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Dive Brief:
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FibroGen agreed to sell its Chinese subsidiary to AstraZeneca in a deal worth $160 million, giving the biotech funds to pay off a loan and extend its cash runway.
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The transaction allows FibroGen to keep about $75 million in cash currently held in China and receive another $85 million from AstraZeneca, FibroGen said Thursday. The company plans to use the money to repay a term loan to Morgan Stanley Tactical Value and now expects to be able to fund research and operations into 2027.
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As part of the agreement, AstraZeneca will take over full rights to the anemia drug roxadustat in China. The two companies have been collaborating on the medicine’s development since 2013.
Dive Insight:
For FibroGen, the deal offers a much-needed cash infusion as the company strives to advance its oncology pipeline after a series of setbacks with other medicines. For AstraZeneca, the transaction represents a doubling down in China even as it continues to deal with government investigations in the country that have hurt its share price.
AstraZeneca has had a presence in China since 1993 and its 2013 collaboration with FibroGen focused on that country as well as the U.S. and certain other markets. Although roxadustat has done well in China, it has yet to be approved in the lucrative U.S. market. Last year, the two companies scaled back their agreement, leaving AstraZeneca with rights only in China and South Korea.
FibroGen has been reeling since the Food and Drug Administration rejected its application to sell roxadustat in 2021. The company cut jobs and restructured, only to face a series of research failures. FibroGen shares, which topped $55 in early 2021, now trade for less than a dollar.
Still, FibroGen isn’t giving up on the U.S. market for roxadustat. The company plans to meet with FDA officials in the second quarter. And sales of the drug overall are strong. In November, FibroGen forecast 2024 revenue of as much as $350 million in China alone. The drug is also approved in the major markets of Europe and Japan, where FibroGen partners with Astellas.
FibroGen expects the sale of its Chinese unit to AstraZeneca to close mid-year. The company’s shares rose 22% to 69 cents in early trading Thursday.