Leases

12 Months Ended

Dec. 31, 2024

5. Leases

As part of its continuing efforts to reduce operating expenses and preserve cash, on September 27, 2024, the Company entered into an Agreement for Termination of Lease and Voluntary Surrender of Premises (“Lease Termination Agreement”) with its landlord, ARE-San Francisco No.43 Owner, LLC (“ARE”) related to the Company’s operating lease of its corporate headquarters in San Francisco, California. The Lease Termination Agreement modifies the lease agreement dated as of September 22, 2006, as subsequently amended and accelerates the expiration date of the term of the Lease from 2028 to no later than December 31, 2024.

Pursuant to the Lease Termination Agreement, the Company paid ARE a total consideration of $10.0 million settlement amount, consisting of a $8.3 million of a one-time cash payment by FibroGen for past rent, FibroGen’s share of operating costs, taxes, insurance, utilities, and other costs and a lease modification payment; and a $1.7 million security deposit, in the form of a letter of credit. As of execution of this Lease Termination Agreement, FibroGen is not responsible for the payment of any further rent payments or operating costs, taxes, insurance, utilities, or any other scheduled monthly payments due under the lease to ARE.

The Company ceased the use of the underlying operating lease right-of-use asset by September 30, 2024. As a result, during the third quarter of 2024, the Company derecognized the related operating lease right-of-use asset of $56.1 million and operating lease liabilities of $68.5 million, and recorded an approximately $1.7 million gain as credits to the selling, general and administrative expenses for the year ended December 31, 2024. As of December 31, 2024, the Company did not have any operating lease and restricted time deposit.

In addition, the Company has several immaterial lease arrangements in the U.S. for office equipment, with contracted lease terms up to six years, treated as finance leases.

The Company’s operating and finance leases were classified within the consolidated balance sheets as held for sale for all periods presented. See Note 3, Discontinued Operations, for details.

The Company’s lease assets and related lease liabilities were as follows (in thousands):


		December 31,
	Balance Sheet Line Item	2024			2023
Assets
Finance:
Right-of-use assets cost		$	1,767		$	1,766
Accumulated amortization			(1,670	)		(1,634	)
Finance lease right-of-use assets, net	Other assets		97			132
Operating:
Right-of-use assets cost			—			93,360
Accumulated amortization			—			(28,421	)
Operating lease right-of-use assets, net	Operating lease right-of-use assets		—			64,939
Total lease assets		$	97		$	65,071

Liabilities
Current:
Finance lease liabilities	Accrued and other current liabilities	$	34		$	32
Operating lease liabilities	Operating lease liabilities, current		—			12,647
Non-current:
Finance lease liabilities	Other long-term liabilities		70			103
Operating lease liabilities	Operating lease liabilities, non-current		—			65,033
Total lease liabilities		$	104		$	77,815

The components of lease expense were as follows (in thousands):


		Years Ended December 31,
	Statement of Operations Line Item	2024			2023
Finance lease cost:
Amortization of right-of-use assets	Cost of goods sold; Research and development; Selling, general and administrative expenses	$	35		$	406
Operating lease cost	Cost of goods sold; Research and development; Selling, general and administrative expenses		9,722			15,175
Sublease income	Selling, general and administrative expenses		(1,125	)		(3,024	)
Total lease cost		$	8,632		$	12,557

Lease term and discount rate were as follows:


	December 31,
	2024			2023
Weighted-average remaining lease term (years):
Finance leases		3.0			3.9
Operating leases		—			4.8
Weighted-average discount rate:
Finance leases		6.26	%		6.17	%
Operating leases		—	%		4.75	%

Supplemental cash flow information related to leases in the U.S. and China were as follows (in thousands):


	Years Ended December 31,
	2024			2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	22,601		$	14,463
Operating cash flows from finance leases		6			9
Financing cash flows from finance leases		40			148
Non-cash: Right-of-use assets obtained in exchange for new lease liabilities:
Finance leases		(16	)		131
Operating leases		55			1,278