What changed in this filing

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Item 1. Financial Statements

2021-08-05 compared with 2021-05-10 · 232 added, 408 removed, 703 unchanged (48% of the section changed)

34 unchanged sentences

0 shares issued and

outstanding at March 31, 2021 and December 31, 2020

outstanding at June 30, 2021 and December 31, 2020

Common stock $ 0.00001 par value;

350,000,000 shares authorized at March 31, 2021 and December 31, 2020;

158,520,089 and 148,074,085 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

350,000,000 shares authorized at June 30, 2021 and December 31, 2020;

169,651,423 and 148,074,085 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 1,504,752 1,425,115

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Product revenue, net $ 32,959 $ 30,696 $ 63,367 $ 59,905

4 unchanged sentences

Amortization of intangibles 9,011 9,101 18,021 18,201

Impairment of intangible asset — 115,527 — 115,527

Total cost of goods sold 52,495 174,616 87,100 202,329

34 unchanged sentences

Balance at March 31, 2020 130,251,440 $ 1 $ 1,251,164 $ — $ ( 854,801 ) $ 396,364

Issuance of common stock, net of

issuance costs 12,650,000 — 142,383 — — 142,383

Share-based compensation expense — — 6,864 — — 6,864

Exercise of options 48,103 — 409 — — 409

Restricted stock unit vesting 179,866 — — — — —

Unrealized loss — — — ( 9 ) — ( 9 )

Net loss — — — — ( 175,751 ) ( 175,751 )

Balance at June 30, 2020 143,129,409 $ 1 $ 1,400,820 $ ( 9 ) $ ( 1,030,552 ) $ 370,260

Balance at December 31, 2020 148,074,085 $ 1 $ 1,425,115 $ 13 $ ( 1,177,511 ) $ 247,618

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Balance at March 31, 2021 158,520,089 $ 2 $ 1,460,971 $ 9 $ ( 1,247,091 ) $ 213,891

Issuance of common stock, net of

issuance costs 10,446,160 — 37,266 — — 37,266

Share-based compensation expense — — 6,515 — — 6,515

Exercise of options — — — — — —

Restricted stock unit vesting 685,174 — — — — —

Unrealized loss — — — ( 3 ) — ( 3 )

Net loss — — — — ( 83,038 ) ( 83,038 )

Balance at June 30, 2021 169,651,423 $ 2 $ 1,504,752 $ 6 $ ( 1,330,129 ) $ 174,631

See accompanying notes to unaudited condensed consolidated financial statements

2 unchanged sentences

(in thousands)

Three Months Ended

March 31, 2021 March 31, 2020

Six Months Ended

June 30, 2021 June 30, 2020

Operating activities:

3 unchanged sentences

Amortization of intangibles 18,021 18,201

Intangible asset impairment charge — 115,527

Amortization of premium/discount on investments ( 15 ) ( 2 )

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Purchase of equipment ( 59 ) ( 45 )

Purchase of available for sale securities — ( 49,950 )

Proceeds from the maturities of available for sale securities 40,000 245

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Proceeds from the exercise of stock options — 821

Net cash provided by (used in) financing activities 74,477 57,348

Net cash provided by financing activities 111,846 200,155

Increase in cash, cash equivalents, and restricted cash 17,900 98,036

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Vadadustat is an oral hypoxia-inducible factor prolyl hydroxylase inhibitor, or HIF-PHI, designed to mimic the physiologic effect of altitude on oxygen availability.

At higher altitudes, the body responds to lower oxygen availability with stabilization of hypoxia-inducible factor, or HIF, which can lead to red blood cell, or RBC, production and improved oxygen delivery to tissues.Vadadustat is approved and marketed in Japan as a treatment for anemia due to CKD in both dialysis-dependent and non-dialysis dependent adult patients under the trade name Vafseo TM .

Vadadustat is approved and marketed in Japan as a treatment for anemia due to CKD in both dialysis-dependent and non-dialysis dependent adult patients under the trade name Vafseo TM .

The Company submitted a New Drug Application, or NDA, to the U.S.

Food and Drug Administration, or FDA, for vadadustat in March of 2021 for the treatment of anemia due to CKD in adult patients with CKD on dialysis, or DD-CKD, and adult patients with CKD not on dialysis, or NDD-CKD.

The Company's NDA submission did not include a Priority Review Voucher.

Based on standard FDA review timelines, the FDA has a 60-day period to determine whether the NDA is complete and acceptable for review.

The Company's NDA submission was accepted for filing by the FDA in May 2021 and at the time of filing the NDA, the FDA indicated that they were not currently planning to hold an Advisory Committee meeting to discuss the application for vadadustat.

The FDA also assigned the application standard review and a Prescription Drug User Fee Act (PDUFA) target action date of March 29, 2022.

In addition, the Company has a commercial product, Auryxia ® (ferric citrate), which is currently approved by the FDA and marketed for two indications in the United States:

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The Company’s management completed its going concern assessment in accordance with ASC 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern , or ASC 205-40.

The Company believes that its cash resources will be sufficient to allow the Company to fund its current operating plan through at least the next twelve months from the filing of this Quarterly Report on Form 10-Q, as required by ASC 205-40.

There can be no assurance, however, that the current operating plan will be achieved in the time frame anticipated by the Company, or that its cash resources will fund the Company’s operating plan for the period anticipated by the Company or that additional funding will be available on terms acceptable to the Company, or at all.

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The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S., or GAAP, for interim financial reporting and as required by Regulation S-X, Rule 10-01.

Accordingly, they do not include all of the information and footnotes required by U.S.

GAAP for complete financial statements.

Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S.

GAAP as found in the Accounting Standards Codification, or ASC, and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB.

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification, or ASC, and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB.

In the opinion of management, all adjustments, consisting of normal recurring accruals and revisions of estimates, considered necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included.

Interim results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021 or any other future period.

Interim results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021 or any other future period.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

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Securities and Exchange Commission on February 25, 2021, or the 2020 Annual Report on Form 10-K.

The significant accounting policies used in preparation of these unaudited condensed consolidated financial statements for the three months ended March 31, 2021 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K and are updated below as necessary.

The significant accounting policies used in preparation of these unaudited condensed consolidated financial statements for the three and six months ended June 30, 2021 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K and are updated below as necessary.

New Accounting Pronouncements – Recently Adopted

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Use of Estimates

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results may differ from those estimates.

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prepaid and accrued research and development expense, operating lease assets and liabilities, derivative liabilities, other non-current liabilities, including the excess purchase commitment liability, stock-based compensation expense, product and collaboration revenues including various rebates and reserves related to product sales, non-cash interest expense on the liability related to sale of future royalties, inventories, income taxes, intangible assets and goodwill.

The Company has made estimates of the impact of COVID-19 within the unaudited condensed consolidated financial statements and there may be changes to those estimates in future periods including changes to sales, payer mix, reserves and allowances, intangible assets and goodwill.

The Company has made estimates of the impact of COVID-19 within the unaudited condensed consolidated financial statements and there may be changes to those estimates in future periods including changes to sales, payor mix, reserves and allowances, intangible assets and goodwill.

Although the Company regularly assesses these estimates, actual results could differ materially from these estimates.

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The Company treats the liability related to sale of future royalties, see Note 5, as a debt financing, amortized under the effective interest rate method over the estimated life of the related expected royalty stream.

The liability related to sale of future royalties

and the debt amortization are based on the Company’s current estimates of future royalties expected to be paid over the life of the arrangement.

The liability related to sale of future royalties and the debt amortization are based on the Company’s current estimates of future royalties expected to be paid over the life of the arrangement.

The Company will periodically assess the expected royalty payments.

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sales of Auryxia.

Total net product revenue was $ 30.4 million and $ 29.2 million for the three months ended March 31, 2021 and 2020, respectively.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the three months ended March 31, 2021 and 2020 (in thousands):

Total net product revenue was $ 33.0 million and $ 30.7 million for the three months ended June 30, 2021 and 2020, respectively, and $ 63.4 million and $ 59.9 million for the six months ended June 30, 2021 and 2020, respectively.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the six months ended June 30, 2021 and 2020 (in thousands):

and Discounts Rebates, Fees

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Credits/payments made ( 5,588 ) ( 63,795 ) ( 3,715 ) ( 73,098 )

Balance at March 31, 2021 $ 1,329 $ 43,216 $ 884 $ 45,429

Balance at June 30, 2021 $ 1,292 $ 46,092 $ 550 $ 47,934

Balance at December 31, 2019 $ 738 $ 30,552 $ 253 $ 31,543

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Credits/payments made ( 4,995 ) ( 54,945 ) ( 2,237 ) ( 62,177 )

Balance at March 31, 2020 $ 717 $ 32,079 $ 255 $ 33,051

Balance at June 30, 2020 $ 767 $ 42,593 $ 744 $ 44,104

Chargebacks, discounts and returns are recorded as a direct reduction of revenue on the unaudited condensed consolidated statement of operations with a corresponding reduction to accounts receivable on the unaudited condensed consolidated balance sheets.

Rebates, distribution-related fees, and other sales-related deductions are recorded as a reduction in revenue on the unaudited condensed consolidated statement of operations with a corresponding increase to accrued liabilities or accounts payable on the unaudited condensed consolidated balance sheets.

Accounts receivable, net related to product sales was approximately $ 28.3 million and $ 21.9 million as of March 31, 2021 and December 31, 2020, respectively.

Accounts receivable, net related to product sales was approximately $ 35.0 million and $ 21.9 million as of June 30, 2021 and December 31, 2020, respectively.

License, Collaboration and Other Significant Agreements

During the three months ended March 31, 2021 and 2020, the Company recognized the following revenues from its license, collaboration and other significant agreements and had the following deferred revenue balances as of March 31, 2021:

Three Months Ended March 31,

During the three and six months ended June 30, 2021 and 2020, the Company recognized the following revenues from its license, collaboration and other significant agreements and had the following deferred revenue balances as of June 30, 2021:

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

License, Collaboration and Other Revenue:

(in thousands)

(in thousands) (in thousands)

MTPC Agreement $ 4,594 $ 15,000 $ 4,612 $ 15,000

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Total License, Collaboration and Other Revenue $ 19,954 $ 59,446 $ 41,850 $ 118,715

March 31, 2021

June 30, 2021

Short-Term Long-Term Total

6 unchanged sentences

Total $ 11,869 $ 16,598 $ 28,467

The following table presents changes in the Company’s contract assets and liabilities during the three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended March 31, 2021 Balance at

The following table presents changes in the Company’s contract assets and liabilities during the six months ended June 30, 2021 and 2020 (in thousands):

Six Months Ended June 30, 2021 Balance at

Period Additions Deductions Balance at End

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Accrued expenses and other current liabilities $ 10,000 $ — $ — $ 10,000

Three Months Ended March 31, 2020

Six Months Ended June 30, 2020

Contract assets:

3 unchanged sentences

Deferred revenue $ 72,950 $ 90,471 $ ( 105,350 ) $ 58,071

Accounts payable $ — $ 5,651 $ — $ 5,651

Accrued expenses and other current liabilities $ — $ 615 $ ( 615 ) $ —

(1) Excludes accounts receivable from other services related to clinical and regulatory activities performed by the Company on behalf of MTPC that are not included in the performance obligations identified under the MTPC Agreement as of March 31, 2021 and 2020 and December 31, 2020 and 2019.

Also excludes accounts receivable related to amounts due to the Company from product sales which are included in the accompanying unaudited condensed consolidated balance sheet as of March 31, 2021 and December 31, 2020.

During the three months ended March 31, 2021 and 2020, the Company recognized the following revenues as a result of changes in the contract asset and contract liability balances in the respective periods (in thousands):

Three Months Ended March 31,

(1) Excludes accounts receivable from other services related to clinical and regulatory activities performed by the Company on behalf of MTPC that are not included in the performance obligations identified under the MTPC Agreement as of June 30, 2021 and 2020 and December 31, 2020 and 2019.

During the three and six months ended June 30, 2021 and 2020, the Company recognized the following revenues as a result of changes in the contract asset and contract liability balances in the respective periods (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Revenue Recognized in the Period from:

2021 2020 2021 2020

Amounts included in deferred revenue at the beginning of the period $ 5,822 $ 16,964 $ 10,895 $ 22,186

Performance obligations satisfied in previous periods $ — $ 3,555 $ — $ 3,263

Mitsubishi Tanabe Pharma Corporation Collaboration Agreement

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In addition, the Company will supply vadadustat for both clinical and commercial use in the MTPC Territory, subject to MTPC’s option to manufacture commercial drug product in the MTPC Territory.

The Company and MTPC agreed that, instead of including Japanese patients in the Company’s global Phase 3 program for vadadustat, MTPC would be the sponsor of a Phase 3 program for vadadustat in Japan.

MTPC is responsible for the costs of the Phase 3 program in Japan and other studies required in Japan, and made no funding payments for the global Phase 3 program for vadadustat.

In June 2020, vadadustat was approved in Japan for the treatment of anemia due to CKD, which triggered a $ 15.0 million regulatory milestone payment to the Company that was received in the third quarter of 2020.

In August 2020, MTPC launched vadadustat commercially in Japan under the trade name Vafseo TM as a treatment of anemia due to CKD for adult patients on dialysis and not on dialysis.

A more detailed description of this collaboration agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

In February 2021, the Company entered into a royalty interest acquisition agreement with HealthCare Royalty Partners IV, L.P., or the Royalty Agreement, whereby the Company sold its right to receive royalties and sales milestones under the MTPC Agreement, subject to certain caps and other terms and conditions (see Note 5 for additional information).

The Company and MTPC have established a joint steering committee pursuant to the MTPC Agreement to oversee development and commercialization of vadadustat in the MTPC Territory, including approval of any development or commercialization plans.

Unless earlier terminated, the MTPC Agreement will continue in effect on a country-by-country basis until the later of the following:

expiration of the last-to-expire patent covering vadadustat in such country in the MTPC Territory;

expiration of marketing or regulatory exclusivity in such country in the MTPC Territory;

or ten years after the first commercial sale of vadadustat in such country in the MTPC Territory.

MTPC may terminate the MTPC Agreement upon twelve months ’ notice at any time after the second anniversary of the effective date of the MTPC Agreement.

Either party may terminate the MTPC Agreement upon the material breach of the other party that is not cured within a specified time period or upon the insolvency of the other party.

MTPC is required to make certain milestone payments to the Company aggregating up to approximately $ 225.0 million upon the achievement of specified development, regulatory and commercial events.

More specifically, the Company received $ 10.0 million in development milestone payments, and is eligible to receive up to $ 40.0 million in regulatory milestone payments, of which the Company received $ 10.0 million in relation to the JNDA filing in the third quarter of 2019 and earned an additional $ 15.0 million following regulatory approval of vadadustat in Japan in the second quarter of 2020, which the Company received in the third quarter of 2020, and up to $ 175.0 million in commercial milestone payments associated with aggregate sales of all products.

In consideration for the exclusive license and other rights contained in the MTPC Agreement, MTPC also made a $ 20.0 million upfront payment as well as a payment of $ 20.5 million for Phase 2 studies in Japanese patients completed by the Company and reimbursed by MTPC.

The Company is also entitled to receive tiered royalty payments ranging from 13 % to 20 % on annual net sales of vadadustat in the MTPC Territory.

Royalty payments are subject to certain reductions, including upon the introduction of competitive products in certain instances.

Royalties are due on a country-by-country basis from the date of first commercial sale of a licensed product in a country until the last to occur of:

(i) the expiration of the last to expire valid claim within the intellectual property covering the licensed product, (ii) the expiration of marketing or regulatory exclusivity in such country, or (iii) the tenth anniversary of the first commercial sale of such licensed product in such country.

Due to the uncertainty of drug development and commercialization and the high historical failure rates associated therewith, although the Company has received $ 10.0 million in development milestones and $ 25.0 million in regulatory milestones, no additional milestone may ever be received from MTPC.

The Company recognizes any revenue from MTPC royalties in the period in which the sales occur.

As noted above, in February 2021, the Company entered into the Royalty Agreement, whereby the Company sold its right to receive royalties and sales milestones under the MTPC Agreement, subject to certain caps and other terms and conditions (see Note 5 for additional information).

Revenue Recognition

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The Company determined that the remaining consideration that may be payable to the Company subsequent to MTPC's commercial launch of Vafseo TM in the third quarter of 2020 is quarterly royalties on net sales, sales milestones, and certain regulatory milestones.

As of March 31, 2021, the transaction price is comprised of:

As of June 30, 2021, the transaction price was comprised of:

(i) the up-front payment of $ 20.0 million, (ii) the cost for the Phase 2 studies of $ 20.5 million, (iii) the cost of all clinical supply provided to MTPC for the Phase 3 studies, (iv) $ 10.0 million in development milestones received, (v) $ 25.0 million in regulatory milestones received, comprised of $ 10.0 million relating to the JNDA filing and $ 15.0 million relating to regulatory approval of vadadustat in Japan, and (vi) $ 0.5 million in royalties from net sales of Vafseo.

As of March 31, 2021, all development milestones and $ 25.0 million in regulatory milestones have been achieved.

As of June 30, 2021, all development milestones and $ 25.0 million in regulatory milestones have been achieved.

No other regulatory milestones have been assessed as probable of being achieved and as a result have been fully constrained.

Revenue for the License, Research and Clinical Supply Performance Obligation for the MTPC Agreement is being recognized using a proportional performance method, for which all deliverables have been completed.

The Company recognized immaterial revenue from MTPC royalties for the three months ended March 31, 2021 and no revenue from the MTPC Agreement for the three months ended and March 31, 2020.

The Company recognized $ 0.1 million of revenue from MTPC royalties for each of the three and six months ended June 30, 2021.

The Company recognized a $ 15.0 million regulatory milestone relating to regulatory approval of vadadustat in Japan as revenue during the three and six months ended June 30, 2020.

As noted above, in February 2021, the Company entered into the Royalty Agreement, whereby the Company sold its right to receive these royalties and sales milestones under the MTPC Agreement, subject to certain caps and other terms and conditions (see Note 5 for additional information).

The revenue is classified as collaboration revenue in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss.

As of March 31, 2021, there is an immaterial amount in accounts receivable, no deferred revenue, and no contract assets.

There were no asset or liability balances classified as long-term in the unaudited condensed consolidated balance sheet as of March 31, 2021.

As of June 30, 2021, there was an immaterial amount in accounts receivable, no deferred revenue, and no contract assets.

There were no asset or liability balances classified as long-term in the unaudited condensed consolidated balance sheet as of June 30, 2021.

Supply of Drug Product to MTPC

In March 2020, in connection with the MTPC Agreement, the Company agreed to supply MTPC with certain vadadustat drug product for commercial use and MTPC agreed to reimburse the Company for certain manufacturing-related expenses.

In March 2020, in connection with the MTPC Agreement, the Company and MTPC executed an amendment that agreed to supply MTPC with certain vadadustat process validation drug product for commercial use and MTPC agreed to reimburse the Company for certain manufacturing-related expenses.

In connection with this arrangement, the Company invoiced the upfront payment of $ 10.4 million, which it received during the three months ended June 30, 2020.

The Company does not recognize revenue under this arrangement until risk of loss passes to MTPC and delivery has occurred.

No revenues were recognized for either of the three months ended March 31, 2021 and 2020 for drug product that was delivered under the MTPC Agreement.

As of March 31, 2021, the Company recorded no accounts receivable, no deferred revenue, and $ 2.2 million in other current liabilities and $ 1.4 million in other non-current liabilities for drug product that was subject to return by MTPC.

No revenues were recognized for either of the three or six months ended June 30, 2021 and 2020 for drug product that was delivered under the MTPC Agreement.

As of June 30, 2021, the Company recorded no accounts receivable, no deferred revenue, and $ 3.0 million in other current liabilities and $ 0.6 million in other non-current liabilities for drug product that was subject to return by MTPC.

On July 15, 2020, the Company and its collaboration partner MTPC entered into a supply agreement, or the MTPC Supply Agreement.

The MTPC Supply Agreement includes the terms and conditions under which the Company will supply vadadustat drug product to MTPC for commercial use in Japan and certain other Asian countries, as contemplated by the MTPC Agreement.

Pursuant to the MTPC Supply Agreement, MTPC provides a rolling forecast, or the MTPC Forecast, to the Company on a quarterly basis.

The MTPC Forecast reflects MTPC’s needs for vadadustat drug product over a certain number of months, represented as a quantity of vadadustat drug product per calendar quarter.

MTPC makes an up-front payment for a certain percentage of each batch of vadadustat drug product ordered.

The term of the MTPC Supply Agreement will exist throughout the term of the MTPC Agreement, and the termination provisions of the MTPC Agreement govern termination of the MTPC Supply Agreement.

The Company did no t recognize any revenue under the MTPC Supply Agreement during the three months ended March 31, 2021.

During the three months ended March 31, 2021, the Company invoiced MTPC for $ 4.4 million in payments for vadadustat drug product ordered by MTPC.

As of March 31, 2021, the Company recorded $ 3.4 million in accounts receivable, $ 5.9 million in deferred revenue, $ 12.2 million in other current liabilities and $ 5.4 million in other non-current liabilities.

Subsequent to March 31, 2021, the Company invoiced MTPC for an additional $ 2.6 million in up-front payments for vadadustat drug product ordered by MTPC.

A more detailed description of this supply agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

The Company recognized $ 4.5 million of revenue under the MTPC Supply Agreement during the three and six months ended June 30, 2021.

During the six months ended June 30, 2021, the Company invoiced MTPC for $ 9.5 million in payments for vadadustat drug product ordered by MTPC.

As of June 30, 2021, the Company recorded $ 0.9 million in accounts receivable, $ 1.4 million in deferred revenue, $ 15.1 million in other current liabilities and $ 7.6 million in other non-current liabilities.

Collaboration and License Agreement with Otsuka Pharmaceutical Co.

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Under the terms of the Otsuka U.S.

Agreement, the Company is responsible for leading the development of vadadustat, including the ongoing Phase 3 development program, and the Company controls and retains final decision-making authority with respect to certain matters, including U.S.

pricing strategy and manufacturing.

The Company and Otsuka will co-commercialize vadadustat in the United States, subject to the approval of vadadustat by the FDA.

Under the terms of the Otsuka U.S.

Agreement, the Company granted to Otsuka a co-exclusive, non-sublicensable license under certain intellectual property controlled by the Company solely to perform medical affairs activities and to conduct non-promotional and commercialization activities related to vadadustat in accordance with the associated plans.

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Additionally, the parties agreed not to promote, market or sell any competing product in the territory covered by the Otsuka U.S.

The Company is responsible for performing all activities related to the development of vadadustat as outlined in the current global development plan, while Otsuka may agree to perform certain activities under the global development plan from time to time as agreed by the parties.

The current global development plan encompasses all activities with respect to the PRO 2 TECT and INNO 2 VATE clinical programs, which were completed in 2020, through the filing for marketing approval, as well as certain other studies.

The Company’s obligations related to the conduct of the current global development plan include the associated manufacturing and supply services for vadadustat.

Under the Otsuka U.S.

Agreement, the parties jointly conduct all medical affairs, commercialization and non-promotional activities pursuant to underlying plans as agreed to by the parties.

If approved by the FDA, Otsuka is obligated to purchase all of its supply requirements of vadadustat for commercial use from the Company pursuant to a separate supply agreement to be negotiated.

The activities under the Otsuka U.S.

Agreement are governed by a joint steering committee, or JSC, formed by an equal number of representatives from the Company and Otsuka.

The JSC coordinates and monitors the parties’ activities under the collaboration.

Among other responsibilities, the JSC manages the overall strategic alignment between the parties, oversees the current global development plan and reviews other detailed plans setting forth the parties’ activities under the arrangement, including the medical affairs plan and commercialization and non-promotional activities plan.

Additionally, the parties established a joint development committee, or JDC, which is comprised of an equal number of representatives from the Company and Otsuka.

Among other responsibilities, the JDC shares information related to, and reviews and discusses activities and progress under, the current global development plan and any other development that may be conducted pursuant to the collaboration.

The Company and Otsuka also established a joint manufacturing committee, or JMC, which is comprised of an equal number of representatives from each of the parties.

Among other responsibilities, the JMC oversees the manufacturing plan and related manufacturing activities.

In support of the potential commercialization of vadadustat, the parties established a joint commercialization committee, or JCC, which is comprised of an equal number of representatives from the Company and Otsuka.

Among other responsibilities, the JCC oversees the activities and progress under the commercialization and non-promotional activities plan and all other sales and marketing activities.

The Company has retained final decision-making authority with respect to certain matters, including U.S.

pricing strategy and certain other key commercialization matters.

Under the terms of the Otsuka U.S.

Agreement, the Company received a $ 125.0 million up-front, non-refundable, non-creditable cash payment in December 2016.

In March 2017, the Company received a payment of approximately $ 33.8 million, which represented reimbursement for Otsuka’s share of costs previously incurred by the Company in implementing the current global development plan through December 31, 2016.

Commencing in the third quarter of 2017, whereupon the Company had incurred a specified amount of incremental costs, Otsuka began to contribute, as required by the Otsuka U.S.

Agreement, a percentage of the remaining costs incurred under the current global development plan.

The Company estimates that Otsuka’s funding of the current global development plan costs subsequent to December 31, 2016 will total $ 320.1 million or more, depending on the actual costs incurred toward the current global development plan.

The costs associated with the performance of any development activities in addition to those outlined in the current global development plan will be subject to a cost sharing or reimbursement mechanism as set forth in the Otsuka U.S.

Agreement or to be determined by the parties.

Costs incurred with respect to medical affairs and commercialization and non-promotional activities will generally be shared equally by the parties.

In addition, due to the costs incurred in completing the activities under the current global development plan exceeding a certain threshold in the second quarter of 2019, the Company elected to require Otsuka to increase the aggregate percentage of current global development costs it funds under the Otsuka U.S.

Agreement and the Otsuka International Agreement, as defined below, from 52.5 % to 80 %, or the Otsuka Funding Option.

The Company estimates the additional funding as a result of exercising the Otsuka Funding Option, or the Additional Funding, to total approximately $ 122.2 million or more, depending on the actual costs incurred toward the current global development plan.

The Additional Funding is fully creditable against future payments due to the Company under the arrangement, provided that future payments due to the Company may not be reduced by more than 50 % in any calendar year and any remaining creditable amount above 50 % in any calendar year will be applied to subsequent future payments until fully credited.

As of March 31, 2021, the Additional Funding was $ 95.0 million.

In addition, Otsuka is required to make certain milestone payments to the Company upon the achievement of specified development, regulatory and commercial events.

More specifically, as of March 31, 2021, the Company is eligible to receive up to $ 65.0 million in regulatory milestone payments for the first product to achieve the associated event and up to $ 575.0 million in commercial milestone payments associated with aggregate sales of licensed products.

These future milestones are subject to reduction as a result of the Company’s exercise of the Otsuka Funding Option, as described above.

Due to the uncertainty of drug development and commercialization and the high historical failure rates associated therewith, no milestone payments may ever be received from Otsuka.

Under the Otsuka U.S.

Agreement, the Company and Otsuka share the costs of developing and commercializing vadadustat in the United States and the profits from the sales of vadadustat after approval by the FDA.

In connection with the profit share calculation, net sales include gross sales to third-party customers net of discounts, rebates, chargebacks, taxes, freight and insurance charges and other applicable deductions.

Shared costs generally include costs attributable or reasonably allocable to the manufacture of vadadustat for commercialization purposes and the performance of medical affairs activities, non-promotional activities and commercialization activities.

Unless earlier terminated, the Otsuka U.S.

Agreement will expire in the United States on a product-by-product basis on the date that one or more generic versions of vadadustat first achieves 90 % market penetration.

Either party may terminate the Otsuka U.S.

Agreement in its entirety upon an uncured breach or insolvency on the part of the other party.

Otsuka may terminate the Otsuka U.S.

Agreement in its entirety upon 12 months’ prior written notice at any time after the release of the first top-line data from the global Phase 3 development program for vadadustat, which release occurred in the second quarter of 2020 with the announcement of top-line data from the INNO 2 VATE program.

In the event of termination of the Otsuka U.S.

Agreement, all

rights and licenses granted to Otsuka under the Otsuka U.S.

Agreement will automatically terminate and the licenses granted to the Company will become freely sublicensable.

In addition, the upfront payment, all development costs and milestone payments received by the Company prior to such termination will not be refunded to Otsuka.

Revenue Recognition

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Agreement in accordance with the provisions of ASC 606 and concluded that the contract counterparty, Otsuka, is a customer.

The Company’s arrangement with Otsuka contains the following material promises under the contract at inception:

The Company’s arrangement with Otsuka contains the

following material promises under the contract at inception:

(i) license under certain of the Company’s intellectual property to develop, perform medical affairs activities with respect to and conduct non-promotional and commercialization activities related to vadadustat and products containing or comprising vadadustat (the License Deliverable), (ii) development services to be performed pursuant to the current global development plan (the Development Services Deliverable), (iii) rights to future intellectual property (the Future IP Deliverable), and (iv) joint committee services (the Committee Deliverable).

The Company has identified three performance obligations in connection with its obligations under the Otsuka U.S.

Agreement as follows:

i) License and Development Services Combined (License Performance Obligation);

(ii) Rights to Future Intellectual Property (Future IP Performance Obligation) and (iii) Joint Committee Services (Committee Performance Obligation).

Factors considered in making the assessment of which material promises will be accounted for as separate performance obligations included, among other things, the capabilities of the collaboration partner, whether any other vendor sells the item separately, whether the good or service is highly interdependent or highly interrelated to the other elements in the arrangement, and whether there are other vendors that can provide the items.

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Agreement does not include a general right of return.

The three performance obligations identified in connection with the Company’s obligations under the Otsuka U.S.

Agreement are as follows:

(i) License and Development Services Combined (License Performance Obligation)

The License Deliverable is not distinct from the Development Services Deliverable, due to the limitations inherent in the license conveyed.

More specifically, the license conveyed to Otsuka does not provide Otsuka with the right to manufacture vadadustat and products containing or comprising vadadustat.

However, the manufacturing and supply services that are conducted as part of the services to be performed pursuant to the current global development plan are necessary for Otsuka to fully exploit the associated license for its intended purpose.

The value of the rights provided through the license conveyed will be realized when the underlying products covered by the intellectual property progress through the development cycle, receive regulatory approval and are commercialized.

Products containing or comprising vadadustat cannot be commercialized until the development services under the current global development plan are completed.

Accordingly, Otsuka must obtain the manufacturing and supply of the associated products that are included within the development services to be performed pursuant to the current global development plan from the Company in order to derive benefit from the license, which significantly limits the ability for Otsuka to utilize the License Deliverable for its intended purpose in a way that generates economic benefits.

(ii) Rights to Future Intellectual Property (Future IP Performance Obligation)

The License and Development Services deliverables combined are distinct from the Future IP Deliverable because Otsuka can obtain the value of the license using the clinical trial materials implicit in the development services without the receipt of any other intellectual property that may be discovered or developed in the future.

The Future IP Deliverable is distinct from the Committee Deliverable because the joint committee services have no bearing on the value to be derived from the rights to potential future intellectual property.

As a result, the Future IP Deliverable qualifies as a separate performance obligation.

(iii) Joint Committee Services (Committee Performance Obligation)

The License and Development Services deliverables combined are distinct from the Committee Deliverable because Otsuka can obtain the value of the license using the clinical trial materials implicit in the development services without the joint committee services.

The Committee Deliverable also is distinct from the rights to Future IP Deliverable because the joint committee services have no bearing on the value to be derived from the rights to potential future intellectual property.

As a result, the Committee Deliverable qualifies as a separate performance obligation.

A more detailed description of the performance obligations under this agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

The Company allocates the transaction price to each performance obligation based on the Company’s best estimate of the relative standalone selling price.

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The Company did not develop a best estimate of standalone selling price for the License Performance Obligation due to the following:

(i) the best estimates of standalone selling price associated with the Future IP Performance Obligation was determined to be immaterial and (ii) the period of performance and pattern of recognition for the License Performance Obligation and the Committee

Performance Obligation was determined to be similar.

The Company has concluded that a change in the key assumptions used to determine the best estimate of standalone selling price for each performance obligation would not have a significant impact on the allocation of arrangement consideration.

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In the event that there is consideration received by a customer in the form of activities performed by such customer under the global development plan, such consideration is reflected as a reduction to the transaction price as contra revenue rather than as an expense because the associated services are not distinct from the License Performance Obligation.

As of June 30, 2021, the Additional Funding was $ 100.0 million.

No amounts were allocated to the Future IP Performance Obligation because the associated best estimate of standalone selling price was determined to be immaterial.

Due to the similar performance period and recognition pattern between the License Performance Obligation and the Committee Performance Obligation, the transaction price has been allocated to the License Performance Obligation and the Committee Performance Obligation on a combined basis.

Accordingly, the Company will recognize revenue related to the allocable arrangement consideration on a proportional performance basis as the underlying development services are performed pursuant to the current global development plan which is commensurate with the period and consistent with the pattern over which the Company’s obligations are satisfied for both the License Performance Obligation and the Committee Performance Obligation.

and consistent with the pattern over which the Company’s obligations are satisfied for both the License Performance Obligation and the Committee Performance Obligation.

Effectively, the Company has treated the arrangement as if the License Performance Obligation and the Committee Performance Obligation are a single performance obligation.

As of March 31, 2021, the transaction price totaling $ 478.9 million is comprised of:

As of June 30, 2021, the transaction price totaling $ 479.1 million was comprised of:

(i) the up-front payment of $ 125.0 million, (ii) the cost share payment with respect to amounts incurred by the Company through December 31, 2016 of $ 33.8 million, and (iii) the estimate of the net cost share consideration to be received of approximately $ 320.3 million with respect to amounts incurred by the Company subsequent to December 31, 2016.

As of March 31, 2021, no development or regulatory milestones have been assessed as probable of being reached and thus have been fully constrained.

During the three months ended March 31, 2021 and 2020, the Company recognized revenue totaling approximately $ 13.7 million and $ 38.6 million, respectively, with respect to the Otsuka U.S.

As of June 30, 2021, no development or regulatory milestones have been assessed as probable of being reached and thus have been fully constrained.

During the three months ended June 30, 2021 and 2020 the Company recognized revenue totaling approximately $ 9.2 million and $ 25.9 million, respectively, and approximately $ 22.8 million and $ 64.5 million, during the six months ended June 30, 2021 and 2020, respectively, with respect to the Otsuka U.S.

The revenue is classified as collaboration revenue in the accompanying unaudited condensed consolidated statements of operations.

As of March 31, 2021, there is approximately $ 18.4 million of deferred revenue related to the Otsuka U.S.

As of June 30, 2021, there was approximately $ 15.6 million of deferred revenue related to the Otsuka U.S.

Agreement of which $ 6.1 million is classified as current and $ 9.5 million is classified as long-term in the accompanying unaudited condensed consolidated balance sheet based on the performance period of the underlying obligations.

Additionally, as of March 31, 2021, there is approximately $ 0.8 million in accounts receivable and $ 1.3 million in prepaid expenses and other current assets in the accompanying unaudited condensed consolidated balance sheet.

Additionally, as of June 30, 2021, there was an immaterial amount in accounts receivable and $ 1.3 million in prepaid expenses and other current assets in the accompanying unaudited condensed consolidated balance sheet.

As of December 31, 2020, there was approximately $ 5.0 million in contract liabilities (included in accounts payable) and $ 1.2 million in prepaid expenses and other current assets in the consolidated balance sheet.

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As a result, the activities conducted pursuant to the medical affairs, commercialization and non-promotional activities plans will be accounted for as a component of the related expense in the period incurred.

During the three months ended March 31, 2021 and 2020, the Company incurred approximately $ 1.0 million and $ 0.5 million, respectively, of costs related to the cost-sharing provisions of the Otsuka U.S.

Agreement, of

which approximately $ 0.5 million and $ 0.3 million are reimbursable by Otsuka and recorded as a reduction to research and development expense during the three months ended March 31, 2021 and 2020, respectively.

During the three months ended March 31, 2021 and 2020, Otsuka incurred approximately $ 0.3 million and $ 0.4 million, respectively, of costs related to the cost-sharing provisions of the Otsuka U.S.

Agreement, of which approximately $ 0.2 million is reimbursable by the Company and recorded as an increase to research and development expense during each of the three months ended March 31, 2021 and 2020.

During the three months ended June 30, 2021 and 2020, the Company incurred approximately $ 2.9 million and $ 0.2 million, respectively, of costs related to the cost-sharing provisions of the Otsuka U.S.

Agreement, of which approximately $ 1.4 million and $ 0.1 million are reimbursable by Otsuka and recorded as a reduction to research and development expense during the three months ended June 30, 2021 and 2020, respectively.

During the three months ended June 30, 2021 and 2020, Otsuka incurred approximately $ 0.3 million and $ 0.4 million, respectively, of costs related to the cost-sharing provisions of the Otsuka U.S.

Agreement, of which approximately $ 0.1 million and $ 0.2 million are reimbursable by the Company and recorded as an increase to research and development expense during each of the three months ended June 30, 2021 and 2020.

International Collaboration and License Agreement with Otsuka Pharmaceutical Co.

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The collaboration is focused on the development and commercialization of vadadustat in Europe, Russia, China, Canada, Australia, the Middle East and certain other territories, collectively, the Otsuka International Territory.

Under the terms of the Otsuka International Agreement, the Company is responsible for leading the development of vadadustat, including the ongoing global Phase 3 development program.

Otsuka has the sole responsibility, at its own cost, for the commercialization of vadadustat in the Otsuka International Territory, subject to the approval by the relevant regulatory authorities.

Under the terms of the Otsuka International Agreement, the Company granted to Otsuka an exclusive, sublicensable license under certain intellectual property controlled by the Company to develop and commercialize vadadustat and products containing or comprising vadadustat in the Otsuka International Territory.

Pursuant to the terms of the Otsuka International Agreement, the Company is responsible for performing all activities related to the development of vadadustat as outlined in the current global development plan, while Otsuka may agree to perform certain activities under the global development plan from time to time as agreed by the parties.

Under the Otsuka International Agreement, the Company controls and retains final decision-making authority with respect to certain matters.

Per the terms of the Otsuka International Agreement, Otsuka is generally responsible for the conduct of any development activities that may be required for marketing approvals in the Otsuka International Territory or otherwise performed with respect to the Otsuka International Territory that are incremental to those included in the current global development plan.

The Company’s obligations related to the conduct of the current global development plan include the associated manufacturing and supply services for vadadustat.

Under the Otsuka International Agreement, Otsuka is to be solely responsible for the conduct of all medical affairs and commercialization activities in the Otsuka International Territory pursuant to underlying plans as reviewed and discussed by the parties.

If approved by the relevant jurisdictional regulatory health authorities in the Otsuka International Territory, the Company will provide vadadustat to Otsuka for commercialization pursuant to a separate supply agreement to be negotiated.

Additionally, the parties agreed not to promote, market or sell any competing product in the territory covered by the agreement.

The activities under the Otsuka International Agreement are governed by a JSC formed by an equal number of representatives from the Company and Otsuka.

The JSC coordinates and monitors the parties’ activities under the collaboration.

Among other responsibilities, the JSC manages the overall strategic alignment between the parties, oversees the current global development plan and reviews other detailed plans setting forth any other development activities that may be conducted under the arrangement.

Additionally, the parties established a JDC, which is comprised of an equal number of representatives from the Company and Otsuka.

The Company and Otsuka also established a JMC, which is comprised of an equal number of representatives from each of the parties.

Among other responsibilities, the JMC oversees the manufacturing plan and related manufacturing activities.

In support of the potential commercialization of vadadustat, the parties established a JCC, which is comprised of an equal number of representatives from the Company and Otsuka.

Among other responsibilities, the JCC manages the activities and progress under the commercialization and non-promotional activities plan and all other sales and marketing activities.

The Company has retained final decision-making authority with respect to certain matters.

Otsuka has retained final decision-making authority with respect to all commercialization matters, other than decisions related to certain marketing matters.

Under the terms of the Otsuka International Agreement, the Company received a $ 73.0 million up-front, non-refundable, non-creditable cash payment.

The Company also received a payment of approximately $ 0.2 million which represents reimbursement for Otsuka’s share of costs previously incurred by the Company in implementing the current global development plan in excess of a specified threshold during the quarter ended March 31, 2017.

Commencing in the second quarter of 2017, Otsuka began to contribute, as required by the Otsuka International Agreement, a percentage of the remaining costs incurred under the current global development plan.

The Company estimates that Otsuka’s funding of the current global development plan costs

subsequent to March 31, 2017 will total roughly $ 224.5 million or more, depending on the actual current global development plan costs incurred.

The costs associated with the performance of any mutually agreed upon development activities in addition to those outlined in the current global development plan will be subject to a cost sharing or reimbursement mechanism as set forth in the Otsuka International Agreement or to be determined by the parties.

Otsuka may elect to conduct additional studies of vadadustat in the EU, subject to the Company’s right to delay such studies based on its objectives outside the Otsuka International Territory.

Otsuka will pay a percentage of the costs of any such studies, and the Company will pay its portion of the costs in the form of a credit against future amounts due to the Company under the Otsuka International Agreement.

The costs incurred related to any other development activities, which are pursued solely for obtaining or maintaining marketing approval in the Otsuka International Territory or otherwise performed solely with respect to the Otsuka International Territory that are incremental to the development activities included in the current global development plan, will be borne in their entirety by Otsuka.

Otsuka will pay costs incurred with respect to medical affairs and commercialization activities in the Otsuka International Territory.

In addition, Otsuka would be required to make certain milestone payments to the Company upon the achievement of specified development, regulatory and commercial events.

More specifically, as of March 31, 2021, the Company is eligible to receive up to $ 52.0 million in regulatory milestone payments for the first licensed product to achieve the associated event.

Moreover, the Company is eligible for up to $ 525.0 million in commercial milestone payments associated with aggregate sales of all licensed products.

Additionally, to the extent vadadustat is commercialized, the Company would be entitled to receive tiered royalty payments ranging from the low double digits to the low thirties based on a percentage of net sales.

Royalties are due on a country-by-country basis from the date of the first commercial sale of a licensed product in a country until the latest to occur of:

(i) the expiration date in such country of the last to expire valid claim within the intellectual property covering the licensed product, (ii) the date of expiration of data or regulatory exclusivity in such country or (iii) the tenth anniversary of the first commercial sale of such licensed product in such country.

Due to the uncertainty of pharmaceutical development and the high historical failure rates associated therewith, no milestone or royalty payments may ever be received from Otsuka.

There are no cancellation, termination or refund provisions in the Otsuka International Agreement that contain material financial consequences to the Company.

Unless earlier terminated, the Otsuka International Agreement will expire upon the expiration of the royalty term in the last country in the Otsuka International Territory.

Either party may terminate the Otsuka International Agreement in its entirety upon an uncured material breach or insolvency on the part of the other party.

Otsuka may terminate the Otsuka International Agreement in its entirety or for a specific region in the Otsuka International Territory upon 12 months’ prior written notice at any time after the release of the first top-line data from the global Phase 3 development program for vadadustat, which release occurred in the second quarter of 2020 with the announcement of top-line data from the INNO 2 VATE program.

In the event of termination of the Otsuka International Agreement, all rights and licensees granted to Otsuka under the Otsuka International Agreement will automatically terminate, and the licenses granted to the Company will become freely sublicensable, but potentially subject to a future royalty.

In addition, the upfront payment, all development costs and milestone payments received by the Company prior to such termination will not be eligible for refund to Otsuka.

Additionally, under the terms of this agreement, the Company is responsible for leading the development of vadadustat, including the ongoing global Phase 3 development program.

Otsuka has the sole responsibility, at its own cost, for the commercialization of vadadustat in the Otsuka International Territory, subject to the approval by the relevant regulatory authorities.

Revenue Recognition

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(i) license under certain of the Company’s intellectual property to develop and commercialize (including the associated packaging) vadadustat and products containing or comprising vadadustat and development services to be performed pursuant to the current global development plan (the License and Development Services Deliverable), (ii) rights to future intellectual property (the Future IP Deliverable) and (iii) joint committee services (the Committee Deliverable).

The Company has identified three performance obligations in connection with its obligations under the Otsuka International Agreement.

Factors considered in making this assessment of which material promises will be accounted for as a separate performance obligation included, among other things, the capabilities of the collaboration partner, whether any other vendor sells the item separately, whether the good or service is highly interdependent or highly interrelated to the other elements in the arrangement, and whether there are other vendors that can provide the items.

Additionally, the Otsuka International Agreement

does not include a general right of return.

The three performance obligations identified in connection with the Company’s obligations under the Otsuka International Agreement are as follows:

The Company has identified three performance obligations in connection with its obligations under the Otsuka International Agreement as follows:

i) License and Development Services Combined (License Performance Obligation);

The Company has determined that the license granted to Otsuka pursuant to the Otsuka International Agreement will be accounted for as component of the development services as opposed to a separately identified promise.

Although the rights granted under the license are effective throughout the entire term of the arrangement, the Company will not be providing significant additional contributions of study data, regulatory submissions and regulatory approvals beyond the point that services under the current global development plan are conducted.

Therefore, the period and pattern of recognition would be the same for both the license and the development services.

Consequently, the Company has concluded that the license will effectively be treated as an inherent part of the associated development services promise instead of as a separate promise.

As a result, the License and Development Services Deliverable will be treated as a single performance obligation (the License Performance Obligation).

(ii) Rights to Future Intellectual Property (Future IP Performance Obligation)

The License and Development Services Deliverable is distinct from the Future IP Deliverable because Otsuka can obtain the value of the license using the clinical trial materials implicit in the development services without the receipt of any other intellectual property that may be discovered or developed in the future.

The Future IP Deliverable is distinct from the Committee Deliverable because the Committee Deliverable has no bearing on the value to be derived from the rights to potential future intellectual property.

As a result, the Future IP Deliverable qualifies as a separate performance obligation.

(iii) Joint Committee Services (Committee Performance Obligation)

The License and Development Services Deliverable is distinct from the Committee Deliverable because Otsuka can obtain the value of the license using the clinical trial materials implicit in the development service without the joint committee services.

The Committee Deliverable is distinct from the Future IP Deliverable because the Committee Deliverable has no bearing on the value to be derived from the rights to potential future intellectual property.

As a result, the Committee Deliverable qualifies as a separate performance obligation.

(ii) Rights to Future Intellectual Property (Future IP Performance Obligation) and (iii) Joint Committee Services (Committee Performance Obligation).

Additionally, the Otsuka International Agreement does not include a general right of return.

A more detailed description of the performance obligations under this agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The Company allocates the transaction price to each performance obligation based on the Company’s best estimate of the relative standalone selling price.

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No amounts were allocated to the Future IP Performance Obligation because the associated best estimate of standalone selling price was determined to be immaterial.

Due to the similar performance period and recognition pattern between the License

Performance Obligation and the Committee Performance Obligation, the transaction price has been allocated to the License Performance Obligation and the Committee Performance Obligation on a combined basis.

Effectively, the Company has treated the arrangement as if the License Performance Obligation and the Committee Performance Obligation are a single performance obligation.

As of March 31, 2021, the transaction price totaling $ 297.7 million is comprised of:

As of June 30, 2021, the transaction price totaling $ 296.3 million was comprised of:

(i) the up-front payment of $ 73.0 million, (ii) the cost share payment with respect to amounts incurred by the Company during the quarter ended March 31, 2017 of $ 0.2 million, and (iii) an estimate of the net cost share consideration to be received with respect to amounts incurred by the Company subsequent to March 31, 2017 of $ 223.1 million.

As of March 31, 2021, no development or regulatory milestones have been assessed as probable of being reached and thus have been fully constrained.

During the three months ended March 31, 2021 and 2020, the Company recognized revenue totaling approximately $ 7.0 million and $ 19.4 million, respectively, with respect to the Otsuka International Agreement.

As of June 30, 2021, no development or regulatory milestones have been assessed as probable of being reached and thus have been fully constrained.

During the three months ended June 30, 2021 and 2020, the Company recognized revenue totaling approximately $ 4.7 million and $ 12.8 million, respectively, and approximately $ 11.7 million and $ 32.2 million, respectively, during the six months ended June 30, 2021 and 2020, with respect to the Otsuka International Agreement.

The revenue is classified as collaboration revenue in the accompanying unaudited condensed consolidated statements of operations.

As of March 31, 2021, there is approximately $ 8.6 million of deferred revenue related to the Otsuka International Agreement of which $ 5.2 million is classified as current and $ 3.5 million is classified as long-term in the accompanying unaudited condensed consolidated balance sheet based on the performance period of the underlying obligations.

Additionally, as of March 31, 2021, there is approximately $ 0.4 million in accounts receivable and $ 0.6 million in prepaid expenses and other current assets in the accompanying unaudited condensed consolidated balance sheet.

As of June 30, 2021, there was approximately

$ 6.8 million of deferred revenue related to the Otsuka International Agreement of which $ 4.4 million is classified as current and $ 2.4 million is classified as long-term in the accompanying unaudited condensed consolidated balance sheet based on the performance period of the underlying obligations.

Additionally, as of June 30, 2021, there was an immaterial amount in accounts receivable and $ 0.6 million in prepaid expenses and other current assets in the accompanying unaudited condensed consolidated balance sheet.

As of December 31, 2020, there was approximately $ 2.3 million in contract liabilities (included in accounts payable) and $ 0.5 million in prepaid expenses and other current assets in the consolidated balance sheet.

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Once a compound was designated for development and commercialization, the Company was to be solely responsible for the development and commercialization of the compound worldwide at its own cost and expense.

Under the terms of the Janssen Agreement, the Company made an upfront payment of $ 1.0 million in cash to Janssen and issued a warrant to purchase 509,611 shares of the Company’s common stock.

In addition, Janssen could be eligible to receive up to an aggregate of $ 16.5 million from the Company in specified development milestone payments on a product-by-product basis.

Janssen will also be eligible to receive up to $ 215.0 million from the Company in specified commercial milestones as well as tiered, escalating royalties ranging from a low- to mid-single digit percentage 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.

Unless earlier terminated, the Janssen Agreement will expire on a product-by-product and country-by-country basis upon the expiration of the last royalty term, which ends upon the longer of the expiration of the patents licensed under the Janssen Agreement, the expiration of regulatory exclusivity for such product, or 10 years from first commercial sale of such product.

The Company may terminate the Janssen Agreement in its entirety or only with respect to a particular licensed compound or product upon 180 days’ prior written notice to Janssen.

The parties also have customary termination rights, subject to a cure period, in the event of the other party’s material breach of the Janssen Agreement or in the event of certain additional circumstances.

As discussed above, the Company issued a Common Stock Purchase Warrant, or the Warrant, to Johnson & Johnson Innovation – JJDC, Inc., or JJDC, an affiliate of Janssen, for 509,611 shares of the Company’s common stock at an exercise price of $ 9.81 per share.

Under the terms of the Janssen Agreement, the Company made an upfront payment of $ 1.0 million in cash to Janssen and issued a warrant (or "the Warrant") to purchase 509,611 shares of the Company’s common stock with an exercise price of $ 9.81 per share to Johnson & Johnson Innovation – JJDC, Inc., or JJDC, an affiliate of Janssen.

The Warrant is exercisable by JJDC, in whole or in part, at any time prior to February 9, 2022.

The Warrant and the shares issuable upon exercise of the Warrant will be sold and issued without registration under the Securities Act of 1933, as

amended, or the Securities Act.

The Warrant and the shares issuable upon exercise of the Warrant will be sold and issued without registration under the Securities Act of 1933, as amended, or the Securities Act.

The Company recorded the fair value of the Warrant in the amount of $ 3.4 million to additional paid-in capital and research and development expense in March 2017.

In addition, Janssen could be eligible to receive up to an aggregate of $ 16.5 million from the Company in specified development milestone payments on a product-by-product basis.

Cyclerion Therapeutics License Agreement

Summary of Agreement

On June 4, 2021, the Company entered into a License Agreement, the Cyclerion Agreement, with Cyclerion Therapeutics Inc., or Cyclerion, pursuant to which Cyclerion granted the Company an exclusive global license under certain intellectual property rights to research, develop and commercialize praliciguat, an investigational oral sGC stimulator.

Under the terms of the Cyclerion Agreement, the Company made an upfront payment of $ 3.0 million in cash to Cyclerion, which was paid during the second quarter of 2021.

Substantially all of the fair value of the assets acquired in conjunction with the Cyclerion Agreement was concentrated in the acquired license.

As a result, the Company accounted for this transaction as an asset acquisition under ASU No.

2017-01, Business Combinations (Topic 805):

Clarifying the Definition of a Business (“ASU 2017-01”).

The upfront payment was charged to expense at acquisition, as it relates to a development stage compound with no alternative future use.

In addition, Cyclerion could be eligible to receive up to an aggregate of $ 222.0 million from the Company 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 a low-single-digit- to mid-double-digit percentage 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.

The Company recorded the upfront payment in the amount of $ 3.0 million to research and development expense in June 2021.

Unless earlier terminated, the Cyclerion Agreement will expire on a product-by-product and country-by-country basis upon the expiration of the last royalty term, which ends upon the longer of the expiration of the patents licensed under the Cyclerion Agreement, the expiration of regulatory exclusivity for such product, or 10 years from first commercial sale of such product.

The Company may terminate the Cyclerion Agreement in its entirety or only with respect to a particular licensed compound or product upon 180 days’ prior written notice to Cyclerion.

The parties also have customary termination rights, subject to a cure period, in the event of the other party’s material breach of the Cyclerion Agreement or in the event of certain additional circumstances.

Vifor Pharma License Agreement

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Pursuant to the Vifor Amended Agreement, the Company granted Vifor Pharma an exclusive license to sell vadadustat to FKC and to certain third party dialysis organizations approved by the Company, or Third Party Dialysis Organizations, in the United States.

The license granted under the Vifor Amended Agreement will become effective upon (i) the approval of vadadustat for DD-CKD adult patients by the FDA, (ii) the earlier of a determination by the Centers for Medicare & Medicaid Services, or CMS, that vadadustat will be reimbursed using Medicare’s bundled reimbursement model or that vadadustat will be reimbursed using the Transitional Drug Add-On Payment Adjustment, and (iii) payment by Vifor Pharma of a $ 25.0 million milestone upon the occurrence of (i) and (ii).

The Vifor Amended Agreement is structured as a profit share arrangement between the Company and Vifor Pharma in which the Company will receive a majority of the profit, after deduction of certain amounts relating to Vifor Pharma’s costs, from Vifor Pharma’s sales of vadadustat to FKC and the Third Party Dialysis Organizations in the United States.

The Company will share the milestone payment and the revenue from the profit share with Otsuka pursuant to the Otsuka U.S.

The Company currently retains rights to commercialize vadadustat for use in the NDD-CKD market and in other dialysis organizations in the United States, which will be done in collaboration with Otsuka following FDA approval.

The Vifor Amended Agreement provides that the Company and Vifor Pharma will enter into a commercial supply agreement for vadadustat pursuant to which the Company will supply all of Vifor Pharma’s requirements for vadadustat in the United States.

In addition, Vifor Pharma will enter into supply arrangements with FKC and the Third Party Dialysis Organizations that will govern the terms pursuant to which Vifor Pharma will supply vadadustat to FKC and the Third Party Dialysis Organizations for use in patients at its dialysis centers in the United States.

During the term of the Vifor Amended Agreement, Vifor Pharma is not permitted to sell any HIF product that competes with vadadustat in the United States to FKC or its affiliates or to any Third Party Dialysis Organization, and the Company may not directly supply vadadustat to FKC or any other affiliate of FMCNA or any Third Party Dialysis Organization.

Unless earlier terminated, the Vifor Amended Agreement will expire upon the later of the expiration of all patents that claim or cover vadadustat or expiration of marketing or regulatory exclusivity for vadadustat in the United States.

Vifor Pharma may terminate the Vifor Amended Agreement in its entirety upon 12 months’ prior written notice after the release of the first top-line data in the vadadustat global Phase 3 program for DD-CKD adult patients, which release occurred in the second quarter of 2020 with the announcement of top-line data from the INNO 2 VATE program.

In addition, either party may, subject to a cure period, terminate the Vifor Amended Agreement in the event of the other party’s uncured material breach or bankruptcy.

The Company may terminate the Vifor Amended Agreement (or suspend the license) upon the occurrence of certain events, such as for specific violations of the Vifor Amended Agreement, Vifor Pharma’s failure to achieve certain sales levels, or if there are changes in Vifor Pharma’s relationship with FKC or in applicable laws and regulations related to the reimbursement of drugs like vadadustat at dialysis clinics, or if Vifor Pharma contests the validity or enforceability of any patent controlled by the Company that covers vadadustat.

The Vifor Amended Agreement also includes a standstill provision and customary representations and warranties.

Investment Agreement

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The amount representing the premium over the closing stock price of $ 12.69 on the date of the transaction, totaling $ 4.7 million, was determined by the Company to represent consideration related to the Vifor Agreement.

As the parties’ rights under the Vifor

Agreement are conditioned upon (a) the approval of vadadustat for DD-CKD adult patients by the FDA;

As the parties’ rights under the Vifor Agreement are conditioned upon (a) the approval of vadadustat for DD-CKD adult patients by the FDA;

(b) the earlier of a determination by CMS that vadadustat will be reimbursed using Medicare’s bundled reimbursement model or that vadadustat will be reimbursed using the Transitional Drug Add-On Payment Adjustment;

12 unchanged sentences

In March of 2021, the Company submitted an NDA for the treatment of anemia due to CKD in both DD-CKD and NDD-CKD adult patients.

The Company's NDA submission did not include a Priority Review Voucher.

The Company's NDA submission did not include a PRV.

During the quarter ended March 31, 2020, the $ 10.0 million payment to Vifor Pharma was recorded to research and development expense in the unaudited condensed consolidated statement of operations and as an operating cash outflow in the unaudited condensed consolidated statement of cash flows.

6 unchanged sentences

The Company is eligible to receive from Panion or any sublicensee royalty payments based on a mid-single digit percentage of net sales of ferric citrate in Panion’s licensed territories.

The Panion Amended License Agreement terminates upon the expiration of each of the Company’s and Panion’s obligations to pay royalties thereunder.

In addition, the Company may terminate the Panion Amended License Agreement (i) in its entirety or (ii) with respect to one or more countries in the Company’s licensed territory, in either case upon 90 days’ notice.

Company and Panion also each have the right to terminate the Panion Amended License Agreement upon the occurrence of a material breach of the Panion Amended License Agreement by the other party, subject to certain cure provisions, or certain insolvency events.

The Panion Amended License Agreement also provides that, on a country-by-country basis, until the second anniversary of the expiration of the obligation of the Company or Panion, as applicable, to pay royalties in a country in which such party has ferric citrate for sale on the date of such expiration, neither the other party nor its affiliates will, directly or indirectly, sell, distribute or otherwise commercialize or supply or cause to supply ferric citrate to a third party for sale or distribution in such country.

The Panion Amended License Agreement includes customary terms relating to, among others, indemnification, confidentiality, remedies, and representations and warranties.

In addition, the Panion Amended License Agreement provides that each of the Company and Panion has the right, but not the obligation, to conduct litigation against any infringer of certain patent rights under the Panion Amended License Agreement in certain territories.

The Company recognized royalty payments due to Panion of approximately $ 2.5 million during each of the three months ended March 31, 2021 and 2020, relating to the Company’s sales of Auryxia in the United States and JT and Torii’s net sales of Riona in Japan, as the Company is required to pay a mid-single digit percentage of net sales of ferric citrate in the Company’s licensed territories to Panion under the terms of the Panion Amended License Agreement.

A more detailed description of this license agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The Company recognized royalty payments due to Panion of approximately $ 2.8 million during each of the three months ended June 30, 2021 and 2020 and $ 5.3 million during each of the six months ended June 30, 2021 and 2020 relating to the Company’s sales of Auryxia in the United States and JT and Torii’s net sales of Riona in Japan, as the Company is required to pay a mid-single digit percentage of net sales of ferric citrate in the Company’s licensed territories to Panion under the terms of the Panion Amended License Agreement.

Sublicense Agreement with Japan Tobacco, Inc.

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JT and Torii are responsible for the future development and commercialization costs in Japan.

Ferric citrate hydrate is currently approved by the Japanese Ministry of Health, Labour and Welfare for manufacturing and marketing in Japan for the treatment of hyperphosphatemia in adult patients with CKD and for the treatment of adult patients with IDA.

Ferric citrate hydrate is being marketed in Japan by Torii, under the brand name Riona.

The Company is eligible to receive royalty payments based on a tiered double-digit percentage of net sales of Riona in Japan escalating up to the mid-teens, subject to certain reductions upon expiration or termination of the Amended and Restated License Agreement between Keryx and Panion, by which Keryx in-licensed the exclusive worldwide rights, excluding certain Asian-Pacific countries, for the development and commercialization of ferric citrate.

The Company is entitled to receive up to an additional $ 55.0 million upon the achievement of certain annual net sales milestones.

The sublicense under the JT and Torii Sublicense Agreement terminates upon the expiration of all underlying patent rights.

Also, JT and Torii may terminate the JT and Torii Sublicense Agreement with or without cause upon at least six months prior written notice to us.

Additionally, either party may terminate the JT and Torii Sublicense Agreement for cause upon 60 days’ prior written notice after the breach of any uncured material provision of the JT and Torii Sublicense Agreement, or after certain insolvency events .

A more detailed description of this sublicense agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Revenue Recognition

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As such, the Company did not develop a best estimate of standalone selling price for the License and Supply Performance Obligation and allocated the entire transaction price to this performance obligation.

Additionally, as of the consummation of the Merger, the services associated

with the License and Supply Performance Obligation were completed and JT and Torii had secured their own source to manufacture ferric citrate hydrate.

As such, any initial license fees as well as any development-based milestones and manufacturing fee revenue were received and recognized prior to the Merger.

Additionally, as of the consummation of the Merger, the services associated with the License and Supply Performance Obligation were completed and JT and Torii had secured their own source to manufacture ferric citrate hydrate.

As such, any initial license fees as well as any development-based milestones and

manufacturing fee revenue were received and recognized prior to the Merger.

The Company determined that the remaining consideration that may be payable to the Company under the terms of the sublicense agreement are either quarterly royalties on net sales or payments due upon the achievement of sales-based milestones.

In accordance with ASC 606, the Company recognizes sales-based royalties, including milestone payments based on the level of sales, when the related sales occur as these amounts have been determined to relate predominantly to the license granted to JT and Torii and therefore are recognized at the later of when the performance obligation is satisfied, or the related sales occur.

The Company recognized license revenue of $ 1.2 million and $ 1.1 million during the three months ended March 31, 2021 and 2020, respectively, related to royalties earned on net sales of Riona in Japan.

The Company recognized license revenue of $ 1.5 million and $ 1.7 million during the three months ended June 30, 2021 and 2020, respectively, and $ 2.6 million and $ 2.9 million, respectively, during the six months ended June 30, 2021 and 2020, respectively, related to royalties earned on net sales of Riona in Japan.

The Company records the associated mid-single digit percentage of net sales royalty expense due to Panion, the licensor of Riona, in the same period as the royalty revenue from JT and Torii is recorded.

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The Company recognized the proceeds received from HCR as a liability that is being amortized using the effective interest method over the life of the arrangement.

The Company recorded the net proceeds of $ 44.8 million as a liability.

At the transaction date, the Company recorded the net proceeds of $ 44.8 million as a liability.

In order to determine the amortization of the liability, the Company is required to estimate the total amount of future net royalty payments to be made to HCR over the term of the Royalty Agreement.

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The Company imputes interest on the unamortized portion of the liability using the effective interest method.

The annual effective interest rate as of March 31, 2021 was 19.3 % which is reflected as interest expense in the unaudited condensed consolidated statements of operations and comprehensive loss.

The annual effective interest rate as of June 30, 2021 was 19.3 % which is reflected as interest expense in the unaudited condensed consolidated statements of operations and comprehensive loss.

Over the course of the Royalty Agreement, the actual interest rate will be affected by the amount and timing of royalty revenue recognized and changes in forecasted royalty revenue.

1 unchanged sentence

On a quarterly basis, the Company reassesses the effective interest rate and adjusts the rate prospectively as needed.

The following table shows the activity within the liability account for the three months ended March 31, 2021:

March 31, 2021

The following table shows the activity within the liability account for the six months ended June 30, 2021:

June 30, 2021

(in thousands)

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Available For Sale Securities

Cash, cash equivalents, and available for sale securities at March 31, 2021 and December 31, 2020 consisted of the following:

Cash, cash equivalents, and available for sale securities at June 30, 2021 and December 31, 2020 consisted of the following:

Amortized Cost Gross

1 unchanged sentence

(in thousands)

March 31, 2021

June 30, 2021

Cash and cash equivalents $ 246,992 $ — $ — $ 246,992

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Total cash, cash equivalents, and available for sale securities $ 268,677 $ 13 $ — $ 268,690

The estimated fair value of the Company’s available for sale securities balance at March 31, 2021, by contractual maturity, was as follows (in thousands):

Due in one year or less $ 19,999

Due after one year —

Total available for sale securities $ 19,999

There were no realized gains or losses on available for sale securities for the three months ended March 31, 2021 and 2020 and the Company did no t recognize any credit losses during the three months ended March 31, 2021 and 2020.

Additionally, the Company did no t have any available for sale securities that were in an unrealized loss position as of March 31, 2021 and December 31, 2020.

There were no realized gains or losses on available for sale securities for the three and six months ended June 30, 2021 and 2020 and the Company did no t recognize any credit losses during the three and six months ended June 30, 2021 and 2020.

Additionally, the Company did no t have any available for sale securities that were in an unrealized loss position as of June 30, 2021 and December 31, 2020.

Fair Value of Financial Instruments

4 unchanged sentences

This is because the Company values its cash equivalents and available for sale securities using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

Assets measured or disclosed at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 are summarized below:

Assets measured or disclosed at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 are summarized below:

Fair Value Measurements Using

1 unchanged sentence

(in thousands)

March 31, 2021

June 30, 2021

Cash and cash equivalents $ 246,992 $ — $ — $ 246,992

government debt securities — 19,999 — 19,999

$ 246,992 $ — $ — $ 246,992

15 unchanged sentences

The events of default include maintaining, on an annual basis, a minimum liquidity threshold which started in 2021, and on a quarterly basis, a minimum net sales threshold for Auryxia which started in the fourth quarter of 2020.

The Company recorded a derivative liability related to the Company’s Loan Agreement with Pharmakon of $ 2.5 million and $ 2.4 million as of March 31, 2021 and December 31, 2020, respectively.

The Company classified the derivative liability as a non-current liability on the unaudited condensed consolidated balance sheet as of March 31, 2021 and December 31, 2020.

The estimated fair value of the derivative liability on both March 31, 2021 and December 31, 2020 was determined using a scenario-based approach and discounted cash flow model that includes principal and interest payments under various scenarios involving clinical development success for vadadustat and various cash flow assumptions.

The Company recorded a derivative liability related to the Company’s Loan Agreement with Pharmakon of $ 1.9 million and $ 2.4 million as of June 30, 2021 and December 31, 2020, respectively.

The Company classified the derivative liability as a non-current liability on the unaudited condensed consolidated balance sheet as of June 30, 2021 and December 31, 2020.

The estimated fair value of the derivative liability on both June 30, 2021 and December 31, 2020 was determined using a scenario-based approach and discounted cash flow model that includes principal and interest payments under various scenarios involving clinical development success for vadadustat and various cash flow assumptions.

Probabilities surrounding clinical development success were derived using industry benchmarks.

4 unchanged sentences

Balance at March 31, 2021 $ 2,500

The Company had no other assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at March 31, 2021 and December 31, 2020.

Change in fair value of derivative liability, recorded as other income ( 570 )

Balance at June 30, 2021 $ 1,930

The Company had no other assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at June 30, 2021 and December 31, 2020.

Investment securities are exposed to various risks such as interest rate, market and credit risks.

1 unchanged sentence

The components of inventory are summarized as follows:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(in thousands)

4 unchanged sentences

Long-term inventory, which primarily consists of raw materials and work in process, is included in other assets in the Company’s unaudited condensed consolidated balance sheets.

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(in thousands)

3 unchanged sentences

Total inventory $ 97,063 $ 86,309

Inventory amounts written down as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold totaled $ 5.1 million during the three months ended March 31, 2021, in addition to related step-up charges of $ 8.7 million during the three months ended March 31, 2021.

Inventory write-downs charged to cost of goods sold totaled $ 0.1 million during the three months ended March 31, 2020.

The increase for the three months ended March 31, 2021 was primarily related to inventory reserves related to a previously disclosed manufacturing quality issue related to Auryxia.

Inventory amounts written down as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold totaled $ 0.4 million and $ 5.4 million during the three and six months ended June 30, 2021, in addition to related step-up charges of $ 8.7 million during the six months ended June 30, 2021.

Inventory write-downs charged to cost of goods sold totaled $ 9.9 million and $ 10.1 million during the three and six months ended June 30, 2020.

The decrease for the three and six months ended June 30, 2021 as compared to the three and six months ended June 30, 2020 was primarily due to lower write-downs to inventory reserves related to a previously disclosed manufacturing quality issue related to Auryxia during 2020.

If future sales of Auryxia are lower than expected, the Company may be required to write-down the value of such inventories.

2 unchanged sentences

Intangible Assets

The following table presents the Company’s intangible assets at March 31, 2021 and December 31, 2020 (in thousands):

March 31, 2021

The following table presents the Company’s intangible assets at June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021

Gross Carrying

13 unchanged sentences

The Company amortizes its definite-lived intangible assets acquired as part of the Merger using the straight-line method, which is considered the best estimate of economic benefit, over its estimated useful life.

The Company recorded $ 9.0 million and $ 9.1 million in amortization expense related to the developed product rights for Auryxia during the three months ended March 31, 2021 and 2020, respectively.

Goodwill was $ 55.1 million as of March 31, 2021 and December 31, 2020.

The Company recorded $ 9.0 million and $ 9.1 million in amortization expense related to the developed product rights for Auryxia during the three months ended June 30, 2021 and 2020, respectively, and $ 18.0 million and $ 18.2 million during the six months ended June 30, 2021 and 2020, respectively.

Goodwill was $ 55.1 million as of June 30, 2021 and December 31, 2020.

The Company operates in one operating segment which the Company considers to be the only reporting unit.

Goodwill is evaluated for impairment at the reporting unit level on an annual basis as of October 1, and more frequently if indicators are present or changes in circumstances suggest that an impairment may exist.

There were no impairments of goodwill during the three months ended March 31, 2021 or 2020.

There were no impairments of goodwill during the three and six months ended June 30, 2021 or 2020.

Accrued Expenses

Accrued expenses as of March 31, 2021 and December 31, 2020 are as follows:

March 31, 2021 December 31, 2020

Accrued expenses as of June 30, 2021 and December 31, 2020 are as follows:

June 30, 2021 December 31, 2020

(in thousands)

34 unchanged sentences

Under certain circumstances, a default interest rate will apply on all outstanding obligations during the occurrence and continuance of an event of default.

As of March 31, 2021 and December 31, 2020, the Company determined that no events of default had occurred.

As of June 30, 2021 and December 31, 2020, the Company determined that no events of default had occurred.

The Company assessed the terms and features of the Loan Agreement in order to identify any potential embedded features that would require bifurcation or any beneficial conversion feature.

4 unchanged sentences

In accordance with ASC 815, the Company concluded that these features are not clearly and closely related to the host instrument, and represent a single compound derivative that is required to be re-measured at fair value on a quarterly basis.

The fair value of the derivative liability related to the Company’s Loan Agreement with Pharmakon was $ 2.5 million and $ 2.4 million as of March 31, 2021 and December 31, 2020, respectively.

The Company classified the derivative liability as a non-current liability on the unaudited condensed consolidated balance sheet as of March 31, 2021.

During the three months ended March 31, 2021 and 2020, the Company recognized approximately $ 2.7 million and $ 2.2 million, respectively, of interest expense related to the Loan Agreement.

The fair value of the derivative liability related to the Company’s Loan Agreement with Pharmakon was $ 1.9 million and $ 2.4 million as of June 30, 2021 and December 31, 2020, respectively.

The Company classified the derivative liability as a non-current liability on the unaudited condensed consolidated balance sheet as of June 30, 2021.

The Company recognized interest expense related to the Loan Agreement of $ 2.7 million and $ 2.2 million, respectively, during the three months ended June 30, 2021 and 2020, and $ 5.4 million and $ 4.4 million for the first six months ended June 30, 2021 and 2020, respectively.

In connection with the Janssen Agreement, in February 2017, the Company issued a warrant to purchase 509,611 shares of the Company’s common stock at an exercise price of $ 9.81 per share.

2 unchanged sentences

The fair value at issuance of $ 3.4 million was calculated using the Black Scholes option pricing model and was charged to research and development expense as it represented consideration for a license for which the underlying intellectual property was deemed to have no alternative future use.

As of March 31, 2021, the warrant remains outstanding and expires on February 9, 2022.

As of June 30, 2021, the warrant remains outstanding and expires on February 9, 2022.

Stockholders’ Equity

1 unchanged sentence

On June 5, 2020, the Company filed a Certificate of Amendment to its Ninth Amended and Restated Certificate of Incorporation, or its Charter, to increase the number of authorized shares of common stock from 175,000,000 to 350,000,000 .

As of March 31, 2021, the authorized capital stock of the Company included 350,000,000 shares of common stock, par value $ 0.00001 per share, of which 158,520,089 and 148,074,085 shares were issued and outstanding at March 31, 2021 and December 31, 2020, respectively;

and 25,000,000 shares of undesignated preferred stock, par value $ 0.00001 per share, of which no shares were issued and outstanding at March 31, 2021 and December 31, 2020.

As of June 30, 2021, the authorized capital stock of the Company included 350,000,000 shares of common stock, par value $ 0.00001 per share, of which 169,651,423 and 148,074,085 shares were issued and outstanding as of June 30, 2021 and December 31, 2020, respectively;

and 25,000,000 shares of undesignated preferred stock, par value $ 0.00001 per share, of which no shares were issued and outstanding as of June 30, 2021 and December 31, 2020.

At-the-Market Facility

4 unchanged sentences

During the three months ended March 31, 2020, the Company sold 7,973,967 shares of common stock under this program with net proceeds (after deducting commissions and other offering expenses) of $ 56.7 million.

On March 12, 2020, the Company filed a prospectus supplement relating to the sales agreement, pursuant to which it was able to offer and sell under the sales agreement up to $ 65.0 million of its common stock at current market prices from time to time.

Through December 31, 2020, the Company sold 3,509,381 shares of common stock under this prospectus supplement with net proceeds (after deducting commissions and other offering expenses) of $ 10.6 million.

During the three months ended March 31, 2021, the Company sold 5,224,278 shares of common stock under this prospectus supplement with net proceeds (after deducting commissions and other offering expenses) of $ 15.9 million.

On February 25, 2021, the Company filed a prospectus relating to the sales agreement with its new shelf registration statement (which replaced the Company's prior shelf registration statement and sales agreement prospectus supplement), pursuant to which it is able to offer and sell under the sales agreement up to $ 100.0 million of its common stock at current market prices from time to time.

During the three months ended March 31, 2021 and through the date of this Quarterly Report on Form 10-Q, the Company sold 5,019,539 shares of common stock under this prospectus with net proceeds (after deducting commissions and other offering expenses) of $ 17.1 million.

Equity Offering

In May 2020, the Company sold 12,650,000 shares of its common stock in a public offering at a price of $ 12.00 per share, including 1,650,000 shares from the full exercise of the underwriters' option to purchase additional shares.

The aggregate net proceeds received by the Company from the offering were $ 142.4 million, net of underwriting discounts and commissions and offering expenses payable by the Company.

On February 28, 2014, the Company’s Board of Directors adopted its 2014 Incentive Plan and its 2014 Employee Stock Purchase Plan, or the 2014 ESPP, which were subsequently approved by its shareholders and became effective upon the closing of the Company’s initial public offering on March 25, 2014.

The Company’s 2014 Incentive Plan was subsequently amended on December 11, 2018, which amendment did not require shareholder approval.

The Company’s 2014 Incentive Plan, as amended, is referred to as the 2014 Plan.

The 2014 Plan replaced the Company’s Amended and Restated 2008 Equity Incentive Plan, or the 2008 Plan;

however, options or other awards granted under the 2008 Plan prior to the adoption of the 2014 Plan that have not been settled or forfeited remain outstanding and effective.

On March 12, 2020, the Company filed a prospectus supplement relating to the sales agreement, pursuant to which it is able to offer and sell up to $ 65.0 million of its common stock at current market prices from time to time.

Through December 31, 2020, the Company sold 3,509,381 shares of common stock under this program with net proceeds (after deducting commissions and other offering expenses) of $ 10.6 million.

During the three months ended March 31, 2021, the Company sold 5,224,278 shares of common stock under this program with net proceeds (after deducting commissions and other offering expenses) of $ 15.9 million.

On February 25, 2021, the Company filed a prospectus relating to the sales agreement with its new shelf registration statement (which replaced the prior shelf registration statement and the sales agreement prospectus supplement), pursuant to which it is able to offer and sell up to $ 100.0 million of its common stock at current market prices from time to time.

During the three and six months ended June 30, 2021 and through the date of this Quarterly Report on Form 10-Q, the Company sold 10,446,160 and 24,404,643 shares of common stock under this program with net proceeds (after deducting commissions and other offering expenses) of $ 37.3 million and $ 67.2 million, respectively.

The Company maintains one stock incentive plan, the 2014 Incentive Plan, or the 2014 Plan as well as the 2014 Employee Stock Purchase Plan, or the 2014 ESPP.

The 2014 Plan replaced the Company’s Amended and Restated 2008 Equity Incentive Plan, or the 2008 Plan, however, options or other awards granted under the 2008 Plan prior to the adoption of the 2014 Plan that

have not been settled or forfeited remain outstanding and effective.

On June 6, 2019, the Company’s shareholders approved the Amended and Restated 2014 Employee Stock Purchase Plan, or the ESPP.

In May 2016, the Company’s Board of Directors approved an inducement award program that was separate from the Company’s equity plans and which, consistent with Nasdaq Listing Rule 5635(c)(4), did not require shareholder approval, or the Inducement Award Program.

During the three months ended March 31, 2021, the Company granted 336,000 options to purchase shares of the Company’s common stock to new hires as inducements material to such employees' entering into employment with the Company, of which 336,000 options to purchase Akebia Shares remained outstanding at March 31, 2021.

The Company also maintains an inducement award program that is separate from the Company's equity plans under which inducement awards may be granted consistent with Nasdaq Listing Rule 5635(c)(4).

During the six months ended June 30, 2021, the Company granted 864,200 options to purchase shares of the Company’s common stock to new hires as inducements material to such employees' entering into employment with the Company, of which 845,200 options to purchase Akebia Shares remained outstanding as of June 30, 2021.

The 2014 Plan allows for the granting of stock options, stock appreciation rights, or SARs, restricted stock, unrestricted stock, RSUs, performance awards and other awards convertible into or otherwise based on shares of the Company’s common stock.

7 unchanged sentences

In addition, the number of Keryx Shares available for issuance under the Keryx 2018 Plan, as adjusted by the Exchange Multiplier pursuant to the terms of the Merger Agreement, may be used for awards granted by the Company under its 2014 Plan, or the Assumed Shares, provided that the Company uses the Assumed Shares for individuals who were not employees or directors of the Company prior to the consummation of the Merger.

During the three months ended March 31, 2021, the Company granted 1,797,200 options to purchase Akebia Shares to employees under the 2014 Plan, 336,000 options to purchase Akebia Shares to employees under the Inducement Award Program, 3,199,200 Akebia RSUs to employees under the 2014 Plan, no Akebia PSUs to employees under the 2014 plan, 80,200 options to purchase Akebia Shares to directors under the 2014 Plan, and no Akebia RSUs to directors under the 2014 Plan.

The ESPP provides for the issuance of options to purchase shares of the Company’s common stock to participating employees at a discount to their fair market value.

As noted above, the Company’s stockholders approved the ESPP, which amended and restated the Company’s 2014 ESPP, on June 6, 2019.

The maximum aggregate number of shares at March 31, 2021 of the Company’s common stock available for future issuance under the ESPP is 5,326,058 .

Under the ESPP, each offering period is six months , at the end of which employees may purchase shares of the Company’s common stock through payroll deductions made over the term of the offering.

The per-share purchase price at the end of each offering period is equal to the lesser of eighty-five percent ( 85 %) of the closing price of the Company’s common stock at the beginning or end of the offering period.

Shares Reserved for Future Issuance

The Company has reserved for future issuance the following number of shares of common stock:

March 31, 2021 December 31, 2020

Common stock options and RSUs outstanding (1) 17,892,786 14,108,828

Shares available for issuance under Akebia equity

plans (2) 3,708,868 3,468,080

Warrant to purchase common stock 509,611 509,611

Shares available for issuance under the ESPP (3) 5,326,058 5,480,334

Total 27,437,323 23,566,853

(1) Includes awards granted under the 2014 Plan and the Inducement Award Program and awards issued in connection with the Merger.

(2) On January 1, 2021, January 1, 2020 and January 1, 2019, the shares reserved for future grants under the 2014 Plan increased by 4,880,775 , 4,031,376 and 3,801,198 shares, respectively, pursuant to the 2014 Plan Evergreen Provision.

On January 30, 2019, the Company’s Board of Directors approved 3,150,000 shares for issuance as option awards in fiscal year 2019 under the Inducement Award Program.

(3) On June 6, 2019, the shares reserved for future issuance under the ESPP increased by 5,200,000 shares upon shareholder approval of the Amended and Restated 2014 Employee Stock Purchase Plan.

On February 28, 2018 and February 28, 2017, the shares reserved for future issuance under the 2014 ESPP remained unchanged.

There were no increases in the shares reserved for future issuance pursuant to the evergreen provision under the ESPP in 2017 and 2018 as the maximum aggregate number of shares available for purchase under the 2014 ESPP had reached its cap of 739,611 on February 28, 2016.

Stock-Based Compensation

Stock Options

Service-Based Stock Options

On February 26, 2021, as part of the Company’s annual grant of equity, the Company issued 1,797,200 stock options to employees.

The Company grants service-based stock options to employees under the 2014 Plan.

During the six months ended June 30, 2021, the Company issued 1,797,200 options to employees.

In addition, the Company issues stock options to directors, new hires and occasionally to other employees not in connection with the annual grant process.

During the first six months ended June 30, 2021, the Company issued 200,800 options to directors under the 2014 Plan.

Options granted by the Company vest over periods of between 12 and 48 months, subject, in each case, to the individual’s continued service through the applicable vesting date.

Options vest either 100 % on the first anniversary of the grant date or in installments of (i) 25 % at the one year anniversary and (ii) 12 equal quarterly installments beginning after the one year anniversary of the grant date, subject to the individual’s continuous service with the Company.

Options generally expire ten years after the date of grant.

The Company recorded approximately $ 2.2 million and $ 1.6 million of stock-based compensation expense related to stock options during the three months ended March 31, 2021 and 2020, respectively.

Restricted Stock Units

Service-Based Restricted Stock Units

On February 26, 2021, the Company issued 3,180,400 restricted stock units, or RSUs, to employees as part of the Company’s annual equity grant process.

The Company occasionally issues RSUs not in connection with the annual grant process to employees when approved by the Compensation Committee.

Options generally expire 10 years after the date of grant.

The Company also grants service-based restricted stock units, or RSUs to employees under the 2014 Plan.

During the six months ended June 30, 2021, the Com pany issued 3,372,212 RSUs to employees.

In addition, the Company issued 82,200 RSUs to directors under the 2014 Plan during the six months ended June 30, 2021.

The Company also occasionally issues RSUs not in connection with the annual grant process to employees.

Generally, RSUs granted by the Company vest in one of the following ways:

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The expense recognized for these awards is based on the grant date fair value of the Company’s common stock multiplied by the number of units granted and recognized on a straight-line basis over the vesting period.

The Company recorded approximately $ 3.5 million and $ 3.1 million of stock-based compensation expense related to employee RSUs during the three months ended March 31, 2021 and 2020, respectively.

Performance-Based Restricted Stock Units

The Company also grants performance-based restricted stock units, or PSUs to employees under the 2014 Plan.

The PSUs granted by the Company vest in connection with the achievement of specified commercial and regulatory milestones.

The PSUs also feature a time-based vesting component.

The expense recognized for these awards is based on the grant date fair value of the Company’s common stock multiplied by the number of units granted and recognized over time based on the

probability of meeting such commercial and regulatory milestones.

The Company recorded approximately $ 0.1 million of stock-based compensation expense related to employee PSUs during each of the three months ended March 31, 2021 and 2020.

Employee Stock Purchase Plan

The first offering period under the ESPP opened on January 2, 2015.

The Company issued 154,276 shares during the three months ended March 31, 2021.

The Company recorded approximately $ 0.2 million of stock-based compensation expense related to the ESPP during each of the three months ended March 31, 2021 and 2020.

Compensation Expense Summary

The Company has classified its stock-based compensation expense related to share-based awards as follows:

Three Months Ended

March 31, 2021 March 31, 2020

(in thousands)

Research and development $ 1,437 $ 1,542

Selling, general and administrative 4,555 3,374

Total $ 5,992 $ 4,916

Compensation expense by type of award:

Three Months Ended

March 31, 2021 March 31, 2020

(in thousands)

Stock options $ 2,227 $ 1,617

Restricted stock units 3,596 3,142

Employee stock purchase plan 169 157

Total $ 5,992 $ 4,916

The expense recognized for these awards is based on the grant date fair value of the Company’s common stock multiplied by the number of units granted and recognized over time based on the probability of meeting such commercial and regulatory milestones.

The Company did not grant any PSUs during the six months ended June 30, 2021.

The ESPP provides for the issuance of options to purchase shares of the Company’s common stock to participating employees at a discount to their fair market value.

As noted above, the Company’s stockholders approved the ESPP, which amended and restated the Company’s 2014 ESPP, on June 6, 2019.

The maximum aggregate number of shares at June 30, 2021 of the Company’s common stock available for future issuance under the ESPP is 5,326,058 .

Under the ESPP, each offering period is six months , at the end of which employees may purchase shares of the Company’s common stock through payroll deductions made over the term of the offering.

The per-share purchase price at the end of each offering period is equal to the lesser of

eighty-five percent ( 85 %) of the closing price of the Company’s common stock at the beginning or end of the offering period.

The Company issued 154,276 shares under the ESPP during the six months ended June 30, 2021.

Commitments and Contingencies

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The term of the Cambridge Lease with respect to the office space expires on September 11, 2026, with one five-year extension option available.

The term of the Boston Lease office space expires on February 28, 2023, with an extension option for one

additional five-year extension option available.

The term of the Boston Lease office space expires on February 28, 2023, with an extension option for one additional five-year term available.

The renewal options in these real estate leases were not included in the calculation of the operating lease assets and operating lease liabilities as the renewal is not reasonably certain.

The term of the Cambridge Lease with respect to the lab space expires on January 31, 2025, with an extension option for one additional period through September 11, 2026.

The renewal options in this real estate lease was included in the calculation of the operating lease assets and operating lease liabilities as the renewal is reasonably certain.

The renewal option in this real estate lease was included in the calculation of the operating lease assets and operating lease liabilities as the renewal is reasonably certain.

The lease agreements do not contain residual value guarantees.

Operating lease costs were $ 1.7 million for each of the three months ended March 31, 2021 and 2020.

Cash paid for amounts included in the measurement of operating lease liabilities was $ 1.8 million and $ 1.7 million for the three months ended March 31, 2021 and 2020, respectively.

Operating lease costs were $ 1.7 million for each of the three months ended June 30, 2021 and 2020 and $ 3.3 million for each of the six months ended June 30, 2021 and 2020.

Cash paid for amounts included in the measurement of operating lease liabilities was $ 1.8 million for each of the three months ended June 30, 2021 and 2020 and $ 3.5 million for each of the six months ended June 30, 2021 and 2020, respectively.

In September 2019, Keryx entered into an agreement to sublease the Boston office space to Foundation Medicine, Inc., or Foundation.

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Keryx continues to be obligated for all payment terms pursuant to the Boston Lease, and the Company will guaranty Keryx’s obligations under the sublease.

Keryx recorded $ 0.4 million in sublease rental income from Foundation during each of the three months ended March 31, 2021 and 2020.

The Company has not entered into any material short-term leases or financing leases as of March 31, 2021.

The total security deposit in connection with the Cambridge Lease is $ 1.6 million as of March 31, 2021.

Keryx recorded $ 0.4 million in sublease rental income from Foundation during each of the three months ended June 30, 2021 and 2020 and $ 0.9 million during each of the six months ended June 30, 2021 and 2020.

The Company has not entered into any material short-term leases or financing leases as of June 30, 2021.

The total security deposit in connection with the Cambridge Lease is $ 1.6 million as of June 30, 2021.

Additionally, the Company recorded $ 0.4 million for the security deposit under the Boston Lease.

Both the Cambridge Lease and the Boston Lease have their security deposits in the form of a letter of credit, all of which are included as restricted cash in other assets in the Company’s unaudited condensed consolidated balance sheets as of March 31, 2021.

As of March 31, 2021, undiscounted minimum rental commitments under non-cancelable leases, for each of the next five years and total thereafter are as follows:

As of June 30, 2021, undiscounted minimum rental commitments under non-cancelable leases, for each of the next five years and total thereafter are as follows:

Leases Lease Payments

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In arriving at the operating lease liabilities, the Company applied incremental borrowing rates ranging from 6.22 % to 6.94 %, which were based on the remaining lease term at either the date of adoption of ASC 842 or the effective date of any subsequent lease term extensions.

As of March 31, 2021, the remaining lease terms ranged from 1.92 years to 5.45 years.

As of March 31, 2021, the following represents the difference between the remaining undiscounted minimum rental commitments under non-cancelable leases and the operating lease liabilities:

As of June 30, 2021, the remaining lease terms ranged from 1.67 years to 5.20 years.

As of June 30, 2021, the following represents the difference between the remaining undiscounted minimum rental commitments under non-cancelable leases and the operating lease liabilities:

(in thousands)

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In addition, the Company and BioVectra each have the ability to terminate these agreements upon the occurrence of certain conditions.

As of March 31, 2021, the Company is required to reimburse BioVectra for certain costs in connection with the construction of the new facility and to purchase minimum quantities of Auryxia drug substance annually for a total cost of approximately $ 91.2 million through the end of the contract term.

As of June 30, 2021, the Company is required to reimburse BioVectra for certain costs in connection with the construction of the new facility and to purchase minimum quantities of Auryxia drug substance annually for a total cost of approximately $ 84.3 million through the end of the contract term.

Pursuant to the Siegfried Master Manufacturing Services and Supply Agreement, as amended (the most recent amendment having been executed on February 11, 2021), or the Siegfried Agreement, the Company has agreed to purchase a minimum quantity of drug substance of Auryxia at predetermined prices.

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The Siegfried Agreement provides the Company and Siegfried with certain early termination rights.

As of March 31, 2021, the Company is required to purchase a minimum quantity of drug substance for Auryxia annually at a total cost of approximately $ 35.2 million through the year ending December 31, 2022.

As of June 30, 2021, the Company is required to purchase a minimum quantity of drug substance for Auryxia annually at a total cost of approximately $ 32.4 million through the year ending December 31, 2022.

As part of purchase accounting, the Company identified executory contracts in the commercial supply agreements between Keryx and its contract manufacturers for Auryxia, which include future firm purchase commitments.

These executory contracts were deemed to have an off-market element related to the amount of purchase commitments that exceed the current forecast.

The liability related to the amount of purchase commitments that exceed the current forecast was $ 46.8 million and $ 55.8 million as of March 31, 2021 and December 31, 2020, respectively.

The $ 9.0 million reduction in the liability was largely driven by a reduction in purchase commitments due to the most recent amendment to the Siegfried Agreement and was recorded as a non-cash gain to cost of goods sold.

The Company regularly reviews its estimate of the excess purchase commitment liability including a review of assumptions of expected future demand, estimates of anticipated expiry of inventory under firm purchase commitments that are estimated to expire before they could be sold as well as any modifications to supply agreements during each reporting period.

During the second quarter ended June 30, 2021, the Company completed a routine update of its long-range plan and related estimates of expiry.

This routine update included the impact of recent activity with regards to our long-term payor contract strategy which continues to focus on contract economics and net revenue growth and resulted in a $ 30.3 million increase in the estimated excess purchase commitments liability with an associated charge to cost of goods sold during the quarter ended June 30, 2021.

The liability related to the amount of purchase commitments that exceed the current forecast or were estimated to expire prior to sale was $ 77.1 million and $ 55.8 million as of June 30, 2021 and December 31, 2020, respectively.

As of June 30, 2021, the Company also considered whether this increase was a potential indicator of impairment of the Auryxia asset group as of June 30, 2021.

As part of its assessment, the Company reviewed the Auryxia net sales and estimated future cash flows included in its long-range plan and concluded that the increase in excess purchase commitment liability was not an indicator of impairment of the Auryxia asset group as of June 30, 2021.

In addition, during the first quarter ended March 31, 2021, the Company recorded a non-cash gain to cost of goods sold of $ 9.0 million driven largely by a reduction in purchase commitments due to the amendment to the Siegfried Agreement during the first quarter of 2021.

On April 9, 2019, the Company entered into a Supply Agreement with Esteve Química, S.A., or Esteve, or the Esteve Agreement.

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Pursuant to the Esteve Agreement, the Company has agreed to purchase a certain percentage of the global demand for vadadustat drug substance from Esteve.

As of March 31, 2021, the Company has committed to purchase $ 44.7 million of vadadustat drug substance from Esteve through the fourth quarter of 2022.

As of June 30, 2021, the Company has committed to purchase $ 36.7 million of vadadustat drug substance from Esteve through the fourth quarter of 2022.

On March 11, 2020, the Company entered into a Supply Agreement with Patheon Inc., or Patheon, or the Patheon Agreement.

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Pursuant to the Patheon Agreement, the Company has agreed to purchase a certain percentage of the global demand for vadadustat drug product from Patheon.

As of March 31, 2021, the Company had a minimum commitment with Patheon for $ 1.0 million through the third quarter of 2021.

As of June 30, 2021, the Company had a minimum commitment with Patheon for $ 2.6 million through the third quarter of 2021.

On April 2, 2020, the Company entered into a Supply Agreement with STA Pharmaceutical Hong Kong Limited, a subsidiary of WuXi AppTec, or WuXi STA, or the WuXi STA DS Agreement.

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Pursuant to the WuXi STA DS Agreement, the Company has agreed to purchase a certain percentage of the global demand for vadadustat drug substance from WuXi STA.

As of March 31, 2021, the Company has committed to purchase $ 44.7 million of vadadustat drug substance from WuXi STA through the first quarter of 2022.

As of June 30, 2021, the Company has committed to purchase $ 45.5 million of vadadustat drug substance from WuXi STA through the first quarter of 2022.

On February 10, 2021, the Company entered into a Supply Agreement with WuXi STA, or the WuXi STA DP Agreement.

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The WuXi STA DP Agreement has an initial term of four years , beginning February 10, 2021 and ending February 10, 2025.

The WuXi STA DP Agreement may be renewed or extended by mutual agreement of the Company and WuXi STA with at least 18 months’ prior written notice.

The WuXi STA DP Agreement may be renewed or extended by

mutual agreement of the Company and WuXi STA with at least 18 months’ prior written notice.

The WuXi STA DP Agreement allows the Company to terminate the agreement on 180 calendar days’ prior written notice to WuXi STA for any reason.

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Other Third Party Contracts

Under the Company’s agreement with IQVIA to provide contract research organization services for the PRO 2 TECT and INNO 2 VATE programs, the total remaining contract costs as of March 31, 2021 were approximately $ 8.3 million, of which Otsuka reimburses a significant portion back to the Company.

Under the Company’s agreement with IQVIA to provide contract research organization services for the PRO 2 TECT and INNO 2 VATE programs, the total remaining contract costs as of June 30, 2021 were approximately $ 8.3 million, of which Otsuka reimburses a significant portion back to the Company.

Substantive performance for the committed work with IQVIA was completed in 2020 and close out activities will be performed throughout 2021.

The Company also contracts with various other organizations to conduct research and development activities with remaining contract costs to the Company of approximately $ 192.3 million at March 31, 2021.

The Company also contracts with various other organizations to conduct research and development activities with remaining contract costs to the Company of approximately $ 187.6 million at June 30, 2021.

The scope of the services under these research and development contracts can be modified and the contracts cancelled by the Company upon written notice.

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Changes in Company estimates could have a material impact on the Company’s results and financial position.

As of March 31, 2021, the Company does not have any significant legal disputes that require a loss liability to be recorded.

As of June 30, 2021, the Company does not have any significant legal disputes that require a loss liability to be recorded.

The Company continually monitors the need for a loss liability for litigation and related matters.

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Therefore, basic and diluted net loss per share were the same for all periods presented in the unaudited Condensed Consolidated Statement of Operations and Comprehensive Loss.

The shares in the table

below were excluded from the calculation of diluted net loss per share, prior to the use of the treasury stock method, due to their anti-dilutive effect:

As of March 31,

The shares in the table below were excluded from the calculation of diluted net loss per share, prior to the use of the treasury stock method, due to their anti-dilutive effect:

As of June 30,

Warrant 509,611 509,611

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements