What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-01 compared with 2021-02-25 · 424 added, 482 removed, 1398 unchanged (39% of the section changed)

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Akebia Therapeutics, Inc.

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Financial Statements

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 25, 2021 expressed an adverse opinion thereon.

Adoption of ASU No.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in the year ended December 31, 2019 due to the adoption of ASU No.

2016-02, Leases (Topic 842) , and the related amendments.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2022 expressed an adverse opinion thereon.

The Company’s Ability to Continue as a Going Concern

The accompanying consolidated statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has stated that substantial doubt exists about the Company’s ability to continue as a going concern.

Management’s evaluation of the events and conditions and managements’ plans regarding these matters are described in Note 1.

The consolidated financial statements do not include any adjustments that might results from the outcome of uncertainty.

Basis for Opinion

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Impairment of Intangible Assets

Description of the Matter

At December 31, 2020, the Company’s definite-lived intangible asset related to developed product rights for Auryxia was $144.2 million.

As described in Note 2 and Note 9 to the consolidated financial statements, intangible assets with definite lives are assessed for recoverability whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable.

The Company evaluates assets for potential impairment by comparing estimated future undiscounted net cash flows to the carrying amount of the asset group.

If the carrying amount of the asset group exceeds the estimated future undiscounted cash flows, impairment is measured based on the difference between the carrying amount of the assets and fair value.

In the second quarter of 2020, the Company revised its long-range plan to reduce its short-term and long-term Auryxia revenue forecast which resulted in a $115.5 million impairment loss related to developed product rights for Auryxia.

Auditing the Company's impairment assessment involved complex judgment due to the significant judgments required to estimate the fair value of the intangible asset.

The Company's model for estimating the fair value of the asset involves significant assumptions, including projected revenues and expenses related to the asset, expected contributory asset charges, and the risk-adjusted discount rate.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested controls over the Company's measurement of its estimated fair value of its intangible assets, including controls over management’s review of the valuation model and the significant assumptions described above.

This included evaluating controls over the Company’s budgetary and forecasting process used to develop the estimated future cash flows.

We also tested controls over management’s review of the completeness and accuracy of the data used to measure the impairment.

To test the estimated fair value of the Company’s asset group and for the intangible asset with definite lives, we performed audit procedures that included, among others, assessing the methodologies used in the model and testing the significant inputs and assumptions discussed above, including the completeness and accuracy of the underlying data used by the Company in its analyses.

We compared the significant assumptions used by management to current industry and economic trends, historical financial results, contractual obligations, and other relevant factors.

We involved our valuation specialists to assist in the assessment of the Company’s discount rate for the fair value estimate of the definite-lived intangible asset due to the carrying amount of the asset group exceeding the estimated future undiscounted cash flows.

We also performed a sensitivity analysis of the significant assumptions to evaluate the change in the fair value of the intangible asset that would result from changes in underlying assumptions.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Excess Purchase Commitment Liability

Description of the Matter

At December 31, 2020, the Company’s liability for excess purchase commitments related to Auryxia’s executory contracts was $55.8 million.

As described in Note 5 and Note 16, the Company recorded a liability for its future firm purchase commitments that exceed the Company’s current forecasts.

At December 31, 2021, the Company’s liability for excess purchase commitments related to executory contracts for Auryxia was $76.7 million.

As described in Note 16, the Company records a liability for its future firm purchase commitments that exceed the Company’s current forecasts.

The Company re-evaluates its excess purchase commitments each reporting period to assess whether any adjustments to its excess purchase commitments liability are necessary.

This evaluation includes reviewing the contractual minimums, expiration and utilization assumptions, and sales forecasts.

The Company’s revised long-term and short-term Auryxia revenue forecasts, along with an amendment to supplier agreements, resulted in the Company recording an increase in its liability for excess purchase commitments of $25.6 million during the year ended December 31, 2020.

Inventory receipts that have been previously identified as excess are recorded as a reduction to the excess purchase commitment liability.

The Company’s quarterly evaluations of for Auryxia sales forecasts, along with an amendment to a supplier agreement, resulted in the Company recording total charges to cost of sales to increase its liability for excess purchase commitments of $33.4 million during the year ended December 31, 2021.

These charges are offset by inventory receipts that had been previously identified as excess totaling $12.5 million.

Auditing the Company's evaluation of its excess purchase commitment liability involved complex judgment due to the significant management judgments required to estimate the value of the total excess commitment.

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Boston, Massachusetts

February 25, 2021

March 1, 2022

AKEBIA THERAPEUTICS, INC.

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Short-term deferred revenue 20,906 15,214

Current portion of long-term debt 97,543 —

Total current liabilities 256,493 187,146

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Long-term debt, net — 96,378

Liability related to sale of future royalties, net 53,079 —

Other non-current liabilities 82,525 60,611

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$ 0.00001 par value;

350,000,000 and 175,000,000 shares authorized at December 31, 2020 and 2019, respectively;

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

177,000,963 and 148,074,085 shares issued and outstanding at December 31, 2021 and 2020, respectively

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Balance at December 31, 2018 116,887,518 $ 1 $ 1,150,583 $ ( 261 ) $ ( 514,395 ) $ 635,928

Keryx Merger 57,773,090 1 527,753 — — 527,754

Issuance of Baupost Additional Share 1,497,320 — 13,386 — — 13,386

Issuance of common stock excluding Keryx Merger, net of issuance costs 9,194,306 — 95,452 — — 95,452

Issuance of common stock, net of issuance costs 4,068,912 — 25,785 — — 25,785

Proceeds from sale of stock under employee stock purchase plan 87,530 — 383 — — 383

Exercise of options 362,796 — 560 — — 560

Retired shares ( 55,324 ) — ( 426 ) — — ( 426 )

Share-based compensation expense — — 11,925 — — 11,925

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Exercise of options 166,633 — 1,226 — — 1,226

Retired shares ( 55,324 ) — ( 426 ) — — ( 426 )

Share-based compensation expense — — 24,460 — — 24,460

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Proceeds from sale of stock under employee stock purchase plan 307,193 — 746 — — 746

Exercise of options 166,633 — 1,226 — — 1,226

Share-based compensation expense — — 22,735 — — 22,735

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Intangible asset impairment charge — 115,527 —

Non-cash interest expense related to sale of future royalties 9,117 — —

Non-cash royalty revenue related to sale of future royalties ( 821 ) — —

Amortization of premium/discount on investments ( 15 ) ( 47 ) ( 819 )

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Write-off of property and equipment — — 2,053

Non-cash merger expense(1) — — 13,386

Fair value step-up of inventory sold or written off 21,575 68,240 70,444

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Prepaid expenses and other current assets ( 18,658 ) ( 8,119 ) 10,541

Operating lease assets ( 13,888 ) — —

Other long-term assets 5,674 ( 2,779 ) 4,917

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Deferred revenue 1,821 ( 32,391 ) ( 39,739 )

Deferred rent — — 418

Other non-current liabilities ( 12,481 ) — —

Net cash used in operating activities ( 252,965 ) ( 110,388 ) ( 257,441 )

Investing activities:

Acquisition of business, net of acquired cash and restricted cash — — 6,147

Purchase of property and equipment ( 59 ) ( 317 ) ( 6,655 )

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Financing activities:

Proceeds from sale of future royalties, net 44,783 — —

Proceeds from the issuance of common stock, net of issuance costs 88,202 209,419 25,785

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Payments on debt — — ( 15,000 )

Payments on capital lease obligations — — ( 19 )

Net cash provided by financing activities 133,731 231,720 88,970

Increase in cash, cash equivalents, and restricted cash 81,328 42,705 35,662

Increase (decrease) in cash, cash equivalents, and restricted cash ( 79,293 ) 81,328 42,705

Cash, cash equivalents, and restricted cash at beginning of the period 231,132 149,804 107,099

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Unpaid offering costs $ 2 $ 100 $ —

Fair value of shares and equity awards issued in acquisition — — 527,754

(1) Relates to non-cash expense associated with the fair value of the Baupost additional shares (see Note 5).

Cash paid for:

Interest 9,632 7,843 781

See accompanying notes to consolidated financial statements.

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

Akebia’s lead investigational product candidate, vadadustat, is an oral therapy in Phase 3 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.

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

Vadadustat is an oral hypoxia-inducible factor prolyl hydroxylase, or HIF-PH inhibitor 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 stimulates erythropoietin, or EPO, production and can lead to red blood cell, or RBC, production and improved oxygen delivery to tissues.

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

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

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

The FDA also assigned the application standard review and a Prescription Drug User Fee Act, or 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 both DD-CKD and NDD-CKD adult patients to the European Medicines Agency, or EMA, in October 2021 .

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 .

In addition, the Company has a commercial product, Auryxia, which is currently approved by the U.S.

In addition, the Company has a commercial product, Auryxia ® (ferric citrate), which is currently approved by the U.S.

Food and Drug Administration, or FDA, and marketed for two indications in the United States, the control of serum phosphorus levels in adult patients with CKD on dialysis, or DD-CKD, and the treatment of iron deficiency anemia, or IDA, in adult patients with CKD not on dialysis, or NDD-CKD.

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

On November 11, 2019, the Company, with Keryx Biopharmaceuticals, Inc., or Keryx, as guarantor, entered into a loan agreement, or the Loan Agreement, with Biopharma Credit plc as collateral agent and lender, or the Collateral Agent, and Biopharma Credit Investments V (Master) LP as lender, pursuant to which term loans in an aggregate principal amount of $ 100 million were available to the Company in two tranches, subject to certain terms and conditions, or the Term Loans.

BioPharma Credit PLC subsequently transferred its interest in the Term Loans, solely in its capacity as a lender, to its affiliate, BPCR Limited Partnership.

The Collateral Agent and the lenders are collectively referred to as Pharmakon.

The first tranche of $ 80.0 million, or Tranche A, was drawn on November 25, 2019 and the second tranche of $ 20.0 million, or Tranche B, was drawn on December 10, 2020.

Refer to Note 11 to our consolidated financial statements in Part II, Item 8 – Financial Statements and Supplementary Data for additional details on the Loan Agreement.

On December 12, 2018, the Company completed a merger with Keryx Biopharmaceuticals, Inc., or Keryx, or the Merger.

Pursuant to the terms and conditions of the Agreement and Plan of Merger, or the Merger Agreement, each share of Keryx common stock, or Keryx Share, issued and outstanding immediately prior to the effective time of the Merger, or the Effective Time, was cancelled and converted into 0.37433 , or the Exchange Multiplier, fully paid and non-assessable shares of Akebia common stock, or Akebia Shares, resulting in the issuance of an aggregate of 59,270,410 Akebia Shares.

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.

Ferric citrate is also approved and marketed in Japan as an oral treatment for the improvement of hyperphosphatemia in 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 commercializing Auryxia, 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.

and its subsidiary Torii Pharmaceutical Co., Ltd., collectively JT and Torii, on December 12, 2018.

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

Additionally, following regulatory approval of vadadustat in Japan, the Company began recognizing royalty revenues from Mitsubishi Tanabe Pharma Corporation, or MTPC, from the sale of Vafseo in August 2020.

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

The Company has not generated a profit to date and may never generate profits from product sales.

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

The Company is subject to a number of risks including, but not limited to, the need to obtain adequate additional funding, including the resources necessary to fund the continued development and commercialization of Auryxia, and the development, regulatory activities and potential commercialization of vadadustat, risks relating to integration following the Merger, risks relating to market acceptance, coverage and reimbursement of Auryxia and vadadustat, if approved, risks related to maintaining the Company’s commercial organization and capabilities, risks relating to potential generic entrants, risks of clinical trial failures, the risk of relying on third parties, the risk that the Company never achieves profitability, protection of proprietary technology, compliance with governmental regulations, and dependence on key personnel, and the impact of legal, regulatory and administrative proceedings.

In December 2015, the Company entered into a collaboration agreement with MTPC to develop and commercialize vadadustat in Japan and certain other countries in Asia, collectively, the MTPC Territory, for total payments of up to $ 245.0 million,

comprised of a $ 20.0 million upfront payment, up to $ 50.0 million in specified development and regulatory milestones, and up to $ 175.0 million in specified commercial milestones, as well as tiered royalty payments ranging from 13 % to 20 % on annual net sales of vadadustat in the MTPC Territory, subject to a reduction upon launch of a generic product on a country-by-country basis.

The Company began receiving royalty payments from MTPC during the year ended December 31, 2020 when MTPC commenced commercial sales of vadadustat in Japan under the trade name, Vafseo TM , in August 2020 (Note 4).

In December 2016, the Company entered into a collaboration and license agreement with Otsuka Pharmaceutical Co.

Ltd., or Otsuka, to develop and commercialize vadadustat in the United States.

In December 2016, the Company received $ 125.0 million upfront payment, and in March 2017, Otsuka reimbursed the Company approximately $ 33.8 million for global expenses previously incurred by us for the global development program for vadadustat in DD-CKD and NDD-CKD adult patients.

The agreement also provides for additional funding for the global development program for vadadustat, totaling $ 319.0 million or more, depending on the actual global development costs incurred.

In addition, as of December 31, 2020, Akebia is eligible to receive from Otsuka up to $ 65.0 million in specified regulatory milestones and up to $ 575.0 million in specified commercial milestones.

The Company will share with Otsuka the costs of developing and commercializing vadadustat in the United States and the profits from sales of vadadustat in the United States after approval by the FDA and commercial launch (Note 4).

In April 2017, the Company entered into a collaboration and license agreement with Otsuka to develop and commercialize vadadustat in Europe, Russia, China, Canada, Australia, the Middle East and certain other territories.

In April 2017, the Company received a $ 73.0 million upfront payment and $ 0.2 million for global expenses previously incurred by the Company in implementing the current global Phase 3 development plan for vadadustat in DD-CKD and NDD-CKD adult patients in excess of a specified threshold during the quarter-ended March 31, 2017.

The agreement also provides for additional funding for the global development program for vadadustat, totaling $ 226.2 million or more, depending on the actual global development costs incurred.

In addition, as of December 31, 2020, Akebia is eligible to receive from Otsuka up to $ 52.0 million in specified regulatory milestones and up to $ 525.0 million in specified commercial milestones (Note 4).

From inception through December 31, 2020, the Company has raised approximately $ 704.3 million of net proceeds from the sale of equity, including $ 519.8 million from several underwritten public offerings, $ 134.5 million from at-the-market offerings, or ATM offerings, pursuant to sales agreements with Cantor Fitzgerald & Co.

and $ 50.0 million from the sale of 3,571,429 shares of common stock to Vifor (International) Ltd., or Vifor Pharma.

During the year ended December 31, 2020, the Company completed an underwritten public offering of our common stock with aggregate net proceeds of $ 142.4 million and raised $ 67.3 million of net proceeds from ATM offerings.

In November 2019, the Company received net proceeds of $ 77.3 million from Tranche A of the Loan Agreement with Pharmakon.

In December 2020, the Company received net proceeds of $ 20.0 million from Tranche B of the Loan Agreement with Pharmakon.

Subsequent to December 31, 2020 and through the date of this Annual Report on Form 10-K, the Company raised $ 15.9 million in net proceeds from ATM offerings.

At the inception of the Company’s collaboration agreements with Otsuka and MTPC, they committed to an aggregate of approximately $ 573.0 million or more in cost-share funding, of which the Company received approximately $ 272.0 million at the onset of the collaborations, and the remainder of which the Company generally continues to receive on a quarterly prepaid basis, and via license payments.

Going Concern

As of December 31, 2021, the Company had cash and cash equivalents of approximately $ 149.8 million.

The Company expects its cash resources to fund its current operating plan for at least twelve months from the date of this filing.

However, the potential timely regulatory approval of vadadustat and the receipt of associated regulatory milestones is an important source of funding of our cash runway, which is outside of the Company’s control.

There can be no assurance that the current operating plan, including with respect to vadadustat, if approved, 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.

In addition, on February 18, 2022, the Company and BioPharma Credit PLC, or the Collateral Agent, BPCR Limited Partnership, as a Lender, and BioPharma Credit Investments V (Master) LP.

as a Lender, entered into the First Amendment and Waiver, or the First Amendment and Waiver, which amends and waives certain provisions of the Loan Agreement, dated November 11, 2019 (see Note 18).

Pursuant to the Loan Agreement, as amended, the Company’s filings of Form 10-Q for fiscal quarters ending June 30, 2022 and September 30, 2022, and its future Annual Reports on Form 10-K, must not be subject to any qualification as to going concern.

If the Company does not satisfy the covenant as to going concern in any of these filings, the Company will be in default under the Loan Agreement.

If an event of default occurs and is continuing under the Loan

Agreement, the Collateral Agent is entitled to take enforcement action, including acceleration of amounts due under the Loan Agreement, which the Company may not have the available cash resources to repay at such time.

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

The Company believes that its cash resources will be sufficient to allow the Company to fund its current operating plan through at least the next twelve months from the filing of the Company’s 2020 Annual Report on Form 10-K, as required by ASC 205-40.

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

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, royalty transactions, strategic transactions, or a combination of these approaches.

Pursuant to the requirements of ASC 205-40, the Company’s management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.

This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued.

When substantial doubt exists under this methodology, the Company’s management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern.

The mitigating effect of the Company’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

However, as certain elements of the Company’s operating plan are outside of the Company’s control, including the potential timely regulatory approval of vadadustat and the receipt of associated regulatory milestones, they cannot be considered probable under ASC 205-40.

There also is uncertainty as to whether or not the Company will meet our quarterly and annual debt covenants.

These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date the financial statements are issued.

The Company will require additional capital to fund its operating plan beyond the next twelve months, including pursuing development and commercial activities related to Auryxia and vadadustat, if approved, 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 Management’s plans to alleviate the conditions that raise substantial doubt include raising additional funding through product revenue, earning milestone payments pursuant to the Company’s collaboration agreements, 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.

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.

for the Company to continue as a going concern for a period of twelve months from the date the financial statements are issued.

The Company has concluded the likelihood that its plan to obtain sufficient funding from one or more of these sources will be successful, while reasonably possible, is less than probable.

Accordingly, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities, other than obligations under the Loan Agreement classified as current, that might result from the outcome of the uncertainties described above.

Summary of Significant Accounting Policies

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New Accounting Pronouncements – Recently Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which requires that financial assets measured at amortized cost be presented at the net amount expected to be collected.

Previously, U.S.

GAAP delayed recognition of the full amount of credit losses until the loss was probable of occurring.

Under this ASU, the income statement will reflect an entity’s current estimate of all expected credit losses.

The Company adopted this new standard on January 1, 2020 using the modified retrospective approach, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption with prior periods not restated.

The cumulative-effect adjustment recorded on January 1, 2020, is not material.

Please see the description of the Company’s “Credit Losses” accounting policy below.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements for fair value measurements.

The Company adopted this new standard on January 1, 2020 using the prospective approach for amendments applicable to the Company.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangible-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract .

This standard clarifies the accounting for implementation costs in cloud computing arrangements.

This standard became effective for the Company on January 1, 2020, and was adopted on a prospective basis.

The adoption of this standard did not have a material impact to the Company’s consolidated financial statements and disclosures.

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808):

Clarifying the Interaction between Topic 808 and Topic 606 .

This standard makes targeted improvements for collaborative arrangements as follows:

• Clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606, Revenue from Contracts with Customers , when the collaborative arrangement participant is a customer in the context of a unit of account.

In those situations, all the guidance in ASC 606 should be applied, including recognition, measurement, presentation and disclosure requirements;

• Adds unit-of-account guidance to ASC 808, Collaborative Arrangements , to align with the guidance in ASC 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of ASC 606;

• Precludes a company from presenting transactions with collaborative arrangement participants that are not directly related to sales to third parties with revenue recognized under ASC 606 if the collaborative arrangement participant is not a customer.

This standard became effective for the Company on January 1, 2020, and did not have a material impact on the Company’s consolidated financial statements and related disclosures.

New Accounting Pronouncements – Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

This ASU is effective for fiscal years beginning after December 15, 2020, including interim periods therein, and is applicable to the Company in fiscal year 2021.

Early adoption is permitted.

This standard became effective for the Company on January 1, 2021.

ASU 2019-12 requires certain amendments to be applied using a modified retrospective approach, which requires a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption, while other amendments should be applied on a prospective basis.

The Company does not expect that the adoption of this standard will have a material impact on the Company’s consolidated financial statements and related disclosures.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.

New Accounting Pronouncements – Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform.

The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform.

These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

The Company is currently evaluating its contracts and the optional expedients provided by the new standard.

Segment Information

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Warrants classified as derivative liabilities and other derivative financial instruments that require separate accounting as liabilities are recorded on the Company’s consolidated balance sheets at their fair value on the date of issuance and will be revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense.

The warrant issued by the Company in connection with the Janssen Pharmaceutica NV Research and License Agreement, the Janssen Agreement, is classified as equity in the Company’s consolidated balance sheet.

(See Note 12).

The derivative liability recorded in connection with the Company’s Loan Agreement with Pharmakon is classified as a liability in the Company’s consolidated balance sheet.

(See Note 11).

The derivative liability recorded in connection with the Company’s Loan Agreement with Pharmakon is classified as a liability in the Company’s consolidated balance sheet (see Note 11).

Use of Estimates

7 unchanged sentences

Estimates are used in the following areas, among others:

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

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

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

11 unchanged sentences

The Company regularly reviews the securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic conditions.

Factors considered also include whether a decline in fair value below the amortized cost basis is due to credit-related factors or noncredit-related factors, the financial condition and near-term prospects of the issuer, and our intent and ability to hold the investment to allow for an anticipated recovery in fair value.

Factors considered also include whether a decline in fair value below the amortized cost basis is due to credit-related factors or noncredit-related factors, the financial condition and near-term prospects of the issuer, and the Company's intent and ability to hold the investment to allow for an anticipated recovery in fair value.

Any unrealized loss that is not credit related is recognized in other comprehensive (loss) income in the consolidated statements of operations.

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The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet that sum to the total of the amounts reported in the consolidated statement of cash flows (in thousands):

December 31, 2020 December 31, 2019 December 31, 2018 December 31, 2017

December 31, 2021 December 31, 2020 December 31, 2019

Cash and cash equivalents $ 149,800 $ 228,698 $ 147,449

13 unchanged sentences

The Company also includes in net investment income, realized gains and losses and declines in value determined to be other than temporary.

The Company bases the cost of securities sold upon the specific identification method and includes interest and dividends on securities in interest income.

bases the cost of securities sold upon the specific identification method and includes interest and dividends on securities in interest income.

Accounts Receivable

10 unchanged sentences

The Company maintains its cash, cash equivalents, and investments with high quality, accredited financial institutions and, accordingly, such funds are subject to minimal credit risk.

The Company’s investment

policy includes guidelines on the quality of the institutions and financial instruments and defines allowable investments that the Company believes minimizes the exposure to concentration of credit risk.

The Company’s investment policy includes guidelines on the quality of the institutions and financial instruments and defines allowable investments that the Company believes minimizes the exposure to concentration of credit risk.

The Company has no significant off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.

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Fresenius Medical Care Rx 33 % 29 % 21 %

AmerisourceBergen Drug Corporation 16 % 12 % 10 %

Otsuka Pharmaceutical Co.

14 % 29 % 45 %

AmerisourceBergen Drug Corporation 12 % 10 % — %

McKesson Corporation 13 % 11 % — %

Cardinal Health, Inc.

Percent of Gross Accounts Receivable

As of December 31,

AmerisourceBergen Drug Corporation 29 % 16 %

Otsuka Pharmaceutical Co.

MTPC 20 % — %

Fresenius Medical Care Rx 16 % 19 %

AmerisourceBergen Drug Corporation 15 % 29 %

Cardinal Health, Inc.

McKesson Corporation — % 12 %

Otsuka Pharmaceutical Co.

(1) Accounts receivable from Otsuka Pharmaceutical Co.

did not represent greater than 10% of gross accounts receivable at December 31, 2020 due to timing of payments and costs incurred.

Property and Equipment

11 unchanged sentences

Equipment 7 2,750 2,692

Leasehold improvements Shorter of the useful life or remaining lease term ( 10 years)

Leasehold improvements Shorter of the useful life or remaining lease term 8,573 8,573

14,419 14,361

2 unchanged sentences

Depreciation expense was approximately $ 1.9 million, $ 2.1 million and $ 2.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.

For the year ended December 31, 2019, approximately $ 2.1 million of certain leasehold improvements were written off in connection with the sublease of the Boston office.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840).

1 unchanged sentence

In 2018, the FASB issued additional ASUs related to Topic 842, or ASC 842, that clarified various aspects of the new lease guidance, including how to record certain transition adjustments, as well as other improvements and practical expedients.

The Company adopted this new standard on January 1, 2019 using the modified retrospective approach for all leases existing at, or entered into after, the date of initial application, and elected to use the following practical expedients that are permitted under the rules of the adoption:

• The Company elected the package of transition practical expedients, which allows it to retain the lease classification and initial direct costs for any leases that existed prior to the adoption of this new standard.

• The Company did not reassess whether any contracts completed prior to the adoption are leases.

The Company made an accounting policy election not to recognize leases with an initial term of 12 months or less within its consolidated balance sheets and to recognize those lease payments on a straight-line basis in its consolidated statements of operations.

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The Company classifies its inventory costs as long-term, in other assets in its consolidated balance sheets, when it expects to utilize the inventory beyond their normal operating cycle.

Prior to the regulatory approval of a product candidate, the Company incurs expenses for the manufacture of material that could potentially be available to support the commercial launch of its products.

Until the first reporting period when regulatory approval has been received or is otherwise considered probable and the future economic benefit is expected to be realized, the Company records all such costs as research and development expense.

12 unchanged sentences

The Company monitors, on an ongoing basis, whether events or circumstances could give rise to a change in the classification of embedded features.

Liability Related to Sale of Future Royalties

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

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

The Company will periodically assess the expected royalty payments.

To the extent the Company’s estimates of future royalty payments are greater or less than previous estimates or the estimated timing of such payments is materially different than previous estimates, the Company will adjust the effective interest rate and recognize related non-cash interest expense on a prospective basis.

Non-cash royalty revenue is reflected as royalty revenue within license, collaboration and other revenue, and non-cash amortization of debt is reflected as interest expense in the unaudited condensed consolidated statements of operations and comprehensive loss.

Excess Purchase Commitment Liability

2 unchanged sentences

The Company re-evaluates the excess purchase commitments each reporting period to assess whether any adjustments to the excess purchase commitment liability are necessary.

This evaluation includes reviewing the contractual minimums, expiration and utilization assumptions, and sales forecasts.

This evaluation

includes reviewing the contractual minimums, expiration and utilization assumptions, and sales forecasts.

Inventory receipts that have been previously identified as excess are recorded as a reduction to the excess purchase commitment liability.

Revenue Recognition

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The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.

Actual amounts of consideration ultimately received may differ from the Company’s estimates.

Actual amounts of consideration ultimately received may differ from the Company’s

If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.

5 unchanged sentences

Product Returns:

different than quantity ordered, the product is damaged in transit prior to receipt by the customer, or is subject to a recall.

Consistent with industry practice, the Company generally offers Customers a limited right of return which allows for the product to be returned when the product expiry is within an allowable window, when the quantity delivered is different than quantity ordered, the product is damaged in transit prior to receipt by the customer, or is subject to a recall.

This right of return generally lapses once the product is provided to a patient.

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(i) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and (ii) the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

The Company uses key assumptions to determine the stand-alone

selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates, and probabilities of technical and regulatory success.

The Company uses key assumptions to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates, and probabilities of technical and regulatory success.

With regard to the MTPC and Otsuka collaboration agreements, the Company recognizes revenue related to amounts allocated to the identified performance obligation on a proportional performance basis as the underlying services are performed.

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If the Company is entitled to additional payments when the licensee exercises these options, any additional payments are recorded in license, collaboration and other revenues when the licensee obtains control of the goods, which is upon delivery.

The Company will recognize sales-based royalties, including milestone payments based on the level of sales, at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

The Company receives royalty payments from JT and Torii, based on net sales of Riona.

been satisfied (or partially satisfied).

The Company receives royalty payments from JT and Torii, based on net sales of Riona, and MTPC based on net sales of Vafseo in Japan.

Collaborative Arrangements

1 unchanged sentence

Accordingly, the elements of the collaboration agreements that represent activities in which both parties are active participants and to which both parties are exposed to the significant risks and rewards that are dependent on the commercial success of the activities are recorded as collaborative arrangements.

The Company considers the guidance in ASC 606-10-15, Revenue from Contracts with Customers – Scope and Scope Exceptions , in determining the appropriate treatment for the transactions between the Company and its collaborative partner and the transactions between the Company and third parties.

The Company considers the guidance in ASC 606-10-15, Revenue from Contracts with Customers – Scope and Scope Exceptions , in determining the appropriate treatment for the transactions between the Company and its collaborative partners and the transactions between the Company and third parties.

Generally, the classification of transactions under the collaborative arrangements is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants.

1 unchanged sentence

Agreement, as defined below in Note 4, as a component of the related expense in the period incurred.

To the extent product revenue is

generated from the collaboration, the Company recognizes its share of the net sales on a gross basis if it is deemed to be the principal in the transactions with customers, or on a net basis if it is instead deemed to be the agent in the transactions with customers, consistent with the guidance in ASC 606.

Business Combinations

The Company accounts for the acquisition of a business in accordance with ASC Topic 805, Business Combinations, or ASC 805.

Amounts paid for each acquisition are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition.

The Company determines the fair value of acquired intangible assets based on detailed valuations that use certain information and assumptions provided by management, which is considered management’s best estimate of inputs and assumptions that a market participant would use.

The Company allocates any excess purchase price over the fair value of the net tangible and intangible assets acquired to goodwill.

Under ASC 805, transaction costs are not included as a component of consideration transferred and are expensed as incurred.

Additionally, in accordance with ASC 805, a transaction entered into by or on behalf of the acquirer or primarily for the benefit of the acquirer or the combined entity, rather than primarily for the benefit of the acquiree (before the combination), is treated as separate transaction.

To the extent product revenue is generated from the collaboration, the Company recognizes its share of the net sales on a gross basis if the Company is deemed to be the principal in the transactions with customers, or on a net basis if the Company is instead deemed to be the agent in the transactions with customers, consistent with the guidance in ASC 606.

Business Combinations and Asset Acquisitions

The purchase price allocation for business combinations requires extensive use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values.

Under ASU No.

2017-01, “Business Combinations (Topic 805):

Clarifying the Definition of a Business (“2017-01”), the Company first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets.

If this threshold is met, the single asset or group of assets, as applicable, is not a business.

The Company accounts for acquired businesses using the acquisition method of accounting, under which the total purchase price of an acquisition is allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date.

In determining fair value, the Company uses market participant assumptions pursuant to ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820).

Acquisition-related costs are expensed as incurred.

Any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired is recorded as goodwill.

The purchase price allocations are initially prepared on a preliminary basis and are subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed.

Any adjustments to the purchase price allocations are made as soon as practicable but no later than one year from the acquisition date.

Acquired inventory is recorded at its fair value, which may require a step-up adjustment to recognize the inventory at its expected net realizable value.

The inventory step-up is recorded to cost of product sales in the Company's consolidated statements of operations when related inventory is sold, and the Company records step-up costs associated with clinical trial material as research and development expense.

Intangible Assets

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If an impairment indicator exists, the Company performs a recoverability test by comparing the sum of the estimated undiscounted cash flows of the intangible asset group to its carrying value on the consolidated balance sheet.

If the carrying value of the intangible asset group exceeds the undiscounted cash flows used in the recoverability test, the Company will write the carrying value of the intangible asset group down to the fair value in the period identified.

If the carrying value of the intangible asset group exceeds the undiscounted cash flows used in the recoverability test, the Company will write the carrying value of the intangible

asset group down to the fair value in the period identified.

The Company calculates the fair value of the intangible asset group as the present value of estimated future cash flows expected to be generated from the intangible asset group using a risk-adjusted discount rate.

In determining estimated future cash flows associated with its intangible asset group, the Company uses market participant assumptions pursuant to ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820).

The Company allocates any excess purchase price over the fair value of the net tangible and intangible assets acquired in a business combination to goodwill.

20 unchanged sentences

The Company remeasures the fair value of these assets upon the occurrence of certain events.

There were no remeasurements to property and equipment for the year ended December 31, 2020.

During the second quarter of 2020, the Company identified indicators of impairment related to the developed product rights for Auryxia, an intangible asset measured using Level 3 inputs, and recorded an impairment charge of $ 115.5 million (see Note 9 for additional information).

There were no other impairments to assets measured using Level 3 inputs during the year ended December 31, 2020.

There were no impairments to assets measured using Level 3 inputs during the year ended December 31, 2021.

There were no other impairments to assets measured using Level 3 inputs during the year ended December 31, 2020.

The Company’s other financial instruments mainly consists of debt (see Note 11).

3 unchanged sentences

Research and development expenses are comprised of costs incurred in providing research and development activities, including salaries and benefits, facilities costs, overhead costs, contract research and development services, and other outside costs.

Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.

Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.

External research and development expenses associated with the Company’s programs include clinical trial site costs, research compounds and clinical manufacturing costs, costs incurred for consultants and other outside services, such as data management and statistical analysis support, and materials and supplies used in support of the clinical and preclinical programs.

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For the years ended December 31, 2021, 2020 and 2019, advertising expenses totaled $ 8.2 million, $ 5.0 million and $ 6.0 million, respectively, all related to Auryxia.

incurred advertising expenses throughout the entire fiscal years 2020 and 2019 compared to the period from December 12, 2018 through December 31, 2018 in fiscal year 2018.

Income taxes are recorded in accordance with FASB Topic 740, Income Taxes, or ASC 740, which provides for deferred taxes using an asset and liability approach.

11 unchanged sentences

ASC 718 requires all stock-based payments to employees and non-employees, including grants of stock options, restricted stock, restricted stock units, or RSUs, performance-based restricted stock units, or PSUs, and modifications to existing stock awards, to be recognized in the statements of operations and comprehensive loss based on their fair values.

The Company’s stock-based awards are comprised of stock options and RSUs.

The Company’s stock-based awards are comprised of stock options, RSUs and PSUs.

The Company estimates the fair value of options granted using the Black-Scholes option pricing model.

The Company uses a blend of its stock price and the quoted market price of comparable public companies to determine the fair value of restricted stock awards and common stock awards.

The Company uses a blend of its stock price and the quoted market price of comparable public companies to determine the fair value of restricted stock awards, common stock awards, and performance-based restricted stock awards.

The Black-Scholes option pricing model requires the input of certain subjective assumptions, including (a) the expected stock price volatility, (b) the calculation of expected term of the award, (c) the risk-free interest rate and (d) expected dividends.

Due to the lack of company-specific historical and implied volatility data for trading the Company’s stock in the public market, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded.

The historical volatility is calculated based on a period of time commensurate with the expected term assumption.

The computation of expected volatility is based on the historical volatility of a representative group of companies with similar characteristics to the Company, including stage of product development and life science industry focus.

Prior to 2017, due to the lack of company-specific historical and implied volatility data for trading the Company’s stock in the public market, the Company had based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded.

The historical volatility was calculated based on a period of time commensurate with the expected term assumption.

The computation of expected volatility was based on the historical volatility of a representative group of companies

with similar characteristics to the Company, including stage of product development and life science industry focus.

During 2017, the Company began to estimate its volatility by using a blend of its stock price history for the length of time it has market data for its stock and the historical volatility of similar public companies for the expected term of each grant.

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To date, the Company’s only source of product revenue has been from the U.S.

sales of Auryxia, which it began recording on December 12, 2018 following the consummation of the Merger.

Total net product revenue was $ 128.9 million and $ 111.1 million for the years ended December 31, 2020 and 2019, respectively, and $ 6.8 million for the period from December 12, 2018 to December 31, 2018.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the period from December 12, 2018 to December 31, 2018 and for the years ended December 31, 2019 and 2020 (in thousands):

sales of Auryxia.

Total net product revenue was $ 142.2 million, $ 128.9 million, and $ 111.1 million for the years ended December 31, 2021, 2020, and 2019, respectively.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the years ended December 31, 2019, 2020, and 2021 (in thousands):

Discounts Rebates, Fees

1 unchanged sentence

Balance at December 31, 2018 $ 516 $ 22,861 $ 360 $ 23,737

Provisions related to sales 415 3,869 ( 58 ) 4,226

Credits/payments made relating to sales ( 365 ) ( 2,255 ) — ( 2,620 )

Provisions related to sales in current year 7,822 110,866 2,008 120,696

Adjustments related to prior year sales — 1,149 — $ 1,149

Credits/payments made ( 7,600 ) ( 104,324 ) ( 2,115 ) $ ( 114,039 )

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

29 unchanged sentences

Otsuka International Agreement 5,467 4,393 $ 9,860

MTPC 7,469 — $ 7,469

Vifor Agreement — 4,679 $ 4,679

12 unchanged sentences

Contract assets:

Other current assets $ — $ 10,000 $ ( 10,000 ) $ —

Accounts receivable (1) $ 15,822 $ 161,772 $ ( 174,549 ) $ 3,045

Prepaid expenses and other current assets $ — $ 1,722 $ — $ 1,722

Contract liabilities:

1 unchanged sentence

Accounts payable $ — $ 17,324 $ ( 10,097 ) $ 7,227

Accrued expenses and other current liabilities $ — $ 10,615 $ ( 615 ) $ 10,000

(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 December 31, 2021 and 2020.

1 unchanged sentence

During the years ended December 31, 2021, 2020 and 2019, 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):

For the Year December 31,

For the Year Ended December 31,

Revenue Recognized in the Period from:

5 unchanged sentences

On December 11, 2015, the Company and MTPC entered into a collaboration agreement, or the MTPC Agreement, providing MTPC with exclusive development and commercialization rights to vadadustat in Japan and certain other Asian countries, collectively, the MTPC Territory.

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.

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

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

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

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

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

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

In January 2022, MTPC filed a new drug application for vadadustat for the treatment of anemia due to CKD in adult patients in Taiwan.

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

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

Unless earlier terminated, the MTPC Agreement will continue in effect on a country-by-country basis

until the later of the following:

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

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

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

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

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

5 unchanged sentences

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

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).

Revenue Recognition

The Company evaluated the elements of the MTPC Agreement in accordance with the provisions of ASC 606 and concluded that the contract counterparty, MTPC, is a customer.

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.

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 in the MTPC Territory (the License Deliverable), (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.

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

9 unchanged sentences

No other development and no regulatory milestones were included in the transaction price at inception, as all other milestone amounts were fully constrained.

Subsequent to inception, the transaction price also included certain development and regulatory milestones, as described below.

Subsequent to inception, the

transaction price also included certain development and regulatory milestones, as described below.

As part of its evaluation of the constraint, the Company considers numerous factors, including that receipt of the milestones is outside the control of the Company and contingent upon success in future clinical trials and the licensee’s efforts.

3 unchanged sentences

As of December 31, 2021, the transaction price is 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, (vi) $ 0.4 million in royalties from net sales of Vafseo.

(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) $ 1.2 million in royalties from net sales of Vafseo.

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

2 unchanged sentences

Accordingly, the Company recognized the $ 15.0 million regulatory milestone relating to regulatory approval of vadadustat in Japan as revenue during the year ended December 31, 2020 and the $ 10.0 million regulatory milestone for the filing of the JNDA as revenue during the year ended December 31, 2019, as the regulatory milestones were both deemed probable of being achieved and the required performance obligations had been satisfied as of December 31, 2020 and 2019, respectively.

The Company also recognized $ 0.4 million of revenue for royalties from the net sales of Vafseo during the year ended December 31, 2020.

The Company recognized $ 9.3 million of revenue during the year ended December 31, 2018.

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

The Company recognized $ 0.8 million and $ 0.4 million of revenue for royalties from the net sales of Vafseo during the years ended December 31, 2021 and 2020, respectively.

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 conditions (see Note 5).

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

As of December 31, 2021, there is $ 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 consolidated balance sheet as of December 31, 2020.

There were no asset or liability balances related to the MTPC Agreement classified as long-term in the consolidated balance sheet as of December 31, 2021.

Supply of Drug Product to MTPC

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

In March 2020, in connection with the MTPC Agreement, the Company and MTPC executed an amendment to the MTPC 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.

During the year ended December 31, 2020, the Company recognized $ 6.2 million in revenue for drug product that was delivered during the year ended December 31, 2020.

As of December 31, 2020, the Company recorded no accounts receivable, no deferred revenue, and $ 4.1 million in other current liabilities and $ 0.1 million in other non-current liabilities for drug product that is subject to return by MTPC.

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

During the years ended December 31, 2021 and 2020, the Company recognized $ 0 million and $ 6.2 million, respectively, in revenue for drug product that was delivered during the applicable period.

As of December 31, 2021, the Company recorded no accounts receivable, no deferred revenue, and $ 2.1 million in other current liabilities and no other non-current liabilities for drug product that is 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.

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

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

During the year ended December 31, 2020, the Company invoiced MTPC for $ 18.6 million in up-front payments for vadadustat drug product ordered by MTPC.

As of December 31, 2020, the Company recorded $ 1.9 million in accounts receivable, $ 13.9 million in other current liabilities and $ 4.7 million in other non-current liabilities.

Subsequent to December 31, 2020, the Company invoiced MTPC for an additional $ 2.6 million in up-front payments for vadadustat drug product ordered by MTPC.

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

During the year ended December 31, 2021, the Company recognized $ 11.6 million of revenue under the MTPC Supply Agreement and invoiced MTPC for $ 18.2 million in up-front payments for vadadustat drug product ordered by MTPC.

As of December 31, 2021, the Company recorded $ 9.4 million in accounts receivable, $ 7.5 million in deferred revenues, $ 14.9 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 is responsible for leading the development of vadadustat, including the ongoing Phase 3 development program, and the Company controls and retains final decision making authority with respect to certain matters, including U.S.

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

pricing strategy and manufacturing.

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

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

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

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

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

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

Among other responsibilities, the JDC shares information related to, and reviews and discusses activities

and progress under, the current global development plan and any other development that may be conducted pursuant to the collaboration.

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

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

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

The Company estimates that Otsuka’s funding of the current global development plan costs subsequent to December 31, 2016 will total $ 319.0 million or more, depending on the actual costs incurred toward the current global development plan.

The Company estimates that Otsuka’s funding of the current global development plan costs subsequent to December 31, 2016 will total $ 360.1 million or more, depending on the actual costs incurred toward the current global development plan, which amount includes the Additional Funding (as defined below).

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

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

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

the Otsuka U.S.

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

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Under the Otsuka U.S.

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

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

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

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

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

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

regulatory approval and are commercialized.

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

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

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

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

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

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(i) Joint Committee Services (Committee Performance Obligation)

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

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

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

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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.

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Additionally, as of December 31, 2021, there are approximately $ 2.0 million in contract liabilities (included in accounts payable) and $ 3.0 million in prepaid expenses and other current assets in the accompanying consolidated balance sheet.

As of December 31, 2019, there was approximately $ 8.9 million in accounts receivable in the accompanying consolidated balance sheet.

As of December 31, 2021, there were no accounts receivable in the accompanying consolidated balance sheet.

The Company determined that the medical affairs, commercialization and non-promotional activities elements of the Otsuka U.S.

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During the years ended December 31, 2021, 2020 and 2019, Otsuka incurred approximately $ 0.9 million, $ 2.1 million and $ 1.9 million, respectively, of costs related to the cost-sharing provisions of the Otsuka U.S.

Agreement, of

which approximately $ 1.1 million, $ 1.0 million and $ 0.5 million are reimbursable by the Company and recorded as an increase to research and development expense during the years ended December 31, 2020, 2019 and 2018, respectively.

Agreement, of which approximately $ 0.4 million, $ 1.1 million and $ 1.0 million are reimbursable by the Company and recorded as an increase to research and development expense during the years ended December 31, 2021, 2020 and 2019, respectively.

International Collaboration and License Agreement with Otsuka Pharmaceutical Co.

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

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

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

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

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

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

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

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

Per the terms of the Otsuka International Agreement, Otsuka is generally responsible for the conduct of any development activities that may be

required for marketing approvals in the Otsuka International Territory or otherwise performed with respect to the Otsuka International Territory that are incremental to those included in the current global development plan.

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

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The Company estimates that Otsuka’s funding of the current global development plan costs subsequent to March 31, 2017 will total roughly $ 244.6 million or more, depending on the actual current global development plan costs incurred.

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

forth in the Otsuka International Agreement or to be determined by the parties.

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

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

More specifically, as of December 31, 2020, the Company is eligible to receive up to $ 52.0 million in regulatory milestone payments for the first licensed product to achieve the associated event.

More specifically, as of December 31, 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.

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

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

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

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

future intellectual property.

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

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

Performance Obligation and the Committee Performance Obligation on a combined basis.

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As of December 31, 2021, there is approximately $ 9.9 million of deferred revenue related to the Otsuka International Agreement of which $ 5.5 million is classified as current and $ 4.4 million is classified as long-term in the accompanying consolidated balance sheet based on the performance period of the underlying obligations.

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

As of December 31, 2019, there was approximately $ 4.0 million in accounts receivable in the accompanying consolidated balance sheet.

Additionally, as of December 31, 2021, there are $ 0.9 million in contract liabilities (included in accounts payable) and $ 1.3 million in prepaid expenses and other current assets in the accompanying consolidated balance sheet.

As of December 31, 2020, there were no accounts receivable in the accompanying consolidated balance sheet.

Janssen Pharmaceutica NV Research and License Agreement

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

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

Under the terms of the Janssen Agreement, the Company made an upfront payment of $ 1.0 million in cash to Janssen and issued a warrant to purchase 509,611 shares of the Company’s common stock, which expired on February 9, 2022.

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.

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

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

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

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

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.

Vifor Pharma License Agreement

The Warrant expired on February 9, 2022.

Cyclerion Therapeutics License Agreement

Summary of Agreement

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

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

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

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

2017-01, Business Combinations (Topic 805):

Clarifying the Definition of a Business .

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 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.

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

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

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

Vifor License Agreement

Summary of Agreement

On May 12, 2017, the Company entered into a License Agreement, or the Vifor Agreement, with Vifor (International) Ltd., or Vifor Pharma, pursuant to which the Company granted Vifor Pharma an exclusive license to sell vadadustat solely to Fresenius Kidney Care Group LLC, or FKC, an affiliate of Fresenius Medical Care North America, or FMCNA, in the United States.

On April 8, 2019, the Company and Vifor Pharma entered into an Amended and Restated License Agreement, or the Vifor Amended Agreement, which amended and restated in full the Vifor Agreement.

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

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

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

On April 8, 2019, the Company and Vifor Pharma entered into an Amended and Restated License Agreement, or the Vifor First Amended Agreement, which amended and restated in full the Vifor Agreement.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Vifor First Amended Agreement was further amended on February 18, 2022, which amended and restated the Vifor First Amended Agreement in its entirety.

See Note 18 contained in this Annual Report on Form 10-K for further information.

Investment Agreement

In connection with the Vifor Agreement, in May 2017, the Company and Vifor Pharma entered into an investment agreement, or the Investment Agreement, pursuant to which the Company sold an aggregate of 3,571,429 shares of the Company’s common stock, or the Shares, to Vifor Pharma at a price per share of $ 14.00 for a total of $ 50.0 million.

In connection with the Vifor Agreement, in May 2017, the Company and Vifor Pharma entered into an investment agreement, or the First Investment Agreement, pursuant to which the Company sold an aggregate of 3,571,429 shares of the Company’s common stock, or the Shares, to Vifor Pharma at a price per share of $ 14.00 for a total of $ 50.0 million.

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

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(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;

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.

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.

As part of its evaluation of the constraint, the Company considered numerous factors, including clinical and regulatory risks that must be overcome in order for the parties’ rights to become effective and the probability of the $ 25.0 million milestone being achieved.

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Upon the satisfaction of the aforementioned conditions, revenue will be recognized as the Company supplies vadadustat to Vifor Pharma using a proportional performance method.

Vifor Pharma agreed to a lock-up restriction such that it agreed not to sell the Shares for a period of time following the effective date of the Investment Agreement as well as a customary standstill agreement.

In addition, the Investment Agreement contains voting agreements made by Vifor Pharma with respect to the Shares.

Vifor Pharma agreed to a lock-up restriction such that it agreed not to sell the Shares for a period of time following the effective date of the First Investment Agreement as well as a customary standstill agreement.

The lock-up restriction in place as part of the First Investment Agreement has since expired.

In addition, the First Investment Agreement contains voting agreements made by Vifor Pharma with respect to the Shares.

The Shares have not been registered pursuant to the Securities Act, and were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder.

The Company and Vifor Pharma also entered into a new Investment Agreement on February 18, 2022.

See Note 18 contained in this Annual Report on Form 10-K for further information.

Priority Review Voucher Letter Agreement

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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 planned 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.

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

The $ 10.0 million payment to Vifor Pharma was recorded to research and development expense in the consolidated statement of operations and as an operating cash outflow in the unaudited condensed consolidated statement of cash flows during 2020.

Vifor Pharma was 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 planned 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.

In March 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.

On August 21, 2021, the Company and Vifor Pharma executed 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 would share the proceeds from the sale based on certain terms.

In the fourth quarter of 2021, Vifor Pharma sold the PRV to a third party, and Vifor Pharma paid the Company $ 8.6 million in proceeds from the sale, which was recorded as contra research and development expense.

These proceeds were subsequently paid to Otsuka as reimbursement for their contribution to the purchase of the PRV, as required under a separate letter agreement executed with Otsuka.

License Agreement with Panion & BF Biotech, Inc.

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

During the years ended December 31, 2020 and 2019 and for the period from December 12, 2018 to December 31, 2018, the Company incurred approximately $ 11.2 million, $ 10.2 million and $ 0.4 million, respectively, in royalty payments due to Panion 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.

During the years ended December 31, 2021, 2020 and 2019, the Company incurred approximately $ 11.8 million, $ 11.2 million and $ 10.2 million, respectively, in royalty payments due to Panion relating to the Company’s sales of Auryxia in the United States and JT and Torii’s net sales of Riona in Japan.

Sublicense Agreement with Japan Tobacco, Inc.

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

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

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

During the three months ended June 30, 2020, JT and Torii announced the filing of a supplemental NDA with the Pharmaceuticals and Medical Devices Agency seeking an additional indication for Riona to treat adult patients with IDA in Japan.

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

In January 2014, JT and Torii received manufacturing and marketing approval of ferric citrate from the Japanese Ministry of Health, Labour and Welfare.

Ferric citrate hydrate, which launched in May 2014 and is being marketed in Japan by Torii under the brand name Riona, is indicated as an oral treatment for the improvement of hyperphosphatemia in patients with CKD, including NDD-CKD and DD-CKD.

In July 2019, JT and Torii, reported positive top-line results from a pivotal Phase 3 comparative study evaluating Riona for the treatment of IDA in adult patients in Japan, which was approved in March 2021.

In May 2020, JT and Torii filed an application for approval of IDA as an additional indication for Riona in Japan.

The Company is eligible to receive royalty payments based on a tiered low double-digit percentage of net sales of Riona in Japan inclusive of amounts that the Company must pay to Panion on JT and Torii's net sales of Riona under the Panion License Agreement subject to certain reductions upon expiration or termination of the Amended and Restated License Agreement between Keryx and Panion, pursuant to which Keryx in-licensed the exclusive worldwide rights, excluding certain Asian-Pacific countries, for the development and commercialization of ferric citrate.

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

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

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

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

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

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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.

During the years ended December 31, 2020 and 2019 and for the period from December 12, 2018 to December 31, 2018, the Company recognized $ 5.7 million, $ 5.9 million and $ 0.1 million, respectively, in license revenue related to royalties earned on net sales of Riona in Japan.

In accordance with ASC 606, the Company recognizes sales-based royalties and 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.

During the years ended December 31, 2021, 2020 and 2019, the Company recognized $ 5.8 million, $ 5.7 million and $ 5.9 million, respectively, in license revenue 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.

Business Combination

On December 12, 2018, the Company completed the Merger with Keryx.

Keryx’s proprietary product, Auryxia, is approved by the FDA for two indications:

(1) the control of serum phosphorus levels in adult patients with DD-CKD, or the Hyperphosphatemia Indication and (2) the treatment of iron deficiency anemia in adult patients with NDD-CKD, or the IDA Indication.

Pursuant to the terms and conditions of the Merger Agreement, each outstanding Keryx Share, excluding the Baupost Additional Shares, as defined below, and each outstanding Keryx equity award were converted into Akebia Shares and substantially similar Akebia equity awards, respectively, at an exchange ratio of 0.37433 for a total fair value consideration of $ 527.8 million consisting of the following (in thousands):

Fair value of 57,773,090 Akebia Shares

Fair value of 602,752 Akebia RSUs

Fair value of 3,967,290 Akebia stock options

Total consideration $ 527,754

Immediately prior to the Merger, Baupost Group Securities, L.L.C., or Baupost, agreed to convert its $ 164.7 million of Keryx’s Convertible Notes into 35,582,335 Keryx Shares, in accordance with the terms of the governing indenture agreement, in exchange for an additional 4,000,000 Keryx Shares, or the Baupost Additional Shares.

The aggregate 39.6 million Keryx Shares were then converted into Akebia Shares at the 0.37433 exchange ratio.

The fair value of the Baupost Additional Shares, on an as-converted basis, of $ 13.4 million has been excluded from the purchase price and recorded within selling, general and administrative expenses in the Company’s consolidated financial statements, as the issuance of those shares by Keryx is considered to be a separate transaction under ASC 805, since it was entered into by or on behalf of the acquirer or primarily for the benefit of the acquirer or the combined entity.

The Company allocated the $ 527.8 million purchase price to the identifiable assets acquired and liabilities assumed in the business combination at their fair values as of December 12, 2018 as follows (in thousands):

Cash and cash equivalents $ 5,257

Inventory 235,597

Trade accounts receivable, net 15,834

Prepaid expenses and other current assets 8,399

Goodwill 55,053

Intangible assets:

Developed product rights for Auryxia 329,130

Other intangible assets 545

Property and equipment, net 3,646

Other assets 14,441

Accounts payable ( 17,570 )

Accrued expenses ( 42,972 )

Deferred tax liability ( 35,096 )

Debt ( 15,000 )

Fair value of unfavorable executory contract ( 29,510 )

Total purchase price $ 527,754

In performing the purchase price allocation, the Company considered, among other factors, the intended future use of acquired assets, analysis of historical financial performance and estimates of future performance of Keryx’s business.

As part of the purchase price allocation, the Company identified developed product rights for Auryxia as the primary intangible asset.

The fair value of the developed product rights for Auryxia was determined using the multi-period excess earnings method which is a variation of the income approach, and is a valuation technique that provides an estimate of the fair value of an asset based on the principle that the value of an intangible asset is equal to the present value of the incremental after-tax cash flows attributable to the asset, after taking charges for the use of other assets employed by the business.

Key estimates and assumptions used in this model were projected revenues and expenses related to the asset, estimated contributory asset charges, and a risk-adjusted discount rate of 20.0 % used to calculate the present value of the future expected cash inflows from the asset.

The intangible asset is being amortized on a straight-line basis over its estimated useful life, which at the time of the Merger was estimated to be nine years .

During the second quarter of 2020, the Company identified indicators of impairment related to the developed product rights for Auryxia and recorded an impairment charge of $ 115.5 million and made a corresponding adjustment to the estimated useful life of the developed product rights for Auryxia from nine years to seven years .

As part of the Company’s routine forecasting process during the fourth quarter of 2020, the Company prospectively adjusted the estimated useful life of the developed product rights for Auryxia from seven years to six years .

This was not deemed an impairment indicator as of December 31, 2020 (see Note 9 for additional information).

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

These executory contracts were deemed to have an off-market element related to the amount of purchase commitments that exceed the current forecast and as such, the Company recorded a liability in purchase accounting.

As of the acquisition date, the fair value of the off-market element was $ 29.5 million.

During the year ended December 31, 2020, the Company recorded a $ 25.6 million increase to the liability for excess purchase commitments, and a corresponding charge to cost of goods sold largely driven by reductions in the short-term and long-term Auryxia revenue sales forecast.

As of December 31, 2020 and 2019, the Company's liability for excess purchase commitments was $ 55.8 million and $ 30.2 million (see Note 16 for additional information).

The goodwill represents the excess of the purchase price over the estimated fair value of net assets acquired.

The factors contributing to the recognition of goodwill were based on several strategic and synergistic benefits that were expected to be realized from the Merger.

These benefits included the expectation that the combined company would establish itself as a leading renal company with enhanced position and large market opportunity, synergistic utilization of Keryx’s commercial organization, and strengthening the combined company’s financial profile.

Such goodwill is no t deductible for tax purposes.

In connection with the Merger, the Company identified a deferred tax liability of $ 35.1 million as a result of the difference in the book basis and tax basis related to the identifiable inventory, other intangible assets, net and other liability.

In determining the deferred tax liability to be recorded the Company elected to first consider the recoverability of the deferred tax assets acquired in the acquisition before considering the recoverability of the acquirer’s existing deferred tax assets.

Liability Related to Sale of Future Royalties

On February 25, 2021, the Company entered into the Royalty Agreement with HealthCare Royalty Partners IV, L.P., or HCR, pursuant to which the Company sold to HCR its right to receive royalties and sales milestones for vadadustat in Japan and certain other Asian countries, such countries, collectively, the MTPC Territory, and such payments collectively the Royalty Interest Payments, in each case, payable to the Company under the MTPC Agreement, subject to an annual maximum “cap” of $ 13.0 million, or the Annual Cap, and an aggregate maximum “cap” of $ 150.0 million, or the Aggregate Cap.

After HCR receives Royalty Interest Payments equal to the Annual Cap in a given calendar year, the Company will receive 85 % of the Royalty Interest Payments for the remainder of that year.

After HCR receives Royalty Interest Payments equal to the Aggregate Cap, or the Company pays the Aggregate Cap to HCR (net of the Royalty Interest Payments already received by HCR), the Royalty Interest Payments will revert back to the Company, and HCR would have no further right to any Royalty Interest Payments.

The Company received $ 44.8 million from HCR (net of certain transaction expenses) under the Royalty Agreement, and the Company is eligible to receive an additional $ 5.0 million in each year from 2021 through 2023 under the Royalty Agreement if specified annual sales milestones are achieved for vadadustat in the MTPC Territory, subject to the satisfaction of certain customary conditions.

The sales milestone for vadadustat in the MTPC Territory was not achieved for 2021.

The Company retains the right to receive all potential future regulatory milestones for vadadustat under the MTPC Agreement.

The Royalty Agreement will terminate on the earlier of the date on which HCR has received (i) the last Royalty Interest Payment or (ii) payment by the Company of an amount equal to the Aggregate Cap minus the aggregate amount of all Royalty Interest Payments actually received by HCR.

Although the Company sold its right to receive royalties and sales milestones for vadadustat in the MTPC Territory as described above, as a result of its ongoing involvement in the cash flows related to these royalties, the Company will continue to account for these royalties as revenue.

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

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

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

The total threshold of net royalties to be paid, less the net proceeds received, will be recorded as interest expense over the life of the liability.

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

The annual effective interest rate as of December 31, 2021 was 18.3 % which is reflected as interest expense in the 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.

There are a number of factors that could materially affect the amount and timing of royalty payments from MTPC, none of which are within the Company's control.

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 year ended December 31, 2021:

December 31, 2021

(in thousands)

Liability related to sale of future royalties, net — beginning balance $ —

Proceeds from sale of future royalties, net 44,783

MTPC royalties payable ( 821 )

Non-cash interest expense recognized 9,117

Liability related to sale of future royalties, net — ending balance $ 53,079

The Royalty Agreement requires the Company to take certain actions, including actions with respect to the Royalty Interest Payments, the MTPC Agreement, the MTPC Supply Agreement, and the Company's intellectual property.

The Royalty Agreement also contains certain representations and warranties, covenants, indemnification obligations, events of default and other provisions that are customary for a royalty monetization transaction of this nature.

In addition, the Company granted HCR a precautionary security interest in connection with the Royalty Interest Payments.

Available For Sale Securities

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Cash and cash equivalents $ 149,800 $ — $ — $ 149,800

Available for sale securities:

government debt securities $ 39,979 $ 13 $ — $ 39,992

Total available for sale securities $ 39,979 $ 13 $ — $ 39,992

Total cash, cash equivalents, and available for sale securities $ 149,800 $ — $ — $ 149,800

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

The estimated fair value of the Company’s available for sale securities balance at December 31, 2020, by contractual maturity, is as follows (in thousands):

Due in one year or less $ 39,992

Due after one year —

Total available for sale securities $ 39,992

There were no realized gains or losses on available for sale securities for the years ended December 31, 2021 or 2020.

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The Company utilizes a portfolio management company for the valuation of the majority of its investments.

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.

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.

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Cash and cash equivalents $ 149,800 — — $ 149,800

government debt securities — 39,992 — 39,992

$ 149,800 $ — $ — $ 149,800

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Cash and cash equivalents $ 228,698 — — $ 228,698

Certificates of deposit — 245 — 245

government debt securities — 39,992 — 39,992

$ 228,698 $ 39,992 $ — $ 268,690

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

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 $ 1.8 million and $ 2.4 million as of December 31, 2021 and 2020, respectively.

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Probabilities surrounding clinical development success were derived using industry benchmarks.

Should the Company’s assessment of the probabilities around these scenarios change, including for changes in market conditions, there could be a change to the fair value of the derivative liability.

Should the Company’s

assessment of the probabilities around these scenarios change, including for changes in market conditions, there could be a change to the fair value of the derivative liability.

The following table provides a roll-forward of the fair value of the derivative liability (in thousands):

Balance at December 31, 2020 $ 2,420

Initial fair value of derivative liability for Tranche B, recorded as debt discount 484

Change in fair value of derivative liability, recorded as other expense 286

Change in fair value of derivative liability, recorded as other income ( 600 )

Balance at December 31, 2021 $ 1,820

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When the Company holds investment securities, due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, the Company considers if changes in risks in the near term would result in material changes in the fair value of investments.

The components of inventory, inclusive of step-up as a result of bringing Keryx’s inventory onto Akebia’s books in connection with the Merger, are summarized as follows:

The components of inventory are summarized as follows:

December 31, 2021 December 31, 2020

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Total inventory $ 79,059 $ 86,309

Inventory amounts written down as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold totaled $ 20.1 million and $ 7.1 million during the years ended December 31, 2020 and 2019, respectively, in addition to related step-up charges of $ 11.4 million and $ 17.1 million during the years ended December 31, 2020 and 2019, respectively.

There were no inventory write-offs during the period from December 12, 2018 through December 31, 2018.

The increase for the year ended December 31, 2020 was primarily related to the write-down of inventory associated with specific lots of Auryxia because it was determined that these lots were not manufactured in conformance with the FDA's GMP guidance relating to validation.

This write-down was largely related to a previously disclosed manufacturing quality issue related to Auryxia.

Inventory amounts written down as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold totaled $ 15.6 million, $ 20.1 million, and $ 7.1 million during the years ended December 31, 2021, 2020, and 2019 respectively.

The decrease in inventory amounts written down for the year ended December 31, 2021 as compared to the year ended December 31, 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 $ 8.7 million, $ 11.4 million, and $ 17.1 million in related step-up charges during the years ended December 31, 2021, 2020, and 2019, respectively.

During the fourth quarter of 2021, the Company recorded $ 12.5 million of receipts related to inventory previously identified as excess as a reduction to the excess purchase commitment liability.

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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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 ( 105,476 ) — 108,127

Total $ 213,603 $ ( 105,476 ) $ — $ 108,127

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Amortization ASC 842

Adjustment Total Estimated useful

Adjustment Total

Acquired intangible assets:

Developed product rights for Auryxia $ 329,130 $ ( 37,918 ) $ — $ 291,212 9 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.

As a result of the adoption of ASC 842 on January 1, 2019, the Company reclassed the remaining balance of the favorable lease intangible asset into the operating lease asset.

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Key estimates and assumptions used in the valuations included projected revenues and expenses related to the asset, estimated contributory asset charges, and a risk-adjusted discount rate of 9.5 % to calculate the present value of the future expected cash inflows.

The Company believes its assumptions are consistent with the plans and estimates that a market participant would use to manage the business.

The Company believes its assumptions are consistent with the plans and estimates that a market participant would use

to manage the business.

The discount rates used are intended to reflect the risks inherent in future cash flow projections and were based on an estimate of the weighted average cost of capital, or WACC, of market participants relative to the Auryxia asset group.

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In the event the estimates and assumptions used in the valuation of the Auryxia asset group, including the forecasted projections, change in the future, additional impairment charges could be recorded in the future.

As part of the Company's routine forecasting process, as of December 31, 2020, the Company reassessed and prospectively adjusted the estimated useful life of the developed product rights for Auryxia from seven years to six years .

In the fourth quarter of 2020, as part of the Company's routine forecasting process, the Company reassessed and prospectively adjusted the estimated useful life of the developed product rights for Auryxia from seven years to six years .

This was not deemed an impairment indicator as of December 31, 2020.

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Accrued clinical 14,036 28,986

Accrued payroll 14,402 12,604

MTPC - Supply of Commercial Drug Product 13,887 —

Amounts due to collaboration partners 22,654 17,977

Otsuka PRV contribution — 10,000

Accrued payroll and related 15,863 14,899

Lease liability 4,802 5,286

MTPC - Supply of Validation Drug Product 4,090 —

Professional fees 3,271 3,444

Royalties 3,472 2,998

Professional fees 1,899 3,271

Accrued commercial manufacturing 3,843 514

Accrued severance 497 725

Accrued other 11,263 8,644

Total accrued expenses $ 104,456 $ 130,624

Future principal payments on the Term Loans (as defined below) as of December 31, 2020 are as follows (in thousands):

Future principal payments pursuant to the contractual terms of the Term Loans (as defined below) as of December 31, 2021 are as follows (in thousands):

(in thousands)

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A change of control triggers a mandatory prepayment of the Term Loans.

The Loan Agreement contains customary representations, warranties, events of default and covenants of the Company and its subsidiaries, including maintaining, on an annual basis, a minimum liquidity threshold starting in 2021, and on a quarterly basis, a minimum net sales threshold for Auryxia which started in the fourth quarter of 2020.

The Loan Agreement contains customary representations, warranties, events of default and covenants of the Company and its subsidiaries, including 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.

On February 18, 2022, the Loan Agreement was amended, which waived the provision under the Loan Agreement that required the Company to not be subject to any qualification as a going concern within the Company's 2021 Annual Report on Form 10-K.

If the Company does not satisfy the covenant as to going concern in any of these filings, the Company will be in default under the Loan Agreement.

There is uncertainty as to whether or not the Company will meet our future quarterly and annual debt covenants related to qualification as to going concern.

If an event of default occurs and is continuing under the Loan Agreement, the Collateral Agent is entitled to take enforcement action, including acceleration of amounts due under the Loan Agreement.

Therefore, as of December 31, 2021, the Company classified the borrowings under the Loan Agreement as current.

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

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The Company recognized approximately $ 10.9 million and $ 8.9 million of interest expense related to the Loan Agreement during the years ended December 31, 2021 and 2020, respectively.

Revolving Line of Credit

Keryx, the Company’s wholly owned subsidiary following the Merger, had a $ 40.0 million revolving line of credit, or the Line of Credit, under its Loan and Security Agreement with Silicon Valley Bank, or SVB.

On July 31, 2019, Keryx entered into a Waiver and First Amendment to Loan and Security Agreement, or the Loan Amendment.

Pursuant to the Loan Amendment, certain revisions were made to the Loan and Security Agreement, including requiring Keryx to maintain, from and after December 31, 2019, subject to certain exceptions, a certain amount of funds to which the Company had unrestricted access in one or more asset management accounts with SVB or SVB’s affiliate and revising certain of the representations and warranties and covenants in the Loan and Security Agreement.

In addition, pursuant to the Loan Amendment, SVB waived the then-existing events of default.

On August 7, 2019, the Company executed and delivered to SVB an Unconditional Guaranty, or the Guaranty, pursuant to which the Company guaranteed the prompt and complete payment and performance when due of all of the obligations and liabilities of Keryx under the Loan and Security Agreement, as amended by the Loan Amendment, or the Amended Loan Agreement.

In addition, the Company entered into a Security Agreement with SVB effective August 7, 2019, or the Security Agreement, pursuant to which the Company granted to SVB a continuing first priority security interest in substantially all of the Company’s personal property, other than the Company’s intellectual property, to secure the payment and performance of the Company’s obligations under the Guaranty.

The Company’s obligations under the Guaranty were independent of Keryx’s obligations, and separate actions were able to be brought against the Company.

Availability under the Line of Credit was subject to a borrowing base comprised of eligible receivables and eligible inventory of Keryx as set forth in the Loan and Security Agreement.

As of December 31, 2020 and 2019, there was $ 0 outstanding under the Line of Credit and the Company had $ 0 in available borrowing base as of December 31, 2020 and 2019, as the Line of Credit was terminated in November 2019.

The principal amount outstanding under the Loan and Security Agreement bore interest at a floating rate per annum equal to the greater of (i) 2.00 % above the “prime rate,” as reported in The Wall Street Journal and (ii) 6.75 %, which interest was payable monthly.

Principal amounts borrowed under the Line of Credit were able to be repaid and, prior to the maturity date, re-borrowed, subject to the terms and conditions set forth in the Loan and Security Agreement.

Upon entry into the Loan and Security Agreement (payable in installments and subject to certain conditions), and at the one year anniversary of the effective date of the Loan and Security Agreement (or, if earlier, upon termination of or an event of default under the Loan and Security Agreement), Keryx paid to SVB a fee equal to 1.00 % of the Line of Credit.

Keryx was also required to pay on a quarterly basis a fee equal to 0.25 % per annum of the average unused portion of the Line of Credit.

Pursuant to the terms of the Loan and Security Agreement, Keryx was required to pay a termination fee of 2.00 % of the Line of Credit, if the Loan and Security Agreement was terminated prior to the maturity date, subject to certain exceptions.

The Company terminated the Loan and Security Agreement, the Unconditional Guaranty, and the Security Agreement on November 7, 2019, and Keryx paid SVB a termination fee of $ 0.8 million.

During the years ended December 31, 2020 and 2019 and for the period from December 12, 2018 through December 31, 2018, the Company recognized approximately $ 0 , $ 0.5 million and $ 65,000 , respectively, of interest expense related to the Line of Credit.

The Company did not incur any amortization expense related to the origination fee and other additional fees noted above as such fees were included in the fair value of the Line of Credit as of December 12, 2018, the date on which the Merger was consummated, in accordance with ASC 805.

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.

1 unchanged sentence

The warrant satisfied the equity classification criteria of ASC 815, and is therefore classified as an equity instrument.

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 December 31, 2020, the warrant remains outstanding and expires on February 9, 2022.

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 December 31, 2021, the warrant remained outstanding.

The Warrant expired on February 9, 2022.

Stockholders’ Equity

4 unchanged sentences

At-the-Market Facility

In May 2016, the Company established an at-the-market, or ATM, equity offering program pursuant to which it was able to offer and sell up to $ 75.0 million of its common stock at the then current market prices from time to time.

Through December 31, 2018, the Company sold 1,775,214 shares of common stock under this program with net proceeds of $ 22.6 million, of which 694,306 shares were sold in the year ended December 31, 2018 for net proceeds of approximately $ 10.5 million.

Additionally, the Company sold 1,384,520 shares in the six months ended June 30, 2019 for net proceeds (after deducting commissions and other offering expenses) of approximately $ 9.4 million.

On November 12, 2019, the Company entered into an Amended and Restated Controlled Equity Offering SM Sales Agreement with Cantor Fitzgerald & Co.

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Also, on November 12, 2019, the Company filed a prospectus supplement pursuant to which it was able to offer and sell up to $ 75.0 million of its common stock at the then current market prices from time to time.

In December 2019, the Company commenced sales under this program.

December 2019, the Company commenced sales under this program.

Through December 31, 2019, the Company sold 2,684,392 shares of common stock under this program with net proceeds (after deducting commissions and other offering expenses) of $ 16.8 million.

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During the year ended 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.

Subsequent to December 31, 2020 and through the date of this Annual Report on Form 10-K, the Company sold 5,224,278 shares of common stock under this program with net proceeds (after deducting commissions and other offering expenses) of $ 15.9 million.

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

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

During the year ended December 31, 2021 and through the date of this Annual Report on Form 10-K, the Company sold 21,532,665 shares of common stock under this program with net proceeds (after deducting commissions and other offering expenses) of $ 73.2 million.

Equity Offering

In March 2018, the Company completed a follow-on public equity offering, whereby the Company sold 8,500,000 shares of common stock at a public offering price of $ 10.50 per share.

The aggregate net proceeds received by the Company from the offering were approximately $ 84.8 million, net of underwriting discounts and commissions and estimated offering expenses payable by the Company.

The Company did not have any follow-on public equity offerings during the year ended December 31, 2019.

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

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

Shares Issued and Awards Assumed in Connection with Business Combination

On December 12, 2018, the Company completed the Merger.

Pursuant to the terms and conditions of the Merger Agreement, each Keryx Share issued and outstanding as of the Effective Time was cancelled and converted into 0.37433 fully paid and non-assessable Akebia Shares.

As a result, in December 2018, the Company issued 57,773,090 shares of common stock to Keryx shareholders, and 1,497,320 shares issued as part of the Baupost Additional Shares which has been excluded from the business combination purchase price (see Note 5).

Additionally, in connection with the Merger, the Company converted outstanding and unexercised options to purchase Keryx Shares into 3,967,290 options to purchase Akebia Shares, as adjusted to the reflect the Exchange Multiplier, of which 3,733,336 are service-based stock options and 233,954 are performance-based stock options.

The Company also converted outstanding Keryx Restricted Shares into 602,752 Akebia RSUs, of which 486,709 are service-based RSUs and 116,043 are performance-based RSUs.

Acceleration of Equity Awards

In connection with the closing of the Merger, certain executives of Keryx were terminated and as a result, the Company accelerated in full the vesting of all of the outstanding equity awards for each such executive, consistent with his or her existing employment agreements.

Additionally, subject to limited exceptions, all outstanding equity awards held by certain officers of Akebia also had the vesting of their outstanding equity awards accelerated in full upon consummation of the Merger as a result of the change in control provision included in each such officer’s award agreements and their Executive Severance Agreements.

As a result, the Company recognized $ 9.7 million of stock-based compensation expense related to the acceleration of awards during the year ended December 31, 2018.

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

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

During the year ended December 31, 2020, the Company granted 1,113,250 options to purchase shares of the Company’s common stock to new hires under the Inducement Award Program, of which 1,064,550 options to purchase Akebia Shares remained outstanding at December 31, 2020.

During the year ended December 31, 2021, the Company granted 1,373,200 options to purchase shares of the Company’s common stock to new hires under the Inducement Award Program, of which 1,238,200 options to purchase shares of the Company's common stock remained outstanding at December 31, 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 the Company's 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 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).

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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.

Shares, provided that the Company uses the Assumed Shares for individuals who were not employees or directors of the Company prior to the consummation of the Merger.

During the year ended December 31, 2021, the Company granted 1,997,200 options to purchase Akebia Shares to employees under the 2014 Plan, 1,373,200 options to purchase Akebia Shares to employees under the Inducement Award Program, 3,399,412 Akebia RSUs to employees under the 2014 Plan, 136,708 Akebia PSUs to employees under the 2014 Plan, 281,000 options to purchase Akebia Shares to directors under the 2014 Plan, and 82,200 Akebia RSUs to directors under the 2014 Plan.

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

The ESPP provides for the issuance 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 December 31, 2020 of the

Company’s common stock available for future issuance under the ESPP is 5,480,334 .

The maximum aggregate number of shares at December 31, 2021 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 may purchase shares of the Company’s common stock through payroll deductions made over the term of the offering.

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December 31, 2021 December 31, 2020

Common stock options and RSUs outstanding (1)

Common stock options, RSUs and PSUs outstanding (1)

16,065,218 14,108,828

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Shares available for issuance under the ESPP 5,173,141 5,480,334

5,480,334 5,715,992

Total 26,423,704 23,566,853

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(2) On January 1, 2022, January 1, 2021 and January 1, 2020, the shares reserved for future grants under the 2014 Plan increased by 5,807,270 , 4,880,775 and 4,031,376 shares, respectively, pursuant to the 2014 Plan Evergreen Provision.

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

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

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

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

Stock-Based Compensation

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Options generally expire ten years after the date of grant.

The Company recorded approximately $ 8.5 million, $ 5.4 million and $ 11.9 million of stock-based compensation expense related to stock options granted during fiscal years 2020, 2019 and 2018, respectively.

On December 12, 2018, pursuant to the Merger Agreement, each outstanding and unexercised option to acquire Keryx Shares granted under a Keryx equity plan converted into an option to acquire Akebia Shares, with the number of shares and exercise price adjusted by the Exchange Multiplier.

As a result, the Company assumed 3,733,336 service-based options related to the Merger.

The vesting schedule for these options is consistent with the vesting schedule noted above.

The Company recorded approximately $ 8.9 million, $ 8.5 million and $ 5.4 million of stock-based compensation expense related to stock options granted during the years ended December 31, 2021, 2020 and 2019, respectively.

The assumptions used in the Black-Scholes pricing model to estimate the grant date fair value of options granted under the 2014 Plan are as follows:

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The weighted-average grant date fair values of options granted in the years ended December 31, 2021, 2020, and 2019 were $ 2.29 , $ 5.63 , and $ 3.85 per share, respectively.

The total intrinsic value of options exercised during the years ended December 31, 2020, 2019, and 2018 were $ 0.4 million, $ 1.3 million, and $ 1.2 million, respectively.

There was no intrinsic value of options exercised during the year ended December 31, 2021, as there were no options exercised in 2021.

The total intrinsic value of options exercised during the years ended December 31, 2020 and 2019 were $ 0.4 million and $ 1.3 million, respectively.

The fair value of options that vested during the years ended December 31, 2021, 2020, and 2019 were $ 10.6 million, $ 6.8 million, and $ 4.3 million, respectively.

As of December 31, 2020, there was approximately $ 19.5 million of unrecognized compensation cost related to stock options under the Company’s 2014 Plan or made pursuant to the Inducement Award Program, which is expected to be recognized over a weighted average period of 2.66 years.

As of December 31, 2021, there was approximately $ 15.7 million of unrecognized compensation cost related to stock options outstanding under the Company’s 2014 Plan or made pursuant to the Inducement Award Program, which is expected to be recognized over a weighted average period of 2.33 years.

Performance-Based Stock Options

On December 12, 2018, pursuant to the Merger Agreement, each outstanding and unexercised performance-based option to acquire Keryx Shares granted under a Keryx equity plan converted into a service-based option or performance-based option to acquire Akebia Shares, with the number of shares and exercise price adjusted by the Exchange Multiplier.

As a result, the Company issued 233,954 performance-based options related to the Merger.

The Company did not have any performance based-options outstanding in fiscal year 2018 prior to the Merger.

The Company did no t issue any performance-based options during the years ended December 31, 2020 and 2019.

As of December 31, 2020, the Company had no performance-based options outstanding compared to 46,790 performance-based options outstanding at December 31, 2019.

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 option 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 and no performance-based options during the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, the Company had 99,558 performance-based options outstanding compared to no performance-based options outstanding at December 31, 2020.

The following table summarizes the Company’s performance-based option activity for the year ended December 31, 2021:

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The Company did no t record any stock-based compensation expense related to performance-based options during 2021, 2020 and 2019.

There were no performance-based options that vested during fiscal year 2020, 46,790 performance-based options that vested during fiscal year 2019, and no performance-based options that vested during fiscal year 2018.

As of December 31,

2020, there were no unrecognized compensation costs related to performance-based stock options under the Company’s 2014 Plan.

There were no performance-based options that vested during fiscal year 2021 or 2020, and 46,790 performance-based options that vested during fiscal year 2019.

As of December 31, 2021, there were no unrecognized compensation costs related to performance-based stock options under the Company’s 2014 Plan.

Restricted Stock Units

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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.

(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.

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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These RSUs vest either (i) in 3 equal annual installments beginning after the one year anniversary of the grant date or (ii) one third on the one year anniversary of the grant date with the remaining RSUs vesting on the first day of each calendar quarter over the next two years thereafter.

As of October 1, 2021, the RSU awards granted in connection with the Merger were fully vested and none are outstanding as of December 31, 2021.

Performance-Based Restricted Stock Units

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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 recorded approximately $ 0.5 million, $ 0 and $ 0 of stock-based compensation expense related to employee PSUs in 2020, 2019 and 2018, respectively.

A following table summarizes the Company’s RSU and PSU activity for the year ended December 31, 2020:

The Company recorded approximately $ 0.3 million, $ 0.5 million and $ 0 of stock-based compensation expense related to employee PSUs in 2021, 2020 and 2019, respectively.

The following table summarizes the Company’s RSU and PSU activity for the year ended December 31, 2021:

Shares Weighted-

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Unvested balance, December 31, 2021 4,554,343 $ 5.17

The total amount of RSUs and PSUs that vested during 2020, 2019 and 2018 (measured on the date of vesting) was $ 9.4 million, $ 2.7 million, and $ 7.4 million, respectively.

The total fair value of RSUs and PSUs that vested during 2021, 2020 and 2019 (measured on the date of vesting) was $ 15.4 million, $ 9.4 million, and $ 2.7 million, respectively.

As of December 31, 2021, there was approximately $ 12.4 million of unrecognized compensation cost related to RSUs and PSUs, which is expected to be recognized over a weighted average period of 1.56 years.

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Restricted stock units 12,927 14,639 6,240

Performance RSUs 294 464 —

Employee stock purchase plan 556 840 264

Total $ 22,735 $ 24,460 $ 11,925

Included in the compensation expense of stock options and RSUs for the year ended December 31, 2018, is approximately $ 1.1 million related to awards assumed under the Merger and acceleration of the vesting for awards of certain officers of Keryx.

The Company’s income tax provision was computed based on the federal statutory rate and the state statutory rates, net of the related federal benefit.

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At December 31, 2019 the Company recorded an additional tax benefit of $ 6.6 million as a result of additional losses incurred during the year.

There was no current or deferred income tax expense or benefit for the year ended December 31, 2020 due to the Company’s net losses and increases in its valuation allowance against its deferred tax assets.

There was no current or deferred income tax expense or benefit for the years ended December 31, 2021 and December 31, 2020 due to the Company’s net losses and increases in its valuation allowance against its deferred tax assets.

The provision for income taxes for each of the years ended December 31, 2021, 2020 and 2019 consisted of the following:

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Federal — — —

State — — 104

Foreign — — —

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Research and development tax credits — 0.1 2.0

Equity compensation — — —

Alternative minimum tax — — —

Change in valuation allowance ( 22.7 ) ( 21.5 ) ( 22.4 )

Impact of US tax reform — — —

Non-deductible transaction costs — — ( 3.1 )

Other permanent differences ( 1.0 ) ( 0.4 ) ( 0.3 )

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Deferred revenue 9,725 9,091

Sale of Royalty 12,037 —

Stock based compensation 9,194 10,014

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ASC 842 ROU asset ( 8,486 ) ( 6,101 )

Derivative liability ( 597 ) ( 423 )

Other ( 282 ) ( 597 )

Total deferred tax liabilities ( 34,366 ) ( 49,355 )

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The Company completed an evaluation of its ownership changes and concluded that an ownership change did occur on December 12, 2018 for both Akebia and Keryx in connection with the Merger.

As a consequence of this ownership change, the Company’s NOL’s and tax credit carryforwards allocable to the tax periods preceding the ownership change became subject to limitation under Section 382.

As a consequence of this ownership change, the Company’s NOLs and tax credit carryforwards allocable to the tax periods preceding the ownership change became subject to limitation under Section 382.

The Company reduced its associated deferred tax assets by $ 44.9 million as a result of the limitation.

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In November 2020, the Company entered into a Sixth Amendment to the Cambridge Lease, or the Sixth Amendment, to extend the term of the Cambridge Lease with respect to the lab space from November 30, 2021 to January 31, 2025.

The Sixth Amendment includes two months of free rent starting in December 2020 and additional monthly lease payments of approximately $ 48,000 commencing in December 2021, and is subject to annual rent escalations, which commence in December 2022.

The Sixth Amendment includes two months of free rent starting in December 2020 and additional monthly lease payments of approximately $ 48,000 , which commenced in December 2021, and is subject to annual rent escalations, which commence in December 2022.

Additionally, as a result of the Merger, the Company has a lease for 27,300 square feet of office space in Boston, Massachusetts, or the Boston Lease, which expires in February 2023.

The total monthly lease payments under the base rent are approximately $ 136,000 and are subject to annual rent escalations.

As of the date of the filing of this Annual Report on Form 10-K, the Company has amended the Boston Lease to extend the term as further described in Note 18.

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

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

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

The renewal option in the with respect to the Cambridge Lease was not included in the calculation of the operating lease assets and operating lease liabilities as the renewal is not reasonably certain.

As of December 31, 2021, the renewal option for the Boston Lease office space was included in the calculation of the operating lease assets and operating lease liabilities as the Company became reasonably certain that the Company would exercise the extension option.

As of the date of the filing of this Annual Report on Form 10-K, the Company has amended the Boston Lease to extend the term as further described in Note 18.

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

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The lease agreements do not contain residual value guarantees.

Operating lease costs were $ 6.7 million and $ 6.6 million for the years ended December 31, 2020 and 2019.

Cash paid for amounts included in the measurement of operating lease liabilities were $ 7.0 million and $ 6.9 million for the years ended December 31, 2020 and 2019.

Operating lease costs were $ 6.7 million for both the years ended December 31, 2021 and 2020.

Cash paid for amounts included in the measurement of operating lease liabilities were $ 7.1 million and $ 7.0 million for the years ended December 31, 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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The term of the sublease commenced on October 16, 2019, upon receipt of the required consent from the landlord for the sublease agreement, and expires on February 27, 2023.

Foundation is obligated to pay Keryx rent that approximates the rent due from Keryx to its landlord with respect to the Boston Lease.

Foundation is obligated to pay Keryx rent that approximates the rent due from Keryx to its

landlord with respect to the Boston Lease.

Sublease rental income is recorded to other income.

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 $ 1.8 million and $ 0.2 million in sublease rental income from Foundation during the years ended December 31, 2020 and 2019, respectively.

Keryx recorded $ 1.8 million in sublease rental income from Foundation during each of the years ended December 31, 2021 and 2020.

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

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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 in prepaid expenses and other current assets in the Company’s consolidated balance sheet as of December 31, 2020.

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 prepaid expenses and other current assets in the Company’s consolidated balance sheet as of December 31, 2021.

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

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Operating lease liabilities $ 38,841

The Company recorded approximately $ 3.7 million in rent expense for the year ended December 31, 2018.

Manufacturing Agreements

As a result of the Merger, the Company's contractual obligations include Keryx’s commercial supply agreements with BioVectra Inc., or BioVectra, and Siegfried Evionnaz SA, or Siegfried, to supply commercial drug substance for Auryxia.

Pursuant to the Manufacture and Supply Agreement with BioVectra and the Product Manufacture and Supply and Facility Construction Agreement with BioVectra, collectively the BioVectra Agreement, the Company agreed to purchase minimum quantities of Auryxia drug substance annually at predetermined prices.

Pursuant to the Manufacture and Supply Agreement with BioVectra and the Product Manufacture and Supply and Facility Construction Agreement with BioVectra, the Company agreed to purchase minimum quantities of Auryxia drug substance annually at predetermined prices.

On September 4, 2020, the Company and BioVectra entered into an Amended and Restated Product Manufacture and Supply and Facility Construction Agreement, which provided for reduced minimum quantity commitments and revised the predetermined prices.

The price per kilogram decreases with an increase in quantity above the predetermined purchase quantity tiers.

In addition, the Manufacture and Supply Agreement with BioVectra and the Amended and Restated Product Manufacture and Supply and Facility Construction Agreement with BioVectra, collectively the Amended BioVectra Agreement, requires the Company to reimburse BioVectra for certain costs in connection with construction of a new facility for the manufacture and supply of Auryxia drug substance.

In addition, the Manufacture and Supply Agreement with BioVectra and the Amended and Restated Product Manufacture and Supply and Facility Construction Agreement with BioVectra require the Company to reimburse BioVectra for certain costs in connection with construction of a new facility for the manufacture and supply of Auryxia drug substance.

These construction costs are recorded in other assets and amortized into drug substance as inventory is released to the Company from BioVectra.

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The term of the Amended and Restated Product Manufacture and Supply and Facility Construction Agreement expires on December 31, 2026, after which it automatically renews for successive one-year terms unless either party gives notice of its intention to terminate within a specified time prior to the end of the then-current term.

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

As of December 31, 2020, 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 $ 95.7 million through the end of the contract term.

Pursuant to the Siegfried Master Manufacturing Services and Supply Agreement, or the Siegfried Agreement, the Company has agreed to purchase a minimum quantity of drug substance of Auryxia at predetermined prices.

In addition, the

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

As of December 31, 2021, the Company is required to reimburse BioVectra for certain costs in connection with the construction of the new facility and to purchase minimum quantities of Auryxia drug substance annually for a total cost of approximately $ 83.6 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.

The price per kilogram will decrease with an increase in quantity above the minimum purchase quantity.

The term of the Siegfried Agreement expires on December 31, 2021, after which, it automatically renews for one-year terms until terminated.

The Siegfried Agreement provides for certain termination rights prior to December 31, 2021 for the Company.

The term of the Siegfried Agreement expires on December 31, 2022, subject to the Company's option to extend through December 31, 2023 by providing 12 months' prior written notice to Siegfried.

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

As of the date of the filing of this Annual Report on Form 10-K, the Company has notified Siegfried that the Company has elected not to exercise the option to extend the term of the Siegfried Agreement through December 31, 2023.

As of December 31, 2021, the Company is required to purchase a minimum quantity of drug substance for Auryxia annually at a total cost of approximately $ 15.6 million through the year ending December 31, 2022.

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

The liability related to the amount of purchase commitments that exceed the current forecast was $ 55.8 million and $ 30.2 million as of December 31, 2020 and 2019, respectively.

The $ 25.6 million increase in liability, which was largely driven by reductions in the short-term and long-term Auryxia revenue sales forecast during the year ended December 31, 2020, was primarily recorded to cost of goods sold.

On February 11, 2021, Keryx and Siegfried entered into an amendment to the Siegfried Agreement, or the Siegfried Amendment.

The Siegfried Agreement, as amended, includes the terms and conditions under which Siegfried will manufacture and supply finished Auryxia drug substance for commercial purposes.

Siegfried currently manufactures Auryxia drug substance at two approved sites.

Pursuant to the Siegfried Amendment, the term of the Siegfried Agreement was extended for one site such that the Siegfried Agreement will expire on December 31, 2022, subject to Keryx’s option to extend the term for such site through December 31, 2023 by providing 12 months’ prior written notice to Siegfried.

The Siegfried Amendment provides for minimum annual quantity commitments and predetermined prices for the remainder of the term as well as certain other changes.

Subsequent to December 31, 2020, the amount of Auryxia drug substance the Company has committed to purchase from Siegfried is $ 45.4 million through December 31, 2022.

The Company regularly reviews its estimate of the excess purchase commitment liability including 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.

The excess purchase commitment liability relating to these executory contracts was $ 76.7 million and $ 55.8 million as of December 31, 2021 and 2020, respectively.

During the quarter ended December 31, 2021, the Company completed its annual budget process for 2022, which included the impact of recent activity in regards to the impact of COVID-19 on the Company's growth rates.

As a result of this budget process, the Company performed an update of its long-term plan.

This update to the Company's long-term plan and related estimates of expiry resulted in a $ 18.0 million charge to cost of goods sold during the quarter ended December 31, 2021.

During the quarter ended December 31, 2021, the Company reduced the excess purchase commitment liability by $ 12.5 million for inventory received that had been previously identified as excess.

During the quarter ended September 30, 2021, the Company recorded a $ 6.0 million reduction to the excess purchase commitments liability within cost of goods sold 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 the Company's 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.The Company considered whether the respective increases in the excess purchase commitment liability were potential indicators of impairment of the Auryxia asset group as of December 31, 2021 and June 30, 2021.

As part of its assessments, the Company reviewed the Auryxia net sales and estimated future cash flows included in its long-range plan and concluded that the respective increases in excess purchase commitment liability were not indicators of impairment of the Auryxia asset group as of December 31, 2021 or June 30, 2021.

During the first quarter ended March 31, 2021, the Company recorded a non-cash gain to cost of goods sold of $ 8.9 million driven largely by a reduction in purchase commitments due to the amendment to the Siegfried Agreement.

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

5 unchanged sentences

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 December 31, 2020, the Company has committed to purchase $ 26.0 million of vadadustat drug substance from Esteve through the second quarter of 2022.

Subsequent to December 31, 2020, the amount of vadadustat drug substance the Company has committed to purchase from Esteve increased to $ 47.6 million of through the fourth quarter of 2022.

As of December 31, 2021, the Company has committed to purchase $ 28.9 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.

The Patheon Agreement includes the terms and conditions under which Patheon will manufacture vadadustat drug product for commercial use.

The Patheon Agreement includes the terms and conditions under which Patheon will manufacture vadadustat drug product for

commercial use.

Pursuant to the Patheon Agreement, the Company provides Patheon a long-term forecast on an annual basis, as well as short-term forecasts on a quarterly basis, or the Patheon Forecast.

3 unchanged sentences

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 December 31, 2020, the Company had a minimum commitment with Patheon for $ 1.3 million through the third quarter of 2021.

As of December 31, 2021, the Company had a minimum commitment with Patheon for $ 4.0 million through the fourth quarter of 2022.

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.

4 unchanged sentences

The WuXi STA DS Agreement has an initial term of four years , beginning April 2, 2020 and ending April 2, 2024.

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 December 31, 2020, the Company has committed to purchase $ 44.7 million of vadadustat drug substance from WuXi STA through the first quarter of 2022.

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 December 31, 2021, the Company has committed to purchase $ 29.2 million of vadadustat drug substance from WuXi STA through the third quarter of 2022.

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

12 unchanged sentences

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 December 31, 2021 were approximately $ 5.0 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 through the first quarter of 2021.

Substantive performance for the committed work with IQVIA was completed in 2020 and close out activities will be performed throughout 2022.

The Company also contracts with various other organizations to conduct research and development activities with remaining contract costs to the Company of approximately $ 237.8 million at December 31, 2021.

18 unchanged sentences

Total 16,574,829 14,618,439 12,704,642

Quarterly Results (unaudited)

Three Months Ended

March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020

(in thousands, except per share data)

Product revenue, net $ 29,209 $ 30,696 $ 34,392 $ 34,604

License, collaboration and other revenue $ 59,269 $ 59,446 $ 25,596 $ 22,095

Cost of goods sold $ 27,713 $ 174,616 $ 30,345 $ 63,234

Operating expenses $ 119,890 $ 89,345 $ 87,738 $ 78,868

Loss from operations $ ( 59,125 ) $ ( 173,819 ) $ ( 58,095 ) $ ( 85,403 )

Other expense, net $ ( 1,622 ) $ ( 1,932 ) $ ( 1,864 ) $ ( 1,597 )

Benefit for income taxes $ — $ — $ — $ —

Net loss $ ( 60,747 ) $ ( 175,751 ) $ ( 59,959 ) $ ( 87,000 )

Net loss per share:

basic and diluted $ ( 0.47 ) $ ( 1.28 ) $ ( 0.42 ) $ ( 0.60 )

Weighted-average number of common shares:

basic and diluted 128,395,163 136,906,968 143,314,729 145,111,415

Three Months Ended

March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019

(in thousands, except per share data)

Product revenue, net $ 23,111 $ 29,089 $ 30,004 $ 28,915

License, collaboration and other revenue $ 49,555 $ 71,714 $ 61,973 $ 40,640

Cost of goods sold $ 31,257 $ 37,669 $ 38,263 $ 38,147

Operating expenses $ 117,378 $ 122,657 $ 109,619 $ 126,299

Loss from operations $ ( 75,969 ) $ ( 59,523 ) $ ( 55,905 ) $ ( 94,891 )

Other income (expense), net $ 791 $ 508 $ 43 $ ( 1,344 )

Benefit for income taxes $ ( 2,757 ) $ ( 845 ) $ ( 1,277 ) $ ( 1,752 )

Net loss $ ( 72,421 ) $ ( 58,170 ) $ ( 54,585 ) $ ( 94,483 )

Net loss per share:

basic and diluted $ ( 0.62 ) $ ( 0.49 ) $ ( 0.46 ) $ ( 0.79 )

Weighted-average number of common shares:

basic and diluted 117,063,352 118,268,832 118,863,063 119,358,081

Subsequent Events

On February 25, 2021, the Company entered into a royalty interest acquisition agreement, or the Royalty Agreement, with HealthCare Royalty Partners IV, L.P., or HCR, pursuant to which the Company sold to HCR its right to receive all royalties and sales milestones for vadadustat, collectively the Royalty Interest Payments, in each case, payable to the Company under its Collaboration Agreement dated December 11, 2015, or the MTPC Agreement, with Mitsubishi Tanabe Pharma Corporation, or MTPC, subject to an annual maximum “cap” of $ 13.0 million, or the Annual Cap, and an aggregate maximum “cap” of $ 150.0 million, or the Aggregate Cap.

After HCR receives Royalty Interest Payments equal to the Annual Cap in a given calendar year, the Company will receive 85 % of the Royalty Interest Payments for the remainder of that year.

The Company received $ 45.0 million from HCR (net of certain transaction expenses) under the Royalty Agreement, and the Company is eligible to receive an additional $ 15.0 million under the Royalty Agreement if specified sales milestones are achieved for vadadustat in the territory covered by the MTPC Agreement, subject to the satisfaction of certain customary conditions.

The Company retains the right to receive all potential future regulatory milestones for vadadustat under the MTPC Agreement.

The Royalty Agreement requires the Company to take certain actions, including actions with respect to the Royalty Interest Payments, the MTPC Agreement, the Company's agreement with MTPC for the commercial supply of vadadustat drug product, and the Company's intellectual property.

In addition, the Company granted HCR a precautionary security interest in connection with the Royalty Interest Payments.

Second Amended and Restated License Agreement with Vifor Pharma

On Febr uary 18, 202 2, the Company and Vifor Pharma entered into a Second Amended and Restated License Agreement, or the Vifor Second Amended Agreement, which amends and restates the Vifor First Amended Agreement.

Pursuant to the

Vifor Second Amended Agreement, the Company granted Vifor Pharma an exclusive license to sell vadadustat to the Supply Group in the United States, or the Territory.

Vadadustat is the Company's investigational oral HIF prolyl hydroxylase inhibitor for the treatment of anemia due to CKD, for which the Company has filed a new drug application with the FDA.

Like the Vifor First Amended Agreement, the Vifor Second Amended Agreement is structured as a profit share arrangement between the Company and Vifor Pharma in which the Company will receive approximately 66 % of the profit, net of certain pre-specified costs.

Under the Vifor Second Amended Agreement, Vifor Pharma will make an upfront payment to the Company of $ 25 million in lieu of the previously disclosed milestone payment of $ 25 million that Vifor Pharma was to pay to the Company following approval of vadadustat by the FDA.

In addition, Vifor Pharma made an equity investment in the Company as further described below under “Investment Agreement.” The Company currently retains rights to commercialize vadadustat for use in the non-dialysis dependent CKD market and to sell to dialysis organizations outside of the Supply Group.

As under the Vifor First Amended Agreement, during the term of the Vifor Second Amended Agreement, Vifor Pharma is not permitted to sell any HIF product that competes with vadadustat in the Territory to the Supply Group.

As under the Vifor First Amended Agreement, the Vifor Second Amended Agreement provides that the Company and Vifor Pharma will enter into a commercial supply agreement for vadadustat pursuant to which the Company will supply all of Vifor Pharma’s requirements for vadadustat in the Territory.

Under the Vifor Second Amended Agreement, Vifor Pharma will contribute $ 40 million to the Working Capital Fund, established to partially fund the Company's costs of purchasing vadadustat from its contract manufacturers, which amount of funding will fluctuate, and which funding the Company will repay to Vifor Pharma over time.

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

Vifor Pharma may terminate the Vifor Second Amended Agreement in its entirety upon 30 months’ prior written notice after the first anniversary of the receipt of regulatory approval, if approved, from the FDA for vadadustat for dialysis-dependent CKD patients.

The Company may terminate the Vifor Second Amended Agreement in its entirety for convenience, following the earlier of a certain period of time elapsing or following certain specified regulatory events, and upon six months’ prior written notice.

If the Company so terminates for convenience, subject to a specified exception, the Company will pay a termination fee to Vifor Pharma.

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

The Company may also terminate the Vifor Second Amended Agreement upon the occurrence of certain other events.

The Vifor Second Amended Agreement also continues to include a standstill provision and customary representations and warranties.

Investment Agreement

In connection with entering into the Vifor Second Amended Agreement, on February 18, 2022, the Company and Vifor Pharma entered into an investment agreement, or the Second Investment Agreement, pursuant to which Akebia sold an aggregate of 4,000,000 shares of its common stock, par value $ 0.00001 per share, or the Shares, to Vifor Pharma for a total of $ 20 million on February 22, 2022.

Vifor Pharma has agreed to a lock-up restriction to not sell or otherwise dispose of the Shares for a period of time following the effective date of the Investment Agreement as well as a customary standstill agreement.

In addition, the Second Investment Agreement contains voting agreements made by Vifor Pharma with respect to the Shares.

The Shares have not been registered

pursuant to the Act and were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2) of the Act and/or Rule 506 promulgated thereunder, as the transaction does not involve any public offering within the meaning of Section 4(a)(2) of the Act.

First Amendment and Waiver to Loan Agreement with Pharmakon

On February 18, 2022, in connection with entering into the Vifor Second Amended Agreement, the Company and Pharmakon entered into the First Amendment and Waiver, or the First Amendment and Waiver, which amends and waives certain provisions of the Loan Agreement.

Pursuant to the First Amendment and Waiver, the Collateral Agent and the Lenders agreed to (1) add the Working Capital Fund to the definition of Permitted Indebtedness under the Loan Agreement, as such term is defined in the Loan Agreement.

subject to certain rights of notice and acceleration of the loans under the Loan Agreement granted to the Collateral Agent and Lenders in connection with the Company’s repayment of the Working Capital Fund to Vifor Pharma, and (2) provide the Company with a waiver with respect to a financial statement covenant included in the Loan Agreement and added a new covenant providing that our Quarterly Reports on Form 10-Q for the fiscal quarters ending June 30, 2022 and September 30, 2022 must not be subject to any qualification as to going concern.

Amendment to Lease Agreement with CLPF One Marina Park Drive LLC

On February 24, 2022, Keryx and the Company entered into an Assignment and Assumption Agreement, pursuant to which the Company assumed all of the rights and responsibilities of Keryx with respect to the One Marina Park Drive Office Lease, dated April 29, 2015, by and between Keryx and Fallon Cornerstone One MPD LLC, or Fallon, or the Boston Lease, for the entire twelfth floor of the building located at One Marina Park Drive, Boston, Massachusetts, or the Premises.

On February 24, 2022, the Company entered into a First Amendment to Lease, or the First Lease Amendment, with CLPF One Marina Park Drive LLC (successor-in-interest to Fallon), or the Landlord, amending the Boston Lease for the Premises.

Pursuant to the First Lease Amendment, the Company has agreed to extend the term of the Boston Lease, as amended, until July 31, 2031.

The monthly lease payment for the Premises pursuant to the First Lease Amendment will be $ 200,122.00 commencing on August 1, 2023, with an annual rent escalation of approximately 2 % commencing on August 1, 2024.

The First Lease Amendment also includes a Landlord’s allowance for certain leasehold improvements to the Premises in an amount of up to $ 1,954,680.00 , provided that such allowance must be used prior to August 1, 2024.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data