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Collaboration Agreements | 6 Months Ended
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Jun. 30, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract] |
Collaboration Agreements |
2. | Collaboration Agreements
Astellas Agreements Japan Agreement In June 2005, the Company entered into a collaboration agreement with Astellas for the development and commercialization (but not manufacture) of roxadustat for the treatment of anemia in Japan (“Japan Agreement”). Under this agreement, Astellas paid license fees and other consideration totaling $40.1 million (such amounts were fully received as of February 2009). Under the Japan Agreement, the Company is also eligible to receive from Astellas an aggregate of approximately $132.5 million in potential milestone payments, comprised of (i) up to $22.5 million in milestone payments upon achievement of specified clinical and development milestone events (such amounts were fully received as of July 2016), (ii) up to $95.0 million in milestone payments upon achievement of specified regulatory milestone events, and (iii) up to approximately $15.0 million in milestone payments upon the achievement of specified commercial sales milestone. The aggregate amount of such consideration received through June 30, 2019 totals $77.6 million. Europe Agreement 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 (“Europe Agreement”). Under the terms of the Europe Agreement, Astellas paid license fees and other upfront consideration totaling $320.0 million (such amounts were fully received as of February 2009). Under the Europe Agreement, the Company is also eligible to receive from Astellas an aggregate of approximately $425.0 million in potential milestone payments, comprised of (i) up to $90.0 million in milestone payments upon achievement of specified clinical and development milestone events (such amounts were fully received as of 2012), (ii) up to $335.0 million in milestone payments upon achievement of specified regulatory milestone events. Under the Europe Agreement, Astellas committed to fund 50% of joint development costs for Europe and North America, and all territory-specific costs. The Europe Agreement also provides for tiered payments based on net sales of product (as defined) in the low 20% range. The aggregate amount of such consideration received through June 30, 2019 totals $410.0 million. In the fourth quarter of 2018, the Company was engaged in the final stages of review with its partners over the proposed development of roxadustat for the treatment of chemotherapy induced anemia (“CIA”). AstraZeneca and Astellas approved the program in December 2018 and January 2019, respectively. Costs associated with the development of this indication are expected to be shared 50/50 between AstraZeneca and Astellas. For revenue recognition purposes, the Company concluded that this new indication represents a modification to the Europe agreements and will be accounted for separately, meaning the development costs associated with the new indications are distinct from the original development costs. The development service period for roxadustat for the treatment of CIA under the Europe Agreement is estimated to continue through the end of 2023 to allow for development of this indication. During the second quarter of 2019, the Company received positive topline results from analyses of pooled major adverse cardiac event (“MACE”) and MACE+ data from its Phase 3 trials evaluating roxadustat as a treatment for dialysis and non-dialysis CKD patients, enabling Astellas to prepare for an MAA submission to the EMA during their fiscal year 2019, which ends on March 31, 2020, following the Company’s NDA submission to the FDA. The Company evaluated the two regulatory milestone payments associated with the planned MAA submission and concluded that these milestones became probable of being achieved in the second quarter of 2019. Accordingly, the total consideration of $130.0 million associated with these milestones was included in the transaction price and allocated to performance obligations under the Europe Agreement in the second quarter of 2019, of which $129.5 million was recognized as revenue during the period from performance obligations satisfied or partially satisfied as of June 30, 2019. According to the Europe Agreement, these milestone payments are not billable to Astellas until the submission of an MAA, therefore this $130.0 million was recorded as an unbilled contract asset as of June 30, 2019. AstraZeneca Agreements U.S./Rest of World (“RoW”) Agreement Effective July 30, 2013, the Company entered into a collaboration agreement with 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 (“U.S./RoW Agreement”). It also excludes China, which is covered by a separate agreement with AstraZeneca described below. Under the terms of the U.S./RoW Agreement, AstraZeneca paid upfront, non-contingent, non-refundable and time-based payments totaling $374.0 million (such amounts were fully received as of June 2016). Under the U.S./RoW Agreement, the Company is also eligible to receive from AstraZeneca an aggregate of approximately $875.0 million in potential milestone payments, comprised of (i) up to $65.0 million in milestone payments upon achievement of specified clinical and development milestone events, $15.0 million of which was received in 2015 as a result of the finalization of its two audited pre-clinical carcinogenicity study reports, (ii) up to $325.0 million in milestone payments upon achievement of specified regulatory milestone events, (iii) up to $160.0 million in milestone payments related to activity by potential competitors and (iv) up to approximately $325.0 million in milestone payments upon the achievement of specified commercial sales events. The aggregate amount of such consideration received through June 30, 2019 totals $389.0 million. As mentioned above, during the second quarter of 2019, the Company received positive topline results from analyses of pooled MACE and MACE+ data from its Phase 3 trials for roxadustat, enabling the Company’s NDA submission to the FDA. The Company evaluated the regulatory milestone payment associated with this planned NDA submission and concluded that this milestone became probable of being achieved in the second quarter of 2019. Accordingly, the consideration of $50.0 million associated with this milestone was included in the transaction price and allocated to performance obligations under the U.S./ RoW Agreement in the second quarter of 2019, of which $41.6 million was recognized as revenue during the period from performance obligations satisfied or partially satisfied as of June 30, 2019. According to the U.S/RoW Agreement, this milestone payment is not billable to AstraZeneca until the Company has submitted the NDA, therefore this $50.0 million was recorded as an unbilled contract asset as of June 30, 2019. China Agreement Effective July 30, 2013, the Company (through its subsidiaries affiliated with China) entered into a collaboration agreement with AstraZeneca for the development and commercialization (but not manufacture) of roxadustat for the treatment of anemia in China (“China Agreement”). Under the terms of the China Agreement, AstraZeneca paid upfront, non-contingent and non-refundable payments totaling $28.2 million (such amounts were fully received in 2014). Under the China Agreement, the Company is also eligible to receive from AstraZeneca an aggregate of approximately $348.5 million in potential milestone payments, comprised of (i) up to $15.0 million in milestone payments upon achievement of specified clinical and development milestone events, (ii) up to $146.0 million in milestone payments upon achievement of specified regulatory milestone events, and (iii) up to approximately $187.5 million in milestone payments upon the achievement of specified commercial sales and other events. The China Agreement is structured as a 50/50 profit or loss share (as defined) 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. The aggregate amount of such consideration received through June 30, 2019 totals $55.2 million. As mentioned above, in the fourth quarter of 2018, the Company was engaged in the final stages of review with its partners over the proposed development of roxadustat for the treatment of CIA. AstraZeneca and Astellas approved the program in December 2018 and January 2019, respectively. Costs associated with the development of this indication are expected to be shared 50/50 between AstraZeneca and Astellas. In addition to CIA, in December 2018, anemia of chronic inflammation (“ACI”) and multiple myeloma (“MM”) have been approved for development by AstraZeneca and is expected to be fully funded by them. For revenue recognition purposes, the Company concluded that the addition of these new indications represents a modification to the collaboration agreements and will be accounted for separately, meaning the development costs associated with the new indications are distinct from the original development costs. The development service period for roxadustat for the treatment of CIA, ACI and MM under the AstraZeneca agreements is estimated to continue through the end of 2024, to allow for development of these additional indications. On December 17, 2018, FibroGen (China) Medical Technology Development Co., Ltd. (“FibroGen Beijing”), received marketing authorization from the NMPA for roxadustat, a first-in-class HIF-PH inhibitor, for the treatment of anemia caused by CKD in patients on dialysis. This approval triggered a $6.0 million milestone payable to the Company by AstraZeneca. On December 29, 2018, FibroGen Beijing received First Manufacturing Approval for a Product in the Field in the Territory, which allows production for Phase IV clinical studies, patients’ early experience programs, donation programs, as well as to supply products for testing and assessments required prior to launch. This approval triggered a $6.0 million milestone payable to the Company by AstraZeneca. These milestones payments were received in the first quarter of 2019. Summary of Revenue Recognized Under the Collaborati on Agreements The table below summarizes the accounting treatment for the various performance obligations pursuant to each of the Astellas and AstraZeneca agreements. License amounts identified below are included in the “License revenue” line item in the condensed consolidated statements of operations. All other elements identified below are included in the “Development and other revenue” line item in the condensed consolidated statements of operations. Amounts recognized as revenue under the Japan Agreement were as follows (in thousands):
|  |  |  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
Agreement |  | Performance Obligation |  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Japan |  | License revenue |  | $ | — |  |  | $ | 14,323 |  |  | $ | — |  |  | $ | 14,323 |
|  | Development revenue |  | $ | 369 |  |  | $ | 1,142 |  |  | $ | 615 |  |  | $ | 1,591 |
The transaction price related to consideration received and accounts receivable has been allocated to each of the following performance obligations under the Japan Agreement, along with any associated deferred revenue as follows (in thousands):
Japan Agreement |  | Cumulative Revenue Through June 30, 2019 |  |  | Deferred Revenue at June 30, 2019 |  |  | Total Consideration Through June 30, 2019 |
License |  | $ | 74,089 |  |  | $ | — |  |  | $ | 74,089 |
Development revenue |  |  | 14,523 |  |  |  | 136 |  |  |  | 14,659 |
Total license and development revenue |  | $ | 88,612 |  |  | $ | 136 |  |  | $ | 88,748 |
The revenue recognized under the Japan Agreement for the three months ended June 30, 2019 included an immaterial amount resulting from changes to estimated variable consideration in the current period relating to performance obligations satisfied or partially satisfied in previous periods. The remainder of the transaction price related to the Japan Agreement includes $0.5 million of variable consideration from estimated future co-development billing and is expected to be recognized over the remaining development service period. Amounts recognized as revenue under the Europe Agreement were as follows (in thousands):
|  |  |  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
Agreement |  | Performance Obligation |  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Europe |  | License revenue |  | $ | 117,470 |  |  | $ | — |  |  | $ | 117,470 |  |  | $ | — |
|  | Development revenue |  | $ | 16,854 |  |  | $ | 5,003 |  |  | $ | 21,467 |  |  | $ | 9,726 |
The transaction price related to consideration received and accounts receivable has been allocated to each of the following performance obligations under the Europe Agreement, along with any associated deferred revenue as follows (in thousands):
Europe Agreement |  | Cumulative Revenue Through June 30, 2019 |  |  | Deferred Revenue at June 30, 2019 |  |  | Total Consideration Through June 30, 2019 |
License |  | $ | 487,951 |  |  | $ | — |  |  | $ | 487,951 |
Development revenue |  |  | 224,304 |  |  |  | 2,019 |  |  |  | 226,323 |
Total license and development revenue |  | $ | 712,255 |  |  | $ | 2,019 |  | * | $ | 714,274 |
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* | Contract assets and liabilities related to rights and obligations in the same contract are recorded net on the condensed consolidated balance sheets. As of June 30, 2019, prepaid expenses and other current assets included a net unbilled contract asset of $128.0 million related to the Europe Agreement, which represents the net of the above-mentioned unbilled contract asset of $130.0 million, and $2.0 million of deferred revenue presented above.
The revenue recognized under the Europe Agreement for the three months ended June 30, 2019 included an increase in revenue of $129.2 million resulting from changes to estimated variable consideration in the current period relating to performance obligations satisfied or partially satisfied in previous periods. The remainder of the transaction price related to the Europe Agreement includes $9.4 million of variable consideration from estimated future co-development billing and is expected to be recognized over the remaining development service period. Amounts recognized as revenue under the U.S./RoW Agreement were as follows (in thousands):
|  |  |  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
Agreement |  | Performance Obligation |  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
U.S. / RoW and China |  | License revenue |  | $ | 33,111 |  |  | $ | — |  |  | $ | 33,111 |  |  | $ | — |
|  | Development revenue |  |  | 23,762 |  |  |  | 23,479 |  |  |  | 42,766 |  |  |  | 50,202 |
|  | China performance obligation |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
The transaction price related to consideration received and accounts receivable has been allocated to each of the following performance obligations under the U.S./RoW Agreement and China Agreement, along with any associated deferred revenue as follows (in thousands):
U.S. / RoW and China Agreements |  | Cumulative Revenue Through June 30, 2019 |  |  | Deferred Revenue at June 30, 2019 |  |  | Total Consideration Through June 30, 2019 |
License |  | $ | 327,275 |  |  | $ | — |  |  | $ | 327,275 |
Co-development, information sharing & committee services |  |  | 451,402 |  |  |  | 16,342 |  |  |  | 467,744 |
China performance obligation |  |  | — |  |  |  | 136,584 |  |  |  | 136,584 |
Total license and development revenue |  | $ | 778,677 |  |  | $ | 152,926 |  | * | $ | 931,603 |
_______________________________________________________________________________________________________
* | Contract assets and liabilities related to rights and obligations in the same contract are recorded net on the condensed consolidated balance sheets. As of June 30, 2019, long-term deferred revenue included $102.9 million related to the U.S./RoW and China Agreement, which represents the net of $152.9 million of deferred revenue presented above and the above-mentioned $50.0 million unbilled contract asset.
The revenue recognized under the U.S./RoW Agreement for the three months ended June 30, 2019 included an increase in revenue of $41.9 million resulting from changes to estimated variable consideration in the current period relating to performance obligations satisfied or partially satisfied in previous periods. The remainder of the transaction price related to the U.S./RoW Agreement and China Agreement includes $149.4 million of 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, which are expected to be recognized in a pattern consistent with estimated deliveries of the commercial drug product. Other Revenues Other revenues consist primarily of collagen material sold for research purposes. Other revenues were immaterial for all periods presented. Deferred Revenue Deferred revenue represents amounts billed, or in certain cases, yet to be billed to the Company’s collaboration partners for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met. The current portion of deferred revenue represents the amount to be recognized within one year from the balance sheet date based on the estimated performance period of the underlying performance obligations. The long term portion of deferred revenue represents amounts to be recognized after one year through the end of the non-contingent performance period of the underlying performance obligations. Deferred revenue includes amounts allocated to the China unit of accounting under the AstraZeneca arrangement as revenue recognition associated with this unit of accounting is tied to the commercial launch of the products within China. As of December 31, 2018, such deferred revenue was included in long-term deferred revenue. As of June 30, 2019, following receipt of the Chinese Good Manufacturing Practices license by FibroGen Beijing in the second quarter of 2019, approximately $0.5 million of the related deferred revenue was included in short-term deferred revenue, which represents the amount of deferred revenue associated with the China unit of accounting that is expected to be recognized as a result of the transfer of control of commercial drug product in China.

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