What changed in this filing

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Item 1A. Risk Factors

2023-08-28 compared with 2023-05-08 · 415 added, 227 removed, 1239 unchanged (34% of the section changed)

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We face a variety of risks and uncertainties in our business.

Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also become important factors that affect our business.

Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also become important factors that affect our business, reputation, results of operations, financial condition and stock price which can be materially and adversely affected.

If any of the following risks occurs, our business, financial condition, financial statements, results of operations and future growth prospects could be materially and adversely affected.

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We have financed our operations primarily through sales of equity securities, our strategic collaborations and product revenues, a royalty monetization transaction and debt.

Prior to the merger, or the Merger, whereby Keryx Biopharmaceuticals, Inc., or Keryx, became our wholly owned subsidiary, we had no products approved for commercial sale and had not generated any revenue from the sale of products.

We are not currently profitable, and we have incurred net losses each year since our inception, including a net loss of $26.2 million for the three months ended March 31, 2023.

As of March 31, 2023, we had an accumulated deficit of $1.6 billion.

Prior to our merger, or the Merger , with Keryx Biopharmaceuticals, Inc., or Keryx , whereby Keryx became our wholly owned subsidiary, we had no products approved for commercial sale and had not generated any revenue from the sale of products.

We are not currently profitable, and we have incurred net losses each year since our inception, including a net loss of $11.2 million for the three months ended June 30, 2023.

As of June 30, 2023, we had an accumulated deficit of $1.6 billion.

We cannot guarantee when, if ever, we will become profitable.

In March 2022, we received a complete response letter, or CRL, from the FDA regarding our NDA for vadadustat, our lead investigational product candidate, for the treatment of anemia associated with CKD.

In March 2022, we received a complete response letter, or CRL , from the U.S.

Food and Drug Administration, or FDA , regarding our new drug application, or NDA, for vadadustat, our lead investigational product candidate, for the treatment of anemia associated with CKD.

The FDA concluded that the data in the NDA do not support a favorable benefit-risk assessment of vadadustat for dialysis and non-dialysis patients.

In October 2022, we submitted a Formal Dispute Resolution Request, or FDRR, to the FDA.

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

In February 2023, we received a second interim response from the FDA to our FDRR, and there can be no assurances that we will be successful in our appeal and obtain approval for vadadustat in a timely manner, on favorable terms, or at all.

In October 2022, we submitted a Formal Dispute Resolution Request, or FDRR , to 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 patients on dialysis 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, or OND, denied our appeal but provided a path forward for us to resubmit the NDA for vadadustat for the treatment of anemia due to CKD for dialysis dependent patients without the need for us to generate additional clinical data.

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

We expect to resubmit the NDA by the end of the third quarter of 2023, with a potential Prescription Drug User Fee Act, or PDUFA , date that we project will be in March 2024.

There can be no assurances that we will be successful in our anticipated NDA resubmission and obtain approval for vadadustat in a timely manner, on favorable terms, or at all.

As a result, the regulatory approval process for vadadustat in the U.S.

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• the size of any market in which Auryxia, vadadustat and any other product or product candidate, including those that may be in-licensed or acquired, receives approval and obtaining adequate market share in those markets;

• addressing the issues identified in the CRL for vadadustat that we received from the FDA and the outcome of our appeal;

• addressing the issues identified in the CRL for vadadustat that we received from the FDA and the outcome of our anticipated NDA resubmission;

• the timing and scope of marketing approvals for vadadustat, if approved, and any other product candidate, if approved, including those that may be in-licensed or acquired;

• maintaining marketing approvals for Auryxia, vadadustat, if approved, and any other product, including those that may be in-licensed or acquired;

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• actual or perceived advantages or disadvantages of our products or product candidates as compared to alternative treatments, including their respective safety, tolerability and efficacy profiles, the potential convenience and ease of administration and cost;

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• current and future restrictions or limitations on our approved or future indications and patient populations or other adverse regulatory actions or in the event that the FDA requires Risk Evaluation and Mitigation Strategies, or REMS , or risk management plans that use restrictive risk minimization strategies;

• the effectiveness of our sales, marketing, manufacturing and distribution strategies and operations;

• the effectiveness of our collaborators' and our sales, marketing, manufacturing and distribution strategies and operations;

• competing effectively with any products for the same or similar indications as our products;

• maintaining, protecting and expanding our portfolio of intellectual property rights, including patents and trade secrets;

• the impact of the COVID-19 pandemic on the above factors, including the disproportionate impact of the COVID-19 pandemic on CKD patients, the adverse impact on the phosphate binder market in which we compete, and the limitation of our sales professionals to meet in person with healthcare professionals as the result of limitations on access for non-patients.

• the impact of the recent COVID-19 pandemic on the above factors, including the disproportionate impact of the recent COVID-19 pandemic on CKD patients, the adverse impact on the phosphate binder market in which we compete, and the limitation of our sales professionals to meet in person with healthcare professionals as the result of limitations on access for non-patients.

Our revenue also depends on our partners’ ability to successfully market and sell vadadustat and Auryxia in the territories in which they have licensed our products.

For example, in May 2023, we entered into a license agreement with MEDICE Arzneimittel Pütter GmbH & Co.

KG, or Medice, pursuant to which we granted Medice an exclusive license to develop and commercialize vadadustat for the treatment of anemia in patients with chronic kidney disease in the European Economic Area, the United Kingdom, Switzerland and Australia, or Medice Territory .

If Medice’s launch of vadadustat in the Medice Territory is delayed or their sales are lower than anticipated, we may not receive the revenue that we expect from Medice on the timing anticipated, or at all.

Our ability to achieve profitability also depends on our ability to manage our expenses.

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In November 2022, we also implemented a reduction of our workforce, by approximately 14% consisting of individuals within our commercial organization as a result of our decision to shift to a strategic account management focused model for our commercial efforts.

We recorded a restructuring charge of approximately $15.9 million and $0.1 million in the year ended December 31, 2022 and the three months ended March 31, 2023, respectively, primarily related to contractual termination benefits including severance, non-cash stock-based compensation expense, healthcare and related benefits.

However, we may incur additional costs not currently contemplated due to events associated with or resulting from the workforce reductions.

Additionally, the reductions in workforce could impact our operations, including our commercialization of Auryxia, which could affect our ability to generate revenue.

We recorded a restructuring charge of approximately $15.9 million in the year ended December 31, 2022 primarily related to contractual termination benefits including severance, non-cash stock-based compensation expense, healthcare and related benefits.

The reductions in workforce could impact our operations, including our commercialization of Auryxia, which could affect our ability to generate revenue.

Additionally, we may incur additional costs not currently contemplated due to events associated with or resulting from the workforce reductions or other operating expenses, including additional costs related to vadadustat and selling, general and administrative expenses.

We expect to continue to incur additional operating expenses, including additional research and development expenses to our pipeline, additional costs related to vadadustat, and research and development and selling, general and administrative expenses for ongoing development and commercialization of Auryxia, which could lead to operating losses for the foreseeable future.

In addition to any additional costs not currently contemplated due to events associated with or resulting from the workforce reductions noted above, our ability to achieve profitability and our financial position will depend, in part, on the rate of our future expenditures, on product revenue, collaboration revenue, and our ability to obtain additional funding.

On June 30, 2022, we entered into a Termination and Settlement Agreement, or the Termination Agreement, with Otsuka Pharmaceutical Co.

Ltd., or Otsuka, pursuant to which we agreed to the immediate termination of the December 18, 2016 collaboration and license agreement with Otsuka, or the Otsuka U.S.

Agreement, and the April 25, 2017 collaboration and license agreement with Otsuka, or the Otsuka International Agreement, in exchange for the payment of $55.0 million to us and the agreement between the parties with respect to the conduct of certain activities.

Unless and until we are able to find a new partner for vadadustat in Europe and other countries previously licensed to Otsuka, we will incur additional expenses in connection with the development of vadadustat and will receive less collaboration revenue and, if approved, product revenue than originally anticipated.

In addition, we expect to continue to incur significant expenses if and as we:

• continue our commercialization activities for Auryxia and vadadustat, if we are able to obtain marketing approval for vadadustat following receipt of the CRL from the FDA in March 2022, and any other product or product candidate, including those that may be in-licensed or acquired;

• address the issues identified in the CRL for vadadustat that we received from the FDA and pursue our appeal of the CRL for vadadustat with the FDA;

• continue our commercialization activities for Auryxia and vadadustat, if we are able to obtain marketing approval for vadadustat following our anticipated NDA resubmission, and any other product or product candidate, including those that may be in-licensed or acquired;

• address the issues identified in the CRL for vadadustat that we received from the FDA and pursue our anticipated NDA resubmission for vadadustat with the FDA;

• conduct and enroll patients in any clinical trials, including post-marketing studies or any other clinical trials for Auryxia, vadadustat or any other product or product candidate, including those that may be in-licensed or acquired;

• seek marketing approvals for vadadustat and any other product candidate, including those that may be in-licensed or acquired;

• maintain marketing approvals for Auryxia and vadadustat, if we are able to obtain marketing approval for vadadustat following receipt of the CRL from the FDA in March 2022, and any other product, including those that may be in-licensed or acquired;

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• maintain marketing approvals for Auryxia and vadadustat, if we are able to obtain marketing approval for vadadustat following our anticipated NDA resubmission, and any other product, including those that may be in-licensed or acquired;

• manufacture Auryxia, vadadustat and any other product or product candidate, including those that may be in-licensed or acquired, for commercial sale and clinical trials;

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• engage in transactions, including strategic, merger, collaboration, acquisition and licensing transactions, pursuant to which we would market and develop commercial products, or develop and commercialize other product candidates and technologies;

• continue to repay, and pay any associated pre-payment penalties, if applicable, the senior secured term loans in an aggregate principal amount of $51.0 million as of March 31, 2023, or the Term Loans, that were made available to us pursuant to the Loan Agreement;

• continue to repay, and pay any associated pre-payment penalties, if applicable, the senior secured term loans in an aggregate principal amount of $43.0 million as of June 30, 2023, that were made available to us pursuant to the Loan Agreement;

• make royalty, milestone or other payments under our license agreements and any future license agreements;

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In any particular quarter, the progress of our clinical development and our operating results could be below the expectations of securities analysts or investors, which could cause our stock price to decline.

We will continue to incur substantial expenditures relating to continued commercialization and post-marketing requirements for Auryxia and vadadustat, if we are able to obtain marketing approval for vadadustat following receipt of the CRL from the FDA in March 2022, and any other products, including those that may be in-licensed or acquired, as well as costs relating to the research and development of any other product candidate, including those that may be in-licensed or acquired.

We will continue to incur substantial expenditures relating to continued commercialization and post-marketing requirements for Auryxia and vadadustat, if we are able to obtain marketing approval for vadadustat following our anticipated NDA resubmission, and any other products, including those that may be in-licensed or acquired, as well as costs relating to the research and development of any other product candidate, including those that may be in-licensed or acquired.

Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

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In addition, our ability to generate revenue would be negatively affected if the size of our addressable patient population is not as significant as we estimate, the indication approved by regulatory authorities is narrower than we sought or the patient population for treatment is narrowed by competition, physician choice, coverage or reimbursement, or payor or treatment guidelines.

Even though we generate product revenue from Auryxia and royalties from Riona TM and Vafseo TM in Japan and may generate revenue and royalties from the sale of any products that may be approved in the future, including those that may be in-licensed or acquired, we may never generate revenue and royalties that are significant enough for us to become and remain profitable, and we will need to obtain additional funding to continue to fund our operating plan beyond Auryxia and certain development activities, and achieve strategic growth.

Even though we generate product revenue from Auryxia and royalties from Riona and Vafseo in Japan and may generate revenue and royalties from the sale of any products that may be approved in the future, including those that may be in-licensed or acquired, we may never generate revenue and royalties that are significant enough for us to become and remain profitable, and we will need to obtain additional funding to continue to fund our operating plan beyond Auryxia and certain development activities, and achieve strategic growth.

We will require substantial additional financing to achieve our goals.

A failure to obtain this necessary capital when needed, or on acceptable terms, could force us to delay, limit, reduce or terminate our product development or commercialization efforts.

As of March 31, 2023, our cash and cash equivalents were $57.0 million.

As of June 30, 2023, our cash and cash equivalents were $53.6 million.

We expect to continue to expend substantial amounts of cash for the foreseeable future as we continue to commercialize Auryxia;

pursue our appeal for vadadustat in the U.S.

pursue our anticipated NDA resubmission for vadadustat in the U.S.

with the FDA;

support the regulatory process with respect to vadadustat with the ACCESS Consortium;

support the regulatory process with respect to vadadustat in Australia;

and develop and commercialize any other product or product candidate, including those that may be in-licensed or acquired.

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In addition, other unanticipated costs may arise.

Because the outcomes of our current and anticipated clinical trials are highly uncertain, we cannot reasonably estimate the actual amount of funding necessary to successfully complete clinical development for any current or future product candidates, including vadadustat depending on what is required to address the issues identified in the CRL for vadadustat, including the outcome of our appeal and if additional clinical trials are required in order to obtain marketing approval, or to complete post-marketing studies for Auryxia and vadadustat, if approved.

Because the outcomes of our current and anticipated clinical trials are highly uncertain, we cannot reasonably estimate the actual amount of funding necessary to

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successfully complete clinical development for any current or future product candidates, including vadadustat depending on what is required to address the issues identified in the CRL for vadadustat, including the outcome of our anticipated NDA resubmission , or to complete post-marketing studies for Auryxia and vadadustat, if approved.

Our future capital requirements depend on many factors, including:

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If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.

We failed to timely file our Quarterly Report on Form 10-Q for the three months ended June 30, 2023, or the Second Quarter 10-Q .

When we file our Annual Report on Form 10-K for the year ending December 31, 2023, or the 2023 Form 10-K , such filing will serve as an update of our current Registration Statement on Form S-3, or the Current Form S-3 , for purposes of Section 10(a)(3) of the Securities Act and Rule 401(b) promulgated under the Securities Act.

Because of our failure to timely file the Second Quarter 10-Q, we will not be eligible to file or use a Registration Statement on Form S-3, including the Current Form S-3, after we file our 2023 Form 10-K.

At such time, if we have not already done so, we will be required to cease the at-the-market offering contemplated by the April 7, 2022 prospectus supplement and accompanying prospectus (to the extent such at-the-market offering has not already been terminated) and in no event later than March 31, 2024.

This may make it more difficult for us to conduct a public offering of our securities.

We expect our cash resources to fund our current operating plan through at least the next twelve months from the filing of this Quarterly Report on Form 10-Q.

However, if our operating performance deteriorates significantly from the levels expected in our operating plan, it could have an effect on our liquidity and our ability to continue as a going concern in the future.

However, if our operating performance deteriorates significantly from the levels expected in our operating plan, it would have an effect on our liquidity and our ability to continue as a going concern in the future.

Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves numerous risks and uncertainties, and actual results could vary as a result of a number of factors, many of which are outside our control.

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In addition, if we fail to satisfy any of the covenants under our Loan Agreement with Pharmakon, including the covenant that our Annual Report on Form 10-K for the fiscal year ending December 31, 2023 not be qualified as to going concern, and the loan is accelerated, we may not have sufficient resources to fund our operating plan through the next twelve months.

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

There can be no assurance that the

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current operating plan will be achieved in the time frame anticipated by us, or that our cash resources will fund our operating plan for the period anticipated by us, or that additional funding will be available on terms acceptable to us, or at all.

Any additional fundraising efforts may divert our management’s attention away from their day-to-day activities, which may adversely affect our ability to develop and commercialize Auryxia and any other products or product candidates, including those that may be in-licensed or acquired, or to continue to seek regulatory approval for vadadustat .

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If we raise additional funds through strategic transactions, we may have to relinquish valuable rights to our portfolio and future revenue streams, and enter into agreements that would restrict our operations and strategic flexibility.

If we raise additional funds through strategic transactions with third parties, we may have to do so at an earlier stage than otherwise would be

If we raise additional funds through strategic transactions with third parties, we may have to do so at an earlier stage than otherwise would be desirable.

In connection with any such strategic transactions, we may be required to relinquish valuable rights to our product and product candidates, future revenue streams or research programs or grant licenses on terms that are not favorable to us.

If we are unable to raise additional funds when needed, we may not be able to pursue planned development and commercialization activities and we may need to grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

If we fail to regain compliance with the continued listing requirements of Nasdaq, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.

On May 12, 2022, we received a deficiency letter from the Listing Qualifications Department of the Nasdaq Stock Market, or Nasdaq, notifying us that, for the last 30 consecutive business days, the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued inclusion on the Nasdaq Global Market, referred to as the minimum bid price rule.

In accordance with Nasdaq Listing Rules, we were provided an initial period of 180 calendar days, or until November 8, 2022, to regain compliance with the minimum bid price rule.

We did not regain compliance with the minimum bid price rule by the initial compliance date.

On November 9, 2022, Nasdaq notified us that we were eligible for an additional 180 calendar day period, or until May 8, 2023, to regain compliance with the minimum bid price rule.

Nasdaq’s determination was based on our meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on the Nasdaq Capital Market with the exception of bid price requirement, and our written notice of our intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.

On November 9, 2022, Nasdaq approved our transfer from the Nasdaq Global Market to the Nasdaq Capital Market, a continuous trading market that operates in substantially the same manner as the Nasdaq Global Market.

The transfer became effective at the opening of business on November 11, 2022.

We held a special meeting of stockholders on May 4, 2023, at which meeting our stockholders did not approve the reverse stock split that our Board had recommended, the primary intent of which was to increase the price of our common stock to meet the price criteria for continued listing on Nasdaq.

To date, we have not regained compliance with the minimum bid price rule, and we do not expect to regain compliance during the additional compliance period.

If we do not regain compliance with the minimum bid price rule by the required date and we are not eligible for any additional compliance period at that time, the Nasdaq Listing Qualifications Department staff will provide us written notification that our common stock may be delisted.

At that time, we plan to appeal the staff’s delisting determination to a Nasdaq Listing Qualifications Panel.

We expect that our common stock would remain listed pending the panel’s decision.

However, there can be no assurance that, even if we appeal the staff’s delisting determination to the Nasdaq Listing Qualifications Panel, such appeal would be successful.

In addition, even if our appeal is successful, we will still need to regain compliance with the minimum bid price rule during the additional compliance period granted by the Nasdaq Listing Qualifications Panel, and there can be no assurance that we will be able to regain compliance with the minimum bid price rule during that time.

There are many factors that may adversely affect our minimum bid price, including those described throughout this section titled “Risk Factors.” Many of these factors are outside of our control.

As a result, we may not be able to sustain compliance with the minimum bid price rule in the long term.

Any potential delisting of our common stock from the Nasdaq Capital Market would likely result in decreased liquidity and increased volatility for our common stock and would adversely affect our ability to raise additional capital or to enter into strategic transactions.

Any potential delisting of our common stock from the Nasdaq Capital Market would also make it more difficult for our stockholders to sell our common stock in the public market.

If we fail to comply with the continued listing requirements of Nasdaq, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.

We must satisfy Nasdaq’s continued listing requirements, including, among other things, a minimum closing bid price of $1.00 per share and timely filing of all periodic financial reports, or risk delisting, which would have a material adverse effect on our business.

In the event we are delisted from Nasdaq, the only established trading market for our common stock would be eliminated, and we would be forced to list our shares on the OTC Markets or another quotation medium, depending on our ability to meet the specific listing requirements of those quotation systems.

As a result, an investor would likely find it more difficult to trade or obtain accurate price quotations for our shares.

Delisting would likely also reduce the visibility, liquidity, and value of our common stock, reduce institutional investor interest in our company, and may increase the volatility of our common stock.

Delisting could also cause a loss of confidence of potential industry partners, lenders, and employees, which could further harm our business and our future prospects.

On May 9, 2023, we received a letter from Nasdaq stating that the Company had not regained compliance with the minimum bid price rule during the compliance period and was subject to delisting.

We timely requested an appeal hearing which stayed delisting pending the decision of a Nasdaq Hearings Panel, or the Panel .

On May 22, 2023, we received a letter from the Office of General Counsel of Nasdaq informing us that Nasdaq confirmed that we had regained compliance with the $1.00 per share minimum bid price requirement.

Following this notice, the scheduled hearing before the Panel on June 22, 2023 was cancelled and our securities continue to be listed and traded on The Nasdaq Capital Market.

On August 11, 2023, we received a notification letter from Nasdaq informing us that since we had not yet filed our Second Quarter 10-Q, we are not in compliance with Nasdaq's listing rule requiring timely filing of all required periodic financial reports with the U.S.

Securities and Exchange Commission, or the SEC .

The Nasdaq notification letter specifies that we have 60 calendar days, or until October 10, 2023, to submit a plan to regain compliance with this rule.

If Nasdaq accepts our plan, Nasdaq can grant an exception of up to 180 calendar days from the Second Quarter 10-Q's due date, or until February 5, 2024, to regain compliance.

Our common stock will continue to trade on The Nasdaq Capital Market pending Nasdaq’s review of our plan to regain compliance.

Although the minimum bid price deficiency matter is now closed, and we expect to regain compliance with the Nasdaq periodic report filing requirement upon filing of this Quarterly Report on Form 10-Q, there can be no assurance that we will be able to continue to comply with the Nasdaq continued listing requirements.

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We may not be successful in our efforts to identify, acquire, in-license, discover, develop and commercialize additional products or product candidates or our decisions to prioritize the development of certain product candidates over others may not be successful , which could impair our ability to grow.

Although we continue to focus a substantial amount of our efforts on the commercialization of Auryxia and to pursue our appeal for vadadustat in the U.S.

Although we continue to focus a substantial amount of our efforts on the commercialization of Auryxia and to pursue our anticipated NDA resubmission for vadadustat in the U.S.

with the FDA and to seek regulatory approval for vadadustat in other territories, a key element of our long-term growth strategy is to develop additional product candidates and acquire, in-license, dev elop and/or market additional products and product candidates.

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We may focus our efforts and resources on potential products, product candidates or other programs that ultimately prove to be unsuccessful.

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We may engage in strategic transactions to acquire assets, businesses, or rights to products, product candidates or technologies or form collaborations or make investments in other companies or technologies that could harm our operating results, dilute our stockholders’ ownership, increase our debt, or cause us to incur significant expense.

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Even if we are able to achieve the long-term benefits of a strategic transaction, our expenses and short-term costs may increase materially and adversely affect our liquidity.

Any of the foregoing could have a detrimental effect on our

business, results of operations and financial condition.

For example, on June 4, 2021, we entered into a license agreement, the Cyclerion Agreement, with Cyclerion Therapeutics Inc., or Cyclerion, pursuant to which Cyclerion granted us an exclusive global license under certain intellectual property rights to research, develop and commercialize praliciguat, an investigational oral soluble guanylate cyclase, or sGC, stimulator.

Any of the foregoing could have a detrimental effect on our business, results of operations and financial condition.

For example, on June 4, 2021, we entered into a license agreement, the Cyclerion Agreement, with Cyclerion Therapeutics Inc., or C yclerion , pursuant to which Cyclerion granted us an exclusive global license under certain intellectual property rights to research, develop and commercialize praliciguat, an investigational oral soluble guanylate cyclase, or sGC , stimulator.

Although we have progressed preclinical studies for praliciguat, we need to do additional work to manufacture product for clinical trials before we can initiate the trials, and when started, we may be unsuccessful in developing praliciguat.

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If we are unable to successfully manage any transaction in which we may engage, our ability to develop new products and continue to expand and diversify our portfolio may be limited.

Our business has been and may continue to be, directly or indirectly, adversely affected by the COVID-19 pandemic.

The COVID-19 pandemic has presented a substantial public health and economic challenge around the world and has affected, and may continue to affect, our business, patients, healthcare providers with whom we interact, customers, our contract manufacturing organizations, or CMOs, and other vendors.

The full extent to which the COVID-19 pandemic and the lasting effects of the pandemic will directly or indirectly impact our business , results of operations and financial condition continues to depend on future developments that are highly uncertain and cannot be accurately predicted, including any resurgences or variants of COVID-19, the actions taken to contain it or treat its impact and the economic and other impacts on local, regional, national and international markets where the healthcare providers with whom we interact, our CMOs, and our other vendors operate.

On January 30, 2023, the Biden Administration announced that it will end the public health emergency declarations related to COVID-19 on May 11, 2023.

On January 31, 2023, the FDA indicated that it would issue a Federal Register notice describing how the termination of the public health emergency will impact the agency’s COVID-19 related guidance.

Thereafter, on March 13, 2023, the FDA announced that it will end twenty-two COVID-19-related policies when the public health emergency ends on May 11, 2023 and allow twenty-two to continue for 180 days.

Our business has been and may continue to be, directly or indirectly, adversely affected by the recent COVID-19 pandemic.

The recent COVID-19 pandemic has presented a substantial public health and economic challenge around the world and has affected, and may continue to affect, our business, patients, healthcare providers with whom we interact, customers, our contract manufacturing organizations, or CMOs , and other vendors.

The full extent to which the recent COVID-19 pandemic and the lasting effects of the pandemic will directly or indirectly impact our business , results of operations and financial condition continues to depend on future developments that are highly uncertain and cannot be accurately predicted, including any resurgences or variants of COVID-19, the actions taken to contain it or treat its impact and the economic and other impacts on local, regional, national and international markets where the healthcare providers with whom we interact, our CMOs, and our other vendors operate.

The public health emergency declarations related to COVID-19 ended on May 11, 2023.

The FDA ended twenty-two COVID-19-related policies on May 11, 2023 and allowed twenty-two to continue for 180 days.

The FDA plans to retain twenty-four COVID-19-related policies with appropriate changes and four whose duration is not tied to the end of the public health emergency.

At this point, it is unclear how, if at all, these developments will impact our efforts to develop and commercialize our product candidates.

We believe our revenue growth was negatively impacted by the COVID-19 pandemic in 2021, 2022 and the first quarter of 2023 primarily as the CKD patient populations that we serve experienced both high hospitalization and mortality rates due to COVID-19, and the pandemic had an adverse impact on the phosphate binder market in which Auryxia competes.

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We believe our revenue growth was negatively impacted by the recent COVID-19 pandemic in 2021, 2022 and the first half of 2023 primarily as the CKD patient populations that we serve experienced both high hospitalization and mortality rates due to COVID-19, and the pandemic had an adverse impact on the phosphate binder market in which Auryxia competes.

Labor shortages and costs have adversely impacted dialysis providers.

These impacts have refocused clinical efforts in addressing bone and mineral disorders like hyperphosphatemia to more acute operational issues to ensure patients receive dialysis treatments and still some patients have been rescheduled or missed treatments due to labor shortages.

We believe, this and potentially other factors, has led to the reduction in the phosphate binder market, which has not experienced growth since early 2020.

While we are unable to quantify the impact of the COVID-19 pandemic on future revenues and revenue growth, the

COVID-19 pandemic and the ongoing impacts from the COVID-19 pandemic continue to adversely and disproportionately impact CKD patients and the phosphate binder market;

therefore, we expect the ongoing impacts from the pandemic to continue to have a negative impact on our revenue growth for the foreseeable future.

We believe, this and potentially other factors, led to the reduction in the phosphate binder market, which has not experienced growth since early 2020.

While we are unable to quantify the impact of the recent COVID-19 pandemic on future revenues and revenue growth, the recent COVID-19 pandemic and the ongoing impacts from the recent COVID-19 pandemic continue to adversely and disproportionately impact CKD patients and the phosphate binder market;

therefore, we expect the impacts from the pandemic to continue to have a negative impact on our revenue growth for the foreseeable future.

In addition, several healthcare facilities have previously restricted access for non-patients, including the members of our sales force.

For example, DaVita, Inc., or DaVita, and Fresenius Medical Care, or Fresenius, which account for a vast majority of the dialysis population in the United States, have previously restricted access to their clinics.

For example, DaVita, Inc., or DaVita , which accounts for a significant portion of the dialysis population in the U.S., has previously restricted access to its clinics.

As a result, we continue to engage with some healthcare providers and other customers virtually, where possible.

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Nevertheless, some restrictions remain, and more restrictions may be put in place again due to a resurgence in COVID-19 cases, including those involving new variants of COVID-19, which may be more contagious and more severe than prior strains of the virus.

Given this uncertain environment and the disproportionate impact of the COVID-19 pandemic on CKD patients, we are actively monitoring the demand in the United States for Auryxia and will be for vadadustat, if approved, including the potential for further declines or changes in prescription trends and customer orders, which could have a material adverse effect on our business, results of operations, and financial condition.

Given this uncertain environment and the disproportionate impact of the recent COVID-19 pandemic on CKD patients, we are actively monitoring the demand in the United States for Auryxia and will be for vadadustat, if approved, including the potential for further declines or changes in prescription trends and customer orders, which could have a material adverse effect on our business, results of operations, and financial condition.

In addition, the direct and indirect impacts of the pandemic or the response efforts to the pandemic, including, among others, competition for labor and resources and increases in labor, sourcing, manufacturing and shipping costs, may cause disruptions to, closures of or other impacts on our CMOs and other vendors in our supply chain on which we rely for the supply of our products and product candidates.

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At this time, our CMOs continue to operate at or near normal levels.

However, it is possible that the COVID-19 pandemic and response efforts may have an impact in the future on our contract manufacturers’ ability to manufacture and deliver Auryxia and vadadustat (if approved in the United States or EMA and which is currently marketed under the trade name Vafseo TM by MTPC in Japan), which may result in increased costs and delays, or disruptions to the manufacturing and supply of our products.

However, it is possible that the recent COVID-19 pandemic and response efforts may have an impact in the future on our contract manufacturers’ ability to manufacture and deliver Auryxia and vadadustat (if approved in the United States and which is currently marketed under the trade name Vafseo by MTPC in Japan and approved in Europe), which may result in increased costs and delays, or disruptions to the manufacturing and supply of our products.

These impacts could have a negative effect on our inventory reserves, which could result in an increase in inventory write-offs due to expiry.

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While we are working to mitigate the impacts on our business, we are mindful that many of these risks and the impact to the larger healthcare market are outside of our control.

The COVID-19 pandemic has, and may continue to, significantly impact the phosphate binder market in which we compete and economies and financial markets worldwide, which could result in adverse effects on our business and operations, impact our ability to raise additional funds and impact the volatility of our stock price and trading in our stock.

Even after the COVID-19 pandemic has been contained or mitigated, we may continue to experience adverse impacts to our business as a result of the adverse impact on the patient population for Auryxia, the decline in the phosphate binder market and any economic recession or depression that has occurred or may occur in the future.

The recent COVID-19 pandemic has, and may continue to, significantly impact the phosphate binder market in which we compete and economies and financial markets worldwide, which could result in adverse effects on our business and operations, impact our ability to raise additional funds and impact the volatility of our stock price and trading in our stock.

Even now that the COVID-19 pandemic has been largely contained, we may continue to experience adverse impacts to our business as a result of the adverse impact on the patient population for Auryxia, the decline in the phosphate binder market and any economic recession or depression that has occurred or may occur in the future.

Risks Related to our Financial Arrangements

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The first tranche of $80.0 million closed on November 25, 2019, and the second tranche of $20.0 million closed on December 10, 2020.

See Note 10 to our condensed consolidated financial statements in Part I, Item 1.

See Note 11, Debt , to our condensed consolidated financial statements in Part I, Item 1.

Financial Statements of this Quarterly Report on Form 10-Q for additional information regarding our obligations under the Loan Agreement.

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The Loan Agreement contains affirmative and negative covenants applicable to us and our subsidiaries, including maintaining, on an annual basis, a minimum liquidity threshold and, on a quarterly basis, a minimum net sales threshold for Auryxia.

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contains various covenants and other provisions, which, if violated, could materially adversely affect our financial condition.

On February 25, 2021, we entered into a royalty interest acquisition agreement, or the Royalty Agreement, with HealthCare Royalty Partners IV, L.P., or HCR, pursuant to which we sold to HCR our right to the to receive royalties and sales milestones for vadadustat, collectively the Royalty Interest Payments, in each case, payable to us under our Collaboration Agreement dated December 11, 2015, or the MTPC Agreement, with Mitsubishi Tanabe Pharma Corporation, or MTPC, subject to an annual maximum “cap” of $13.0 million, or the Annual Cap, and an aggregate maximum “cap” of $150.0 million, or the Aggregate Cap.

On February 25, 2021, we entered into a royalty interest acquisition agreement, or the Royalty Agreement , with HealthCare Royalty Partners IV, L.P., or HCR , pursuant to which we sold to HCR our right to receive royalties and sales milestones for vadadustat, collectively the Royalty Interest Payments, in each case, payable to us under our Collaboration Agreement dated December 11, 2015, or the MTPC Agreement , with Mitsubishi Tanabe Pharma Corporation, or MTPC , subject to an annual maximum “cap” of $13.0 million, or the Annual Cap , and an aggregate maximum “cap” of $150.0 million, or the Aggregate Cap .

Under the Royalty Agreement, we are required to comply with various covenants, including obligations to take certain actions, such as actions with respect to the Royalty Interest Payments, the MTPC Agreement, our agreement with MTPC for the commercial supply of vadadustat drug product, and our intellectual property.

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Our business and our ability to generate product revenue largely depend on our, and our collaborators’, ability to successfully commercialize Auryxia.

Our ability to generate revenue depends on our ability to execute on our commercialization plans, and the size of the market for, and the level of market acceptance of, Auryxia and any other product or product candidate, including those that may be in-licensed or acquired.

Our ability to generate revenue depends on our ability to execute on our commercialization plans, and

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the size of the market for, and the level of market acceptance of, Auryxia and any other product or product candidate, including those that may be in-licensed or acquired.

If the size of any market for which a product or product candidate is approved decreases or is smaller than we anticipate, our revenue and results of operations could be materially adversely affected.

For example, the phosphate binder market has declined since 2020, which we believe was partially a result of the COVID-19 pandemic.

If the phosphate market does not recover or continues to decline, our revenue from Auryxia could be materially adversely affected.

For example, the phosphate binder market has declined since 2020, which we believe was partially a result of the recent COVID-19 pandemic.

In addition, dialysis organizations continue to experience business continuity challenges that arise due to labor constraints and staffing shortages, facility closures and a decline in new patients, all of which could impact the phosphate binder market.

If the phosphate binder market does not recover or continues to decline, our revenue from Auryxia could be materially adversely affected.

Market acceptance is also critical to our ability to generate significant product revenue.

Any product may achieve only limited market acceptance or none at all.

If Auryxia, or any of our product candidates that is approved, is not accepted by the market to the extent that we expect or market acceptance decreases, we may not be able to generate significant product revenue and our

business would be materially harmed.

If Auryxia, or any of our future products, is not accepted by the market to the extent that we expect or market acceptance decreases, we may not be able to generate significant product revenue and our business would be materially harmed.

Market acceptance of Auryxia or any other approved product depends on a number of factors, including:

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• the countries in which marketing approvals are obtained;

• the claims we and our collaborators are able to make regarding the safety and efficacy of the product;

• the claims we and our partners are able to make regarding the safety and efficacy of the product;

• the success of our physician and patient communications and education programs;

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• favorable or adverse publicity about our products or favorable or adverse publicity about competing products;

• the effectiveness of our and our collaborators’ sales, marketing and distribution efforts;

• the effectiveness of our and our partners’ sales, marketing, manufacturing and distribution strategies and operations;

• the restrictions on the use of the product together with other medications, if any.

In addition, our ability to generate net product revenue depends on our ability to control the expenses associated with commercializing a product, including internal expenses, manufacturing costs, rebates, product returns and other adjustments.

We do not have control over many of the expenses required to commercialize our products, and if we experience increased expenses, our net product revenue may decrease and/or we may incur additional expenses.

In addition, o ur net product revenue requires judgement and includes estimates for rebates and product returns, which can fluctuate from quarter-to-quarter and year-over-year.

If our net product revenue is lower than anticipated, our business could be harmed.

If we are unable to maintain or expand, or, if vadadustat is approved, initiate, sales and marketing capabilities or enter into additional agreements with third parties, we may not be successful in commercializing Auryxia, vadadustat, if approved, or any other product candidates that may be approved.

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If the remaining sales and marketing team cannot successfully commercialize Auryxia, or if additional sales and marketing employees decide to leave as a result of the reduction in workforce or otherwise, it could have a material adverse effect on Auryxia revenue and our financial condition.

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If we obtain regulatory approval to market vadadustat in the U.S., we believe that we can leverage the current commercial foundation for vadadustat in the U.S., but if we are unable to do so successfully this would materially harm our business.

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Obtaining coverage and reimbursement approval for a product from a governmental authority, PBM or a third-party payor is a time consuming and costly process that could require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our products to the payor.

In the United States, there are multiple governmental authorities, PBMs and third-party payors with varying coverage and reimbursement levels for pharmaceutical products, and the timing of commencement of reimbursement by a governmental payor can be dependent on the assignment of codes via the Healthcare Common Procedural Coding System, which codes are assigned on a quarterly basis.

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reimbursement by a governmental payor can be dependent on the assignment of codes via the Healthcare Common Procedural Coding System, which codes are assigned on a quarterly basis.

Within Medicare, for oral drugs dispensed by pharmacies and also administered in facilities, coverage and reimbursement may vary depending on the setting.

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While we believe that the vast majority of the Medicare prescriptions written for Auryxia today are for the Hyperphosphatemia Indication and therefore will continue to be covered by Medicare with prior authorization, the CMS Decision has had and will continue to have an adverse impact on the sales and future growth of Auryxia for the Hyperphosphatemia Indication and the IDA Indication.

For example, in the second quarter of 2020, we reduced our short-term and long-term Auryxia revenue forecast, primarily driven by the compounding impact of the CMS Decision.

As a result, we recorded an impairment charge of $115.5 million to the Auryxia intangible asset associated with the developed product rights for Auryxia during the three months ended June 30, 2020.

Medicaid reimbursement of drugs varies by state.

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Four distributors, Fresenius Medical Care Rx, McKesson Corporation, Cardinal Health, Inc.

and Amerisource Bergen Drug Corporation, in the aggregate, accounted for a significant percentage of our gross revenue during the three months ended March 31, 2023.

and Amerisource Bergen Drug Corporation, in the aggregate, accounted for a significant percentage of our gross revenue during the three months ended June 30, 2023.

If we are not able to maintain our arrangements with these key distributors on favorable terms, on a timely basis or at all, or if there is any adverse change in one or more of these distributors’ business practices or financial condition, it would adversely impact the market opportunity for Auryxia, our product revenues and operating results.

Furthermore, vadadustat was approved in Japan for the treatment of adult patients with anemia due to CKD and is being marketed by MTPC in Japan under the trade name Vafseo TM .

Furthermore, vadadustat was approved in Japan for the treatment of adult patients with anemia due to CKD and is being marketed by MTPC in Japan under the trade name Vafseo.

Pricing and reimbursement strategy is a key component of MTPC’s commercialization plans for Vafseo in Japan.

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The dialysis market is unique and is dominated by two providers:

DaVita and Fresenius, which account for a vast majority of the dialysis population in the United States.

DaVita and Fresenius Medical Care, which account for a vast majority of the dialysis population in the United States.

Under the Vifor Second Amended Agreement, we granted CSL Vifor an exclusive license to sell vadadustat to Fresenius Medical Care North America and its affiliates, including Fresenius Kidney Care Group LLC, to certain third-party dialysis organizations approved by us, to independent dialysis organizations that are members of group purchase organizations, and to certain non-retail specialty pharmacies in the United States.

We refer to Fresenius Medical Care North America and its affiliates, these organizations and specialty pharmacies collectively as the “Supply Group".

See Note 4 to our consolidated financial statements in Part I, Item 1.

See Note 5 to our consolidated

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financial statements in Part I, Item 1.

Financial Statements of this Quarterly Report on Form 10-Q for additional information regarding the Vifor Second Amended Agreement.

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Adequate coverage and reimbursement of our products by government and private insurance plans are central to patient and provider acceptance of any products for which we receive marketing approval.

Existing competitive products may enter into sole source agreements with dialysis providers that impact the ability for new product innovations and new competitors may face price pressure based on existing contracts with dialysis providers.

Further, in many countries outside the United States, a drug must be approved for reimbursement before it can be marketed or sold in that country.

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However, the failure to obtain reimbursement in one jurisdiction may negatively impact our ability to obtain reimbursement in another jurisdiction.

We may not be able to obtain such reimbursement approvals on a timely basis, if at all, an d favorable pricing in certain countries depends on a number of factors, some of which are outside of our control.

In addition, if vadadustat is approved outside of the United States, we plan to rely on a partner to obtain approval by reimbursement authorities outside the United States.

If we are unsuccessful or delayed in entering into an agreement with a new partner, the launch of vadadustat following approval outside the United States may be delayed, which could have an adverse effect on our results of operations.

We or our partners may not be able to obtain such reimbursement approvals on a timely basis, if at all, an d favorable pricing in certain countries depends on a number of factors, some of which are outside of our control.

In addition, we plan to rely on a partner to obtain approval by reimbursement authorities outside the United States.

In May 2023, we entered into the license agreement with Medice, pursuant to which we granted Medice an exclusive license to develop and commercialize vadadustat for the treatment of anemia in patients with chronic kidney disease in the Medice Territory.

If Medice is not able to obtain favorable pricing in the Medice Territory, or if such approvals are delayed, it will effect Medice’s sales of vadadustat in the Medice Territory , which could have an adverse effect on our results of operations.

We face substantial competition, which may result in others discovering, developing or commercializing products before, or more successfully than, we do.

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Most of the phosphate binders listed above are now also available in generic forms.

In addition, other agents are in development, including OPKO Health Inc.’s Alpharen™ Tablets (fermagate tablets) and Unicycive’s Renazorb (lanthanum dioxycarbonate) or could otherwise enter the market, including Ardelyx, Inc.’s tenapanor (which is approved in the United States for the treatment of adults with irritable bowel syndrome with constipation, and for which Ardelyx resubmitted a new drug application to the FDA in April 2023 with respect to the control of serum phosphorus in adult patients with CKD on dialysis) , that may impact the market for Auryxia.

In addition, other agents are in development, including OPKO Health Inc.’s Alpharen™ Tablets (fermagate tablets) and Unicycive’s Renazorb TM (lanthanum dioxycarbonate) or could otherwise enter the market, including Ardelyx, Inc.’s tenapanor (which is approved in the United States for the treatment of adults with irritable bowel syndrome with constipation, and for which Ardelyx resubmitted a new drug application to the FDA in April 2023 with respect to the control of serum phosphorus in adult patients with CKD on dialysis) , that may impact the market for Auryxia.

Auryxia is competing in the IDA market in the United States with over-the-counter oral iron, ferrous sulfate, other prescription oral iron formulations, including ferrous gluconate, ferrous fumerate, and polysaccharide iron complex, and intravenous iron formulations, including Feraheme® (ferumoxytol injection), Venofer® (iron sucrose injection), Ferrlicit® (sodium ferric gluconate complex in sucrose injection), Injectafer® (ferric carboxymaltose injection), and Triferic® (ferric pyrophosphate citrate).

In addition, other new therapies for the treatment of IDA may impact the market for Auryxia, such as Shield Therapeutics plc's Feraccru® (ferric maltol), which is available in Europe for the treatment of IDA and Accrufer® (ferric maltol), which was launched in the United States for the treatment of IDA in July 2021.

In addition, other new therapies for the treatment of IDA may impact the market for Auryxia, such as Shield

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Therapeutics plc's Feraccru® (ferric maltol), which is available in Europe for the treatment of IDA and Accrufer® (ferric maltol), which was launched in the United States for the treatment of IDA in July 2021.

Furthermore, Auryxia’s commercial opportunities may be reduced or eliminated if our competitors develop and market products that are less expensive, more effective, safer or offer greater patient convenience than Auryxia.

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In particular, these companies have greater experience and expertise in conducting preclinical testing and clinical trials, obtaining marketing approvals, manufacturing such products on a broad scale and marketing approved products.

These companies also have significantly greater research and marketing capabilities than we do and may also have products that have been approved or are in late stages of development and have collaborative arrangements in our target markets with leading companies and research institutions.

These companies also

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have significantly greater research and marketing capabilities than we do and may also have products that have been approved or are in late stages of development and have collaborative arrangements in our target markets with leading companies and research institutions.

Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make the product candidates that we are developing obsolete.

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If we are not able to compete effectively against potential competitors, our business will not grow and our financial condition and operations will suffer.

The commercialization of Riona TM and Vafseo TM in Japan, Vafseo TM in Europe and our current and potential future efforts with respect to the development and commercialization of our products and product candidates outside of the United States subject us to a variety of risks associated with international operations, which could materially adversely affect our business.

The commercialization of Riona and Vafseo in Japan, Vafseo in Europe and our current and potential future efforts with respect to the development and commercialization of our products and product candidates outside of the United States subject us to a variety of risks associated with international operations, which could materially adversely affect our business.

Our Japanese sublicensee, JT, and its subsidiary, Torii Pharmaceutical Co., Ltd., or Torii, commercialize Riona, the trade name for ferric citrate hydrate in Japan, as an oral treatment for the improvement of hyperphosphatemia in patients with CKD, including DD-CKD and NDD-CKD, and for the treatment of adult patients with IDA in Japan.

In Japan and certain other countries in Asia, we granted MTPC exclusive rights to commercialize vadadustat, which has been approved and is being marketed by MTPC in Japan under the trade name Vafseo TM .

In Japan and certain other countries in Asia, we granted MTPC exclusive rights to commercialize vadadustat, which has been approved and is being marketed by MTPC in Japan under the trade name Vafseo.

We also granted Averoa SAS, or Averoa , an exclusive license to develop and commercialize ferric citrate in the EEA, Turkey, Switzerland and the United Kingdom.

Pursuant to the terms of the Termination Agreement with Otsuka, Otsuka has transferred to us the marketing authorization application, or MAA, for vadadustat with the EMA, and in the United Kingdom, Switzerland and Australia, and in April 2023, the European Commission, or EC, approved the marketing authorization of Vafseo™..

In 2023, the marketing authorization for vadadustat was approved by the EMA, the Medicines and Healthcare Products Regulatory Agency, or the MHRA , and the Swiss Agency for Therapeutic Products, or Swissmedic .

In addition, we have conducted and in the future plan to conduct clinical trials outside of the United States for Auryxia, vadadustat and any other product or product candidate that may be in-licensed or acquired.

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• foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country;

• production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad, including as a result of the COVID-19 pandemic;

• production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;

• business interruptions resulting from geopolitical actions, including war and terrorism, global pandemics, or natural disasters including earthquakes, typhoons, floods and fires.

In addition, we receive revenues from royalty payments converted to U.S.

dollars based on net sales of Riona and Vafseo TM in Japanese yen.

dollars based on net sales of Riona and Vafseo in Japanese yen.

The exchange rates between the Japanese yen on the one hand, and the U.S.

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Risks Related to Product Development

Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and we will incur additional costs in connection with, and may experience delays in completing, or ultimately be unable to complete, the development and, if approved, commercialization of vadadustat and any other product candidates.

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The risk of failure in drug development is high.

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Many companies in the biopharmaceutical industry have suffered significant setbacks in late-stage clinical trials after achieving positive results in early-stage development, and we may face similar setbacks.

Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their product

In addition, in March 2022, we received the CRL for vadadustat indicating that the FDA had determined that it could not approve the NDA in its present form, thus delaying any potential approval of vadadustat.

In October 2022, we submitted the FDRR to the FDA and i n February 2023, we received a second interim response from the FDA to our FDRR .

In October 2022, we submitted the FDRR to the FDA.

In May 2023, the OND denied our appeal but provided a path forward for us to resubmit the NDA for vadadustat for the treatment of anemia due to CKD for dialysis dependent patients without the need for us to generate additional clinical data.

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

We expect to resubmit the NDA by the end of the third quarter of 2023, with a potential PDUFA date that we project will be in March 2024.

However, it is impossible to predict when or if vadadustat or any of our other product candidates will prove effective or safe in humans or will receive marketing approval or on what terms.

In April 2023, the EC approved Vafseo™ (vadadustat), an oral HIF-PH inhibitor, for the treatment of symptomatic anemia associated with CKD in adults on chronic maintenance dialysis.

However, we do not have commercial operations in Europe.

We plan to pursue a new partner to commercialize vadadustat in Europe and other territories previously licensed to Otsuka.

If we are unsuccessful in entering into a new agreement for the commercialization of vadadustat in Europe in a timely manner, or at all, it may result in a delay in the launch of vadadustat in Europe, and could have an adverse effect on our results of operations.

If we are unsuccessful in obtaining approval for vadadustat in the U.S.

or other territories, it would have an adverse effect on our results of operations.

We may experience numerous unforeseen events during, or as a result of, preclinical development or clinical trials that could delay, prevent or make more challenging our ability to receive or maintain marketing approval or commercialize our product candidates.

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• lack of adequate funding to continue a clinical trial, including unforeseen costs due to enrollment delays, requirements to conduct additional clinical trials or repeat a clinical trial and increased expenses associated with the services of our CROs and other third parties;

• we may fail to initiate, delay of or failure to complete a clinical trial as a result of an Investigational New Drug application, or IND, being placed on clinical hold by the FDA, the EMA, the PMDA, or other regulatory authorities, or for other reasons, such as failure to recruit or enroll suitable patients or patients' failure to return for post-treatment follow up;

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for other reasons, such as failure to recruit or enroll suitable patients or patients' failure to return for post-treatment follow up;

• we may determine to change or expand a clinical trial, including after it has begun;

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Additionally, it is often more difficult to enroll special or particular subpopulations of patients, such as pediatric or elderly patients, due to a number of factors including parental or other caregiver considerations, concerns and burdens.

For example, we enrolled sites in a post-approval pediatric study for the Hypophosphatemia Indication of Auryxia in the second quarter of 2022, which began patient recruitment in the third quarter of 2022, but study sites have not yet enrolled any eligible pediatric patients despite efforts to do so.

Furthermore, the COVID-19 pandemic resulted in temporary closures of, and may continue to impact, clinical trial sites on which we rely for the conduct of clinical trials and COVID-19 pandemic precautions and staffing shortages have caused moderate delays in enrolling new clinical trials and may cause delays in enrolling other new clinical trials.

For example, we enrolled sites in

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a post-approval pediatric study for the Hypophosphatemia Indication of Auryxia in the second quarter of 2022, which began patient recruitment in the third quarter of 2022, but enrollment of eligible pediatric patients in study sites continues to be very slow despite efforts to do so.

Furthermore, the recent COVID-19 pandemic resulted in temporary closures of, and may continue to impact, clinical trial sites on which we rely for the conduct of clinical trials and recent COVID-19 pandemic precautions and staffing shortages have caused moderate delays in enrolling new clinical trials and may cause delays in enrolling other new clinical trials.

Finally, competition for clinical trial sites may limit our access to patients appropriate for our clinical trials.

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• the potential burden of complying with a variety of laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatments.

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Data obtained from studies conducted in the United States may not be accepted by the EMA, the PMDA and other regulatory authorities outside of the United States.

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Auryxia, vadadustat or any other product or product candidate, including those that may be in-licensed or acquired, may cause undesirable side effects or have other properties that may delay or prevent marketing approval or limit their commercial potential.

Undesirable effects caused by, or other undesirable properties of, Auryxia, vadadustat or any other product or product candidate, including those that may be in-licensed or acquired, or competing commercial products or product candidates in development that utilize a common mechanism of action could cause us or regulatory authorities to interrupt, delay or halt clinical trials, could result in a more restrictive label or the delay, denial or withdrawal of marketing approval by the FDA or

other regulatory authorities, and could lead to potential product liability claims.

In addition, results of our clinical trials could reveal a high frequency of undesirable effects or unexpected characteristics.

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The FDA expressed safety concerns noting failure to meet non-inferiority in MACE in the non-dialysis patient population, the increased risk of thromboembolic events, driven by vascular access thrombosis in dialysis patients, and the risk of drug-induced liver injury.

In October 2022, we submitted the FDRR to the FDA.

In February 2023, we received a second interim response from the FDA to our FDRR, and there can be no assurances that we will be successful in our appeal.

In October 2022, we submitted the FDRR to 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 patients on dialysis 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 th e risk of drug-induced liver injury.

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

We expect to resubmit the NDA by the end of the third quarter of 2023, with a potential PDUFA date that we project will be in March 2024.

There can be no assurances that we will be successful in our anticipated NDA resubmission.

If we are unable to overcome these concerns, vadadustat may not be approved by the FDA on favorable terms, or at all, and our financial condition could be materially harmed.

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• we may be precluded from pursuing additional development opportunities to enhance the clinical profile of a product within its indicated populations, or studying the product or product candidate in additional indications and populations or in new formulations;

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• we could be investigated by the government or sued and held liable for harm caused to patients, including in class action lawsuits;

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Serious treatment emergent adverse events were slightly lower for vadadustat treated patients at 55.0% and 58.3% for darbepoetin alfa-treated patients.

Patients with DD-CKD experienced an increased risk of

thromboembolic events compared to darbepoetin alfa with a time to first event HR of 1.20 (95% CI 0.96 - 1.50) driven by thrombosis of vascular access.

Patients with DD-CKD experienced an increased risk of thromboembolic events compared to darbepoetin alfa with a time to first event HR of 1.20 (95% CI 0.96 - 1.50) driven by thrombosis of vascular access.

With respect to the global PRO 2 TECT Phase 3 program, the incidence of treatment emergent adverse events during the erythropoiesis stimulating agent, or ESA , untreated patients study ( Correction ) in the vadadustat-treated patients was 90.9%, and 91.6% in darbepoetin alfa-treated patients.

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Any of the above safety data or other occurrences could delay or prevent us from achieving or maintaining marketing approval, harm or prevent sales of Auryxia or, if approved, vadadustat or any other product or product candidate, including those that may be in-licensed or acquired, increase our expenses and impair or prevent our ability to successfully commercialize Auryxia, vadadustat or any other products or product candidates.

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In addition, any post-marketing clinical trials conducted, if successful, may expand the patient populations treated with Auryxia, vadadustat or any other product we acquire or for which we receive marketing approval, within or outside of their current indications or patient populations, which could result in the identification of previously unknown undesirable effects, increased frequency or severity of known undesirable effects, or result in the identification of unexpected safety signals.

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Of the large number of drugs in development in the United States and in other jurisdictions, only a small percentage successfully complete the FDA’s and other jurisdictions’ marketing approval processes and are commercialized.

Accordingly, even if we are able to obtain the requisite capital to continue to fund our development

and commercialization efforts, we may be unable to successfully obtain regulatory approval for or commercialize vadadustat or any other product or product candidate, including those that may be in-licensed or acquired.

Accordingly, even if we are able to obtain the requisite capital to continue to fund our development and commercialization efforts, we may be unable to successfully obtain regulatory approval for or commercialize vadadustat or any other product or product candidate, including those that may be in-licensed or acquired.

We are not permitted to market vadadustat in the United States until we receive approval from the FDA or in any other jurisdiction until the requisite approval from regulatory authorities in such jurisdiction is received.

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The FDA concluded that the data in the NDA do not support a favorable benefit-risk assessment of vadadustat for dialysis and non-dialysis patients.

In October 2022, we submitted a Formal Dispute Resolution Request, or FDRR, to the FDA.

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

We expect to resubmit the NDA by the end of the third quarter of 2023 , with a potential PDUFA date that we project will be in March 2024 .

There can be no assurances that we will be successful in our anticipated NDA resubmission and obtain approval for vadadustat in a timely manner, on favorable terms, or at all.

As a result, the regulatory approval process for vadadustat in the U.S.

is highly uncertain.

We may not obtain approval at all, and if we are able to obtain approval, it may only be for patients with DD-CKD and, in any event, the expense and time to do so could adversely impact our ability to successfully commercialize vadadustat, and our financial condition could be materially harmed.

We may not obtain approval at all, and if we are able to obtain approval, it will only be for patients with DD-CKD and, in any event, the expense and time to do so could adversely impact our ability to successfully commercialize vadadustat, and our financial condition could be materially harmed.

Further, vadadustat and any other product candidate may not receive marketing approval in the United States even if it is approved in other countries.

For example, although vadadustat is approved in Japan for the treatment of anemia due to CKD in DD-CKD and NDD-CKD adult patients and in Europe for the treatment of aneumia due to CKD in DD-CKD patients, such approval does not guarantee approval in the United States by the FDA for these indications or at all.

For example, although vadadustat is approved in Japan for the treatment of anemia due to CKD in DD-CKD and NDD-CKD adult patients and in Europe for the treatment of anemia due to CKD in DD-CKD patients, such approval does not guarantee approval in the United States by the FDA for these indications or at all.

In addition, while each regulatory authority makes their own assessment as to the safety and efficacy of a drug, FDA’s concern about the safety or efficacy of vadadustat or any other product candidate could impact the regulatory authority’s decision in another country.

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For example, on September 23, 2015, the European Commission, or EC , approved Fexeric for the control of hyperphosphatemia in adult patients with CKD.

Pursuant to the sunset clause under EU law, the EC’s approval of Fexeric in the EU was contingent on, among other things, our commencing marketing of Fexeric within three years;

Pursuant to the sunset clause under EU law, the EC’s approval of Fexeric in the

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EU was contingent on, among other things, our commencing marketing of Fexeric within three years;

although we successfully negotiated an extension to December 23, 2019, we did not commence marketing Fexeric by such date and therefore the Fexeric approval in the EU has ceased to be valid.

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If any of these outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval in the UK for vadadustat or any other product candidate, which could significantly and materially harm our business.

As of January 1, 2021, the Medicines and Healthcare Products Regulatory Agency, or the MHRA, became responsible for supervising medicines and medical devices in Great Britain, comprising England, Scotland and Wales under domestic law, whereas Northern Ireland will continue to be subject to European Union rules under the Northern Ireland Protocol.

As of January 1, 2021, the MHRA became responsible for supervising medicines and medical devices in Great Britain, comprising England, Scotland and Wales under domestic law, whereas Northern Ireland will continue to be subject to European Union rules under the Northern Ireland Protocol.

The MHRA will rely on the Human Medicines Regulations 2012 (SI 2012/1916) (as amended) as the basis for regulating medicines.

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• the relevant regulatory authority may grant approval contingent on the performance of costly post-marketing clinical trials;

• the relevant regulatory authority 's onsite inspections may be delayed due to the COVID-19 pandemic or otherwise;

• the relevant regulatory authority 's onsite inspections may be delayed due to the recent COVID-19 pandemic or otherwise;

• we, or our CROs or other vendors, may fail to comply with GXP or fail to pass any regulatory inspections or audits;

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• the relevant regulatory authority could deem that our financial relationships with certain pr incipal investigators constitute a conflict of interest, such that the data from those principal investigators may not be used to support our applications;

• as part of any future regulatory process, the FDA may ask an Advisory Committee to review portions of the NDA, the FDA may have difficulty scheduling an Advisory Committee meeting in a timely manner or, if convened, an FDA Advisory Committee could recommend non-approval, conditions of approval or restrictions on approval, and the FDA may ultimately agree with the recommendations;

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Advisory Committee could recommend non-approval, conditions of approval or restrictions on approval, and the FDA may ultimately agree with the recommendations;

• the relevant regulatory authority’s review process and decision-making regarding vadadustat and any other product candidate may be impacted by the results of our and our competitors’ clinical trials and safety concerns of marketed products used to treat the same indications as the indications for which vadadustat and any other product candidate are being developed;

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If we experience further delays in obtaining approval, or if we fail to obtain approval of vadadustat for some or all of the indications for which we have sought approval, the commercial prospects for vadadustat may be harmed and our ability to generate revenues will be materially impaired, which could have a material adverse effect on our business.

For example, the FDRR we submitted to the FDA in October 2022 focuses on the favorable balance between the benefits and risks of vadadustat for the treatment of anemia due to CKD in adult patients on dialysis.

For example, the FDRR we submitted to the FDA in October 2022 focused on the favorable balance between the benefits and risks of vadadustat for the treatment of anemia due to CKD in adult patients on dialysis.

Finally, our ability to develop and market new drug products may be threatened by ongoing litigation challenging the FDA’s approval of mifepristone.

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Court of Appeals for the Fifth Circuit.

Thereafter, on April 21,

2023, the US Supreme Court entered a stay pending disposition of the appeal of the district court decision in the Court of Appeals for the Fifth Circuit or the Supreme Court.

Thereafter, on April 21, 2023, the U.S.

Supreme Court entered a stay pending disposition of the appeal of the district court decision in the Court of Appeals for the Fifth Circuit or the Supreme Court.

That court held oral arguments in the case on May 17, 2023 and a decision is expected soon.

Depending on the outcome of this litigation and the regulatory uncertainty it has engendered, our ability to develop new drug product candidates and to maintain approval of existing drug products and measures adopted under a REMS is at risk and could be delayed, undermined or subject to protracted litigation.

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Consequently, we received a notification of noncompliance with PREA.

However, we have since been released from the original post marketing requirement, or PMR, and a new PMR was issued.

Therefore, this PMR trial is no longer considered delayed.

Recruitment of the other patients is pending receipt of further data regarding the manufacturing of the smaller size tablets and the FDA’s concurrence before proceeding with the use of such formulation.

However, we have since been released from the original post marketing requirement, or PMR , and a new PMR was issued that provided that the final report is due in April 2024.

Therefore, this PMR trial is no longer considered delayed and is open and actively enrolling patients.

In June 2023 we requested an extension of time for the submission of the final report and such request was denied by the FDA in August 2023.

Therefore, the final report for this PMR trial is still due in April 2024, and we are unlikely to complete the trial by that time.

With regard to our IDA Indication, we initially committed to completing the post-approval pediatric study and submitting a final report to the FDA by January 2023.

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The FDA lifted the partial clinical hold in June 2022, however, we have not commenced start up of this study pending resolution of the manufacturing of the smaller size tablets.

If we are unable to complete these studies successfully, or have further delays in completing these studies, we will need to inform the FDA, have further discussions and, if the FDA finds that we failed to comply with pediatric study requirements, in violation of applicable law, it could institute enforcement proceedings to seize or enjoin the sale of Auryxia or seek civil penalties, which would have a material adverse impact on our ability to commercialize Auryxia and our ability to generate revenues from Auryxia.

If we are unable to complete these studies successfully by the applicable deadline, or have further delays in completing these studies, we will need to inform the FDA, have further discussions and, if the FDA finds that we failed to comply with pediatric study requirements, in violation of applicable law, it could institute enforcement proceedings to seize or

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enjoin the sale of Auryxia or seek civil penalties, which would have a material adverse impact on our ability to commercialize Auryxia and our ability to generate revenues from Auryxia.

In addition, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for Auryxia, vadadustat, if approved, and any other product for which we receive regulatory approval will be subject to extensive and ongoing regulatory requirements and guidance.

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For example, we previously had three limited, voluntary recalls of Auryxia.

These and any other recalls or any supply, quality or manufacturing issues in the future could result in significant negative consequences, including reputational harm, loss of customer confidence, and a negative impact on our financials, any of which could have a material adverse effect on our business and results of operations, and may impact our ability to supply Auryxia, Vafseo TM, in Japan or vadadustat, if approved, for commercial and clinical use.

These and any other recalls or any supply, quality or manufacturing issues in the future could result in significant negative consequences, including reputational harm, loss of customer confidence, and a negative impact on our financials, any of which could have a material adverse effect on our business and results of operations, and may impact our ability to supply Auryxia in Japan, Vafseo in Japan and Europe or vadadustat, if approved in other countries, for commercial and clinical use.

Non-compliance with the FDA, the EMA, the PMDA and other regulatory authorities’ requirements regarding safety monitoring or pharmacovigilance can also result in significant financial penalties.

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Risks Related to Governmental Regulation and Compliance

We are subject to a complex regulatory scheme that requires significant resources to ensure compliance and our failure to comply with applicable laws could subject us to government scrutiny or enforcement, potentially resulting in costly investigations, fines, penalties or sanctions, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.

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investigations, fines, penalties or sanctions, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.

In general, a variety of laws apply to us or may otherwise restrict our activities, including the following:

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• data privacy laws existing in the United States, the EU, the UK and other countries in which we operate, including the U.S.

Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, state privacy and data protection laws, such as the California Consumer Privacy Act, or CCPA, and the California Privacy Rights Act of 2020, or CPRA, as well as state consumer protection laws, GDPR, any additional applicable EU member state data protection laws in force from time to time, the retained EU law version of the General Data Protection Regulation as saved into United Kingdom law by virtue of section 3 of the United Kingdom's European Union (Withdrawal) Act 2018, or the EU GDPR;

Health Insurance Portability and Accountability Act of 1996, or HIPAA , as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH , state privacy and data protection laws, such as the California Consumer Privacy Act, or CCPA , and the California Privacy Rights Act of 2020, or CPRA , as well as other state consumer protection laws, GDPR, any additional applicable EU member state data protection laws in force from time to time, the retained EU law version of the General Data Protection Regulation as saved into United Kingdom law by virtue of section 3 of the United Kingdom's European Union (Withdrawal) Act 2018, or the EU GDPR ;

• federal and state laws requiring the submission of accurate product prices and notifications of price increases;

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• analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws and gift ban and transparency statutes, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by state Medicaid or other programs, or non-governmental third party payors, including private insurers, and which are not preempted by federal laws and often differ from state to state, thus complicating compliance efforts;

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state laws restricting interactions with healthcare providers and other members of the healthcare community or requiring pharmaceutical manufacturers to implement certain compliance standards, which vary from state to state.

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If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion of products from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations, any of which could materially adversely affect our business and would result in increased costs and diversion of management attention and could negatively impact the development, regulatory approval and commercialization of Auryxia or vadadustat, any of which could have a material adverse effect on our business.

Further, if any of the physicians or other healthcare providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they

may be subject to criminal, civil or administrative sanctions, including exclusions from participation in government funded healthcare programs.

Further, if any of the physicians or other healthcare providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from participation in government funded healthcare programs.

We will incur significant liability if it is determined that we are promoting any “off-label” use of Auryxia or any other product we may develop, in-license or acquire or if it is determined that any of our activities violates the federal Anti-Kickback Statute.

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It may also be subject to exclusion and debarment from federal healthcare reimbursement programs.

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Notwithstanding the regulatory restrictions on off-label promotion, the FDA and other regulatory authorities allow companies to engage in truthful, non-misleading, and non-promotional scientific communications concerning their products in certain circumstances.

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In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may increase the time necessary for new drugs to be reviewed or approved by necessary government agencies, which would adversely affect our

Disruptions at the FDA and other agencies may increase the time necessary for new drugs to be reviewed or approved by necessary government agencies, which would adversely affect our business.

If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our, or our collaboration partners', regulatory submissions, which could have a material adverse effect on our business.

Disruptions may result also from continuation of the COVID-19 pandemic or any similar event that may occur in the future.

During the COVID-19 pandemic, a number of companies announced receipt of complete response letters due to the FDA’s inability to complete required inspections for their applications.

Disruptions may still result also from the recent COVID-19 pandemic or any similar event that may occur in the future.

During the recent COVID-19 pandemic, a number of companies announced receipt of complete response letters due to the FDA’s inability to complete required inspections for their applications.

The FDA has now indicated that it can and will conduct timely reviews of applications for medical in line with its user fee performance goals, including conducting mission critical domestic and foreign inspections to ensure compliance of manufacturing facilities with FDA quality standards.

However, in the event of a resurgence of the COVID-19 pandemic or a similar public health emergency in the future, the FDA may not be able to continue its current pace and review timelines could be extended.

Regulatory authorities outside the United States facing similar circumstances may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic and may also experience delays in their regulatory activities.

However, in the event of a resurgence of the recent COVID-19 pandemic or a similar public health emergency in the future, the FDA may not be able to continue its current pace and review timelines could be extended.

Regulatory authorities outside the United States facing similar circumstances may adopt similar restrictions or other policy measures in response to the recent COVID-19 pandemic or a similar public health emergency and may also experience delays in their regulatory activities.

If a prolonged government shutdown occurs, or if global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

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Data Protection Act 2018 applies to the processing of personal data that takes place in the U.K.

and includes parallel obligations to those set forth by GDPR.

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includes parallel obligations to those set forth by GDPR.

The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data when required, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to whom the personal data relates, when required, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third party processors.

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Companies must continue to monitor the regulatory landscape and implement necessary changes, all of which may be costly and may put the company out of compliance while any changes are being implemented.

Additionally, in October 2022, President Biden signed an executive order to implement the EU-U.S.

Data Privacy Framework, which would serve as a replacement to the EU-U.S.

Privacy Shield.

The European Union initiated the process to adopt an adequacy decision for the EU-U.S.

Data Privacy Framework in December 2022, and the EC adopted the adequacy decision on July 10, 2023.

The adequacy decision will permit U.S.

companies who self-certify to the EU-U.S.

Data Privacy Framework to rely on it as a valid data transfer mechanism for data transfers from the EU to the U.S.

However, some privacy advocacy groups have already suggested that they will be challenging the EU-U.S.

Data Privacy Framework.

If these challenges are successful, they may not only impact the EU-U.S.

Data Privacy Framework, but also further limit the viability of the standard contractual clauses and other data transfer mechanisms.

The uncertainty around this issue has the potential to impact our business internationally.

Given the breadth and depth of changes in data protection obligations, complying with the GDPR’s requirements is rigorous and time intensive and requires significant resources and a review of our technologies, systems and practices, as well as those of any third party collaborators, service providers, contractors or consultants that process or transfer personal data collected in the EU.

commercialization activities and increase our cost of doing business, and could lead to government enforcement actions, private litigation and significant fines and penalties against us and could have a material adverse effect on our business, financial condition or results of operations.

The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as healthcare data or other personal information from our clinical trials, could require us to change our business practices and put in place additional compliance mechanisms, may interrupt or delay our development, regulatory and commercialization activities and increase our cost of doing business, and could lead to government enforcement actions, private litigation and significant fines and penalties against us and could have a material adverse effect on our business, financial condition or results of operations.

Similar privacy and data security requirements are either in place or underway in the United States.

There are a broad variety of data protection laws that may be applicable to our activities, and a range of enforcement agencies at both the state and federal levels that can review companies for privacy and data security concerns.

The Federal Trade Commission and state Attorneys General all are aggressive in reviewing privacy and data security protections for consumers.

The Federal Trade Commission, or the FTC , and state Attorneys General all are aggressive in reviewing privacy and data security protections for consumers.

For example, the FTC has been particularly focused on the unpermitted processing of health and genetic data through its recent enforcement actions and is expanding the types of privacy violations that it interprets to be “unfair” under Section 5 of the Federal Trade Commission Act, as well as the types of activities it views to trigger the Health Breach Notification Rule (which the FTC also has the authority to enforce).

The agency is also in the process of developing rules related to commercial surveillance and data security that may impact our business.

We will need to account for the FTC’s evolving rules and guidance for proper privacy and data security practices in order to mitigate our risk for a potential enforcement action, which may be costly.

If we are subject to a potential FTC enforcement action, we may be subject to a settlement order that requires us to adhere to very specific privacy and data security practices, which may impact our business.

We may also be required to pay fines as part of a settlement (depending on the nature of the alleged violations).

If we violate any consent order that we reach with the FTC, we may be subject to additional fines and compliance requirements.

New laws also are being considered at both the state and federal levels.

For example, the CCPA, which went into effect on January 1, 2020, and the CPRA, which amends CCPA by expanding the scope and applicability, while also introducing new privacy protections, is creating similar risks and obligations as those created by GDPR.

For example, the CCPA, which went into effect on January 1, 2020, and the CPRA, which amends CCPA by expanding the scope and applicability, while also introducing new

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privacy protections, is creating similar risks and obligations as those created by GDPR.

In November 2020, California voters passed a ballot initiative for the CPRA, which went into effect on January 1, 2023 and significantly expanded the CCPA to incorporate additional GDPR-like provisions including requiring that the use, retention and sharing of personal information of California residents be reasonably necessary and proportionate to the purposes of collection or processing, granting additional protections for sensitive personal information, and requiring greater disclosures related to notice to residents regarding retention of information.

The CPRA also creates a new agency that is specifically responsible for enforcing the new law.

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In addition, we will need to ensure that our policies recognize the rights granted to consumers (as that phrase is broadly defined in the CCPA and can include business contact information).

Other states have also passed privacy laws that are similar to the CCPA/CPRA, including Virginia, Colorado, Connecticut, and Utah.

The laws in the various states vary in terms of their exact requirements, but they all provide regulators in these states with enforcement authority.

Many other states are considering similar legislation.

In addition to California, at least eleven other states have passed comprehensive privacy laws similar to the CCPA and CPRA.

These laws are either in effect or will go into effect sometime before the end of 2026.

Like the CCPA and CPRA, these laws create obligations related to the processing of personal information, as well as special obligations for the processing of “sensitive” data (which includes health data in some cases).

Some of the provisions of these laws may apply to our business activities.

There are also states that are strongly considering or have already passed comprehensive privacy laws during the 2023 legislative sessions that will go into effect in 2024 and beyond, including New York and New Jersey.

Other states will be considering these laws in the future, and Congress has also been debating passing a federal privacy law.

There are also states that are specifically regulating health information that may affect our business.

For example, Washington state recently passed a health privacy law that will regulate the collection and sharing of health information, and the law also has a private right of action, which further increases the relevant compliance risk.

Connecticut and Nevada have also passed similar laws regulating consumer health data.

These laws may impact our business activities, including our identification of research subjects, relationships with business partners and ultimately the marketing and distribution of our products.

A broad range of legislative measures also have been introduced at the federal level.

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The pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by legislative initiatives.

Current laws, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any FDA approved product, such as Auryxia or vadadustat, if approved, or any reimbursement that physicians receive for administering any approved product.

Current laws, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and additional downward pressure on the price that we receive for any FDA approved product, such as Auryxia or vadadustat, if approved, or any reimbursement that physicians receive for administering any approved product.

In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or the MMA , changed the way Medicare covers and pays for pharmaceutical products.

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In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or, collectively, the ACA.

In addition, other legislative changes and regulatory have been proposed and adopted since the ACA was enacted.

In addition, other legislative and regulatory changes have been proposed and adopted since the ACA was enacted.

These changes include the Budget Control Act of 2011, which, among other things, led to aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which will remain in effect through 2031.

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In addition, other legislative and regulatory changes have been proposed, but not yet adopted.

For example, in July 2019, HHS proposed regulatory changes in kidney health policy and reimbursement.

For example, in July

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2019, the U.S.

Department of Health and Human Services, or HHS , proposed regulatory changes in kidney health policy and reimbursement.

Any new legislative or regulatory changes may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for Auryxia or vadadustat, if approved, or the frequency with which Auryxia and vadadustat, if approved, is prescribed or used.

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To date, there have been several recent U.S.

congressional inquiries and proposed and enacted state and federal legislation

designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products.

congressional inquiries and proposed and enacted state and federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products.

At the federal level, Congress and the current administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs.

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The new legislation has implications for Medicare Part D, which is a program available to individuals who are entitled to Medicare Part A or enrolled in Medicare Part B to give them the option of paying a monthly premium for outpatient prescription drug coverage.

Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap;

imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023);

Among other things, the IRA imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023);

and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).

The IRA permits the Secretary of HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

We consider many factors when we implement a price increase for a product, including historical and potential future inflation rates.

However, there are many variables that are outside of our control and if we increase the price of Auryxia or vadadustat, if approved, faster than the pace of inflation, we would be subject to additional rebates under Medicare, which could have a material adverse effect on our product revenues.

Specifically, with respect to price negotiations, Congress authorized Medicare to negotiate lower prices for certain costly single-source drug and biologic products that do not have competing generics or biosimilars and are reimbursed under Medicare Part B and Part D.

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The new law also caps Medicare out-of-pocket drug costs at an estimated $4,000 a year in 2024 and, thereafter beginning in 2025, at $2,000 a year.

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On June 6, 2023, Merck & Co.

Inc., or Merck , filed a lawsuit against HHS and CMS asserting that, among other things, the IRA’s Drug Price Negotiation Program for Medicare constitutes an uncompensated taking in violation of the Fifth Amendment of the United States Constitution.

Subsequently, other parties, including the U.S.

Chamber of Commerce, Bristol Myers Squibb Company, and the Pharmaceutical Research and Manufacturers of America also filed lawsuits in various courts with similar constitutional claims against HHS and CMS.

On July 11, 2023, Merck moved for summary judgment in its action and, the next day, the U.S.

Chamber of Commerce moved for preliminary injunctive relief seeking to stop implementation of the drug pricing provisions of the IRA.

We expect that litigation involving these and other provisions of the IRA will continue, with unpredictable and uncertain results.

At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

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We also could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations.

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Although we maintain workers’ compensation insurance to cover us for costs and expenses, we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities.

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We also entered into a collaboration agreement with MTPC to develop and commercialize vadadustat in Japan and certain other Asian countries.

In addition, we entered into the Vifor Second Amended Agreement pursuant to which we granted CSL Vifor an exclusive license to sell vadadustat to the

Supply Group in the United States .

In addition, we entered into the Vifor Second Amended Agreement pursuant to which we granted CSL Vifor an exclusive license to sell vadadustat to the Supply Group in the United States .

We also granted to Averoa an exclusive license to develop and commercialize ferric citrate in the EEA, Turkey, Switzerland and the United Kingdom.

Furthermore, in May 2023, we entered into the license agreement with Medice, pursuant to which we granted Medice an exclusive license to develop and commercialize vadadustat for the treatment of anemia in patients with chronic kidney disease in the Medice Territory.

We may form or seek other strategic alliances, joint ventures, or collaborations, or enter into additional licensing arrangements with third parties that we believe will complement or augment our and our partners' commercialization efforts with respect to Auryxia, Riona, Vafseo and our and our partners' development and, if approved, commercialization efforts with respect to vadadustat and any other product candidates.

We may not be able to maintain our collaborations for development and commercialization.

For example, on May 13, 2022, Otsuka elected to terminate our collaboration agreements with them, and we subsequently negotiated the Termination Agreement with Otsuka.

This termination by Otsuka may delay the launch of vadadustat in Europe or the approval or launch of vadadustat in other territories or adversely affect how we are perceived in scientific and financial communities.

For example, on May 13, 2022, Otsuka Pharmaceutical Co.

Ltd., or Otsuka , elected to terminate our collaboration agreements with them, and we subsequently negotiated a Termination and Settlement Agreement with Otsuka.

This termination by Otsuka may delay the launch of vadadustat in Europe or other territories previously licensed to Otsuka or adversely affect how we are perceived in scientific and financial communities.

For example, in August 2023, Medice informed us that their launch of Vafseo in certain countries in the Medice Territory was going to be later than previously anticipated due to the activities required to enable the launch.

In addition, our current and any future collaborations may not be successful due to a number of important factors, including the following:

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• collaborations may not lead to development or commercialization of products and product candidates, if approved, in the most efficient manner or at all;

• a significant change in the senior management team, a change in the financial condition or a change in the business operations, including a change in control or internal corporate restructuring, of any of our collaborators, could result in delayed timelines, re-prioritization of our programs, decreasing resources or funding allocated to support our programs, or termination of the collaborations;

• inefficiencies or structural changes in internal operations or processes of our collaborators may lead to increased expenses associated with commercializing a product, including manufacturing costs, rebates, returns and other adjustments which would negatively impact net product revenue;

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delayed timelines, re-prioritization of our programs, decreasing resources or funding allocated to support our programs, or termination of the collaborations;

• collaborators may not comply with all applicable regulatory and legal requirements.

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We may seek to establish additional collaborations and, if we are not able to establish them on commercially reasonable terms, or at all, we may have to alter our development and commercialization plans.

We will require substantial additional cash to fund the continued commercialization of Auryxia and the development and potential commercialization of any of our product candidates, including vadadustat, if approved, especially following the termination of our collaboration agreements with Otsuka.

We may decide to enter into additional collaborations for the development and commercialization of vadadustat or Auryxia, both within and outside of the United States.

For example, we plan to pursue a new partner to develop and commercialize vadadustat in Europe and other territories previously licensed to Otsuka.

If we are unsuccessful in entering into a new agreement for the development and commercialization of vadadustat in Europe and other territories in a timely manner, or at all, it may result in a delay in the launch of vadadustat in Europe or the approval or launch of vadadustat in other territories, a need for additional capital and expansion of our internal capabilities to pursue further development or commercialization of the applicable products and product candidates, particularly the development and commercialization of vadadustat in Europe and other territories, and could have an adverse effect on our results of operations.

We may decide to enter into additional collaborations for the development and commercialization of Auryxia or our product candidates, including vadadustat, both within and outside of the United States.

For example, in May 2023, we entered into the license agreement with Medice, pursuant to which we granted Medice an exclusive license to develop and commercialize vadadustat for the treatment of anemia in patients with chronic kidney disease in the Medice Territory.

Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing stockholders, divert management’s attention, or disrupt our business.

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• restrictions due to an existing collaboration agreement.

If we are unable to enter into additional collaborations in a timely manner, or at all, we may have to delay or curtail the commercialization of Auryxia or vadadustat, if and where approved, reduce or delay its development program or other of our other development programs, or increase our expenditures and undertake additional development or commercialization activities at our own expense.

If we are unable to enter into additional collaborations in a timely manner, or at all, we may have to delay or curtail the commercialization of Auryxia or the development and potential commercialization of any of our product candidates, including vadadustat, if approved, reduce or delay our development programs, or increase our expenditures and undertake additional development or commercialization activities at our own expense.

For example, following the termination of our collaboration agreements with Otsuka in 2022, we incurred additional expenses in connection with the development of vadadustat in Europe and other countries.

If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all.

If we do not have sufficient funds, we may not be able to further develop or commercialize Auryxia or vadadustat, if approved.

If we do not have sufficient funds, we may not be able to further develop or commercialize Auryxia or our other product candidates, including vadadustat, if approved.

Even if we enter into additional collaboration agreements and strategic partnerships or license our intellectual property, we may not be able to maintain them or they may be unsuccessful, which could delay our timelines or otherwise adversely affect our business.

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

We received $44.8 million from HCR (net of certain transaction expenses) under the Royalty Agreement, and we are eligible to receive up to an additional $15.0 million under the Royalty Agreement if specified sales milestones are achieved for vadadustat in the territory covered by the MTPC Agreement, subject to the satisfaction of certain customary conditions.

We received $44.8 million from HCR (net of certain transaction expenses) under the Royalty Agreement, and we are eligible to receive up to an additional $15.0 million under the Royalty

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Agreement if specified sales milestones are achieved for vadadustat in the territory covered by the MTPC Agreement, subject to the satisfaction of certain customary conditions.

The royalty revenues under the MTPC Agreement may fluctuate considerably because they depend upon, among other things, the rate of growth of sales of vadadustat in the territory covered by the MTPC Agreement.

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• our commercial supply arrangements for Auryxia or vadadustat are terminated;

• any of our third party manufacturers are unable to fulfill the terms of their agreements with us, including with respect to quality and quantity, or are unable or unwilling to continue to manufacture on the manufacturing lines included in our regulatory filings;

• any of our third party manufacturers are unable to fulfill the terms of their agreements with us due to technical issues, natural disasters or other reasons, including with respect to quality and quantity, or are unable or unwilling to continue to manufacture on the manufacturing lines included in our regulatory filings;

• any of our third party manufacturers breach our supply agreements, do not comply with quality or regulatory requirements and guidance, including cGMP or are subject to regulatory review or ceases their operations for any reason.

If any of our third party manufacturers cannot or do not perform as agreed or expected, including as a result of catastrophic events, including pandemics, including the COVID-19 pandemic, terrorist attacks, wars or other armed conflicts, geopolitical tensions or natural disasters, if they misappropriate our proprietary information, if they terminate their engagements with us, if we terminate our engagements with them, or if there is a significant disagreement, we may be forced to manufacture the materials ourselves, for which we currently do not have the capabilities or resources, or enter into agreements with other third party manufacturers, which we may not be able to do in a timely manner or on favorable or reasonable terms, if at all.

If any of our third party manufacturers cannot or do not perform as agreed or expected, including as a result of catastrophic events, including pandemics, including the recent COVID-19 pandemic, terrorist attacks, wars or other armed conflicts, geopolitical tensions or natural disasters, if they misappropriate our proprietary information, if they terminate their engagements with us, if we terminate our engagements with them, or if there is a significant disagreement, we may be forced to manufacture the materials ourselves, for which we currently do not have the capabilities or resources, or enter into agreements with other third party manufacturers, which we may not be able to do in a timely manner or on favorable or reasonable terms, if at all.

If any of these events occur, especially with respect to one of our sole source suppliers, we may not have sufficient quantities of product for the commercialization of Auryxia and/or vadadustat, if approved, or may experience delays in the development of our products or product candidates, which could materially and adversely impact our business and results of operation.

For example, one of our manufacturers has notified us that it will be discontinuing operations at one site at a future date.

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The delays and costs associated with the qualification of a new manufacturer and validation of manufacturing processes would negatively affect our ability to supply clinical trials, obtain and maintain marketing approval, or commercialize or satisfy patient demand for Auryxia and vadadustat, where approved, in a timely manner, within budget, or at all.

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In addition, the cost of obtaining Auryxia and vadadustat is subject to adjustment based on our third party manufacturers’ costs of obtaining raw materials and producing the product.

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The facilities and processes used by our third party manufacturers to manufacture Auryxia may be inspected by the FDA and other regulatory authorities at any time, and the facilities and processes used by our third party manufacturers to manufacture vadadustat will be inspected by the FDA, the EMA and other regulatory authorities prior to or after we submit our marketing applications.

Although we have general visibility into the manufacturing processes of our third party manufacturers, we do not ultimately

control such manufacturing processes of, and have little control over, our third party manufacturers, including, without limitation, their compliance with cGMP requirements and guidance for the manufacture of certain starting materials, drug substance and finished drug product.

Although we have general visibility into the manufacturing processes of our third party manufacturers, we do not ultimately control such manufacturing processes of, and have little control over, our third party manufacturers, including, without limitation, their compliance with cGMP requirements and guidance for the manufacture of certain starting materials, drug substance and finished drug product.

Similarly, although we review final production, we have little control over the ability of our third party manufacturers to maintain adequate quality control, quality assurance and qualified personnel.

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For example, we previously conducted three limited, voluntary recalls of Auryxia.

These and any other recalls or any supply, quality or manufacturing issues in the future and any related write-downs of inventory or other consequences could result in significant negative consequences, including reputational harm, loss of customer confidence, and a negative impact on our financials, any of which could have a material adverse effect on our business and results of operations, and may impact our ability to supply Auryxia, Vafseo in Japan or vadadustat for clinical and commercial use.

Also, if our starting materials, drug substance or drug product are damaged or lost while in our or our third party manufacturers’ control, it may adversely impact our ability to supply Auryxia or vadadustat, and we may incur significant financial harm.

Also, if our starting materials, drug substance or drug product are damaged or lost while in our or our third party

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manufacturers’ control, it may adversely impact our ability to supply Auryxia or vadadustat, and we may incur significant financial harm.

In addition, Auryxia and vadadustat may compete with other products and product candidates for access to third party manufacturing facilities.

A third party manufacturer may also encounter delays or operational issues brought on by sudden internal resource constraints, labor disputes, shifting priorities or shifting regulatory protocols including, in each case, relating to the COVID-19 pandemic.

A third party manufacturer may also encounter delays or operational issues brought on by sudden internal resource constraints, labor disputes, shifting priorities or shifting regulatory protocols.

Certain of these third party manufacturing facilities may be contractually prohibited from manufacturing Auryxia or vadadustat due to exclusivity provisions in agreements with our competitors.

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A ny performance failure on the part of our storage or distributor partners could delay clinical development, marketing approval or commercialization, resulting in additional costs and depriving us of potential product revenue.

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If the licensor of certain intellectual property relating to Auryxia terminates, modifies or threatens to terminate existing contracts or relationships with us, our business may be materially harmed.

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No consistent policy regarding the breadth of claims allowed in pharmaceutical and biotechnology patents has emerged to date.

Changes in the patent laws or the interpretation of the patent laws in the United States and other jurisdictions may diminish the value of our patents or narrow the scope of our patent protection.

Changes in the patent laws or the interpretation of the patent laws in the United States and other jurisdictions

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may diminish the value of our patents or narrow the scope of our patent protection.

Accordingly, the patents we own or license may not be sufficiently broad to prevent others from practicing our technologies or from developing competing products.

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The laws of the European Patent Convention, for example, provide for post-grant opposition procedures that permit competitors to challenge, or oppose, our European patents administratively at the European Patent Office, or EPO .

grant review, interference proceedings or other patent office proceedings or litigation, in the United States or elsewhere, challenging our patent rights or the patent rights of others.

We may become involved in addressing patentability objections based on third party submission of references, or we may become involved in defending our patent rights in oppositions, derivation proceedings, reexamination, inter partes review, post grant review, interference proceedings or other patent office proceedings or litigation, in the United States or elsewhere, challenging our patent rights or the patent rights of others.

An adverse result in any such proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us.

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If we cannot maintain the confidentiality of this information, our ability to receive patent protection or protect our trade secrets or other proprietary information will be at risk.

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We may not be able to protect our intellectual property rights throughout the world.

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During the exclusivity period, the FDA may not accept for review an ANDA or a 505(b)(2) NDA submitted by another company for another version of such drug where the sponsor does not own or have a legal right of reference to all the data required for approval.

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An ANDA that references an NDA product with NCE exclusivity may be submitted after four years if it contains a certification of patent invalidity or non-infringement.

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If granted, this pediatric exclusivity may provide an additional six months which are added to the term of any non-patent exclusivity that has been awarded as well as to the regulatory protection related to the term of a relevant patent, to the extent these protections have not already expired.

We cannot assure you that Auryxia, vadadustat, if approved, or any of our potential future products will obtain such pediatric exclusivity, NCE exclusivity or any other market exclusivity in the United States, EU or any other territory, or that we will be the first to receive the respective regulatory approval for such drugs so as to be eligible for any non-patent exclusivity

We also cannot assure you that Auryxia, vadadustat, if approved, or any of our potential future products will obtain patent term extension.

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It is possible that we may receive Paragraph IV certification notice letters from additional ANDA filers and may not ultimately be successful in an ANDA litigation.

For example, we received another Paragraph IV certification notice letter regarding an ANDA submitted to the FDA in February 2023 and, in March 2023, we filed a complaint for patent infringement against the ANDA filer.

Generic competition for Auryxia or any of our potential future products could have a material adverse effect on our sales, results of operations and financial condition.

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In addition, third parties may have or may obtain patents in the future and claim that our products or other technologies infringe their patents.

If we are required to defend against suits brought by third parties, or if we sue third parties to protect our rights, we may be required to pay substantial litigation costs, and our management’s attention may be diverted from operating our business.

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may be diverted from operating our business.

In addition, any legal action against our licensor, licensees or us that seeks damages or an injunction of commercial activities relating to Auryxia, vadadustat or any other product candidates or other technologies, including those that may be in-licensed or acquired, could subject us to monetary liability, a temporary or permanent injunction preventing the development, marketing and sale of such products or such technologies, and/or require our licensor, licensees or us to obtain a license to continue to develop, market or sell such products or other technologies.

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Our portfolio includes one commercial product, Auryxia.

We received the CRL from the FDA

regarding our NDA for vadadustat in March 2022, and, if in the future vadadustat is approved, vadadustat could be commercialized.

We received the CRL from the FDA regarding our NDA for vadadustat in March 2022, and, if in the future vadadustat is approved, vadadustat could be commercialized.

We attempt to ensure that our products and product candidates and the methods we employ to manufacture them, as well as the methods for their use which we intend to promote, do not infringe other parties’ patents and other proprietary rights.

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We discussed the status of the opposition and/or invalidation proceedings against certain FibroGen patents in Part I, Item 3.

Legal Proceedings of our Annual Report on Form 10-K for the year ended December 31, 2022.

Legal Proceedings of our Annual Report on Form 10-K for the year ended December 31, 2022 filed on March 10, 2023.

Third parties, including FibroGen, may in the future claim that our product and product candidates and other technologies infringe upon their patents and may challenge our ability to commercialize Auryxia and vadadustat, if approved.

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Should a license to a third party patent become necessary, we cannot predict whether we would be able to obtain a license or, if a license were available, whether it would be available on commercially reasonable terms.

If such a license is necessary and a license under the applicable patent is unavailable on commercially reasonable terms, or at all, our ability to commercialize our product or product candidate may be impaired or delayed, which could in turn significantly harm our business.

If such a license is necessary and a license under the applicable patent is unavailable on

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commercially reasonable terms, or at all, our ability to commercialize our product or product candidate may be impaired or delayed, which could in turn significantly harm our business.

Further, defense of infringement claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business.

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We are also highly dependent on our executives, certain members of our senior management and certain members of our commercial organization.

The loss of the services of our executives, senior managers or other employees could impede the achievement of our research, development, regulatory and commercialization objectives and seriously harm our ability to successfully implement our business strategy.

The loss of the services of our

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executives, senior managers or other employees could impede the achievement of our research, development, regulatory and commercialization objectives and seriously harm our ability to successfully implement our business strategy.

Specifically, following receipt of the CRL, in April and May 2022, we implemented a reduction of our workforce by approximately 42% across all areas of our company (47% inclusive of the closing of the majority of open positions), including several members of management.

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We may not realize, in full or in part, the anticipated benefits, savings and improvements in our cost structure from our restructuring efforts due to unforeseen difficulties, delays or unexpected costs.

If we are unable to realize the expected operational efficiencies and cost savings from the restructuring, our operating results and financial condition would be adversely affected.

We also cannot guarantee that we will not have to undertake additional workforce reductions or restructuring activities in the future, including as a result of the FDA's decision related to our appeal of the CRL for vadadustat.

Furthermore, our cost savings plan may be disruptive to our operations, including our commercialization of Auryxia, which could affect our ability to generate product revenue.

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If we are ultimately successful in obtaining approval of vadadustat in the United States, we will need to hire additional employees to support the commercialization of vadadustat in the United States, and if we are unsuccessful or delayed in doing so, the potential launch of vadadustat could be delayed.

We may encounter difficulties in managing our growth, including with respect to our employee base, and managing our operations successfully.

We may encounter difficulties in managing our growth, including with respect to our employee base, and managing our partnerships and operations successfully.

In our day-to-day operations, we may encounter difficulties in managing the size of our operations as well as challenges associated with managing our business.

We have strategic collaborations for the commercialization of Riona and the development and commercialization of vadadustat, which is now being marketed under the trade name Vafseo TM by our collaboration partner, MTPC, in Japan.

We have strategic collaborations for the commercialization of Riona and the development and commercialization of vadadustat, which is now being or will be marketed under the trade name Vafseo by our collaboration partner, MTPC, in Japan and our collaboration partner, Medice, in the Medice Territory.

Additionally, in the United States, we have a strategic relationship with CSL Vifor related to the commercialization of vadadustat, if approved .

As our operations continue, we expect that we will need to manage our current relationships and enter into new relationships, especially in light of the termination of our collaboration agreements with Otsuka, with various strategic collaborators, consultants, vendors, suppliers and other third parties.

As our operations continue, we expect that we will need to manage our current relationships and enter into new relationships with

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various strategic collaborators, consultants, vendors, suppliers and other third parties.

These relationships are complex and create numerous risks as we deal with issues that arise.

For example, we supply or have agreed to supply, as applicable, Auryxia in Europe, Vafseo in Japan and Europe and vadadustat in the United States, if approved, for commercial and clinical use to MTPC, Medice, Averoa and CLS Vifor, which will require us to successfully manage our limited financial and managerial resources.

In addition, we may not be able to obtain the raw materials or product that we need, or the cost of the raw materials or product may be higher than expected.

If we are unable to successfully manage our supply obligations, our ability to commercialize our products or supply such products to our partners could have a material adverse effect on our relationships with our partners and our results of operations.

Our future financial performance and our ability to commercialize Auryxia and vadadustat, if and where approved, and to compete effectively will depend, in part, on our ability to manage any future growth effectively.

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If any of our service providers are later legally deemed to be employees, we could be subject to employment and tax withholding liabilities and other additional costs as well as other multiple damages and attorneys’ fees.

If we fail to develop or maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in us and the trading price of our common stock may decline.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports and effectively prevent fraud and operate successfully as a public company.

Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows.

If our internal control over financial reporting is not effective, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities.

Failure to remedy any material weakness in our internal control over financial reporting could also restrict our future access to the capital markets.

A material weakness in internal control over financial reporting has in the past and could in the future lead to deficiencies in the preparation of financial statements.

Deficiencies in the preparation of financial statements, could lead to litigation claims against us.

The defense of any such claims may cause the diversion of management’s attention and resources, and we may be required to pay damages if any such claims or proceedings are not resolved in our favor.

Any litigation, even if resolved in our favor, could cause us to incur significant legal and other expenses.

Such events could also affect our ability to raise capital to fund future business initiatives.

We have identified a material weakness in our internal control over financial reporting as of December 31, 2022 relating to our product return reserves that resulted in a revision of our financial statements for the years ended December 31, 2022, 2021 and 2020.

If we are not able to remediate this material weakness, or if we experience additional material weaknesses or other deficiencies in our internal control over financial reporting in the future or otherwise fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, is designed to prevent fraud.

Any failure to maintain or implement required new or improved controls, or difficulties encountered in implementation could cause us to fail to meet our reporting obligations.

In addition, any testing by us, as and when required, conducted in connection with Section 404 of the Sarbanes-Oxley Act, or Section 404, or any testing by our independent registered public accounting firm may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement.

During the quarter ended June 30, 2023 we identified a material weakness in our internal control over financial reporting that existed as of December 31, 2022 and continues to be unremediated through the date of this filing.

Specifically, we did not appropriately design the controls for accrual of product returns to capture the return lag based on our customer returns policy for Auryxia, or the Product Return Reserve Material Weakness .

This resulted in, among other things, errors to the following as of and for the years ended December 31, 2022, 2021 and 2020:

• an understatement of accrued expenses and other current liabilities by$5.1 million, $4.6 million and $2.0 million, respectively;

• an understatement of other non-current liabilities by $3.1 million, $3.4 million and $4.0 million, respectively;

• an overstatement of revenue by $0.1 million, $1.9 million and $0.6 million, respectively;

• an understatement of accounts receivable by $1.1 million, $0.7 million and $0.7 million, respectively;

• an understatement of goodwill by $2.6 million.

For further discussion of the material weakness, see Part I, Item 4, “Controls and Procedures.”

We have taken certain steps and plan to take additional steps to remediate this material weakness, including (i) implementing and documenting a new methodology and new controls to help to ensure the completeness and accuracy of our product return reserves, (ii) engaging additional third party subject matter experts and accounting personnel with U.S.

GAAP experience

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specific to product returns accounting and (iii) establishing effective monitoring and oversight controls to help to ensure the completeness and accuracy of our accrued product returns included in our financial statements and related disclosures.

However, we cannot provide assurance that we will be able to correct this material weakness in a timely manner or that our remediation efforts will be adequate to allow us to conclude that our internal control over financial reporting will be effective in the future.

Even if this material weakness is remediated in the future, we could identify additional material weaknesses or deficiencies in our internal control over financial reporting that could require correction or remediation.

In addition, our conclusion that we have a material weakness could give rise to increased scrutiny, review, audit and investigation over our accounting controls and procedures, which could then lead to additional areas of deficiency or errors in our financial statements.

We will need to continue to dedicate internal resources, engage outside consultants and maintain a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to remediate the material weakness relating to our reserve for Auryxia product returns described above and any future control deficiencies or material weaknesses, and improve control processes as appropriate, validate through testing that controls are functioning as documented and maintain a continuous reporting and improvement process for internal control over financial reporting.

If we are not able to correct material weaknesses or deficiencies in internal controls in a timely manner or otherwise comply with the requirements of Section 404 in a timely manner, our ability to record, process, summarize and report financial information accurately and within applicable time periods may be adversely affected, and we could be subject to sanctions or investigations by the SEC, the Nasdaq Stock Market or other regulatory authorities as well as stockholder litigation which, even if resolved in our favor, would require additional financial and management resources and could adversely affect the market price of our common stock.

Furthermore, if we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed.

Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock and could also effect our ability to raise capital to fund future business initiatives.

Security breaches and unauthorized use of our information technology systems and information, or the information technology systems or information in the possession of our collaborators and other third parties, could damage the integrity of our clinical trials, impact our regulatory filings, compromise our ability to protect our intellectual property, and subject us to regulatory actions that could result in significant fines or other penalties.

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Security breaches, whether through physical or electronic break-ins, computer viruses, ransomware, impersonation of authorized users, attacks by hackers or other means, can create system disruptions or shutdowns or the unauthorized disclosure of confidential information.

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Although we believe our collaborators, vendors and service providers, such as our CROs, take steps to manage and avoid information security risks and respond to attacks, we may be adversely affected by attacks against our collaborators, vendors or service providers, and we may not have adequate contractual remedies against such collaborators, vendors and service providers to remedy any harm to our business caused by such event.

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Outside parties may also subject us to distributed denial of services attacks or introduce viruses or other malware through “trojan horse” programs to our users’ computers in order to gain access to our systems and the data stored therein.

Cyber-attacks have become more prevalent and much harder to detect and defend

against and, because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and continuously become more sophisticated, often are not recognized until launched against a target and may be difficult to detect for a long time, we may be unable to anticipate these techniques or to implement adequate preventive or detective measures, and we might not immediately detect such incidents and the damage caused by such incidents.

Cyber-attacks have become more prevalent and much harder to detect and defend against and, because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and continuously become more sophisticated, often are not recognized until launched against a target and may be difficult to detect for a long time, we may be unable to anticipate these techniques or to implement adequate preventive or detective measures, and we might not immediately detect such incidents and the damage caused by such incidents.

Such attacks, whether successful or unsuccessful, or other compromises with respect to our information security and the measures we implement to prevent, detect and respond to them, could:

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equivalents, including those related to insider trading.

We hold a marketing authorization for vadadustat from the EMA, we are seeking regulatory approval for vadadustat with countries in the ACCESS Consortium, and we conducted our global clinical trials for vadadustat, and may in the future conduct additional trials, in countries where corruption is prevalent, and violations of any of these laws by our personnel or by any of our vendors or agents, such as our CROs or CMOs, could have a material adverse impact on our clinical trials and our business and could result in criminal or civil fines and sanctions.

We hold a marketing authorization for vadadustat from the EMA, the MHRA and Swissmedic, we are seeking regulatory approval for vadadustat with countries in the ACCESS Consortium, and we conducted our global clinical trials for vadadustat, and may in the future conduct additional trials, in countries where corruption is prevalent, and violations of any of these laws by

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our personnel or by any of our vendors or agents, such as our CROs or CMOs, could have a material adverse impact on our clinical trials and our business and could result in criminal or civil fines and sanctions.

We are subject to complex laws that govern our international business practices.

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In addition, goodwill could become impaired in the future under certain conditions.

Any potential future impairment of goodwill or intangible assets may significantly impact our results of operations and financial condition.

As of March 31, 2023, we had approximately $118.1 million in the aggregate of goodwill and a definite lived intangible asset from the Merger.

In accordance with generally accepted accounting principles, or GAAP, we are required annually, or more frequently upon certain indicators of impairment, to review our estimates and assumptions underlying the fair value of our goodwill and our definite lived intangible assets when indicators of impairment are present.

Events giving rise to impairment of goodwill or intangible assets are an inherent risk in the pharmaceutical industry and often cannot be predicted.

Conditions that could indicate impairment and necessitate such a review include, but are not limited to, Auryxia’s commercial performance, our inability to execute on our strategic initiatives, the deterioration of our market capitalization such that it is significantly below our net book value, a significant adverse change in legal factors, unexpected adverse business conditions,

and an adverse action or assessment by a regulator.

To the extent we conclude that goodwill and/or definite lived intangible assets have become impaired, we may be required to incur material write-offs relating to such impairment and any such write-offs could have a material impact on our future operating results and financial position.

Any potential future impairment of goodwill or intangible asset may significantly impact our results of operations and financial condition.

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As of June 30, 2023, we had approximately $113.1 million in the aggregate of goodwill and a definite lived intangible asset from the Merger.

In accordance with generally accepted accounting principles, or GAAP , we are required annually, or more frequently upon certain indicators of impairment, to review our estimates and assumptions underlying the fair value of our goodwill and our definite lived intangible asset when indicators of impairment are present.

Events giving rise to impairment of goodwill or intangible asset are an inherent risk in the pharmaceutical industry and often cannot be predicted.

To the extent we conclude that goodwill and/or definite lived intangible asset have become impaired, we may be required to incur material write-offs relating to such impairment and any such write-offs could have a material impact on our future operating results and financial position.

For example, in the second quarter of 2020, in connection with a routine business review, we reduced our short-term and long-term Auryxia revenue forecast.

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As a result, we recorded an impairment charge of $114.4 million during the three months ended June 30, 2020, which was entirely allocated to our only intangible asset, the developed product rights for Auryxia, and made a corresponding adjustment to the estimated useful life of the developed product rights for Auryxia, which we again adjusted during the three months ended December 31, 2020.

The estimates, judgments and assumptions used in our impairment testing, and the results of our testing, are discussed in Note 8 to our consolidated financial statements in Part I, Item 1.

The estimates, judgments and assumptions used in our impairment testing, and the results of our testing, are discussed in Note 9, Intangible Assets and Goodwill , to our consolidated financial statements in Part I, Item 1.

Financial Statements of this Quarterly Report on Form 10-Q.

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Although we maintain product liability insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage.

Our insurance policies also have various exclusions, and we may be subject to a product liability claim for which we have insufficient or no coverage.

Our insurance policies also have various exclusions, and

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we may be subject to a product liability claim for which we have insufficient or no coverage.

If we have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, we may not have, or be able to obtain, sufficient capital to pay such amounts.

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Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.

Our Ninth Amended and Restated Certificate of Incorporation, as amended, or Charter, and our Amended and Restated By-Laws, or Bylaws, as amended to date, contain provisions that eliminate, to the maximum extent permitted by the General Corporation Law of the State of Delaware, or DGCL, the personal liability of our directors and executive officers for monetary damages for breach of their fiduciary duties as a director or officer.

Our Ninth Amended and Restated Certificate of Incorporation, as amended, or Charter , and our Second Amended and Restated Bylaws, or Bylaws , as amended to date, contain provisions that eliminate, to the maximum extent permitted by the General Corporation Law of the State of Delaware, or DGCL , the personal liability of our directors and executive officers for monetary damages for breach of their fiduciary duties as a director or officer.

Our Charter and our Bylaws also provide that we will indemnify our directors and executive officers and may indemnify our employees and other agents to the fullest extent permitted by the DGCL.

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Any claims for indemnification made by our directors or officers could impact our cash resources and our ability to fund the business.

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Our ability to use net operating losses to offset future taxable income may be subject to certain limitations.

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federal tax rates and the rules governing net operating loss carryforwards that may significantly impact our ability to utilize our net operating losses to fully offset taxable income in the future.

Future changes in our stock ownership, many of which are outside of our

control, could result in an additional ownership change under Section 382.

Future changes in our stock ownership, many of which are outside of our control, could result in an additional ownership change under Section 382.

As a result, if we generate taxable income, our ability to use our pre-change NOL carryforwards to offset federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us.

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On January 18, 2023, defendants moved to dismiss the amended consolidated complaint in its entirety.

Briefing on defendants’ motion to dismiss the amended consolidated complaint was completed on April 5, 2023 and oral argument is currently scheduled to be held on June 21, 2023.

Briefing on defendants’ motion to dismiss the amended consolidated complaint was completed on April 5, 2023 and oral argument is currently scheduled to be held on October 18, 2023.

In connection with any litigation or other legal proceedings, we could incur substantial costs, and such costs and any related settlements or judgments may not be covered by insurance.

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We could also suffer an adverse impact on our reputation, negative publicity and a diversion of management’s attention and resources, which could have a material adverse effect on our business.

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Risks Related to our Common Stock

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Our stock price has been and will likely continue to be volatile.

The stock market in general and the market for similarly situated biopharmaceutical companies specifically have experienced extreme volatility that has often been unrelated to the

operating performance of particular companies.

The stock market in general and the market for similarly situated biopharmaceutical companies specifically have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.

Since our initial public offering in March 2014, the price of our common stock as reported on The Nasdaq Stock Market has ranged from a low of $0.24 on October 24, 2022 to a high of $31.00 on June 20, 2014.

The daily closing market price for our common stock varied between a high price of $1.15 on February 8, 2023 and a low price of $0.56 on March 31, 2023 in the three-month period ended March 31, 2023.

The daily closing market price for our common stock varied between a high price of $1.43 on May 24, 2023 and a low price of $0.51 on April 5, 2023 in the three-month period ended June 30, 2023.

During that time, the price of our common stock ranged from an intra-day low of $0.49 per share to an intra-day high of $1.63 per share.

The market price of shares of our common stock could be subject to wide fluctuations in response to many risk factors listed in this section, including, among others, developments related to and results of our research or clinical trials, developments related to our regulatory submissions and meetings with regulatory authorities, in particular as it relates to vadadustat, commercialization of Auryxia, vadadustat in Europe and, if and as approved in the U.S.

and foreign markets, and any other product candidates, announcements by us or our competitors of significant transactions or strategic collaborations, negative publicity around Auryxia or vadadustat, regulatory or legal developments in the United States and other countries, developments or disputes concerning our intellectual property, the recruitment or departure of key personnel including as a result of our reductions in workforce, actual or anticipated changes in estimates as to financial results, changes in the structure of healthcare payment systems, market conditions in the biopharmaceutical sector, potential delisting from The Nasdaq Stock Market and other factors beyond our control.

and other foreign markets, and any other product candidates, announcements by us or our competitors of significant transactions or strategic collaborations, negative publicity around Auryxia or vadadustat, regulatory or legal developments in the United States and other countries, developments or disputes concerning our intellectual property, the recruitment or departure of key personnel including as a result of our reductions in workforce, actual or anticipated changes in estimates as to financial results, changes in the structure of healthcare payment systems, market conditions in the biopharmaceutical sector, potential delisting from The Nasdaq Stock Market and other factors beyond our control.

As a result of this volatility, our stockholders may not be able to sell their common stock at or above the price at which they purchased it.

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These sales, or the perception in the market that the holders of a large number of shares intend to sell such shares, could reduce the market price of our common stock.

As of March 31, 2023 and based on the amounts reported in the most recent filings made under Section 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, Muneer A.

As of June 30, 2023 and based on the amounts reported in the most recent filings made under Section 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, Muneer A.

Satter, or Satter , beneficially owned approximately 8% of our outstanding shares of common stock, the Vanguard Group, or Vanguard , beneficially owned approximately 6% of our outstanding shares of common stock, and CSL Vifor beneficially owned approximately 4% of our outstanding shares of common stock.

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Such sales of our common stock could result in higher than average trading volume and may cause the market price for our common stock to decline.

In addition, we currently have on file with the SEC a shelf registration statement, which allows us to offer and sell up to $300 million in registered securities, such as common stock, preferred stock, debt securities, warrants and units, from time to time pursuant to one or more offerings at prices and terms to be determined at the time of sale, including a sales agreement prospectus that covers the offering, issuance and sale by us of up to a maximum aggregate offering price of up to $26 million of our common stock that may be issued and sold from time to time under a sales agreement with Jefferies LLC.

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prospectus that covers the offering, issuance and sale by us of up to a maximum aggregate offering price of up to $26 million of our common stock that may be issued and sold from time to time under a sales agreement with Jefferies LLC.

Sales of substantial amounts of shares of our common stock or other securities by our employees or our other stockholders or by us under our shelf registration statement, pursuant to at-the-market offerings or otherwise, could dilute our stockholders, lower the market price of our common stock and impair our ability to raise capital through the sale of equity securities.

Our executive officers, directors and principal stockholders maintain the ability to significantly influence all matters submitted to stockholders for approval.

As of March 31, 2023, our executive officers, directors and principal stockholders, in the aggregate, beneficially owned shares representing a significant percentage of our capital stock.

As of June 30, 2023, our executive officers, directors and principal stockholders, in the aggregate, beneficially owned shares representing a significant percentage of our capital stock.

As a result, if these stockholders were to choose to act together, they would be able to significantly influence all matters submitted to our stockholders for approval, as well as our management and affairs.

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Any payment of cash dividends in the future would be at the discretion of our Board of Directors and would depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that the Board of Directors deems relevant.

In addition, the terms of the Loan Agreement preclude us from paying cash dividends and future debt agreements may preclude us from paying cash dividends.

In addition, the terms of the Loan Agreement preclude us from

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paying cash dividends and future debt agreements may preclude us from paying cash dividends.

As a result, capital appreciation, if any, of our common stock will be our stockholders’ sole source of gain for the foreseeable future.

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Sales of Unregistered Securities

During the quarter ended March 31, 2023, we did not have any sales of unregistered securities.

During the quarter ended June 30, 2023, we did not have any sales of unregistered securities.

Defaults Upon Senior Securities.

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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 1A. Risk Factors