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Is FibroGen (NASDAQ:FGEN) A Risky Investment?

Simply Wall St · 1d ago

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. We can see that FibroGen, Inc. (NASDAQ:FGEN) does use debt in its business. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is FibroGen's Debt?

As you can see below, FibroGen had US$19.5m of debt at September 2025, down from US$91.0m a year prior. However, it does have US$118.0m in cash offsetting this, leading to net cash of US$98.5m.

debt-equity-history-analysis
NasdaqGS:FGEN Debt to Equity History December 16th 2025

How Strong Is FibroGen's Balance Sheet?

According to the last reported balance sheet, FibroGen had liabilities of US$36.0m due within 12 months, and liabilities of US$83.6m due beyond 12 months. Offsetting these obligations, it had cash of US$118.0m as well as receivables valued at US$10.1m due within 12 months. So it can boast US$8.57m more liquid assets than total liabilities.

This surplus suggests that FibroGen is using debt in a way that is appears to be both safe and conservative. Given it has easily adequate short term liquidity, we don't think it will have any issues with its lenders. Simply put, the fact that FibroGen has more cash than debt is arguably a good indication that it can manage its debt safely. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine FibroGen's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

View our latest analysis for FibroGen

In the last year FibroGen managed to produce its first revenue as a listed company, but given the lack of profit, shareholders will no doubt be hoping to see some strong increases.

So How Risky Is FibroGen?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And the fact is that over the last twelve months FibroGen lost money at the earnings before interest and tax (EBIT) line. Indeed, in that time it burnt through US$17m of cash and made a loss of US$52m. While this does make the company a bit risky, it's important to remember it has net cash of US$98.5m. That means it could keep spending at its current rate for more than two years. Even though its balance sheet seems sufficiently liquid, debt always makes us a little nervous if a company doesn't produce free cash flow regularly. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. We've identified 3 warning signs with FibroGen (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.

If, after all that, you're more interested in a fast growing company with a rock-solid balance sheet, then check out our list of net cash growth stocks without delay.