Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the United States, or U.S. , Securities and Exchange Commission, or the SEC , on February 26, 2026, or the 2025 Form 10-K . In addition to historical information, the following discussion and analysis contains forward-looking statements that reflect our plans, estimates, beliefs and explanations that involve significant risks and uncertainties. As a result of many factors, such as those set forth under “Risk Factors” in Part II, Item 1A. of this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements.
Business Overview
We are a fully integrated biopharmaceutical company with two commercial products for patients impacted by kidney disease. We have built a business focused on developing and commercializing innovative therapeutics that we believe serve as a foundation for future growth, including by contributing net product revenue to support the development and advancement of our robust pipeline of mid-stage programs targeting rare kidney diseases and early-stage programs targeting kidney disease and non-kidney focused indications.
We have established the Company as a leader in the kidney community and believe our cross-organizational expertise in kidney disease positions us for success. Chronic kidney disease, or CKD , is a condition in which the kidneys are progressively damaged to the point that they cannot properly filter the blood circulating in the body. This damage causes waste products to build up in the patient’s blood, leading to other health problems, including anemia, cardiovascular disease and bone disease. Our two commercial products address certain complications of kidney disease.
Our current product portfolio includes:
Vafseo® (vadadustat) is an orally administered medicine that was approved by the U.S. Food and Drug Administration, or the FDA , in March 2024 for the treatment of anemia due to CKD in adult patients on dialysis for at least three months. Vafseo is the only oral hypoxia inducible factor, or HIF , based treatment available in the U.S. Vafseo entered the market in January 2025.
Vafseo is approved for use in adults in 37 countries and is marketed in certain countries outside the U.S. by our partners.
Auryxia® (ferric citrate) is an orally administered medicine approved and marketed in the U.S. for two indications: (1) the control of serum phosphorus levels in adult patients with dialysis dependent chronic kidney disease, or DD-CKD , and (2) the treatment of iron deficiency anemia, or IDA , in adult patients with non-dialysis-dependent chronic kidney disease, or NDD-CKD .
Today, we market Auryxia in the U.S. Auryxia became part of our portfolio in 2018 and has historically contributed meaningful revenue to the business. In March 2025, Auryxia reached loss of exclusivity, or LoE . On March 11, 2026, Teva Pharmaceuticals Ltd., or Teva , received approval for its Abbreviated New Drug Application, or ANDA , for a generic version of Auryxia, which has subsequently entered the market.
Ferric citrate is approved for use and marketed in certain countries outside the U.S. by our partners.
Our development pipeline includes:
Our mid-stage rare kidney disease pipeline assets , praliciguat and ebribafusp, are being evaluated to target areas of unmet need. In June 2021, we licensed praliciguat from Cyclerion Therapeutics, Inc., or Cyclerion , via an exclusive global license, which includes certain intellectual property rights to research, develop and commercialize the asset. Praliciguat is an oral, once-daily soluble guanylate cyclase, or sGC , stimulator. We are evaluating praliciguat for the treatment of biopsy-confirmed focal segmental glomerulosclerosis, or FSGS , a rare kidney disease, in a Phase 2 clinical trial. The first patient was dosed in this trial in December 2025. We also plan to assess the use of praliciguat in other rare podocytopathies in the future.
In November 2025, we entered into an asset purchase agreement with Q32 Bio Inc. and Q32 Bio Operations Inc., together Q32 , pursuant to which we purchased and assumed substantially all assets and liabilities of Q32 and its affiliates related to the research, development, manufacture and commercialization of Q32’s clinical-stage development candidate ADX-097, known as ebribafusp (AKB-097), an anti-C3d-Factor H fusion protein complement inhibitor. Ebribafusp is a potential next-generation complement inhibitor, and we believe ebribafusp has applicability across a wide range of complement-mediated rare kidney diseases. Ebribafusp is intended to provide targeted regulation of complement activation at sites of tissue injury while limiting systemic complement inhibition. In August
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2026, we announced the initiation of a Phase 2 basket study to evaluate ebribafusp in IgA Nephropathy, or IgAN , C3 Glomerulopathy, or C3G , and Lupus Nephritis, or LN .
Our early-stage pipeline assets include AKB-9090 and AKB-10108, which are HIF molecules. We plan to initially evaluate AKB-9090 for the treatment of cardiac surgery-related acute kidney injury, or CS-AKI . The first patient was dosed in a Phase 1 study in healthy volunteers in April 2026. We may also study AKB-9090 in acute respiratory distress syndrome, or ARDS , as well as other acute treatment indications. AKB-10108 will potentially be evaluated for retinopathy of prematurity, or ROP , in neonates, and other indications, and is currently in preclinical development.
We continue to explore additional commercial and development opportunities to expand our pipeline and portfolio of novel therapeutics through both internal research and external innovation to leverage our fully integrated team.
Factors Affecting Our Performance and Results of Operations
Financial Components
Product Revenue
We generate product revenue from commercial sales of Auryxia and Vafseo to a limited number of customers, including dialysis organizations, wholesale distributors, certain specialty pharmacy providers and our authorized generic distribution partner for Auryxia, Mylan Therapeutics, Inc., or AG Distributor . Our net product revenue includes many variables, including judgments and estimates of discounts, rebates and product returns, which can fluctuate from quarter-to-quarter and year-over-year.
License, Collaboration and Other Revenue
License, collaboration and other revenue includes revenue earned under our agreements with our partners, including license fees, royalty payments and revenue from product we supply.
We expect to continue to generate revenue from our license, collaboration and supply agreements with MEDICE Arzneimittel Pütter GmbH & Co. KG, or Medice , Tanabe Pharma Corporation, or TPC , Japan Tobacco, Inc., and its subsidiary, Torii Pharmaceutical Co., Ltd., collectively, JT and Torii , and any other collaborations into which we have entered or may enter.
Cost of Product and Other Revenue
Cost of product and other revenue includes costs closely correlated or directly related to the costs to manufacture commercial drug substance and drug product, including at our contract development and manufacturing organizations, or CDMOs , as well as indirect costs. Direct and indirect costs include fees for packaging, shipping, insurance and quality assurance, idle capacity charges, changes in reserves for excess inventory, write-offs for inventory that fails to meet specifications or is otherwise no longer suitable for commercial sale, including scrap, changes in a firm purchase commitment liability and royalties due to the licensor of Auryxia related to U.S. and Japan product sales recognized during the period.
Cost of product and other revenue also includes costs to manufacture drug product provided to TPC and Medice for commercial sales of Vafseo in Japan and in the EEA, the UK, Switzerland and Australia, or collectively the Medice Territory , respectively, as well as to our AG Distributor. In addition, cost of product and other revenue includes personnel-related costs, including salaries and bonuses, employee benefits and stock-based compensation attributable to employees in particular functions and associated directly with the manufacturing of our commercial products.
Cost of product and other revenue for a newly launched product does not include the full cost of manufacturing until the initial pre-launch inventory is depleted and additional inventory is manufactured and sold. Until we received regulatory approval for Vafseo in the U.S., we recorded costs incurred to manufacture the U.S. pre-launch inventory, such as raw materials, drug substance and drug product conversion costs as research and development, or R&D , expense.
Research and Development Expenses
R&D expenses consist primarily of costs incurred for the development of Vafseo and costs associated with our pipeline which includes:
• personnel-related expenses, including salaries, bonuses, employee benefits, stock-based compensation and travel expenses for employees engaged in R&D functions;
• costs associated with feasibility and potential new manufacturing processes and methods for our commercial products;
• regulatory registration and related fees for non-commercial products;
• expenses incurred under agreements with contract research organizations, or CROs , and investigative sites that conduct our clinical trials;
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• the cost of acquiring, developing and manufacturing clinical trial materials through CDMOs;
• facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies associated with our laboratory space as well as our R&D team;
• acquired in process research and development costs associated with the acquisition of Q32's clinical stage development asset known as ebribafusp; and
• costs associated with discovery and development for preclinical, clinical and regulatory activities.
R&D costs are expensed as incurred. Advance payments made for goods or services to be received in the future for use in R&D activities are recorded as prepaid expenses and other current assets. The prepaid amounts are expensed as the benefits are consumed. 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.
We cannot determine with certainty the duration and completion costs of our R&D projects, the costs of related clinical development, or if, when, or to what extent we will generate revenue from the commercialization or sale of any of our product candidates.
From inception through June 30, 2026, we have incurred $1.8 billion in R&D expenses. We expect to incur significant R&D expenditures for the foreseeable future as we continue the development of Vafseo, praliciguat, ebribafusp, AKB-9090 and any other product or product candidate, including those that may be in-licensed or acquired.
A significant portion of our R&D costs have been external costs, which we track on a program-by-program basis as well as costs related to possible new manufacturing processes and methods associated with our commercial products. These external costs include fees paid to investigators, consultants, central laboratories and CROs in connection with our clinical trials and costs related to acquiring and manufacturing clinical trial materials, including costs paid to CDMOs to manufacture clinical trial materials.
We do not track our internal personnel and facilities costs on a program-by-program basis as our personnel are deployed across multiple R&D projects.
Each of our products and product candidates has technical, clinical, regulatory, and commercial risk, including those discussed more fully under the heading “Risk Factors” in Part II, Item 1A of this Form 10-Q. A change in the outcome of any of the variables with respect to the development of Vafseo, praliciguat, ebribafusp and AKB-9090 and any other product or product candidate, could result in a significant change in the costs and timing associated with that development.
Selling, General and Administrative Expenses
Selling, general and administrative, or SG&A , expenses consist primarily of compensation for personnel, including stock-based compensation related to commercial, marketing, executive, finance and accounting, information technology, corporate and business development and human resource functions. Other SG&A expenses include costs for marketing initiatives for our commercial products, market research and analysis on our commercial products and potential product candidates, conferences and trade shows, travel expenses, professional services fees (including legal, patent, accounting, audit, tax, and consulting fees), insurance costs, general corporate expenses and allocated facilities-related expenses, including rent and maintenance of facilities.
License Expense
License expense relates to royalties due to Panion & BF Biotech, Inc., or Panion , for sales of Auryxia in the U.S. and Riona in Japan.
Other Income (Expense), Net
Other income (expense), net consists primarily of interest income on our interest-bearing accounts, interest expense related to our term loans and accretion of the debt discount on our term loans. Other income (expense), net, also includes non-cash interest on our liability related to settlement royalties and the amortization of the discount and deferred gain related to our Working Capital Fund (as defined below) liability to Vifor (International) Ltd. (now a part of CSL Limited), or CSL Vifor . See Note 8, Liability Related to Settlement Royalties, Working Capital Fund Liability and Liability Related to Sale of Future Royalties , in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information on our arrangements with CSL Vifor.
Change in Fair Value of Warrant Liability
Change in fair value of warrant liability relates to the change in fair value of our warrant liability related to a warrant agreement with Kreos Capital VII Aggregator SCSp, an affiliate of Kreos Capital VII (UK) Limited , or Kreos. See Note 3, Fair
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Value Measurements , and Note 7, Indebtedness , in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information on the warrant liability.
Recent Events
Interim Analysis of Vafseo Outcomes In Center Experience (VOICE) Trial
In June 2026, we and U.S. Renal Care, or USRC , Kidney Research announced the results of a planned interim analysis of the VOICE trial and that it met the predefined stopping criteria by establishing non-inferiority and superiority of the primary composite endpoint and the decision by USRC Kidney Research to stop the trial on this basis. The primary investigator made the decision to stop the trial after a recommendation from the Independent Data Monitoring Committee and Trial Steering Committee, based on an interim analysis of data from the trial as of the June 1, 2026 data cutoff date meeting the prescribed stopping criteria.
Increase to Authorized Shares
In June 2026, we filed a Certificate of Amendment to our Ninth Amended and Restated Certificate of Incorporation, which (i) increased the number of authorized shares of capital stock from 375,000,000 to 525,000,000 and (ii) increased the number of authorized shares of common stock, par value $0.00001 per share, from 350,000,000 to 500,000,000.
Cambridge Lease Extension - Lab Space
On April 9, 2026, we extended the term of our lease for office and laboratory space in Cambridge, Massachusetts, or the Cambridge Lease , with respect to the laboratory space from September 11, 2026 to October 31, 2026. See Note 9, Leases , in the accompanying notes to the consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information on the Cambridge Lease.
Initiation of Phase 1 Trial in CS-AKI
In April 2026, we dosed our first patient in a Phase 1 clinical trial of AKB-9090 for the treatment of CS-AKI.
Waltham Lease
In January 2026, we entered into a lease agreement, or the Waltham Lease , pursuant to which we will lease an aggregate of approximately 43,474 square feet, consisting of 28,518 square feet of office space and 14,956 square feet of laboratory space located in Waltham, Massachusetts. We intend to relocate our corporate headquarters to Waltham in September 2026.
See Note 9, Leases , in the accompanying notes to the consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information on the Waltham Lease.
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Results of Operations
Comparison of the Three Months Ended June 30, 2026 and 2025
Three Months Ended June 30, Change
(dollars in thousands) 2026 2025 $ %
Revenues
Product revenue, net $ 46,765 $ 60,461 $ (13,696) (23) %
License, collaboration and other revenue 2,363 2,011 352 18 %
Total revenues 49,128 62,472 (13,344) (21) %
Cost of goods sold
Cost of product and other revenue 10,424 9,919 505 5 %
Total cost of goods sold 10,424 9,919 505 5 %
Operating expenses
Research and development 14,059 11,013 3,046 28 %
Selling, general and administrative 28,171 26,555 1,616 6 %
License 855 896 (41) (5) %
Restructuring 1,945 — 1,945 100 %
Total operating expenses 45,030 38,464 6,566 17 %
Income (loss) from operations (6,326) 14,089 (20,415) (145) %
Other expense, net (3,078) (6,862) 3,784 (55) %
Change in fair value of warrant liability 566 (6,980) 7,546 (108) %
Income (loss) before income taxes (8,838) 247 (9,085) (3678) %
Income tax expense (70) — (70) *
Net income (loss) $ (8,908) $ 247 $ (9,155) (3706) %
*Percentage change not meaningful.
Product Revenue, Net— Net product revenue is derived from sales of Auryxia and Vafseo in the U.S. We distribute Auryxia and Vafseo principally through a limited number of dialysis organizations, wholesale distributors, certain specialty pharmacy providers and our AG Distributor for Auryxia.
Net product revenue was $46.8 million for the three months ended June 30, 2026, compared to $60.5 million for the three months ended June 30, 2025. The decrease was primarily due to lower Auryxia revenues, which were partially offset by higher Vafseo revenues.
Following LoE for Auryxia in March 2025, our AG Distributor has been selling an authorized generic version of Auryxia in the U.S. On March 11, 2026, Teva received approval for its ANDA for a generic version of Auryxia. As a result of Teva's entry into the market, we have experienced, and we expect to continue to experience, a significant reduction in the volume of Auryxia sales. We expect the ongoing sales of generic versions of Auryxia, including by Teva and our AG Distributor, and of any additional generic versions of Auryxia that may be approved, will continue to have a significant adverse impact on our revenue. However, the extent of the impact on future Auryxia revenues will depend on many factors, including our ability to maintain contracts with dialysis organizations on favorable terms, or at all, the timing and number of additional generics, the amount of generic product available to supply the market and the pricing of generics and other products on the market that compete with Auryxia.
As a result of changes in the amount of reimbursement dialysis facilities will receive for use of Vafseo when Vafseo transitions from the Transitional Drug Add-on Payment Adjustment, or TDAPA , period to the post-TDAPA period beginning in 2027, we expect to price Vafseo within the range of the price for ESAs. ESAs are currently priced significantly lower than Vafseo’s current price. As a result, while we expect to sell a higher unit volume of Vafseo in 2027 as compared to 2026, we expect Vafseo revenues to decrease significantly in 2027 as compared to 2026 due to the expected lower price point.
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The following table summarizes our product revenue by product for the three months ended June 30, 2026 and 2025 (in thousands):
Three Months Ended June 30,
Product
2026
2025
Vafseo
$ 21,302 $ 13,279
Auryxia (1)
25,463 47,182
Total product revenues
$ 46,765 $ 60,461
(1) Includes the authorized generic version of Auryxia sold and distributed by our AG Distributor during the three months ended June 30, 2026 and 2025.
License, Collaboration and Other Revenue— License, collaboration and other revenue was $2.4 million for the three months ended June 30, 2026, compared to $2.0 million for the three months ended June 30, 2025. The increase was primarily due to revenue recognized in connection with our supply agreement with Medice during the three months ended June 30, 2026.
Cost of Goods Sold—Cost of Product and Other Revenue— Cost of product and other revenue was $10.4 million for the three months ended June 30, 2026 compared to $9.9 million for the three months ended June 30, 2025. The increase was primarily due to an increase in inventory write-downs as a result of excess, obsolescence, scrap or other reasons during the three months ended June 30, 2026.
We began capitalizing our Vafseo costs in March 2024, in connection with the FDA's approval of Vafseo for the treatment of anemia due to CKD in adult patients on dialysis for at least three months. Prior to the capitalization of Vafseo inventory costs, such costs were recorded as research and development expenses in the period incurred. Cost of product and other revenue for Vafseo was $1.0 million for the three months ended June 30, 2026, comprised of manufacturing and overhead costs as the associated inventory costs such as raw materials, drug substance and drug product conversion costs were expensed previously. If Vafseo inventory sold during the three months ended June 30, 2026 was valued at cost, our cost of product and other revenue would have been $3.5 million. As of June 30, 2026, we had $18.2 million of reduced-cost Vafseo inventory. We expect our cost of product and other revenue for Vafseo will increase, reflecting the full cost of manufacturing, subsequent to the utilization of our reduced-cost Vafseo inventory.
R&D Expenses— R&D expenses were $14.1 million for the three months ended June 30, 2026, compared to $11.0 million for the three months ended June 30, 2025. The increase was primarily driven by increased clinical trial activities related to our mid-stage pipeline assets, which include praliciguat and ebribafusp, as well as higher headcount related costs during the three months ended June 30, 2026.
The following table summarizes our external research and development expenses by program, as well as costs not allocated to programs, for the three months ended June 30, 2026 and 2025 (in thousands):
Three Months Ended June 30,
2026 2025
Clinical trial and related external costs (1) :
Vafseo and Auryxia $ 2,950 $ 3,239
Mid-stage pipeline assets (praliciguat and ebribafusp) 2,545 22
Early-stage pipeline assets (AKB-9090 and AKB-10108) 663 1,162
Non-program specific 1,706 1,436
Total external R&D expenses 7,864 5,859
Internal personnel, consulting, facilities and other 6,195 5,154
Total R&D expenses $ 14,059 $ 11,013
(1) See the section titled "Business Overview" for details on our current product portfolio and development pipeline.
We expect to incur significant R&D expenses in future periods in support of ongoing or planned studies with respect to the development of our product candidates.
Selling, General and Administrative Expenses— Selling, general and administrative expenses were $28.2 million for the three months ended June 30, 2026, compared to $26.6 million for the three months ended June 30, 2025. The increase was driven by increased commercialization activities.
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License Expenses— License expenses related to royalties due to Panion for sales of Riona in Japan were $0.9 million for each of the three months ended June 30, 2026 and 2025.
Restructuring Expenses— Restructuring expenses were $1.9 million for the three months ended June 30, 2026. In June 2026, we modified our commercial approach with the goal of increasing the efficiency and effectiveness of our commercial field team based on the stage of our Vafseo launch and implemented a commercial reorganization, which resulted in a reduction in headcount representing approximately 13% of our workforce prior to the reduction. There were no restructuring expenses for the three months ended June 30, 2025.
Other Expense, Net— Other expense, net, was $3.1 million for the three months ended June 30, 2026, compared to $6.9 million for the three months ended June 30, 2025. The decrease was primarily due to lower non-cash interest expense related to the settlement royalty liability in connection with the Termination and Settlement Agreement with CSL Vifor, or the Vifor Termination Agreement , as well as higher interest income related to our money market funds. See Note 8, Liability Related to Settlement Royalties, Working Capital Fund Liability and Liability Related to Sale of Future Royalties , included in the accompanying notes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information.
Change in Fair Value of Warrant Liability— Change in fair value of warrant liability was $0.6 million and $7.0 million for the three months ended June 30, 2026 and 2025, respectively.
Income Tax Expense— Income tax expense was $0.1 million for the three months ended June 30, 2026. There was no income tax expense for the three months ended June 30, 2025.
Comparison of the Six Months Ended June 30, 2026 and 2025
Six Months Ended June 30, Change
2026 2025 $ %
Revenues
Product revenue, net $ 98,757 $ 116,252 $ (17,495) (15) %
License, collaboration and other revenue 3,915 $ 3,556 359 10 %
Total revenues 102,672 119,808 (17,136) (14) %
Cost of goods sold
Cost of product and other revenue 22,714 $ 17,544 5,170 29 %
Total cost of goods sold 22,714 17,544 5,170 29 %
Operating expenses
Research and development 28,866 20,767 8,099 39 %
Selling, general and administrative 58,607 52,297 6,310 12 %
License 1,562 1,597 (35) (2) %
Restructuring 1,945 — 1,945 100 %
Total operating expenses 90,980 74,661 16,319 22 %
Operating income (loss) (11,022) 27,603 (38,625) (140) %
Other expense, net (7,766) (14,419) 6,653 (46) %
Change in fair value of warrant liability 1,022 (6,825) 7,847 (115) %
Income (loss) before income taxes (17,766) 6,359 (24,125) (379) %
Income tax expense (196) — (196) *
Net income (loss) (17,962) 6,359 (24,321) (382) %
*Percentage change not meaningful.
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Product Revenue, Net— Net product revenue is derived from sales of Auryxia and Vafseo in the U.S. We distribute Auryxia and Vafseo principally through a limited number of dialysis organizations, wholesale distributors, certain specialty pharmacy providers and our AG Distributor for Auryxia.
Net product revenue was $98.8 million for the six months ended June 30, 2026, compared to $116.3 million for the six months ended June 30, 2025. The decrease was primarily due to lower Auryxia revenues, which were partially offset by higher Vafseo revenues. The lower Auryxia revenues are due to LoE for Auryxia in March 2025 and Teva's entry into the market in March 2026 following approval of its ANDA for a generic version of Auryxia as described in greater detail above.
The following table summarizes our product revenue by product for the six months ended June 30, 2026 and 2025 (in thousands):
Six Months Ended June 30,
Product
2026 2025
Vafseo
$ 37,104 $ 25,313
Auryxia (1)
61,653 90,939
Total product revenues
$ 98,757 $ 116,252
(1) Includes the authorized generic version of Auryxia sold and distributed by our AG Distributor during the six months ended June 30, 2026 and 2025
License, Collaboration and Other Revenue— License, collaboration and other revenue was $3.9 million for the six months ended June 30, 2026, compared to $3.6 million for the six months ended June 30, 2025. The increase was primarily due to revenue recognized in connection with our supply agreement with Medice during the six months ended June 30, 2026.
Cost of Goods Sold—Cost of Product and Other Revenue— Cost of product and other revenue was $22.7 million for the six months ended June 30, 2026 compared to $17.5 million for the six months ended June 30, 2025. The increase was primarily due to an increase in inventory write-downs as a result of excess, obsolescence, scrap or other reasons during the six months ended June 30, 2026.
We began capitalizing our Vafseo costs in March 2024, in connection with the FDA's approval of Vafseo for the treatment of anemia due to CKD in adult patients on dialysis for at least three months. Prior to the capitalization of Vafseo inventory costs, such costs were recorded as research and development expenses in the period incurred. Cost of product and other revenue for Vafseo was $2.4 million for the six months ended June 30, 2026, comprised of manufacturing and overhead costs as the associated inventory costs such as raw materials, drug substance and drug product conversion costs were expensed previously. If Vafseo inventory sold during the six months ended June 30, 2026 was valued at cost, our cost of product and other revenue would have been $9.7 million. As of June 30, 2026, we had $18.2 million of reduced-cost Vafseo inventory. We expect our cost of product and other revenue for Vafseo will increase, reflecting the full cost of manufacturing, subsequent to the utilization of our reduced-cost Vafseo inventory.
R&D Expenses— R&D expenses were $28.9 million for the six months ended June 30, 2026, compared to $20.8 million for the six months ended June 30, 2025. The increase was primarily driven by increased clinical trial activities related to Vafseo and our mid-stage pipeline assets, which include praliciguat and ebribafusp, as well as higher headcount related costs during the six months ended June 30, 2026.
The following table summarizes our external research and development expenses by program, as well as costs not allocated to programs, for the six months ended June 30, 2026 and 2025 (in thousands):
Six Months Ended June 30,
2026 2025
Clinical trial and related external costs (1) :
Vafseo and Auryxia $ 6,428 $ 4,877
Mid-stage pipeline assets (praliciguat and ebribafusp) 4,411 238
Early-stage pipeline assets (AKB-9090 and AKB-10108) 1,619 2,278
Non-program specific 3,184 2,966
Total external R&D expenses 15,642 10,359
Internal personnel, consulting, facilities and other 13,224 10,408
Total R&D expenses $ 28,866 $ 20,767
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(1) See the section titled "Business Overview" for details on our current product portfolio and development pipeline.
We expect to incur significant R&D expenses in future periods in support of ongoing or planned studies with respect to the development of our product candidates.
Selling, General and Administrative Expenses— Selling, general and administrative expenses were $58.6 million for the six months ended June 30, 2026, compared to $52.3 million for the six months ended June 30, 2025. The increase was driven by increased commercialization activities and headcount related costs during the six months ended June 30, 2026.
License Expenses— License expenses related to royalties due to Panion for sales of Riona in Japan were $1.6 million for each of the six months ended June 30, 2026 and 2025.
Restructuring Expenses— Restructuring expenses were $1.9 million for the six months ended June 30, 2026 due to our commercial reorganization implemented in June 2026. There were no restructuring expenses for the six months ended June 30, 2025.
Other Expense, Net— Other expense, net, was $7.8 million for the six months ended June 30, 2026, compared to $14.4 million for the six months ended June 30, 2025. The decrease was primarily due to lower non-cash interest expense related to the settlement royalty liability in connection with the Vifor Termination Agreement, as well as higher interest income related to our money market funds. See Note 8, Liability Related to Settlement Royalties, Working Capital Fund Liability and Liability Related to Sale of Future Royalties , included in the accompanying notes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information.
Change in Fair Value of Warrant Liability— Change in fair value of warrant liability was $1.0 million and $6.8 million for the six months ended June 30, 2026 and 2025, respectively.
Income Tax Expense— Income tax expense was $0.2 million for the six months ended June 30, 2026. There was no income tax expense for the six months ended June 30, 2025.
Liquidity and Capital Resources
As of June 30, 2026, we had cash and cash equivalents of $155.5 million and restricted cash of $1.7 million.
To date, we have funded our operations principally through sales of our common stock, including through our employee stock purchase plan, product sales, payments received from our collaboration and licensing partners, borrowings under term loans, a working capital payment from CSL Vifor and a royalty transaction. From inception through June 30, 2026, we raised approximately $932.5 million of net proceeds from the sale of equity, including $567.9 million from various underwritten public offerings, $294.6 million from at-the-market, or ATM , offerings, pursuant to our sales agreement with Jefferies LLC, or Jefferies , and prior sales agreements with Cantor Fitzgerald & Co., and $70.0 million from the sale of 7,571,429 shares of common stock to CSL Vifor. During the three and six months ended June 30, 2026, we sold 3,138,107 shares of our common stock under the ATM offering with Jefferies with gross proceeds of $3.4 million ($3.2 million, net of offering expenses).
We incurred net loss of $8.9 million and $18.0 million during the three and six months ended June 30, 2026, respectively, and generated net income of $0.2 million and $6.4 million during the three and six months ended June 30, 2025, respectively. As of June 30, 2026 and December 31, 2025, we had an accumulated deficit of $1.7 billion.
We had exclusive rights under a series of patents and patent applications to commercialize Auryxia in the U.S. that protected us from generic drug competition until March 2025. Following LoE, our AG Distributor has been selling an authorized generic version of Auryxia in the U.S. On March 11, 2026, Teva received approval for its ANDA for a generic version of Auryxia. As a result of Teva's entry into the market, we have experienced, and we expect to continue to experience, a significant reduction in the volume of Auryxia sales. We expect the ongoing sales of generic versions of Auryxia, including by Teva and our AG Distributor, and of any additional generic versions of Auryxia that may be approved, will continue to have a significant adverse impact on our revenue. However, the extent of impact on future Auryxia revenues will depend on many factors, including our ability to maintain contracts with dialysis organizations, the timing and number of additional generics that enter the market, the amount of generic product available to supply the market and the pricing of generics and other products on the market that compete with Auryxia.
We believe our existing cash resources and the cash we expect to generate from product, royalty, supply and license revenues are sufficient to fund our current operating plan for at least two years. This estimate is contingent upon us refinancing our outstanding debt under our senior secured term loan facility to defer the payment of principal, which would otherwise commence on January 1, 2027. See Note 7, Indebtedness , to our unaudited condensed consolidated financial statements in Part I, Item 1. Financial Statements of this Form 10-Q for additional information regarding our obligations under our senior secured term loan facility. If we are unable to execute such refinancing on favorable terms or at all, we believe that our existing cash resources and the cash we expect to generate from product, royalty, supply and license revenues will be sufficient to enable us to fund our current operating plan for at least 12 months from the filing of this Quarterly Report on Form 10-Q.
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If we are unable to refinance our senior secured term loan, or our operating performance deteriorates significantly from the levels expected in our long-term operating plan, including if we do not achieve our future anticipated revenue projections from Vafseo, it would have an adverse effect on our liquidity and capital resources, and we would be required to obtain additional financing to fund our operating plan or continue as a going concern in the future. In addition, we may also seek to sell additional private or public equity, enter into new debt transactions, explore potential strategic transactions or a combination of these approaches or other strategic alternatives. If we raise additional funds by issuing equity securities, our shareholders would experience dilution. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. Additional financing may not be available to us in amounts or on terms acceptable to us, if at all. If we are unable to raise additional capital in sufficient amounts when needed or on attractive terms, we may not be able to pursue development and commercial activities related to Vafseo, or any additional products and product candidates, including those that may be in-licensed or acquired. Any of these events could significantly harm our business, financial condition and prospects.
There can be no assurance that the current operating plan will be achieved in the time frame anticipated by us, or that our cash resources will fund our operating plan for the period of time anticipated by us, or that additional funding will be available on terms acceptable to us, or at all. 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 numerous risks and uncertainties, and actual results could vary as a result of a number of factors, many of which are outside our control. We have based this estimate on assumptions that may be substantially different than actual results, and we could utilize our available capital resources sooner than we currently expect. Our future funding requirements, both near- and long-term, will depend on many factors including, but not limited to, those described under Part II, Item 1A. Risk Factors under the heading "Risks Related to our Financial Position, Need for Additional Capital and Growth Strategy."
Contractual Obligations and Commitments
Debt Agreements and Other Funding Arrangements
BlackRock Term Loans
On January 29, 2024, or the Closing Date , we entered into the Agreement for the Provision of a Loan Facility, as amended, or the BlackRock Credit Agreement , with Kreos Capital VII (UK) Limited , or Kreos , which are funds and accounts managed by BlackRock Inc., collectively, BlackRock . The BlackRock Credit Agreement provides for a senior secured term loan facility, in the aggregate principal amount of up to $55.0 million, or the Term Loan Facility . The Term Loan Facility was available in three tranches (i) Tranche A — $37.0 million was funded on the Closing Date; (ii) Tranche B — $8.0 million was funded on April 19, 2024; and (iii) Tranche C — $10.0 million was funded on February 3, 2025, or the Tranche C Closing Date , collectively, the Term Loans . The Term Loan Facility matures on January 29, 2028, or the BlackRock Maturity Date .
On February 3, 2025, we and Kreos entered into a Second Amendment to the BlackRock Credit Agreement, which, among other things, extended the expiry date of Tranche C from December 31, 2024 to the Tranche C Closing Date, or the Extended Tranche C . Tranche C was available subject to receipt of a certain amount of cumulative gross cash proceeds after the Closing Date in the form of equity or equity linked securities in one or more series of transactions. The terms of the Extended Tranche C are substantially similar to the terms of the original Tranche C, however, interest accrued on the Extended Tranche C as if it was advanced on December 31, 2024.
We are required to make interest-only payments until December 31, 2026 after which, we will begin making equal monthly principal payments. In the event of certain prespecified events, the repayment schedule will be accelerated.
The Term Loan Facility accrues interest at a floating annual rate equal to the sum of (i) term Secured Overnight Financing Rate for a tenor of one month (subject to a floor of 4.25% per annum) plus (ii) a margin of 6.75% per annum (subject to an overall cap of 15.00% per annum on the all-in interest rate). During the continuance of any payment event of default the interest rate on such overdue sum will automatically increase by an additional 3.0% per annum, and may be subject to an additional late fee of 2.0% of such overdue sum.
All obligations under the Term Loan Facility are secured by substantially all of our existing and after-acquired assets. The BlackRock Credit Agreement requires us to either (i) maintain cash and cash equivalents, measured as of the last day of each fiscal month, greater than or equal to $15.0 million or (ii) earn consolidated revenue, measured as of the last day of each fiscal month for the trailing twelve-month period, of $150.0 million. The BlackRock Credit Agreement contains certain representations and warranties, affirmative and negative covenants that limit our ability to engage in specified types of transactions and other provisions typical within a credit agreement. If an event of default occurs and is continuing under the BlackRock Credit Agreement, BlackRock is entitled to take enforcement action, including acceleration of amounts due which
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could limit our ability to make certain payments under the Vifor Termination Agreement. If we prepay the Term Loans prior to the BlackRock Maturity Date, we will be required to pay a prepayment fee ranging from 1.0% to 4.0% of the amount prepaid.
On the Closing Date, Kreos Capital VII Aggregator SCSp, an affiliate of Kreos, or the Warrant Holder , received a warrant to purchase 3,076,923 shares of our common stock, or the Initial Warrant , at an exercise price per share of $1.30, and upon the borrowing of Tranche C in February 2025, we issued additional warrants to purchase 1,153,846 shares of our common stock at an exercise price per share of $1.30. Each warrant is exercisable for eight years from the date of issuance.
On July 21, 2025, the Warrant Holder exercised its option to purchase 2,115,384 shares of our common stock under the Initial Warrant on a cashless basis at an exercise price per share of $1.30. On July 23, 2025, as a result of the cashless exercise, we issued 1,408,588 shares of our common stock to the Warrant Holder.
See Note 7, Indebtedness, in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.
Liability Related to Settlement Royalties
On July 10, 2024, we and CSL Vifor entered into the Vifor Termination Agreement. Pursuant to the terms of the Vifor Termination Agreement, we pay CSL Vifor decreasing quarterly tiered royalty payments ranging from a high single-digit percentage of our net sales of Vafseo up to $450.0 million to a mid-single digit percentage of our net sales of Vafseo above $450.0 million, in each case, in the U.S. during a calendar year, or the Settlement Royalty Payments . The Settlement Royalty Payments commenced upon the first sale of Vafseo by us to a third party for use in the U.S., and will continue until the later of the (i) expiration of the last-to-expire valid claim listed in the FDA Orange Book that would be infringed by the making, using, selling or importing of Vafseo in the U.S. or (ii) the expiration of marketing or regulatory exclusivity for Vafseo in the U.S., or the Settlement Royalty Term . Beginning on July 1, 2027 and throughout the Settlement Royalty Term, we have the option to make a one-time payment to CSL Vifor, or the Royalty Buy-Down Option , upon which the Settlement Royalty Payments will be adjusted as of the date of exercise of the Royalty Buy-Down Option such that we will then only pay CSL Vifor quarterly royalty payments based on a mid-single digit percentage of our net sales of Vafseo up to $450.0 million in the U.S. during a calendar year in lieu of the above Settlement Royalty Payments. If we exercise the Royalty Buy-Down Option, the WCF Royalty Payments will continue as described below.
The WCF Royalty Payments, as described below, the Settlement Royalty Payments and the Royalty Buy-Down Option are in consideration for the termination of the Vifor License Agreement and all obligations thereunder, and the covenants and agreements set forth in the Vifor Termination Agreement, including the settlement and release of all disputes and claims arising from the Vifor License Agreement.
As a result of the Vifor Termination Agreement, we concluded that CSL Vifor no longer met the definition of a customer and, therefore, the arrangement should not be considered a revenue contract with a customer under ASC 606, Revenue from Contracts with Customers. We therefore determined that the $43.3 million received from Vifor in connection with the Vifor License Agreement and related investment agreements should be classified as debt and we are amortizing such amount using the effective interest method over the Settlement Royalty Term. The liability related to settlement royalties and the amortization are based on our current estimates of future royalties expected to be paid over the life of the arrangement. The annual effective interest rate as of June 30, 2026 was 9.9% which is reflected as interest expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss). We recognized interest expense related to the liability related to settlement royalties of $1.7 million and $5.3 million for the three and six months ended June 30, 2026, respectively, and $5.4 million and $10.8 million during the three and six months ended June 30, 2025, respectively. As of June 30, 2026, $9.6 million and $60.8 million of the liability related to settlement royalties is classified as a current and non-current liability, respectively.
See Note 8, Liability Related to Settlement Royalties, Working Capital Fund Liability and Liability Related to Sale of Future Royalties , in the accompanying notes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information.
Working Capital Fund Liability
In February 2022, we amended our agreement with CSL Vifor and they contributed $40.0 million to a working capital fund, or the Working Capital Fund , established to partially fund our costs of purchasing Vafseo from our contract manufacturers.
Pursuant to the terms of the Vifor Termination Agreement, and generally consistent with the terms of the Vifor License Agreement, we agreed to repay the Working Capital Fund to CSL Vifor through quarterly tiered royalty payments ranging from 8% to 14% of our net sales of Vafseo in the U.S., or the WCF Royalty Payments . The WCF Royalty Payments commenced on July 1, 2025, and will continue until the earlier of (i) the cumulative total of the WCF Royalty Payments equals $40.0 million, or (ii) May 31, 2028. The WCF Royalty Payments are subject to certain minimum true-up milestones.
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The Working Capital Fund is considered a debt arrangement with zero coupon interest, and we impute interest on the Working Capital Fund liability at a rate of 15.0% per annum. As of June 30, 2026, $10.7 million and $21.2 million of the Working Capital Fund liability is classified as a current and non-current liability, respectively, based on management’s estimated timing of the repayment of the Working Capital Fund liability to CSL Vifor.
See Note 8, Liability Related to Settlement Royalties, Working Capital Fund Liability and Liability Related to Sale of Future Royalties , in the accompanying notes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information.
Liability Related to Sale of Future Royalties
In February 2021, we sold to HealthCare Royalty Partners IV L.P., or HCR , our right to receive royalties and sales milestones for Vafseo in Japan and certain other Asian countries, such countries collectively, the TPC Territory , such payments collectively the Royalty Interest Payments , in each case, payable to us under the Collaboration Agreement dated December 11, 2015, between us and TPC, or the TPC Agreement . The Royalty Interest Payments are subject to an annual maximum “cap” of $13.0 million, after which we will receive 85% of the Royalty Interest Payments for the remainder of that year. The Royalty Interest Payments are also subject to an aggregate maximum “cap” of $150.0 million, after which the Royalty Interest Payments will revert back to us.
We received $44.8 million from HCR, net of certain transaction expenses, which we recorded as a liability at the transaction date. We amortize the liability related to the sale of future royalties using the effective interest method over the life of the arrangement. The annual effective interest rate as of June 30, 2026 was 0%. We retain the right to receive all potential future regulatory milestones for Vafseo under the TPC Agreement. We recorded non-cash royalty revenue of $0.4 million and $0.8 million during the three and six months ended June 30, 2026, respectively, and $0.5 million and $0.9 million during the three and six months ended June 30, 2025, respectively. As of June 30, 2026, $1.5 million and $50.0 million of the liability related to the sale of future royalties is classified as a current and non-current liability, respectively.
See Note 8, Liability Related to Settlement Royalties, Working Capital Fund Liability and Liability Related to Sale of Future Royalties , in the accompanying notes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information.
Off-Balance Sheet Arrangements
Letter of Credit
As of June 30, 2026, in connection with the Cambridge Lease, we had $1.7 million in a letter of credit outstanding.
Director and Officer Indemnification
We have entered into indemnification agreements with our directors and certain officers that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. No demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our consolidated financial statements.
Contractual Obligations and Commitments Other Than Debt Agreements
We are party to contractual obligations involving commitments to make payments to third parties in the future. Certain contractual obligations are reflected on our unaudited condensed consolidated balance sheet as of June 30, 2026, while others are considered future obligations. Our material cash requirements as of June 30, 2026, include contractual obligations and commitments arising in the normal course of business, including leases, license agreements, manufacturing agreements and unconditional purchase commitments which are described in more detail below.
Cambridge Lease
We lease approximately 65,167 square feet of office, storage and laboratory space under the Cambridge Lease. The office and storage lease expires on September 11, 2026 and the lab lease expires on October 31, 2026.
Waltham Lease
In January 2026, we entered into the Waltham Lease. We intend to relocate our corporate headquarters to Waltham in September 2026.
See Note 9, Leases , in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information on the Cambridge Lease and Waltham Lease.
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License Agreements
Panion License Agreement
We have a license agreement with Panion, under which we are required to pay royalties related to the sale of Auryxia. The royalty payment obligations are contingent upon generating product revenue, and the amount and timing of such payments are not known. See Note 10, Commitments and Contingencies , in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.
Cyclerion Agreement
In June 2021, we entered into a license agreement, or the Cyclerion Agreement , with Cyclerion, as amended in December 2024, under which we obtained an exclusive global license under certain intellectual property rights to research, develop and commercialize praliciguat, an investigational oral soluble guanylate cyclase stimulator.
Under the Cyclerion Agreement, as amended, Cyclerion is eligible to receive up to an additional aggregate of $197.5 million from us in specified development and regulatory milestone payments on a product-by-product basis. Cyclerion will also be eligible to receive specified commercial milestones as well as tiered royalties ranging from mid-single-digit percentage to twenty percent of net sales, on a product-by-product basis, and subject to reduction upon expiration of patent rights or the launch of a generic product in the territory.
See Note 10, Commitments and Contingencies , in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.
Q32 Purchase Agreement
On November 28, 2025, or the APA Closing Date , we entered into an Asset Purchase Agreement, or the Q32 Purchase Agreement , with Q32, pursuant to which we purchased and assumed from Q32 substantially all assets and liabilities of Q32 and its affiliates related to the research, development, manufacture and commercialization of Q32's clinical-stage development candidate ADX-097, known as ebribafusp (AKB-097), worldwide for the treatment, prevention or diagnosis of any disease or condition in humans. Ebribafusp, which has been evaluated in a Phase 1 clinical trial in healthy volunteers, in a tissue-targeted C3d-Factor H fusion protein complement inhibitor with the potential to treat rare kidney diseases.
Under the terms of the Q32 Purchase Agreement, we (i) made an upfront payment of $7.0 million on the APA Closing Date, (ii) made an additional upfront payment of $3.0 million on the six-month anniversary of the APA Closing Date, (iii) will make certain milestone payments upon the achievement of specified development and regulatory milestone events related to ebribafusp up to an aggregate amount equal to $94.5 million, including a $2.0 million development milestone payment upon the earlier of initiation of a Phase 2 clinical trial and December 31, 2026, (iv) will make certain milestone payments upon the achievement of specified commercial milestone events with respect to the net sales of ebribafusp up to an aggregate amount equal to $487.5 million, and (v) will make certain royalty payments based on the net sales of ebribafusp with royalty percentage tiers ranging from the low single digits to mid-teen percentages. The royalties will expire on a country-by-country basis on the later to occur of (a) the date of expiration of the last-to-expire valid claim of any transferred patent right that covers such product in such country, and (b) the tenth anniversary of the first commercial sale of such product.
See Note 10, Commitments and Contingencies , in the accompanying notes to the consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information on the Q32 Purchase Agreement.
Manufacturing Agreements
We have various supply arrangements to which we are a party, and we are obligated to pay for drug substance and drug product for commercial use. We are obligated to purchase a certain percentage of the global demand for Vafseo drug substance and drug product based on certain quarterly and annual forecasts we provide to certain suppliers. Our supply agreements for Vafseo drug substance and drug product provide for a volume-based pricing structure. We may also be required to reimburse certain suppliers for reasonable expenses.
See Note 10, Commitments and Contingencies , in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.
Other Third Party Contracts
We enter into agreements in the normal course of business with various vendors, which are generally cancellable upon notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-cancellable obligations of service providers, up to the date of cancellation. In addition, we contract with various organizations to conduct R&D activities with remaining contract costs to us of approximately $75.9 million as of June 30, 2026. The scope of the services under these R&D contracts can be modified upon mutual agreement of the parties, and the contracts or scope of
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services can be cancelled by us upon written notice. In some instances, the contracts may be cancelled by the third party upon written notice.
Cash Flows
The following table provides a summary of cash flow data for each applicable period:
Six Months Ended June 30,
NET CASH PROVIDED BY/(USED IN) ( in thousands ):
2026 2025
Operating activities $ (17,682) $ 8,758
Investing activities (4,141) 28
Financing activities (7,464) 76,662
Increase (decrease) in cash, cash equivalents and restricted cash $ (29,287) $ 85,448
Cash, cash equivalents and restricted cash — beginning of period 186,543 53,550
Cash, cash equivalents and restricted cash — end of period $ 157,256 $ 138,998
Operating Activities
Net cash used in operating activities was $17.7 million for the six months ended June 30, 2026 and consisted of a net loss of $18.0 million and net non-cash adjustments of $21.1 million, including a change in fair value of the warrant liability of $1.0 million, and a reduction of $20.8 million in working capital.
Net cash provided by operating activities was $8.8 million for the six months ended June 30, 2025 and consisted of net income of $6.4 million reduced by net non-cash adjustments of $27.0 million, including a change in fair value of the warrant liability of $6.8 million, offset by a reduction of $24.6 million in working capital.
Investing Activities
Net cash used in investing activities was $4.1 million for the six months ended June 30, 2026 and was comprised of the additional upfront payment of $3.0 million paid to Q32 as well as purchases of equipment.
Net cash provided by investing activities for the six months ended June 30, 2025 was immaterial.
Financing Activities
Net cash used in financing activities was $7.5 million for the six months ended June 30, 2026, which primarily consisted of payments to CSL Vifor of $8.9 million and $2.1 million related to the Working Capital Fund liability and liability related to settlement royalties, respectively, which were partially offset by net proceeds of $3.2 million from the sale of common stock under our ATM facility.
Net cash provided by financing activities was $76.7 million for the six months ended June 30, 2025, which primarily consisted of proceeds of $10.0 million from the issuance of debt under the BlackRock Credit Agreement and net proceeds of $66.4 million from the sale of common stock from our March 2025 underwritten public offering and under our ATM facility.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 2, Summary of Significant Accounting Policies , of the Notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, including the current or long-term classification of such assets, liabilities and expenses, classification of the expenses and the related disclosure of contingent assets and liabilities. We monitor our estimates on an ongoing basis for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate. In making estimates and judgments, management employs critical accounting policies.
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During the six months ended June 30, 2026, there were no material changes to our methodologies used for our critical accounting estimates as reported in our 2025 Form 10-K.