingdom (“UK”) have restricted the transfer of personal data to the U.S. and other countries whose data privacy and security laws they believe are inadequate. Although there are currently various mechanisms that may have a material and adverse effect on potential revenues from sales of roxadustat in China. Moreover, the process and timing for the implementation of price restrictions is unpredictable, which may cause potential revenuesbe used to transfer personal data from the ~~sales of roxadustat~~EEA and UK to ~~fluctuate from period to period.~~

~~If our planned business activities~~the U.S. in ~~China fall within a restricted category under~~compliance with law, such as the ~~China Catalog for Guidance for Foreign Investment, we will need to operate in China through a variable interest entity (“VIE”) structure.~~

~~The China Catalog for Guidance for Foreign Investment sets forth the industries~~EEA and ~~sectors that the Chinese government encourages and restricts with respect to foreign investment and participation. The Catalog for Guidance for Foreign Investment is~~UK’s standard contractual clauses, these mechanisms are subject to ~~revision~~legal challenges. Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the U.S., are subject to increased scrutiny from ~~time to time by the China Ministry of Commerce. While we currently do not believe the development~~regulators, individual litigants, and ~~marketing of roxadustat falls within a restricted category under the Catalog~~activities groups.

Preparing for Guidance for Foreign Investment, if roxadustat does fall under such a restricted category, we will need to operate in China through a VIE structure. A VIE structure involves a wholly foreign-owned enterprise that would control and ~~receive the economic benefits of a domestic Chinese company through various contractual relationships. Such a structure would subject~~complying with these obligations requires us to ~~a number~~devote significant resources and may necessitate changes to our services, information technologies, systems, and practices and to those of ~~risks~~any third parties that ~~may have an adverse effect~~process personal data on our ~~business, including that~~behalf.

If we or the ~~Chinese government may determine that such contractual arrangements do not~~third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable ~~regulations, Chinese tax authorities may require us~~data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation (including class-action claims); additional reporting requirements and/or oversight; bans on processing personal data; and orders to ~~pay additional taxes, shareholders~~destroy or not use personal data. Any of our VIEs may have potential conflicts of interest with us, and we may lose the ability to use and enjoy assets held by our VIEs that are important to the operations of our business if such entities go bankrupt or become subject to dissolution or liquidation proceedings. VIE structures in China have come under increasing scrutiny from accounting firms and the SEC staff. If we do attempt to use a VIE structure and are unsuccessful in structuring it so as to qualify as a VIE, we would not be able to consolidate the financial statements of the VIE with our financial statements, whichthese events could have a material adverse effect on our ~~operating results and~~reputation, business, or financial ~~condition.~~

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~~FibroGen Beijing would be subject~~customers; inability to ~~restrictions on paying dividends~~process personal data or ~~making other payments~~ to ~~us, which may restrict our~~operate in certain jurisdictions; limited ability to ~~satisfy~~develop or commercialize our liquidity requirements.*

~~We plan~~products; expenditure of time and resources to conduct all of our business in China through FibroGen China Anemia Holdings, Ltd. and FibroGen Beijing. We may rely on dividends and royalties paid by FibroGen Beijing for a portion of our cash needs, including the funds necessary to servicedefend any debt we may incur and to pay our operating expenses. The payment of dividends by FibroGen Beijing is subject to limitations. Regulations in China currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. FibroGen Beijing is not permitted to distribute any profits until losses from prior fiscal years have been recouped and in any event must maintain certain minimum capital requirements. FibroGen Beijing is also required to set aside at least 10.0% of its after-tax profit based on Chinese accounting standards each year to its statutory reserve fund until the cumulative amount of such reserves reaches 50.0% of its registered capital. Statutory reserves are not distributable as cash dividends. In addition, if FibroGen Beijing incurs debt on its own behalf in the future, the agreements governing such debt may restrict its ability to pay dividendsclaim or ~~make other distributions to us. As of September 30, 2017, approximately $2.4 million of our cash and cash equivalents is held in China.~~

Any capital contributions from us to FibroGen Beijing must be approved by the Ministry of Commerce in China, and failure to obtain such approval may materially and adversely affect the liquidity position of FibroGen Beijing.

~~The Ministry of Commerce in China~~inquiry; adverse publicity; or its local counterpart must approve the amount and use of any capital contributions from us to FibroGen Beijing, and there can be no assurance that we will be able to complete the necessary government registrations and obtain the necessary government approvals on a timely basis, or at all. If we fail to do so, we may not be able to contribute additional capital to fund our Chinese operations, and the liquidity and financial position of FibroGen Beijing may be materially and adversely affected.

~~We may be subject to currency exchange rate fluctuations and currency exchange restrictions with respect to our operations in China, which could adversely affect our financial performance.~~

If roxadustat is approved for sale in China, most of our product sales will occur in local Chinese currency and our operating results will be subject to volatility from currency exchange rate fluctuations. To date, we have not hedged against the risks associated with fluctuations in exchange rates and, therefore, exchange rate fluctuations could have an adverse impact on our future operating results. Changes in value of the Renminbi against the U.S. dollar, Euro and other currencies is affected by, among other things,substantial changes in China’s political and economic conditions. Currently, the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. Any significant currency exchange rate fluctuations may have a material adverse effect on our business and financial condition.

In addition, the Chinese government imposes controls on the convertibility of the Renminbi into foreign currencies and the remittance of foreign currency out of China for certain transactions. Shortages in the availability of foreign currency may restrict the ability of FibroGen Beijing to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency-denominated obligations. Under existing Chinese foreign exchange regulations, payments of current account items, including profit distributions, interest payments and balance of trade, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange (“SAFE”) by complying with certain procedural requirements. However, approval from SAFE or its local branch is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The Chinese government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our operational requirements, our liquidity and financial position may be materially and adversely affected.

~~Because FibroGen Beijing’s funds are held in banks that do not provide insurance, the failure of any bank in which FibroGen Beijing deposits its funds could adversely affect our business.~~

Banks and other financial institutions in China do not provide insurance for funds held on deposit. As a result, in the event of a bank failure, FibroGen Beijing may not have access to funds on deposit. Depending upon the amount of money FibroGen Beijing maintains in a bank that fails, its inability to have access to cash could materially impair its operations.

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~~We may be subject to tax inefficiencies associated with our offshore corporate structure.~~

The tax regulations of the U.S. and other jurisdictions in which we operate are extremely complex and subject to change. New laws, new interpretations of existing laws, such as the Base Erosion Profit Shifting project initiated by the Organization for Economic Co-operation and Development and any legislation proposed by the relevant taxing authorities, or limitations on our ability to structure our operations and intercompany transactions may lead to inefficient tax treatment of our revenue, profits, royalties and distributions, if any are achieved. In the U.S., comprehensive tax reform has been announced as a priority by the new President’s administration and the U.S. Congress. Various proposals are under evaluation and consideration but it is not possible to accurately ascertain at this time the overall impact of such proposals on our future effective tax rate and corporate structure.

In addition, we and our foreign subsidiaries have various intercompany transactions. We may not be able to obtain certain benefits under relevant tax treaties to avoid double taxation on certain transactions among our subsidiaries. If we are not able to avail ourselves of the tax treaties, we could be subject to additional taxes, which could adversely affect our financial condition and results of operations.

~~Our foreign operations, particularly those in China, are subject to significant risks involving the protection of intellectual property.~~

~~We seek to protect the products and technology that we consider important~~ to our business ~~by pursuing patent applications in China and other countries, relying on trade secrets~~model or pharmaceutical regulatory protection or employing a combination of these methods. We note that the filing of a patent application does not mean that we will be granted a patent, or that any patent eventually granted will be as broad as requested in the patent application or will be sufficient to protect our technology. There are a number of factors that could cause our patents, if granted, to become invalid or unenforceable or that could cause our patent applications not to be granted, including known or unknown prior art, deficiencies in the patent application, or lack of originality of the technology. Furthermore, the terms of our patents are limited. The patents we hold and the patents that may be granted from our currently pending patent applications have, absent any patent term adjustment or extension, a twenty-year protection period starting from the date of application.operations.

Intellectual property rights and confidentiality protections in China may not be as effective as those in the U.S. or other countries for many reasons, including lack of procedural rules for discovery and evidence, low damage awards, and lack of judicial independence. Implementation and enforcement of China intellectual property laws have historically been deficient and ineffective and may be hampered by corruption and local protectionism. Policing unauthorized use of proprietary technology is difficult and expensive, and we may need to resort to litigation to enforce or defend patents issued to us or to determine the enforceability and validity of our proprietary rights or those of others. The experience and capabilities of China courts in handling intellectual property litigation varies and outcomes are unpredictable. An adverse determination in any such litigation could materially impair our intellectual property rights and may harm our business.

We are subject to laws and regulations governing corruption, which ~~will~~ require us to ~~develop and implement~~maintain costly compliance programs.

We must comply with a wide range of laws and regulations to prevent corruption, bribery, and other unethical business practices, including the ~~FCPA,~~U.S. Foreign Corrupt Practices Act (“FCPA”), anti-bribery and anti-corruption laws in other countries, particularly China. The ~~creation~~implementation and ~~implementation~~maintenance of ~~international business practices~~ compliance programs is costly and such programs ~~are~~may be difficult to enforce, particularly where reliance on third parties is required.

Anti-bribery laws prohibit us, our employees, and some of our agents or representatives from offering or providing any personal benefit to covered government officials to influence their performance of their duties or induce them to serve interests other than the missions of the public organizations in which they serve. Certain commercial bribery rules also prohibit offering or providing any personal benefit to employees and representatives of commercial companies to influence their performance of their duties or induce them to serve interests other than their employers. The FCPA also obligates companies whose securities are listed in the U.S. to comply with certain accounting provisions requiring us to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and devise and maintain an adequate system of internal accounting controls for international operations. The anti-bribery provisions of the FCPA are enforced primarily by the Department of Justice. The SEC is involved with enforcement of the books and records provisions of the FCPA.

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Compliance with these anti-bribery laws is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the anti-bribery laws present particular challenges in the pharmaceutical industry because in many countries including China, hospitals are state-owned or operated by the government, and doctors and other hospital employees are considered foreign government officials. Furthermore, in certain countries (China in particular), hospitals and clinics are permitted to sell pharmaceuticals to their patients and are primary or significant distributors of pharmaceuticals. Certain payments to hospitals in connection with clinical studies, procurement of pharmaceuticals and other work have been deemed to be improper payments to government officials that have led to vigorous anti-bribery law enforcement actions and heavy fines in multiple jurisdictions, particularly in the U.S. and China.

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It is not always possible to identify and deter violations, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.

In the pharmaceutical industry, corrupt practices include, among others, acceptance of kickbacks, bribes or other illegal gains or benefits by the hospitals and medical practitioners from pharmaceutical manufacturers, distributors or their ~~third party~~third-party agents in connection with the prescription of certain pharmaceuticals. If our employees, partners, affiliates, subcontractors, distributors or ~~third party~~third-party marketing firms violate these laws or otherwise engage in illegal practices with respect to their sales or marketing of our products or other activities involving our products, we could be required to pay damages or heavy fines by multiple jurisdictions where we operate, which could materially and adversely affect our financial condition and results of operations. The Chinese government has also sponsored anti-corruption campaigns from time to time, which could have a chilling effect on any future marketing efforts by us to new hospital customers. There have been recent occurrences in which certain hospitals have denied access to sales representatives from pharmaceutical companies because the hospitals wanted to avoid the perception of corruption. If this attitude becomes widespread among our potential customers, our ability to promote our products to hospitals may be adversely affected.

~~As we expand~~Considering our ~~operations~~current presence and potential expansion in ~~China~~international jurisdictions, the creation, implementation, and other jurisdictions internationally, we will need to increase the scope of our compliance programs to address the risks relating to the potential for violations of the FCPA and other anti-bribery and anti-corruption laws. Our compliance programs will need to include policies addressing not only the FCPA, but also the provisions of a variety of anti-bribery and anti-corruption laws in multiple foreign jurisdictions, including China, provisions relating to books and records that apply to us as a public company, and include effective training for our personnel throughout our organization. The creation and implementationmaintenance of anti-corruption compliance programs is costly and such programs are difficult to enforce, particularly where reliance on third parties is required. Violation of the FCPA and other anti-corruption laws can result in significant administrative and criminal penalties for us and our employees, including substantial fines, suspension or debarment from government contracting, prison sentences, or even the death penalty in extremely serious cases in certain countries. The SEC also may suspend or bar us from trading securities on U.S. exchanges for violation of the FCPA’s accounting provisions. Even if we are not ultimately punished by government authorities, the costs of investigation and review, distraction of our personnel, legal defense costs, and harm to our reputation could be substantial and could limit our profitability or our ability to develop or commercialize our product candidates. In addition, if any of our competitors are not subject to the FCPA, they may engage in practices that will lead to their receipt of preferential treatment from foreign hospitals and enable them to secure business from foreign hospitals in ways that are unavailable to us.

If we fail to maintain an effective system of internal control, it may result in material misstatements in our financial statements.*

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on the effectiveness of our system of internal control. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. As a public company, we are required to comply with the Sarbanes-Oxley Act and other rules that govern public companies.

Efforts required to remediate an ineffective system of control over financial reporting may place a significant burden on management and add increased pressure on our financial resources and processes. Moreover, we implemented an enterprise resource planning (“ERP”) system in the first quarter of 2023, which replaced our existing operating and financial systems, to improve the efficiency of certain financial and transactional processes. However, there is an increased risk that changing controls may be ineffective during the implementation and this ERP system may place additional burden on employees to learn and adapt our processes to effectively operate under the ERP system. If the ERP system does not operate as intended, the effectiveness of our internal control over financial reporting could be negatively impacted. If we experience material weaknesses or otherwise fail to maintain an effective system of internal control over financial reporting, the accuracy and timing of our financial reporting and subsequently our liquidity and our access to capital markets may be adversely affected, we may be unable to maintain or regain compliance with applicable securities laws and the Nasdaq Stock Market LLC listing requirements, we may be subject to regulatory investigations and penalties, investors may lose confidence in our financial reporting, and our stock price may decline.

The impact of U.S. healthcare reform may adversely affect our business model.

In the U.S. and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes and proposed changes regarding the healthcare system that could affect our operations. In particular, the commercial potential for our approved products could be affected by changes in healthcare spending and policy in the U.S. and abroad. We operate in a highly regulated industry and new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations, or decisions, related to healthcare availability, the method of delivery or payment for healthcare products and services could negatively impact our business, operations and financial condition.

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Further, in the U.S. there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several presidential executive orders, Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under government payor programs, and review the relationship between pricing and manufacturer patient programs. For example, in July 2021, the Biden administration released an executive order that included multiple provisions aimed at prescription drugs. In response to Biden’s executive order, on September 9, 2021, the U.S. Department of Health and Human Services (“HHS”) released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform. The plan sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions the HHS can take to advance these principles. In addition, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in Affordable Care Act marketplaces through plan year 2025. The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and creating a new manufacturer discount program. Further, the IRA (1) directs HHS to negotiate the price of certain single-source drugs or biologics covered under Medicare, and (2) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation. These provisions will take effect progressively starting in fiscal year 2023, although they may be subject to legal challenges. It is currently unclear how the IRA of 2022 will be implemented but is likely to have a significant impact on the pharmaceutical industry. Further, the Biden administration released an additional executive order on October 14, 2022, directing U.S. Department of Health and Human Services to report on how the Center for Medicare and Medicaid Innovation can be further leveraged to test new models for lowering drug costs for Medicare and Medicaid beneficiaries. It is unclear whether this executive order or similar policy initiatives will be implemented in the future. At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products if approved or additional pricing pressures.

Roxadustat is considered a Class 2 substance on the 2019 World Anti-Doping Agency Prohibited List that could limit sales and increase security and distribution costs for our partners and us.

Roxadustat is considered a Class 2 substance on the World Anti-Doping Agency Prohibited List. There are enhanced security and distribution procedures we and our collaboration partners and third-party contractors will have to take to limit the risk of loss of product in the supply chain. As a result, our distribution, manufacturing and sales costs for roxadustat, as well as for our partners, will be increased which will reduce profitability. In addition, there is a risk of reduced sales due to patient access to this drug.

Our employees may engage in misconduct or improper activities, which could result in significant liability or harm our reputation.

We are exposed to the risk of employee fraud or other misconduct, including intentional failure to:

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comply with FDA regulations or similar regulations of comparable foreign regulatory authorities;

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provide accurate information to the FDA or comparable foreign regulatory authorities;

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comply with manufacturing standards we have established;

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comply with data privacy and security laws protecting personal data;

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comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities;

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comply with the FCPA and other anti-bribery laws;

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report financial information or data accurately; or

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disclose unauthorized activities to us.

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Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions, delays in clinical trials, or serious harm to our reputation. We have adopted a code of conduct for our directors, officers and employees, but it is not always possible to identify and deter employee misconduct. The precautions we take to detect and prevent this activity may not be effective in protecting us from the negative impacts of governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. An unfavorable outcome or settlement in connection with a governmental investigation or other action or lawsuit may result in a material adverse impact on our business, results of operations, financial condition, prospects, and stock price. Regardless of the outcome, litigation and governmental investigations can be costly, time-consuming, and disruptive to our business, results of operations, financial condition, reputation, and prospects.

If we fail to comply with environmental, health or safety laws and regulations, we could incur fines, penalties or other costs.

Risks Related to Our International Operations

We have established operations in China and are seeking approval to commercialize our product candidates outside of the U.S., and a number of risks associated with international operations could materially and adversely affect our business.

A number of risks related to our international operations, many of which may be beyond our control, include: different regulatory requirements in different countries, including for drug approvals, manufacturing, and distribution; potential liability resulting from development work conducted by foreign distributors; economic weakness, including inflation, or foreign currency fluctuations, which could result in increased operating costs and expenses and reduced revenues, and other obligations incident to doing business in another country; workforce uncertainty in countries where labor unrest is more common than in the U.S.; compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; political instability in particular foreign economies and markets; and business interruptions resulting from geopolitical actions specific to an international region, including war and terrorism, or natural disasters, including the differing impact of the COVID-19 pandemic on each region.

The pharmaceutical industry in China is highly regulated and such regulations are subject to change.

The pharmaceutical industry in China is subject to comprehensive government regulation and supervision, encompassing the approval, registration, manufacturing, packaging, licensing and marketing of new drugs. In recent years, many aspects of pharmaceutical industry regulation have undergone significant reform, and reform may continue. For example, the Chinese government implemented regulations that impact distribution of pharmaceutical products in China, where at most two invoices may be issued throughout the distribution chain, a change that required us to change our distribution paradigm. Any regulatory changes or amendments may result in increased compliance costs to our business or cause delays in or prevent the successful development or commercialization of our product candidates in China. Any failure by us or our partners to maintain compliance with applicable laws and regulations or obtain and maintain required licenses and permits may result in the suspension or termination of our business activities in China.

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The China-operations portion of our audit is conducted by PricewaterhouseCoopers Zhong Tian LLP, an independent registered public accounting firm headquartered in China.*

The majority of audit work incurred for the audit report included in the 2022 Form 10-K was performed by the U.S.-based independent registered public accounting firm we have retained, PricewaterhouseCoopers LLP, which is headquartered in the U.S. and was not identified in the report issued by the PCAOB on December 16, 2021.

However, we estimate that between 30% and 40% of the total audit hours for our December 31, 2022 audit were provided by PricewaterhouseCoopers Zhong Tian LLP.

On December 18, 2020, the Holding Foreign Companies Accountable Act (the “HFCAA”) was signed into law. The HFCAA requires that the SEC identify issuers that retain an auditor that has a branch or office that is located in a foreign jurisdiction and that the PCAOB determines it is unable to inspect or investigate completely because of a position taken by an authority in that foreign jurisdiction. Among other things, the HFCAA requires the SEC to prohibit the securities of any issuer from being traded on any of the U.S. national securities exchanges, such as The Nasdaq Global Select Market, or on the U.S. “over-the-counter” markets, if the auditor of the issuer’s financial statements is not subject to PCAOB inspections for three consecutive “non-inspection” years after the law became effective. On December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act (the “AHFCAA”) signed into law as part of a package of bills reduced the number of consecutive non-inspection years required for triggering the listing and trading prohibitions under the HFCA Act from three years to two years.

On December 2, 2021, the SEC adopted final amendments to its rules implementing the HFCAA and established procedures to identify issuers and prohibit the trading of the securities of certain registrants as required by the HFCAA. This rule stated that only the principal accountant, as defined by Rule 2-05 of Regulation S-X and PCAOB AS 1205, is “deemed ‘retained’ for purposes of Section 104(i) of the Sarbanes-Oxley Act and the Commission’s determination of whether the registrant should be a Commission Identified Issuer.” The principal accountant, as defined, that we have retained is PricewaterhouseCoopers LLP. The HFCAA does not apply to registrants that retain a principal accountant that is headquartered in the U.S. and subject to PCAOB inspection. Accordingly, the HFCAA does not currently apply to us.

On December 16, 2021, the PCAOB issued a report on its determination that it is unable to inspect or investigate completely PCAOB-registered accounting firms headquartered in China and in Hong Kong.

On December 15, 2022, the PCAOB announced that it was able to conduct inspections and investigations completely of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong in 2022. The PCAOB vacated its previous 2021 determinations accordingly. While vacating those determinations, the PCAOB noted that, should it encounter any impediment to conducting an inspection or investigation of auditors in mainland China or Hong Kong as a result of a position taken by any authority there, the PCAOB would act to immediately reconsider the need to issue new determinations consistent with the HFCAA and PCAOB’s Rule 6100.

If our operations fundamentally change in a way that requires our independent registered public accounting firm be located in China or Hong Kong in order to comply with the standards of the PCAOB regarding principal auditor then the HFCAA would apply to us, including the potential delisting from The Nasdaq Global Select Market and prohibition from trading in the over-the counter market in the U.S. Such a restriction would negatively impact our ability to raise capital. We view the likelihood to be remote that our operations will fundamentally change so as to require our principal auditor to be located in China or Hong Kong. Additionally, it is possible that in the future Congress could amend the HFCAA or the SEC could modify its regulations to apply the restrictions, including trading prohibitions and delisting, under the HFCAA in situations in which an independent registered public accounting firm in China or Hong Kong performs part of the audit such as in our current situation. There are currently no such proposals.

Inspections of auditors conducted by the PCAOB in territories outside of China have at times identified deficiencies in those auditors’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. In the future, should PCAOB encounter any impediment to continue conducting an inspection of audit work undertaken in China, including by PricewaterhouseCoopers Zhong Tian LLP, it could prevent the PCAOB from evaluating the effectiveness of such audits and such auditors’ quality control procedures. As a result, investors could be deprived of the potential benefits of such PCAOB inspections for this portion of our audit, which could cause investors and potential investors in our common stock to lose confidence in the audit procedures conducted by our U.S. auditor’s China-based subsidiary, which may negatively impact investor sentiment towards us or our China operations, which in turn could adversely affect the market price of our common stock.

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Changes in U.S. and China relations, as well as relations with other countries, and/or regulations may adversely impact our business.

The U.S. government, including the SEC, has made statements and taken certain actions that have led to changes to U.S. and international relations, and will impact companies with connections to the U.S. or China, including imposing several rounds of tariffs affecting certain products manufactured in China, imposing certain sanctions and restrictions in relation to China, and issuing statements indicating enhanced review of companies with significant China-based operations. It is unknown whether and to what extent new legislation, executive orders, tariffs, laws or regulations will be adopted, or the effect that any such actions would have on companies with significant connections to the U.S. or to China, our industry or on us. We conduct manufacturing and development activities and have business operations both in the U.S. and China. Any unfavorable government policies on cross-border relations and/or international trade, including increased scrutiny on companies with significant China-based operations, capital controls or tariffs, may affect the competitive position of our drug products, the hiring of scientists and other research and development personnel, the demand for our drug products, the import or export of products and product components, our ability to raise capital, the market price of our common stock, or prevent us from commercializing and selling our drug products in certain countries.

While we do not operate in an industry that is currently subject to foreign ownership limitations in China, China could decide to limit foreign ownership in our industry, in which case there could be a risk that we would be unable to do business in China as we are currently structured. In addition, our periodic reports and other filings with the SEC may be subject to enhanced review by the SEC and this additional scrutiny could affect our ability to effectively raise capital in the U.S.

If any new legislation, executive orders, tariffs, laws and/or regulations are implemented, if existing trade agreements are renegotiated or if the U.S. or Chinese governments take retaliatory actions due to the recent U.S.-China tension, such changes could have an adverse effect on our business, financial condition and results of operations, our ability to raise capital and the market price of our common stock.

We use our own manufacturing facilities in China to produce roxadustat API and drug product for the market in China. There are risks inherent to operating commercial manufacturing facilities, and with these being our single source suppliers, we may not be able to continually meet market demand.

We have two manufacturing facilities in China, with one located in Beijing and the other in Cangzhou, Hebei.

We will be obligated to comply with continuing cGMP requirements and there can be no assurance that we will maintain all of the appropriate licenses required to manufacture our product candidates for clinical and commercial use in China. In addition, our product suppliers and we must continually spend time, money and effort in production, record-keeping and quality assurance and appropriate controls in order to ensure that any products manufactured in our facilities meet applicable specifications and other requirements for product safety, efficacy and quality and there can be no assurance that our efforts will continue to be successful in meeting these requirements.

Manufacturing facilities in China are subject to periodic unannounced inspections by the National Medical Products Administration and other regulatory authorities. We expect to depend on these facilities for our product candidates and business operations in China, and we do not yet have a secondary source supplier for either roxadustat API or drug product in China. Consequently, we also carry single source supplier risk for the Ex-China market. Natural disasters or other unanticipated catastrophic events, including power interruptions, water shortages, storms, fires, pandemics (including the COVID-19 pandemic), earthquakes, terrorist attacks, government appropriation of our facilities, and wars, could significantly impair our ability to operate our manufacturing facilities. Further, the climate of geopolitical tensions in China affecting global supply chains may impact our ability to continually meet market demand. Certain equipment, records and other materials located in these facilities would be difficult to replace or would require substantial replacement lead-time that would impact our ability to successfully commercialize our product candidates in China. The occurrence of any such event could materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.

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We may experience difficulties in successfully growing and sustaining sales of roxadustat in China.

AstraZeneca and we have a profit-sharing arrangement with respect to roxadustat in China and any difficulties we may experience in growing and sustaining sales will affect our bottom line. Difficulties may be related to our ability to maintain reasonable pricing and reimbursement, obtain and maintain hospital listing, or other difficulties related to distribution, marketing, and sales efforts in China. Our current National Reimbursement Drug List reimbursement pricing is effective for a standard two-year period (between January 1, 2022 to December 31, 2023), after which time we will have to negotiate a new price for roxadustat. Sales of roxadustat in China may ultimately be limited due to the complex nature of the healthcare system, low average personal income, pricing controls, still developing infrastructure and potentially rapid competition from other products.

The retail prices of any product candidates that we develop will be subject to pricing control in China and elsewhere.

FibroGen (China) Medical Technology Development Co., Ltd. (“FibroGen Beijing”) would be subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity requirements.*

We plan to conduct all of our business in China through FibroGen China Anemia Holdings, Ltd., FibroGen Beijing and its branch offices, and our joint venture distribution entity, Beijing Falikang Pharmaceutical Co., Ltd. (“Falikang”). We do not currently rely on revenue from China to fund our operations outside of China. However, we may in the future rely on dividends and royalties paid by FibroGen Beijing for a portion of our cash needs, including the funds necessary to service any debt we may incur and to pay our operating costs and expenses. The payment of dividends by FibroGen Beijing is subject to limitations. Regulations in China currently permit payment of dividends only out of accumulated profits as determined in accordance with applicable accounting standards and regulations in China. FibroGen Beijing is not permitted to distribute any profits until losses from prior fiscal years have been recouped and in any event must maintain certain minimum capital requirements. FibroGen Beijing is also required to set aside at least 10.0% of its after-tax profit based on Chinese accounting standards each year to its statutory reserve fund until the cumulative amount of such reserves reaches 50.0% of its registered capital. Statutory reserves are not distributable as cash dividends. In addition, if FibroGen Beijing incurs debt on its own behalf in the future, the agreements governing such debt may restrict its ability to pay dividends or make other distributions to us. As of March 31, 2023, approximately $77.6 million of our cash and cash equivalents is held in China.

The Ministry of Commerce in China or its local counterpart must approve the amount and use of any capital contributions from us to FibroGen Beijing, and there can be no assurance that we will be able to complete the necessary government registrations and obtain the necessary government approvals on a timely basis, or at all. If we fail to do so, we may not be able to contribute additional capital or find suitable financing alternatives within China to fund our Chinese operations, and the liquidity and financial position of FibroGen Beijing may be materially and adversely affected.

We may be subject to currency exchange rate fluctuations and currency exchange restrictions with respect to our operations in China as well as our partner’s operations in Japan and Europe, which could adversely affect our financial performance.

Most of our and our partner’s product sales will occur in local currency and our operating results will be subject to volatility from currency exchange rate fluctuations. To date, we have not hedged against the risks associated with fluctuations in exchange rates and, therefore, exchange rate fluctuations could have an adverse impact on our future operating results. Changes in the value of the Renminbi, Euro or Yen against the U.S. dollar and other currencies are affected by, among other things, changes in political and economic conditions. Any significant currency exchange rate fluctuations may have a material adverse effect on our business and financial condition.

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In addition, the Chinese government imposes controls on the convertibility of the Renminbi into foreign currencies and the remittance of foreign currency out of China for certain transactions. Shortages in the availability of foreign currency may restrict the ability of FibroGen Beijing to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency-denominated obligations. Under existing Chinese foreign exchange regulations, payments of current account items, including profit distributions, interest payments and balance of trade, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from the State Administration of Foreign Exchange or its local branch is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The Chinese government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our operational requirements, our liquidity and financial position may be materially and adversely affected.

Because FibroGen Beijing’s funds are held in banks that do not provide insurance, the failure of any bank in which FibroGen Beijing deposits its funds could adversely affect our business.

We may be subject to tax inefficiencies associated with our offshore corporate structure.

The tax regulations of the U.S. and other jurisdictions in which we operate are extremely complex and subject to change. New laws, new interpretations of existing laws, such as the Base Erosion Profit Shifting project initiated by the Organization for Economic Co-operation and Development, and any legislation proposed by the relevant taxing authorities, or limitations on our ability to structure our operations and intercompany transactions may lead to inefficient tax treatment of our revenue, profits, royalties, and distributions, if any are achieved. For example, the Biden administration has proposed to increase the U.S. corporate income tax rate from 21%, increase the U.S. taxation of our international business operations and impose a global minimum tax, although the recently enacted Inflation Reduction Act of 2022 omitted to include any of these proposals but included only a minimum tax on certain large corporations and a tax on certain repurchases of stock on the corporations doing those repurchases. Such proposed changes, as well as regulations and legal decisions interpreting and applying these changes, may adversely impact our effective tax rate.

In addition, our foreign subsidiaries and we have various intercompany transactions. We may not be able to obtain certain benefits under relevant tax treaties to avoid double taxation on certain transactions among our subsidiaries. If we are not able to avail ourselves to the tax treaties, we could be subject to additional taxes, which could adversely affect our financial condition and results of operations.

On December 22, 2017, the Tax Cuts and Jobs Act (Tax Act) was enacted which instituted various changes to the taxation of multinational corporations. Since inception, various regulations and interpretations have been issued by governing authorities and we continue to examine the impacts to our business, which could potentially have a material adverse effect on our business, results of operations or financial conditions.

Our foreign operations, particularly those in China, are subject to significant risks involving the protection of intellectual property.

We seek to protect the products and technology that we consider important to our business by pursuing patent applications in China and other countries, relying on trade secrets or pharmaceutical regulatory protection or employing a combination of these methods. We note that the filing of a patent application does not mean that we will be granted a patent, or that any patent eventually granted will be as broad as requested in the patent application or will be sufficient to protect our technology. There are a number of factors that could cause our patents, if granted, to become invalid or unenforceable or that could cause our patent applications not to be granted, including known or unknown prior art, deficiencies in the patent application, or lack of originality of the technology. Furthermore, the terms of our patents are limited. The patents we hold and the patents that may be granted from our currently pending patent applications have, absent any patent term adjustment or extension, a twenty-year protection period starting from the date of application.

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Uncertainties with respect to the China legal system and regulations could have a material adverse effect on us.

The legal system of China is a civil law system primarily based on written statutes. Our financial condition and results of operations may be adversely affected by government control, perceived government interference and/or changes in tax, cyber and data security, capital investments, cross-border transactions and other regulations that are currently or may in the future be applicable to us. In 2022, Chinese regulators announced regulatory actions aimed at providing China’s government with greater oversight over certain sectors of China’s economy, including the for-profit education sector and technology platforms that have a quantitatively significant number of users located in China. Although the biotech industry is already highly regulated in China and while there has been no indication to date that such actions or oversight would apply to companies that are similarly situated as us and that are pursuing similar portfolios of drug products and therapies as us, China’s government may in the future take regulatory actions that may materially adversely affect the business environment and financial markets in China as they relate to us, our ability to operate our business, our liquidity and our access to capital.

Unlike in a common law system, prior court decisions may be cited for reference but are not binding. Because the China legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit legal protections available to us. Moreover, decision makers in the China judicial system have significant discretion in interpreting and implementing statutory and contractual terms, which may render it difficult for FibroGen Beijing to enforce the contracts it has entered into with our business partners, customers and suppliers. Different government departments may have different interpretations of certain laws and regulations, and licenses and permits issued or granted by one government authority may be revoked by a higher government authority at a later time. Furthermore, new laws or regulations may be passed, in some cases with little advance notice, that affect the way we or our collaboration partner do business in China (including the manufacture, sale, or distribution of roxadustat in China). Our business may be affected if we rely on laws and regulations that are subsequently adopted or interpreted in a manner different from our understanding of these laws and regulations. Navigating the uncertainty and change in the China legal ~~system~~and regulatory systems will require the devotion of significant resources and time, and there can be no assurance that our contractual and other rights will ultimately be maintained or enforced.

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Changes in China’s economic, ~~political~~governmental, or social conditions ~~or government policies~~ could have a material adverse effect on our ~~business~~business.

Chinese society and ~~operations.~~

~~The~~the Chinese economy ~~and Chinese society~~ continue to undergo significant change. ~~Adverse changes~~Changes in the ~~political~~regulatory structure, regulations, and economic policies of the Chinese government could have a material adverse effect on the overall economic growth of China, which could adversely affect our ability to conduct business in China. The Chinese government continues to adjust economic policies to promote economic growth. Some of these measures benefit the overall Chinese economy, but may also have a negative effect on us. For example, our financial condition and results of operations in China may be adversely affected by government control over capital investments or changes in tax regulations. Recently, Chinese regulators announced regulatory actions aimed at providing China’s government with greater oversight over certain sectors of China’s economy, including the for-profit education sector and technology platforms that have a quantitatively significant number of users located in China. Although the biotech industry is already highly regulated in China and while there has been no indication to date that such actions or oversight would apply to companies that are similarly situated as us and that are pursuing similar portfolios of drug products and therapies as us, China’s government may in the future take regulatory actions that may materially adversely affect the business environment and financial markets in China as they relate to us. As the Chinese pharmaceutical industry grows and evolves, the Chinese government may also implement measures to change the regulatory structure and structure of foreign investment in this industry. We are unable to predict the frequency and scope of such policy changes and structural changes, any of which could materially and adversely affect FibroGen Beijing’s development and commercialization timelines, liquidity, access to capital, and its ability to conduct business in China. Any failure on our part to comply with changing government regulations and policies could result in the loss of our ability to develop and commercialize our product candidates in China. In addition, the changing government regulations and policies could result in delays and cost increases to our development, manufacturing, approval, and commercialization timelines in China.

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We may be subject to additional Chinese requirements, approvals or permissions in the future.

We are incorporated in the state of Delaware. To operate our general business activities currently conducted in China, each of our Chinese subsidiaries (and our joint venture with AstraZeneca, Falikang) is required to and does obtain a business license from the local counterpart of the State Administration for Market Regulation. Such business licenses list the business activities we are authorized to carry out and we would be noncompliant if we act outside of the scope of business activities set forth under the relevant business license.

Due to China’s regulatory framework in general and for the pharmaceutical industry specifically, we are required to apply for and maintain many approvals or permits specific to many of our business activities, including but not limited to manufacturing, distribution, environment protection, workplace safety, cybersecurity, from both national and local government agencies. For example, FibroGen Beijing is required to maintain a Drug Product Production Permit that allows it to manufacture API and roxadustat capsules. Falikang, our joint venture with AstraZeneca, is required to maintain a Drug Product Distribution Permit in order to be able to distribute our drug product roxadustat in China. For certain of our clinical trials conducted in China, we need to obtain, through the clinical sites, permits from the Human Genetic Resources Administration of China to collect samples that include human genetic resources, such as blood samples.

We may also be required to obtain certain approvals from Chinese authorities before transferring certain scientific data abroad or to foreign parties or entities established or actually controlled by them.

None of our subsidiaries or our joint venture in China are required to obtain approval or prior permission from the China Securities Regulatory Commission, Cyberspace Administration of China, or any other Chinese regulatory authority under the Chinese laws and regulations currently in effect to issue securities to our investors. However, the approvals and permits we do have to comply with are numerous and there are uncertainties with respect to the Chinese legal system and changes in laws, regulations and policies, including how those laws and regulations will be interpreted or implemented. For further information, see the risk factor titled “Uncertainties with respect to the China legal system and regulations could have a material adverse effect on us.” There can be no assurance that we will not be subject to new or changing requirements, approvals or permissions in the future in order to operate in China.

If we are unable to obtain the necessary approvals or permissions in order to operate our business in China, if we inadvertently conclude that such approvals or permissions are not required, or if we are subject to additional requirements, approvals, or permissions, it could have an adverse effect on our business, financial condition and results of operations, our ability to raise capital and the market price of our common stock.

If the Chinese government determines that our corporate structure does not comply with Chinese regulations, or if Chinese regulations change or are interpreted differently in the future, the value of our common stock may decline.

In July 2021, the Chinese government provided new guidance on China-based companies raising capital outside of China, including through arrangements called variable interest entities. We do not employ a variable interest entity structure for purposes of replicating foreign investment in Chinese-based companies where Chinese law prohibits direct foreign investment. We do not operate in an industry that is currently subject to foreign ownership limitations in China. However, there are uncertainties with respect to the Chinese legal system and there may be changes in laws, regulations and policies, including how those laws and regulations will be interpreted or implemented. For further information, see the risk factor titled “Uncertainties with respect to the China legal system and regulations could have a material adverse effect on us.” If in the future the Chinese government determines that our corporate structure does not comply with Chinese regulations, or if Chinese laws or regulations change or are interpreted differently from our understanding of these laws and regulations, the value of our common stock may decline.

Our operations in China subject us to various Chinese labor and social insurance laws, and our failure to comply with such laws may materially and adversely affect our business, financial condition and results of operations.

We are subject to China Labor Contract Law, which provides strong protections for employees and imposes many obligations on employers. The Labor Contract Law places certain restrictions on the circumstances under which employers may terminate labor contracts and require economic compensation to employees upon termination of employment, among other things. In addition, companies operating in China are generally required to contribute to labor union funds and the mandatory social insurance and housing funds. Any failure by us to comply with Chinese labor and social insurance laws may subject us to late fees, fines and penalties, or cause the suspension or termination of our ability to conduct business in China, any of which could have a material and adverse effect on business, results of operations and prospects.

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Risks Related to COVID-19

Our business could continue to be adversely affected by the ~~United Kingdom’s referendum vote~~ongoing COVID-19 global pandemic.*

The COVID-19 pandemic may continue to negatively impact our and/or our partners’ sales of roxadustat, clinical programs and timelines, and general productivity, the magnitude of which will depend, in ~~favor~~part, on the progression of ~~leaving~~ the ~~European Union~~disease, the efficacy of various mitigation efforts, including vaccines and other therapeutics in preventing and treating current and future COVID-19 variants, and restrictions (including lockdowns) governments impose in response to new outbreaks of COVID-19 variants.

During the pandemic, we have seen impacts from COVID-19 on various parts of our operations and at varying degrees. There is a risk that our sales, manufacturing, clinical trials or operations could be further affected by additional or continued COVID-19 outbreaks or lockdowns.

We believe we have sufficient stock of roxadustat and pamrevlumab supplies for our near-term expected commercial and clinical requirements. However, we only have a limited stockpile of these products, and therefore, further outbreaks of COVID-19, lockdowns, disruptions in shipping, or product expiration due to slowed clinical trials, could create supply shortages in our global supply chains. COVID-19 has also created increased demand for the limited global biologics manufacturing capacity, and for manufacturing supplies, including vials, reagents, supplements and media. Any such supply disruptions could adversely ~~affect us.~~impact our clinical development and ability to generate revenues from our approved products and our business, financial condition, results of operations and growth prospects could be materially adversely affected.

~~The United Kingdom held a referendum on June 23, 2016 in which a majority voted for the United Kingdom’s withdrawal from the EU, commonly referred~~Due to ~~as “Brexit”. As a result~~these and potentially additional business disruptions, there may be delays to any of ~~this vote, negotiations are expected to commence to determine the terms of the United Kingdom’s withdrawal from the EU~~our business areas including those outlined above, as well as ~~its relationship with~~in regulatory, distribution, warehousing and other development, commercialization and launch efforts. In addition, health risks and remote work could affect the ~~EU going forward, including~~productivity of our workforce. The full extent of these potential effects is unknown, but any of which could have a material impact on our business, operating results, and financial condition.

To the ~~terms~~extent the ongoing COVID-19 pandemic adversely affects our business and results of ~~trade between the United Kingdom and the EU. The effects of the United Kingdom’s withdrawal from the EU, and the perceptions as to its impact, are expected to be far-reaching and~~operations, it may adversely affect business activity and economic conditions in Europe and globally and could continue to contribute to instability in global financial markets, including foreign exchange markets. The United Kingdom’s withdrawal from the EU could also have the effect of ~~disrupting~~heightening many of the ~~free movement~~other risks and uncertainties described in this “Risk Factors” section.

Risks Related to the Operation of ~~goods, services~~Our Business

We have incurred significant losses since our inception and ~~people between~~anticipate that we will continue to incur losses for the ~~United Kingdom~~foreseeable future and may never achieve or sustain profitability. We may require additional financing in order to fund our operations, which may be dilutive to our shareholders, restrict our operations or require us to relinquish rights to our intellectual property or product candidates. If we are unable to raise capital when needed or on acceptable terms, we may be forced to delay, reduce or eliminate our research and development programs and/or our commercialization efforts.*

We are a biopharmaceutical company with two lead product candidates in clinical development, roxadustat for anemia in CKD, MDS, and chemotherapy-induced anemia, and pamrevlumab for IPF, pancreatic cancer, and DMD. Most of our revenue generated to date has been based on our collaboration agreements and we have limited commercial drug product sales to date. We continue to incur significant research and development and other expenses related to our ongoing operations. Our net loss for the years ended December 31, 2022, 2021 and 2020 were $293.7 million, $290.0 million and $189.3 million, respectively. As of March 31, 2023, we had an accumulated deficit of $1.6 billion. As of March 31, 2023, we had capital resources consisting of cash, cash equivalents and short-term investments of $355.9 million. In addition, as of March 31, 2023, we had $17.7 million of accounts receivable in our current assets. Despite contractual development and cost coverage commitments from our collaboration partners, AstraZeneca and Astellas, and the EUpotential to receive milestone and other payments from these partners, and despite commercialization efforts for roxadustat for the treatment of anemia caused by CKD, we anticipate we will continue to incur losses on an annual basis for the foreseeable 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 the product candidates that are approved, 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 (deficit) and working capital. Our failure to become and remain profitable would depress the market price of our common stock and could ~~also lead to legal uncertainty and potentially divergent national laws and regulations as the United Kingdom determines which EU laws to replace or replicate, including laws that could impact~~impair our ability to raise capital, expand our business, diversify our product offerings or continue our ~~collaborator’s ability~~operations.

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We believe that we will continue to expend substantial resources for the foreseeable future as we continue to grow our operations in ~~the case of roxadustat,~~China, expand our clinical development efforts on pamrevlumab, continue to ~~obtain~~seek regulatory approval, establish commercialization capabilities 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 our partners and ourselves. The outcome of any clinical trial and/or ~~sell our products in the United Kingdom. However, the full effects of such withdrawal are~~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 our existing cash and cash equivalents, short-term and long-term investments and accounts receivable, cash flows from commercial sales and sales of drug product, and expected third-party collaboration revenues will ~~depend on any agreements~~allow us to fund our operating plans through at least 12 months from the ~~United Kingdom~~date of issuance of these consolidated financial statements. Our operating plans or third-party collaborations may ~~make to retain access to EU markets. Lastly,~~change as a result of many factors, including the ~~United Kingdom’s withdrawal from the EU,~~success of our development and commercialization efforts, operations costs (including manufacturing and regulatory), competition, and other ~~European countries~~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 financing or other sources, such as revenue interest monetization or other structured financing. Future sales of equity or debt securities 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.

Accordingly, we may seek additional funds sooner than planned. We may also seek additional capital due to ~~conduct referenda~~favorable market conditions or strategic considerations even if we currently believe that we have sufficient funds for our current or future operating plans.

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize any of our product candidates. We cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all or that we will be able to satisfy the performance, financial and other obligations in connection with any such financing. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. We could also be required to seek funds through additional collaborations, partnerships, licensing arrangements with third parties or otherwise at an earlier stage than would be desirable and we may be required to relinquish rights to intellectual property, future revenue streams, research programs, product candidates or to grant licenses on terms that may not be favorable to us, any of which may have a material adverse effect on our business, operating results and prospects.

In addition, the terms of any financing may adversely affect the holdings or the rights of our stockholders. If we raise additional funds by issuing equity securities, dilution to our existing stockholders will result. In addition, as a condition to providing additional funding to us, future investors may demand, and may be granted, rights superior to those of existing stockholders. Moreover, any debt financing, if available, may involve restrictive covenants that could limit our flexibility in conducting future business activities and, in the event of insolvency, would be paid before holders of equity securities received any distribution of corporate assets. For example, in 2022 we entered into a Revenue Interest Financing Agreement (“RIFA”) with an affiliate of NovaQuest Capital Management (“NovaQuest”) and in 2023 we entered into a debt financing agreement with investment funds managed by Morgan Stanley Tactical Value, each of which impose certain performance and financial obligations on our business. Our ability to satisfy and meet any future debt service obligations will depend upon our future performance, which will be subject to financial, business and other factors affecting our operations, many of which are beyond our control.

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.

Our non-dilutive transactions with Morgan Stanley Tactical Value and NovaQuest could limit cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations, and contain various covenants and other provisions, which, if violated, could result in the acceleration of payments due in connection with such transaction or the foreclosure on security interest.*

On November 4, 2022, we entered into a $50 million RIFA financing with NovaQuest with respect to ~~their continuing membership~~our revenues from Astellas’ sales of roxadustat in Europe, Japan and the other Astellas territories.

As material inducement for NovaQuest to enter into the RIFA, we granted NovaQuest a security interest over our rights, title and interest in and to the revenue interest payments and intellectual property related to roxadustat and the Astellas territories.

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In addition, the RIFA includes customary reporting obligations and events of default by us. Upon the occurrence of an event of default, NovaQuest may exercise all remedies available to it at law or in equity in respect of the security interest.

On April 29, 2023, we entered into a financing agreement (“Financing Agreement”) for up to $150 million with ~~the EU. Given these possibilities~~investment funds managed by Morgan Stanley Tactical Value, as lenders, and ~~others we may not anticipate, as well~~Wilmington Trust, National Association, as the ~~lack~~administrative agent.

Our Financing Agreement with Morgan Stanley Tactical Value requires us to maintain a minimum balance of ~~comparable precedent,~~$30 million of unrestricted cash and cash equivalents held in accounts in the ~~full extent~~United States and, while any portion of the term loans or any other obligations under the Financing Agreement remain outstanding, we must comply with certain customary affirmative and negative covenants set forth in the Financing Agreement and related loan documents. The Financing Agreement also provides for customary events of default triggers. Upon an event of default, the administrative agent under the Financing Agreement may, and at the direction of the majority lenders shall, accelerate all of our outstanding obligations under the Financing Agreement and related loan documents, terminate all outstanding funding commitments and/or exercise remedies available at law or equity or under contract for secured creditors. The term loans are secured by substantially all of our and our non-Chinese subsidiaries’ assets, subject to ~~which~~customary exceptions.

For additional details about these financing transactions, see Note 6, Liability Related to Sale of Future Revenues and Note 11, Subsequent Event, to the condensed consolidated financial statements.

Our obligations under these financing transactions could have significant negative consequences for our shareholders, and our business, results of operations and financial condition ~~could~~by, among other things:

•

increasing our vulnerability to adverse economic and industry conditions;

•

limiting our ability to obtain additional non-dilutive financing or enter into collaboration or partnership agreements of a certain size;

•

requiring the dedication of a portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes;

•

limiting our flexibility to plan for, or react to, changes in our business; and

•

placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.

Our ability to comply with the above covenants may be ~~adversely~~ affected by events beyond our control, and future breaches of any of the ~~United Kingdom’s withdrawal~~covenants could result in a default under the RIFA, the Financing Agreement, or any future financing agreements. If not waived, future defaults could cause all of the outstanding indebtedness under either financing transaction to become immediately due and payable and NovaQuest or Morgan Stanley Tactical Value could seek to enforce their security interest in assets that secure such indebtedness.

To the extent we incur additional debt, the risks described above could increase. A default in one of such agreements could trigger a default in the other. Any of the above risks would negatively impact our ability to operate our business and obtain additional debt or equity financing on favorable terms.

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

If either or both of our 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 potential commercialization of roxadustat for the EUtreatment of anemia caused by CKD or MDS, or we may require additional partnering in order to help fund such development and commercialization. While we continue to commercialize roxadustat in China with AstraZeneca, and develop roxadustat in the U.S. for the treatment of anemia in patients with MDS, we have not been able to agree on a path forward for AstraZeneca to fund further roxadustat development in the U.S. for CKD anemia and there is ~~uncertain.~~a significant risk we will be unable to do so. There is also a significant risk that the AstraZeneca U.S./RoW Agreement will be amended or terminated. 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 development or commercialization efforts or other operations.

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We may encounter difficulties in managing our growth and expanding our operations successfully.

As we seek to advance our product candidates through clinical trials and commercialization, we will need to expand our development, regulatory, manufacturing, commercialization and administration capabilities or contract with third parties to provide these capabilities for us. As our operations expand, ~~and we continue to undertake the efforts and expense to operate as a public reporting company,~~ we expect that we will need to increase the responsibilities ~~on members~~ of ~~management in order to manage any future growth effectively.~~management. Our failure to accomplish any of these steps could prevent us from successfully implementing our strategy and maintaining the confidence of investors in ~~our company.~~us.

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~~If we fail to attract and keep~~ senior management and key personnel ~~in particular~~could adversely affect our ~~chief executive officer, we may be unable to successfully develop our product candidates, conduct our clinical trials and commercialize our product candidates.~~business.

We are highly dependent on ~~our chief executive officer, Thomas B. Neff, and other~~ members of our senior management ~~team.~~team, including Enrique Conterno, our Chief Executive Officer. The loss of the services of Mr. ~~Neff~~Conterno or any of ~~these other individuals would be expected to~~our senior management could significantly ~~negatively~~ impact the development and commercialization of our products and product candidates ~~our existing collaborative relationships~~ and our ability to successfully implement our business strategy.

Recruiting and retaining qualified commercial, development, scientific, clinical, and manufacturing personnel are and will continue to be critical to our ~~success.~~success, particularly as we expand our commercialization operations. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize product candidates. We may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the intense competition among numerous biopharmaceutical companies for similar personnel.

There is also significant competition, in particular in the San Francisco Bay Area, for the hiring of experienced and qualified personnel, which increases the importance of retention of our existing personnel. If we are unable to continue to attract and retain personnel with the quality and experience applicable to our product candidates, our ability to pursue our strategy will be limited and our business and operations would be adversely affected.

We are exposed to the risks associated with litigation, investigations, regulatory proceedings, and other legal matters, any of which could have a material adverse effect on us.

We are currently and may in the future face legal, administrative and regulatory proceedings, claims, demands, investigations and/or other dispute-related matters involving, among other things, our products, product candidates, or other issues relating to our business as well as allegations of violation of U.S. and foreign laws and regulations relating to intellectual property, competition, securities, consumer protection, and the environment.

For example, we and certain of our current and former executive officers have been named as defendants in a consolidated putative class action lawsuit (“Securities Class Action Litigation”) and certain of our current and former executive officers and directors have been named as defendants in several derivative lawsuits (“Derivative Litigation”). The complaint filed in the Securities Class Action Litigation alleges violations of the securities laws, including, among other things, that the defendants made certain materially false and misleading statements about our Phase 3 clinical studies data and prospects for FDA approval. The complaints filed in the Derivative Litigation asserts claims based on some of the same alleged misstatements and omissions as the Securities Class Action Litigation and seeks, among other things, unspecified damages. We intend to vigorously defend the claims made in the Securities Class Action Litigation and Derivative Litigation; however, the outcome of these matters cannot be predicted, and the claims raised in these lawsuits may result in further legal matters or actions against us, including, but not limited to, government enforcement actions or additional private litigation. In the fourth quarter of 2021, FibroGen received a subpoena from the SEC requesting documents related to roxadustat’s pooled cardiovascular safety data. We have been fully cooperating with the SEC’s investigation.

Our Board of Directors also received three litigation demands from our purported shareholders, asking the Board of Directors to investigate and take action against certain current and former officers and directors of ours for alleged wrongdoing based on the same allegations in the pending derivative and securities class action lawsuits. We may in the future receive such additional demands.

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We cannot predict whether any particular legal matter will be resolved favorably or ultimately result in charges or material damages, fines or other penalties, government enforcement actions, bars against serving as an officer or director, or civil or criminal proceedings against us or certain members of our senior management. For additional information regarding our pending litigation and SEC investigation, see Note 10, Commitments and Contingencies, to the condensed consolidated financial statements.

Legal proceedings in general, and securities and class action litigation and regulatory investigations in particular, regardless of their merits or their ultimate outcomes, are costly, divert management’s attention and may materially adversely affect our business, results of operations, financial condition, prospects, and stock price. In addition, such legal matters could negatively impact our reputation among our customers, collaboration partners or our shareholders. Furthermore, publicity surrounding legal proceedings, including regulatory investigations, even if resolved favorably for us, could result in additional legal proceedings or regulatory investigations, as well as damage to our reputation.

If product liability lawsuits are brought against us, we may incur substantial liabilities and may ~~be required~~have to limit ~~commercialization of our product candidates.~~commercial operations.

We face an inherent risk of product liability as a result of the clinical testing, manufacturing and commercialization of our product candidates. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in a product, negligence, strict liability or breach of warranty. Claims could also be asserted under state consumer protection acts. If we are unable to obtain insurance coverage at levels that are appropriate to maintain our business and operations, or if we are unable to successfully defend ourselves against product liability claims, we may incur substantial liabilities or otherwise cease operations. Product liability claims may result in:

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termination of further development of unapproved product candidates or significantly reduced demand for any approved products;

•

material costs and expenses to defend the related litigation;

•

a diversion of time and resources across the entire organization, including our executive management;

•

product recalls, product withdrawals or labeling restrictions;

•

termination of our collaboration relationships or disputes with our collaboration partners; and

•

reputational damage negatively impacting our other product candidates in development.

If we fail to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims, we may not be able to continue to develop our product candidates. We maintain product liability insurance in a customary amount for the stage of development of our product candidates. Although we believe that we have sufficient coverage based on the advice of our ~~third party~~third-party advisors, there can be no assurance that such levels will be sufficient for our needs. Moreover, our insurance policies have various exclusions, and we may be in a dispute with our carrier as to the extent and nature of our coverage, including whether we are covered under the applicable product liability policy. If we are not able to ensure coverage or are required to pay substantial amounts to settle or otherwise contest the claims for product liability, our business and operations would be negatively affected.

Our business and operations would suffer in the event of computer system failures.*

Despite ~~the implementation of~~implementing security measures, our internal computer systems, and those of our CROs, collaboration partners, and other third parties on which we rely, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, fire, terrorism, war and telecommunication and electrical failures. We ~~have recently~~ upgraded our disaster and data recovery ~~program, however,~~capabilities in 2022, and continue to maintain and upgrade these capabilities. However, to the extent that any disruption or security breach, in particular with our partners’ operations, results in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and it could result in a material disruption and delay of our drug development programs. For example, the loss of clinical trial data from completed, ongoing or planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

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We depend on sophisticated information technology systems to operate our business and a cyber-attack or other breach of these systems could have a material adverse effect on our business.*

~~We rely on information technology systems to process, transmit and store electronic information in our day-to-day operations. The size and complexity of~~If our information technology systems ~~makes them~~or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.*

In the ordinary course of our business, we and the third parties upon which we rely process confidential, proprietary, and sensitive data, and, as a result, we and the third parties upon which we rely face a variety of evolving threats, including but not limited to ransomware attacks, which could cause security incidents. Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our confidential, proprietary, and sensitive data and information technology systems, and those of the third parties upon which we rely. Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors.

Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a ~~cyber-attack,~~heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our services.

We and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious ~~intrusion, breakdown, destruction,~~code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.

In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of confidential, proprietary, and sensitive data and income, reputational harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.

In addition, our reliance on third-party service providers could introduce new cybersecurity risks and vulnerabilities, including supply-chain attacks, and other threats to our business operations.We rely on third-party service providers and technologies to operate critical business systems to process confidential, proprietary, and sensitive data in a variety of contexts, including, without limitation, CROs, CMOs, cloud-based infrastructure, data center facilities, encryption and authentication technology, employee email, content delivery to customers, and other functions. We also rely on third-party service providers to provide other products, services, parts, or otherwise to operate our business. Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. If our third-party service providers experience a security incident or other interruption, we could experience adverse consequences. While we may be entitled to damages if our third-party service providers fail to satisfy their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award.In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised.

Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our confidential, proprietary, and sensitive data or our information technology systems, or those of the third parties upon whom we rely. A security incident or other interruption could disrupt our ability (and that of third parties upon whom we rely) to provide our services.

We may expend significant ~~disruption.~~ resources or modify our business activities to try to protect against security incidents. Additionally, certain data privacy and security obligations may require us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and confidential, proprietary, and sensitive data.

While we have ~~recently upgraded our disaster data recovery program, a~~ successful attack could result in the theft or destruction of intellectual property, data, or other misappropriation of assets, or otherwise compromise our confidential or proprietary information and disrupt our operations. Cyber-attacks are becoming more sophisticated and frequent. We have invested in our systems and the protection ~~and recoverability~~ ~~of our data~~implemented security measures designed to ~~reduce the risk of an intrusion or interruption, and we monitor and test our systems on an ongoing basis for any current or potential threats. There~~protect against security incidents, there can be no assurance that these measures will be effective. We take steps to detect and ~~efforts will prevent future interruptions~~remediate vulnerabilities, but we may not be able to detect and remediate all vulnerabilities because the threats and techniques used to exploit the vulnerability change frequently and are often sophisticated in nature. Therefore, such vulnerabilities could be exploited but may not be detected until after a security incident has occurred. These vulnerabilities pose material risks to our business. Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities.

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Applicable data privacy and security obligations may require us to notify relevant stakeholders, such as governmental authorities, partners, and affected individuals, of security incidents. Such disclosures may involve inconsistent requirements and are costly, and the disclosure or ~~breakdowns.~~ the failure to comply with such requirements could lead to adverse consequences.

If we ~~fail~~(or a third party upon whom we rely) experience a security incident or are perceived to ~~maintain~~ have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or ~~protect~~oversight; restrictions on processing confidential, proprietary, and sensitive data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in our information technology systems and data integrity effectively or fail to anticipate, plan for or manage significant disruptions to these systems, we could have difficulty preventing, detecting and controlling such cyber-attacks and any such attacks could resultoperations (including availability of data); delays in ~~losses described above as well as disputes with physicians, patients and~~ our ~~partners, regulatory sanctions or penalties, increases in operating expenses, expenses or lost revenues~~development or other ~~adverse~~business plans; financial loss; and other similar harms. Security incidents and attendant consequences ~~any~~may cause customers to stop using our services, deter new customers from using our services, and negatively impact our ability to grow and operate our business.

Our contracts may not contain limitations of ~~which~~liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations. We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.

In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could ~~have a material adverse effect on~~be used to undermine our ~~business, results of operations, financial condition, prospects and cash flows.~~competitive advantage or market position.

Our headquarters ~~and data storage facilities~~ are located near known earthquake fault zones. The occurrence of an earthquake, fire or any other catastrophic event could disrupt our operations or the operations of third parties who provide vital support functions to us, which could have a material adverse effect on our business, results of operations and financial condition.*

We and some of the ~~third party~~third-party service providers on which we depend for various support functions ~~such as data storage,~~ are vulnerable to damage from catastrophic events, such as power loss, natural disasters, terrorism and similar unforeseen events beyond our control. Our corporate headquarters and other facilities are located in the San Francisco Bay Area, which in the past has experienced severe earthquakes and ~~fires.~~fires, and has been affected by the COVID-19 pandemic, including economic disruption resulting from the related shelter-in-place and stay-at-home governmental orders.

~~We do~~After a comprehensive earthquake risk analysis conducted by Marsh Risk, we decided not ~~carry~~to purchase earthquake or flood insurance. ~~Earthquakes~~Based upon (among other factors) the Marsh Risk analysis, the design and construction of our building, the expected potential loss, and the costs and deductibles associated with earthquake and flood insurance, we chose to self-insure. However, earthquakes or other natural disasters could severely disrupt our operations, or have a larger cost than expected, and have a material adverse effect on our business, results of operations, financial condition and prospects.

If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, damaged critical infrastructure, or otherwise disrupted operations, all critical systems and services can be accessible from the disaster recovery site, but it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time. The disaster recovery and business continuity plans ~~we have~~are in ~~place~~draft and are unlikely to provide adequate protection in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which, particularly when taken together with our lack of earthquake insurance, could have a material adverse effect on our business.

Furthermore, integral parties in our supply chain are operating from single sites, increasing their vulnerability to natural disasters or other sudden, unforeseen and severe adverse ~~events.~~events, such as the COVID-19 pandemic. If such an event were to affect our supply chain, it could have a material adverse effect on our business.

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Risks Related to Our Common Stock

The market price of our common stock may be highly volatile, and you may not be able to resell your shares at or above your purchase price.

In general, pharmaceutical, biotechnology and other life sciences company stocks have been highly volatile in the current market. The volatility of pharmaceutical, biotechnology and other life sciences company stocks is sometimes unrelated to the operating performance of particular companies and biotechnology and life science companies stocks often respond to trends and perceptions rather than financial performance. In particular, the market price of shares of our common stock could be subject to wide fluctuations in response to the following factors:

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results of clinical trials of our product candidates, including roxadustat and pamrevlumab;

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the timing of the release of results of and regulatory updates regarding our clinical trials;

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the level of expenses related to any of our product candidates or clinical development programs;

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results of clinical trials of our competitors’ products;

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safety issues with respect to our product candidates or our competitors’ products;

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~~regulatory actions with respect to our product candidates and any approved products or our competitors’ products;~~

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regulatory actions with respect to our product candidates and any approved products or our competitors’ products;

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fluctuations in our financial condition and operating results, which will be significantly affected by the manner in which we recognize revenue from the achievement of milestones under our collaboration agreements;

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adverse developments concerning our collaborations and our manufacturers;

•

the termination of a collaboration or the inability to establish additional collaborations;

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~~the publication of research reports by securities analysts about us or our competitors or our industry or negative recommendations or withdrawal of research coverage by securities analysts;~~

the inability to obtain adequate product supply for any approved drug product or inability to do so at acceptable prices;

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disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;

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~~the ineffectiveness of our internal controls;~~

~~our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market;~~

~~additions and departures of key personnel;~~

~~announced strategic decisions by us or our competitors;~~

changes in legislation or other regulatory developments affecting our product candidates or our industry;

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fluctuations in the valuation of the biotechnology industry and particular companies perceived by investors to be comparable to us;

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~~sales of our common stock by us, our insiders or our other stockholders;~~

speculation in the press or investment community;

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~~announcement or expectation of additional financing efforts;~~

announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us;

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~~changes in accounting principles;~~

activities of the government of China, including those related to the pharmaceutical industry as well as industrial policy generally;

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performance of other U.S. publicly traded companies with significant operations in China;

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~~terrorist acts, acts of war or periods of widespread civil unrest;~~

~~natural disasters such as earthquakes and other calamities;~~

changes in market conditions for biopharmaceutical stocks;

and

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~~changes in general market and economic conditions; and~~

the other factors described in this ~~“Risk Factors”~~“Risk Factors” section.

As a result of fluctuations caused by these and other factors, comparisons of our operating results across different periods may not be accurate indicators of our future performance. Any fluctuations that we report in the future may differ from the expectations of market analysts and investors, which could cause the price of our common stock to fluctuate significantly. Moreover, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. ~~This type of~~We are currently subject to such litigation and it has diverted, and could continue to result in ~~substantial costs and divert~~diversions of, our management’s attention and resources and ~~could also require us to make substantial payments to satisfy judgments or to settle litigation.~~

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We have broad discretion in the use of the net proceeds from our underwritten public offerings of common stock completed on April 11, 2017 (the “April 2017 Offering”)and completed on August 24, 2017 (the “August 2017 Offering”) and may not use them effectively.*

The net proceeds from the April 2017 Offering is intended to be used to fund the expansion of product development in China, including developing roxadustat in additional indications beyond CKD, manufacturing and commercialization activities, as well as for general corporate purposes. The net proceeds from the August 2017 Offering is intended to be used to fund the expansion of product development, including our development of pamrevlumab beyond current Phase 2 programs, manufacturing and commercialization activities, as well as for general corporate purposes. These general corporate purposes, may include, among other things, funding research and development, clinical trials, vendor payables, potential regulatory submissions, hiring additional personnel and capital expenditures. However, we have no current commitments or obligations to use the net proceeds in the manner described above. Our management has broad discretion in the application of the balance of the net proceeds from the April 2017 Offering and the August 2017 Offering, and could spend the proceeds in ways our stockholders may not agree with or that fails to improve our business or enhance the value of our common stock. The failure by our management to use these funds effectivelyit could result in ~~financial losses that could harm our business, cause the price~~significant expense, monetary damages, penalties or injunctive relief against us. For a description of our ~~common stock to decline~~pending litigation and ~~delay the development of our product candidates.~~

~~If securities or industry analysts do not continue to publish research or reports about our business, or if they change their recommendations regarding our stock adversely, our stock price~~SEC investigation, see Note 10, Commitments and ~~trading volume could decline.~~

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of the analysts who cover us downgrade our stock, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Our principal stockholders and management own a significant percentage of our stock and will be able to exercise significant influence over matters subject to stockholder approval.*

As of October 31, 2017, our executive officers, directors and principal stockholders, together with their respective affiliates, owned approximately 21.21% of our common stock, including shares subject to outstanding options that are exercisable within 60 days after such date and shares issuable upon settlement of restricted stock units that will vest within 60 days after such date. This percentage is based upon information supplied by officers, directors and principal stockholders and Schedules 13D and 13G, if any, filed with the SEC, which information may not be accurate as of July 31, 2017. Accordingly, these stockholders will be able to exert a significant degree of influence over our management and affairs and over matters requiring stockholder approval, including the election of our board of directors and approval of significant corporate transactions. The interests of this group may differ from those of other stockholders and they may vote their shares in a way that is contraryContingencies, to the way other stockholders vote their shares. This concentration of ownership could have the effect of entrenching our management and/or the board of directors, delaying or preventing a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which in turn could have a material and adverse effect on the fair market value of our common stock.

Additional remedial measures that may be imposed in the proceedings instituted by the SEC against five China based accounting firms, including the Chinese affiliate of our independent registered public accounting firm, could result in ourcondensed consolidated financial ~~statements being determined to not be in compliance with the requirements of the Exchange Act.~~statements.

In late 2012, the SEC commenced administrative proceedings under Rule 102(e) of its Rules of Practice and also under the Sarbanes-Oxley Act of 2002 against the Chinese affiliates of the “big four” accounting firms, including PricewaterhouseCoopers Zhong Tian CPAs Limited, the Chinese affiliate of our independent registered public accounting firm. The Rule 102(e) proceedings initiated by the SEC relate to these firms’ failure to produce documents, including audit work papers, in response to the request of the SEC pursuant to Section 106 of the Sarbanes-Oxley Act of 2002, as the auditors located in China are not in a position lawfully to produce documents directly to the SEC because of restrictions under Chinese law and specific directives issued by the China Securities Regulatory Commission (“CSRC”). The issues raised by the proceedings are not specific to our auditors or to us.

In January 2014, an administrative law judge reached an initial decision that the Chinese affiliates of the “big four” accounting firms should be barred from practicing before the SEC for a period of six months. In February 2015, the Chinese affiliates of the “big four” accounting firms each agreed to a censure and to pay a fine to the SEC to settle the dispute and avoid suspension of their ability to practice before the SEC and audit U.S.-listed companies. The settlement required the firms to follow detailed procedures and to seek to provide the SEC with access to Chinese firms’ audit documents via the CSRC. If future document productions fail to meet specified criteria, the SEC retains authority to impose a variety of additional remedial measures on the firms depending on the nature of the failure.

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We cannot predict if the SEC will further review the four firms’ compliance with specified criteria or if such further review would result in the SEC imposing additional penalties such as suspensions or commencing any further administrative proceedings. Although it does not play a substantial role (as defined under PCAOB standards) in the audit of our consolidated financial statements, if PricewaterhouseCoopers Zhong Tian CPAs Limited were denied, temporarily, the ability to practice before the SEC, our ability to produce audited consolidated financial statements for our company could be affected and we could be determined not to be in compliance with the requirements of the Exchange Act. Such a determination could ultimately lead to the delisting of our shares from the NASDAQ Global Select Market or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of our stock.

We may engage in ~~future~~ acquisitions that could ~~disrupt our business, cause dilution to our~~dilute stockholders and harm our ~~business, results of operations, financial condition and cash flows and future prospects.~~business.

~~While we currently have no specific plans to acquire any other businesses, we~~We may, in the future, make acquisitions of or investments in companies that we believe have products or capabilities that are a strategic or commercial fit with our present or future product candidates and business or otherwise offer opportunities for ~~our company.~~us. In connection with these acquisitions or investments, we may:

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issue stock that would dilute our existing stockholders’ percentage of ownership;

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incur debt and assume liabilities; and

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incur amortization expenses related to intangible assets or incur large and immediate write-offs.

We may not be able to complete acquisitions on favorable terms, if at all. If we do complete an acquisition, we cannot assure you that it will ultimately strengthen our competitive position or that it will be viewed positively by customers, financial markets or investors. Furthermore, future acquisitions could pose numerous additional risks to our operations, including:

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problems integrating the purchased business, products or technologies, or employees or other assets of the acquisition target;

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increases to our expenses;

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disclosed or undisclosed liabilities of the acquired asset or company;

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diversion of management’s attention from their day-to-day responsibilities;

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reprioritization of our development programs and even cessation of development and commercialization of our current product candidates;

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harm to our operating results or financial condition;

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entrance into markets in which we have limited or no prior experience; and

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potential loss of key employees, particularly those of the acquired entity.

We may not be able to complete any acquisitions or effectively integrate the operations, products or personnel gained through any such acquisition.

Provisions in our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, ~~even if an acquisition would be beneficial to our stockholders,~~ and may prevent attempts by our stockholders to replace or remove our current directors or management.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may have the effect of discouraging, delaying or preventing a change in control of us or changes in our management. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our ~~board~~Board of ~~directors~~Directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our ~~board~~Board of ~~directors.~~Directors. Among other things, these provisions:

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authorize “blank check” preferred stock, which could be issued by our ~~board~~Board of ~~directors~~Directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock;

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create a classified ~~board~~Board of ~~directors~~Directors whose members serve staggered three-year terms;

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specify that special meetings of ~~Contents~~

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~~specify that special meetings of our stockholders can be called only by our board of directors pursuant to a resolution adopted by a majority of the total number of directors;~~

our stockholders can be called only by our Board of Directors pursuant to a resolution adopted by a majority of the total number of directors;

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prohibit stockholder action by written consent;

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establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our ~~board~~Board of ~~directors;~~

Directors;

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provide that our directors may be removed prior to the end of their term only for cause;

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provide that vacancies on our ~~board~~Board of ~~directors~~Directors may be filled only by a majority of directors then in office, even though less than a quorum;

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•

require a supermajority vote of the holders of our common stock or the majority vote of our ~~board~~Board of ~~directors~~Directors to amend our bylaws; and

•

require a supermajority vote of the holders of our common stock to amend the classification of our ~~board~~Board of ~~directors~~Directors into three classes and to amend certain other provisions of our certificate of incorporation.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management by making it more difficult for stockholders to replace members of our ~~board~~Board of ~~directors,~~Directors, which is responsible for appointing the members of our management.

Moreover, because we are incorporated in Delaware, we are governed by certain anti-takeover provisions under Delaware law which may discourage, delay or prevent someone from acquiring us or merging with us whether or not it is desired by or beneficial to our stockholders. We are subject to the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

Any provision of our amended and restated certificate of incorporation, our amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

~~Our ability to use net operating losses (“NOLs”) to offset future taxable income may be subject to certain limitations.~~

In general, under Section 382 of the Internal Revenue Code of 1986, as amended (“Code”), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOL or tax credits (“credits”), to offset future taxable income. Our existing NOLs or credits may be subject to substantial limitations arising from previous ownership changes, and if we undergo an ownership change our ability to utilize NOLs or credits could be further limited by Section 382 of the Code. In addition, future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Section 382 of the Code. Our NOLs or credits may also be impaired under state law. Accordingly, we may not be able to utilize a material portion of our NOLs or credits. Furthermore, our ability to utilize our NOLs or credits is conditioned upon our attaining profitability and generating U.S. federal and state taxable income. As described above under “— ~~Risks Related to Our Financial Condition and History of Operating Losses~~,” we have incurred significant net losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future; thus, we do not know whether or when we will generate the U.S. federal or state taxable income necessary to utilize our NOLs or credits. A full valuation allowance has been provided for all of our NOLs and credits.

Changes in our tax provision or exposure to additional tax liabilities could adversely affect our earnings and financial condition.

As a multinational corporation, we are subject to income taxes in the U.S. and various foreign jurisdictions. Significant judgment is required in determining our global provision for income taxes and other tax liabilities. In the ordinary course of a global business, there are intercompany transactions and calculations where the ultimate tax determination is uncertain. Our income tax returns are subject to audits by tax authorities. Although we regularly assess the likelihood of adverse outcomes resulting from these examinations to determine our tax estimates, a final determination of tax audits or tax disputes could have an adverse effect on our results of operations and financial condition. In the U.S., comprehensive tax reform has been announced as a priority by the new President’s administration and the U.S. Congress. Various proposals are under evaluation and consideration but it is not possible to accurately ascertain at this time the overall impact of such proposals on our future tax liabilities, profitability, and financial condition.

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We are also subject to non-income taxes, such as payroll, withholding, excise, customs and duties, sales, use, value-added, net worth, property, gross receipts, and goods and services taxes in the ~~U.S,~~U.S., state and local, orand various foreign jurisdictions. We are subject to audit and assessments by tax authorities with respect to these non-income taxes and the determination of these non-income taxes is subject to varying interpretations arising from the complex nature of tax laws and regulations. Therefore, we may have exposure to additional non-income tax liabilities, which could have an adverse effect on our results of operations and financial ~~condition~~.condition.

~~Our amended~~The tax regulations in the U.S. and ~~restated~~other jurisdictions in which we operate are extremely complex and subject to change. Changes in tax regulations could have an adverse effect on our results of operations and financial condition.

Tariffs imposed by the U.S. and those imposed in response by other countries could have a material adverse effect on our business.

Changes in U.S. and foreign governments’ trade policies have resulted in, and may continue to result in, tariffs on imports into and exports from the U.S. Throughout 2018 and 2019, the U.S. imposed tariffs on imports from several countries, including China. In response, China has proposed and implemented their own tariffs on certain products, which may impact our supply chain and our costs of doing business. If we are impacted by the changing trade relations between the U.S. and China, our business and results of operations may be negatively impacted. Continued diminished trade relations between the U.S. and other countries, including potential reductions in trade with China and others, as well as the continued escalation of tariffs, could have a material adverse effect on our financial performance and results of operations.

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Our certificate of incorporation designates ~~the state or federal~~ courts located in ~~the State of~~ Delaware as the sole ~~and exclusive~~ forum for certain ~~types of actions and~~ proceedings, ~~that may be initiated by our stockholders,~~ which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation provides that, subject to limited exceptions, the ~~state and federal courts located in~~Court of Chancery of the State of Delaware ~~will be~~is the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated by-laws, or (4) any other action asserting a claim against us that is governed by the internal affairs doctrine. ~~Any person~~This provision would not apply to suits brought to enforce a duty or ~~entity purchasing or otherwise acquiring any interest~~liability created by the Exchange Act. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. While the Delaware courts determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in ~~shares~~a venue other than that designated in the exclusive forum provisions. For example, one of ~~our capital stock shall be deemed~~the Derivative Litigation was brought in federal court in California, despite the exclusive forum provision. We are currently moving to ~~have notice~~dismiss that lawsuit on the basis of improper forum and we would expect to ~~have consented to~~vigorously assert the validity and enforceability of the exclusive forum provisions of our amended and restated certificate of incorporation ~~described above.~~ in any additional litigations that are brought in a venue other than that designated in the exclusive forum provision. This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. ~~Alternatively, if~~If a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

~~Because we~~We do not ~~anticipate paying any cash dividends on our capital stock in the foreseeable future, capital~~plan to pay dividends. Capital appreciation ~~if any,~~ will be your sole possible source of gain, ~~and you~~which may never ~~receive a return on your investment.~~occur.

You should not rely on an investment in our common stock to provide dividend income. We do not anticipate that we will pay any cash dividends to holders of our common stock in the foreseeable future and investors seeking cash dividends should not purchase our common stock. We plan to retain any earnings to invest in our product candidates and maintain and expand our operations. Therefore, capital appreciation, or an increase in your stock price, which may never occur, may be the only way to realize any return on your investment.

Our business or our share price could be negatively affected as a result of shareholder proposals or actions.

Public companies are facing increasing attention from stakeholders relating to environmental, social and governance matters, including corporate governance, executive compensation, environmental stewardship, social responsibility, and diversity and inclusion. Key stakeholders may advocate for enhanced environmental, social and governance disclosures or policies or may request that we make corporate governance changes or engage in certain corporate actions that we believe are not currently in the best interest of FibroGen or our stockholders. Responding to challenges from stockholders, such as proxy contests or media campaigns, could be costly and time consuming and could have an adverse effect on our reputation, which could have an adverse effect on our business and operational results, and could cause the market price of our common stock to decline or experience volatility.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

~~Use of Proceeds from Initial Public Offering of Common Stock~~Not applicable.

On November 13, 2014, our Registration Statement on Form S-1, as amended (Reg. Nos. 333-199069 and 333-200189) was declared effective in connection with the initial public offering of our common stock. There has been no material change in the planned use of proceeds from our initial public offering as described in our final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act on November 14, 2014.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

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ITEM 5. OTHER INFORMATION.

None.

72ITEM 6. EXHIBITS


Exhibit		Incorporation By Reference
Number	Exhibit Description	Form	SEC File No.	Exhibit	Filing Date

3.1	Amended and Restated Certificate of Incorporation of FibroGen, Inc.	8-K	001-36740	3.1	11/21/2014

3.2	Amended and Restated Bylaws of FibroGen, Inc.	S-1/A	333-199069	3.4	10/23/2014

4.1	Form of Common Stock Certificate.	8-K	001-36740	4.1	11/21/2014

4.2	Common Stock Purchase Agreement by and between FibroGen, Inc. and AstraZeneca AB, dated as of October 20, 2014.	S-1/A	333-199069	4.17	10/24/2014

10.1	Amended and Restated Equity Distribution Agreement by and between FibroGen, Inc. and Goldman Sachs & Co. LLC and BofA Securities, Inc., dated February 27, 2023.	10-K	001-36740	10.44	02/27/2023

10.2*†	Amendment No. 1 to Commercial Supply Agreement (Roxadustat) by and between FibroGen, Inc. and its Affiliates and Catalent Pharma Solutions, LLC dated as of January 1, 2023.	—	—	—	—

10.3*+	FibroGen, Inc. Non-Employee Director Compensation Policy, as amended.	—	—	—	—

10.4*+	Form of Executive Officer Change in Control and Severance Agreement.	—	—	—	—

31.1*	Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a).	—	—	—	—

31.2*	Certification of Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a).	—	—	—	—

32.1*	Certification of Principal Executive Officer and Principal Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350)(1)).	—	—	—	—

101.INS	Inline XBRL Instance Document: the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	—	—	—	—

101.SCH	Inline XBRL Taxonomy Extension Schema Document	—	—	—	—

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	—	—	—	—

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	—	—	—	—

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	—	—	—	—

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	—	—	—	—

104	Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.)	—	—	—	—

* Filed herewith

† Portions of this exhibit (indicated by asterisks) have been omitted as the Company has determined that (i) the omitted information is not material and (ii) the omitted information would likely cause competitive harm if publicly disclosed or is the type of information the Company treats as confidential.

+ Indicates a management contract or compensatory plan.

Table of Contents

SIGNATURES

~~ITEM 6. EXHIBITS.~~

Exhibit

Incorporation By Reference
Number

Exhibit Description

Form

SEC File No.

Exhibit

Filing Date

  3.1

Amended and Restated Certificate of Incorporation of FibroGen, Inc.

8-K

001-36740

3.1

11/21/2014

  3.2

Amended and Restated Bylaws of FibroGen, Inc.

S-1/A

333-199069

3.4

10/23/2014

  4.1

Form of Common Stock Certificate.

8-K

001-36740

4.1

11/21/2014

  4.2

Investor Rights Agreement by and among FibroGen, Inc. and certain of its stockholders, dated as of December 1995.

S-1

333-199069

4.2

10/01/2014

  4.3

Investor Rights Agreement by and among FibroGen, Inc. and certain of its warrant holders, dated as of February 8, 2000.

S-1

333-199069

4.7

10/01/2014

  4.4

Warrant to Purchase 11,076 Shares of Common Stock issued to Bristow Investments, L.P, dated as of February 8, 2000.

S-1

333-199069

4.12

10/01/2014

  4.5

Common Stock Purchase Agreement by and between FibroGen, Inc. and AstraZeneca AB, dated as of October 20, 2014.

S-1/A

333-199069

4.17

10/24/2014

  4.6*

Shareholders’ Agreement by and among FibroGen International (Cayman) Limited and certain of its shareholders, dated as of September 8, 2017.

—

—

—

—

10.9*

Collaboration Agreement, by and between FibroGen, Inc. and Astellas Pharma Inc., effective as of June 1, 2005.

—

—

—

—

31.1*

Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a).

—

—

—

—

31.2*

Certification of Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a).

—

—

—

—

32.1*

Certification of Principal Executive Officer and Principal Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350)(1)).

—

—

—

—

101*

Financial statements from the quarterly report on Form 10-Q of the Company for the quarter ended September 30, 2017, formatted in XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations (iii) the Condensed Consolidated Statement of Comprehensive Loss, (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Condensed Consolidated Financial Statements.

—

—

—

—

*	~~Filed herewith~~

~~Table of Contents~~

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	FibroGen, Inc.

~~Dated: November~~Date: May 8, ~~2017~~2023	By:	/s/ ~~Thomas B. Neff~~Enrique Conterno
		~~Thomas B. Neff~~Enrique Conterno
		~~Chairman of the Board and~~ Chief Executive Officer
		(Principal Executive Officer)


~~Dated: November~~Date: May 8, ~~2017~~2023	By:	/s/ ~~Pat Cotroneo~~Juan Graham
		~~Pat Cotroneo~~Juan Graham
		Senior Vice President ~~Finance~~ and Chief Financial Officer
		(Principal Financial and Accounting Officer)


409 Illinois Street
San Francisco, CA		94158
(Address of Principal Executive Offices)		(Zip Code)


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	FGEN	The Nasdaq Global Select Market


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
		Emerging growth company	☐


		Page
PART I—FINANCIAL INFORMATION

Item 1.	~~Condensed Consolidated~~ Financial Statements ~~(Unaudited)~~	32
	Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016~~2022 (Unaudited)	32
	Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 (Unaudited)	43
	Condensed Consolidated Statements of Comprehensive Loss for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 (Unaudited)	54
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2023 and 2022 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2023 and ~~2016~~2022 (Unaudited)	6
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1724
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3140
Item 4.	Controls and Procedures	3140

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	3342
Item 1A.	Risk Factors	3342
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7280
Item 3.	Defaults Upon Senior Securities	7280
Item 4.	Mine Safety Disclosures	7280
Item 5.	Other Information	7281
Item 6.	Exhibits	7381
	Signatures	7482

	September 30, 2017			December 31, 2016
				(Note 1)			March 31, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	651,373		$	173,782		$	188,550		$	155,700
Short-term investments		78,599			79,397			167,399			266,308
Accounts receivable ($4,580 and $4,102 from a related party)		8,628			10,448
Accounts receivable, net ($11,563 and $12,088 from related parties)								17,654			16,299
Inventories								42,456			40,436
Prepaid expenses and other current assets		2,856			2,889			14,490			14,083
Total current assets		741,456			266,516			430,549			492,826

Restricted time deposits		6,217			6,217			2,072			2,072
Long-term investments		16,767			71,010			—			4,348
Property and equipment, net		126,643			123,657			18,693			20,605
Equity method investment in unconsolidated variable interest entity								5,884			5,061
Operating lease right-of-use assets								76,674			79,893
Other assets		3,809			2,152			4,672			5,282
Total assets	$	894,892		$	469,552		$	538,544		$	610,087

Liabilities, stockholders’ equity and non-controlling interests
Liabilities, stockholders’ equity (deficit) and non-controlling interests
Current liabilities:
Accounts payable	$	6,407		$	6,223
Accrued liabilities ($479 and $1,615 to related parties)		54,117			50,914
Deferred revenue		7,974			7,988
Accounts payable ($57,499 and $0 to a related party)							$	71,282		$	30,758
Accrued and other current liabilities ($19,594 and $63,886 to a related party)								157,042			219,773
Deferred revenue ($13,129 and $9,259 to related parties)								16,495			12,739
Operating lease liabilities, current								9,927			10,292
Total current liabilities		68,498			65,125			254,746			273,562

Long-term portion of lease financing obligations		97,370			97,352
Product development obligations		16,922			14,854			17,276			16,917
Deferred rent		3,799			4,212
Deferred revenue, net of current		110,844			106,709
Other long-term liabilities		6,690			6,191
Deferred revenue, net of current ($10,245 and $31,044 to a related party)								163,089			185,722
Operating lease liabilities, non-current								76,885			79,593
Liability related to sale of future revenues, non-current								48,370			49,333
Other long-term liabilities ($1,618 and $0 to a related party)								7,063			6,440
Total liabilities		304,123			294,443			567,429			611,567

Commitments and Contingencies
Commitments and Contingencies (Note 10)

Stockholders’ equity:
Preferred stock, $0.01 par value; 125,000 shares authorized at September 30, 2017 and December 31, 2016; no shares issued and outstanding at September 30, 2017 and December 31, 2016		—			—
Common stock, $0.01 par value; 225,000 shares authorized at September 30, 2017 and December 31, 2016; 81,814 and 63,665 shares issued and outstanding at September 30, 2017 and December 31, 2016		818			637
Stockholders’ deficit:
Preferred stock, $0.01 par value; 125,000 shares authorized; no shares issued and outstanding at March 31, 2023 and December 31, 2022								—			—
Common stock, $0.01 par value; 225,000 shares authorized at March 31, 2023 and December 31, 2022; 96,623 and 94,166 shares issued and outstanding at March 31, 2023 and December 31, 2022								966			942
Additional paid-in capital		1,146,112			625,903			1,589,145			1,541,019
Accumulated other comprehensive loss		(1,609	)		(960	)		(4,570	)		(5,720	)
Accumulated deficit		(573,823	)		(469,742	)		(1,634,393	)		(1,557,688	)
Total stockholders’ equity		571,498			155,838
Total stockholders’ deficit								(48,852	)		(21,447	)
Non-controlling interests		19,271			19,271			19,967			19,967
Total equity		590,769			175,109
Total liabilities, stockholders’ equity and non-controlling interests	$	894,892		$	469,552
Total deficit								(28,885	)		(1,480	)
Total liabilities, stockholders’ deficit and non-controlling interests							$	538,544		$	610,087


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


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


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2023			2022
Revenue:
License and milestone revenue (includes $4,125, $4,371, $11,652 and $20,727 from a related party)	$	19,997		$	20,867		$	60,930		$	113,802
Collaboration services and other revenue (includes $445, $436, $1,230 and $1,114 from a related party)		7,275			9,235			22,230			33,863
License revenue (includes $0 and $22,590 from a related party)													$	6,000		$	22,590
Development and other revenue (includes $1,624 and $5,180 from a related party)														3,891			11,762
Product revenue, net (includes $21,372 and $16,223 from a related party)														24,161			18,881
Drug product revenue (includes $2,109 and $7,594 from a related party)														2,109			7,594
Total revenue		27,272			30,102			83,160			147,665			36,161			60,827

Operating expenses:
Operating costs and expenses:
Cost of goods sold														3,491			4,238
Research and development		50,336			40,558			144,049			136,599			74,486			89,018
General and administrative		12,953			11,646			37,908			33,440
Total operating expenses		63,289			52,204			181,957			170,039
Selling, general and administrative														34,275			30,564
Total operating costs and expenses														112,252			123,820
Loss from operations		(36,017	)		(22,102	)		(98,797	)		(22,374	)		(76,091	)		(62,993	)

Interest and other, net
Interest expense		(2,769	)		(2,760	)		(7,901	)		(7,975	)		(2,372	)		(97	)
Interest income and other, net		1,106			866			2,783			2,411
Interest income and other income (expenses), net														1,036			(322	)
Total interest and other, net		(1,663	)		(1,894	)		(5,118	)		(5,564	)		(1,336	)		(419	)

Loss before income taxes		(37,680	)		(23,996	)		(103,915	)		(27,938	)		(77,427	)		(63,412	)
Provision for (benefit from) income taxes		57			158			166			(260	)
Provision for income taxes														74			113
Investment income in unconsolidated variable interest entity														796			320
Net loss	$	(37,737	)	$	(24,154	)	$	(104,081	)	$	(27,678	)	$	(76,705	)	$	(63,205	)

Net loss per share - basic and diluted	$	(0.50	)	$	(0.38	)	$	(1.49	)	$	(0.44	)	$	(0.81	)	$	(0.68	)

Weighted average number of common shares used to calculate net loss per share - basic and diluted		75,891			62,858			69,899			62,543			94,691			93,043


	For The Three Month Period
	Common Stock				Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Non Controlling
	Shares		Amount		Capital			Income (Loss)			Deficit			Interests		Total
Balance at December 31, 2022		94,166,086	$	942	$	1,541,019		$	(5,720	)	$	(1,557,688	)	$	19,967	$	(1,480	)
Net loss		—		—		—			—			(76,705	)		—		(76,705	)
Change in unrealized gain or loss on investments		—		—		—			1,398			—			—		1,398
Foreign currency translation adjustments		—		—		—			(248	)		—			—		(248	)
Issuance of common stock under ATM Program		1,541,579		15		31,116			—			—			—		31,131
Shares issued from stock plans, net of payroll taxes paid		915,644		9		898			—			—			—		907
Stock-based compensation		—		—		16,112			—			—			—		16,112
Balance at March 31, 2023		96,623,309	$	966	$	1,589,145		$	(4,570	)	$	(1,634,393	)	$	19,967	$	(28,885	)

Balance at December 31, 2021		92,880,533	$	929	$	1,476,414		$	(4,163	)	$	(1,264,034	)	$	19,967	$	229,113
Net loss		—		—		—			—			(63,205	)		—		(63,205	)
Change in unrealized gain or loss on investments		—		—		—			(2,591	)		—			—		(2,591	)
Foreign currency translation adjustments		—		—		—			249			—			—		249
Shares issued from stock plans, net of payroll taxes paid		408,051		4		(2,707	)		—			—			—		(2,703	)
Stock-based compensation		—		—		17,152			—			—			—		17,152
Balance at March 31, 2022		93,288,584	$	933	$	1,490,859		$	(6,505	)	$	(1,327,239	)	$	19,967	$	178,015


		Three Months Ended March 31,
Agreement	Performance Obligation	2023		2022
Astellas Japan Agreement	License revenue	$	—	$	—
	Development revenue	$	95	$	32


Astellas Japan Agreement	Total Consideration Through March 31, 2023
License	$	100,347
Development revenue		16,977
Total license and development revenue	$	117,324


Astellas Europe Agreement	Total Consideration Through March 31, 2023
License	$	618,975
Development revenue		281,794
Total license and development revenue	$	900,769

	Cumulative Revenue Through September 30, 2017		Deferred Revenue at September 30, 2017		Total Consideration Through September 30, 2017
License	$	46,646	$	—	$	46,646
When and if available compounds		24		24		48
Manufacturing--clinical supplies		2,164		—		2,164
Committee services		21		—		21
Total license and collaboration services revenue	$	48,855	$	24	$	48,879


AstraZeneca U.S./RoW Agreement and AstraZeneca China Agreement	Cumulative Revenue Through March 31, 2023		Deferred Revenue at March 31, 2023			Total Consideration Through March 31, 2023
License	$	341,844	$	—		$	341,844
Co-development, information sharing & committee services		617,670		—			617,670
China performance obligation *		128,106		175,326			303,432
Total license and development revenue	$	1,087,620	$	175,326	**	$	1,262,946


	Balance at December 31, 2022			Additions			Recognized as Revenue		Currency Translation and Other			Balance at March 31, 2023
Product revenue - AstraZeneca China performance obligation - deferred revenue	$	(175,646	)	$	(20,889	)	$	21,372	$	(163	)	$	(175,326	)


	Three Months Ended March 31,
	2023		2022
Employee stock options		7,578		9,484
RSUs, PRSUs and TSR awards		2,762		2,196
ESPP		362		473
		10,702		12,153


Entity	Ownership Percentage			Balance at December 31, 2022		Share of Net Income		Currency Translation		Balance at March 31, 2023
Falikang		51.1	%	$	5,061	$	796	$	27	$	5,884

	September 30, 2017
	Level 1		Level 2		Level 3		Total		March 31, 2023
									Level 1		Level 2		Level 3		Total
Money market funds									$	42,740	$	—	$	—	$	42,740
Corporate bonds	$	—	$	75,872	$	—	$	75,872		—		41,304		—		41,304
Bond and mutual funds		18,251		—		—		18,251
Equity investments		207		—		—		207
Money market funds		546,498		—		—		546,498
Certificate of deposits		—		1,036		—		1,036
Commercial paper										—		42,970		—		42,970
U.S. government bonds										57,141		14,425		—		71,566
Agency bonds										—		9,075		—		9,075
Asset-backed securities										—		2,484		—		2,484
Total	$	564,956	$	76,908	$	—	$	641,864	$	99,881	$	110,258	$	—	$	210,139

	December 31, 2016								December 31, 2022
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Money market funds									$	19,881	$	—	$	—	$	19,881
Corporate bonds	$	—	$	126,683	$	—	$	126,683		—		82,008		—		82,008
Bond and mutual funds		22,462		—		—		22,462
Equity investments		225		—		—		225
Money market funds		94,543		—		—		94,543
Certificate of deposits		—		1,037		—		1,037
Commercial paper										—		57,381		—		57,381
U.S. government bonds										98,972		12,373		—		111,345
Agency bonds										—		11,468		—		11,468
Asset-backed securities										—		2,474		—		2,474
Foreign government bonds										—		4,980		—		4,980
Convertible promissory note										—		—		1,000		1,000
Total	$	117,230	$	127,720	$	—	$	244,950	$	118,853	$	170,684	$	1,000	$	290,537


	Three Months Ended March 31, 2023
Liability related to sale of future revenues - beginning balance	$	49,333
Interest expense recognized		2,249
Liability related to sale of future revenues - ending balance		51,582
Less: Current portion classified to accrued and other current liabilities		(3,212	)
Liability related to sale of future revenues, non-current	$	48,370


	Cash Received for Upfront Payments and Milestone Payments Through March 31, 2023		Additional Potential Cash Payment for Milestones		Total Potential Cash Payments for Upfront Payments and Milestones
	(in thousands)
Astellas--related-party:
Astellas Japan Agreement	$	105,093	$	67,500	$	172,593
Astellas Europe Agreement		685,000		60,000		745,000
Total Astellas		790,093		127,500		917,593
AstraZeneca:
AstraZeneca U.S./RoW Agreement		439,000		810,000		1,249,000
AstraZeneca China Agreement		77,200		299,500		376,700
Total AstraZeneca		516,200		1,109,500		1,625,700
Total	$	1,306,293	$	1,237,000	$	2,543,293

	Cash Received Through September 30, 2017		Additional Potential Cash Payments		Total Potential Cash Payments
	(in thousands)
Astellas--related-party:
Japan Agreement	$	62,593	$	110,000	$	172,593
Europe Agreement		410,000		335,000		745,000
Total Astellas		472,593		445,000		917,593
AstraZeneca:
U.S. / RoW Agreement		389,000		860,000		1,249,000
China Agreement		28,200		348,500		376,700
Total AstraZeneca		417,200		1,208,500		1,625,700
Total revenue	$	889,793	$	1,653,500	$	2,543,293


	Three Months Ended September 30,				Change							Nine Months Ended September 30,				Change							Three Months Ended March 31,				Change
	2017		2016		$			%				2017		2016		$			%				2023		2022		$			%
	(dollars in thousands)																						(dollars in thousands)
Revenue:
License and milestone revenue	$	19,997	$	20,867	$	(870	)		(4	)	%	$	60,930	$	113,802	$	(52,872	)		(46	)	%
Collaboration services and other revenue		7,275		9,235		(1,960	)		(21	)	%		22,230		33,863		(11,633	)		(34	)	%
License revenue																							$	6,000	$	22,590	$	(16,590	)		(73	)	%
Development and other revenue																								3,891		11,762		(7,871	)		(67	)	%
Product revenue, net																								24,161		18,881		5,280			28		%
Drug product revenue																								2,109		7,594		(5,485	)		(72	)	%
Total revenue	$	27,272	$	30,102	$	(2,830	)		(9	)	%	$	83,160	$	147,665	$	(64,505	)		(44	)	%	$	36,161	$	60,827	$	(24,666	)		(41	)	%