What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 239 added, 199 removed, 736 unchanged (37% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30,

2021 December 31,

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0 shares issued and

outstanding at June 30, 2021 and December 31, 2020

outstanding at September 30, 2021 and December 31, 2020

Common stock $ 0.00001 par value;

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

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

174,551,989 and 148,074,085 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 1,526,815 1,425,115

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

21 unchanged sentences

Net loss $ ( 59,544 ) $ ( 59,959 ) $ ( 212,162 ) $ ( 296,457 )

Other comprehensive loss - unrealized loss on debt securities ( 3 ) ( 9 ) ( 7 ) ( 9 )

Other comprehensive gain (loss) - unrealized gain (loss) on debt securities — 15 ( 7 ) 6

Total comprehensive loss $ ( 59,544 ) $ ( 59,944 ) $ ( 212,169 ) $ ( 296,451 )

26 unchanged sentences

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

Proceeds from sale of stock under

employee stock purchase plan

120,634 — 649 — — 649

Share-based compensation expense — — 6,592 — — 6,592

Exercise of options 54,404 — 405 — — 405

Restricted stock unit vesting 24,205 — — — — —

Unrealized gain — — — 15 — 15

Net loss — — — — ( 59,959 ) ( 59,959 )

Balance at September 30, 2020 143,328,652 $ 1 $ 1,408,466 $ 6 $ ( 1,090,511 ) $ 317,962

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

11 unchanged sentences

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

Exercise of options — — — — — —

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

2 unchanged sentences

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

Issuance of common stock, net of

issuance costs 4,730,466 — 16,092 — — 16,092

Proceeds from sale of stock under

employee stock purchase plan 152,917 — 379 — — 379

Share-based compensation expense — — 5,592 — — 5,592

Restricted stock unit vesting 17,183 — — — — —

Net loss — — — — ( 59,544 ) ( 59,544 )

Balance at September 30, 2021 174,551,989 $ 2 $ 1,526,815 $ 6 $ ( 1,389,673 ) $ 137,150

See accompanying notes to unaudited condensed consolidated financial statements

2 unchanged sentences

(in thousands)

Six Months Ended

June 30, 2021 June 30, 2020

Nine Months Ended

September 30, 2021 September 30, 2020

Operating activities:

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

Net cash provided by investing activities 39,941 ( 49,750 )

Net cash provided by (used in) investing activities 39,941 ( 99,687 )

Financing activities:

4 unchanged sentences

Net cash provided by financing activities 128,328 201,209

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

Increase (decrease) in cash, cash equivalents, and restricted cash ( 21,888 ) 21,916

Cash, cash equivalents, and restricted cash at beginning of the period 231,132 149,804

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Akebia Therapeutics, Inc., referred to as Akebia or the Company, was incorporated in the State of Delaware in 2007.

Akebia is a biopharmaceutical company with the purpose of bettering the lives of people living with kidney disease.

Akebia is a biopharmaceutical company with the purpose of bettering the lives of people impacted by kidney disease.

Akebia’s lead investigational product candidate, vadadustat, is an oral therapy in development for the treatment of anemia due to chronic kidney disease, or CKD.

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.

At higher altitudes, the body responds to lower oxygen availability with stabilization of hypoxia-inducible factor, or HIF, which stimulates erythropoietin, or EPO, production, and 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 .

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

The Company’s collaboration partner, Otsuka Pharmaceutical Co.

Ltd., submitted a Marketing Authorization Application, or MAA, for vadadustat for the treatment of anemia due to CKD in adult patients to the European Medicines Agency, or EMA, in October 2021 .

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:

the control of serum phosphorus levels in DD-CKD adult patients and the treatment of iron deficiency anemia, or IDA, in NDD-CKD adult patients.

Ferric citrate is also approved and marketed in Japan as an oral treatment for IDA in adult patients and the improvement of hyperphosphatemia in adult patients with DD-CKD and NDD-CKD under the trade name Riona (ferric citrate hydrate).

Ferric citrate is also approved and marketed in Japan as an oral treatment for IDA in adult patients for the improvement of hyperphosphatemia in adult patients with DD-CKD and NDD-CKD under the trade name Riona (ferric citrate hydrate).

Since inception, the Company has devoted most of its resources to research and development, including its preclinical and clinical development activities, and providing general and administrative support for these operations.

The Company began recording revenue from the U.S.

sales of Auryxia and revenue from sublicensing rights to Auryxia in Japan to the Company’s Japanese partners Japan Tobacco, Inc.

sales of Auryxia and revenue from sublicensing rights to Auryxia in Japan from the Company’s Japanese partners, Japan Tobacco, Inc.

and its subsidiary Torii Pharmaceutical Co., Ltd., collectively JT and Torii, on December 12, 2018 following the consummation of a merger with Keryx Biopharmaceuticals, Inc., or Keryx, or the Merger.

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Vadadustat and the Company’s other potential product candidates are subject to long development cycles, and the Company may be unsuccessful in its efforts to develop, obtain marketing approval for or market vadadustat and its other potential product candidates.

If the Company does not successfully commercialize Auryxia, vadadustat or any other potential product candidate, it may be unable to achieve profitability.

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.

If the Company does not successfully commercialize Auryxia, vadadustat or any other potential product candidate, if approved, it may be unable to achieve profitability.

The Company’s management completed its going concern assessment in accordance with Accounting Standards Codification, or 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.

If the Company receives regulatory approval of vadadustat in the U.S., the Company expects to incur significant incremental costs to its current operating plan to commercialize vadadustat, including costs of marketing, manufacturing and distribution.

The potential timely regulatory approval of vadadustat and the receipt of associated regulatory milestones is an important source of funding of the Company's cash runway.

However, the Company will require additional funding to fund its operating plan beyond the next twelve months.

There are numerous risks and uncertainties associated with research, development and commercialization activities, and actual results could vary materially as a result of a number of factors, many of which are outside of the Company's control.

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.

The Company will require additional capital to pursue development and commercial activities related to Auryxia and vadadustat or any additional products and product candidates, including those that may be in-licensed or acquired.

The Company expects to finance future cash needs through product revenue, public or private equity or debt transactions, payments from its collaborators, strategic transactions, or a combination of these approaches.

However, adequate additional financing may not be available to the Company on acceptable terms, or at all.

The Company expects to finance future cash needs through product

revenue, public or private equity or debt transactions, payments from its collaborators, strategic transactions, or a combination of these approaches.

However, additional financing may not be available to the Company on acceptable terms, or at all.

If the Company is unable to raise capital in sufficient amounts when needed or on attractive terms, it may not be able to pursue development and commercial activities related to Auryxia and vadadustat or any additional products and product candidates, including those that may be in-licensed or acquired.

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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.

Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the 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 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.

Interim results for the three and nine months ended September 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 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.

The significant accounting policies used in preparation of these unaudited condensed consolidated financial statements for the three and nine months ended September 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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sales of Auryxia.

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):

Total net product revenue was $ 36.8 million and $ 34.4 million for the three months ended September 30, 2021 and 2020, respectively, and $ 100.1 million and $ 94.3 million for the nine months ended September 30, 2021 and 2020, respectively.

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

and Discounts Rebates, Fees

4 unchanged sentences

Credits/payments made ( 8,593 ) ( 99,518 ) ( 4,979 ) ( 113,090 )

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

Balance at September 30, 2021 $ 1,119 $ 44,236 $ 536 $ 45,891

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

2 unchanged sentences

Credits/payments made ( 7,701 ) ( 96,807 ) ( 5,991 ) ( 110,499 )

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

Balance at September 30, 2020 $ 785 $ 41,869 $ 774 $ 43,428

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 $ 35.0 million and $ 21.9 million as of June 30, 2021 and December 31, 2020, respectively.

Accounts receivable, net related to product sales was approximately $ 22.2 million and $ 21.9 million as of September 30, 2021 and December 31, 2020, respectively.

License, Collaboration and Other Significant Agreements

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,

During the three and nine months ended September 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 September 30, 2021:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

8 unchanged sentences

Total License, Collaboration and Other Revenue $ 12,003 $ 25,596 $ 53,853 $ 144,311

June 30, 2021

September 30, 2021

Short-Term Long-Term Total

6 unchanged sentences

Total $ 15,692 $ 27,965 $ 43,657

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

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

Nine Months Ended September 30, 2021 Balance at

Period Additions Deductions Balance at End

6 unchanged sentences

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

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Contract assets:

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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 June 30, 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 June 30, 2021 and December 31, 2020.

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,

(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 September 30, 2021 and 2020 and December 31, 2020 and 2019.

During the three and nine months ended September 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 September 30, Nine Months Ended September 30,

Revenue Recognized in the Period from:

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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.

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.

A more detailed description of this collaboration agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2020 Annual Report on Form 10-K.

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).

2 unchanged sentences

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

(i) license under certain of the Company’s intellectual property to develop and commercialize vadadustat (the License Deliverable) in the MTPC Territory, (ii) clinical supply of vadadustat (the Clinical Supply Deliverable), (iii) knowledge transfer, (iv) Phase 2 dosing study research services (the Research Deliverable), and (v) rights to future know-how.

(i) license under certain of the Company’s intellectual property to develop and commercialize vadadustat in the MTPC Territory, (ii) clinical supply of vadadustat, (iii) knowledge transfer, (iv) Phase 2 dosing study research services, and (v) rights to future know-how.

The Company identified two performance obligations in connection with its material promises under the MTPC Agreement as follows:

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

As of September 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 NDA filing in Japan and $ 15.0 million relating to regulatory approval of vadadustat in Japan, and (vi) $ 0.9 million in royalties from net sales of Vafseo.

As of September 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 $ 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.

The Company recognized $ 0.3 million and $ 0.4 million of revenue from MTPC royalties for the three and nine months ended September 30, 2021, respectively.

The Company recognized a $ 15.0 million regulatory milestone relating to regulatory approval of vadadustat in Japan as revenue during the nine months ended September 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 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.

As of September 30, 2021, the Company recorded $ 0.2 million 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 September 30, 2021.

Supply of Drug Product to MTPC

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 March 2020, in connection with the MTPC Agreement, the Company and MTPC entered into a letter agreement, pursuant to which the Company 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 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.

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

No revenues were recognized during the three and nine months ended September 30, 2021 and approximately $ 0.5 million and $ 4.5 million of revenue was recognized during the three and nine months ended September 30, 2020, respectively, for drug product that was delivered during the applicable period.

As of September 30, 2021, the Company recorded no accounts receivable, no deferred revenue, $ 3.0 million in other current liabilities and $ 0.4 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.

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.

A more detailed description of this supply agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2020 Annual Report on Form 10-K.

The Company recognized $ 2.2 million and $ 6.7 million of revenue under the MTPC Supply Agreement during the three and nine months ended September 30, 2021, respectively.

During the nine months ended September 30, 2021, the Company invoiced MTPC for $ 13.4 million in payments for vadadustat drug product ordered by MTPC.

As of September 30, 2021, the Company recorded $ 4.5 million in accounts receivable, $ 4.9 million in deferred revenue, $ 16.3 million in other current liabilities and $ 5.8 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 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.

The co-exclusive license relates to activities that will be jointly conducted by the Company and Otsuka pursuant to the terms of the Otsuka U.S.

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

A more detailed description of this collaboration agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2020 Annual Report on Form 10-K.

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:

(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’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, (ii) development services to be performed pursuant to the current global development plan, (iii) rights to future intellectual property, and (iv) joint committee services.

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

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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.

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 2020 Annual Report on Form 10-K.

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 re-evaluates the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

The Company determined that under ASC 606, the contract was modified in the second quarter of 2019 when the Otsuka Funding Option became effective and the Company became eligible to receive the Additional Funding amount.

In connection with the modification, the Company adjusted the transaction price to include the Additional Funding amount as additional variable consideration.

The Company constrains the variable consideration to an amount for which a significant revenue reversal is not probable.

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.

In the event that there is consideration received by Otsuka in the form of activities performed by Otsuka 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.

The Company estimates the additional funding as a result of exercising the Otsuka Funding Option, or the Additional Funding, to total approximately $ 139.8 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 June 30, 2021, the Additional Funding was $ 100.0 million.

As of September 30, 2021, the Additional Funding was $ 106.7 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.

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.

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

As of September 30, 2021, the transaction price totaling $ 504.2 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 $ 345.4 million with respect to amounts incurred by the Company subsequent to December 31, 2016.

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.

As of September 30, 2021, the Company is eligible to receive up to $ 65.0 million in regulatory milestone payments for the first HIF product to achieve the associated event and up to $ 575 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.

As of September 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 September 30, 2021 and 2020, the Company recognized revenue totaling approximately $ 6.1 million and $ 16.3 million, respectively, and approximately $ 29.0 million and $ 80.7 million, during the nine months ended September 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 June 30, 2021, there was approximately $ 15.6 million of deferred revenue related to the Otsuka U.S.

As of September 30, 2021, there was approximately $ 23.0 million of deferred revenue related to the Otsuka U.S.

Agreement of which $ 6.3 million is classified as current and $ 16.7 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 $ 1.3 million in prepaid expenses and other current assets in the accompanying unaudited condensed consolidated balance sheet.

Additionally, as of September 30, 2021, there was $ 2.4 million in accounts receivable and $ 2.4 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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Accordingly, the Company is accounting for the joint medical affairs, commercialization and non-promotional activities in accordance with ASC No.

808, Collaborative Arrangements (ASC 808).

808, Collaborative Arrangements .

Additionally, the Company has determined that in the context of the medical affairs, commercialization and non-promotional activities, Otsuka does not represent a customer as contemplated by ASC 606-10-15, Revenue from Contracts with Customers – Scope and Scope Exceptions .

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 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.

During the three months ended September 30, 2021 and 2020, the Company incurred approximately $ 3.6 million and $ 1.2 million, respectively, of costs related to the cost-sharing provisions of the Otsuka U.S.

Agreement, of which approximately $ 1.8 million and $ 0.5 million are reimbursable by Otsuka and recorded as a reduction to research and development expense during the three months ended September 30, 2021 and 2020, respectively.

During the three months ended September 30, 2021, Otsuka incurred no costs related to the cost-sharing provisions of the Otsuka U.S.

During the three months ended September 30, 2020, Otsuka incurred $ 0.5 million of costs related to the cost-sharing provisions of the Otsuka U.S.

Agreement, of which approximately $ 0.3 million were reimbursable by the Company and recorded as an increase to research and development expense during the three months ended September 30, 2020.

International Collaboration and License Agreement with Otsuka Pharmaceutical Co.

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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.

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.

Additionally, under the terms of this agreement, the Company is responsible for leading the development of vadadustat.

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.

A more detailed description of this collaboration agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2020 Annual Report on Form 10-K.

Revenue Recognition

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

(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).

(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, (ii) rights to future intellectual property and (iii) joint committee services.

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

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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.

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 2020 Annual Report on Form 10-K.

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

As of September 30, 2021, the transaction price totaling $ 310.4 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 $ 237.3 million.

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.

As of September 30, 2021, the Company is eligible to receive up to $ 17.0 million in regulatory milestone payments for the licensed HIF product if the Company achieves the associated event within 12 to 24 months of the first HIF product approval.

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

As of September 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 September 30, 2021 and 2020, the Company recognized revenue totaling approximately $ 1.9 million and $ 7.2 million, respectively, and approximately $ 13.5 million and $ 39.4 million, respectively, during the nine months ended September 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 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 September 30, 2021, there was approximately $ 11.1 million of deferred revenue related to the Otsuka International Agreement of which $ 4.5 million is classified as current and $ 6.6 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 September 30, 2021, there was $ 1.1 million in accounts receivable and $ 1.1 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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Summary of Agreement

On February 9, 2017, the Company entered into a Research and License Agreement, the Janssen Agreement, with Janssen Pharmaceutica NV, or Janssen, a subsidiary of Johnson & Johnson, pursuant to which Janssen granted the Company an exclusive license under certain intellectual property rights to develop and commercialize worldwide certain HIF prolyl hydroxylase targeted compounds.

On February 9, 2017, the Company entered into a Research and License Agreement, or the Janssen Agreement, with Janssen Pharmaceutica NV, or Janssen, a subsidiary of Johnson & Johnson, pursuant to which Janssen granted the Company an exclusive license under certain intellectual property rights to develop and commercialize worldwide certain HIF prolyl hydroxylase targeted compounds.

Under the terms of the Janssen Agreement, Janssen granted to the Company a license for a three-year research term to conduct research on the HIF compound portfolio, which research term is now expired.

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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.

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.

In addition, Janssen is 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 is also 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.

A more detailed description of this collaboration agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2020 Annual Report on Form 10-K.

Cyclerion Therapeutics License Agreement

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2017-01, Business Combinations (Topic 805):

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

Clarifying the Definition of a Business .

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.

In addition, Cyclerion is 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.

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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.

A more detailed description of this collaboration agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2020 Annual Report on Form 10-K.

Investment Agreement

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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;

(b) 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 (c) payment by Vifor Pharma of a $ 25.0 million milestone upon the occurrence of (a) and (b), in accordance with ASC 606, the Company has determined that the full transaction price is fully constrained.

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Pursuant to the Letter Agreement, Akebia paid Vifor Pharma $ 10.0 million in connection with the closing of the PRV Purchase.

Vifor Pharma is obligated to retain all rights to, and maintain the validity of, the PRV until Akebia and Vifor Pharma (a) enter into a definitive agreement setting forth the financial and other terms by which Vifor Pharma will assign the PRV to Akebia for use with Akebia’s NDA for vadadustat for the treatment of anemia due to CKD in both dialysis-dependent and non-dialysis dependent patients, or (b) make a mutual decision to sell the PRV and share the proceeds based on certain terms.

vadadustat for the treatment of anemia due to CKD in both dialysis-dependent and non-dialysis dependent patients, or (b) make a mutual decision to sell the PRV and share the proceeds based on certain terms.

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 PRV.

In August 2021, the Company and Vifor Pharma entered into an amendment to the Letter Agreement whereby the parties agreed that Vifor Pharma would sell the PRV to a third party, and the Company and Vifor Pharma will share the proceeds from the sale based on certain terms.

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.

License Agreement with Panion & BF Biotech, Inc.

As a result of the Merger, the Company had a license agreement, which was amended from time to time, with Panion & BF Biotech, Inc., or Panion, under which Keryx, the Company’s wholly owned subsidiary, was the contracting party, or the Panion License Agreement, pursuant to which Keryx in-licensed the exclusive worldwide rights, excluding certain Asian-Pacific countries, or the Licensor Territory, for the development and commercialization of ferric citrate.

Prior to the Merger, Keryx entered into a license agreement, or the Panion License Agreement, which was amended from time to time, with Panion & BF Biotech, Inc., or Panion, under which Keryx in-licensed the exclusive worldwide rights, excluding certain Asian-Pacific countries, or the Licensor Territory, for the development and commercialization of ferric citrate.

On April 17, 2019, the Company and Panion entered into a second amended and restated license agreement, or the Panion Amended License Agreement, which amends and restates in full the Panion License Agreement, effective as of April 17, 2019.

The Panion Amended License Agreement provides Keryx with an exclusive license under Panion-owned know-how and patents covering the rights to sublicense, develop, make, use, sell, offer for sale, import and export ferric citrate worldwide, excluding the Licensor Territory.

The Panion Amended License Agreement also provides Panion with an exclusive license under Keryx-owned patents covering the rights to sublicense (with the Company’s written consent), develop, make, use, sell, offer for sale, import and export ferric citrate in certain countries in the Licensor Territory.

Consistent with the Panion License Agreement, under the Panion Amended License Agreement, Panion is eligible to receive from the Company or any sublicensee royalty payments based on a mid-single digit percentage of sales of ferric citrate in the Company’s licensed territories.

The Panion Amended License Agreement provides Keryx with an exclusive license under Panion-owned know-how and patents with the right to sublicense, develop, make, use, sell, offer for sale, import and export ferric citrate worldwide, excluding the Licensor Territory.

The Panion Amended License Agreement also provides Panion with an exclusive license under the Keryx-owned patents, with the right to sublicense (with the Company’s written consent), develop, make, use, sell, offer for sale, import and export ferric citrate in certain countries in the Licensor Territory.

Under the Panion Amended License Agreement, Panion is eligible to receive from the Company or any sublicensee royalty payments based on a mid-single digit percentage of sales of ferric citrate in the Company’s licensed territories.

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.

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.

A more detailed description of this license agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2020 Annual Report on Form 10-K.

The Company recognized royalty payments due to Panion of approximately $ 3.0 million and $ 2.9 million during the three months ended September 30, 2021 and 2020, respectively, and $ 8.3 million and $ 8.2 million during the nine months ended September 30, 2021 and 2020, respectively, relating to the Company’s sales of Auryxia in the United States and JT and Torii’s 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.

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.

A more detailed description of this sublicense agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2020 Annual Report on Form 10-K.

Revenue Recognition

1 unchanged sentence

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

(i) exclusive license to develop and commercialize ferric citrate hydrate in Japan (the License Deliverable), (ii) supply of ferric citrate hydrate until JT and Torii could secure their own source (the Supply Deliverable), (iii) knowledge transfer, and (iv) rights to future know-how.

(i) exclusive license to develop and commercialize ferric citrate hydrate in Japan, (ii) supply of ferric citrate hydrate until JT and Torii could secure their own source, (iii) knowledge transfer, and (iv) rights to future know-how.

The Company identified two performance obligations in connection with its obligations under the JT and Torii Sublicense Agreement:

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

The Company developed a best estimate of the standalone selling price for the Rights to Future Know-How Performance Obligation primarily based on the likelihood that additional intellectual property covered by the license conveyed will be developed during the term of the arrangement and determined it immaterial.

conveyed will be developed during the term of the arrangement and determined it immaterial.

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.

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 $ 1.5 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 recognized license revenue of $ 1.4 million and $ 1.2 million during the three months ended September 30, 2021 and 2020, respectively, and $ 4.1 million and $ 4.0 million, respectively, during the nine months ended September 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 imputes interest on the unamortized portion of the liability using the effective interest method.

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.

The annual effective interest rate as of September 30, 2021 was 19.2 % 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 six months ended June 30, 2021:

June 30, 2021

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

September 30, 2021

(in thousands)

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Available For Sale Securities

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

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

Amortized Cost Gross

1 unchanged sentence

(in thousands)

June 30, 2021

September 30, 2021

Cash and cash equivalents $ 207,204 $ — $ — $ 207,204

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

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.

There were no realized gains or losses on available for sale securities for the three and nine months ended September 30, 2021 and 2020 and the Company did no t recognize any credit losses during the three and nine months ended September 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 September 30, 2021 and December 31, 2020.

Fair Value of Financial Instruments

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This company is an independent, third-party vendor recognized to be an industry leader with access to market information that obtains or computes fair market values from quoted market prices, pricing for similar securities, recently executed transactions, cash flow models with yield curves and other pricing models.

For valuations obtained from the pricing service, the Company performs due diligence to understand how the valuation was calculated or derived, focusing on the valuation technique used and the nature of the inputs.

For valuations obtained from the pricing service, the Company performs due

diligence to understand how the valuation was calculated or derived, focusing on the valuation technique used and the nature of the inputs.

Based on the fair value hierarchy, the Company classifies its cash equivalents and available for sale securities within Level 1 or Level 2.

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 June 30, 2021 and December 31, 2020 are summarized below:

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

Fair Value Measurements Using

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(in thousands)

June 30, 2021

September 30, 2021

Cash and cash equivalents $ 207,204 $ — $ — $ 207,204

11 unchanged sentences

$ — $ — $ 2,420 $ 2,420

The Company’s Loan Agreement with Pharmakon (see Note 11) contains certain provisions that change the underlying cash flows of the debt instrument, including a potential extension to the interest-only period dependent on both no event of default having occurred and continuing and on the Company achieving certain regulatory and revenue conditions.

The Company’s Loan Agreement with Pharmakon (see Note 11) contains certain provisions that change the underlying cash flows of the debt instrument, including a potential extension to the interest-only period dependent on both (a) no event of default having occurred and continuing and (b) the Company achieving certain regulatory and revenue conditions.

The Company also assessed the acceleration of the obligations under the Loan Agreement under an event of default.

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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 $ 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.

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 September 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 September 30, 2021 and December 31, 2020.

The estimated fair value of the derivative liability on both September 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.

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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.

Change in fair value of derivative liability, recorded as other income —

Balance at September 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 September 30, 2021 and December 31, 2020.

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

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The components of inventory are summarized as follows:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(in thousands)

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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.

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(in thousands)

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Total inventory $ 95,409 $ 86,309

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.

Inventory amounts written down as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold totaled $ 1.7 million and $ 7.1 million during the three and nine months ended September 30, 2021, respectively, and totaled $ 8.5 million and $ 18.6 million during the three and nine months ended September 30, 2020, respectively.

The decrease in inventory amounts written down for the three and nine months ended September 30, 2021 as compared to the three and nine months ended September 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.

In addition, there were no related step-up charges during the three months ended September 30, 2021 and $ 1.4 million related step-up charges during the three months ended September 30, 2020.

Related step-up charges were $ 8.7 million during the nine months ended September 30, 2021 and $ 7.4 million during the nine months ended September 30, 2020.

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

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Intangible Assets

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

June 30, 2021

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

September 30, 2021

Gross Carrying

Value Accumulated Amortization Total Estimated

Value Accumulated Amortization Total

Acquired intangible assets:

Developed product rights for Auryxia $ 213,603 $ ( 87,455 ) $ 126,148 6 years

Developed product rights for Auryxia $ 213,603 $ ( 96,465 ) $ 117,138

December 31, 2020

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Amortization ASC 842

Adjustment Total Estimated

Adjustment Total

Acquired intangible assets:

Developed product rights for Auryxia $ 213,603 $ ( 69,433 ) — $ 144,170 6 years

Favorable lease 545 ( 5 ) ( 540 ) — N/A

Developed product rights for Auryxia $ 213,603 $ ( 69,433 ) — $ 144,170

Favorable lease 545 ( 5 ) ( 540 ) —

Total $ 214,148 $ ( 69,438 ) $ ( 540 ) $ 144,170

On December 12, 2018, the Company completed the Merger, whereby it acquired certain definite-lived intangible assets, including the developed product rights for Auryxia and a favorable lease.

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 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 recorded $ 9.0 million and $ 6.1 million in amortization expense related to the developed product rights for Auryxia during the three months ended September 30, 2021 and 2020, respectively, and $ 27.0 million and $ 24.3 million during the nine months ended September 30, 2021 and 2020, respectively.

Goodwill was $ 55.1 million as of September 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 and six months ended June 30, 2021 or 2020.

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

Accrued Expenses

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

June 30, 2021 December 31, 2020

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

September 30, 2021 December 31, 2020

(in thousands)

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Accrued clinical 19,249 28,986

MTPC - Supply of commercial drug product 15,069 13,887

Amounts due to collaboration partners 27,375 17,977

Otsuka PRV contribution 10,000 10,000

Accrued payroll 8,238 14,402

Accrued payroll and related 12,834 14,899

Lease liability 5,723 5,286

MTPC - Supply of validation drug product 2,994 4,090

Royalties 3,022 2,998

1 unchanged sentence

Accrued commercial manufacturing 1,682 514

Accrued severance 649 497

Accrued other 11,458 8,644

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

As of September 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.

As part of this analysis, the Company assessed the economic characteristics and risks of the Loan Agreement, including put and call features.

The terms and features assessed include a potential extension to the interest-only period dependent on both no event of default having occurred and continuing and on the Company achieving certain regulatory and revenue conditions.

The terms and features assessed include a potential extension to the interest-only period dependent on both no event of default having occurred and continuing and the Company achieving certain regulatory and revenue conditions.

The Company also assessed the acceleration of the obligations under the Loan Agreement under an event of default.

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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 $ 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.

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 September 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 September 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 September 30, 2021 and 2020, and $ 8.1 million and $ 6.6 million for the first nine months ended September 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.

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

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

Stockholders’ Equity

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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 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.

As of September 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 174,551,989 and 148,074,085 shares were issued and outstanding as of September 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 September 30, 2021 and December 31, 2020.

At-the-Market Facility

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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 is able to offer and sell up to $ 65.0 million of its common stock at current market prices from time to time.

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 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.

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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.

During the three and nine months ended September 30, 2021 and through the date of this Quarterly Report on Form 10-Q, the Company sold 4,730,466 and 19,180,365 shares of common stock under this program with net proceeds (after deducting commissions and other offering expenses) of $ 16.1 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.

On June 6, 2019, the Company’s shareholders approved the

Amended and Restated 2014 Employee Stock Purchase Plan, or the ESPP.

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.

During the nine months ended September 30, 2021, the Company granted 1,228,200 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 1,154,200 options remained outstanding as of September 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.

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The Company initially reserved 1,785,000 shares of its common stock for the issuance of awards under the 2014 Plan.

The 2014 Plan provides that the number of shares reserved and available for issuance under the 2014 Plan will automatically increase annually on January 1 of each calendar year, by an amount equal to three percent ( 3 %) of the number of Akebia Shares outstanding on a fully diluted basis as of the close of business on the immediately preceding December 31, or the 2014 Plan Evergreen Provision.

The 2014 Plan provides that the number of shares reserved and available for issuance under the 2014 Plan will automatically increase annually on January 1 of each calendar year, by an amount equal to three percent ( 3 %) of the number of Akebia Shares (as defined in Note 1 of the 2020 Annual Report on Form 10-K) outstanding on a fully diluted basis as of the close of business on the immediately preceding December 31, or the 2014 Plan Evergreen Provision.

The Company’s Board of Directors may act prior to January 1 of any year to provide that there will be no automatic increase in the number of Akebia Shares available for grant under the 2014 Plan for that year (or that the increase will be less than the amount that would otherwise have automatically been made).

On December 12, 2018, in connection with the consummation of the Merger, the Company assumed outstanding and unexercised options to purchase Keryx Shares, as adjusted by the Exchange Multiplier pursuant to the terms of the Merger Agreement, under the following Keryx equity plans, or the Keryx Equity Plans:

On December 12, 2018, in connection with the consummation of the Merger, the Company assumed outstanding and unexercised options to purchase Keryx Shares (as defined in Note 1 of the 2020 Annual Report on Form 10-K), as adjusted by the Exchange Multiplier pursuant to the terms of the Merger Agreement, under the following Keryx equity plans, or the Keryx Equity Plans:

the Keryx 1999 Share Option Plan, the Keryx 2004 Long-Term Incentive Plan, the Keryx 2007 Incentive Plan, the Keryx Amended and Restated 2013 Incentive Plan, and the Keryx 2018 Equity Incentive Plan, or the Keryx 2018 Plan.

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.

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.

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

During the nine months ended September 30, 2021, the Company issued 1,997,200 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.

During the nine months ended September 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.

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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 grants performance-based stock options to employees under the 2014 Plan.

The performance-based stock options granted by the Company vest in connection with the achievement of specified commercial and regulatory milestones.

The performance-based stock options 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 options granted and recognized over time based on the probability of meeting such commercial and regulatory milestones.

The Company issued 99,558 performance-based stock options during the nine months ended September 30, 2021.

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

During the nine months ended September 30, 2021, the Com pany issued 3,396,012 RSUs to employees.

In addition, the Company issued 82,200 RSUs to directors under the 2014 Plan during the nine months ended September 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:

(i) 100 % of each RSU grant vests on either the first or the third anniversary of the grant date, (ii) one third of each RSU grant vests on the first, second and third anniversaries of the grant date, subject, in each case, to the individual’s continued service through the applicable vesting date, or (iii) 50 % of each RSU grant vests on the first anniversary and 25 % of each RSU grant vests every six months after the one year anniversary of the grant date.

(i) 100 % of each RSU grant vests on either the first anniversary of the grant date, (ii) one third of each RSU grant vests on the first, second and third anniversaries of the grant date, or (iii) 50 % of each RSU grant vests on the first anniversary and 25 % of each RSU grant vests every six months after the one year anniversary of the grant date, subject, in each case, to the individual’s continued service through the applicable vesting date.

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.

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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 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 Company issued 37,150 PSUs during the nine months ended September 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.

As of September 30, 2021, the maximum aggregate number of shares of the Company’s common stock available for future issuance under the ESPP is 5,173,141 .

Under the ESPP, each offering period is six months , at the end of which employees who elect to 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 307,193 shares under the ESPP during the nine months ended September 30, 2021.

Commitments and Contingencies

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The lease agreements do not contain residual value guarantees.

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.

Operating lease costs were $ 1.7 million for each of the three months ended September 30, 2021 and 2020 and $ 5.0 million for each of the nine months ended September 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 September 30, 2021 and 2020 and $ 5.3 million for each of the nine months ended September 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 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.

Keryx recorded $ 0.4 million in sublease rental income from Foundation during each of the three months ended September 30, 2021 and 2020 and $ 1.3 million during each of the nine months ended September 30, 2021 and 2020.

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

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

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:

As of September 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 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:

As of September 30, 2021, the remaining lease terms ranged from 1.41 years to 4.95 years.

As of September 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 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.

As of September 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 $ 82.9 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 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.

September 30, 2021, the Company is required to purchase a minimum quantity of drug substance for Auryxia annually at a total cost of approximately $ 27.7 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.

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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.

The excess purchase commitment liability relating to these executory contracts was $ 71.2 million and $ 55.8 million as of September 30, 2021 and December 31, 2020, respectively.

During the quarter ended September 30, 2021, the Company reviewed the detailed assumptions above and recorded a $ 6.0 million reduction to the excess purchase commitments liability within cost of goods sold.

The reduction to the excess purchase commitments liability was primarily due to the settlement of all patent litigation proceedings related to Abbreviated New Drug Applications filed with respect to Auryxia, which allows for generic versions of Auryxia beginning in March 2025.

The Company recognized this non-cash gain in accordance with ASC 270 Interim Reporting, specifically ASC 270-10-45-6(c) Other Presentation Matters, which allows for recovery of losses on the same inventory in later interim periods of the same fiscal year as long as the as long as the recovery of losses does not exceed the previously recognized loss.

During the 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 charge to cost of goods sold during the quarter ended June 30, 2021.

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

As of September 30, 2021, the Company has committed to purchase $ 34.4 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 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.

As of September 30, 2021, the Company had a minimum commitment with Patheon for $ 4.2 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, as amended on April 15, 2021, or the WuXi STA DS Agreement.

The WuXi STA DS Agreement includes the terms and conditions under which WuXi STA will manufacture vadadustat drug substance for commercial use.

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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 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.

As of September 30, 2021, the Company has committed to purchase $ 44.8 million of vadadustat drug substance from WuXi STA through the end of 2022.

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

The WuXi STA DP Agreement includes the terms and conditions under which WuXi STA will manufacture and supply vadadustat drug product for commercial purposes.

The WuXi STA DP Agreement includes the terms and conditions under which WuXi STA will manufacture and supply vadadustat

drug product for commercial purposes.

Pursuant to the WuXi STA DP Agreement, the Company will provide rolling forecasts to WuXi STA on a quarterly basis, or the WuXi STA DP Forecast.

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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.

1 unchanged sentence

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 June 30, 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 September 30, 2021 were approximately $ 7.6 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 $ 187.6 million at June 30, 2021.

The Company also contracts with various other organizations to conduct research and development activities with remaining contract costs to the Company of approximately $ 244.4 million at September 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 June 30, 2021, the Company does not have any significant legal disputes that require a loss liability to be recorded.

As of September 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.

3 unchanged sentences

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,

As of September 30,

Warrant 509,611 509,611

3 unchanged sentences

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