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Item 1. Financial Statements

2023-08-28 compared with 2023-05-08 · 830 added, 444 removed, 308 unchanged (81% of the section changed)

1 unchanged sentence

Akebia Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share amounts) June 30,

2023 December 31,

1 unchanged sentence

Cash and cash equivalents $ 53,572 $ 90,466

Inventory 20,604 21,762

Inventories 20,905 21,568

Accounts receivable, net 19,572 40,284

2 unchanged sentences

Property and equipment, net 4,419 5,214

Operating lease assets 27,958 29,158

Operating right-of-use assets 14,391 29,158

Intangible asset, net 54,063 72,084

Goodwill 59,044 59,044

Other intangible assets, net 63,074 72,084

Other assets 5,238 5,372

Other long-term assets 3,348 5,372

Total assets $ 253,712 $ 356,054

Liabilities and stockholders' equity

Liabilities and stockholders' (deficit) equity

Current liabilities:

5 unchanged sentences

Deferred revenue, net of current portion 43,296 43,296

Operating lease liabilities, net of current portion 27,418 28,961

Derivative liability 760 760

Long-term operating lease liabilities 11,480 28,961

Embedded debt derivative 760 760

Long-term debt, net 18,486 34,078

1 unchanged sentence

Refund liability to customer 40,623 40,992

Other non-current liabilities 12,643 12,161

Other long-term liabilities 17,142 15,717

Total liabilities 280,519 350,824

2 unchanged sentences

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

0 shares issued and

outstanding at March 31, 2023 and December 31, 2022

no shares issued and

outstanding at June 30, 2023 and December 31, 2022

Common stock $ 0.00001 par value;

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

350,000,000 shares authorized at June 30, 2023 and December 31, 2022;

188,128,869 and 184,135,714 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 1,568,260 1,562,247

Accumulated other comprehensive gain 6 6

Accumulated other comprehensive income 6 6

Accumulated deficit ( 1,595,075 ) ( 1,557,025 )

1 unchanged sentence

Total liabilities and stockholders' (deficit) equity $ 253,712 $ 356,054

See accompanying notes to unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Akebia Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

Three Months Ended

| Form 10-Q | Page 2

Akebia Therapeutics, Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

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

(dollars in thousands, except per share amounts)

2023 2022 2023 2022

Product revenue, net $ 42,244 $ 43,309 $ 76,950 $ 84,681

3 unchanged sentences

Product 8,273 9,589 19,452 32,694

Amortization of intangibles 9,011 9,011

Amortization of intangible asset 9,011 9,011 18,021 18,021

Total cost of goods sold 17,284 18,600 37,473 50,715

5 unchanged sentences

Total operating expenses 48,088 73,690 93,502 162,777

Operating loss ( 24,938 ) ( 58,493 )

Operating (loss) income ( 8,996 ) 34,075 ( 34,594 ) ( 25,504 )

Other income (expense)

Interest expense ( 1,642 ) ( 5,037 ) ( 3,204 ) ( 10,099 )

Other income 282 1,134

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

Net loss per share - basic and diluted $ ( 0.14 ) $ ( 0.35 )

Weighted-average number of common shares - basic and diluted 184,768,983 179,599,045

Comprehensive loss:

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

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

See accompanying notes to unaudited condensed consolidated financial statements.

Other (expense) income ( 10 ) 411 272 1,545

Loss on lease termination ( 524 ) — ( 524 ) —

Net (loss) income $ ( 11,172 ) $ 29,449 $ ( 38,050 ) $ ( 34,058 )

Comprehensive (loss) income $ ( 11,172 ) $ 29,449 $ ( 38,050 ) $ ( 34,058 )

Net (loss) income per share:

Basic $( 0.06 ) $ 0.16 $( 0.20 ) $( 0.19 )

Diluted $( 0.06 ) $ 0.15 $( 0.20 ) $( 0.19 )

Weighted average common shares outstanding:

Basic 186,817,431 183,597,766 185,798,865 181,609,452

Diluted 186,817,431 190,375,317 185,798,865 181,609,452

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Akebia Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

(in thousands, except share data)

Shares $ 0.00001

Additional Paid-In

Capital Unrealized

Gain/(Loss) Accumulated

| Form 10-Q | Page 3

Akebia Therapeutics, Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated

Deficit Total Stockholders'

Equity (Deficit)

(dollars in thousands) Shares Amount

Balance at December 31, 2021 177,000,963 $ 1 $ 1,536,800 $ 6 $ ( 1,462,799 ) $ 74,008

7 unchanged sentences

Balance at March 31, 2022 183,386,035 $ 2 $ 1,548,880 $ 6 $ ( 1,526,308 ) $ 22,580

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

Exercise of options 142,440 — 67 — — 67

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

Net income — — — — 29,449 29,449

Balance at June 30, 2022 183,704,654 $ 2 $ 1,555,788 $ 6 $ ( 1,496,859 ) $ 58,937

Common Stock Additional Paid-In

Capital Accumulated Other Comprehensive Income (Loss) Accumulated

Deficit Total Stockholders'

Equity (Deficit)

(dollars in thousands) Shares Amount

Balance at December 31, 2022 184,135,714 $ 2 $ 1,562,247 $ 6 $ ( 1,557,025 ) $ 5,230

5 unchanged sentences

Balance at March 31, 2023 185,835,946 $ 2 $ 1,564,770 $ 6 $ ( 1,583,903 ) $ ( 19,125 )

See accompanying notes to unaudited condensed consolidated financial statements

Stock-based compensation expense — — 3,490 — — 3,490

Restricted stock unit vesting 2,292,923 — — — — —

Net loss — — — — ( 11,172 ) ( 11,172 )

Balance at June 30, 2023 188,128,869 $ 2 $ 1,568,260 $ 6 $ ( 1,595,075 ) $ ( 26,807 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Akebia Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

Three Months Ended

March 31, 2023 March 31, 2022

| Form 10-Q | Page 4

Akebia Therapeutics, Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

(dollars in thousands) 2023 2022

Operating Activities:

2 unchanged sentences

Depreciation and amortization 795 833

Amortization of intangibles 9,011 9,011

Amortization of intangible asset 18,021 18,021

Non-cash interest expense related to sale of future royalties — 4,428

Non-cash royalty revenue related to sale of future royalties ( 936 ) ( 764 )

Non-cash R&D expense 782 —

Non-cash collaboration revenue — ( 9,550 )

Non-cash research and development expense 782 —

Non-cash interest expense 983 916

Non-cash operating lease expense ( 955 ) ( 1,198 )

Non-cash write-off from termination of lease ( 825 ) —

Write-down of inventory 612 7,430

Change in excess inventory purchase commitments — 4,854

Stock-based compensation 2,489 4,536

Change in fair value of derivative liability — ( 710 )

Stock-based compensation expense 5,979 11,453

Change in fair value of embedded debt derivative — ( 710 )

Changes in operating assets and liabilities:

4 unchanged sentences

Accounts payable ( 12,058 ) ( 8,807 )

Accrued expense ( 25,047 ) 4,426

Accrued expense and other current liabilities ( 19,382 ) ( 19,464 )

Operating lease liabilities 1,034 1,205

Deferred revenue ( 3,738 ) 5,963

Other non-current liabilities — ( 3,191 )

Other long-term liabilities 481 ( 8,622 )

Net cash used in operating activities ( 13,909 ) ( 52,280 )

Investing Activities:

Purchase of equipment — ( 114 )

Purchases of equipment — ( 114 )

Net cash used in investing activities — ( 114 )

1 unchanged sentence

Proceeds from refund liabilities to customers — 40,000

Proceeds from the issuance of common stock, net of issuance costs — 7,178

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

Payments on debt ( 16,000 ) —

Proceeds from issuance of common stock, net of issuance costs — 7,102

Proceeds from issuances of stock under employee stock purchase plan 34 367

Proceeds from the exercise of stock options — 67

Repayments of term debt ( 24,000 ) —

Net cash (used in) provided by financing activities ( 23,966 ) 47,536

(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

See accompanying notes to unaudited condensed consolidated financial statements

Decrease in cash, cash equivalents and restricted cash ( 37,875 ) ( 4,858 )

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

Cash, cash equivalents and restricted cash — end of period $ 55,294 $ 146,981

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Akebia Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

Nature of Organization and Operations

| Form 10-Q | Page 5

Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NATURE OF BUSINESS

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

1 unchanged sentence

The Company has one commercial product, Auryxia ® (ferric citrate), which is approved by the U.S.

Food and Drug Administration, or FDA, and marketed for two indications in the United States:

the control of serum phosphorus levels in adult patients with chronic kidney disease, or CKD, on dialysis, or DD-CKD, and the treatment of iron deficiency anemia, or IDA, in adult patients with CKD not on dialysis, or NDD-CKD.

Food and Drug Administration ( FDA ), and marketed for two indications in the United States:

the control of serum phosphorus levels in adult patients with chronic kidney disease ( CKD) on dialysis ( DD-CKD ), and the treatment of iron deficiency anemia ( IDA ) in adult patients with CKD not on dialysis ( NDD-CKD ).

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

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

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

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

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

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

In February 2023, 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.

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

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

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

In October 2022, the Company submitted a Formal Dispute Resolution Request with the FDA and 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 May 2023, the Office of New Drugs ( OND ) denied the Company's appeal but provided a path forward for the Company to resubmit the NDA for vadadustat for the treatment of anemia due to CKD for dialysis dependent patients without the need for the Company to generate additional clinical data.

In July 2023, the Company held an End of Dispute Type A meeting with the FDA to align on the contents of the NDA resubmission.

The Company expects to resubmit the NDA by the end of the third quarter of 2023, with a potential Prescription Drug User Fee Act ( PDUFA ) date that the Company projects will be in March 2024.

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.

( Otsuka ), submitted a Marketing Authorization Application ( 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 ( EMA ) .

In connection with the Termination and Settlement Agreement with Otsuka dated June 30, 2022 ( Termination Agreement ), Otsuka transferred the MAA for vadadustat with each of the EMA, the United Kingdom, Switzerland and Australia to the Company.

In April 2023, the European Commission ( 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.

In May 2023, the United Kingdom ( UK ) Medicines and Healthcare products Regulatory Agency 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.

In June 2023, the Swiss Agency for Therapeutics Products approved the marketing authorization for 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, and marketed and sold in Japan by Mitsubishi Tanabe Pharma Corporation ( MTPC ).

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

3 unchanged sentences

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

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

and its subsidiary Torii Pharmaceutical Co., Ltd.

(collectively, JT and Torii ), in December 2018.

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

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

In February 2021, the Company entered into a royalty interest acquisition agreement with HealthCare Royalty Partners IV, L.P.

( HCR ) ( Royalty Agreement ), whereby the Company sold its right to receive royalties and sales milestones under its Collaboration Agreement with MTPC ( MTPC Agreement ), subject to certain caps and other terms and conditions (see Note 6 for additional information).

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

1 unchanged sentence

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

Akebia Therapeutics, Inc.

| Form 10-Q | Page 6

Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

As of June 30, 2023, the Company had cash and cash equivalents of approximately $ 53.6 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 would 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.

2 unchanged sentences

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

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

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

The Company's significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2022, and notes thereto, which are included in the Company's Annual Report on Form 10-K, as amended by Amendment No.

1 on Form 10-K/A that was filed with the Securities and Exchange Commission ( SEC ) on August 28, 2023 ( 2022 Annual Report on Form 10-K/A ).

Since the date of those financial statements, there have been no material changes to the Company's significant accounting policies.

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

Interim results for the three months ended March 31, 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.

Interim results for the three and six months ended June 30, 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.

Basis of Presentation and Principals of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S.

( GAAP ) for interim financial reporting and as required by Regulation S-X, Rule 10-01.

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

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

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

All intercompany balances and transactions have been eliminated in consolidation.

Management has determined that the Company operates in one segment, which is the business of developing and commercializing novel therapeutics for people with kidney disease.

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the U.S.

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 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.

Certain monetary amounts, percentages, and other figures included elsewhere in these unaudited condensed consolidated financial statements have been subject to rounding adjustments.

Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.

Segment Information

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

The Company's chief operating decision maker as of June 30, 2023 was its President and Chief Executive Officer.

Based on the criteria established by Accounting Standards Codification 280, Segment Reporting , the Company has one operating and reportable segment, which is the business of developing and commercializing novel therapeutics for people with kidney disease.

Revision of Previously Issued Financial Statements

In connection with the preparation of its consolidated financial statements as of and for the three and six months ended June 30, 2023, the Company identified immaterial prior period errors related to the identification, evaluation and accounting for product returns in its previously issued consolidated financial statements.

In accordance with SAB No.

99, “Materiality,” and SAB No.

108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” and as described further in Note 3, Revision of Previously Issued Financial Statements, the Company evaluated the errors and determined the related impacts were not material to its financial statements for the prior year periods when they occurred, but that correcting the errors in the current period would be

Akebia Therapeutics, Inc.

| Form 10-Q | Page 7

Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

significant to the Company's results of operations for the three and six months ended June 30, 2023.

Accordingly, the Company has revised previously reported financial information for such immaterial errors.

A summary of revisions to certain previously reported financial information presented herein for comparative purposes is included in Note 3, Revision of Previously Issued Financial Statements.

Use of Estimates

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

Actual results may differ from those estimates.

Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements.

Management must apply significant judgment in this process.

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

Management bases its estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances.

In certain circumstances, management must apply significant judgment in this process.

In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends.

The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates.

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, 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.

Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to:

prepaid and accrued research and development expense, right-of-use assets and liabilities, embedded debt derivative, refund liabilities to customers, other long-term liabilities, stock-based compensation expense, and certain judgments regarding product and collaboration revenues including various rebates, returns and reserves related to product sales, non-cash interest expense on the liability related to sale of future royalties, inventories, income taxes, intangible asset and goodwill.

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

Changes in estimates are recorded in the period they become known.

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

Reconciliation of Cash, Cash Equivalents and Restricted Cash

In determining its cash, cash equivalents and restricted cash, t he Company considers only those highly liquid investments, readily convertible to cash which as of June 30, 2023 primarily included funds invested in money market funds.

The following table reconciles cash, cash equivalents and restricted cash reported within the Company's consolidated balance sheet to the total amounts showing in the consolidated statement of cash flows:

(in thousands) June 30, 2023 December 31, 2022

Cash and cash equivalents $ 53,572 $ 90,466

Restricted cash included in other long-term assets 1,722 2,703

Total cash, cash equivalents and restricted cash $ 55,294 $ 93,169

REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

As previously disclosed, including in the Company's Form 12b-25 filed with the SEC on August 10, 2023, in the course of preparing its financial statements for the quarter ended June 30, 2023, the Company identified certain accounting errors relating to the recording and reporting of reserves for returns of the Company’s product, Auryxia® (ferric citrate) at the time the Company acquired Keryx Biopharmaceuticals, Inc.

("Keryx") on December 12, 2018 and when calculating the product return reserves for subsequent annual and quarterly periods through March 31, 2023 (collectively, the "Product Return Reserve Errors").

This resulted in errors in the Company's consolidated financial statements previously filed by the Company with the SEC for each of the fiscal years ended December 31, 2022, 2021 and 2020.

Specifically, the Company utilized an incorrect methodology to calculate, record and report the Auryxia product return reserves at the time the Company acquired Keryx on December 12, 2018, which resulted in errors in the calculation of and understatement of goodwill of $ 2.6 million in each of the subsequent annual periods.

The Company continued to utilize the incorrect methodology to calculate, record and report the product return reserves in the consolidated financial statements it issued with respect to its fiscal years ended December 31, 2022, 2021 and 2020, which resulted in the product return reserves and other product revenue allowances being understated by $ 8.2 million, $ 7.9 million and $ 6.0 million as of December 31, 2022, 2021 and 2020, respectively.

A breakdown of the understatement of the product return reserves between current and long-term in the consolidated balance sheet are as follows:

Akebia Therapeutics, Inc.

| Form 10-Q | Page 8

Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands) 2020 2021 2022

Included in accrued expenses and other current liabilities:

Product return reserves and other product revenue allowances $ 1,956 $ 4,557 $ 5,051

Included in other long-term liabilities:

Product return reserves 4,048 3,360 3,132

Total understatement of product return reserves and other product revenue allowances $ 6,004 $ 7,917 $ 8,183

Further, as a result of the Product Return Reserve Errors, revenue was overstated by $ 0.1 million, $ 1.9 million and $ 0.6 million, and accounts receivable was understated by $ 1.1 million, $ 0.7 million and $ 0.7 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The changes did not impact cash or ending cash balances in the Company’s consolidated balance sheets in the periods presented in this report or in previously issued annual and quarterly financial statements.

In addition to the Product Return Reserve Errors, the Company has corrected other immaterial misstatements in the revised consolidated financial statements for the years ended December 31, 2022, 2021 and 2020 and related quarterly periods, including a $ 1.4 million to goodwill in each of the years ended December 31, 2022, 2021 and 2020 related to an excess purchase commitment recorded in connection with the Keryx acquisition.

The Company assessed the materiality of the Product Return Reserve Errors, including the presentation on prior period consolidated financial statements in accordance with the SEC Staff Accounting Bulletin No.

99, Materiality , codified in ASC Topic 250, Accounting Changes and Error Corrections ( ASC 250 ).

Based on this assessment, the Company evaluated the materiality of the impacts caused by the Product Return Reserve Errors and concluded that they do not result in a material misstatement of the Company's previously issued consolidated financial statements but would materially misstate the Company’s unaudited condensed consolidated financial statements for the three and six months ended June 30, 2023.

As a result, the Company determined that it was necessary to revise the consolidated financial statements it previously issued with respect to the fiscal years ended December 31, 2022, 2021 and 2020 and filed an amendment to its Annual Report on Form 10-K for the fiscal year ended December 31, 2022 with the SEC on August 28, 2023 to reflect the revisions.

The following tables reflect the impact of this revision on the Company’s condensed consolidated financial statements as of and for the three and six months ended June 30, 2022 ( dollars in thousands, except per share amounts ):

June 30, 2022

Condensed Consolidated Balance Sheet As Previously Reported Adjustment As Revised

Inventories $ 36,272 $ 3,954 $ 40,226

Accounts receivable, net 81,869 133 82,002

Total current assets 304,163 4,087 308,250

Goodwill 55,053 3,991 59,044

Total assets $ 521,804 $ 8,078 $ 529,882

Accrued expenses and other current liabilities $ 91,284 $ 3,721 $ 95,005

Total current liabilities 233,680 3,721 237,401

Other non-current liabilities 66,889 7,721 74,610

Total liabilities 459,504 11,442 470,946

Accumulated deficit ( 1,493,496 ) ( 3,363 ) ( 1,496,859 )

Total liabilities and stockholders' equity $ 521,804 $ 8,078 $ 529,882

Akebia Therapeutics, Inc.

| Form 10-Q | Page 9

Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Statement

of Operations and Comprehensive Income Three Months Ended June 30, 2022

As Previously Reported Adjustment As Revised

Product revenue, net $ 43,703 $ ( 394 ) $ 43,309

Selling, general and administrative 32,807 ( 567 ) 32,240

Operating income 33,902 173 34,075

Net income $ 29,276 $ 173 $ 29,449

Comprehensive income $ 29,276 $ 173 $ 29,449

Earnings per share - basic $ 0.16 $ — $ 0.16

Earnings per share - diluted $ 0.15 $ — $ 0.15

Six Months Ended June 30, 2022

Condensed Consolidated Statement of

Operations and Comprehensive Income As Previously Reported Adjustment As Revised

Product revenue, net $ 85,151 $ ( 470 ) $ 84,681

Cost of goods sold, product 31,923 771 32,694

Selling, general and administrative 77,134 ( 328 ) 76,806

Operating loss ( 24,591 ) ( 913 ) ( 25,504 )

Net loss and comprehensive loss ( 33,145 ) ( 913 ) ( 34,058 )

Net loss per share - basic and diluted $( 0.18 ) $( 0.01 ) $( 0.19 )

June 30, 2022

Condensed Consolidated Statement of Stockholders' (Deficit) Equity As Previously Reported Adjustment As Revised

Accumulated deficit $ ( 1,493,496 ) $ ( 3,363 ) $ ( 1,496,859 )

Net income $ 29,276 $ 173 $ 29,449

Six Months Ended June 30, 2022

Condensed Consolidated Statement of Cash Flows As Previously Reported Adjustment As Revised

Net loss $ ( 33,145 ) $ ( 913 ) $ ( 34,058 )

Adjustments to reconcile net loss to net cash used in operating activities:

Change in excess inventory purchase commitments ( 773 ) 5,627 4,854

Changes in operating assets and liabilities:

Accounts receivable ( 30,994 ) 573 ( 30,421 )

Inventory 1,159 ( 5,521 ) ( 4,362 )

Other long-term assets 9,347 665 10,012

Accrued expenses and other current liabilities ( 18,625 ) ( 839 ) ( 19,464 )

Other non-current liabilities ( 9,030 ) 408 ( 8,622 )

Net cash used in operating activities $ ( 52,280 ) $ — $ ( 52,280 )

Akebia Therapeutics, Inc.

| Form 10-Q | Page 10

Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following tables reflect the impact of this revision on the Company’s condensed consolidated financial statements as of and for the three months ended March 31, 2023 and 2022 ( dollars in thousands, except per share amounts ):

March 31, 2023

Condensed Consolidated Balance Sheet As Previously Reported Adjustment As Revised

Inventories $ 20,604 $ ( 194 ) $ 20,410

Accounts receivable, net 17,781 950 18,731

Prepaid expenses and other current assets 25,381 ( 678 ) 24,703

Total current assets 120,719 79 120,798

Goodwill 55,053 3,991 59,044

Total assets $ 276,858 $ 4,070 $ 280,928

Accrued expenses and other current liabilities $ 46,367 $ 4,712 $ 51,079

Total current liabilities 82,944 4,712 87,656

Other non-current liabilities 12,643 4,129 16,772

Total liabilities 291,210 8,841 300,051

Accumulated deficit ( 1,579,130 ) ( 4,773 ) ( 1,583,903 )

Total liabilities and stockholders' equity $ 276,858 $ 4,070 $ 280,928

Three Months Ended March 31, 2023

Condensed Consolidated Statement of

Operations and Comprehensive Income As Previously Reported Adjustment As Revised

Product revenue, net $ 34,828 $ ( 122 ) $ 34,706

Cost of goods sold, product 10,473 705 11,178

Selling, general and administrative 25,221 ( 168 ) 25,053

Operating loss ( 24,938 ) ( 661 ) ( 25,599 )

Net loss $ (26,217) $ (661) $ (26,878)

Comprehensive loss $ ( 26,217 ) $ ( 661 ) $ ( 26,878 )

Earnings per share - basic and diluted $ ( 0.14 ) $ ( 0.01 ) $ ( 0.15 )

March 31, 2023

Condensed Consolidated Statement of Stockholders' (Deficit) Equity As Previously Reported Adjustment As Revised

Accumulated deficit $ ( 1,579,130 ) $ ( 4,773 ) $ ( 1,583,903 )

Net loss $ ( 26,217 ) $ ( 661 ) $ ( 26,878 )

Three Months Ended March 31, 2023

Condensed Consolidated Statement of Cash Flows As Previously Reported Adjustment As Revised

Net loss $ ( 26,217 ) $ ( 661 ) $ ( 26,878 )

Changes in operating assets and liabilities:

Accounts receivable 21,399 154 21,553

Accrued expenses and other current liabilities ( 25,047 ) ( 68 ) ( 25,115 )

Other non-current liabilities — 573 573

Net cash used in operating activities $ ( 17,538 ) $ ( 2 ) $ ( 17,540 )

Akebia Therapeutics, Inc.

| Form 10-Q | Page 11

Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

Condensed Consolidated Balance Sheet As Previously Reported Adjustment As Revised

Inventories $ 39,422 $ 1,676 $ 41,098

Accounts receivable, net 64,582 776 65,358

Total current assets 302,687 2,452 305,139

Goodwill 55,053 3,991 59,044

Total assets $ 535,356 $ 6,443 $ 541,799

Accrued expenses and other current liabilities $ 109,660 $ 4,583 $ 114,243

Total current liabilities 253,914 4,583 258,497

Other non-current liabilities 77,743 5,398 83,141

Total liabilities 509,240 9,981 519,221

Accumulated deficit ( 1,522,772 ) ( 3,536 ) ( 1,526,308 )

Total liabilities and stockholders' equity $ 535,356 $ 6,443 $ 541,799

Three Months Ended March 31, 2022

Condensed Consolidated Statement of

Operations and Comprehensive Income As Previously Reported Adjustment As Revised

Product revenue, net $ 41,448 $ ( 76 ) $ 41,372

Cost of goods sold, product 22,333 772 23,105

Selling, general and administrative 44,327 239 44,566

Operating loss ( 58,493 ) ( 1,088 ) ( 59,581 )

Net loss $ (62,421) $ (1,088) $ (63,509)

Comprehensive loss $ ( 62,421 ) $ ( 1,088 ) $ ( 63,509 )

Earnings per share - basic and diluted $( 0.35 ) $ — $( 0.35 )

March 31, 2022

Condensed Consolidated Statement of Stockholders' (Deficit) Equity As Previously Reported Adjustment As Revised

Accumulated deficit $ ( 1,522,772 ) $ ( 3,536 ) $ ( 1,526,308 )

Net loss $ ( 62,421 ) $ ( 1,088 ) $ ( 63,509 )

Three Months Ended March 31, 2022

Condensed Consolidated Statement of Cash Flows As Previously Reported Adjustment As Revised

Net loss $ ( 62,421 ) $ ( 1,088 ) $ ( 63,509 )

Adjustments to reconcile net loss to net cash used in operating activities:

Change in excess inventory purchase commitments ( 773 ) 773 —

Changes in operating assets and liabilities:

Accounts receivable ( 13,707 ) ( 71 ) ( 13,778 )

Inventory ( 5,247 ) ( 3,243 ) ( 8,490 )

Other long-term assets 3,297 669 3,966

Accrued expenses and other current liabilities 4,426 2,960 7,386

Net cash used in operating activities $ ( 21,620 ) $ — $ ( 21,620 )

Akebia Therapeutics, Inc.

| Form 10-Q | Page 12

Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

Condensed Consolidated

Statement of Stockholders' (Deficit) Equity As Previously Reported Adjustment As Revised

Accumulated deficit $ ( 1,460,351 ) $ ( 2,448 ) $ ( 1,462,799 )

Net loss $ ( 282,840 ) $ 816 $ ( 282,024 )

The consolidated balance sheet as of December 31, 2022 has been revised in this Quarterly Report on Form 10-Q.

PRODUCT REVENUE AND RESERVES FOR VARIABLE CONSIDERATION

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sales of Auryxia.

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):

Total net product revenue was $ 42.2 million and $ 43.3 million for the three months ended June 30, 2023 and 2022, respectively, and $ 77.0 million and $ 84.7 million for the six months ended June 30, 2023 and 2022, respectively.

Product revenue allowance and reserve categories were as follows:

(in thousands) Chargebacks

and Discounts Rebates, Fees

Deductions Returns Total

Deductions Product Returns Total

Balance at December 31, 2022 $ 1,259 $ 30,043 $ 10,923 $ 42,225

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Credits/payments made ( 5,616 ) ( 41,474 ) ( 5,510 ) ( 52,600 )

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

Balance at June 30, 2023 $ 851 $ 25,366 $ 7,875 $ 34,092

(in thousands) Chargebacks

and Discounts Rebates, Fees

Deductions Product Returns Total

Balance at December 31, 2021 $ 1,047 $ 27,100 $ 10,065 $ 38,212

2 unchanged sentences

Credits/payments made ( 5,236 ) ( 43,803 ) ( 2,968 ) ( 52,007 )

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 $ 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 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,

Balance at June 30, 2022 $ 907 $ 26,643 $ 9,832 $ 37,382

Chargebacks, discounts and estimated product returns are recorded as a reduction of revenue in the period the related product revenue is recognized in the unaudited condensed consolidated statement of operations and comprehensive income (loss).

Chargebacks are recorded as a reduction to accounts receivable while discounts, rebates, fees and other deductions are recorded with a corresponding increase to accrued expenses and other current liabilities or accounts payable on the unaudited condensed consolidated balance sheets.

Estimated product returns for the period related to product sales are recorded as other long-term liabilities in the unaudited condensed consolidated balance sheet.

Accounts receivable, net related to product sales, was approximately $ 18.2 million and $ 37.3 million as of June 30, 2023 and December 31, 2022, respectively.

Akebia Therapeutics, Inc.

| Form 10-Q | Page 13

Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

LICENSE, COLLABORATION AND OTHER REVENUE

(in thousands)

MTPC Agreement $ 4,162 $ 7,962

The Company recognized the following revenues from its license, collaboration and other revenue agreements (in thousands):

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

License, collaboration and other revenue:

2023 2022 2023 2022

MTPC Collaboration Agreement $ 516 $ 434 $ 4,678 $ 8,398

Agreement 2,225 81,135 2,225 86,773

Otsuka International Agreement — — — 5,503

Total Proportional Performance Revenue $ 4,162 $ 19,103

JT and Torii 1,137 1,148

Total collaboration revenue $ 2,741 $ 81,569 $ 6,903 $ 100,674

JT and Torii Sublicense Agreement 1,391 1,487 2,528 2,633

Medice License Agreement 10,000 — 10,000 —

Total license, collaboration and other revenue $ 14,132 $ 83,056 $ 19,431 $ 103,307

March 31, 2023

Short-Term Long-Term Total

Deferred Revenue:

(in thousands)

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 three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31, 2023 Balance at

Period Additions Deductions Balance at End

The following table presents changes in the Company’s contract assets and liabilities (in thousands):

Six Months Ended June 30, 2023

Period Additions Deductions Balance

Contract assets:

Accounts receivable (1)

$ 1,901 $ 943 $ ( 2,319 ) $ 525

Prepaid expenses and other current assets $ 781 $ — $ ( 781 ) $ —

Contract liabilities:

Contract liability:

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

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Period Additions Deductions Balance

Contract assets:

Accounts receivable (1)

$ 19,094 $ 92,146 $ ( 54,614 ) $ 56,626

Prepaid expenses and other current assets $ 4,309 $ 9,550 $ ( 4,309 ) $ 9,550

2 unchanged sentences

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

(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.

Also excludes accounts receivable related to amounts due to the Company from product sales which are included in the accompanying unaudited condensed consolidated balance sheet as of March 31, 2023 and 2022.

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,

(1) Excludes accounts receivable related to amounts due to the Company from product sales of Auryxia which are included in the accompanying unaudited condensed consolidated balance sheet as of June 30, 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 June 30, Six Months Ended June 30,

Revenue Recognized in the Period:

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

Performance obligations satisfied in previous periods $ — $ —

Mitsubishi Tanabe Pharma Corporation Collaboration Agreement

Summary of Agreement

2023 2022 2023 2022

Deferred revenue — beginning of the period $ — $ 15,503 $ — $ 22,105

During the three and six months ended June 30, 2023 and 2022, the Company recognized no revenue from performance obligations satisfied in previous periods.

MTPC Collaboration 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 ), which was amended effective as of December 2, 2022.

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).

A more detailed description of the MTPC 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.

In February 2021, the Company entered into the Royalty Agreement

Akebia Therapeutics, Inc.

| Form 10-Q | Page 5

Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 6 for additional information).

See Note 5 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K/A for a more detailed description of the MTPC Agreement.

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

2 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.

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.

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

As of June 30, 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) $ 4.0 million in royalties from net sales of Vafseo.

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

As of June 30, 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 months ended March 31, 2023 and 2022, the Company recognized revenue from MTPC royalties totaling approximately $ 0.4 million and $ 0.3 million, respectively.

During the three and six months ended June 30, 2023, the Company recognized revenue from MTPC royalties totaling approximately $ 0.5 million and $ 0.9 million, respectively, and approximately $ 0.4 million and $ 0.7 million during the three and six months ended June 30, 2022, 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 6 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 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.

As of June 30, 2023, there were no accounts receivable, no deferred revenue, and no contract assets.

There were no asset or liability balances classified as long-term in the unaudited condensed consolidated balance sheet as of June 30, 2023.

Supply of Drug Product to MTPC

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

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

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

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

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.

See Note 5 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K/A for a more detailed description of this supply agreement.

On December 16, 2022, the Company, MTPC, and Esteve Química, S.A.

( Esteve ) executed an Assignment of Supply Agreement ( Esteve Assignment Agreement ), pursuant to which the Supply Agreement between the Company and Esteve ( Esteve Agreement ) (see Note 13) was assigned to MTPC.

The Esteve 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 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.

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.

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.

On April 25, 2017, the Company entered into the Otsuka International Agreement.

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.

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

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

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

The Company recognized no revenue and $ 3.7 million in revenue under the MTPC Supply Agreement during the three and six months ended June 30, 2023, respectively, and no revenue and $ 7.6 million during the three and six months ended June 30, 2022, respectively.

As of June 30, 2023, the Company recorded no accounts receivable, deferred revenue or other current liabilities.

Akebia Therapeutics, Inc.

| Form 10-Q | Page 6

Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cyclerion License Agreement

On June 4, 2021, the Company entered into a License Agreement ( Cyclerion Agreement ) with Cyclerion Therapeutics Inc.

( Cyclerion ), pursuant to which Cyclerion granted the Company an exclusive global license under certain intellectual property rights to research, develop and commercialize praliciguat, an investigational oral soluble guanylate stimulator.

Under the terms of the Cyclerion Agreement, the Company made an upfront payment of $ 3.0 million in cash to Cyclerion, which was paid and recorded to research and development expense in June 2021.

6 unchanged sentences

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

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.

A more detailed description of this agreement can be found in Note 5 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K/A.

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.

(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.

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

(now a part of CSL Limited) ( 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 ( FMCNA ) in the United States.

On April 8, 2019, the Company and CSL Vifor entered into an Amended and Restated License Agreement ( 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 ( 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 (collectively, the Supply Group ) in the United States ( Vifor 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 Vifor 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.

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.

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.

2 unchanged sentences

Investment Agreement

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.

In connection with the Vifor Agreement, in May 2017, the Company and CSL Vifor entered into an investment agreement ( First Investment Agreement ), pursuant to which the Company sold an aggregate of 3,571,429 shares of the Company’s common stock ( 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.

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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.

1 unchanged sentence

The 2017 Shares have not been registered pursuant to the Securities Act of 1933, as amended, or the Securities Act, and were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder.

In connection with entering into the Vifor Second Amended Agreement, on February 18, 2022, the Company and CSL Vifor entered into an investment agreement, or the Second Investment Agreement, pursuant to which the Company sold an aggregate of 4,000,000 shares of its common stock, or the 2022 Shares, to CSL Vifor for a total of $ 20 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 (Second Investment Agreement), pursuant to which the Company sold an aggregate of 4,000,000 shares of its common stock (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.

2 unchanged sentences

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.

See Note 5 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K/A for a more detailed description of the Vifor Second Amended Agreement.

Revenue Recognition

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

The transaction price at inception was comprised of:

1 unchanged sentence

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.

Also pursuant to the Vifor Second Amended Agreement, if the Centers for Medicare & Medicaid Services ( CMS ) determines that vadadustat is excluded from the Transitional Drug Add-on Payment Adjustment ( 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 March 31, 2023.

Therefore, the Company determined that the entire transaction price at inception was constrained under ASC 606, and the Company has recorded the transaction price of $ 43.3 million to long-term deferred revenue as of June 30, 2023.

Refund Liability to Customer

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

The $ 40 million initial contribution to the Working Capital Fund 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 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.

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 ( Working Capital Fund ), which amount of funding will fluctuate, and which funding the Company is required to repay to CSL Vifor over time.

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 Vifor Territory and agreed upon vadadustat inventory levels held by the Company for the Vifor Territory.

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

5 unchanged sentences

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

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 $ 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.

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

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

The amortization of the discount was $ 0.9 million and $ 1.7 million for the three and six months ended June 30, 2023, respectively, and $ 1.1 million for the three and six months ended June 30, 2022.

The amortization of the deferred gain was $ 1.0 million and $ 2.0 million for the three and six months ended June 30, 2023, respectively, and $ 0.8 million for the three and six months ended June 30, 2022.

As of June 30, 2023, the $ 40.6 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.

Panion License Agreement

The Company had a license agreement, which was amended from time to time, with Panion & BF Biotech, Inc.

( Panion ), under which Keryx, the Company's wholly owned subsidiary, was the contracting party ( Panion License Agreement ), pursuant to which Keryx in-licensed the exclusive worldwide rights, excluding certain Asian-Pacific countries ( 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 ( Panion Amended License Agreement ), which amends and restates in full the Panion License Agreement, effective as of April 17, 2019.

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

2 unchanged sentences

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

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 $ 2.6 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.

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.

See Note 5 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K/A for a more detailed description of this license agreement.

The Company recognized royalty payments due to Panion of approximately $ 3.2 million and $ 6.0 million during the three and six months ended June 30, 2023, respectively, and $ 3.5 million and $ 6.6 million during the three and six months ended June 30, 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.

JT and Torii Sublicense Agreement

The Company has an Amended and Restated Sublicense Agreement, which was amended in June 2013, with JT and Torii ( 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.

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

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

See Note 5 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K/A for a more detailed description of this sublicense agreement.

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

1 unchanged sentence

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 $ 1.1 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 recognized license revenue of $ 1.4 million and $ 2.5 million during the three and six months ended June 30, 2023, respectively, and $ 1.5 million and $ 2.6 million during the three and six months ended June 30, 2022, respectively, related to royalties earned on net sales of Riona in Japan.

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

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.

Averoa License Agreement

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

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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 and Averoa will establish a joint steering committee to oversee the development, manufacturing and commercialization of the Averoa 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 Averoa 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 Averoa 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.

The Company did not receive any consideration under this agreement as of June 30, 2023.

A more detailed description of this license agreement can be found in Note 5 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K/A.

Medice License Agreement

On May 24, 2023 ( Medice Effective Date ), the Company and MEDICE Arzneimittel Pütter GmbH & Co.

KG ( Medice ) entered into a license agreement ( Medice License Agreement ), pursuant to which the Company granted to Medice an exclusive license to develop and commercialize vadadustat ( Medice Licensed Product ) for the treatment of anemia in adult patients with chronic kidney disease in the European Economic Area, the United Kingdom, Switzerland and Australia ( Medice Territory ).

Under the Medice License Agreement, the Company is entitled to receive the following payments:

(i) an up-front payment of $ 10.0 million,

(ii) commercial milestone payments up to an aggregate of $ 100.0 million, and

(iii) tiered royalties ranging from 10 % to 30 % of Medice's annual net sales of the Medice Licensed Product in the Medice Territory, subject to reduction in certain circumstances.

The royalties will expire on a country-by-country basis upon the latest to occur of (a) the date of expiration of the last-to-expire valid claim of any Company, Medice, or joint patent that covers the Medice Licensed Product in such country in the Medice Territory, (b) the date of expiration of data or regulatory exclusivity for the Medice Licensed Product in such country in the Medice Territory, and (c) the date that is 12 years from first commercial sale of the Medice Licensed Product in such country in the Medice Territory.

Under the Medice License Agreement, the Company retains the right to develop the Medice Licensed Product for non-dialysis patients with anemia due to chronic kidney disease in the Medice Territory.

If the Company develops the Medice Licensed Product for non-dialysis patients and such Medice Licensed Product receives marketing approval in the Medice Territory, Medice will commercialize the Medice Licensed Product for both indications in the Medice Territory.

In this instance, the Company would receive 70 % of the net product margin of any sales of the Medice Licensed Product in the non-dialysis patient population, unless Medice requests to share the cost of the development necessary to gain approval to market the Medice Licensed Product for non-dialysis patients in the Medice Territory and the parties agree on alternative financial terms.

If the Company develops the licensed product for non-dialysis patients, the Company has determined that the activities under the Medice License Agreement represent joint operating activities in which both parties are active participants and of which both parties are exposed to significant risks and rewards that are dependent on the success of the activities.

Accordingly, if the Company develops the Medice Licensed Product for non-dialysis patients the Company will account for the joint activities in accordance with ASC No.

808, Collaborative Arrangements (ASC 808).

Additionally, the Company has determined that in the context of the development of the Medice Licensed Product for non-dialysis patients, Medice does not represent a customer as contemplated by ASC 606-10-15, Revenue from Contracts with Customers – Scope and Scope Exceptions .

As a result, the activities conducted pursuant to development activities for the Medice Licensed Product for non-dialysis patients will be accounted for as a component of the related expense in the period incurred.

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

The Medice License Agreement expires on the date of expiration of all payment obligations due thereunder with respect to the Medice Licensed Product in the last country in the Medice Territory, unless earlier terminated in accordance with the terms of the Medice License Agreement.

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

Medice has the right to terminate the Medice License Agreement in its

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

entirety for convenience upon 12 months' prior written notice delivered on or after the date that is 12 months after the Medice Effective Date.

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

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

Revenue Recognition

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

The Company's arrangement with Medice contains one material promise under the contract at inception, which is the exclusive license under the Company's intellectual property to develop and commercialize the Medice Licensed Product in the Medice Territory during the term of the Medice License Agreement and use the Akebia Trademark solely in connection with the commercialization of the Medice Licensed Product ( License Deliverable ).

The Company identified one performance obligation in connection with its obligations under the Medice License Agreement, which is the License Deliverable ( License Performance Obligation ).

The transaction price at inception was comprised of the up-front payment of $ 10.0 million, of which the Company received $ 8.6 million as of June 30, 2023.

The remaining $ 1.4 million was withheld by the German Federal Tax Office and was recorded to other long-term assets on the condensed consolidated balance sheet as of June 30, 2023.

The Company allocated the up-front payment of $ 10.0 million to the License Performance Obligation.

Pursuant to the terms of the Medice License Agreement, this payment from Medice is non-refundable and non-creditable against any other amount due to the Company.

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

The License Performance Obligation was satisfied as of the Medice Effective Date of the Medice License Agreement.

As such, the Company recognized the $ 10.0 million up-front payment as License, collaboration, and other revenue in the condensed consolidated statement of operations and comprehensive income (loss) during the three and six months ended June 30, 2023.

Past Collaboration and License Agreements

Collaboration and License Agreement with Otsuka Pharmaceutical Co.

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

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 ( 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.

During the three and six months ended June 30, 2022, the Company recognized collaboration revenue totaling $ 81.1 million and $ 86.8 million, respectively, with respect to the Otsuka U.S.

During the three months ended June 30, 2023, the Company recognized $ 2.2 million in collaboration revenue in connection with the Packaging Validation Transfer Agreement entered into with Otsuka on April 20, 2023.

The Company evaluated the agreement under ASC 606 and concluded it was closely tied to the prior collaboration revenue agreements and under ASC606 recognized collaboration revenue in the current quarter.

A more detailed description of the Otsuka U.S.

Agreement can be found in Note 5 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K/A.

International Collaboration and License Agreement with Otsuka Pharmaceutical Co.

On April 25, 2017, the Company entered into the Otsuka International Agreement.

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 ).

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

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the three and six months ended June 30, 2022, the Company recognized no collaboration revenue and $ 5.5 million with respect to the Otsuka International Agreement, respectively.

A more detailed description of this collaboration agreement and the Company's evaluation of this agreement under ASC 606 can be found in Note 5 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K/A .

LIABILITY RELATED TO SALE OF FUTURE ROYALTIES

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

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

The Company received $ 44.8 million from HCR (net of certain transaction expenses) under the Royalty Agreement.

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

The annual effective interest rate as of June 30, 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 three months ended March 31, 2023:

March 31, 2023

(in thousands)

A more detailed description of Royalty Agreement can be found in Note 7 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K/A.

The following table shows the activity within the liability account for the six months ended June 30, 2023 (in thousands):

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

MTPC royalties payable ( 936 )

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

Liability related to sale of future royalties, ending balance at June 30, 2023 $ 56,548

FAIR VALUE OF FINANCIAL INSTRUMENTS

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 March 31, 2023 and December 31, 2022 are summarized below:

Fair Value Measurements Using

Level 1 Level 2 Level 3 Total

(in thousands)

March 31, 2023

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

$ 56,953 $ — $ — $ 56,953

Derivative liability $ — $ — $ 760 $ 760

$ — $ — $ 760 $ 760

Fair Value Measurements Using

Level 1 Level 2 Level 3 Total

(in thousands)

The tables below present certain assets and liabilities measured at fair value categorized by the level of input used in the valuation of each asset and liability (in thousands):

June 30, 2023

Level 1 Level 2 Level 3 Total Fair Value

Cash equivalents:

Money market funds $ 17,929 $ — $ — $ 17,929

Long-term liability:

Embedded debt derivative $ — $ — $ 760 $ 760

December 31, 2022

Cash and cash equivalents $ 90,466 $ — $ — $ 90,466

$ 90,466 $ — $ — $ 90,466

Derivative liability $ — $ — $ 760 $ 760

$ — $ — $ 760 $ 760

The Company’s Loan Agreement with Pharmakon (see Note 10) contains certain provisions that change the underlying cash flows of the debt instrument, including a potential extension to the interest-only period dependent on both (i) no event of default having occurred and continuing and (ii) the Company achieving certain regulatory and revenue conditions.

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

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

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

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

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

The 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 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.

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

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

Balance at December 31, 2022 $ 760

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

Balance at March 31, 2023 $ 760

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:

March 31, 2023 December 31, 2022

(in thousands)

Raw materials $ 503 $ 610

Level 1 Level 2 Level 3 Total Fair Value

Cash equivalents:

Money market funds $ 52,442 $ — $ — $ 52,442

Long-term liability:

Embedded debt derivative $ — $ — $ 760 $ 760

Cash and cash equivalents —Money market funds included within cash and cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

Akebia Therapeutics, Inc.

| Form 10-Q | Page 12

Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The Company did not meet one of the regulatory conditions and therefore, the Company is no longer eligible for the interest-only extension period and this no longer changes the underlying cash flows of the debt instrument.

The Company concluded the acceleration of the obligations under the Loan Agreement under certain events of default, and under certain circumstances, the application of a default interest rate on all outstanding obligations during the occurrence and continuance of an event of default represent a single compound embedded debt derivative required to be bifurcated from the debt host instrument that is required to be re-measured at fair value on a quarterly basis.

The estimated fair value of the embedded debt derivative on both June 30, 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 cash flow assumptions.

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

The determination of the fair value of the embedded debt derivative includes inputs not observable in the market and as such, represents Level 3 measurement.

The methodology utilized requires inputs based on certain subjective assumptions, specifically, probabilities of acceleration of the obligations under the Loan Agreement by Pharmakon under certain events of default.

The probabilities used in the valuation of the embedded debt derivative included a 95 % probability that the obligations under the Loan Agreement will not be accelerated due to an event of default under the Loan Agreement.

The fair value of the embedded debt derivative related to the Company’s Loan Agreement with Pharmakon was $ 0.8 million as of June 30, 2023 and December 31, 2022.

Inventories related to our commercial product, Auryxia, consists of the following (in thousands):

June 30, 2023 December 31, 2022

Work-in-process $ 8,571 $ 7,892

Finished goods 12,334 13,676

Total inventory $ 21,107 $ 22,372

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

March 31, 2023 December 31, 2022

(in thousands)

Balance Sheet Classification:

Inventory $ 20,604 $ 21,762

Other assets 503 610

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 $ 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 March 31, 2023 and December 31, 2022 (in thousands):

March 31, 2023

Gross Carrying

Value Accumulated Amortization Total

Intangible assets:

Developed product rights for Auryxia $ 213,603 $ ( 150,529 ) $ 63,074

Total $ 213,603 $ ( 150,529 ) $ 63,074

December 31, 2022

Inventories, current $ 20,905 $ 21,568

Raw materials included in other long-term assets 229 610

Total inventories $ 21,134 $ 22,178

Inventory written down as a result of excess, obsolescence, scrap or other reasons charged to cost of goods in the unaudited condensed consolidated statement of operations and comprehensive income (loss) totaled approximately $ 0.3 million and $ 2.1 million during the three months ended June 30, 2023 and 2022, respectively, and $ 0.6 million and $ 7.4 million during the six months ended June 30, 2023 and 2022, respectively.

In accordance with GAAP, to date, the Company recorded prepaid amounts related to vadadustat drug substance as prepaid manufacturing costs.

As of June 30, 2023 and December 31, 2022, the Company has $ 15.6 million included in other current assets on the condensed consolidated balance sheet.

Released batches are expensed as research and development expense.

During the quarter ended June 30, 2023, vadadustat received marketing authorization in the European Commission ( EC ) under the trade name Vafseo.

Future costs associated with converting the drug substance to finished goods will be capitalized as inventory on the condensed consolidated balance sheet of the Company.

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Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

INTANGIBLE ASSET AND GOODWILL

Intangible Asset

Intangible asset, net of accumulated amortization, prior impairments and adjustments as of June 30, 2023 and December 31, 2022 consisted of the following (in thousands):

Three Months Ended June 30, 2023 December 31, 2022

Intangible asset:

Gross Carrying

Value Accumulated

Amortization Total

Intangible assets:

Developed product rights for Auryxia $ 213,603 $ ( 141,519 ) $ 72,084

Total $ 213,603 $ ( 141,519 ) $ 72,084

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 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 March 31, 2023 and December 31, 2022.

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

Goodwill is evaluated for impairment at the reporting unit level on an annual basis as of October 1, and more frequently if indicators are present or changes in circumstances suggest that it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

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 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.

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

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

As a result of the significance of goodwill, the Company's results of operations and financial position in a future period could be negatively impacted should an impairment test be triggered that results in an impairment of goodwill.

Accrued Expenses

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

March 31, 2023 December 31, 2022

(in thousands)

Value Accumulated Amortization Net Book Value Net Book Value Estimated Useful Life

Developed product rights for Auryxia $ 214,705 $ ( 160,642 ) $ 54,063 $ 72,084 6 years

The Company recorded $ 9.0 million in amortization expense for each of the three month periods ended June 30, 2023 and 2022, and $ 18.0 million for each of the six month periods ended June 30, 2023 and 2022.

On December 12, 2018, in connection with the consummation of the merger ( Merger ) of the Company and Keryx Biopharmaceuticals, Inc.

( Keryx ), Keryx became a wholly owned subsidiary of the Company, and the Company recorded goodwill representing the excess of the purchase price over the fair market value, at the date of the Merger, of the assets that were not individually identified and separately recognized as net assets.

As of June 30, 2023 and December 31, 2022, the Company had goodwill of $ 59.0 million and no accumulated impairment losses related to goodwill.

The Company's assessment included 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.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consists of the following (in thousands):

June 30, 2023 December 31, 2022

Product revenue allowances $ 23,303 $ 26,268

Accrued clinical 1,148 5,755

Accrued payroll and related 5,717 11,481

Lease liability 5,160 4,744

Product return reserves, current portion 4,626 7,789

Clinical trial costs 754 5,755

Compensation and related benefits 6,582 11,481

Operating lease liabilities, current portion 4,757 4,744

Royalties 3,198 3,804

Professional fees 2,800 1,886

Accrued commercial manufacturing 1,299 4,310

Accrued restructuring 1,286 2,751

Accrued other 5,132 7,413

Total accrued expenses $ 46,367 $ 70,997

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

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

Accrued manufacturing costs 5,578 4,310

Restructuring costs 334 2,751

Other 4,476 6,989

Total accrued expenses and other current liabilities $ 56,408 $ 75,777

Accrued manufacturing costs includes the costs associated with the Company's commercial product Auryxia and vadadustat for which the Company is seeking approval from the FDA to market in the U.S.

and for which the Company recently signed a license agreement with Medice to market in Europe and other territories (see Note 5 for further details).

Pharmakon Term Loans

On November 11, 2019, the Company, with Keryx as guarantor, entered into a loan agreement ( Loan Agreement ), with BioPharma Credit PLC as collateral agent and a lender ( Collateral Agent ), and BioPharma Credit Investments V (Master) LP as a lender.

BioPharma Credit PLC subsequently transferred its interest in the loans, solely in its capacity as a lender, to its

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Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

affiliate, BPCR Limited Partnership.

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

The first tranche of $ 80.0 million, or Tranche A, was drawn on November 25, 2019, 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.

The Loan Agreement, as amended, consists of a secured term loan facility in an aggregate amount of up to $ 100.0 million ( Term Loans ), which was made available under two tranches:

(i) the first tranche of $ 80.0 million ( Tranche A ), and (ii) the second tranche of $ 20.0 million ( Tranche B ).

On November 25, 2019, the Company drew $ 77.3 million on Tranche A, net of fees and expenses, incurred by Pharmakon and reimbursed by the Company, or Lender Expenses.

On December 10, 2020, the Company drew $ 20.0 million on Tranche B, net of immaterial Lender Expenses and issuance costs.

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

The Company and Keryx entered into a Guaranty and Security Agreement with the Collateral Agent, or the Guaranty and Security Agreement, on the Tranche A Funding Date.

Pursuant to the Guaranty and Security Agreement, the Company’s obligations under the Term Loans are unconditionally guaranteed by Keryx, or the Guarantee.

The Company and Keryx entered into a Guaranty and Security Agreement with the Collateral Agent ( Guaranty and Security Agreement ) on the Tranche A Funding Date.

Pursuant to the Guaranty and Security Agreement, the Company’s obligations under the Term Loans are unconditionally guaranteed by Keryx ( Guarantee ).

Additionally, the obligations of the Company and Keryx under the Term Loans and the Guarantee are secured by a first priority lien on certain assets of the Company and Keryx, including Auryxia and certain related assets, cash and certain equity interests held by the Company and Keryx, collectively the Collateral.

The Term Loans bear interest at a floating rate per annum equal to the three-month LIBOR rate plus 7.50 %, subject to a 2.00 % LIBOR floor and a 3.35 % LIBOR cap, payable quarterly in arrears.

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

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.

The Term Loans bear interest through maturity at a variable rate, payable quarterly in arrears.

Through June 30, 2023, this rate was based upon the three-month LIBOR rate plus 7.50 %, subject to a 2.00 % LIBOR floor and a 3.35 % LIBOR cap.

On June 30, 2023, the three-month LIBOR rate was above the 3.35 % LIBOR cap, therefore, the Company's interest rate as of June 30, 2023 was 10.85 %.

On June 29, 2023, the Company and Pharmakon entered into the Third Amendment to the Loan Agreement, which replaced LIBOR with the Secured Overnight Financing Rate (SOFR ), effective June 30, 2023.

The three-month SOFR rate was also above the 3.35 % SOFR cap and therefore, the Company's interest rate as of June 30, 2023 would still have been 10.85 % should SOFR been utilized for the quarter ended June 30, 2023.

On August 11, 2023, the Company received an extension from Pharmakon of the deadline in the Loan Agreement with respect to the Company's obligation to deliver quarterly financial statements for the period ended June 30, 2023 through August 28, 2023.

The Term Loans will mature on November 25, 2024 ( Maturity Date ).

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 ( Amortization Schedule ).

During the three and six months ended June 30, 2023, the Company made quarterly principal payments under the Term Loans totaling $ 8.0 million and $ 24.0 million, respectively.

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.

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

If the Company prepays the loan prior to the Maturity Date, it will be required to make a prepayment fee.

The prepayment fee would be 1.00 % on or after the third anniversary, but prior to the fourth anniversary, of the applicable Funding Date of Tranche A, and 0.50 % on or after the fourth anniversary of the applicable Funding Date of Tranche A 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, which includes a new entity or group owning a majority (greater than 50%) of the Company's voting stock, triggers a mandatory prepayment of the Term Loans.

On February 18, 2022, the Loan Agreement was amended by the First Amendment and Waiver ( 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.

2 unchanged sentences

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

As of March 31, 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.

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

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

As of June 30, 2023 and December 31, 2022, the Company determined that no events of default had occurred.

Akebia Therapeutics, Inc.

| Form 10-Q | Page 15

Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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.

See Note 12 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K/A for further details.

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.

3 unchanged sentences

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.

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

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 embedded derivative that is required to be re-measured at fair value on a quarterly basis.

The fair value of the embedded debt derivative related to the Company’s Loan Agreement with Pharmakon was $ 0.8 million as of June 30, 2023 and December 31, 2022.

The Company classified the embedded debt derivative as a long-term liability on the unaudited condensed consolidated balance sheet as of June 30, 2023.

The Company recognized interest expense related to the Loan Agreement of $ 1.6 million and $ 2.7 million during the three months ended June 30, 2023 and 2022, respectively, and $ 3.3 million and $ 5.4 million during the six months ended June 30, 2023 and 2022, respectively.

Unamortized discount and issuance costs were $ 0.5 million as of June 30, 2023.

CAPITAL STOCK, STOCK-BASED COMPENSATION AND BENEFIT PLAN

Authorized and Outstanding Capital Stock

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

As of March 31, 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.

As of June 30, 2023, the authorized capital stock of the Company included 350,000,000 shares of common stock, $ 0.00001 par value per share, of which 188,128,869 and 184,135,714 shares were issued and outstanding as of June 30, 2023 and December 31, 2022, respectively;

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

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.

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

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

During the three months ended March 31, 2022, the Company sold 404,600 shares of common stock under this program with net proceeds (after deducting commissions and other offering expenses) of $ 0.8 million.

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

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

Also, on April 7, 2022, the Company filed a prospectus supplement relating to the Sales Agreement, pursuant to which it is able to offer and sell under the Sales Agreement up to $ 26.0 million of its common stock at current market prices from time to time.

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

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

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

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

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 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.

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

The Company’s employees, officers, directors and consultants and advisors are eligible to receive awards under the 2014 Plan.

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

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

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

On December 12, 2018, in connection with the consummation of the merger, 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 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.

Terminated 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.

( 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.

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

On March 16, 2022, the

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Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Company terminated the Prior Sales Agreement.

Stock-Based Compensation and Benefit Plans

The Company incurred stock-based compensation expenses of $ 3.5 million and $ 6.0 million for the three and six months ended June 30, 2023, respectively and $ 6.9 million and $ 11.5 million for the three and six months ended June 30, 2022, respectively.

Equity Incentive Plans

The following table contains information about our equity plans:

June 30, 2023

Title of Plan Group Eligible Type of Award Granted (or to be Granted) Awards Outstanding Additional Awards Authorized for Grant

Keryx Equity Plans (1)(2) *

Employees, directors and consultants Stock options and RSUs 287,100 —

Akebia Therapeutics, Inc.

Amended and Restated 2008 Equity Incentive Plan ( the 2008 Plan ) (2)

Employees, directors and consultants Stock options and RSUs 419 —

Akebia Therapeutics, Inc.

2014 Incentive Plan, as amended (2)

( the 2014 Plan )

(replaces 2008 Plan)

Employees, directors, consultants and advisors Stock options, RSUs, SARs and performance awards 17,513,530 —

Akebia Therapeutics, Inc.

2023 Stock Incentive Plan ( the 2023 Plan )

(replaces 2014 Plan)

Employees, officers, directors, consultants and advisors Stock options, SARs, restricted stock, unrestricted stock, RSUs, performance awards, other share-based awards and dividend equivalents 549,000 16,256,679

(1) The Keryx Equity Plans consist of the Keryx Biopharmaceuticals, Inc.

1999 Share Option Plan, Keryx Biopharmaceuticals, Inc., as amended, the 2004 Long-Term Incentive Plan, as amended, the Keryx Biopharmaceuticals, Inc.

2007 Incentive Plan, the Keryx Biopharmaceuticals Inc.

Amended and Restated 2013 Incentive Plan and the Keryx Biopharmaceuticals, Inc.

2018 Equity Incentive Plan.

(2) Shares are no longer being issued under these plans.

Common Stock Options and SARs

During the six months ended June 30, 2023, the Company issued 2,564,500 options to employees under the 2014 Plan and 315,000 options to directors under the 2023 Plan.

During the six months ended June 30, 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.

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

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

During the six months ended June 30, 2023, the Company granted 75,000 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 72,000 options remained outstanding as of June 30, 2023.

The Company grants annual service-based stock options to employees and directors and SARs to certain executives under the 2023 and 2014 Plans.

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 six months ended June 30, 2023, the Company granted options not

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

in connection with the annual grant process with an aggregate grant date fair values of $ 0.1 million calculated using the Black-Scholes option-pricing model.

The fair value of stock options that vested during the six months ended June 30, 2023 was $ 4.1 million.

The combined stock option activity for the six months ended June 30, 2023, is as follows:

Options Weighted Average Exercise Price Weighted-Average Remaining Contractual Life (years) Aggregate Intrinsic Value (in thousands)

Outstanding at December 31, 2022 11,775,411 $ 5.82 7.26 years —

Granted 3,514,813 $ 0.69 — —

Exercised — — — —

Canceled and forfeited ( 1,130,737 ) $ 6.35 — —

Outstanding at June 30, 2023 14,153,498 $ 4.50 7.33 years $ 1,435,662

Exercisable at June 30, 2023 7,800,000 $ 6.64 6.01 years

Performance Awards

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.

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 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:

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

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

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

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

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, regulatory and corporate milestones.

The Company also grants performance-based restricted stock units ( PSUs ) to employees under the 2023 Plan and the 2014 Plan.

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

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

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

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

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

The Company did not issue any performance-based stock options under the 2023 Plan or the 2014 Plan during the six months ended June 30, 2023.

Restricted Stock Units

Generally, restricted stock units ( RSUs ) granted by the Company vest in one of the following ways:

The grant-date fair value of the RSUs is recognized as expense on a straight-line basis.

The Company determines the fair value of the RSUs based on the closing price of the common stock on the date of the grants.

RSU activity is as follows:

2014 Plan 2023 Plan

Number of Shares Weighted Average Fair Value Number of Shares Weighted Average Fair Value

Outstanding as of December 31, 2022 5,674,406 $ 2.10 — —

Granted 2,759,675 $ 0.68 210,000 $ 1.20

Forfeited and canceled ( 564,606 ) $ 1.00 — —

Outstanding as of June 30, 2023 7,869,475 $ 1.30 210,000 $ 1.20

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As of June 30, 2023, there was $ 4.4 million of unrecognized compensation costs related to time-based RSUs which is expected to be recognized over a weighted-average period of 1.77 years.

Employee Stock Purchase Plan

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

Under the ESPP substantially all employees may voluntarily enroll to purchase shares of the Company’s common stock through payroll deductions at a price equal to 85 % of the lower of the fair market values of the stock as of the beginning or the end of the six-month offering period.

An employee's payroll deductions under the ESPP are limited to 15 % of the employee's compensation, and an employee may not purchase more than $ 25,000 worth of stock during any calendar year.

In addition, an employee may not purchase more than 1,500 shares in any offering period.

As of June 30, 2023, a total of 4,734,495 shares of the Company’s common stock are available for future issuance under the ESPP.

The Company issued 103,500 shares under the ESPP during the six months ended June 30, 2023.

Stock-Based Compensation Expense

The Black-Scholes option pricing model is used to estimate the fair value of the stock options.

The weighted-average assumptions used in calculating the fair values the rights to acquire stock under the 2023 Plan and the 2014 Plan were as follows:

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

Stock Options 2023 2022 2023 2022

Risk-free interest rate 3.67 % - 3.99 % 2.80 % - 3.01 % 3.54 % - 3.99 % 1.69 % - 3.01 %

Expected volatility 102.31 % - 111.71 % 87.99 % - 91.57 % 100.97 % - 111.71 % 79.77 % - 91.57 %

Expected term (years) 5.51 years - 6.25 years 5.51 years - 6.25 years 5.51 years - 6.25 years 5.51 years - 6.25 years

Expected dividend yield — % — % — % — %

Fair value at grant date $ 0.97 $ 0.31 $ 0.56 $ 1.21

The Company has classified stock-based compensation in its condensed consolidated statement of operations and comprehensive income (loss) and comprehensive loss as follows (in thousands):

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

2023 2022 2023 2022

Research and development $ 605 $ 905 $ 1,341 $ 2,094

Selling, general and administrative 2,685 2,709 4,220 6,056

Restructuring $ 200 $ 3,303 $ 418 $ 3,303

Total stock-based compensation $ 3,490 $ 6,917 $ 5,979 $ 11,453

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COMMITMENTS AND CONTINGENCIES

Cambridge Leases

The Company leases approximately 65,167 square feet of office and lab space in Cambridge, Massachusetts under a lease which was most recently amended in November 2020 (collectively, the Cambridge Lease ).

Under the Third Amendment to the Cambridge Lease, or the Third Amendment, executed in July 2016, total monthly lease payments under the initial base rent were approximately $ 242,000 and are subject to annual rent escalations.

Under the Third Amendment to the Cambridge Lease ( Third Amendment ), executed in July 2016, total monthly lease payments under the initial base rent were approximately $ 0.2 million and are subject to annual rent escalations.

In addition to such annual rent escalations, base rent payments for a portion of said premises commenced on January 1, 2017 in the monthly amount of approximately $ 22,000 .

The Fourth Amendment to the Cambridge Lease, executed in May 2017, provided additional storage space to the Company and did not impact rent payments.

In April 2018, the Company entered into a Fifth Amendment to the Cambridge Lease, or the Fifth Amendment, for an additional 19,805 square feet of office space on the 12t h floor.

In April 2018, the Company entered into a Fifth Amendment to the Cambridge Lease ( Fifth Amendment ) for an additional 19,805 square feet of office space on the 12t h floor.

Monthly lease payments for the existing 45,362 square feet of office and lab space, under the Third Amendment, remain unchanged.

The new space leased by the Company was delivered in September 2018 and additional monthly lease payments of approximately $ 135,000 commenced in February 2019 and are subject to annual rent escalations, which commenced in September 2019.

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 new space leased by the Company was delivered in September 2018 and additional monthly lease payments of approximately $ 0.1 million commenced in February 2019 and are subject to annual rent escalations, which commenced in September 2019.

In November 2020, the Company entered into a Sixth Amendment to the Cambridge Lease ( 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 commenced in December 2022.

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.

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

The First Lease Amendment includes five months of free rent starting in March 2023 and monthly lease payments of $ 200,122 commencing on August 1, 2023, with an annual rent escalation of approximately 2 % commencing on August 1, 2024.

The First Lease Amendment also includes a landlord's allowance for certain leasehold improvements to the premises in an amount of up to $ 1,954,680 , provided that such allowance must be used prior to August 1, 2024.

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

The term of the Boston Lease office space expires on July 31, 2031, with an extension option for one additional five-year term available.

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

The renewal option in this real estate lease was not included in the calculation of the right-of-use asset and operating lease liability as the renewal is not reasonably certain.

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

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

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

The lease agreements do not contain residual value guarantees.

Operating lease costs were $ 1.8 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 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 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.

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

Remaining 2023 $ 5,248

Thereafter $ 9,631

Total $ 40,032

Operating lease costs were $ 1.4 million and $ 1.8 million for the three months ended June 30, 2023 and 2022, respectively, and $ 3.2 million and $ 3.6 million for the six months ended June 30, 2023 and 2022, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities was $ 1.4 million and $ 1.8 million for the three months ended June 30, 2023 and 2022, respectively, and $ 3.1 million and $ 3.7 million for the six months ended June 30, 2023 and 2022, respectively.

The security deposit in connection with the Cambridge Lease is $ 1.7 million in the form of a letter of credit, which is included as restricted cash in prepaid expenses and other current assets in the Company’s unaudited condensed consolidated balance sheets as of June 30, 2023.

The Company has not entered into any material short-term leases or financing leases as of June 30, 2023.

Former Boston Lease

Previously, the Company leased 27,924 square feet of office space in Boston, Massachusetts ( Boston Lease ).

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

The First Lease Amendment included five months of free rent starting in March 2023 and monthly lease payments of $ 0.2 million commencing on August 1, 2023, with an annual rent escalation of approximately 2 % commencing on August 1, 2024.

In May 2023, the Company entered into an Assignment and Assumption of Lease Agreement ( Lease Assignment Agreement ) with LG Chem Life Sciences Innovation Center, Inc.

( LG Chem ), pursuant to which the Company assigned all of its rights, title, and interest in, to, and under the Boston Lease to LG Chem, or the Assignment.

As part of the Lease Assignment Agreement, the Company made a payment to LG Chem of $ 1.3 million (Lease A ssignment Amount ) and LG Chem assumed all of the rights and obligations of the Company under the Boston Lease.

Subsequent to the Assignment, the Company has no further obligations for rent or other payments under the Boston Lease.

In accordance with ASC 842, Leases , the Company wrote off the right-of-use asset and lease liability associated with the Boston Lease, and recognized the difference between the right-of-use asset and the lease liability offset by the Assignment Amount as a loss on lease termination in the condensed consolidated statement of operations and comprehensive income (loss) of $ 0.5 million during the three and six months ended June 30, 2023.

Under the terms of the Lease Assignment Agreement the Company was entitled to, and received back, its security deposit of $ 1.0 million as of June 30, 2023, which had been recorded as restricted cash in prepaid expenses and other current assets in the Company's condensed consolidated balance sheet as of December 31, 2022.

In September 2019, the Company entered into an agreement to sublease the Boston office space to Foundation Medicine, Inc.( Foundation ).

The sublease was subject and subordinate to the Boston Lease between the Company 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

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agreement, and expired on February 27, 2023.

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

Sublease rental income is recorded to other income in the condensed consolidated statement of operations and other comprehensive income (loss).

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

The Company did not record any sublease rental income for the three months ended June 30, 2023 and recorded $ 0.3 million in sublease rental income from Foundation during the six months ended June 30, 2023.

The Company recorded sublease rental income of $ 0.4 million and $ 0.9 million during the three and six months ended June 30, 2022, respectively.

Future Lease Commitments

Future commitments under non-cancelable lease agreements are as follows:

Years ending December 31, Operating

Lease Commitments

Remainder of 2023 $ 2,835

Total lease commitments $ 18,006

present value adjustment ( 1,769 )

Current and long-term operating lease liabilities $ 16,237

In arriving at the operating lease liabilities, the Company applied incremental borrowing rates ranging from 6.65 % to 6.94 %, which were based on the remaining lease term at either the date of adoption of ASC 842 or the effective date of any subsequent lease term extensions.

As of March 31, 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)

Undiscounted minimum rental commitments $ 40,032

Present value adjustment using incremental borrowing rate ( 7,452 )

Operating lease liabilities $ 32,580

Manufacturing Agreements

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

Pursuant to the Manufacture and Supply Agreement with BioVectra and the 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.

As of June 30, 2023, the remaining lease term for the Cambridge Lease was 3.20 years.

Manufacturing and Unconditional Purchase Commitment Agreements

The Company's contractual obligations include a commercial supply agreement with Siegfried Evionnaz SA ( Siegfried ) to supply commercial drug substance for Auryxia.

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) ( 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.

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

As of June 30, 2023, the Company is required to purchase a minimum quantity of drug substance for Auryxia annually at a total cost of approximately $ 20.8 million through the end of 2024.

On April 9, 2019, the Company and Esteve entered into the Esteve Agreement, which 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.

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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.

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

The Esteve 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.

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

( Patheon ) or the Patheon Agreement.

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

3 unchanged sentences

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.

The current term of the Patheon Agreement ends

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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 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.

As of June 30, 2023, the Company had a minimum commitment with Patheon for $ 1.9 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 ( WuXi STA ), as amended on April 15, 2021 ( WuXi STA DS Agreement ).

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

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

As of June 30, 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.

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

Former Manufacturing and Unconditional Purchase Commitments

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

The 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.

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 ( BioVectra Effective Date ).

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 and $ 0.9 million for the three and six months ended June 30, 2023, respectively.

Other Third-Party Contracts

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.

The Company contracts with various organizations to conduct research and development activities with remaining contract costs to the Company of approximately $ 54.9 million at June 30, 2023.

The scope of the services under these research and

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

development contracts can be modified and the contracts cancelled by the Company upon written notice.

In some instances, the contracts may be cancelled by the third party upon written notice.

Litigation and Related Matters

From time to time, the Company may become subject to legal proceedings and claims which arise in the ordinary course of its business.

Consistent with ASC 450, Contingencies , the Company’s policy is to record a liability if a loss in a significant legal dispute is considered probable and an amount can be reasonably estimated.

The Company is involved from time to time in various legal proceedings arising in the normal course of business.

The Company provides disclosure when a loss in excess of any reserve is reasonably possible, and if estimable, the Company discloses the potential loss or range of possible loss.

Significant judgment is required to assess the likelihood of various potential outcomes and the quantification of loss in those scenarios.

The Company’s estimates change as litigation progresses and new information comes to light.

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

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.

Changes in the Company’s estimates could have a material impact and are recorded as litigation progresses and new information comes to light.

Although the outcomes of potential legal proceedings are inherently difficult to predict, the Company does not expect the resolution of these occasional legal proceedings to have a material adverse effect on its financial position, results of operations or cash flows.

Guarantees and Indemnifications

As permitted under Delaware law, the Company may indemnify its officers, directors and employees for certain events or occurrences that happen by reason of their relationship with, or position held at, the Company.

The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions.

The Company maintains director and officer liability insurance coverage that is intended to cover a portion of amounts that may be due with respect to indemnification after a deductible is met.

Further, the Company is a party to a variety of agreements in the ordinary course of business under which it may be obligated to indemnify third parties with respect to certain matters.

For the three and six months ended June 30, 2023 and 2022, the Company did not experience any losses related to these indemnification obligations, and no claims were outstanding as of June 30, 2023.

The Company does not have any claims related to these indemnification obligations and consequently concluded that the fair value of these obligations is negligible and no related accruals were recorded.

NET LOSS PER SHARE

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.

Potentially dilutive securities, common stock options, RSUs and SARs have been excluded from the calculation of diluted net loss per share as their effects would be anti-dilutive.

For periods in which the Company reports a net loss, the weighted average number of shares outstanding used to calculate both basic and diluted net loss per share were the same except for the three months ended June 30, 2022, as the Company had net income for that period.

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

As of March 31,

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

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

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

2023 2022 2023 2022

Outstanding common stock options and SARs 13,753,498 13,502,015 13,753,498 13,508,217

Unvested RSUs 4,596,551 — 4,596,551 6,771,349

Total 18,350,049 13,502,015 18,350,049 20,279,566

SUBSEQUENT EVENTS

The Company has completed an evaluation of all subsequent events after the balance sheet date of June 30, 2023, through the filing date of this Quarterly Report on Form 10-Q with the SEC, to ensure that the condensed consolidated financial statements include appropriate disclose of events both recognized in the consolidated financial statements as of June 30, 2023, and events which occurred subsequently but were not recognized in the consolidated financial statements.

The Company has concluded that no subsequent events have occurred that require disclosure.

Akebia Therapeutics, Inc.

| Form 10-Q | Page 23

Akebia Therapeutics, Inc.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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