What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-08 compared with 2022-11-03 · 235 added, 420 removed, 517 unchanged (56% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30,

2023 December 31,

16 unchanged sentences

Short-term deferred revenue — 3,738

Current portion of refund liability to customer 13,681 —

Current portion of long-term debt 24,000 32,000

3 unchanged sentences

Derivative liability 760 760

Liability related to sale of future royalties, net 58,236 53,079

Refund liability to customer, net of current portion 26,788 —

Long-term debt, net 26,296 34,078

Liability related to sale of future royalties 57,059 57,484

Refund liability to customer 40,794 40,992

Other non-current liabilities 12,643 12,161

1 unchanged sentence

Commitments and contingencies (Note 12)

Stockholders' equity:

Stockholders' (deficit) equity:

Preferred stock $ 0.00001 par value, 25,000,000 shares authorized;

0 shares issued and

outstanding at September 30, 2022 and December 31, 2021

outstanding at March 31, 2023 and December 31, 2022

Common stock $ 0.00001 par value;

350,000,000 shares authorized at September 30, 2022 and December 31, 2021;

183,951,583 and 177,000,963 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

350,000,000 shares authorized at March 31, 2023 and December 31, 2022;

185,835,946 and 184,135,714 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 1,564,770 1,562,247

Accumulated other comprehensive loss 6 6

Accumulated other comprehensive gain 6 6

Accumulated deficit ( 1,579,130 ) ( 1,552,913 )

Total stockholders' equity 13,853 76,456

Total liabilities and stockholders' equity $ 435,894 $ 525,550

Total stockholders' (deficit) equity ( 14,352 ) 9,342

Total liabilities and stockholders' (deficit) equity $ 276,858 $ 351,830

See accompanying notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Product revenue, net $ 34,828 $ 41,448

15 unchanged sentences

Other income 282 1,134

Loss on extinguishment of debt ( 906 ) — ( 906 ) —

Net loss $ ( 26,217 ) $ ( 62,421 )

3 unchanged sentences

Net loss $ ( 26,217 ) $ ( 62,421 )

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

Total comprehensive loss $ ( 26,217 ) $ ( 62,421 )

1 unchanged sentence

AKEBIA THERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

(in thousands, except share data)

4 unchanged sentences

Deficit Total Stockholders'

Equity (Deficit)

Balance at December 31, 2021 177,000,963 $ 1 $ 1,536,800 $ 6 $ ( 1,460,351 ) $ 76,456

5 unchanged sentences

Restricted stock unit vesting 1,789,326 — — — — —

Unrealized loss — — — ( 4 ) — ( 4 )

Net loss — — — — ( 62,421 ) ( 62,421 )

Balance at March 31, 2022 183,386,035 $ 2 $ 1,548,880 $ 6 $ ( 1,522,772 ) $ 26,116

Issuance of common stock, net of

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

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

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

Unrealized loss — — — ( 3 ) — ( 3 )

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

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

Issuance of common stock, net of

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

Proceeds from sale of stock under

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

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

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

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

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

Balance at December 31, 2022 184,135,714 $ 2 $ 1,562,247 $ 6 $ ( 1,552,913 ) $ 9,342

Issuance of common stock, net of

issuance costs 4,404,600 1 7,177 — — 7,178

Proceeds from sale of stock under

4 unchanged sentences

Balance at March 31, 2023 185,835,946 $ 2 $ 1,564,770 $ 6 $ ( 1,579,130 ) $ ( 14,352 )

Stock-based compensation expense — — 6,841 — — 6,841

Exercise of options 142,440 — 67 — — 67

Restricted stock unit vesting 176,179 — — — — —

Net income — — — — 29,276 29,276

Balance at June 30, 2022 183,704,654 $ 2 $ 1,555,788 $ 6 $ ( 1,493,496 ) $ 62,300

Share-based compensation expense — — 3,375 — — 3,375

Proceeds from sale of stock under

employee stock purchase plan 144,000 — 43 — — 43

Restricted stock unit vesting 102,929 — — — — —

Net loss — — — — ( 51,865 ) ( 51,865 )

Balance at September 30, 2022 183,951,583 $ 2 $ 1,559,206 $ 6 $ ( 1,545,361 ) $ 13,853

See accompanying notes to unaudited condensed consolidated financial statements

2 unchanged sentences

(in thousands)

Nine Months Ended

September 30, 2022 September 30, 2021

Three Months Ended

March 31, 2023 March 31, 2022

Operating activities:

3 unchanged sentences

Amortization of intangibles 9,011 9,011

Amortization of premium/discount on investments — ( 15 )

Non-cash interest expense related to sale of future royalties — 2,345

Non-cash royalty revenue related to sale of future royalties ( 425 ) ( 329 )

Non-cash collaboration revenue ( 9,550 ) —

Non-cash R&D expense 782 —

1 unchanged sentence

Non-cash operating lease expense ( 578 ) ( 557 )

Non-cash loss on extinguishment of debt 406 —

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

Write-down of inventory 335 5,344

15 unchanged sentences

Purchase of equipment — ( 114 )

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

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

Net cash used in investing activities — ( 114 )

Financing activities:

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

Proceeds from refund liabilities to customers — 40,000

1 unchanged sentence

Proceeds from the sale of stock under employee stock purchase plan 34 367

Proceeds from the exercise of stock options 67 —

Payments on debt ( 16,000 ) —

Net cash provided by financing activities 14,599 128,328

(Decrease) in cash, cash equivalents, and restricted cash ( 3,990 ) ( 21,888 )

Net cash (used in) provided by financing activities ( 15,966 ) 47,545

(Decrease) increase in cash, cash equivalents, and restricted cash ( 33,504 ) 25,811

Cash, cash equivalents, and restricted cash at beginning of the period 93,169 151,839

Cash, cash equivalents, and restricted cash at end of the period $ 59,665 $ 177,650

Non-cash financing activities

Unpaid offering costs $ — $ 57

See accompanying notes to unaudited condensed consolidated financial statements

3 unchanged sentences

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 impacted by kidney disease.

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.

5 unchanged sentences

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 July 2022, the Company held an end of review meeting with the FDA to inform the Company's next steps with respect to the potential U.S.

approval of vadadustat, if any, and in October 2022, the Company submitted a Formal Dispute Resolution Request, or FDRR, with the FDA.

The FDRR focuses on the favorable balance between the benefits and risks of vadadustat for the treatment of anemia due to CKD in adult patients on dialysis in light of safety concerns expressed by the FDA in the CRL 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.

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.

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, the Company received a second interim response from the FDA to the FDRR.

In March 2023, the Company had a productive meeting with the FDA, who indicated that it was continuing internal consultation with experts to complete the review and render a decision.

FDA has indicated that it has completed internal discussions, and the Company expects a response to the FDRR within the next thirty days.

In October 2021, the Company's former collaboration partner, Otsuka Pharmaceutical Co.

Ltd., or 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 and Settlement Agreement with Otsuka dated June 30, 2022, or the Termination Agreement, Otsuka transferred the MAA for vadadustat with the EMA to the Company.

In April 2023, the European Commission, or EC, approved the marketing authorization of vadadustat under the trade name Vafseo™ for the treatment of symptomatic anemia associated with CKD in adults on chronic maintenance dialysis.

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.

Vadadustat is also approved in Korea as a treatment for anemia due to CKD in DD-CKD patients.

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

8 unchanged sentences

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

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.

As of September 30, 2022, the Company had cash and cash equivalents of approximately $ 144.8 million.

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

However, the Company's operating plan includes assumptions pertaining 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.

Therefore, because these cost avoidance measures and certain other elements of the Company's operating plan are outside of its control, including the planned amendment of contractual arrangements with certain supply and collaboration partners, and the reduction of operating expenses, there is uncertainty as to whether the Company's cash resources will be adequate to support its operations for a period through at least the next twelve months from the date of issuance of these financial statements.

In addition, on July 15, 2022, or the Effective Date, the Company entered into the Second Amendment and Waiver with BioPharma Credit PLC, or the Collateral Agent, BPCR Limited Partnership, as a Lender, and BioPharma Credit Investments V (Master) LP, as a Lender, or the Second Amendment and Waiver, which amends and waives certain provisions of the loan agreement entered on November 11, 2019, between the Company, with Keryx Biopharmaceuticals, Inc., or Keryx, as guarantor, and the Collateral Agent, as collateral agent and a lender, and BioPharma Credit Investments V (Master) LP as a lender, or the Loan Agreement, as amended by the First Amendment and Waiver among the Collateral Agent, the Lenders and the Company, dated February 18, 2022, or the First Amendment and Waiver.

The Collateral Agent and the Lenders are collectively referred to as Pharmakon (see Note 11).

Pursuant to the Second Amendment and Waiver, on the Effective Date, the Company made prepayments totaling $ 25.0 million together with a prepayment premium of $ 0.5 million plus all accrued and unpaid interest on such prepayments of principal to the Effective Date, and Pharmakon agreed to waive or modify certain covenants in the Loan Agreement (see Note 11).

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.

For example, pursuant to covenants in the Loan Agreement, the Company's Annual Reports on Form 10-K must not be subject to any qualification as a going concern.

If any of the Company's future Annual Reports on Form 10-K is subject to any qualification related to going concern, it will result in an event of default under the Loan Agreement.

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.

Management’s plans to alleviate the conditions that raise substantial doubt through cost avoidance measures, including amending contractual arrangements with certain supply and collaboration partners, and reducing operating expenses, for the Company to continue as a going concern for a period of twelve months from the date the financial statements are issued.

However, the Company has concluded that the likelihood that its plan to extend its cash runway from one or more of these approaches will be successful, while reasonably possible, is less than probable.

Accordingly, the Company has concluded that substantial doubt exists about its 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.

As of March 31, 2023, the Company had cash and cash equivalents of approximately $ 57.0 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 this Quarterly Report on Form 10-Q.

If the Company’s operating performance deteriorates significantly from the levels expected in the Company’s operating plan, 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 its 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

4 unchanged sentences

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

Interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022 or any other future period.

Interim results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023 or any other future period.

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

3 unchanged sentences

Securities and Exchange Commission on March 10, 2023, or the 2022 Annual Report on Form 10-K.

The significant accounting policies used in preparation of these unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2022 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s 2021 Annual Report on Form 10-K and are updated below as necessary.

New Accounting Pronouncements – Not Yet Adopted

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

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

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

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

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

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

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

The significant accounting policies used in preparation of these unaudited condensed consolidated financial statements for the three months ended March 31, 2023 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s 2022 Annual Report on Form 10-K and are updated below as necessary.

Use of Estimates

6 unchanged sentences

Estimates are used in the following areas, among others:

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

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

4 unchanged sentences

sales of Auryxia.

Total net product revenue was $ 42.2 million and $ 36.8 million for the three months ended September 30, 2022 and 2021, respectively, and $ 127.4 million and $ 100.1 million for the nine months ended September 30, 2022 and 2021, respectively.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the nine months ended September 30, 2022 and 2021 (in thousands):

Total net product revenue was $ 34.8 million and $ 41.4 million for the three months ended March 31, 2023 and 2022, respectively.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the three months ended March 31, 2023 and 2022 (in thousands):

and Discounts Rebates, Fees

4 unchanged sentences

Credits/payments made ( 1,997 ) ( 22,321 ) ( 1,631 ) ( 25,949 )

Balance at September 30, 2022 $ 1,428 $ 25,369 $ 498 $ 27,295

Balance at March 31, 2023 $ 605 $ 22,368 $ 834 $ 23,807

Balance at December 31, 2021 $ 1,278 $ 26,625 $ 475 $ 28,378

2 unchanged sentences

Credits/payments made ( 2,465 ) ( 22,491 ) ( 1,293 ) ( 26,249 )

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

Balance at March 31, 2022 $ 1,392 $ 26,237 $ 541 $ 28,170

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

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

Accounts receivable, net related to product sales was approximately $ 24.0 million and $ 24.6 million as of September 30, 2022 and December 31, 2021, respectively.

Accounts receivable, net related to product sales was approximately $ 17.3 million and $ 36.2 million as of March 31, 2023 and December 31, 2022, respectively.

License, Collaboration and Other Significant Agreements

During the three and nine months ended September 30, 2022 and 2021, the Company recognized the following revenues from its license, collaboration and other significant agreements and had the following deferred revenue balances as of September 30, 2022:

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

2022 2021 2022 2021

During the three months ended March 31, 2023 and 2022, the Company recognized the following revenues from its license, collaboration and other significant agreements and had the following deferred revenue balances as of March 31, 2023:

Three Months Ended March 31,

License, Collaboration and Other Revenue:

(in thousands) (in thousands)

(in thousands)

MTPC Agreement $ 4,162 $ 7,962

3 unchanged sentences

JT and Torii 1,137 1,148

MTPC Other Revenue — — — 73

Total License, Collaboration and Other Revenue $ 5,299 $ 20,251

September 30, 2022

March 31, 2023

Short-Term Long-Term Total

1 unchanged sentence

(in thousands)

MTPC Agreement $ 1,265 $ — $ 1,265

Vifor Pharma Agreement — 43,296 43,296

CSL Vifor Agreement $ — $ 43,296 $ 43,296

Total $ — $ 43,296 $ 43,296

The following table presents changes in the Company’s contract assets and liabilities during the nine months ended September 30, 2022 and 2021 (in thousands):

Nine Months Ended September 30, 2022 Balance at

The following table presents changes in the Company’s contract assets and liabilities during the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31, 2023 Balance at

Period Additions Deductions Balance at End

4 unchanged sentences

Deferred revenue $ 47,034 $ — $ ( 3,738 ) $ 43,296

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

Accrued expenses and other current liabilities $ — $ — $ — $ —

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Contract assets:

4 unchanged sentences

Accounts payable $ 3,171 $ — $ ( 2,852 ) $ 319

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

(1) Excludes accounts receivable from other services related to clinical and regulatory activities performed by the Company on behalf of MTPC that are not included in the performance obligations identified under the MTPC Agreement as of September 30, 2022 and 2021 and December 31, 2021 and 2020.

Also excludes accounts receivable related to amounts due to the Company from product sales which are included in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2022 and December 31, 2021.

During the three and nine months ended September 30, 2022 and 2021, the Company recognized the following revenues as a result of changes in the contract asset and contract liability balances in the respective periods (in thousands):

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

(1) Excludes accounts receivable from other services related to clinical and regulatory activities performed by the Company on behalf of MTPC that are not included in the performance obligations identified under the MTPC Agreement as of March 31, 2023 and 2022 and December 31, 2022 and 2021.

During the three months ended March 31, 2023 and 2022, the Company recognized the following revenues as a result of changes in the contract asset and contract liability balances in the respective periods (in thousands):

Three Months Ended March 31,

Revenue Recognized in the Period:

2022 2021 2022 2021

Amounts included in deferred revenue at the beginning of the period $ 3,738 $ 6,602

2 unchanged sentences

Summary of Agreement

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

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

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

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

4 unchanged sentences

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

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

As such, the Company did not develop a best estimate of standalone selling price for the License, Research and Clinical Supply Performance

Obligation and allocated the entire transaction price to this performance obligation.

The deliverables associated with the License, Research and Clinical Supply Performance Obligation were satisfied as of June 30, 2018.

As of September 30, 2022, the transaction price was comprised of:

As of March 31, 2023, the transaction price was comprised of:

(i) the up-front payment of $ 20.0 million, (ii) the cost for the Phase 2 studies of $ 20.5 million, (iii) the cost of all clinical supply provided to MTPC for the Phase 3 studies, (iv) $ 10.0 million in development milestones received, (v) $ 25.0 million in regulatory milestones received, comprised of $ 10.0 million relating to the NDA filing in Japan and $ 15.0 million relating to regulatory approval of vadadustat in Japan, and (vi) $ 3.4 million in royalties from net sales of Vafseo.

As of September 30, 2022, all development milestones and $ 25.0 million in regulatory milestones have been achieved.

As of March 31, 2023, all development milestones and $ 25.0 million in regulatory milestones have been achieved.

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

1 unchanged sentence

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

During the three and nine months ended September 30, 2022, the Company recognized revenue from MTPC royalties totaling approximately $ 0.4 million and $ 1.2 million, respectively, and approximately $ 0.3 million and $ 0.4 million during the three and nine months ended September 30, 2021, respectively.

During the three months ended March 31, 2023 and 2022, the Company recognized revenue from MTPC royalties totaling approximately $ 0.4 million and $ 0.3 million, 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 terms and conditions (see Note 5 for additional information).

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

As of September 30, 2022, the Company recorded $ 0.2 million in accounts receivable, no deferred revenue, and no contract assets.

There were no asset or liability balances classified as long-term in the unaudited condensed consolidated balance sheet as of September 30, 2022.

As of March 31, 2023, the Company recorded $ 0.2 million in accounts receivable, no deferred revenue, and no contract assets.

There were no asset or liability balances classified as long-term in the unaudited condensed consolidated balance sheet as of March 31, 2023.

Supply of Drug Product to MTPC

2 unchanged sentences

A more detailed description of this supply agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K.

The Company recognized $ 5.1 million in revenue and $ 12.7 million in revenue under the MTPC Supply Agreement during the three and nine months ended September 30, 2022, respectively, and $ 2.2 million and $ 6.7 million during the three and nine months ended September 30, 2021, respectively.

As of September 30, 2022, the Company recorded $ 0.2 million in accounts receivable, $ 1.3 million in deferred revenue and $ 18.6 million in other 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 12), or the Esteve Agreement, was assigned to MTPC.

The Assignment Agreement transferred the rights and obligations of the Company under 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.

The Company recognized $ 3.7 million and $ 7.6 million in revenue under the MTPC Supply Agreement during the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, the Company recorded no accounts receivable, no deferred revenue and no other current liabilities.

Collaboration and License Agreement with Otsuka Pharmaceutical Co.

On December 18, 2016, the Company entered into the Otsuka U.S.

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

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

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.

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 the United States in accordance with the associated plans.

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.

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

Agreement and the April 25, 2017 collaboration and license agreement with Otsuka, or 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.

A more detailed description of this collaboration agreement and the Company's evaluation of this agreement under ASC 606 can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K.

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);

(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 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 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) an up-front payment of $ 125.0 million, (ii) a cost share payment with respect to amounts incurred by the Company through December 31, 2016 of $ 33.8 million, and (iii) net cost share consideration 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.

On May 12, 2022, the Company received notice from Otsuka that it 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, as of June 30, 2022, the Otsuka U.S.

Agreement and the Otsuka International 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 three and nine months ended September 30, 2022, the Company recognized $ 0 and $ 92.3 million of collaboration revenue from the Otsuka U.S.

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

The collaboration revenue for the nine months ended September 30, 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 three and nine months ended September 30, 2021, the Company recognized collaboration revenue totaling $ 6.1 million and $ 29.0 million, respectively, with respect to the Otsuka U.S.

Additionally, as of September 30, 2022, there was $ 5.6 million in prepaid expenses and other current assets in the accompanying unaudited condensed consolidated balance sheet.

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

During the three months ended March 31, 2022, the Company recognized collaboration revenue totaling $ 5.6 million with respect to the Otsuka U.S.

International Collaboration and License Agreement with Otsuka Pharmaceutical Co.

1 unchanged sentence

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.

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.

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);

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

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) an 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 with respect to amounts incurred by the Company under the global development plan 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 condensed consolidated statement of operations and comprehensive loss.

During the three and nine months ended September 30, 2021, the Company recognized collaboration revenue totaling approximately $ 1.9 million and $ 13.5 million, respectively, with respect to the Otsuka International Agreement.

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

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

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

A more detailed description of this collaboration agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2021 Annual Report on Form 10-K.

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

A more detailed description of this collaboration agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2021 Annual Report on Form 10-K.

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

During the three months ended March 31, 2022, the Company recognized collaboration revenue totaling approximately $ 5.5 million with respect to the Otsuka International Agreement.

Cyclerion Therapeutics License Agreement

4 unchanged sentences

2017-01, Business Combinations (Topic 805):

the Definition of a Business .

Clarifying the Definition of a Business .

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

2 unchanged sentences

A more detailed description of this agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K.

Vifor Pharma License Agreement

CSL Vifor License Agreement

Summary of License 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, 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.

On February 18, 2022, 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 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, Vifor Pharma agreed that it would not sell or otherwise supply vadadustat until the FDA has granted regulatory approval for vadadustat in the DD-CKD Indication in the Territory and until Vifor Pharma 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 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 made an upfront payment to the Company of $ 25.0 million in lieu of the previously disclosed milestone payment of $ 25.0 million that Vifor Pharma was to pay the Company following approval of vadadustat by the FDA, as established under the Vifor First Amended Agreement.

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, 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.

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.

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 Vifor Pharma.

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 2017 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.

Vifor Pharma 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.

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

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.

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 Vifor Pharma 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 Vifor Pharma for a total of $ 20 million on February 22, 2022.

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 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.

Vifor Pharma 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 Vifor Pharma with respect to the 2022 Shares.

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.

A more detailed description of the Vifor Second Amended Agreement and the Company's evaluation of this agreement under ASC 606 can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K.

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, Vifor Pharma, is a customer.

The Company’s arrangement with Vifor Pharma 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 Company 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 Vifor Pharma on the First Investment Agreement of $ 4.7 million, and (iii) the premium paid by Vifor Pharma on the Second Investment Agreement of $ 13.6 million.

Pursuant to the terms of the Vifor Second Amended Agreement, these payments from Vifor Pharma 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 Vifor Pharma 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.

Vifor Pharma 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.

(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.

CSL Vifor also agreed that it will 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 .

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 September 30, 2022.

Refund Liability to Customer

Pursuant to the Vifor Second Amended Agreement, Vifor Pharma 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 will repay to Vifor over time.

The $ 40 million initial contribution to the Working Capital Fund represents 50 % of the amount of purchase orders that the Company has 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 2022.

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.

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 Vifor Pharma (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.

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 Vifor Pharma in the future.

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.

1 unchanged sentence

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 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 condensed consolidated balance sheet as of the date the funds were received from Vifor Pharma, which was March 18, 2022.

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 condensed 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.

The amortization of the discount was $ 1.1 million and $ 2.3 million for the three and nine months ended September 30, 2022, respectively.

The amortization of the deferred gain was $ 0.9 million and $ 1.8 million for the three and nine months ended September 30, 2022, respectively.

Of the $ 40.5 million total refund liability, net of deferred gain and discount, the Company classified $ 13.7 million as a short-term refund liability based on management's estimate of potential amounts that could be refundable within a one-year period as a result of anticipated changes to the Company's operating plan following the CRL.

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 an 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.

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

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

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

A more detailed description of this transaction can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2021 Annual Report on Form 10-K.

The amortization of the discount was $ 0.8 million and immaterial for the three months ended March 31, 2023 and 2022, respectively.

The amortization of the deferred gain was $ 1.0 million and immaterial for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, the $ 40.8 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.

License Agreement with Panion & BF Biotech, Inc.

As a result of the merger with Keryx, or 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.

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.

4 unchanged sentences

A more detailed description of this license agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K.

The Company recognized royalty payments due to Panion of approximately $ 2.9 million and $ 3.0 million during the three months ended September 30, 2022 and 2021, respectively, and $ 9.5 million and $ 8.3 million during the nine months ended September 30, 2022 and 2021, respectively, relating to the Company’s sales of Auryxia in the United States and JT and Torii’s net sales of Riona in Japan, as the Company is required to pay a mid-single digit percentage of net sales of ferric citrate in the Company’s licensed territories to Panion under the terms of the Panion Amended License Agreement.

The Company recognized royalty payments due to Panion of approximately $ 2.6 million and $ 2.5 million during the three months ended March 31, 2023 and 2022, respectively, relating to the Company’s sales of Auryxia in the United States and JT and Torii’s net sales of Riona in Japan, as the Company is required to pay a mid-single digit percentage of net sales of ferric citrate in the Company’s licensed territories to Panion under the terms of the Panion Amended License Agreement.

Sublicense Agreement with Japan Tobacco, Inc.

and its subsidiary, Torii Pharmaceutical Co., Ltd.

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.

4 unchanged sentences

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

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

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

The Company recognized license revenue of $ 1.2 million and $ 1.4 million during the three months ended September 30, 2022 and 2021, respectively, and $ 3.9 million and $ 4.1 million during the nine months ended September 30, 2022 and 2021, respectively, related to royalties earned on net sales of Riona in Japan.

The Company recognized license revenue of $ 1.1 million during each of the three months ended March 31, 2023 and 2022 related to royalties earned on net sales of Riona in Japan.

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

Restructuring

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.

The workforce reduction was substantially completed as of June 30, 2022.

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

The workforce reduction is expected to be substantially complete by the end of May 2023.

These actions reflect 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 in line with being a single commercial product company.

The workforce reduction is expected to include total restructuring charges of approximately $ 14.7 million.

During the three and nine months ended September 30, 2022, the Company recognized $ 0.2 million and $ 14.7 million, respectively, of restructuring charges in the condensed consolidated statement of operations.

These charges included $ 11.4 million of one-time termination benefits and contractual termination benefits for severance, healthcare, and related benefits and $ 3.3 million of 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 reduction for the period ended September 30, 2022 are as follows:

September 30, 2022

(in thousands)

Balance at December 31, 2021 $ —

Restructuring charges 14,711

Stock-based compensation expense ( 3,253 )

Severance payments and adjustments ( 7,220 )

Balance at September 30, 2022 $ 4,238

License Agreement with Averoa SAS

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 Averoa 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 Averoa Territory, including certain minimum royalty amounts in certain years, and subject to reduction in certain circumstances.

The Company and Averoa will establish a joint steering committee to oversee the development, manufacturing and commercialization of the Licensed Product in the Averoa 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 Averoa Territory, unless earlier terminated in accordance with the agreement.

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 Averoa 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 March 31, 2023.

A more detailed description of this license agreement can be found in Note 4 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K.

Liability Related to Sale of Future Royalties

8 unchanged sentences

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

The annual effective interest rate as of September 30, 2022 was 13.6 % which is reflected as interest expense in the unaudited condensed consolidated statements of operations and comprehensive loss.

The annual effective interest rate as of March 31, 2023 was 0 % which is reflected as interest expense in the unaudited condensed consolidated statements of operations and comprehensive loss.

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

A more detailed description of Royalty Agreement can be found in Note 6 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K.

The following table shows the activity within the liability account for the nine months ended September 30, 2022:

September 30, 2022

The following table shows the activity within the liability account for the three months ended March 31, 2023:

March 31, 2023

(in thousands)

Liability related to sale of future royalties, net beginning balance at December 31, 2021 $ 53,079

Liability related to sale of future royalties, beginning balance at December 31, 2022 $ 57,484

MTPC royalties payable ( 425 )

Non-cash interest expense recognized 6,352

Liability related to sale of future royalties, net — ending balance $ 58,236

Liability related to sale of future royalties, ending balance $ 57,059

Fair Value of Financial Instruments

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

This portfolio management 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.

Based on the fair value hierarchy, the Company classifies its cash equivalents within Level 1 or Level 2.

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

Assets measured or disclosed at fair value on a recurring basis as of September 30, 2022 and December 31, 2021 are summarized below:

Assets measured or disclosed at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 are summarized below:

Fair Value Measurements Using

1 unchanged sentence

(in thousands)

September 30, 2022

March 31, 2023

Cash and cash equivalents $ 56,953 $ — $ — $ 56,953

17 unchanged sentences

The potential events of default assessed include failure to maintain, 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 September 30, 2022 and December 31, 2021, respectively.

The Company classified the derivative liability as a non-current liability on the unaudited condensed consolidated balance sheet as of September 30, 2022 and December 31, 2021.

The estimated fair value of the derivative liability on both September 30, 2022 and December 31, 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.

The Company recorded a derivative liability related to the Company’s Loan Agreement with Pharmakon of $ 0.8 million as of March 31, 2023 and December 31, 2022.

The Company classified the derivative liability as a non-current liability on the

unaudited condensed consolidated balance sheet as of March 31, 2023 and December 31, 2022.

The estimated fair value of the derivative liability on both March 31, 2023 and December 31, 2022 was determined using a scenario-based approach and discounted cash flow model that includes principal and interest payments under various scenarios involving clinical development success for vadadustat and various cash flow assumptions.

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

4 unchanged sentences

Balance at March 31, 2023 $ 760

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

Balance at June 30, 2022 $ 1,110

Change in fair value of derivative liability, recorded as other income ( 350 )

Balance at September 30, 2022 $ 760

The Company had no other assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at September 30, 2022 and December 31, 2021.

The Company had no other assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at March 31, 2023 and December 31, 2022.

The components of inventory are summarized as follows:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(in thousands)

4 unchanged sentences

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(in thousands)

3 unchanged sentences

Total inventory $ 21,107 $ 22,372

Inventory amounts written down as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold totaled $ 2.6 million and $ 1.7 million during the three months ended September 30, 2022 and 2021, respectively, and $ 10.0 million and $ 7.1 million during the nine months ended September 30, 2022 and 2021, respectively.

The increase in inventory amounts written down for the three and nine months ended September 30, 2022 as compared to the three and nine months ended September 30, 2021 was primarily due to higher write-downs to inventory reserves related to expired inventory.

In addition, there were no related step-up charges during the nine months ended September 30, 2022 and $ 8.7 million related step-up charges during the nine months ended September 30, 2021.

During the nine months ended September 30, 2022, the Company recorded $ 14.8 million of long-term inventory reserves and related reduction to the excess purchases commitment liability related to Auryxia inventory previously identified as excess, reflecting Auryxia inventory that was received during the period.

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

Inventory write-downs and losses on purchase commitments are recorded as a component of cost of goods sold in the unaudited condensed consolidated statement of operations.

Inventory amounts written down as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold totaled $ 0.3 million and $ 5.3 million during the three months ended March 31, 2023 and 2022, respectively.

The decrease in inventory amounts written down for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022 was primarily due to lower write-downs to inventory reserves related to expired inventory.

Inventory write-downs are recorded as a component of cost of goods sold in the unaudited condensed consolidated statement of operations.

Intangible Assets and Goodwill

Intangible Assets

The following table presents the Company’s intangible assets at September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022

The following table presents the Company’s intangible assets at March 31, 2023 and December 31, 2022 (in thousands):

March 31, 2023

Gross Carrying

11 unchanged sentences

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 $ 9.0 million in amortization expense related to the developed product rights for Auryxia during each of the three months ended September 30, 2022 and 2021, and $ 27.0 million during each of the nine months ended September 30, 2022 and 2021.

The Company recorded $ 9.0 million in amortization expense related to the developed product rights for Auryxia during each of the three months ended March 31, 2023 and 2022.

The Company's goodwill results from the acquisition of Keryx in December 2018.

Goodwill was $ 55.1 million as of September 30, 2022 and December 31, 2021.

Goodwill was $ 55.1 million as of March 31, 2023 and December 31, 2022.

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

1 unchanged sentence

Events that could indicate impairment and trigger an interim 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 nine months ended September 30, 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 increase 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 qualitative interim impairment assessments of the Company's goodwill balance as of each of the three months ended March 31, 2022, June 30, 2022, and September 30, 2022.

During the three months ended March 31, 2023, the Company evaluated business factors, including the Company's market capitalization as impacted by the continued decline in the Company's stock price and the Company's negative carrying value as of March 31, 2023 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 interim impairment assessment of the Company's goodwill balance as of the three months ended March 31, 2023.

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 interim impairment test for any period.

3 unchanged sentences

Accrued Expenses

Accrued expenses as of September 30, 2022 and December 31, 2021 are as follows:

September 30, 2022 December 31, 2021

Accrued expenses as of March 31, 2023 and December 31, 2022 are as follows:

March 31, 2023 December 31, 2022

(in thousands)

1 unchanged sentence

Accrued clinical 1,148 5,755

Amounts due to collaboration partners 19,550 22,654

Accrued payroll and related 5,717 11,481

8 unchanged sentences

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

The Collateral Agent and the lenders are collectively referred to as Pharmakon (see Note 1 to our condensed consolidated financial statements).

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

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

Each of the Tranche A Funding Date and the Tranche B Funding Date, a Funding Date.

The Tranche A draw was $ 77.3 million, net of facility fee, other expenses incurred by Pharmakon and reimbursed by the Company, or Lender Expenses, and issuance costs.

The Tranche B draw was $ 20.0 million, net of immaterial Lender Expenses and issuance costs.

Proceeds from the Term Loans may be used for general corporate purposes.

4 unchanged sentences

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 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.

As of September 30, 2022, the Company made its first quarterly principal payment under the Term Loans of $ 8.0 million.

The Company is required to 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.

During the three months ended March 31, 2023, the Company made two quarterly principal payments under the Term Loans totaling $ 16.0 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.

On the Tranche A Funding Date, the Company paid to Pharmakon a facility fee equal to 2.00 % of the aggregate principal amount of the Term Loans, or $ 2.0 million, in addition to other expenses incurred by Pharmakon and reimbursed by the Company, or Lender Expenses.

The Tranche A draw was $ 77.3 million, net of facility fee, Lender Expenses and issuance costs.

The Tranche B draw was $ 20.0 million, net of immaterial Lender Expenses and issuance costs.

The Loan Agreement permits voluntary prepayment at any time in whole or in part, subject to a prepayment premium.

The prepayment premium would be 2.00 % of the principal amount being prepaid prior to the third anniversary of the applicable Funding Date, 1.00 % on or after the third anniversary, but prior to the fourth anniversary, of the applicable Funding Date, and 0.50 % on or after the fourth anniversary of the applicable Funding Date but prior to the Maturity Date, and a make-whole premium on or prior to the second

anniversary of the applicable Funding Date in an amount equal to foregone interest through the second anniversary of the applicable Funding Date.

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

The Loan Agreement contains customary representations, warranties, events of default and covenants of the Company and its subsidiaries, including maintaining, on an annual basis, a minimum liquidity threshold 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 by 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 its future 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 September 30, 2022, the Company continued to classify 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 September 30, 2022 and December 31, 2021, the Company determined that no events of default had occurred.

As of March 31, 2023 and 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.

1 unchanged sentence

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

During each of the three and nine months ended September 30, 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 Vifor Pharma, 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 Vifor Pharma 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 by the Second Amendment and Waiver, are as follows (in thousands):

(in thousands)

Total before unamortized discount and issuance costs 67,000

unamortized discount and issuance costs ( 1,053 )

Total term loans $ 65,947

During the three months ended September 30, 2022, the Company recorded a debt extinguishment loss of $ 0.9 million.

A more detailed description of Second Amendment and Waiver can be found in Note 11 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K.

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.

2 unchanged sentences

The Company also assessed the acceleration of the obligations under the Loan Agreement under an event 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 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 fair value of the derivative liability related to the Company’s Loan Agreement with Pharmakon was $ 0.8 million and $ 1.8 million as of September 30, 2022 and December 31, 2021, respectively.

The Company classified the derivative liability as a non-current liability on the unaudited condensed consolidated balance sheet as of September 30, 2022.

The Company recognized interest expense related to the Loan Agreement of $ 2.1 million and $ 2.7 million during the three months ended September 30, 2022 and 2021, respectively, and $ 7.5 million and $ 8.1 million for the nine months ended September 30, 2022 and 2021, respectively.

The fair value of the derivative liability related to the Company’s Loan Agreement with Pharmakon was $ 0.8 million as of March 31, 2023 and December 31, 2022.

The Company classified the derivative liability as a non-current liability on the unaudited condensed consolidated balance sheet as of March 31, 2023.

The Company recognized interest expense related to the Loan Agreement of $ 1.8 million and $ 2.7 million during the three months ended March 31, 2023 and 2022, respectively.

Stockholders’ Equity

1 unchanged sentence

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

As of September 30, 2022, the authorized capital stock of the Company included 350,000,000 shares of common stock, par value $ 0.00001 per share, of which 183,951,583 and 177,000,963 shares were issued and outstanding as of September 30, 2022 and December 31, 2021, respectively;

and 25,000,000 shares of undesignated preferred stock, par value $ 0.00001 per share, of which no shares were issued and outstanding as of September 30, 2022 and December 31, 2021.

As of March 31, 2023, the authorized capital stock of the Company included 350,000,000 shares of common stock, par value $ 0.00001 per share, of which 185,835,946 and 184,135,714 shares were issued and outstanding as of March 31, 2023 and December 31, 2022, respectively;

and 25,000,000 shares of undesignated preferred stock, par value $ 0.00001 per share, of which no shares were issued and outstanding as of March 31, 2023 and December 31, 2022.

At-the-Market Facility

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 February 25, 2021, the Company filed a prospectus relating to the Prior 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 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.

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.

7 unchanged sentences

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

During the nine months ended September 30, 2022, the Company granted 400,000 options to purchase shares of the Company’s common stock to new hires as inducements material to such employees' entering into employment with the Company, of which 266,000 options remained outstanding as of September 30, 2022.

During the three months ended March 31, 2023, the Company granted 22,000 options to purchase shares of the Company’s common stock to new hires as inducements material to such employees' entering into employment with the Company, of which 22,000 options remained outstanding as of March 31, 2023.

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.

4 unchanged sentences

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'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:

On December 12, 2018, in connection with the consummation of the merger, or the Merger, whereby Keryx Biopharmaceuticals, Inc., or Keryx, became a wholly owned subsidiary of the Company, 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.

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

During the nine months ended September 30, 2022, the Company issued 3,233,500 options to employees under the 2014 Plan.

The Company grants annual service-based stock options to employees and directors and SARs to certain executives under the 2014 Plan.

During the three months ended March 31, 2023, the Company issued 2,489,500 options to employees under the 2014 Plan.

During the three months ended March 31, 2023, the Company issued 635,313 SARs to one executive under the 2014 Plan.

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

During the nine months ended September 30, 2022, the Company issued 140,700 options to directors under the 2014 Plan.

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 10 years after the date of grant.

Options and SARs 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 and SARs 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 and SARs generally expire 10 years after the date of grant.

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

The Company issued 400,000 performance-based stock options under the 2014 Plan during the nine months ended September 30, 2022.

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

The Company issued no performance-based stock options under the 2014 Plan during the three months ended March 31, 2023.

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

The performance-based stock options also generally 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.

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, regulatory and corporate milestones.

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

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

During the nine months ended September 30, 2022, the Company issued 5,216,908 RSUs to employees and 95,900 RSUs to directors under the 2014 Plan.

During the three months ended March 31, 2023, the Company issued 2,459,675 RSUs to employees and no RSUs to directors under the 2014 Plan.

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

2 unchanged sentences

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

The Company issued 400,000 PSUs during the nine months ended September 30, 2022.

The Company issued no PSUs during the three months ended March 31, 2023.

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

3 unchanged sentences

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

As of September 30, 2022, the maximum aggregate number of shares of

the Company’s common stock available for future issuance under the ESPP is 4,837,995 .

As of March 31, 2023, the maximum aggregate number of shares of the Company’s common stock available for future issuance under the ESPP is 4,734,495 .

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

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

The Company issued 335,146 shares under the ESPP during the nine months ended September 30, 2022.

The Company issued 103,500 shares under the ESPP during the three months ended March 31, 2023.

Commitments and Contingencies

7 unchanged sentences

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.

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 initial base rent were approximately $ 136,000 and are subject to annual rent escalations.

8 unchanged sentences

The lease agreements do not contain residual value guarantees.

Operating lease costs were $ 1.8 million and $ 1.7 million for the three months ended September 30, 2022 and 2021, respectively, and $ 5.4 million and $ 5.0 million for the nine months ended September 30, 2022 and 2021, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities was $ 1.8 million for each of the three months ended September 30, 2022 and 2021 and $ 5.5 million and $ 5.3 million for the nine months ended September 30, 2022 and 2021, respectively.

Operating lease costs were $ 1.8 million for each of the three months ended March 31, 2023 and 2022.

Cash paid for amounts included in the measurement of operating lease liabilities was $ 1.7 million and $ 1.8 million for the three months ended March 31, 2023 and 2022, 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 sublease was 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 expired on February 27, 2023.

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

Sublease rental income is recorded to other income.

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

Keryx recorded $ 0.5 million and $ 0.4 million in sublease rental income from Foundation during the three months ended September 30, 2022 and 2021, respectively, and $ 1.4 million and $ 1.3 million during the nine months ended September 30, 2022 and 2021, respectively.

The Company has not entered into any material short-term leases or financing leases as of September 30, 2022.

The total security deposit in connection with the Cambridge Lease is $ 1.6 million as of September 30, 2022.

Keryx was obligated for all payment terms pursuant to the Boston Lease, and the Company guaranteed Keryx’s obligations under the sublease.

Keryx recorded $ 0.3 million and $ 0.5 million in sublease rental income from Foundation during the three months ended March 31, 2023 and 2022, respectively.

The Company has not entered into any material short-term leases or financing leases as of March 31, 2023.

The total security deposit in connection with the Cambridge Lease is $ 1.6 million as of March 31, 2023.

Additionally, the Company recorded $ 1.1 million for the security deposit under the Boston Lease.

Both the Cambridge Lease and the Boston Lease have their security deposits in the form of a letter of credit, all of which are included as restricted cash in other assets in the Company’s unaudited condensed consolidated balance sheets as of September 30, 2022.

As of September 30, 2022, undiscounted minimum rental commitments under non-cancelable leases, for each of the next five years and total thereafter are as follows:

Leases Lease Payments

to be Received

from Sublease Net Operating

The Cambridge Lease and the Boston Lease have their security deposits in the form of a letter of credit, all of which are included as restricted cash in prepaid expenses and other current assets in the Company’s unaudited condensed consolidated balance sheets as of March 31, 2023.

As of March 31, 2023, undiscounted minimum rental commitments under non-cancelable leases, for each of the next five years and total thereafter are as follows:

Lease Payments

(in thousands)

Remaining 2023 $ 5,248

2023 6,954 307 6,647

2024 8,167 — 8,167

2025 8,293 — 8,293

2026 6,571 — 6,571

Thereafter $ 9,631

1 unchanged sentence

In arriving at the operating lease liabilities, the Company applied incremental borrowing rates ranging from 6.65 % to 7.25 %, which were based on the remaining lease term at either the date of adoption of ASC 842 or the effective date of any subsequent lease term extensions.

As of September 30, 2022, the remaining lease terms ranged from 3.95 years to 8.84 years.

As of September 30, 2022, the following represents the difference between the remaining undiscounted minimum rental commitments under non-cancelable leases and the operating lease liabilities:

As of March 31, 2023, the remaining lease terms ranged from 3.45 years to 8.34 years.

As of March 31, 2023, the following represents the difference between the remaining undiscounted minimum rental commitments under non-cancelable leases and the operating lease liabilities:

(in thousands)

4 unchanged sentences

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

Pursuant to the Manufacture and Supply Agreement with BioVectra and the Product Manufacture and Supply and Facility Construction Agreement with BioVectra, 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 September 30, 2022, 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 $ 74.8 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 the term through December 31, 2023 by providing 12 months’ prior written notice to Siegfried.

Pursuant to the Manufacture and Supply Agreement with BioVectra and the Amended and Restated 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 as well as reimburse BioVectra for certain costs in connection with construction of a new facility for the manufacture and supply of Auryxia drug substance.

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.

Under the terms of 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.

In addition, 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.

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.

The amortization of the discount was $ 0.5 million for the three months ended March 31, 2023.

Pursuant to the Master Manufacturing Services and Supply Agreement between the Company and Siegfried, as amended (the most recent amendment having been executed on February 28, 2023), or the Siegfried Agreement, the Company has agreed to purchase a minimum quantity of drug substance of Auryxia at a predetermined price.

The term of the Siegfried Agreement expires on December 31, 2024, unless otherwise agreed by the parties and subject to the Company's option to extend the term through December 31, 2026 by providing 12 months’ prior written notice to Siegfried.

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

In the first quarter of 2022, the Company notified Siegfried that the Company had elected not to exercise the option to extend the term of the Siegfried Agreement through December 31, 2023.

As of September 30, 2022, the Company is required to purchase a minimum quantity of drug substance for Auryxia annually at a total cost of approximately $ 9.9 million through the year ending December 31, 2022.

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.

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

The excess purchase commitment liability relating to these executory contracts was $ 74.3 million and $ 76.7 million as of September 30, 2022 and December 31, 2021, respectively.

During the quarter ended September 30, 2022, the Company increased the excess purchase commitment liability and recorded a $ 13.2 million charge to cost of goods sold as a result of a routine long-term forecast update and continued declines in the binder market and a reduction in its contractual purchase commitment with a supplier.

During the quarter ended September 30, 2022, the Company also reduced the excess purchase commitment liability by $ 5.8 million for inventory received that had previously been identified as excess.

The Company considered whether the increase in the excess purchase commitment liability was a potential indicator of impairment of the Auryxia asset group as of September 30, 2022.

As part of its assessment, the Company reviewed the Auryxia net sales and estimated future cash flows included in its forecast and concluded that the increase in excess purchase commitment liability was not an indicator of impairment of the Auryxia asset group as of September 30, 2022.

During the quarter ended June 30, 2022, the Company reduced the excess purchase commitment liability by $ 5.8 million for inventory received that had been previously identified as excess.

During the quarter ended March 31, 2022, the Company recorded a $ 0.8 million reduction to the excess purchase commitments liability within cost of goods sold and reduced the excess purchase commitment liability by $ 3.2 million for inventory received that had previously been identified as excess.

As of March 31, 2023, the Company is required to purchase a minimum quantity of drug substance for Auryxia annually at a total cost of approximately $ 23.9 million through the end of 2024.

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 September 30, 2022, the Company has committed to purchase $ 26.9 million of vadadustat drug substance from Esteve through the second quarter of 2023.

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.

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

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

3 unchanged sentences

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

The Patheon Agreement has an initial term, which began on March 11, 2020 and ends on 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 September 30, 2022, the Company had a minimum commitment with Patheon for $ 3.2 million through the fourth quarter of 2022.

As of March 31, 2023, 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, as amended on April 15, 2021, or the WuXi STA DS Agreement.

5 unchanged sentences

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 September 30, 2022, the Company has committed to purchase $ 19.2 million of vadadustat drug substance from WuXi STA through the end of 2023.

As of March 31, 2023, 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.

7 unchanged sentences

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

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

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

In addition, each party has the ability to terminate the WuXi STA DP Agreement upon the occurrence of certain conditions.

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 September 30, 2022 were approximately $ 4.6 million.

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 $ 176.3 million at September 30, 2022.

The Company contracts with various organizations to conduct research and development activities with remaining contract costs to the Company of approximately $ 77.6 million at March 31, 2023.

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

7 unchanged sentences

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

As of September 30, 2022, the Company does not have any significant legal disputes that require a loss liability to be recorded.

As of March 31, 2023, the Company does not have any significant legal disputes that require a loss liability to be recorded.

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

Net Loss per Share

For purposes of the diluted net loss per share calculation, preferred stock, stock options, warrants, restricted stock and RSUs are considered to be common stock equivalents and have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for periods presented.

For purposes of the diluted net loss per share calculation, preferred stock, stock options, restricted stock, RSUs and SARs are considered to be common stock equivalents and have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for periods presented.

Therefore, basic and diluted net loss per share were the same for all periods presented in the unaudited condensed consolidated statement of operations and comprehensive loss.

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

As of September 30,

Warrant — 509,611

Outstanding stock options 11,844,609 11,593,539

As of March 31,

Outstanding stock options and SARs 14,113,067 14,187,899

Unvested restricted stock units 6,460,421 5,782,635

1 unchanged sentence

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

What changed 10-Q

Item 1. Financial Statements