What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-10 compared with 2022-03-01 · 448 added, 666 removed, 1156 unchanged (49% of the section changed)

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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, 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.

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, 2022, 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 10, 2023, expressed an unqualified opinion thereon.

Basis for Opinion

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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

Revenue recognition - Payor Mix Impact on Measuring Variable Consideration, specifically payor rebates

Description of the Matter

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.

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.

The Company's model for estimating the liability involves significant assumptions, including projected sales volumes, which is sensitive to and affected by economic, industry and company-specific qualitative factors.

As of December 31, 2022, the Company recorded accrued product revenue allowances of $29.0 million, which includes payor rebates.

As discussed in Note 2 to the Company’s consolidated financial statements, the Company recognizes revenue from product sales at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established.

The Company contracts with various commercial payor organizations, primarily health insurance companies and pharmacy benefit managers, for the payment of rebates with respect to utilization of its products.

The Company estimates the rebates for payors based upon (i) its contracts with the payors and (ii) information obtained from its customers and other third parties regarding the payor mix.

The Company estimates these payor rebates and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability.

Auditing the measurement of the Company’s net product revenues was complex and judgmental due to the significant estimation required in determining the amount of consideration that will be collected net of estimates for payor rebates.

In particular, the payor rebate is affected by assumptions in payor behavior such as changes in payor mix, payor collections and current customer contractual requirements.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested controls over the Company's evaluation of its excess purchase commitment liability.

This included controls over the model, significant assumptions, and completeness and accuracy of the data used in the evaluation.

To test the Company’s evaluation of its excess purchase commitment liability, we performed audit procedures that included, among others, 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 also performed a sensitivity analysis of the significant assumptions to evaluate the change in the liability that would result from changes in underlying assumptions.

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s revenue recognition process, including controls over the underlying assumptions and inputs used by management to estimate the payor rebates.

Specifically, this included controls to assess the completeness and accuracy of the current and historical data used in calculating the estimate.

Our audit procedures to test the Company’s recognition of net product revenues and specifically the variable consideration component of payor rebates included, among others, assessing the methodology used to determine the estimate and testing the significant assumptions and the underlying data used by the Company in its analysis.

This included testing the reasonableness of management’s estimates to other inputs into their calculations such as contract terms, product in the distribution channel, and actual invoices received.

We assessed the historical accuracy of management’s estimates by comparing actual activity to previous estimates and performed analytical procedures to evaluate the completeness of the payor rebate reserves.

/s/ Ernst & Young LLP

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Cash and cash equivalents $ 90,466 $ 149,800

Available for sale securities — 39,992

Inventory 21,762 38,195

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Liability related to sale of future royalties, net 57,484 53,079

Refund liability to customer 40,992 —

Other non-current liabilities 12,161 82,525

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License expense 3,175 3,489 3,409

Restructuring 15,933 — —

Total operating expenses 286,921 325,502 375,841

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Other income (expense) 3,146 2,414 1,856

Loss on extinguishment of debt ( 906 ) — —

Net loss before income taxes ( 92,562 ) ( 282,840 ) ( 383,457 )

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Net loss $ ( 92,562 ) $ ( 282,840 ) $ ( 383,457 )

Other comprehensive gain - unrealized gain on securities ( 7 ) 13 261

Other comprehensive (loss) gain - unrealized (loss) gain on securities — ( 7 ) 13

Total comprehensive loss $ ( 92,562 ) $ ( 282,847 ) $ ( 383,444 )

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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

Restricted stock unit vesting 2,267,342 — — — — —

Unrealized gain — — — 13 — 13

Unrealized loss — — — ( 7 ) — ( 7 )

Net loss — — — — ( 282,840 ) ( 282,840 )

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Restricted stock unit vesting 2,252,565 — — — — —

Unrealized gain — — — ( 7 ) — ( 7 )

Exercise of options 142,440 — 67 — — 67

Net loss — — — — ( 92,562 ) ( 92,562 )

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

Non-cash collaboration revenue ( 9,550 ) — —

Non-cash research and development expense 8,768 — —

Non-cash interest expense 2,121 1,165 1,534

Non-cash operating lease expense ( 2,417 ) ( 1,842 ) ( 2,037 )

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

Non-cash loss on extinguishment of debt 406 — —

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

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Stock-based compensation 17,849 22,735 24,460

Deferred income taxes — — ( 6,631 )

Change in fair value of derivative liability ( 1,060 ) ( 600 ) 286

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Proceeds from the maturities of available for sale securities — 40,000 60,245

Proceeds from sales of available for sale securities — — 64,721

Net cash provided by (used in) investing activities ( 114 ) 39,941 ( 40,004 )

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

Proceeds from refund liabilities to customers 40,000 — —

Proceeds from the issuance of common stock, net of issuance costs 7,121 88,202 209,419

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Proceeds from the exercise of stock options 67 — 1,226

Retirement of treasury stock — — ( 426 )

Proceeds from the issuance of debt, net — — 19,975

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

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

Akebia’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 ® (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 (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.

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

The Company has one commercial product, Auryxia ® (ferric citrate), which is 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 chronic kidney disease, or 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 IDA in adult patients for the improvement of hyperphosphatemia in such patients with DD-CKD and NDD-CKD under the trade name Riona (ferric citrate hydrate).

Vadadustat, the Company’s lead investigational product candidate, is an investigational oral hypoxia-inducible factor prolyl hydroxylase, or HIF-PH, inhibitor designed to mimic the physiologic effect of altitude on oxygen availability.

On March 29, 2022, the Company received a complete response letter, or CRL, from the FDA.

The CRL provided that the FDA had completed its review of the Company's new drug application, or NDA, for vadadustat for the treatment of anemia due to CKD in adult patients and had determined that it could not approve the NDA in its present form.

In October 2022, the Company submitted a Formal Dispute Resolution Request, or FDRR, with the FDA.

The FDRR focused on the favorable balance between the benefits and risks of vadadustat for the treatment of anemia due to CKD in adult DD-CKD patients in light of safety concerns expressed by the FDA in the CRL for dialysis patients related to the rate of adjudicated thromboembolic events driven by vascular access thrombosis for vadadustat compared to the active comparator and the risk of drug-induced liver injury.

In February 2023, we received a second interim response from the FDA to our FDRR.

On May 12, 2022, the Company received notice from its former collaboration partner, Otsuka Pharmaceutical Co.

Ltd., or Otsuka, that Otsuka had elected to terminate the Collaboration and License Agreement dated December 18, 2016, or the Otsuka U.S.

Agreement, and the Collaboration and License Agreement dated April 25, 2017, or the Otsuka International Agreement.

On June 30, 2022, the Company and Otsuka entered into a Termination and Settlement Agreement, or the Termination Agreement, pursuant to which, among other things, the Company and Otsuka agreed to terminate the Otsuka U.S.

Agreement and the Otsuka International Agreement as of June 30, 2022 (see Note 4 for further details).

In October 2021, Otsuka submitted a Marketing Authorization Application, or MAA, for vadadustat for the treatment of anemia due to CKD in adult patients with DD-CKD and NDD-CKD to the European Medicines Agency, or EMA .

In connection with the Termination Agreement, Otsuka transferred the MAA for vadadustat with the EMA to the Company.

Vadadustat is approved in Japan as a treatment for anemia due to CKD in both DD-CKD and NDD-CKD patients under the trade name Vafseo TM , and marketed and sold in Japan by Mitsubishi Tanabe Pharma Corporation, or MTPC.

In addition, the Company continues to explore additional development opportunities to expand its pipeline and portfolio of novel therapeutics.

Since inception, the Company has devoted most of its resources to research and development, including its preclinical and clinical development activities, 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 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).

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

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

Additionally, following regulatory approval of vadadustat in Japan, the Company began recognizing royalty revenues from 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 HCR, 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 6 for additional information).

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

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

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

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

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.

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.

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

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.

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 2021 Annual Report on Form 10-K.

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.

The Company’s operating plan during 2022 included the planned completion of several operating changes that the Company implemented over the course of the year.

These assumptions pertained to cost avoidance measures and the reduction of overhead costs that would result from the planned amendment of contractual arrangements with certain supply and collaboration partners, and the reduction of operating expenses, which were outside of the Company’s control.

Over the course of 2022, and completing in the fourth quarter, the Company executed on certain of these cost avoidance measures and reduction of overhead costs from the amendment or termination of contractual arrangements with certain supply partners as well as the reduction of future operating expenses, which is consistent with the Company’s plan to fund operations with existing cash resources and cash from operations.

Examples of these reductions include the amendment, assignment and termination of certain supply agreements for both vadadustat and Auryxia.

For example, on December 22, 2022, the Company and BioVectra Inc., or BioVectra, entered into a Termination Agreement, or the BioVectra Termination Agreement, pursuant to which the parties agreed, among other things, to terminate, effective immediately, any and all existing agreements entered into between the parties in connection with the manufacture and supply, by BioVectra to the Company, of Auryxia drug substance.

Under the terms of the BioVectra Termination Agreement, the Company agreed to pay BioVectra a total of $ 32.5 million consisting of (i) an upfront payment of $ 17.5 million and (ii) six quarterly payments of $ 2.5 million commencing in April 2024, totaling $ 15.0 million.

Pursuant to the BioVectra Termination Agreement, each of the Company and BioVectra have released one another from all existing and future claims and liabilities and the return of certain materials and documents.

Furthermore, as it relates to all open purchase orders, BioVectra is relieved from any obligations to manufacture any product or perform services under any such open purchase orders, and the Company is relieved from any obligations to purchase any product under such open purchase orders .

The Company is also relieved from any obligations to pay any outstanding invoices related to performance by BioVectra of services and all other obligations under the agreements.

Additionally, on December 16, 2022, the Company, Mitsubishi Tanabe Pharma Corporation, or MTPC, and Esteve Química, S.A., or Esteve, executed the Assignment Agreement, pursuant to which the Supply Agreement between the Company and Esteve was assigned to MTPC.

The Assignment Agreement transferred the rights and obligations of the Supply Agreement to MTPC, specifically including the obligations under certain purchase orders issued by the Company and accepted by Esteve.

As such, the transferred purchase orders will continue to have a binding effect on MTPC to take delivery of the product from Esteve in accordance with the terms of the Supply Agreement.

The Company will have no further obligation to take delivery of or pay for product delivered by Esteve under the transferred purchase orders.

In relation to cost avoidance measures, in November 2022, the Board of Directors approved a reduction of the Company’s workforce by approximately 14 % consisting solely of individuals within the commercial organization as a result of the Company’s decision to shift to a strategic account management focused model for its commercial efforts.

This shift is due to multiple factors, including the maturity of Auryxia®, the continued impact of the COVID-19 pandemic on dialysis centers and the phosphate binder market and that, if the Company is successful in its appeal of the complete response letter for vadadustat with the U.S.

Food and Drug Administration, the Company’s commercial focus for vadadustat will be limited to the dialysis patient population for the foreseeable future.

As of December 31, 2022, the Company had cash and cash equivalents of approximately $ 90.5 million.

Based on its current operating plan, 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 2022 Annual Report on Form 10-K.

If the Company’s operating performance deteriorates significantly from the levels achieved in 2022, it could have an effect on the Company’s liquidity and its ability to continue as a going concern in the future.

The Company expects to finance future cash needs through product revenue, potential strategic transactions, public or private equity or debt transactions, operating expense management, or a combination of these approaches.

Assuming the Company is successful in executing its operating plan, the Company will require additional funding to fund its strategic growth beyond Auryxia or to pursue later stage development and commercial activities for its product candidates and any additional product or product candidates, including those that may be in-licensed or acquired.

There can be no assurance that the current operating plan will be achieved in the time frame anticipated by the Company, or that its cash resources will fund our 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.

Summary of Significant Accounting Policies

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

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

GAAP as found in the Accounting

Standards Codification, or ASC, and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB.

New Accounting Pronouncements – Recently Adopted

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

Simplifying the Accounting for Income Taxes.

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 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):

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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 new guidance provides optional expedients and exceptions for applying U.S.

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.

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

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 at December 31, 2021 (see Note 12).

The warrant, or the Warrant, to purchase shares of the Company's common stock issued by the Company in connection with the Janssen Pharmaceutica NV Research and License Agreement, or the Janssen Agreement, expired on February 9, 2022.

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).

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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, 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.

prepaid and accrued research and development expense, operating lease assets and liabilities, derivative liabilities, refund liabilities to customers, other non-current liabilities, 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.

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

1 unchanged sentence

The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances.

Credit Losses

Available for sale debt securities.

Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date.

The Company classifies all securities as available for sale and includes them in current assets as they are intended to fund current operations.

The Company's investment portfolio at any point in time contains investments in money market mutual funds, U.S.

government debt securities, certificates of deposit and corporate debt securities.

The Company segments its portfolio based on the underlying risk profiles of the securities and have a zero loss expectation for money market mutual funds, U.S.

government debt securities and certificates of deposit.

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 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.

A credit-related unrealized loss is recognized as an allowance on the consolidated balance sheets with a corresponding adjustment to earnings in the consolidated statements of operations.

Cash, Cash Equivalents, and Restricted Cash

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in the statement of cash flows $ 93,169 $ 151,839 $ 231,132

Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date.

Currently, the Company classifies all securities as available for sale which are included in current assets as they are intended to fund current operations.

The Company carries available for sale securities at fair value.

The Company conducts periodic reviews to identify and evaluate each investment that has an unrealized loss, in accordance with the meaning of other-than-temporary impairment and its application to certain investments.

When assessing whether a decline in the fair value of a security is other-than-temporary, the Company considers the fair market value of the security, the duration of the security’s decline, and prospects for the underlying business.

Based on these considerations, the Company did not identify any other-than-temporary unrealized losses at December 31, 2021.

Unrealized losses on available for sale securities that are determined to be temporary, and not related to credit loss, are recorded in accumulated other comprehensive loss, a component of stockholders’ equity.

The amortized cost of debt securities in this category reflects amortization of premiums and accretion of discounts to maturity computed under the effective interest method.

The Company includes this amortization in the caption “Interest income, net” within the consolidated statements of operations and comprehensive loss.

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

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

Accounts Receivable

The Company’s accounts receivable represent amounts due to the Company from product sales (see Note 3) and from its collaboration agreements with MTPC and Otsuka (see Note 4).

The Company’s accounts receivable represent amounts due to the Company from product sales (see Note 3) and from its collaboration agreement with MTPC (see Note 4).

Reimbursable costs that have not been invoiced as of the balance sheet date are recorded as unbilled accounts receivable.

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Concentrations of Credit Risk and Off-Balance Sheet Risk

Cash, cash equivalents, investments, and accounts receivable are the only financial instruments that potentially subject the Company to concentrations of credit risk.

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.

Cash, cash equivalents, and accounts receivable are the only financial instruments that potentially subject the Company to concentrations of credit risk.

The Company maintains its cash and cash equivalents 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.

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Fresenius Medical Care Rx 34 % 33 % 29 %

AmerisourceBergen Drug Corporation 16 % 12 % 10 %

Otsuka Pharmaceutical Co.

20 % 14 % 29 %

AmerisourceBergen Drug Corporation 15 % 16 % 12 %

McKesson Corporation — % 13 % 11 %

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As of December 31,

Otsuka Pharmaceutical Co.

MTPC 20 % — %

Fresenius Medical Care Rx 44 % 16 %

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McKesson Corporation 10 % — %

Otsuka Pharmaceutical Co.

MTPC — % 20 %

Property and Equipment

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ASU 2016-02 requires entities to recognize right-of-use assets and lease liabilities for leases with lease terms of more than 12 months on their balance sheets and provide enhanced disclosures.

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.

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 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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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.

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 consolidated statements of operations and comprehensive loss.

Refund Liability to Customer

The Company treats the refund liability to customer as a zero-coupon debt financing, which is recorded at net present value.

The Company recorded an initial discount on the refund liability to the customer and a corresponding deferred gain to the refund liability to customer on the consolidated balance sheet as of the date the funds were received from CSL Vifor, which was March 18, 2022.

The discount on the note payable is being amortized to interest expense using the effective interest method over the expected term of the refund liability.

The deferred gain is being amortized to interest income on a straight-line basis over the expected term of the refund liability.

Restructuring

Restructuring charges principally consist of one-time termination benefits and contractual termination benefits for severance, healthcare, and related benefits as well as non-cash share-based compensation expense.

The Company records restructuring charges based on whether the termination benefits are provided under an on-going benefit arrangement or under a one-time benefit arrangement.

The Company accounts for on-going benefit arrangements, such as those documented by employment agreements, in accordance with Accounting Standards Codification 712, or ASC 712, Nonretirement Postemployment Benefits.

Under ASC 712, liabilities for postemployment benefits are recorded at the time the obligations are probable of being incurred and can be reasonably estimated.

The Company accounts for one-time employment benefit arrangements in accordance with ASC 420 Exit or Disposal Cost Obligations.

When applicable, the Company records such costs into operating expense.

Excess Purchase Commitment Liability

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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

The Company generates revenues primarily from sales of Auryxia, see Note 3, and from its collaborations with MTPC and Otsuka, see Note 4.

The Company generates revenues primarily from sales of Auryxia, see Note 3, from its collaboration with MTPC and its prior collaboration agreements with Otsuka, see Note 4.

The Company recognizes revenue in accordance with ASC 606, which applies to all contracts with customers, except for contracts that are within the scope of other standards.

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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

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

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.

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A deliverable represents a separate performance obligation if both of the following criteria are met:

(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.

(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.

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.

With regard to the MTPC and former 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.

Licenses of Intellectual Property

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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 and MTPC based on net sales of Vafseo in Japan.

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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.

Therefore, the Company recognizes its allocation of the shared costs incurred with respect to the jointly conducted medical affairs and commercialization and non-promotional activities under the Otsuka U.S.

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.

Therefore, the Company recognized its allocation of the shared costs incurred with respect to the jointly conducted medical affairs and commercialization and non-promotional activities under the former Otsuka U.S.

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 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

The Company maintains a definite-lived intangible asset related to developed product rights for Auryxia, which was acquired on December 12, 2018 as part of the Merger.

The Company maintains a definite-lived intangible asset related to developed product rights for Auryxia.

Intangible assets are initially recorded at fair value and stated net of accumulated amortization and impairments.

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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.

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A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Items measured at fair value on a recurring basis include available for sale securities and derivative liabilities (see Note 7).

Items measured at fair value on a recurring basis include derivative liabilities (see Note 7).

The carrying amounts of prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to their short-term maturities.

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

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

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).

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 years ended December 31, 2022 and 2021.

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

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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, common stock awards, and performance-based restricted stock awards.

The Company uses the market price at the time of grant to determine the fair value of restricted 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.

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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.

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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(in thousands)

Agreement $ 7,970 $ 12,402 $ 20,372

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

MTPC $ 3,738 $ — $ 3,738

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Accounts payable $ 3,171 $ — $ ( 3,171 ) $ —

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

Twelve Months Ended December 31, 2021

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Summary of Agreement

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 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.

In addition, the Company supplies vadadustat to MTPC for both clinical and commercial use 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.

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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:

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

commercialization plans.

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

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

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(i) the up-front payment, (ii) the estimated cost for the Phase 2 studies, (iii) a non-substantive milestone associated with the first patient enrolled in the NDD-CKD Phase 3 study, and (iv) the cost of all clinical supply provided to MTPC for the Phase 3 studies.

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.

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.

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.

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

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

As of December 31, 2022, the transaction price was comprised of:

(i) the up-front payment of $ 20.0 million, (ii) the cost for the Phase 2 studies of $ 20.5 million, (iii) the cost of all clinical supply provided to MTPC for the Phase 3 studies, (iv) $ 10.0 million in development milestones received, (v) $ 25.0 million in regulatory milestones received, comprised of $ 10.0 million relating to the JNDA filing and $ 15.0 million relating to regulatory approval of vadadustat in Japan, and (vi) $ 3.0 million in royalties from net sales of Vafseo.

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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 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.

The Company recognized $ 1.8 million, $ 0.8 million, and $ 0.4 million of revenue for royalties from the net sales of Vafseo during the years ended December 31, 2022, 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 6).

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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 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.

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

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

During the years ended December 31, 2022, 2021 and 2020, the Company recognized $ 0 million , $ 0 million , and $ 6.2 million, respectively, in revenue for drug product that was delivered during the applicable period.

As of December 31, 2022, the Company recorded no accounts receivable, no deferred revenue, no 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, which was amended effective as of December 5, 2022.

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

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

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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.

On December 16, 2022, the Company, MTPC, and Esteve Química, S.A., or Esteve, executed an Assignment of Supply Agreement, or the Assignment Agreement, pursuant to which the Supply Agreement between the Company and Esteve (see Note 15), or the Esteve Agreement, was assigned to MTPC.

The Assignment Agreement transferred the rights and obligations of the Esteve Agreement to MTPC, including the obligations under certain purchase orders issued by the Company and

accepted by Esteve.

As such, the transferred purchase orders will continue to have a binding effect on MTPC to take delivery of the product from Esteve in accordance with the terms of the Esteve Agreement.

The Company will have no further obligation to take delivery of or pay for product delivered by Esteve under the transferred purchase orders.

During the years ended December 31, 2022, 2021, and 2020, the Company recognized $ 16.2 million, $ 11.6 million, and 0 million , respectively, of revenue under the MTPC Supply Agreement.

As of December 31, 2022, the Company recorded $ 2.1 million in accounts receivable and $ 3.7 million in deferred revenues.

Collaboration and License Agreement with Otsuka Pharmaceutical Co.

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On December 18, 2016, the Company entered into a collaboration and license agreement with Otsuka, or the Otsuka U.S.

The collaboration is focused on the development and commercialization of vadadustat in the United States.

The collaboration was focused on the development and commercialization of vadadustat in the United States.

Under the terms of the Otsuka 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.

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

Agreement, the Company was responsible for leading the development of vadadustat, for which it submitted an NDA to the FDA in March 2021, and for which it received the CRL in March 2022.

On May 12, 2022, the Company received notice from Otsuka that Otsuka had elected to terminate the Otsuka U.S.

Agreement and the Otsuka International Agreement.

On June 30, 2022, the Company and Otsuka entered into the Termination Agreement, pursuant to which, among other things, the Company and Otsuka agreed to terminate the Otsuka U.S.

Agreement and the Otsuka International Agreement as of June 30, 2022.

Under the terms of the Otsuka U.S.

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

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

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

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

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 to by the parties.

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.

Under the Otsuka U.S.

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

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

The activities under the Otsuka U.S.

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

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

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

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

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

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

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

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

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

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

pricing strategy and certain other key commercialization matters.

Under the terms of the Otsuka U.S.

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

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

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

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

The Company estimates that Otsuka’s funding of the current global development plan costs subsequent to December 31, 2016 will total $ 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.

Agreement or to be determined by the parties.

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

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

the Otsuka U.S.

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

The Company estimates the additional funding as a result of exercising the Otsuka Funding Option, or the Additional Funding, to total approximately $ 149.6 million or more, depending on the actual costs incurred toward the current global development plan.

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

As of December 31, 2021, the Additional Funding was $ 111.9 million.

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

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

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

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

Under the Otsuka U.S.

Agreement, the Company and Otsuka 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.

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

Unless earlier terminated, the Otsuka U.S.

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

Either party may terminate the Otsuka U.S.

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

Otsuka may terminate the Otsuka U.S.

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

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

Agreement, all rights and licenses granted to Otsuka under the Otsuka U.S.

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

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

Revenue Recognition

The Company evaluated the elements of the Otsuka U.S.

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

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

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

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

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

Additionally, the Otsuka U.S.

Agreement does not include a general right of return.

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

Agreement are as follows:

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

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

Agreement as follows:

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

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

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

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

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

regulatory approval and are commercialized.

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

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

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

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.

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

(i) Joint Committee Services (Committee Performance Obligation)

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.

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

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

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

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

The Company developed a best estimate of standalone selling price for the Committee Performance Obligation after considering the nature of the services to be performed and estimates of the associated effort and rates applicable to such services that would be expected to be realized under similar contracts.

The Company developed a best estimate of standalone selling price for the Future IP Performance Obligation primarily based on the likelihood that additional intellectual property covered by the license conveyed will be developed during the term of the arrangement.

The Company developed a best estimate of standalone selling price for the Future IP Performance Obligation primarily based on the likelihood that additional intellectual property covered by the license conveyed would be developed during the term of the arrangement.

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

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

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

The transaction price at inception was comprised of:

(i) the up-front payment, (ii) the cost share payment with respect to amounts incurred by the Company through December 31, 2016, and (iii) an estimate of the cost share payments to be received with respect to amounts incurred by the Company subsequent to December 31, 2016.

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

As part of its evaluation of the constraint, the Company considered 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.

Any consideration related to sales-based milestones will be recognized when the related sales occur as they were determined to relate predominantly to the license granted to Otsuka and therefore have also been excluded from the transaction price.

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

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

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

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

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

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

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

Accordingly, the Company will

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

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

As of December 31, 2021, the transaction price totaling $ 518.9 million is comprised of:

(i) the up-front payment of $ 125.0 million, (ii) the cost share payment with respect to amounts incurred by the Company through December 31, 2016 of $ 33.8 million, and (iii) the estimate of the net cost share consideration to be received of approximately $ 360.1 million with respect to amounts incurred by the Company subsequent to December 31, 2016.

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

During the years ended December 31, 2021, 2020 and 2019, the Company recognized revenue totaling approximately $ 36.6 million, $ 93.4 million and $ 131.3 million, respectively, with respect to the Otsuka U.S.

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

As of December 31, 2021, there is approximately $ 20.4 million of deferred revenue related to the Otsuka U.S.

Agreement of which $ 8.0 million is classified as current and $ 12.4 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, 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, 2021, there were no accounts receivable in the accompanying consolidated balance sheet.

The Company re-evaluated the transaction price in each reporting period and as uncertain events were resolved or other changes in circumstances occurred.

The Company determined that under ASC 606, the contract was modified in the second quarter of 2019, when the Company elected to require Otsuka to increase the aggregate percentage of current global development costs it funds under the Otsuka U.S.

Agreement and the Otsuka International Agreement from 52.5 % to 80 %, or the Otsuka Funding Option, and the Company became eligible to receive the amount from the Otsuka Funding Option.

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

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

Pursuant to the Otsuka U.S.

Agreement, the Company received:

(i) the up-front payment of $ 125.0 million, (ii) the cost share payment with respect to amounts incurred by the Company through December 31, 2016 of $ 33.8 million, and (iii) the net cost share consideration received with respect to amounts incurred by the Company under the global development plan of approximately $ 319.2 million with respect to amounts incurred by the Company subsequent to December 31, 2016.

Pursuant to the Termination Agreement, in July 2022, the Company received a nonrefundable and non-creditable payment of $ 55.0 million in consideration for the covenants and agreements set forth in the Termination Agreement, including the settlement and release of all disputes and claims as provided therein.

The Company determined that the Termination Agreement met the definition of a contract modification and was accounted for as a cumulative catch-up adjustment at the time of modification under ASC 606.

During the year ended December 31, 2022, the Company recognized $ 92.3 million of collaboration revenue from the Otsuka U.S.

Agreement and the Otsuka International Agreement combined in its consolidated statement of operations and comprehensive loss.

The collaboration revenue for the year ended December 31, 2022 is primarily comprised of the $ 55.0 million payment received pursuant to the Termination Agreement, $ 15.5 million related to previously deferred revenue as of the date of termination and $ 9.6 million of non-cash consideration related to Otsuka's obligations to complete certain agreed upon clinical activities related to the Phase 3b clinical trial of vadadustat Otsuka is conducting.

During the years ended December 31, 2021 and 2020, the Company recognized collaboration revenue totaling approximately $ 36.6 million and $ 93.4 million, respectively, with respect to the Otsuka U.S.

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

Agreement represent joint operating activities in which both parties are active participants and of which both parties are exposed to significant risks and rewards that are dependent on the success of the activities.

Accordingly, the Company is accounting for the joint medical affairs, commercialization and non-promotional activities in accordance with ASC No.

Agreement represented joint operating activities in which both parties were active participants and of which both parties were exposed to significant risks and rewards that were dependent on the success of the activities.

Accordingly, the Company accounted for the joint medical affairs, commercialization and non-promotional activities in accordance with ASC No.

808, Collaborative Arrangements (ASC 808).

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

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

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

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

During the years ended December 31, 2022, 2021 and 2020, the Company incurred approximately $ 7.6 million, $ 17.5 million and $ 5.1 million, respectively, of costs related to the cost-sharing provisions of the Otsuka U.S.

Agreement of which approximately $ 8.6 million, $ 2.2 million and $ 0.7 million are reimbursable by Otsuka and recorded as a reduction to research and development expense during each of the years ended December 31, 2021, 2020 and 2019, respectively.

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 $ 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.

Agreement of which approximately $ 3.8 million, $ 8.6 million and $ 2.2 million were reimbursable by Otsuka and recorded as a reduction to research and development expense during each of the years ended December 31, 2022, 2021 and 2020, respectively.

During the year ended December 31, 2022, Otsuka incurred no costs related to the cost-sharing provisions of the Otsuka U.S.

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

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

International Collaboration and License Agreement with Otsuka Pharmaceutical Co.

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On April 25, 2017, the Company entered into a collaboration and license agreement with Otsuka, or the Otsuka International Agreement.

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 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.

The collaboration was 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 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 to by the parties.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Company estimates that Otsuka’s funding of the current global development plan costs subsequent to March 31, 2017 will total roughly $ 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.

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

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

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

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

More specifically, as of 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.

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

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

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

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

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

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

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

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

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

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

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

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

Revenue Recognition

The Company has accounted for the Otsuka International Agreement separately from the collaboration arrangement with Otsuka with respect to the U.S.

due to the lack of interrelationship and interdependence of the elements and payment terms within each of the contracts as they relate to the respective territories.

Accordingly, the Company has applied the guidance in ASC 606 solely in reference to the terms and conditions of the Otsuka International Agreement, while the Otsuka U.S.

Agreement has continued to be accounted for as a discrete agreement in its own right.

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

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

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

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

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

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

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

due to the lack of interrelationship and interdependence of the elements and payment terms within each of the contracts as they related to the respective territories.

Accordingly, the Company applied the guidance in ASC 606 solely in reference to the terms and conditions of the Otsuka International Agreement, while the Otsuka U.S.

Agreement continued to be accounted for as a discrete agreement in its own right.

The Company evaluated the Otsuka International Agreement in accordance with the provisions of ASC 606 and concluded that the contract counterparty, Otsuka, was a customer.

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

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

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

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

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

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

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

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

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

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

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

(i) Joint Committee Services (Committee Performance Obligation)

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

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

future intellectual property.

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

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

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

The Company allocated the transaction price to each performance obligation based on the Company’s

best estimate of the relative standalone selling price.

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The transaction price at inception was comprised of:

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

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

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

Any consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur as they were determined to relate predominantly to the license granted to Otsuka and therefore have also been excluded from the transaction price.

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

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

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

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

As of December 31, 2021, the transaction price totaling $ 317.7 million is comprised of:

(i) the up-front payment of $ 73.0 million, (ii) the cost share payment with respect to amounts incurred by the Company during the quarter ended March 31, 2017 of $ 0.2 million, and (iii) an estimate of the net cost share consideration to be received with respect to amounts incurred by the Company subsequent to March 31, 2017 of $ 244.6 million.

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

During the years ended December 31, 2021, 2020 and 2019, the Company recognized revenue totaling approximately $ 16.4 million, $ 45.5 million, and $ 75.6 million, respectively, with respect to the Otsuka International Agreement.

The Company re-evaluated the transaction price in each reporting period and as uncertain events were resolved or other changes in circumstances occurred.

Pursuant to the Otsuka International Agreement, the Company received:

(i) the up-front payment of $ 73.0 million, (ii) the cost share payment with respect to amounts incurred by the Company during the quarter ended March 31, 2017 of $ 0.2 million, and (iii) the net cost share consideration received with respect to amounts incurred by the Company subsequent to March 31, 2017 of $ 216.7 million.

As discussed above, the Otsuka International Agreement was terminated on June 30, 2022 pursuant to the Termination Agreement.

Refer to earlier in this Note 4 for further details of the recognition of this Termination Agreement in the Company's consolidated statement of operations and comprehensive loss.

During the years ended December 31, 2021 and 2020, the Company recognized revenue totaling approximately $ 16.4 million and $ 45.5 million, respectively, with respect to the Otsuka International Agreement.

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

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, 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.

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

Janssen Pharmaceutica NV Research and License Agreement

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

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

During the research term, the Company could designate one or more compounds as candidates for development and commercialization.

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, 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.

Janssen will also be eligible to receive up to $ 215.0 million from the Company in specified commercial milestones as well as tiered, escalating royalties ranging from a low to mid-single digit percentage of net sales, on a product-by-product basis, and subject to reduction upon expiration of patent rights or the launch of a generic product in the territory.

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

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

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

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

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.

The Warrant expired on February 9, 2022.

On August 1, 2022, the Company notified Janssen that it was exercising its right to terminate the Janssen Agreement in its entirety, and Janssen agreed to the termination which became effective on August 2, 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.

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In addition, Cyclerion is eligible to receive up to an aggregate of $ 222.0 million from the Company in specified development and regulatory milestone payments on a product-by-product basis.

Cyclerion will also be eligible to receive specified commercial milestones as well as tiered royalties ranging from a low-single-digit to mid-double-digit percentage of net sales, on a product-by-product basis, and subject to reduction upon expiration of patent rights or the launch of a generic product in the territory.

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

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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

CSL 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 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.

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 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.

On May 12, 2017, the Company entered into a License Agreement, or the Vifor Agreement, with Vifor (International) Ltd.

(now a part of CSL Limited), or CSL Vifor, pursuant to which the Company granted CSL Vifor an exclusive license to sell vadadustat solely to Fresenius Kidney Care Group LLC, an affiliate of Fresenius Medical Care North America, or FMCNA, in the United States.

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

On February 18, 2022, the Company and CSL Vifor 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 CSL Vifor an exclusive license to sell vadadustat to FMCNA and its affiliates, including Fresenius Kidney Care Group LLC, to certain third party dialysis organizations approved by the Company, to independent dialysis organizations that are members of certain group purchasing organizations, and to certain non-retail specialty pharmacies, or collectively, the Supply Group, in the United States, or the Territory.

Pursuant to the Vifor Second Amended Agreement, CSL Vifor agreed that it would not sell or otherwise supply vadadustat until the FDA has granted regulatory approval for vadadustat for the treatment of anemia due to CKD in adult patients with DD-CKD in the Territory and until CSL Vifor has entered a supply agreement with the applicable member of the Supply Group.

Similar to the Vifor First Amended Agreement, the Vifor Second Amended Agreement is structured as a profit share arrangement between the Company and CSL Vifor in which the Company will receive approximately 66 % of the profit, net of certain pre-specified costs.

Under the Vifor Second Amended Agreement, in February 2022, CSL Vifor made an upfront payment to the Company of $ 25.0 million in lieu of the previously disclosed milestone payment of $ 25.0 million that CSL Vifor was to pay the Company following approval of vadadustat by the FDA, as established under the Vifor First Amended Agreement.

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 expiration of marketing or regulatory exclusivity for vadadustat in the Territory.

CSL Vifor 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 specified exceptions, the Company will pay a termination fee to CSL Vifor.

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.

Investment Agreement

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.

In connection with the Vifor Agreement, in May 2017, the Company and CSL Vifor 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 2017 Shares, to CSL Vifor 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.

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

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

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.

Accordingly, the $ 4.7 million continues to be recorded as deferred revenue in the accompanying consolidated balance sheets.

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 First Investment Agreement as well as a customary standstill agreement.

CSL Vifor agreed to a lock-up restriction such that it agreed not to sell the 2017 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.

In addition, the First Investment Agreement contains voting agreements made by CSL Vifor with respect to the 2017 Shares.

The 2017 Shares have not been registered pursuant to the

Securities Act of 1933, as amended, or 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.

In connection with entering into the Vifor Second Amended Agreement, on February 18, 2022, the Company and CSL Vifor entered into an investment agreement, or the Second Investment Agreement, pursuant to which the Company sold an aggregate of 4,000,000 shares of its common stock, or the 2022 Shares, to CSL Vifor for a total of $ 20.0 million on February 22, 2022.

The amount representing the premium over the grant date fair value on the date of the transaction, $ 13.6 million, was determined by the Company to represent the consideration related to the Vifor Second Amended Agreement.

CSL Vifor has agreed to a lock-up restriction to not sell or otherwise dispose of the 2022 Shares for a period of time following the effective date of the Second Investment Agreement as well as a customary standstill agreement.

In addition, the Second Investment Agreement contains voting agreements made by CSL Vifor with respect to the 2022 Shares.

The 2022 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/or Rule 506 promulgated thereunder, as the transaction did not involve any public offering within the meaning of Section 4(a)(2) of the Securities Act.

Revenue Recognition

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

The Company’s arrangement with CSL Vifor contains one material promise under the contract at inception, which is the non-sublicensable, non-transferrable license under certain of the Company’s intellectual property to (i) sell vadadustat solely to the Supply Group, (ii) sell vadadustat to Designated Wholesalers solely for resale to members of the Supply Group, (iii) conduct medical affairs with respect to vadadustat in the Territory in the field during the term of the Vifor Second Amended Agreement and (iv) use the Akebia Trademark solely in connection with the sale of vadadustat (the License Deliverable).

The Company has identified one performance obligation in connection with its obligations under the Vifor Second Amended Agreement, which is the License Deliverable, or License Performance Obligation.

The transaction price at inception was comprised of:

(i) the up-front payment of $ 25.0 million, (ii) the premium paid by CSL Vifor on the First Investment Agreement of $ 4.7 million, and (iii) the premium paid by CSL Vifor on the Second Investment Agreement of $ 13.6 million.

Pursuant to the terms of the Vifor Second Amended Agreement, these payments from CSL Vifor are non-refundable and non-creditable against any other amount due to the Company.

Also pursuant to the Vifor Second Amended Agreement, if the Centers for Medicare & Medicaid Services, or CMS, determines that vadadustat is excluded from the Transitional Drug Add-on Payment Adjustment, or TDAPA, the Company can terminate the Vifor Second Amended Agreement and will be required to repay the up-front payment and the premiums paid by CSL Vifor in the First Investment Agreement and Second Investment Agreement, respectively.

The Company considered whether the transaction price was constrained as required per the guidance in ASC 606-10-32-11.

As part of its evaluation of the constraint, the Company considered numerous factors, including the CRL received from the FDA for vadadustat, the uncertainty associated with a potential future approval of vadadustat by the FDA, and if approval of vadadustat is received in the future, whether vadadustat would be included in certain reimbursement bundles by CMS, which are all outside of the Company’s control.

CSL Vifor also agreed that it will not sell or otherwise supply vadadustat until the FDA has granted regulatory approval for vadadustat in the DD-CKD Indication.

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

Therefore, the Company determined that the entire transaction price at inception was constrained under ASC 606, and the Company has recorded the transaction price to deferred revenue as of December 31, 2022.

Refund Liability to Customer

Pursuant to the Vifor Second Amended Agreement, CSL Vifor contributed $ 40.0 million to a working capital fund established to partially fund the Company’s costs of purchasing vadadustat from its contract manufacturers, or the Working Capital Fund, which amount of funding will fluctuate, and which funding the Company is required to repay to CSL Vifor over time.

The $ 40 million initial contribution to the Working Capital Fund represented 50 % of the amount of purchase orders that the Company had placed with its contract manufacturers for the supply of vadadustat for the Territory already delivered as of the effective date of the Vifor Second Amended Agreement, and to be delivered through the end of 2023.

The amount of the Working Capital Fund will be reviewed at specified intervals and is adjusted based on a number of factors including outstanding supply commitments for vadadustat for the Territory and agreed upon vadadustat inventory levels held by the Company for the Territory.

Upon termination or expiration of the Vifor Second Amended Agreement for any reason other than convenience by CSL Vifor (including following receipt of the CRL for vadadustat), the Company will be required to refund the outstanding balance of the Working Capital Fund on the date of termination or expiration.

The Company has recorded the Working Capital Fund as a refund liability under ASC 606.

The Company has determined that the refund liability itself does not represent an obligation to transfer goods or services to CSL Vifor in the future.

The Company has therefore determined that this refund liability is not a contract liability under ASC 606.

The Company accounted for the refund liability as a debt arrangement with zero coupon interest.

The Company imputed interest on the refund liability to the customer at a rate of 15.0 % per annum, which was determined based on certain factors, including the Company's credit rating, comparable securities yield, and the expected repayment period of the Working Capital Fund.

The discount on the note payable is being amortized to interest expense using the effective interest method over the expected term of the refund liability.

The deferred gain is being amortized to interest income on a straight-line basis over the expected term of the refund liability.

The amortization of the discount was $ 3.4 million for the year ended December 31, 2022.

The amortization of the deferred gain was $ 2.4 million for the year ended December 31, 2022.

The $ 41.0 million total refund liability is classified as a long-term refund liability based on management's estimate of potential amounts that could be refundable exceeding a one-year period.

Priority Review Voucher Letter Agreement

On February 14, 2020, the Company entered into a letter agreement, or the Letter Agreement, with Vifor Pharma relating to Vifor Pharma’s agreement with a third party to purchase a Priority Review Voucher, or the PRV, issued by the FDA, subject to satisfaction of customary closing conditions, or the PRV Purchase.

A PRV entitles the holder to priority review of a New Drug Application, or NDA, or a Biologics License Application for a new drug, which reduces the target FDA review time to six months after official acceptance of the submission, and could lead to expedited approval.

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

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.

On February 14, 2020, the Company entered into a letter agreement, or the Letter Agreement, with CSL Vifor relating to CSL Vifor’s agreement with a third party to purchase a Priority Review Voucher, or the PRV, issued by the FDA, subject to satisfaction of customary closing conditions, or the PRV Purchase.

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

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

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.

On August 21, 2021, the Company and CSL Vifor executed an amendment to the Letter Agreement whereby the parties agreed that CSL Vifor would sell the PRV to a third party, and the Company and CSL Vifor would share the proceeds from the sale based on certain terms.

In the fourth quarter of 2021, CSL Vifor sold the PRV to a third party, and CSL Vifor 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.

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

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

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

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

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

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

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

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

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

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

indirectly, sell, distribute or otherwise commercialize or supply or cause to supply ferric citrate to a third party for sale or distribution in such country.

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

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Summary of Agreement

As a result of the Merger, the Company has an Amended and Restated Sublicense Agreement, which was amended in June 2013, with JT and Torii, or the JT and Torii Sublicense Agreement, under which Keryx, the Company’s wholly owned subsidiary, remains the contracting party.

The Company has an Amended and Restated Sublicense Agreement, which was amended in June 2013, with JT and Torii, or the JT and Torii Sublicense Agreement, under which Keryx, the Company’s wholly owned subsidiary, remains the contracting party.

Under the JT and Torii Sublicense Agreement, JT and Torii obtained the exclusive sublicense rights for the development and commercialization of ferric citrate hydrate in Japan.

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

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

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 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.

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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.

License Agreement with Averoa SAS

Summary of Agreement

On December 22, 2022, the Company and Averoa SAS, or Averoa, entered into a license agreement, or the Averoa License Agreement, pursuant to which the Company granted to Averoa an exclusive license to develop and commercialize ferric citrate, or the Licensed Product, in the European Economic Area, Turkey, Switzerland and the United Kingdom, or the Territory.

Under the Averoa License Agreement, the Company is entitled to receive tiered, escalating royalties ranging from a mid-single digit percentage to a low double-digit percentage of Averoa's annual net sales in the Territory, including certain minimum royalty amounts in certain years, and subject to reduction in certain circumstances.

The royalties will expire on a country-by-country basis upon the last to occur of (a) 10 years following the date of first commercial sale of the Licensed Product in such country;

(b) expiration of the last valid claim of Company patent rights and joint patent rights in such country;

and (c) the date of expiration of the data, regulatory, or marketing exclusivity period conferred by the applicable regulatory authority in such country with respect to the Licensed Product.

The Company and Averoa will establish a joint steering committee to oversee the development, manufacturing and commercialization of the Licensed Product in the Territory.

The Averoa License Agreement expires on the date of expiration of all royalty obligations due thereunder with respect to the Licensed Product on a country-by-country basis in the Territory, unless earlier terminated in accordance with the agreement.

Either party may, subject to a cure period, terminate the Averoa License Agreement in the event of the other party’s uncured material breach.

Averoa has the right to terminate the Averoa License Agreement for convenience upon 12 months’ prior written notice delivered on or after the date that is 12 months after the effective date.

In addition, Averoa has the right to terminate the Averoa License Agreement upon 30 days’ notice if the EMA rejects Averoa’s marketing authorization application for the Licensed Product, and the parties in good faith agree that submitting a new marketing authorization application to the EMA will not result in approval.

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

The Averoa License Agreement provides that the Company and Averoa will enter into a supply agreement pursuant to which the Company will supply the Licensed Product to Averoa for commercial use in the Territory.

The Company will have the right to terminate the supply agreement upon 24 months' notice, which may be provided on or after January 1, 2024.

The Company did not receive any consideration under this agreement as of December 31, 2022.

Restructuring and Other Charges, Net

On April 4, 2022, the Board of Directors of the Company approved a reduction of the Company’s workforce by approximately 42 % across all areas of the Company ( 47 % inclusive of the closing of the majority of open positions) following the receipt of the CRL from the FDA to the Company’s NDA for vadadustat for the treatment of anemia due to CKD in adult patients.

On May 5, 2022, the Company implemented a further reduction in workforce consisting of several members of management.

These actions reflected the Company’s determination to refocus its strategic priorities around its commercial product, Auryxia ® , and its development portfolio, and are steps in a cost savings plan to significantly reduce the Company’s expense profile.

The workforce reductions were completed as of December 31, 2022, and the Company has incurred all related charges.

During the year ended December 31, 2022, the Company recognized $ 14.5 million of restructuring charges in the consolidated statement of operations.

These charges included $ 11.3 million of one-time termination benefits and contractual termination benefits for severance, healthcare, and related benefits and $ 3.2 million of non-cash share-based compensation expense.

charges were recorded pursuant to ASC 712, Compensation-Nonretirement Postemployment Benefits or ASC 420, Exit or Disposal Cost Obligations, depending on the employee .

On November 7, 2022, the Board of Directors approved a reduction of the Company’s workforce by approximately 14 % consisting solely of individuals within the commercial organization as a result of the Company’s decision to shift to a strategic account management focused model for its commercial efforts.

This shift in approach supports the Company’s strategic pillars to drive Auryxia revenue while also continuing to decrease operating costs.

The workforce reduction was completed as of December 31, 2022, and the Company has incurred all related charges.

During the year ended December 31, 2022, the Company recognized $ 1.4 million of restructuring charges in the consolidated statement of operations.

These charges included one-time termination benefits and contractual termination benefits for severance, healthcare, and related benefits and non-cash share-based compensation expense.

The charges were recorded pursuant to ASC 712, Compensation-Nonretirement Postemployment Benefits or ASC 420, Exit or Disposal Cost Obligations, depending on the employee .

Details of the restructuring liability activity for the Company's workforce reductions for the period ended December 31, 2022 as recorded in accrued expenses and other current liabilities and other non-current liabilities in the consolidated balance sheet on this Form 10-K are as follows:

December 31, 2022

(in thousands)

Balance at December 31, 2021 $ —

Restructuring charges 15,933

Stock-based compensation expense ( 3,197 )

Severance payments and adjustments ( 8,977 )

Balance at December 31, 2022 $ 3,758

Liability Related to Sale of Future Royalties

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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 sales milestone for vadadustat in the MTPC Territory was not achieved for 2022 or 2021.

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

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

The annual effective interest rate as of 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.

The annual effective interest rate as of December 31, 2022 was 0 % 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.

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

Proceeds from sale of future royalties, net 44,783

MTPC royalties payable ( 1,777 )

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

Available For Sale Securities

Available for sale securities at December 31, 2021 and 2020 consist of the following:

Amortized Cost Gross

Losses Fair Value

(in thousands)

December 31, 2021

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

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

Amortized Cost Gross

Losses Fair Value

(in thousands)

December 31, 2020

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

Available for sale securities:

Certificates of deposit $ 39,979 $ 13 $ — $ 39,992

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

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

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

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

As such, the Company did not recognize any credit losses during the year ended December 31, 2021.

Fair Value of Financial Instruments

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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$ — $ — $ 1,820 $ 1,820

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.

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 (i) no event of default having occurred and continuing and (ii) the Company achieving certain regulatory and revenue conditions.

One of the regulatory conditions was approval of vadadustat by August 2022, however, in March 2022, the Company received the CRL from the FDA stating that the FDA had determined that it could not approve the NDA for vadadustat in its present form.

Therefore, the Company is no longer eligible for the interest-only extension period and this no longer changes the underlying cash flows of the debt instrument.

The Company also assessed the acceleration of the obligations under the Loan Agreement under certain events of default.

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

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 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 potential 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 $ 0.8 million and $ 1.8 million as of December 31, 2022 and 2021, respectively.

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The estimated fair value of the derivative liability on both December 31, 2022 and 2021 was determined using a scenario-based approach and discounted cash flow model that includes principal and interest payments under various scenarios involving clinical development success for vadadustat and various cash flow assumptions.

Probabilities surrounding clinical development success were derived using industry benchmarks.

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 Company used a 0 % probability of clinical development success due to receipt of the CRL from the FDA for vadadustat.

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):

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The Company had no other assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at December 31, 2022 and 2021.

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

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 are summarized as follows:

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Inventory amounts written down as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold totaled $ 30.2 million, $ 15.6 million, and $ 20.1 million during the years ended December 31, 2022, 2021, and 2020, 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.

The increase in inventory amounts written down for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was primarily due to higher write-downs to inventory reserves related to Auryxia drug substance that will not be forward processed into drug product.

In addition, there were $ 0 million , $ 8.7 million, and $ 11.4 million in related step-up charges during the years ended December 31, 2022, 2021, and 2020, 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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Value Accumulated

Amortization ASC 842

Adjustment Total

Amortization Total

Acquired intangible assets:

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Value Accumulated

Amortization ASC 842

Adjustment Total

Amortization Total

Acquired intangible assets:

Developed product rights for Auryxia $ 213,603 $ ( 105,476 ) $ 108,127

Favorable lease 545 ( 5 ) ( 540 ) —

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

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 of six years .

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.

The Company recorded $ 36.0 million, $ 31.5 million and $ 36.4 million in amortization expense related to the developed product rights for Auryxia during the years ended December 31, 2021, 2020 and 2019, respectively.

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

The Company recorded $ 36.0 million in amortization expense during the years ended December 31, 2022 and 2021, and $ 31.5 million in amortization expense during the year ended December 31, 2020 related to the developed product rights for Auryxia.

Estimated future amortization expense for the intangible asset as of December 31, 2022 is as follows (in thousands):

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

Goodwill was $ 55.1 million as of December 31, 2021 and 2020, derived as follows (in thousands):

Total Merger consideration $ 527,754

Fair value of identified acquired assets and liabilities, net ( 472,701 )

Goodwill $ 55,053

Goodwill was $ 55.1 million as of December 31, 2022 and 2021.

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

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

Events that could indicate impairment and trigger an impairment assessment include, but are not limited to, an adverse change in current economic or market conditions, including a significant prolonged decline in market capitalization, a significant adverse change in legal factors, unexpected adverse business conditions, and an adverse action by a regulator.

During the year ended December 31, 2022, the Company evaluated business factors, including the receipt of the CRL from the FDA for vadadustat, the Company's market capitalization as impacted by a recent decline in the Company's stock price, the impact of the Otsuka Termination Agreement on the Company's future cash flows, and the impact of the BioVectra Termination Agreement to the Company's excess purchase commitment liability to determine if there were events or changes in circumstance to indicate that the fair value of the reporting unit was less than its carrying value.

The Company performed a qualitative impairment assessment of the Company's goodwill balance as the year ended December 31, 2022.

The Company determined that it was not more likely than not that the fair value of the reporting unit was less than its carrying value and, therefore, did not perform a further quantitative impairment test.

The Company's qualitative assessments were based on the Company's estimates and assumptions, a number of which are dependent on external factors and actual results may differ materially from these estimates.

In addition, the future occurrence of events including, but not limited to, an adverse change in current economic and market conditions, including a significant prolonged decline in market capitalization, a significant adverse change in legal factors, unexpected adverse business conditions and an adverse action or assessment by a regulator could indicate potential impairment and trigger an impairment assessment of goodwill, which could result in an impairment of goodwill.

As a result of the significance of goodwill, the Company's results of

operations and financial position in a future period could be negatively impacted should an impairment test be triggered that results in an impairment of goodwill.

There were no impairments of goodwill during the years ended December 31, 2021 and 2020.

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Amounts due to collaboration partners — 22,654

Otsuka PRV contribution — 10,000

Accrued payroll and related 11,481 15,863

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Accrued commercial manufacturing 4,310 3,843

Accrued restructuring 2,751 —

Accrued other 7,413 11,263

Total accrued expenses $ 70,997 $ 104,456

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)

Total before unamortized discount and issuance costs 100,000

unamortized discount and issuance costs ( 2,457 )

Total term loans $ 97,543

On November 11, 2019, the Company, with Keryx as guarantor, entered into a loan agreement, or the Loan Agreement, with BioPharma Credit PLC as collateral agent and a lender, or the Collateral Agent, and BioPharma Credit Investments V (Master) LP as a lender, pursuant to which term loans in an aggregate principal amount of $ 100.0 million were made available to the Company in two tranches, subject to certain terms and conditions, or the Term Loans.

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The Term Loans will mature on the fifth anniversary of the Tranche A Funding Date, or the Maturity Date.

The Company will repay the principal under the Term Loans in equal quarterly payments starting on the 33 rd-month anniversary of the applicable Funding Date or, if certain conditions are met, it will have the option to repay the principal in equal quarterly payments starting on the 48 th-month anniversary of the applicable Funding Date, or collectively the Amortization Schedule.

The Company will repay the principal under the Term Loans in equal quarterly payments starting on the 33 rd-month anniversary of the applicable Funding Date, or the Amortization Schedule.

If certain conditions were met, it would have had the option to repay the principal in equal quarterly payments starting on the 48 th-month anniversary of the applicable Funding Date.

One of these conditions was approval of vadadustat;

however, the Company received the CRL from the FDA in March 2022 stating that the FDA had determined that it could not approve the NDA in its present form.

Therefore, the Company is no longer eligible for this option to delay repayment of the principal under the Loan Agreement.

During the year ended December 31, 2022, the Company made its first quarterly principal payment under the Term

Loans of $ 8.0 million.

Under certain circumstances, unless certain liquidity conditions are met, the Maturity Date may decrease by up to one year , and the Amortization Schedule may correspondingly commence up to one year earlier.

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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.

On February 18, 2022, the Loan Agreement was amended pursuant to a First Amendment and Waiver, or the First Amendment and Waiver, 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.

Pursuant to the First Amendment and Waiver, 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, which requirement as to the Company's filings on Form 10-Q was waived in the Second Amendment and Waiver.

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.

As of December 31, 2022, the Company determined that no events of default had occurred.

On July 15, 2022, or the Effective Date, the Company and Pharmakon entered into the Second Amendment and Waiver, or the Second Amendment and Waiver, which amended and waived certain provisions of the Loan Agreement, as amended by the First Amendment and Waiver.

Pursuant to the Second Amendment and Waiver, on the Effective Date, the Company made a $ 5.0 million prepayment of the principal of the Tranche A loan, or the Second Amendment Effective Date Tranche A Prepayment, and a $ 20.0 million prepayment of principal of the Tranche B loan, or the Second Amendment Effective Date Tranche B Prepayment, in each case, together with any and all accrued and unpaid interest on such prepayments of principal to the Effective Date.

In connection therewith, the Company also paid $ 0.5 million in prepayment premiums under the Loan Agreement.

During the year ended December 31, 2022, the Company recorded a debt extinguishment loss of $ 0.9 million.

Subject to the payment in full of the Second Amendment Effective Date Tranche A Prepayment and the Second Amendment Effective Date Tranche B Prepayment, Pharmakon agreed to, among other things, (1) increase the amount of the working capital facility established in connection with the Company’s Second Amended and Restated License Agreement with CSL Vifor, which facility is part of the definition of Permitted Indebtedness (as such term is defined in the Loan Agreement) under the Loan Agreement, that the Company is permitted to repay to CSL Vifor without causing an acceleration of the liabilities under the Loan Agreement, (2) waive the requirement that the Company’s Quarterly Reports on Form 10-Q for the fiscal quarters ending June 30, 2022 and September 30, 2022 not be subject to any qualification as to going concern, and (3) waive certain amounts payable under the Loan Agreement in connection with the Second Amendment Effective Date Tranche B Prepayment.

Future principal payments pursuant to the contractual terms of the Loan Agreement, as amended, as of December 31, 2022 are as follows (in thousands):

(in thousands)

2023 $ 32,000

Total before unamortized discount and issuance costs 67,000

unamortized discount and issuance costs ( 922 )

Total term loans $ 66,078

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

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The Company classified the derivative liability as a non-current liability on the balance sheet at December 31, 2022.

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.

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.

The warrant was fully vested upon issuance and exercisable in whole or in part, at any time prior to February 9, 2022.

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, 2021, the warrant remained outstanding.

The Warrant expired on February 9, 2022.

The Company recognized approximately $ 9.5 million, $ 10.9 million, and $ 8.9 million of interest expense related to the Loan Agreement during the years ended December 31, 2022, 2021, and 2020, respectively.

Stockholders’ Equity

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At-the-Market Facility

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

for the offer and sale of common stock at the then current market prices in amounts to be determined from time to time.

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.

December 2019, the Company commenced sales under this program.

On March 12, 2020, the Company filed a prospectus supplement relating to the Company's sales agreement with Cantor Fitzgerald & Co., or the Prior Sales Agreement, pursuant to which it was able to offer and sell up to $ 65.0 million of its common stock at current market prices from time to time.

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

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

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.

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), pursuant to which it was able to offer and sell up to $ 100.0 million of its common stock at current market prices from time to time.

Through December 31, 2021, the Company sold 21,128,065 shares of common stock under this program with net proceeds (after deducting commissions and other offering expenses) of $ 72.4 million.

On March 1, 2022, the Company filed a prospectus relating to the Prior Sales Agreement, pursuant to which it was authorized to offer and sell up to $ 25.3 million of its common stock at current market prices from time to time.

On March 16, 2022, the Company terminated the Prior Sales Agreement.

During the three months ended March 31, 2022, the Company sold 404,600 shares of common stock under this program with net proceeds (after deducting commissions and other offering expenses) of $ 0.8 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 May 2020, the Company sold 12,650,000 shares of its common stock in a public offering at a price of $ 12.00 per share, including 1,650,000 shares from the full exercise of the underwriters' option to purchase additional shares.

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

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

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

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

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

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

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

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

On April 7, 2022, the Company entered into an Open Market Sale Agreement SM , or the Sales Agreement, with Jefferies LLC, or Jefferies, as agent, for the offer and sale of common stock at current market prices in amounts to be determined from time to time.

Also, on April 7, 2022, the Company filed a prospectus supplement relating to the Sales Agreement, pursuant to which it

is able to offer and sell under the Sales Agreement up to $ 26.0 million of its common stock at current market prices from time to time.

From the date of filing of the prospectus supplement through the date of the filing of this Annual Report on Form 10-K, the Company has not sold any shares of its common stock under this program.

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

The 2014 Plan replaced the Company’s Amended and Restated 2008 Equity Incentive Plan, or the 2008 Plan, however, options or other awards granted under the 2008 Plan prior to the adoption of the 2014 Plan that have not been settled or forfeited remain outstanding and effective.

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

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

During the year ended December 31, 2022, the Company granted 435,000 options to purchase shares of the Company’s common stock to new hires under the Inducement Award Program, of which 258,000 options to purchase shares of the Company's common stock remained outstanding at December 31, 2022.

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.

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

Dividend equivalents may also be provided in connection with an award under the 2014 Plan.

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

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

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

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

In addition, the number of Keryx Shares available for issuance under the Keryx 2018 Plan, as adjusted by the Exchange Multiplier pursuant to the terms of the Merger Agreement, may be used for awards granted by the Company under its 2014 Plan, or the Assumed

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

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 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.

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

During the year ended December 31, 2022, the Company granted 3,233,500 options to purchase Akebia Shares to employees under the 2014 Plan, 435,000 options to purchase Akebia Shares to employees under the Inducement Award Program, 5,219,908 Akebia RSUs to employees under the 2014 Plan, 800,000 performance stock units, or PSUs, to employees under the 2014 Plan, 140,700 options to purchase Akebia Shares to directors under the 2014 Plan, and 95,900 RSUs to directors under the 2014 Plan.

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

The maximum aggregate number of shares at December 31, 2022 of the Company’s common stock available for future issuance under the ESPP is 4,837,995 .

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

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

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

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

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

Options generally expire ten years after the date of grant.

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The weighted-average grant date fair values of options granted in the years ended December 31, 2022, 2021, and 2020 were $ 1.27 , $ 2.29 , and $ 5.63 per share, respectively.

There was an immaterial intrinsic value of options exercised during the year ended December 31, 2022 as the value of the options exercised in 2022 was immaterial.

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 total intrinsic value of options exercised during the year ended December 31, 2020 was $ 0.4 million.

The fair value of options that vested during the years ended December 31, 2022, 2021, and 2020 were $ 8.4 million, $ 10.6 million, and $ 6.8 million, respectively.

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

The Company issued 400,000 and 99,558 performance-based options during the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, the Company had 400,000 performance-based options outstanding compared to 99,558 performance-based options outstanding at December 31, 2021.

The following table summarizes the Company’s performance-based option activity for the year ended December 31, 2022:

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Outstanding, December 31, 2022 400,000 $ 0.41 9.4 $ 66,800

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 2021 or 2020, and 46,790 performance-based options that vested during fiscal year 2019.

The Company did not record any stock-based compensation expense related to performance-based options during 2022, 2021 and 2020.

There were no performance-based options that vested during fiscal year 2022, 2021 or 2020.

As of December 31, 2022, there were no unrecognized compensation costs related to performance-based stock options under the Company’s 2014 Plan.

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Service-Based Restricted Stock Units

On February 28, 2021, as part of the Company’s annual grant of equity, the Company issued 3,180,400 restricted stock units, or RSUs, to employees.

In addition, the Company occasionally issues RSUs not in connection with the annual grant process to employees.

On February 28, 2022, as part of the Company’s annual grant of equity, the Company issued 2,899,008 RSUs to employees.

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

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

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

(iii) 50 % of each RSU grant vests on the first anniversary and 25 % of each RSU grant vests every six months after the one year anniversary of the grant date.

(i) 100 % of each RSU grant vests on the first anniversary of the grant date, (ii) one third of each RSU grant vests on the first, second and third anniversaries of the grant date, (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, or (iv) one third of each RSU grant vests on the first anniversary of the grant date and the remaining two-thirds vests in eight substantially equal quarterly installments beginning after the one year anniversary, subject, in each case, to the individual’s continued service through the applicable vesting date.

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

The Company recorded approximately $ 7.6 million, $ 12.9 million and $ 14.6 million of stock-based compensation expense related to employee RSUs in 2022, 2021 and 2020, respectively.

On December 12, 2018, pursuant to the Merger Agreement, each Keryx Share that was subject to a Keryx restricted share award, other than those Keryx restricted shares that accelerated or lapsed as a result of the completion of the Merger, was converted into an RSU award of Akebia, covering the number of Akebia Shares determined in accordance with the Exchange Multiplier.

As a result, the Company issued 486,709 service-based RSUs in substitution for Keryx restricted share awards in connection with the Merger.

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

During the year ended December 31, 2022, the Company issued 400,000 performance-based restricted stock units, or PSUs, to the Company’s executives.

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

The PSUs also feature a time-based vesting component.

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

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

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

The Company recorded approximately $ 0.1 million, $ 0.3 million and $ 0.5 million of stock-based compensation expense related to employee PSUs in 2022, 2021 and 2020, respectively.

The following table summarizes the Company’s RSU and PSU activity for the year ended December 31, 2022:

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As of December 31, 2022, there was approximately $ 5.2 million of unrecognized compensation cost related to RSUs and PSUs, which is expected to be recognized over a weighted average period of 1.44 years.

There are 13,102 performance-based RSUs, issued in connection with the Merger, outstanding at December 31, 2021.

Employee Stock Purchase Plan

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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.

At December 31, 2018 the Company recorded a tax benefit of $ 28.3 million as a result of the Merger with Keryx.

As part of purchase accounting, the Company recorded a deferred tax liability that is a source of income for which the Company can benefit from its tax attributes.

The use of the Company’s tax attributes resulted in a release of the corresponding valuation allowance associated with this benefit.

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 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:

Year ended December 31,

2021 2020 2019

Federal — — —

Foreign — — —

Total Current:

Federal — — —

State — — ( 6,631 )

Foreign — — —

Total Deferred:

— — ( 6,631 )

Total Income Taxes — — ( 6,631 )

There was no current or deferred income tax expense or benefit for the years ended December 31, 2022 and 2021 due to the Company’s net losses and increases in its valuation allowance against its deferred tax assets.

Our effective income tax rate differs from the statutory federal income tax rate as follows for the years ended December 31, 2022, 2021 and 2020:

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

Reduction in deferred tax assets for change in ownership — — ( 1.6 )

Stock Option Cancellations ( 2.5 ) — —

Stock Option Shortfalls ( 1.6 ) — —

Effect of rate changes 0.6 0.3 0.8

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Research and development credits 4,827 5,034

Capitalized research and development costs 13,825 —

Other non-current liabilities 2,754 20,424

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ASC 842 lease liability 8,032 9,096

Fixed assets 799 700

UNICAP 3,190 2,132

Inventory reserve 17,411 10,281

Derivative Liability 413 542

Refund liability 9,478 —

Other 13,159 10,483

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Net deferred tax liability $ — $ —

At December 31, 2021 and 2020, the Company has approximately $ 0.3 million (after amortization of $ 1.7 million) and $ 0.4 million (after amortization of $ 1.6 million), respectively, of start-up expenses capitalized for income tax purposes with amortization available to offset future federal, state and local income tax.

As of December 31, 2021 and 2020, the Company has approximately $ 1,223.3 million and $ 1,128.3 million, respectively, of federal NOL carry-forwards which expire through 2037.

At December 31, 2022 and 2021, the Company had approximately $ 0.1 million (after amortization of $ 1.8 million) and $ 0.3 million (after amortization of $ 1.7 million), respectively, of start-up expenses capitalized for income tax purposes with amortization available to offset future federal, state and local income tax.

As of December 31, 2022 and 2021, the Company had approximately $ 1,227.9 million and $ 1,223.3 million, respectively, of federal NOL carry-forwards which expire through 2037.

Included in the $ 1,227.9 million of federal NOLs are losses of $ 645.9 million that will carry forward indefinitely as a result of the Tax Cuts and Jobs Act.

Additionally, at December 31, 2021 and 2020, the Company has approximately $ 1,792.1 million and $ 1,620.7 million, respectively, of state NOL carry-forwards which expired through 2041.

Additionally, at December 31, 2022 and 2021, the Company had approximately $ 1,803.6 million and $ 1,792.1 million, respectively, of state NOL carry-forwards, which expire through 2042.

The Company also has approximately $ 2.5 million of federal research and development tax credit carryforwards which expire through 2040 and $ 2.9 million of state research and development tax credit carryforwards which expire through 2036.

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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 , 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.

Additionally, the Company has a lease for 27,300 square feet of office space in Boston, Massachusetts, or the Boston Lease.

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.

In February 2022, the Company entered into the First Amendment to the Boston Lease, or the First Lease Amendment, to extend the term of the Boston Lease from February 2023 to July 2031.

The First Lease Amendment includes five months of free rent starting in March 2023 and monthly lease payments of $ 200,122 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 , provided that such allowance must be used prior to August 1, 2024.

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 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 Boston Lease office space expires on July 31, 2031, 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 term of the Cambridge Lease with respect to the lab space expires on January 31, 2025, with an extension option for one additional period through September 11, 2026.

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

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

The lease agreements do not contain residual value guarantees.

Operating lease costs were $ 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.

Operating lease costs were $ 7.1 million, $ 6.7 million and $ 6.7 million for the years ended December 31, 2022, 2021and 2020, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities were $ 7.2 million, $ 7.1 million and $ 7.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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

The sublease is subject and subordinate to the Boston Lease between Keryx and the landlord.

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.

The term of the sublease commenced on October 16, 2019, upon receipt of the required consent from the landlord for the sublease agreement,

and expired 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.

Sublease rental income is recorded to other income.

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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.

As a result of the Merger, the Company's contractual obligations include Keryx’s commercial supply agreements with BioVectra and 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, 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 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.

The term of the Manufacture and Supply Agreement with BioVectra expires on December 31, 2022.

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, 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, 2022, subject to the Company's option to extend through December 31, 2023 by providing 12 months' prior written notice to Siegfried.

The price per kilogram decreased 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 required 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 were recorded in other assets and amortized into drug substance as inventory was released to the Company from BioVectra.

On December 22, 2022, the Company and BioVectra entered into the BioVectra Termination Agreement, pursuant to which the parties agreed, among other things, to terminate, effective immediately, any and all existing agreements entered into between the parties in connection with the manufacture and supply, by BioVectra to the Company, of Auryxia drug substance.

The upfront payment of $ 17.5 million was made during the quarter ended December 31, 2022 and was recognized to cost of goods sold.

In accordance with ASC 420, Exit or Disposal Cost Obligations , the Company recognized a liability and corresponding expense for the remaining termination fees based on estimated fair value as of December 22, 2022, or the BioVectra Effective Date.

The Company imputed interest on the liability for the remaining termination fees at a rate of 17.0 % per annum, which was determined based on certain factors, including the Company's credit rating, comparable securities yield, and expected repayment period of the remaining termination fees.

The Company recorded an initial discount on the remaining termination fees on the consolidated balance sheet as of the BioVectra Effective Date.

This resulted in the recording of a liability and corresponding charge to cost of goods sold of $ 11.2 million during the quarter ended December 31, 2022.

The discount on the liability balance is being amortized to interest expense using the effective interest rate method over the term of the liability.

In addition, each of the Company and BioVectra have released one another from all existing and future claims and liabilities and the return of certain materials and documents.

The Company is also relieved from any obligations to pay any outstanding invoices related to performance by BioVectra of services and all other obligations under the agreements.

Pursuant to the Master Manufacturing Services and Supply Agreement between the Company and Siegfried, as amended through December 31, 2022, or the Siegfried Agreement, the Company has agreed to purchase a minimum quantity of drug substance of Auryxia at predetermined prices.

The term of the Siegfried Agreement was to expire on December 31, 2022, but was automatically extended into 2023 as a result of Siegfried’s updated production schedule for delivery of product originally scheduled for delivery in 2022.

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.

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

As of December 31, 2022, the Company is required to purchase a minimum quantity of drug substance for Auryxia annually at a total cost of approximately $ 8.4 million through the third quarter of 2023.

As of the date of the filing of this Annual Report on Form 10-K, the Company has amended the Siegfried Agreement pursuant to which, the Company agreed to extend the term and purchase a minimum quantity of drug substance of Auryxia at a predetermined price as further described in Note 17 to the Company's consolidated financial statements in Part II, Item 8.

Financial Statements and Supplementary Data of this Annual Report.

Certain of the Company's commercial supply agreements are executory contracts 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.

1 unchanged sentence

The excess purchase commitment liability relating to these executory contracts was $ 0 million and $ 76.7 million as of December 31, 2022 and 2021, 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.

During the quarter ended December 31, 2022, the Company recorded a $ 74.3 million reduction to the excess purchase commitments liability within cost of goods sold driven by the reduction in purchase commitments due to execution of the BioVectra Termination Agreement.

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

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

Pursuant to the Esteve Agreement, the Company provides rolling forecasts to Esteve on a quarterly basis, or the Esteve Forecast.

The Esteve Forecast reflects the Company’s needs for vadadustat drug substance produced by Esteve over a certain number of months, represented as a quantity of vadadustat drug substance per calendar quarter.

The parties have agreed to a volume-based pricing structure under the Esteve Agreement.

The Esteve Agreement has an initial term of four years , beginning April 9, 2019 and ending April 9, 2023.

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, 2021, the Company has committed to purchase $ 28.9 million of vadadustat drug substance from Esteve through the fourth quarter of 2022.

The Esteve Agreement included the terms and conditions under which Esteve would manufacture vadadustat drug substance for commercial use.

Pursuant to the Esteve Agreement, the Company provided rolling forecasts to Esteve on a quarterly basis, or the Esteve Forecast.

The Esteve Forecast reflected the Company’s needs for vadadustat drug substance produced by Esteve over a certain number of months, represented as a quantity of vadadustat drug substance per calendar quarter.

The parties agreed to a volume-based pricing structure under the Esteve Agreement.

On December 16, 2022, the Company, MTPC, and Esteve executed the Assignment Agreement, pursuant to which the Supply Agreement between the Company and Esteve was assigned to MTPC.

As such, the Company will have no further obligation to take delivery of or pay for product delivered by Esteve under the transferred purchase orders.

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.

The Patheon Forecast reflects the Company’s needs for commercial supply of vadadustat drug product produced by Patheon, represented as a quantity of drug product per calendar quarter.

The Patheon Forecast reflects the Company’s needs

for commercial supply of vadadustat drug product produced by Patheon, represented as a quantity of drug product per calendar quarter.

The parties have agreed to a volume-based pricing structure under the Patheon Agreement.

The Patheon Agreement has an initial term beginning March 11, 2020 and ending June 30, 2023.

The Patheon Agreement has an initial term beginning March 11, 2020 and ending June 30, 2023 and automatically renews for successive one-year terms unless either party gives the other party eighteen months ' prior written notice.

The current term of the Patheon Agreement ends June 30, 2025.

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, 2021, the Company had a minimum commitment with Patheon for $ 4.0 million through the fourth quarter of 2022.

As of December 31, 2022, the Company had a minimum commitment with Patheon for $ 3.1 million through the third quarter of 2023.

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

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

As of 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.

As of December 31, 2022, the Company has committed to purchase $ 15.3 million of vadadustat drug substance from WuXi STA through the end of 2023.

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

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Other Third Party Contracts

Under the Company’s agreement with IQVIA to provide contract research organization services for the PRO 2 TECT and INNO 2 VATE programs, the total remaining contract costs as of 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 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.

The Company contracts with various organizations to conduct research and development activities with remaining contract costs to the Company of approximately $ 90.2 million at December 31, 2022.

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

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17 Subsequent Events

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.

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.

On February 28, 2023, the Company and Siegfried entered into Amendment No.

5 to the Siegfried Agreement, or the Amendment.

Pursuant to the Amendment, the Company has agreed to purchase a minimum quantity of drug substance for Auryxia at a predetermined price.

As a result of the Amendment, the term of the Siegfried Agreement expires on December 31, 2024, subject to the Company's option to extend through December 31, 2026 by providing 12 months' prior written notice to Siegfried.

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