What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-08 compared with 2023-08-28 · 218 added, 240 removed, 188 unchanged (71% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2022 as amended by Amendment No.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2022 as amended by Amendment No.

1 on Form 10-K/A filed with the U.S.

Securities and Exchange Commission, or the SEC , on August 28, 2023, or the 2022 Annual Report on Form 10-K/A , including the audited consolidated financial statements and related notes therein.

This discussion and analysis contains forward-looking statements that involve significant risks and uncertainties.

Securities and Exchange Commission, or the SEC , on August 28, 2023, or the 2022 Annual Report on Form 10-K/A .

In addition to historical information, the following discussion and analysis contains forward-looking statements that reflect our plans, estimates, beliefs and explanations that involve significant risks and uncertainties.

As a result of many factors, such as those set forth under “Risk Factors” in Part II, Item 1A.

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We are a fully integrated biopharmaceutical company committed to addressing patients’ unmet needs.

Since our initial public offering in 2014, we have built a business focused on developing and commercializing innovative therapeutics that we believe serves as a foundation for future growth.

Since our initial public offering in 2014, we have built a business focused on developing and commercializing innovative therapeutics that we believe serve as a foundation for future growth.

Our purpose is to better the life of each person impacted by kidney disease, and we have established ourselves as a leader in the kidney community.

We believe our demonstrated ability to deliver value broadly to the kidney community has enabled us to build a sustainable company.

While our current focus centers on people living with kidney disease, we believe our continued commitment to our products and pipeline assets, focusing on all patients who can realize a meaningful benefit from our medicines, will result in delivering value for shareholders.

Our current portfolio includes:

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The product is also available in Japan and Taiwan.

• Vafseo (vadadustat) , an oral hypoxia-inducible factor prolyl hydroxylase, or HIF-PH , inhibitor, is approved in Europe, the United Kingdom, and Switzerland for the treatment of symptomatic anemia due to chronic kidney disease, or CKD , in adult patients on chronic maintenance dialysis.

• Vafseo (vadadustat) an oral hypoxia-inducible factor prolyl hydroxylase, or HIF-PH , inhibitor, is approved in Europe, the United Kingdom, Switzerland, Australia and Taiwan for the treatment of symptomatic anemia due to chronic kidney disease, or CKD , in adult patients on chronic maintenance dialysis.

Vadadustat is also approved in Japan for the treatment of anemia due to CKD in adult patients on dialysis and not on dialysis.

Additionally, vadadustat is approved in Korea as an anemia treatment for patients with CKD on hemodialysis.

Vadadustat is also under regulatory review for the treatment of anemia due to CKD in Australia and Taiwan.

We continue to pursue a path to potentially gain approval for vadadustat in the U.S.

We continue to pursue approval for vadadustat in the U.S., and in September 2023, we completed our resubmission to our New Drug Application, or NDA , for the treatment of anemia due to CKD for dialysis dependent patients to the U.S.

Food and Drug Administration, or FDA .

In October 2023, the FDA acknowledged that the resubmission was complete, classified it as a Class 2 response and set a user fee goal date, or PDUFA Date , of March 27, 2024.

Further, we have several lifecycle management and indication expansion opportunities currently under evaluation or in development for vadadustat.

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with our well-established, nephrology-focused commercial organization.

Auryxia is a non-calcium, non-chewable, orally administered tablet that was approved for marketing by the U.S.

Food and Drug Administration, or FDA , in September 2014 as a phosphate binder for the Hyperphosphatemia Indication and was commercially launched in the U.S.

Auryxia is a non-calcium, non-chewable, orally administered tablet approved for marketing by the FDA in September 2014 as a phosphate binder for the Hyperphosphatemia Indication and was commercially launched in the U.S.

shortly thereafter.

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| Form 10-Q | Page 23

We are seeking regulatory approval in the United States for vadadustat as an oral treatment of anemia in adult DD-CKD patients.

We and Mitsubishi Tanabe Pharma Corporation, or MTPC , are also seeking regulatory approval for vadadustat as a treatment for anemia in adult DD-CKD and NDD-CKD patients in Taiwan.

In April 2023, the European Commission, or EC , approved the marketing authorization of vadadustat under the trade name Vafseo for the treatment of symptomatic anemia associated with CKD in adults on chronic maintenance dialysis, which is applicable to all 27 European Union member states and Iceland, Norway and Liechtenstein.

In May 2023, the UK Medicines and Healthcare products Regulatory Agency approved the marketing authorization of vadadustat under the trade name Vafseo for the treatment of symptomatic anemia associated with CKD in adults on chronic maintenance dialysis.

In June 2023, the Swiss Agency for Therapeutic Products approved the marketing authorization of vadadustat under the trade name Vafseo for the treatment of symptomatic anemia associated with CKD in adults on chronic maintenance dialysis.

Following the termination of our U.S.

and international collaboration agreements with Otsuka Pharmaceutical Co.

Ltd., or Otsuka , in June 2022, we regained full rights to vadadustat in Europe, Australia, China, Canada, Latin America, the Middle East and Russia.

We are seeking regulatory approval in the U.S.

for vadadustat as an oral treatment of anemia in adult DD-CKD patients.

In April 2023, the European Commission, or EC, approved the marketing authorization of vadadustat under the trade name Vafseo for the treatment of symptomatic anemia associated with CKD in adults on chronic maintenance dialysis, which applies to all 27 European Union member states and Iceland, Norway and Liechtenstein.

The marketing authorization of vadadustat under the trade name Vafseo for the treatment of symptomatic anemia associated with CKD in adults on chronic maintenance dialysis was subsequently approved in May 2023 in the UK, by the Medicines and Healthcare Products Regulatory Agency, in June 2023 in Switzerland by the Swiss Agency for Therapeutic Products and in September 2023 in Australia by the Therapeutic Goods Administration, or TGA .

In May 2023, we entered into a License Agreement, or the Medice 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 CKD in the EEA, the UK, Switzerland and Australia, or the Medice Territory.

We submitted a new drug application, or NDA , to the FDA for vadadustat in March of 2021.

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

Additionally, in September 2023, vadadustat was approved in Taiwan by the Taiwan Food and Drug Administration under the trade name Vafseo for the treatment of symptomatic anemia associated with CKD in adults on chronic maintenance dialysis.

MTPC plans to commercialize vadadustat in Taiwan.

Additionally, vadadustat is approved in Korea as an anemia treatment for patients with CKD on hemodialysis.

We submitted an NDA to the FDA for vadadustat in March of 2021.

On March 29, 2022, the FDA issued a complete response letter, or CRL , to our NDA for vadadustat.

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.

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

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.

We believe there are compelling data supporting a positive benefit-risk profile for the use of vadadustat broadly in patients with CKD, including non-dialysis patients though we have always remained cautious about receiving a broad label for vadadustat that would extend to non-dialysis patients with anemia due to CKD.

As such, we began the process to dispute the FDA ruling, and in October 2022, we submitted a Formal Dispute Resolution Request with the FDA regarding the CRL, specifically related to DD-CKD adult patients and focused on the favorable balance of the benefits and risks of vadadustat for the treatment of adult DD-CKD patients in light of safety concerns expressed by the FDA in the CRL related to the rate of adjudicated thromboembolic events driven by vascular access thrombosis for vadadustat compared to the active comparator and the risk of drug-induced liver injury.

We believe there are compelling data supporting a positive benefit-risk profile for the use of vadadustat broadly in patients with CKD, including non-dialysis patients, though we have always remained cautious about receiving a broad label for vadadustat that extends to non-dialysis patients with anemia due to CKD.

In October 2022, we submitted a Formal Dispute Resolution Request with the FDA regarding the CRL, specifically related to DD-CKD adult patients and focused on the favorable balance of the benefits and risks of vadadustat for the treatment of adult DD-CKD patients in light of the safety concerns expressed by the FDA in the CRL related to the rate of adjudicated thromboembolic events driven by vascular access thrombosis for vadadustat compared to the active comparator and the risk of drug-induced liver injury.

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.

In September 2023, we completed our resubmission to our NDA for vadadustat for the treatment of anemia due to CKD for dialysis dependent patients.

In October 2023, the FDA acknowledged that the resubmission was complete, classified it as a Class 2 response and set a PDUFA date of March 27, 2024.

Future decisions by the FDA or foreign regulatory agencies related to the potential regulatory approval of vadadustat, and our ability to generate additional value from vadadustat, if approved, could potentially provide additional license and product revenue.

However, these future decisions and transactions are not contemplated in our current operating plan and are outside of our control.

Following the termination of our collaboration agreement with Otsuka, we own full rights to vadadustat in the U.S., subject to our licensing agreement with CSL Vifor.

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While the study missed the primary endpoint, the data detailed in the Clinical Development Program section were encouraging.

For reference, subjects receiving vadadustat demonstrated 94% probability for conferring benefit on the NIAID-OS at Day 14, slightly below the primary superiority threshold of >95% probability.

We believe vadadustat has the potential to prevent the worsening of ARDS more broadly since the mechanism underlying the benefits are not specific to COVID-19, and we will further explore vadadustat in an acute care setting.

Akebia Therapeutics, Inc.

| Form 10-Q | Page 25

Operating Segments

We operate our business in a single segment and as one reporting unit, which is how our chief operating decision maker (who is our president and chief executive officer) reviews financial performance and allocates resources.

Operating Overview

We have incurred net losses in each year since inception.

Our net loss was $11.2 million for the three months ended June 30, 2023 and our net income was $29.4 million for the three months ended June 30, 2022.

Our net losses were $38.1 million and $34.1 million for the six months ended June 30, 2023 and 2022, respectively.

Substantially all of our net losses resulted from costs incurred in connection with the continued commercialization of Auryxia and development efforts relating to vadadustat, including conducting clinical trials of, and seeking regulatory approval for, vadadustat, providing general and administrative support for these operations and protecting our intellectual property.

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 the 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 our net product revenue from Auryxia, our collaboration revenue, our ability to successfully implement cost avoidance measures and reduce overhead costs and our ability to obtain additional funding.

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 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 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;

• conduct discovery and development activities for additional product candidates or platforms that may lead to the discovery of additional product candidates;

• 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 $43.0 million as of June 30, 2023, that were made available to us pursuant to the loan agreement that we entered into with funds managed by Pharmakon Advisors LP, or Pharmakon , in November 2019, or the Loan Agreement ;

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

• maintain, protect and expand our intellectual property portfolio;

• make decisions with respect to our personnel, including the retention of key employees;

• make decisions with respect to our infrastructure, including to support our operations as a fully integrated publicly traded biopharmaceutical company;

• experience any additional delays or encounter issues with any of the above.

For reference, subjects receiving vadadustat demonstrated a 94% probability for conferring benefit on the NIAID-OS at Day 14, slightly below the primary superiority threshold of >95% probability.

We believe hypoxia-inducible factors, or HIFs , have the

Akebia Therapeutics, Inc.

| Form 10-Q | Page 24

We have not generated, and may not generate, enough net product revenue to realize net profits from product sales.

potential to prevent the worsening of ARDS more broadly since the mechanism underlying the benefits is not specific to COVID-19, and we will further explore HIFs in an acute care indication.

Manufacturing and Clinical Development/Use of Third Parties

We have no manufacturing facilities, and all of our manufacturing activities are contracted out to third parties.

We utilize third parties to distribute our products to our customers.

Additionally, we currently utilize contract research organizations, or CROs , to carry out our clinical development activities.

If we obtain marketing approval for vadadustat, and as we continue to commercialize Auryxia, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.

We expect to finance future cash needs through product revenue, potential strategic transactions, public or private equity or debt transactions, or a combination of these approaches.

If we are unable to raise additional capital in sufficient amounts when needed or on attractive terms, we may not be able to pursue development and commercial activities related to Auryxia and vadadustat, if approved, or any additional products and product candidates, including those that may be in-licensed or acquired.

Any of these events could significantly harm our business, financial condition and prospects.

From inception through June 30, 2023, we raised approximately $793.5 million of net proceeds from the sale of equity, including $519.8 million from various underwritten public offerings, $223.7 million from at-the-market offerings, or ATM offerings, pursuant to prior sales agreements with Cantor Fitzgerald & Co., and $70.0 million from the sale of 7,571,429 shares of common stock to CSL Vifor.

As of June 30, 2023, through our collaboration agreement with MTPC and our prior collaboration agreements with Otsuka we received approximately $837.1 million in cost-share funding, and are not entitled to receive any additional cost-share funding.

On June 30, 2022, we entered into the Termination and Settlement Agreement, or the Termination Agreement , with Otsuka, pursuant to which we received a nonrefundable and non-creditable payment of $55.0 million in consideration for the covenants and agreements set forth in the Termination Agreement.

On November 11, 2019, we entered into the Loan Agreement pursuant to which term loans in an aggregate principal amount of $100.0 million were made available to us in two tranches, subject to certain terms and conditions, or the Term Loans .

On July 15, 2022, or the Effective Date , we entered into the Second Amendment and Waiver with BioPharma Credit PLC, or the Collateral Agent , BPCR Limited Partnership, as a Lender, and BioPharma Credit Investments V (Master) LP, as a Lender, or the Second Amendment and Waiver , which amends and waives certain provisions of the Loan Agreement as amended by the First Amendment and Waiver between the Collateral Agent, the Lenders and us, dated February 18, 2022.

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

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

In addition, on February 25, 2021, we received an upfront payment of $44.8 million (net of certain transaction expenses) in connection with our sale to HealthCare Royalty Partners IV, L.P., or HCR , of the right to receive all royalties and sales milestones payable to us under our collaboration agreement with MTPC, or the MTPC Agreement , subject to certain caps and other terms and conditions described elsewhere in this Quarterly Report on Form 10-Q.

On February 18, 2022, we entered into a Second Amended and Restated License Agreement, or the Vifor Second Amended Agreement , with CSL Vifor.

Pursuant to the Vifor Second Amended Agreement, CSL Vifor made an upfront payment to us of $25.0 million in lieu of the previously disclosed milestone payment of $25.0 million that CSL Vifor was to pay to us following approval of vadadustat by the FDA.

Also pursuant to the Vifor Second Amended Agreement, Vifor contributed $40.0 million to a working capital fund established to partially fund our costs of purchasing vadadustat from our contract manufacturers, or the Working Capital Fund , which amount of funding may fluctuate, and which funding we are required to repay to CSL Vifor over time.

Finally, on May 24, 2023, we entered into the Medice License Agreement pursuant to which Medice made an upfront payment to us of $10.0 million.

Akebia Therapeutics, Inc.

| Form 10-Q | Page 27

Impacts of COVID-19 Pandemic

Certain changes that occurred during the recent COVID-19 pandemic, including remote work arrangements, closures, limited access to healthcare facilities and labor shortages impacted us and the broader healthcare industry.

During the pandemic, the CKD patient population that we serve experienced both higher hospitalization and mortality rates due to COVID-19 which may or may not continue post-pandemic.

Further, the pandemic had an adverse impact on the phosphate binder market in which Auryxia competes.

Please see the section captioned “Part II.

Risk Factors” of this Quarterly Report on Form 10-Q for additional information with respect to the risks faced by our business in light of the recent COVID-19 pandemic.

While the pandemic has ended, we caution that there continues to be a possibility for potential future challenges associated with infections, staffing shortages or supply chain disruptions due to current or new variants of COVID-19 in certain jurisdictions.

The impact of these challenges is currently unknown but could be significant, and we continue to take precautions so as not to disrupt our business.

Financial Highlights

Operating Segments

Factors Affecting Our Performance and Results of Operations

We believe that our performance and future success depend on many factors that present significant opportunities for us, but also pose risks and challenges, including those discussed more fully under the heading “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.

Financial Components

Product and Collaboration Revenue

To date, our revenues have been derived from net product revenue from commercial sales of Auryxia, royalties from the sale of Auryxia in Japan and collaboration revenues.

We generate net product revenue from commercial sales of Auryxia, royalties from the sale of Auryxia in Japan and collaboration revenues.

Collaboration revenue includes license and milestone payments, royalty and cost-sharing revenue generated through collaboration and license agreements with partners for the development and commercialization of vadadustat, a nonrefundable, non-creditable termination fee pursuant to the terms of the Termination Agreement with Otsuka and royalty revenue from sales of Riona in Japan.

Our net product revenue requires judgement and estimates of rebates and returns which can fluctuate from quarter-to-quarter and year-over-year.

Our net product revenue requires judgment and estimates of discounts, rebates and product returns, which can fluctuate from quarter-to-quarter and year-over-year.

In addition, we evaluate, at least annually and more frequently, if needed, price increases of our commercial product Auryxia.

We expect our product revenue to continue to be generated primarily from our commercial sales of Auryxia.

We expect our net product revenue to continue to be generated primarily from our commercial sales of Auryxia.

In addition, we expect to continue to generate revenue through our collaborations with Medice, MTPC and JT and Torii and any other collaborations into which we have entered or may enter.

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Cost of goods sold includes costs closely correlated or directly related to the costs to manufacture commercial drug substance and drug product for Auryxia, as well as indirect costs.

Direct and indirect costs, including costs for packaging, shipping, insurance and quality assurance, idle capacity charges, write-offs for inventory that fails to meet specifications or is otherwise no longer suitable for commercial sale, changes in our excess purchase commitment liability, and royalties due to the licensor of Auryxia related to U.S.

Direct and indirect costs include fees for packaging, shipping, insurance and quality assurance, idle capacity charges, write-offs for inventory that fails to meet specifications or is otherwise no longer suitable for commercial sale, changes in our excess purchase commitment liability and royalties due to the licensor of Auryxia related to U.S.

and Japan product sales recognized during the period.

Cost of goods sold also includes costs to manufacture drug product provided to MTPC for commercial sale of Vafseo in Japan and personnel-related costs, including salaries and bonuses, employee benefits, and stock-based compensation attributable to employees in a particular function and associated with our products.

On June 28, 2018, we entered into an Agreement and Plan of Merger with Keryx and Alpha Therapeutics Merger Sub, Inc., or Merger Sub , pursuant to which Merger Sub merged with and into Keryx, with Keryx becoming a wholly owned subsidiary of ours, or the Merger .

On December 12, 2018, we completed the Merger.

As part of the purchase price allocation, we identified developed product rights for Auryxia as the primary intangible asset which is being amortized to cost of goods sold over its estimated useful life, which as of June 30, 2023 is estimated to be six years.

Cost of goods sold also includes costs to manufacture drug product provided to MTPC for commercial sale of Vafseo in Japan and personnel-related costs, including salaries and bonuses, employee benefits and stock-based compensation attributable to employees in a particular function and associated direct with our commercial products.

On December 12, 2018, we merged with Keryx and Alpha Therapeutics Merger Sub, Inc., or Merger Sub , pursuant to which Merger Sub merged with and into Keryx, with Keryx becoming a wholly owned subsidiary of ours.

As part of the purchase price allocation, we identified developed product rights for Auryxia as the primary intangible asset, which is being amortized to cost of goods sold over its estimated useful life, which, as of September 30, 2023 is estimated to be six years.

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for the development of vadadustat, which include:

• personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation expense for employees engaged in research and development functions;

• personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation expenses for employees engaged in research and development functions;

• expenses incurred under agreements with CROs and investigative sites that conduct our clinical trials;

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• costs associated with preclinical, clinical and regulatory activities;

• costs associated with pre-launch inventory build for vadadustat in the United States and Europe, for which we received the CRL from the FDA in the United States in March 2022.

Akebia Therapeutics, Inc.

| Form 10-Q | Page 25

• costs associated with the pre-launch inventory build for vadadustat in the United States and Europe, for which we received the CRL from the FDA in the United States in March 2022.

Research and development costs are expensed as incurred.

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We cannot determine with certainty the duration and completion costs of current or future clinical trials of Auryxia and vadadustat or if, when, or to what extent we will receive marketing approval for vadadustat or generate revenue from the commercialization and sale of vadadustat, if approved.

We may never succeed in achieving marketing approval for vadadustat.

The duration, costs and timing of clinical trials and development of Auryxia and vadadustat will depend on a variety of factors including, but not limited to, those described in Part II, Item 1A.

We may fail to achieve marketing approval for vadadustat.

The duration, costs and timing of clinical trials and development of Auryxia and vadadustat will depend on various factors including, but not limited to, those described in Part II, Item 1A.

Risk Factors.

A change in the outcome of any of these variables with respect to the development of Auryxia and vadadustat could mean a significant change in the costs and timing associated with that development.

For example, if the FDA, the EMA, or other regulatory authorities were to require us to conduct clinical trials in addition to or different from those that we currently anticipate, or if we experience delays in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.

From inception through June 30, 2023, we have incurred $1.6 billion in research and development expenses.

A change in the outcome of any of these variables with respect to the development of Auryxia and vadadustat could mean a significant difference in the costs and timing associated with that development.

For example, if the FDA, the European Medicines Agency, or other regulatory authorities were to require us to conduct clinical trials in addition to or different from those that we currently anticipate, or if we experience delays in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.

From inception through September 30, 2023, we have incurred $1.6 billion in research and development expenses.

We expect to incur significant research and development expenditures for the foreseeable future as we continue the development of Auryxia, vadadustat and any other product or product candidate, including those that may be in-licensed or acquired.

Our direct research and development expenses consist principally of external costs, such as fees paid to clinical trial sites, consultants, central laboratories and CROs in connection with our clinical trials, and drug substance and drug product manufacturing for clinical trials.

In 2020, we completed our global Phase 3 clinical program for vadadustat to which the majority of our research and development costs are attributable.

In 2020, we completed our global Phase 3 clinical program for vadadustat, to which the majority of our historical research and development costs are attributable.

A significant portion of our research and development costs have been external costs, which we track on a program-by-program basis.

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We do not track our internal research and development expenses on a program-by-program basis, as they are deployed across multiple projects under development.

The following table summarizes our external research and development expenses by program, as well as expenses not allocated to programs, for the three and six months ended June 30, 2023 and 2022 (in thousands):

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

The following table summarizes our external research and development expenses by program, as well as costs not allocated to programs, for the three and nine months ended September 30, 2023 and 2022 (in thousands):

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

2023 2022 2023 2022

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Total external research and development expenses 5,066 18,357 24,822 58,710

Internal personnel, consulting, facilities and other costs 9,356 9,180 20,128 29,507

Internal personnel, consulting, facilities & other costs 8,264 9,671 28,392 39,178

Total research and development expenses $ 13,330 $ 28,028 $ 53,214 $ 97,888

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| Form 10-Q | Page 26

Financial Highlights

Product revenue in the first nine months of 2023 has declined by approximately 8% to $117.1 million from $126.7 million in the first nine months of 2022, primarily due to decreases in product volume partially offset by price increases.

We have incurred net losses in each year since inception.

Our net losses were $14.5 million and $54.1 million for the three months ended September 30, 2023 and 2022, respectively.

Our net losses were $52.5 million and $88.2 million for the nine months ended September 30, 2023 and 2022, respectively.

Recent Events

Medice License Agreement

On May 24, 2023, we entered into the Medice License Agreement pursuant to which we granted Medice an exclusive license to develop and commercialize vadadustat for the treatment of anemia in patients with CKD in the Medice Territory.

We retain the rights to develop and commercialize in the Medice Territory for all other indications.

During the quarter ended June 30, 2023 we received an upfront payment of $10.0 million.

In the future we may receive commercial milestone payments up to an aggregate of $100 million, and tiered royalties ranging from 10% to 30% of Medice’s annual net sales of vadadustat in the Medice Territory, subject to reduction in certain circumstances.

See Note 5 of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report on Form 10-Q.

Boston Lease Assignment

Previously, we leased 27,924 square feet of office space in Boston, Massachusetts, or the Boston Lease .

On May 26, 2023, we entered into an Assignment and Assumption of Lease Agreement, or the Lease Assignment Agreement, with LG Chem Life Sciences Innovation Center, Inc., or LG Chem , pursuant to which we assigned all of our rights, title, and interest in, to, and under the Boston Lease to LG Chem, or the Lease Assignment .

As part of the Lease Assignment Agreement, we made a payment to LG Chem of $1.3 million, or the Lease Assignment Amount , and LG Chem assumed all of our rights and obligations under the Boston Lease.

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

See Note 13 of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

International Approval of vadadustat

In September 2023, we were granted approval for Vafseo (vadadustat) by Australia's Therapeutic Goods Administration and the Taiwan Food and Drug Administration for the treatment of symptomatic anemia associated with CKD in adults on chronic maintenance dialysis.

Submission of NDA with FDA for vadadustat

In September 2023, we completed our resubmission to our NDA for vadadustat for the treatment of anemia due to CKD for dialysis dependent patients.

In October 2023, the FDA acknowledged that the resubmission to the NDA for vadadustat as a treatment for anemia due to CKD in adult patients on dialysis was complete, classified it as a Class 2 response, and set a PDUFA date of March 27, 2024.

Vadadustat is currently approved for use in 36 countries.

Amendment to Pharmakon Loan Agreement

See Debt Financing and Covenants Below and Note 10, Debt , in the accompanying notes to the consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Impact of Inflation

We are experiencing rising costs for certain inflation-sensitive operating expenses such as labor and certain service providers that are heavily dependent on labor.

We do not believe these impacts were material to net loss during the six months ended June 30, 2023 or will be going forward.

We do not believe these impacts were material to our net loss during the nine months ended September 30, 2023 or will be going forward.

However, significant sustained inflation driven by the macroeconomic environment or other factors could negatively impact our margins, profitability and results of operations in future periods.

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We continue to decrease our operating expenses by seeking to operate more efficiently and curtail non-headcount related expense growth and expect to keep 2023 headcount relatively flat with current levels.

Economic Conditions (Impacts of COVID-19 Pandemic)

Certain changes during the recent COVID-19 pandemic, including remote work arrangements, closures, limited access to healthcare facilities and labor shortages, impacted us and the broader healthcare industry.

During the pandemic, the CKD patient population that we serve experienced higher hospitalization and mortality rates due to COVID-19 which may or may not continue post-pandemic.

Further, the pandemic had an adverse impact on the phosphate binder market in which Auryxia competes.

Please see the section captioned “Part II.

Risk Factors” of this Quarterly Report on Form 10-Q for additional information with respect to the risks faced by our business in light of the recent COVID-19 pandemic.

The impact of these challenges is currently unknown but could be significant, and we continue to take precautions so as not to disrupt our business.

Akebia Therapeutics, Inc.

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Results of Operations

The tables and discussion below present the results for the periods indicated and the three months ended June 30, 2022 have been updated to reflect the impact of errors revised in prior periods and as described in more detail in Note 3 in the Notes to the Condensed Consolidated Financial Statements found in Part I, Item 1 of this Quarterly Report on Form 10-Q:

Comparison of the Three Months Ended June 30, 2023 and 2022

The tables and discussion below present the results for the periods indicated and the three months ended September 30, 2022 have been updated to reflect the errors revised in prior periods and as described in more detail in Note 1 in the Notes to the Consolidated Financial Statements found in Part II, Item 8 of our Annual Report on Form 10-K/A:

Comparison of the Three Months Ended September 30, 2023 and 2022

Three Months Ended September 30,

(dollars in thousands) 2023 2022 $ %

Three Months Ended Change

June 30, 2023 June 30, 2022 $ %

Product revenue, net $ 40,118 $ 41,989 $ (1,871) (4) %

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Total operating expenses 37,073 60,838 (23,765) (39) %

Operating (loss) income (8,996) 34,075 (43,071) (126) %

Loss from operations (13,036) (50,405) 37,369 (74) %

Other expense, net (1,453) (2,785) 1,332 (48) %

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

Net (loss) income $ (11,172) $ 29,449 $ (40,621) (138) %

Loss on extinguishment of debt — (906) 906 *

Net loss $ (14,489) $ (54,096) $ 39,607 (73) %

*Percentage change not meaningful.

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We distribute our product principally through a limited number of wholesale distributors as well as certain specialty pharmacy providers.

Net product revenue was $42.2 million for the three months ended June 30, 2023, compared to $43.3 million for the three months ended June 30, 2022.

The decrease was primarily due to the impact of shifting payor mix and a volume decrease partially caused by contracting dynamics and a decline in the phosphate binder market.

The decline was partially offset by higher revenues resulting from a price increase in January 2023

License, Collaboration and Other Revenue— License, collaboration and other revenue was $14.1 million for the three months ended June 30, 2023, compared to $83.1 million for the three months ended June 30, 2022.

The decrease was primarily due to a reduction in revenue from the Otsuka collaboration agreement that was terminated on June 30, 2022.

The Termination Agreement, among other things, terminated the cost sharing arrangement under the Otsuka collaboration agreement for the U.S.

the Otsuka U.S.

Agreement , and the Otsuka collaboration agreement for certain territories outside the U.S., or the Otsuka International Agreement .

During the three months ended June 30, 2022, we recognized $55.0 million in collaboration revenue related to a payment to be received pursuant to the terms of the Termination Agreement with Otsuka, $15.5 million related to previously deferred revenue as of the date of termination and $9.6 million of non-cash consideration related to Otsuka's obligations to complete certain agreed upon clinical activities related to the Phase 3b clinical trial of vadadustat that Otsuka was conducting, or the MODIFY Study , in accordance with the current study protocol, at its own cost and expense.

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

However, we do not expect to recognize any future revenue under the Otsuka U.S.

Agreement or the Otsuka International Agreement.

This decrease was partially offset by the $10.0 million upfront payment recognized in connection with the Medice License Agreement during the three months ended June 30, 2023.

Cost of Goods Sold - Product— Cost of goods sold was $8.3 million for the three months ended June 30, 2023 compared to $9.6 million for the three months ended June 30, 2022.

The decrease of $1.3 million is primarily due to a decrease in inventory

Net product revenue was $40.1 million for the three months ended September 30, 2023, compared to $42.0 million for the three months ended September 30, 2022.

The decrease was primarily due to a reduction in volume and the impact of shifting payor mix, partially caused by contracting dynamics and a decline in the phosphate binder market.

The decline was partially offset by price increases in January 2023 and July 2023.

License, Collaboration and Other Revenue— License, collaboration and other revenue was $1.9 million for the three months ended September 30, 2023, compared to $6.7 million for the three months ended September 30, 2022.

On December 16, 2022, we, MTPC, and Esteve Química, S.A., or Esteve, executed an Assignment of Supply Agreement, or the Esteve Assignment Agreement, pursuant to which the supply agreement between us and Esteve, or the Esteve Agreement, was assigned to MTPC.

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

Therefore, MTPC is purchasing some vadadustat directly from Esteve, and the decrease was primarily due to a reduction in revenue from the MTPC Supply Agreement.

Cost of Goods Sold - Product— Cost of goods sold was $9.0 million for the three months ended September 30, 2023 compared to $29.3 million for the three months ended September 30, 2022.

The decrease of $20.3 million is primarily due to a decrease in a non-cash charge related to the prior liability for excess purchase commitments, a decrease in inventory write-downs as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold during the three months ended September 30, 2023, as well as a decrease in the volume of sales resulting in a reduction in product costs.

Cost of Goods Sold - Amortization of Intangible Asset— Amortization of intangible asset relates to the acquired developed product rights for Auryxia, which is being amortized using a straight-line method over its estimated useful life of

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write-downs as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold during the three months ended June 30, 2023.

Amortization of intangible asset during each of the three months ended June 30, 2023 and 2022 was $9.0 million.

Research and Development Expenses— Research and development expenses were $20.2 million for the three months ended June 30, 2023, compared to $26.0 million for the three months ended June 30, 2022, a decrease of $5.8 million.

The decrease was primarily due to a reduction in spending on vadadustat development, including decreased clinical trial costs as well as decreased outsourced contract services.

Although we expect our research and development expenses to continue to decrease in the near term, we will continue to incur significant research and development expenses in future periods in support of ongoing or planned studies with respect to Auryxia and vadadustat and development of other potential product candidates.

Selling, General and Administrative Expenses— Selling, general and administrative expenses were $27.0 million for the three months ended June 30, 2023, compared to $32.2 million for the three months ended June 30, 2022.

The decrease of $5.2 million was primarily due to decreased headcount related costs as a result of the April and November 2022 reductions in force, reduced Auryxia marketing and promotional expenses and reduced professional service expenses.

License Expenses— License expense related to royalties due to Panion relating to sales of Riona in Japan were $0.9 million for each of the three months ended June 30, 2023 and 2022.

Restructuring— Restructuring expenses were $14.5 million for the three months ended June 30, 2022 that were incurred in connection with our reductions of our workforce in the second quarter 2022 by approximately 42% across all areas of our company including several members of management.

Other Expense, Net— Other expense, net, was $1.7 million for the three months ended June 30, 2023, compared to $4.6 million for the three months ended June 30, 2022.

The decrease of $3.0 million was primarily due to a decrease in interest expense as a result of reducing our outstanding principal balance on the Pharmakon Term Loans by $57.0 million since the period ended June 30, 2022.

This decrease was offset by nearly a 135 basis point increase in the interest rate as a result of the current rising interest rate macroeconomic environment.

In addition, our non-cash interest expense from our liability for the sale of future royalties decreased due to a drop in the effective interest rate on the liability for the three months ended June 30, 2023 compared to the three months ended June 30, 2022.

Loss on Lease Termination— Loss on lease termination was $0.5 million for the three months ended June 30, 2023.

On May 26, 2023, we entered into the Lease Assignment Agreement with LG Chem, pursuant to which we assigned all of our rights, title, and interest in, to, and under the Boston Lease to LG Chem.

In accordance with ASC 842, Leases , we wrote off the right-of-use asset and lease liability associated with the Boston Lease, and recognized the difference between the right-of-use asset and the lease liability offset by the payment we made to LG Chem of $1.3 million, or the Lease Assignment Amount, as a loss on lease termination in the condensed consolidated statement of operations and comprehensive income (loss) of $0.5 million during the three months ended June 30, 2023.

approximately six years.

Amortization of intangible asset during each of the three months ended September 30, 2023 and 2022 was $9.0 million.

Research and Development Expenses— Research and development expenses were $13.3 million for the three months ended September 30, 2023, compared to $28.0 million for the three months ended September 30, 2022, a decrease of $14.7 million.

The decrease was primarily due to a reduction in spending on vadadustat development, including decreased clinical trial costs, and curtailment of outsourced contract services.

Although we expect our research and development expenses to continue to decrease in the near term, we will continue to incur significant research and development expenses in future periods in support of ongoing or planned studies with respect to Auryxia and vadadustat as well as the development of other potential product candidates.

Selling, General and Administrative Expenses— Selling, general and administrative expenses were $22.7 million for the three months ended September 30, 2023, compared to $31.9 million for the three months ended September 30, 2022.

The decrease of $9.2 million was primarily due to the reduction in headcount related costs, including stock based compensation, as a result of the April and November 2022 reductions in force, benefits realized from the assignment of the Boston Lease in May 2023 and targeted cutbacks in Auryxia marketing and promotional expenses that were offset by some one-time non-recurring expenses.

See Note 12, Commitments and Contingencies in the accompanying notes to the consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information on the assignment of the Boston Lease.

License Expenses— License expense related to royalties due to Panion relating to sales of Riona in Japan were $0.9 million and $0.7 million for the three months ended September 30, 2023 and 2022, respectively.

Restructuring— Restructuring expenses were $0.2 million for the three months ended September 30, 2023 due to stock compensation expense related to our reductions of our workforce.

Restructuring expenses were $0.2 million for the three months ended September 30, 2022 due to one-time termination benefits for severance, healthcare and related benefits related to our reductions of our workforce.

Other Expense, Net— Other expense, net, was $1.5 million for the three months ended September 30, 2023, compared to $2.8 million for the three months ended September 30, 2022.

The decrease of $1.3 million was primarily due to a decrease in interest expense as a result of reducing our outstanding principal balance on the Pharmakon Term Loans by $24.0 million offset by nearly a 136 basis point increase in the interest rate since the period ended September 30, 2022.

In addition, during the three months ended September 30, 2022 we recorded 1.9 million non-cash interest expense on our liability for the sale of future royalties, and we no longer record interest related to our liability for the sale of future royalties.

Loss on Extinguishment of Debt.

During the three months ended September 30, 2022, we recorded $0.9 million loss on the extinguishment of debt in connection with the prepayments made on the Term Loans in connection with the Second Amendment and Waiver.

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| Form 10-Q | Page 29

The tables and discussion below present the results for the periods indicated and the six months ended June 30, 2022 have been updated to reflect the impact of errors revised in prior periods and as described in more detail in Note 3 in the Notes to the Condensed Consolidated Financial Statements found in Part I, Item 1 of this Quarterly Report on Form 10-Q:

Comparison of the Six Months Ended June 30, 2023 and 2022

The tables and discussion below present the results for the periods indicated and the nine months ended September 30, 2022 have been updated to reflect the errors revised in prior periods and as described in more detail in Note 1 in the Notes to the Consolidated Financial Statements found in Part II, Item 8 of our Annual Report on Form 10-K/A:

Comparison of the Nine Months Ended September 30, 2023 and 2022

Nine Months Ended September 30,

(dollars in thousands) 2023 2022 $ %

Six Months Ended Change

June 30, 2023 June 30, 2022 $ %

Product revenue, net $ 117,068 $ 126,670 $ (9,602) (8) %

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Other expense, net (4,385) (11,339) 6,954 (61) %

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

Loss on extinguishment of debt — (906) 906 *

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

Net loss $ (52,539) $ (88,155) $ 35,616 (40) %

2 unchanged sentences

We distribute our product principally through a limited number of wholesale distributors as well as certain specialty pharmacy providers.

Net product revenue was $77.0 million for the six months ended June 30, 2023, compared to net product revenue of $84.7 million for the six months ended June 30, 2022.

The decrease was primarily due to a decline in volume and impact of shifting payor mix partially caused by contracting dynamics and a decline in the phosphate binder market.

In addition, the decline was partially offset by higher revenues resulting from a price increase in January 2023.

License, Collaboration and Other Revenue— License, collaboration and other revenue was $19.4 million for the six months ended June 30, 2023 compared to $103.3 million for the six months ended June 30, 2022.

Net product revenue was $117.1 million for the nine months ended September 30, 2023, compared to net product revenue of $126.7 million for the nine months ended September 30, 2022.

The decrease was primarily due to a reduction in volume and impact of shifting payor mix partially caused by contracting dynamics and a decline in the phosphate binder market.

In addition, the decline was partially offset by price increases in January 2023 and July 2023.

License, Collaboration and Other Revenue— License, collaboration and other revenue was $21.4 million for the nine months ended September 30, 2023 compared to $110.0 million for the nine months ended September 30, 2022.

The decrease was primarily due to a reduction in revenue from the Otsuka collaboration agreement that we terminated on June 30, 2022 pursuant to the Termination Agreement which, among other things, terminated the cost sharing arrangement under the Otsuka collaboration agreement for the Otsuka U.S.

Agreement and the Otsuka International Agreement.

During the six months ended June 30, 2022, we recognized $55.0 million in collaboration revenue related to a payment to be received pursuant to the terms of the Termination Agreement with Otsuka, $15.5 million related to previously deferred revenue as of the date of termination and $9.6 million of non-cash consideration related to Otsuka's obligations to complete certain agreed upon clinical activities related to the MODIFY Study in accordance with the current study protocol, at its own cost and expense.

We also recognized $19.1 million in collaboration revenue for the six months ended June 30, 2022 from the Otsuka U.S.

During the nine months ended June 30, 2022, we recognized $55.0 million in collaboration revenue related to a payment to be received pursuant to the terms of the Termination Agreement with Otsuka, $15.5 million related to previously deferred revenue as of the date of termination and $9.6 million of non-cash consideration related to Otsuka's obligations to complete certain agreed upon clinical activities related to the MODIFY Study in accordance with the current study protocol, at its own cost and expense.

We also recognized $19.1 million in collaboration revenue for the nine months ended June 30, 2022 from the Otsuka U.S.

Agreement and the Otsuka International Agreement prior to the termination, as well as royalty revenue under the MTPC Agreement.

We recognized $2.2 million in collaboration revenue in connection with the Packaging Validation Transfer Agreement during the six months ended June 30, 2023.

We recognized $2.2 million in collaboration revenue in connection with the Packaging Validation Transfer Agreement during the nine months ended September 30, 2023.

However, we do not expect to recognize any future revenue under the Otsuka U.S.

Agreement, the Otsuka International Agreement or the Packaging Validation Transfer Agreement.

Additionally, on December 16, 2022, we, MTPC, and Esteve Química, S.A., or Esteve , executed an Assignment of Supply Agreement, or the Esteve Assignment Agreement , pursuant to which the supply agreement between us and Esteve, or the Esteve Agreement , was assigned to MTPC.

The Esteve Assignment Agreement transferred the rights and obligations of the

Additionally, on December 16, 2022, we, MTPC, and Esteve entered into the Esteve Assignment Agreement, pursuant to which the Esteve Agreement was assigned to MTPC.

The Esteve Assignment Agreement transferred the rights and obligations

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Esteve Agreement to MTPC, including the obligations under certain purchase orders issued by us and accepted by Esteve.

Therefore, we expect significantly less revenue in the future under our supply agreement with MTPC.

This decrease was partially offset by the $10.0 million upfront payment received as part of the Medice License Agreement signed during the three months ended June 30, 2023.

of the Esteve Agreement to MTPC, including the obligations under certain purchase orders issued by us and accepted by Esteve.

Therefore, MTPC is purchasing some vadadustat directly from Esteve, and the decrease in license, collaboration and other revenue was partially due to a reduction in revenue from the MTPC Supply Agreement.

We expect significantly less revenue in the future under our supply agreement with MTPC.

This decrease was partially offset by the $10.0 million upfront payment received as part of the Medice License Agreement signed during the nine months ended September 30, 2023.

Cost of Goods Sold - Product .

Cost of goods sold was $19.5 million for the six months ended June 30, 2023, compared to $32.7 million for the six months ended June 30, 2022.

The decrease of $13.2 million is primarily due to a decrease in inventory write-downs as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold during the six months ended June 30, 2023, as well as a decrease in sales volume.

Cost of goods sold was $28.5 million for the nine months ended September 30, 2023, compared to $62.0 million for the nine months ended September 30, 2022.

The decrease of $33.5 million is primarily due to a decrease in a non-cash charge related to the prior liability for excess purchase commitments, a decrease in inventory write-downs as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold during the nine months ended September 30, 2023, as well as a decrease in sales volume resulting in a reduction in product costs.

Amortization of intangible asset during each of the six months ended June 30, 2023 and 2022 was $18.0 million.

Research and Development Expenses— Research and development expenses were $39.9 million for the six months ended June 30, 2023, compared to $69.9 million for the six months ended June 30, 2022, a decrease of $30.0 million.

Amortization of intangible asset during each of the nine months ended September 30, 2023 and 2022 was $27.0 million.

Research and Development Expenses— Research and development expenses were $53.2 million for the nine months ended September 30, 2023, compared to $97.9 million for the nine months ended September 30, 2022, a decrease of $44.7 million.

The decrease was primarily due to a reduction of vadadustat development expenses of approximately $27.3 million.

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Selling, General and Administrative Expenses— Selling, general and administrative expenses were $52.1 million for the six months ended June 30, 2023, compared to $76.8 million for the six months ended June 30, 2022.The decrease of $24.7 million was primarily due to decreased headcount related costs as a result of the 2022 reductions in force and lower marketing and promotional expenses.

License Expenses— License expense related to royalties due to Panion relating to sales of Riona in Japan was $1.5 million and $1.6 million for the six months ended June 30, 2023 and 2022, respectively.

Restructuring— Restructuring expenses were $14.5 million for the six months ended June 30, 2022 that were incurred in connection with our reduction of our workforce in the second quarter 2022 by approximately 42% across all areas of our company including several members of management.

Other Expense, Net— Other expense, net, was $2.9 million for the six months ended June 30, 2023 compared to $8.6 million for the six months ended June 30, 2022.

The decrease of $5.6 million was primarily due to a decrease in interest expense as a result of reducing our outstanding principal balance on the Pharmakon Term Loans by $57.0 million since the period ended June 30, 2022.

This decrease was offset by nearly 135 basis point increase in the interest rate as a result of the current rising interest rate macroeconomic environment.

In addition, our non-cash interest expense from our liability for the sale of future royalties decreased due to a drop in the effective interest rate on the liability for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

Selling, General and Administrative Expenses— Selling, general and administrative expenses were $74.8 million for the nine months ended September 30, 2023, compared to $108.7 million for the nine months ended September 30, 2022.

The decrease of $33.9 million was primarily due to decreased headcount related costs, including stock based compensation, as a result of the 2022 reductions in force, decreased professional service and consulting expenses and lower marketing and promotional expenses.

In addition, rent expense declined due to the assignment of the Boston Lease in May 2023.

See Note 12, Commitments and Contingencies in the accompanying notes to the consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information on the Boston Lease.

License Expenses— License expense related to royalties due to Panion relating to sales of Riona in Japan was $2.4 million and $2.3 million for the nine months ended September 30, 2023 and 2022, respectively.

Restructuring— Restructuring expenses were $14.7 million for the nine months ended September 30, 2022 that were incurred in connection with our reductions of our workforce in the second quarter of 2022 which reduced our headcount by approximately 42% and impacted all departments, including several members of senior management.

Other Expense, Net— Other expense, net, was $4.4 million for the nine months ended September 30, 2023 compared to $11.3 million for the nine months ended September 30, 2022.

The decrease of $7.0 million was primarily due to a decrease in interest expense as a result of reducing our outstanding principal balance on the Pharmakon Term Loans by $24.0 million offset by nearly 136 basis point increase in the interest rate since the period ended September 30, 2022.

In addition, we no longer record interest on our liability for the sale of future royalties.

Loss on Lease Termination— On May 26, 2023 we incurred a loss on lease termination of $0.5 million in connection with the Lease Assignment Agreement, with LG Chem pursuant to which we assigned all of our rights, title, and interest in, to, and under the Boston Lease to LG Chem.

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

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

Liquidity and Capital Resources

Historical Cash Flows

We have incurred recurring losses from inception and anticipate net losses and negative operating cash flows for the near future.

For the six months ended June 30, 2023 and 2022, we incurred net operating losses of $38.1 million and $34.1 million, respectively.

As of September 30, 2023 and December 31, 2022, we had cash and cash equivalents of $46.5 million and $90.5 million, respectively, and restricted cash of $1.6 million and $2.7 million, respectively.

To date, we have funded our operations principally through product sales, payments received from our collaboration and licensing partners, borrowings under term loans, sales of our common stock, including through our employee stock purchase plan, a working capital payment from CSL Vifor and a royalty transaction.

From inception to September 30, 2023, we have raised approximately $813.5 million of net proceeds from the sale of equity, including $519.8 million from various

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As of June 30, 2023 and December 31, 2022, we had an accumulated deficit of $1,595.1 million and $1,557.0 million, respectively.

Our primary uses of capital are, and we expect will continue to be for the near future, funding operating activities, principal payments on our debt and funding our vadadustat inventory on hand which is included in research and development expense on the condensed consolidated statement of operations and comprehensive income (loss).

Our cash flows may fluctuate and are difficult to forecast and will depend on many factors.

Cash and Cash Equivalents

As of June 30, 2023 and December 31, 2022, we had cash and cash equivalents of $53.6 million and $90.5 million, respectively.

Sources of Liquidity

As of June 30, 2023, we had outstanding debt of $42.5 million, net of debt issuance costs.

underwritten public offerings, $223.7 million from at-the-market offerings, or ATM offerings , pursuant to prior sales agreements with Cantor Fitzgerald & Co., and $70.0 million from the sale of 7,571,429 shares of common stock to CSL Vifor.

We have incurred recurring losses and generated negative cash flow from operations from inception and anticipate net losses and negative operating cash flows for the near future.

For the nine months ended September 30, 2023 and 2022, we incurred net operating losses of $52.5 million and $88.2 million, respectively.

As of September 30, 2023 and December 31, 2022, we had an accumulated deficit of $1.6 billion.

We currently have exclusive rights under a series of patents and patent applications to commercialize Auryxia in the U.S.

that protect us from generic drug competition until March 2025.

Following loss of exclusivity, or LoE , in the U.S., we may not be able to realize enough product revenue from sales of Auryxia to realize net profits from product sales.

We believe the Centers for Medicare & Medicaid Services's, or CMS , decision to include phosphate binders in the dialysis bundle could potentially lead to higher sales of Auryxia after the LoE date than in other LoE scenarios, and plan to work with payors and providers to continue the use of Auryxia beyond LoE.

However, Auryxia product sales have not generated, and may not generate, now or following LoE in the U.S, sufficient product revenue to realize net profits from product sales to cover our current or long-term operating costs.

We believe our existing cash resources and the cash we expect to generate from product, royalty and license revenues are sufficient to fund our current operating plan for at least twelve months from the date of this filing.

However, we may also seek to sell additional private or public equity, enter into new debt transactions, explore potential strategic transactions, or a combination of these approaches.

If we raise additional funds by issuing equity securities, our shareholders would experience dilution.

Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt.

Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.

Additional financing may not be available to us in amounts or on terms acceptable to us, if at all.

Any of these events could significantly harm our business, financial condition and prospects.

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 of time anticipated by us, or that additional funding will be available on terms acceptable to us, or at all.

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.

We have based this estimate on assumptions that may be substantially different than actual results, and we could utilize our available capital resources sooner than we currently expect.

If our operating performance deteriorates significantly from the levels expected in our operating plan or if vadadustat is not approved in the U.S., it would have an effect on our liquidity and our ability to continue as a going concern in the future.

Our future funding requirements, both near- and long-term, will depend on many factors including, but not limited to, those described under Part II, Item 1A.

Risk Factors under the heading "Risks Related to our Financial Position, Need for Additional Capital and Growth Strategy."

Debt Financing and Covenants

On November 11, 2019, we entered into the Loan Agreement with funds managed by Pharmakon Advisors LP, or Pharmakon , pursuant to which term loans in an aggregate principal amount of $100.0 million were made available to us in two tranches, subject to certain terms and conditions, or the Term Loans .

The principal balance under the Term Loans was $43.0 million and $67.0 million as of September 30, 2023 and December 31, 2022, respectively.

We are required to pay a variable rate of interest based upon the three-month Secured Overnight Financing Rate, or SOFR , plus 0.30%, plus 7.50%.

As of September 30, 2023, the annual interest rate was 11.15%

On October 31, 2023, we entered into the Fourth Amendment to Loan Agreement, or Fourth Amendment , with Pharmakon, which removed the SOFR interest cap of 3.35%.

In addition, the Fourth Amendment, extended the maturity date from November 11, 2024 to March 31, 2025, or the New Maturity Date .

The Fourth Amendment also delayed the payment of additional principal of each Term Loan until October 31, 2024, at which time we will make monthly payments of principal of $5.8 million;

provided that, if certain pre-specified events occur, we will (a) make payments of principal of such Term Loans commencing on the Payment Date (as defined in the Loan Agreement) immediately following the occurrence of such event and continuing on a quarterly basis on each Payment Date thereafter through the New Maturity Date and (b) repay, on a specified date on or after July 1, 2024, all unpaid principal that would have been due and payable during the period commencing on the Payment Date immediately following the Fourth Amendment Effective Date and ending on the Payment Date immediately following such date (including all accrued and unpaid interest thereon, if any), as if w had been required to make equal quarterly payments of principal of such Term Loans commencing on the Payment Date immediately following the Fourth Amendment Effective Date.

The Pharmakon Term Loans are secured by a first priority lien on certain of our and Keryx's assets, including Auryxia and certain related assets, cash and certain equity interests held by us and Keryx.

The Loan Agreement contains various

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affirmative and negative covenants, including that limit our ability to engage in specified types of transactions and require us to maintain one or more controlled cash accounts.

In addition, the Loan Agreement, as amended, requires us to (i) report quarterly minimum net Auryxia sales for the trailing twelve-month period of $85.0 million, (ii) in certain instances maintain an annual minimum liquidity threshold and (iii) not be subject to any qualification as to going concern in its the Annual Reports on Form 10-K.

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

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

As of September 30, 2023, we were in compliance with these covenants.

See Note 10, Debt , in the accompanying notes to the consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

As of June 30, 2023, we were in compliance with these covenants.

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

Other Agreements Accounted for as Debt

On February 18, 2022, we entered into a Second Amended and Restated License Agreement, or the Vifor Agreement , with CSL Vifor pursuant to which CSL Vifor contributed $40.0 million to a working capital fund established to partially fund our costs of purchasing vadadustat from our contract manufacturers, or the Working Capital Fund .

The Working Capital Fund amount may fluctuate, and will be repaid to CSL Vifor over time.

We have determined the Working Capital Fund itself does not represent an obligation to transfer goods or services to CSL Vifor in the future and thus under ASC606 was recorded as a refund liability.

The refund liability is considered a debt arrangement with zero coupon interest and we impute interest on the refund liability at a rate of 15.0% per annum.

As of September 30, 2023, the $40.3 million refund liability is classified as a long-term liability based on management's estimated timing of the repayment of the refund liability to Vifor exceeding one-year.

Equity and Other Funding Arrangements

At-the-Market Offering

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Cost-Share Funding

As of June 30, 2023, through our former and current collaboration agreements with Otsuka and MTPC, respectively, we received approximately $837.1 million in cost-share funding, and are not entitled to receive any additional cost-share funding.

As of September 30, 2023, through our former and current collaboration agreements with Otsuka and MTPC, respectively, we received approximately $837.1 million in cost-share funding, and are not entitled to receive any additional cost-share funding.

We subsequently received an additional $2.2 million in connection with the Packaging Validation Transfer Agreement entered into with Otsuka on April 20, 2023.

Contractual Obligations, Commitments and Contingencies Other than Debt

We are party to contractual obligations involving commitments to make payments to third parties in the future.

Certain contractual obligations are reflected on our condensed consolidated balance sheet as of June 30, 2023, while others are considered future obligations.

Our material cash requirements as of June 30, 2023, include the following contractual obligations and commitments arising in the normal course of business, including leases, purchases commitments, and purchase obligations described in more detail below.

As of June 30, 2023, other than as disclosed in Note 11, Debt , and Note 13, Commitments and Contingencies , in the accompanying notes to the consolidated financial statements included in Part I, Item 1 of this From 10-Q, there have been no material changes to our contractual obligations and commitments from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2022 Annual Report on Form 10-K/A.

Certain contractual obligations are reflected on our condensed consolidated balance sheet as of September 30, 2023, while others are considered future obligations.

Our material cash requirements as of September 30, 2023, include the following contractual obligations and commitments arising in the normal course of business, including leases, purchases commitments, and purchase obligations described in more detail below.

As of September 30, 2023, other than as disclosed in Note 10, Debt, and Note 12, Commitments and Contingencies, in the accompanying notes to the consolidated financial statements included in Part I, Item 1 of this From 10-Q, there have been no material changes to our contractual obligations and commitments from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2022 Annual Report on Form 10-K/A.

Off-Balance Sheet Arrangements

Letter of Credit

As of June 30, 2023, in connection with our leased properties in Cambridge, MA, we had $1.7 million in a letter of credit outstanding.

As of September 30, 2023, in connection with our leased properties in Cambridge, MA, we had $1.6 million in a letter of credit outstanding.

Akebia Therapeutics, Inc.

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The following table provides a summary of cash flow data for each applicable period:

Six Months Ended

Nine Months Ended September 30,

NET CASH PROVIDED BY/(USED IN) ( in thousands ):

June 30, 2023 June 30, 2022

Operating activities $ (21,076) $ (18,475)

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Operating Activities

Net cash used in operating activities was $13.9 million for the six months ended June 30, 2023.

Net cash used in operating activities was $21.1 million for the nine months ended September 30, 2023.

Net cash used in operating activities consists of a net loss of $52.5 million, adjusted for non-cash items such as amortization of our intangible asset of $27.0 million, stock-based compensation expense of $7.8 million and the effect of changes in working capital.

In addition, we had a one time expense related to the termination of our Boston Lease of $0.8 million.

Net cash used in operating activities was $52.3 million for the six months ended June 30, 2022.

Net cash used in operating activities consists of a net loss of $34.1 million, adjusted for non-cash items such as amortization of intangible asset of $18.0 million, stock-based compensation expense of $11.5 million, non-cash collaboration revenue decrease of $9.6 million, non-cash interest and royalty revenue related to the sale of future royalties and the effect of changes in working capital.

In addition, we had a write-off related to the termination of our Boston Lease of $0.8 million.

Net cash used in operating activities was $18.5 million for the nine months ended September 30, 2022.

Net cash used in operating activities consists of a net loss of $88.2 million, adjusted for non-cash items such as amortization of intangible asset of $27.0 million, stock-based compensation expense of $14.8 million, non-cash interest and royalty revenue related to the sale of future royalties, write-down of inventory of $10.0 million and the effect of changes in working capital.

Investing Activities

No net cash was used in investing activities for the six months ended June 30, 2023.

Net cash used in investing activities for the three months ended June 30, 2022 was $0.1 million and was primarily comprised of purchases of equipment.

No net cash was used in investing activities for the nine months ended September 30, 2023.

Net cash used in investing activities for the three months ended September 30, 2022 was $0.1 million and was primarily comprised of purchases of equipment.

Financing Activities

Net cash used in financing activities for the six months ended June 30, 2023 primarily consisted of principal payments of debt of $24.0 million.

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

As of and for the six months ended June 30, 2023, the effect of switching from LIBOR to SOFR would not have been material to our consolidated financial statements.

Net cash provided by financing activities for the three months ended June 30, 2022 was $47.5 million and consisted of net proceeds from a refund liability to a customer of $40.0 million, net proceeds from the issuance of common stock of $7.1 million, and proceeds from the sale of stock under our employee stock purchase plan.

Operating Capital Requirements

We have funded our operations principally through sales of our common stock, including through our employee stock purchase plan, payments received from our collaboration and licensing partners, product sales, a working capital payment from Vifor, debt and a royalty transaction.

We have one product, Auryxia, approved for commercial sale in the United State, and we have not generated, and may not generate, enough product revenue from the sale of Auryxia to realize net profits from product sales.

We currently have exclusive rights under a series of patents and patent applications to commercialize Auryxia in the U.S.

that currently protect us from generic drug competition until March 2025.

Following loss of exclusivity in the U.S., we may not be

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able realize enough product revenue from sales of Auryxia to realize net profits from product sales after March 2025.

We have incurred losses and cumulative negative cash flows from operations in each year since our inception in February 2007, and as of June 30, 2023, we had an accumulated deficit of $1.6 billion.

Our current operating plan anticipates continued increasing levels of cash flows from operations.

We also expect to continue to incur additional research and development expenses related to our pipeline, additional costs related to vadadustat, and research and development and selling, general and administrative expenses for our ongoing development and commercialization of Auryxia.

The revenue from sales of our only commercial product Auryxia at the present time is not sufficient to cover our long-term operating costs.

Our ability to achieve sufficient revenue to cover our long-term operating costs is highly dependent upon us obtaining market approval for vadadustat in the U.S.

We expect our cash resources to fund our current operating plan for at least twelve months from the date of this filing.

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

We plan to reduce our need for future financing through product sales, expense management, and cost avoidance measures in line with being a single commercial product company.

We believe our expense management, future decisions by the FDA or foreign regulatory agencies related to the potential regulatory approval of vadadustat, and our ability to generate additional value from vadadustat, if approved, could potentially further extend our cash runway for a period greater than twelve months.

However, these future decisions and transactions are not contemplated in our operating plan and are outside of our control.

Additionally, with loss of exclusivity, or LOE , for Auryxia in March of 2025, we believe the Centers for Medicare & Medicaid Services, or CMS , decision to include phosphate binders in the dialysis bundle could potentially lead to higher sales of Auryxia after the LOE date than in other LOE scenarios, and plan to work with payors and providers to continue the use of Auryxia beyond LOE.

Assuming we are successful in those endeavors, we will require additional funding to fund our strategic growth beyond Auryxia or to pursue later stage development and commercial activities for our product candidates and any additional product or product candidates, including those that may be in-licensed or acquired.

We have based this estimate on assumptions that may be substantially different than actual results, and we could utilize our available capital resources sooner than we currently expect.

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 future funding requirements, both near- and long-term, will depend on many factors including, but not limited to, those described under Part II, Item 1A.

Risk Factors under the heading "Risks Related to our Financial Position, Need for Additional Capital and Growth Strategy."

Net cash used in financing activities for the nine months ended September 30, 2023 primarily consisted of principal payments of debt of $24.0 million.

On June 29, 2023, we entered into the Third Amendment to the Loan Agreement with Pharmakon, which replaced LIBOR with SOFR effective June 30, 2023.

As of and for the nine months ended September 30, 2023, the effect of switching from LIBOR to SOFR was not material to our consolidated financial statements.

Under the Fourth Amendment , with Pharmakon, the SOFR interest cap of 3.35% was removed.

Net cash provided by financing activities for the nine months ended September 30, 2022 was $14.6 million and consisted of net proceeds from a refund liability to a customer of $40.0 million, net proceeds from the issuance of common stock of $7.1 million and proceeds from the sale of stock under our employee stock purchase plan, partially offset by principal payments of debt of $33.0 million.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, please see Note 2 of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Critical Accounting Estimates and Significant Judgments

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The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our unaudited condensed consolidated financial statements.

On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue, inventory, our excess purchase commitment liability, liabilities related to sale of future royalties, refund liabilities to customers, impairment of intangible asset, stock-based compensation expense and income taxes.

On an ongoing basis, we evaluate our

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estimates and judgments, including those related to revenue, inventory, our excess purchase commitment liability, liabilities related to sale of future royalties, refund liabilities to customers, impairment of intangible asset, stock-based compensation expense and income taxes.

We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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In making estimates and judgments, management employs critical accounting policies.

During the six months ended June 30, 2023, there were no material changes to our methodologies used for our critical accounting estimates as reported in our 2022 Annual Report on Form 10-K/A.

Recent Accounting Pronouncements

During the nine months ended September 30, 2023, there were no material changes to our methodologies used for our critical accounting estimates as reported in our 2022 Annual Report on Form 10-K/A.

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 2. Management’s Discussion and Analysis